mon law, and established by the by-law of a corporation, does not render such by-law invalid: Goddard v. Merchants' Exchange, 9 Mo. App. 290; affirmed in same case, 78 Mo. 609. A by-law which unreasonably interferes with the free exercise of the right to transfer stock is void as being in restraint of trade: Farmers' etc. Bank v. Wasson, 48 Iowa, 336; 30 Am. Rep. 398; Moore v. Bank of Commerce, 52 Mo. 377; Chouteau Spring Co. v. Harris, 20 Mo. 382; Quiner v. Marblehead Social Ins. Co., 10 Mass. 476. This is so where a by-law of a bank prohibits the alienation of stock therein or puts restrictions thereon, because the right of alienation is an incident of property: Moore v. Bank of Commerce, 52 Mo. 377. While a by-law of a corporation respecting the transfer of stock may sometimes be enforced as a reasonable regulation for the protection of the corporation against worthless stockholders, it cannot, therefore, be made available to defeat the rights of third persons, as where such a by-law provides that transfers of stock shall not be valid unless approved by the board of directors: Farmers' etc. Bank v. Wasson, 48 Iowa, 336; 30 Am. Rep. 398. The power contained in the charter of an incorporated company "to regulate the transfer" of stock by by-laws does not include the power to restrain transfers or prescribe to whom they may be made. It merely prescribes the formalities to be ob served in making them. Such a power will not prevent a party from selling this stock even to an insolvent person: Chouteau Spring Co. v. Harris, 20 Mo. 382. A by-law that no person shall exercise the art of a painter within the city of London, not being "free of the company of painters," is in restraint of trade and void, unless there is a special custom to warrant it: Clark v. Le Creu, 9 Barn. & C. 52. By-laws of a society forbidding a member to work at his trade at such prices as he may choose to accept, and compelling him to join in a "strike" by punishing him for refusing to do so, are void as against public policy: People v. New York etc. Society, 3 Hun, 361. A by-law that will disturb a vested right of any shareholder in a corporation is clearly unauthorized and void: Gray v. Portland Bank, 3 Mass. 364; 3 Am. Dec. 156; People v. Crockett, 9 Cal. 113; People v. Fire Department, 31 Mich. 458. When neither the charter of a corporation, nor any general statute, imposes on the individual members a liability to pay its debts, such liability cannot be created by any by-law or vote of the corporation: Trustees v. Flint, 13 Met. 539; Kennebec etc. R. R. Co. v. Kendall, 31 Me. 470; or, expressed somewhat differently, a corporation cannot by a mere by-law, in the absence of a statute upon the subject, bind stockholders not assent. ing thereto for the payment of debts of the corporation: Flint v. Pierce, 99 Mass. 68; 98 Am. Dec. 691; and monographic note to Freeland v. McCul lough, 43 Am. Dec. 694. A mutual benefit society cannot entirely take away the right to invoke the aid of the courts in enforcing claims existing in favor of its members upon contracts. A member is not concluded, by an adverse decision on his claim by the highest power in the society, from re sorting to a court of law; and the society cannot, by provisions in its con stitution, by-laws, or relief fund laws, deprive him of this right: Bauer v. Samson Lodge, K. P., 102 Ind. 262; Supreme Council C. F. v. Garrigus, 104 Ind. 133; 54 Am. Rep. 298. In the next case to the last one cited it is held that a custom that a party shall not sue in a court of justice for money due him on a contract is not valid. So, if the statute gives the stockhold. ers of a corporation the power to elect its directors, the corporation cannot, by its by-laws, either give or take it away: Brewster v. Hartley, 37 Cal. 15, 24; 99 Am. Dec. 237. The principle of such cases is that the powers of

5

corporation being derived from the law, no by-law can abridge or enlarge those powers: Brewster v. Hartley, 37 Cal. 15; 99 Am. Dec. 237.

A by-law of an insurance company, providing that any suit on a policy should be brought in a certain county, is not binding on the assured: Nute ▾. Hamilton Mut. Ins. Co., 6 Gray, 174. It is otherwise as to a by-law limiting the time within which suit must be brought: Amesbury v. Bowditch Mut. Fire Ins. Co., 6 Gray, 596; Wilson v. Etna Ins. Co., 21 Vt. 99; Cray v. Hartford Fire Ins. Co., 1 Blatchf. 280. A by-law of a secret order or asso ciation which insures the lives of its members, making initiation necessary to membership and the enjoyments of the benefit attaching thereto, is rea sonable, and calculated to promote the objects and welfare of the order or association, and is not void as being unreasonable, or opposed to law or public policy: Matkin v. Supreme Lodge K. of H., 82 Tex. 301; 27 Am. St. Rep. 886.

