2. Naming directors. Where the charter of a railroad corporation requires that the directors shall be named in the articles of association, it is a sufficient compliance with the requirement that the articles are adopted at the time of electing the directors. The requirement is only directory. Ind. Supreme Ct. 1859, Eakright v. Logansport &c. R. R. Co. 13 Ind. 404.

owner on the Etherow, brought an action statute. Vt. Supreme Ct. 1847, Rogers v. against the corporation. The declaration Danby Universalist Society, 19 Vt. 187. contained counts for wrongfully diverting the waters of the Etherow, and also counts for not discharging a quantity of water equal to seventy-five cubic feet per second for twelve hours of every working day. The defendants paid money into court as to the former counts, and to the latter pleaded that they had not completed the reservoir and works mentioned in the act, so as to make it their duty to discharge water at the rate specified. Held, that the plea was good; that the defendants were not estopped from setting up the non-completion of the reservoir, and that the plaintiffs were only entitled to damages for the loss of the natural flow of the waters of the Etherow, and not for the non-discharge, from the reservoir, of the seventy-five cubic feet per second. Exch. 1861, Waller v. Mayor &c. of Manchester, 6 Hurlst. & N. 667.

3. Water rates. For decisions on the amount and collection of water rates in particular cities, see Parker v. City of Boston, 1 Allen, 361; Cromwell v. Stephens, 3 Abb. Pr. N. S. 26.

ARTICLES OF ASSOCIATION. [Under this head is treated the instrument, by whatever

name known, common in joint stock associations and corporations formed under general acts, which creates the corporate union between the members, and prescribes the corporate objects and form of organization. This instrument is distinguished from charter in that the latter emanates from the sovereign power; and from by-laws,

in that they are the acts of a corporation already in existence. Only cases which relate to the articles as a whole, and with reference to matters common to companies generally are here given. The interpretation

and effect of articles governing particular subjects are under those subjects:-e. g. provisions authorizing bylaws are under BY-LAWS; those prescribing the mode of conducting elections, are under ELECTIONS. And decisions depending on the objects and functions of a particular kind of corporation, are under its particular name.] 1. Minor informalities in articles do not invalidate. If the object expressed in articles of association is one expressly contemplated by the statute, and the articles of association are substantially in the form prescribed, and the provisions indicate an intention to form a corporation rather than a voluntary association, the associates may be deemed a corporation notwithstanding the fact that the articles do not conform to the statute in some particulars,-e. g. in stating the residence of the subscribers, and referring to the

3. Filing. The delivery of the articles of association of a railroad corporation to the officer whose duty it is to put them on file, may be proved by evidence other than his indorsement. Ind. Supreme Ct. 1858, Johnson v. Crawfordsville &c. R. R. Co. 11 Ind. 280.

4. The date of filing is no part of the articles of association of a railroad company, filed under the general law, and therefore may be proved by parol, regardless of the statute provision for the proof of the articles. Ib.

5. What is a "copy" of articles. Whether under a general act which requires that every association, formed under the act, shall, before it can acquire a corporate character, deposit with the town clerk "a copy of its articles of association," it is necessary that the copy should contain the names of the members as subscribed to the original articles, —see West Winsted Savings Bank &c. v. Ford, 27 Conn. 282.

6. Burden of proof to impeach articles of association lies on those who have signed them,-see Pennsylvania Ins. Co. v. Murphy, 5 Min. 36.

ASSESSMENTS.

[This title includes the power of a corporation to split its demand against a subscriber upon his engagement to pay for stock, into several instalments, and to collect them successively. These instalments are generally known in the English cases as "calls;" in the American as "assessments." The two terms are employed, in this work, as substantially equivalent; and the whole subject treated under the name most common in this country.

Many cases upon the right of a corporation to enforce the contract of subscription or other obligations of a stockholder, very analogous to those here presented, except that they regard the obligation as a whole, and do not contemplate dividing it into instalments, are under STOCK and SUBSCRIPTION.

