The purchaser of shares in such corporation cannot compel their transfer by mandamus, where his incidental rights as stockholder do not depend on ownership of these specific shares. Ib.

Pledgee of stock as collateral is equitable owner, and may surrender certificate and have new certificate in his own name. Haldeman v. R. R. Co., 2 Handy, 10I. But equitable owner cannot recover value of stock from company, if certificates are out in name of another claiming to be owner. Bank v. R. R. Co., 21 Ohio St. 221.

One corporation cannot become owner of any portion of capital stock of another corporation, unless authority to become such is clearly conferred by statute. Franklin Bank v. Commercial Bank, 36 Ohio St. 355. And a refusal by one bank to transfer on its books stock to another bank which is held by the latter as collateral security, is not a conversion. Ib.

An incorporated company cannot subscribe to stock of another corporation. Ry. Co. v. Iron Co., 46 Ohio St. 44.

An agreement between a corporation and one of its stockholders for the surrender of the latter's stock to the former is illegal. Shaw v. Ohio Edison Installation Co., 19 B. 292.

An assignee of stock in railroad company, who tenders an unpaid installment, with interest, may compel the corporation to issue to him a stock certificate; and as against such an action the statute of limitations will begin to run from the time of such tender. Iron R. R. Co. v. Fink, 41 Ohio St. 321.

Purchase of stock by trustee for the company to be paid for with notes of the company, in consideration of the proposed retirement of two officers, is void, and those who attempted to sell did not cease to be stockholders. Mer. Nat. Bank v. Overman Carriage Co., 17 C. C. 253.

Ohio corporation cannot buy in its own stock. Halcomb v. Gibson, 39 B.

380.

Where certificates of stock are required to be issued by the president and secretary, neither of whom is prohibited from holding stock, certificate issued to secretary is not notice sufficient to put party on inquiry as to whether he is rightfully owner, and one purchasing such certificate in the market without knowledge of any fraud in its issue becomes the owner, although it was fraudulently issued, which inquiry at the company's office would have disclosed. Ry. Co. v. Citizens' Nat. Bk., 56 Ohio St. 351; apparently contrary, Ry. Co. v. Third Nat. Bk., 1 C. C. 199.

See also R. R. Co. v. Bank, 24 B. 198, and 22 B. 248. For other questions arising from over issue of stock, see Perin v. Railroad Co., 17 B. 261, and 18 B. 382.

Where a former officer of a railroad company has fraudulently issued stock and pledged it and other collaterals as security for his own debt, and the directors bought up such claims and collaterals for the purpose of realizing on the collaterals other than stock, and thereby canceling the stocks without paying bona fide holders for them; held, such action is not ultra vires, R. R. Co. v. Duckworth, 2 C. C. 518, affirmed in 21 B. 36.

The sale and transfer of a certificate of stock transfers that portion of the entire assets of the company which the certificate bears to the entire stock,

and no valid reservation of any portion of a future dividend can be made at the time of such transfer. Marble v. Van Wert Nat. Bk., 3 C. C. 464.

The indorsement of a certificate in blank and delivery as a pledge estops the pledgor from asserting any title thereto against an innocent purchaser for value from the pledgee, although sold in violation of the pledge. Krebs v. Forbriger, 21 B. 313.

Purchase of treasury stock by stockholders for less than par may not render them liable for the difference where such purchases were made in good faith to aid the corporation and resulted in no profit to the stockholders. Peter v. The Union Mfg. Co., 56 Ohio St. 181.

:

Net earnings are property of corporation until dividend is declared; and using scrip certificates, redeemable in the future in stock, is not a division and such certificates are not taxable. Adams v. Shields, Treas., 17 C. C. 129, affirmed 42 B. 262. See also Clev. Trust Co. v. Lander, Treas., 43 B.

297.

Whether ordinary corporation may reserve a lien on stock for debts due from stockholders, see Tomb v. Felch, Assignee, 40 B. 186; Stafford v. Produce Ex. Co., 61 Ohio St. 160, affirming 16 C. C. 50.

