intended was to require that all preferences, tract contained in the certificate of incorpoor special privileges to be conferred upon ration. Section 86 does not say that the preany class of stock be set forth in the cer- ferred stockholders shall be paid the par tificate of incorporation. If they did not in- value of their stock with the unpaid divitend this result, it would have been unneces- dends that may have accrued thereon. It sary to require, by section 8, that the cer- requires only that the preferred stock shall tificate should set forth the terms on which be paid in preference to the general stockthe respective classes of stock were created; holders, and that means that they shall be and it was probably because they intended paid so much, and so much only, as their The amount of the that the stock should not have any other contract gives them. preference that in section 18, in attempting surplus to be paid to the general stockholdto define the rights of preferred or special ers is not necessarily the amount that may stockholders, they limited the special rights be left after paying the preferred stockor special restrictions to such preferences holders the par value of their stock. It and voting powers or restrictions or qualifi- may just as well mean the surplus that is cations thereof "as shall be stated or express- left after paying them the amount to which ed in the certificate of incorporation." The they are entitled by their contract. Nor is power to create preferred stock is granted by any difficulty presented where the terms of section 18, and it is granted upon the terms the contract entitle the preferred stockholdset forth in that section. To enact that the er to a preference in dividends only. In this case, which, as Vice Chancellor Van stock should have such preference as is stat ed or expressed in the certificate was equiv alent to enacting that it should have no other preference, upon the general principle of interpretation that the expression of one thing is the exclusion of another. The very fact that section 18 provided for more than one class of preferred or special stock leads to the same conclusion, for it can hardly be claimed that the rights of more than one kind of preferred stock would be determined by the language of section 86 standing alone. That section is a survival of legislation going back to the early days of corporations in this state, at a time when only one class of preferred stockholders was authorized. Such is not now the case. Under the present act it is possible, for example, to issue what are called sometimes "founders' shares." Unless the rights of such shares are determined by the certificate of incorporation, they cannot be determined by the provisions of section 86, and the same reasoning is applicable to other classes of shares (aside from the ordinary preferred shares) which are issued by modern corporations. We recognize the necessity of construing the several sections of the act so as to give effect to each and to all the language of each. We think that can well be done. Section 86 is still necessary, notwithstanding the changes made in 1896, in order to cover the case of corporations existing under special chart. ers, or corporations under the general acts prior to 1896. A greater difficulty, perhaps, is presented by the provision of section 86 that the surplus funds, after payment of creditors, costs, expenses, and allowances, and the preferred stockholders, shall be paid to the general stockholders proportionally according to their respective shares. It requires no strained construction, however, to hold that this provision as to the payment of preferred stockholders in preference to the general stockholders is a payment to them, not of the par value of their stock, but of the amount to which they are en Fleet said, and as the authorities show, was the ordinary case, in the absence of such a provision as that contained in secgeneral stockholders would share pro rata tion 86, the preferred stockholders and the in the distribution of assets after the payment of dividends due the preferred stockholders. That such would be the rule is well illustrated by a thoroughly considered case in the English courts, which presented the novel situation of a fund upon dissolution of a corporation sufficient to pay not only the debts and the amount invested by the preferred and common stockholders, but to leave a large surplus for distribution. In that case the preferred stock had been fully paid up to the extent of £10 per share. The common stock had been paid for only to the extent of £3 10s. per £10-share. It was held in the court of first instance and in the court of appeal that after paying to each preferred stockholder £10 per share, and to each common stockholder £3 10s. per share, the surplus should be divided among all the stockholders, preferred and common, in proportion to the amount of money actually contributed by each. The common stockholders insisted that the whole of this surplus was profits, and that, as they were entitled to all of the profits after paying the 5 per cent. to the preferred stockholders, they were entitled to the whole of the fund. The court, however, held that this position was untenable, and that the rule contended for by the common stockholders applied only to annual profits, and not to the large profits arising from the sale of the property of the corporation. In this respect the decree was affirmed by the House of Lords, but it was there held that the surplus should be divided among the stockholders in proportion to the number of shares held by each, and not in proportion to the amount contributed by each. In re Bridgewater Navigation Co., L. R. 39 Chancery Division, 1, 57 