argued at bar. In the first place, it is contended on behalf of the defendants that there never was any valid corporate act authorizing this increase of capital stock, because the meeting had not been properly called, and because a majority of the stockholders were not present or represented at the meeting which voted its issue. It is a fact which appears from the minutes that there was not a validly authorized representation of a majority of the stock. At this meeting of 16th April, 1868, assuming that Henry A. Thompson represented Allen A. Chapman's stock, which does not appear from the minutes, but probably was so because the proxy filed in the minute-book authorized Thompson to vote Chapman's stock as well as that of the other persons whom the minutes state he did represent, still there was not a majority of the 200 shares present, unless W. F. Sayles was authorized to represent and vote the $36,000 of Taft stock. The testimony is very convincing that Sayles' only authority with respect to the Taft stock was either a verbal one or an assumed This stock was pledged to Sayles, and in his testimony he referred to the written agreement of pledge as containing his authority to vote it, but, when produced, the agreement, which is dated 12th March, 1868, is found to contain no such authority. The Rhode Island statute (section 24) specially enacts that the pledgeor and not the pledgee of stock shall have the right to vote it.

one.

The filing of the certificate in the township of North Providence on July 19, 1864, ended the contractual individual liability of the stockholders under the first section of the law as to the debts thereafter contracted; and one question in this case is whether as to those who never took the new stock their individual liability was revived by the issuing of the new stock, supposing its issue to have been valid, and as to which no certificate was or could be filed. In construing a statute so harsh and so destructive of the very purposes of incorporation, it does not seem to us we should, if avoidable, give it a construction which would put it in the power of those holding a majority of the stock, many of them, perhaps, as was the fact in this case, themselves personally responsible by indorsement and otherwise for the bulk of the company's large indebtedness, by voting an increase of capital by the issue of partially paid up stock to impose a ruinous burden upon stockholders whose individual liability had once ended. The reasoning of the opinion of the court of appeals of New York in Veeder v. Mudgett, 95 N. Y. 295, is to us very convincing, and the judgment of that court upon a similar statute, but under which the stockholders could only be held to an amount equal to the par value of each one's stock, was that holders of the original stock were not liable, and that the liability rested solely upon the holders of the new stock, and only to the extent of their holdings of that new stock. But the question still remains whether any of the stockholders are to be held liable on account of the alleged increase of stock of this company? The charter of the American File Company provided that the capital should not exceed $500,000, "to be fixed in amount by a vote of the company." The first section of the law speaks of "the whole amount of the capital stock fixed and limited by the charter of the company, or by a vote of

the company in pursuance of the charter or of law." The only reference to an increase is in the last clause of section 2 which says: "In case of increase of capital stock of said companies, like proceedings shall be had as to the amount added and paid in." It seems, us, reading the terms of the statute with the strictness which all courts have held such legislation demands, that the changing of the capital stock once fixed by a vote of the company must, in order to subject any of the stockholders to a liability so greatly in derogation of common right, be a change made by a valid corporate act. How far a stockholder would be estopped from setting up such invalidity as against a creditor who had been misled to his injury in dealing with the corporation on the faith of such invalid increase is a question which cannot arise in this case. The Garretts took the bonds of the company, issued in 1870, from Chapman, knowing nothing of the company, and making no inquiry, and the complainants themselves, or those they represent, were the active managers, officers, and directors of the company, and they were all liable in Rhode Island to the Garretts for this debt, without reference to the supposed increase of stock. They are not in the position of innocent creditors of the company, who might by any possibility have been misled to their injury with regard to the stock, assets, or solvency of the company. The company never paid any dividends, and this third issue of stock, so far as it was taken at all, was divided among certain of the old stockholders simply to relieve the company by converting a floating debt into stock. The company's indebtedness was not afterwards increased, and the bonds upon which the Garretts recovered judgment were issued to take up liabilities of the company then existing. So far as this case discloses, we see no ground upon which to found a suggestion that any innocent person who has dealt with the company could be injuriously affected by the proposed increase of capital stock being held invalid for want of a valid corporate vote authorizing its issue.

We think the complainants' bill must be dismissed as to the defendants generally upon the following grounds:

1. Because the allegations of the bill are not sustained by the proofs. 2. Because the contractual liability of the defendants, who are holders only of shares of the old $200,000 of stock, was extinguished as to after-contracted debts by the filing of the certificate on the 19th July, 1864, with the town-clerk of North Providence, where the manufactory was then established, and was not revived by the subsequent increase of stock, even if valid.

