St0ry Case

Mr. H. G. Walker owed Mr. Massey $475. He refused or was unable to pay it. Mr. Walker, thereupon, brought an action against him upon the debt and recovered judgment for the debt and costs, amounting in all to $514. Mr. Massey refused to pay the judgment. His only property was three shares worth about $325 in Aurora Dairy Company, a corporation. Mr. Walker then proposed to attach certain cows belonging to the dairy company, in order to satisfy the debt. The corporation resisted the attachment, on the ground that the cows were the property of the corporation and could not be attached for the debt of a stockholder. What should be the decision of the Court under the foregoing circumstances?

Ruling Court Ca8e. Burrall Vs. Bushwick Railroad Company, Volume 75 New York Reports, Page 211

The Bushwich Railroad Company was incorporated under the laws of the state of New York. The corporation, through its duly authorized agents, issued the following to Foster:

"This certifies that Charles Foster is entitled to ten (10) shares of the capital stock of the Bushwick Railroad Company, upon surrender of this certificate at the company's office.

F. W. Kallfleish, President."

Foster sold this certificate to Burrall for value. Burrall, thereupon, brought this action and sought to have the corporation compelled to issue the stock or to pay him $1,000 with interest.

The Court refused to grant Burall the relief which he asked, mainly on the ground of defaults in his pleading, and in discussing the question, made some interesting remarks on the subject of the nature of the capital stock of a corporation. Mr. Justice Folger, in the opinion of the Court said: "A corporation cannot issue and deliver a share of its capital stock. By the joint action of the corporation and subscribers for its stock, he may become the owner of a given number of shares thereof, but not in such sense as that he may take away those shares out of the common corporate fund. The capital stock is that money or property which is put into a single corporate fund by those who, by subscription therefor, become members of the corporate body. That fund becomes the property of the aggregate body only. A share of the capital stock is the right to partake, according to the amount put into the fund, of the surplus profits of the corporation; and ultimately on the dissolution of it, or so much of the fund thus created, as remains unimpaired, and is not liable for debts of the corporation."

For the reason above given, the Court gave judgment for the Bushwick Railroad Company.

Ruling Law. Story Case Answer

The capital stock of a corporation is that property or money which is delivered by the stockholders, with which the business of the corporation is to be conducted. It then ceases to be the property of the stockholder and becomes vested solely in the organization. The corporation, however, issues to the stockholder a certificate of stock, which certifies that he is entitled to share in the profits which may be made by the organization with this capital stock. Even though the corporation owns nothing but real estate, the interest of the stockholder is not a real interest, but is a personal interest, or is personal property. It is somewhat in the nature of a chose-in-action, a right to call for a part of the part, and a part of the corporate property remaining after dissolution. In the Story Case, the creditor could not attach the cows, belonging to the corporation to satisfy the debt of the stockholder. The cows belonged to the corporation, not to the stockholder. Judgment, therefore, should be given for the Aurora Dairy Company.