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tive capacity. In re Election of Cape May, etc., Nav. Co., 51 N. J. Law, 78.

The right is held to extend to foreign executors. The letters testamentary issued by the foreign court were held to be conclusive proof of the executor's title to the stock, and of his right to vote in respect thereof. Id.

In New York an administrator or executor may vote at corporate elections, and a formal transfer to him on the books is unnecessary. In re North Shore S. I. Ferry Co., 63 Barb. (N. Y.), 556; In re Hastings, 120 App. Div. (N. Y.), 756.

Fledgor and Pledgee.

One who lends money on the pledge of stock held in trust will be held to have had notice that the trustee was abusing his trust and applying the money lent to his own purposes when the certificates of the stock pledged show on their face that the stock pledged is held in trust (though the name of the cestui que trust does not appear), and when the loan was apparently for the private purposes of the borrower, and that fact would have been revealed by inquiry. Gaston v. American Exchange Nat'l Bank, 29 N. J. Eq., 98.

As between the corporation and the parties to a pledge of stock the corporation is not intended by this section to have the burden of determining whether the transfer was in pledge or not. The duty

of the corporation is to recognize the registered holder shown on its transfer books. But where the pledgee is under obligation to give the pledgor a proxy equity will so decree on application. Canadian Imp. Co. v. Lea, 69 Atl. Rep., 455, 462.

Where the owner of stock is disqualified to vote it, the disqualification cannot be removed by simply hypothecating the stock as collateral, the right given to the pledgor of stock to empower the pledges to vote thereon is limited to pledgors who themselves are empowered to vote the stock which they own. Thomas v. International Silver Co., 72 N. J. Eq., 224.

See Gorman-Wright Co. v. Wright, 134 Fed. Rep., 363.

A trustee, pending the execution of a trust, has a voting power on the stock held in trust and is under obligation to the cestui que trustent to exercise the power in accordance with his best judgment. Clowes v. Miller, 60 N. J. Eq., 179.

It is not a wrongful conversion for a pledgee to exchange the certificates which he holds for the same number of new certificates, where the company, by legislative authority, has reduced the nominal value of its shares of stock by reducing its capital. Donnell v. Wyckoff, 49 N. J. Law, 48.

This section does not cast the burden upon the corporation of determining whether a transfer is in pledge or not. The duty of the

corporation is to recognize only the registered holder shown on its transfer books. Canadian Imp. Co. v. Lea, 69 Atl. Rep., 455.

Partner may vote for the firm.

One partner of a firm, which owns stock in a corporation, entered on the corporate books in the partnership name, may vote in behalf of the firm. Kenton Furnace R. & Mfg. Co. v. McAlpin, 5 Fed., 737.

38. Shares of stock of a corporation belonging to said corporation shall not be voted upon directly or indirectly.

P. L. 1825, p. 82; R. S. (Ed. of 1846), p. 139, §6; Act of 1875, §43.

Purchase by a corporation of its own stock.

"Under the corporation act of 1896 there is an implied grant of power to corporations to purchase shares of their own capital stock, provided such purchase is required for legitimate corporate purposes, but not otherwise." See Knickerbocker Importation Co. v. Assessors, 74 N. J. Law, 583, 586, citing Morawetz on Private Corporations, Section 112 (2nd Ed.); Maryland Trust Co. v. National Mechanics' Bank, 63 Atl. Rep., 70.

It is doubtful whether the right to purchase its own shares exists when such a purchase would disable the corporation from paying its debts in full or where it would convert stockholders into creditors on an

equality with other creditors. Oliver v. Rahway Ice Co., 64 N. J. Eq., 596.

See also Chapman v. Ironclad Rheostat Co., 62 N. J. Law, 497; Berger v. U. S. Steel Corp., 63 N. J. Eq., 809.

The company may not vote upon such shares either directly or indirectly.

McNeely v. Woodruff, 13 N. J. Law, 352, 360; Matter of St. Lawrence Steamboat Co., 44 N. J. Law, 529, 539; see also Hilles v. Parrish, 14 N. J. Eq., 380; O'Connor v. International Silver Co., 68 N. J. Eq., 67; aff'd Id., 680; Thomas v. International Silver Co., 72 N. J. Eq., 224. This includes all stock standing in the name of an officer, a trustee, or in the name of any person, if the stock is the property of the company. Lien on stock.

A corporation has no lien on its stock held by its debtor. D. L. & W. R. R. Co. v. Oxford Iron Co., 38 N. J. Eq., 340, and cases cited. Except, perhaps, where there is a provision in the certificate of incorporation giving the company a lien. Drexel v. Long Branch Gas Co., 3 N. J. L. J., 250.

39. Directors Shall Be Stockholders.

No person shall be elected a director of any corporation issuing stock unless he shall be, at the time of his election, a bona fide holder of some of the stock thereof; and any director ceasing to be a bona fide holder of some of the stock thereof shall cease to be a director; any corporation may, by its certificate of incorporation or by-laws, determine how many shares a person shall hold to qualify him to be a director.

Act of 1875, §§47, 48.

