This is an appeal by the plaintiff from a judgment sustaining a demurrer to the first and second causes of action  set forth in the amended complaint.   The demurrer as to both causes of action was based upon the following grounds:

(a)  Lack of legal capacity to sue on part of plaintiff;
(b)  Failure to state facts constituting  a cause of action;
(c)  Defect of parties plaintiff; and,
(d)  Uncertainty.

The lower court sustained the demurrer as to both causes of action  upon the second ground above-mentioned.

The following errors have been assigned:

The court a quo erred in sustaining the demurrer to the first cause of action and dismissing the same because  (a) the facts  alleged constitute a cause  of action, and  (b)  the remedy sought by the plaintiff is the only one available.

The same errors are assigned as  to the second cause of action.

The  gist of the first and second causes of action is as follows:

That during the years  1903, 1904, 1905, 1906, and 1907 the defendants and appellees, without the knowledge, consent, or acquiescence of  the stockholders, deducted their respective compensation from the gross income instead of from the net profits of the bank,  thereby defrauding  the bank and its stockholders  of  approximately P20,000  per annum; that though due demand has been made upon them therefor, defendants refuse  to refund to the bank the sums so misappropriated, or any part thereof;  that defendants constitute a majority of the present board of directors of the bank, who alone can authorize an action against them in the name of the corporation, and  that prior to the filing of the present suit plaintiff  exhausted every remedy in  the premises within this banking corporation.

The  second cause of action  sets forth that defendants' and appellees' immediate predecessors in office in this bank during  the  years 1899, 1900,  1901, and 1902, committed the same illegality as to their  compensation as is charged against the defendants  themselves; that in the four years immediately following the year 1902, the  defendants and appellees were the only officials or representatives  of  the bank who could and should investigate and take action in regard to the sums of money thus fraudulently appropriated by their predecessors;  that they were  the only persons interested in the bank who knew of the fraudulent appropriation by their predecessors; that they wholly neglected to take any action in  the premises or  inform the  stockholders thereof; that due demand has been made upon defendants to reimburse the bank for this loss; that the bank itself can not bring an action in its own name against the defendants and appellees, for the reason already stated, and that there remains no remedy within the corporation itself.

The questions raised in the third cause of action are hot before us at this time as the demurrer to that cause of action was overruled.

The court below sustained the demurrer as to the first and second causes of action on the ground that in actions of this character the plaintiff must aver in his complaint that he was the owner of stock in the corporation at the time of the occurrences complained of, or else that the stock  has since devolved upon him by operation of law.

This action was  brought by the plaintiff Pascual, in his own right as a stockholder of the bank, for the benefit of the bank, and all  the other stockholders thereof.  The plaintiff sues on behalf of the corporation,  which, even though nominally  a  defendant, is to  all  intents and purposes the  real plaintiff in  this case.  That such is the case is  shown by the prayer  of the complaint which is that  judgment be entered in favor of the bank.

According to  the pleadings,  the Banco Espanol-Filipino is a banking corporation, constituted  as such by royal decree of the  Crown  of Spain in the year 1854, the original grant having been subsequently extended  and modified  by royal decree of July 14, 1897, and by Actt No. 1790 of the Philippine Commission.   From the first it has been a bank of issue,  and under the Spanish  regime was regarded as a quasi-public institution, its full title  having been  originally "Banco  Espanol-Filipino  de  Isabel  II."  The   Captain-General  of  the  Philippine Islands was its protector and supreme head.  To him  belonged the power to appoint its directors and other managing officers, remove them from office for cause,  fix the rate of interest demandable by  the bank,  resolve  all doubts  and controversies relating to its management, "and finally, exercise, as representative of Her Majesty's Government, the powers that the laws give him respecting public establishments protected and privileged." it is alleged in the amended complaint that the only compensation contemplated or provided for the managing officers of the bank was a certain per cent of the net profits resulting from the bank's operations, as set  forth in article  30 of its reformed charter or statutes, which article is as follows:

"Of the profits or gains  which may result from the bank's operations, after deducting all the expenses of its administration  and the part,  if any, which  corresponds to  the  legal reserve fund, there shall be set apart ten  per cent for the directors and  five per cent for the board of  government,' the distribution  of which  shall be  made as provided in the regulations.   The eighty-five per cent remaining shall belong integrally to the shareholders pro rata the number  of shares owned by each."

