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2 Case & Com. 1 (1895-1896)

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    Case and Comment.

                                 NOTES OF

            RECENT IMPORTANT, INTERESTING DECISIONS.

INDEX   TO   ANNOTATION OF THE LAWYERS' REPORTS, ANNOTATED.

                  LEGAL   NEWS NOTES AND FACETIYE.


VOL.  2.


JUNE,   1895.


No.  1.


        CASE   AND   COMMENT.
  Monthly. Subscription, 50 cents per annum post-
paid.
   THE LAWYERS' CO-OPERATIVE PUB. CO.,
                          Rochester, N. Y.
           New York, 177 Broadway.
Branch Ofli Chicago, Lkeside Buildig.
           Boston, 10 Tremont Street.

  Entered at postoffice at Rochester, N. Y., as
         second class mail matter.


     Forfeiture of Corporate  Stock.

  Unquestionably  there are  multitudes of
people in  this country who own  shares of
stock which are subject to forfeiture by rea-
son of defaults in payment of installments.
In the vast number of corporations this is all
the time true.  Yet cases in the courts on
this subject are not remarkably  frequent.
Probably  most stockholders who   are from
time to time delinquent afterwards pay what
,they owe and continue their relation to their
corporation. Nevertheless  forfeitures have
been enforced in a considerable number  of
cases, and the proportion of the English an-
thorities to the  American  authorities  is
greater on this subject than on most others.
In a  note on this question in 27 L. R. A.
305, it is shown that the English cases con-
stitute an important part of the law on this
subject.  While the authorities establish the
proposition that there is no inherent power
in a corporation to declare a forfeiture, it is
doubtless true nearly everywhere that author-
ity of this kind has been conferred by stat-
ute.  In enforcing such forfeiture the courts
proceed on the theory that the right is stric-
tissimijuris. All provisions as to notice and
procedure must  be strictly complied with.
Some  interesting questions arise as to the
right to redeem  from  a forfeiture. These


generally depend on the validity of the for-
feiture. Conflict has existed as to the effect
of forfeiture on the personal liability of the
stockholder.  Some cases have proceeded on
the theory that a forfeiture of shares was in-
consistent with any  further claims on the
stockholder.  But it seems reasonable to say,
and  other authorities make the distinction,
that while this may be true of a literal for-
feiture, it is not true of a so-called forfeiture
which  is made by a sale of the shares in the
nature of  a foreclosure of a claim against
them.   No more  reason exists against hold-
ing  the stockholder liable for a deficiency
remaining  on such a sale than for holding
the  mortgagor personally liable for a de-
ficiency remaining unpaid on foreclosure of
his mortgage.  In two or three states at least
the liability of a stockholder for such a de-
ficiency is denied by following out the the-
ory, now  repudiated in most jurisdictions,
that there is no personal liability of a sub-
scriber to stock to pay assessments or calls
thereon.  But  the doctrine, almost every-
where established now, holds that a subscrip-
tion to stock includes a promise to pay law-
ful assessments or calls thereon; and this
logically requires the subscriber in case the
shares are sold for unpaid installments to pay
any deficiency that may be left on such sale.
  Another  phase of the subject is as to the
effect of forfeiture on a stockholder's liabil
ity to creditors. An attempt has been made
in some cases to procure a forfeiture in the
interest of the stockholder with the secret
purpose  of avoiding liability to creditors.
It is needless to say that the courts do not
permit this to be done. But  a forfeiture in
the interest of the corporation is held to dis-
solve the stockholder's connection with the
company  and  terminate his liability to cred-

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