$56. THE NATURE OF CAPITAL STOCK. As there is no consensus of legal opinion on the exact definition of capital stock, and as the term is frequently used interchangeably with capital, capitalization, etc., the definition framed here is made to accord with what seems to be the general tendency of the courts and what strict accuracy from a knowledge of corporate practice would dictate. Capital stock and capital are distinguishable. The capital of a corporation is, on the initiation of a corporate enterprise, the total of the amounts of money paid or property given in by subscribers to shares of stock, or agreed and secured to be paid or given in by them; when the corporation has been running some time, it is these amounts of money or property in themselves, or the money represented by property purchased, together with all the undivided profits or gains realized in conducting the business, and used in conducting the business, less all the losses and depreciations incurred in operation. Money derived from the sale of bonds is sometimes included in the capital. In financial practice, capital belongs to the corporation considered as a legal person or entity, and not to the stockholders, or shareowners. It may change from time to time; it is the net corporate property at any given time. Capital stock is, in the statutes providing for the organization of private corporations, the amount authorized by the charter . as the limit up to which the capital of the corporation may be extended by stock subscriptions. This amount is fixed. More strictly, as a matter of equity, capital stock is the right to that part of the mentioned amount which is made vital and active by being subscribed and paid to the capital account. Under the first definition the capital stock has merely a potential value, while under the second definition its value is actual. Capital shares are the personal property of the several stockholders. They are in the nature of what is known to law as a "chose in action," a personal right to a thing of which one does not have possession, which right, under certain contingencies, may be enforced by law. The corporation owns the capital in a sense, but holds it for the benefit of the shareholders. Capital stock that is paid for, paid-up stock, is a liability of the corporation to the shareholders. The value of the capital stock depends upon the value of the net corporate property, capital, and this value may be more or less than the face, or par, value of all the shares. Profits and gains are part of the capital till they are distributed, as in dividends, for instance, among the shareholders. Dividend rights belong to capital stock, and, in this enlarged view, capital stock is the total amount of the issued rights to share equitably in the net capital, or assets, of the corporation, and also in the net earnings as they accrue and are distributed. Capital stock is not tangible property, but it is usually represented tangibly by the certificates of shares. The right to the shares of property is never realized except on the dissolution of the corporation and on the distribution of its assets, but it may be practically realized by selling the right to another for the value of the share or shares which it represents. The sale is made by formally transferring the certificate of stock to the purchaser. Shares of capital stock are generally subject to levy and execution as is other personal property. A corporation for profit must have capital stock, and a corporation not for profit may or may not have capital stock. But a business corporation for profit or a capitalized corporation not for profit may exist without share ownership in the absence of any statutory or charter provision to the contrary, as in a case where the rights of the members in the capital stock pass with their rights as members, as sometimes happens in lodge organizations. § 57. FULL PAID AND PARTLY PAID STOCK. Stock is full paid if it has been paid for at par in cash or in full equivalent to par value in property or services, where this latter form of payment is permissible. If full par value has not been given for the stock it is only partly paid. Stock issued "full paid and non-assessable" in good faith and without fraud is in no way obligated to the corporation or its creditors, except in some states for labor, nor to the corporation for assessments imposed, except in such states as Minnesota and California, where a liability is imposed on all private business corporation stock as on bank stock, making the holders thereof liable in excess of the par value of the shares. If there are not restrictive statutes, stock may be issued at such a price as the corporation directors, on authority of the stockholders, desire. Stock is frequently issued in exchange for only a part of its par value and, in the absence of a statute constituting such stock "full paid and nonassessable" when so issued, the holders thereof are liable to creditors of the corporation in the difference between the amount paid and the par value thereof, but they are not liable to the corporation itself. This applies to original purchasers and subsequent purchasers who know of the fact that the stock is only partly paid, but does not apply to subsequent purchasers for value who are innocent of the fact that the stock is only partly paid. These last are not liable to creditors nor to the corporation. When stock is issued full paid and non-assessable, the certificate should so recite. § 58. BONUS AND WATERED STOCK. Where there is no constitutional or statutory prohibition a corporation may give away common stock with bonds or preferred stock as a "bonus"; or it may issue stock under an agreement whereby the holder is to pay less than the par value. Such |