Sa 
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13 BULLETIN 1106, U. S. DEPARTMENT OF AGRICULTURE. 
corporation suffered a loss by reason of the excess indebtedness, 
and it brought suit against the manager to recover the amount, of 
the loss which it claimed it had sustained and recovered a judgment 
for $3,000 against him. 
In probably all of the States there are penal statutes prescribing 
punishments for various acts by officers and agents of the corpora- 
tion. Typical among such offenses are securing subscriptions to 
stock by fictitious persons or deceiving State officials by false en- 
tries or records as to the assets of the corporation. In some States 
directors of corporations are personally lable to creditors of the 
corporation in the event that they create debts beyond the pre- 
scribed capital stock. 
An officer or director of a corporation at common law may re- 
sign at will,°* and a statute providing that directors shall hold 
office for one year and until their successors have been elected and 
qualified does not prevent resignation during the year.** 
WHO MAY BECOME MEMBERS. 
The question of who may become stockholders or members of a 
corporation is worthy of consideration. Fundamentally a :cor- 
poration has the right to determine to whom it will sell stock or 
issue membership certificates. On the other hand, a corporation 
can not make an individual a member or stockholder of 1t without 
his consent. Within constitutional limits a State undoubtedly 
could, by statute, require corporations incorporated under it to ad- 
mit to membership all who apply and meet certain conditions, or 
who belong to a certain class, but as a rule this is not done. 
SUBSCRIBER, STOCK, CAPITAL STOCK. 
“A subscriber is one who has agreed to take stock from the 
corporation on the original issue of such stock.” *® The shares of 
stock into which the capital stock of the corporation is divided may 
consist 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 
shareholder or class of stockholders in the division. By preferred stock is 
meant stock which entitles its owners to dividends out of the net profits be- 
fore or in preference to the holders of the common stock. Common stock 
entitles the owner to pro rata dividends, équally with all other holders of the 
33 Hwald v. Medical Society, 180 N. Y. S. 1024; (reversed on other grounds, 144 App. 
Div. 82). 
% Briggs v. Spaulding, 141 U. S. 132, 154. 
* Cook on Corporations, vol. 1, p. 43. 
