the company was organized, the consent of a majority of the members is sufficient to render it effective and binding upon all the incorporators. But if the amendment be fundamental, radical and vital, the unanimous acceptance of all the incorporators is requisite to render it binding upon the company; and the legislature cannot in the amendment itself, authorize the majority to bind the minority herein." Co., (1851) 13 Ill. 504. Cf. Hester v. Memphis & C. R. Co., (1856) 32 Miss. 378; Witter v. Mississippi, Ouachita & Red River R. Co., (1859) 20 Ark. 463. 1 Union Agricultural & S. Assoc. v. Mills, (1870) 31 Iowa, 95; Woodfork v. Union Bank, (1866) 3 Coldw. (Tenn.) 488; Illinois River R. Co. v. Zimmer, (1858) 20 Ill. 654; Buffalo & N. Y. City R. Co. v. Dudley, (1856) 14 N. Y. 336; Schenectady & S. Plank Road Co. v. Thatcher, (1854) 11 N. Y. 102; Dayton &c. R. Co. v. Hatch, (1855) 1 Disney, 84; Commonwealth v. Cullen, 13 Pa. St. 133; Taggart v. Western R. Co., (1866) 24 Md. 563; Danbury &c. R. Co. v. Wilson, (1853) 22 Conn. 435. In Chicago Life Ins. Co. v. Needles, 113 U. S. 574, it was said that in addition to the implied condition that the privileges and franchises of a corporation shall not be abused, the condition is also implied that the corporation shall be subject to such reasonable regulations as the legislature may from time to time prescribe, which do not materially interfere with or obstruct the privileges the State has granted, and which serve only to secure the ends for which the corporation was created. 2 Woodfork v. Union Bank, (1866) 3 Coldw. (Tenn.) 488. In Mills v. Central R. Co., (1886) 41 N. J. Eq. 1, speaking of a statute authorizing a consolidation, the court said: "The provision in that act, that it shall be lawful to lease or consolidate, is merely a legislative authorization, a concession on the part of the legislature, of the power to do that which could not be lawfully done without such authority. It is not an enactment, that the directors may, without the consent of the stockholders of the company, lease, consolidate, or merge, nor is it in effect an enactment, that they may with the consent of the majority of the stockholders do so. But the statute is merely an enabling act, a law intended to give, once for all, a general legislative authority to lease, consolidate, or merge. The legislature did not intend to affect the rights of stockholders inter sese, and the act does not do so, either expressly or by implication. After the shareholders had entered entered into a contract among themselves, under legislative sanction, and expended their money in the execution of the plan mutually agreed upon, the plan could not, even by virtue of legislative enactment, be radically changed by the majority alone, and dissentient stockholders be compelled to engage in a new and totally different undertaking, because such action would impair the obligation of the dissenting stockholders' contract with their associates and the State." See also cases cited infra, §§ 42 and 43. 3 New Orleans &c. R. Co. v. Harris, 27 Miss. 517; Mills v. Central R. Co., (1886) 41 N. J. Eq. 1, cited and quoted supra. 