the nominal capital to an amount which shall correspond with its actual value, rather than a withdrawal and distribution of actual capital. Id. See Seeley v. N. Y. Nat. Ex. Bk., 8 Daly, 400; aff'd 78 N. Y., 608.

There was no provision in the former law for returning any portion of the actual capital held by the company to the stockholders, nor for any inquiry into the financial condition of the company, beyond the fact how much of the capital was paid in and the amount of its debts not secured by trust mortgages. Strong v. Brooklyn C.-T. R. R. Co., ante. But the above section (46) provides that in case the capital stock is reduced, the amount of capital over and above the amount of the reduced capital shall be returned to the stockholders pro rata at such times and in such manner as the directors shall determine.

To authorize such a distribution, if the original capital has been paid in, it should appear that the capital so paid in has not been impaired; and, if it has been impaired, it should appear that the corporation still has on hand actual capital, available for the payment of debts, exceeding the amount to which it has reduced its capital. Strong v. Brooklyn C.-T. R. R. Co., id. If it has, the excess only ought to be distributed. Id.

The surplus, which a corporation, in such case, is at liberty to pay to its stockholders, must, in every case, be ascertained, and depends upon the result of an examination into its affairs, and not upon the difference between the original amount of capital and the reduced amount. Id. Whenever the corporation, by sales of property, or by means of earnings, or otherwise, comes in possession of funds which are in excess of the reduced amount fixed as capital, it can distribute that excess without violating any law. Id.

Upon the increase of the capital of a corporation, the trustees, in disposing of the increased stock, are to be considered as trustees for those holding shares of the original stock, and it is their duty to so dispose of them that as much value as possible shall be returned to the corporation for its business purposes. v. W. U. T. Co., 9 Abb. N. C., 419.

Williams

§ 47. Preferred and common stock. Every domestic stock corporation may have preferred and common stock, and different classes of preferred stock, if the certificate of incorporation so provides or by the unanimous consent of the stockholders, and may, upon the written request of the holder of any preferred stock, by a two-thirds vote of its directors, exchange the same for common stock, and issue certificates for common stock therefor, share for share, or upon such other valuation as may have been agreed upon in the scheme for the organization of such corporation, or the issue of such preferred stock, but the total amount of such capital stock shall not be increased thereby.

Former section 47 amended.

See section 1, chap. 225 of 1880, now repealed.

There is no power in a corporate body, nor in a majority of the stockholders, to provide by a by-law for the creation of a preferred stock, so as to bind a minority of the stockholders not assenting thereto. Kent v. Quicksilver M. Co., 78 N. Y.,

159.

A corporation may begin its corporate action by classifying the shares in its capital stock, with peculiar privileges to one share over another, and thus offer its stock to the public for subscriptions thereto. Id.

of

§ 48. Prohibited transfers to officers or stockholders. No corporation which shall have refused to pay any of its notes or other obligations when due, in lawful money of the United States, nor any its officers or directors, shall transfer any of its property to any of its officers, directors or stockholders, directly or indirectly, for the payment of any debt, or upon any other consideration than the full value

of the property paid in cash. No conveyance, assignment or transfer of any property of any such corporation by it or by any officer, director or stockholder thereof, nor any payment made, judgment suffered, lien created or security given by it or by any officer, director or stockholder when the corporation is insolvent or its insolvency is imminent, with the intent of giving a preference to any particular creditor over other creditors of the corporation shall be valid.

Every person receiving by means of any such prohibited act or deed any property of the corporation shall be bound to account therefor to its creditors or stockholders or other trustees.

No stockholder of any such corporation shall make any transfer or assignment of his stock therein to any person in contemplation of its insolvency. Every transfer or assignment or other act done in violation of the foregoing provisions of this section shall be void.

No conveyance, assignment or transfer of any property of a corporation formed under or subject to the banking law, exceeding in value one thousand dollars shall be made by such corporation, or by any officer or director thereof, unless authorized by a previous resolution of its board of directors, except promissory notes or other evidences of debt issued or received by the officers of the corporation in the transaction of its ordinary business and except payments in specie or other current money or in bank bills made by such officers. No such conveyance, assignment or transfer shall be void in the hands of a purchaser for a valuable consideration without notice.

Every director or officer of a corporation who shall violate or be concerned in violating any provision of this section, shall be personally liable to the creditors and stockholders of the corporation of which he shall be director or an officer to the full extent of any loss they may respectfully sustain by such violation.

Former section 48 amended.

The provisions of this section are intended as a restraint on the action of the directors and officers of the company and of them only. Kingsley v. First Nat. Bk., 31 Hun, 329. They do not control or direct the action of creditors, who may seek to collect or secure payment of their debts against the corporation. Id.

