to incorporate for such a purpose as that here is a statutory right, which is free to everybody. The rights in the corporation can be adjusted by contract, and the terms fixed by contract. The corporation is little more, under our laws, than a joint stock company under the English laws, indeed, in its true nature more nearly resembling a limited partnership under special articles than a corporation at common law. This corporation was organized under an agreement, which was in itself legal and binding. The original corporators were really the men (except one-if, indeed, he were not the assignee of one) who made the agreement, and were bound to execute it. They had the power to execute it; for they had on the organization the power, subject to restrictions which we do not apply here, to control their own business in their own way. A man may as well make an agreement with another for certain stock in a corporation to be organized hereafter, as an agreement for stock in a presently existing corporation. If A, B and C agree to form a corporation for a railroad with a capital of so much, to be represented by so many shares of stock, why may not they contract that each is to have so many shares on such and such terms? What rule of law forbids? Is there anything immoral in the contract, or opposed to public policy? Can not a man as well subscribe one time as another for stock, if all interested consent? Indeed, as under this particular agreement they organized, so far as the then members are concerned, the agreement becomes as effectual as if a part of the corporate act. As there is in this respect no restriction upon the terms on which they associate or do business, or to the time of making them, why not find those terms in an antecedent agreement as well as a present adoption, if the preceding agreement is connected by clear proof with the act of incorporation and its affairs? Suppose A, B and C agree to form a corporation for running stages, and put in, each, $10,000, but there are to be no certificates of stock issued and no debts incurred. This agreement precedes, of course, the incorporation; and suppose. the money is paid before the corporate act is consummated. The corporation is formed and proceeds to do business. Will it be contended that these men are not entitled to their respective shares of the profits, etc., from the mere fact that all this occurred before the technical ideal thing—the corporation—was called into existence? The truth is, the corporation, under our system, following such an agreement, would be the mere agency of the asscciates created for the sake of convenience in carrying out the agreement, as between those who made the bargain—the different characters or forms in which or by which the bargain was made, and the order in which the several parts of it were executed, makes no substantial difference in the obligation. But if it did, and this ideal thing, the corporation, be something essential, distinct and exclusive, making the men inside of it and controlling it wholly different from the same men just before they went into it; yet these shares are interests and property in esse or posse. This interest, or those shares, entitle the holder to certain privileges of value, and may entitle him to profits. Whether, therefore, the corporation is bound of itself, and as a separate entity, to recognize a right in a claimant to this interest, a private person holding these shares or interests would be bound to such claimant for them. But apart from all this, when the corporation became such, it organized with Chater, Bond and Gordon as trustees, and these were really the sole corporators also; and they organized with full knowledge of this agreement, which not only contemplated the formation of the company or corporation, but prescribed the terms and rights of the members in the corporation and corporate business. Chater was not only superintendent under this agreement, but trustee, too; and the corporate business was commenced and for a long time prosecuted with reference to this agreement, which recited these terms and affirmed these rights. If anything could be, this was an adoption by the corporation of these terms. It is not necessary to inquire whether an innocent purchaser of the stock, buying subsequently without notice, would be affected by any such acts-for no such question is before us now. If the corporation be bound by this agreement, and the court, proceeding to enforce it by ordering the issuance of stock, should affect injuriously any innocent holder of stock, it will be time enough to consider his rights, legal or equitable, when the facts and proper parties are before the court. If, on taking the account, it should appear that Chater is not entitled to anything, but that the corporation is so indebted as to make it inequitable for him to receive his shares, the court below, on the final hearing, can make the proper decree, unaffected by anything in the decree under review. With these modifications, the decree is affirmed and the cause remanded. 