302. A foreign corporation cannot be dissolved.

A State can never dissolve a foreign corporation or declare a forfeiture of its charter for misuser.11 A receiver may be appointed and the corporation enjoined from doing business in the State, 12 so that for all practical purposes it may cease to exist within the jurisdiction; but it is not thereby dissolved. Creditors may still bring suit against it unless dissolved in the State of charter. 13 Proceedings may, however, be brought to test the right of a foreign corporation to exercise its franchises within the State; and for this purpose quo warranto is the proper remedy.14 The proper judgment is an ouster, not from its franchises, but from the exercise of its franchises in the State, 15

$303. Contracts not declared void for misuser of powers.

If a State cannot declare a forfeiture of the charter of a foreign corporation, neither can it declare its contracts void. for misuser. In Silver Lake Bank v. North 16 it is said, "Since plaintiff was duly incorporated with power to contract, if they should pass the exact line of their power, it would rather belong to the government of Pennsylvania to exact a forfeiture of their charter, than for this court in this collateral matter to decide a question of misuser, by setting aside a just and bona fide contract." The general proposition that a con

11 Society for Propagation of the Gospel v. New Haven, 8 Wheat. 464, 5 L. ed. 662; Republican Mt. S. M. v. Brown, 58 Fed. 644, 24 L. R. A. 776; Merrick v. Van Santvoord, 34 N. Y. 208; Dodge v. Pyrolusite Mang. Co., 69 Ga. 665.

12 See post, chap. xxxii.

13 Kincaid v. Dwinelle, 59 N. Y. 548.

14 State v. Am. Book Co., 65 Kan. 847, 69 Pac. 563; State v. Fidelity & Casualty Ins. Co., 39 Minn. 538; State v. Standard Oil Co., 61 Neb. 28, 84 N. W. 413, 87 A. S. R. 449; State v. Insurance Co., 49 Oh. St. 440, 31 N. E. 658, 34 A. S. R. 573, 16 L. R. A. 611; State v. Boston, C. & M. Ry., 25 Vt. 433.

15 State v. W. U. M. Life Ins. Co., 47 Oh. St. 167, 24 N. E. 392, 8 L. R. A. 129.

16 4 Johns. Ch. (N. Y.) 370.

tract of a corporation should not be declared void for collateral misuser is undoubtedly sound.17 The Supreme Court of the United States has given a similar opinion.18 It was assumed that a bank chartered by the United States did take a deed of trust of land in a manner not authorized by charter. It was held that the security was not void. The court said: "The statute does not declare such a security void. . . . The authority of Silver Lake Bank v. North, if recognized as sound, is conclusive. We cannot believe it was meant that stockholders, and perhaps depositors and other creditors, should be punished and the borrower rewarded, by giving success to this defense whenever the offensive fact shall occur. The impending danger of ouster and dissolution, was, we think, the check and none other contemplated by Congress. That has been always the punishment prescribed for the wanton violation of a charter, and it may be made to follow whenever the proper public authority shall see fit to invoke its application. A private person cannot directly or indirectly usurp this function of the government."

§ 304. Shareholders bound by general laws of State of charter.

The relation of a shareholder to a corporation is more intimate than that of one who merely does business with it. It is no injustice to require of a shareholder assent to the laws of the State granting the charter and it is held that he gives such assent. 19 If a State makes certain laws for the regulation of corporations, one who wishes to become a member of a corporation of that State should in justice and reason be required to acquaint himself with them.20 Accordingly, a citizen of Maryland purchasing stock in a Virginia corporation was held bound to pay assessments accruing after he had

17 Bank of Kentucky v. Schuylkill Bank, 1 Parsons (Pa.), 226. 18 National Bank v. Matthews, 98 U. S. 621, 25 L. ed. 188.

19 Nashua Sav. Bank v. Anglo-Am. Land, Mtg. & Agency Co., 189 U. S. 221, 47 L. ed. 782.

20 Keystone Driller Co. v. Superior Ct., 138 Cal. 738, 72 Pac. 398.

parted with the stock, by virtue of a Virginia statute which provided that assignment should not operate to discharge a shareholder from assessments already due or thereafter to become due.21 The Supreme Court of the United States decided that a shareholder was bound by the construction put on a Missouri statute by the courts of Missouri, to the effect that the creditor of a corporation might have further execution against a shareholder.22 Even if it is alleged that the corporation is being mismanaged and a citizen of the State of forum treated mala fide the court cannot interfere, if the acts are legal in the charter State.23

So, where an Englishman filed his bill in England to be protected against a forfeiture of his shares in a Dutch company, it was held that the law of Holland was conclusive in the matter.24

The same principle is involved where the by-laws of a corporation provide (in accordance with the laws of the incorporating State) that every foreign shareholder should choose a domicil in the incorporating State, in order that process may there be served on him in case of disputes between himself and the corporation; and if he does not choose such a domicil, that service may be made for him on a certain public officer. In such a case service made on the officer named gives the court jurisdiction over the shareholder.25 And where the law of the incorporating State provides that a joint-stock company may be sued in the name of one of its officers, and a judgment in such a suit will bind a member on whom no service is made, a foreign member will be bound 21 McKim v. Glenn, 66 Md. 479, 8 Atl. 130.

22 Allen v. Fairbanks, 45 Fed. 445.

23 Republican Mt. S. M. v. Brown, 58 Fed. 644, 24 L. R. A. 776. See Bank of China v. Morse, 168 N. Y. 458, 61 N. E. 774, 85 A. S. R. 676, 56 L. R. A. 139.