Before proceeding to the determination of the real questions involved in this case it might be well to note briefly the origin and history of the right of a stockholder  in  a corporation to maintain a suit of this kind.

"A corporation is an artificial being, invisible, intangible, and existing only in contemplation  of  law."  (Chief Justice Marshall in Trustees of Dartmouth College vs. Woodward, 4 Wheat., 636.)

"The word 'corporation' is but a collective name for the corporators or members who compose an incorporated association ; and where it is said that a  corporation is itself  a person, or being, or creature, this  must be understood  in  a figurative sense only."  (Morawetz on Private Corporations, 2d ed., sec. 1.)

"A  corporation is 'an  artificial  person  created by  the sovereign from natural persons and  in which artificial person the natural persons of which it is composed become merged and nonexistent.' "  (Quoted with  approval in  case of The People, ex. rel Winchester, etc., respondent, vs. Coleman, et al., commissioners of taxes  etc., appellants,  133  N., Y. Appls., 279.)

In  suits of this character the corporation itself and not the plaintiff stockholder is the real party in interest.   The rights of the individual stockholder are  merged into that of the corporation.   It  is a universally recognized  doctrine that a stockholder  in a corporation has no title  legal or equitable to the corporate property; that  both  of these are in the corporation itself for the benefit of all the stockholders. Text writers illustrate this rule by  the familiar example of  one person or entity owning all the stock and still having no greater or essentially different title than if he owned but one single share.  Since, therefore, the  stockholder has no title, it is evident that what he does have,  with respect to the corporation arid  his  fellow  stockholders, are  certain rights  sui generis.  These rights are generally enumerated as being, first, to have a certificate or other evidence of his status as stockholder issued to him; second, to vote at meetings of the corporation; third, to receive his proportionate share of the profits of the corporation;  and lastly, to participate proportionately in the distribution of the corporate assets upon the dissolution or winding up,   (Purdy's Beach on Private Corporations, sec.  554.)

The right of individual stockholders to maintain suits for and on behalf of the corporation  was denied until  within a  comparatively short time, but this right is now no longer doubted.  Oh this  point  Cook on Corporations, 5th  ed. (1903), sees. 644, 646, and  646, says:

"Notwithstanding this fact, however, that  it was the duty and right of the corporation to bring suit to remedy these wrongs, it gradually became apparent that  frequently the corporation was helpless and  unable to  institute the suit. It was found, where the guilty parties themselves controlled the directors and also a majority of the stock, that the corporation was in their power,  was unable to institute suit, and that the minority of the  stockholders were being  defrauded of their rights and were without remedy.  The time came when the minority of the stockholders of the defrauded corporation - the corporation itself being controlled by the guilty parties - were given a standing in  court for the purpose of taking up the cause of the corporation,  and, in its name and stead, of bringing the guilty parties to an account. Accordingly, in 1843, in the leading case of Foss vs. Harbottle, a stockholder brought suit in the name of himself and other defrauded stockholders, and for the benefit of the corporation, against the directors, for a breach of their duty to the corporation.  This case was decided against the complaining stockholder, on the ground that the complainant had not proved that the corporation itself was under the control of the guilty parties, and had not proved that it was unable to institute  suit.   The court, however, broadly  intimated that a case might arise when a suit instituted by defrauded stockholders would be entertained by the court and redress given.  Acting upon this suggestion, and impelled by the utter inadequacy of suits instituted by the corporation, defrauded stockholders continued to institute these  suits and to urge the courts of equity to grant relief.  These efforts were unsuccessful in clearly establishing the right of stockholders herein until the cases of Atwol against Merriwether, in England, 1867,  and of Dodge vs. Woolsey, in this country, in 1855.  These  two great  and  leading cases  have firmly established the law  for England and America, that where corporate directors have committed a breach of trust either by their frauds,  ultra vires acts, or negligence,  and the corporation is unable or unwilling to institute suit to remedy the wrong, a  single stockholder may institute that suit, suing on behalf of himself and other stockholders and for the benefit of the corporation, to bring about a redress of the wrong done directly to the corporation and indirectly to the stockholders. "It is now no longer doubted, - said Mr. Justice Wayne, in the case of Dodge vs. Woolsey, 18 How. (U. S.), 331 - either in England or the United States, that courts of equity; in both, have a jurisdiction over corporations, at the instance of one or more of their members; to apply preventive remedies by injunction, to  restrain those who administer them from doing  acts  which would  amount to a  violation  of charters, or to prevent any misapplication of their capitals or profits, which might result in lessening the dividends of stockholders, or the value of their shares, as either may be protected by the  franchises of a corporation,  if the acts intended to be done  create what is  in the law denominated a breach of trust.   Ahd the jurisdiction extends to inquire into, and to enjoih, as the case may require that to be done, any proceedings by individuals, in whatever character they  may profess to act, if the subject of complaint is an imputed violation of a corporate franchise, or the denial of a right growing out of it, for which there is not an adequate remedy at law."

