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 (\L LIBRARY FACILII 
 
 
 
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 UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW 
 LIBRARY
 
 WASHINGTON COKPOEATIONS 
 
 CONTAINING THE 
 
 STATUTES OF THE STATE OF 
 d WASHINGTON 
 
 EELATING TO COEPOEATIONS AS AMEJNDED TO AND 
 INCLUDING THE SESSION OF 1913 
 
 
 
 TOGETHER WITH A 
 
 SUMMAEY 
 
 OF THE GENEEAL COEPOEATION LAW, INCLUDING EMINENT 
 
 DOMAIN, AN OUTLINE OF COEPOEATE PEOCEDUEE, 
 
 ANNOTATIONS, AND FOEMS 
 
 BT 
 
 STEPHEN A. McINTIRE, A.B., LL.B. 
 
 POETLAND, OEEGON 
 
 GEO. A. BATESON & CO., Inc. 
 
 Law Book PubHshers 
 1913
 
 r , 
 
 Copyright, 1913 
 
 BY 
 
 STEPHEN A. McINTIRE, A.B., LL.B. 
 
 
 San Francisco 
 
 The Filmer Brothers Electrotype Company 
 
 Typographers and Stereotypers
 
 As A Mark of Affectionate Respect 
 This Book is Inscribed 
 
 TO 
 
 Joseph H. McIntirb.
 
 PREFACE. 
 
 This book is intended to bring within handy reach and 
 ready reference by the practitioner the principal rules of 
 Corporation Law in the State of Washington, with the most 
 weighty authorities therefor — in the Summary making acces- 
 sible ruling decisions in general, scattered in digests and 
 commentaries; in the Statutes (i. e., of Washington affecting 
 corporations, as compiled by the Secretary of State and re- 
 verified from the Session Laws), collecting and arranging, 
 in notes and annotations to the various sections, the Wash- 
 ington decisions construing and bearing upon the statutory 
 provisions; and in the Outline of Procedure pointing out the 
 sections of the statutes regulating particular matters, and 
 requisites for compliance with them, together with numerous 
 
 forms most frequently required for use. 
 
 S. A. ]\L 
 
 (V)
 
 CONTENTS. 
 
 Pages. 
 Introduction 1- 19 
 
 SUMMAEY. 
 
 CHAPTER I. 
 
 Sections. 
 
 Corporate Existence 1- 3 
 
 Organization of a Corporation 4- 7 
 
 CHAPTER II. 
 
 Corporations De Jure and De Facto 18- 20 
 
 Liability of Stockholders of De Facto Corporation 21 
 
 CHAPTER III. 
 
 Corporate Powers 32- 46 
 
 Acquiring and Holding of Real Property by Corporations 47- 56 
 
 CHAPTER IV. 
 
 Ultra Vires Transactions 60- 71 
 
 Estoppel to Set Up Ultra Vires as a Defense 75- 86 
 
 CHAPTER V. 
 
 Corporate Crimes and Torts 90 
 
 Monopolies, Trusts and Restraints of Trade &1-106 
 
 CHAPTER VI. 
 
 Stockholders 110-134 
 
 Voting by Proxy and Voting Trusts 135-150 
 
 CHAPTER VII. 
 
 Directors and Officers 155-164 
 
 Liability as Individuals of Directors and Officers of Corporations 
 
 for Acts or Failure to Act while Engaged in Such Capacity. .165-169 
 
 (vii)
 
 VIU CONTENTS. 
 
 CHAPTER VIII. 
 
 Sections. 
 
 Consolidation and Merger 175-179 
 
 Holding Stock of Itself or Other Companies by Corporation 180 
 
 CHAPTER IX. 
 Eeceivers 185-192 
 
 CHAPTER X. 
 
 Termination of Corporate Existence 195-203 
 
 Period of Corporate Existence 204-205 
 
 CHAPTER XI. 
 
 Foreign Corporations 210-221 
 
 Actions and Suits by and Against Foreign Corporations 222-237 
 
 EMINENT DOMAIN. 
 
 CHAPTER XII. 
 PubUc Use 250-266 
 
 CHAPTER XIII. 
 
 Taking of Private Property 270-288 
 
 CHAPTER XIV. 
 Compensation 290-295 
 
 CHAPTER XV. 
 
 Procedure 300-311 
 
 WASHINGTON STATUTES. 
 
 (Annotated) 
 
 General Provisions 401-451 
 
 Foreign Corporations 452-461 
 
 Eminent Domain 462-497
 
 CONTENTS. IX 
 
 Sections. 
 
 Railroad Corporations 498-508 
 
 Electric Railway Companies 511-513 
 
 Telegraph and Telephone Companies 514-524 
 
 Boom Companies 525-541 
 
 Toll Logging Roads and Ways 542-545 
 
 Patrons of Husbandry 547-549 
 
 Building Loan and Savings Associations 550-587 
 
 Trust Companies 588-604 
 
 Banks — Formation and Regulation 605-662 
 
 Corporations Other than Those Formed for Profit 663-675 
 
 Religious, Educational, Social and Charitable Corporations 677-685 
 
 Social and Charitable Organizations • • ■ • 686-697 
 
 Benevolent Societies for Protection of Homeless or Abused 
 
 Children 698-705 
 
 Cemetery Associations 706-713 
 
 Fees and License Tax 714-727 
 
 Reinstatement Provisions 728-73 1 
 
 Constitutional Provisions 732-751 
 
 OUTLINE 
 
 OP 
 
 CORPORATE PROCEDURE. 
 
 Character of Corporate Existence 760 
 
 The Several Kinds of Corporations 761 
 
 Preliminary Considerations 762 
 
 Articles of Incorporation 763 
 
 First Meeting of Trustees 764 
 
 Subscriptions 765 
 
 Preferred Stock 766 
 
 By-laws 767 
 
 Issue of Stock for Property 768 
 
 "Various Proceedings 769-776 
 
 Dissolution 777 
 
 Foreign Corporations 778 
 
 Various Purpose Clauses for Corporations 779-796 
 
 Forms 797-823
 
 INTEOBUCTION. 
 
 As is the case with much of our common law other than 
 land tenures founded on the rules of mediaeval feudalism, we 
 are largely indebted to the civil law, the jus civile of the 
 ancient Romans, for our conception of a corporation and the 
 basic foundation of the rules of law, that have become estab- 
 lished, governing corporate relations. 
 
 The term "corporation" is derived from the Latin verb 
 "Corporare, " to form into a corpus or body, and is used to 
 describe the result of associating individuals into one body, 
 entity or unit, recognized as such by the law, as distinguished 
 from merely associated individuals acting together. To illus- 
 trate : Title to land owned by a corporation is in the corpora- 
 tion as such, and the members of the corporation have no 
 title to the land, and accordingly dealing with such property 
 is simplified, since the title is not affected by the life or death 
 or other vicissitude of the individual members of the corpo- 
 ration. 
 
 So the corporate rights and liabilities in general are quite 
 distinct from those of the individual members who become 
 such and cease to be such in perpetual succession during the 
 corporate existence without in that respect affecting the cor- 
 porate status in the least degree. 
 
 These peculiar characteristics of corporations have been de- 
 veloped in much detail in the American and English statutes 
 and decisions, but the conception of the corporation was orig- 
 inated by the Romans, as appears from the readings in the 
 Institutes of Justinian and the Digest, nomine "Collegia," 
 the term which was applied by the Romans themselves to what 
 we term by the Latin derivative "Corporations." The Col- 
 legia of the Romans or Universitates were formed for various 
 public and private purposes, and distinguished by names de- 
 scriptive of such different objects, as, e. g., Civitates, for pub- 
 1 (1)
 
 INTRODUCTION. U 
 
 lie governing bodies similar to our municipalities, and Fabri, 
 Pictores, Navicularii, for business, trade, and other purposes. 
 
 In all these societies the unity of the juristic person as dis- 
 tinguished from the individual members in the matter of suc- 
 cession, the right to sue and be sued, and the ownership of 
 property wholly independent of the individual members, was 
 fully reco^ized and applied. 
 
 This conception of a corporation was all along more or less 
 familiar to the scholastic clerics versed in Latin and Roman 
 institutions, and the ecclesiastics of England early adopted it 
 as a device to perpetuate their ownership, in clerical succes- 
 sion, as distinguished from individual inheritance or devolu- 
 tion, of the property, mostly real, that from religious or other 
 motives was donated to them from time to time for charitable 
 and church purposes. They applied and utilized the corpo- 
 ration, therefore, in all instances to accomplish succession of 
 property in the members of societies, educational-, religious 
 and charitable, and as well in the successive individual in- 
 cumbents of offices, in time classifying their corporations into 
 aggregate and sole, according as they were societies or a suc- 
 cession of individual incumbents of an office. 
 
 It was but natural that the corporation previously utilized 
 for governmental and charitable purposes should be adopted 
 for business purposes as soon as manufactures, trade and 
 commerce began to take the place of the more primitive pur- 
 suits, and co-operation in associations of individuals and 
 property was found necessary for the more efficient and suc- 
 cessful accomplishment of business objects than could be at- 
 tained by the individuals acting separately or in cumbersome 
 partnerships. Once adopted for business purposes the use of 
 corporations for joint stock business objects rapidly extended 
 and led to the further classification of corporations into eccle- 
 siastical and lay, civil and eleemosynary, public and private. 
 
 The public corporations, cities, merchant fraternities, and 
 the like were undoubtedly antecedent to private corporations 
 and furnished the conception for the latter. The res pub- 
 lica, public thing, or community of interest, recognized as the 
 common important concern of that sturdy band of robbers 
 who fortified themselves on the seven hills by the Tiber about
 
 3 INTRODUCTION. 
 
 eight hundred years before the Christian era, became the 
 Respubliea, dominant mistress of all the known world in the 
 centuries prior to and succeeding the appearance of Jesus 
 Christ. Similarly during the Roman supremacy, and after- 
 ward, municipal or town communities and cities became estab- 
 lished in all the countries now comprising Europe, and these 
 cities and towns, with their merchant orders and fraternities, 
 all during the period of the decline of Rome and the Middle 
 Ages, and so on down after the revival of learning, kept alive 
 the spirit of freedom and liberty once characteristic of the 
 Romans, and against eccleciastics, kings and feudal barons 
 fought the fight, ultimately victorious, for political freedom. 
 
 While, however, the public corporation was being largely 
 instrumental in the fight for political freedom, the private 
 corporation from the earliest was subject to various abuses 
 which attempts were made to correct by the Romans and later 
 by their successors in government. 
 
 In England, as before said, the ecclesiastics adopted the cor- 
 poration for the purpose of succession in their ownership of 
 property, with the result that the eccleciastical corporations, 
 aggregate and sole, including monasteries, churches, bishops, 
 vicars, et al., soon bade fair in a comparatively brief period 
 to acquire into their spiritual hands most, if not all, the lands 
 of England. 
 
 This was regarded as an abuse by some, particularly the 
 king and the feudal barons, whose incidents of tenure were 
 thus cut off by what they termed the dead hand of the church 
 and its members thus incorporated. They therefore pro- 
 ceeded to correct the evil by acts of Parliament, in the various 
 Statutes of Mortmain so called, providing for the forfeiture 
 of lands donated or conveyed to corporations. 
 
 That the abuse was dangerous and one with which it ap- 
 peared difficult to deal effectively, as well as the mischief 
 aimed at, is apparent in the preamble of the Statute De Re- 
 ligiosis, A. D. 1279, commonly called the Statute of Mortmain, 
 "Where of late it was provided that religious men should not 
 enter into the fees of any without license and will of the 
 chief lords of whom such fees be holden immediately; and 
 notwithstanding such religious men have since entered as well
 
 INTRODUCTION. 4 
 
 into their own fees as into the fees of other men appropriat- 
 ing and buying them, and sometimes receiving them of the 
 gift of others, whereby the services that are due of such fees, 
 and which at the beginning were provided for the defence 
 of the Realm, are wrongfully withdrawn and the chief lords 
 do lose their escheats of the same; we therefore, to the profit 
 of our Realm, intending to provide convenient remedy by 
 the advice of our prelates earls barons and other our sub- 
 jects being of our council have provided established and or- 
 dained, that no person religious or other whatsoever he be 
 presume to buy or sell or under color of gift or lease or by 
 reason of any other title whatsoever it be, to receive of any 
 man, or by any other craft or device to appropriate to him- 
 self any lands or tenements, under pain of forfeiture of the 
 same whereby such lands or tenements may anywise come into 
 Mortmain." 
 
 By Statute of Richard II this prohibition was extended to 
 include all corporations, business as well as religious, and 
 from the Statute of Wills of Henry VIII, enabling devises of 
 land, corporations were excepted as devisees. By the Act of 
 George II, commonly called the Mortmain Act, all devises to 
 charitable uses, whether to corporations or individuals, were 
 prohibited, while by the Wills Act of 1837 the old provision 
 against devises to corporations was omitted, such devises fall- 
 ing under the old Statutes of Mortmain. Finally, by the 
 Mortmain and Charitable Uses Act of 1888 corporations are 
 prohibited from taking land for any purpose without license 
 from the crown. It will thus be seen that from the earliest 
 days it has been the policy of England, rigidly adhered to 
 and enforced, to prevent land from being held by corporations 
 and thus sequestered from individual ownership. 
 
 In America the adaptable spirit of enterprise characteristic 
 of Americans seized upon the corporation from the outset, as 
 the instrumental means affording the co-operation necessary 
 to the successful attainment of desired ends, in the struggle 
 with natural forces and conditions hitherto unsubdued. 
 
 With ever-increasing frequency the corporation has been 
 utilized for such co-operation in the attainment of purposes, 
 great and small, until at present the corporation is formed
 
 5 INTRODUCTION. 
 
 almost universally for the accomplishment of public and pri- 
 vate objects, whether religious, educational, charitable, or for 
 business and pecuniary profit. 
 
 Common as they have become, however, corporations have 
 always been looked upon, by those not immediately benefited, 
 with more or less jealousy, fear and hatred, and as an insti 
 tution to be blamed for any existing ills not otherwise ac- 
 counted for in a manner satisfactory to the less successful 
 and fortunate members of the community. Indeed, attempts 
 have been made by the states to stay the tide of corporate 
 influx, but with a degree of success very like to that of Canute 
 in stemming the waves of the sea by royal mandate. 
 
 Chancellor Kent, in his Commentaries written about 1825, 
 says: 
 
 "The propensity, in modern times, has, however, been to 
 multiply civil corporations, especially in the United States, 
 where they have increased in a rapid manner and to a most 
 astonishing extent. The demand for charters of incorpora- 
 tion is not merely for municipal purposes, but usually for the 
 more private and special objects of assisting individuals in 
 their joint stock operations and enterprising efforts, directed 
 to the business of commerce, manufactures and the various de- 
 tails of internal improvement. This branch of jurisprudence 
 becomes, therefore, an object of curious as well as deeply in- 
 teresting research. The multiplication of corporations, and 
 the avidity with which they are sought, have arisen in conse- 
 quence of the power which a large and consolidated capital 
 gives them over business of every kind, and the facility which 
 the incorporation gives to the management of that capital, 
 and the security which it affords to the persons of the mem- 
 bers, and to their property not vested in the corporate stock. 
 The convention of the people of New York, when they 
 amended their constitution in 1821, endeavored to check the 
 improvident increase of corporations by requiring the assent 
 of two-thirds of the members elected to each branch of the 
 legislature to every bill for creating, continuing, altering or 
 renewing any body politic or corporate. Even this provision 
 seems to have failed in its purpose; for in the session of 1823, 
 being the first session of the legislature under operation of
 
 INTRODUCTION. O 
 
 this check, there were thirty-nine new private companies in- 
 corporated, besides numerous other acts amending or altering 
 charters. The various acts of incorporation of private com- 
 panies for banking, manufacturing, literary, charitable and 
 insurance purposes, for turnpike and railroads, and toll 
 bridges, and for many other objects upon which private in- 
 dustry, skill and speculation can be freely and advantageously 
 employed, constitute a mighty mass of charters, which occupy 
 a large part of the volumes of the statute law in almost every 
 state." 
 
 In noteworthy contrast is the statement, for example, of 
 Mr. Frank White in the Introductory to his work on New 
 York Corporations of the year 1905, as follows : ' ' The number 
 of corporations formed under the laws of this state during the 
 calendar year 1904 reached the record figures of 4,420, and 
 in view of the fact that 505 new corporations came into exist- 
 ence here in the month of January, 1905, it is fair to predict 
 that the current year will show an aggregate in excess of the 
 high record of the preceding year." 
 
 In other words, thousands of corporations are now formed 
 yearly in every state, though the jealousy and fear of corpo- 
 rations has increased rather than diminished since the time 
 of the foregoing statement by Chancellor Kent, and in fact 
 was probably never greater than at the present day. 
 
 The reason is not far. The corporation, like all things 
 human, institutions included, has its good uses and its abuses, 
 and as yet, in the minds of the majority of the people con- 
 cerned, the good prevails over the bad. The problem as to 
 how the abuses may be eliminated without destroying the root 
 and the sap, and so the good tree itself, remains to be worked 
 out. And indeed it must be worked out and cannot be solved 
 by good or evil catastrophe. The pruning-iron must be ap- 
 plied as wisely as possible to cut away the already advanced 
 growth of abuse, but the tree fruitful of general good can only 
 rise by the slow steps of growth and evolution. Natura nou 
 facit saltum. Growth is gradual in all natural development, 
 and neither political nor economic progress constitutes an ex- 
 ception to the general rule. If this simple truth, generally 
 enough understood, could by some forceful accentuation be
 
 7 INTRODUCTION. 
 
 brought home to the consciousness of the public so as to be 
 really felt and actually sensed, sufficiently to be kept in mind, 
 the way would be cleared for real progress in the correction 
 of abuses that undoubtedly exist, and much bellowing flabber- 
 gast would be eliminated for want of audience. 
 
 It is to be noted that the corporation in America, both in 
 its legal status and its extensive use, is different in several 
 particular respects from its prototype in England. There 
 corporations, time out of mind, have come into existence in 
 several ways — by royal grant, by prescription and by act of 
 Parliament — while with us the corporation exists only by 
 virtue of, and to the extent of, the authority conferred by 
 the statute governing the case. This involves a diametrically 
 opposite approach to certain questions — e. g., as to the extent 
 of corporate powers — for in England the question is one of 
 statutory limitation of powers otherwise potentially existing, 
 and the validity of corporate acts, ultra vires, or beyond the 
 express powers conferred by the corporate charter, being not 
 necessarily for that reason null and void, is left still to be 
 determined. But with us the charter contains the limit or 
 boundary set by the creating statute to the corporate power 
 and existence, and any corporate act attempted beyond that 
 limit has no greater legal validity as a corporate act than if 
 the charter had not been granted and the corporation not 
 created. 
 