24 Sudlow v. Dutch Rhemish Ry., 21 Beav. 43. Acc. Republican Mt. S. M. v. Brown, 58 Fed. 644, 24 L. R. A. 776; Mining Co. v. Field, 64 Md. 151, 20 Atl. 1039; but see Bank of China v. Morse, 168 N. Y. 458, 61 N. E. 774, 55 A. S. R. 676, 56 L. R. A. 139.

though he had no notice of the suit.26 So the shareholders in an English company must allow it to be wound up according to the law of England; 27 and the validity of calls by the corporation for an unpaid installment of the subscription is determined by the same law.28 Upon the same principle the liability of a stockholder to creditors depends upon the law of the State of charter.29 And so, too, priority given to a lien by the laws of the State of domicile cannot be contested by a shareholder.30

Where a citizen of Alabama becomes a member of a building and loan association of Minnesota, her membership fee, and an attorney's fee provided for foreclosure of mortgage is collectible; 31 and so a member of an English company will be bound by the posting of a notice of calls and the forwarding of a printed notice, when the articles of association provide that notice for a non-resident shareholder who neglected to give his address shall be posted in an office which will be deemed his registered place of abode.32

§ 305. Management regulated by State of charter.

As a general rule, the internal management of a foreign corporation will not be interfered with on petition of a share

26 Bank of Australasia v. Harding, 19 L. J. C. P. 345; Bank of Australasia v. Nias, 16 Q. B. 717, 20 L. J. Q. B. 284; Kelsall v. Marshall, 26 L. J. C. P. 19; Tompkins v. Blakey, 70 N. H. 584, 49 Atl. 111.

27 Republican Mt. S. M. v. Brown, 58 Fed. 644, 24 L. R. A. 776; Bank of China v. Morse, 168 N. Y. 458, 61 N. E. 774, 85 A. S. R. 676, 56 L. R. A. 139; to the same effect Bank Commrs. v. Granite St. Prov. Ass., 70 N. H. 557, 49 Atl. 124, 85 A. S. R. 646.

28 Nashua Savings Bank v. Anglo-Am. Land, Mtg. & Agency Co., 189 U. S. 221, 47 L. ed. 782; Amer. Pastoral Co. v. Gurney, 61 Fed. 41; Langworthy v. Garding, 74 Minn. 325, 77 N. W. 208; but see Bank of China v. Morse, 168 N. Y. 458, 61 N. E. 774, 85 A. S. R. 676, 56 L. R. A. 139. 29 Post, Ch. XVII.

30 Hudson River Pulp & Paper Co. v. H. H. Warner & Co., 99 Fed. 187. 31 Falls v. U. S. Sav. & Loan & Bldg. Co., 97 Ala. 417, 13 So. 25, 38 A. S. R. 194, 24 L. R. A. 174.

32 Nashua Savings Bank v. Anglo-Am. Land, Mtg. & Agency Co., 189 U. S. 221, 47 L. ed. 782.

holder.33 The stockholder must apply to the courts of the State of charter. Thus the court of a foreign State will not enjoin the action of the officers of a corporation,34 as for instance adopting, without authority as it is alleged, a new plan of insurance.35 Nor will the foreign court appoint a receiver for a solvent foreign corporation at the suit of a stockholder who claims mismanagement and wasting the assets; nor on the other hand will it compel a distribution of the assets among the stockholders.37 Nor will it interfere to prevent the trustees from applying to the legislature of the charter State for an extension of powers.38

. 36

But while this is the principle upon which courts ordinarily act, there is no lack of jurisdiction in a court of equity to restrain the acts of any corporation on which its process may be served; and in an exceptional case a court of equity may exercise its power over a foreign corporation. Thus the English Court of Chancery did in one case without much considering the point restrain the resident directors of a Turkish corporation from using the funds for the prosecution of a libel suit against an officer of the company.39

§ 306. Officers.

The court will not interfere in any way with the election

33 Leary v. Colo. River & P. S. Nav. Co., 82 Fed. 775; Sidway v. Mo. Land &c. Co., 101 Fed. 481; Stockley v. Thomas, 89 Md. 663, 43 Atl. 766; State v. N. Amer. Land & Timber Co., 106 La. 621, 31 So. 172, 87 A. S. R. 309; Redmond v. Enfield Mfg. Co., 13 Abb. Pr. (N. s.) (N. Y.) 332; Madden v. Penn. El. L. Co., 199 Pa. 454, 49 Atl. 296.

34 Wilkins v. Thorne, 60 Md. 253; Hallenborg v. Greene, 73 N. Y. S. 403, 66 App. Div. 590.

35 Taylor v. Mut. Res. Fund Life Ass., 97 Va. 60, 33 S. E. 385, 45 L. R. A. 621.

36 Leary v. Colo. Riv. & P. S. Nav. Co., 82 Fed. 775; Sidway v. Mo. Land &c. Co., 101 Fed. 481; but see Harding v. Amer. Glucose Co., 182 Ill. 551, 55 N. E. 577, 74 A. S. R. 189.

37 Leary v. Colo. Riv. & P. S. Nav. Co., 82 Fed. 775; Redmond v. Enfield Mfg. Co., 13 Abb. Pr. (N. s.) (N. Y.) 332; American T. N. C. Co. v. Schuler, (Tex. Civ. App.) 79 S. W. 370.

38 Bill v. Sierra Nevada L. W. & M. Co., 1 DeG. F. & J. 177.

30 Pickering v. Stephenson, L. R. 14 Eq. 322.