And in answer to the argument that the individual stockholders had only a claim on the company, and not upon the realty, and that this must be of a personal nature, the Court said: "But the stockholders, as members of the company, are owners of the turnpike road; and it is in virtue of this interest, that they have their claims for the dividends, or their respective shares of the toll. It is not a mere claim on the corporation." This decision was recognized as law, in 1822, in a suit between the same parties, 4 Conn. 182, though the question was not expressly made.
In 1835, the Supreme Court of Pennsylvania held that "a toll-bridge erected by two individuals across a river between their lands, by legislative authority, is real estate." The court said that the right was "not only a right arising out of the soil, but so far as the abutments of the bridge are concerned, it is the soil itself." Hurst v. Meason, 4 Watts, 346. It is to be observed, however, that it does not appear that the builders were incorporated.
In Price v. Price's Heirs, 6 Dana, 107, the Court of Appeals of Kentucky, in 1838, held that the stock in the Lexington and Ohio Railroad Company is real estate. Without citing any adjudicated case, the Court came to a conclusion which is thus expressed: "The right conferred on each shareholder is unquestionably an incorporeal hereditament. It is a right of perpetual duration; and though it springs out of the use of personalty, as well as rands and houses, this matters not. It is a franchise which has ever been classed in that class of real estate denominated an incorporeal hereditament.''
On the other hand, the Supreme Court of Massachusetts, in 1798, in Russell et al. v. Temple and Others, 3 Dana's Abr. 108, held that shares in incorporated bridge and canal companies are personalty. The case was between the widow and heirs of Thomas Russell, the former contending that the shares were personal property, and that consequently she was entitled to a distributive portion of them, and the latter insisting that they were realty, and that therefore she had but a dower estate. The question was very fully discussed and was decided (says Professor Greenleaf in his edition of Cruise), " upon great consideration."
For the heirs it was urged that these shares were real estate; because, it was said, "the estates were real in the corporations; and that if the estates in the corporations were real, the estates of the individual members in them followed their nature, and were real; and that the frequent declaration of the Legislature declaring such shares personal estates, at least show a doubt, that when one has a right to receive rent, he has only a right to receive a sum of money, yet it does not follow that his estate is not real estate out of which his rent issues."
For the widow it was argued that the shares were personalty, because the estate (in the bridges, canals, towing-paths, wharves, and lands), "can only exist in the corporation, which alone can acquire it, alone be seized or possessed of it, alone pass it away, manage or repair it, and so must hold it entire; and that the corporation is a moral person to all the purposes of property. Its tenure is to their successors, or to their successors and assigns. The estates can never vest in, or be divided among the individual members, to hold as tenants in common, etc., in their private capacities. Only the corporation can possess the estate, and that only by possessing the charter; and only the corporation can be taxed for it on common-law principles; and on these can it alone be taken in execution for the debts of the corporation." "That the share is personal estate though the corporation hold real estate; for the individual member has no estate, but only a right to such dividends as the corporation from time to time assigns to him. He is unknown in the grants made to it, and he cannot grant any part of the estate; nor can he be taxed for it but by statute law; nor can any private member of a corporation be distrained for a public concern of it; his only remedy for his dividend is case in assumpsit, or an action on the case for a wrongful refusal or neglect to pay or allow him his part of the profits."
The judgment of the court was, as I have stated, that the shares were personal estate. "The principal reason of the decision," says Dane, "appears to be, because the court considered that the individual member, or shareholder, had only a right of action for a sum of money, his part of the net profits or dividends. And so the law has been held to be since this decision was made."
In his edition of Cruise, Greenleaf says: 'Shares in the property of a corporation are real or personal property, according to the nature, object and manner of the investment. Where the corporate powers are to be exercised solely in land, as where original authority is given by the charter to remove obstructions in a river and render it navigable, to open new channels, etc., to make a canal, erect water-works, and the like, as was the case of the New River water, the navigation of the river Avon and some others, and the property or interest in the land, though it be an incorporeal hereditament, is vested inalienably in the corporators themselves, the shares are deemed real estate. Such, in some of the United States, has been considered the nature of shares in toll-bridge, canal and turnpike corporations by the common law; though latterly it has been thought that railway shares were more properly to be regarded as personal estate. But where the property originally entrusted is money, to be made profitable to the contributors by applying it to certain purposes, in the course of which it may be invested in lands or in personal property, and changed at pleasure, the capital fund is vested in the corporation, and the shares in the stock are deemed personal property, and as such are in all respects treated; in modern practice, however, shares in corporate stock, of whatever nature, are usually declared by statute to be personal estate." 1 Greenleaf's Cr. Dig.