 Another important respect in which American corpora- 
 tions are different from English is that the Mortmain Acts 
 have never been enacted in America except in Pennsylvania, 
 and have been repealed in that state, so that while we hear 
 continually the cry of the single-taxers and others, attribut- 
 ing inequality in wealth to the unearned increment of value 
 in land owned by individuals, which, whatever maj^ be 
 thought, cannot be remedied without a violation of the fun- 
 damental principle of private property, the corporation which 
 is the mere creature of statute, with no rights as an indi- 
 vidual and no rights of any sort except what are expressly 
 given by the creating statute, is everywhere allowed, with 
 little remonstrance, to acquire and hold land ad libitum, and 
 oftentimes in large tracts, for the express purpose purely of
 
 INTRODUCTION. 8 
 
 realizing the aforementioned unearned increment or increase 
 in value. A compulsory disposition at the market within a 
 limited period of their lands, not directly needed by corpora- 
 tions for their corporate purposes, Avould be in most cases 
 constitutional as well as consonant with the best spirit of 
 our Anglo-Saxon institutions, and would reopen a wide door 
 of opportunity to the individual. Some well-considered ap- 
 plication of the principle embodied in the time-honored Stat- 
 utes of Mortmain is worthy of consideration. 
 
 Another peculiarity of our corporation laws is their diver- 
 sity. Our corporations are formed for the most part under 
 state laws, and these, while similar in many respects, are 
 divergent in others, so that business men about to incorpo- 
 rate have a line of forty-five and more varieties of corporate 
 vestments from which to choose that best adapted to their 
 needs; and it is not uncommon for men doing business in 
 New York City, with no idea of going elsewhere, to incorpo- 
 rate, for example, in Arizona. This condition of things soon 
 brought about a competition among the various states and 
 territories in offering inducements to influence the choice of 
 the state in which to incorporate as the legal domicile of the 
 corporation, the recognized object being to attract capital 
 to the state and incidentally to swell the state funds in the 
 treasury with incorporation taxes and franchise license fees. 
 This, oddly enough, is without much doubt, to a large degree, 
 responsible for the liberalization of the corporation laws of 
 the various states to a point of laxity otherwise not likely to 
 have been reached. To be sure, a general sweeping provision 
 against monopoly is contained in most of the statutory corpo- 
 ration laws of the various states, but in the prevailing status 
 of corporation laws as at present existing such a provision is 
 not dissimilar in its effectiveness to a legislative enactment 
 authorizing debauchery but prohibiting crime. 
 
 Congress has also fulminated against supposed evils in the 
 Sherman Anti-Trust Act of 1890 with an effectiveness not 
 unlike that of a stuffed cat upon pilfering rodents and with 
 little other result than of late a noisy cracking of shells for 
 the squirrels to eat the meats of nuts collected.
 
 9 INTRODUCTION. 
 
 The uses of corporations are great, and, left uncurbed, per- 
 haps encouraged, whether consciously or not, grow into abuses 
 that cannot in the nature of things be effectively corrected by 
 ex post facto legislation. 
 
 The fundamental use of the corporation is the facility it 
 affords for continued effective co-operation of numbers of in- 
 dividuals, their labors and capitals. The combined effort of 
 such union, not occasionally but usually, produces a multiple 
 of the result that would be obtained by the aggregate of the 
 same individuals, their labors, and capitals, in independent 
 undertakings. The decreased cost of production and the in- 
 creased returns in the larger establishment, due to lesser 
 duplication and more economic utilization of fixed capital, 
 the greater skill of the superintendence, and the more perfect 
 division of labor, are generally recognized. The possible ex- 
 tension of this principle to greater and still greater establish- 
 ments is without definite limit. Limits have been set in. 
 theory, only to be exceeded in practice, and while instances 
 may be cited of establishments so great as to be unwieldy, in 
 which the scale is turned and the economic losses more than 
 counterbalance further economic gains, proof thereby is made 
 only of the need of greater skill of superintendence, and the 
 principle of increased returns still remains. In a general 
 way, and allowing exceptions, economic experience proves 
 that the gross returns to total labor and capital expended in- 
 crease in more than proportionate ratio to the enlargement 
 of the establishment, and of the practical truth of this our 
 so-called trusts are concrete examples. The corporation 
 makes not only possible, but feasible, combination and co-op- 
 eration that could not otherwise be approached, and thus 
 makes practicable the indefinite enlargement by growth and 
 consolidation of great establishments, with the incident eco- 
 nomic increase of total product. This can have but one re- 
 sult upon the small establishment; it goes down in the 
 struggle, and is absorbed into the greater or forced out of 
 business. The wail of defeat is heard through the land that 
 competition is destroyed and monopoly is rampant. This is 
 supposed to be a sufficient condemnation, but this is not true 
 unless competition be an end m itself and monopoly neces-
 
 INTRODUCTION. 10 
 
 sarily bad. If competition were an end good in itself, and 
 to be sought for its own sake, then all co-operation would 
 best be eliminated. Competition is desirable in so far as it 
 is conducive to individual effort and affords incentive to in- 
 dividual enterprise, keeping open the door of opportunity 
 and forcing the best product at the lowest cost, thus tending 
 at the same time to reward effort and benefit the public. But 
 often competition is not conducive to these ends, but opposite 
 in its tendency, and such competition may well be eliminated 
 by co-operation. 
 
 Monopoly, too, is an ill-sounding w^ord, the application of 
 which merely in a particular instance proves nothing with- 
 out such further explanation as to show the existence of some 
 real evil or abuse. If monopoly be used to describe the elimi- 
 nation of competition to a certain degree, it is often merely 
 the application of an abusive epithet to what, in the interest 
 of the community at large, is a beneficent condition. 
 
 Suppose, for illustration, that in a sudden cataclysm of 
 frenzied philanthropy the owners of the Standard Oil Com- 
 pany, to avoid the proceedings that culminated in the decision 
 for the dissolution of the company in 221 U. S., had decided 
 to divide the stock of the company among the consumers of 
 oil and the other products of the company in the United 
 States, and the stock of the company had beer distributed 
 among the consumers in the ratio of consumption and the 
 company then had continued with the stock so distributed; 
 the net result would be that the consumers of oil in the 
 United States would, through the instrumentality of what is 
 now regarded as a wicked monopoly, be producing their own 
 oil at the lowest possible cost and sharing in the profits from 
 the sale of the company's products abroad. Asswming, for 
 argument's sake, such a state of things possible, would any- 
 one gainsay its beneficence? Still the elimination of compe- 
 tition and the control of production and of prices would exist 
 to the same degree. Monopoly, in a different sense, in the 
 sense of concentration of property in the hands of a few in- 
 dividuals by the concentration of stock ownership, would be 
 eliminated. Is it not true, then, that the great corporate 
 establishment itself, demonstrably more economic as a pro-
 
 11 INTRODUCTION. 
 
 ductive a<?ent, is not in itself an evil, call it monopoly or what 
 you will, but, under existing conditions and rules, regulating 
 the control and management of corporations, there has come 
 about a concentraticn of stock ownership that is the real evil, 
 and a resulting concentration or monopol.y of v/ealth and 
 dominance of production and distribution by a few that is 
 indeed no less intolerable than was the political dominance 
 by the feudal barons of the Middle Ages? 
 
 Concentration of stock ownership is the real monopoly, the 
 real specific abuse, to be prevented and cured, and not merely 
 fulminated against after the fact exists. 
 
 The problem is not one of the production, but of the dis- 
 tribution, of wealth. Admitting this, many will say at once 
 that the true remedy for this and for all problems of dis- 
 tribution is socialism, i. e., some form of common ownership 
 of property and administration of business — say, government 
 ownership of property and conduct of business, as distin- 
 guished from the present individual ownership. 
 
 Socialism appeals to two classes: 1. Idealists, who dream of 
 an impossible equality of wealth; 2. Those certain shiftless, 
 incapable, improvident individuals who have little or nothing, 
 and are not above the desire to share in a division of other 
 people's property. 
 
 To the real American, intelligent, self-respecting and of 
 that pride of manhood that is the admitted heritage of Anglo- 
 Saxon people, it is abhorrent, as being fundamentally incon- 
 sistent with that freedom of action in the conduct of life 
 and pursuit of happiness that is prized above every vicissi- 
 tude of fortune or misfortune, wealth or poverty. Socialism, 
 of ver.y necesssity, imports some constituted authority, gov- 
 ernmental or other, somewhere in the community that shall, 
 irrespective of the individual will, (determine the fitness and 
 capacity of the individual, his place in the community, the 
 value of his service, the amount of his compensation, the 
 limitations of his life, the measure of his pursuit of happiness. 
 No material wealth would make such conditions tolerable to 
 free men. Furthermore, if it were tolerable, no human 
 agency, however selected, could determine the relative capa- 
 city, physical, mental and moral, the character of work or
 
 INTRODUCTION. 12 
 
 service to "be rendered by each to the community, and espe- 
 cially the relative value of services performed by the indi- 
 vidual members of the community. Such a function would 
 require little short of infinite intellifrence, knowledge and 
 goodness. Still further, if socialism were either tolerable or 
 possible, it would not be feasible for more than a short-lived 
 experiment, for it is not in accord with the nature of human 
 life, and would remove all incentive to human progress. The 
 history of man, like that of all life, is the story of struggle 
 for existence and survival. It is man's nature to struggle 
 first for the means of subsistence, and that once gained, to 
 continue to struggle to gain distinction of one sort or another, 
 or at least to better his condition as compared to that of his 
 fellows. 
 
 Equality of wealth or well-being in men is therefore neither 
 possible nor desirable. It would be like requiring in a foot- 
 race that all the runners should keep abreast and at the end 
 all touch the tape at once. Just as such a rule would destroy 
 all zest in the footrace, so would equality of wealth and well- 
 being in men destroy the incentive that must subsist in the 
 individual to better his own relative condition. 
 
 Acquisition and individual betterment, not possession, be 
 it great or small, are the incentives to progress. 
 
 But there are many who would readily assent to the posi- 
 tion that socialism would be for the various reasons intoler- 
 able and impossible, yet believe that some sort of government 
 ownership and control of property and business is necessary 
 in order to correct the growing inequality of wealth, errone- 
 ously attributed, as before stated, to the so-called trusts as 
 instruments of production, rather than to the concentration 
 of their stock ownership, which is the real abuse. 
 
 Mr. Cook, for example, the well-recognized authority on 
 corporation law, in the preface to the last edition of his work 
 on Corporations, while recognizing the impracticability of 
 socialism, proposes as a remedy for our railroad problem a 
 gigantic holding company to purchase the railroads of the 
 countrj% under the supervision, guaranty and partial con- 
 trol by the government. Assuming that it would be practical 
 to dispose of such a tremendous stock at one time to the public
 
 13 INTRODUCTION. 
 
 sufficient to enable the acquisition of the roads, who would be 
 likely to buy the stock in such tremendous amounts under 
 the plan but the great interests to-day owning the roads, thus 
 virtually selling their own property to themselves at a large 
 profit to themselves? — their profits being measured in a not 
 widely different way from what they have been in other simi- 
 lar cases, namely, by the extent to which the outside public 
 should come in and buy stock with real cash out of pocket, 
 the government, by being a party to the transaction, having 
 little other effect than to cause the machinery of manipula- 
 tion to revolve more smoothly. 
 
 An experiment in straight-out government ownership and 
 operation would be preferable to that, and much could be 
 said for public ownership of the railways, telephones, tele- 
 graphs and other public utilities to prevent unneeded dupli- 
 cation and bring about adequacy of service and equality of 
 charge to the public, if there could be devised a civil service, 
 free from plunder and graft, efficient to the adequate admin- 
 istration of such vast business. 
 
 In the railways, however, and other public utilities is to be 
 found, to a superlative degree, the concentration of stock 
 ownership, with the corollary discrimination in service and 
 rates, calculated only to increase the power and wealth of the 
 controlling few at the expense of the rest of the stockholders 
 and the public generally. 
 
 The concentration of stock ownership in the great corpora- 
 tions constitutes an economic feudalism to-day not dissimilar 
 in essential respects to the political feudalism of centuries 
 past. 
 
 The great corporation, efficient agent of production, is in- 
 deed not to be destroyed for an evanesc-ent socialist dream, 
 but the method of its control, which has grown into an abuse 
 in the concentration of stock ownership, must be remedied by 
 a gradual growth in the opposite direction by regulations that 
 shall have a compelling tendency toward a more and more 
 widely distributed stock ownership and control. Just as the 
 public corporation kept alive the spirit of freedom in the 
 Middle Ages and was largely instrumental in bringing about 
 political freedom, so may the great private corporation, by
 
 INTRODUCTION. 14 
 
 reason of its very efficiency as an agent of production, be 
 made instrumental in bringing about economic freedom and 
 equality of opportunity, but likewise it must change from an 
 oligarchy to a democracy. 
 
 The time is at hand when the political state should he di- 
 vorced from the economic. It is the function of government, 
 national, state and municipal, to prescribe and execute the 
 rules governing the acquisition, ownership and disposal of 
 wealth. Let it confine itself to that function, and in its per- 
 formance thereof let it regulate its creature, the private cor- 
 poration, so that its stock may become, by natural processes, 
 in course of time, widely and more widely distributed and 
 its control popularized, and thus may, and it may be con- 
 fidently asserted will, be developed an economic state com- 
 posed of these corporations without geographical locality or 
 limit, and with such a distributed stock ownership, that they 
 will be at once the most efficient instrument of production, 
 and a bulwark of economic freedom and equality in the dis- 
 tribution of wealth. 
 
 It is not, however, to be supposed that an economic state 
 of freedom can be brought forth full-grow^n at a leap like 
 Pallas Athena from the head of Jove. It cannot be too 
 strongly emphasized that economic well-being cannot be 
 brought about by government fiat, but only by patient, per- 
 sistent struggle, as was political freedom and like all good 
 development and growth. Government can do no more than 
 prescribe the rules of the game. The people must struggle in- 
 dividually and together for the prize of economic freedom. 
 We have heard of the rights of the people ad nauseam. Let 
 us hear more of their duties to themselves and one another, 
 individually and as a whole. 
 
 Rules or laws of a compelling tendency to bring about a 
 wider and gradually wider distribution of stock ownership 
 are not at all impossible or impracticable, nor would they be 
 revolutionary or inconsistent with private property, and in- 
 dividual freedom in enterprise and acquisition of wealth. 
 
 The corporation is the creature of statute, and in most cases 
 to-day is subject to state regulation, limited only by the 
 vested rights of individuals and public policy. The corpora-
 
 15 INTRODUCTION. 
 
 tion, therefore, has none of the inalienable rights of the in- 
 dividual, and the method of its control and stock ownership 
 is not a matter of right at all, but of policy purely. A lim- 
 itation, therefore, of the amount of stock to be owned or con- 
 trolled by any individual in any corporation would, generally 
 speaking, be no violation of any corporate right, and would 
 not be open to the several objections against limiting the 
 amount of property generally to be acquired by the indi- 
 vidual, since he would still be free to exercise his enterprise 
 to acquire as much other additional property as he could 
 lawfully become possessed of. It is presumed that no one 
 will suppose that a suggestion is made to confiscate stock- 
 holdings; just as concentration of stock has been a develop- 
 ment, so wider distribution should be brought about grad- 
 ually and by slow degrees. It is feasible to enact and enforce 
 a law requiring all stock-holdings of any individual in any 
 single company in excess of five million dollars, e. g., par or 
 market value, to be disposed of to the public within a reason- 
 able period on pain of condemnation and sale at an appraised 
 valuation, and that all similar stock-holdings in excess of 
 three million dollars be similarly disposed of within some 
 longer period, thus by degrees reducing the amount of stock 
 held or to be held by any individual in any one company. 
 This would have the effect "of bringing the public in" in a 
 way that would really, in the course of the time that would 
 suffice to bring about such change, be beneficial to all, — to the 
 corporation as an efficient agent of production, for there 
 would be a broader public interest in its successful operation 
 and a much wider circle of interested owners from whom to 
 select the managing trustees; beneficial to the public to the 
 extent of their greater share in the particular corporation 
 and its wealth-bringing capacity, — and really beneficial to 
 the present stock magnates, for the greater their property 
 stake the greater their real interest in whatever conduces to 
 the permanent public advantage. A well-considered law of 
 such character, generally enacted and enforced, would be a 
 long stride toward democracy in the economic state. 
 
 Another modification in our corporation laws, necessary in 
 the interest of the citizen of average means, potential if not
 
 INTRODUCTION. 16 
 
 actual stockholder, is such regulation of the governing board 
 of corporations, while leaving them wide discretion, as shall 
 make of them not only directors for the now very limited 
 controlling few, but really trustees, representing and respon- 
 sible to all the stockholders ; and to that end they should be 
 elected by groups of stock, in order that no one large block of 
 stock should practically appoint the whole board; and fur- 
 ther, they should be removable at the will of those electing 
 them, and should be held to account fully, whenever required, 
 to any and all stockholders in the same manner as a trustee 
 to a cestui que trust, in order that the small investing stock- 
 holder may actually feel that without prolonged legal con- 
 test he can readily learn from time to time how the business 
 which is his own pro tanto is being conducted. At present, 
 furthermore, directors are paid practically nothing for their 
 services, and their main incentive to advance the interests 
 of their corporation is to enable them to manipulate and job 
 the stock to their own pecuniary advantage, very often to the 
 actual sacrifice of the interests of the average stockholder. 
 "With limitation of stock ownership and making of directors 
 actual trustees, the baneful incentive of stock-jobbing and 
 manipulation should be replaced by sufficiently large salaries 
 to attract men of first-rate business capacity to compete for 
 the office of trustee of the stockholders to manage the corpo- 
 rate business purely as such. 
 
 One constant and matter-of-course corporate practice, more- 
 over, the continued toleration of which is an abuse of the first 
 magnitude, is little less than a reproach to the intelligence 
 of the business community interested, and which is especially 
 conducive to concentration of stock ownership and control 
 and to coterie manipulation and management of corporate 
 concerns, is accumulated proxy voting at corporate elections. 
 
