subsequently incorporated company cannot specifically enforce in equity such an agreement to which it was not a party, yet it may bring at law an action for damages for a failure to accept and pay for the stock." And it has been held that one of the signers of such a preliminary subscription has his action against any of those signing with him who refuse to carry out the agreement, for such damages as he may have sustained by reason of the refusal.1 Still a mere informal promise to take stock before the articles of association have been signed, is not enforceable,13 13 for an agreement to subscribe is not a subscription.14

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1 Sanger v. Upton, 91 U. S. 59; Webster v. Upton, 91 U. S. 65; Buffalo etc. R R. Co. v. Gifford, 87 N. Y. 291; Rensselaer etc. R. R. Co. v. Barton, 16 N. Y. 457; Buffalo etc. R. R. Co. v. Dudley, 14 N. Y. 336; Lake Ontario etc. R. R. Co. v. Mason, 16 N. Y. 451, 463; Buffalo etc. R. R. Co. v. Clark, 22 Hun, 359; Kirksey v. Florida etc. R. R. Co. 7 Fla. 23; 68 Am. Dec. 426; Bene v. Cahawba etc. R. R. Co. 3 Ala. 660; Selma etc. R. R. Co. v. Tipton, 5 Ala. 787; 39 Am. Dec. 344; Thigpen v. Mississippi etc. R. R. Co. 32 Miss. 347; Penobscot etc. R. R. Co. v. Dummer, 40 Me. 172; 63 Am. Dec. 654; Hartford etc. R. R. Co. v. Kennedy, 12 Conn. 499; Klein v. Alton etc. R. R Co. 13 Ill. 514; Banet v. Alton etc. R. R. Co. 13 Ill. 504; Peninsular etc. R. R. Co. v. Duncan, 28 Mich. 130; Heaston v. Cincinnati etc. R. R. Co. 16 Ind. 275; 79 Am. Dec. 430.

2 Lake Ontario etc. R. R. Co. v. Curtiss, 80 N. Y. 219; Poughkeepsie etc. R. R. Co. v. Griffin, 24 N. Y. 150: Charlotte etc. R. R. Co. v. Blakely, 3 Strob. Law, 245; Strasburgh etc. R. R. Co. v. Echternacht, 21 Pa. St. 220; 60 Am. Dec. 49; I ittsburgh etc. R. R. Co. v. Gazzam, 32 Pa. St. 340; Chase v. Sycamore etc. R. R. Co. 38 Ill. 215; Melhado v. The Porto Alegra etc. R'y Co. Law R. 9 Com. P. 503 Cf. Carlisle v. Saginaw etc. R. R. Co. 27 Mich. 315; Sewell v. Eastern R. R. Co. 9 Cush. 5; Sedalia etc. R. R. Co. v. Wilkerson, 83 Mo. 235; Phoenix etc. Co. v. Badger, 67 N. Y. 294: Buffalo etc. R. R. Co. v. Hatch, 20 N. Y. 157; Erie etc. R. R. Co. v. Owen, 32 Barb. 616; Garrett v. Dillsburg etc. R. R. Co. 78 Pa. St. 465; Rikhoff v. Brown's Rotary etc. Co. 68 Ind. 388. Contra, Hamilton etc. Co. v. Rice, 7 Barb. 157; Anderson v. Newcastle etc. R. R. Co. 12 Ind. 376; 74 Am. Dec. 218; Hughes v. Antietam etc. Co. 34 Md. 316.

3 Holt v. Winfield Bank, 25 Fed. Rep. 812; Garrett v. Dillsburg etc. R. R. Co. 78 Pa. St. 4€5. "It is difficult to see," says Mr. Wood in his treatise on Railway Law, § 26, "how a subscription made before the corporation was incorporated can be enforced, unless the subscriber after the incorporation does some act in affirmance of his former promise." See Strasburg R. R. Co. v. Echternach, 21 Pa. St. 222; 60 Am. Dec. 49; Thrasher v. Pike County R. R. Co. 25 Ill. 393; Mt. Sterling Coal Road Co. v. Little, 14 Bush, 429.

4 Cook v. Crittenden Bank, 25 Fed. Rep. 544.

5 Starrett v. Rockland etc. R. R. 65 Me. 374.

ỏ Bell's Appeal (1887) 115 Pa. St. 88.

7 Maltby v. Northwestern etc. R. R. Co. 16 Md. 422. 8 Inter-Mountain etc. R. R. Co. v. Jack, 5 Mont. 568. 9 Rockville etc. Co. v. Van Ness, 2 Cranch C. C. 449.