This section declares the assignment on transfer void, in case the same is made in contemplation of insolvency. Id. The simple question is, was there actual or contemplated insolvency and a transfer of property for the benefit of creditors. Id.; Brouwer v. Harbeck, 9 N. Y., 589; Harris v. Thompson, 15 Barb., 62· Robinson v. Bk. of Attica, 21 N. Y., 406; Dutcher v. I. & T. Bk.. 59 id., 5; Matter of Hurst, 7 Wend., 239. An offer by a corporation to allow a judgment to be taken against it, is an unlawful transfer of its property within the meaning of this section. Id. Under such circumstances, a stockholder or director can not enter a judgment against the company. Id.

This section does not render void payments made in the ordinary and usual course of business by a corporation insolvent to the knowledge of its officers, to a debtor who is wholly ignorant of its financial condition. Dutcher v. I. & T. Nat. Bk., 59 N. Y., 5.

The payment of a debt to a bona fide creditor is prohibited by this section, equally with a general transfer of property, or an assignment in trust for creditors. Robinson v. Bank of Attica, 21 N. Y., 406.

A transfer is in contemplation of insolvency, as well where the insolvency actually exists as where it is anticipated. Id.

This section makes the question depend upon what was passing in the minds of the officers of the company when the transfer is made. Paulding v. Chrome Steel Co., 94 N. Y., 334. Where they execute a mortgage in pursuance of a previous contract, by which the company is bound, either in law, equity or other wise, under such circumstances that it can not have a choice, the condition of insolvency becomes of no moment, for it was not in contemplation, or in their minds. Id.

The transfer, by an insolvent bank, of drafts for over $1,000 in the aggregate, is prohibited, though no one draft is of that value. Atchison v. Rochester P. Co,, 114 N. Y., 168. The fraud of the officers gives the depositor no preference over other creditors, unless he can identify the property. Id. The collection of the balance from such depositor by the receiver, in ignorance of such unlawful preference, does not operate to release from liability to account for such preference. Id. The transfer is illegal if made without consideration and not in the usual course of business, without regard to the intent or ignorance of the transferrer. Id. In such case, the question of the bona fides is not one of the jury. Id.

Directors of insolvent corporation can not effect equality of distribution by abuse of forms of law. Nat. B. Bk. v. W. M. Co., 59 Hun, 470.

Sequestration proceedings, used for this purpose, constitute transfer in contemplation of insolvency. Id.

They can not, by such means, prevent honest creditor from obtaining preference, to which his diligence entitles him. Id.

Director of insolvent corporation can not secure preference over other creditors by attachment. Throop v. H. L. Co., 125 N. Y., 530.

Trustee and stockholder of insolvent corporation can not, as creditor, attach its property. Throop v. Hatch L. Co., 58 Hun, 149.

Malfeasance of co-trustees does not remove disability. Id.

Attempt by creditor, who is also stockholder and director of corporation, to obtain preference by action at law, with co-operation or his associates, amounts to unlawful preference by way of assignment, in contemplation of insolvency. King v. Union Ï. Co., 33 N. Y. St. Rep., 545.

Where there was no actual ntent to defraud creditors, no judgment by way of punishment should be given. Id.

Judgment entered on offer of insolvent corporation is void. Braem v. Merchants' Nat. Bk., 40 N. Y. St. Rep., 327.

Insolvent corporation may suffer judgment to be taken by default. Varnum v. Hart, 119 N. Y., 101.

Failure of officer to disclose service of summons does not violate statute. Id. Judgments against insolvent corporation are not void, unless recovered by active procurement of officer of such corporation. Dixon v. Mayer, 35 N. Y. St. Rep., 482.

Conveyance of message by president from his wife to attorney to commence suit, does not establish violation of statute. Id.

Bill of sale given by manufacturing corporation in contemplation of insolvency and with intent to create preference, is void. Keiley v. Mechanics' & T. Bank, 39 N. Y. St. Rep., 438.

Insolvent corporation can not sell out its property in order to commit suicide, whether in good or bad faith. Cole v. M. I. Co., 38 N. Y. St. Rep., 34.

When officer of insolvent and purchasing corporations are same, sale should not stand. Id.

Knowledge of officers in such case is sufficient to put defendant upon inquiry. Id. Bondholders, with notice of creditor's equity, can not claim any lien under mortgage as against creditor. Id.

What is proper remedy of creditor under the circumstances. Id.

No notice to Attorney-General need be given of application for appointment of new trustee of insolvent insurance company, in place of trustee appointed under act of 1814. Matter of Gay; Matter of Columbian Ins. Co. (Sup. Ct., 1889), 21, 346; 21 N. Y. St. Rep., 346.

Purpose of act of 1883, defined. Id.

