Stock

The word 'stock' is not uniformly used to designate the capital of a corporation, although its primary meaning is capital, in whatever form it may be invested. Indeed, it is not at all unusual to find the word used synonymously with 'shares,' and meaning the certificates issued to subscribers to the company's stock... There is an obvious distinction between the capital stock of an incorporated company and the 'shares' of the company. The one is the capital upon which the business is to be undertaken, and is represented by the property of every kind acquired by the company. Shares are the mere certificates which represent a subscriber's contribution to the capital stock, and measure his interest in the company.

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The capital of a merchant or tradesman, including his money, merchandise, and credits. See "Capital." The goods and wares he has for sale and traffic. Of Corporations. The amount of money or property subscribed and paid in, or agreed to be paid in, by the shareholders. It is ordinarily divided into equal shares of a determined value, and apportioned among the stockholders in proportion to the amount which they have paid in, or for which they are liable. Distinction has been made between the capital stock, which is an asset of the corporation, and the shares of stock, which are the property of the several shareholders. 34 Eng. & Am. Corp. Cas. 223.

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

In mercantile law. The goods and wares of a merchant or tradesman, kept for sale and traffic.

In a larger sense. The capital of a merchant or other person, including his merchandise, money, and credits, or, in other words, the entire property employed in business.

In corporation law. The capital or principal fund of a corporation , or joint-stock company, formed by the contributions of subscribers or the sale of shares, and considered as the aggregate of a certain number of shares severally owned by the members or stockholders of the corporation; also the proportional part of the capital which is owned by an individual stockholder; also the incorporeal property which is represented by the holding of a certificate of stock; and in a wider and more remote sense, the right of a shareholder to participate in the general management of the company and to share proportionallj in Its net profits or earnings or in the distribution of assets on dissolution. See Tbayer v. Wathen, 17 Tex. Civ. App. 382, 44 S. W. 906; Burrall v. Bushwick R. Co., 75 N. Y. 216; State v. Lewis, 118 Wis. 482, 95 N. W. 388; Heller v. National Marine Bank, 89 Md. 602, 43 Atl. 800, 45 In R. A. 438, 73 Am. St. Rep. 212; Trask v. Maguire, 18 Wall. 402, 21 It Ed. 938; Harrison v. Vines, 46 Tex. 15. The funded indebtedness of a state or government, also, is often represented by stocks, shares of which are held by its creditors at interest In the law of descent. The term is used, metaphorically, to denote the original progenitor of a family, or the ancestor from whom the persons in question are all descended; such descendants being called "branches." Classes of corporate stock. Preferred stock is a separate portion or class of the stock of a corporation, which is accorded, by the charter or by-laws, a preference or priority in respect to dividends, over the remainder of the stock of the corporation, which in that case is called "common" stock. That is, holders of the preferred stock are entitled to receive dividends at a fixed annual rate, out of the net earnings or profits of the corporation, before any distribution of carnings is made to the common stock. If the earnings applicable to the payment of dividends are not more than sufficient for such fixed annual dividend, they will be entirely absorbed by the preferred stock. If they are more than sufficient for the purpose, the remainder may be given entirely to the common stock (which is the more usual custom) or such remainder may be distributed pro rata to both classes of the stock, in which case the preferred stock is said to "participate" with the common. The fixed dividend on preferred stock may be "cumulative" or "non-eumulative." In the former case, lf the stipulated dividend on preferred stock is not earned or paid in any one year, it becomes a charge upon the surplus earnings of the next and succeeding years, and all such accumulated and unpaid dividends on the preferred stock must be paid off before the common stock is entitled to receive dividends. In the case of "non-cumulative" preferred stock, its preference for any given year ls extinguished by the failure to earn or pay its dividend in that ycar. If a corporation has no class of preferred stock, all its stock ls common stock. The word "common" in this connection signifies that all the holders of such stock are entitled to an equal pro rata division of profits or net earnings, if any there be, without any preference or priority among themselves. "Deferred" stock is rarely issued by American corporations, though it ls not uncommon in England. This kind of stock is distinguished by the fact that the payment of dividends upon it is expressly postponed until some other class of stock bas received a dividend, or until some certain llability or obligation of the corporation is discharged. If there is a class of "preferred" stock, the common stock may in this sense be said to be "deferred," and the term is sometimes used as equivalent to "common" stock. But it is not impossible that a corporation should have three classes of stock:
(1) Preferred,
(2) common, and
(3) deferred; the latter class being postponed, in respect to participation in profits, until both the preferred and the common stock had received dividends at a fixed rate. See Cook, Corp. § 12; State v. Railroad Co., 16 S. C. 528; Scott v. Railroad Co.., 93 Md. 475, 49 Atl. 327; Jones v. Railroad Co., 67 N. H. 234, 30 Atl. 614, 68 Am. St. Rep. 650; Lockhart v. Van Alstyne, 31 Mich. 76, 18 Am. Rep. 156; Burt v. Rattle, 31 Ohio St. 116; Storrow v. Mfg. Ass'n, 87 Fed. 616, 31 C. C. A. 139.

— Capital stock. See that title.

— Certificate of stock. See Certificate.

— Guarantied stock. Stock of a corporation which is entitled to receive dividends at a fixed annual rate, the payment of which dividends is guarantied by some outside person or corporation. See Field v. Lamson, eta, Mfg. Co... l&2 Mass. 388, 38 N. E. 1126, 27 In R. A. 136.

— Publio stocks. The funded or bonded debt of a government or state.