10 Kansas City Hotel Co. v. Hunt, 57 Mo. 126.

11 Thrasher v. Pike County etc. R. R. Co. 25 Ill. 393; Rhey v. Ebensburg etc. R. R. Co. 27 Pa. St. 261. Cf. Mt. Sterling etc. R. R. Co. v. Little, 14 Bush, 429; Ottawa etc. R. R. Co v. Black, 79 Ill. 93.

12 Lake Ontario etc. R. R. Co. v. Curtiss, 80 N. Y. 219.

13 Troy etc. R. R. Co. v. Tibbits, 18 Barb. 237; Troy etc. R. R. Co. v. Warren, 18 Barb. 319: Thrasher v. Pike County R. R. Co. 25 Ill. 393; Charlotte etc. R. R. Co. v. Blakely, 3 Strob. 245.

14 Mt. Sterling Coal Road Co. v. Little, 14 Bush, 429.

§ 87. Of the promise to pay. The prevailing rule is that a subscription for shares of stock implies a promise to pay for them;1 even though the corporation may have the right to forfeit the shares upon a failure to pay.2 For, it is said, the remedy of forfeiture is cumulative merely, and the corporation may waive the right to forfeit and elect to enforce the contract of subscription.3 "Whatever may be the form or language of a subscription to the stock of an incorporated company, any person who in any manner becomes a subscriber for, or engages to take any portion of the stock of such company, thereby assumes to pay according to the conditions of the charter." The liability of a shareholder to pay for stock does not arise out of the relation between him and the corporation; but depends either upon some statute fixing his liability, or upon an express or implied promise on his part to pay therefor. Accordingly, one to whom shares have been issued as a gratuity, does not, by accepting them, become liable for their face value as upon a contract of subscription." In those States where the rule prevails that these subscriptions may be specifically enforced, it is

held unnecessary ther to that the corporation should have formally accepted the subscriptions. In some courts it has been decided that subscriptions to stock cannot be enforced, in the absence of statutory authority to the corporation to sue, unless there has been an express promise by the subscriber to pay for the shares. In Massachusetts and Maine and in Vermont, no action will lie unless there has been an express promise to pay.8

1 Hawley v. Upton, 102 U. S. 314; Rensselaer etc. R. R. Co. v. Barton, 15 N. Y. 457; Lake Ontario etc. R. R. Co. v. Mason, 16 N. Y. 451; Ogdensburg etc. R. R. Co. v. Frost, 21 Barb. 541: Chase v. Pailroad Co. 5 Lea, 415; Hartford etc. R. R. Co. v. Croswell, 5 Hill, 3SC; 4) Am. Dec. 354; Northern etc. R. R. Co. v. Miller, 10 Barb. 2 6; Fry v. Lexington etc. R. R. Co. 2 Met. (Ky.) 314; Leene v. Cahawba etc. R. P. Co. 3 Ala. 660; Buc field Branch R. R. Co. v. Irish, 39 Me. 44; Kennebeck cte. P. R. Co. v. Palmer, 31 Me. 361; Waukon etc. R. R. Co. v. Dwyer. 49 Iowa, 121; Danbury etc. R R. Co.. Wilson, 22 Conn. 435; Connecticut etc. R. R. Co. v. Bailey, 21 Vt. 466; 53 Am. Dec. 181.

2 Dexter etc. Co. v. Millerd, 3 Mich. 91; Hughes v. Antietam etc. Co. 34 Md. 316.

3 Price v. Grand Rapids etc. R. R. Co. 18 Ind. 137; Herron v. Vance, 7 Ind. 595; Thompson v. Reno Savings' Bank, 19 Nev. 103; 3 Am. Rep. 797 and note, 806-892.

4 Rensselaer etc. Co. v. Barton, 16 N. Y. 460.

5 Christensen v. Eno (1887), 106 N. Y. 97; CO Am. Rep. 429.

6 Lake Ontario etc. R. R. Co. v. Mason, 16 N. Y. 451; Buffalo etc. R. R. Co. v. Dudley, 11 N. Y. 336; Northern R. R. Co. v. Miller, 10 Darb. 260; Buffalo ctc. R. R. Co. v. Clark, 22 Iun, 359; Hughes v. Antietam ctc. Co. 34 Md. 316. Cf. Penobscot etc. R. R. Co. v. Dummer, 40 Me. 172; 63 Am. Dec. 654. Contra, Starrett v. Rockland etc. R. R. Co. 65 Me. 374.

