transferer from all the responsibilities which attached to him as a creditor. Tucker v. Gilman, 121 N. Y., 189; Adderly v. Stone, 6 Hill, 624; Rosevelt v. Brown, 11 N. Y., 148; Johnson v. Underhill, 52 id., 203; Cutting v. Damnerel, 88 id., 410.

In an action under section 57 of this act, the corporate books are, to some extent, evidence against stockholders who are chargeable with knowledge of their contents. Blake v. Griswold, 103 N. Y., 429.

A subscriber is liable for the amount of his subscription, though after calls are made, and before they are payable, he assigns his stock to a responsible party, and has it transferred to, and an account opened with him, on the books of the company. Schenectady, etc., Co. v. 11 N. Y., 102.

The delivery of the certificate, as between the owner and assignee, with the assignment and power indorsed, passes the entire legal and equitable title in the stock, subject only to such liens or claims as the corporation may have upon it. Cushman v. Thayer Mfg. J. Co., 76 N. Y., 365; McNeil v. Tenth Nat. Bk., 46 id., 331; N. Y. & N. H. R. R. Co. v. Schuyler, 34 id., 30, 80.

Where a subscriber, after receiving his shares, made transferable upon the books of the corporation by the terms of the certificate, makes a transfer thereof in good faith, and the company accepts a surrender of his certificate, issues a new one to the transferee and credits him with the stock upon its books, the transaction amounts to a consent by the company to a release of the former stockholder from liability for future calls, and a substitution of the liability of the transferee. Billings v. Robinson, 94 N. Y., 415; Cowles v. Cromwell, 25 Barb., 414; Isham v. Buckingham, 49 N. Y., 220.

But the issue of a new certificate to the transferee is not essential to effect this result, where there exist other circumstances which clearly indicate the intent of the parties, and establish by their mutual assent such release and substitution. Id. The delivery of a certificate, together with a power of attorney, authorizing the person to whom such certificate is delivered to transfer the shares upon the books of the company, transfers the title to such shares to him without their formal transfer upon the books of the corporation. Dunn v. Star Fire Ins. Co., 19 W. Dig., 531; 7 Lans., 317.

The liability of stockholder to creditors of the company is not discharged by a transfer of the stock on the corporate books, unless it is made in pursuance of an actual bona fide sale, without any secret understanding or trust in favor of the tranferrer. Veiller v. Brown, 18 Hun, 571.

No member of a corporation can exonerate himself from liability, or defeat the claims of creditors, by transferring his interest to an insolvent person or to a bankrupt. McLaren v. Franciscus, 43 Mo., 452; or make a fraudulent transfer for the purpose of avoiding personal liability. Marcy v. Clark, 17 Mass., 330.

The company is liable for an unauthorized refusal to transfer stock on its books. Dunn v. Star Fire Ins. Co., 19 W. Dig., 531.

The company should resist the transfer on its books without production and surrender of the outstanding certificates, or proof of loss or destruction, and proof that the real owner has applied for a new certificate. Smith v. Amer. C. Co., 7 Lans., 321; Cushman v. Thayer Mfg. J. Co., 76 N. Y., 365; N. Y. & N. H. R. R. Co. v. Schuyler, 34 id., 83.

An equitable action will lie to compel a transfer upon its books by a corporation, of shares of its capital stock, to the owner of the same. Cushman v. Thayer

Mfg. J. Co, 76 N. Y., 355; Middlebrook v. Merchants' Bk., 41 Barb, 481; 21 How., 474; aff'd 3 Abb. Ap. Dec., 295; Com. Bk. v. Kortright, 22 Wend., 348; Pollock 2. Nat. Bk., 7 N. Y., 274; Purchase v. N. Y. Ex. Bk., 3 Roht., 161; White v. Schuyler, 1 Abb., N. S., 300; Buckmaster v. Consumers' Ice Co., 5 Daly, 313; Cushman v. Thayer Mfg. J. Co., 53 How., 60; aff'd 7 Daly, 330. The general rule is for courts of equity not to entertain jurisdiction for a specific performCushman v. Thayer Mfg. J. Co., 76 N. Y., 365. But this rule is limited to cases where a compensation in damages will furnish a complete and satisfactory remedy. Id. Where a recovery of damages, for a refusal to transfer, will furnish an inadequate compensation, an equitable action is

ance on the sale of stock.

proper. Id.