So it is clear that the plaintiff, by reason of the fact that he is a stockholder in the bank (corporation) has a right to maintain a suit for and on behalf of the bank, but the extent of such a right must depend upon when, how, and for what purpose he acquired the  shares which he now owns.   In the determination of these questions we  can not  see how, if it be true that the bank is a quasi-public institution, it can affect in any way the final result.

It is alleged that the plaintiff became a stockholder on the 13th  of November, 1903;  that the defendants,  as  members of the board of directors and  board  of  government, respectively,  during each and all the years 1903, 1904,  1905, 1906, and 1907, did fraudulently, and to the great prejudice Of the bank and  its  stockholders, appropriate to their own use from the profits of the bank sums of money amounting approximately to P20,000 per annum.

Article 31 of the  bank's charter provides that dividends $hall  be declared each semestre.   The stockholders meet once a year, in February, to receive and consider the report of the bank's operations contained in  the annual balance and memorial.   Beyond  this they have  no  direct voice in  the affairs of the bank,  but all who are then stockholders and have  a right to vote must  clearly have a  right to vote upon  all the business proceedings of the year,  irrespective of the date upon which they may have become stockholders. They are entitled to all the dividends that  have  been, earned by their stock during the year which has not been already declared and paid, regardless of the precise period of  the year  in which it may have  accrued.   So, in  the general meeting of the stockholders on February 3,1904, the plaintiff had a right to participate.

Neither  the charter, the  by-laws, nor the  regulations prescribe when,  within the semestre, the dividends shall be declared; but  it may be presumed  that such dividends are declared at  the  end of  the semestre and that the first semestre begins with the first day of January of each year.   On this basis  the  owner of stock from whom the plaintiff purchased h?s ten shares might have received the dividends  corresponding to  these ten shares  for  the first semestre (six months)  of the year 1903.  The dividends were declared twice a year, every six months.  The times for declaring the dividends are specifically and distinctly pointed out - one period is separated from the other.  Every six months forms a  period.   So if the  plaintiff was not entitled to the dividends for the first period (from  January to July, 1903), he having become a stockholder in September of  that year, he would have been entitled to the dividends on his stock for the second period, or semestre.  The  plaintiff was, therefore, a stockholder during all the time for which he  seeks recovery in his first cause of action, except the first six months of the year 1903.   Then, again, as a matter of fact (which we do not now decide), if the defendants had taken their salaries for  the year 1903 at the close of that year or at  any time after  September  13,  the plaintiff would then have had  an interest and, on the theory that he  was a stockholder,  could have questioned the legality of the defendants' right to take  such salary, inasmuch as his dividends would be directly affected, in that, if the defendants took 10 per cent of the gross instead of the net earnings of the bank,  his dividend on his ten shares for the second period  (from July to  December, 1903) would be less.

