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pliance. But as S. was held to have defeated the organization of the corporation by his own conduct to have put himself in a position in which he could not comply with his contract with B. by transferring the stock, a specific execution was enforced against him to the extent that he was compelled to accept a compliance on the part of B. and to be liable to him for the value of the stock, which was ascertained by the court and judgment directed therefor.

But where the agreement to transfer the shares forms part of a different contract which is specifically enforceableme. g. a contract to convey real estate—the court will decree a delivery of the stock. This is upon the principle that having acquired jurisdiction for the purpose of specifically enforcing the contract as to the realty, equity will give complete relief by compelling the transfer of the shares : Leach v. Fobes, 11 Gray 506; Bissell v. F. f M. Bank, 5 McLean 505.

Fraud.The contract must not be unconscionable or fraudulent. Thus a court of equity will not decree the delivery of a large quantity of the stock of a bankrupt railway company to one who purchases for a merely nominal sum, -in the case in point $50."The court," said Mr. Justice BRADLEY, “is not bound to shut its eyes to the evident character of the transaction. It will never lend its aid to carry out an unconscionable bargain, but will leave the party to his remedy at law.” M. f. M. Railroad Co. v. Cromwell, 91 U. S. 645.

But where a company was by its articles of association prohibited from issuing shares below par without the sanction of a general meeting, and one Mendel agreed to purchase 2000 shares in the company at par; and on the same day the board of directors agreed to pay him 40001. in consideration of his services, it was held, on an action brought by the company against Mendel for specific performance of his agreement, that Mendel could not set up the second agreement as part of the first for the purpose of showing that he had been a party to a collusive arrangement by which shares should be issued to him below par, in defiance of the articles of the association, and that, where parts of an agreement are separated, the court will grant piecemeal performance if that appears to have been the intention of the parties. Concerning the collusive arrangement Fry, J., said: “I am asked to hold the two agreements *** to be parts of one and the same transaction, in order that Mr. Mendel may say that they are beyond the power of the directors to enter into. I decline to do that. I think that where a transaction, taking it in its entirety would be bad, but where the agent of one of the parties to it has colluded with the other party for the purpose of putting the agreement into such a form that the valid part shall be separated from the invalid part, that that which is intra vires may be separated from that which is ultra vires ; in other words that that which is honest and true may be separated from that which is dishonest and false. The principal may say to the other party whom he sues; you have agreed that that which was originally commenced as one negotiation shall result in two separate agreements, and having so agreed I will now take you at your word and I will enforce so much of the agreement as is contained in the valid separate document upon which I sue, and I will leave the other part of the agreement alone:” Odessa Tram. Co. v. Mendel, 37 L. T. N. S. 275.


Possibility of enforcement.--Performance and enforcement thereof must be possible. It is well settled that a court of equity will not make a simply nugatory decree, or one which is impossible of performance or enforcement. This principle has been unsuccessfully relied upon by subscribers sought to be compelled to accept shares in joint stock companies. For example. In New Brunswick, fe., Co. v. Muggeridge, 4 Drew. 686, it was objected that by subscribing for shares the defendant had only agreed to become a partner and that equity would not decree specific performance of a contract to enter a firm. Lord Eldon, was quoted as saying, in Hercy v. Birch, 9 Ves. 357, that “no one ever heard of this court executing an agreement for a partnership when the parties might dissolve immediately afterwards.”

But while admitting that a man might withdraw at any moment from a firm and leave it in the same condition as if he had never been a member, and also that the consequence of this would be to render nugatory a decree of the court requiring him to enter the firm, the court denied that a subscriber for shares could so withdraw from a joint stock company. “But supposing," said the Vice-chancellor “ he had signed the written acceptance of shares, what does he mean by saying that he could retire at any moment at his pleasure ? He could not by retiring put an end to his shares.

He must either retain the shares or find some other person to become a shareholder in respect of his shares. Assuming that he may transfer them without the leave of the company still the company get the benefit of the shares being held either by the defendant or by his transferree. The effect of decreeing him to perform his agreement would be that the company would obtain the benefit of having some one liable to it for calls on so many shares, and that is a benefit of which it is not in the power of the defendant to deprive the company by retiring from the concern. The fallacy of the defendant's argument is that he calls a joint stock company a partnership, and assumes, because in an ordinary partnership, where no term is fixed for its duration, any partner may put an end to the whole business at once and so retire from it, that, therefore, the shareholders in a joint stock company are in the same position, forgetting that it is precisely in this respect that a joint stock company differs from an ordinary partnership. A shareholder in a joint stock company cannot, as an ordinary partner may do, where no term of partnership is fixed, dissolve the partnership and put an end to it; he can only retire from it by transferring his shares to some other person who shall stand as a partner in his place. Therefore, to make a decree enforcing the contract to accept shares would not be a nugatory decree, and the principle on which the defendant relies does not apply to this case ; for that principle is founded on the supposition that the plaintiffs would derive no benefit from a decree for specific performance." This case appears to conflict with Sheffield Gas Co. v. Harrison, 17 Beav. 294, wherein specific performance of an agreement to take shares in a joint stock company was refused on the ground that a decree so to do would be nugatory, since it would be virtually a decree that defendant enter a partnership. But here, according to the terms of the deed of settlement, the subscriber could cease to be a partner within fourteen days.

