them to sell it to another company notwithstanding an injunction granted to prevent the latter company from obtaining control of the former. Where the president of a company, who owned a majority of its shares, contracted to sell them and to resign his office for the purpose of enabling his purchasers to acquire control of the corporate affairs, it was said by the court that, inasmuch as those who have the largest interests in corporations may control them, it was unable to see that any policy of the law was thereby violated, or that upon the evidence any wrong was thereby done to anyone. Where the undertaking has been virtually abandoned, and a portion of the subscriptions have been returned to shareholders, a purchaser with notice of these facts, whose good faith in becoming a shareholder is questionable, is not entitled to registration.5

1 Townsend v. McIver, 2 S. C. 25; Moffatt v. Farquhar, 7 Ch. Div. 591, where it was supposed that the purpose of the transfer was to increase the votes of the transferree.

2 Moffatt v. Farquhar, 7 Ch. Div. 591; Pender v. Lushington, 6 Ch. Div. 70. With respect to buying stock for the purpose of controlling the corporation, see Havemeyer v. Havemeyer, 86 N. Y. 618; Barnes v. Brown, 80 N. Y. 527; Jacobs v Miller, 15 Alb. Law J. 188; Fremont v. Stone, 2 Barb. 169; O'Brien v. Breitenbach, 1 Hilt. 304.

3 Pennsylvania R. R. Co. v. Commonwealth, Supr. Ct. Penn. 1887. 4 Barnes v. Brown, 80 N. Y. 527. Contra, Fremont v. Stone, 42 Barb. 169. Cf. Seymour v. Detroit Copper etc. Mills, 56 Mich. 117.

5 Regina v. Liverpool etc. R'y Co. 21 Law J. Q. B. 284; S. C. 16 Jur. 949.

§ 399. Liability of the corporation for failure or refusal to register. The failure of the company to register a proper deed of transfer, whereby the shares have been forfeited and sold, subjects it to liability to an action for damages. And if it refuse to allow registration of a transfer, the party demanding it, whether transferrer or transferree,

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may bring an action for damages at law, the measure of damages being substantially the same as in other cases of conversion of stock; or he may file a bill in equity, and the court will either decree that a registry be made, or in case that be not possible, will award damages to the injured party. It is doubtful, however, whether equity may grant relief by mandamus.“ While the weight of authority is adverse to resorting to this extraordinary remedy, where no public interest is involved, where no reason is shown for the transfer of a specific favorite thing, and where the remedy by action for damages is fully adequate, yet there are respectable authorities holding that the writ will issue, especially when there is no good reason for refusal of registration."

1 Catchpole v. Ambergate etc. R'y Co. 1 El. & B. 111.

2 Telford etc. Turnpike Co. v. Girhab, Supr. Ct. Penn. 1888; Helm v. Swiggett, 12 Ind. 134; Hussey v. Manufacturers' etc. Bank, 27 Mass. 414. 3 Iron R. R. Co. v. Fink, 41 Ohio St. 321; 52 Am. Rep. 84; Cleveland R. R. Co. v. Robbins, £5 Ohio St. 483; Cook on Stock & Stockh. § 392.

4 Mechanics' Bank v. Seton, 1 Pet. 299; Cushman v. Thayer Manuf. Co. 76 N. Y. 365; 32 Am. Rep. 315; Burra 1 v. Bushwick R. R. Co. 75 N. Y. 211; Iasigi v. Chicago etc. R. R. Co. 123 Mass. 46; Iron R. R. Co. v. Fink, 41 Ohio St. 321; 52 Am. Rep. 81; Walker v. Detroit Transit R'y Co. 47 Mich. 333. Cf. Regina v. Liverpool etc. R'y Co. 21 Law J. Q. B. 284.

5 Smith v. North American Mining Co. 1 Nev. 423.

6 Murray v. Sevens, 110 Mass. 95.

7 State v. Miller, N. Y. Daily Reg. April 10, 1886; Shipley v. Mechanics' Bank, 10 Johns. 484; Ex parte Firemans' ins. Co. 6 Hill, 243; People v. Parker et. Co. 10 How. Pr. 513; State v. Rombauer, 46 Mo. 155; State v. St. Louis etc. Co. 21 Mo. App. 526; Townes v. Nichols, 73 Me. 515; Wilkinson v. Providence Bank, 3 R. I. 22; Birmingham Fire Ins. Co. v. Commonwealth, 92 Pa. St. 72; Baker v. Marshall, 15 Minn. 177; Kimball v. Union Water Co. 44 Cal. 173; State v. Guerrero, 12 Nev. 105; King v. Bank of England, 2 Doug K. B. 524; King v. London Assurance Co. 1 Dowl. & R. 510; Queen v. Liverpool etc. R'y Co. 21 Law J. Q. B. 284; Rex v. Worcester Navigation Co. 1 Mon. & R. 529.

8 State v. Cheraw etc. R. R. Co. 16 S. C. 524; Townsend v. McIver, 2 S. C. 25; Cooper v. Swamp etc. Co. 2 Murph. (S. C.) 195; State v. First National Bank, 89 Ind. 302; Green Mountain etc. Co. v. Bulla, 45 Ind. 1; People v. Goss Manuf. Co. 99 Ill. 355: People v. Crockett, 9 Cal. 112; Regina v. Carnatic R'y Co. Law R. 8 Q. B. 299; Norris v. Irish Land Co. 8 El. & B. 512; Goodwin v. Ottawa etc. R'y Co. 13 Up. Can. Com. P. 254; Browne & Theobald's Railway Law, 73, citing Ward v. Southeastern R'y Co. 29 Law J. Q. B. 177; S. C. 2 El. & E. 812.