Conceding that this  cause of action is demurrable on the grounds that the  plaintiff was not a  stockholder during the first six months of the year 1903, should the demurrer have been sustained as to  the whole cause of action when the time for which recovery is sought is clearly divisible?

Section 90 of the Code of Civil Procedure in  force in the Philippine  Islands provides, in part, as follows:

"2.  *  *  *   If the complaint contains more than one cause of action, each  distinct cause  of action must be set  forth in a separate paragraph containing all the facts constituting the particular cause of action.

"Where the matter in a single count is divisible in its nature the demurrer should be confined to those parts which are defective, as the same general rule which applies to different counts applies  also to divisible matter in the same count constituting different causes of action; and where one count, containing distinct averments,  discloses a good cause of action in one of such averments,  as  when several breaches are assigned, some well  and others  ill, a general demurrer will be overruled."  (6 Ency. Plead. & Prac, 303, 304.)

The complaint contains three causes of action, each set forth in a  separate  paragraph.  The matter in the first cause is, as we have said, divisible in its nature.  The rule above quoted is, therefore, perfectly applicable.

The most important question to be decided is, did the lower court err in sustaining the demurrer to the second cause of action?  If this question be decided in the negative, then it will not be necessary to determine  whether of not the allegations  in  this part of the complaint  are sufficient to hold the defendants liable for the acts of their predecessors.

It affirmatively appears  from  the complaint  that  the plaintiff was not a stockholder  during any of the time in question in this second cause of action.  Upon  the question whether or not a  stockholder can maintain a suit of this li character upon a cause of action pertaining to the corporation  when it appears that he was not a  stockholder at the time of the occurrence of the acts complained of and upon which the action is based, the authorities do not agree.

In the case of Hawes vs.  Oakland (14 Otto  [104 U. S.], 450,  456), the plaintiff, a shareholder in the Contra Costa Waterworks Company, brought a bill in  equity against the company and the city of Oakland, in the Circuit Court of the United  States for California, on the ground  that he was a citizen of New York and the defendants citizens of California, alleging that the company was furnishing the city of Oakland with water free of charge beyond what the law required it to do, and that, although he had required them ta desist, the directors had failed to heed  his protest and that unless enjoined they would continue to furnish water to the city in excess of their legal obligations in this particular, to the damage of plaintiff and the shareholders.

To this complaint the city of Oakland demurred upon the ground that the appellant had shown no capacity in himself to maintain the suit, the injury, if any, being to the corporation, and  the right to, sue pertaining to it solely.  The demurrer was sustained and the bill dismissed, whereupon the plaintiff carried the case to the Supreme Court of the United States.

The decision of the court,  which was written by Mr; Justice Miller and concurred in by all the other justices, contains a review of the earlier decisions of the English and American courts  with respect to  the right  of stockholders of corporations to maintain suits of this character.  In concluding, the court, after enumerating a number of circumstances in which a stockholder might be permitted to sue upon a cause of action pertaining to the corporation,  said:

"But in addition to the existence of grievances which call for this kind of relief, it is equally  important that before the shareholder is permitted,  in his own name to institute and conduct a litigation which usually belongs to the corporation he should show to the satisfaction of the  court that he has exhausted all the means within his reach to attain within the  corporation itself, the redress of  his  grievances,  or action in  conformity  to  his  wishes.   He must make an earnest, not a simulated effort, with the managing body of the  corporation, to induce remedial action on their part, and this must be made apparent to the court.  If time permits, or has permitted, he must show, if he fails with the directors, that he has  made  an honest effort to obtain action  by the stockholders as a body, in the matter of which he complains. And he must show a case, if this is not done, where it could not be done, or it was not reasonable to require it.

"The efforts to induce such action as plaintiff desires on the part of the directors,  or of the stockholders when that is necessary, and the  cause of failure in these efforts, and all allegation that plaintiff was a shareholder at the time of the transactions of which he complains, or that the  shares have devolved  on him since by operation of law and that the suit is not a collusive one to confer on a court, of the United States jurisdiction in a case in which it could otherwise have no cognizance, should be in the bill, which  should be verified by affidavit."

