stances under which a quasi trust relation has been held to exist, and where equity will interfere, on the one hand, to require an accounting from any member seeking to gain an unfair advantage over the whole body of members,' and on the other, to restrain a majority of the company from overriding a dissenting minority. Thus, the majority of a solvent corporation can not at their pleasure effect a dissolution, against the will of a dissenting minority. in an ice company, and also the president of a water company, and a large stockholder therein, procured the adoption of a resolution at a stockholders' meeting authorizing the board of directors of the water company to lease its dam to the newly-created ice company for ice purposes. Immediately thereafter the stockholders elected a new board of directors, consisting of F. and others, who were interested in the ice company, in place of the old board, consisting of plaintiffs and others. The lease was accordingly made by the new board. Both before and after making it plaintiffs were given an opportunity and were urged to take stock in the ice company, but they declined; after that, company had become a success, however, they sued to cancel the lease. But their bill was dismissed. 1 Thompson v. Meisser, (1884) 108 Ill. 359, where a shareholder at tempted to discharge his liability by an assignment of claims against the company which he had bought up at a discount. In Aultman's Appeal, (1883) 98 Pa. St. 505, where certain stockholders of an insolvent corporation bought its property at a public sale, it was held that they were not entitled to any advantage over other stockholders in respect thereof, and, there being no laches, they would be held to account to such other stockholders for profits realized. Cf. Myers v. Scott, (1888) 50 Hun, 603, where Nor can they, by the complaint alleged that plaintiffs were stockholders in a railway construction company which, under a contract with a company whose road it had constructed, held land-grant bonds secured by mortgages, which it proposed to divide among its members and then dissolve; that the lands were to be appraised, and taken by the bondholders at their appraised value, thus securing equality of rights; but that bonds had been issued by the officers of the company under which such officers and others had derived unfair benefits, and appropriated valuable unappraised portions of the lands, leaving plaintiffs and other shareholders inferior lands. It was decided that the facts alleged entitled plaintiffs to protection and redress. 2 Ervin v. Oregon Ry. & Nav. Co., (1884) 20 Fed. Rep. 577. 3 In a case decided in the New York Court of Common Pleas, the majority of a solvent company, applied under the N. Y. Code Civ. Proc., $2429, before the expiration of the term for which it was incorporated, to effect a dissolution of the corporation and a distribution of its assets, consisting largely of money received for shares, the later issues of which were taken by the minority at a higher price than the earlier issues held by the majority. The ground of the application was that it would be "beneficial to the interests of the stockholders;" but it was held that the adoption of by-laws or otherwise, deprive a dissenting stockholder of a right secured to him by the corporate articles. Accordingly, a building association can not retire and cancel shares of stock against the will of the owner thereof. Upon the same principle a stockholder's claim of a loan, to which the articles of association declare him to be entitled, will be sustained. An action at law can not be maintained by one member of the company against another member who is in possession of the corporate property, to recover his proportional part thereof; but if a majority of the stockholders, having authority by law to dissolve the company, purchase the corporate property at the distribution sale under an unfair appraisal, they may be held accountable in an action instituted by any one or more of the minority, without making the corporation a party, the company in such a case being considered practically dissolved.1 § 71. Of the rights and powers incident to membership— In general. The principal rights and powers of the members are, to meet and elect directors," to accept or reject applicants in the absence of especial provision giving a majority the right to it, a dissolution is not required by the Code, because beneficial to a majority, and should be denied. In re Importers' & Grocers' Exchange, (N. Y. Com. Pleas, 1888) 2 N. Y. Supl. 257. 1 Bergman v. St. Paul Mutual Building Assoc., (1883) 29 Minn. 275, where it was further held that the stockholder is not estopped from objecting because an amendment to the by-laws, made before he purchased his stock, authorized the directors to set aside certain money for cancellation of certain shares, or because a subsequent amendment authorizing a forced cancellation of shares was submitted to by other stockholders, and he shared in the benefits accruing to the association. 