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$400. The rights and remedies of holders of outstanding certificates as against the transferrer. An assignment of the stock certificates, although the transfer be not registered on the corporate books, estops the transferrer from asserting any title to the stock as against subsequent bonajide transferrees.' For example, he cannot, even before registration, attack the assignment on the ground of failure of consideration; nor on account of informalities in the transfer. As a part of the contract of sale, there is an implied guaranty on the part of the vendor that the corporation will permit the stock to be registered in the name of the purchaser, and if it refuses to allow registration, the vendor becomes liable to his vendee thereon. Accordingly, the refusal of the corporation to register the transfer, does not affect the title to the stock as between transferrer and transferree; nor deprive the transferree of his right to receive dividends upon the stock purchased by him. So, too, when the corporation has refused rezistration on the ground that the transferrer was indebted to it, and, in order to obtain registration the tranferree has satisfied the corporate lien upon the stock by paying the debt, he may recover the amount from his transferrer."

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4

1 Cushman v. Thayer, 76 N. Y. 365; 32 Am. Rep. 315; Gilbert v. Manchester etc. Co. 11 Wend. 627; Duke v. Cahawba Navigation Co. 10 Ala. 8:41 Am. Dec. 472; Baltimore etc. R'y Co. v. Sewall, 35 Md. 238; Hall v. United States Ins. Co. 5 Gill, 484; Bank of America v. McNiel, 10 Bush, 5; Frown v. Smith, 122 Mass. 589: Beckwith v. Burroughs, 13 R. I. 294; People's Bank v. Gridley, 91 Ill. 457.

2 Cushman v. Thayer Manuf. Co. 70 N. Y. 365; 32 Am. Rep. 315; Hall v. United States Ins. Co. 5 Gill, 484.

3 Chew v. Bank of Baltimore, 14 Md. 299; Home Stock Ins. Co. v. Sherwood, 72 Mo. 461; Holyoke Bank v. Goodman etc. Co. 9 Cush. 576; Cheltenham etc. R'y Co. v. Daniel, 2 Q. B. 281; Sheffield etc. R'y Co. v. Woodcock, 7 Mees. & W. 574.

4 Wilkinson v. Lloyd, 7 Q. B. 27.

5 Poole v. Middleton, 29 Beav. 646; Crawford v. Provident Ins. Co. 8 Up. Can. Com. P. 263.

6 Poole v. Middleton, 29 Beav. 646.

7 Bates v. New York Ins. Co. 3 Johns. Cas. 238.

§ 401. The rights and remedies of holders of outstanding certificates as against the corpora- · tion. If a corporation has allowed a transfer of stock to be registered without requiring the old certificates to be surrendered, a bona-fide purchaser of the outstanding certificates bas his remedy either against the company, or against the corporate officer who permitted the registration to be made.” But if the company be compelled by legal proceedings, as in case of execution sales, to make registration of the transfer, it is not to be held liable therefor to the owner of the outstanding certificate.3

1 Baker v. Wasson, 59 Tex. 140.

2 Baker v. Wasson, 59 Tex. 140.

3 Friedlander v. Slaughter House Co. 31 La. An. 523; Cook on Stock & Stockh. § 359.

§ 402. The rights of a transferree, the certificates outstanding. The purchaser of stock may insist upon the surrender of the old certificate; but if he do not insist upon its surrender, and the transfer be actually made upon the books of the company, the title to the stock will pass thereby.' The non-production of the original certificate of stock is not of itself necessarily fatal to the title of the transferree, and, if he be a bona-fide purchaser, his title is good to the new stock issued to him.' Accordingly when a company has once registered a person as a shareholder, it is not entitled to cancel the registration because his legal title afterward

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proves to be defective; but he may compel the company to allow his name to stand upon its registration books, unless the registration was clearly a clerical error." But after a stockholder has transferred his shares by assignment of the stock certificates, and his purchaser has caused the transfer to be registered and new certificates issued to him, the original certificates being delivered to the company and canceled, the rights of the original owner of the stock are thereby extinguished, so that no subsequent assignment of the shares by him can pass any title to his second assignee; and although by mistake a new certificate is issued to the second assignee, he will derive no legal title against the company to be admitted to the rights of a stockholder; although it would seem that he might have an equitable remedy if he were a bona-fide purchaser for value, and had been induced to accept the transfer upon the faith of representations made by the company or its officers. The registered transferree, without knowledge that his transferrer has already sold the certificates, is not liable to the holder of them.' But where a person purchased stock of a corporation at a sheriff's sale, knowing that the certificates of the same stock had been previously hypothecated, he was held to take subject to the claim of the pledgee.10

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1 Boatman's Ins. etc. Co. v. Able, 48 Mo. 136, 140.

2 Baker v. Wasson, 53 Tex. 150, 156; citing New York etc. R. R. Co. v. Schuyler, 31 N. Y. 30, 80.

3 Ward v. South Eastern R'y Co. 29 Law J. Q. B. 177; S. C. 2 EL & E; S. C. 6 Jur. N. S. 890.

4 Cady v. Potter, 55 Barb. 463.

5 Smith v. North American etc. Co. 1 Nev. 423.

6 Houston etc. R'y Co. v. Van Alstyne, 56 Tex. 439.

7 Houston etc. R'y Co. v. Van Alstyne, 56 Tex, 139, 447.