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It is sometimes provided by statute or agreement that interest shall be payable on stock until the completion of the road, or it is opened for use; 1 and when so provided, the agreement does not create an absolute liability, or put the stockholder on the footing of a creditor, but by true construction the interest is payable only out of earnings which are available for dividends.2

The right of a stockholder to an interest dividend payable at a future time, if the corporation is able to pay it, depends on the ability of the corporation, which is to be judicially determined.3

The power to increase the capital stock within the limits. allowed by statute is usually to be exercised by the stockholders, and not by the directors.*

A corporation, even a foreign one, may be enjoined from issuing certificates of stock beyond the lawful limit.5

Money paid to a corporation for shares of stock which were part of a contemplated illegal issue, may be recovered by the subscriber who has not received his shares.6

Overissues of Capital Stock. The amount of capital stock and the number of shares, when fixed by law, cannot be increased either by the formal act of the corporation, or by the unauthorized or fraudulent act of its officers and agents. An overissue of stock being thus void, the bona fide purchasers of spurious certificates do not become stockholders. A corporation being, however, responsible like a natural person for the torts of its agents while engaged in the course of their employment, although they may at the time exceed the powers conferred by the charter, is liable in damages to innocent purchasers of shares which have been issued in excess of the legal limit of the capital stock, by agents authorized to issue certificates. Where it has conferred

1 Pittsburg & C. R. Co. v. Allegheny County, 63 Pa. St. 126; McManus v. Phila. & R. R. Co., 58 Pa. St. 330; Ohio City v. Cleveland & T. R. Co., 6 Ohio St. 489; McLaughlin v. Detroit & M. R. Co., 8 Mich. 100.

2 Wright v. Vt. & M. R. Co., 12 Cush. 68; Waterman v. Troy & G. R. Co., 8 Gray, 433; Cunningham v. Vt. & M. R. Co., 12 Gray, 411; Barnard v. Vt. & M. R. Co., 7 Allen, 512; Richardson v. Vt. & M. R. Co., 44 Vt. 613; Rutland & B. R. Co. v. Thrall, 35 Vt. 536, 543; Painesville & H. R. Co. v. King, 17 Ohio St. 534.

8 Barnard v. Vt. & M. R. Co., 7 Allen, 512.

▲ Ante, p. 33.

5 O'Brian v. Chicago, R. I., & P. R. Co., 36 How. Pr. 24; Fisk v. Chicago, R. I., & P. R. Co., 36 How. Pr. 20, 53 Barb. 513; Belmont v. Erie R. Co., 52 Barb. 637. The jurisdiction for this purpose over a foreign corporation is questionable. Sce ante, Chap. I. p. 15.

6 Knowlton v. Congress & E. S. Co., 14 Blatch. 364. Contra, s. c., 57 N. Y. 518.

the authority to issue certificates, it is liable for its abuse to innocent persons. The limitation of the agent's authority by extrinsic facts, which from their nature are particularly within his knowledge, as that it is to be exercised only in case of a transfer of shares and a surrender of the certificate, does not relieve the corporation which is bound by his representation that those facts exist, and such representation is implied from his act of issuing the certificates. The liability of the corporation for such spurious certificates being founded on an unlawful act and resulting injury, may be enforced without further privity by any bona fide holder, whether the certificates were issued directly to him or to others from whom his title is derived.1

The same rule of corporate liability for overissued shares applies where the officers issued the certificate originally to themselves in the same form as to stockholders generally.2

The burden of proof is on the corporation to show, in an action against it for refusing to transfer stock, that a certificate signed by its proper agents does not represent genuine stock.3

Where the corporation has issued the full number of shares, it cannot recover on subscriptions of additional stock, and a subscriber cannot acquire title thereto by a subscription.5

1 New York & N. H. R. Co. v. Schuy. ler, 34 N. Y. 30, 17 N. Y. 592, 38 Barb. 534; Bridgeport Bank v. New York & N. H. R. Co., 30 Conn. 231; Bruff v. Mali, 36 N. Y. 200; Titus v. Great Western Turnp. R. Co., 61 N. Y. 237; Blatchford v. New York & N. H. R. Co., 5 Abbott Pr. 276; Cazeaux v. Mali, 25 Barb. 578. See Seizer v. Mali, 32 Barb. 76, 6 Abbott Pr. 270, note; Hall v. Rose Hill & E. Road Co., 70 Ill. 673. The doctrine of the text is contained in elaborate judgments relating to the overissue of the stock of the New York and New Haven Railroad Company by R. Schuyler, its president and transfer agent. In the early stage of the litigation his agency appeared by the evidence to be limited to an issue of certificates where there was a transfer of shares on the company's books, accompanied by a surrender of the previous owner's certificate, and, according to this view of the facts, the corporation was considered not liable for his issue of certificates, without such transfer and surrender. Mechanics' Bank v. New York & N. H. R. Co., 13 N. Y. 599, 4 Duer,

484; Henning v. New York & N. H. R. Co., 9 Bosw. 283. But in the later case of New York & N. H. R. Co v. Schuyler, 34 N. Y. 30, his authority was found to have been more general, and to have extended to the issuing of certificates in the same form to original subscribers and purchasers where there was no such transfer and surrender. The corporation was held chargeable with the negligence of its directors, who with proper diligence could have prevented the fraud in question.

