paid up must be made a matter of corporate and public record; but fully paid up shares can be transferred in blank without any record whatever. Common companies may have secrets; the law attempts to make all the operations of a railway company so far a matter of record that in case of need every step and phase of the company could be brought to light. $48. A statute amendatory to the general railway incorporation act went into force July 1, 1873. It was designed and had the effect to extend the privilege of reorganization under the general law passed by the previous general assembly to associations or corporations that had attempted to be formed, giving to such inchoate companies the same rights and privileges as were previously enjoyed by perfected organizations, "notwithstanding any defects or omissions in their articles of association." The same idea is contained in the clause, "all such corporations that have adopted or that will adopt this act are hereby declared legal and valid corporations, within the provisions of this act, from the date of the filing of their respective articles of association. And the fixing of the termini by any such corporation shall have the same effect as if fixed by the general assembly."1 Two provisos are added to the law; but they will come under the head of construction and municipal aid bonds. §49. The association is not binding upon the corporators until the organization has been completed. At the same time, if one actually becomes a subscriber 1 These quotations contain the only really new and vital parts of that statute and was evidently designed to remedy a defect in a particular railway organization which had recently been pointed out by the supreme court. he is bound by the terms of his subscription, and must bear his share of the preliminary expenses, unless the subscription provide the contrary, although several decisions favor the opinion that merely taking shares in a railroad project does not obligate the subscriber to pay any preliminary expenses, unless there is a contract to that effect. If the scheme should prove abortive, the terms of the subscription, whatever they may be, must be observed in good faith. When fully organized the company may and generally does assume the liabilities incurred by the provisional association in securing a completed organization.1 II. CORPORATE RIGHTS AND LIABILITIES. 2 § 50. Conditions precedent. 51. Corporate citizenship. 52. Importance thereof; constitution of the United States. 53. Agreement to take stock. 54. Subscription by installment. 55. Unpaid subscriptions and promissory notes, 56. No fictitious stock issues allowed. 57. Increase of capital stock. 58. Books of the corporation. 59. Corporate mortgages. 60. Late legislation authorizing it. 61. Why authorization necessary. 62. Stock personal property. 1 For a full discussion of the points stated in this paragraph see Spear v. Crawford, 14 Wend. 20; Thrasher v. Pike Co. R. R. Co. 25 Ill. 393; Illinois River R. R. Co. v. Zimmer, 20 Ill. 654; Ill. Grant v. Green, 46 Ill. 469. 2 It is proposed in this connection to consider only the rights and labilities of railway companies as corporations. Their obligations and privileges as common carriers, and their general operative relations to the public will be set forth elsewhere. 63. Transfers of stock abroad; act of Congress. 64. Consolidation under common law. 65. Consolidation under the constitution. 66. Railway leases. 67. Cheap transportation contracts. 68. Railway liability to execution and sale. 69. Cumulative system of voting for directors. 74. Corporate limitations. § 50. It is the doctrine of the supreme court of the United States that if the law requires a certain amount of capital stock to be paid in before the corporation is fully formed, this condition precedent must be fairly complied with. But unless the charter or general law, as the case may be, specifically require it, such prepayment is not necessary.1 The general law of Illinois does not make any such requirement. 51. A corporate person, as well as a private individual, has a citizenship. Many cases at law have turned upon this point: what determines the local habitation of a joint stock company? It has been claimed that the residence of a majority of the stockholders is decisive of the question. But the doctrine of the courts is that the residence of the stockholders in no wise affects the citizenship of a corporation.2 All the stock of all Illinois railroads might be owned outside of the state, and still each and every company 1 Minor v. Mechanics' Bank of Alexandria, 1 Peters, 46. 2 Louisville R. R. Co. v. Letson, 2 Howard, 497; Ohio R. R. Co. v. Wheeler, 1 Black, 286; Covington Bridge Co. v. Shepherd, 20 How. 227; Marshall v. Baltimore and Ohio R. R. Co, 16 How. 314; Regina v. Arnaud, 9 Q. B. 806. would be a citizen of this commonwealth. A private person may change his citizenship at pleasure. A corporation has no such power. § 52. This is liable to be a matter of great practical importance. In litigation, the general policy of railway companies is to delay a final judgment. Under the constitution of the United States, the federal judiciary has appellate jurisdiction in all suits between citizens of different states; but not in cases between citizens of the same state, unless arising under the national constitution or acts of congress. The right of appeal often involves immensely important practical results.2 1 § 53. An undertaking to subscribe a certain amount of stock does not make one a stockholder. Such a promise is like the promise to purchase any other specific piece of property. If there is no delivery nor any offer to deliver, the company in a suit against such a promisor could not recover, as damages, the value of the stock, because they still hold it in their own name. The true measure of damage in such a case would be the actual damage resulting from the loss of the bargain; that is, the difference between the par and market value of such stock.3 54. In common law, subscription may be made to a capital stock by installments. When this is done 1 U. S. Constitution, art. iii. sec. 2, 2 For elaborate discussion of this subject see Bank of Augusta v. Earl, 13 Peters, 519; Zabriskie v. Cleveland, Columbus and Cincinnati R. R. Co. 23 How. 381; Bank of U. S. v. Dandridge et al. 12 Wheaton, 64. 3 Thrasher v. Pike County R. R. Co. 25 Ill. 393; Chase v. Sycamore and Courtland R. R. Co. 38 Ill, 215. without condition or reservation and certificate of stock issued, the person becomes a member of the corporation and as such is liable for the calls of the company. Nothing remains to be done concerning the contract except payment of the money. This may be recovered by a suit indebitatus assumpsit for the money due on the installments. But one corporation can not recover upon subscriptions made to another, however identical the objects sought by the organization or the parties composing them. Under the statutory law of Illinois the directors of a railroad company have almost unlimited power in regard to the payment of railway stock subscriptions. 3 $55. The supreme court of Illinois holds that a railroad company has the same claim upon an unpaid subscription to its stock that it has upon a promissory note. The corporation may sell the subscription, or make a contract to dispose of it, as a part of its assets. The sale must be for the purposes of the road, as must be the expenditure of all the funds of the company.4 No stock or bonds can be issued or money disbursed for an object foreign to the designs of the company. Whatever the railway facts might show, railway law is very plain on this point. § 56. No stock or bonds may be issued except for money, labor or property actually received and applied to the purposes for which the company was organized. This is the constitutional law.5 No stock dividends or 1 Peake v. Wabash R. R. Co. 18 Ill. 88. 2 Thrasher v. Pike R. R. Co. 25 Ill. 393. 3 See Duties of Directors. * Morris v. Cheney, 51 Ill. 451. 'Ill. Constitution, art. xi, sec. xiii. |