This case  was decided January 16, 1882.  More than a year afterward the Supreme Court embodied the procedural part of this  decision in the 94th Equity Rule, adopted January 23, 1883.   The rule  reads as follows:

"Every bill  brought by one  or more stockholders in a corporation  against  the  corporation  and  other  parties, founded on rights which may properly  be asserted by the corporation,  must be verified by oath, and must contain an allegation that the plaintiff was a shareholder at the time of the transaction of which he complains, or that his shares had devolved on him  since by operation of law, and that the suit is not  a  collusive  one to confer on  a court of the United States jurisdiction of a case of which it  would not otherwise  have cognizance.  It must also set  forth with particularity the  efforts of the plaintiff to secure such action as he  desires on the part of the managing directors or trustees, and, if necessary, of the shareholders, and the causes of his failure to obtain such action."

January 21, 1884, the Supreme Court decided the case of Dimpfel  vs. Ohio, etc., R.  R. Co.  (110 U. S., 212; 28 Law Ed., 121, 122),  which was similar  to the Hawes case,  above cited.  Mr. Justice Field, by whom the opinion of the court was written, says (p. 122):

"The suit was brought to  set aside a contract by which the Ohio and  Mississippi Railway  Company  became the owner of a portion  of  its road known as the Springfield Division, and to obtain a decree from the court  declaring that the bonds, issued by the company and secured  by a mortgage upon that division, are null and void.  It was commenced  by Dimpfel, an individual stockholder in the company, who stated in his bill, that it was filed on behalf of himself and such other stockholders as might join him in the suit.  Callaghan, another stockholder, is the only one who joined  him.   The two claim to be owners of fifteen hundred shares of the stock  of the company.  The whole number of shares  is 240,000.  The owners of the balance of this large number make no complaint of the transactions which  the complainants  seek to annul.  And it  does not appear that the complainant owned their shares when these transactions took place.   For aught we can see to the contrary, they may have purchased the shares  long afterwards, expressly to annoy and vex the company,  in the hope that they might thereby extort, from its fears,  a larger benefit than the other  stockholders have received  or may reasonably expect from the purchase, or compel the company to buy their shares at prices above the market value.  Unfortunately, litigation against large companies is  often instituted by individual stockholders from no higher motive."

The bill in this case was also open to the objection  that the plaintiff had not exhausted the means of redress available within the corporation.  The court next proceeds  to consider this point, but prefaces its remarks with the following significant phrase:

"But assuming that the complainants were the owners of the shares held by them when the transactions  of Which they complain took  place, it does not appear that they made any attempt, etc."

Counsel for the plaintiff, in a  very able and exhaustive brief sought  to show that the doctrine  laid down  in these two cases is not applicable to the case at bar, first, because the Supreme Court in these cases merely; established a rule of practice, designed to prevent collusive suits in the Federal courts; and, second, that if such rule is to be regarded as a declaration of substantive law, it is wrong on principle and should be disregarded.  Many of the authorities cited by the plaintiff to the effect that the rule is merely one of practice, peculiar to the Federal courts, base that conclusion upon the fact that the requirement of the inclusion of the averments in question in the bill is to be found in the :94th Equity Rule. Some of the  authorities  cited,  which hold this  view, are: Pomeroy, Eq. Jur,, sec. 1096; Thompson, Corporations, sec. 4570; Cook, Corporations vol. 3, sees. 736, 737; Morawetz, Corporations, sec. 209; Forrester vs. Mining Co., 55 Pac. Rep., 229.

In the first place the doctrine was announced in Hawes vs. Oakland, supra, more than a year before the 94th Equity Rule was promulgated, so that it can admit of no dispute that in the opinion of the Supreme Court, at least, the ownership of stock  at the time of the transaction complained of was essential  to the right to maintain  such an action as a matter of substantive law, prior to and independent  of the Equity Rule.