L. J. Ch. Div. 809, 14 Appeal Cases, 525, 59 L. R. Ch. Div. 122. We see no rea same rule should not be applicable under | ferred stockholders, the question in any parsection 86, and the amount to be paid to the ticular case is whether they have in fact preferred stockholders in such a case would done so. When they have undertaken, as be, first, what they were entitled to under in this case, to set forth the preference to the certificate of organization, and, second, which preferred stock is entitled, we think their proportional share of the remaining that they must set forth that preference fulassets. The surplus, after making that pay- ly, and that, so far as they fail to express a ment, would, by the terms of section 86, be- preference, the preferred stock can have no long to the general stockholders. other rights than the common stock. The decree must be reversed, with costs, and the record remitted to the Court of Chancery for further proceedings therein in conformity with this opinion. GARRISON, J., dissents. See 72 Atl. 440. (75 N. J. E. 245) Section 18 provides that in case of insolvency the debts or other liabilities shall be paid in preference to the preferred stock. With our present notions of the character of stock, such a provision seems unnecessary, and, unless explained, it might be supposed that it implied that preferred stockholders were to be paid as creditors next after the debts. We think, however, that there is an explanation of the insertion of this provision in the act of 1875 growing out of the efforts that had been made in other jurisdictions to give preferred stock more the (Court of Errors and Appeals of New Jersey. character of a security for money loaned than of an investment in the business subject to the ordinary hazards. Attempts to give preferred stockholders the status of creditors rather than of shareholders are re ferred to in Cook on Corporations (3d Ed.) § 271. Some of these efforts were directed to securing a dividend to the preferred stockholder whether profits were made or not; some were directed to securing him by way of mortgage. Taft v. Hartford, Providence & Fishkill R. Co., 8 R. I. 310, 5 Am. Rep. 575; Lockhart v. Van Alstein, 31 Mich. 76, 18 Am. Rep. 156; Chaffee v. Rutland, &c., R. Co., 55 Vt. 110; Warren v. King, 108 U. S. 389, 2 Sup. Ct. 789, 27 L. Ed. 769; Miller v. Ratterman, 47 Ohio, 141, 24 N. E. 496. In view of these cases, it is not surprising that the Legislature inserted the clause in question in the act of 1875, and has retained it in the act of 1896. The effect of it is to prevent the incorporators from giving the preferred stockholders a claim superior to that of creditors by an insertion of a provision to that effect in the certificate of organization, and in that respect this clause still serves a useful purpose. STATE COUNCIL OF JUNIOR ORDER OF March 1, 1909.) BENEFICIAL ASSOCIATIONS (§ 16*)-PROPERTY A beneficiary order was organized into national council, state councils, and subordinate councils. By the scheme of the order, the funds contributed by the individual members were paid to the subordinate councils, and a small sum for expenses only paid each year to the state council, part of which was for the expenses of the national council. The constitution, by-laws, and permission to organize the subordinate council contained provisions that upon dissolution of the subordinate council its property should be forfeited. After a severance of relations between the national council and the state council, one of the subordinate councils remained true to its allegiance to the national council, retained its organization, and continued its operations as before. Held that, under the circumstances. the state council could not by its own act work a forfeiture of the property of the subordinate council. [Ed. Note.-For other cases, see Beneficial Associations, Dec. Dig. 16.*] (Syllabus by the Court.) Appeal from Court of Chancery. Bill by the State Council of the Junior Order of the United American Mechanics of the State of New Jersey against Enterprise Council No. 6. Decree (67 Atl. 432) for plaintiff, and defendant appeals. Reversed. It is important that investors in a corporation should be able to ascertain their rights by an examination of the certificate, and it was no doubt with that end in view that the Legislature made the changes in the The bill was filed for a discovery and acact of 1875 which now appear in section 8 count of the assets in the hands of the deand section 18. It is true, as was forcibly fendant, and a decree that the complainant argued on behalf of the respondents, that it was the owner of the same, and requiring can hardly be that all of the rights of pre- the defendant to deliver all of their propferred stockholders need be set forth in the erty to the complainant. The history of the certificate of organization, but this fact does organization is set forth in the opinion of not require that we should hold that the Vice Chancellor Pitney in State Council v. certificate of organization cannot limit such National Council, 71 N. J. Eq. 433, 437, 64 rights. Manifestly it can, for, if it were Atl. 561, 562. The defendant is one of two not so, it would be beyond the power of the local councils which adhered to the National incorporators to take away the right to a Council at the time of the severance of repreference on distribution of assets confer- lations between the National Council and red by section 86. Since the corporators the State Council. It was originally organhave this power to limit the rights of pre-ized pursuant to leave of the Pennsylvania councils might continue their life and existence without reference to or assistance from either State or National Council, and that