of the time limit, although they never saw the advertisement of the notice of the committee until after the reorganization was completed, where the bonds were not registered but payable to bearer and, hence, the committee had no means of reaching holders except by the publication of notices.91

A participating bondholder cannot complain, it seems, because the committee has permitted other bondholders to join after the time. limited in the agreement, where they have otherwise complied with its terms.9 92

§ 4899. Time as limited by statute. When the persons interested in a corporation undertake to reorganize under a statute providing for reorganization, they must comply with its terms. A person who does not comply with its terms, although he may not lose his rights as against the old corporation and its property, acquires no right to share in the reorganization. For example, if a statute provides that any stockholder may come in and assent to a plan of reorganization of a railroad company at any time within six months after a foreclosure sale, and thereby become entitled to share in the benefits thereof, upon compliance with its terms, a stockholder who does not come in and assent within the six months has no right to come in, and a court of equity cannot relieve him from the effect of his delay.93

§ 4900. Payment of assessments. Where stockholders or bondholders are required to pay assessments or a certain sum towards the expenses of the reorganization, as a condition of participating in the reorganization, failure to make such payments bars the right to participate. And failure to pay assessments as provided for in the

91 Bound v. South Carolina R. Co., 78 Fed. 49, aff 'g 71 Fed. 53.

92 Walker v. Montclair & G. L. Ry. Co., 30 N. J. Eq. 525, 529.

93 Vatable v. New York, L. E. & W. R. Co., 96 N. Y. 50, rev'g 11 Abb. N. Cas. 133.

94 Dow v. Iowa. Cent. Ry. Co., 144 N. Y. 426, 39 N. E. 398; Vatable v. New York, L. E. & W. R. Co., 96 N. Y. 49; Zebley v. Farmers' Loan & Trust Co., 63 Hun (N. Y.) 541, 18 N. Y. Supp. 526.

In a Pennsylvania case, several parties who held mortgage bonds of a railroad company, about to be sold

out on foreclosure of the mortgage, entered into an agreement that, in case of the purchase of the railroad in their interest as bondholders, they would not claim their proportion of the proceeds of the sale, but would take in lieu thereof bonds to be issued in a reorganization of the company. There was no stipulation in the agreement as to which of the bondholders should purchase the property, nor as to contribution towards the expenses of the sale and of the reorganization. A., one of the bondholders, undertook to buy at the sale, but the property was bid above his

agreement bars the right to afterwards obtain an exchange of stock upon tendering the amount of instalments due, after the expiration of the time limit.95 Where stockholders are entitled by the reorganization plan or by statute to acquire an interest in the new company on making certain payments before a specified time, it seems that notice of such time limit need not be given the stockholders in any mode, or at least that notice by publication is sufficient.96 If stockholders are given the right to participate in the reorganization by making certain payments within a specified time, a stockholder who has not made his payment within such time cannot compel the committee to receive the payment merely because it has accepted like payments from other stockholders after the time had expired.97

The purchase at the foreclosure sale may be made by a trustee appointed by the bondholders, or a majority of them, for that purpose, under an agreement containing a plan of reorganization, in which case if the trustee proceeds to complete the purchase as such, he is bound by the terms of his trust, notwithstanding he was en

limit, and sold to another party, who subsequently transferred the title to A. for advances made to him and other indebtedness. A. began to reorganize the company, and requested the other parties to the agreement to join in the payment of expenses, which they refused to do; and they afterwards filed a bill in equity against A. for an account of the proceeds in his hands. It was held that, conceding that the purchase and reorganization were in pursuance of the agreement, and were therefore to inure to the benefit of all the parties thereto, yet the latter were debarred, by their refusal to share in the expenses, from claiming any share in the purchase. In re Fidelity Insurance, Trust & Safe Deposit Co., 106 Pa. St. 144.