Any act suffered by the corporation, which wrongly invests a third party with the ownership of shares of stock, without due production and surrender of the certificate, renders it liable to the owner. Y., 365. Cushman v. Thayer Mfg. J. Co., 76 N.

▲ provision in the act of incorporation, or in the by-laws, requiring transfers of stock to be made upon its books, is for the benefit of the corporation. Robinson v. Nat. Bk., 95 N. Y., 637. This requirement will be deemed waived and nonessential, when it wrongfully refuses to obey its own rule. Id. Isham v. Buckingham, 49 N. Y., 220; Billings v. Robinson, 94 id., 415; Johnson v. Laflin, 17 Alb. L. J., 146. After refusal, without a valid reason, to make a transfer on its books, the corporation is bound to recognize the title of the assignee, precisely the same as though it had done its duty and made the proper entries. Robinson v. Nat. Bk., ante. The transferee in such case is entitled to maintain an action to recover the declared dividends without a further request or demand. Id. His right is not affected by the fact that he can bring an equitable action to compel a transfer, or an action at law to recover damages for the wrongful acts of the company. Id.

Usually, a corporation, acting in good faith and without notice of the rights of others, may treat registered shareholders as the actual owners of the shares standing in their names. Campbell v. American Zylonite Co., 122 N. Y., 455. But this rule is only applicable to such transactions as are within the express or implied powers conferred upon the company or its shareholders. Id. The assignees of shares having possession of the certificates, though holding under unregistered transfers, are not bound by contracts between the corporation and the regis tered, and all other stockholders, which are not within such express or implied powers. Id. As between the assignor and assignee, the unregistered assignment is void under this section. Id.

The object of the provision of this section in regard to an exhibition or inspec tion of the books is to give a liberal opportunity at all reasonable times to examine the books and to punish the person in charge who should willfully and intentionally deprive the creditors and stockholders of such examination. Kelsey v. Pfaulder P. F. Co., 41 Hun, 20. Where the company has provided a safe in which the books are kept, and the clerk, who has the key and combination of the safe, is necessarily called away for a short time, it is not unreasonable to request a creditor or stockholder to wait until the morning of the next business day, to see the books. Id. A willful and intentional attempt to deprive them of such examination must appear. Id.

Where no statutory right to inspect the books of a corporation exists, the granting or refusing a writ of mandamus to compel the officers of such corporation to allow a stockholder to make such inspection is discretionary. Matter of Sage, 70 N. Y. 220; People ex rel. Hatch v. Lake Shore, etc., 11 Hun, 1. But this right is expressly given by this section, and the above cited cases do not apply to a proceeding under it. People ex rel. McDonald v. U. S. M. R. Co., 20 Abb. N. C., 192. Under this section, the books shall daily, during business hours, be open for the inspection of stockholders and creditors of the corporation, and their personal representatives, at its principal business office. Id. If either of these persons applies in person to inspect the books, and his application is refused, he is entitled to a mandamus as a matter of absolute right. Id. But a demand, made by his attorney-at-law, is insufficient to found a proceeding to compel inspection. Id. It may be doubted whether, even though a proper demand is made, such proceeding can be maintained against the company itself.

Id.

Any officer of the corporation, having the charge of its books, who, though he submits them to the inspection of the stockholder or creditor, shall yet refuse to permit him to take extracts therefrom, subjects himself to the penalty prescribed in this section. Cortheal v. Bronner, 5 N. Y., 562.

A corporation is liable under this section for failure to exhibit the stock-book, when requested, and the exercise of due diligence to do so is not shown. Kelsey v. Pfaulder P. F. Co., 20 N. Y. St. Rep., 533. The stockholder need not show pecuniary loss. Id. What does not constitute a waiver of the right to enforce the penalty. Id.

The officer having the custody of the books is not constituted by this section a judge of the motives of the stockholder in making his inspection, or of the precise manner in which it shall be conducted, or of the purpose which the information thus obtained shall be made to subserve. Cortheal v. Browner, 5 N. Y., 562. This section does not authorize the custodian to close the books because the stockholder or creditor, in the progress of his examination, may make an extract for any purpose. Id.