 The ordinary corporate election often is farcical. At the 
 time appointed the directors interrupt the usual office routine 
 and go through a formality just sufficient to warrant a cor- 
 porate record of action taken. If a lone stockholder appears, 
 he is eyed askance, given a cigar, seated in a corner with the 
 morning paper to read, and his presence tolerated with 
 amused condescension until ennui and satisfied curiosity leads
 
 17 INTRODUCTION. 
 
 him to depart. The directors, when the spirit moves them, 
 light cigars and declare the meeting in session, report to 
 themselves in a satisfactory manner as to their conduct of 
 the corporation, and at the proper time declare the polls open, 
 produce a neat bundle of proxies, which they then proceed 
 to vote, declare themselves or their appointees elected, and 
 adjourn the meeting. They sometimes fall out and a contest 
 is precipitated, and honest men get their dues to the extent 
 of determining which has the larger bundle of proxies. 
 
 This is an abuse developed by force of custom from its 
 origin in the inconvenience for the individual stockholder 
 to attend meetings in person, increased in the case of bodies 
 of stockholders living at great distances apart. The small 
 stockholder feels the inconvenience, and knows that his indi- 
 vidual vote or votes will count little in influencing the result, 
 and further, he knows that others similarly situated will give 
 their proxies to the controlling directors, so that unless he be 
 some contumacious fellow, with an absurd notion that his 
 property interest, though it be a small one, is for him to man- 
 age and dispose of himself, he tal^es the easiest way and 
 joins the proce^ion by sending his proxy to the controlling 
 director. 
 
 In fact, stockholders' meetings in person in our private 
 corporations to-day are as antiquated and more impracticable 
 for the accomplishment of results really beneficial to the 
 business community than would be general town meetings 
 in the municipal government of our great cities. 
 
 Furthermore, it is just as much for the interest of the small 
 stockholder as for the large to select the most competent di- 
 rectors to manage the corporate business, and as in the public 
 or municipal corporation all citizens have equal voting power 
 in the selection of officers, irrespective of the extent of their 
 property interest, so in private corporations, in the election 
 of directors at least, all stockholders should have an equal 
 vote, irrespective of the extent of their stockholdings. Fur- 
 ther, in public corporations voting by proxy would not be 
 tolerated. It is no less absurd in private corporations that 
 often represent business and public interests far greater than
 
 INTRODUCTION. 18 
 
 those of any but the greatest municipalities. Accumulated 
 proxy voting ought to be done away with and corporate elec- 
 tions of directors held by taking vote by ballots duly executed 
 and collected by mail from the stockholders, each stockholder 
 having one vote and no more. 
 
 Another important and very requisite regulation of corpo- 
 rate conduct, that the stockholders of a corporation may be 
 cognizant of its affairs, is the establishment of boards of 
 auditors elected directly by the stockholders and independent 
 of the directors, and these auditors should have at all times 
 free access to all corporate books and records, and they should 
 be under the duty to furnish from time to time to all stock- 
 holders full information regarding the business and general 
 condition of the corporation, and any information whenever 
 called for by any stockholder. 
 
 Some directors would throw up their hands in horror at 
 such auditing as calculated to lay open business and trade 
 secrets to competitors. But this is largely a fictitious bogle 
 to guard, the real esoteric mystery which they would truly 
 keep undisclosed, namely, their clever manipulations for their 
 own personal unjust enrichment. 
 
 Still another respect in which corporate regulation is both 
 feasible and worthy of serious thought is one already adverted 
 to, namely, the application of the principle of the Statutes 
 of Mortmain to land-holdings by American corporations. As 
 a policy to be adopted de novo, the creation by statute of fic- 
 titious entities to hold large tracts of land for periods of 
 years purely for speculative purpose would probably find few 
 serious advocates. Still, it is the undoubted fact that vast 
 tracts of land in various parts of the United States, particu- 
 larly in the west, are held by corporations not only for specu- 
 lative purposes simply, but for the particular purpose of 
 preventing their present development by other companies or 
 individuals. The compulsory sale to the public of all lands 
 held by corporations, not clearly shown to be necessary for 
 immediate corporate purposes, is feasible without striking 
 opposition of private right or public policy; indeed, it may 
 be doubted if substantial grounds of public policy will, in 
 the majority of cases, support land-holding by corporations
 
 X9 INTRODUCTION. 
 
 other than by way of lease for a limited period of corporate 
 existence. 
 
 The foregoing corrective regulations suggested would not, 
 to be sure, bring about forthwith a millenium of equality of 
 wealth, or otherwise revolutionize the laws of nature as found 
 existent in human as in other growth and evolution, but, en- 
 acted in well-planned legislation, would, it is believed, be a 
 substantial advance in the rise of an economic democracy out 
 of the present freebooting, piratical state of finance and busi- 
 ness. 
 
 STEPHEN A. McINTIRE. 
 
 Portland, Oregon, October 12, 1912.
 
 SUMMAEI 
 
 OF 
 
 COKPORATION LAW. 
 
 CHAPTER I. 
 
 CORPORATE EXISTENCE. 
 
 § 1. In determining most questions of corporation law, it iis 
 especially conducive to correct decision always to keep clearly 
 in mind the source of corporate existence, that it is statutory 
 purely, that a corporation is wholly the creature of statute, 
 and exists, acts, terminates, acquires rights, and incurs lia- 
 bilities by virtue of and only within the scope and limits of the 
 creating statute. The corporation differs diametrically from 
 the common-law partnership in this particular respect, and 
 most of the legal distinctions between corporations and part- 
 nerships may be traced to this fundamental difference, that 
 a partnership is an association of individuals who have as 
 such, just as the individual has, from time to time, asserted 
 certain rights which have been recognized by the common law 
 in judicial decision, and have been abridged or enlarged from 
 time to time by statute ; while the corporation, on the other 
 hand, does not exist at all but within the statute. 
 
 The characteristics of a corporation are stated by Thomp- 
 son, Justice, in Runyan v. Coster, 39 U. S. 120, repeating sub- 
 stantially the language of Chief Justice Taney in Bank of 
 Augusta V. Earle, 38 U. S. 517, as follows : 
 
 "The rights and powers of a corporation were very fully 
 examined and illustrated by this court at the last term in the 
 case of the Bank of Augusta v. Earle, 13 Pet. 584, in which 
 case and in various other cases decided in this court a corpo- 
 ration is considered an artificial being existing only in con- 
 
 (21).
 
 § 2 SUMMARY OF CORPORATION LAW. 22 
 
 templation of law; and being a mere creature of the law, it 
 possesses only those properties which the charter of its creation 
 confers upon it either expressly or as incidental to its very 
 existence. That corporations created by statute must depend 
 for their powers and the mode of exercising them upon the 
 true construction of the statute. A corporation can have no 
 legal existence out of the sovereignty by which it is created, 
 as it exists only in contemplation of law and by force of the 
 law ; and that when that law ceases to operate and is no longer 
 obligatory, the corporation can have no existence. It must 
 dwell in the place of its creation and cannot migrate to an- 
 other sovereignty ; but though it must live and have its being 
 in that state only, yet it does not follow that its existence will 
 not be recognized in other places, and its residence in one state 
 creates no insuperable objection to its contracting in another. 
 The corporation must show that the law of its creation gave 
 it authority to make such contracts, yet, as in the case of a 
 natural person, it is not necessary that it should actually exist 
 in the sovereignty in which the contract is made. It is suffi- 
 cient that its existence as an artificial person in the state of 
 its creation is acknowledged and recognized by the state or 
 nation where the dealing takes place, and that it is permitted 
 by the laws of that place to exercise there the powers with 
 which it is endowed." 
 
 § 2. A corporation is a person, is individual and is an in- 
 habitant, resident and, for some purposes, a citizen of the state 
 creating it. 
 
 "A corporation created by a state to perform its functions 
 under the authority of that state and only suable there, 
 though it may have members out of the state, seems to us to 
 be a person, though an artificial one, inhabiting and belong- 
 ing to that state, and therefore entitled, for the purpose of 
 suing and beinsr sued, to be deemed a citizen of that state." 
 (Wayne, J., R. R. Co. v. Letson, 2 How. (U. S.) 555, modify- 
 ing Bank v. Deveaux, 5 Cranch (U. S.), 84.) 
 
 "That corporations are in law, for civil purposes, deemed 
 persons is unquestionable, and the citation from 2 Inst. 736, 
 establishes that they are so deemed within the purview of the 
 penal statutes. Lord Coke there, in commenting on the 
 statute of 31 Eliz., c. 7, respecting the erection of a cottage 
 where the word used is 'no person shall,' etc., says: 'This ex- 
 tends as well to persons politic and incorporate as to natural 
 persons whatsoever.' " (Story, J., in holding that the words 
 "person or persons" in a criminal statute included corpora- 
 tions, United States v. Amedy, 11 Wheat; (U. S.) 411.)
 
 23 CORPORATE EXISTENCE. § 3 
 
 "The great object of an incorporation is to bestow the char- 
 acter and properties of individuality on a collective and 
 changing body of men." (Marshall, C. J., Bank v. Billings, 
 4 Pet. (U. S.) 561.) 
 
 *'In the jurisprudence of the United States a corporation 
 is regarded as in effect a citizen of the state which created it." 
 (Swayne, J., in St. Louis v. The Ferry Co., 11 Wall. 428.) 
 
 "A corporation can have no legal existence outside of the 
 sovereignty by which it was created. Its place of residence 
 is there, and can be nowhere else. Unlike a natural person, 
 it cannot change its domicile at will, and although it may be 
 permitted to transact business where its charter does not oper- 
 ate, it cannot on that account acquire a residence there." 
 (Davis, J., in Insurance Co. v. Francis, 11 Wall. (U. S.) 216.) 
 
 § 3. A corporation, if actually incorporated in different 
 states, becomes a resident in each of the states in which it is so 
 incorporated. 
 
 "The Boston, Hartford and Erie Company, therefore, 
 though made up of distinct corporations chartered by the 
 legislatures of different states, had a capital stock which was 
 a unit and only one set of shareholders, who had an interest 
 by virtue of their ownership of shares of such stock in all of 
 its property everywhere. In its organization and action and 
 the practical management of its property it was one corpora- 
 tion, having one board of directors, though in its relations to 
 any state it was a separate corporation, governed by the laws 
 of that state as to its property therein. It therefore had a 
 domicile in each state, and the corporators or shareholders 
 could, in the absence of any statutory provision to the con- 
 trary, hold meetings and transact corporate business in any 
 one state so as to bind the corporation in respect to its prop- 
 erty everywhere." (Blatchford, J., in Graham v. Boston etc. 
 R. R. Co., 118U. S. 169.) 
 
 "This court has often recognized that a corporation of one 
 state may be made a corporation of another state by the legis- 
 lature of that state in regard to property and acts within its 
 territorial jurisdiction. Ohio & Mississippi R. R. Co. v. 
 Wheeler, 1 Black, 286, 297; Railroad Co. v. Harris, 12 Wall. 
 65, 82 ; Railway Co. v. Whitton, 13 Wall. 270, 283 ; Railroad 
 Co V Vance, 96 U. S. 450, 457 ; Memphis & Charleston R. R. 
 V. Alabama, 107 U. S. 581; Clark v. Barnard, 108 U. S. 436, 
 451 452; Stone v. Farmers' Loan & Trust Co., 116 U. S. 307, 
 334'; Graham v. Boston etc. R. R., 118 U. S. 161. 169 ; Martin 
 V. Baltimore & Ohio R. R., 151 U. S. 673, 677. But this court 
 has repeatedly said that in order to make a corporation,
 
 §§4,5 SUMMARY OP CORPORATION LAW. 24 
 
 already in existence under the laws of one state, a corpora- 
 tion of another state, 'the language used must imply creation 
 or adoption in such form as to confer the power usually exer- 
 cised over corporations by the state or by the legislature and 
 such allegiance as a state corporation owes to its creator. The 
 mere grant of privileges or powers to it as an existing corpo- 
 ration does not do this.' Pennsylvania R. R. v. St. Louis etc. 
 R. R., 118 U. S. 290, 296; Goodlett v. Louisville & Nashville 
 R. R., 122 U. S. 391, 405, 408 ; St. Louis & San Francisco Ry. 
 V. James, 161 U. S. 545, 561." (Grav, J., in Louisville Ry. 
 Co. V. Louisville Trust Co., 174 U. S. 562.) 
 
 ORGANIZATION OF A CORPORATION. 
 
 § 4. The question not infrequently arises as to what consti- 
 tutes organization of a corporation. In general, it may be said 
 that a corporation is organized when enough has been done 
 in compliance with the statute under which the corporation 
 is formed, so that the corporation is in a position to perform 
 corporate acts. In order that the corporation may be in such 
 a position rightfully or de jure, all antecedent provisions of 
 the statute must have been complied with, but if no statutory 
 provision has been neglected, though not strictly complied with, 
 and the formation of the corporation has progressed to the 
 stage where officers or official representatives have been ap- 
 pointed who may perform acts in the corporate name, the cor- 
 poration may be said to be organized at least de facto. 
 
 § 5. In McGuty v. Athol Reservoir Co., 155 Mass. 183, 
 where only one of the persons named in the certificate met with 
 others and adopted by-laws and chose officers, it was held that 
 they constituted a corporation. Morton, J., said: 
 
 "At least one of the persons named in the act of incorpo- 
 ration, without objections, so far as appears, from the others, 
 with seven persons not named in the act, duly met on June 
 21, 1854, and accepted the act of incorporation, adopted by- 
 laws, chose officers and transacted other business. It is clear 
 that the persons who took part in these proceedings became 
 a corporation under the name of 'The Athol Reservoir Com- 
 pany.' " 
 
 In Braintree Water Supply Co. v. Braintree, 146 Mass. 
 482, where, under an act of incorporation, all the members
 
 25 CORPORATE EXISTENCE. § 6 
 
 united in electing directors and a president, though statutory 
 notice was omitted, the corporation was held to be organized. 
 
 In Ossipee Hosiery & Woolen Mfg. Co. v. Canney, 54 N. H. 
 295, where the first meeting was called on fourteen instead of 
 fifteen days' notice required by statute, and by-laws adopted 
 and a clerk chosen, it was held that the corporation was ' ' or- 
 ganized as a company" under the act. 
 
 In Judah v. American Live Stock Ins. Co., 4 Ind. 333, 
 where stock had been subscribed and directors elected by all 
 the stockholders, though commissioners did not, as required, 
 receive subscriptions and call the meeting of stockholders, the 
 company was held legally organized. 
 
 In Hunt V. Kansas & M. Bridge Co., 11 Kan. 412, where 
 persons named in the act of incorporation opened books for 
 subscription to the capital stock of the company, and ten per 
 cent was subscribed and an election of directors and officers 
 was held as required by the act, the company was legally 
 organized for the transaction of business. 
 
 In Union Water Co. v. Kean, 52 N. J. Eq. Ill, where notice 
 of the opening of subscription books was given and the stock 
 was subscribed by the incorporators and a stockholders' meet- 
 ing was held and directors and officers elected, the corpora- 
 tion was held sufficiently organized to institute suit. 
 
 § 6. In Walton v. Oliver, 49 Kan. 107, where nothing 
 was done but to file a charter naming certain persons as 
 directors for the first year, it was held that there was no 
 organization sufficient to enable the corporation to do busi- 
 ness, the court construing "organized" to require the election 
 of officers, the subscription and payment of the capital stock, 
 the adoption of by-laws, and such steps as are necessary to 
 endow the legal entity with the capacity to transact the legit- 
 imate business for which it was created. 
 
 In McVicker v. Cane, 21 Or. 353, nothing appeared to have 
 been done but the filing of the articles of incorporation, and 
 this was held not enough to create a corporate entity with 
 power to contract and transact business. Lord, J., said: 
 
 "In the case at bar there was no stock, nor subscription of 
 stock, nor officers nor board of directors, nor anything done
 
 § 7 SUMMARY OF CORPORATION LAW. 26 
 
 to perfect the organization. It is true that the whole amount 
 of stock is not required to be subscribed to entitle the corpora- 
 tion to proceed with the organization ; but the amount pro- 
 vided by section 3222, Hill's Code, must be subscribed before 
 the corporation can be legally organized. (Coyote etc. v. 
 Ruble, 8 Or. 284.) In the case last cited, Kelly,' C. J., said: 
 'Where the statute prescribes the manner in which the cor- 
 poration shall be organized, its requirements must be substan- 
 tially complied with, otherwise it will have no legal capacity 
 to transact any business as a corporation.' " 
 
 Similarly, Western Screw & Mfg. Co. v. Causley, 72 111. 
 531. 
 
 § 7. In Roosevelt v. Hamblin, 199 Mass. 127, in holding that 
 corporate franchises belonged to the incorporators before or- 
 ganization and afterward to the corporation, Hammond, J., 
 said: 
 
 "In the cas'C before us it does not appear that there were 
 any subscribers to the stock before the date of the act of in- 
 corporation. The franchise, therefore, was held by the thir- 
 teen incorporators specifically named therein. It is neces- 
 sarily implied in the act that the franchise does not remain 
 in the incorporators after the corporation is organized; and 
 we are of opinion that within the meaning of this statute, and 
 for the transfer of the franchise, the corporation must be 
 regarded as organized when the first meeting has been called, 
 the act of incorporation accepted, the officers elected and by- 
 laws providing for future meetings adopted, at least where 
 there are any stockholders." 
 
 In Lechmere Bank v. Boynton, 11 Cush. (Mass.) 369, 
 where a special charter for a bank was granted certain "peti- 
 tioners and their associates," it was held that subscribers to 
 stock other than those signing the petition for the charter 
 were not entitled to participate in the organization of the 
 bank. Shaw, C. J., said : 
 
 "Association ex vi termini implies agreement, compact, 
 union of mind and purpose and action. When, as above 
 stated, it includes those who are to come in afterward, either 
 together with, or as successors to, the original grantees, it is 
 by a compact between the party who desires to come in, on 
 the one hand, and the corporation who consents to receive 
 him on the other. One of the powers granted is to receive
 
 27 CORPORATE EXISTENCE. § 7 
 
 associates and provide for a succession of members. But the 
 right to receive associates is a corporate right, to be exercised, 
 like other corporate powers, by a majority, if not otherwise 
 regulated. But the exercise of a corporate right presupposes 
 a previous corporate organization, and therefore until such 
 organization, there can be no such associates, and therefore 
 no such one can act in the organization, although invited to 
 do so by some, or even a majority, of individual grantees." 
 
 The articles and other certificates required by law must 
 be filed in order that a corporate entity may be legally 
 brought into existence. (Capps v. Hastings Prospecting Co., 
 40 Neb. 470; Edwards v. Armour Packing Co., 190 111. 67; 
 Rikhofe V. Machine Co., 68 Ind. 388.)
 
 § 18 SUMMARY OF CORPORATION LAW. 28 
 
 CHAPTER II. 
 
