ing the stock shall be considered as holding the same, and shall be liable as a stockholder, and the estate and funds in the hands of the executor, administrator, guardian or trustee shall be liable in like manner and to the same extent as the testator, or intestate, or the ward or person interested in the trust fund would have been if he or she had been living and competent to act and hold the stock in his or her name.

§ 455. Wisconsin.'-No person holding stock in any railroad corporation as executor, administrator, guardian, or trustee, and no person holding such stock as collateral security, shall be personally subject to any liability as stockholder of such corporation, for any calls or installments on any past paid stock thereof; but the person pledging such stock shall be considered as holding the same, and shall be liable as a stockholder accordingly; and the estates and funds in the hands of such executor, administrator, guardian, or trustee, shall be liable in like manner and to the same extent as the testator or intestate, ward or person interested would have been, if he had been living, or competent to act, and held the same stock in his own name.

§ 456. Wyoming.-No person holding stock as collateral security shall be personally subject to any liability as stockholder of such company, but the person pledging such stock shall be considered as holding the same, and shall be liable as a stockholder accordingly.

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§ 457. One to whom a corporation has pledged its own stock is entitled to the benefit of a statute which exempts a pledgee from liability as a stockholder, and continues the liability of the pledgor. This question has arisen under the statute of Missouri, and was decided by the supreme court of that state contrary to the proposition stated above. One ground of the

1

1 G. S. 1898, § 1827.

8

3 Burgess v. Seligman, 107 U. S. 20,

2 R. S. 1887, § 516; Compiled Laws 27 Alb. L. J. 256, 2 S. C. Rep. 10, 24. 1876, c. 34, §§ 16, 17.

Fisher v. Seligman, 75 Mo. 13; Griswold v. Seligman, 72 Mo. 110.

decision was that in case of such a pledge by the corporation itself of stock which has never been issued in the usual course of business, unless the pledgee becomes a stockholder with a stockholder's liabilities, there is no person who can be made liable as a stockholder; that in every case of a pledge within the meaning of the statute, there must be a stockholder whom the law still regards as a stockholder with a stockholder's responsibilities; that if there is not a pledgor who occupies the position of a stockholder, there must be a pledgee who is responsible as a stockholder; that there must be some one against whom a creditor can seek redress in case the corporation becomes insolvent. For these reasons the state court held that the statute was inapplicable in case of a pledge by a corporation of its unissued stocks.

Upon this part of the case Mr. Justice Bradley, delivering the opinion of the supreme court of the United States adversely to the judgment of the state court, said: "The argument that the exemption from liability in cases of stock held as collateral security applies only to those who have received it from third persons who were stockholders, and who can be proceeded against as such, seems to us unsound, and contrary both to the words and the reason of the law. It takes for granted that stock can not be received as collateral security from the corporation itself, and still belong to the corporation, and yet we know that such transactions are very common in the business of the country. **The argument is that the words of the statute imply that there must always be some person or estate to respond for the stock, or else the exemption can not take effect. The obvious answer is that this clause fixes the liability upon the pledgor as a stockholder, where there is a pledgor who can be made liable in that character. When the corporation pledges its own stock as collateral security, though it can not be proceeded against as a stockholder eo nomine, the reason is because it is primarily liable, before all stockholders, for all its debts. In such a case the clause last quoted would not strictly

1 Burgess v. Seligman, 107 U. S. 20, 27 Alb. L. J. 256, 2 S. C. Rep. 10, 24.

apply to it; but the holder of its stock as collateral security would be within both the letter and the spirit of the first clause. It is supposed that some flagrant injustice would ensue if there was not some one who could be reached as a stockholder in every case of stock pledged as collateral security; hence, stock pledged by the corporation itself must be regarded as belonging to the pledgee, though no other pledgee of stock is treated in this way. Where is the justice of this? Why should the stock be necessarily considered as belonging to some one besides the corporation itself? Is any one harmed by considering the corporation as its true owner? If the stock had not been issued as collateral security, it would not have been issued at all; it would not have been in existence. Would the cred

itors have been any better off in such case? They are better off by the issue of the stock as collateral, because the general assets of the company here received the benefit of the moneys obtained by means of the pledge. The more closely the matter is examined, the more unreasonable it seems to deny to a pledgee of the corporation the same exemption which is extended to the pledgee of third persons. We think that the one equally with the other is protected by the express words and true spirit of the law."

