LEGAL PHASES OF COOPERATIVE ASSOCIATIONS. 21 



In the absence of restrictions in the charter or by-laws of a non- 

 stock corporation or of a statutory provision on the subject, a member 

 may withdraw at any time, and no acceptance is required. ^^ On the 

 other hand, shareholders or members of a corporation having capital 

 stock can not, strictly speaking, withdraw from the corporation.''* 



This brief sketch on the differences between stock or nonstock cor- 

 porations explains why a stock corporation is generally thought of as 

 a commercial organization; that is, as an organization in which 

 money, rather than the personnel of the membership, is the dominant 

 factor. By appropriate charter or statutory provisions a stock cor- 

 poration may exercise control over its membership resembling that 

 exercised by nonstock corporations. Indeed, no reason is apparent 

 why the legislature could not endow stock corporations, at least at 

 the time of their creation, with as complete control over their mem- 

 bership as that possessed by nonstock corporations. In several juris- 

 dictions at this time statutes providing for the incorporation of co- 

 operative associations with capital stock exist which give such asso- 

 ciations control over their members or stockholders comparable with 

 that fundamentally possessed by nonstock corporations. 



TRANSFER OF STOCK, LOSS OF MEMBERSHIP. 



As has been pointed out elsewhere, an incorporated cooperative 

 association or other corporation may, if appropriate statutory author- 

 ity exists, restrict the transfer of its stock. At common law, however, 

 shares of stock may be transferred or disposed of in any of the ways 

 known to the law. In the absence of restrictions, therefore, shares of 

 stock may be sold, devised, or transferred like property of any other 

 kind. Transfer books are usually kept by corporations in which 

 the names and addresses of purchasers of stock are kept. This 

 is necessary in order that the officers of the corporation may be 

 able to pay the dividends to those entitled thereto, and in order that 

 notices may be sent to the shareholders. Fundamentally, and this is 

 the rule in the absence of stipulations to the contrary, on the transfer 

 of the stock of a corporation held by an individual the purchaser 

 stands in the place of the former owner as to rights and liabilities, 

 and the former owner has no further interest in the corporation and 

 is free from any further liability.^^ 



As previously stated, the general rule is that the owner of stock 

 or the holder of a membership certificate that is fully paid for is 

 exempt from liability to the creditors of the corporation. Limited 

 liability is the general rule relative to the stockholders or members 



83 Ewald V. Medical Society, 130 N. Y. S. 1024, (reversed on other grounds, 144 App. 

 Div. 82) ; Finch v. Oalfe, 73 L. T. R. (N. S.) 716. 

 «* Picalora v. Gulf Cooperative Co., 12.3 N. Y. S. 980. 

 «5 Whitney v. Butler, 118 U. S. 655. 



