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which separate interest coupons are attached for each annual or semiannual interest payment (see p. 179 ante).

5. A stockholder in behalf of himself and other stockholders may invoke the aid of a court to restrain the officers from committing a breach of trust, or the corporation itself from engaging in ultra vires acts, that is, acts beyond the scope of the charter powers. While the majority rule, they must rule within the limits of the charter powers, and if they exceed these, or if their acts are fraudulent, the minority may obtain an injunction.

153. Liability of stockholders. Stockholders are liable to the corporation for any unpaid portion of their subscriptions. This liability is enforced by an action at law, like any action to collect a debt.

Stockholders are not liable to creditors of the corporation unless the statute or charter provides for some personal liability. But creditors may compel original stockholders who have paid to the corporation less than par value for the stock issued to them to pay the balance if the creditors have been led to believe that stockholders were paying in to the capital stock the full par value. It is a kind of fraud on creditors for a corporation to advertise a capital stock of say $100,000 fully paid in when in fact it issued the stock at forty cents on the dollar, and the capital stock is therefore only $40,000. So also, if the capital stock is fully paid in, but a part of it is thereafter returned to stockholders under the guise of dividends, the creditors may compel the stockholders to refund it so far as necessary to pay the debts of the corporation.

If the statute makes stockholders personally liable for the debts of the corporation, or liable to an amount specified, as, for example, to an amount equal to the face value of their shares. of stock, a creditor who has a judgment against the corporation which he cannot satisfy out of its property may proceed against stockholders who were such when his debt was contracted or, as in some jurisdictions, when his action was begun.

154. Reports of corporations. The statutes generally provide that a stock corporation shall make an annual report of its affairs and file the same in some public office where any person may

inspect it. This is in order that persons who may wish to do business with the corporation may ascertain whether it is in a sound and solvent condition. The report usually contains a statement as to the amount of capital stock, the amount actually issued, the amount of the debts, and the amount of the assets. The statutes quite generally make directors personally liable for debts in case they fail to file such a report, and also for debts contracted upon the faith of the report filed in case it is false in any material particular, and sometimes for damages suffered by persons purchasing stock upon the faith of such false report.

155. Receivers of corporations. When a corporation becomes insolvent the court may, upon the petition of the directors, bondholders, or general creditors, appoint a receiver of the property and assets of the corporation. A receiver may also be appointed upon the petition of a stockholder, if the directors are wasting or misapplying the funds or property. A receiver is an officer of the court, and as such takes entire charge of all the property and business pending a dissolution or reorganization of the corporation. The property until final decree is therefore in the custody of the court appointing the receiver.

A "receiver's certificate" is an obligation issued by a receiver under authority of the court for the purpose of raising money to carry on the business of the corporation during the term of the receivership. It takes precedence over all other obligations of the corporation, even its first-mortgage bonds.

156. Dissolution of corporations. A corporation is dissolved by the expiration of the time for which it was chartered.

A corporation may be dissolved by the decree of a court for various causes, among which may be mentioned insolvency, nonuse of franchises, abuse of charter powers, violation of law, and other fraudulent or illegal acts. The directors or stockholders may also apply for permission to surrender the charter whenever they deem such a course beneficial to the interests of the stockholders.

Upon dissolution, after all debts and claims are paid, the remaining assets are divided among the stockholders in proportion to their holdings.

REVIEW QUESTIONS

SECTION 146. Define a corporation. What is meant by saying it is a "legal entity"? What are public corporations? What are private corporations? What two main classes of private corporations? Object of a stock corporation?

147. How is a corporation created? Explain what constitutes the charter where a corporation is formed under a general act. Draw articles of association to incorporate a stock company to quarry and sell stone.

148. Who are members of a stock corporation? How does membership change? What is a stock certificate? How is it transferred?

149. Who are the directors? How are they chosen? What is cumulative voting and what is its object? What are the powers of the directors? What is their duty?

150. How are corporate officers and agents appointed? Which officers are entitled to compensation? How are the powers of officers fixed? Define the powers of each. What is the ultimate authority in a corporation as to contracts?

151. Enumerate the powers of a corporation. How much real estate may it hold? May it become a partner? What business may it conduct? What are ultra vires acts?

152. What are the rights of stockholders? How many votes does each stockholder have? What are dividends? How fixed? What are profits? What is preferred stock? What are bonds? When may a stockholder seek the aid of a court to protect his interests?

153. When is a stockholder liable to the corporation? When is he liable to creditors of the corporation in the absence of statutory liability? What is statutory liability?

154. What reports of corporations are required? What do they contain? Where are they filed? What is the effect if they are not filed or are false?

155. Who is a receiver? Whose agent is he? What are receiver's certificates? Are they more or less valuable than bonds?

156. How may a corporation be dissolved? After dissolution what is done with the assets?

PART VI

PROPERTY IN LAND AND MOVABLES

CHAPTER XIV

REAL PROPERTY

I. ESTATES IN REAL PROPERTY

157. Meaning of the term "property." Property may be regarded as an object, or as a right or estate in or to an object. It may be corporeal or incorporeal, and it is classified as real and personal.

1. Property as an object. The word property is used concretely to designate an object or thing (lands or chattels) in which one may have a proprietary right; it is used abstractly to designate the right, interest, or estate one has in such an object or thing. Property in the legal sense is the right, often but not always exclusive, to possess, enjoy, and dispose of lands

and chattels.

As an object of ownership property falls into two classes: (1) immovables or land and things so annexed thereto or connected therewith as to be regarded as a part of the land; (2) movables, or things not so annexed to land as to be considered a part thereof. The first class is popularly called real property and the second personal property; but in the view of the law not all interests in land are real-property interests. It becomes necessary, therefore, to classify the interests which one may have in land into real estate, or real property, and personal estate, or personal property.

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