be so construed as to prevent any mining or manufacturing corporation, subject to the provisions of this chapter, from issuing stock or bonds, and negotiating the sale of the same, in payment of real and personal estate for the use of such corporation, and for its other corporate purposes and business, at such price and upon such terms and conditions as may be agreed upon by the owners and directors or stockholders of such corporation. And any subscriber to the capital stock of any such mining or manufacturing corporation may pay for the same by the transfer and conveyance to such corporation of real or personal property, or both, proper or necessary for the uses and purposes of the corporation, upon such terms as may be mutually agreed upon. All stock so issued shall be fully paid and not liable to any further call or assessment, and in the absence of actual fraud in the transaction the valuation of the property so purchased shall be conclusive; but it shall be the duty of the corporation to have its minutes or other permanent records to show with reasonable detail the items of the property in payment for which stock or bonds were so issued." 22 Stock may be issued for property, services or other thing of value, and the judgment of the board of directors or of the stockholders entered of record is conclusive in the absence of fraud.23 § 343. Payment for bonds. The same provision which is usually made as to the issue of stock applies also to bonds; no bonds shall be issued except for money, labor done, or property actually received,24 and all fictitious increase of bonded indebtedness is void.25 The 22 W. Va. Code, ch. 53, § 24, as amended 1901, ch. 35. 23 Spring Garden Bank v. Hulings Lumber Co., 32 W. Va. 357, 9 S. E. 243; Richardson v. Graham, 45 W. Va. 134, 30 S. E. 92. 24 Ante, § 342. 25 Ala. Const. Art. 234; Cal. Const. Art. 12, § 11, Civ. Code, § 359; Ida. Const. Art. 11, § 9; Mo. Rev. Stat. § 962; Mont. Const. Art. 15, § 10; N. Dak. bonded indebtedness shall not be increased "except in pursuance of general law, nor without the consent of the persons holding the larger amount in value of the stock, at a meeting called for that purpose, giving sixty days' public notice, as may be provided by law." 26 In Missouri "the bonded indebtedness of a corporation shall not be increased so that the entire amount thereof shall exceed the amount of the authorized capital, except that any railroad company may issue its bonds in excess of its capital stock for the purpose of constructing or acquiring another railroad, which shall connect with the railroad of the company issuing such bonds, but the bonds so issued in excess of its capital stock shall not exceed the authorized capital stock of the company whose road is constructed or acquired with the proceeds thereof, and shall be secured by mortgage on the railroad franchises and property constructed or acquired with the proceeds thereof, or by the deposit as collateral security of the first mortgage bonds of the railroad constructed or acquired with the proceeds thereof. But no such bonds shall be issued without first obtaining the consent of the persons holding the larger amount in value of the stock of the company issuing the same, at a meeting called for that purpose, and of which meeting and the object and purpose thereof sixty days' public notice shall be given by advertisement in a daily or weekly newspaper published in the town or city in this state where the general offices of the company issuing such bonds may be located." 27 In California: "Any two or more corporations may by a separate compliance by each corporation with the provisions of this section applicable in the premises. in respect to creating or increasing bonded indebtedness, create or increase a consolidated bonded indebtedness of such corporations, to be binding jointly and severally on such cor Const. § 138; Pa. Const. Art. 16, § 7; S. Car. Const. Art. 9, § 10; S. Dak. Const. Art. 17, § 8. 20 Ala. (30 days' notice), Cal., Mo., N. Dak., Pa., S. Dak., ubi supra. 27 Mo. ubi supra. porations, and which may be secured by a consolidated mortgage or deed of trust executed by all such corporations, mortgaging or conveying in trust all or any of the properties of all such corporations, acquired or to be acquired." 