instead of another, and has acted as director, attended meetings and voted calls on stock, cannot deny his liability as a stockholder on the ground that there was no formal undertaking on his part to become a stockholder, and that there had been no registration of a transfer upon the corporate books. When, however, a subscriber before the incorporation of the company transfers his right to the stock which he has agreed to take, the company is not bound to recognize the transferree as a stockholder.5 Where a transferree of corporate stock signs a paper, which purports to be an original subscription, and enters into an express agreement to pay the amount subscribed as may be determined by the board of directors, he thereby incurs the liability of an original shareholder, and is liable for the amount of the unpaid subscription. If a subscriber transfers his shares before the certificates of stock have been issued to him, and, in accordance with his directions, they are issued to his transferree, this transferree becomes the original taker, and he is not entitled to stand upon the ground of a bona-fide purchaser without notice." But the mere fact that shares of corporate stock are issued directly to bona-fide purchasers thereof for value from the original holders, to whom they had been allotted but not issued, does not render the transferrees original subscribers so as to subject them to liability to corporate creditors upon an overvaluation of the property received by the company from the original subscribers in payment of their subscriptions.

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1 State v. Butler, 86 Tenn. 614; 4 R'y & Corp. Law J. 178, 180; Bank v. *Bank, 105 U. S. 217.

2 Ryder v. Alton etc. R. R. Co. 13 Ill. 516.

3 Burke v. Smith, 16 Wall. 390; Thorp v. Woodhull, 1 Sand. Ch. 411; Brigham v. Mead, 10 Allen, 245. Cf. Upton v. Burnham, 3 Diss. 431, 520; Midland Counties R'y Co. v. Gordon, 16 Miees. & W. 804; S. C. 5 R'y & Canal Cas. 76.

4 Weinman v. Wilkinsburg etc. R'y Co. (1888), 118 Pa. 192.

5 Hawkins v. Mansfield etc. Co. 52 Cal. 513; Morrison v. Gold Mount. ain etc. Co. 52 Cal. 306. Contra, Baltimore etc. R'y Co. v. Sewell, 35 Md. 238; 6 Am. Rep. 402; Merrimac etc. Co. v. Levy, 54 Pa. St. 227.

6 Citizens' etc. Co. v. Gillespie (1887), 115 Pa. 564.

7 In re Vulcan Iron Works, Law T. 1885, p. 61; Rowland's Case, 42 Law T. N. S. 785; Potter's Appeal, W. N. 1878, p. 81; Cook on Stock & Stockh. $50, q. v. for a lucid exposition of this whole subject. Contra, Carling's Case, 1 Ch. Div. 115.

8 Young v. Erie Iron Co. (1887) 65 Mich. 111; citing Sanger v. Upton, 91 U. S. 56, 60; Steacy v. Little Rock etc. R. R. Co. 5 Dill. 348, 373-377.

§ 382. Notification of transfer and demand of registration.-Either the transferrer1 or the transferree may insist upon registration being made, and, upon the refusal of the company to comply, enforce the right in equity. When the company does not keep a registration book, notification to it that the transfer has been made is held to constitute a registry. But when it does keep books for the registration of transfers, it need pay no attention to a mere notification that a transfer has been made.1 It is a sufficient demand for registration by the transferree to apply at the office of the company during the usual hours of business, and make his demand upon the officers or clerks who may be in attendance there; and, in case they are not authorized to attend to that particular business, they must either refer him to the proper officer, or procure the attendance of that officer, or of the board of directors, if necessary, without any unreasonable delay. In the absence of any proof to the contrary, it may be fairly presumed that the principal officer or clerk in attendance at the office, during the usual hours of business, is authorized to reg

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BEACH ON RAILWAYS-39

ister a transfer when proper." Where, however, it is prescribed by a by-law of the company that registration shall be made in the presence of a certain officer, it must be complied with."

1 Johnston v. Laflin, 103 U. S. 800, 804; Webster v. Upton, 91 U. S. 65, 71; Eustace v. Dublin etc. R'y Co. Law R. 6 Eq. 182.

2 Johnston v. Laflin, 103 U. S. 800, 804; Cushman v. Thayer Manufacturing Co. 76 N. Y. 365; 22 Am. Rep. 315.

3 Crawford v. Providential Ins. Co. 8 Up. Can. C. P. 263.

4 Stockwell v. St. Louis etc. Co. 9 Mo. App. 133. See, however, Purchase v. New York Exchange Bank, 3 Rob. (N. Y.) 164.

5 Commercial Bank v. Kortright, 22 Wind. 348, 351; 34 Am. Dec. 317. 6 Commercial Bank v. Kortright, 22 Wind. 348, 351; 34 Am. Dec. 317. In Case v. Bank, 100 U. S. 446, an application to the cashier of a bank was considered sufficient. In Green Mountain etc. Co. v. Bulla, 45 Ind. 1, an application to the president was sustained. In Goodwin v. Ottawa etc. R'y Co. 13 Up. Can. C. P. 254, an application to a secr tary and treasurer was held sufficient. In McMurrish v. Bond etc. Co. 9 Up. Can. Q. B. 333, application to a secretary was deemed sufficient.

