isting right since the adoption of our present constitution. State v. Building Ass'n, 35 Ohio St. 258.

But, however that may be, the right of a corporation to traffic in its own stock, at pleasure, appears to us to be inconsistent with the principle of the provisions of the present constitution (article 13, § 3), which reads as follows: "Dues from corporations shall be secured by such individual liability of stockholders, and other means, as may be prescribed by law; but, in all cases, each stockholder shall be lia ble, over and above the stock by him or her owned, and any amount unpaid thereon, to a further sum, at least equal in amount to such stock." Now, it is just as plain, that a business or trading corporation can not exist without stock and stockholders, as it is that the creditors of such corporations are entitled to the security named in the constitution. State v. Sherman, 22 Ohio St. 411. The corporation itself can not be a stockholder of its own stock within the meaning of this provision of the constitution. Nobody will deny this proposition. And if a corporation can buy one share of its stock at pleasure, why may it not buy every share? If the right of a corporation to purchase its own stock at pleasure exists and is unlimited, where is the provision intended for the benefit of creditors? This is not the security to which the constitution invites the creditors of corporations. I am aware, that the amount of stock required to be issued is not fixed by the constitution or by statute, and also that provision is made by stat ute for the reduction of the capital stock of corporations; but of these matters, creditors are bound to take notice. They have a right, however, to assume that stock once issued, and not called back in the manner provided by law, remains outstanding in the hands of stockholders liable to respond to creditors to the extent of the individual liability prescribed. In this view it matters not whether the stock purchased by the corporation that issued it becomes extinct, or is held subject to be reissued. It is enough to know that the corporation, as purchaser of its own stock, does not afford to creditors the security intended. And surely, if the law forbids the organization of a corporation without stock, because the required security is not furnished, it can not be that, having brought the corporation into existence, it invests it with power to assume, at pleasure, the identical character or relation to the public that was an insurmountable objection to the giving of corporate existence in the first place.

Plaintiff in error lays much stress on the averments in the petition, that it had been the custom of the corporation that its officers and others, actively engaged in its service, should be holders of shares of its stock, and upon ceasing to be connected with the company such persons had been accustomed to sell, and the company to buy, such stock; and that the plaintiff had purchased the stock for the price of which suit was brought while in the employment of defendant.

We can not see why these averments should take the case out of the general rule.

If it were averred that the plaintiff had purchased this stock from the defendant, or from others, under an agreement with the company

that it would buy the same from him when he quit its employment, or if the contract of purchase by the defendant had been executed, very different questions would arise.

It is not even averred that the plaintiff relied upon such custom, either in making the purchase or the sale of the stock; so that, in fact, he is unaffected by the alleged custom. But if such custom had been relied on by the plaintiff when he purchased the stock, it would not have made the executory contract of the defendant to buy the stock binding, which, without such custom, would be void. The usage of a corporation does not become the law of its existence, or the measure of its powers. The general law of the state, of which all persons are presumed to have knowledge, is the source and limit of all its powers and duties; and these can not be varied either by usage or contract. The doctrine of estoppel has no application in the case. Nor is there any such equity in the case as would have arisen between the parties in case the contract had been executed.

Judgment affirmed.

Note. Accord: 1833, Taylor v. Miami Ex. Co., 6 Ohio 176, 218; 1854, Barton v. Port Jackson, etc., Co., 17 Barb. 397; 1875, Currier v. Lebanon State Co., 56 N. H. 262; 1875, First Natl. Bank v. Exchange, etc., Bank, 92 U. S. 122; 1877, German Sav. Bank v. Wulfekuhler, 19 Kan. 60; 1878, Hubbard v. Riley, 3 W. L. B. (Ohio) 434; 1879, Abeles v. Cochran, 22 Kan. 405; 1882, Coppin v. Greenlees, etc., Co., 38 Ohio St. 275, 43 Am. R. 425, supra; 1884, Crandall v. Lincoln, 52 Conn. 73; 1887, St. Louis C. M. Co. v. Hilbert, 24 Mo. App. 338; 1888, Shaw v. Ohio Edison, etc., Co., 19 W. L. B. (Ohio) 292; 1895, Adams, etc., W. Co. v. Deyette, 8 S. D. 119; 1896, Barto v. Nix, 15 Wash. 563, 46 Pac. Rep. 1033; 1897, Hamor v. Taylor-Rice, etc., Co., 84 Fed. Rep. 392; 1897, St. Louis Rawhide Co. v. Hill, 72 Mo. App. 142; 1898, Merchants' Natl. Bank v. Overman, 17 Ohio C. C. 253; 1899, Herring v. Ruskin Co-op. Assn., Tenn. Ch. App. 52 S. W. Rep. 327. See preceding cases and notes.

