out unless there is in the agreement thereof a promise or understanding that what is borrowed will be repaid or returned; the thing itself or something like it of equal value, with or without compensation for the use of it in the meantime. To borrow is the reciprocal action with to lend; and to lend or to loan, say the dictionaries, is the parting with a thing of value to another for a time fixed, or indefinite, yet to have some time an ending, to be used or enjoyed by that otherthe thing itself, or the equivalent of it, to be given back at the time fixed, or when lawfully asked for, with or without compensation for the use, as may be agreed upon. In this transaction with some stockholders, that corporation had not the right, nor was it under the liability to never pay back the five dollars per share furnished by them to it; that was not named in the terms of the obligation given, nor was it contemplated in the negotiation and bargain. The stockholder had not, by the scope of his bargain, nor by the terms of the written evidence of it, any right ever to ask for repayment of the money furnished by him. In short, there was not formed thereby the relations of debtor and creditor. The stockholder parted forever with the money furnished, inasmuch as the charter of the company is perpetual, and the company made a perpetual charge upon its net earnings. Though there was a compensation fixed for the use of the money, and though it was to take the form of a yearly payment, and at a rate the same as the then lawful rate of interest, yet we can not conceive that the transaction was a loan and borrowing of money, with a compensation for the use of it. If it had been, though the compensation was great for the sum furnished, yet it was not a violation of the usury laws of which the corporation could avail itself (Laws of 1850, chap. 172); and the courts might not overhaul it; save perhaps as an unconscionable and extortionate agreement (1 Story Eq. Juris., secs. 246– 331), as to which we will speak again before the close. The transaction is not to be looked upon as other than a preference of one class of stockholders to another; as giving to the first class a perpetual, inextinguishable prior right to a portion of the earnings of the company before the other class might have anything therefrom. It was none other than the creation of a "preferred stock."

Then there arises the query, whether there was at that time power in the corporation to distinguish between the stockholders in it, to form them into two classes, and to give to one class rights in the corporate property, business and earnings, from which the other was shut out.

We are not prepared to say that, at the first, the corporation might not have lawfully divided the interest in its capital stock into shares arranged in classes, preferring one class to another in the right it should have in the profits of the business. The charter gave power to make such by-laws as it might deem. proper, consistent with constitution and law; and to issue certificates of stock representing the value of the property. We know nothing in the constitution or the law that inhibits a corporation from beginning its corporate action by classifying the shares in its capital stock, with peculiar privileges to one share over another, and thus offering its stock to the public for subscription thereto. No rights are got until a subscription is made. Each subscriber would know for what class of stock he put down his name, and what right he got when he thus became a stockholder. There need be no deception or mistake; there would be no trenching upon rights previously acquired; no contract, express or implied, would be broken or impaired.

This corporation did otherwise. A by-law was duly made, which declared the whole value of its property and the whole amount of its capital stock, and divided the whole of it into shares equal in amount, and directed the issuing of certificates of stock therefor. It is not to be said that this by-law authorized anything but shares equal in value and in right; or that the taker of one did not own as large an interest in the corporation, its capital, affairs and profits to come as any other holder of a share. Certificates of stock were issued under this by-law, that gave no expression of anything different from that. When that by-law was adopted, it was as much the law of the corporation as if its provisions had been a part of the charter: Presbyterian Church v. City of New York, 5 Cow. 538. So it is said in Grant on Corporations, page 80, in a qualified way. Thereby, and by the certificate, as between it and every stockholder the capital stock of the company was fixed in amount, in the number of shares into which

it was divisible, and in the peculiar and relative value of each share. The by law entered into the compact between the corporation and every taker of a share; it was in the nature of a contract between them. The holding and owning of a share gave a right which could not be divested without the assent of the holder and owner; or unless the power so to do had been reserved in some way: Mech. Bank v. N. Y. & N. H. R. R.Co., 13 N. Y. 599-627. Shares of stock are in the nature of choses in action, and give the holder a fixed right in the division of the profits or earnings of a company so long as it exists, and of its effects when it is dissolved. That right is as inviolable as is any right in property, and can no more be taken away or lessened against the will of the owner than can any other right, unless power is reserved in the first instance, when it enters into the constitution of the right; or is properly derived afterward from a superior law-giver.

The certificate of stock is the muniment of the shareholder's title and evidence of his right. It expresses the contract between the corporation and his co-stockholders and himself; and that contract can not, he being unwilling, be taken away from him or changed as to him, without his prior dereliction, or under the conditions above stated. Now it is manifest that any action of a corporation which takes hold of the shares of its capital stock already sold and in the hands of lawful owners, and divides them into two classes—one of which is thereby given prior right to a receipt of a fixed sum from the earnings before the other may have any receipt therefrom, and is given an equal share afterward with the other in what earnings may remain-destroys the equality of the shares, takes away a right which originally existed in it, and materially varies the effect of the certificate of stock.