they and their individual members comprised and formed the very life and soul of the whole order, as was subsequently stated by the same Vice Chancellor in the opinion in State Council v. National Council, 71 N. J. Eq. 433, 64 Atl. 561. In that opinion he contrasted the legal relation between the national, state, and subordinate councils with the legal relations between the national government and the governments of the several states. The decree in the first case was affirmed upon the Vice Chancellor's opinion, and the appeal from the decree in the second case was dismissed. It is thus settled that it is the subordinate councils which have an independent existence, and that their relationship with the State and National Councils is, as the Vice Chancellor said, a purely voluntary one. The State Council could have no greater right to coerce the subordinate council than the National Council had to coerce the State Council. State Council on October 9, 1868, prior to | members, but were composed of delegates, the organization of the State Council of New it necessarily followed that the subordinate Jersey and of the National Council. The written authority to organize is called a charter, but is in effect merely a permission to certain gentlemen to form a subordinate council. This permission provided that, if Enterprise Council was dissolved by forfeiture of its charter or otherwise, then all books, papers, etc., the property of said council, should become the property of the State Council of Pennsylvania. The "laws" of the National Council provide as follows: "In the event of the disbanding of a council the national or state council (granting its charter) shall collect its charter, private work, books and other property previous to granting a charter for its reorganization." By the "laws" of the State Council (edition of 1873) provision was made for a revenue to be derived from the sale of certain printed matter and from the payment of not less than 3 nor more than 5 per cent. on all amounts received for propositions, initiations, admission by card, degrees, and weekly dues, as the State Council might from time to time direct; and it was provided that any council neglecting or refusing to pay the same should be deprived of the privileges of the order, and be debarred of the right to be heard through their representatives on the floor of the State Council. The "laws" of the State Council (edition of 1900) contain the following provision: "A council may be suspended or dissolved, and its char ter and property forfeited to the State Council, for improper conduct, or for a refusal to enforce or obey the laws adopted by this State Council, for refusing or neglecting to make proper returns in due time, or for nonpayment of its per capita tax, for not holding a regular meeting for a period of three months, or being reduced in membership to less than seven; but a charter of a council shall not in any case be forfeited until it shall have been duly notified and opportunity offered to answer the charges proferred against it." The printed record fails to show whether this provision was contained in the laws of the order in force prior to 1900, as nothing is printed but extracts from those laws. By the constitution of the National Council an appeal was given to the National Council from the action of a state or subordinate council. B. B. Hutchinson and Robert H. McCarter, for appellant. Alan H. Strong and Fergus A. Dennis, for respondent. SWAYZE, J. (after stating the facts as above). In the opinion of the Court of Chancery in the first case which arose in this state growing out of the controversy between the National Council and the State Council, it was held that the relation between the parties was a purely voluntary one; that any member might withdraw at any time. Since neither the National Coun The fact that the National and State Councils chose to call their permission to organize subordinate councils a "charter," and chose to call their constitution and by-laws "general laws," does not give them the force of law. As the Vice Chancellor held in the opinion approved by this court, the relationship is purely contractual, and in ascertaining the terms of that contract recourse must be had to the so-called "charter" and "laws," which embodied the terms upon which individual members became associated in these organizations. Those documents have a twofold aspect. In the first place, they determine the relationship between the three grades of councils and the method of securing co-operation and enforcing discipline, and in the second place they contain provisions affecting the property rights of the individual members of the order in the funds arising out of their contributions. In the present case we are concerned only with the property rights. In determining these rights, it is of the first importance to consider the object with which the funds are raised and the method of disposition in contemplation of the individual members of the order. Enterprise Council is a New Jersey corporation organized for benevolent and charitable purposes. Its specific objects are set forth in what is called its constitution, which are to maintain and promote the interests of the Amer ican youth and shield them from the depressing effects of foreign competition; to assist Americans in obtaining employment; to encourage Americans in business; to establish a sick and funeral fund; to prepare the youth of America to become members of the Order of United American Mechanics when they arrive at the proper age. It should become the property of the State Council of Pennsylvania. If we assume, as perhaps we fairly may, that upon the organization of the State Council of New Jersey and the affiliation