LEGAL PHASES OF COOPEKATIVE ASSOCIATIONS. 19 



It is true that as a rule a corporation usually pays the necessary 

 legitimate expenses and costs incurred by those who brought about 

 its formation, but the corporation is not liable for such charges unless 

 it elects to pay them. 



DIFFERENCES BETWEEN STOCK AND NONSTOCK CORPORATIONS. 



A stock corporation is a corporation having capital stock divided 

 into shares. As evidence of these shares, although not the shares 

 themselves, certificates of stock are usually issued. 



Capital stock and stock certificates or stock are generally re- 

 garded as characteristics of a business corporation. That is, busi- 

 ness corporations usually have capital stock and usually issue cer- 

 tificates of stock. This need not necessariily be true. For it should 

 be remembered that corporations are creations of the legislature and 

 that it can, within constitutional limitations, endow them with such 

 powers and limitations as seem advisable. The State, then, can 

 create business corporations without the elements mentioned. True, 

 this is not generally done, but the power to do so undoubtedly 

 exists. The thought to have in mind is that the legislature has com- 

 plete control, within constitutional limitations, of the creation of 

 corporations. It may make no provision for their creation, or it 

 may grant those created limited or wide powers. 



Nonstock corporations do not have capital stock and usually are 

 not commercial organizations. They generally issue certificates of 

 membership to their members evidencing the right of the members 

 in the corporation. Some of the more common of the corporations 

 of this type are incorporated churches, clubs, or social organiza- 

 tions. In the early history of business corporations having capital 

 stock, certificates of stock evidencing the shares into which the 

 capital stook of the corporation had been divided were not issued, 

 but as time went on some* corporations issued certificates of stock 

 evidencing the interest of shareholders in the corporation. The 

 convenience and desirability of stock certificates which could be 

 readily transferred from hand to hand were so apparent that it soon 

 came to be looked upon as a right of a member of a business cor- 

 poration to have certificates of stock issued to him. And at this 

 time purchasers of stock may generally require the corporation to 

 issue certificates of stock. 



From an early date stock certificates were assigned and transferred, 

 and this assignability is generally regarded as one of their leading 

 qualities. Stock of a corporation is regarded as property and, like 

 property of any other kind, is vendible. The whole policy of the 

 law is against restraint on the disposition or sale of property. How- 

 ever, the courts have, where the corporation was authorized to do so, 