3. Because, as the issue of stock in 1868 was not authorized by a valid corporate vote, it did not impose any liability under the first section of the Rhode Island law, even upon those of the defendants who accepted the new stock.

4. That therefore the liability under which the complainants were compellable to pay the bonds issued in 1870, held by the Garretts, was the penal liability for not filing the annual certificates under section 12, which could only be enforced in Rhode Island, and in respect to which these defendants cannot be called upon to contribute.

There are special defenses pleaded on behalf of certain of the defendants, which in our opinion are good, but the view we have taken of complainants' case makes it unnecessary to discuss them. The bill must be dismissed.

BOND, J., concurs.

MILLER v. CLARK et al.

(Circuit Court, D. Connecticut. October 5, 1889.)

1. GIFTS-INTER VIVOS.

C., a married woman, having some $6,000 in her name in a savings bank, in accordance with a previously expressed intention directed the bank teller to transfer $1,500 to each of three nieces, which he did, charging her account with $4,500. On her desire that the bank-books should be so made that the money could not be drawn during her life, the teller indorsed on the pass-books: "Only Mrs. C. has power to draw." C. and her nieces wrote their names in the signature book, the word "Trustee" being added to that of C. by the teller. The books were given to C., who, during her life, declared that she was trustee as to this money for her nieces. The nieces accepted the gifts in the life-time of C. Held a valid gift inter vivos, and that, owing to the express declaration of trust by C., no cessation of control over the property given was necessary.

2. EVIDENCE-DECLARATIONS.

Evidence of declarations and acts of the donor at or about the time of the acceptance of the gift, showing her purpose in transferring the deposits to her nieces, was admissible.

In Equity.

James H. McMahon and J. M. Buckingham, for complainant.

W. L. Bennett and W. B. Stoddard, for defendants.

SHIPMAN, J. This is a bill in equity by one of the residuary legatees under the will of Irene Clark, deceased, to compel three of the defendants to deliver to the executor of said will three savings bank books alleged to be in their possession, and to compel the executor to receive said books, to inventory the deposits named therein as a part of the assets of said estate, and to collect the amount due thereon for the benefit of said estate. Mrs. Irene Clark, of Milford, Conn., died in April, 1887, leaving a last will, which was executed in November, 1881, by which, after a specific legacy to her husband, she gave all the rest of her personal estate to six nieces, Irene M. and Martha A. Buckingham, Emma J. and Mary Belle Clark, Ellen C. Platt, and Rosalie Merwin, to be equally divided between said persons; and appointed Alburtus N. Clark, the husband of said Emma J., her executor. At the time of her death she was from 76 to 78 years old, without children, the second wife of Bela Clark, to whom she was married late in life. Her living relatives were a sister and a brother, divers nephews and grand-nephews, nieces and grandnieces. Her personal property, besides a small amount of household goods and wearing apparel, amounted to $7,509.83, mostly consisting of deposits in savings banks. On October 15, 1884, she had $5,871 on deposit in the Connecticut Savings Bank, of New Haven. In