95 Dow v. Iowa Cent. Ry. Co., 144 N. Y. 426, 39 N. E. 398.

96 Under Acts N. Y. 1874, c. 430, to facilitate the reorganization of railroads sold under mortgage, and providing for the formation of new companies in such cases, it was held that a stockholder in the old company had a right to join the new only on com

pliance with the terms of the plan of reorganization; that the projectors of the plan were not required to provide for a notice; and notice having been given by publication, to the effect that certain payments must be made by stockholders wishing to join the new organization, stockholders failing to make the required payments within the time limited could not afterwards claim the right to come in, on the ground that they had no notice. Vatable v. New York, L. E. & W. R. Co., 96 N. Y. 50, rev'g 11 Abb. N. Cas. 133.

97 Keane v. Moffly, 217 Pa. 240, 66 Atl. 319.

The fact that the committee has permitted some stockholders to make payments so as to comply with the terms of the reorganization agreement, after the time so to do has elapsed, does not give the court power to compel them to accept a payment from another stockholder after the expiration of such time. Dow v. Iowa Cent. Ry. Co., 70 Hun (N. Y.) 186, 24 N. Y. Supp. 292.

titled to abandon the purchase because of the failure of the agreeing bondholders to pay assessments; and a purchaser from such trustee with knowledge of the trust takes subject thereto, and the bondholders may follow the property into his hands.98

VI. WHAT CONSTITUTES JOINDER IN REORGANIZATION AGREEMENT AND

EFFECT THEREOF

§ 4901. General rules. It is hardly necessary to state that stockholders, bondholders and other creditors who become a party to the reorganization agreement, or who consent thereto, are bound by the terms thereof,99 including provisions therein as to delivery of bonds. and other conditions contained in the agreement, and cannot afterwards attack the reorganization as invalid. Any one, whether a stockholder, bondholder or other creditor, or the corporation itself, who enters into a valid agreement for the purpose of reorganization, is bound thereby, and cannot repudiate the same and insist upon his original rights in violation of its terms, either before or after the agreement has been carried out. And a stockholder, or bondholder, or a general creditor, who consents to a foreclosure sale, or who takes

98 Indiana, I. & I. R. Co. v. Swannell, 157 Ill. 616, 30 L. R. A. 290, 41 N. E. 989.

99 A stockholder who votes for a reorganization cannot thereafter attack it as without authority. Farish v. Cieneguita Copper Co., 12 Ariz. 235, 100 Pac. 781.

Persons signing the proposed plan of reorganization are bound by the terms thereof, and especially is this SO as to a stockholder and director who drew up the proposed plan in addition to signing it. Wadsworth v. Pressed Prism Plate Glass Co., 239 Fed. 507.

An agreement that no more than a limited number of shares of stock in the reorganized company shall be issued to any one stockholder is binding upon the parties to the agreement, even if it is not binding on the corporation. Hladovee v. Paul, 222 Ill. 254, 78 N. E. 619, aff'g 124 Ill. App. 589.

A committee was appointed by

the holders of corporate bonds to arrange for the reorganization of the corporation and to levy ratable assess ment on the bondholders for expenses incurred in connection therewith. The plan of reorganization submitted to the bondholders by the committee stated the necessity for the raising of certain moneys for expenses and improvements and provided for an assessment on the bondholders to cover same. After the acceptance by the bondholders and payments of the first instalment called for, the plan became binding. Mills v. Potter, 189 Mass. 238, 75 N. E. 627.

1 First Nat. Bank of Chattanooga v. Radford Trust Co., 80 Fed. 569; Dester v. Ross, 85 Mich. 370, 48 N. W. 530. See Glens Falls Paper Mill Co. v. Trask, 29 N. Y. App. Div. 449, 51 N. Y. Supp. 977, aff'd 164 N. Y. 604, 58 N. E. 1087. See also Security State Bank v. Gannon, 39 S. D. 232, 163 N. W. 1040.

part in a reorganization of the corporation after such a sale, is estopped, in the absence of fraud, to attack the sale or reorganization as invalid, and sue to set it aside. So where a plan of reorganization is not prohibited by law, one who purchases stock, after the plan is adopted, from a stockholder who voted for such plan, cannot insist that it is ultra vires.3