 CORPORATIONS DE JURE AND DE FACTO. 
 
 § 18. Where the conditions and requirements of the law, 
 whether general or by way of special charter, are substantially 
 complied with in its formation, the corporation exists de jure. 
 
 "It was said in People v. Selfridge, 52 Cal. 331: 'The right 
 to be a corporation is in itself a franchise, and to acquire a 
 franchise under a general law the prescribed statutory condi- 
 tions must be complied with.' Still, a substantial rather than 
 a literal compliance will suffice. People v. Stockton & V. R. 
 Co., 45 Cal. 313. Was there substantial compliance in this 
 case? Because a substantial compliance will do it does not 
 follow that any positive statutory requirement can be omitted 
 on the ground that it is unimportant. They are conditions 
 precedent to acquiring a statutory right, and none can be 
 dispensed with by the court. WTiat is a substantial rather 
 than a literal compliance may be illustrated from the cases. 
 In Ex parte Spring Valley Water Works, 17 Cal. 132, the cer- 
 tificate stated the place of business, but did not describe it as 
 the 'principal place of business,' as required. The court said: 
 'The statement that San Francisco was the place of bu.siness 
 w^ould seem to imply that it was not only the principal but 
 the only place of business.' In People v. Stockton & V. R. 
 Co., 45 Cal. 306, the affidavit required in such cases to be at- 
 tached to the certificate stated that ten per cent of the amount 
 subscribed had been actually paid in, omitting the words 'in 
 good faith,' which the statute required. In the certificate it 
 was stated that more than ten per cent had been actually in 
 good faith paid in. It was held sufficient, and it would seem 
 that if it was actually paid in cash it must have been paid in 
 good faith; and it was further held that payment by checks 
 drawn against sufficient funds in a bank which was ready to 
 accept and pay the checks was substantially payment in cash. 
 In People v. Cheeseman, 7 Colo. 376, the acknowledgment 
 taken by the notary omitted to state that the persons whose 
 acknowledgments were taken were personally known to the 
 notary. The certificate did state that the persons who signed 
 appeared before him and acknowledged it. The statute did 
 not prescribe what the acknowledgment should contain, and it 
 was held a substantial compliance with the requirement, al- 
 though the form prescribed for acknowledgment of deeds was
 
 29 CORPORATIONS DE JURE AND DE FACTO. § 19 
 
 not followed. It was acknowledged. In all these cases it will 
 be seen that the thing reqviired was done but not literally as 
 directed, but there was no omission of any requirement." 
 (Temple, C, in People v. Monteeito Water Co., 97 Cal. 276.) 
 
 § 19. Where an association is not a corporation de jure, but 
 has acted as a corporation, and enough has been done in com- 
 pliance with statutory requirements so that the public is rea- 
 sonably justified in dealing with it as a corporation, and it 
 would be inequitable to treat the corporation as a nullity, such 
 an association is regarded and held a corporation de facto, sub- 
 ject to be questioned as to its corporate existence only by the 
 state in a proceeding instituted for that purpose. 
 
 In Buffalo & Alleghany R. Co. v. Gary, 26 N. Y. 75, an 
 action on a stock subscription, Denio, C. J., said: 
 
 "The defendant contends that the plaintiff's organization 
 is defective because the affidavit annexed to the articles of 
 association does not contain the allegation required by the 
 statute 'that it is intended in good faith to construct or to 
 maintain and operate the road mentioned in the articles of 
 association,' and that it is not, therefore, a corporation. _ The 
 articles of association are in due form, and the affidavit an- 
 nexed to them, while it does not come up to the requirement 
 of the statute in the particular specified, is colorable. The 
 articles and affidavit were filed and recorded in the office of 
 the Secretary of State ; the capital stock was subscribed and 
 partly paid in; the route of the road was surveyed and 
 located; the right of way obtained; a contract for the con- 
 struction of the whole road entered into and liabilities in- 
 curred which have not been satisfied. This was sufficient to 
 constitute the plaintiff a corporation de facto, so that neither 
 it nor its stockholders can object that it is not strictly a corpo- 
 ration de jure. I am of the opinion that under this and 
 similar general acts for the formation of corporations, if the 
 papers filed by which the corporation is sought to be created 
 are colorable, but so defective that in a proceeding on the part 
 of the state against it, it would for that reason be dissolved, 
 yet by acts of user under such an organization it becomes a 
 corporation de facto, and no advantage can be taken of such 
 defect in its constitution collaterally by any person. Any 
 other rule, it seems to me, must be fraught with serious con- 
 sequences and great public mischief. Most of the persons 
 who subscribe in good faith for the stock do not examine to 
 see whether all the requirements of the statute in the organ-
 
 § 20 SUMMARY OP CORPORATION LAW. 30 
 
 ization of the corporation have been complied with; and if 
 they did examine Avould not probably discover a defect like 
 the one now pointed out. The stock is sold in the market 
 from hand to hand without any such examination. The cor- 
 poration may carry on its business for years and its stock have 
 entirely changed hands when its property may be destroyed 
 by a trespasser, and in an action atjainst him in the name of 
 the corporation his only defense, 'you are not legally a corpo- 
 ration by reason of a defect in your constitution,' would, upon 
 the doctrine contended for by the defendant, be successful. 
 The doctrine of estoppel could not be applied in that case, as 
 it has been in some cases, to counteract an erroneous decision 
 upon the question now before us." 
 
 § 20. In an action to foreclose a mortgage, Society Perun 
 V. Cleveland, 43 Ohio St. 481, Owen, J., said: 
 
 "It is conceded by the city that parties who had recognized 
 the existence of the society by their transactions with it as a 
 supposed corporation are estopped to deny its corporate ex- 
 istence. But it is maintained that the city having engaged 
 in no transactions with it is free to challenge its existence as 
 a corporation de facto as well as de jure. The argument is 
 that 'No case can be found where it is held that there is a 
 corporation de facto against persons who have in no way 
 recognized its existence as a corporation,' and that 'The 
 notion of a de facto corporation is based on the doctrine of 
 estoppel ; when estoppel cannot be invoked there can be no de 
 facto corporation.' 
 
 "The theory that a de facto corporation has no real existence, 
 that it is a mere phantom, to be invoked only by that rule of 
 estoppel which forbids a party who has dealt with a pretended 
 corporation to deny its corporate existence, has no foundation 
 either in reason or authority. A de facto corporation is a 
 reality. It has an actual and substantial legal existence. It 
 is, as the term implies, a corporation. 
 
 "It is a self-evident proposition that a contract cannot be 
 made with a corporation unless the corporation be in existence 
 at the time. A real contract with an imaginary corporation 
 is as impossible in the nature of things as a real contract with 
 an imaginary person. It is essential, therefore, in order to 
 establish the existence of a contract with a corporation, to 
 show that the corporation was in existence, at least de facto, 
 at the time the contract was made. (Morawetz on Private 
 Corporations, sec. 137.)
 
 31 CORPORATIONS DE JURE AND DE FACTO. § 21 
 
 "It is bound by all such acts as it might rightfully perform 
 as a corporation de jure. Where it has attempted in good 
 faith to assume corporate powers; where its proceedings in 
 that behalf are colorable and are approved by those officers 
 of the state who are authorized to act in that regard; where 
 it has honestly proceeded for a number of years, without in- 
 terference from the state, to transact business as a corpora- 
 tion, has been reputed and dealt with as a duly incorporated 
 body, and valuable rights and interests have been acquired 
 and transferred by it, no substantial reason is suggested why 
 its corporate existence in a suit involving such transactions 
 should be subject to attack by any other party than the state, 
 and then only when it is called upon, in a direct proceeding 
 for that purpose, to show by what authority it assumes to be 
 a corporation." 
 
 Nelson, J., in Lessee of Frost v. Frostburg Coal Co., 24 
 How. (U. S.) 283, said: 
 
 "The defendants were made a corporation by the charter, 
 the persons named in it constituting the corporate body, 
 clothed with the powers and privileges conferred upon it, and 
 were capable of taking and holding real estate ; and, second, 
 even if it were otherwise and some irregiilarities occurred in 
 the organization of the company, inasmuch as no act made a 
 condition precedent to the existence of the corporation has 
 been omitted or its nonperformance shown, a party dealing 
 with the company is not permitted to set up the irregularity. 
 The courts are bound to regard it as a corporation, so far as 
 third persons are concerned, until it is dissolved by a judicial 
 proceeding on behalf of the government that created it." 
 
 LIABILITY OF STOCKHOLDERS OF DE FACTO 
 CORPORATION. 
 
 § 21. Though enough has been done to constitute a corpora- 
 tion de facto, yet the franchise rights recognized as existing de 
 facto may be forfeited by quo warranto proceedings on behalf 
 of the state. (Cook, 6th ed., § 231.) While in the earlier 
 decisions and books there was much diversity upon the point 
 whether stockholders of de facto corporations were liable as 
 partners, as if no corporation had been formed (Cook, 1st 
 ed., § 233, 17 L. R. A. 549n), the general rule now is estab- 
 lished that if enough has been done to constitute a de facto
 
 § 21 SUMMARY OF CORPORATION LAW. 82 
 
 corporation, the stockholders are liable only as such and not 
 as partners. 
 
 In Whitney v. Wyman, 101 U. S. 392, in holding that the 
 defendants in that case, who, as officers, directors and stock- 
 holders of a de facto corporation, had entered into a contract 
 with the plaintiff, in the name of the de facto corporation, were 
 not individually liable on the contract, Swayne, J., in the 
 opinion of the court, said: 
 
 "The court instructed the jury, in substance, that the letter 
 of the Prudential Committee of February 1, 1870, bound the 
 corporation and not the defendants, if there was then a cor- 
 poration, and the defendants were authorized by it to give the 
 order, and that if the corporation had acted as such and ex- 
 ercised its franchises, then it was a corporation de facto, and 
 that in such case any irregularity in its organization was im- 
 material. 
 
 "The plaintiff excepted to these instructions, and took 
 numerous other exceptions in the course of the trial, which 
 are set forth in the record. 
 
 "The jury found for the defendants; and judgment having 
 been entered for them, Whitney removed the case here 
 
 "Looking at the letter of the defendants of the 1st of Feb- 
 ruary, 1869, and the answer of the plaintiff of the 10th of that 
 month, we cannot doubt as to the understanding and meaning 
 of both parties with respect to the point in question. 
 
 "The former advised the latter of the progress made in or- 
 ganizing the corporation ; that the order was given by the direc- 
 tion of its officers, and the letter is signed by the writers as 
 the 'Prudential Committee of the Grand Haven Fruit-basket 
 Co.,* which was the name in full of the corporation. The 
 plaintiff addressed his reply to the 'Grand Haven Fruit-basket 
 Company,' thus using the name of the corporation as the party 
 v\'ith whom he knew he was dealing, and omitting the names 
 of the defendants, and their designation as a committee, ac- 
 cording to the style they gave themselves in their letter. 
 
 "It seems to us entirely clear that both parties understood 
 and meant that the contract was to be, and in fact was, with 
 the corporation, and not with the defendants indi\adually. 
 
 "The agreement thus made could not be afterward changed 
 bv either of the parties without the consent of the other. 
 (Utley V. Donaldson, 94 U. S. 29.) 
 
 "But it is said the corporation at the date of these letters 
 was forbidden to do any business, not having then filed its 
 articles of association, as required by the statute. 
 
 "To this objection there are several answers.
 
 33 COKPORATIONS DE JURE AND DE FACTO. § 21 
 
 "The corporation subsequently ratified the contract by 
 recognizing and treating it as valid. 
 
 "This made it in all respects what it would have been if the 
 requisite corporate power had existed when it was entered 
 into. (Angell & Ames, Corp., sec. 804 and note.) 
 
 "The corporation having assumed by entering into the con- 
 tract with the plaintiff to have the requisite power, both par- 
 ties are estopped to deny it. (Id., sec. 635 and note.) 
 
 * ' The restriction imposed by the statute is a simple inhibi- 
 tion. It did not declare that what was done should be void, 
 nor was any penalty prescribed. No one but the state could 
 object. The contract is valid as to the plaintiff, and he has 
 no right to raise the question of its invalidity. (National 
 Bank V. Matthews, 98 U. S. 621.) 
 
 "The instruction given by the court to the jury with re- 
 spect to acts of user by the corporation in proof of its exist- 
 ence was correct. If there was any error, it was in favor of 
 the plaintiff. (Angell & Ames, Corp., sec. 635.)" (Mora- 
 wetz, § 748 ; Rutherford v. Hill, 22 Or. 218, 17 L. R. A. 549 ; 
 Love V. Ramsay, 139 Mich. 47 ; Webb v. Rockefeller, 195 Mo. 
 57; Larned v. Beal, 65 N. H. 184; Doty v. Patterson, 155 Ind. 
 60; Crowder v. Sullivan, 128 Ind. 486; Curtis v. Meeker, 
 169 111. 233 ; Johnson v. Okerstrom, 70 Minn. 303 ; Vanneraan 
 V. Young, 52 N. J. L. 403; Bates v. Wilson, 14 Colo. 140; 
 Snider 's Sons Co. v. Trov, 91 Ala. 224; Mokelumne Hill 
 Min. Co. v. Woodbury, 14 Cal. 424 ; Tarbell v. Page, 24 111. 
 46; Demarest v. Flack, 128 N. Y. 205; Cook, 6th ed., § 233.) 
 
 But where no law authorizes the attempted corporation, or 
 if a law exists under which a corporation might be formed, 
 but no substantial bona fide colorable attempt has been made 
 by the association to comply with the law, or fraud or legal 
 wrongdoing taints the attempted formation, those stock- 
 holders or members responsible will be held liable as part- 
 ners. (Eaton V. Walker, 76 Mich. 579; Booth v. Wonderly, 
 36 N. J. L. 250; Hill v. Beach, 12 N. J. Eq. 31; McGrew v. 
 Exchange, 85 Tenn. 572; Kaiser v. Lawrence Sav. Bank, 56 
 Iowa, 104 ; Bigelow v. Gregory, 73 111. 197 ; Medill v. Collier, 
 16 Ohio St. 599; Hurt v. Salisbury, 55 Mo. 310; Ferris v. 
 Thaw, 72 Mo. 446; Garnett v. Richardson, 35 Ark. 144, 
 Abbott V. Omaha Smelt. & Ref . Co., 4 Neb. 416 ; McVicker v. 
 Cone, 21 Or. 353; Coleman v. Coleman, 78 Ind. 344; New 
 York etc. Bank v. Crowell, 177 Pa. 313. For further author- 
 ities, see Cook, 6th ed., §§ 230-243; 17 L. R. A. 549.) 
 3
 
 32 SUMMARY OF CORPORATION LAW. 34 
 
 CHAPTER III. 
 
 CHARTER POWERS. 
 
 § 32. The creation of a corporation is a franchise a^'ant — a 
 delegation of governmental power to the body corporate to act 
 and govern itself under by-laws and otherwise, and is strictly 
 construed. 
 
 "The essential properties of corporate existence are quite 
 distinct from the franchises of the corporation. The fran- 
 chise of being a corporation belongs to the corporators, while 
 the powers and privileges vested in and to be exercised by the 
 body corporate as such are the franchises of the corporation. 
 The latter has no power to dispose of the franchise of its mem- 
 bers which may survive in the mere fact of corporate existence 
 after the corporation has parted with all its property and all 
 its franchises." (Matthews, J., in Memphis R. R. Co. v. Com- 
 missioners, 112 U. S. 619.) 
 
 In holding that a state could not tax franchises granted by 
 Congress without the consent of Congress, Bradley, J., in Cali- 
 fornia V. Pacific R. R. Co., 127 U. S. 1, 40, said : 
 
 "Assuming, then, that the Central Pacific Railroad Com- 
 pany has received the important franchises referred to by 
 grant of the United States, the question arises whether they 
 are legitimate subjects of taxation by the state. They were 
 granted to the company for national purposes and to subserve 
 national ends. It seems very clear that the state of California 
 can neither take them away nor destroy nor abridge them nor 
 cripple them by onerous burdens. Can it tax them? It may 
 undoubtedly tax outside visible property of the company situ- 
 ated within the state. That is a different thing. But may 
 it tax franchises which are the grant of the United States? 
 In our judgment it cannot. What is a franchise ? Under the 
 English law, Blackstone defines it as 'a royal privilege or 
 branch of the king's prerogative subsisting in the hands of a 
 subject.' 2 Bl. Com. 37. Generalized and devested of the 
 special form which it assumes under a monarchical govern- 
 ment based on feudal traditions, a franchise is a right, privi- 
 lege or power of public concern which ought not to be exer- 
 cised by private individuals at their mere will and pleasure, 
 but should be reserved for public control and administration 
 either by the governmeut directly or by public agents acting
 
 35 CHARTER POWERS. § 33 
 
 under such conditions and regulations as the government may 
 impose in the public interest and for the public security. 
 Such rights and powers must exist under every form of 
 society. They are always educed by the laws and customs 
 of the community. Under our system their existence and dis- 
 posal are under the control of the legislative department of 
 the government, and they cannot be assumed or exercised 
 without legislative authority. No private person can estab- 
 lish a public highway, or a public ferry or railroad, or charge 
 tolls for the use of the same, without authority from the legis- 
 lature direct or derived. These are franchises. No private 
 person can take another's property, even for a public use, 
 without such authority; which is the same as to say that the 
 right of eminent domain can only be exercised by virtue of 
 a legislative grant. This is a franchise. No persons can 
 make themselves a body corporate and politic without legis- 
 lative authority. Corporate capacity is a franchise. The list 
 might be continued indefinitely." 
 
 § 33. The express statutory authority under and by which 
 a corporation is created and exists is termed the charter of the 
 corporation. Where the incorporation is by special law, the 
 charter is the special act incorporating the company and its 
 amendments; where the incorporation is by general law, the 
 charter of the company is the general law and the certification 
 by the duly authorized public officer showing the scope and 
 character of the company in the compliance with, and accept- 
 ance of, that general law by the incorporators of the company. 
 
