14 BULLETIN 1106, U. S. DEPARTMENT OF AGRICULTURE. 



stock is given a vote by statute, those interested in forming an asso- 

 ciation may, if the incorporation statute authorizes, include a suit- 

 able provision in the articles of association establishing what the 

 voting unit at meetings of the stockholders shall be. It would also 

 appear to be the right of members of a corporation to adopt a 

 by-law on the subject where the matter is not controlled by statute 

 or by the charter.^'' However, it has been held in the absence of a 

 provision in the statute or charter on the subject, that a by-law 

 changing the common -law rule is void.*^ If there is a statute or 

 charter provision dealing with the matter it controls, and a by-law to 

 be valid must be in harmony therewith. In a case decided by the 

 Supreme Court of the United States it was said : 



Usually a stockholder is a member of the company, and as such has a right 

 to vote, but it does not necessarily follow that the right increases with the 

 increase in stock, or that th'e right is lessened in case the number of shares 

 owned by the stockholder should be diminished." 



In case there is no provision in the statute, charter, or by-laws 

 on the subject, the common-law rule prevails of one vote for each 

 member or stockholder without regard to the number of shares he 

 may own. With respect to nonstock associations or corporations, 

 this rule also prevails unless changed in one of the ways indicated. 

 It is interesting to note that the generally accepted cooperative prin- 

 ciple of one man, one vote, is merely an application of the common- 

 law rule on the subject. 



RESTRICTING TRANSFER OF STOCK. 



May an incorporated cooperative association or any other cor- 

 poration restrict the transfer of its stock as against third persons? 

 The answer is yes, if appropriate statutory authority exists in the 

 State in which the association is incorporated. If a statute of the 

 State expressly restricts the transfer of stock except under cer- 

 tain conditions, the matter is clear. This was the situation in a 

 Minnesota case *^ where the statute under which the association was 

 incorporated provided that, " No person shall be allowed to become 

 a stockholder in such association except by the consent of the man- 

 agers of the same." The court said, " We have no doubt of the 

 validity of such a restriction on the transfer of shares." If the 

 statute of the State under which the association is incorporated au- 

 thorizes the inclusion of a provision in the articles of association or 

 the certificate of incorporation or the by-laws restricting the trans- 



^ Detwiler v. Commonwealth ex rel. Dickinson, 131 Pa. 614, 7 L. R. A. 357. 



" Taylor v. Griswold, 14 N. J. Law 239, 27 Amer. Dec. 33. 



*2 Bailey v. Railroad Co., 89 U. S. 604, 635. 



" Healey et al. v. Steele Center Creamery Ass'n., 115 Minn. 451, 133 N. W. 69. 