Other species of assessment are under other titles. Thus the power of mutual insurance companies to make assessments on premium notes, is under INSURANCE COMPANIES; the power of a municipal corporation to assess lands within its jurisdiction for the expenses of local improvements, is under MUNICIPAL CORPORATIONS; the as

1. Nature and origin of the power to assess. That the debt created by a subscription is entire; the calls made by the company merely ascertaining the amount and the times when the instalments of that debt should be paid,‚—see Small v. Herkimer Manufacturing Co. 2 N. Y. (2 Comst.) 330.

2. A corporation has not power at common law, as an incident to corporate existence, to assess, for its own use, a sum of money upon the corporators and compel them by action at law to pay it. The power to maintain an action to recover an assessment levied upon the members by the corporation, must be deduced from the act by which they are incorporated. N. H. Superior Ct. 1821, Franklin Glass Co. v. Alexander, 2 N. H. 380; Mass. Supreme Ct. 1809, Andover & Medford Turnpike Corporation v. Gould, 6 Mass. 40; 1810, Andover & Medford Turnpike Corporation v. Hay, 7 Mass 102; 1811, New Bedford & Bridgewater Turnpike Corporation v. Adams, 8 Mass. 138; 1817, Franklin Glass Co. v. White, 14 Mass. 286; Me. Supreme Ct. 1835, Bangor House Proprietary v. Hinckley, 3 Fairf. 385.*

3. Paid corporate stock cannot be assessed, without special authority derived from the charter or statute. R. I. Supreme Ct. 1858, Atlantic De Laine Co. v. Mason, 5 R. I. 463. 4. An illegal assessment upon corporate stock cannot be made upon the ground of a presumption of assent, drawn from assent to former illegal assessments of lesser amount: nor can such assent be given by an assignor of stock after an assignment of the stock and notice of the assignment to the corporation. Ib.

5. Assent of individual stockholder to assessment, not necessary to charge him. See Smith v. Natchez Steamboat Co. 1 How. (Miss.) 479. 6. Succession. Whether a corporation formed pursuant to articles of association of an unincorporated company, can exercise a power of assessment conferred by those articles upon the unincorporated body to whose property and franchises it succeeds,-see Hull v. Wellesley, 6 Hurlst. & N. 38; Wallingford Manuf. Co. v. Fox, 12 Vt. 304; Goddard v. Pratt, 16 Pick. 412.

A

7. In whom the power is vested. provision in a statute or charter, authorizing the corporation, at a legal meeting, called for the purpose, to make assessments upon shares, vests the power in the corporation, as distinguished from the board of directors, and the corporation cannot delegate such power to the directors, in the absence of any special authority to do so. U. S. Circ. Ct. (Mass.) 1844, Exp. Winsor, 3 Story C. Ct. 411.

8. A by-law authorizing the directors to take care of the interests, and manage the concerns, of the corporation, must, upon the principles of fair reasoning, be limited to the ordinary interests, and ordinary concerns, of the corporation, as general agents of the corporation; and not extend to the extraordinary interests, or extraordinary concerns, expressly confided to the discretion of the corporation itself, by the very terms of the charter,- -e. g. the power to lay assessments on shareholders. Ib.

9. Power of trustees of a mining com pany to levy assessments to defray its proper and legal expenses. Sullivan v. Triunfo Gold & Silver Mining Co. 29 Cal. 585.

10. That, under the English statutes relative to public companies, the power to make calls is regarded as lodged with the directors, being deemed included in their general authority to manage the concerns of the company,- -see Ambergate &c. Railway Co. v. Mitchell, 4 Exch. 540; 19 Law. J. Exch. 89.

11. And it was held no sufficient ground of enjoining the directors from making calls, that the proceedings of the directors had been improper, and such as to amount to an abandonment of the enterprise; as it was

*The subscriptions sued upon in these cases appear not to have contained any definite engagements to pay specific sums, but to have been only designed to constitute the sub-possible that there were still legal obligations scribers a body corporate, leaving the mode of raising their capital to be subsequently provided.

For cases on the right to maintain an action for calls, see subdivision IV, 2, of the above chapter; also, SUBSCRIPTION.

to answer.

