16 BULLETIN 1106, U. S. DEPARTMENT OF AGEICULTURE. 



the management of its affairs and, " To provide therein the terms 

 and limitations of stock ownership." It was held that a by-law 

 which provided that, " No stockholder shall transfer his stock with- 

 out first giving the corporation 90 days' notice and option to 

 purchase said stock at par plus the accrued and undivided dividends 

 which are payable per share " was valid. The by-law was referred 

 to on the face of the certificates of stock. 



A similar conclusion was reached in an Ohio case involving an 

 analogous statutory provision.*^ Where the statute under which 

 an association is incorporated authorizes the inclusion in the articles 

 of association or the certificate of incorporation or in the by-laws of 

 a provision restricting the transfer of its stock, such a provision 

 will be enforced by the courts of the State where suit is brought, 

 although the association was incorporated in another State. These 

 were the facts in the case last mentioned. In that case the corpora- 

 tion was incorporated in Delaware, but ©the transactions relative to 

 the stock took place in Ohio, where the corporation had its principal 

 place of business, and the suit was brought there. One is charged 

 with notice of the law of the State under which a corporation is 

 incorporated and of its powers. Even though a by-law restricting 

 the right to transfer stock is unauthorized by the statute under 

 which the corporation is formed, they have been enforced as con- 

 tracts between the corporation and its members,*^ although a con- 

 trary conclusion has been reached.*^ It is not believed that an 

 absolute prohibition on the transfer of stock in an unauthorized 

 by-law would be upheld. Shares of stock at common law are re- 

 garded as personal property, and as such all the rules of law rela- 

 tive to such property are applicable. The policy of the law is 

 against prohibitions or such as have that effect on the transfer of 

 property, on the theory that the right of sale or disposition is an 

 inseparable incident of its ownership. But the law permits some 

 restrictions on the right of sale or transfer of real or personal prop- 

 erty .^° In a case decided by the Supreme Court of the United States 

 it was said that "In * * * a joint stock corporation * * * 

 each stockholder whether by purchase or original subscription has 

 the right, unless restricted by the charter or articles of association, 

 to sell and transfer his shares and by transferring them introduce 

 others in their stead.^^ 



" Nicholson v. rranklin Brewing Co., 82 Ohio 94, 91 N. E. 991, 19 Am. Cas. 699. 



« New England Trust Co. v. Abbott, 162 Mass. 148, 38 N. E. 432, 27 L. R. A. 271 ; 

 Clothing House v. Dickinson, (Minn.) 178 N. W. 957. 



*9 Steele v. Farmers & Merchants Mutual Tel. Assn., 95 Kan. 580, 148 Pac. 661. 



60 Lathrop v. Merrill, 207 Mass. 6, 92 N. E. 1019 ; Gray Restraints on the Alienation 

 of Property, (2d ed.) p. 399. 



Bi Morgan v. Struthers, 131 U. S. 246, 254. 



