articles of association that the members shall pay the amount of their respective subscriptions to such trustees, the latter can collect the amount subscribed, by an action, if necessary, in their own names, although it would be otherwise, unless the articles contained an express promise on the part of the subscribers to pay the amount of their respective subscriptions to the trustees. All the officers and agents of a joint-stock company stand in the relation of trustees to the stockholders, being responsible to their cestuis que trust, for all gain and profit that accrues to them in the discharge of their official duties.3 They are not individually liable for the debts of the association, unless they have in some way rendered themselves specially liable, and although managers of a joint-stock company, appointed to conduct the affairs of the company and protect the interests of the parties joined, are personally liable for neglect or fraud, in the discharge of their official duties, the stockholders of such company, particularly where it is organized under statute, stand to each other in the relation of co-owners of the property managed, and are not individually responsible for the acts of their managers.5

1 Cross v. Jackson, 5 Hill (N. Y.), 478.

2 Ante, idem. Coal Co. v. Fry, 4 Phil. (Penn.) 129; Bullard v. Kinney, 10 Cal. 60; Perring v. Hane, 4 Bing. 28; Holmes v. Higgins, 1 B. & C. 74; Ewing v. Needlock, 5 Port. (Ala.) 82.

3 Coal Co. v. Fry, 5 Phil. (Penn.) 129.

4 Wolf v. Schlieffer, 2 Brewst. (Penn.) 563; Fredenholl v. Taylor, 23 Wis. 538; Siger v. Daniels, 66 Barb. 426. Managers are specially liable for expenses resulting from unauthorized acts. Held so in the case of a land company, and this, even though the expense enhanced the value of the company's land. McKinley v. Irwin, 13 Ala. 681. Also Crum's App., 66. Penn. St. 474.

Boodey v. Drew, 46 How. (N. Y.) 459; s. c. 2 N. Y. Sup. (T. & C.)

§ 359. Same Misconduct of trustees or managers. Occupying a fiduciary position with relation to its members, the managers and directors of a joint-stock company can derive no profit or gain at the expense of the parties whose interest they are bound to protect, without the fullest and most complete disclosure, and any gain they may reap in the discharge of their official duties they must account for to the company.1 Managers and directors are individually liable to the company they represent for any damage resulting from their neglect or fraud in the discharge of their official duties, and if their misconduct is of such a nature as to impair the credit of the company, or seriously injure the interests of its members, a court of equity would prevent a repetition of the offense by injunction, and if necessary remove the guilty officer. But it is no ground for a dissolution or the appointment of a receiver that the manager or officers of a joint-stock company have been guilty of misconduct or infidelity. The court will generally only go so far as to enjoin or prevent the misconduct by a removal of the objectionable officer, and a dissolution would only be decreed on the unanimous consent of all the shareholders, and it must be specially prayed for if such consent cannot be had.

69.

1 Coal Company v. Fry, 5 Phil. (Penn.) 129.

2 Boodey v. Drew, 46 How. (N. Y.) 459; s. c. 2 N. Y. Sup. (T. & C.)

8 Bisp. Prin. Eq. 428, 465. Members of a joint-stock company are not personally liable for the fraud of the secretary in putting in effect bogus issues of shares. Dixon v. Kenneway, 69 L. J. Ch. 501 (1901).

4 MacSwinney Mines, p. 116; Bisp. Prin. Eq., §§ 508, 509. No dissolution would be decreed at the instance of a minority of the members, unless equitably entitled to it. Hinkle v. Belthew, 78 Me. 221. But if impracticable to keep the company together, because of the failure of the enterprise, a dissolution would be ordered. Von Schmidt v. Huntingdon, 1 Cal. 55. Or if the business has been suspended and the enterprise abandoned. Burk v. Roper, 72 Ala. 138; Billington v. Steel Co., 9 Atl. Rep. 35.