2 Bergman v. St. Paul Mutual Building Assoc., (1883) 29 Minn. 282. 3 Whitehouse v. Sprague, (Me. 1887) 7 Atlan. Rep. 17. 4 Ervin v. Oregon Ry. & Nav. Co., (1884) 20 Fed. Rep. 577. 5 Vide infra, CORPORATE MEETINGS. See also, "Jurisdiction of Equity to Enjoin Corporate Elections," by James L. High, 3 So. L. Rev. (N. S.) 211. "The directors are elected by the stockholders, and manage all their affairs, in virtue of the power conferred by the election. The stockholders impart no authority to them, except by electing them as directors. But, we are told, and are told truly, that the authority is given in the charter. The charter authorizes the directors to manage all the business of the corporation. But do they act as individuals, or in a corporate character? If they act as a corporate body then the whole law applies to them as to other corporate bodies. If they act as indi 3 for admission,' and to prescribe by-laws for the governance of the body corporate; 2 to inspect the corporate books; to receive such portion of the profits of the enterprise as the directors may deem it advisable to distribute as dividends; ' to hold the directors and officers accountable for any breach of the trust committed to them; to restrain the corporation from ultra vires or illegal acts; and in extreme cases, where the directors refuse to act in the matter, to bring and defend suits in the corporate name.' 8 5 § 72. Of the power to admit new members.-The power of electing new members is an incident to corporate existence. It is not necessary that it should be expressly conferred by the charter. Unless otherwise expressly provided in the constitution or by-laws, it is to be exercised by the whole body of incorporators. Ordinarily, in companies having capital stock, however, the power of admitting new members is not vested. in the corporation at large; but is committed to the discretion of the commissioners or officers or agents authorized to receive subscriptions to the stock; since the usual requisite of membership is simply the ability to enter into a legal contract, viduals then we have a corporation Commonwealth v. Woelper, (1817) which never acts in its corporate 3 Serg. & R. 29; Newling v. Francis, character, except in the instances of (1789) 3 Term Rep. 189. Cf. Samuel electing its directors, or instructing v. Holladay, (1869) 1 Woolw. 400; them. Beach on Railways, § 405. The corporation possesses many important powers, and is as a corporation to perform many important acts, scarcely one of which is to be performed in a corporate character. They are all to be performed by agents, acting as individuals under general powers conferred by the charter." Bank of the United States v. Dandridge, (1827) 12 Wheat. 64, 113. 1 Vide infra, § 72. 2 People v. Kip, (1822) 4 Cowen, 382, note; Kearney v. Andrews, (1854) 10 N. J. Eq. 70; People v. Crossley, (1873) 69 Ill. 195; Carroll v. Mullanphy Savings Bank, (1880) 8 Mo. App. 249, 253; Juker v. Commonwealth, (1853) 20 Pa. St. 484; 3 Beach on Railways, §§ 406–410. Vide infra, §§ 75–79. 4 Vide infra, DIVIDENDS. 5 Beach on Railways, §§ 412-414. See Annotation of Cook v. Sherman, (1882) 20 Fed. Rep. 167, 181, by J. R. Harper. 6 Leslie v. Lorillard, (1886) 40 Hun, 392; Leonard v. Spencer, (1888) 108 N. Y. 338. 7 Beach on Railways, SS 415-418. Annotations of Cook v. Sherman, (1882) 20 Fed. Rep. 167, 182, by J. R. Harper. This subject will be treated in a subsequent chapter. 8 Commonwealth v. Gill, (1838) 3 Whart. 228, 247. and the desirability of an applicant for membership is usually a mere question of ability to pay for the shares allotted him.' But in societies and associations not organized primarily for purposes of gain, an election is generally necessary to the admission of new members. Yet even in the case of corporations having capital stock, the mere ownership of shares may not, under the charter or by-laws, constitute membership therein; and when in addition to the ownership of stock an election to membership is requisite, reference must be had to the spirit and provisions of the charter, to determine by whom the power of admission is to be exercised." § 73. Extraordinary powers of the corporation to be exercised by the members. To the members is reserved also the right of applying to the legislature for amendments of their charter and the power to accept or reject proposed amendments thereof," to alter the articles of association, to 1 Vide supra, § 61. 2 For examples see the statements of facts to the cases cited in § 59, supra. As to injunction to restrain admission to membership, see Thompson v. Society of Tammany, (1879) 17 Hun, 305. 