18 BULLETIN 110 6, U. S. DEPARTMENT OF AGRICULTURE 
tions 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. 87 
At least in some States if the purchaser or assignee of stock has 
actual or constructive notice of a by-law giving the corporation a lien 
on the stock, it is effective, and the corporation is not obliged to 
recognize the purchaser or assignee of the stock unless the lien is 
given effect. 88 
SUBSCRIBER, STOCK, CAPITAL STOCK 
"A subscriber is one who has agreed to take stock from the cor- 
poration on the original issue of such stock." 89 The shares of stock 
into which the capital stock of the corporation is divided may con- 
sist of common stock or common and preferred stock. In Cook on 
Corporations it is said: 
By common stock is meant that stock which entitles the owners of it to an 
equal pro rata division of profits, if any there be : one stockholder or class of 
stockholders having no advantage, priority, or preference over any other stock- 
holder or class of stockholders in the division. By preferred stock is meant 
stock which entitles its owners to dividends out of the net profits before or in 
preference to the holders of the common stock. Common stock entitles 
the owner to pro rata dividends equally with all other holders of the stock 
except preferred stockholders ; while preferred stock entitles the owner to a 
priority in dividends. 
Usually the dividend rate on preferred stock is fixed, whereas that 
on common stock in commercial corporations is not generally fixed. 
Under the statutes of many of the States the right to vote at meet- 
ings of the stockholders is limited to the common-stock holders, and 
many of the statutes providing for the incorporation of cooperative 
associations authorize by-laws that limit the right to vote to common- 
stock holders of the corporation. 
"The capital stock is usually divided into equal portions called 
shares ; and a share of the capital stock of a corporation is the inter- 
est or right which the owner has in the management of the corpora- 
tion, in its surplus profits, and upon dissolution in all its assets 
remaining after the payment of its debts." 90 
Shares of stock are usually represented by certificates of stock. A 
certificate of stock is not the stock itself but simply evidence of its 
ownership, just as a deed is evidence of the ownership of land. A 
stockholder or shareholder is one who owns one or more shares of 
stock. One may be a stockholder, although no certificate of stock 
has been issued to him, 91 just as one may be the owner of other per- 
sonal property, although he has never received a bill of sale thereto. 
A stockholder is not by reason of this fact a creditor of an associa- 
tion, and the possession of a certificate of stock, whether common or 
preferred, does not represent indebtedness but ownership. 92 
8 ' Gibbs v. Long Island Bank, 83 Hun, 92. 31 N. Y. S. 406. 
83 Iowa-Missouri Grain Co. v. Powers, 198 Iowa 20S, 196 N. W. 979, 33 A. L. R. 126S. 
89 Cook on Corporations, 8th Ed., v. 1, p. 43. 
80 14 C J. 384. 
91 In re Culver's Estate, 145 Iowa 1, 123 N. W. 743. 
^Sternbergh v. Brock. 225 Pa. 279. 74 A. 166, 24 L. R. A. (N. S.) 107S ; Wineinger v. 
Farmers' & Stockmen's Loan & Investment Ass'n (Tex. Civ. App.), 278 S. W. 932, 287 
S. W. 1091. 