28 8344. Increase of stock. It is likewise commonly provided that "the stock of corporations shall not be increased except in pursuance of general law, nor without the consent of the persons holding a majority of the stock first obtained at a meeting held after at least sixty days' notice given in pursuance of law." 29 By statute in California the consent must be that of two-thirds of the stock,30 and this statute is commonly followed in the far west. § 345. Preferred stock: provisions of various States. In most States a corporation is expressly permitted by statute to issue preferred stock. The issue of preferred stock involves or may involve two things: a promise to pay dividends on such stock before paying them on common stock, when the profits authorize the payment of any dividends; and a guaranty that a certain percentage of profit will be earned or paid. Either or both these agreements may be made by the corporation issuing the preferred stock. It must be clear that whether a corporation can issue preferred stock depends upon the law of the State of charter. The legality of such a contract must be tested by that law alone.31 If in any State there is no statute permitting the issue of preferred stock, the authority of a corporation to issue such 28 Cal. Civ. Code, § 359. 29 Ala. Const. Art. 234 (30 days' notice); Cal. Const. Art. 12, § 11; Ida. Const. Art. 11, §9 (30 days' notice); Mo. Rev. Stat. § 962; Mont. Const. Art. 15, 10 (30 days' notice); N. Dak. Const. § 138; Pa. Const. Art. 16, §7; S. Dak. Const. Art. 17, § 8. 30 Cal. Civ. Code, § 359. 31 McVity v. E. D. Albro Co., 90 App. Div. 109, 86 N. Y. S. 144. stock must be regarded as doubtful. The provisions of the statutes differ so greatly that it is necessary to give them in extenso. § 346. Alabama. No corporation shall issue preferred stock without the consent of the owners of two-thirds of the stock of said corporation.32 It may be issued with such consent, by vote at a meeting duly notified.33 § 347. Connecticut. "Any specially chartered corporation, not engaged either in a trust, insurance, or banking business or in trading in bonds, notes, or other evidences of indebtedness, which has by law power to increase its capital stock, may so increase it by the issue of preferred stock, which shall be entitled to dividends of an agreed amount before any dividends are declared upon the stock already issued; and such dividends, if not paid in any one year, may be paid out of the earnings of subsequent years, if it be so provided in the vote authorizing such increase. Any specially chartered corporation, having power under [the preceding] section to issue stock preferred as to dividends, may also issue stock preferred as to assets, the holders of which shall, in case of the winding up of the corporation, be paid up to the full par value of such preferred stock, out of the net assets available for distribution to stockholders, before the holders of other stock receive anything; and, if the holders of a majority of the common stock shall so vote, the holders of such preferred stock may be given the right to exchange such preferred stock for common stock, on such terms and conditions as may be determined by said vote; but the total capital stock of the corporation shall not be increased by such exchange. No issue of preferred stock shall 32 Ala. Const. § 237. 33 Ala. Code, § 1269. be made unless authorized at a meeting of the stockholders warned and held for that purpose, by a vote of stockholders holding not less than two-thirds of the stock of such corporation, which vote shall determine the amount of preferred stock so to be issued, the number and value of the shares thereof, the dividends to be paid thereon, whether the same shall be cumulative or not, and the terms of the preferment as to assets, if such preferment is made." 34 § 348. Delaware. "Every corporation shall have power to create two or more kinds of stock of such classes, with such designations, preferences and voting powers, or restriction or qualification thereof, as shall be stated and expressed in the certificate of incorporation; and the power to increase or decrease the stock, as in this Act elsewhere provided, shall apply to all or any of the classes of stock; but at no time shall the total amount of the preferred stock exceed two-thirds of the actual capital paid in cash or property; and such preferred stock may, if desired, be made subject to redemption at not less than par, at a fixed time and price, to be expressed in the certificate thereof, and the holders thereof shall be entitled to receive, and the corporation shall be bound to pay thereon a fixed yearly dividend, to be expressed in the certificate, not exceeding eight per centum, payable quarterly, half yearly or yearly, before any dividend shall be set apart or paid on the common stock, and such dividends may be made cumulative; and in no event shall a holder of preferred stock be personally liable for the debts of the corporation; but in case of insolvency, its debts or other liabilities shall be paid in preference to the preferred stock. Unless its original or amended charter or certificates of incorporation shall so provide, no corporation shall create preferred stock. The terms 'general stock' and 'common stock' are syn |