Mr. Justice Ricks
delivered the opinion of the court:
It will be seen from the statement that the issue raised upon the propositions of law presented and involved in this suit is whether the resolution of the board of directors on February 9, 1903, attempting to amend the by-laws relating to the salary of the vice-president, was effectual without being ratified and confirmed by the stockholders at the first meeting of the stockholders thereafter.
The statute in reference to corporations (Hurd’s Stat. 1903, sec. 6, p. 473,) provides: “The corporate powers shall be exercised by a board of directors or managers. * * * The officers of the company shall consist of a president, secretary and treasurer, and such other officers and agents as shall be determined by the directors or managers, and the directors or managers rggy, adopt by-laws for the government of the officers and affairs of the company.”
It will be seen from the reading of the statute that the office of vice-president is not provided for, except that the board of directors or managers may provide for other “officers and agents.” There is no other provision in the statute relating to corporations providing for the making of by-laws, and while the statute uses the word “may,” no interpretation could be made other than that “may” means “shall,” (providing that by-laws are to be adopted.) The words “may” and “shall” are frequently used interchangeably, as will best express the legislative intent, and one may be used for the other, and such construction should be placed upon the statute with reference to the two words. as seems consistent. Both words and phrases are sometimes transposed, if by so doing the legislative intention can be determined. Wabash, St. Louis and Pacific Railway Co. v. Pinkert, 106 Ill. 298.
Under our statute a corporation can act only through its board of directors and officers. Its property is hot subject to the control of its members or its stockholders. (Sellers v. Greer, 172 Ill. 549.) In Allemong v. Simmons, 124 Ind. 199, where the owner of five-sixths of the stock ,of a corporation, who was also a director, undertook to enter into a contract, the court held that he had no power to make the contract for the corporation, as it could only be bound by the action of the board of directors. It was also held that the power could be conferred upon one person by the board of directors to enter into a contract which would be binding, upon the company, but that the action should be by a majority of the board of directors.
In Humphreys v. McKissock, 140 U. S. 304, in discussing the rights of stockholders, the court said: “Both the commissioner, and the court in confirming his report and entering the decree mentioned, seem to have confounded the ownership of stock in a corporation with the ownership of its property. But nothing is more distinct than the two rights. The ownership of one confers no ownership of the other. The property of a corporation is not subject to the control of individual members, whether acting separately or jointly. They can neither encumber or transfer that property nor authorize others to do so. The corporation—the artificial being created—holds the property and alone can mortgage or transfer it; and the corporation acts ionly through its officers, subject to the conditions prescribed by law.”
In Smith v. Hurd, 12 Metc. 385, it is said: “The individual members of a corporation, whether they shall all join or each act severally, have no right or power to intermeddle with the property or concerns of the bank, or call any officer, agenktir servant to account or discharge them from any liability. Should all the stockholders join in a power of attorney to any one he could not take possession of any real or personal estate, any security or dioses in action; could not collect any debt or discharge a claim or release damage arising from any default, simply because they are not the legal owners of the property and damage done to such property is not injury to them. Their rights and their powers are limited and well defined.”
In Hopkins v. Roseclare Lead Co. 72 Ill. 373, it was held that a stockholder, simply because he owned a majority of the stock, could not act for the company unless he was specially authorized, and while he had a right to control an action of the company by the election of its officers, still the company could only act through its officers or by delegating its powers to others.
In Cook on Stockholders (3d ed. sec. 709,) it is said: “The stockholders cannot enter into contracts with third persons. Contracts between the corporation and third persons must be entered into by the directors, and not by the stockholders. The corporation, in such matters, is represented by the former and not by the latter. Such is one of the main objects of corporate existence. To the directors is given the management and formation of corporate contracts. The stockholders cannot, in meeting assembled, bind the corporation by their contracts in its behalf. Although one person owns a majority of the stock, or all of it, or all but two shares, he does not, in consequence thereof, acquire the right to act for the corporation or as the corporation, independently of the directors. One person may own all the stock, and yet the existence, relations and business methods of the corporation continue. A single stockholder cannot make a contract for and' in the name of the corporation which shall have any binding force or validity, except by subsequent ratification or adoption in the regular manner.”