 ''This charter of the Northeastern Company as it existed in 
 1863 was based upon the two acts of the legislature passed in 
 1851 and 1855, respectively. The first act was entitled an 
 'act to incorporate' the Northeastern Company. The latter 
 act was entitled 'an act to amend the charter of the North- 
 eastern Company.' A charter in the sense here used is an 
 instrument or authority from the sovereign power bestowing 
 rights or privileges; as it is briefly expressed, it is an act of 
 incorporation. Such was the obvious understanding of the 
 word by the legislature of South Carolina. The first act was 
 expressed as creating the incorporation of the company. The 
 second, using a synonymous expression, purported to amend 
 its charter. The words 'charter' and 'act of incorporation' 
 were used convertibly. Whether it be said that the rights and 
 privileges conferred upon the Northeastern as they stood in 
 1863 existed in its charter or were derived from its incorpo-
 
 § 34 SUMMARY OF CORPORATION LAW. 36 
 
 ration amounts to the same thing. We have no doubt that 
 all of them were intended to be granted to the Cheraw Com- 
 pany by the act of that year. The charter or incorporation 
 of 1851 had been amended in 1855 and by an act which pur- 
 ported in its title not to create an original authority, but by 
 amending the original charter to bestow additional powers 
 upon the company. After the passage of the amended act 
 the Northeastern was in law as if it had originally been char- 
 tered with all the rights, powers and privileges conferred 
 upon it by the act of 1855." (Hunt, J., in Humphrey v. 
 Pegues, 83 U. S. 248.) 
 
 § 34. The principle is not different in cases of incorpora- 
 tion under general law. 
 
 "All these statutes [general incorporation laws] were com- 
 plete as laws when they came from the hands of the legis- 
 lature, and did not depend for their force and efficacy upon 
 the action or will of any other power. It is true that they 
 could only take effect upon the happening of some event, such 
 as' the filing the petition or declaration and giving publicity 
 to the purpose of the association in the mode prescribed by 
 the act. But if this were a good reason for regarding these 
 statutes as invalid, then how few corporations could abide the 
 test ! For it requires the acceptance of the charter to create 
 a corporate body, for the government cannot compel persons 
 to become an incorporated body without their consent, and 
 this consent, either express or implied, is generally subsequent 
 in point of time to the creation of the charter. And yet no 
 charter that we are aware of has been ad.iudged invalid be- 
 cause the law creating it and previously defining its powers, 
 rights, capacities and liabilities did not take effect until the 
 acceptance of the corporate body, or at least a majority of 
 them, was signified." (Lumpkin, J., in Franklin Bridge Co. 
 V. Wood, 14 Ga. 80.) 
 
 The corporation comes into existence on acceptance of the 
 express statutory authority constituting the charter. 
 
 "The simple enactment of the charter for the corporation 
 by the legislature did not create the corporation. It required 
 one act on the part of the persons named in the charter to 
 do that, viz., acceptance of the charter enacted. Sa3^s Grant 
 in his work on Corporations, vide page 13 : 'Nor can a charter 
 be forced on any body of persons who do not choose to accept 
 it'; and again, at page 18, he says: 'The fundamental rule is 
 this: no charter of incorporation is of any effect until it is
 
 37 CHARTER POWERS. §§35,36 
 
 accepted by a majority of the grantees or persons who are 
 to be the corporators under it.' " (Perkins, J., in State v. 
 Dawson, 16 Ind. 40.) 
 
 § 35. The rights and powers of a corporation arise ex- 
 pressly or by necessary implication out of its charter. The 
 charter is a contract which by the constitution of the United 
 States and as well by the constitutions of certain states may 
 not be impaired in its obligations by any state law, unless the 
 power of amendment, alteration or repeal is reserved by the 
 state creating the corporation and prior thereto. The charter 
 is construed strictly against the corporation to the extent that 
 the right or power must affirmatively appear, either expressly 
 or by necessary implication. 
 
 "The whole doctrine of vested rights as applied to the 
 charters of corporations is based upon the Dartmouth College 
 Case, 4 "Wheat. 518, in which the broad proposition was laid 
 down that such charters were contracts within the meaning 
 of the constitution, and hence that an act of the state legis- 
 lature altering a charter in any material respect was uncon- 
 stitutional and void Subsequent cases have settled the 
 
 law that wherever property rights have been acquired by 
 virtue of a corporate charter, such rights, so far as they are 
 necessary to the full and complete enjoyment of the main 
 object of the grant, are contracts and beyond the reach of 
 destructive legislation. Even before the IDartmouth College 
 Case was decided it was held by this court that grants of land 
 made by the crown to colonial churches were irrevocable, and 
 that property purchased by or devised to them prior to the 
 adoption of the constitution could not be diverted to other 
 purposes by the states which succeeded to the sovereign power 
 of the colonies. Terrett v. Taylor, 9 Cranch, 43 ; Town of 
 Pawlet V. Clark, 9 Cranch, 292 ; Society for Propagation of 
 the Gospel v. New Haven, 8 Wheat. 464. 
 
 § 36. "Indeed, the sanctity of charters vesting in grantees 
 the title to lands or other property has been vindicated in a 
 large number of cases. Davis v. Gray, 16 Wall. 203 ; Fletcher 
 V. Peck, 6 Cranch, 87, 137; Moore v. Robbins, 96 U. S. 530; 
 United States v. Schurz, 102 U. S. 378 ; Noble v. Union River 
 Logging R. R., 147 U. S. 165. This court has had, perhaps, 
 more frequent occasion to assert the inviolability of corporate 
 charters in cases respecting the power of taxation than in 
 any other, and in a long series of decisions has held that a
 
 § 37 SUMMARY OF CORPORATION LAW. 38 
 
 clause imposing certain taxes in lieu of all other taxes or of 
 all taxes to which the company or stockholders therein would 
 be subject is impaired by legislation raising the rate of tax- 
 ation or imposing taxes other than those specified in the 
 charter. Thus, in State Bank of Ohio v. Knoop, 16 How. 369, 
 it was held that where by a general banking law it was pro- 
 vided that a certain percentage of dividends should be set off 
 for the use of the state and should be in lieu of all taxes to 
 which the company or stockholders therein would otherwise 
 be subjected, this was a contract fixing permanently the 
 amount of taxation, and that legislation could not thereafter 
 increase it. In this connection it was said by Mr. Justice 
 IMcLean: 'Every valuable privilege given by the charter and 
 which conduced to an acceptance of it and an organization 
 under it is a contract which cannot be changed by the legis- 
 lature where the power to do so is not reserved in the charter. 
 The rate of discount, the duration of the charter, the specific 
 tax agreed to be paid, and other provisions essentially con- 
 nected with the franchise and necessary to the business of 
 the bank cannot, without its consent, become a subject for 
 legislative action.' To the same effect are New Jersey v. 
 Wilson, 7 Cranch, 164 ; Gordon v. Appeal Tax Court, 3 How. 
 133; Dodge v. Woolsey, 18 How. 331; Jefferson Branch Bank 
 V. Skelly, 1 Black, 436 ; McGee v. Mathis, 4 Wall. 143 ; Home 
 of the Friendless v. Rouse, 8 Wall. 430 ; Wilmington R. R. v. 
 Reid, 13 Wall. 264 ; Humphrey v. Pegues, 16 Wall. 244 ; Far- 
 rington v. Tennessee, 95 U. S. 679 ; New Jersey v. Yard, 95 
 U. S. 104 ; Asylum v. New Orleans, 105 U. S. 362. If, how- 
 ever, the charter contain a reservation of an unlimited power 
 to alter, amend or repeal, the legislature may take away 
 an immunity from taxation. Tomlinson v. Jessup, 15 Wall. 
 454. Within the same principle are grants of an exclusive 
 right to supply gas or water to a municipality or to occupy 
 its streets for railway purposes. New Orleans Gas Co. v. 
 Louisiana Light Co., 115 U. S. 650; New Orleans Water 
 Works V. Rivers, 115 U. S. 674; Louisville Gas Co. v. Citizens' 
 Gas Co., 115 U. S. 683 ; St. Tammany Water Works v. New 
 Orleans Water Works, 120 U. S. 64; Boston & LoweU R. R. 
 V. Salem & Lowell R. R., 2 Gray, 1. 
 
 § 37. "So if a company be chartered with power to con- 
 struct and maintain a turnpike, erect toll-gates and collect tolls, 
 such franchise is protected by the constitution. Turnpike Co. 
 V. Illinois, 96 U. S. 63 ; Monongahela Navigation Co. v. United 
 States, 148 U. S. 312. If it be provided in the charter of 
 a bank that the bills and notes of the institution shall be re-
 
 39 CHARTER POWERS. § 38 
 
 ceived in payment of taxes or of debts due to the state, such 
 undertaking on the part of the state constitutes a contract be- 
 tween the state and holders of the notes which the state is 
 not at liberty to break, although notes issued after the repeal 
 of the act are not within the contract and may be refused. 
 Woodruff V. Trapnall, 10 How. 190; Paup v. Drew, 10 How. 
 218 ; Furman v. Nichol, 8 Wall. 44 ; Keith v. Clark, 97 U. S. 
 454 ; Antoni v. Greenhow, 107 U. S. 769 ; Poindexter v. Groen- 
 bow, 114 U. S. 270. And in Planters' Bank v. Sharp, 6 How. 
 301, where a bank was chartered with the usual powers to re- 
 ceive money on deposit, discount bills of exchange and notes, 
 and to make loans, and in the course of its busine.ss the bank 
 discounted and held promissory notes, and the legislature then 
 pa.ssed a law declaring that it should not be lawful for any 
 bank to transfer by indorsement or otherwise any note, bill 
 receivable, or other evidence of debt, it was held that the 
 statute conflicted with the constitution, and was void. It was 
 said in this case that 'a power to dispose of its notes as well 
 as other property may well be regarded as an incident to its 
 business as a bank to discount notes which are required to be 
 in their terms assignable as well as an incident to its right 
 of holding them and other property, when no express limi- 
 tation is imposed upon the power to transfer them.' In 
 each of the above cases, however, the title to property had 
 either become vested in the grantee by operation of law or 
 the exercise of the power granted was so far necessary to the 
 full enjoyment of the main object of the charter that persons 
 subscribing to the stock might be presumed to take into con- 
 sideration and be influenced in their subscriptions by the 
 fact that the corporation was endowed with those privileges 
 during the continuance of the charter. 
 
 § 38. **Such limitations, however, upon the power of the 
 legislature must be construed in subservience to the general 
 rule that grants by the state are to be construed strictly against 
 the grantees, and that nothing will be presumed to pass except 
 it be expressed in clear and unambiguous language. As was 
 said by Mr. Justice Swayne in Fertilizing Co. v. Hyde Park, 
 97 U. S. 659, 666: 'The rule of construction in this class of 
 cases is that it shall be most strongly against the corporation. 
 Every reasonable doubt is to be resolved adversely. Nothing 
 is to be taken as conceded but what is given in unmistakable 
 terms, or by an implication equally clear. The affirmative 
 must be shown. Silence is negation and doubt is fatal to the 
 claim. This doctrine is vital to the public welfare. It is 
 axiomatic in the jurisprudence of this court.' Hence an
 
 § 39 SUMMARY OF CORPORATION LAW. 40 
 
 exclusive right to enjoy a certain franchise is never pre- 
 sumed, and unless the charter contain words of exclusion, it is 
 no impairment of the grant to permit another to do the same 
 thing, although the value of the franchise to the first grantee 
 may be wholly destroyed. This principle Avas laid down at 
 an early date in the case of the Charles River Bridge v. 
 Warren Bridge, 11 Pet. 420, and has been steadily adhered 
 to ever since. Turnpike Co. v. State, 3 Wall. 210; Providence 
 Bank v. Billings, 4 Pet. 514; Pennsylvania R. R. v. Miller, 
 132 U. S. 75. If, however, there be an exclusive provision, 
 as, for instance, in the charter of a bridge company that it 
 shall not be lawful for any person to erect another bridge 
 within a certain distance of the bridge authorized, this con- 
 stitutes an inviolable contract. The Binghampton Bridge, 3 
 Wall. 51. But even in such cases if the second charter be 
 for a similar franchise, but to be exercised in a substantially 
 different manner, the exclusive right conferred by the first 
 charter is held not to be violated ; as, for instance, if the first 
 charter be for an ordinary bridge and the second for a rail- 
 way viaduct impossible for man or beast to cross except in 
 railway cars. Bridge Proprietors v. Hoboken Co., 1 Wall. 
 116. So if the first franchise be for the sole privilege of 
 supplying a city with water from a designated source, it is 
 not impaired by a grant to another party of the privilege to 
 supply it with water from a different source. Stein v. Bien- 
 ville Water Supply Co., 141 U. S. 67. 
 
 "Upon a similar principle it was held in Tucker v. Fergu- 
 son, 22 Wall. 527, that a tax upon lands owned by a railway 
 company and not used, nor necessary, in working the road 
 and in the exercise of its franchise, was not unlawful, though 
 the charter had provided for a certain tax upon the railroad 
 company, and had enacted that such tax should be in lieu 
 of all other taxes to be imposed within the state. See, also, 
 West Wisconsin Ry. v. Supervisors, 93 U. S. 595. 
 
 § 39. "Nor does it follow from the fact that the contract 
 evidenced by the charter cannot be impaired that the power of 
 the legislature over such charter is wholly taken away, since 
 statutes which operate only to regulate the manner in which 
 the franchises are to be exercised and which do not interfere 
 substantially with the enjoyment of the main object of the 
 grant are not open to the objection of impairing the contract. 
 A familiar instance of this class of legislation is that enacted 
 under what is known as the police power. In virtue of this 
 the state may prescribe regulations contributing to the com- 
 fort, safety and health of passengers, the protection of the
 
 41 CHARTER POWERS. § 40 
 
 public at highway crossings or elsewhere, the security of 
 owners of adjacent property, by requiring the track to be 
 fenced, and such appliances to be annexed to the engines as 
 shall prevent the communication of fire to neighboring build- 
 ings. Cooley Prin. Const. Law, 321. This power, as was 
 said by Mr. Justice Miller in the Slaughter-house Cases, 16 
 Wall. 36, 62, is and must be, from its very nature, incapable 
 of any very exact definition or limitation. 'Upon it depends 
 the security of social order, the life and health of the citizen, 
 the comfort of existence in a thickly populated community, 
 the enjoyment of private and social life, and the beneficial 
 use of property.' The following cases show to what extent 
 and for what purposes this power may be exercised. Slaugh- 
 ter-house Cases, 16 AVall. 36 ; Fertilizing Co. v. Hyde Park, 97 
 U. S. 659 ; Beer Co. v. Massachusetts, 97 U. S. 25 ; Patterson 
 v. Kentucky, 97 U. S. 501 ; Barbier v. Conolly, 113 U. S. 27 ; 
 Charlotte Columbia etc. R. R. v. Gibbes, 142 U. S. 386 ; Lawton 
 V. Steele, 152 U. S. 133; Eagle Ins. Co. v. Ohio, 153 U. S. 
 446. And so important is this power and so necessary to the 
 public safety and health, that it cannot be bargained away by 
 the legislature, and hence it has been held that charters for 
 purposes inconsistent with a due regard for the public health 
 or public morals may be abrogated in the interests of a more 
 enlightened public opinion. Stone v. Mississippi, 101 U. S. 
 814; Phalen v. Virginia, 8 How. 163, 168. 
 
 ''In obedience to the same principle it has always been held 
 that the legislature may repeal laws authorizing municipal 
 subscription to railways, though such laws were in existence 
 at the time the railway was chartered and may be supposed 
 to have influenced the promoters and stockholders of the road 
 
 in undertaking its construction The contract protected 
 
 by this clause must also be founded upon a good considera- 
 tion. If it be a mere nude pact, a bare promise to allow a 
 certain thing to be done, it will be construed as a revocable 
 license. 
 
 § 40. "A vested right is defined by Fearne in his work upon 
 Contingent Remainders as 'an immediate fixed right of pres- 
 ent or future enjoyment'; and by Chancellor Kent as 'an 
 immediate right of present enjoyment or a present fixed 
 right of future enjoyment.' 4 Kent Com. 202. It is said 
 by Mr. Justice Cooley that 'rights are vested in contradis- 
 tinction to being expectant or contingent. They are vested 
 when the right to enjoyment, present or prospective, has be- 
 come the property of some particular person or persons as a 
 present intercut. They are expectant when they depend upon 
 the continued existence of the present condition of things
 
 § 41 SUMMARY OF CORPORATION LAW. 42 
 
 until the happening of some future event. They are con- 
 tingent when they are only to come into existence on an event 
 or condition which may not happen or be performed until 
 some other event may prevent their vesting.' Principles of 
 Const. Law, 332. 
 
 "As applied to railroad corporations, it may reasonably 
 be contended that the term extends to all rights of property 
 acquired by executed contracts, as well as to all such rights 
 as are necessary to the full and complete enjoyment of the 
 original grant or of property legally acquired subsequent to 
 such grant. If, for example, the legislature should authorize 
 the construction of a certain railroad, and by a subsequent 
 act should take away the power to raise funds for the con- 
 struction of the road in the usual manner by a mortgage or 
 the power to purchase rolling stock or equipment, such acts 
 might perhaps be treated as so far destructive of the original 
 grant as to render it valueless, although there might in neither 
 case be an express repeal of any of its provisions. Sala v. 
 New Orleans, 2 Woods, 188. 
 
 "But where the charter authorizes the company in sweep- 
 ing terms to do certain things which are unnecessary to the 
 main object of the grant, and not directly and immediately 
 within the contemplation of the parties thereto, the power so 
 conferred, so long as it is unexecuted, is within the control 
 of the legislature and may be treated as a license, and may 
 be revoked if a possible exercise of such power is found to 
 conflict with the interests of the public." (Brown, J., in 
 Pearsall v. Great Northern Ry., 161 U. S. 646.) 
 
 § 41. In construing a provision in a charter of a railroad to 
 unite with other roads, Bro^vn, J., in Louisville & Nashville 
 R. R. Co. V. Kentucky, 161 U. S. 677, said : 
 
 "In construing this section w^e are bound to bear in mind 
 the general rule so often affirmed by this court, that all doubts 
 with regard to the authority granted in a corporate charter 
 are to be resolved against the corporation, and that a sur- 
 render of the power of the legislature in any matter of public 
 concern must never be presumed from uncertain or equivocal 
 expressions. Dubuque & Pacific R. R. v. Litchfield, 23 How. 
 66, 88 ; Delaware Railroad Tax, 18 Wall. 206, 225 ; Bailey v. 
 Maguire, 22 Wall. 215; Slidell v. Grandjean, 111 U. S. 
 412; Belmont Bridge v. Wheeling Bridge, 138 U. S. 287." 
 
 Respecting the reservation of the right to amend, alter or 
 repeal the charter. Field, J., in Tomlinson v. Jessup, 15 Wall. 
 454, said:
 
 43 CHARTER POWERS. § 42 
 
 "The reservation affects the entire relation between the 
 state and the corporation, and places under leuislative con- 
 trol all rights, privileges and immunities derived by its char- 
 ter directly from the state." 
 
 § 42. While charters are construed strictly as above set 
 forth, nevertheless rights and powers necessary to the exercise 
 of those expressl}^ given are implied. 
 
