In an action under this section it is no defense to such a liability that the director is also a creditor of the company. Richards v. Croker, 19 Abb. Ñ. C., 73.

A recovery on the ground of the falsity of a report made can not be had upon the allegation of an omission to make and file any report. Whitney Arms Co. v. Barlow, 68 N. Y., 34.

The penalty, imposed by this section, is not incurred simply because of an omission of certain liabilities of the company from the aggregate of indebtedness, though this was known to the trustees at the time the report was made. Butler v. malley, 101 N. Y., 71.

A mere statement by a trustee to a fellow-trustee, that he will have no more to do with the company, can not be construed as a resignation. Kuidberg v. Mudgett, 24 W. Dig., 229. To have such effect, his intention to give up the office should be expressed distinctly and brought home to the corporation. Id.

An action under this section is local and must be tried in the county where the cause of action, or some part thereof, arose. Veeder v. Baker, 80 N. Y., 156. Such cause of action arises in the county where the report was made and filed, though the debt against the company may have originated in another county. Id.

§ 32. Alteration or extension of business.-Any stock corporation heretofore or hereafter organized under any general or special law of this state may extend or alter its business and powers so as to include any purposes and powers which at the time of such extension may have been conferred by law upon corporations engaged in a business of the same general character, or which might be included in the certificate of incorporation of a corporation organizing under any general law of this state for a business of the same general character, by filing in the manner provided for the original certificate of incorporation an amended certificate, executed by a majority of its directors, stating the extension of business and powers and rights proposed, and that the same has been duly authorized by a vote of stockholders representing at least three-fifths of the capital stock, at a meeting of the stockholders called for the purpose in the manner provided in section forty-five of this chapter, and a copy of the proceedings of such meeting, verified by the affidavit of one of the directors present thereat, shall be filed with such amended certificate.

§33. Sale of franchise and property.-A stock corporation, except a railroad corporation and except as otherwise provided by law, with the consent of twothirds of its stock, may sell and convey its property, rights, privileges and franchises, or any interest therein or any part thereof to a domestic corporation, engaged in a business of the same general character, or which might be included in the certificate of incorporation of a corporation organizing under any general law of this state for a business of the same general character; and such sale and conveyance shall vest the rights, property and franchises thereby transferred in the corporation to which they are conveyed for the term of its corporate existence, subject to the provisions and restrictions applicable to the corporation conveying them. Before such sale or conveyance shall be made such consent shall be ob tained at a meeting of the stockholders called upon like notice as that required for an annual meeting. If any stockholder not voting in favor of such proposed sale or conveyance shall at such meeting, or within twenty days thereafter object to such sale, and demand payment for his stock, he may, within sixty days after such meeting apply to the supreme court at any special term thereof held in the district in which the principal place of business of such corporation is situated, upon eight days notice to the corporation, for the appointment of three persons to appraise the value of such stock, and the court shall appoint three such ap praisers, and designate the time and place of their proceedings as shall be deemed proper, and also direct the manner in which payment for such stock shall be made to such stockholder. The court may fill any vacancy in the board of appraisers occurring by refusal or neglect to serve or otherwise. The appraisers shall meet at the time and place designated, and they or any two of them, after being duly sworn honestly and faithfully to discharge their duties, shall estimate and certify the value of such stock at the time of such dissent, and deliver one copy to such corporation, and another to such stockholder if demanded; the charges and ex penses of the appraisers shall be paid by the corporation. When the corporation shall have paid the amount of such appraisal, as directed by the court, such stockholders shall cease to have any interest in such stock and in the corporate

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property of such corporation and such stock may be held or disposed of by such corporation.

Added by chap. 638 of 1893.

ARTICLE III.

STOCK; STOCKHOLDERS, THEIR RIGHTS AND LIABILITIES.

SECTION 40. Issue and transfers of stock.

41. Subscriptions to stock.

42. Consideration for issue of stock and bonds.

43. Time of payment of subscriptions to stock.

44. Increase or reduction of capital stock.

45. Notice of meeting to increase or reduce capital stock.

46. Conduct of such meeting; certificate of increase or reduction.

47. Preferred and common stock.

48. Prohibited transfers to officers or stockholders.

49. Payment by stockholders of mortgage debt pending foreclosure.

50. Application to court to order issue of new in place of lost certificate of stock. 51. Order of court upon such application.

52. Financial statement to stockholders.

53. Stock books of foreign corporation.

54 Liabilities of stockholders.

55. Limitation of stockholder's liability.

56. Increase or reduction of number of shares.

57. Voluntary dissolution.

58. Merger.

59. Change of place of business.

60. Liability of officers, directors and stockholders of foreign corporations. 40. Issue and transfers of stock. The stock of every stock corporation shall be represented by certificates prepared by the directors and signed by the president or vice-president and secretary or treasurer and sealed with the seal of the corporation, and shall be transferable in the manner prescribed in this chapter and in the bylaws. No share shall be transferable until all previous calls thereon shall have been fully paid in.

