Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/601

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 572. to borrow on bond and mortgage (2 Redf. on Railways, chap. 33, sec. 4, § 237 ; Harrison v. Mex. R. W., 12 Eng. Rep. 793), or the amount of the capital has not been reached, and such stock is issued therefrom (Hazelhurst v. Savannah R. R., 43 G-a. 53 ; Tottan v. Tison, 54 ib. 139), or there was legislative au- thority (Davis v. Proprietors, 8 Metcf. 321 ; Rutland R. R. Co. v. Thrall, 35 Vt. 545), or a restriction to authorized capital, and there was unanimous consent of the stockholders (Prouty v. M. S. and N. I. R. R., 1 Hun, 663 ; 43 Ga. 53, supra), or there was power to redeem, which was a transaction in the nature of a debt (Westchester, etc., R. R. Co. v. Jackson, 77 Penn. St. 321), or the opinion was obiter (Bates v. Androscoggin R. R. Co., 49 Maine, 491), or it was the case of a subscription for stock with a condition for interest until the corporation was in operation (Richardson v. Vt. and Mass. R. R. Co., 44 Vt. 613), or it was an action on a subscription more favorable to defendant than to other subscribers, and it was held that defendant could not set up the lack of equality (Evansville R. R. Co. v. Evansville, 15 Ind. 395), or a solemn determination of this question was not necessary for the disposaL of the case (Williston v. M. S. and N". I. R. R. Co., 13 Allen, 400), or the issue was authorized by the articles of association (In re A. D. St. Nav. and Col. Co., 20 L. R. [Eq.] 339), or there was full knowledge on the part of all concerned (Lockhart v. Van Alstyne, 31 Mich. 81), or the power in the corporate body was conceded, and it was denied that it existed in the directors (McLaughlin v. D. and M. R. R., 8 ib. 100). ... It needs not that we consider the position that the issue of the preferred stock was an authorized increase of the capital and so legal. It did not profess to be, nor was it in fact. For each share of preferred stock given out a share of common stock was taken in, so that the gross amount of the capital was still the same, and so were the number of shares and the nominal value of each share." 1 1 Kent v. Quicksilver Mg. Co., 78 N. Y. 159, 179 et seq. It is held that a corporation is not a trustee fur preferred any more than for common shareholders, and the former have no special control over the corporation and its man- agement. Thompson v. Erie R'y Co., 11 Ahb. Pr. N. S. (N. Y.) 188. When a. company disables itself from issuing preferred stock sub- scribed for, the subscriber may re- fuse to take common stock, and may recover his subscription as for a 581