3 State v. Primm, 50 Mo. 87; Commonwealth v. Gill, (1838) 3 Whart. 228. 4" The power of electing both officers and members is an incident to every corporation. It is not necessary that it should be expressly conferred by the charter. If the power is not expressly lodged in other hands, it is to be exercised by the company at large. But this power of election may, by the charter, be taken from the body at large, and reposed in a body of directors, or any other select committee. Whether this has been done, either expressly or by necessary implication, is a question which is to be determined by reference to the provisions and spirit of the charter." Commonwealth V. Gill, (1838) 3 Whart. 228, 247. See also, Diligent Fire Ins. Co. v. Commonwealth, (1874) 75 Pa. St. 291, 296; Waterman on Corporations, 160. 5 Vide supra, § 41. "The directors had the management of the concerns of the company; but this did not enable them to apply to the legislature for an increase of their powers. Such application could be made by the authority of the company only. The resolve of the Assembly giving power to the company to assess the stockholders was void, because the application was made by the directors only, without any authority from the company. But if the power had been given to the company it could only have been exercised by the stockholders at a proper meeting. As the assessment in question was made by the directors without any authority from the company it is void." Marlborough Manf. Co. v. Smith, (1818) 2 Conn. 579, 583. 6 Vide supra, § 44. authorize an increase or reduction of the capital stock,' to sell or lease the corporate property, or modify the terms of an existing lease, to consolidate or merge the company with other 1 Beach on Railways, § 323. When a corporation is authorized by its charter to increase its capital stock, the power can not be exercised by the directors without the assent of the stockholders. Eidman v. Bowman, (1871) 58 Ill. 444, where the court said: "That the directors are but the agents or trustees of the shareholders, for the honest, faithful, and prudent management of the legitimate affairs of the shareholders, there is no doubt. But the question is as to the extent of their powers. Are they unlimited? Are all of the powers conferred on the company delegated to them by their election and admission to their office, or are there powers which are still reserved to the shareholders? It would seem that the management and transaction of all business for which the company was created, and the general affairs of the corporation devolved upon and may clearly be exercised by them; and there are other powers that are as clearly reserved to the shareholders. The power to appoint or elect directors does not devolve upon them, but that power is reserved to the shareholders. The power to sell and transfer the charter and franchises is not granted to them; the power to dissolve the body is not within the scope of their authority; and other powers which they are unable to exercise might be enumerated. Is the power possessed by them to effect great or radical changes in the organization of the body without the consent of the shareholders? Can they at pleasure, and without the consent of the shareholders, increase or diminish the capital stock of the company, and thus materially affect the value of the shares and the amount of dividends?" Eidman v. Bowman, (1871) 58 Ill. 444. See Hoyt v. Thompson, (1859) 19 N. Y. 207. In Railway Co. v. Allerton, (1873) 18 Wall. 233, 235, Bradley, J., said: "As it respects the constituency or capital and membership, this is the next most important and fundamental point in the constitution of a body corporate. To change it without the consent of the stockholders would be to make them members of an association in which they never consented to become such. It would change the relative influence, control, and profit of each member. If the directors alone could do it, they would always perpetuate their own power. Their agency does not extend to such an act, unless so expressed in the charter, or subsequent enabling act; and such subsequent act, as before said, would not bind the stockholders without their acceptance of it, or assent to it in some form. Even when the additional stock is distributed to each stockholder pro rata, it would often work injustice, because many of the stockholders might be unable to take their respective share, and might thus lose their relative interest and influence in the corporate concerns." But see Lincoln Bank v. Richardson, 1 Greenl. 70. 2 Troy &c. R. Co. v. Boston &c. R. Co., 86 N. Y. 107; Metropolitan Elevated Ry. Co. v. Manhattan Ry. Co., (1884) 11 Daly, 367, Van Brunt, J.; s. c. 15 Am. & Eng. Ry. Cas. 1. See also, Cass v. Manchester, 13 The Reporter, 167; Flagg v. Metropolitan Ry. Co., 20 Blatchf. 142; Martin v. |