The regular manner in which a ratification of a contract could be made or by-laws enacted would be the manner provided by statute. Although the power of making by-laws is vested in the managers of the corporation and not in the shareholders, a by-law passed at a meeting called as a shareholders’ meeting will be valid if the shareholders and managers were the same persons and all were present and participated. But that would not prohibit the regularly constituted law-making body of the corporation to amend or change its by-laws at any time it saw fit. Under the common law it was no doubt the duty of the stockholders to enact by-laws regulating the affairs of the company, and it may be that where a corporation had its existence at common law, and subsequent to its creation its charter was so amended as to give the power of making by-laws to a select body, this amendment might not necessarily be held to deprive the body at large of its common law power to make by-laws, for the reason that the body at large, being the primary source of authority, was not, by the mere act of conferring upon the select body special powers, deprived of its general powers unless so provided by its charter act. This we regard as the effect of the holding in Lovell v. Westzvood, 2 Dow & Clark, 21; and the authorities cited by the appellee, to the effect that the stockholders have power to adopt by-laws notwithstanding the statute confers that power on the board of managers or directors, all seem to rely upon the above case. But where, as in our State, there is a statute specially providing the mode and manner in which a corporation is organized and controlled and its by-laws enacted, under which statute this corporation has its existence, if any particular manner is pomtéd out by the staMte as to the in which the by-laws should be adopted we are unable to see how any other legal method could be resorted to.
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Mr. Justice Ricks
delivered the opinion of the court:
It will be seen from the statement that the issue raised upon the propositions of law presented and involved in this suit is whether the resolution of the board of directors on February 9, 1903, attempting to amend the by-laws relating to the salary of the vice-president, was effectual without being ratified and confirmed by the stockholders at the first meeting of the stockholders thereafter.
The statute in reference to corporations (Hurd’s Stat. 1903, sec. 6, p. 473,) provides: “The corporate powers shall be exercised by a board of directors or managers. * * * The officers of the company shall consist of a president, secretary and treasurer, and such other officers and agents as shall be determined by the directors or managers, and the directors or managers rggy, adopt by-laws for the government of the officers and affairs of the company.”
It will be seen from the reading of the statute that the office of vice-president is not provided for, except that the board of directors or managers may provide for other “officers and agents.” There is no other provision in the statute relating to corporations providing for the making of by-laws, and while the statute uses the word “may,” no interpretation could be made other than that “may” means “shall,” (providing that by-laws are to be adopted.) The words “may” and “shall” are frequently used interchangeably, as will best express the legislative intent, and one may be used for the other, and such construction should be placed upon the statute with reference to the two words. as seems consistent. Both words and phrases are sometimes transposed, if by so doing the legislative intention can be determined. Wabash, St. Louis and Pacific Railway Co. v. Pinkert, 106 Ill. 298.
Under our statute a corporation can act only through its board of directors and officers. Its property is hot subject to the control of its members or its stockholders. (Sellers v. Greer, 172 Ill. 549.) In Allemong v. Simmons, 124 Ind. 199, where the owner of five-sixths of the stock ,of a corporation, who was also a director, undertook to enter into a contract, the court held that he had no power to make the contract for the corporation, as it could only be bound by the action of the board of directors. It was also held that the power could be conferred upon one person by the board of directors to enter into a contract which would be binding, upon the company, but that the action should be by a majority of the board of directors.
In Humphreys v. McKissock, 140 U. S. 304, in discussing the rights of stockholders, the court said: “Both the commissioner, and the court in confirming his report and entering the decree mentioned, seem to have confounded the ownership of stock in a corporation with the ownership of its property. But nothing is more distinct than the two rights. The ownership of one confers no ownership of the other. The property of a corporation is not subject to the control of individual members, whether acting separately or jointly. They can neither encumber or transfer that property nor authorize others to do so. The corporation—the artificial being created—holds the property and alone can mortgage or transfer it; and the corporation acts ionly through its officers, subject to the conditions prescribed by law.”
In Smith v. Hurd, 12 Metc. 385, it is said: “The individual members of a corporation, whether they shall all join or each act severally, have no right or power to intermeddle with the property or concerns of the bank, or call any officer, agenktir servant to account or discharge them from any liability. Should all the stockholders join in a power of attorney to any one he could not take possession of any real or personal estate, any security or dioses in action; could not collect any debt or discharge a claim or release damage arising from any default, simply because they are not the legal owners of the property and damage done to such property is not injury to them. Their rights and their powers are limited and well defined.”
In Hopkins v. Roseclare Lead Co. 72 Ill. 373, it was held that a stockholder, simply because he owned a majority of the stock, could not act for the company unless he was specially authorized, and while he had a right to control an action of the company by the election of its officers, still the company could only act through its officers or by delegating its powers to others.
