have a capital stock of many thousand dollars, and its capital, by reason of business losses, may be nothing. The value of the capital stock, however, is determined by the value of its capital above liabilities, as the holders of the capital stock are ultimately entitled to the net property of the corporation.

The capital stock of a corporation is generally divided into convenient parts, called shares. The amount of each share depends largely upon the object of the corporation. For instance, if it is desired to interest many people with small holdings, the shares may be fixed at ten, twenty-five or fifty dollars or even less, whereas, in corporations in which only a few principal stockholders are interested the shares may be made a hundred dollars or more each.

The shares of stock are usually evidenced by what are known as certificates of stock, but it should be borne in mind that a certificate of stock is only evidence of the ownership of stock and not the stock itself; one may be a stockholder in a corporation without having a certificate of stock. The ownership of a share or shares of stock entitles the owner to participate in the profits of the corporation in the proportion that his share or shares sustain to the whole number of shares outstanding, when such profits are declared as dividends, and also to participate in the same proportion in the net amount of the corporate property on dissolution.

Shares of stock are considered personal property, even though the corporation by which they are issued owns or deals in nothing but real estate. A sale of shares of stock exceeding fifty dollars in value comes within the provision of the Statute of Frauds, and such contract must be in writing unless the buyer at the time of sale pays part of the purchase price or receives the shares or a part of them. (See the chapter on Statute of Frauds.)

Certificates of stock are not negotiable; that is, a transfer ordinarily does not vest a better title in the transferee than the transferrer had. However, if a certificate of stock is fraudlently issued by a corporation officer acting within the apparent scope of his authority, and such certificate gets into the hands of an innocent holder, the corporation is liable thereon.

Subscription.-A subscription is an offer to take shares of stock in a corporation either before or after its organiza

tion. It becomes a contract when presented to and accepted by the corporation. A subscription need not be in any particular form, but it should ordinarily be in writing, and clearly express the terms on which the subscription is made. If the contract is induced by fraud, it may be avoided or other remedy had upon it. (See the Chapter on Fraud.)

Sometimes a subscription is made conditional, that is, not binding until the happening of a certain contingency, or to be void upon the happening of a contingency. Such subscriptions are generally valid. Where, however, the statute requires a certain amount of the stock to be subscribed before the corporation can do business, the statute contemplates absolute subscriptions, and conditional subscriptions would not be a compliance with it.

A subscription may also be delivered conditionally. In such case the contract of subscription does not take effect at all until the fulfillment of a certain condition. A conditional delivery of a contract of subscription should be distinguished from a conditional subscription. In the former no contract is made with the corporation until the condition happens, but in the latter a contract is made upon a certain condition. Thus, a subscription for shares of stock with the understanding that such subscription is not to be binding until at least ten subscriptions of the same amount have been obtained, and which was delivered to the president of the corporation with the understanding that he was not to deliver it to the corporation until such other subscriptions had been obtained, creates a conditional delivery of the subscription in the hands of the president. "Generally, such promises do not become operative, as contracts, before delivery. The fact of delivery or non-delivery is ordinarily almost incapable of proof except by oral testimony. If it is wrongly delivered, contrary to the agreement of the parties, such delivery has no effect to make it become operative and binding. So, the question whether it was delivered in fact, contrary to the agreement in that behalf, is always necessarily open to question on parol testimony It required both a delivery of the subscription to the corporation and the assent of the corporation to it to make it binding as a subscription for stock upon either party.'

A corporation may also sell its stock after organization. A sale differs from a subscription in that a subscription is

an agreement to take stock, whereas a sale is an absolute transfer of it; one contract is executory whereas the other is executed. When a subscription to stock has been accepted by the corporation and is not paid, the corporation may bring suit thereon as upon any other contract made with it. A corporation may sell its stock subscription as any other debt due to it. By statute in this state it is provided that stock may also be sold by the corporation for unpaid subscription.

How subscriptions called in.-The statute provides that "unless otherwise expressly provided by law or the articles of organization, the directors of any corporation may call in the subscriptions to the capital stock by instalments, in such proportion and at such times as they shall think proper, by giving such notice thereof as the by-laws shall prescribe, and may enforce payment thereof by suit in the name of the corporation; or in case any stockholder shall neglect or refuse payment of any such instalment for the space of sixty days after the same shall have become due and payable and after he shall have been notified thereof the stock of such negligent stockholder may be sold by the directors at public auction, giving at least thirty days' notice in some newspaper published at or nearest to the place where the business of such corporation is transacted; and the proceeds of such sale shall be first applied in payment of the instalment called for and the expenses attending the sale and the residue be refunded to the owner thereof; but if the proceeds of such sale shall not be sufficient to pay such instalment and the expenses of the sale, such delinquent stockholder shall remain liable to the corporation for such deficiency; such sale shall entitle the purchaser to all the rights of a stockholder to the extent of the shares so bought."