Creditor can not prove both original debt and security therefor, against insolvent corporation. People v. E. Remington & Sons, 54 Hun, 480; Varnum v. Hart, 6 N. Y. Supp., 346; Brower v. Harbeck, 9 N. Y., 589; Kingsley v. Bank, 31 Hun, 329.

§ 49. Payment by stockholders of mortgage debt pending foreclosure. Whenever default shall be made by any corporation in the payment of principal or interest of any of its bonds secured by mortgage or deed of trust of its property, any stockholder may at any time during the pendency of the foreclosure of such mortgage or deed of trust and before the sale thereunder pay to the mortgagees or grantees in such mortgage or deed, for the use and benefit of the holders of such bonds, a sum equal to such proportion of the amount due and secured to be paid by such mortgage or deed, as his stock in such corporation shall bear to its whole capital stock, and on making such payment he shall to the extent thereof become and be interested in such mortgage or deed and protected thereby.

Former section 49 without change.

§ 50. Application to court to order issue of new in place of lost certificate of stock. The owner of a lost or destroyed certificate of stock, if the corporation shall refuse to issue a new certificate in place thereof, may apply to the supreme court, at any special term held in the district where he resides, or in which the principal business office of the corporation is located, for an order requiring the corporation to show cause why it should not be required to issue a new certificate in place of the one lost or destroyed. The application shall be by petition, duly verified by the owner, stating the name of the corporation, the number and date of the certificate, if known, or if it can be ascertained by the petitioner; the number of shares named therein, to whom issued, and as particular a statement of the circumstances attending such loss or destruction as the petitioner can give. Upon the presentation of the petition the court shall make an order requiring the corporation to show cause, at a time and place therein mentioned, why it should not issue a new certificate of stock in place of the one described in the petition. A copy of the petition and order shall be served on the president or other head of the corporation, or on the secretary or treasurer thereof, personally, at least ten days before the time for showing cause.

Former section 50 amended.

See section 1, chap. 151 of 1873, now repealed.

To confer upon the court jurisdiction to make an order in a proceeding instituted under this section, it must be proved that the petitioner is the owner of the shares, and that the certificate for such shares has been lost or destroyed and can not, after due diligence, be found. Matter of Biglin v. Friendship Ass'n, 46 Hun, 223; 27 W. Dig., 302. See Brisbane v. D. L. & W. R. R. Co., 25 Hun, 438; aff'd 94 N.

Y., 204.

A corporation, which has permitted a transfer of stock owned by a stockholder upon a forged power of attorney, and has canceled the original certificates, may be compelled to issue new certificates, and if it has no shares which it can issue, to pay the value thereof. Pollock v. National Bk., 7 N. Y., 274.

§ 51. Order of court upon such application.-Upon the return

of the order, with proof of due service thereof, the court shall, in a summary manner, and in such mode as it may deem advisable, inquire into the truth of the facts stated in the petition, and hear the proofs and allegations of the parties in regard thereto, and if satisfied that the petitioner is the lawful owner of the number of shares, or any part thereof, described in the petition, and that the certificate therefor has been lost or destroyed, and can not after due diligence be found, and that no sufficient cause has been shown why a new certificate should not be issued, it shall make an order requiring the torporation, within such time as shall be therein designated, to issue and deliver to the petitioner a new certificate for the number of shares specified in the order, upon depositing such security, or filing a bond in such form and with such sureties as to the court shall appear sufficient to indemnify any person other than the petitioner who shall thereafter be found to be the lawful owner of the certificate lost or destroyed; and the court may direct the publication of such notice, either before or after making such order as it shall deem proper. Any person claiming any rights under the certificates alledged to have been lost or destroyed shall have recourse to such indemnity, and the corporation shall be discharged from all liability to such person upon compliance with such order; and obedience to the order may be enforced by attachment against the officer or officers of the corporation on proof of his or their refusal to comply with it.

Former section 51 without change.

See section 2, chap. 151 of 1873, now repealed.

§ 52. Financial statement to stockholders.-Stockholders owning five per centum of the capital stock of any corporation other than a monied corporation, not exceeding one hundred thousand dollars, or three per centum where it exceeds one hundred thousand dollars, may make a written request to the treasurer or chief fiscal officer thereof, for a statement of its affairs, under oath, embracing a particular ac count of all its assets and liabilities, and the treasurer shall make such statement and deliver it to the person presenting the request within thirty days thereafter, and keep on file for twelve months thereafter a copy of such statement, which shall at all times during business hours be exhibited to any stockholder demanding an examination thereof; but the treasurer or such chief fiscal officer shall not be required to deliver more than one such statement in any one year. The supreme court, or any justice thereof, may upon application, for good cause shown, extend the time for making and delivering such certificate. For every neglect or refusal of the treasurer or other chief fiscal officer thereof to comply with the provisions of this section he shall forfeit and pay to the person making such request the sum of fifty dollars, and the