or ratification of the stockholders is not essential to its validity.Beveridge v. N. Y. El. R. Co., 112 N. Y. 1, 19 N. E. 489, 2. L. R. A. 648.

Acts making organic or fundamental changes in the character of the business of a corporation, such as the leasing of the property, cannot be done either by the directors alone, or by the shareholders alone.Metropolitan El. R. Co. v. Manhattan R. Co., 14 Abb. N. C. (N. Y.) 103, 11 Daly (N. Y.), 373.

[9] What included in lease.

The lease of a railroad necessarily includes the use of the franchise of the company owning it.-People ex rel. Manhattan R. Co. v. Barker, 152 N. Y. 417, 46 N. E. 875, revg. s. c. 6 App. Div. (N. Y.) 356, 39 N. Y. Supp. 682.

[10] Interests of stockholders.

A state may provide for the condemnation of minority shares of stock in a railroad where the majority of the shares are held by another railroad corporation, if public interest demands and the improvement of the through facilities afforded by the latter corporation may be a public use.- Offield v. N. Y. N. H. & H. R. Co., 203 U. S. 372, 27 Sup. Ct. R. (U. S.) 72.

If the charter of a railway corporation does not authorize it to transfer its franchise and property to another corporation, the legislature, by sanctioning such transfer, cannot do more than waive the right of the state to object thereto. It could not impair the rights of the stockholders as between themselves, or as between themselves and the corporation.- City of Knoxville v. Knoxville & O. R. Co., 22 Fed. 758.

If a proposed merger of two banking corporations is so unconscionable that it cannot be ratified against the objections of a minority stockholder, equity will enjoin the proposed merger, on the application of such stockholder.- Colby v. Equitable Trust Co., 55 Misc. (N. Y.) 355.

A sale and transfer by the directors of a corporation, of its entire business and all its property except its real estate, is void as against non-consenting stockholders.- Abbott v. American Hard Rubber Co., 20 How. Pr. (N. Y.) 199, 33 Barb. (N. Y.) 578.

A majority of the members of a corporation cannot constitutionally be authorized to divest the interest of a dissenting stockholder, by a transfer of the whole of its property to another company, to be paid for in the shares of such other company, without first giving security for the interests of such dissenting stockholder.- Louman v. Lebanon V. R. Co., 30 Pa. 42.

[11] Actions to restrain or set aside unauthorized agreements. Where, after transferring railway stock to a corporation in return for its shares, a person becomes a director of the purchasing corporation and participates in acts consistent only with the absolute ownership by it of the stock transferred to it, and does so after an action has been brought to declare the transaction unlawful, his right to rescind and compel restitution of his original stock is lost by acquiescence, if he ever had such right.- Harriman v. Northern Securities Co., 197 U. S. 244, 25 Sup. Ct. R. (U. S.) 493.

Where a stockholder of a holding corporation owning all the stock of certain street railway companies sues the former for relief against its unauthorized action in leasing the property of the street railway companies and otherwise depriving such stockholder of his right to share ratably with the other stockholders in the net earnings of the street railway companies in question, such suit does not concern the internal management of the street railway companies, which therefore are not necessary parties, but such suit may be brought in any court having jurisdiction over the defendant and need not be brought in the state in which defendant was incorporated.- Saber v. United Traction & Elect. Co., 156 Fed. 79.

Where the objection to the acts of a corporation is that they are ultra vires without being either mala prohibita or mala in se, a stockholder cannot maintain an action in his own behalf based on such objection where he himself, with knowledge of the character of the acts, has acquired and accepted pecuniary benefits thereunder.- Wormser v. Metropolitan St. R. Co., 184 N. Y. 83, affg. s. c. 98 App. Div. (N. Y.) 29, 90 N. Y. Supp. 714.

Where the action of the majority of the stockholders is within the corporate powers but is plainly a fraud upon, or in other words, is really oppressive to the minority shareholders, and the directors or trustees have acted with and formed part of the majority, an action may be sustained by one of the minority shareholders suing in his own behalf and in that of all others coming in, to enjoin the action contemplated, and in such action the corporation should be made a party defendant.- Gamble v. Queens Co. W. Co., 123 N. Y. 91, 25 N. E. 201, 9 L. R. A. 527.

Where directors have no authority to enter into agreements without the consent of stockholders, no expression of dissent by the stockholders is necessary before action is brought to set aside such agreement, because they are void unless ratified.- Metropolitan El. R. Co. v. Manhattan R. Co., 14 Abb. N. C. (N. Y.) 103, 11 Daly (N. Y.), 373.

Where directors act without authority in making agreements and leases, the corporation may repudiate the acts so done, because the stockholders not only may claim, but must claim their rights by and

through the corporation, unless the corporation refuses to assert such rights. Therefore where an action is brought in the name of the corporation and not in the name of a stockholder to set aside a fraudulent agreement entered into by directors, it is not a sufficient objection to urge that the corporation itself is a party to the fraud.— Metropolitan El.. R. Co. v. Manhattan R. Co., 14 Abb. N. C. (N. Y.) 103, 11 Daly (N. Y.), 373.

[12] Common directorate.

Where the two corporations which it is proposed to merge have nine directors in common, and both are dominated by the same stockholder, it is the duty of a court of equity to scrutinize with vigilant care a contract between the corporations, especially when the contract has the effect of extinguishing the corporate life of one of the contracting parties.- Colby v. Equitable Trust Co., 55 Misc. (N. Y.) 355.

For discussion of question whether persons who are directors in two corporations are disqualified from acting in respect to a lease of the property or one corporation to the other.- Metropolitan El. R. Co. v. Manhattan R. Co., 14 Abb. N. C. (N. Y.) 103, 11 Daly (N. Y.), 373.

[13] Acts of officers or directors voidable.