A corporation cannot make a call or "assessment” on stock after it is fully paid, unless it has authority to do so by its articles of incorporation. When a corporation once issues stock as fully paid, and such stock is watered, the corporation cannot thereafter make an assessment thereon. Nor can a corporation make a call after the first one for preliminary expenses until at least fifty per cent. of the stock has been subscribed and twenty per cent. paid in.

A call must be uniform, that is, it must operate upon

all stockholders alike. A call requiring one stockholder to pay in more than others is void. "A regulation made by the directors... as to the time when any particular instalment of capital stock should be paid, if applicable alike to all. . . . subscriptions, would be in substance and effect a valid by-law regulating the stock of the corporation. A call is an official declaration by the directors that the sum subscribed, or any specified instalment thereof, is required to be paid, and the call is ordinarily made effective by notice thereof to the subscribers, in accordance with the by-laws or general regulations of the corporation on that subject. The essential thing required is that the call shall be general, extending to all subscriptions, and that the subscribers shall have notice thereof. .... As a general rule, a call must be made in order to render a subscription, or any part of it, due. The subscription is a debt payable at a future time. The time when it shall be paid is indefinite until fixed by a call.”

A board of directors of a corporation passed a resolution as follows: "Resolved, that a call be, and hereby is, made upon the unpaid portion of subscription for stock in this company, amounting to $46 per share, the same to be paid thirty days from date, either in cash or by a promise to pay in the form of a land contract or contracts.

The court says: "The proof fails to show a valid call. The resolution of the board of directors provides that the stockholder may pay either in cash or by a promise to pay in the form of a land contract or contracts. Its indefiniteness is sufficient to condemn it. The resolution fails to show at whose option the shareholder may pay in cash or land contract. It prescribes no conditions, and fixes no terms by which either the board of directors or stockholders are to be governed in settlement of the balance due to the corporation. Calls of this kind should be uniform in their operation, and not of such a character as to permit the directors to practice favoritism or act oppressively. It is not to be understood that a call may not be so that the shareholder may pay in money or money's worth. The chief requisites are that it should be impartial and uniform, and sufficiently definite to enable the stockholder to comply with the requirements. It was also decided in this case that the notice of the call must be given as provided by the by-laws, which must be made by the stockholders, and that a resolution of the directors directing notice to be given, in the absence of a by-law authorizing such course, is not sufficient.

Transfer of stock, etc.-"The capital stock of every corporation, divided into shares, shall be deemed personal property, and when certificates thereof are issued such shares may be transferred by indorsement of the owner, his attorney or legal representative and delivery of the certificate. The delivery of a stock certificate of a corporation to a bona fide purchaser or pledgee for value, together with a written transfer of the same signed by the owner of the certificate, his attorney or legal representative shall be a sufficient delivery to transfer the title as against all persons, but no such transfer shall affect the right of the corporation to pay any dividend due upon the stock or to treat the holder of recordas the holder in fact until such transfer is recorded upon the books of the corporation or a new certificate is issued to the person to whom it has been so transferred; and every person transferring any such certificates or shares shall remain liable to the creditors of the corporation to the extent and in the manner prescribed" in the section providing for release from liability. This section is quoted in the following paragraph.

A valid pledge of stock may be made by transferring it by an endorsement in blank. When stock is pledged, the pledgor still has the right to vote upon it unless by agreement he has given that right to the pledgee.

A transfer of stock is usually made by an endorsement on the back, inserting the name of the purchaser, or leaving the name blank, and usually the secretary of the corporation is authorized to make the proper transfer on the books.

Release from liability.-"If any stock shall be transferred which is not fully paid the corporation may, by agreement, to be noted on its stock book, discharge the stockholder making such transfer from liability to it for the unpaid part of his stock subscription and accept that of the person to whom the stock is transferred in his place; but the person transferring such stock shall be liable for the amount unpaid thereon to the then creditors of such corporation and those who may become such within six months after such transfer or to any lawfully appointed receiver or assignee of the corporation for their use."

In the absence of this statute it is generally decided by the courts that a bona fide transfer of stock releases the holder from all subsequent liability, and the transferee thereafter assumes such liability. After the transfer, the transferee is