Any stock corporation, domestic or foreign, now existing or hereafter organized, except monied corporations, may purchase, acquire, hold and dispose of the stocks, bonds and other evidences of indebtedness of any corporation, domestic or foreign, and issue in exchange therefor its stock, bonds or other obligations if authorized so to do by a provision in the certificate of incorporation of such stock corporation, or in any certificate amendatory thereof or supplementary thereto, filed in pursuance of law, or if the corporation whose stock is so purchased, acquired, held or disposed of, is engaged in a business similar to that of such stock corporation, or engaged in the manufacture, use or sale of the property, or in the construction or operation of works necessary or useful in the business of such stock corporation, or in which or in connection with which the manufactured articles, product or property of such stock corporation are or may be used, or is a corporation with which such stock corporation is or may be authorized to consolidate. When any such corporation shall be a stockholder in any other corporation, as herein provided, its president or other officers shall be eligible to the office of director of such corporation, the same as if they were individually stockholders therein and the corporation holding such stock shall possess and exercise in respect thereof, all the rights, powers and privileges of individual owners or holders of such stock.

Any stock corporation may, in pursuance of a unanimous vote of its stockholders voting at a special meeting called for that purpose by notice in writing signed by a majority of the directors of such corporation stating the time and place and object of the meeting, and served upon each stockholder appearing as such upon the books of the corporation, personally or by mail at his last known postoffice address at least sixty days prior to such meeting, guarantee the bonds of any other domestic corporation engaged in the same general line of business. Former section 40 amended.

See section 7, chap. 67 of 1811; section 8, chap. 40 of 1848, and section 12, chap. 6:1 of 1875, now repealed.

The capital stock is the money contributed by the corporators to the capital. and is usually represented by shares issued to the subscribers to the stock on the initiation of the corporate enterprise. Christensen v. Eno, 106 N. Y., 97; Burrall

. Bushwick R. R. Co., 75 id., 211.

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A person who subscribes regularly to the stock of a corporation becomes a stockholder in virtue of his subscription, and especially so after he has paid a portion of his subscription. Spear &. Crawford, 14 Wend., 20; Lathrop v. Kneeland. 46 Barb., 432.

Where the whole capital stock has been subscribed for and taken at the time the articles of incorporation were filed, no person, by merely writing his name in the corporation book and affixing a number of shares opposite thereto, can acquire a right to any shares of stock, or become, by such act, a stockholder of the cor poration, and as such liable for its debts. Lathrop v. Kneeland, ante. In such case, no person can become a stockholder, except by purchase from an original subscriber, or his assignee, and by assignment of stock.” Id.

A subscription to the certificate of incorporation only by placing opposite to his signature the number of shares taken by him, is sufficient as a subscription. Phoenix W. Co. v. Badger, 6 Hun, 293; aff'd 67 N. Y., 294; Buffalo, etc., Co. v. Dudley, 14 id., 336; Lake Ontario, etc., Co. v. Mason, 16 id., 451; Dayton v. Borst, 31 id., 435 note.

The payment for stock, and the right to receive the certificates therefor, make the subscriber or purchaser a stockholder in the corporation, to the extent of the stock he is entitled to receive. De Caumont v. Bogart, 36 Hun, 382; Rutter v. Kilpatrick, 63 N. Y., 606. He is in a position to assign his right to receive the cer tificate. Id.; Robinson v. National Bk., etc., 95 N. Y., 637.

The effect of a certificate of unpaid stock in a corporation, created for the private benefit of its projectors, is to give the holder a title conditional upon his making further payments, if called, but leaves such payments optional with him. Seymour v. Sturgess, 26 N. Y., 134.

Stock certificates executed, though not detached, are sufficiently issued. Halstead v. Dodge, 51 Supr., 169.

Any contract of subscription, good and valid at common law, is still valid, notwithstanding this section. Buffalo & J. R. R. Co. v. Gifford, 87 N. Y., 294.

A call for payment, is sufficient notice that a sufficient amount of stock has been subscribed. Harlem C. Co. v. Seixas, 2 Hall, 504.

Christensen v. Eno, ante.

The unissued shares of a corporation are not assets. The right to sell shares is a personal one, to be enjoyed and exercised in severalty by the stockholders of a corporation. Campbell v. American Zylonite Co., 122 N. Y., 455.

Certificates may be transferred in blank, and the holder may fill in his name. Com. Bk. v. Kortright, 22 Wend., 848; Leavitt v. Fisher, 4 Duer, 1.

