LEGAL PHASES OF COOPERATIVE ASSOCIATIOISTS. 17 



LIEN ON STOCK. 



If a statute under which a corporation is incorporated or the 

 general law of the State gives a corporation a lien on the stock of a 

 stockholder for debts due the corporation by him, strangers, even 

 though without actual notice, and residents of other States buy the 

 stock subject to the lien. The Supreme Court of the United States 

 has said : ^^ " Where by general law a lien is given to a corporation 

 upon its stock for the indebtedness of the stockholder, it is valid 

 and enforceable against all the world." If the statute under which 

 an association or corporation is to be incorporated authorizes the 

 inclusion of a provision in the articles of association or the certifi- 

 cate of incorporation giving the corporation a lien on its stock for 

 any indebtedness due it by a stockholder, such a provision, if 

 included, is also valid against all the world.^^ In a New York case 

 the articles of association provided that, " No shareholder of the 

 association shall be permitted to transfer his shares or receive a 

 dividend or interest thereon who shall owe to the association a debt 

 which shall have become due, until such debt be paid, unless by 

 and with the consent of the Board of Directors of the association." 

 On the face of each certificate qf stock involved was the statement, 

 " Subject to the conditions and stipulations contained in the articles 

 of association." Although the plaintiff had no actual knowledge 

 of the limitation on the transfer of stock, he was held bound by the 

 provision in the articles of association.'* 



LIMITATION ON INDEBTEDNESS. 



The common law places no limit upon the amount which a corpora- 

 tion may borrow. The amount borrowed may be greater than the 

 capital stock,^^ The general rule is that a debt contracted by a cor- 

 poration in excess of the limit fixed by statute or by the charter is 

 valid and enforceable against the corporation. A national bank 

 purchased furniture and executed three promissory notes in pay- 

 ment thereof at a time when the amount of its indebtedness ex- 

 ceeded that allowed by a Federal statute. In a suit brought on the 

 notes it was held that the notes were enforceable against the bank. 

 In this case it was said, " We hold, therefore, that an indebtedness 

 which a national bank incurs in the exercise of any of its authorized 

 powers is not void from the fact that the amount of the debt sur- 

 passes the limit prescribed by the statute or is even incurred in vio- 



B2 Hammond v. Hastings, 134 U. S. 401. 



Bs Union Bank v. Laird, 2 Wheat. 390. 



" Gibbs V. Long Island Bank, 83 Hun. 92, 31 N. Y. S. 406. 



" Cook on Corporations, Sec. 760. 



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