Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/579

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 552. ing the capital stock of the corporation to the amount required by law, in order that the corporation might pass the examina- tion of the commissioners appointed by the comptroller, a pre- mium note was given upon an agreement that after the examina- tion the note might be withdrawn and a lesser one substituted, it was held that the agreement was a fraud, and that the maker of the note continued liable thereon, although it had been with- drawn and destroyed. 1 § 551. A person who has subscribed for shares cannot annul his subscription by giving notice to the agent with whom he contracted. 2 The circumstances of a late Pennsylvania case, which may be regarded as authority on this point, were note- worthy. A person was active in soliciting subscriptions to build a railroad. He took a subscription book from the agent of the company, subscribed therein, persuaded others to do so, and kept the book about six months. Then, because of a difference with the company's agent in regard to his remuneration, he cut out his own name, and returned the book to the company. The company sued him on his subscription, and it was held, that he had perfected a contract with the company and was bound as much as if he had left his name in the book. 3 § 552. If the corporation is in failing circumstances, or if for any other reason it cannot legally acquire its own shares, a shareholder will not avoid any liability he may be subject to, by surrendering his shares to it ; even o/Yhares 9 though the corporation reissue them ; 4 and whatever poration° r " money or property he receives from the corporation in payment for his shares transferred to it, he will hold subject to the claims of its creditors. 5 1 It was held in Teasdale's Case, L. R. 9 Ch. 54, that a company might hy special resolution vary its articles so as to give itself the power to accept surrenders of old shares in exchange for new. 2 Lowe v. E. and K. R. R. Co., 1 Head (Tenn.), 659; Rider v. Morri- son, 54 Md. 429; Chicago B'ldg & Mfg. Co. v. Lyon, 10 Okl. 704. 3 Greer v. ChartiersR'y Co., 96 Pa. St. 391. 4 Matter of Reciprocity Bank, 22 N. Y. 9. For the power of a corpo- ration to purchase its own shares, see § 134, and for the effect of such a purchase on the relations between the shareholder and creditors, see §747. 6 Crandall v. Lincoln, 52 Conn. 73, 100. Compare Columbian Bank's Estate, 147 Pa. St. 422; and see Hall v. Henderson, 126 Ala. 449. 559