As to issuing bonds in excess of the aggregate amount secured by a mortgage, containing the recital that they are so secured, see Stephens v. Benton, 1 Duvall, 112.

2 Titus v. Great Western Turnp. Road, 61 N. Y. 237, 5 Lans. 250.

3 Bridgeport Bank v. New York & N. H. R. Co., 30 Conn. 231. See Merrill ". Gamble, 46 Iowa, 615; Merrill v. Reaver, 50 Iowa, 404.

4 McCord v. Ohio & M. R. Co., 13 Ind. 220.

5 Lathrop v. Kneeland, 46 Barb. 432.

The corporation may, where the overissued shares are held by numerous parties, maintain as the proper representative of the genuine stockholders a bill in equity against the holders of the disputed certificates to test their validity, to procure a cancellation of those found to be spurious, and to determine the liability of the corporation in damages to such holders. This remedy is applied in order to remove a cloud from the titles of the lawful owners, and as a bill of peace to quiet titles and prevent a multiplicity of actions. Such a suit may be maintained by a foreign as well as a domestic corporation.1

Lien of the Corporation. - At common law the corporation has no lien on a stockholder's shares for debts owing by him to it, and cannot obtain such lien by a by-law assuming to give it; 2 but the right is sometimes given by statute.3 A power given by statute to regulate the transfer of stock has been held to authorize a by-law which conferred the lien. The lien exists only against a record-owner.5 A lien, when existing, will prevail against a vendee whose title has not been recorded on the books as provided by the by-laws; but it will not prevail in favor of claims of the corporation arising subsequent to its being notified of the sale.7

1 New York & N. H. R. Co. v. Schuy ler, 17 N. Y. 592, 34 N. Y. 30. There were three hundred and twenty-six defendants in this suit. See Venice v. Woodruff, 62 N. Y. 462, 470; Lehigh Valley R. Co. v. McFarlan, 4 Stewart (N. J.), 730.

2 Bank of Attica v. Manufacturers' Bank, 20 N. Y. 501; Driscoll v. West B. & C. Man. Co., 59 N. Y. 96, 36 N. Y. Superior, 488; Steamship Dock Co. v. Heron, 52 Pa. St. 280; Sargent v. Franklin Ins. Co., 8 Pick. 90; Farmers' & M. Bank v. Wasson, 48 Iowa, 336. Contra, Pendergrast r. Stockton, 2 Sawyer, 108; Bachman's Case, 12 Nat. Bank. Reg. 223. See Bank v. Lanier, 11 Wall. 369; Bullard v. Bank, 18 Wall. 589, 594; Evansville Nat. Bank v. Metropolitan Nat. Bank, 2 Biss. 527; Conklin v. Second Nat. Bank, 45 N. Y.

9

655; Rosenback v. Salt Springs Nat. Bank, 53 Barb. 495; Hagar v. Union Nat. Bank, 63 Me. 509.

8 Pittsburg & C. R. Co. v. Clarke, 29 Pa. St. 146; Reese v. Fisher, 14 Md. 271.

4 Lockwood v. Mechanics' Nat. Bank, 9 R. I. 308; St. Louis Perpetual Ins. Co. v. Goodfellow, 9 Mo. 149; Mechanics' Bank v. Merchants' Bank, 45 Mo. 513; Geyer v. Western Ins. Co., 3 Pittsburg, 41. A by-law when giving a lien will operate only prospectively. People v. Crockett, 9 Cal. 112.

5 Helm v. Swigget, 12 Ind. 194. But see Stebbins v. Phoenix Fire Ins. Co., 3 Paige, 350.

6 Union Bank v. Laird, 2 Wheat. 390. 7 Conant v. Seneca County Bank, 1 Ohio St. 298.

CHAPTER VI.

PURCHASE OF RIGHT OF WAY, AND AGREEMENTS WITH LANDOWNERS.

THE power of a railroad corporation to purchase real estate or interests therein for its purposes is usually conferred by statute, but, if not expressly granted, it may be inferred as incidental to the general powers of the corporation limited in each case to its legitimate purposes.1

Title or Interest acquired. — A railroad company may acquire by purchase a title in fee to lands necessary for its use, and convey the same title. It will acquire a fee as the grantee in a deed conveying land in the terms by which a fee is granted to individuals.3 It may convey under authority of law to another corporation the interest in land which it has acquired by purchase for a right of way, to be used by the purchaser for the same purpose. A deed of a right of way to the company grants, where the intention to convey a fee does not appear, a perpetual easement. A conveyance for railroad purposes creates a qualified or determinable fee liable to be divested if the estate is used for other purposes.