60 L. R. A. 927. See 1903, Home Ins. Co. v. Barber, - Neb. Note. (1) Specific performance of stock agreements may be had when damages would be inadequate. See: 1746, Buxton v. Lister, 3 Atkyns, Ch. 383; 1804, Lady Arundell v. Phipps, 10 Vesey 148; The Mechanics', etc., Bank v. Seton, 1 Peters (U. S. Sup. C.) 299; 1828, Cowles v. Whitman, 10 Conn. 121; 1839, Clark v. Flint, 22 Pick. (Mass.) 231; 1863, Treasurer v. Commercial Mining Co., 23 Cal. 390; 1879, Cushman v. Thayer Mfg. I. Co., 76 N. Y. 365, 32 Am. Rep. 315; 1886, Eckstein v. Downing, 64 N. H. 248, 10 Am. St. Rep. 404; 1888, Goodwin Gas S. & M. Co.'s Appeal, 117 Pa. St. 514; 1891, Bumgardner v. Leavitt, 35 W. Va. 194, 12 Law. Rep. Ann. 776; 1894, New England Trust Co. v. Abbott, 162 Mass. 148, 27 Law. Rep. Ann. 271. (2) Waiver of statutory liability, by creditors, may be made by express agreement: 1839, Kerridge v. Hesse, 9 Carr. & Payne 200; 1863, Robinson v. Bidwell, 22 Cal. 379; 1872, Basshor v. Forbes, 36 Md. 154; 1883, Brown v. Eastern Slate Co., 134 Mass. 590. (3) Generally in informal agreement among members of a corporation, without corporate action in the prescribed mode, does not bind the corporation: 1891, Independent Order of Foresters v. Zak, 136 Ill. 185, 29 Am. St. Rep. 318; 1896, Dennis v. Joslin Mfg. Co., 19 R. I. 666, 61 Am. St. Rep. 805. (4) Provisions in articles of association contrary to law or public policy are void: 1889, People v. Gas Trust Co., 130 Ill. 268, 17 Am. St. Rep. 319; yet they may be considered as surplusage, and not vitiate the organization: 1896, Shick v. Citizens' Enterprise Co., 15 Ind. App. 329, 57 Am. St. Rep. 230; unless there is no sanction in law at all for the purposes proposed: 1894, State v. Inter-National Investment Co., 88 Wis. 512, 43 Am. St. 920. Sec. 18. Same. Particularly, (a) In matters relating to the constitution of the corporation itself, or changes therein. ASHTON v. BURBANK ET AL.1 1873. IN THE United States CIRCUIT COURT, Eighth Circuit, District of Minnesota. 2 Dillon (U. S. Cir. Ct.) 435-441, Fed, Cas. No. 582. [This is an action on a promissory note, dated August 19, 1867, for $3.000, made by the defendants to the Provident Life Insurance and Investment Company. The defendants were subscribers of that company, and the note in suit was given for an assessment upon their stock. The original charter of said company authorized it to transact a "life and accident insurance" business. After the defendants' subscription to the stock, the charter was amended, and the name of the company changed to the Eagle Insurance Company, and it was also authorized, by the amended charter, to transact the business of "fire, marine and inland insurance." The amended charter was accepted, but, in point of fact, the company took no risks during the short period it afterwards did business, except such as were authorized by its original charter. Subsequently, the company, being then in possession of the note in suit, forfeited, under authority given in its charter, the stock of the defendants therein. The note in suit, when long past due, was transferred by the company to the plaintiff. The defendants neither procured nor assented to said last mentioned act [amending the charter], nor did they know of it until after its passage, and thereupon they protesed against it, and refused to pay the note in suit on this ground. Subsequently the said Eagle Insurance Company ceased to do business, and this note, among other assets, was sold to the plaintiff in the year 1871, in payment of a debt due from the Eagle Insurance Company to him. After the said amendment of the charter of March 3, 1869, the Eagle Insurance Company did not, in fact, transact any fire, marine or inland insurance business, or do any other business than such as was authorized by the original charter.] DILLON, C. J. We hold the following propositions: The change in the charter, by which a life and accident company was authorized to transact fire, marine and inland insurance, is an organic change of such a radical character as to discharge previous subscribers to the stock of the company from any obligation to pay their subscription, unless the change is expressly or impliedly assented to by them. Here there was no such assent, and no acquiescence in the structural change made in the charter of the company. The company could not, against such a subscriber, maintain a suit to collect his subscription, and take the money and use it as capital for the transaction of business under the charter as altered. We think, in 1 Statement of facts condensed. Part of opinion omitted. such a case, the subscriber is not bound to enjoin action under the amended charter, but may, if he elects, defend against an action to recover on his subscription to the stock. If the company accepted the amended charter, as it did, by adopting the new name, it is not essential to such a defense to show that at the time of the trial the corporation had actually exercised the enlarged powers conferred upon it. The defendants are not bound, on their subscription, to pay to the company money which, if paid, may be used as capital to carry on the business authorized by the amended charter. Judgment for the defendants. Note. The power of the majority to modify the constitution of a corporation is discussed in ch. 16, see p. 1447, infra. See, particularly: 1820, Livingston v. Lynch, 4 Johns. Ch. 573; 1824, Natusch v. Irving, 2 Cooper's Ch. 358, appendix to Gow on Partnership, p. 398; 1862, Durfee v. Old Colony & F. R. R. Co., 5 Allen (Mass.) 230; 1867, Zabriskie v. H. & N. Y. R. Co., 18 N. J. Eq. (3 C. E. Green), 178, 90 Am. Dec. 617; 1887, Dow v. Northern R. Co., 67 N. H. 1, 36 Atl. 510. Sec. 19. Same. (b) In determining the rights of members among themselves in equity. DODGE, APPELLANT, V. WOOLSEY.1 1855. IN THE SUPREME COURT OF THE UNITed States. 