It is said that when a corporation can lawfully buy property or get money on loan, any known assurance may be exacted and given which does not fall within the prohibitions, expressed or implied, of some statute (Curtis v. Leavitt, 15 N. Y. 66, 67); and that is sought to be applied here. But the prohibition to such action as this is found, not, indeed, in a statute commonly so called, but in the constitutional provision which forbids the impairment of vested rights, save for public purposes and on due compensation. The right which a stockholder gets on the

purchase of his share and the issue to him of the certificato therefor is such a vested right.

It is contended that the power so to do is an incidental and implied power, necessary to the use of the other powers of the corporation, and is a legitimate means of raising money and securing the agreed consideration therefor. We have already conceded that it is legitimate to borrow money, and to secure the repayment of it, with a compensation for the use of it. But that is when it is done in such way as to put the burden upon every share of stock alike; and to enable every share of stock to be relieved therefrom alike, in such way as to preserve the equality of right and privilege and value of the shares, and maintain intact the contract thereto with the stockholder.

Citations are made to us for the converse of this; but they do not come up (sometimes in their facts, sometimes in their declarations) to the necessity of the proposition. Either it is where the capital is not limited and it is new shares that may be issued with a preference, and where there is express power to borrow on bond and mortgage: 2 Redf. on Railways, chap. 33, sec. 4, 237; Harrison v. Mex. R. W., 12 Eng. Rep. 793; or the amount of the capital has not been reached and such stock is issued therefrom: Hazelhurst v. Savannah R. R., 43 Ga. 53; Tottan v. Tison, 54 Id. 139; or there was legislative authority: Davis v. Proprietors, 8 Metcf. 321; Rutland R. R. Co. v. Thrall, 35 Vt. 545; or a restriction to authorize capital, and there was unanimous consent of the stockholders: Prouty v. M. S. and N. I. R. R., 1 Hun, 663; 43 Ga. 53, supra; or there was power to redeem, which was a transaction in the nature of a debt: West Chester, etc., R. R. Co. v. Jackson, 77 Pa. St. 321; or the opinion was obiter: Bates v. Androscoggin R. R. Co., 49 Maine, 491; or it was the case of a subscription for stock with a condition for interest until the corporation was in operation: Richardson v. Vt. and Mass. R. R. Co., 44 Vt. 613; or it was an action on a subscription more favorable to the defendant than to other subscribers, and it was held that defendant could not set up the lack of equality: Evansville R. R. Co. v. Evansville, 15 Ind. 395; or a solemn determination of this question was not necessary for the disposal of the case: Williston v. M. S. and N. I. R. R. Co., 13 Allen, 400; or the issue was authorized by the articles of association: In re

A' D. St. Nav. and Col. Co., 20 L. R. Eq. 339; or there was full knowledge on the part of all concerned: Lockhart v. VanAlstyne, 31 Mich. 81; or the power in the corporate body was conceded, and it was denied that it existed in the directors: McLaughlin v. D. and M. R. R. Co., 8 Id. 100.

We will not say, for we are not called upon here to say, that never can a corporation rightfully, against the dissent of a portion of its stockholders, make some of the stock preferred; what we assent is that this case does not present a state of facts in which a power so to do exists.

There is a power in this charter to alter, amend, add to or repeal, at pleasure, by-laws before made. It is argued from this that it was in the power of the corporate body, in due form and manner, to alter the by-law which had fixed the amount of the capital stock and the number and relative value of the shares thereof. The power to make by-laws is to make such as are not inconsistent with the constitution and the law, and the power to alter has the same limit, so that no alteration could be made which would infringe a right already given and secured by the contract of the corporation. Nor was the power to alter, to the extent of affecting the contracted relative value of a share, reserved when the share was sold to the stockholder so as to enter into and form a part of the contract. An alteration is a pro tanto repeal; but no private corporation can repeal a by-law so as to impair rights which have been given and become vested by virtue of the by-law afterward repealed. All by-laws must be reasonable and consistent with the general principles of the laws of the land, which are to be determined by the courts, when a case is properly before them: The Master, etc., v. Green, 1 Ld. Raym. 113. A by-law may regulate or modify the constitution of a corporation, but can not alter it: Rex v. Cutbush, 4 Burr. 2204; Railway Co. v. Allerton, 18 Wall. 233. The alteration of a by-law is but the making of another upon the same matter. If the first must be reasonable and in accord with principles of law, so must that which alters it. If, then, the power is reserved to alter, amend or repeal, and that reservation enters into a contract, the power reserved is to pass reasonable by-laws, agreeable to law. But a by-law that will disturb a vested right is not such: See Gray v. Portland