of Enterprise Council therewith the State Council of New Jersey took the place of the State Council of Pennsylvania, the question still recurs whether the condition upon which the property was to be forfeited has been complied with, and whether the accumulated funds are a part of the property that was to be forfeited. It is convenient to deal with the latter question first. The provision relates to "all books, papers, etc., the property of the said which funds would be likely to be accumu-, papers, etc., the property of the council, lated is the establishment of a sick and funeral fund. No provision is made in the constitution and by-laws either of the National or State Council for turning over any of this fund to either of those organizations. The right of the State and National Councils to revenue is limited to what is called a tax, and is really a contribution of a small sum per capita for the necessary expenses of those councils collected of the individual members by the subordinate councils. Such revenue as the State Council derived from the sale of printed blanks was nothing more than a profit upon the sale of merchandise, which the subordinate councils might buy elsewhere if they chose. The form of trav-council." It would seem that this language eling card issued by the subordinate councils indicates that the amount of sick and funeral benefits to be allowed to a member was fixed and determined by the constitution and by-laws of the local council, and there is nothing to indicate that there was any legal claim on the part of a member to relief from a council other than that to which he belonged, or that there was any legal obligation on the part of either national or state councils to pay such benefits. The claim of the individual member to relief, and the obligation to afford it, rested upon the subordinate council only. Enterprise Council has paid the capitation tax collected by it from its members on behalf of the State Council up to the time of the severance of relations, and the only question is whether since that severance the State Council is entitled to the funds accumulated by Enterprise Council for the purposes of the order. Those purposes, as far as concerns the accumulated funds, were the relief of the members of Enterprise Council alone, and, if that council is to be deprived of those funds, it must be by reason of something in the contract which justifies the conclusion that the members who contributed the funds did so with the understanding that in certain contingencies the money should be turned over to purposes other than that for which it was raised the relief of members of Enterprise Council. As was held in National Council v. State Council, 64 N. J. Eq. 470, 53 Atl. 1082, the burden of proof was upon the complainant to establish the trust, and that trust must be the trust created by the individual members who contributed to the fund. It is quite evident that these contributors did not intend to create any trust in favor of either the State or National Council as long as the relations between the subordinate council and the State Council and between the State Council and National Council remained unsevered. The only provision that seems to contemplate any change of the trust when the relations were severed is that contained in the so-called charter of Enterprise Council and the extracts from the laws above quoted. The provision in the charter was that, upon the was hardly intended to cover accumulated funds. If it had been in contemplation in 1868 that such funds would be accumulated, it is difficult to explain the omission of any reference thereto, and the charter is careful not to say that all the property of Enterprise Council shall become the property of the State Council, but to limit it to the "books, papers, etc.," which are the property of Enterprise Council. It probably was not contemplated at the time that funds would be accumulated, and it was no doubt thought that all that would be necessary upon the dissolution of Enterprise Council would be to take up the books and papers, including, perhaps, the regalia and similar property. But, even if the language is sufficient to include invested funds, it becomes necessary to determine whether the condition upon which the property was to pass to the State Council has been fulfilled. This condition was not that the so-called charter should be forfeited, but that the council should be dissolved; and the law which we have quoted provided that a council might be suspended or dissolved, and its charter and property forfeited to the State Council. In view or the use of language such as "charter," "laws," "tax," and "dissolution," which appear throughout the documents, it seems probable that the authors had the idea that the order possessed the power to grant charters, enact laws, levy taxes, and dissolve subordinate councils; in short, that it possessed, so far as the order was concerned, governmental powers. If this is so, the word "dissolution" should be construed as meaning what it would mean when we speak of a corporation being dissolved by an act of government or judicial proceedings, and this is the construction which we think ought to be adopted in view of the legal principle that conditions involving a forfeiture of property are to be construed strictly. If this is the proper construction, the condition upon which the property was to be forfeited has not come to pass, for, in fact, Enterprise Council has not been dissolved; it is still an existing body. All that has happened has been that it has thrown off allegiance to the State Council and adhered to the National Council, allegiance to the National Council. More over, the State Council is without power to dissolve