stockholders at a meeting duly warned may guarantee the bonds of any other domestic corporation engaged in the same general line of business; or by a two-thirds vote guarantee the bonds of a domestic corporation of the sort of which it owns all the capital stock." 81

"In West Virginia the statute provides that unless specially authorized, no corporation shall . . . subscribe for or purchase the stock, bonds or securities of any joint-stock company, or become surety or guarantor for the debt or default of such company.82 Nevertheless. . . any corporation may take real estate, stock, bonds and securities in payment, in whole or in part, of any debt bona fide owing to it, or as a security therefor, or may purchase the same if deemed necessary to secure or obtain payment of any such debt, in whole or in part, and may manage, use and dispose of what has been so taken or purchased as a natural person might do; and any corporation may compromise or purchase its own debt, and establish and manage a sinking fund for that purpose." 83

§ 374. Voting-trust.

"A stockholder may, by agreement in writing, transfer his stock to any person or persons for the purpose of vesting in him or them the right to vote thereon for a time not exceeding five years upon terms and conditions stated, pursuant to which such person or persons shall act; every other stockholder, upon his request therefor may, by a like agreement in writing also transfer his stock to the same person or persons and thereupon may participate in the terms, conditions and privileges of such agreement; the certificates of stock so transferred shall be surrendered and canceled and certificates therefor issued to such transferee or transferees in which it shall appear Rev. Stat. ch. 47, § 51; N. J. Corp. Supp. § 51; Pa. 1901, Act No. 298; infra, § 734.

81 N. Y. 1902, ch. 601.

82 W. Va. Code, ch. 52, § 3.

83 Ibid. § 4.

that they are issued pursuant to such agreement and in the entry of such transferee or transferees as owners of such stock in the proper books of said corporation that fact shall also be noted and thereupon he or they may vote upon the stock so transferred during the time in such agreement specified; a duplicate of every such agreement shall be filed in the office of the corporation where its principal business is transacted and be open to the inspection of any stockholder, daily, during business hours." 84 This provision legalizes the voting trust, but as will be noticed for five years only. An agreement for such a trust in a foreign corporation, which provides for an irrevocable power of attorney, will not be specifically enforced in New York, and is probably against public policy.85

§ 375. Stock owned by a married woman.

It is provided in several States that "shares of stock in corporations held or owned by a married woman may be transferred by her, her agent or attorney, without the signature of her husband, in the same manner as if such married woman were a feme sole. All dividends payable upon any shares of stock of a corporation held by a married woman may be paid to such married woman, her agent or attorney, in the same manner as if she were unmarried, and it is not necessary for her husband to join in a receipt therefor; and any proxy or power given by a married woman, touching any shares of stock of any corporation owned by her, is valid and binding without the signature of her husband, the same as if she were unmarried." 11 86

§376. Attachment of corporate stock.

The interest of the stockholder in a corporation is double.

84 N. Y. Gen. Corp. L. § 20, as amended 1901, ch. 355.

85 Sullivan v. Parkes, 69 App. Div. 221, 74 N. Y. S. 787.

86 Cal. Civ. Code, § 325; Ida. Rev. Stat. § 2123; Mont. Civ. Code, § 473; Okla. Stat. § 953; S. Dak. Code, § 417. The law of the charter governs the right of the married woman to receive dividends, irrespective of the law of her domicil: Graham v. First National Bank, 84 N. Y. 393.

He has in the first place membership in the corporation, with all the rights that come from being registered as a stockholder on its books. This interest is property which can be affected only through the corporation itself, by a transfer of ownership on the books. It can be affected, therefore, only where the corporation can be reached; and since membership in the corporation has to do with its internal affairs, no court will interfere with it except the court of the State of charter.87 It follows that this interest of the stockholder can be attached only in the State of charter; 88 and that it is impossible to attach the stockholder's interest in a foreign corporation,8 89 even though the corporation is within the jurisdiction of the court.90 For the same reason shares in a foreign corporation are not subject to garnishment, and statutes providing for garnishment of a stockholder's interest must be interpreted as applying only to domestic corporations.91

The stockholder, however, has another interest besides his relation to the corporation. His certificate of stock is by mercantile custom itself a document of value, and may be reached by a court which has control of it, though it has no control over the corporation itself. What effect a sale on execution would have upon membership in the corporation is a different question. If the certificate has been indorsed

87 Ante, § 307.

88 It may be attached there; Masury v. Arkansas Nat. Bank, 87 Fed. 381; Young v. South T. I. Co., 85 Tenn. 189, 4 A. S. R. 752.

89 Del. Corp. Supp. § 130; Ind. Rev. Stat. § 735.

90 Smith v. Downey, 8 Ind. App. 179; New Jersey S. & W. Co. v. Traders' Deposit Bank, 20 Ky. L. Rep. 565, 46 S. W. 677; Caffery v. Choctaw C. & M. Co., 95 Mo. App. 174, 68 S. W. 1049; Plimpton v. Bigelow, 93 N. Y. 592; Greenwood v. Hat-Sweat Mfg. Co., 13 W. N. (Pa.) C. 447; Ireland v. Globe M. & R. Co., 19 R. I. 180, 32 Atl. 921, 61 A. S. R. 756, 29 L. R. A. 429. Contra as to shares in resident foreign corporation; Smith v. Pilot Min. Co., 67 Mo. App. 409.

91 Pinney v. Nevills, 86 Fed. 97; Armour Bros. Banking Co. v. St. Louis Nat. Bank, 113 Mo. 12, 20 S. W. 690; Simpson v. Jersey C. C. Co., 47 App. Div. 17, 61 N. Y. S. 1033.

in blank by the owner, or is accompanied by such indicia of title that a transferee could take, and has been deposited with a resident bailee, the certificate may be reached by garnish. ment.92

92 Simpson v. Jersey C. C. Co., 47 App. Div. 17, 61 N. Y. S. 1033.

CHAPTER XVII.

STATUTORY LIABILITY OF STOCKHOLDERS AND DIRECTORS.

There are no statutory provisions regarding the liability of stockholders. Directors who depreciate by any means the market value of the corporate stock or bonds for the purpose of buying them are guilty of a misdemeanor, and are liable