the unpaid amount, for the creditors are entitled to this full protection. Creditors cannot resort to it as a trust fund, however, until the corporate assets have been exhausted. In some states by statute the stockholder is liable for double the amount of his stock. This is also the liability of a stockholder in a National Bank. In still other states the stockholder is liable the same as a partner. The corporation has a lien upon a stockholder's stock for debts due the company by the stockholder. This lien may arise by charter, by statute or by by-law.

510. Rights of Stockholders.-The stockholder has the right at common law to examine or inspect, at any reasonable time, the books and records of the corporation. This right is also conferred in many states by statute. He has the right to compel a director guilty of negligence to make good the loss occasioned thereby to the corporation. He also has the right to attend meetings of the stockholders and to participate therein.

511. Transfer of Stock.-To transfer a share of stock there are generally two steps to be taken. First, the assignment of the cer tificate to the transferee, and second, the perfecting of that assignment by surrendering the certificate to the corporation and obtaining an entry on the transfer books of the change of ownership. Usually on the back of the certificate is printed a blank assignment, which is filled out by the transferrer, giving the proper officer of the corporation power of attorney to transfer the ownership of the stock on the books of the company to the transferee named. This method does not require the presence of the transferrer, and is much used for this reason. The old certificate may be taken up, canceled, and a new one issued in its stead. Sometimes the assignment mentioned. above is filled out, but the name of the transferee is omitted; by this means the certificate may pass from hand to hand by delivery, and has led some to consider it as a quasi negotiable paper.

512. Dissolution of Corporation.-A corporation may be dissolved by the expiration of the time for which it was created; by act of the legislature; by surrendering its charter, or by forfeiture of its franchise.

REVIEW QUESTIONS.

1. Define a corporation. 2. Is any authority necessary to the formation of a corporation, and if so what is the source of that authority? 3. How are corporations divided? 4. Are there any sole corporations in the country? 5. What is a public corporation? 6. What is a quasi corporation? 7. In what ways may a corporation be created? 8. What is meant by a special charter? 9. How are corporations now generally created? 10. Why is this the case? 11. Does congress ever create corporations by special act? 12. Who is a corporator? 13. Who is a subscriber? 14. Define capital stock. 15. What is the usual procedure in the organization of a corporation? 16. What is a by-law and who makes it? 17. What is a charter? 18. How is stock issued? 19. What kind of property is stock? 20. Name and define the different kinds of stock. 21. What is meant by "watering stock"? 22. What are the implied powers of a corporation? 23. What is meant by "succession"? 24. Why do corporations have a common seal? 25. How are officers elected? 26. Explain the manner of voting. 27. What is meant by a system of "cumulative voting"? 28. Is it in vogue in your State? 29. Does the right to vote by proxy exist at common law? 30. How far is a corporation liable for the torts of its agents? 31. What contracts may a corporation make? 32. By what law is a corporation governed? 33. What are the liabilities of a 'stockholder? 34. What are the rights of a stockholder? 35. How is stock transferred? 36. How may a corporation be dissolved? 37. Through whom does a corporation do business?

JOINT STOCK COMPANIES.

CHAPTER XLII.

513. Explanation.-Joint stock companies occupy a kind of middle ground between a partnership on the one side and a corporation on the other. In many respects they resemble each. In England they have been numerous, and formerly in this country they were much more numerous than now. The ease with which corporations can be organized under the general incorporation acts, which have been passed by the various states, has had the effect of increasing the number of corporations at the expense of the number of joint stock companies.

514. How Formed. A joint stock company being a voluntary association, it can be formed for any lawful purpose. It is organized in much the same manner as a partnership, but is preferable to a partnership when a large number of partners are interested, for the business is conducted by the officers or agents in the same manner as in a corporation. Those who are to compose the membership of a joint stock company enter into articles of agreement as to how the business shall be conducted. This agreement is at once the charter and by-laws of the association, and by it the powers and duties of the members are to be judged, their liabilities being left to the law itself.

515. What Articles Should Contain. -The articles provide for the manner of forming the company; for the amount of the capital stock; for the number and par value of the shares; for the manner of transferring the shares; for the number and kinds of officers and the manner of their appointment; for regular meetings of the stockholders and the manner of calling special meetings; for the manner of voting

1 In Illinois and Louisiana they have been held as illegal at common law. But this is certainly not the weight of authority.

at such meetings, and in general for the entire management of the association.

Sometimes the articles provide that the property of the association shall be held by a board of trustees, in whose name the business is to be conducted. This is valid at common law, but many states1 have special statutes expressly specifying the objects for which a trust may be created, and these statutes should always be consulted when involved.

516. By Implication.-A joint stock company may also exist by implication. Where there has been an ineffectual attempt at incorporation the result may be a joint stock company. Thus after the charter of a corporation has expired, if the company still continues to do business, they do so as a joint stock association.

517. Liability of Stockholders. The stockholders in a joint stock association are liable to its creditors as partners, and the ordinary rules of partnership apply as between themselves, including the right to contribution. A member's subscription may be enforced, as in a corporation.

Under the peculiar statute in New York a member may deal with and sue the company, the same as in a corporation, but it is said that this right does not exist at common law. A member who transfers his stock is liable for precedent debts of the association.

518. Joint Stock Companies Compared with Partnerships and Corporations. From what has been said it will be seen that in their formation and the liability of members, joint stock companies resemble partnerships, but in their organization, manner of doing business and election of officers, they are like corporations. They also resem. ble corporations in having the "power of succession." They do not, however, have a common seal.

In voting each member has one vote, regardless of the amount of his investment.

519. How May Sue and be Sued.-A joint stock company cannot sue by common law, as can a corporation by and in its name, but in the name of its members.

520. Dissolution. On the dissolution of a joint stock company, either by expiration of time or otherwise, the directors or trustees

1 California, Connecticut, Georgia, Kentucky, Michigan, Minnesota, North Carolina, Pennsylvania.

are bound to convert the property into cash, pay the debts and distribute the remainder. When a certain time is fixed in the articles for the dissolution of the company, it cannot be dissolved at the instance of a member before that time. It may be dissolved by decree of court when the enterprise becomes impracticable.

521. Social and Benevolent Clubs.-A joint stock association should be distinguished also from social and benevolent clubs, which do not have a capital stock.