Stock deemed personal property.

Lien on.

Stock of in

sale, etc., of.

power to afford the protection provided for herein upon proper application thereto.

(81) SEC. 4. The stock of every corporation shall be deemed personal property and shall be subject to the provisions of act number one hundred three of the public acts of nineteen hundred thirteen, known as the uniform stock transfer act, as to all matters and things therein prescribed; and as to matters not therein prescribed in relation to the transfer of stock, the said corporation shall have the power to make its by-laws and other regulations. Such corporation. shall at all times have a lien upon all stock or property of its members invested therein, for all debts due from them to such corporation.

(82) SEC. 5. Any corporation which has a lien upon the debted holder, stock of any stockholder therein as provided by the preceding section, may give notice to such stockholder that unless he shall pay his indebtedness to said corporation within thirty days from the time of giving such notice, then such corporation will proceed to sell and transfer the stock of such stockholder in said corporation, and upon default of payment said corporation may sell the stock of such indebted stockholder in the same manner and by the same procedure as is hereinbefore provided for the sale of the stock of a subscriber who has not paid up his subscription, and any such corporation may prescribe by its by-laws the manner of giving the notice required by this section.

When stock reissued.

When stock assigned as security.

See Lufkin Rule Co. v. Secretary of State, 163/32; Moore v. Lumber Co., 171/417.

(83) SEC. 6. Whenever the purchaser of said stock shall have complied with the conditions of said sale, the corporation shall issue new certificates of stock to such purchaser, or to his order, and shall cancel upon the books of the corporation the certificates of such indebted stockholders, and the new certificates so issued shall entitle the holders thereof to all the privileges, rights, and interests of a stockholder in such corporation.

(84) SEC. 7. Whenever any stockholder in any such corporation shall have made a transfer or assignment of his stock as security for his indebtedness to a third party, and afterwards shall become a debtor to such corporation, such corporation may sell the equity of redemption of such stock in the same manner as is provided for the sale of stock on which it has a lien, and shall credit the amount received from such sale to such indebted stockholder. Such corporation may require the party holding the transfer or assignment of such stock, to give a statement to the treasurer of such corporation, under oath, of the amount for which said stock was pledged; and if said party shall not give such a statement at or before the time such sale is to take place, he shall forfeit all claim and lien on such stock or any part thereof, and such corporation may sell the same as herein provided.

(85) SEC. 8. Nothing contained in the three preceding Lien, etc., sections shall affect any lien or right acquired by any other not affected. party by virtue of any attachment or levy of execution upon the stock of any stockholder in any such corporation.

ity for.

(86) SEC. 9. The stockholders of all corporations shall Labor, liabil be individually liable for all labor performed for such corporations, which said liability may be enforced against any stockholder by action founded on this statute, at any time after an execution shall be returned unsatisfied, in whole or in part, against the corporation, or at any time after an adjudication in bankruptcy against said corporation, and the amount due on such execution shall be prima facie evidence of the amount recoverable, with costs against any such stockholder; and if any stockholder shall be compelled by any such action to pay the debts of any creditor, or any part thereof, he shall have the right to call upon all the responsible stockholders to contribute their equal part of the sum so paid by him as aforesaid, and may sue them, jointly or severally, or any number of them, and recover in such action the amount due from the stockholder or stockholders so sued. Nothing in this section contained shall be construed as taking away any of the remedies provided by the judicature act, so-called.

