Stock

In Mercantile Law. The capital of a merchant, tradesman, or other person, including his merchandise, money, and credits. The goods and wares he has for sale and traffic. In Corporation Law. A right to partake, according to the amount of the party’s subscription, of the surplus profits obtained from The capital stock of a corporation is that money or property which is put into a fund by those who, by subscription therefor, become members of the corporate body.

Burrail v. R. Co., 75 N. Y. 211.

The phrase capital stock has been objected to, as the two words have separate meanings, capital being the sum subscribed and paid into the company, and stock being the thing which the subscriber receives for what he pays in: Dos Bassos, St. Brokers 579.

See People v. Com’rs of Taxes and Assessments, 23 N. Y. 192.

The interest which each person has in the corporation is termed a share, which is the right to participate in the profits, of the corporation, and, upon its dissolution, in the division of its assets. See Burr all v. R. Co., 75 N. Y. 211. “Capital stock” has been held to mean the amount contributed by the shareholders, and not the property of the company; State v. Morristown Fire Ass’n, 23 N. J. L. 195. Capital stock is the sum fixed by the corporate charter as the amount paid in or to be paid in by the stockholders for the prosecution of the business of the corporation and for the benefit of corporate creditors.

Cook, St. & Stockh. § 9.

It is to be clearly distinguished from the amount of property possessed by the corporation; id. The property or means contributed by the stockholders as the fund or basis for the business or enterprise for which the corporation or association was formed.

Bailey v. Clark, 21 Wall. (U. S.) 284, 22 L. Ed. 651. See definitions in People v. Colyman, 126 N. Y. 433, 21 N. E. 818, 12 L. R. A. 762; St. Louis, I. M & S. Ry. v. Loftin, 30 Ark. 693; Bent v. Hart 10 Mo. App. 146.

Capital stock is a differenl thing from shares of stock; the latter are evidences of ownership; Wilkes Barre De posit & Sav. Bk. v. Wilkes Barre, 148 Pa 601, 21 At 1.

111.

Stock is commonly used tc mean shares of stock, and it has been so helc in a tax statute; Lockwood v. Weston, 61 Conn. 211, 23 Atl. 9. The capital stock of a corporation differs widely in legal import from the aggregate shares into which it is divided by its chattel (Farrington v. Tennessee, 95 U S. 686, 24 L Ed. 558; People v. Coleman, 126 N. Y. 437, 21 N. E. 818, 12 L. R. A. 762); while the formei includes only the fund of money or othei property derived by it from the sale or ex change of its shares of stock, the latter rep resents the totality of the corporate asset* and property; Ilamor v. Engineering Co., & Fed. 396. A share of stock is a right which its ownei has in the management, profits, and ultimate assets of the corporation.

Cook, St. & Stockh § 12. So, also, In re Clemcnti, 92 N. Y. 592 Van Allen v. Assessors, 3 Wall. (U. S.) 585 18 L. Ed. 229.