Issue of treasury stock" by vote of directors for nominal consideration is illegal and void. Straman v. No. Balt. Water Works Co., 8 C. C. 89. Where a private corporation, organized under the laws of a foreign state, is permitted by the charter to have an office here, the right of the stockholders granted by statute of such state to inspect the books of the corporation will be enforced by mandamus. Ohio v. Farmer, 7 C. C. 429.

But in case of Ohio corporation remedy is by mandatory injunction— motive of stockholder immaterial. Blymer v. Blymer Co., 5 N. P. 71 (Sup. Ct. Cin.); Cin. Volksblatt Co. v. Hoffmeister, 43 B. 258 (Sup. Ct.).

Remedy for refusal to issue certificate of stock in action against corporation for damages, or to enforce issue and delivery of certificate, in equity. State v. Carpenter, 51 Ohio St. 83; Krohn v. Ry. & Bridge Co., 4 N. P. 270 (C. P).

3254-1.

Reissuing of lost certificates

In case any certificate of stock in any corporation be lost or destroyed, the owner thereof may file his petition in the probate court of the county where the principal business office of such corporation is located in this state, setting forth a pertinent description of such certificate, and a full statement of the facts relating to such destruction or loss, including the fact that he is the owner of such certificate, and was at the time of its loss or destruction, and had not assigned, transferred, or disposed of the same, and that the same was not pledged to any one, or if so, stating to whom, and the facts relating thereto, and such petitioner shall make the corporation and any pledgee defendants to such proceeding, and shall serve a certified copy of such petition on some chief officer of such corporation, and on any such

pledge, on which copies the probate judge shall state over his signature when said petition will be heard, and said copies shall be served not less than twenty days before the hearing, and such petitioner shall also publish, for three consecutive weeks, in some newspaper published and of general circulation in the county where the proceeding is pending, and in the county where the petitioner resides the notice containing the substance and prayer of such petition immediately before the day of hearing, and stating when and where the same will be heard. 88 O. L. 336.

If the probate court, upon the hearing, find that the foregoing provisions have been complied with, and that such described certificate has been lost or destroyed, and that such petitioner at that time was and is the owner thereof, an order shall be made that such corporation issue and deliver a new certificate of stock to such petitioner for the original amount and kind of stock, and in case, at the time of such loss or destruction of such original certificate, the certificate was pledged to anyone, and the pledgee yet has a claim against the same, then such order shall direct that such new certificate shall be delivered to such pledgee on such terms as the court may direct, and the corporation shall comply with said orders, and shall in no wise be prejudiced by complying with said orders, or by paying dividends on such new certificate, so long as it is not made known to it that such original certificate is in existence and owned by some person other than said petitioner; and all rights and liabilities attaching to said original certificate shall attach to said reissued certificate, while in force, but upon the production of the original certificate to such corporation by the owner or pledgee, such reissued certificate shall be canceled and surrendered, and be void, and executors and administrators, on behalf of estates of deceased owners of any such lost or destroyed certificates of stock, shall be entitled to proceed under this act and have all the rights and benefits thereof. 88 O. L. 336.

3255. Stock is personal property

Shares of stock in any company shall be personal property, and when fully paid up shall be subject to levy and sale upon execution against the owner. 50 v. 274, § 5; S. & C. 276.

The interest of a stockholder may be reached by garnishee process served on corporation, and if the corporation is the attaching creditor, such process may be served upon itself; but if certificates have been pledged and delivered under absolute power of sale, the attachment reaches only the surplus after paying the pledgee, and if the pledgee does not sell the stock the court may order its sale, and ascertain and apply the surplus, and dividends follow the stock and are subject to same order of distribution. Norton v. Norton, 43 Ohio St. 509.

Stock in foreign corporation must be listed for taxation here if owner resides in Ohio. Bradley v. Bauder, 36 Ohio St. 28.

A stockholder's indebtedness to a national bank cannot be set off against the claims of a pledgee of the stock of the former, who received it in pledge to secure the payment of a loan made on the faith of such pledge without knowledge of the claims of the bank, or that it was insolvent. McConville, Agent, etc., v. Means, 21 B. 193.