A stockholder in an incorporated company can not be deprived of the right to

inspect the books of the company because they are kept in a particular way, or contain, along with the information to which he is entitled, other information which he has no right to demand. People ex rel. Richmond v. Pacific M. S. Co., 50 Barb., 217. If the corporation does not keep the books which the statute prescribes, it is its duty to permit an inspection of such as it does keep for the purpose of recording the transactions, which the statute gives the stockholders the right to know. Id.

Every stockholder has a right to know who are qualified voters, and the number of votes each shareholder is entitled to cast. People ex rel. Richmond v. Pacific M. S. Co., 50 Barb., 280; Cotheal v. Browner, 5 N. Y., 562.

What is not such a denial of positive averments of ownership of shares contained in the applicant's affidavit for an inspection of the corporate books as to defeat an application for a mandamus to compel the company to permit an inspection. Matter of Martin, 41 N. Y. St. Rep., 409. See also People v. Board, etc., 46 Hun, 296; People v. Cromwell, 102 N. Y., 477; People v. Common Council, 77 id., 503; People v. Supervisors, 25 N. Y. St. Rep., 737; Sullivan v. Gilroy, 55 Hun, 285; Kelsey v. Pfaulder, 20 N. Y. St. Rep., 533. The fact that the by-laws of the company direct that the books shall be in the charge of the secretary is no defense to such application, where the refusal of the treasurer to permit inspection is unqualified, and not put on the ground of inability. Matter of Martin, ante.

Under section 17, chap. 611, of 1875, it was held that the right of the stockholders to inspect the books of account included the right to take extracts therefrom. Matter of Martin, 41 N. Y. St. Rep, 409; though it contains no provision, in express language, to that effect. Id. But such right is conferred expressly by sect. 29 of this act.

The directors, if deprived of the possession of the stock-book of the company, may open a new one, making it as far as possible a copy of the old book. Schoharie Valley R. R. Co., 12 Abb., N. S., 394. The inspectors of election may, in such case, properly refer to the new stock-book to ascertain who are voters. İd. But, if the old book is produced, the record therein must govern in reference to transfers therein before the new book was opened. Id.

The books of account of a corporation are not competent evidence, of themselves, to establish an account or claim against a trustee or stockholder in an action brought in behalf of the corporation. Rudd v. Robinson, 126 N. Y., 13; 36 N. Y. St. Rep., 500; Hager v. Cleveland, 36 Md., 476; Hill . Manchester, etc., W. W. Co., 5 B. & Adol., 866; Haynes v. Brown, 36 N. H., 545; Chenango Bridge Co. v. Lewis, 63 Barb., 111; Olney v. Chadsey, 7 R. I., 224; Wheeler v. Walker, 45 N. H., 355; Pearsall v. W. U. T. Co., 35 N. Y. St. Rep., 307. A director or stockholder is not charged with actual knowledge of the entries made in the books of the company. Rudd v. Robinson, ante.

It is the general rule that the books of the company, containing the transactions of the corporation, are admissible in evidence in respect to such transactions against officers and members of the corporation. Billings v. Trask, 30 Hun, 314. But it is very doubtful whether this rule can be extended to make the private accounts with the individuals dealing with the corporation, whether themselves stockholders or not, evidence of indebtedness to charge stockholders or officers with liability to penalties. Id. If admissible, it is not conclusive, but subject to explanation and rebuttal. Id. See further, on the examination of corporate books, Matter of Martin, 62 Hun,

557.

