Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/178

 § 185.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. railroad, a lease executed without such assent is invalid. 1 In like manner, where under its enabling act a corporation is au- thorized to mortgage its property, having first obtained the written consent of the owners of two-thirds of the capital stock, this written consent is a condition precedent to the valid- ity of a mortgage executed by the corporation ; and the cor- poration itself cannot give consent on behalf of stock held by itself, nor can the assenting shareholders be deemed to rep- resent a proportionate amount of the stock held by the corpo- ration. 2 Still, in another case, 3 it was held by the same court construing the same statute, that where there is no fraud the defects in the execution of the consent must, to invalidate it, be so radical that an intention to consent cannot be inferred. In this case the objection was interposed by the holder of a subsequent mortgage, and the court said : " Without consider- ing the question whether any but stockholders may interpose the objection to the authority exercised in this case, the infer- ence that the general purpose and design of the act was in the interest of stockholders only has some bearing on the question presented as to the proper rule of construction to be adopted of the paper produced as the assent of the stockholders." 4 The 1 Peters v. Lincoln and N. W. R. R. Co., 2 MeCrary, 275. 2 Vail v. Hamilton, 85 N. Y. 453. Such a mortgage may be set aside at the suit of a receiver, the corporation being insolvent. The last two points stated in the text were not necessary to the deci- sion of this case; for even if the cor- poration could validly have consented on behalf of the shares held by it, or if those shares had been deducted from the total amount of its stock, still there would not have been a representation of two-thirds of the stock; for some of the shares on which the corporation purported to consent, and which were needed to make up the two-thirds, it had re- issued to an individual by a transfer absolute in form, though made as collateral security. Compare Green- 158 point Sugar Co. v. Whitin, 69 N. Y. 328, 339, infra. Still, it is settled that a corporation cannot vote on shares held by it. § 136. lb. Where for the validity of a mortgage the charter required the consent of the holders of more than seventy per cent of the common and preferred stock, it was held that this provision was for the protection of the stockholders, and that a mortgage executed without such consent could not be set aside by the creditors through the assignee in insolvency. Bishop v. Kent & Stanley Co., 20 R. I. 681. 3 Greenpoint Sugar Co. v. Whitin, 69 N. Y. 328. See Paulding v. Chrome Steel Co., 94 N. Y. 334; Welch v. Importers', etc., Bank, 122 X. Y. 177. Compare Lewis v. Jeff- ries, 86 Pa. St. 340.
 * 69 N. Y. 333. See Boyce v.