Sec. 303. (3) Power to acquire shares of stock in other corporations.

1. The English rule.

IN RE BARNED'S BANKING COMPANY.

EX PARTE THE CONTRACT CORPORATION.

1867. IN ENGLISH CHANCERY APPEALS. L. R. 3 Ch. App. Cas. 105-118.

[Appeal by the official liquidator of The Contract Corporation from the decision of the master of the rolls, who had placed its name on the list of contributories to the banking company, as a contributory upon 368 shares owned by it.]

LORD CAIRNS, L. J.The first objection taken to the order under 1 Statement abridged; only part of opinion given; arguments omitted.

appeal was that it was ultra vires The Contract Corporation to take shares in any other trading corporation, and to apply its funds in payment for those shares. Generally speaking, this would be so. It is at first sight beyond the province of one trading corporation to become a shareholder in another, and to apply its funds for that purpose. But here one of the objects of The Contract Corporation, as defined by its memorandum of association, was "to purchase or accept any obligations, bonds, debentures, notes and shares in any foreign or English company, and to negotiate the sale of any such securities.' It appears to me, that in applying for and accepting shares in Barned's Banking Company, The Contract Corporation, Limited, was strictly and to the letter complying with and acting within these terms. If it were necessary to make this power still clearer, the forty-seventh clause of the articles of association provides that the directors may invest any of the money of the corporation on such securities (other than the corporation's own shares) as they, the direc tors, may think desirable, plainly implying that, although they might not invest their money upon the purchase or allotment of their own shares, they might invest them upon the allotment or purchase of shares ejusdem generis in other companies.

The second argument was, that even assuming that, according to the constitution of the contract corporation, it was not ultra vires to invest their money in shares of another trading company; yet that under the act of 1862 one trading corporation could not become a member of another trading corporation. Now, if that argument is to prevail, it must be upon the words of the act of parliament of 1862, because there is no apparent or prima facie objection to a corporation so joining with another corporation in trade. A trading corporation, as we all well know, may enter into trade or partnership along with an individual. There is no reason at common law, so far as I know, why one corporate body should not become a member of another corporate body. Other acts of parliament relating to companies appear to assume that corporations may become members of and shareholders in companies. For example, the general act, the companies clauses consolidation act of 1845, provides, in the interpretation clause, that "shareholder" in that act shall include a corporation; and the chartered companies act, 1 Vict., c. 73, expressly points out that the crown may grant a charter to a trading corporation, the shareholders in which may themselves be corporate bodies, and whose liability under that charter may be limited. Now, looking to the words of the act of 1862, it is said, no doubt justly, that they appear throughout to point to person, and to the executors and administrators of persons, as if the shareholders were all to be persons in their natural capacity. But even in this act there are traces that the term "shareholder" and the word "persons" must have been intended to be used in a larger sense, for in the fiftieth and fifty-first clauses provision is made for the determination of questions of considerable importance by general meetings, and by votes to be given at those meetings, either in person or by proxy, in cases where, by

the regulations of the company, proxies are allowed, and on turning to the forms in the schedule, which may be adopted by any company for its regulation, we find, in the forty-ninth clause of table A, a provision that the instrument appointing a proxy shall be in writing under the hand of the appointer; "or if such appointer is a corporation, under their common seal." Form B contains a similar clause (clause 22), as do also the forms in the schedule to the act of 1865. It would, therefore, appear to have been in the contemplation of the legislature that the appointer of a proxy might be a corporation; and inasmuch as the appointer was to be a shareholder, that a shareholder might be a corporate body.