It is  true that the  court in writing the decision  in the Hawes case, had in mind the prevalence of the practice of bringing suits in the  Federal courts, by collusion between the parties, which should properly be tried in the State court. It is equally true that the court  was desirous of  preventing a continuance of these fraudulent  practices, by  establishing a test which should prevent them.  The basis  of the right to sue in the Federal courts being diversity of citizenship, the usual method employed to enable parties to suits of this kind to invoke the jurisdiction of these courts was to have a few shares  of  stock transferred to some person who was a citizen of a State  other than that of which the proposed defendants were citizens.  In a case of this kind the transfer of the stock would be, of  necessity, merely nominal, and the plaintiff, under such circumstances,  would not be a bona fide stockholder, and would not be entitled to maintain the suit.   Of  necessity, in cases of this kind, of genuine collusion to create a fictitious diversity of citizenship the nominal transfer of the stock is made at a date sequent to that of the occurrence of the acts or omissions complained of.  Although the court was lawfully entitled to protect itself against such frauds as those of which it complains in this case, and to refuse to take cognizance of cases, in which, owing to the purely fictitious nature of the simulated diversity of citizenship, the proper tribunals were the State courts, on the  other hand, in cases of genuine diversity  of citizenship, it could not lawfully refuse to exercise the jurisdiction vested in it.   No citation of authority is needed to support the proposition that it is the duty of courts to  exercise the jurisdiction properly conferred upon them.  It is elementary that where there is a higher tribunal authorized to issue the writ, mandamus will lie to put the judicial machinery  in motion.  (Spelling,  Extraordinary Relief, sec.  1394.)   This  being the case, the conclusion  is obvious that the mere fact that in some cases persons suing as stockholders for the redress of grievances anterior to the transfer  of the stock held by  the  plaintiff  are not  acting in good faith would not justify or authorize  a refusal to take jurisdiction  in  any case in which the plaintiff's stock was acquired after the occurrence of the facts supposed to constitute the cause of action, unless the court were of the opinion, as  a matter of substantive  law, that in no event would a stockholder  so situated be entitled to maintain such an action.

It is only upon this assumption that the correctness of the decision in Hawes vs. Oakland and the legality of the 94th Equity Rule can be maintained.  The court had no authority to change the substantive  law either by its decision  or the rule, and  it is not to be presumed that it intended to do so. A careful examination of  the Hawes case and of the  rule will show that no  such change was in fact  made.  The decision is merely declaratory of the preexisting law, as the court understood it  to be, and the rule merely provides a rule of pleading.

The decision  in the Hawes case is that among other necessary averments, the bill should contain  "an allegation  that  the plaintiff was a shareholder at the time of  the transaction of which he complains   *   *  *  and that the suit is not a collusive one to confer jurisdiction on a court of the United States in a case in which it would  otherwise have no cognizance  *    *  *."   The language of the 94th Equity Rule is practically identical  with this.   It provides, in terms, that a stockholder's  bill in cases  of this character  "must contain an allegation that the plaintiff was a  stockholder at the time of the transaction of which he complains   *   *  * and that  the suit is not a collusive one to confer jurisdiction *    * *."

This is, obviously, a mere rule of pleading - it requires averments of facts upon which the plaintiff's cause of action and the jurisdiction of the court rest.  It assumes, as the court had already decided,  that the ownership of the stock at the time of the transaction is a fact essential to the maintenance of  the suit in  any event.   Unless that fact exists no cause of action exists, whether the suit is collusive or not. Even if the stock  was owned prior to the transaction complained of,  if the  suit is collusive - as.it  would be, for instance,  if one of the  defendants had acquired a  merely colorable  domicile  in another State to support the allegation of diversity of citizenship  - the plaintiff has  no right to maintain  the action in  a Federal court.   Consequently; the rule requires that these two facts be distinctly averted.  The requirement that  they  be pleaded is procedural;  The necessity of the existence of the facts in order to give" rise to the right  of action is substantive.