7 Planters' etc. Ins. Co. v. Selma Savings Bank, 63 Ala. 585; Dane v. Young, 61 Me. 160.

383. Of the surrender of the old certificates.

It is essential to the protection of a corporation when called upon to register a transfer of shares of stock, that it require the surrender of the old stock certificates for cancellation; for the outstanding certificates may be fraudulently put upon the market by the transferrer, and their purchaser may hold the company liable for permitting the registration.1 The purchaser of the stock certificates is told under the seal of the corporation that the shareholder is entitled to so much stock, which can be transferred on the books of the corporation, in person or by attorney, when the certificates are surrendered, but not otherwise. This is a notification to all persons interested to know, that whoever in good faith buys the stock, and produces to the corporation the certificates, regularly assigned, with power of attorney to register the transfer, is

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entitled to have the stock transferred to him. And the notification goes further, for it assures the holder that the corporation will not transfer the stock to anyone not in possession of the certificates. The failure of the parties to the transfer to produce the certificates at the time, is notice to the company that a superior title may be in some third party. By thus interdicting corporations from transferring stocks on their books, except upon surrender of the certificate, or proof of its loss or destruction, the law surrounds those who take them with the safeguards it accords to the holders of other great agencies of commerce— bills, notes, bills of lading, et cetera. Even when the transferree demanding registration purchased the stock at an execution sale, the company should refuse to permit the transfer to be registered without the surrender of the old certificates. Otherwise, a bona-fide holder of the outstanding certificates, who purchased for value before the levy of the execution or attachment, may recover damages from the company for permitting registration to be made. If, however, it has refused to permit registration to be made and a judicial tribunal of competent jurisdiction of last resort, after a fair contest in good faith by the corporation, orders the stock to be transferred to the purchaser at the execution sale, the corporation cannot be held liable to the holder of the outstanding certificate who took no steps to protect himself."

1 Moore v. Citizens' National Bank, 111 U. S. 156; Bank v. Lanier, 11 Wall. 369; Brisbane v. Delaware etc. R. R. Co, 91 N. Y. 204; Cushman v. Thayer Manuf. Co. 76 N. Y. 365; 32 Am. Rep. 315; New York etc. R. R. Co. v. Schuyler, 31 N. Y. 30, 81; State v. New Orleans etc. R. R. Co. 30 La. An. 303; Smith v. Crescent City etc. Co. 30 La. An. 1378; Strange v,

Houston etc. R, R Co. 53 Tex. 162; Bridgeport Bank v. New York etc. R. R. Co. 30 Conn. 231; Cleveland etc. R. R. Co. v. Robbins, 35 Ohio St. 483. Cf. Hart v. Frantino etc. Co. Law R. 5 Ex. 111. Contra, Shropshire etc. R'y & Canal Co. v. Queen, Law R. 7 H. L. 496, 509; Houston etc. R'y Co. v. Van Alstyne, 56 Tex. 439; Hall v. Rose Hill etc. Road Co. 70 Ill. 673.

2 Lanier v. First National Bank, 11 Wall. 377; Brisbane v. Delaware etc. R. R. Co. 25 Hun, 438.

3 Strange v. Houston etc. R. R. Co. 53 Tex. 162.

4 Factors' etc. Ins. Co. v. Marine etc. Co. 31 La. An. 149.

5 Hazard v. National Fxchange Bank, 26 Fed. Rep. 94; Smith v. American Coal Co. 7 Lans. 317. Cf. St. Louis ete. R'y Co. v. Wilson, 114 U. S. C0; Rogers v. Stevens, 8 N. J. Eq. 167.

6 Friedlander v. Slaughter House Co. 31 La. An. 523; National Bank v. Lake Shore etc. R. R. Co. 21 Ohio St. 221. Cf. State v. Warren etc. Co. 32 N. J. 43; Chapman v. New Orleans etc. Co. 4 La. An. 153.

§ 384. The same subject, continued.-The nonproduction and non-surrender of the certificate at the time of the transfer is not fatal to the title of the transferree. It is only essential to the safety of the corporation, and may be waived at its peril. The company having the means of knowing whether a certificate of particular stock is outstanding or not, and the power to compel its return and cancellation before any transfer is made, will be liable to a purchaser of a certificate of stock for allowing his vendor to transfer upon the corporate books the same stock to another subsequent purchaser, in contravention of its by-laws requiring a surrender and cancellation,' upon the ground that by such a by-law the corporation courted and established privity between itself and every holder of the certificate by asserting "that his equitable title was safe, because nobody but he could transfer the legal title;" and upon the further ground that as the law supposes that the corporation promises or undertakes to do its duty, and subjects it to answer in a proper action for its defaults, whether of non-feasance or misfeasance, so much the more is the cor

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