So, also, in cases where, besides the issuance or transfer of stock, other things are to be done, performance of which the court will not undertake to enforce, a specific decree will be refused. Contracts by which railways are to be constructed to be paid for in stock and bonds, illustrate this proposition: Ross v. U. P. Railroad Co., 1 Woolw. 26; Danforth v. P. & C., M., &c., Railroad Co., 30 N. J. Eq. 12; Fallon v. Railroad Co., 1 Dill. 121.

Especially will specific performance be refused if it is rendered


clearly impossible, as, for example, by reason of the company having no shares, all of them having been allotted and issued : Ferguson v. Wilson, 2 Ch. App. 87. Nor will the officials of a company be compelled to issue its stock or bonds after it has become extinct by reason of a charter forfeiture or dissolution of the company by any other means. Indeed an issuance of stock or bonds, after such an event, might render the corporate officers authorizing it liable to severe and ignominious.punishment: Danforth v. P. 8. C., M., fc., Railroad Co., 30 N. J. Eq. 12.

Nor, where shares have all been distributed by the directors, will they be compelled to deliver to a subscriber omitted in the distribution enough of the shares which they have allotted to themselves to make up the number which the subscriber agreed to take. In Ferguson v. Wilson, L. R., 2 Ch. App. 87, the prayer of the bill was in the alternative that, if the shares had all been allotted, the directors be decreed to make good to the plaintiff the shares to which he claimed to be entitled or that they might pay damages in respect of being unable to fulfil what the bill insisted was a contract on their part to allot in favor of plaintiff. As to this, Sir G. J. TURNER, L. J., said: “The bill then prays damages in, I may say, a double form. It prays, in the first place, that the directors of the company may, out of the shares which have been allotted them, transfer to the plaintiff those shares which, according to his contention, would have been proper to be allotted to him. What in truth is that but asking for payment of damages by the directors of the company in the shape of a sacrifice of the shares which have been allotted to them instead of the money? If a man has to make good a certain claim it is just the same thing whether he makes it good by paying a sum of money or by parting with other property to which he has become validly entitled. In truth, therefore, that part of the prayer which seeks the transfer of the shares by the directors is no other than a prayer for damages. There may be cases in which, if there is a trust relation subsisting between A. and B., and B. has taken property under the trust which belongs to A., or ought to have been appropriated to A.,

the court will compel B., out of the property which he has taken, to make good that of which A. has been deprived. But this is not a case of trust; this is simply a case of contract, as I think between the plaintiff and the company. But if it goes further it is a case of contract between the plaintiff and the other directors. I am not aware that there is any law of this court which in a case of contract, not raising any question of trust, would put upon a defendant in a suit the obligation of satisfying the claim in the mode in which the plaintiff contends that it ought to be satisfied.”


Public policy.—The contract must not be contrary to public policy. An interesting case involving this point is Foll's Appeal, 91 Penn St. 434. Foll, in writing, agreed to sell and Greer agreed to purchase fifteen shares of the stock of a national bank. Greer and his friends owned sufficient stock to give them, with these fifteen shares, the control of the bank, to obtain which was the avowed purpose of the purchase of these fifteen shares. Foll, refusing to deliver the stock, Greer sought to compel specific performance of the agreement.

Said Mr. Justice Paxson: “ This case presents some extraordinary features.

We have nothing like it in this state since equity powers were conferred upon the courts. * * * While the legal right of the complainant to buy up sufficient of the stock of this bank to control it in the interest of himself and friends


be conceded, it is by no means clear that a court of equity will lend its aid to help him. A national bank is a quasi public institution. While it is the property of its stockholders and its profits enure to their benefit, it was nevertheless, intended by the law creating it that it should be for the public accommodation. It furnishes a place supposed to be safe, in which the general public may deposit their moneys, and where they can obtain temporary loans upon giving the proper security. There are three classes of persons to be protected, the depositors, the noteholders and the stockholders. We have no intimation that the bank, as at present organized, is not prudently and carefully managed. The stock, as now held, is scattered among a variety of people and held in greater or lesser amounts. It is difficult to see how the small stockholders, who have their modest earnings invested in it, the depositors who use it for the safe keeping of their moneys, or the business public who look to it for accommodation in the way of loans are to be benefited by the concentration of its stock in the hands of one man, or in such a way that one man and his friends shall control it. Especially is this so when an attempt is made to control it by the use of borrowed capital. The temptation to use it for personal ends in such case is very strong.

It is a fact to which we cannot close

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