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Stock which a corporation itself owns can not be voted upon.1

District of Columbia: R. S. 1875, factory to the presiding officer. P. S., § 578. c. 149, § 21.

Idaho Territory: R. Laws, 1875, p. 622, § 12.

New Mexico: A pledgor of stock may represent the same at all meetings and vote thereon as a stockholder. Comp. Laws 1884, § 203.

Illinois: R. S. 1898, c. 32, § 24. Indiana: Burns' R. S., § 3432. Kentucky: G. S. 1899, § 552. Maine: When the owner of stock in a corporation has transferred, mortgaged or in any way pledged the same to another for security merely, and it so appears in such transfer, mortgage or pledge and on the books of the corporation, such owner shall have the right to vote such stock in all meetings of the stockholders until his right of redemption ceases. Acts 1872, c. 69; R. S. 1883, c. 46, § 14.

New York: Every pledgor of stock standing in his name on the books of the corporation shall be deemed the owner thereof for the purpose of voting. 1 R. S. (Birdseye, 2d ed.), p. 655.

Maryland: Until forfeiture, upon exhibiting a certificate in writing from the pledgee that the stock is held in pledge, the owner may vote. An executor, administrator, guardian, or trustee, holding stock may vote upon it. R. Code 1878, p. 316, § 13; 1 Pub. Gen. Laws, p. 289, § 13.

Missouri: R. S. 1899, § 947.

Nevada: Any stockholder, who has pledged his stock by delivery of the certificate, may nevertheless represent the same at all meetings and vote as stockholder. Comp. Laws 1873, vol. 2, §3400.

New Hampshire: The pledgor of stock as collateral security is entitled to vote as a stockholder. G. L. 1878, p. 355, § 12; P. S. 1900, c. 149, § 21. A person holding stock in a corporation as executor, administrator, guardian, or trustee, and a person who has pledged his stock as collateral security, may vote thereon as a stockholder, upon producing, if his right is contested, evidence of his title satis

Pennsylvania: As between the pledgor and pledgee of capital stock pledged to secure a specific loan with a fixed period or periods of maturity, the right to vote shall be determined as follows: First, by the written agreement of the pledgor and pledgee. Second, in all other instances the pledgor shall be held to be the owner and entitled to the right to vote. 1 Brightly's Purdon's Dig. 1894, p. 416, § 62.

Washington Territory: Pledgor may vote as stockholder. Code 1896, § 2657; Codes & Stats. 1897, § 4264.

Wyoming Territory: The same provision here also. R. S. 1887, § 517.

Ex parte Barker, 6 Wend. (N. Y.) 509; Ex parte Desdoity, 1 Wend. (N. Y.) 98, 99; Page v. Smith, 48 Vt. 266; American Railway-Frog Co. v. Haven, 101 Mass. 398.

Under a statute requiring the written assent of stockholders owning two-thirds of the capital stock of a corporation to authorize a mortgage of its property, the corporation itself can not assume to sign as the owner of certain shares of its own stock which it has pledged to secure a loan. Vail v. Hamilton, 20 Hun (N.Y.) 355.

When stock is transferred to the name of the pledgee upon the company's books, the pledgee thus holding the legal title is entitled to exercise the privilege of voting unless it is otherwise provided by statute or by some by-law of the corporation. A statute which provides that when a pledgor of stock as collateral reserves the right to vote upon it, his vote shall be received, does not affect the right of a pledgee holding the legal title to stock without any reservation to the pledgor, to vote upon it, if he would be entitled to vote at common law, or under the corporate by-laws of the corporation.

"It is a right

of property incident to the legal title to the stock, and the declaratory and directory provisions of the statute did not take it away.

The pledgor of stock has the right to vote upon it in case the pledgee does not claim the right to vote upon it under an agreement with the pledgor.

§ 442. One in whose name stock is registered upon the books of the corporation has the prima facie right to vote upon it, though, in fact, he may hold the stock as pledgee or trustee for a pledgee. But if his only title is that of pledgee, and that title is the full measure of his rights and authority as regards the stock, the pledgor is entitled, upon proof of his general ownership, to vote upon the stock, though he has pledged it for its full value. A trustee holding the stock for the pledgee has no greater rights. The trustee in such case is merely an agent of the creditor, and the delivery or transfer of the stock to him amounts to the same as a delivery of it to the creditor.

Stock belonging to the corporation itself, though transferred to a trustee to hold in pledge for a creditor, can not be voted upon by any person. It can not be voted upon by the cor

1 Commonwealth v. Eberhardt (Pa.), 25 Atl. Rep. 535, per Mitchell, J.

2 Dulin v. Pacific Wood & Coal Co., 103 Cal. 357, 35 Pac. Rep. 1045, 37 Pac. Rep. 207.

In re Barker, 6 Wend. (N. Y.) 509;

In re Mohawk & Hudson R. R. Co., 19 Wend. (N. Y.) 135.

Brewster v. Hartley, 37 Cal. 15. 5 Brewster v. Hartley, 37 Cal. 15, 99 Am. Dec. 237.

poration in which the general property remains, or by any one in its behalf, and it can not be voted upon by the trustee in behalf of the pledgee.