— Special stock of a corporation, in Massachusetts. authorized by statute. It is limited in amount to two-fifths of the actual capital. It is subject to redemption by the corporation at par after a fixed time. The coi> poration is bound to pay a fixed annual dividend on it as a debt The holders of it are in no event liable for the debts of the corporation beyond their stock; and an issue of special stock makes all the general stockholders liable for ali debts and contracts of the corporation until the special stock is fully redeemed. American Tube Works v. Boston Mach. Co., 139 Mass. 5, 29 N. E. 63.

— Stock association. A joint-stock company, (q. v.)

— Stock-broker. One who buys and sells stock as the agent of others. Banta v. Chicago, 172 111. 204, 50 N. E. 233, 40 L. R. A. 611; Little Rock v. Barton, 33 Ark. 486; Gast v. Buckley (Ky.) 64 S. W. 632,

— Stock corporation. A corporation having a capital stock divided into shares, and which is authorized by law to distribute to the holders thereof dividends or shares of the surplus profits of the corporation. Buker v. Steele (Co.. Ct.) 43 N. Y. Supp. 350.

— Stock dividend. See Dividend.

— Stock-exchange. A voluntary association of persons (not usually a corporation) who, for convenience in the transaction of business with each other, have associated themselves to provide a common .place for the transaction of their business; an (association of stock-brokers. Dos Passos, Stock-Brok. 14. The building or room used by an association of stock-brokers for meeting for the transaction of their common business.

— Stockjobber. A dealer in stock; one who buys and sells stock on his own account on speculation. State v. Debenture Co., 51 La. Ann. 1874, 26 South. 600.

— Stock-note. The term "stock-note" has no technical meahing, and may as well apply to a note given on the sale of stock which the bank had purchased or taken in the payment of doubtful debts as to a note given on account of an original subscription to stock. Dunlap v. Smith, 12 111. 402,

— Watered stock. Stock issued by way of increase or addition to the nominal capital stock of the corporation, and passing into the bands of stockholders either by purchase or in the form of a stock dividend, but which does not represent or correspond to any increase in the actual capital or acfual value of the assets of the corporation. See Appeui of Wiltbank, 64 Pa. 260, 3 AmRep. 585.

A source or root of succession or descent; the goods and wares of a merchant, kept for sale and traffic; in a larger sense, the capital of a merchant, including merchandise, money and credits; the capital of a private corporation; the animals collected, used or raised on a farm.

1. Indebtedness of states or governments is often represented by stocks, so called, shares in which are represented by scrip issued to creditors of the government, or by entries and records in official books kept in the government offices. The funded national debt of Great Britain is understood to stand wholly in the form of stocks. In this country, an issue of bonds has been ■ The term stock is also employed to denote the moneys advanced to government, which constitute a part of the national debt, whereupon a certain amount of interest is payable. Since the introduction of the system of borrowing upon interminable annuities, the meaning of the word stock has become gradually changed; and, instead of signifying the security upon which loans are advanced, it has for a long time signified the principal of the loans themselves.

In this latter sense, we speak of the sale, purchase, a id transfer of stock. Mozleij ^ W. Stock-broker; stock-jobber. These are two names for persons who make dealings in stocks their business. According to English writers, the members of the stock exchange are called "jobbers" and "brokers." The jobber is the dealer, who buys and sells at the market prices, and acts as an intermediary between the broker who buys and the broker who sells. The broker, on behalf of his principal, deals with the jobber. Stock ezcchange. An association or society in any commercial city of persons making dealings in stocks their business, organized for the better regulation of their transactions; also, the building or establishment maintained by such a society for the public sale of stocks. 2. The property of a business corporation, kept and used to enable it to carry on its business, is called its stock, and is usually treated and dealt in as if divided into shares, represented by certificates setting forth the ownership, and transferable by entries and recorded in the books of the company, such as the transfer book, the stock ledger, &c. The owner of^ share or shares is called a stockholder, — a term not minutely accurate, for what he holds is a certificate; as to the stock, he is an owner rather than a holder. When the word stock, as used in reference to a corporation, means any thing else than the capital of the company, it cannot refer to any thing else than the interests of the shareholders or individuals. Such interests are called stock; and the sum total of tliem is appropriately enough called the stock of a corporation. People v. Commissioners of Taxes, 23 N. Y. 192, 220. That a statute imposing a tax upon the stock of a corporation, means upon its tangible property, and not upon its shares, see Auditor, &c. v. New Albany, &c. R. R. Co, 11 Ind. 570; State v. Harnilton, 5 Ind. 310. That such a statute includes both stock subscriptions, and also all the actual tan- A statute exempting the capital stock of a railroad company from taxation was held to mean the capital to be raised by subscriptions to the stock, and not to include lands granted by congress to aid the road, in St. Louis, &c. Railway v. Loftin, 30 Ark. 693. 3. The various things accumulated by an agriculturist, artisan, or merchant, or indeed any person in business, for use or disposal in the regular, current prosecution of his vocation, are called his stock, his stock in trade, his stock of goods, stock of his farm or shop. This is a popular use of the term rather than a legal one, and what it includes depends on the connection and circumstances. The expression live-stock belongs under this head. It seems to mean that portion of the stock of a farm or plantation, or other establishment or business, which is composed of live animals. But any distinctions as to the use of the term in this sense belong to the vernacular dictionaries. 4. Stock also means a family, in the sense of persons connected by descent; as in the expression that a person comes from a good stock.

mer. law. The capital of a merchant, tradesman, or other person, including his merchandise, money and credits. Ina narrower sense it signifies only the goods and wares he has for sale and traffic. The capital of corporations is also called stock; this is usually divided into shares of a definite value, as one hundred dollars, fifty dollars per share.