So with a by-law prohibiting the publication of the regular news dispatches of any other news association covering like territory, and organ. ized for a like purpose: Matthews v. Associated Press, 136 N. Y. 333; 32 Am. St. Rep. 741. A by-law of a building association, providing that every stockholder delinquent in the payment of his monthly dues and interest "shall forfeit and pay the additional sum of ten cents monthly on each and every dollar due by him," is, in the absence of any special statutory authority in the association to impose fines, oppressive, extortionate, and unreasonable, and therefore void: Lynn v. Freemansburg etc. Assn., 117 Pa. St. 1; 2 Am. St. Rep. 639. So with a by-law providing for a forfeiture of benefits, in a mutual benevolent society, for a period of three months from and after the liquidation of any arrears of dues by a member: Cartan v. Father Mathew etc. Soc., 3 Daly, 20. A by-law by the directors excluding one of them from examining the corporate books is void: People v. Throop, 12 Wend. 183; so with a by-law restricting the right of members of a church to vote as authorized by statute: People v. Phillips, 1 Denio, 388; or a by-law imposing penalties for past acts: People v. Fire Department, 31 Mich. 458. A by-law that transfers of stock are subject to the approval of the directors: Farmers' etc. Bank v. Wasson, 48 Iowa, 336; 30 Am. Rep. 398; or the approval of the president is void: Sargent v. Franklin Ins. Co., 8 Pick. 90; 19 Am. Dec. 306. So with a by-law authorizing the corporation to sue a subscriber for the difference between the subscription and the price for which the stock sold on forfeiture: Jay Bridge Co. v. Woodman, 31 Me. 573; Kennebec R. R. Co. v. Kendall, 31 Me. 470. A by-law compelling members of an exchange to submit their controversies to arbitration on pain of expulsion or suspension is void: State v. Merchants' Exchange, 2 Mo. App. 96. So with a by-law enlarging the liability of stockholders for debts of the corporation: Trustees etc. v. Flint, 13 Met. 539; or one com pelling stockholders to retire a part of their stock: Bergman v. St. Paul etc. Assn., 29 Minn. 275; or one prohibiting the use of the company's canal on Sundays: Calder etc. Nav. Co. v. Pilling, 14 Mees. & W. 76; or one restrict ing the members as to their fishing business: Adley v. Whitstable Co., 17 Ves. 315; 19 Ves. 304. A by-law of a bank that mistakes in pass-books must be corrected at once does not bind a depositor: Mechanics' etc. Bank v. Smith, 19 Johns. 115; and a by-law which limits or regulates the corporate powers which the charter confers on the directors may be disregarded by them: Union etc. Ins. Co. v. Keyser, 32 N. H. 313; 64 Am. Dec. 375. A by-law restricting the number of apprentices which members may have is void: Rex v. Coopers' Co., 7 Term Rep. 543; Rex v. Tappenden, 3 East,

186. So with one restricting the transfer of seats in an exchange: Ritterband v. Baggett, 10 Jones & S. 556; or one which prohibits members from working with persons who are not members: Thomas v. Mutual etc. Union, 49 Hun, 171.

The authority to forfeit shares for nonpayment of the subscription cannot be created by a by-law: In re Long Island R. R. Co., 19 Wend. 37; 32 Am. Dec. 429; Budd v. Multnomah St. Ry. Co., 15 Or. 413; 3 Am. St. Rep. 169; Kennebec etc. R. R. Co. v. Kendall, 31 Me. 470; Rosenback v. Salt Springs Nat. Bank, 53 Barb. 495, 506; Kirk v. Norvill, 1 Term Rep. 118. Such a forfeiture would be wholly void, and transfers based thereon would confer no rights upon the transferee: In re Long Island R. R. Co., 19 Wend. 37; 32 Am. Dec. 429. But if such a power is conferred by a bylaw adopted at a meeting of the stockholders, a stockholder whose stock has been declared forfeited under the by-law, and who is shown to have assented to the by-law, will not be heard to question the validity of the forfeiture, as he is estopped: Lesseps v. Architects' Co., 4 La. Ann. 316.