§ 443. But it does not follow that a pledgee or his trustee will be restrained by injunction from voting upon the stock standing upon the books of the company in his name without intimation that he is not the absolute owner of it. In a recent case in New York a pledgor of certain shares of the stock of the Cleveland, Columbus, Cincinnati and Indianapolis Railway Company, which had been transferred to a trustee for the pledgee, obtained a temporary injunction against the trustee's voting upon the stock. The plaintiff's complaint alleged that the trustee, who was the president of the New York, Lake Erie and Western Railway Company, by reason of his control of the pledged shares, had been enabled to control the management of the former corporation, and had managed the same without regard to its best interests, and so as to subserve the interests of the corporation of which he was president; that the trustee had voted on these shares at previous elections held by the stockholders, and claimed the right to do so at future elections; that it was greatly against the pledgor's interest to permit the trustee so to vote, and that the pledgor would suffer great and irreparable injury if the trustee should be permitted to do so. The court of appeals, however, reversed the action of the supreme court, and held that the temporary injunction was unauthorized.' Chief Justice Andrews, delivering the opinion of the court, said: "It is not sufficient to authorize the remedy by injunction, that a violation of a naked legal right of property is threatened. There must be some special ground of jurisdiction; and where an injunction is the final relief sought, facts which entitle the plaintiff to this remedy must be averred in the complaint, and established on the hearing. The complaint in this case is bare of any facts authorizing final relief by injunction. It is true that it is alleged that

1 McHenry v. Jewett, 90 N. Y. 58, 62, reversing 26 Hun 453.

the defendant, by the use of the shares, has been enabled, to a great extent, to control the management of the corporation in the interest of the New York, Lake Erie and Great Western Railway Company, with little or no regard to the best interests of the company issuing the shares. But there are no facts supporting this allegation, nor is it averred that the interests of the latter company have been prejudiced, or that the value of the shares has been impaired by the acts of the defendant. So also it is alleged that it is greatly against the plaintiff's interest as a shareholder to permit the defendant to vote upon the shares, and that the plaintiff will suffer great and irreparable injury if the defendant is permitted to do so. But no facts justifying these conclusions are stated; and the mere allegation of serious or irreparable injury, apprehended or threatened, not supported by facts or circumstances tending to justify it, is clearly insufficient. Neither injury to the plaintiff's property, inadequacy of legal remedy, or any pressing or serious emergency, or danger of loss, or other special ground of jurisdiction, is shown by the complaint. The complaint, therefore, does not show that the plaintiff is entitled to final relief by injunction.'

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§ 444. A creditor voting upon stock held in pledge does not thereby convert it to his own use, and make it his own.'

A person holding stock of a corporation merely as collateral security, without participating in its meetings, is not so far a part of the corporation as to be chargeable with knowledge of facts in possession of the corporation or its officers. Nor is he so far the owner of the stock as to be entitled to notice of the meetings of the corporation. The pledgor is still the owner of the stock, and a member of the corporation.*


§ 445. The statutes of several states exempt those who hold stock in a representative capacity, or by way of security, from

1 Heath v. Silverthorn Lead Mining & Smelting Co., 39 Wis. 146, 157. 2 Baker v. Woolston, 27 Kan. 185.

3 McDaniels v. Flower Brook Mfg. Co., 22 Vt. 274.


Merchants' Bank v. Cook, 4 Pick. (Mass.) 405.

the usual liabilities of stockholders. There is a manifest justice in such statutes which should lead to their adoption in every state. Corporate stocks now represent a large share of the capital or property of the country, and it is important, as a matter of commercial policy, that ready use of such capital in general business should be made as safe and convenient as possible. If a person taking stock merely as collateral security is to be made liable as a general stockholder, in place of the owner of the stock, he may well hesitate to incur liabilities he knows not of by becoming a stockholder, and may well decline to take such collateral unless he has a full knowledge of the affairs of the corporation. In a late case before the supreme court of the United States it was remarked that "the courts in England, and some in this country, have gone very far in sustaining a liability for unpaid subscriptions to stock against persons holding the same in any capacity whatever, whether as trustees, guardians or executors, or merely as collateral security. It can not be denied that, in some cases, the extreme length to which the doctrine has been pushed has operated very harshly; and in cases in which the corporation itself has no just right to enforce payment, and where no bad faith or fraudulent intent has intervened, it may be doubted whether creditors have any better right, unless by force of some express provision of a statute.""

§ 445a. United States. The statute in regard to national banking associations provides that persons holding stock as executors, administrators, guardians or trustees shall not be personally subject to any liabilities as stockholders; but the estates and funds in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward or person interested in such funds would be if living and competent to act and hold the stock in his own name.

Although the statute does not exempt pledgees from personal liability, a pledgee who receives from his creditor, acting

1 Burgess v. Seligman, 107 U. S. 20, 2 S. C. Rep. 10, 15, per Bradley, J.

2 R. S., § 5152.

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