LEGAL PHASES OF COOPEEATIVE ASSOCIATIONS. 15 



fer of stock, there would, seem to be no doubt concerning the right 

 of an association to adopt such a restriction. 



From the cases that have come before the courts it is apparent that 

 the required statutory authority need not expressly authorize re- 

 strictions on the transfer of stock, but general language dealing with 

 this subject would seem to be enough. A few illustrations from de- 

 cided cases will shed light on this matter. In a recent New York 

 case (1919) the certificates of incorporation of each of the three 

 corporations involved, " Provided that no stock shall be transferred 

 until it was first offered for sale to the other stockholders on terms 

 and conditions to be fixed by the by-laws or by agreement between 

 stockholders, but, in case the offer to sell were refused, the stock 

 would be no longer subject to the conditions." The court held this 

 provision and the by-laws and the agreement connected therewith 

 valid and enforceable. Notice of the restrictions on the sale of 

 stock were stamped on eacR certificate of stock.** Section 10 of the 

 General Corporation Law of New York provides that " The certifi- 

 cate of incorporation of any corporation may contain any provisions 

 for the regulation of the business and the conduct of the affairs of 

 the corporation, and any limitation upon its powers, or upon the 

 powers of its directors and stockholders, which does not exempt 

 them from the performance of any obligation or the performance 

 of any duty imposed by law." It was apparently in pursuance of 

 this provision that the restrictions on the right to transfer the stock 

 were included in the certificates of incorporation. In every case un- 

 doubtedly there must be some provision in the statute or general law 

 . of the State under which an association is formed to authorize the 

 inclusion in the articles of association or the certificates of incorpora- 

 tion of a provision such as that involved in the New York case. A 

 case presenting similar facts in which a like conclusion was reached 

 was passed upon by the Supreme Court of Massachusetts.*^ If there 

 is nothing in the law of the State authorizing the inclusion of a 

 provision in the articles of association or the certificate of incorpora- 

 tion restricting the transfer of stock, the fact that one was included 

 would undoubtedly be held to be valueless. 



A statute may authorize associations incorporated under it to 

 adopt by-laws restrictive of the right to transfer stock. This was 

 the situation in a North Dakota case.*^ The statute empowered 

 associations incorporated under it, " To regulate and limit the right 

 of stockholders to transfer their stock" and to make by-laws for 



« BloQmingdale v. Bloomingdale, 177 N. Y. S. 873. 



^-Longyeai- v. Hardman, 219 Mass. 405, 106 N. E. 1012; see also Kaspcr v. Kalt 

 Zimmers Mfg. Co., 159 Wis. 517, 149 N. W. 754. 



« Chaffee v. Farmers' Co-op. El. Co., (N. D.) 168 N. W. 616. 