30. Annual report.-Every domestic stock corporation and every foreign stock corporation doing business within this state, except moneyed and railroad corporations, shall annually, during the month of January, or, if doing business without the United States, before the first day of May, make a report as of the first day of January, which shall state:

1. The amount of its capital stock, and the proportion actually issued.

2. The amount of its debts or an amount which they do not then exceed.

3. The amount of its assets or an amount which its assets at least equal.

Such report shall be signed by a majority of its directors, and verified by the oath of the president or vice-president and treasurer or secretary, and filed in the office of the secretary of state, and in the office of the county clerk of the county within this state where its principal business office may be located. If such report is not so made and filed, all the directors of the corporation shall jointly and severally be personally liable for all the debts of the corporation then existing, and for all contracted before such report shall be made. No director shall be liable for the failure to make and file such report if he shall file with the secretary of state, within thirty days after the first day of February, or the first day of May, as the case may be, a verified certificate, stating that he has endeavored to have such report made and filed, but that the officers or a majority of the directors have refused and neglected to make and file the same, and shall append to such certificate a report containing the items required to be stated in such annual report, so far as they are within his knowledge or are obtainable from sources of information open to him, and verified by him to be true to the best of his knowledge, information and belief.

[Am'd, ch. 384 of 1897.]

Former section 30, as amended by laws 1892, chap. 2, further amended.

See section 12, chap. 40 of 1848, section 18, chap. 611 of 1875, and section 1, chap. 208 of 1884, now repealed.

As to annual report, under this section, see N. Y. Law Review, No. 1, vol. 1, pp. 12-14. The object of this section is stated in Cincinnati Cooperage Co. v. O'Keefe, 44 Hun, 64.

The purpose for which the annual reports are required, stated. Pier v. Hanmore, 86 N. Y., 101; Walton v. Godwin, 58 Hun, 91; 33 N. Y. St. Rep., 886; Torbett v. Godwin, 41 N. Y. St. Rep., 323.

As soon as a director parts with all beneficial interest in, and control over, the stock which the statute, section 2, chap. 567 of 1890, requires him to hold, and requests the officers of the corporation to make a proper transfer of such stock on the books of the company, he ceases to be a director, and is not liable to creditors by reason of any subsequent failure to file the report under this section. Chemical Nat. Bk. v. Colwell, 43 N. Y. St. Rep., $76.

A corporation is not liable for the acts of its trustees, done prior to the filing of the articles of incorporation and not ratified by it. Berridge v. Abernethy, 24 W. Dig., 513.

The filing of the certificate in the county clerk's office, immediately followed by user, renders the company a corporation de facto, and imposes upon it the duty of making and publishing a report. Meridan Tool Co. v. Morgan, 1 Abb. N. C.,

125 n.

The duty, imposed by this section, of making and filing an annual report, is a corporate duty. Cornell v. Roach, 101 N. Y., 373. This duty is not cast upon the trustees, either as such or in their individual capacity. Id.

No penalty will be imposed under this section save in cases where the plain language of the section requires it. Whitaker v. Masterton, 106 N. Y., 277; Whitney Arms Co. v. Barlow, 63 id., 62; Wiles v. Suydam, 64 id., 173; Bonnell v. Griswold, 80 id., 128; Brackett v. Griswold, 103 id., 425.

Chapman v.

Where a failure to file the annual report has occurred, the moment the corporation creates the debt, a trustee becomes liable to pay the same. Comstock, 58 Hun, 325. He has incurred the statutory penalty, and remains liable during the next three years ensuing. Id. At the end of the three years, the short statute of limitations becomes a bar to the creditor's right of recovery. Id.; Duckworth v. Roach, 81 N. Y., 49. Neither the continuance of the default, nor subsequent omissions on the part of the company to make a report, has the effect to renew the old liability, create a new right of action, or stay the running of the statute of limitations. Id.; Rector, etc., v. Vanderbilt, 98 N. Y., 175.

28

Upon the default of a company to report, all the trustees then in office are jointly and severally liable for all the debts of the company then existing, whether contracted by them or their predecessors, and for all that may be subsequently contracted during their continuance in office until such report is made. Vincent v. Sands, 42 How., 231; aff'd 58 N. Y., 672.

Trustees, who upon such default, retire from office, are liable for all then existing, but for no subsequent debts of the company. Vincent v. Sands, 42 How., 231; aff'd 58 N. Y., 672.

Under section 18, chap. 611 of 1875, a trustee could escape the consequences of an omission, on the part of the company, to make and file the report, by himself subsequently and within a fixed time filing a certificate or report. Butler v. Smalley, 101 N. Y., 71; and a similar exemption is made by the provisions of this section.

