Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/543

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 510. prise. The body corporate, acting through whatever agency constitutes the corporate management, is the representative of the rights of all persons interested in the corporate enterprise. Therefore, ordinarily, to an action brought by the corporation against a shareholder, for instance to enforce his subscription, no defence can be pleaded that would impair the rights of any persons respecting the corporate funds. With a view, however, to a proper arrangement of topics, discussion of legal relations subsisting directly and apparently among shareholders, and between shareholders and corporate officers and creditors will be reserved for future chapters. §509. Legal relations between shareholders 1 and the body corporate are occasioned in the first instance by pur- chasing, subscribing for, or contracting to take latfonsbe- shares of stock. The shareholder is thus brought S h^rehoid- within the operation of rules of law entering into corporL the the constitution of the corporation, which thereupon tion ; how manifest themselves in legal relations not only be- tween the shareholder and the body corporate, but also between the shareholder and all other persons in any way interested in the corporate enterprise. But in this chapter, as before re- marked, we are concerned only with the relations of these persons as represented by the corporation. § 510. The forms of contracts to take shares in the stock of a corporation may differ, 2 but the legal relations occasioned by them are similar. 3 A contract of this kind is in the main a 1 " The type .... of a member or shareholder of a company is a person who has agreed to become a member, and with regard to whom all conditions precedent to the ac- quisition of the rights of a member have been duly observed. Where all these circumstances are com- bined, there is membership in its fullest and most accurate sense." 1 Lindley on Part, (Am. ed.) 127. 2 A stock certificate, although con- taining an agreement to pay interest to the holder until the happening of a certain event, may still constitute him a shareholder; and the agree- ment to pay interest is a contract between the holder and the corpo- ration, which cannot be varied by the vote of a majority of share- holders to pay such interest in bonds. McLaughlin v. Detroit, etc., R. R. Co., 8 Mich. 100. See, also, Richardson v. Vermont and Mass. R. R. Co., 44 Vt. 613, in which case the interest was payable out of sur- plus earnings. 3 Mutual insurance companies, in which the insured becomes a mem- ber by the payment of the cash pre- mium, are anomalous. The theory of such companies is that the pre- 523