*1. That a majority of a joint-stock company cannot use the joint property except within the legitimate scope of their charter,

sent. Ellis v. Marshall, 2 Mass. 269; nor can he be compelled to remain a member of such company after its fundamental organization is altered by act of the legislature. But an act of the legislature allowing a navigation company to raise their dam above the point of the original charter limit, is in furtherance of the original grant, and will not exonerate the subscribers. Gray v. Monongahela Navigation Co., 2 Watts & Serg. 156. And an alteration in the number of votes, to be cast by stockholders, if it impair the obligation of the contract resulting from the grant, is void, and so cannot release the subscribers. Osborn v. Bank of United States, 9 Wheat. 738. But any statute which has the force to effect an alteration in the structure of the corporation, will release subscribers. Indiana & Ebensburg Turnp. Co. v. Phillips, 2 Penn. 184.

4. That statutes extending the term of a corporation, for closing up its business, on petition of the directors, have no proper bearing upon the question. Lincoln & K. Bank v. Richardson, 1 Greenl. 79; Foster v. The Essex Bank, 16 Mass. 245.

5. That it is no fatal objection to the application that it is made at the instigation of a rival enterprise. Coleman v. Eastern Counties Railw., 10 Beavan,

1. [But see ante, § 20.]

6. That an existing railway company will be restrained in equity from applying its present funds to extend their line, or improve the navigation of a river connected with their line, or for obtaining an act of the legislature, authorizing them to do so. Munt v. Shrewsbury & Chester Railw., 13 Beav. 1; s. c. 3 Eng. L. & Eq. 144; Coleman v. Eastern Co.'s Railw., 10 Beavan, 1.

7. That members of an existing company cannot be compelled to surrender their interest to the company, or to others, and retire, in order to enable them to change the character of the enterprise. Lord Eldon, Chancellor, in Natusch

v. Irving, supra.

8. In favor of the importance and necessity of having this constant supervision exercised over joint-stock companies, in order to keep them within the range of their legitimate functions, the learned chancellor thus concludes: —

"Where it is clearly shown that a corporation is about to exceed its powers, and to apply their funds or credit to some object beyond their authority, it would, if the purpose of the corporation was carried out, constitute a breach of trust; a court of equity cannot refuse to give relief by injunction. Agar v. The Regent's Canal Co., Cooper's Eq. 77; The River Dun Navigation Co. v. North Midland Railw. Co., 1 Railw. C. 153, 154. The last case was before the Lord Chancellor, and he uses this language: If these companies go beyond the powers which the legislature has given them, and, in a mistaken exercise of those powers, interfere with the property of individuals, this court is bound to interfere; and that was Lord Eldon's ground in Agar v. The Regent's Canal Co.' The lord chancellor further adds: 'I am not at liberty (even if I were in the least disposed, which I am not) to withhold the jurisdiction of this court, as exercised in the case of Agar v. The Regent's Canal Co.' In that case Lord Eldon proceeded simply on the ground that it was necessary to exercise this jurisdiction of chancery, for the purpose of keeping these companies within the powers

* and if they attempt to do so equity will restrain them. 2. The shareholders are bound by such modifications of the charter as are not fundamental, but merely auxiliary to the main design. 3. If a majority of a railway company obtain an alteration of their charter, which is fundamental, as to enable them to build an extension of their road, any shareholder who has not assented* to the act, may restrain the company, by injunction, from applying the funds of the original organization to the extension.

4. In a late case before the Master of the Rolls, it was held which the acts give them. And it is added: And a most wholesome exercise of the jurisdiction it is; because, great as the powers necessarily are, to enable the companies to carry into effect works of this magnitude, it would be most prejudicial to the interests of all persons with whose property they interfere, if there was not a jurisdiction continually open, and ready to exercise its power to keep them within their legitimate limits.'

