1 Coffin v. Ransdell (1887), 110 Ind. 417. 2 Coffin v. Ransdell, 110 Ind. 417. fully in the chapter on the ISSUE OF STOCK.

3 Mitchell v. Beckman, 64 Cal. 117.

This subject is treated more

4 Van Allen v. Illinois etc. R. R. Co. 7 Bosw. 515.

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§ 90. Of cash deposits at the time of making the subscription.—If the charter or by-laws of the corporation require a certain part of the amount subscribed to be paid in cash at the time the subscription is made, and no such payment is made, the subscriber cannot be held liable upon the contract.1 But although a part payment in cash be required at the time of subscription, a check upon the subscriber's bank account,' and his promissory note, negotiated by the company and met by the subscriber at maturity, have been held equivalent to a cash payment. And it is even affirmed that although the statutory requirement that a certain amount be paid at the time of subscription, has not been complied with, the subscriber cannot take advantage thereof to evade liability upon his contract, such provisions being directory rather than mandatory. In England the authorities are conflicting. Some cases hold that a person who has become a shareholder is liable upon his stock notwithstanding a provision in the act of incorporation prohibiting the issue of shares and declaring that no title shall vest in the person accepting them until a certain amount has been paid thereon. The effect of such a provision is held only to prevent the shareholder from transferring his liability as between himself and the company until the statute has been complied with and the required payment made. In other cases in which it

was forbidden to issue any share till the payment of twenty per cent. on the nominal value, and the company issued serip certificates on which ten per cent. was paid, it was held that the company could not compel the allottee of such scrip certificates to become a shareholder, and that his name should be removed from the register if improperly inserted.* If a subscriber has advanced money to the promoters of a company, in good faith, as a deposit or assessment upon the shares to be issued to him, and the company for any reason fails to be incorporated, he may recover the amount so advanced,' without deduction of any part thereof expended in the promotion of the scheme.8

1 Beach v. Smith, 30 N. Y. 116; Black River etc. R. R. Co. v. Clark 25 N. Y. 208; Croker v. Crane, 21 Wend. 211; 34 Am. Dec. 228.

2 In re Staten Island Rapid Transit R. R. Co. 37 Hun, 422; People v. Stockton etc. R. R. Co. 45 Cal. 306; 13 Am. Rep. 178. Cf. Comins v. Coe, 117 Mass. 45.

3 Ogdensburg etc. R. R. Co. v. Wooley, 3 Abb. App. Dec. 398. See, also, Vermont Central R. R. Co. v. Clayes, 21 Vt. 30, S. C. 1 Am. R. R. Cas. 226, where a note payable on demand was given in lieu of the statutory deposit of five dollars on each share. Cf. East New York etc. R. R. Co. v. Lighthall, 6 Rob. (N. Y.) 407.

4 Lake Ontario etc. R. R. Co. v. Mason, 16 N. Y. 451. Cf. Black River etc. R. R. Co. v. Clarke, 25 N. Y. 208; Hall v. Selma etc. R. R. Cɔ. 6 Ala. 741.

5 East Gloucester R'y Co. v. Bartholomew, Law R. 3 Ex. 15; Purdey's Case, 16 Week R. 660; McEuen v. West London etc. Co. 6 Ch. 655.

6 Eustace v. Dublin Trunk R'y Co. 6 Eq. Cas. Abr. 182; McElwraith v. Dublin Trunk R'y Co. 7 Ch. 134.

7 Nockels v. Crosby, 2 Barn & C. 814; Colt v. Woollaston, 2 P. Wms. 154; Williams v. Salmond, 2 Kay & J. 463. Cf. Grand Trunk etc. R'y Co. v. Brodie, 9 Hare, 823; 6 Geo. I, ch. 18, called the "Bubble Act.'

8 Nockels v. Crosby, 2 Barn. & C. 814. Contra, Williams v. Salmond, 2 Kay & J. 463,

§ 91. The subscriber's right to demand a certificate of stock.-It is not essential to the validity of the contract of subscription that a certificate of stock be issued to a subscriber;1 for, as was stated

BEACH ON RAILWAYS-9

in a foregoing section, the title of the shareholder, and his right to vote and to receive dividends, is quite independent of the certificate of stock. But if a subscriber during the solvency of the corporation tender the full amount of his subscription, demanding the issue of a certificate, and the company declines the tender without legal cause, and refuses to issue the certificate, the subscriber is released from all liability, even as against the assignee of the company upon insolvency. Or for a refusal to issue a certificate of stock, the subscriber has his action in assumpsit for the value of the stock at the time that he demanded it; or by a bill in equity he may enforce the specific performance of the contract, provided of course that the full amount of the capital stock has not been taken. But if all the stock has been issued, the subscriber's only remedy is in assumpsit. Under a stat ute declaring that when any subscriber shall make full payment for his stock, the corporation shall issue him a certificate of stock, it is held that no certificate can be demanded until the amount of his subscription be paid."