 "Anciently, it seems to have been held that corporations 
 could not do anything without deed. 13 Hen. VIII, 12 ; 4 
 Hen. VII, 6; 7 Ibid. 9. Afterward, the rule seems to have 
 been relaxed, and they were, for convenience sake, permitted 
 to act in ordinary matters without deed ; as to retain a ser- 
 vant, cook, or butler (Plowd. 91b; 2 Saund. 305) ; and grad- 
 ually this relaxation widened to embrace other objects. 
 Bro. Corp. 51; 3 Salk. 191; 3 Lev. 107; Moore, 512. At 
 length, it seems to have been established that though they 
 could not contract directly, except under their corporate seal, 
 yet they might, by mere vote or other corporate act, not under 
 their corporate seal, appoint an agent, whose acts and con- 
 tracts within the scope of his authority would be binding on 
 the corporation. Rex v. Bigg, 3 P. Wms. 419. And courts 
 of equity in this respect, seeming to follow the Inw, have 
 decreed a specific performance of an agreement made by a 
 major part of a corporation and entered in the corporation 
 books, although not under the corporate seal. 1 Fonbl. 305 
 (Phila. ed.), note o. The sole ground upon which such 
 an agreement can be enforced must be the capacity of the 
 corporation to make an unsealed contract 
 
 "The technical doctrine that a corporation could not con- 
 tract except under its seal, or, in other words, could not make 
 a promise, if it ever had been fully settled, must have been 
 productive of great mischiefs. Indeed, as soon as the doctrine 
 was established that its regularly appointed agent could con- 
 tract in their name without seal, it was impossible to support 
 it, for otherwise the party who trusted such contract would 
 be without remedy against the corporation. Accordingly, it 
 would seem to be a sound rule of law that wherever a corpora- 
 tion is acting within the scope of the legitimate purposes of 
 its institution, all parol contracts made by its authorized 
 agents are express promises of the corporation ; and all duties 
 imposed on them by law and all benefits conferred at their 
 request raise implied promises for the enforcement of which 
 an action may well lie. And it seems to the court that ad- 
 judged cases fully support the position. Bank of England
 
 § 43 SUMMARY OF CORPORATION LAW. 44 
 
 V. Moffat, 3 Bro. C. C. 262 ; Rex v. Bank of England, 2 Doug. 
 524, and note; Gray v. Portland Bank, 3 Mass. 364; Worcester 
 Turnpike Corp. v. Willard, 5 Ibid. 80; Gilmore v. Pope, 
 
 5 Mass. 491; Andover & Medford Turnpike Corp. v. Gould, 
 
 6 Mass. 40. 
 
 § 43. "In the case before the court these principles assume 
 a peculiar importance. The act incorporating the Bank of 
 Columbia (act of Maryland, 1793, c. 30) contains no express 
 provision authorizing the corporation to make contracts. And 
 it follows that upon principles of the common law, it might 
 contract under its corporate seal. No power is directly given 
 to issue notes not under seal. The corporation is made 
 capable to have, purchase, receive, enjoy and retain lands, 
 tenements, hereditaments, goods, chattels and effects of what 
 kind, nature or quality soever, and the same to sell, grant, 
 demise, alien or dispose of; and the board of directors are 
 authorized to determine the manner of doing business and the 
 rules and forms to be pursued ; to appoint and pay the various 
 officers, and dispose of the money or credit of the bank in 
 the common course of banking for the interest and benefit of 
 the proprietors. Unless, therefore, a corporation, not ex- 
 pressly authorized, may make a promise, it might be a serious 
 question how far the bank notes of this bank were legally bind- 
 ing upon the corporation, and how far a depositor in the bank 
 could possess a legal remedy for his property confided to the 
 good faith of the corporation. In respect to insurance com- 
 panies also, it would be a difficult question to decide whether 
 the law would enable a party to recover back a premium the 
 consideration of which had totally failed. Public policy, 
 therefore, as well as law, in the judgment of the court, fully 
 justifies the doctrine which w^e have endeavored to establish." 
 (Story, J., in Bank of Columbia v. Patterson, 7 Cranch, 298.) 
 ■ "Now, I am of opinion that though power to make laws 
 [by-laws] is given by special clause to all incorporations, yet 
 it is needless ; for I hold it to be included by law in the very 
 act of incorporating as is also the power to sue, to purchase 
 and the like. For as reason is given to the natural body for 
 the governing of it, so the body corporate must have laws, 
 as a politic reason to govern it ; but those laws must ever be 
 subject to the general law of the realm as subordinate to it. 
 And therefore, though there be no proviso for that purpose, 
 the law supplies it." (Hobart, C. J. ( ?), in Norris v. Stops, 
 1614r-1625 (?), Hobart's Reports, p. 211a.),
 
 45 CHARTER POWERS. § 4-1 
 
 § 44. "The remaining consideration relates to the authority 
 of Sampson to execute the mortgage in behalf of the corpora- 
 tion. It is not necessary that the authority should be given 
 by a formal vote. Such an act by the president and general 
 manager of the business of the corporation, with the knowl- 
 edge and concurrence of the directors, or with their subse- 
 quent and long-continued acquiescence, may properly be re- 
 garded as the act of the corporation. Authority in the agent 
 of a corporation may be inferred from the conduct of its 
 officers or from their knowledge and neglect to make objec- 
 tion, as well as in the case of individuals." (Wells, J., in 
 Sherman v. Fitch, 98 Mass. 59.) 
 
 "To corporations, however erected, there are said to be 
 certain incidents attached without any express words or au- 
 thority for this purpose ; such as the power to plead and be 
 impleaded, to purchase and alien, to make a common seal 
 and to pass by-laws. Com. Dig., 'Franchise,' F. 10, 13." 
 (Story, J., in Bank v. Dandridge, 12 Wheat. 63, p. 66.) 
 
 "The charter of a corporation, read in connection with 
 the general laws applicable to it, is the measure of its powers, 
 and a contract manifestly beyond those powers will not sus- 
 tain an action against the corporation. But whatever, under 
 the charter and other general laws, reasonably construed, may 
 fairly be regarded as incidental to the objects for which the 
 corporation is created, is not to be taken as prohibited. 
 Thomas v. Railroad Co., 101 U. S. 71 ; Attorney General v. 
 Great Eastern Ry. Co., 5 App. Cas. 473 ; Davis v. Old Colony 
 R. R. Co., 131 Mass. 258." (Gray, J., in Green Bay etc. R. 
 R. Co. V. Union etc. Co., 107 U. S. 98.) 
 
 "Conceding the rule applicable to all statutes that what is 
 fairly implied is as much granted as what is expressed, it 
 remains that the charter of a corporation is the measure of 
 its powers, and that the enumeration of these powers implies 
 the exclusion of all others." (Miller, J., in Thomas v. Rail- 
 road Co., 101 U. S. 71, p. 82.) 
 
 "It is a well-settled rule of construction of grants by the 
 legislature to corporations, whether public or private, that 
 only such powers and rights can be exercised under them as 
 are clearly comprehended within the words of the act or de- 
 rived therefrom by necessary implication, regard being had 
 to the objects of the grant. Any ambiguity or doubt arising 
 out of the terms used by the legislature must be resolved in 
 favor of the public." (Nelson, J., in Minturn v, Larue et. 
 al., 23 How. 435, p. 436.)
 
 § 45 SUMMARY OF CORPORATION LAW. 46 
 
 § 45. In Perrine v. Chesapeake & Delaware Canal Co., 9 
 How. 171, in holding that the canal company had no right to 
 demand tolls except as specified and enumerated in the charter 
 of the company, Taney, C. J., said: 
 
 "No toll is given on the vessels themselves, except only 
 when they have no commodities on board, or not sufficient to 
 yield a toll of four dollars. Passengers are not mentioned in 
 the enumeration, nor is any toll given upon a vessel on account 
 of the persons or passengers it may have on board. 
 
 "Now, it is the well-settled doctrine of this court that a 
 corporation created by statute is a mere creature of the law, 
 and can exercise no powers except those which the law confers 
 upon it, or which are incident to its existence. (Head and 
 Armory v. The Providence Ins. Co., 2 Cranch, 127 ; Dartmouth 
 College V. Woodward, 4 Wheat. 636; Bank of the United 
 States V. Dandridge, 12 Wheat. 64; Charles River Bridge v. 
 Warren Bridge, 11 Pet. 544; Bank of Augusta v. Earle, 13 
 Pet. 587.) And as no power is given to this corporation to 
 demand toll from passengers, or from vessels on account of 
 the passengers on board, it is very clear that no such power 
 can be exercised, and no such toll lawfully taken. 
 
 "The principle above stated is also an answer to the argu- 
 ment which places the right of the company to demand toll 
 upon the ground that it is the absolute owner of the works and 
 of the land it occupies, and insists that it may therefore, like 
 any other owner, demand compensation from any person pass- 
 ing over its property. The error of this argument consists 
 in regarding the title of the company to the property in ques- 
 tion as derived to them upon common-law principles, and 
 measuring their rights by the rules of the common law. The 
 corporation has no rights of property except those derived 
 from the provisions of the charter, nor can it exercise any 
 powers over the property it holds except those with which the 
 charter has clothed it. It holds the property only for the 
 purposes for which it was permitted to acquire it — that is, to 
 effectuate the objects for which the legislature created it. 
 And whether it may lawfully demand compensation from a 
 person whom it permits to pass over its property must depend 
 upon the language of the charter, and not upon the rules of 
 the common law. 
 
 "Certainly in this instance the power is not conferred in 
 express terms, nor are any words used from which it can 
 reasonably be implied. It would, indeed, be a most unusual 
 one, and we believe without precedent in any charter here-
 
 47 CHARTER POWERS. § 46 
 
 tofore granted by any state in this Union. For the power 
 claimed is the right to demand toll from every citizen who 
 passes through the canal, and to fix the amount at the 
 discretion of the corporation. In form, it is true, the demand 
 is made on the owner of the vessel engaged in transporting 
 passengers ; but it is immaterial to the passenger whether he 
 is charged with the toll in the increased price of his passage 
 or by a direct tax upon himself. In either case the result is 
 the same, and the power exercised is the same. Such an un- 
 limited power to levy contributions on the public, and one so 
 inconsistent with the ordinary course of legislation upon that 
 subject, and, we may add, so unjust and injurious to the pub- 
 lic, ought not to be sustained in a court of justice, unless it 
 is conferred in plain and express words. It should not be 
 inferred where the slightest doubt could arise and the words 
 are capable of any other construction ; and still less can it be 
 inferred in a charter like this, where the toll granted upon 
 goods and property of every kind is so carefully specified and 
 fixed in the law, and the charter altogether silent in relation 
 to passengers. The contrary inference would seem to be 
 irresistible. ' ' 
 
 § 46. While articles of association filed under a general law 
 are commonly termed the charter, they cannot assume any 
 rights or powers not within the statute. 
 
 "It is argued that the articles of association under the 
 Oregon law, and the memorandum of association, under the 
 Companies' Acts of Great Britain, are themselves the equiva- 
 lent of an act of incorporation by the legislature, and that 
 whatever is found as a grant of power or description of the 
 purpose of the company, set forth in such articles or mem- 
 orandum, is tantamount to a legislative act. A phrase in the 
 opinion of the court in Thomas v. Railroad Co., supra, is 
 cited as supporting this proposition, namely, 'The memoran- 
 dum of association, as Lord Cairns said, stands in the place 
 of a legislative charter.' But what was meant both by Lord 
 Cairns and by this court, was that anything not claimed, 
 granted or described in such instrument in relation to the 
 powers and business of the corporation could not be held to 
 be a part of them by construction ; in other words, that its 
 powers could not exceed those enumerated therein. It was 
 necessarily implied in such a remark that anything in such 
 articles or memorandum not warranted by the statutes in 
 question authorizing the formation of corporate bodies was 
 void for want of authority.
 
 §§47, 48 SUMMARY OF CORPORATION LAW. 48 
 
 "Of course, any authority for the exercise of corporate 
 powers, derived from the laws of Oregon, must be in accord 
 with the constitution of that state and its statutes upon that 
 subject. The constitutional provision, above quoted, that cor- 
 porations shall not be created by special laws, but may be 
 formed under general laws, implies that no private corpora- 
 tion could be created thereafter until such general law had 
 been enacted, and that it thereupon became the fundamental 
 law of the state in regard to all corporations formed under 
 it. It is idle to say, therefore, that any corporation could 
 assume to itself powers of action by the mere declaration in 
 its articles or memorandum that it possessed them." (Miller, 
 J., in Oregon Ry. Co. v. Oregonian Ey. Co., 130 U. S. 1,- 
 p. 25.) 
 
 ACQUIRING AND HOLDING OF REAL PROPERTY BY 
 CORPORATIONS. 
 
 § 47. The right or power of a corporation to acquire and 
 hold land' or real property involves several questions : 
 
 (1) The implied power incident to a corporation as such; 
 
 (2) The extent of statutory authority, prohibition or lim- 
 itation; 
 
 (3) In what cases the individual may question the right. 
 In view of the fact that, historically, the main purpose of 
 
 a corporation has ever been regarded as that of holding prop- 
 erty, that object being the original cause of its adoption in 
 England, the power to hold real property has always been 
 held both in England and America as being naturally inci- 
 dent to a corporation, irrespective of express grant, and sub- 
 ject only to statutory prohibition or limitation. 
 
 § 48. In First Parish in Sutton v. Cole, 3 Pick. (Mass.) 
 232, in holding a devise to a parish for the use of schools valid, 
 Parker, C. J., said: 
 
 "By the common law it was the right of corporations to 
 take and hold property, both real and personal, to their own 
 use, unless restricted by the terms of their charter, or by 
 immemorial usage in such corporations as exist by prescrip- 
 tion. This common-law right has been taken aw^ay in Eng- 
 land by the Statutes of Mortmain, so that now corporations 
 can take and hold real estate only by license from the King or
 
 49 CHARTER PO\^^ERS. § 49 
 
 by act of Parliament, if they derive their power from that 
 source. 1 Bl. Com. 475, Christian's note; Co. Lit. 2. These 
 Statutes of Mortmain seem never to have been re-enacted, 
 adopted or practiced upon in this country, but still it may 
 be inferred from the special power given to various cor- 
 porations by acts of the legislature to hold real estate to a 
 certain limited extent, that corporations created for specific 
 objects would not have the power to take and hold real estate 
 for purposes wholly foreign to those objects." 
 
 In Nicoll V. The New York & Erie R. R. Co., 12 N. Y. 121, 
 in holding that a railroad company incorporated for a limited 
 time could take a fee in lands, Parker, J., said : 
 
 "The company had ample power to purchase lands. It 
 was a power incident at common law to all corporations unless 
 they were especiallv restrained bv their charters or by stat- 
 ute. (2 Kent, 28l'; Co. Litt. 44a, 300b; 1 Kyd's Corp., 76, 
 78, 108, 115; 3 Pick. 239.)" 
 
 To the same effect are: The Banks v. Poitiaux, 3 Rand. 
 (Va.) 136; Widow etc. of Reynolds v. Conners-Stark Co., 
 5 Ohio, 204; Lathrop v. Commercial Bank, 8 Dana (Ky.), 
 114; Thompson v. Waters, 25 Mich. 214; Mallet v. Simpson, 
 94 N. C. 37; People v. La Rue, 67 Cal. 526; Kelly v. People's 
 Trans. Co., 3 Or. 189. 
 
 § 49. Corporations having, therefore, as a natural incident 
 the power to acquire and hold real estate, the extent of their 
 power becomes a question of statutory restriction, express or 
 implied. 
 
 In England, the acquisition and holding of lands by cor- 
 porations is subjected to the stringent restrictions of the 
 Acts of Mortmain, but these statutes have not been re-enacted 
 in this country, except in Pennsylvania and in New York, to 
 the extent of the prohibition contained in the Statute of Wills. 
 
 Statutory authority to acquire and hold land is now given 
 by the corporation laws of the states. 
 
 Statutory restrictions of the power of corporations to ac- 
 quire and hold land are of three classes: (1) Express pro- 
 hibitions as contained in the Mortmain Acts (In re McGraw, 
 111 N. Y. 66) ; (2) Express statutory limitations where au- 
 thority is given by statute to a corporation or class of cor- 
 4
 
 § 50 SUMMARY OF CORPORATION LAW. 50 
 
 porations to acquire and hold land to an amount specified 
 (Hubbard v. Worcester Art Museum (Mass.), 80 N. E. 490) ; 
 (3) Implied statutory limitations confining the acquisition and 
 holding of lands by corporations to those required for the cor- 
 porate purposes specified in the charter and to the extent rea- 
 sonably necessary for those purposes. (Sutton v. Cole, 3 
 Pick. (Mass.) 232; Riley v. Rochester, 9 N. Y. 64; National 
 Home Bldg. etc. Assn. v. Home Sav. Bank, 181 111. 35 (citing 
 authorities); Thweatt v. Bank of Ilopkinsville, 81 Ky. 1; 
 Pacific R. R. Co. v. Seely, 45 Mo. 212 ; State v. Newark, 25 
 N. J. L. 315; Case v. Kelly, 133 U. S. 1; Waldo v. Chicago 
 etc. R. Co., 14 Wis. 625; Cecum v. Sprague Mfg. Co., 34 
 Conn. 529; First M. E. Church v. Dixon, 178 111. 260; People 
 V. Pullman Palace Car Co., 175 111. 125.) 
 
 § 50. The question whether the individual may question 
 the right or power of the corporation to acquire and hold land 
 has given rise to much diversity in the decisions. Where courts 
 have construed the corporation to be utterly without power 
 to take or hold land, such attempted taking has been held 
 void, and subject to question by any individual interested. 
 Thus, in New York, the statute prohibits a corporation from 
 taking by devise, except to the extent authorized by its char- 
 ter, and it is held that a devise to a corporation in excess of 
 its limit authorized by statute is void, and may be questioned 
 by the individual interested. (In re McGraw, 111 N. Y. 66.) 
 In that case, in holding that the heirs and next of kin of the 
 testator could defeat a gift to Cornell University in excess of 
 the amount authorized by charter, Peckham, J., said: 
 
 "A devise to a corporation which is forbidden to take (or 
 forbidden to hold, if the word, under the circumstances of 
 the case, is construed to include a taking also) does not, there- 
 fore, give a title subject to the right of some superior to 
 claim a forfeiture of the land; but if it be in violation of a 
 statute, I think the devise is void, and the land descends to 
 the heir or residuary devisee." 
 
