[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 503
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 504 We are of opinion that it was not in the power of the directors of the defendant's bank to restrain the transfer of its stock in the manner proposed by the by-law upon which the defendant relies. The general banking law contemplates an individual ownership of the shares into which the capital stock shall be divided, and their transfer from one *Page 505 person to another. It declares that the shares shall be personal property, though the money which constitutes the capital may be in part invested in real estate. The association, in judgment of law, is seised and possessed of all its real and personal property; but it is not in any sense the owner of the shares, those being vested in the individual proprietors. The quality of transferability being attached to the shares, the corporate body has no authority to interfere with the disposition which any shareholder may see fit to make, except so far as such authority is conferred by the act itself, or by some general law applicable to the case. Upon the subject of transfers, the nineteenth section of the statute declares that the shares shall be transferable on the books of the association in such manner as may be agreed upon in the articles of association. (Laws of 1838, 249.) Assuming, without at present deciding, that this provision would allow a restraint to be inserted in the articles of the character of that contained in this by-law, it does not afford any countenance to the position that it could be imposed in any other form. If we concede that the power to determine the manner in which a transfer on the books may be made includes a power to forbid it in a case in which the shareholder is indebted to the association, the act prescribes very distinctly that it is to be contained in the articles. The manner of the transfer, including, according to this assumption, any qualifications or restraint which it may be thought expedient to attach to the right to transfer, is to be such as may be agreed upon, — not by a by-law, or by any act of the directors, but in the articles of association. It was not necessary to insert negative words to exclude any other manner of performing the same thing; for, by the most common rules of construction, where a matter is authorized to be done in a particular way, every other different method of doing it is excluded. And the difference between a restraint upon alienating the shares in these associations, contained in the articles which must receive the assent of all the primary shareholders, and by which all persons holding derivative interests must be bound, and a like restraint imposed by the agents of the association in the form of *Page 506 a by-law, which may or may not come to the knowledge of the shareholders, and which, if known, may be disapproved of by them, is very marked. A person may generally agree by express contract to any qualification of his rights of property, not repugnant to the rules of law; but if another person undertakes to attach such qualifications in his behalf, he must show his authority for the act. I am unable to find any authority for the directors in these associations to insert such a provision in a by-law. The Revised Statutes do indeed declare that every corporation, as such, has power to make by-laws not inconsistent with any existing law, among other things, for the transfer of its stock. (1 R.S., 600, § 1, subd. 6.) If this would be a sufficient warrant for the by-law under consideration — if the general banking law had been silent upon the subject of transfers of stock — it is quite otherwise when we see that a distinct regulation is contained in that act, assigning the articles of association as the instrument in which the rules respecting transfers are to be contained.
I do not think, therefore, it was in the power of the associates to agree in the articles, that the matters which the Legislature had declared might be contained in them, should be the subject of regulation by the directors in forming their by-laws; but if they could so agree, I am of opinion that the delegation of power is not sufficiently comprehensive to meet the case. The articles in this case declare that a majority of the directors may make by-laws and regulations for the government of themselves, their officers and agents, and for the management of the business of the association. The portion of the by-laws relied upon by the defendants, does not relate to these subjects. It does not concern the business of the association, but the private business and individual interests of the shareholders. Ample scope would be given to the delegation of authority, if we hold it to be confined to the affairs which the corporation as such are concerned in transacting for the common interest of all the shareholders.
These considerations lead to the reversal of the judgment of the Supreme Court, and it is accordingly reversed. *Page 507
JOHNSON, Ch. J., COMSTOCK, S.B. STRONG and GROVER, Js., concurred.