It is the right to participati in stockholders' meetings, and in the profit the original purposes; Forbes v. R. Co., 2 Woods 331, Fed. Cas. No. 4,926. The number of shares depends upon the statutory regulations, or in their absence the agreement of the parties forming the corporation; Somerset & K. R. Co. v. Cushing, 45 Me. 524. Shares may be arranged in classes, one class being preferred to another in the distribution of profits; Kent v. Min. Co., 78 N. Y. 159. Voting may be restricted to a certain class. The ownership of shares is usually attested by a certificate issued under the corporate seal; and when a new transfer is effected, such certificate is surrendered and cancelled, and a new one is issued to the transferee. A certificate need not be under seal; Coddington v. R. Co., 103 U. S. 409, 26 L. Ed. 400. But a person may be the owner of shares in a corporation without holding such certificate; Field v. Pierce, 102 Mass. 261; see Schaeffer v. Ins. Co., 46 Mo. 248; and, strictly speaking, a company need not issue any certificates or muniments of title, if not required to do so by law or its charter; Agricultural Bk. v. Burr, 24 Me. 256. The presence of a party’s name on the stock books of the company is evidence of his ownership of shares; Appeal of Bank of Commerce, 73 Pa. 59. The possession of a corporate certificate of stock, duly issued, is a continuing affirmation of ownership of the stock by the person named therein; First Nat. Bank v. Lanier, 11 Wall. (IJ. S.) 369, 20 L. Ed. 172; which generally creates an estoppel against the company in favor of the holder; Ilolbrook v. Zinc Co., 57 N. Y. 616; though in England it is said to be merely a solemn affirmation that the specified amount of stock stands on the stock books in the name of the person specified in the certificate; L. R. 7 H. L. 496. Every stockholder is entitled to a certificate of his shares; Cecil Nat. Bank v. Bank, 105 U. S. 217, 26 L. Ed. 1039. The stock of a national bank is said to be a species of chose in action, or an equitable interest which the shareholder possesses, and which he can enforce against the corporation. See Taggart v. Murray, 53 N. Y. 237. “If a share in a bank is not a chose in action, it is in the nature of a chose in action, and is personal property;’’ per Shaw, C. J., in Hutchins v. Bank, 12 Mete. (Mass.) 421. Shares are not, strictly speaking, chattels; they bear a greater resemblance to choses in action; or, in other words, they are merely evidence of property; Ang. & A. Corp. § 560. They are now universally considered to be personal property; Ang. & A. Corp. § 557; Moraw. Priv. Corp. 119, 200; though in some earlier cases it was held otherwise.

See Cook, St & Stockh. § 12, n.

They are not a debt; Dos property; Allen v. Pegram, 16 la. 173, per Dillon, J. In Louisiana, stock is property and not a credit; New Orleans Nat B. Assln v. P. S. Wiltz & Co., 10 Fed. 330. It is settled in England that shares in a joint-stock company are not goods, wares and merchandise within the statute ol frauds; 11 A. & E. 205; it has been otherwise decided in Massachusetts; Tisdale V. Harris, 20 Pick. (Mass.) 9, uniformly followed in this country; Cook, St & Stockh. f 339. Stock is issued for money, in payment for property or labor, or as a stock dividend. It is established in England that stock may be issued for property, and such was the common law; Thomas v. Mueller, 106 111.

43. See Sanger v. Upton, 91 U. S. 60, 23 L. Ed. 220.

The subject is usually regulated by statute in this country. Stock can be issued by way of a stock dividend, which “is lawful when an amount of money or property equal in value to the stock distributed as a dividend has been accumulated and is permanently added to the capital stock of the corporation.”

Cook, St. & Stockh. § 536.

It is generally held that stock cannot be issued at a discount, and made full paid; Handley v. Stutz, 139 U. S. 429, 11 Sup. Ct 530, 35 L. Ed. 227 (see infra ); [1897] A. C. 299; 38 Ch. Div. 415; 2 De G. F. & J. 295; II Manitoba 629; but it has been held that an agreement with the company that the holders should never be called upon to pay any further assessment upon stock is valid as between the parties; Scovill v. Thayer, 105 U. S. 143, 26 L. Ed. 90S.

See Lorillard v. Clyde, 86 N. Y. 384; L. R. 14 Ch. Div. 394.

Directors issued stock at a discount; its market price went above par. It was held that the issue was unlawful and that the directors were liable, but only for the difference between the price at which they issued it and its par value; [1894] A. C. 654. Where stock is issued for property which is overvalued, the transaction may be set aside for fraud; Braut v. Elilen, 59 Md. 1; Coit v. Amalgamating Co., 14 Fed. 12. The corporation, after issuing its stock as full paid cannot complain; Scoville v. Thayer, 105 U. S. 143; unless the entire transaction is such that equity will rescind it for actual fraud. See, as to overvaluing property, 7 Am. & E. Corp. Cas. 652; Elyton Land Co. v. Elevator Co., 92 Ala. 407, 9 South. 129, 12