1 § 42. Of material and immaterial amendments - The rights of a minority. Whether an amendment be material or immaterial depends largely upon the circumstances of each particular case. Under certain circumstances amendments authorizing railway companies to build branch lines have been held to be merely auxiliary to the original purpose of incorporation, and acceptance thereof by a majority of the stockholders was deemed sufficient; so with respect to amendments authorizing an extension of the road, or consolidations to take the place of part of the line as laid out, or even the purchase of other railroads. Likewise amendments authorizing certain changes in the route of a railroad, or a change of termini, or extending the time for completing the road, have been held binding upon the corporation when accepted by a majority. And it has been held that a majority may give the corporate consent to amendments authorizing an issue of preferred stock, or of more common stock, or a reduction of capital stock and shortening of the road,1o or an increase of the capital stock and extending the road, such changes not appearing on the record to be detrimental." And there are similar decisions with respect to increasing the number of directors,12 1 Peoria & Rock Island R. Co. v. Preston, (1872) 34 Iowa, 115; Greenville & C. R. Co. v. Coleman, (1851) 5 Rich. (S. C.) 118; Peoria & O. R. Co. v. Elting, (1856) 17 Ill. 429. 2 Cross v. Peach Bottom Ry, Co., (1879) 90 Pa. St. 392. Sprague v. Illinois River R. Co., (1857) 19 Ill. 174; Hannah v. Cincinnati & Fort Wayne R. Co., (1863) 20 Ind. 30. - Venner v. Atchison &c. R. Co., (1886) 28 Fed. Rep. 581. 5 Willson v. Willes Valley R. Co., (1863) 33 Ga. 466; Johnson v. Pensacola &c. R. Co., (1860) 9 Fla. 299; Peoria & O. R. Co. v. Elting, (1856) 17 Ill. 429; Banet v. Alton & S. R. Co., (1851) 13 Ill, 504. 6 Pacific R. Co. v. Renshaw, (1852) 18 Mo. 210; Ross v. Chicago &c. R. Co., 77 Ill. 134. 'Agricultural Branch R. Co. v. Winchester, (1866) 13 Allen, 29; Poughkeepsie &c. Co. v. Griffin, (1861) 24 N. Y. 150; Bailey v. Hollister, (1862) 26 N. Y. 112. 8 Everhart v. West Chester & Phila. R. Co., (1857) 28 Pa. St. 339; Rutland & B. R. Co. v. Thrall, (1863) 35 Vt. 536. 9 City of Covington v. Covington & Cincinnati Bridge Co., (1873) 10 Bush, 69, Carlisle & O'Hara for appellant. 10 Troy & Rutland R. Co. v. Kerr, (1854) 17 Barb. 581. 11 Peoria & O. R. Co. v. Elting, (1856) 17 Ill. 429; Rice v. Rock Island R. Co., 21 Ill. 93. 12 Mower v. Staples, (1884) 32 Minn. 284. See also Gray v. Coffin, (1852) 9 Cush. 192; Child v. Coffin, (1820) 17 Mass. 64; Langley v. Little, (1846) 26 Me. 162; Payson v. Withers, (1873) 5 Biss. 269; Joy v. Jackson &c. Co., (1863) 11 Mich. 155; Fry's Ex'rs v. and changing the corporate name. Under other circumstances amendments authorizing variations in the routes of railways, such as changing a terminus,' shortening, or extending the line, have been held to be material. So also an amendment authorizing an increase in the par value of the stock, has been held to be such a change as requires the unanimous consent of the stockholders. Likewise, amendments authorizing the dividing of a line of railway and' the formation of two or more corporations,' consolidating the corporation with another corporation, allowing business to be commenced before Lexington &c. R. Co., 2 Metc. (Ky.) 322; Waring v. Mayor &c. of Mobile, 24 Ala. 201; Bank v. Richardson, 1 Me. 79; Greenville &c. R. Co. v. Johnson, 8 Baxt. 332; State v. Accommodation Bank, 26 La. Ann. 288; Fall River Iron Works v. Old Colony R. Co., 5 Allen, 221; Pacific &c. R. Co. v. Hughes, 22 Mo. 297. Thus an alteration in the charter of a private corporation increasing the number of directors from five to nine is not a fundamental alteration, and may be accepted by a majority of the stockholders. Mower v. Staples, 32 Minn. 284. 1 Bucksport & B. R. Co. v. Buck, (1878) 68 Me. 81; Clark v. Monongahela Nav. Co., (1840) 10 Watts, 364. Ind. Acts 1875, p. 166, providing that any university incorporated under a special charter might change its name by a vote of a majority of its directors, if done within a limited time, was held not unconstitutional, being neither local nor special, nor creating a new corporation, nor amending the charter. Hazlett v. Butler University, 84 Ind. 230. 