* * *

With respect to the qualification of a director, the company's books are not conclusive. A person may be qualified to be a director whose vote cannot be received at the election. He may be a bona fide holder of stock at that time, and yet be disqualified from voting on it by reason of the transfer to him not being entered on the books. Matter of Election of St. Lawrence Steamboat Co., 44 N. J. Law, 529, 540. "The question of the competency of a person for the directorship is one exclusively of judicial cognizance over which the inspectors of election have no jurisdiction. A stockholder may have purchased stock with a view of becoming a director, or have obtained it by gift, or he may hold it upon a trust, and be qualified to be a director. If the stock was legally issued and is not the property of the corporation, and the legal title is in him, he is prima facie capable of being a director, and his right to be a director in virtue of his legal title to such stock can be impeached only by showing that title was put in him colorably with a view to qualify him to be a director for some dishonest purpose, in furtherance of some fraudulent scheme touching the organization or control of the company, or to carry into effect some fraudulent arrangement with the company." Matter of Election of St. Lawrence Steamboat Co., supra; see also In re Leslie, 58 N. J. Law, 609, 618; Election of Cape May Nav. Co., 51 N. J. Law, 78.

The court has held that where one is made a director of a corporation solely to make up the number of directors required by law, his right to hold such office cannot be impeached for fraud at the instance of one who was a consenting party to his admission into the company and his election to the office. In re Leslie, supra.

When a director makes an assignment of his estate for the benefit of creditors he ceases to be a director de jure, and the company may declare his office vacant and elect his successor, but as to third parties dealing in good faith with the company, without notice of any infirmity

in the title of the director, he must be regarded as a director de facto. Kuser v. Wright, 52 N. J. Eq., 825, reversing Wright v. First Nat'l Bank, 52 Id., 392.

A person is not a director, though nominated and elected, until he has accepted the office either expressly or impliedly. Whittaker v. Amwell Nat'l Bank, 52 N. J. Eq., 400, 415.

This section is held not to apply to the first directors of a consolidated company. Camden, etc., Co. v. Burlington Carpet Co., 33 Atl. Rep., 479.

40. Stock Books to Determine Who May Vote.

In case the right to vote upon any share of stock shall be questioned, the inspectors of the election shall refer to the stock books of the corporation to ascertain who are the stockholders, and in case of a discrepancy between the books, the transfer book shall control and determine who are entitled to vote.

Inspectors of election.

The statute does not in express language require inspectors of election; the election must be by ballot, unless the certificate of incorporation otherwise provides (Sec. 34). It is usual, however, to provide in the by-laws that at all elections of directors, two judges or inspectors shall be appointed by the chairman of the meeting.

They are ordinarily sworn to the faithful performance of their duty, and when the polls are closed they present a written report. Except at the first election, no person who is a candidate for election as director can be an inspector, and if elected his election is void (Sec. 35). The powers of inspectors are purely ministerial. They must receive the votes, count them and certify to the result.

If the right to vote is challenged they must refer to the books and ascertain whether the person offering the vote is a registered holder of stock. The books of the company are the only evidence they may receive on this question, and where this evidence is conflicting the transfer book controls. If a share has been transferred within twenty days next preceding the election, any vote offered on it must be rejected. Election of St. Lawrence Steamboat Co., 44 N. J. Law, 529, 539; Downing v. Potts, 23 N. J. Law, 66; In re Delaware River & A. R. Co., 76 N. J. Law, 163. Section 36, ante.

Representatives, executors, guardians and the like must be permitted to vote on the shares they represent upon producing satisfactory evidence of their representative capacity. See Section 37; Election of Cape May, etc., Nav. Co., 51 N. J. Law, 78.

Inspectors of election cannot reject a vote offered by proxy because the written proxy was not acknowledged or proved. If the proxy is regular in form and apparently the act of the stockholder, and not more than three years old, the inspectors should receive the votes offered under it. Election of St. Lawrence Steamboat Co., supra. For New York see In re Cecil, 36 Howard's Pr. (N. Y.), 477.

Evidence of right to vote.

Under the statute the books of the corporation constitute the only evidence as to who are stockholders entitled to vote at an election of directors. In re Election of Directors of Cedar Grove Cemetery Co., 61 N. J. Law, 422; Archer v. Am. Water Works Co., 50 N. J. Eq., 33. See also Johnston v. Jones, 23 N. J. Eq., 216.

Inspectors are bound by the stock and transfer books in determining who is entitled to vote. In re Delaware and Atlantic Ry. Co., 76 N. J. Law, 163.

At an election of directors of a corporation, two sets of directors were elected, one by persons shown by the original stock book, ledger and transfer book of the company to be the owners of a majority of the stock, and the other set by persons shown by such books to own only a minority of the stock, but by another stock book, specially prepared for the election, shown to own a majority of the stock. Held, that the directors elected by the persons shown by the original books to own a majority of the stock were the directors, under Corporation Act, Sections 33, 40, providing that the stock books of a corporation, and, in case of a discrepancy between them, the transfer book, shall determine who are stockholders entitled to vote for directors. Election of Directors of Consolidated Telephone & Telegraph Co., 43 Atl. Rep., 433.

In re

41. Failure to Elect Directors.

If the election for directors of any corporation shall not be held on the day designated by the act or certificate of incorporation or by-laws, the directors shall cause the election to be held as soon thereafter as conveniently may be; no failure to elect directors at the designated time shall work any forfeiture or dissolution of the corporation, but any justice of the supreme court may summarily order an election to be held upon the application of any stockholder, and

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