If the  Supreme Court had been of the opinion,  as  are some of the State  courts and text writers cited in plaintiff's brief, that the transferee of shares of stock in a corporation acquires the right to sue upon causes of action which accrued before he acquired such  shares, it surely would not have attempted to  deprive him of the  right to exercise in  the Federal courts an action which, were  it  not for diversity of citizenship, he  might exercise in  a  State court.  If  the court had believed that  the transferee of stock could, under any circumstances, sue upon a cause of action accruing to the corporation prior to such transfer, the rule  instead of requiring the plaintiff to allege unconditionally that he was a stockholder at the time of the transaction complained of and that the suit is not collusive, would have provided that the plaintiff should be required to aver  in  his sworn bill the date upon which he acquired his stock, and if it appeared that it was.acquired  after the occurrence of the acts  complained of, then that he should also be required to aver under oath that the suit was not collusive.

"Sound reason and good authority sustain the rule that a purchaser of stock can not complain of the prior acts and management of the corporation."   (Home Fire Ins. Co. vs. Baker, 60 L. R. A.,  927,  933,  citing  Hawes vs. Oakland, supra; Dimpfel vs, Ohio & M. R. Co., supra;  Taylor vs. Holmes, 127 U. S., 489;  Southwest Natural Gas  Co., vs. Fayette Fuel Gas Co,, 146 Pa., 13; Alexander vs. Searcy, 81 Ga., 536;  Clark vs.  American  Coal  Co,, 86  Iowa,  436; United Electric Securities Co., vs. Louisiana  Electric Light Co., 68 Fed., 673; Venner vs. Atchisdn T. & S. F. R. Co., 28 Fed., 581; Heath vs. Erie R. Co., 8 Blachf., 347; Dannmeyer vs. Coleman, 8 Sawy., 51; Works vs. Sowers, 2 Walk (Pa.), 416; 4 Thompson Corp., 4569.)

In Alexander vs. Searcy,  supra, the court said  (p. 550): "The weight of authority seems to be that a person  who did not own stock at the time of the transactions complained of can not complain or bring a  suit to have  them declared illegal."

In United Electric  Securities Co. vs. Louisiana Electric Light Co., supra, it is said:

"As a general proposition, the purchaser  of stock in ri corporation is not allowed to attack the acts and management of the  company prior  to the acquisition of bis stock; otherwise we might have a case where stock duly represented in a corporation consented to and participated in bad management and waste, and  after reaping the benefits from such transaction, could be easily passed into the hands of a subsequent purchaser, who could make his harvest by appearing and contesting the very acts  and conducts which his vendor had consented to."

Where stock is required for the purpose of bringing suit it has been held that the complainant is a  mere interloper and entitled to no  consideration.  And stockholder suits not brought  in good faith in  the interest of  the  corporation. have been dismissed on that  ground.  (Home Fire Ins. Co. vs. Baker, supra,  and cases cited  therein.)  Some of the State courts hold that a purchaser of shares  in a corporation acquires all the rights of the vendor.  The  Alabama Supreme Court has  gone so far  as to hold that a purchaser in good faith is not necessarily disqualified as a suitor in all cases because the prior holder was personally disqualified. (Parsons vs. Joseph, 92 Ala., 403.)   From the pleadings in this case (it having been decided by the Supreme Court upon a  demurrer)  it appears that Joseph  sought  to have  canceled  certain  certificates of stock issued  by  the Street Railway Company to Parsons, on the ground that said stock was fictitious and was issued in violation of the constitution and statute law of the State.  It was alleged, as a special defense, that if the transactions, which form the basis of the issuance of the stock to Parsons, were illegal, and fraudulent, and not done in good faith, thje complainant, Joseph,  was estopped from setting up fraud in such transactions, or seeking to cancel the  stock, because one E. Lesser, who  was complainant's transferred participated in all of said transactions.  In this case the court, speaking through Mr. Justice Coleman, said:

"If the transferee purchased the shares in good faith, and without notice of the fact that the prior holder had precluded himself from  suing, he would have as just  a  title to relief as if he had purchased from a shareholder who was under no disability;  but if  the purchaser  was aware that the prior holder had barred his right to  relief, neither  justice nor public policy would require that the transferee, under these cicumstances, should  be accorded any greater rights  than his transferrer.

