Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/626

§ 002.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. IX. by-law, 1 and the preponderance of authority is certainly to the effect that a general power possessed by a corporation to regu- late the transfer of its shares authorizes it to create by a by-law a lien on them in its own favor. 2 But even this last proposi- tion has been disapproved ; 8 and many cases strenuously deny any implied power in a corporation to pass a by-law which creates a lien on its shares, or in any material way interferes with their transferability. 4 But in order to decide some of the cases where the opinion of the court in terms denies the power of a corporation to pass a by-law of this character, it was only necessary to hold (what these cases also hold with perfect justice on their side, and little or no authorit}^ against them), that the rights of a person purchasing shares without actual notice of such a by-law are not affected by it. 5 § 602. It may also be held contrary to public policy to allow certain corporations to acquire a lien on their shares. Thus, a national bank organized under the act of 186i, cannot even by provisions in its articles of association and by-laws, acquire a lien on its own shares for debts owing it from shareholders ; 1 Child ». Hudson's Bay Co., 2 P. Wms. 207; In re Bachman, 12 Nat- B'k'y Reg. 223; Tiittle v. Walton, 1 Ga. 43 ; Gever 15. Insurance Co., 3 Pittsburgh, 41. See Brent v. Bank of Washington, 10 Pet. 596, 616 ; Costello v. Brewing Co., 69 N. H. 405. 2 Lockwood v. Mechanics 1 Nat. B'k, 9 R. I. 308; Pendergast v. Bank of Stockton, 2 Sawyer, 108 ; Cun- ningham v. Alabama Life Ins Co., 4 Ala. 652; Geyer 15. Ins. Co., 3 Pitts- burgh, 41; Graflin County 15. Wood- side, 87 Md. 146. 3 See Driscoll 15. West Bradley, etc., M'f'g Co., 59 N. Y. 90; Chou- teau Spring Co. 15. Harris, 20 Mo. 382; Moore 15. Bank of Commerce, 52 Mo. 377. 4 Mobile Mutual Insurance Com- pany 15. Cnllum, 49 Alabama, 558; Bank r. Durfee, 118 Missouri, 431; Driscoll 15. West Bradley, etc., M'f'g Co., supra ; Bank of Attica v. Manu- 606 facturers 1 Bank, 20 N. Y. 505; Byron 15. Carter, 22 La. Ann. 98; People v. Crockett, 9 Cal. 112; Moore v. Bank of Commerce, 52 Mo. 377; Farmers', etc., Bank v. Wasson, 48 Iowa, 336. See Steamship Dock Co. 15. Heron's Administratrix, 52 Pa. St. 280; Nes- mith v. Washington Bank, 6 Pick. 324; Weston's Case, L. R. 4 Ch. 20; Robinson 15. Chartered Bank, L. R. 1 Eq. 32; Anglo California Bank 15. Granger's Bank, 63 Cal. 359. Com- pare Walker's Case, L. R. 2 Eq. 554. 5 Farmers', etc., Bank v. Wasson, 48 Iowa, 536; Driscoll v. West Brad- ley, etc., M'f'g Co., 59 N. Y. 96; Bank of Attica v. Manufacturers' Bank, 20 N. Y. 505; Bank of Holly Springs 15. Pinson, 58 Miss. 421. See People 15. Crockett, 9 Cal. 112. For the general rule is that outsiders are not affected with notice of the by- laws of a corporation. See §§196, 197.