Chanc. 1851, Logan v. Courtown,

5 Eng. L. & Eq. 171.
12. Limits of the power. A corporation,

19. A charter of a railroad corporation authorized the directors to make such equal assessments from time to time on all the shares in the corporation as they might deem expedient and necessary in the execution and progress of the work; provided "that no assessments shall be laid upon any share in said corporation of a greater amount than $100 in 14. That when the sum designated in a the whole on such share; and if a greater charter, to be raised by assessment, has been amount of money shall be necessary to comraised, the power to assess is exhausted,‚—see | plete said road, it shall be raised by creating State v. Morristown Fire Association, 3 Zabr. 195.

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required, an amendment to their charter is tract. Miss. Ct. of Errors, 1856, Roberts v. procured, by which the required number of Mobile & Ohio R. R. Co. 32 Miss. 373. shares is reduced, a previous subscriber is not liable to pay an assessment on his shares, at least until the sum originally fixed is subscribed. Me. Supreme Ct. 1855, Oldtown &c. R. R. Co. v. Veazie, 39 Me. (4 Heath), 571.

27. Where the defendant subscribed for shares in the Mobile and Ohio Railroad Co. payable, “when needed for the payment of the contractors for the construction of the road, in such instalments as shall be called and required by the president and directors 23. The charter of a railroad corporation of the company, from time to time, the contained a provision that the capital stock amount to be expended upon the road in Itashould consist of not less than a certain num-wamba county." Held, that the president ber of shares. Held, that all assessments, laid and directors had no right to call for the payby the company before the required number ment of such instalments, until it became reof shares had been subscribed, were invalid, quisite to pay contractors for the construction and an action for the amount of such assess- of the road at the point stated. ments could not be maintained. Ib.

24. — in subscription paper. A subscription paper for shares in a railroad corporation, which provides that assessments may be laid "when three thousand shares shall have been subscribed," does not authorize the laying of an assessment until the stipulated amount has been unconditionally subscribed, payable in cash. Thus this provision does not include a subscription, by a contractor for building a railroad, of a certain number of shares, "being a portion of" a sum which, by his contract, was to be paid to him in stock at par, or, in case of any stock being issued by the corporation below par, then at the rate of the lowest issue. Ib.

Ib.

28. Defendant agreed, by his subscription, to pay $100 on a share at such times as should be determined on by the directors, not exceeding $25 at any one time. The directors made a call for $42 at a particular time. Held, that the defendant was not bound to pay it on such call, but not having taken advantage of the irregularity in the answer or trial, he could not avail himself of it on appeal. N. Y. Ct. of Appeals, 1856, Eastern Plank Road Co. v. Vaughan, 14 N. Y. (4 Kern.) 546.

29. Necessity of completing the subscription. In a suit to recover an assessment laid for the general objects of a corporation whose charter requires that the stock be divided

tion must show that all the shares were taken up before the assessment was laid; and if any subscriptions were conditional, it must be shown that the condition was fulfilled or waived. Mass. Supreme Ct. 1830, Central Turnpike Corporation v. Valentine, 10 Pick. 142.

30. The subscription paper signed by the defendant stipulated that the capital should be $1,500,000. In an action for an assessment,-Held, 1. That a subscription for the entire sum was a condition precedent to making any calls.

25. The same principle applies to a sub-into a certain number of shares, the corporascription to the stock of a railroad company (authorized by the charter to connect at the State line with any railroad that may be constructed from a place in another State, or to take a lease of any such contiguous railroad), made upon condition that no assessment shall be made until that part of the railroad between the end of the line in another State and a certain place in this commonwealth shall be put under contract. Mass. Supreme Ct. 1857, Troy &c. R. R. Co. v. Newton, 8 Gray, 596. 26. By a contract of subscription for stock in a railroad company, it was stipulated that two per cent. should be paid at the time of subscription, and three per cent. in three months from that date, and the remainder when called for and required by the president and directors; and the first two instalments were not to be called for until March 1, 1853. Held, that the first two instalments were payable on March 1, 1853, and the latter was payable thereafter, at the discretion of the company, according to the terms of the con

2. That it was not waived by the defendant's having received his shares and paid one assessment upon them, though after knowledge of a vote to reduce the amount to $1,350,000. Mass. Supreme Ct. 1852, Atlantic Cotton Mills v. Abbott, 9 Cush. 423.