A trustee is liable for a default in filing the annual report which he can not control, unless he makes and files a report within the time and in the form required in the latter part of this section. Vincent v. Sands, 42 How., 231; aff'd 58 Ñ. Y., 672. This is a saving clause intended to protect the innocent and willing trustee from personal liability.

Their successors, by promptly obeying the requirements of this section, may escape all liability. Vincent v. Sands, 42 How., 231; aff'd 58 N. Y., 672. If they continue the default till the next January, they are liable for the debts contracted during their administration up to that time, and for no other, unless they then and there make default. Id. In the latter case, they become liable for all the debts then existing. Id.

The members of successive boards of trustees may become liable for the same debts, by reason of the successive defaults. Vincent v. Sands, 42 How., 231; aff'd 58 Ñ. Y., 672; Boughton v. Otis, 21 id., 261; Shaler & H. Q. Co. v. Bliss, 27 id., 297; aff'g 34 Barb., 309; 12 Abb., 470; Garrison v. Howe, 17 N. Y., 458; Miller v. White, 57 Barb., 504.

When directors of business corporation are liable for failure to file annual report, etc. P. E. P. Co. v. Coursey, 32 N. Y. St. Rep., 748.

To make a trustee personally liable for the debts of the corporation, three things must concur: the trusteeship, the neglect to publish the annual report, and the debt. Chandler v. Hoag, 2 Hun, 613; aff'd 63 N. Y., 634.

A trustee's liability depends upon the existence of the corporate debt, a default in making the report, and the trusteeship. Rector, etc. v. Vanderbilt, 20 W. Dig., 488; Shaler, etc., Co. v. Bliss, 27 N. Y., 297; Duckworth v. Roach, 81 id., 49.

Recovery in actions under this section is not in any respect based upon the theory of affording compensation to the creditor for damages sustained by reason of the omission to make and file a report. Stokes v. Stickney, 96 N. Y., 323; Wiles v. Suydam, 64 id., 173; Easterly v. Barber, 65 id., 252; Knox v. Baldwin, 80 id., 610; Veeder v. Baker, 83 id., 156; Pier v. George, 86 id., 613.

An action under this section is one to enforce a penalty. Victory W. P. Co. v. Beecher, 97 N. Y., 651; Merchants' Bk. v. Bliss, 35 id., 412; Jones v. Barlow, 62 id., 02; Whitney Arms Co. v. Barlow, 63 id., 62; Wiles v. Suydam, 64 id., 173; Brice v. Platt, 80 id., 379; Knox v. Baldwin, id., 610; Easterly v. Barber, 65 id., 252; Veeder v. Baker, 83 id., 156; Pier v. George, 86 id., 613; Roach v. Duckworth, 95 id., 391; Stokes v. Stickney, 96 id., 323; Whitaker v. Masterton, 106 id., 277; Brackett v. Griswold, 103 id., 425; Gadsden v. Woodward, id., 242.

The recovery allowed by this section against trustees is a penalty. Victory W. P. Co. v. Beecher, 26 Hun, 48; Merchants' Bk. v. Bliss, 35 N. Y., 412; Garrison T. Howe, 17 id., 458; Adams v. Mills, 60 id., 536, 553; McHarg v. Eastman, 35 How., 205; 7 Robt. 137.

The liability of trustees, under this section, is in the nature of a penalty or punishment for the omission of a duty. Shaler & H. Q. Co. v. Bliss, 34 Barb., 309; aff'd 27 N. Y.. 297. It attaches to the individuals and not to the office. Id.

The liability imposed upon trustees of manufacturing companies for neglecting to make and file an annual report, is in the nature of a penalty for misconduct in office. Dabney v. Stevens, 40 How., 341; Bird v. Hayden, 2 Abb., N. S., 61; McHarg Eastman, 35 How., 205; Merchants' Bank v. Bliss, 35 N. Y., 412.

The annual report must be filed each year after the organization of the corporation. Jones v. Barlow, 62 N. Y., 202. The fact that it has not commenced business at the time prescribed for such filing, is no excuse for an omission so to do. Id. ▲ report, professedly in compliance with this section, will receive, in the absence