Stock may be assigned in equity by delivery without indorsement. Lawler v. Kell, Ex'rx, 4 N. P. 218 (C. P.).

Transfer to fictitious person is void. Krohn Ry. Co. v. Bridge Co., 4 N. P. 270 (C. P.).

$3256. May borrow money on bond and mortgage

A corporation may borrow money, not exceeding the amount of its capital stock, and issue its notes or coupon or registered bonds therefor, bearing any rate of interest authorized by law, and may secure the payment of the same by a mortgage of its real or personal property, or both.

In Bosche v. The Toledo Display Horse Co., 14 C. C. 289-293, it was held that a chattel mortgage executed without a formal vote of the directors was valid, where the money was to be used in carrying on its business and paying its debts. A serious query under this section is whether the stock must be subscribed or may a company borrow money equal to the authorized capital. The section seems to authorize companies to borrow to the extent of its capital paid in, or at least subscribed.

In Smead v. Foundry Co. v. Chesbrough, 3 O. D. 534, it was held that the president of the corporation has no power to mortgage its property, or to confess a judgment against it. For a discussion of this question, see 6 Thompson on Corporations, sec. 7561.

Where a corporation borrows money at usurious interest, the contract is void only as to the excess over the legal rate. Larwell v. Hanover Savings Fund Society, 40 Ohio St. 274.

§3257. May stipulate that its obligations may be converted

into stock

Upon the written assent of not less than three-fourths of the stockholders, representing at least three-fourths of the capital stock of the company actually paid, any company may borrow

money, not exceeding one-half of the capital stock actually paid in, on such security, by way of mortgage, or otherwise, as may be agreed upon, and at a rate of interest not exceeding that allowed by law to be contracted for, and may, in the instruments evidencing the contract stipulate that the holders of such instruments shall have the right to convert the amount borrowed, or any part thereof, into either common or preferred stock, such stock having been provided for by the proper action and certificate of the company; and any action of the directors for borrowing money, issuing bonds, or involving an expenditure of money, shall be by a yea and nay vote, and record thereof shall be made showing the vote of each director voting upon the question. 67 v. 26, §§ 1, 2, 3, 4.

§ 3258.

Stockholders liable in an amount equal to their stock

The stockholders of a corporation which may be hereafter formed, and such stockholders as are now liable under former statutes, shall be deemed and held liable, in addition to their stock, in an amount equal to the stock by them subscribed, or otherwise acquired, to the creditors of the corporation to secure the payment of the debts and liabilities of the corporation. v. 44, § 78. S. & C. 310.

It is well settled that, unless they have received assets of the corporation which were liable to the payment of its debts, or have agreed to pay the debts, the stockholders of a corporation are not liable for the debts of the corporation, except when made so by charter or statute. Carr v. Iglehart, 3 Ohio St. 457. But see State v. Sherman, 22 Ohio St. 411.

Holders of preferred stock are liable equally with common stockholders. When plaintiff's claims have not been reduced to judgments, stockholders can interpose only such defenses as are open to the corporation. It is no defense that defendants became stockholders after liability to plaintiffs was incurred. The equities between the holders of stock by assignment and their assignors who are parties to the suit, may be adjusted in the final judgment. R. R. Co. v, Smith, 48 Ohio St. 219.

One who holds "stock in trust for another," named, is personally liable as a stockholder. The remedy under this section is cumulative. Holcomb v. Gibson, 39 B. 380 (Sup. Ct.); Henkle v. Salem Mfg. Co., 39 Ohio St. 552. If a stockholder sells stock as paid up when it is not, as between himself and vendee he is primarily liable for the debts of the company contracted while he held the stock. Gates v. Tippecanoe Stone Co., 57 Ohio St. 60.

A holder of stock in an Ohio corporation, who transfers his stock after a corporate debt has been created, is not relieved from his statutory liability for such debt by an agreement for an extension of the time for its payment;