pursuance of a previously expressed intention, she went to said bank on said day, accompanied by Mrs. Nellie C. Platt, gave the teller her bankbook to be written up, and directed that $1,500 should be transferred from her account to each one of the three defendants, Nellie C. Platt, Emma J. Clark, and Mary Belle Clark. This was done, and three new accounts were opened in the names of said three persons, whereby each was credited with $1,500, and Mrs. Irene Clark's account was corresponsively reduced $4,500. Three new pass-books were made out in the names of said three new depositors, and were given to Mrs. Irene Clark. She told the teller that she wanted to have the bank-books so fixed, or the entries so made, that the money should belong to the persons named, but so fixed that they could not draw it and spend it during her life. The teller thereupon entered upon the pass-books the words: "Only Mrs. Irene Clark has power to draw." The ledger accounts were in the names of said three persons. The said bank has a "signature book" so called, in which are entered the signatures of each depositor, and, when trust accounts are opened, the signatures of the trustee and of the cestui que trust. Other facts in regard to the depositor or the cestui que trust are also entered in this book for the purpose of identification. Mrs. Irene Clark on this day wrote her name in the signature book, to which the teller added, in writing, the word "Trustee," but it did not clearly appear when the word was written. Mrs. Platt wrote her name in the book opposite the number of her pass-book, and the two signatures were included in a bracket. The words, "Mrs. Clark only to draw," were also written in the margin by the teller. Blank slips for the other two donees to sign, and upon which to state the required facts, were given to Mrs. Clark. Upon her return to Milford, on that day, she showed the husband of Mrs. Platt the three bank-books, said that she had given the girls $1,500 each, showed the two slips, and instructed him to have the two other nieces informed that they must be signed and returned to the bank. These slips she kept. In a few days the said two nieces were informed that their aunt had given to each a bank-book of $1,500, and that she wanted them to come to her house and get some slips to sign and return to the bank. The slips were obtained, signed, and returned to the bank, and the portions containing the signatures of the cestuis que trust were pasted in the signature book, opposite the respective numbers of the books. The other facts were entered by the teller and some other clerk. After the signatures were pasted in the book,-but how long after did not appear, the teller also wrote the words, "Mrs. Irene Clark, Trustee,” below each signature, and the words, "Mrs. Clark only to draw," in the margin. The bank-books were retained by Mrs. Irene Clark until a short time before her death, when all the seven bank-books in which she was interested were intrusted by her to Mrs. Platt, for some purpose not known, and were, at the request of Mrs. Clark, returned to her three or four days before her death. This request to return was manifestly to satisfy and quiet her husband. Nothing has ever been drawn upon the three books in controversy, either as principal or interest. Other testimony in regard to the executed purpose of Mrs. Irene Clark to give the

three deposits of $1,500 each to the said three persons, as declared by her after her return from New Haven and before the acceptance of the gifts by the absent nieces, and also about the time of and either before or soon after said acceptance, was given. Her executed and completed intention to give said deposits to the three donees, the actual gift, its consummation by an acceptance on their part, and her express declaration of trusteeship during her life, of the said moneys for the benefit of the named persons, were clearly proved. Her purpose to give the several sums so that the funds should belong to said parties, and to create a trusteeship thereof in herself during her life, was plainly declared at the bank, and was honestly, and, so far as appears, at the request of Mrs. Irene Clark only, attempted to be carried out by the teller in accordance with her wishes by the entries which he made upon the books of the bank and the pass-books.

The facts bring the case within any rule which has been laid down in regard to the validity of gifts inter vivos. The courts of last resort in Massachusetts and in New York differ from each other in regard to the absolute necessity of an acceptance of the gift of the donee, (Gerrish v. Institution, 128 Mass. 159; Martin v. Funk, 75 N. Y. 134;) but there can be no doubt that the donees in this case knew of and accepted the gifts. The authorities unitedly declare that the gift may be made by delivering to the donee, or by the creation of a trust in a third person, or in the donor; and that, where there is an express declaration of trust in the donor, the rule which requires cessation of control and dominion by the donor over the personal property which is given, is not applicable. Milroy v. Lord, 4 De Gex, F. & J. 264; Young v. Young, 80 N. Y. 422; Scott v. Bank, 140 Mass. 157, 2 N. E. Rep. 925; Minor v. Rogers, 40 Conn. 512; Buone v. Bank, 84 N. Y. 83. Testimony in regard to the declarations and acts of the donor which were made or which took place before or about the time of the acceptance of the gifts, and which declared her purpose in transferring the deposits to the donees, was objected to. This species of testimony is wont to be admitted in this class of cases for the purpose of showing the intention of Mrs. Clark in making the transfer and holding the books, and of showing the character of said acts. Scott v. Bank, supra. These statements, being also against the interest of Mrs. Clark, and tending to prove the fact of the gift, are admissible. By the statute of Connecticut, in actions by or against the representatives of a deceased person, the entries, memoranda, and declarations of the deceased relevant to the matter in issue may be received as evidence. No testimony was given by any of the parties to the suit in regard to the acts or declarations of the donor. The complainant makes the point that, in case these transfers were gifts, they were in partial ademption or satisfaction of the residuary bequests under the will. Without stopping to consider the question whether the principle of the ademption of a general or specific legacy is applicable to the case of these residuary legatees, it is sufficient to say that the testimony proves the existence of an intent on the part of the testatrix that the gifts were to have no reference to the testamentary disposition of her property. Let the bill be dismissed. v.40F.no.1-2