The liability of a shareholder to pay for stock does not arise out of his relation. Christensen v. Eno, ante. It depends upon his contract, express or implied, or upon some statute. Id. In the absence of either of these grounds of liability, & person to whom shares have been issued as a gratuity, has not, by accepting them, committed any wrong upon creditors, or made himself liable to pay the nominal face of the shares as upon a subscription or contract. Id.; Seymour t Sturgess, ante.

Presence of the first election, election as a director thereat, and acting as a member of the board will estop a subscriber from objecting, in an action against him by the company, to the validity of its organization, on the ground that no notice of such election was given, and that some of the subscribers did not attend. Schenectady, etc., Co. v. Thatcher, 11 N. Y., 102; see also, Phoenix W. Co. v. Badger, 6 Hun, 293; Buffalo, etc., Co. v. Cary, 26 N. Y., 75; Dorris v. French, 4 Hun, 292; White v. Coventry, 29 Barb., 305; Cooper v. Shaver, 41 id., 151; Knowlton v. Congress, etc., E. S. Co., 57 N. Y., 331.

A corporation can not purchase or deal in stocks of other corporations, unless expressly authorized by law so to do. Holmes & G. Mfg. Co. v. Holmes & W. M. Co., 127 N. Y., 352; 38 N. Y. St. Rep., 155; Talmage v. Pell, 7 N. Y., 328; Berry v. Yates, 24 Barb., 200; Milbank v. N. Y., L. E. & W. R. Co., 64 How., 20; Mechanics' M. S. Bk. v. Meriden A. Co., 24 Conn., 159; Central R. R. Co. v. Penn. R. R Co., 31 N. J. Eq. 475; Hazlehurst v. Savannah R. R. Co., 43 Ga., 57; Valley R. R. Co. v. Lake Erie I. Co., 18 N. E. Rep. 486; People v. Chicago G. T. Co, 130 Ill., 268; Franklin Co. v. Lewiston Inst., 68 Me. 43; Hill v. Nesbet, 100 Ind., 341. But it may take title to all kinds of property, even the stock of another company, in the payment of a debt. Id.; Kent . Quicksilver M. Co., 78 N. Y., 159; Treadwell v. S. M. Co., 7 Gray, 393; Howe . Boston C. Co., 16 id., 493 : Hodges v. N. E. S. Co., 1 R. L., 312; State v. Western I. C. Co., 40 Kan., 96; Leathers v. Janney, 41 La. Ann., 1120; Hibernia Ins. Co. v. St. Louis, etc., 13 Fest. Rep., 516; Taylor v. North S. G. M. Co., 79 Cal., 285; Miners' D. Co. v. Zellerbach, 37 id., 543; State v. Butler, 86 Tenn., 614; Palmer v. Cypress H Cem., 122 N. Y., 429.

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Stockholder in corporation has an insurable interest in corporate property. Riggs v. Com. Ins. Co., 125 N. Y., 7.

§ 41. Subscriptions to stock.—If the whole capital stock shall not have been subscribed at the time of filing the certificate of incorporation, the directors named in the certificate may open books of subscription to fill up the capital stock in such places, and after giving such notices as they may deem expedient, and may continue to receive subscriptions until the whole capital stock is subscribed. At the time of subscribing, every subscriber, whose subscription is payable in money, shall pay to the directors ten per centum upon the amount subscribed by him in cash, and no such subscription shall be received or taken without such payment.

Former section 41 amended.

See section 5, chap. 611 of 1875, now repealed.

This section does not point out how, or where the books of subscription shall be opened, or what kind of books shall be used. Buffalo & J. R. R. Co. v. Gifford, 87 N. Y., 294. Every purpose of the statute is satisfied, if the directors adopt a book which some one else has provided. Id.

A subscription of the whole amount of stock is never held a condition precedent to a legal corporate existence, except when it is made so by the act of incorporation. Schenectady, etc., Co. v. Thatcher, 11 N. Y., 102.

The directors have authority to require payment of subscriptions for stock before the whole capital is subscribed. Id.

In actions upon unpaid subscriptions for stock, and against assignees of stock not fully paid for, courts have respect to the terms of the contract and certificate, and the circumstances of the case. Seymour v. Sturges, 26 N. Y., 141; Billings v. Robinson, 94 id., 415.

Each subscription constitutes a separate and independent agreement, and, in the absence of proof, there can be no presumption that a person was induced to subscribe because another had done so. Whittlesey v. Frantz, 74 N. Y., 456.