In Cook on Stockholders (3d ed. sec. 709,) it is said: “The stockholders cannot enter into contracts with third persons. Contracts between the corporation and third persons must be entered into by the directors, and not by the stockholders. The corporation, in such matters, is represented by the former and not by the latter. Such is one of the main objects of corporate existence. To the directors is given the management and formation of corporate contracts. The stockholders cannot, in meeting assembled, bind the corporation by their contracts in its behalf. Although one person owns a majority of the stock, or all of it, or all but two shares, he does not, in consequence thereof, acquire the right to act for the corporation or as the corporation, independently of the directors. One person may own all the stock, and yet the existence, relations and business methods of the corporation continue. A single stockholder cannot make a contract for and' in the name of the corporation which shall have any binding force or validity, except by subsequent ratification or adoption in the regular manner.”
The regular manner in which a ratification of a contract could be made or by-laws enacted would be the manner provided by statute. Although the power of making by-laws is vested in the managers of the corporation and not in the shareholders, a by-law passed at a meeting called as a shareholders’ meeting will be valid if the shareholders and managers were the same persons and all were present and participated. But that would not prohibit the regularly constituted law-making body of the corporation to amend or change its by-laws at any time it saw fit. Under the common law it was no doubt the duty of the stockholders to enact by-laws regulating the affairs of the company, and it may be that where a corporation had its existence at common law, and subsequent to its creation its charter was so amended as to give the power of making by-laws to a select body, this amendment might not necessarily be held to deprive the body at large of its common law power to make by-laws, for the reason that the body at large, being the primary source of authority, was not, by the mere act of conferring upon the select body special powers, deprived of its general powers unless so provided by its charter act. This we regard as the effect of the holding in Lovell v. Westzvood, 2 Dow & Clark, 21; and the authorities cited by the appellee, to the effect that the stockholders have power to adopt by-laws notwithstanding the statute confers that power on the board of managers or directors, all seem to rely upon the above case. But where, as in our State, there is a statute specially providing the mode and manner in which a corporation is organized and controlled and its by-laws enacted, under which statute this corporation has its existence, if any particular manner is pomtéd out by the staMte as to the in which the by-laws should be adopted we are unable to see how any other legal method could be resorted to. Surely there could be no doubt as to the right of the directors, under the statute/to abolish the office of vice-president, as the office could npt be created in any manner except by the board of director^ there being no statutory provision for such an office«i*A¥hile it is true that at a meeting of the stockholders a by-law was enacted providing that no amendment to its by-laws could be made without being ratified by the stockholders, yet the stockholders and directors were the same persons, all directors being stockholders and all stockholders being directors. The making of the by-laws would, in fact, be held to be made by the persons authorized by statute to make the same, which would be the board of managers or directors. (People ex rel. v. Sterling Burial Case Manf. Co. 82 Ill. 457.) And if the by-laws were enacted by the directors,—-which we must hold was done,—we can see no reason why they could not amend any by-law enacted by them. If the stockholders have no right to make by-laws, why should they have any voice in amending them? The law charges the board of managers or directors with the duty of making the by-laws necessary for the proper conduct of the business of the corporation. If it be held that the limitation found in by-law No. 16, requiring the ratification by the stockholders of a change of the by-laws made by the directors, is valid and binding, then we are to hold, in effect, that one board of directors at one time may place a limitation upon themselves or future board's of directors in the matter of making by-laws, and add requirements neither provided for in nor contemplated by the law of their creation. Such, we think, is not the law, nor do we think it should be so. The best interest of the corporation, and not the interest of the individual stockholder, is the consideration that should move the directors to make by-laws, and if such limitation were placed upon their authority they would be powerless to perform their duty except in cases where the proposition was such as met the individual notion of the holders of a majority of the stock.
While the question here considered has not been before us in the exact form it is now presented, a similar question was considered in Supreme Lodge Knights of Pythias v. Kutscher, 179 Ill. 340, and the views we now express are in harmony with and in full analogy to the views expressed in that case and others that might be cited.
There being a statutory provision providing for the manner in which by-laws should be enacted, and the manner provided for having been observed by the board of directors in its meeting, we are of the opinion that the stockholders had no right to limit the action of the directors in reference to the making of its by-laws, and therefore had no right to provide that any amendment made to the by-laws by the directors should be ratified by the stockholders before it became operative. It therefore follows that the amendment made by the directors was legal even if the by-laws were adopted by the stockholders, as the stockholders and the directors were the same.
Such being our view of the law, the trial court erred in holding propositions of law presented by appellee to be the law and refusing those presented by appellant, and the Appellate Court also erred in rendering judgment affirming the judgment of the trial court.
The 'judgments of both the Appellate and the trial courts are therefore reversed, and the cause is remanded to the superior court of Cook county for such further proceedings as to law and justice may appertain.
Reversed and remanded.