"The injunction must, therefore, be allowed; but only so far as to restrain the defendants, until the further order of the chancellor, from applying the present funds of the corporation, or their income from their present road, either directly or indirectly, to the purpose of building said extension in said road, or to pay land damages and other expenses which may be contingent upon the building of it; and also from using or pledging, directly or indirectly, the credit of the corporation in effecting the object of the extension; and at the same time, the company will be left at liberty to build the extension with any new funds which they may see fit to obtain for that specific object." See also Gifford v. New Jersey Railw., 2 Stockton's Ch. 171, where this subject is examined somewhat at length by the chancellor, and the conclusion arrived at, that it is competent for a court of equity to interfere in the management and application of the funds of a corporation, at the instance of a single stockholder; that the legislature may give additional power from time to time to corporations, and that such acts are binding, unless they conflict with vested rights, or impair the obligation of contracts. That a stockholder in an existing corporation has a vested right in any exclusive privilege of the corporation which tends to enhance the value of its stock, and that he would not be bound by any act of the legislature tending to produce such effect, without his consent; but that such consent will be inferred from long acquiescence, which is equivalent to express consent. In Scofield v. School District, 27 Conn. 499, it was held by a divided court, that one inhabitant of a school district might obtain an injunction against the corporation denying them the power to use their school-house for the purposes of religious meetings and Sunday schools, which is certainly carrying the doctrine to the very verge of absurdity. Post, § 174, n. 7.

4 Colman v. Eastern Counties Railw., 10 Beav. 1; s. c. 4 Railw. C. 513. See also Munt v. Shrewsbury & Chester Railw., 13 Beav. 1; s. c. 3 Eng. L. & Eq. 144; East Anglian Railw. v. Eastern Counties Railw., 11 C. B. 775; s. c. 7 Eng. L. & Eq. 505; MacGregor v. Deal & Dover Railw., 18 Q. B. 618; s. c. 16 Eng. L. & Eq. 180; Danbury & Norwalk Railw. v. Wilson, 22 Conn. 435; Mill-Dam Co. v. Dane, 30 Maine, 347; post, § 235; Winter v. Mus

that directors have no right to enter into or to pledge the funds of the company in support of any project not pointed out by their act, although such project may tend to increase the traffic upon the railway, and may be assented to by the majority of the shareholders, and the object of such project may not be against public policy. And that acquiescence by shareholders in a project for ever so long time, affords no presumption of its legality. And in a late case in this country it is held, that the subscriber having acted as director of the corporation, and as such having participated in the proceedings to effect the alteration, will not make him liable for calls, upon his original subscription.5

5. But it is no defence to an action for calls, that the directors have altered the location of the road, if by the charter they had the discretion to do so.6 And if the charter contain a provision that the legislature may alter or amend the same, the exercise of this power will not absolve the shareholders from their liability to pay calls. And all subscriptions to stocks, and all contracts* for the cogee Railw., 11 Ga. 438; Hamilton Plank Road v. Rice, 7 Barb. 157; Commonwealth v. Cullen, 1 Harris, 133; 3 Woodbury & Minot, 105.

› Macedon Plank Road Co. v. Lapham, 18 Barb. 312. But see Greenville & Columbia Railw. v. Coleman, 5 Rich. 118.

Colvin v. The Turnpike Co., 2 Carter, 511; id. 656.

Nor is it a defence to an action for calls, that the name of the company, or the length and termini of the road, have been materially altered. Del. & Atlantic Railw. v. Irick, 3 Zab. 321.

'Northern Railw. v. Miller, 10 Barb. 260; Pacific Railw. v. Renshaw, 18 Missouri, 210. And where a subscription is made to the capital stock of a railway, while an act of the legislature exists, allowing the consolidation of such company with another, the fact that such consolidation is subsequently made affords no ground for avoiding the subscription. Bish v. Johnson, 21 Ind. 299. And if, from the articles of association of the company, it is obvious that consolidation with another company was one of the leading purposes of the incorporation, the fact of such consolidation, after the date of a subscription, will be no defence against its enforcement, even when the statute authorizing the consolidation is subsequent to the date of the subscription. Hanna v. Cin. & F. W. Railw., 20 Ind. 30. The consolidation of two corporations does not effect the dissolution of either, so as to work the abatement of pending actions. Baltimore & Susq. Railw. v. Musselman, 2 Grant Cas. 348. But see McMahan v. Morrison, 16 Ind. 172, contra. For many purposes the liabilities of the original companies remain, as before the consolidation. Central Railw. Co. v. Bunn, 3 Stockt. Ch. 336. It is here decided, that where the original company and a new company formed by the mortgagees after sale of the road bear the same name and have the same president, a suit to enforce a claim contracted before the sale, served upon the president, cannot go to judgment against the new company, nor

purchase of stock, to be delivered at a future day, must be understood to be made subject to the exercise of all the legal powers of the directors and of the legislature, and an illegal exercise of power by either will, it has sometimes been said, bind no one, and should exonerate no one from his just obligations.8