In the absence of statutory restriction, a corporation has power to receive payment otherwise than in money for a subscription to its capital stock. Williams . W. U. T. Co., 9 Abb. N. C., 437; East N. Y., etc., R. R. Co. v. Lighthall, 5 Abb., N. S., 458; Barry v. Mer. Ex. Co., 1 Sandf. Ch., 280; De Groff v. Am. L. I. Co, 21 N. Y., 124.

The language employed in the enactment of this section can be satisfied only by & payment in cash or its actual equivalent. Excelsior G. B. Co. v. Stayner, 25 Hun, 91; 61 How., 456; 12 W. Dig., 536. In no proper sense can the unpaid or uncertified check of the subscriber be accepted or regarded as cash. Id. See Durant v. Abendroth, 69 N. Y., 148; Beach v. Smith, 30 id., 116. If the payment is not so made, the party can not become a subscriber. Excelsior G. B. Co. v. Stayner, ante. He can not acquire in any other way a right to the stock, nor can the formal terms of the contract, made for the payment of its price, be enforced against him. Id. The next section (42) renders void all stock issued in violation of its provisions. See Jenkins v. Union Turnpike Co., 1 Caine's Cases, 86; President, etc., Hurtiss, 9 Johns., 217; Same v. McKean, 11 id., 98; Rensselaer, etc., Co. v. Barton, 16 N. Y., 457 note; Black River, etc., Co. v. Clarke, 25 id.,

208.

The subscription and the payment of the ten per cent. must both concur to make a valid subscription. Excelsior G. B. Co. v. Stayner, ante. Actual pay ment at any period after subscription, with intent to effectuate and complete it, will satisfy the statute. Id.

A subscription unaccompanied by the required ten per cent. is void under this section. Perry v. Hoadley, 19 Abb. N. C., 76.

In the absence of the provisions that nothing but cash shall be considered as payment of capital, and that, if stock is issued for property, it must be so specified, a general statement that so much capital had been paid in would not, in com

mon parlance, be very far from correct, even though the capital had not been all paid in cash. Pier v. Hanmore, 86 N. Y., 95. The former law contained these provisions, but the present act has omitted them.

Where a corporation procures an alteration to be made in its charter by which a new and different business is superadded to that originally contemplated, such of the stockholders as do not assent to the alteration will be absolved from liability on their subscriptions to the capital stock. Hartford & N. H. R. R. Co., 5 Hill, 383. Especially if the alteration is one plainly prejudicial to their interests. Id. Subscriber to capital stock is not entitled to certificate, until full payment, nor to receive certificate of consolidated stock in exchange therefor. Babcock v. Schuylkill v. L. V. R. R. Co., 39 N. Y. St. Rep., 506.

§ 42. Consideration for issue of stock and bonds.-No corporation shall issue either stock or bonds except for money, labor done or property actually received for the use and lawful purposes of such corporation. No such stock shall be issued for less than its par value. No such bonds shall be issued for less than the fair market value thereof.

Former section 42 amended.

See section 14, chap. 40 of 1848, and section 14, chap. 611 of 1875, now repealed. The company can not issue its stock as full paid at anything less than par value. Gamble v. Queens Co. W. Co., 123 N. Y., 93. The amount of the nominal or par value of the stock must be put against the value of the property purchased. Id. This section contemplates clearly that only the amount of the stock as named in the scrip is to be issued to the amount of the value of the property, and is there to be regarded as full paid stock. Id.

The fair value contemplated by this section is that of the property at the time of the sale. Huntington v. Attrill, 118 N. Y., 365; Hatch v. Same, id., 383. This constitutes the consideration, upon which the subscription to the capital stock of the company, is satisfied. Id.

When directors have power to issue stock for accounts. Gurney v. W. T. & S. Co., 57 Supr., 444.

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The application upon his stock of an account for services rendered in constructing furnaces for the company by a subscriber for original stock, is a payment in money the meaning of this section. Veeder v. Mudgett, 95 N. Y., 295.

A corporation may issue stock for portion of purchase price, and may pay in cash or issue bonds for balance. Gamble v. Queens C. W. Co., ante.

§ 43. Time of payment of subscriptions to stock.—Subscriptions to the capital stock of a corporation shall be paid at such times and in such installments as the board of directors may by resolution require. If default shall be made in the payment of any installment as required by such resolution, the board may declare the stock and all previous payments thereon forfeited for the use of the corporation, after the expiration of sixty days from the service on the defaulting stockholder, personally or by mail directed to him at his last known post-office address, of a written notice requiring him to make payment within sixty days from the service of the notice at a place specified therein, and stating that, in case of failure to do so, his stock and all previous payments thereon will be forfeited for the use of the corporation.

Such stock, if forfeited, may be reissued or subscriptions therefor may be received as in the case of stock not issued or subscribed for. If not sold for its par value or subscribed for within six months after such