Enterprise Council, for that is a corporation under the laws of the state of New Jersey, and can only be dissolved by proceedings in accordance with the New Jersey statutes. The fact is that the word "dissolution" is inapt to express any legal intent which the parties may have entertained; for, even in the case of an unincorporated association, it would be quite impossible for the State Council to dissolve such a voluntary association as long as its members chose to continue together. If, however, we should assume, in order to give force to the language which the parties probably did not themselves have in mind, that by dissolution they meant only the dissolution of the relations existing between the State Council and the subordinate councils, the question would | still remain, how that termination should be brought about so as to work a forfeiture of property. The complainants must establish that they themselves had the right to dissolve this connection, and thereby possess themselves of the property of Enterprise Council held in trust by that council for the purposes of its organization and subsequent incorporation, and for the benefit of its individual members. It was upon that view that the Vice Chancellor determined this cause. Such a provision for the forfeiture of property, or, what amounts to the same thing, a change in the personnel of the cestuis que trust, would be contrary to the fundamental principle which prevents one from being a judge in his own cause; and, as far as Enterprise Council is concerned, it would be illegal also because it would strip that council of the property which it held for the purpose of carrying out the object for which it was incorporated. We approve of the rule established in Austin v. Searing, 16 N. Y. 112, 69 Am. Dec. 665. The court there said: "The effect of some of the provisions of these constitutions is to create a tribunal having power to adjudicate upon the rights of property of all the members of the subordinate lodges, and to transfer that property to others; the members of this tribunal being liable to constant fluctuations, and not subject in any case to the selection or control of the parties upon whose rights they sit in judgment. To create a judicial tribunal is one of the functions of the sovereign power; and, although parties may always make such tribunals for themselves in any specific case by a submission to arbitration, yet the power is guarded by the most cautious rules. A contract that the parties will submit confers no power upon the arbitrator; and, even where there is an actual submission, it may be revoked at any time. The law allows the party up to the last moment to ascertain whether there is not some covert bias or prejudice on the part of the arbitrator chosen. It would hardly accord with this scrupulous care to secure be held legally bound by the sort of engagement that exists here, by which the most extensive judicial powers are conferred upon bodies of men whose individual members are subject to continual fluctuation.” In the later case of Wicks v. Monihan, 130 N. Y. 232, 29 N. E. 130, 14 L. R. A. 243, the court said: "The property of Local Assembly No. 4119 was not derived from the General Assembly, but was contributed and owned by the associated members of No. 4119, and held by an absolute title, as perfect and unconditional, so far as is shown by the case, as is the title by which any person or corporation holds its individual property. To hold that the General Assembly can, by a decree, divest the title to property and vest it in itself, is giving to it a power which is forbidden to be exercised by Congress or by the Legislature of any state." A similar result was reached in Wells v. Monihan, 129 N. Y. 161, 29 N. E. 232. The court said, referring to Excelsior Assembly 4120 of the Knights of Labor: "Their charter was revoked for insubordination, of which, very likely, they were guilty. The offense and its punishment ended their powers and privileges so far, and so far only, as they were derived from the rules and regulations of the Knights of Labor; but could not destroy their rights as individuals, or as an unincorporated association derived from the law of the state. Under that law they could, as they did, associate for a common purpose, and choose officers, in whose name they could sue. These powers they had when their charter from the Knights was given, and retained when it was taken away. That event broke off their relations with the order, but not with their own treasury. That treasury they could control, in their collective capacity, until some superior power took it away, or it disappeared in a final distribution among the members." The same result was reached in a like litigation in Maryland (District Grand Lodge v. Jedidjah Lodge, 65 Md. 236, 3 Atl. 104), and in a later phase (Goodman v. Jedidjah Lodge, 67 Md. 117, 9 Atl. 13), where the court said: "It is true that, when this corporation was formed, this lodge was a subordinate lodge, forming part of the general order, and by several of the articles of association it was bound to observe and enforce the rules and regulations of the grand lodge of the district. But the courts must look to the powers which the state has, by its law, conferred upon this corporate body. Among them, as we have said, is the power to change its articles of association, given, not only by the original act of 1852, but secured by the present corporation laws. Such a change of its articles as would completely sever all connection between this corporation and the district grand lodge or the general order could be made without, so far as we can perceive, affecting injuriously any substantial property or pecuniary rights of any of the corporators |