31. Where the charter provided that the members might divide the capital stock into as many shares as they might think proper; and by a written agreement the subscribers

fixed the capital stock at $50,000, divided | Lowestoft Navigation Co. v. Theobald, 1 into 500 shares of $100 each, but only 138 Moody & M. 151. were subscribed. Held, that no assessment for the general purposes of the corporation could be made. N. H. Superior Ct. 1844, Littleton Manufacturing Co. v. Parker, 14 N. H. 543; N. H. Supreme Ct. 1855, Contocook Valley R. R. Co. v. Barker, 32 N. H. 363.

32. Where, on the organization of a corporation, the number of shares of the capital stock, and the sum to be paid for each, are fixed by vote, and inserted in the agreement of subscription, the subscribers are not bound to proceed, and may refuse to pay any part of their subscriptions, until the requisite number of shares is subscribed for, at the rate fixed by the vote. And, where the price of shares is fixed, a subscription conditioned that the shares shall be paid for in other stock, share for share, of the same nominal value, but of less value in the market, is not a compliance with the agreement. Mass. Supreme Ct. 1850, Cabot & West Springfield Bridge v. Chapin, 6 Cush. 50.

33. where the number of shares is prescribed by charter. Where the number of shares into which the capital stock of a corporation is divided is fixed by the charter, and that provides that the directors may make equal assessments upon all the shares, no valid assessment can be made against a subscriber for shares, until all the shares are taken, unless he in some way waives the provisions of the charter. N. H. Superior Ct. 1855, N. H. Central Railroad v. Johnson, 10 Fost. 390.

34. Where the charter of a railway company provided that the whole capital stock should be subscribed, before any of the powers and provisions of the charter should be put in force, and the company made a call upon the shares before the subscriptions were completed, and commenced an action after they were so, Held, the action could not be maintained; the completion of the subscription being necessary to enable the company to make the call.* K. B. 1828, Norwich &

*In a later case it has been held that a provision in the charter of a railway act, that so soon as 1,500,000%. shall have been subscribed, it shall be lawful for the company to put in force all the powers of the act, authorizing the construction of the railway, and of the acts therein recited (the general railway acts), does not require such subscription to be made before making calls, but only before exercising compulsory powers of taking land. Exch. 1851, Waterford, Wexford, & W. Railway Co. v. Dalbiac, 6 Eng. Railw. C. 753; 4 Eng. L. & Eq. R. 455; 20 Law J. Exch. 227.

35. If, by the charter, the stock of the company is divided into a certain number of shares, that number cannot be changed by act of the company. And if the charter either expressly or by implication requires that a certain number of shares be subscribed

before any assessment is laid, no valid assessment can be laid until that number be bonâ fide subscribed. Mass. Supreme Ct. 1827, Salem Mill Dam Corporation t. Ropes, 6 Pick. 23.

36. But subscribers for stock, who after the passing of an act of incorporation, sign an agreement to pay all legal assessments that may be made after the corporation shall be organized, are personally liable for an assessment laid to defray preliminary expenses incurred in obtaining such act, although the corporation was not authorized, at the time of laying such assessment, to lay assessments for the general objects of the act. Mass. Supreme Ct. 1827, Salem Mill Dam Corporation v. Ropes, 6 Pick. 23; 1830, Central Turnpike Corporation v. Valentine, 10 Pick. 142.

37. When the number of shares in the stock of a corporation is fixed by its charter, an assessment, made before the whole number of shares is subscribed for, is invalid, although the remainder of the shares be subscribed for on the same day, after the dissolution of the meeting of directors at which the assessment was made. Mass. Supreme Ct. 1854, Stoneham Branch Railroad v. Gould, 2 Gray, 277.

38. where it is left to be fixed by direc tors. If the charter of a railroad company does not fix the number of shares of the capital stock, it is to be presumed that the legislature intended that the stockholders or the directors should fix the number. And it is indispensable that the number be so determined before any assessment can be made thereon. Me. Supreme Ct. 1858, Somerset &c. R. R. Co. v. Cushing, 45 Me., 524.

39. In a case where the number of shares is not fixed by charter, if the number of shares fixed by the directors exceeds the number actually subscribed for and taken, the stockholders or directors may change the number; but the assessment must be upon the whole number. If the shares are not all taken, an assessment upon the number that have been taken is void. Ib.