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1 Hawley v. Upton, 102 U. S. 314: Buffalo etc. R. R. Co. v. Dudley, 14 N. Y. 336, 347; Mitchell v. Beckman, 64 Cal. 117; New Albany etc. R. R. Co. v. McCormick, 10 Ind. 499; 71 Am. Dec. 337, n.

2 Supra, § 61.

3 Potts v. Wallace, 32 Fed. Rep. 272.

4 Wyman v. American Powder Co. 8 Cush. 168. Cf. Swazy v. Choate etc. Co. 48 N. H. 200.

5 Ferguson v. Wilson, Law R. 2 Ch. 77.

6 Finley etc. Co. v. Kurtz, 34 Mich. 89. As to measure of damages, see Van Allen v. Illinois etc. R. R. Co., 7 Bosw. 515; Baltimore etc. R. R. Co. v. Sewall, 35 Md. 238; 6 Am. Rep. 402.

7 Spurlock v. Missouri Pacific R'y Co. (1887), 90 Mo. 199.

§ 92. Of subscriptions in excess of the capital stock. As a general rule subscriptions in excess of

the amount limited as the capital stock of the corporation are void;1 and no liability thereon attaches to a subscriber to whom stock in excess of the amount authorized has been issued. Where subscriptions are taken by commissioners, however, the act of incorporation often vests them with a discretion in the distribution of the shares, and in case of subscriptions in excess of the capital stock, they may allot to each subscriber such a proportion of the whole capital stock as the amount of his subscription bears to the whole amount subscribed, and no subscription will then be entirely void." Equity will grant relief against the failure of the commissioners to make a proper apportionment.* But in the absence of an express statutory authority, the commissioners have no implied power to apportion an excess of subscriptions. When the act of incorporation makes provision for the apportionment of the subscriptions, the contract of subscription is not complete until the apportionment has been made."

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1 Burrows v. Smith, 10 N. Y. 550; Lathrop v. Kneeland, 46 Barb. 432; Oler v. Baltimore etc. R. R. Co. 41 Md. 583.

2 Clark v. Turner, 73 Ga. 1.

3 Buffalo etc. R. R. Co. v. Dudley, 14 N. Y. 336. Cf. Danbury etc. R. R. Co. v. Wilson, 22 Conn. 435, 454.

4 Walker v. Devereaux, 4 Paige, 229.

5 Van Dyke v. Stout, 8 N. J. Eq. 333. Cf. Croker v. Crane, 21 Wend. 211; 34 Am. Dec. 228.

6 Burrows v. Smith, 10 N. Y. 550; Croker v. Crane, 21 Wend. 211; 31 Am. Dec. 228; Walker v. Devereaux, 4 Paige, 229. Cf. Buffalo etc. R. R. Co. v. Dudley, 14 N. Y. 336, 316.

§ 93. Of agreements to issue shares at less than their face value.-An agreement between a subscriber and the corporation that an amount less than the face value of the stock shall be accepted

in full payment therefor, does not, as against creditors, release the subscriber from liability upon the full par value of the shares.1 Thus a contract of subscription by which a corporation agrees to issue full-paid stock upon the payment of forty per centum of the par value thereof, does not relieve a subscriber from liability to the corporate creditors for the remaining sixty per centum." Yet in a recent case, where subscribers had been required to pay calls in excess of the amount expected and represented to them as necessary at the commencement of the enterprise, and the corporation to make good their loss issued to them, as a gratuity, stock credited with a payment of forty per centum, which as a matter of fact had not been paid, it was held that corporate creditors could not compel the holders of such stock to account for the unpaid forty per centum as though they had been subscribers therefor. The rule that a stipulation exempting the holders of stock from payment of the full par value thereof is void as against creditors, has been held not to apply in a case in which certain persons to whom a railway company was indebted accepted in good faith the stock of the company at twenty cents on the dollar, in satisfaction of their claims, the arrangement being beneficial to the company and due publicity being given thereto by spreading the terms of the transaction upon the corporate minutes.1 For when the strict construction of a statute

prohibiting attempted exemptions from the full payment for shares of stock, will work a positive injury to creditors for whose protection it was intended, the court will apply a liberal construction in accordance with the spirit of the enactment. In