The question whether a corporation may, by a by-law, create a lien in its own favor upon the shares of its stockholders for debts due by them to the corporation is not settled. There are cases sustaining the validity of such a by-law: People v. Crockett, 9 Cal. 112; Mechanics' Bank v. Mer• chants' Bank, 45 Mo. 513; 100 Am. Dec. 358; Spurlock v. Pacific R. R., 61 Mo. 319; Bank of Holly Springs v. Pinson, 58 Miss. 421; 38 Am. Rep. 330; Pendergast v. Bank of Stockton, 2 Saw. 108.

But it seems to be clear that a by-law of the usual purport, forbidding a transfer by a stockholder in debt to the corporation, and making all indebt. edness a lien on the debtor's stock until paid, cannot affect subsequent pur chasers for value without notice: Farmers' etc. Bank v. Wasson, 48 Iowa, 336; 30 Am. Rep. 398; Bank of Holly Springs v. Pinson, 58 Miss. 421; 38 Am. Rep. 330; Anglo-Californian Bank v. Grangers' Bank, 63 Cal. 359; Carroll v. Mullanphy Sav. Rank, 8 Mo. App. 249; Driscoll v. West Bradley etc. Mfg. Co., 59 N. Y. 96; Pitot v. Johnson, 33 La. Ann. 1286; Bank v. Lanier, 11 Wall. 369; Bank of Atchison County v. Durfee, 118 Mo. 431; 40 Aın. St. Rep. 396, and note 405.

And this is upon the principle that restrictions upon the transfers of stock must have their source in legislative enactment; that the corpora tion itself cannot create these impediments by mere by-laws; and that the power of corporations to make by-laws for the transfer of their stock does not include the power to create liens thereon affecting purchasers for value without notice: Carroll v. Mullanphy Sav. Bank, 8 Mo. App. 249; AngloCalifornian Bank v. Grangers' Bank, 63 Cal. 359; Conklin v. Second Nat. Bank, 45 N. Y. 655.

With respect to national banks, it has been held that a power to regulate the transfer of stock, or manner of transferring stock, is sufficient to authorize a valid by-law prohibiting the transfer of stock until all debts due from the stockholder to the bank are paid, and creating a lien on the stock for such indebtedness: Lockwood v. Mechanics' Nat. Bank, 9 R. I. 308; 11 Am. Rep. 253; Knight v. Old Nat. Bank, 3 Cliff. 429; Young v. Vough, 23 N. J. Eq. 325; but it is now settled that a by-law giving it a lien on the stock of its debtors is not "a regulation of the business of the bank, or a regulation for the conduct of its affairs," within the meaning of the National Banking Act of 1864; and that the bank has no power to make such a bylaw, and cannot, therefore, acquire such a lien: Bullard v. Bank, 18 Wall

589; Bank v. Lanier, 11 Wall. 369; Corklin v. Second Nat. Bank, 45 N. Y. 655.

Divisibility—Alteration, Amendment, or Repeal.-A by-law may be good in part and void for the rest: Rogers v. Jones, 1 Wend. 237; 19 Am. Dec. 493; but where part of a by-law is void and the whole forms an entirety, so that the part which is void influences the whole, the entire by-law is void: State v. Curtis, 9 Nev. 325. If, however, the by-law is divisible, the invalidity of part does not invalidate the remaining part: Amesbury v. Bowditch Mut. Fire Ins. Co., 6 Gray, 596; Shelton v. Mayor, 30 Ala. 540; 68 Am. Dec. 143. Although the power is reserved to a corporation by its charter to alter, amend, or repeal its by-laws, it cannot repeal a by-law so as to impair rights which have been given, and become vested by virtue of the by-law: Kent v. Quicksilver Min. Co., 78 N. Y. 159, 182; affirming same case, 12 Hun, 53. It is true that there are no particular rules in regard to the method of enacting, amending, or repealing by-laws; that they need not be written: Union Bank v. Ridgely, 1 Har. & G. 324, 413; Bank of Holly Springs v. Pinson, 58 Miss. 421; 38 Am. Rep. 330; and may be modified by usage: Henry v. Jackson, 37 Vt. 431; that the power to make by-laws implies power to repeal them: King v. Ashwell, 12 East, 22; Kent v. Quicksilver Min. Co., 78 N. Y. 159, 182; affirming same case, 12 Hun. 53; and that a by-law may be repealed by a resolution inconsistent with it: Royal Bank case, L. R. 4 Ch. 252; but as the power of a corporation to make a by-law is limited to such as are not inconsistent with the constitution and the law, so must the power to alter have the same limit. No alteration can, therefore, be made which will infringe a right already given and secured by the contract of the corporation. An alteration of a by-law is a pro tanto repeal. It is but the making of another upon the same matter. If the first must be reasonable and in accord with principles of law, so must that which alters it. If, then, the power is reserved to alter, amend, or repeal, and that reservation enters into a contract, the power reserved is to pass reasonable by-laws, agreeable to law. But a by-law which disturbs vested rights is not such a law, although it may be regularly passed by a majority of the stockholders: Kent v. Quicksilver Min. Co., 78 N. Y. 159, 182; affirining same case, 12 Hun. 53. Mutual benefit societies have the right to alter, amend, or repeal their laws, or to enact others consistent with the purpose for which they are organized, but they cannot so exercise this right as to operate as a repudiation of their obligations, or to work a forfeiture of rights previously vested in their members: Wist v. Grand Lodge A. O. U. W., 22 Or. 271; 29 Am. St. Rep. 603; Supreme Lodge K. P. v. Knight, 117 Ind. 489. If articles of association of a company prohibit the union or consolidation of the com. pany with any other, without the consent of a majority of the stockholders, but also authorize amendments of the articles by a concurrent vote of twothirds of the executive committee, and a majority of the trustees, the authority to amend must be held not to take away from the stockholders the power to prohibit the merger of the company with any other company-a power expressly reserved and intended for their own protection. In such a case, a merger of the company in another, without the consent of the stock. holders, is, as to those who do not agree, utterly beyond the powers of the executive committee and directors: Blatchford v. Ross, 54 Barb. 42; 5 Abb. Pr., N. S., 434; 37 How. Pr. 110. But an amendment of a by-law which merely changes the number necessary to constitute a quorum of a board of directors does not alter another by-law which requires a vote of two-thirds of the directors to suspend or remove an officer of the company: Stockton v.