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"If a stockholder participates in a wrongful or fraudulent contract, or silently  acquiesces until the contract becomes executed, he can  not then come into a court of equity  to cancel the  contract,  and more especially if  the company, or himself, as  a stockholder, has reaped a benefit from the contract; and this rule holds good, although the consideration of the contract may be one expressly prohibited by statute. The same disability .would attach to the transferee  of his stock who bought with notice."

This rule, in the main,  is correctly stated, but we think that the latter  part of the same should be modified so as  to read: "The same disability would attach to the transferee  of his stock who  bought with or without notice."  We base our modification of this rule upon the ground that a  transferee could not sue as being a bona fide purchaser in  ignorance of the disability attaching to his vendor, because  shares of stock, strictly speaking,  are not negotiable, and the  sale can not  pass greater rights than  those possessed, by the vendor.   (Clark vs,  American Coal Co., 86  Iowa, 436;  4 Thomp. Corp.,  8410.)

It is self-evident that the plaintiff in the case at bar was not, before he acquired in September, 1903, the shares  which he now owns,  injured or  affected  in any manner by the transactions set forth in the second cause of  action.  His vendor could have complained of these  transactions, but he did not choose  to  do so.   The discretion whether to sue to set them aside, or to  acquiesce in and agree to them, is, in our opinion, incapable of transfer.   If the plaintiff himself had been injured  by the  acts  of defendants' predecessors that is another matter.  He ought to take things as he  found them  when Ke  voluntarily acquired his ten shares.  If he was defrauded in the purchase of  these shares he should sue his vendor.  

"If the party himself,  who is the victim of fraud or usury, chooses  to waive his remedy and release the party,. it does not belong to a subsequent purchaser under him to recall and assume the remedy for him.  (Quoted with  approval in the case of Graham vs. La Crosse and Milwaukee R. R. Co., 102 U.S., 148.)

"But it is contended that this  is a  case  in which the debtor corporation was defrauded of its property, and that as the company had a right of proceeding for its recovery, any of its judgment and execution creditors have an equal right; that it is a property right, and one that inures to the benefit of creditors.

"Conceding that creditors who were such when the fraudulent procurement  of the debtor's  property  occurred - and cases to  that effect have  been cited - the  question still remains, whether, the debtor being unwilling to disturb the transaction, subsequent creditors have such an interest that they can reach the property for  the satisfaction of their debts.   We doubt whether  any case, going as far as  this, can be found.  No such case has been cited in the argument. Dicta of judges to that effect may undoubtedly be produced, but they are not supported  by the facts  of the cases under consideration.

"It seems clear that subsequent creditors have no better right than subsequent purchasers, to question a previous transaction in which  the debtor's property was  obtained from him by fraud, which he has acquiesced in, and which he has manifested no desire  to disturb.  Yet, in such a case, subsequent purchasers have no such right."   (Id.)

So it seems to be settled by the Supreme  Court of the United States, as a matter of substantive law, that a stockholder in a corporation who was not such at the time of the transactions complained of, or whose shares had not devolved upon him since by operation of law, can  not maintain suits of this character, unless such transactions  continue and are injurious to  the stockholder,  or affect him especially and specifically in some  other way.

We are, therefore of the opinion, and so  hold, that the judgment appealed from, sustaining the demurrer  to the first cause of  action  should be, and the same is  hereby reversed; and the judgment sustaining the demurrer to the      second cause of action should be,  and is  hereby affirmed, without any special ruling as to costs.  The record will be returned to the court whence it came for further proceedings in accordance with this decision.   So ordered.

Arellano, C. J.,  Torres, Mapa, and Johnson, JJ., concur.

CARSON, J., with whom concurs MORELAND  J., concurring in part:

I concur in the foregoing opinion in so far as it overrules the demurrer but dissent in so far as it sustains the same in part.