6. But where subscriptions are made upon the express condition that the road shall go in a particular place, the performance of such condition is commonly regarded as indispensable to the liability of the subscribers, the same as in other contracts. But an alteration in the line of the road, which does not affect the interest of the subscriber, will not absolve him from his subscription.10

And when the subscription was made upon condition that the road be located upon a given line, and providing that such* location should be sufficiently evinced by an order of the board of directors accepting such subscription upon the condition named, it was held sufficient to bind the subscriber, that the road had been in fact located and built upon the line designated, and that this was known to him, although there had been no formal action of the board accepting the subscription.11

7. And an alteration in the charter, which consists only of an increase of the corporate powers, or of a different organization of the corporate body, leaving it with lawful power to execute, what

will a court of equity allow a general judgment, at law, to be taken. The plaintiff must elect to take judgment, in terms, against the original company. This seems to be a very judicious course, but one for which courts of equity will afford no precedent. The order should have been made, most obviously, in the court of law.

• Irvin v. Turnpike Co., 2 Penn. 466; Conn. & Pas. Rivers Railw. v Bailey, 24 Vt. 479; Faulkner v. Hebard, 26 Vt. 452; Fry's Exr. v. Lex. & Big S. Railw., 2 Met. (Ky.) 314.

9 See cases under notes 2 & 3, supra; and also Railsback v. Liberty & Abington Turnp. Co., 2 Carter (Ind.) 656. And in Kenosha, Rockford, and Rock Island R. Co. v. Marsh, 17 Wiscons. 13, it was held, that where the legislature had the general power to repeal or alter acts of incorporation, and accordingly allowed an existing company, chartered to carry a railway over a given line, and whose subscriptions had been taken with that view, to change their route very essentially, the subscribers were thereby released from their obligation to pay calls.

10 Banet v. Alton & Sangamon Railw., 13 Ill. 504; Danbury & Norwalk Railw. v. Wilson, 22 Conn. 435.

11 Moore v. New Albany & Salem Railw. Co., 15 Ind. 78.

may be regarded as substantially the original object of its creation, will not exonerate subscribers to the stock of the company.12 So too where the general laws of the state provide that all acts of incorporation may be altered, amended, or repealed by the legislature, it is no defence to a subscription for stock, that subsequently the legislature increased the liability of the stockholders, 13

8. And notwithstanding much apparent conflict in the cases upon this subject, it will be found to be the general result of the best considered cases, that the alteration, either in the charter of the company, or the line of the road, to exonerate the subscriber for stock, must be one which removes the prevailing motive for the subscription, or else materially and fundamentally alters the responsibilities and duties of the company, and in a manner not *provided for, or contemplated, either in the charter itself or the general laws of the state.14

12 Pacific Railw. v. Hughs, 22 Missouri, 291; Peoria & Oquawka Railw. v. Elting, 17 Ill. 429. In Everhart v. West Chester and Philadelphia Railw., 28 Penn. St. 339, the subscribers for stock were held not released by such a change in the charter of the company as empowered them to issue preferred stock, to enable them to raise the means of making and equipping the road in the manner originally contemplated. It was considered that such an amendment of the charter was merely ancillary to the main design, and might be accepted by a majority of the stockholders and thus become binding upon all; that it is implied in every subscription for the stock in a railway company, that they may resort to the ordinary and legal means for accomplishing the object proposed by the charter.

It is here said, that an alteration of the charter, which superadds an entirely new enterprise, will release subscriptions to the stock. See also Fry's Exr. v. Lex. & Big. S. Railw., 2 Met. (Ky.) 314.

13 South Bay Meadow Dam Co. v. Gray, 30 Maine, 547; Buffalo & New Y. City Railw. v. Dudley, 4 Kernan, 336.

14 But in the Greenville & Columbia Railw. v. Coleman, 5 Rich. 118, where the charter gave the stockholders the right to designate the route they preferred, and if any stockholder was dissatisfied with the route selected, the right to withdraw his subscription, "provided, at the time of subscribing, he designated the route he desires to be selected," and one subscribed without designating the route he preferred, under an assurance from one, who was soliciting subscriptions, that he might pay $5 on $100, and be free from liability as to the residue, it was held, that he was liable, as a stockholder, without the right to withdraw. But some of the American cases do not seem to recognize any alteration in the route of the road, even one which renders it practically a different enterprise, as a defence to subscriptions for stock. Central Plank Road Co. v. Clemens, 16 Mo. 359. But in Champion v. Memphis & Charleston R. Co.,