The case, however, does not rest there. The act of 1862 is an act amending and consolidating the whole of the prior laws with regard to the joint stock companies. Among other acts of parliament repealed by the act of 1862 are 7 and 8 Vict., ch. 110 (the joint stock companies act of 1844), and 11 and 12 Vict., ch. 45 (the winding-up act of 1848). The interpretation clause in each of those acts provided that the word "person" throughout the act should include bodies politic or corporate, whether sole or aggregate. In the present act of 1862 there is no interpretation clause, but section 180 and the following sections provide that companies formed under the repealed act of the 7 and 8 Vict., ch. 110, and under the chartered companies act, I Vict., ch. 73, may be registered under this act of 1862, and that before registration they must send in a list showing the names, addresses and occupations of all persons who on a certain day were members of the company, and when so registered they are to become subject in every respect to the act of 1862. But the company which was thus to register itself, and thus to send in a list of its shareholders to the registrar under the act of 1862, might be a company entitled to have and having among its shareholders corporate bodies, whether sole or aggregate, and they would become members of the company registered under that act of 1862. It would, therefore, be necessary, in reading the act of 1862, with regard to a company of that kind, to read the word "person" as including bodies politic.

So also, on turning to section 199, and the following sections, we find provisions for the winding up of joint stock companies formed under 7 and 8 Vict., c. 110, and provisions which, as regards the process of winding up, are identical with provisions applicable to companies formed for the first time under the act of 1862. There again the whole of those provisions, though apparently pointing to persons and individuals, must, of necessity be read as applying to corporate bodies which should be shareholders under the former act of parliament. Now, I think the conclusion irresistible, that if in all these sections to which I have referred, beginning with section 180, and ending with section 200, the general words used must be read as comprising bodies corporate which are shareholders, there is no reason why, throughout the whole of the act, from the beginning to the end, the same words should not be read in the same way, and be held to include bodies corporate. It is satisfactory to find that the conclusion

at which I have arrived tallies with the conclusion which has been arrived at in several cases, because instances were mentioned, and do not appear to have been disputed, in which limited companies have been registered as shareholders in other companies, and have been fixed as contributories in the course of the winding up of those other companies. It is true the objection does not seem in any of those cases to have been taken, or the point to have been argued, and if the matter rested upon practice alone, probably there would not have been enough in the practice by itself to have led to the conclusion at which I have arrived. But it appears to me, upon the proper construction of the act, that the practice is entirely warranted by the act of parliament. The second argument, therefore, of the official liquidator seems to me to fall to the ground.

Order of master of rolls affirmed.

Note. Accord: 1863, Great Western Ry. Co. v. Met. Ry., 32 L. J. Ch. 382; 1869, Royal Bank of Indiana, 4 Ch. App. 252.

But see 1851, East Anglican Ry. Co. v. Eastern Counties Ry., 7 Eng. L. & Eq. 505; 1878, Ex Parte Liquidators B. N. L. I. Assn., L. R. 8 Ch. 679, contra.

Sec. 304. Same.

2. General rule in the United States.

THE PEOPLE, EX REL. PEABODY, v. THE CHICAGO GAS TRUST

COMPANY.1

1889. IN THE SUPREME COURT OF ILLINOIS.

130 Ill. Rep. 268303, 17 Am. St. Rep. 319, 8 L. R. A. 497.

[Quo warranto as to the authority of the Gas Trust Company to exercise certain powers. The company pleaded that its charter permitted the exercise of the powers in question. The error assigned was the overruling of demurrers to the pleas.]

MAGRUDER, J. The Chicago Gas Trust Company, appellee herein, was organized under the general incorporation law of this state. The statement filed by the original incorporators with the secretary of state sets forth that the Trust Company was formed for two objects, or for one object of a twofold character. The object, named in the first clause of the second specification of the "statement" is, in brief, the erection and operation of works in Chicago and other places in Illinois, for the manufacture, sale and distribution of gas and electricity.

The object named in the second clause of the second specification of the "statement,” is, in brief, "to purchase and hold or sell the capital stock" of any gas or electric company or companies in Chicago or elsewhere in Illinois.

In this proceeding no attack is made upon the validity of the organization of the Gas Trust Company as a corporation.

1 Statement, except as in opinion, arguments and part of opinion omitted.