Harmon, 32 Fla. 312. If a member of a benefit association is entitled to, and has been paid, weekly benefits at a rate fixed by its charter, it cannot, by subsequent amendment to its by-laws, reduce the amount of benefits to which he is entitled under such charter: Becker v. Berlin Beneficial Society, 144 Pa. St. 232; 27 Am. St, Rep. 624.

The conclusion from the cases is that a by-law of a corporation must be reasonable and consistent with law, or it is void; that the question of reasonableness is one for the court, and not for the jury; that the courts will, when called upon, relieve a member of the corporation from the operation of all unreasonable by-laws; that by-laws are not binding on third persons dealing with the corporation, and who have no notice, but operate simply as a rule for the orderly transaction of business within the corporate body; that by-laws do not operate ex post facto, but in futuro; and that these principles apply to municipal corporations as well as to private corporations.

CHAPMAN V. STATE.

[104 CALIFORNIA, 690.]

-

LIABILITY OF State for NEGLIGENT ACTS OF ITS OFFICERS.-In the absence of a statute voluntarily assuming such liability the state is not liable in damages for the negligent acts of its officers while engaged in dis charging ordinary official duties pertaining to the administration of the government of the state. CONSTITUTIONAL LAW-GIFTS, PROHIBITION Of-Prevents Legislature FROM CREATING LIABILITY FOR NEGLIGENCE. — Under a constitu tional provision forbidding the legislature from making any gift of public money, it has no power to create a liability against the state for any past act of negligence on the part of its officers. LIABILITY OF STATE FOR BREACH OF CONTRACT-NEGLIGENCE OF HARBOR COMMISSIONERS IN FAILING TO KEEP WHARF IN REPAIR.-If a lot of coal is received at a public wharf, under the jurisdiction of the state harbor commissioners, in consideration of wharfage and dockage paid to them, and to be delivered on such wharf for removal therefrom, but the coal is lost by the breaking away of the wharf, through the neglect of such officers to keep it in repair, there is a breach of contract on the part of the state, and it is liable in an action for damages for loss of the coal, though it may not be liable for the mere negligence of the harbor commissioners.

CONTRACTS OF STATE-RULES APPLICABLE TO.-The state in all of its contracts and dealings with individuals is governed by the same rules ap plicable in determining the rights of private citizens contracting and dealing with each other.

WHARFINGERS

DUTY AND LIABILITY - NEGLIGENCE.-A wharfinger is bound to return or deliver the goods according to his contract, which impliedly binds him to exercise ordinary care for their preservation and safety. He is liable for breach of his contract, in case of their loss by reason of an unsafe condition of the wharf, which could have been ascertained and remedied by the use of ordinary care.

LIABILITY OF WHARFINGER FOR LOSS-HOW ENFORCED-ASSUMPSIT.-At common law the liability of a wharfinger for breach of contract by neg.