Statute of Frauds. An action at law will not lie against the company for the price of land sold to it, where no written contract conforming to the requirements of the Statute of Frauds has been entered into between the parties, subscribed by the vendor, and assented to or accepted by the purchaser.7

1 Post, Chap. XIX., CORPORATE PowERS, p. 505.

2 Nicoll v. New York & E. R. Co., 12 N. Y. 121, 12 Barb. 460; Heath v. Barmore, 50 N. Y. 302; Hill v. Western Vt. R. Co., 25 Vt. 68; State v. Brown, 3 Dutcher, 18; Holt v. Somerville, 127 Mass. 408.

8 Page v. Heineberg, 40 Vt. 81; Yates v. Van de Bogert, 56 N. Y. 526.

B. Monr. 470; Junction R. Co. v. Ruggles, 7 Ohio St. 1; Pollard v. Maddox, 28 Ala. 321; Southard v. Central R. Co., 2 Dutcher, 13; New Jersey Midland R. Co. v. Van Syckle, 8 Vroom, 496.

5 Junction R. Co. v. Ruggles, 7 Ohio St. 1. See Nicoll v. New York & E. R. Co., 12 N. Y. 121, 12 Barb. 460.

6 State v. Brown, 3 Dutcher, 13.
7 Reynolds v. Dunkirk & S. L. R. Co.,

4 Harrison v. Lexington & F. R. Co., 9 17 Barb. 613.

Rights in Land under a License. A permanent interest in land by way of easement cannot be acquired by a parol license. Thus, a license to lay railroad tracks and construct other works on a person's land, or to erect structures within the company's location which would otherwise be an actionable nuisance, is revocable ; 1 and the license may be revoked as well by a subsequent owner of the land as by the land-owner who gave it. It will, however, until revoked, justify the acts coming within it; but the licensee is liable for injuries arising from want of care and skill. The mere non-user of an easement duly acquired will not impair the right to it. The deed of an easement is not revocable. The company may, on a license being revoked, remove the rails which it has laid on the track; but if they are laid wrongfully, they become a part of the realty, and it cannot enter to remove them.o

3

Distinctions have been admitted in some jurisdictions, though denied elsewhere, in favor of executed licenses, particularly where expense has been incurred by the licensee, and also in favor of acts done under a license on the land of the licensee; but it does not seem necessary to dwell on them in this connection.9

1 Miller v. Auburn & S. R. Co., 6 Hill, 61; Selden v. Delaware & H. Canal Co., 29 N. Y. 634, 24 Barb. 362.; Murdock v. Prospect Park & C. I. R. Co., 73 N. Y. 579; Eggleston v. New York & H. R. Co., 35 Barb. 162; Hetfield v. Central R. Co., 5 Dutcher, 571, 206; Foot v. New Haven & N. R. Co., 23 Conn. 214; Mathews v. St. Paul & S. C. R. Co., 18 Minn. 434; Blaisdell v. Portsmouth, G. F., & C. R. Co., 51 N. H. 483; Irish v. B. & S. W. R. Co., 44 Iowa, 380; Hosher v. Kansas City, St. J., & C. R. Co., 60 Mo. 329; Stevens v. Stevens, 11 Met. 251; Morse v. Copeland, 2 Gray, 302; Batchelder v. Hibbard, 58 N. H. 269. See Hamilton & R. Hydraulic Co. v. Cincinnati, H., & D. R. Co., 29 Ohio St. 341.

4 Selden v. Delaware & H. Canal Co., 29 N. Y. 634.

5 Barlow v. Chicago, R. I., & P. R. Co., 29 Iowa, 276; Veghte v. Raritan Water Power Co., 4 C. E. Green, 142, 156, 6 C. E. Green, 463, 480.

6 New Jersey Midland R. Co. v. Van Syckle, 8 Vroom, 496; Hudson v. Leeds & B. R. Co., 16 Q. B. 796.

7 Northern Cent. R. Co. v. Canton County, 30 Md. 347; Justice v. Nesquehoning Valley R. Co., 87 Pa. St. 82; Dietrich v. Murdock, 42 Mo. 279.

8 Merriam v. Brown, 128 Mass. 391. 9 Trenton Water Power Co. v. Chambers, 1 Stock. 471; Veghte v. Raritan Water Power Co., 4 C. E. Green, 142, 6 C. E. Green, 463; Central R. Co. v. Het

2 Foot v. New Haven & N. Co., 23 field, 5 Dutcher, 206; Cumberland ValConn. 214.

3 Miller v. Auburn & S. R. Co., 6 Hill, 61; Selden v. Delaware & H. Canal Co., 29 N. Y. 634, 24 Barb. 362; Foot v. New Haven & N. Co., 23 Conn. 214; Blaisdell v. Portsmouth, G. F., & C. R. Co., 51 N. H. 483; Louisville & N. R. Co. v. Thompson, 18 B. Monr. 735.

ley R. Co. v. McLanahan, 59 Pa. St. 23; Thompson v. McElarney, 82 Pa. St. 174; Foot v. New Haven & N. Co., 23 Coun. 214; Batchelder v. Hibbard, 58 N. H. 269; Baker v. Chicago, R. I., & L. P. R. Co., 57 Mo. 265; Hosher v. Kansas City, St. J., & C. B. R. Co., 60 Mo. 329; Williamston & T. R. Co. v. Battle, 66 N. C.

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