Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/577

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 549. laws, that may apply regulating the nature and contents of the notice 1 and the manner of conducting the sale, must be strictly followed. 2 A forfeiture declared by illegally chosen directors may be set aside ; 3 or one declared by a board composed of a less number of directors than are authorized by the articles of association to transact business for the company. 4 And a sale of shares for the nonpayment of several assessments, one of which is illegal, is void. 5 § 548. The option to declare a forfeiture rests with the cor- poration, and cannot be exercised by the delinquent i i i i a ,, mi. . ,, ,.., Collusive shareholder. 6 " lhe power to forfeit, like the power forfeitures. to manage all the affairs of the corporation, is vested in the directors, upon the assumption that they will exercise it in the best manner practicable for the promotion of the inter- ests of the company and its creditors ; that they will not for- feit the stock unless the interest of all will be promoted thereby. Should they forfeit it for the purpose of defrauding the corpo- ration, or any creditor, such forfeiture would, for that reason, be set aside." 7 § 549. It is incompetent for the directors, 8 or for the body 1 Morris v. Land Co., 164 Pa. St. 326; Watson v. Eales, 23 Beav. 294; Van Diemen's Land Co. ». Cockerell, 1 C. B. N. S. 732. 2 Portland, etc., R. R. Co. v. Gra- ham, 11 Mete. (Mass.) 1; York, etc., R. R. Co. v. Ritchie, 40 Me. 425. 3 Garden Gully M'g Co. v. Mc- Lister, L. R. 1 App. Cas. 39. A shareholder may enjoin illegally chosen directors from selling his shares. Moses v. Tompkins, 84 Ala. 613. i In re Alma Spinning Co., 29 W. R. 133. 6 Stoneham Branch R. R. Co. v. Gould, 2 Gray, 277; Lewey's Island R. R. Co. v. Bolton, 48 Me. 451. • Klein v. Alton, etc., R. R. Co., 13 111. 514; Railroad Co. ». Rod- rigues, 10 Rich. L. (S. C. ) 278. 7 Mills v. Stewart, 41 N. Y. 384, 390. Collusive forfeitures may be set aside. Richmond's Case, 4 Kay & J. 305, 323; Gower's Case, L. R. 6 Eq. 77; In re St. Marylebone B'k'g Co., Stanhope's Case, 3 De G. & Sm. 198. 8 Chouteau Ins. Co. v. Floyd, 74 Mo. 286; Hughes v. Antietam M'f'g Co., 34 Md. 316; Bedford R. R. Co. v. Bowser, 48 Pa. St. 29; Cartwright v. Dickinson, 88 Tenn. 476 ; Hall's Case, L. R. 5 Cli. 707 See Thomas's Case, L. R. 13 Eq. 437. A plea to an action on a subscrip- tion that the directors released the defendant, is bad on demurrer, un- less it avers a consideration, and that there were no creditors of the corpo- ration at the time. Zirkel v. Joilet Opera House Co., 79 111. 334; World's Fair Ex. Co. v. Gasch, 162 111. 402. 557