§ 458. A pledgee of a corporation's own stock is entitled to a statutory exemption from liability, though he has voted upon the stock without having special authority to do so. It was adjudged otherwise by the supreme court of Missouri in a case where a person had taken from the corporation as security for advances a certificate for a majority of its capital stock absolute upon its face, and had voted upon it and controlled the election of the officers of the corporation. It was held that the pledgee by voting upon the stock without having any contract authority to do so was estopped to deny that he was a stockholder, and he was made liable as such both to the corporation and to its creditors. The stock having been pledged by a written contract containing no such authority, it was declared

1 Burgess v. Seligman, 107 U. S. 20, 27 Alb. L. J. 256, 2 S. C. Rep. 10.

that it was not even competent for the pledgee to show that there was a verbal understanding that he should have the privilege of voting upon the stock.'

But the supreme court of the United States, upon the same facts, made a contrary decision, which must settle the law, not merely by reason of the authority of the court but also by virtue of the conclusiveness of its reasoning, which can be stated here only in part. Mr. Justice Bradley, speaking for the court, said: "If the law allows stock to be held in trust, or as collateral security, without personal liability, and if, as we suppose, the clear effect of the contract was to create such holding in this case, we do not see how the doctrine of estoppel can apply. The only parties to complain would be the other stockholders, who might, perhaps, complain that stock held merely in trust, or as collateral security, is not entitled to participate with them in the privilege of voting. But from them no complaint is heard. Creditors could not complain, for, on the hypothesis that stock may lawfully be held at all in trust, or as collateral security, without incurring liability to them, the act of voting on the stock can not injure or affect them. In the absence of such a law the case might be very different. Undoubtedly it has been held, in cases innumerable, that acting as a stockholder binds one as such; but that is where the law does not allow stock to be held at all without incurring all the liabilities incident to such holding. The present is an action at law based upon the supposed liability of the defendants under a statute which makes the distinction referred to,

1Griswold v. Seligman, 72 Mo. 110, 124. "This is a case where acts speak louder than words; where plausible theories go for nothing, when confronted by palpable facts. We can not impute to the pledgees either ignorance of, or a desire to violate the law, and so must conclude that they by the act of voting the stock represented themselves to the corporation, and were by the corporation regarded as fully entitled to the privileges they

claimed and exercised. This being the case, they certainly can not be heard to gainsay their heretofore admitted title; to assert that title, if there was a profit, and deny it if there was a loss." Per Sherwood, C. J. Affirmed in Fisher v. Seligman, 75 Mo. 13.

Matthews v. Albert, 24 Md. 527, and McMahon v. Macy, 51 N. Y. 155, to the contrary, are distinguished in Griswold v. Seligman, 72 Mo. 110.

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and which does not make all stockholders liable indiscriminately. It is by no means clear, however, that the pledgee did not have a right to vote on the stock, even as against the stockholders. When the law provides that if a person holds stock as a trustee, or by way of collateral security only, he shall not be personally liable for the company's debts, it supposes that the stock shall be holden, and that the pledgee or trustee shall be the holder. If, then, the law is to have any force or effect, the mere fact of holding can not be set up as a bar or estoppel against proof of the manner and character of such holding. And if such pledgee or trustee may be a holder of the stock in that character, is he bound to be perfectly passive in his holding? He will not be entitled to any dividends or profits, it is true, or, if he receives dividends or profits, he must account therefor; but is it certain that he may not lawfully vote on the stock? An executor, administrator, guardian, or trustee certainly may vote; and where is the rule to be found that a holder for collateral security, under a law which permits such holding, may not vote on the stock so held without losing his character as a mere pledgee? But, as before said, if the pledgee in voting on the stock exceeds his right as such pledgee, it can not have the effect of making the stock his own. No one is injured, and no one can complain except the other stockholders whose rights are invaded."

§ 459. This view is sustained by decisions in cases arising under other statutes similar to that of Missouri. Thus it was so decided in Maryland, with reference to a statute of that state, from which the Missouri statute, so far as relates to the exception of those holding stock in trust or as collateral security, was copied. It was sought to charge one who had loaned money to the corporation and had taken from it a certificate of stock, as security for its payment, as a general stockholder, and liable for the company's debts. The certificate was originally issued to him in absolute form, but after its

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