The liability of stockholders under this state for labor claims is substantially the same liability as that of partners. Each stockholder is individually liable for all the labor debts of the corporation. He can be sued again and again until all the debts are satisfied and his liability is not limited to the amount of stock he holds and he may call upon other responsible stockholders to contribute.-Shurlow v. Lewis, 170/503. The benefit of the provision is confined to laborers. Peck v. Miller, 39/594. The stockholder's obligation for labor is not created by personal obligation, but by law. Pettibone v. McGraw, 6/441. Under somewhat similar provisions for the protection of laborers, it has been held that contractors and sub-contractors are not laborers, etc., within the meaning of the statute.-Chicago & N. E. R. R. Co. v. Sturgis, 44/538. But the work done by a man's team may be regarded as labor performed by him.-Ibid. This section does not make stockholders primarily liable for the labor debts of the corporation. The stockholders stand in the position of sureties for the debt; their liability is only collateral to that of the company. Hence, if the creditor accepts the company's note for the demand and extends the time of payment, the stockholders are released. Hanson v. Donkersly, 37/184. The stockholders of all corporations and joint stock associations shall be individually liable for all labor performed for such corporation or association.-Const., Art. XV, Sec. 7. The individual liability of stockholders under the constitution, for labor debts, is a liability beyond that of members of the corporations. Milroy v. Spur M. I. M. Co., 43/231; and is collateral to that of the corporation. Hanson v. Donkersly, 37/184. Where, in an action against a stockholder to recover the amount of damages and costs awarded to the plaintiff in a suit against the corporation for personal labor, judgment is taken for the amount of the damages only, an objection that the return to the execution issued against the corporation failed to show that the sheriff could not collect the costs is without force.-Macomber v. Wright, 108/109. Each stockholder or member of a corporation is so far an integral part thereof that, in a suit brought to determine the amount of indebtedness of the corporation preparatory to an assessment upon the stockholders to pay the same, he is represented through the corporation itself, and bound and concluded by the determination therein. Mutual Fire Insurance Co. v. Pheonix Furniture Co., 108/170. A guaranty by the organizers of a corporation, who have issued the entire capital stock to themselves as fully paid, that stock purchased from them is "non-assessable" until the full par value of all the stock shall have been expended in the enterprise, operates to indemnify subsequent purchasers against liability under a statute declaring that stockholders shall be individually liable to the creditors of the corporation in an amount equal to their stock, such liability to be enforced by an action against all of the stockholders, in which the amount payable by each upon the total corporate indebtedness shall be found and determined.-Omo v. Bernart, 108/43. A judgment against a corporation upon its acceptance of a draft for the purchase price of goods sold to it under an arrangement with its treasurer that an accounting between it and the vendor should be had at stated intervals,

and that 30, 60 and 90 day acceptances should be given and received for the amounts found due, is, in the absence of evidence that the accepted draft was itself received as payment, a judgment for goods, wares and merchandise within the meaning of the statute (1 How. Stat., Sec. 3940), making stockholders individually liable on such judgments after execution against the corporation has been returned unsatisfied.-Kirkpatrick v. Mehalitch, 113/631. Act No. 141, P. A. 1877 (1 Hod. Stat., Sec. 4886, et seq.), prescribing a general method for enforcing the individual liability of the stockholders of insolvent corporations, applicable to all cases except where labor claims are sought to be enforced by the persons performing the labor, was not repealed or in any way abrogated by Act No. 232, P. A. 1885 (3 How. Stat., Sec. 4161a, et seq.), section 29 of which makes the stockholders of all corporations organized thereunder individually liable for all labor performed by the corporation and provides that such liability may be enforced against any stockholder by action founded upon said statute. Hence, the assignee of a labor claim against a corporation organized under the last mentioned act can only enforce the liability of the stockholders therefor by proceeding in accordance with the act of 1877.-Musselman v. Wright, 107/639. How. Stat., Sec. 4161cs, making the stockholders of a manufacturing corporation individually liable for all labor performed therefor, and providing that such liability may be enforced against "any stockholder" upon the return of an execution against the corporation unsatisfied, applies only to those who were stockholders in the corporation at the time the labor was performed.-Kamp v. Wintermute, 107/635. The provisions of Act No. 79, P. A. 1893, subjecting foreign corporations theretofore authorized to do business in this state to the payment of a specified franchise fee upon every increase of capital stock does not apply to an increase of stock made prior to the passage of the act, although the certificate thereof was not filed with the secretary of state until after the act took effect; and this notwithstanding the provisions of 3 How. Stat., Sec. 41616, that foreign corporations when permitted to carry on business in this State shall be subject to all the restrictions and liabilities of domestic corporations, and the provision of 3 How. Stat., Sec. 4161a1, subd. 4, that an increase in the capital stock of a domestic corporation shall be operative from the date when the certificate is received by the secretary of state.Warren-Scharf Co. v. Sec'y of State, 115/234. Before filing a bill in equity to enforce the liability of stockholders for partly paid stock the creditor must reduce his claim to judgment and exhaust his legal remedies.-Strelow v. American Color Co., 162/709.

Co-operative

how governed.

CHAPTER 4.

Co-operative Corporations.

(87) SECTION 1. Corporations organized to conduct. any corporations, lawful business upon a co-operative plan shall be governed by the provisions of this chapter as to the mode of corporate management, manner of distribution of earnings and profits, their powers and optional principles of doing business, and as to any other matters, and things prescribed herein where the provisions of this chapter are inconsistent with or prescribe regulations or features differing wholly or to any extent from those provisions of this act in other chapters hereof governing corporations generally. Otherwise, such cooperative corporations shall be subject to the provisions of this act governing corporations generally, and excepting as provided in section one of chapter one of part three of this act, shall be deemed to be corporations for pecuniary profit.