2 Middlesex Turnpike Co. v. Locke, (1811) 8 Mass. 267; Middlesex Turnpike Co. v. Swan, (1813) 10 Mass. 384; Hester v. Memphis & Charleston R. Co., (1856) 32 Miss. 378; Witter v. Mississippi, Ouachita & Red River R. Co., (1859) 20 Ark. 463; Champion v. Memphis &c. R. Co., 35 Miss. 692; Simpson v. Denison, 10 Hare, 54. 3 Manheim &c. Co. v. Arndt, (1858) 31 Pa. St. 317; Marietta &c. R. Co. v. Elliott, 10 Ohio St. 57; Middlesex Turnpike Co. v. Locke, 8 Mass. 267; Middlesex Turnpike Co. v. Swan, 10 Mass. 384; Thompson v. Guion, 5 Jones Eq. 113. 4 Bank v. City of Charlotte, (1881) 85 N. C. 433. 5 Stevens v. Rutland & B. R. Co., (1855) 29 Vt. 545. See, also, Noesen v. Town of Port Washington, (1875) 37 Wis. 168, where there was no amendment authorizing the purchase of a railroad running at right angles to the old, but a release was upheld. 462. Mahon v. Wood, (1872) 44 Cal. 7 Leed & E. Turnpike Road Co. v. Phillips, 2 Penr. & W. 184; Supervisors of Fulton County v. Mississippi & Wabash R. Co., (1859) 21 Ill. 338; Carlisle v. Terre Haute & Richmond R. Co., (1855) 6 Ind. 316. 8 Illinois Grand Trunk R. Co. v. Cook, (1862) 29 Ill. 237; McCray v. Junction R. Co., (1857) 9 Ind. 358; Sparrow v. Evansville &. C. R. Co., 7 Ind. 369; Shelbyville & Rushville Turnpike Co. v. Barnes, (1873) 42 Ind. 498; Booe v. Junction R. Co., (1857) 10 Ind. 93; New Orleans & J., 1 Memphis Branch R. Co. v. Sullivan, (1876) 57 Ga. 240. the full capital stock is subscribed,' making the charter perpetual, and increasing the power to hold property, allowing a life insurance company to insure against fire and marine loss, and permitting a railroad to go into water transportation business, require the consent of all the stockholders." Neither a mandatory statute nor a vote of the directors nor of a majority of the stockholders can compel a dissenting stockholder to accept a material alteration of the terms of the contract in view of which he intrusted his funds to the corporate management. For "each shareholder in an incorporate company has a right to insist on the prosecution of the particular objects of the charter. He can not be deprived of his rights or privileges without his assent. Such alterations of the charter as are necessary to carry into effect its main design may be made without his consent. But an alteration which materially and fundamentally changes the responsiG. N. R. Co. v. Harris, (1854) 27 to adopt that course. But is he Miss. 517; Clearwater v. Meredith, bound to adopt it as his only rem(1863) 1 Wall. 25, where Mr. Justice edy?" Davis who delivered the opinion of the court said obiter, "Clearwater could have prevented this consolidation had he chosen to do so; " Kean v. Johnson, (1853) 1 Stock. (9 N. J. Eq.) 401; Black v. Delaware & R. Canal Co., (1873) 24 N. J. Eq. 455; Mowrey v. Indianapolis & C. R. Co., (1868) 4 Biss. 78, criticising Lanman v. Lebanon Valley R. Co., (1858) 30 Pa. St. 42, and declaring it to be the only American case found by the court which seems opposed to the rule, and continuing, "There is, indeed, a dictum in the case of The State v. Bailey, 16 Ind. 46, which seems to favor the Pennsylvania doctrine above mentioned. It is to the effect that in the case of the consolidation of two railroad companies those stockholders in the old who do not enter the new are entitled to withdraw their shares in the capital stock, and may enjoin until they are secured.' This may be true if the objecting stockholder should choose 2 Proprietors of the Union Lock and Canals v. Towne, (1817) 1 N. H. 44. Ashton v. Burbank, 2 Dill. 435. 