§ 360. Contracts of joint-stock companies. - A jointstock company can contract and be contracted with the same as an ordinary partnership or corporation, in the manner provided by the articles of association or by-laws, but the individual liability of members of the company is the same as that of ordinary partners.1 A part only, of the members of a company, have no right to bind the other members of the company on contracts, and the company will in no case be liable on an unauthorized executory contract, without a subsequent ratification by a majority of the members, or the number provided for to make a valid contract for the company. There are certain cases in which the company can be bound on an implied contract, as where the act done was necessary, or in furtherance of the objects for which the company was organized, but when such is not the case a prior authority or subsequent ratification must be proved. And the subsequent ratification of an anauthorized contract must be of as high authority as the original power, to authorize the making of a valid contract, so where the president and other members of a company purchased property for the company, without authority, a ratification of such unauthorized contract by the managers of the company, who had no authority to borrow money, or increase the capital, was held to be insufficient to bind the 'members. But evidence of the custom of a company, as to its established and uniform manner of doing business, is held to be admissible to charge the company with an acquiescence or consent to a departure from its by-laws or the prescribed manner for making contracts, and where

1 Dow v. Moore, 47 N. H. 419. And is liable on a quantum meruit for work. Sullivan v. Campbell, 2 Hall (N. Y.), 271.

2 Sizer v. Daniels, 66 Barb. 426.

3 Ante, idem. Wait's Act. & Def., Vol. 4, p. 165. + Crum's Appeal, 66 Penn St. 474.

such custom is fairly established, the company's agents would not be held individually liable on a contract in disregard of the company's rules, if such contract was subsequently ratified by the members of the company, unless it could be directly traced to the negligence of the company's agents.1

§ 361. Company property and assets. There is no legal impediment to vesting the title to property in an unincorporated joint-stock company; 2 the company can acquire title to money paid upon subscriptions to capital stock, and it has been held that the capital stock and property of the company may consist of contributions of any kind of property other than money. The property of joint-stock companies consists principally of the following elements, i. e., (1) The capital stock, (2) the property and assets of the company, (3) the franchise, and (4) the stock of the individual shareholders. The managers of a company, appointed by a majority of the members

1 Henry v. Jackson, 37 Vt. 431; Dow v. Moore, 47 N. H. 419. “A mining company, unincorporated, consisting of eleven members, formed a partnership with one Davis, for trading purposes, the company and Davis each advancing half the capital. One of the mining company acted as salesman in the store; two other of its members attended to the business for the mining company: Held, that each member of the mining company was a member of the trading firm; 2. That the particular party who acted as salesman was by no means a dormant partner, and upon the facts of the case, his note bound the firm." Rich v. Davis, 6 Cal. 163; M. M. D. 269.

2 Wait's Act. & Def., Vol. 5, p. 164, § 7; American Silk Works v. Soloman,.6 N. Y. Sup. (T. & C.) 362; s. c. 4 Hun, 135.

"The

3 Ante, idem. Boynton v. Hatch, 47 N. Y. (2 Sick.) 225. 4 Louisville &c. Co. v. State, 8 Heisk. (Tenn.) 663, 795. shareholders in a ditch may be regarded as partners entitled to participate in the profits derived from the business of carrying on a ditch, where such profits consist in sales of water from the ditch. Abel v. Love, 17 Cal. 238; M. M. D. 259.

present at a regular meeting, have a perfect right to appropriate the funds and assets of such company placed under their control, for any purpose within the scope of the general object of the company's business, for which they have been raised,1 and in case the company should afterwards become incorporated, no formal transfer of the property of the joint-stock company is necessary, upon the formation of the corporation, if such property was acquired for the purpose of forming a corporation and the members of the company have agreed that it shall form a part of the corporate assets when formed.2 But the funds and assets of a joint-stock company can only be applied to further the general purpose for which they were contributed, and the trustees or managers have no right to divert the funds from those purposes, without the consent or authority of the members of the company, and they cannot, upon any pretense, apply the company's funds for purposes beyond the general scope of the company's business.3

It is per

§ 362. Same Right to hold real estate. fectly competent for an unincorporated joint-stock company to acquire and hold the title to real estate, and the members of the same, like an ordinary partnership, are tenants in common in the land.1 It was said in an early case that the right of such an association to hold real estate could only be questioned by the people. However,

1 Wait's Act. & Def., Vol. 4, p. 163, § 7; Abels v. McKean, 10 N. J. Eq. 462.

2 Abels v. McKean, 18 N. J. Eq. 462; Boynton v. Hatch, 47 N. Y. (2 Sick.) 225; Amer. Silk Works v. Soloman, 6 N. Y. Sup. (T. & C.) 352. 3 Morton v. Smith, 5 Bush (Ky.), 467; Abels v. McKean, 18 N. J. Eq. 462.

4 Wright v. Putnam, 2 Thomp. & Cook, 455. See, as to wife's dower in land so held, Nicoll v Ogden, 29 Ill. 323.

5 Howell v. Earp, 21 Hun, 393.