 Similarly in Davidson College v. Chambers, 56 N. C. 253; 
 Wood V. Hammond, 16 R. I. 98 ; House of Mercy v. Davidson,
 
 51 CHARTER POWERS. §§ 51, 52 
 
 90 Tex. 529; Cromil v. Louisville Orphans' Home Soc, 3 
 Bush (Ky.), 365; Heiskell v. Lodge, 87 Tenn. 668. 
 
 § 51. And in many jurisdictions where a corporation has 
 attempted to acquire land for a purpose not authorized by its 
 charter, it has been held a nullity and void, and that an 
 individual interested and not for some reason estopped could 
 raise the question and defeat such acquisition and holding. 
 (Occum Co. v. Sprague Mfg. Co., 34 Conn. 529; National 
 Home etc. Assn. v. Home Sav. Bank, 181 111. 35; Rivanna 
 Nav. Co. V. Dawsons, 3 Gratt. (Va.) 19; Thweatt v. Bank 
 of Hopkinsville, 81 Ky. 1.) 
 
 § 52. Where, however, there is no prohibition, the distinc- 
 tions are pointed out by the supreme court of Massachusetts in 
 the case of Hubbard v. Worcester Art Museum, 80 N. E. 490, 
 where it was held that a devise to a corporation in excess of 
 the amount authorized by the charter was not for that reason 
 necessarily void. Knowlton, C. J., in delivering the opinion 
 of the court, said: 
 
 "Under the feudal system, when land was given to a cor- 
 poration, the chief lords of whom the land was held and the 
 King, as ultimate chief lord, lost their chances of escheat 
 and various other rights and incidents of military tenure. 
 During the Middle Ages the accumulation of land in the 
 ecclesiastical corporations was so great 'as to be thought a 
 national grievance. Hence the English Mortmain Acts, 
 which go back to Magna Charta and Stat. 9, Henry III, 
 chapter 36, and which have continued, with various modi- 
 fications, to this day. (See Stat. 7, Edward I, c. 2; Stat. 
 15, Richard II, c. 5 ; Shelf ord Mortmain, 2, 6, 8, 16, 25, 34, 
 39, 809, 812; Tyssen on Charitable Bequests, 2, 383.) Under 
 these acts the alienations were not void, so as to let in the 
 grantors and their heirs; but they merely operated as a for- 
 feiture which gave a right to the mesne lord and the King 
 to enter after due inquest. This right to enter was often 
 waived by a license in Mortmain. (See citations above and 
 Tyssen on Charitable Bequests, 383; Stat. 7 & 8, William III, 
 c. 37.) In form, these licenses commonly authorized a hold- 
 ing of property 'not exceeding' a certain value. In later 
 years this authority sometimes has been inserted in the char- 
 ter, and this limited power of purchase has, it is said, been
 
 § 53 SUMMARY OF CORPORATION LAW. 52 
 
 exceeded by almost all corporations. ( Shelf ord Mortmain, 
 55. See, also, pages 10, 44, 49, 56, 891 ; Tyssen on Charitable 
 Bequests, 393, 394, 396.) 
 
 "Another act, Stat. 9, George II, chapter 36, which is 
 usually called the 'Mortmain Act' but is called by Tyssen the 
 'Georgian Mortmain Act,' is of a very different nature. One 
 of its purposes, as declared in the preamble, is to avoid 
 'improvident alienations or dispositions made by languishing 
 or dying persons or by other persons to uses called ' charitable 
 uses; to take place after their deaths, to the disherison of 
 their lawful heirs.' Considered in reference to its purposes, 
 it is not properly called a ]\Iortmain Act. It applies only to 
 gifts for charitable uses ; and under it all such gifts, unless 
 made as the statute allows, are absolutely void. 
 
 § 53. "We never have had any real Mortmain Acts in Mas- 
 sachusetts. The nearest approach to one was the provincial 
 statute of 28 George II, Acts 1754, chapter 12, January 12, 
 1755; 3 Prov. Acts, page 778. This made deacons a cor- 
 poration to take gifts for charitable purposes, limited the 
 grants to such as would produce an income not exceeding 
 three hundred pounds a year, and provided that they should 
 be made by deed three months before death, and that all 
 bequests, devises or later grants should be void. This statute 
 related only to gifts to deacons and was repealed b}' Stat. 
 1785, page 532, chapter 51 (February 20, 1786), 1 ^Massa- 
 chusetts Laws, page 282, which re-enacted a part of the law 
 but omitted the provision that gifts not authorized by the 
 act should be void. (Bartlett v. King, 12 Mass. 536-545; 7 
 Am. Dec. 99. See Eev. Laws, c. 37, § 1.) The significance 
 of this reference to English law and to our legislation is, 
 first, that except for this short period, we have never had 
 in Massachusetts any legislation prohibiting charitable gifts 
 to trustees or corporations or providing that any kind of 
 conveyances, devises or bequests to corporations shall be void. 
 On the other hand, the policy of the commonwealth as ex- 
 pressed both by legislation and the decisions of its courts has 
 been exceedingly liberal to testators and public charities. 
 (Sanderson v. White, 18 Pick. 328, 333, 334, 29 Am. Dec. 
 591 ; American Academy v. Harvard College, 12 Gray, 582, 
 595, 596; Saltonstall v. Saunders, 11 Allen, 446; Jackson v. 
 Phillips, 14 Allen, 539-550.) Secondly, the implied limita- 
 tions upon the power of corporations to hold property, which 
 appear in numerous enactments, have been made not in the 
 interest of grantors or devisors or their heirs, but in the 
 interest of the state on considerations of public policy. The
 
 53 CHARTER POWERS. § 53 
 
 general form of those limitations which appears in the stat- 
 ute before us, and with slight variations in special charters 
 (a list of which, 274 in number, granted in this state prior 
 to 1850, has been furnished us through the industry of 
 counsel), corresponds with the form of licenses granted by 
 the Crown in England under the old Mortmain Acts, and 
 sometimes embodied in charters granted by Parliament. Un- 
 der these English acts, grants or devises to a corporation to 
 hold property without a license or in excess of the amount 
 licensed were not void but only voidable by the mesne lord or 
 the King upon entry after inquest according to law. In view 
 of the close relations between Massachusetts and the mother 
 country in early times, this justifies an argument, of con- 
 siderable strength, that the implied limitations in our statutes 
 were intended to have no greater force than the old Mortmain 
 Acts of England, as distinguished from the Georgian Mort- 
 main Act. We start with the inherent right, already referred 
 to, of every corporation to take and hold property at common 
 law by virtue of the act of its creation. This right is recog- 
 nized'in our statutes by implication without express mention. 
 (Rev. Laws, c. 109, §§ 4-6.) What force is to be given to 
 the words 'may hold real and personal estate to an amount 
 not exceeding" $1,500,000'? The respondent contends that 
 their meaning is as if words were added as follows: 'And 
 beyond that amount it shall have no right, as against the 
 commonwealth, and the commonwealth may take proper meas- 
 ures, through action of the attorney general or otherwise, to 
 prevent or terminate such larger holding.' According to the 
 argument, a taking and holding by a corporation above the 
 prescribed amount is under its inherent right. As between 
 it and the state, as the guardian of the public interest, a pro- 
 vision as to amount is made which does not affect its right 
 as to third persons. As to the general legality of the holding 
 except when the state chooses to enforce the law for its own 
 benefit, the condition is similar to that resulting from a statu- 
 tory provision which is merely directory. It is not very 
 unlike the old law as to conveyances to aliens. Such convey- 
 ances, whether by grant or devise, were good against everyone 
 but the state, and could be set aside only after office found. 
 (Fox V. Southack, 12 Mass. 143; Waugh v. Riley. 8 Met. 
 290 ; Judd V. Lawrence, 1 Cush. 531 ; Kershaw v. Kelsey, 100 
 Mass. 561, 97 Am. Dec. 124; 1 Am. Rep. 142.) 
 
 ' ' That this is the effect of such limitations in statutes of this 
 kind, where the title of the corporation is under a grant as 
 distinguished from a devise, seems to be the universal rule. 
 (Vidal v. Philadelphia, 2 How. 127-191, 11 L. Ed. 205-231;
 
 § 54 SUMMARY OF CORPORATION LAW. 54 
 
 Rimyan v. Coster, 14 Pet. 122, 10 L. Ed. 382; Union Nat. v. 
 Matthews, 98 U. S. 621, 25 L. Ed. 188; Cowell v. Colorado 
 Springs Co., 100 U. S. 55-60, 25 L. Ed. 547-550: Jones v. 
 New York Guaranty & I. Co., 101 U. S. 622, 25 L. Ed. 1030 ; 
 National Bank v. Whitney, 103 U. S. 99, 26 L. Ed. 443 ; Fritts 
 V. Palmer, 132 U. S. 282, 33 L. Ed. 317, 10 Sup. Ct. Rep. 93; 
 Leazure v. Hillep;as. supra; Chambers v. St. Louis, 29 Mo. 
 543, 9 L. R. A., N. S. ; Banks v. Poitiaux, 3 Ptand. (Va.) 136, 
 15 Am. Dec. 706 ; Fayette Land Co. v. Louisville & N. R. Co. 
 93 Va. 274, 24 S. E. 1016; Mallett v. Simpson, 94 N. C. 37, 
 55 Am. Rep. 595; Gilbert v. Hole, 2 S. D. 164, 49 N. W. 1; 
 Barrow v. Nashville & C. Turnp. Co., 9 Humph. 304 ; Hough 
 V. Cook County Land Co., 73 HI. 23, 24 Am. Rep. 230; Alex- 
 ander V. Tolleston Club, 110 111. 65; Barnes v. Suddard, 117 
 HI. 237, 7 N. E. 477; Hamsher v. Hamsher, 132 HI. 273, 8 
 L. R. A. 556, 23 N. E. 1123; Baker v. Neff, 73 Ind. 68-70.) 
 .... Some judges, in holding that such titles cannot be 
 taken under wills, endeavor to found a distinction upon the 
 executed character of a title by grant, and suggest that a de- 
 vise or bequest is executory. It seems to us there is no good 
 reason for the distinction. When a will is proved and al- 
 lowed, it takes effect immediately to pass all property affected 
 by it. The provision in the law against large holdings by 
 corporations has no relation to the probate of the will. The 
 act of the testator in executing the will is confirmed and 
 given effect as a complete and executed disposition of the 
 property, by the allowance of the will. In this respect a 
 recorded will does not materially differ from a delivered deed. 
 The heirs at law are bound by one as well as by the other. 
 
 § 54. "The decisions upon the precise point at issue are con- 
 flicting. In Jones v. Habersham, 107 U. S. 174, 27 L. Ed. 401, 
 2 Sup. Ct. Rep. 336, a case similar to that now before us, it was 
 held by the court in an opinion by Mr. Justice Gray that 're- 
 strictions imposed by the charter of a corporation upon the 
 amount of property that it may hold cannot be taken advan- 
 tage of collaterally by private persons.' In the same case, in 
 the circuit court, the question had been considered previously, 
 and the same result was reached, in an opinion by Mr. Justice 
 Bradley, of the supreme court of the United States, which 
 is found in 3 Woods, 443-475, Fed Cas. No. 7,465. The same 
 rule is established in ]Marvland. (Hanson v. Little Sisters 
 of the Poor, 79 Md. 434, 32 L. R. A. 293, 32 Atl. 1052 ; Re 
 Stickney (Congregational Church Bldg. Soc. v. Everitt), 85 
 Md. 79-104, 60 Am. St. Rep. 308, 35 L. R. A. 693, 36 Atl. 
 654.) Re Camp v. Dobbins, 29 N. J. Eq. 36-40, was decided
 
 55 CHARTER POWERS. § 54 
 
 by the diancellor on this ground. The decree was affirmed 
 on another ground in the court of errors and appeals ('S\ N. 
 J. Eq. 671-690), in an opinion by Beasley, C. J., which con- 
 tains a dictum disapproving of the view of the chancellor. 
 In Farrington v. Putnam, 90 Me. 405, 38 L. R. A. 339, 37 
 Atl. 652, tile court, in a very elaborate opinion, in a case iden- 
 tical in its leading features with that now before us. held that 
 the gift was good. The same doctrine is stated in Brigham 
 V. Peter Bent Brigham Hospital (C. C), 126 Fed. 796-801, 
 67 C. C. A. 393, 134 Fed. 513-527. It is also stated in text- 
 books. (Purdy 's Beach Corp., § § 5795-5797 ; 2 Thomp. Corp.. 
 §§ 5795-5797.) The leading case which presents the oppo- 
 site view is Re McGraw, supra (111 N. Y. 66). Although 
 the decision necessarily puts a construction upon a statute 
 of that state, this construction seems to be materially affected 
 by the policy of New York in reference to charities. Said 
 Judge Peckham, who delivered the opinion: 'We have a de- 
 cided mortmain policy. It is found in our statute relating 
 to wills prohibiting a devise to a corporation, unless specially 
 permitted by its charter or by isome statute to take property 
 by devise.' In Chamberlain v. Chamberlain, 43 N. Y. 424, 
 the court refers to the prohibition of devises, and to Laws 
 1860, chapter 360, page 607, still in force, which makes void 
 all bequests or devises to charity in excess of one-half the tes- 
 tator's property where he leaves relatives. Other statutes 
 have been passed limiting the amount that can be devised to 
 certain corporations by one testator, forbidding a devise or 
 bequest to charities by a person leaving relatives of more than 
 one-fourth of his estate, and making void such gifts where 
 the will was executed within two months before the death of 
 the testator. (4 Heydecker's Gen. Laws (1901), c. 53, pp. 
 4885, 4891, 4892.) The policy of that state in regard to 
 charities has been very unfavorable. (See Allen v. Stevens, 
 161 N. Y. 122-139, 140, 55 N. E. 568 ; People v. Powers, 147 
 N. Y. 104, 35 L. R. A. 502, 41 N. E. 432; Fosdick v. Hemp- 
 stead, 125 N. Y. 581, 11 L. R. A. 715, 26 N. E. 801.) 
 
 "The doctrine of the New York court is stated as the law 
 in Davidson College v. Chambers, 56 N. 0. (3 Jones Eq.) 253, 
 and adopted in Wood v. Hammond, 16 R. I. 98-115, 17 Atl. 
 324, 18 Atl. 198, and House of Mercy v. Davidson, 90 Tex. 
 529, 39 S. W. 924. In the case in North Carolina the decision 
 was by two of the three judges of the court, the chief justice 
 giving an able dissenting opinion. The courts in Kentucky 
 and Tennessee have expressed approval of the McGraw case 
 in New York, but in terms that do not leave the grounds of 
 their decisions entirely clear. (Cromie v. Louisville Orphans'
 
 §§ 55, 56 SUMMARY OP CORPORATION LAW. 56 
 
 Home Soc, 3 Bush, 365-383; Hciskell v. Chickasaw Lodore 
 No. 8 I. 0. 0. F., 87 Tenn. 668-685, 4 L. R. A. 699, 11 S. W. 
 825.) In reference to supposed errors in the opinion in the 
 last case, see Pritchard on Wills, § 153, note, and Farrington 
 V. Putnam, 90 Me. 405-433, 38 L. R. A. 339, 37 Atl. 652." 
 
 § 55. In holding a conveyance to a national bank for a pur- 
 pose not authorized by the charter not void but voidable, 
 Hughes, J., in Kerfoot v. Farmers & Merchants' Bank, 218 
 U. S. 281, said (p. 286) : 
 
 "In the absence of a clear expression of legislative inten- 
 tion to the contrary, a conveyance of real estate to a corpora- 
 tion for a purpose not authorized by its charter is not void, 
 but voidable, and the sovereign alone can object. Neither the 
 grantor nor his heirs nor third persons can impugn it upon 
 the ground that the grantee has exceeded its powers. Smith 
 V. Sheeley, 12 Wall. 358; National Bank v. Matthews, 98 U. 
 S. 621; National Bank v. Whitney, 103 U. S. 99; Reynolds 
 V. Crawfordsville Bank, 112 U. S. 405; Fritts v. Palmer, ]32 
 U. S. 282." 
 
 § 56. Where the taking and holding of land by the corpora- 
 tion is not expressly prohibited or void by reason of being 
 clearly for purposes other than those granted by the charter, 
 the rule is now generally established that only the state can 
 question the right of the corporation to take in cases where the 
 land has passed through the corporation or title has vested in 
 the corporation, subject only to such question. (Saunders v. 
 Farmer, 62 N. H. 572 ; Chicago B. & Q. R. Co. v. Lewis, 53 
 Iowa, 101; California State Tel. Co. v. Alta Teleg. Co., 22 
 Cal. 398 ; Hamsher v. Hamsher, 132 111. 273 ; Hough v. Cook 
 County Land Co., 73 111. 23; In re Stickney, 85 Md. 79; 
 Brigham v. Peter Bent Brigham Hospital, 126 Fed. 796; 
 Eliot's Appeal, 74 Conn. 586; Kelly v. People's Transporta- 
 tion Co., 3 Or. 189; Natoma Water etc. Co. v. Clarkin, 14 
 Cal. 544; Hay ward v. Davidson, 41 Ind. 212; Jones v. Haber- 
 sham, 107 U. S. 174 ; Fritts v. Palmer, 132 U. S. 282 ; Kerfoot 
 v. Farmers & Merchants' Bank, 218 U. S. 281; Thompson, 2d 
 ed., § 2391.) 
 
 But where, by reason of the transaction being executory, 
 the corporation must ask the aid of the court to perfect its
 
 57 CHARTER POWERS. § 56 
 
 right, the individual interested may question the power of the 
 corporation. (Case v. Kelly, 133 U. S. 21; Coleman v. S. R. 
 T. R. Co., 49 Cal. 517 ; Pacific R. Co. v. Seely, 45 Mo. 212 ; 
 South & N. A. R. Co. V. Highland Ave. & B. R. Co., 119 
 Ala. 105 J United States v. Northern Pac. R. Co., 152 U. S. 
 284.)
 
 §§ 60, 61 SUMMARY OF CORPORATION LAW. 58 
 
 CHAPTER IV. 
 
 ULTRA VIRES TRANSACTIONS. 
 