Bondholders who have joined in a reorganization plan cannot object that the new corporation is created with greater powers than the old company, since they cannot be affected by an enlargement of corporate power. So a minority stockholder who agrees to a transfer of the property of his corporation, upon its insolvency, to another corporation organized by some of the stockholders, in exchange for stock, cannot attack the transfer, especially after the lapse of nearly two years.5

An officer of a corporation who proposes to pay all its debts and form a new corporation in consideration of additional stock, where the proposition is accepted by resolution, cannot attack the validity of the resolution because of the absence of a stockholder who has raised no objection thereto.6

A foreclosure sale will not be set aside on the application of a bondholder who had joined in the reorganization plan, where the purchase was by the committee, because of acts resulting in no injury to him, such as that the committee had purchased bonds from others to stifle competition at the sale, or had let in on the combination other bondholders after the time to join had expired.7

A participating bondholder cannot complain that competition at the foreclosure sale was prevented by the acts of his committee, since the act of his own agent in his interest, and since the effect of such agreements is not to encourage competition but exactly the reverse.

2 Crawshay v. Soutter, 6 Wall. (U. S.) 739, 18 L. Ed. 845; Symmes v. Union Trust Co. of New York, 60 Fed. 830.

A reorganization of a corporation after a foreclosure sale of its property cannot be defeated by one who purchased stock after the plan of reorganization had been adopted and partially carried out, nor by stockholders who approved and subscribed to such plan in respect of part of their stock. Symmes v. Union Trust Co., 60 Fed. 830.

Where a corporation is dissolved, and a new corporation formed, and all the assets of the old corporation, including a surplus, are transferred to the new corporation, a stockholder of the old corporation who receives for his interest an equal number of shares in the new corporation, and who allows the matter to rest after his demand for a share of the surplus is refused, waives any right in such surplus except as a stockholder in the new corporation, and cannot afterwards assert a right thereto when the corporation has become insolvent.9

But one owning both stock of, and unsecured claims against, a company whose property is about to be foreclosed, who assents to a scheme of reorganization which does not on its face show that it unduly provides for the stockholders and does not adequately provide for the unsecured creditors, is not precluded from subsequently claiming that for such reason the property is still chargeable after the sale with his unsecured debt.10

Of course, if the agreement is not to be binding until signed by all the bondholders, it is of no effect until so signed.11

§ 4902. Deposit of securities as making depositor a party. By the deposit of bonds or other securities as provided for in the reorganization agreement, the depositor ordinarily, without more, becomes a party to the agreement; 12 and the receipt for the bonds deposited sometimes itself provides that "by accepting this receipt the holder assents to the terms and provisions of said [reorganization] instrument, and becomes a party thereto." 13

§ 4903. Acceptance of benefits as equivalent to consent. By acquiescence in reorganization proceedings and the acceptance of the benefits accruing therefrom, stockholders or creditors become bound. by the reorganization agreement,14 and cannot thereafter assert the invalidity of the reorganization proceedings.15 Thus a creditor who

9 Boynton v. Roe, 114 Mich. 401, 72 N. W. 257.

10 Kansas City Southern R. Co. v. Guardian Trust Co., 240 U. S. 166, 60 L. Ed. 579, aff 'g 210 Fed. 696 and 201 Fed. 811.

11 Martin v. Somerville Water-Power Co., 3 Wall. Jr. 206, Fed. Cas. No. 9,165.

12 See Central Trust Co. v. Carter, 78 Fed. 225, 230.

13 See Big Creek Gap Coal & Iron Co. v. American Loan & Trust Co., 127 Fed. 625, 634.

14 Farmers' Loan & Trust Co. v. Central Railroad & Banking Co. of Georgia, 120 Fed. 1006; Hunt v. Roosen, 87 Minn. 68, 91 N. W. 259; Treadwell v. United Verde Copper Co., 134 N. Y. App. Div. 394, 119 N. Y. Supp.

112.

15 Creditors who acquiesce in a re