18 Howard (59 U. S) 331-380. [Appeal from the circuit court of the United States for the district of Ohio. Suit in chancery by Woolsey, a citizen of Connecticut, and holder of thirty shares in the Commercial Bank of Cleveland (an Ohio corporation, and branch of the State Bank of Ohio) against the tax collector (Dodge), the bank directors and the bank itself (all citizens of Ohio) to enjoin the collection of the tax assessed by the state of Ohio against the bank. The bank's charter of 1845 provided that semiannually it should pay six per cent. of its net profits for the preceding six months to the state of Ohio “in lieu of all taxes to which said company or the stockholders, on account of stock owned therein, would otherwise be subject." In 1851 the new state constitution was adopted, and this provided that laws should be passed taxing "the notes and bills discounted or purchased, money loaned and all other property, effects or dues whatever, without deduction, of all banks now existing or hereafter created, and of all bankers, so that all property employed in banking shall always bear a burden of taxation equal to that imposed on the property of individuals." In 1852 the legislature of Ohio, in accordance with this constitutional provision, made it the duty 1 Statement of facts condensed. Arguments and parts of opinions omitted. of the president and cashier of every bank (under a severe penalty) to make report of the various items indicated to the county auditors, who were to place the same upon the tax duplicate, to be taxed as other property. In 1852, the president and cashier of the Commercial Bank of Cleveland, did this, under protest, the tax assessed and collected by distress being over $10,000, and more than $7,500 more than it would have been under the charter plan. Like proceedings were had in 1853, when the tax assessed was nearly $12,000 more than the charter plan would have made. Woolsey alleged that "if the taxes are permitted to be assessed and collected it will virtually destroy and annul the contract between the state and the bank, in respect to the tax which the state imposed upon it by the charter ** in lieu of all other taxes, the stock will be thereby lessened in value, dividends diminished, and the bank be compelled to suspend business; that, as a stockholder, he had requested the directors of the bank to take measures to prevent the collection of the tax." * The material allegations, except the unconstitutionality of the law, and the application to the directors to prevent the collection of the tax, were admitted. Upon the latter point it was agreed that Woolsey had by his attorney addressed a letter to the bank requesting it to take proper proceeding to prevent the collection of the tax, the answer to which was: "Resolved, that we fully concur in the views named, and believe it to be in no way binding upon the bank; but in consideration of the many obstacles in the way of testing the law in the courts of the state, we can not consent to take the action which we are called upon to take, but must leave the said (Woolsey) to pursue such measures as he may deem best in the premises.' Upon the foregoing, the circuit court granted the injunction with costs against Dodge, who appealed, his counsel relying upon the following points: "I. The complainant does not show himself to be entitled to relief in a court of chancery, because the charter of the bank provides that its affairs shall be managed by a board of directors, and that they are not amenable to the stockholders for an error of judgment merely. And that in order to make them so, it should have been averred that they were in collusion with the tax collector in their refusal to take legal steps to test the validity of the tax."] [2 and 3, relating to the jurisdiction of the court, and the constitutionality of the tax, omitted.] Mr. Justice WAYNE (after stating the facts) delivered the opinion of the court. * We will consider the points in their order. The first comprehends two propositions, namely; that courts of equity have no jurisdiction over corporations, as such, at the suit of a stockholder for violations of charters, and none for the errors of judgment of those who manage their business ordinarily. There has been a conflict of judicial authority in both. Still, it has been found necessary, for prevention of injuries for which commonlaw courts were inadequate, to entertain in equity such a jurisdiction |