Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/565

CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 532. §531. On the other hand, a great number of cases hold that an alteration of the constitution effecting a radical change in the corporate enterprise releases a shareholder from his sub- scription. 1 These cases proceed on the theory that the corpo- ration cannot enforce the subscription of a dissenting shareholder while the constitution as altered remains in force ; since that would be to enforce a contract which the shareholder never made. 2 § 532. Still it seems quite possible that many of these de- cisions are wrong on principle ; at least, those of them where the charter was not amended in pursuance of a right reserved to the state to alter and repeal. For it is surely universally recognized law that a charter imports a contract between the corporation and the state ; and the state cannot constitution- ally pass a law radically changing it. 3 Consequently, any such change unaccepted by the corporation would be plainly uncon- stitutional and void. But the corporation, or majority of shareholders, has no power to bind the minority by acts beyond the scope of the original chartered powers, and a for- tiori no authority to bind them by any act causing a radical change in the corporate enterprise, as, for instance, by accept- ing a radical amendment to the corporate constitution. 4 There- fore, the state having no power to amend the constitution against the consent of the corporation, and the corporation having no power to accept an amendment against the consent of any shareholder, it would seem that no shareholder should 1 Manheim, etc., Turnpike Co. v. Arndt, 31 Pa. St. 317; Ohartiers R'y Co. v. Hodgens, 77 Pa. St. 187; Caley v. Phila. and Chester R. R. Co., 80 Pa. St. 363 ; Southern Penn. R. R. Co. v. Stevens, 87 Pa. St. 195; Noesen v. Town of Port Washington, 37 Wis. 168; Ashton v. Burbank, 2 Dill. 435; Bank v. City of Charlotte, 85 N. C. 433; Supervisors v. Mississippi, etc., R. R. Co., 21 111. 33S; Union Locks and Canals v. Towne, 1 N. H. 44; Marietta, etc., R. R. Co. v. Elliott, 10 Ohio St. 57 ; Thompson v. Guion, 5 Jones, Eq. (N. C. ) 113; Snook v. Georgia Imp. Co., 83 Ga. 61 ; also 35 cases in next note. See Fry's Ex'r v. Lexington, etc., R. R. Co., 2 Mete. (Ky.) 314; Richmond Street R. R. Co. n. Reed, 83 Ind. 9. 2 Hartford and N. H. R. R. Co. v. Croswell, 5 Hill (X. Y.), 383; Mid- dlesex Turnpike Co. v. Locke, 8 Mass. 268; Carlisle v. Terre Haute, etc., R. R. Co., 6 Ind. 316; McCray v. Junction R. R. Co., 9 Ind. 358; Booe v. Same, 10 Ind. 93; Hoey v. Henderson, 32 La. Ann. 1069. 3 See §§ 450 et seq. 4 See Chapman v. Mad River, etc., R. R. Co., 6 O. St. 119, 137; and §557. 545