Co-operative plan.

Subdivision 1.

(88) SEC. 2. Such corporations may engage in any lawful business within this state upon any co-operative plan adopted by the incorporators, or by the stockholders at any annual or special meeting. For the purpose of this chapter, the term

"co-operative plan" shall be deemed to mean a mode of operation whereby the earnings of the corporation are distributed, in whole or in part, on the basis of, or in proportion to, the value of property bought from or sold to stockholders or members or other persons, or labor performed for or services rendered to the corporation: Provided, That the foregoing Proviso. definition shall not be construed as prohibiting any such corporation from paying limited dividends to stockholders based upon stock investment, or from reserving a certain proportion of earnings for future operations or for future distribution, before general distribution of net earnings shall have been authorized and made.

stock, what printed upon.

(89) SEC. 3. (a) There shall be printed upon each share Shares of of stock issued by such corporations a condensed statement of every article of by-law which in any wise limits the stockholders' right to assign or transfer such shares or to vote the total number of shares held at meetings of the corporation, or which forbids voting by proxy;

applicable.

(b) The provisions of the uniform stock transfer law of Provisions not this state shall not be held to apply to the shares of stock of such co-operative corporations in any manner or to any extent inconsistent with the provisions of this chapter.

stockholders.

(90) SEC. 4. The stockholders of any such corporation Power of shall have power: To adopt by-laws for the government and regulation of its business management, and to amend such by-laws; to determine the manner of distributing the earnings of the company upon a co-operative plan; to limit and define the powers and duties and the number of directors and officers; to delegate to the directors any particular power or authority which the stockholders themselves possess, excepting the right to elect or dismiss directors and to amend the articles of incorporation; to fix the time for holding the elections of its directors, which shall be annual unless a longer term is prescribed in the articles or by-laws; to provide the manner in which directors and officers may be removed and their successors elected at any time by vote of the stockholders or members; to determine the manner in which stockholders may vote at stockholders' meetings by mail, and whether or not proxies may be employed, and if so when and how; to determine whether or not stockholders shall be limited to one vote each, regardless of the number of shares held; to determine the number of stockholders or directors attending any meeting, or the number of shares represented at any meeting of stockholders shall constitute a quorum, which shall not be less than a majority of the stock outstanding in the case of meetings of the shareholders; and to provide a limitation upon the amount of capital stock which may be owned by any one stockholder therein; all of which shall be included in the by-laws or in the articles.

(91) SEC. 5. The stockholders of every such corporation Membership, may also provide in their articles or by-laws, the necessary etc. qualifications,

Amendment to articles.

Investment of reserve fund.

Business of another company, purchase of.

Proviso.

qualifications of stockholders or members, together with provisions limiting, prescribing or regulating the transfer of such membership, and the terms and conditions under which, if at all, certificates of stock may be transferred. No sale, transfer, or assignment of membership rights or of any stock in any such corporation shall be valid unless made in accordance with the articles or the by-laws of the corporation; nor shall any purchase and sale of any such stockholder's stock or privileges in such corporation made under execution, or in the course of bankruptcy proceedings, or by any legal process or by operation of law, give any person any stockholder's or membership right, title or interest in and to such corporation, unless in accordance with the articles or the by-laws of such corporation.

(92) SEC. 6. The by-laws of every such corporation shall provide a practical method and plan whereby one-tenth of the entire number of members or stockholders may propose any desired amendment to the articles or to the by-laws of the corporation, and whereby any amendment so proposed shall be voted upon at the next annual meeting by the members or stockholders. Such by-laws shall also provide a practical method and plan whereby stockholders or members who are unable to be present at meetings of the corporation may vote by mail for directors or upon any amendment or proposition to be voted on at any regular or special meeting of stockholders or members.

(93) SEC. 7. At any regular meeting, or any regularly called special meeting, at which the quorum fixed by the bylaws shall be present, the stockholders of any such corporation may by a majority vote of such stockholders present or represented (if proxies be permitted) subscribe for shares and invest a portion of the reserve fund of such corporation not to exceed, at any time, twenty per cent in the aggregate of its capital in the capital stock of any other similiar co-operative company or companies with which it desires to co-operate or affiliate.

(94) SEC. 8. Whenever such corporation shall purchase the business of another company, person or persons, it may pay for the same in whole or part by issuing to the selling association, person or persons, shares of its capital stock to an amount which, at par value, would equal the fair market value of the business so purchased, and in such case the transfer to the association of such business of such valuation shall be equivalent to payment in cash for the shares of stock so issued: Provided, That suitable provision be made in the by-laws of such corporation for admitting the vendors to such membership.