An officer of a corporation cannot make an agreement with himself acting on the one part individually and for his own benefit, and on the other part in his fiduciary capacity as an officer of the corporation. The acts and votes of corporate officers are voidable when they are effected by private interests.-Jacobson v. Brooklyn Lumber Co., 184 N. Y. 152, 76 N. E. 1075.

Every contract entered into by a director with his corporation may be avoided by the corporation within a reasonable time, irrespective of the merits of the contract itself.- Metropolitan El. R. Co. v. Manhattan R. Co., 14 Abb. N. C. (N. Y.) 103, 11 Daly (N. Y.), 373.

[14] Non-performance of functions.

Where a railroad acquires by consolidation two actually or practically parallel lines of road, and can substantially accommodate the people of the state by operating one line between the same points, and can abandon the other line without any serious detriment to any considerable number of people, it should not be compelled to operate both lines at a great sacrifice of money upon the fanciful idea that the sovereignty of the state is wounded by its omission to operate both lines.- People v. Rome, W. & O. R. Co., 103 N. Y. 95, 8 N. E. 369.

If a railroad corporation ceases to operate all or part of its line, its charter is subject to forfeiture.- People v. Albany & Vt. R. Co., 24 N. Y. 261.

A street railway operating under franchise, etc., cannot at its mere will and discretion abandon the operation of its lines or any part thereof.- State v. Bridgeton & M. Traction Co., 62 N. J. L. 592, 43 Atl. 715, 45 L. R. A. 837.

A street railway corporation can cease to perform its proper functions only upon the consent of the state.- State v. Spokane St. R. Co., 19 Wash. 518, 53 Pac. 719, 41 L. R. A. 515.

[15] When dissolution is effected.

Where the stock of a street railway corporation is exchanged for that of another, and by operation of law the former is left without stock, officers, property or franchises, it is dissolved by operation of the law which brings about this state of affairs.- Rochester R. Co. v. Rochester, 205 U. S. 236, 27 Sup. Ct. R. (U. S.) 469, affg. s. c. 182 N. Y. 99, 74 N. E. 953, 70 L. R. A. 773.

A lease by a railroad corporation and a transfer to the lessee of the lessor's capital stock does not terminate the existence of the lessor corporation.-Matter of N. Y. El. R. Co., 63 Hun (N. Y.), 629, 17 N. Y. Supp. 778; affd. on opinion below, 133 N. Y. 690, 31 N. E. 627.

[16] Value of corporate stock.

Good will is an element of the property of a corporation which contributes to the value of a share of the corporate stock.- People ex rel. U. T. Co. v. Coleman, 126 N. Y. 433, 27 N. E. 818, 12 L. R. A. 762n; Colby v. Equitable Trust Co., 55 Misc. (N. Y.) 355; Lindemann v. Rusk, 125 Wis. 210, 104 N. W. 119.

[17] Action to annul franchise.

In determining whether, under N. Y. Code Civ. Pro. §§ 1797-9, to grant permission to the attorney-general of the state to bring an action to annul the corporate franchise of a public service corporation alleged to have been formed by an unlawful merger a justice of the New York Supreme Court, sitting in Special Term, will follow a decision. made by another justice of the same court in Special Term, rather than a decision of the United States District Court for that district.Matter of Interborough-Metropolitan Co., 56 Misc. (N. Y.) 128, following Matter of Consolidated Gas Co., 56 Misc. (N. Y.) 48, declining to follow Burrows v. Interborough-Metropolitan Co., 156 Fed. 389.

§ 55. Approval of issues of stock, bonds and other forms of indebtedness; * [merger; capitalization of franchises].-A common carrier, railroad corporation or street railroad corporation organized or existing, or hereafter incorporated, *Words in brackets not a part of section heading as enacted.-Ed.

under or by virtue of the laws of the state of New York, may issue stocks, bonds, notes or other evidence of indebtedness payable at periods of more than twelve months after the date thereof, when necessary for the acquisition of property, the construction, completion, extension or improvement of its facilities, or for the improvement or maintenance of its service or for the discharge or lawful refunding of its obligations, provided and not otherwise, that there shall have been secured from the proper commission an order authorizing such issue, and the amount thereof and stating that, in the opinion of the commission, the use of the capital to be secured by the issue of such stock, bonds, notes or other evidence of indebtedness is reasonably required for the said purposes of the corporation, but this provision shall not apply to any lawful issue of stock, to the lawful execution and delivery of any mortgage or to the lawful issue of bonds thereunder, which shall have been duly approved by the board of railroad commissioners before the time when this act becomes a law. For the purpose of enabling it to determine whether it should issue such an order, the commission shall make such inquiry or investigation, hold such hearings and examine such witnesses, books, papers, documents or contracts as it may deem of importance in enabling it to reach a determination. Such common carrier, railroad corporation or street railroad corporation may issue notes, for proper corporate purposes and not in violation of any provision of this or any other act, payable at periods of not more than twelve months without such consent, but no such notes shall, in whole or in part, directly or indirectly be refunded by any issue of stock or bonds or by any evidence of indebtedness running for more than twelve months without the consent of the proper commission. Provided, however, that the commission shall have no power to authorize the capitalization of any franchise to be a corporation or to authorize the capitalization of any franchise or the right to own, operate or enjoy any franchise whatsoever in excess of the amount (exclusive of any tax on annual charge) actually paid to the state or to a political subdivision thereof as the consideration for the grant of such franchise or right; nor shall the capital stock of a corporation formed by the merger or consolidation of two or more other corporations, exceed the sum of the capital stock of the corporations so consolidated, at the par value thereof, or such sum and any additional sum actually paid in cash; nor shall any contract for consolidation or lease be capitalized in the stock of any corporation whatever; nor shall any corporation hereafter issue

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