7 Pittsburgh etc. R. R. Co. v. Gazzam, 32 Pa. St. 340, where a statute authorizing suit was declared unconstitutional; Belfast etc. R. R. Co. v. Cottrell, 66 Me. 185; Kennebec etc. R. R. Co. v. Kendall, 31 Me. 470; Katowa Land Co. v. Holley, 123 Mass. 540.

8 Boston etc. R. R. Co. v. Wellington, 113 Mass. 79; Belfast etc. R. R. Co. v. Cottrill, C6 Me. 185; Belfast etc. R. R. Co. v. Mcore, CO Me. 56; Buckfield etc. R. R. Co. v. Irish, 33 Me. 44; Kennebeck eic. R. R. Co. v. Kendall, 31 Me. 470: Connecticut etc. R. R. Co. v. Bailey, 24 Vt. 465; 59 Am. Dec. 181. Cf. New Hampshire etc. R. R. Co. v. Johnson, 30 N. H. 390, 64 Am. Dec. 300.

§ 88. The consideration for the contract of subscription-Consideration distinguished from motive.-A subscription to the capital stock of a

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company, from the membership of which a shareholder may derive pecuniary advantages, gives to the subscriber such an interest as will be a sufficient consid ration to support a promise to pay for the shares. Such an enterprise is a combination of means for mutual profit, and is in no sense a gift or promise without consideration. The advantages to be derived from being a member of such a company, and of the consequent right to participate in the pecuniary dividends, is a positive benefit, and where the agreement secures that advantage to the subscriber, on the organization of the company, the objection of a want of consideration cannot be made with success.' Various other considerations have been held to support the contract-the mutual promises of the subscribers; " the implied promise on the part of the corporation to issue the stock; the prior proceedings and acts of the parties, and the partial execution of the purpose designed by the charter. Again, it is said that the consideration to sustain such a promise is raised by inference of law from the subscription itself, and the privileges thereby conferred; and that from the same circumstance the law will infer a duty to pay for the stock, and an implied obligation of equal force with an express contract. The legal consideration for a contract of subscription is to be carefully distinguished from the motive by which the subscriber was governed. Thus the motive of the defendant in subscribing may have been to secure a road where he supposed the one in question was to be located. The consideration of his subscription was the stock

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to which the payment would entitle him. And accordingly, where the location of the line was different from what he had hoped, there was no failure of consideration."

1 Lake Ontario etc. R. R. Co. v. Mason, 16 N. Y. 451, 463; Buffalo etc. R. R. Co. v. Dudley, 14 N. Y. 336; Schenectady etc. R. R. Co. v. Thatcher, 11 N. Y. 102, 108; Thigpen v. Mississippi Central R. R. Co. 32 Miss. 348; New Albany etc. R. R. Co. v. Fields, 10 Ind. 187; Selma etc. R. R. Co. v. Tipton, 5 Ala. 787; 39 Am. Dec. 344; Fry v. Lexington etc. R. R. Co. 2 Met. (Ky.) 314; Hartford etc. R. R. Co. v. Kennedy, 12 Conn. 499. Cf. East Tennessee etc. R. R. Co. v. Gammon, 5 Sneed, 567; Danbury etc. R. R. Co. v. Wilson, 22 Conn. 435.

2 Bullock v. Falmouth etc. Turnpike Co. (1887), 85 Ky. 184; Twin Creek etc. Co. v. Lancaster, 79 Ky. 552.

3 St. Paul etc. R. R. Co. v. Robbins, 23 Minn. 439.

4 Kennebec etc. R. R. Co. v. Palmer, 34 Me. 366. Cf. McCally v. Pittsburgh etc. R. R. Co. 32 Pa. St. 25. And see Cook on Stock & Stockh. $ 70.

5 East Tennessee etc. R. R. Co. v. Gammon, 5 Sneed, 567; Cole v. Ryan, 52 Barb. 68.

6 Miller v. Wild Cat etc. Co. 52 Ind. 51, 64; Parker v. Northern etc. R. R. Co. 33 Mich. 23; Illinois River R. R. Co. v. Zimmer, 20 Ill. €54.

§ 89. Of payment in property, and of the effect of an extension of credit.-Ordinarily a corporation may accept in payment of shares of stock any property of a kind which it is authorized to purchase. In the absence of fraud, although such property was accepted at an overvaluation, a receiver cannot maintain an action at law against the subscriber to collect the difference between the alleged actual value thereof and the valuation at which it was received in payment for the stock." A corporation does not, by extending a reasonable credit to a subscriber for the payment of the purchase-money, lose the right to enforce the contract against him. But the subscription is void when the corporation has contracted with the subscriber to allow him an indefinite time in which to pay for his shares.1

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