4 Hartford & N. H. R. Co. v. Croswell, (1843) 5 Hill, 383, a leading case; Marietta & C. R. Co. v. Elliott, (1859) 10 Ohio St. 57. The stockholder may say: "I have agreed to become interested in a railroad company, and have contracted in view of the profits to be expected and the perils and losses incident to that description of business; but I have not agreed that those to be intrusted with the capital I contribute shall have power to use it in a business of a different character, and attended with hazards of a different description." Marietta &c. R. Co. v. Elliott, (1859) 10 Ohio St. 57. 5 Winter v. Muscogee R. Co., (1852) 11 Ga. 438. bilities and duties of the company, or which superadds an entirely new enterprise to that which was originally contemplated, may be resisted by the stockholders, unless such alterations are provided for in the charter itself, or in the general laws of the State in force at the time the act of incorporation was passed." Some cases go so far as to say that all alterations of the corporate charter are equally material.2 § 43. Of the dissenting stockholder's remedy.- If the corporation fails to protect itself from legislative interference with its charter, any stockholder may institute proceedings to remedy the wrong, unless he acquired his interest in the company after the amendment was made. The proper remedy is by injunction either to restrain the company from accepting the amendment or from acting under the powers thereby conferred. Or, if he have not paid for his stock, he may elect Cf. 1 Fry v. Lexington &c. R. Co., (1859) 2 Metc. (Ky.) 314; Delaware &c. R. Co. v. Irick, (1852) 23 N. J. 321, where it was held, however, that until the corporation has accepted the amendment a stockholder has no ground for complaint. Pearce v. Madison R. Co., 21 How. 441; Tuttle v. Michigan A. L. R. Co., 35 Mich. 247; New Jersey &c. R. Co. v. Strait, 35 N. J. 322; Sprague v. Illinois R. Co., 19 Ill. 174; Commonwealth v. Cullen, (1850) 13 Pa, St. 133. 2 Zabriskie v. Hackensack & N. Y. R. Co., (1867) 18 N. J. Eq. 178; Dayton & C. R. Co. v. Hatch, 1 Disney, 84; Central R. Co. v. Collins, 40 Ga. 617. 3 Dodge v. Woolsey, (1855) 18 How. 331; State Bank of Ohio v. Knoop, (1853) 16 How. 369; Wilmington R. Co. v. Reid, (1871) 13 Wall. 264; Minot v. Philadelphia, W. & B. R. Co. ("The Delaware Railroad Tax Case"), (1873) 18 Wall. 206. 4 Epps v. Mississippi &c. R. Co., (1859) 35 Ala. N. S. 54; McClure v. People's Freight Co., (1879) 90 Pa. St. 269. 5 Owen v. Purdy, (1861) 12 Ohio St. 73; Fry v. Lexington &c. R. Co., 2 Metc. (Ky.) 314. Cf. Bailey v. Hollister, (1862) 26 N. Y. 112; Thompson v. Guion, 5 Jones Eq. 113; Mowrey v. Indianapolis &c. R. Co., (1868) 4 Biss. 78, holding that one dissenting shareholder is entitled to an injunction; Lanman v. Lebanon Valley R. Co., (1858) 30 Pa. St. 42, which while holding that a single stockholder has no right to object to the consolidation of the company in which he owns stock, with another railroad company, granted an injunction till the dissenting shareholder should be secured in the payment of the value of his stock; Hamilton Ins. Co. v. Hobart, 2 Gray, 543; Gardner v. Hamilton &c. Ins. Co., (1865) 33 N. Y. 421; Stevens v. Rutland & B. R. Co., (1855) 29 Vt. 545; Black v. Delaware & R. Canal Co., (1873) 24 N. J. Eq. 455; Mowrey v. Indiana &c. R. Co., (1866) 4 Biss. 78. Cf. Ship v. Crosskill, (1870) L. R. 10 Eq. 73; Stewart v. Austin, (1866) L. R. 3 Eq. 299. But see Mowrey v. Indiana &c. R. Co., (1866) 4 Biss. 78. |