 § 60. A contract or transaction of a corporation not au- 
 thorized expressly or impliedly by its charter, being for that 
 reason usually termed ultra vires, has no legal validity, and 
 will not on any ground be recognized or enforced by the courts, 
 for the reason that such contracts are void per se and that it is 
 contrary to public policy to validate and breathe life judi- 
 cially into usurpation of rights and powers by corporations. 
 On the other hand, it is manifestly unjust for a corporation 
 to receive the benefit of a contract and then shake off the bur- 
 den by denying its own authority to enter into the contract. 
 This dilemma has resulted in some confusion in the adjudi- 
 cated cases dealing with ultra vires contracts and transactions 
 with attempted distinctions not always adhered to between 
 executed, partly executed and executory contracts, the mass, 
 as a whole, being leavened but not clarified by the frequent 
 use of the word "estoppel," of much or little meaning. It 
 is now pretty well settled, however, that an ultra vires con- 
 tract or transaction has no legal validity, and is regarded 
 and treated as such by the courts, but that where it has been 
 so far executed on both sides that it is vain to attempt to re- 
 store the parties to the status in which they would be but for 
 the contract or transaction, the courts leave them where they 
 find them, and where the contract or transaction has been 
 partly executed, the courts will, in cases where justice requires 
 it, and in a quantum meruit or other appropriate proceeding 
 instituted for the purpose, enforce restoration, so far as may 
 be possible, of the status of the parties, if there had been no 
 sueii contract or transaction, not by way of recognizing the 
 contract, but on the basis of its being a nullity. 
 
 § 61. "A contract of a corporation, which. is ultra vires, in 
 the pr-oper sense, that is to say, outside the object of its creation 
 as defined in the law of its organization, and therefore beyond
 
 59 ULTRA VIRES TRANSACTIONS. § 62 
 
 the powers conferred upon it by the legislature, is not voidable 
 only, but wholly void and of no legal effect. The objection 
 to the contract is not merely that the corporation ought not 
 to have made it, but that it could not make it. The contract 
 cannot be ratified by either party, because it could not have 
 been authorized by either. No performance on either side 
 can give the unlawful contract any validity or be the founda- 
 tion of any right of action upon it. 
 
 "When a corporation is acting within the general scope of 
 the powers conferred upon it by the legislature, the corpora- 
 tion, as well as persons contracting with it, may be estopped 
 to deny that it has complied with the legal formalities which 
 are prerequisite to its existence or to its action, because such 
 requisites might, in fact, have been complied with. But when 
 the contract is beyond the powers conferred upon it by existing 
 laws, neither the corporation nor the other party to the con- 
 tract can be estopped, by assenting to it, or by acting upon 
 it, to show that it was prohibited by those laws. 
 
 "The doctrine of the common law, by v.'hich a tenant of real 
 estate is estopped to deny his landlord's title, has never been 
 considered by this court as applicable to leases by railroad 
 corporations of their roads and franchises. It certainly has 
 no bearing upon the question whether this defendant may set 
 up that the lease sued on, which is not of real estate, but of 
 personal property, and which includes, as inseparable from 
 the other property transferred, the inalienable franchise of the 
 plaintiff, is unlawful and void, for want of legal capacity in 
 the plaintiff to make it. 
 
 § 62, "A contract ultra vires being unlawful and void, not 
 because it is in itself immoral, but because the corporation, by 
 the law of its creation, is incapable of making it, the courts, 
 v^'hile refusing to maintain any action upon the unlawful con- 
 tract, have always striven to do justice between the parties, 
 so far as could be done consistently with adherence to law, 
 by permitting property or money, parted with on the faith 
 of the unlawful contract, to be recovered back or compensa- 
 tion to be made for it. 
 
 "In such case, however, the action is not maintained upon 
 the unlawful contract, nor according to its terms; but on an 
 implied contract of the defendant to return or, failing to do 
 that, to make compensation for property or money which it 
 has no right to retain. To maintain such an action is not to 
 af!irm, but to disaffirm, the unlawful contract. 
 
 "The ground and the limits of the rule concerning the rem- 
 edy, in the case of a contract ultra vires which has been
 
 § 63 SUMMARY OF CORPORATION LAW. 60 
 
 partly performed and under which property has passed, can 
 hardly be summed up better than they were by Mr. Justice 
 Miller in a passage already quoted, where he said that the 
 rule 'stands upon the broad ground that the contract itself is 
 void and that nothing which has been done under it, nor the 
 action of the court, can infuse any vitality into it'; and that 
 'where the parties have so far acted under such a contract that 
 they cannot be restored to their original condition, the court 
 inquires if relief can be given independently of the contract 
 or whether it will refuse to interfere as the matter stands.' 
 Pennsylvania R. R. v. St. Louis etc. R. R., 118 U. S. 317." 
 (Gray, J., in holding an action for suit under an ultra vires 
 lease not maintainable, in Central Transp. Co. v. Pullman's 
 Car Co., 139 U. S. 24, p. 59.) 
 
 § 63. In allowing recovery by way of quantum meruit of 
 property parted with under an ultra vires lease, Peckham, J,, 
 in Pullman's Car Co. v. Transportation Co., 171 U. S. 138, 
 p. 149, said: 
 
 "This brings us to a discussion of the principles upon which 
 a recovery in this case should be founded. The so-called lease 
 mentioned in this case has been already pronounced illegal 
 and void by this court. (139 U. S. 24.) The contract or 
 lease was held to be unlawful and void because it was beyond 
 the powers conferred upon the Central Company by the legis- 
 lature, and because it involved an abandonment by that com- 
 pany of its duty to the public It was argued on the 
 
 part of the Central Company that even if the contract sued on 
 were void, yet that having been fully performed on the part 
 of the lessor, and the benefits of it received by the lessee for 
 the period covered by the declaration in that case, the de- 
 fendant should be estopped from setting up the invalidity of 
 the contract as a defense to the action to recover compensation 
 for that period. But it was answered that this argument, 
 though sustai'ned by the decisions in some of the states, finds 
 no support in the judgment of this court, and cases in this 
 court were cited in which such recoveries were denied. 
 
 "It is true that courts in different states have allowed a 
 recoverv in such cases, among the latest of which is the case 
 of Bath Gas Light Co. v. Clatfy, 151 N. Y. 24, where Chief 
 Judge Andrews, of the court of appeals, examines the various 
 cases, and that court concurred with him in permitting a re- 
 covery of rent upon a void lease, where the lessee had en- 
 joyed the benefits of the possession of the property of the
 
 61 ULTRA VIRES TRANSACTIONS. § 64 
 
 lessor (luring the time for which the recovery of rent was 
 sought. 
 
 "But in the case of this lease now before the court, a re- 
 covery of the rent due thereunder was denied the lessor, al- 
 though the lessee had enjoyed the possession of the property 
 in accordance with the terms of the lease, .... and the opin- 
 ion of the court ended with the statement that 'Whether this 
 plaintiff could maintain any action against this defendant in 
 the nature of a quantum meruit or otherwise independently 
 of the contract, need not be considered, because it is not pre- 
 sented by this record and has not been argued. This action, 
 according to the declaration and evidence, was brought and 
 prosecuted for the single purpose of recovering sums which 
 the defendant had agreed to pay by the unlawful contract, 
 and which, for the reasons and upon the authorities above 
 stated, the defendant was not liable for. ' 
 
 § 64. "The principle is not new, but, on the contrary, it has 
 been frequently announced, commencing in cases considerably 
 over a hundred years old. It was said by Lord Mansfield, in 
 Holman v. Johnson, 1 Cowp. 341, decided in 1775, that 'the ob- 
 jection that a contract is immoral or illegal as between the 
 plaintiff and defendant sounds at all times very ill in the 
 mouth of the defendant. It is not for his sake, however, that 
 the objection is ever allowed; but it is founded in general 
 principles of policy, which the defendant has the advantage 
 of, contrary to the real justice as between him and the plain- 
 tiff — by accident, if I may say so. The principle of public 
 policy is this: ex dolo malo non oritur actio. No court will 
 lend its aid to a man who founds his cause of action upon an 
 immoral or an illegal act.' 
 
 "The cases upholding this doctrine are numerous and em- 
 phatic They are substantially unanimous in express- 
 ing the view that in no way and through no channels, directly 
 or indirectly, will the courts allow an action to be maintained 
 for the recovery of property delivered under an illegal con- 
 tract, where in order to maintain such recovery it is necessary 
 to have recourse to that contract. The right of recovery must 
 rest upon a disaffirmance of the contract, and it is permitted 
 only because of the desire of courts to do justice as far as 
 possible to the party who has made payment or delivered prop- 
 erty under a void agreement, and which in justice he ought to 
 recover. But courts will not, in such endeavor, permit 
 any recovery which will weaken the rule founded upon the 
 principles of public policy already noticed."
 
 §§ 65, 66 SUMMARY OF CORPORATION LAW. 62 
 
 § 65. "The doctrine of ultra vires by which a contract made 
 by a corporation beyond the scope of its corporate powers is 
 unlawful and void, and will not support an action, rests, as this 
 court has often recognized and affirmed, upon three distinct 
 grounds: The obligation of anyone contracting with a cor- 
 poration to take notice of the legal limits of its powers ; the 
 interest of the stockholders not to be subject to risks which 
 they have never undertaken ; and above all, the interest of the 
 public that the corporation shall not transcend the powers 
 conferred upon it by law. Pearce v. Madison & Indianapolis 
 R. R., 21 How. 441 ; Pittsburg etc. Ry. v. Keokuk & Hamil- 
 ton Bridge Co., 131 U. S. 371, 384; Central Transp. Co. v. 
 Pullman's Car Co., 139 U. S. 24, 48. 
 
 "When the corporation is created by a charter granted by 
 the legislature, any person dealing with it is bound to take 
 notice of the terms of the charter and of the general laws re- 
 stricting or defining the powers of the corporation. Pearce 
 V. Madison & Indianapolis R. R., above cited; Zabriskie v. 
 Cleveland etc. R. R!, 23 How. 381, 398; Thomas v. Railroad 
 Co., 101 U. S. 71 ; Penn.sylvania R. R. v. St. Louis R. R., 118 
 U. S. 290, 630. In like manner, when the corporation is 
 formed under general laws, by the recording or filing in a 
 public office of the required articles of association and cer- 
 tificate, any person dealing with the association is bound to 
 take notice of the documents recorded or filed, upon which, 
 as authorized and controlled by the general laws, depend the 
 existence of the corporation, the extent of its corporate powers, 
 and its capacity to act as a corporation. Oregon Ry. v. Ore- 
 gonian Ry., 130 U. S. 1, 25; Central Transp. Co. v. Pullman's 
 Car Co., above cited." (Gray, J., in holding that a lease 
 made by a national bank before being authorized to do busi- 
 ness was void and not capable of being enforced by estoppel 
 or otherwise, in McCormick v. Market Bank, 165 U. S. 538, 
 p. 549.) 
 
 § 66. "Whatever divergence of opinion may arise on this 
 question from conflicting adjudications in some of the state 
 courts, in this court it is settled in favor of the right of the cor- 
 poration to plead its want of power, that is to say, to assert 
 the nullity of an act which is an ultra vires act. The cases of 
 Thomas v. Railroad Co., 101 U. S. 71, Pennsylvania R. R. v. St. 
 Louis etc. R. R., 118 U. S. 290, Oregon Ry. & Nav. Co. v. Ore- 
 gonian Ry. Co., 130 U. S. 1, Pittsburg etc. Ry. v. Keokuk & 
 Hamilton Bridge Co., 131 U. S. 371, Central Transp. Co. v. 
 Pullman's Car Co., 139 U. S. 24, St. Louis etc. R. R. v. Terre 
 Haute & Indianapolis R. R., 145 U. S. 393, Union Pacific Ry.
 
 C3 ULTRA VIRES TRANSACTIONS. §§ 67, 68 
 
 V. Chicago etc. Ry., 163 U. S. 564, and :MeCormick v. Market 
 Nat. Bank, 165 ij. S. 538, recognize as sound doctrine that 
 the powers of corporations are such only as are conferred upon 
 them by statute The doctrine thus enunciated is like- 
 wise that which obtains in England. Ashbury Railway Car- 
 riage & Iron Co. V. Riche, L. R. 7 H. L. 653 ; Attorney General 
 V. Great Eastern Ry. Co., 5 App. Cas. 473; Baroness Wenlock 
 V. The River Dee Co., 10 App. Cas. 354; Trevor v. Whitworth, 
 12 App. Cas. 409; Ooregum Gold ]\lin. Co. of India v. Roper, 
 [1892] App. Cas. 125; Mann v. Edinburgh Northern Tram- 
 ways, [1893] App. Cas. 69." (White, J., in California Bank 
 V. Kennedy, 167 U. S. 362, p. 367.) 
 
 § 67. The rule that contracts ultra vires the charter of a 
 corporation are void and will not be enforced nor recognized as 
 having validity is thus well established in the United States 
 supreme court and in the English courts. The only departure 
 in the United States supreme court is perhaps the attitude of 
 the court in cases of real property conveyed to a corporation in 
 excess of charter powers. There can be no difference in prin- 
 ciple whether the subject matter of an ultra vires contract be 
 land or something else, except upon the theory illustrated 
 supra, that in America, as well as in England, a corporation 
 has implied power to hold land except as positively prohibited 
 from so doing. The court, however, has gone very far in 
 holding that a conveyance of land to a corporation cannot be 
 questioned collaterally, not merely where it is ultra vires but 
 even when expressly prohibited. Such a rule cannot be sup- 
 ported consistently with the general rule respecting ultra vires 
 contracts heretofore set out, except on the ground, possibly, 
 in particular cases that, the contract being executed, the court 
 is unable in the particular instance to restore the parties to 
 the status quo. 
 
 § 68. In Fritts v Balmer, 132 U. S. 282, in an action in 
 ejectment, in holding that a conveyance to a foreign corpora- 
 tion contrary to express statutory prohibition could not be 
 questioned by the plaintiff, Harlan, J., in delivering the 
 opinion of the court, said : 
 
 "In National Bank v. Matthews, 98 U. S. 621, 627, the ques- 
 tion was directly presented whether a national bank was en-
 
 § 68 SUMMARY OF CORPORATION LAW. 64 
 
 titled to the benefit of a deed of trust upon real estate which 
 with the note described in it was taken — not as security for, 
 or in satisfaction of, debts previously contracted in the course 
 of its dealings, but — for a loan made by the bank at the time 
 the deed of trust was assigned to it. The supreme court of 
 Missouri held the deed of trust to be void in the hands of the 
 bank, because its loan was made upon real estate security in 
 violation of the statute. But this court, after observing that 
 the result insisted upon did not necessarily follow, said : 
 
 " 'The statute does not declare such a security void. It is 
 silent upon the subject. If Congress so meant, it would have 
 been easy to say so ; and it is hardly to be believed that this 
 would not have been done, instead of leaving the question to 
 be settled by the uncertain result of litigation and judicial 
 decision. Where usurious interest is contracted for, a for- 
 feiture is prescribed and explicitly defined.' Again: 'Where 
 a corporation is incompetent by its charter to take a title to 
 real estate, a conveyance to it is not void but only voidable, 
 and the sovereign alone can object. It is valid until assailed 
 in a direct proceeding instituted for that purpose. ' 
 
 "In National Bank v. Whitney, 103 U. S. 99, 103, which in- 
 volved the validity of a mortgage to a national bank to secure 
 future advances made to the mortgagor, the right of the bank 
 to enforce the mortgage was sustained upon the principles an- 
 nounced in National Bank v. Matthews. The court said: 
 'Whatever objection there may be to it as security for such 
 advances from the prohibitory provisions of the statute, the 
 objection can only be urged by the government.' To the same 
 effect are Swope v. Leffingwell, 105 U. S. 3, and Revnolds v. 
 Crawfordsville Bank, 112 U. S. 405, 412. 
 
 "In Smith v. Shelley, 12 Wall. 358, 361, which was an ac- 
 tion of ejectment, the question was collaterally raised as to the 
 validity of the title acquired by a banking institution, under 
 a deed of the premises, in consideration of a certain sum paid 
 by it to the grantor. The bank was created by an act of the 
 territorial legislature of Nebraska, with power 'to issue bills, 
 deal in exchange and buy and possess property of every kind.* 
 But when that act passed there was in force an act of Con- 
 gress which provided that 'no act of the territorial legislature 
 of any of the territories of the United States, incorporating 
 any bank or any institution with banking powers or privileges 
 hereafter to be passed, shall have any force or effect whatever, 
 until approved and confirmed by Congress.' The act of the 
 territorial legislature incorporating the bank above referred 
 to never was approved or confirmed by Congress. It was 
 urged, as an objection to the deed made to the bank — upon
 
 65 ULTRA VIRES TRANSACTIONS. § 69 
 
 which deed one of the parties relied — that it was not a com- 
 petent grantee to receive title. This court said: 'It is not 
 denied that the bank was duly organized in pursuance of the 
 provisions of an act of the legislature of the territory of 
 Nebraska; but it is said it had no right to transact business 
 until the charter creating it was approved by Congress. This 
 is so, and it could not legally exercise its powers until this 
 approval was obtained; but this defect in its constitution can- 
 not be taken advantage of collaterally. No proposition is 
 more thoroughly settled than this, and it is unnecessary to 
 refer to authorities to support it. Conceding the bank to be 
 guilty of usurpation, it was still a body corporate de facto, 
 exercising at least one of the franchises which the legislature 
 attempted to confer upon it; and, in such a case, the party 
 who makes a sale of real estate to it is not in a position to ques- 
 tion its capacity to take the title, after it has paid the con- 
 sideration for the purpose. If, prior to the execution of the 
 deed, there had been a judgment of ouster against the corpora- 
 tion at the instance of the government, the aspect of the ease 
 would be different.' See, also, Myers v. Croft, 13 Wall. 291, 
 295 ; Jones v. Guaranty and Indemnity Co., 101 U. S. 622, 628 ; 
 Fortier v. New Orleans Bank, 112 U. S. 439, 451. 
 
 "To the above cases may be added those holding that an 
 alien may take by deed or devise and hold against anyone but 
 the sovereign until office found: Cross v. De Valle, 1 Wall. 1, 
 13 ; Governeur v. Robertson, 11 Wheat. 332 ; National Bank v. 
 Matthews, 98 U. S. 621, 628 ; Phillips v. Moore, 100 U. S. 208. 
 Also those holding that the question whether a corporation, 
 having capacity to purchase and hold real estate for certain 
 defined purposes, or in certain quantities, has taken title to 
 real estate for purposes not authorized by law, or in excess of 
 the quantity permitted by its charter concerns only the state 
 within whose limits the property is situated. It cannot be 
 raised collaterally by private persons unless there be something 
 m the statute expressly or by necessary impli'cation authoriz- 
 ing them to do so: Cowell v. Springs Co., 100 U. S. 55, 60; 
 Jones V. Habersham, 107 U. S. 174, 188." 
 
 § 69. Miller, J., dissenting from this opinion of Harlan, J., 
 said (p. 294) : 
 
 "I can conceive of eases where corporations have been au- 
 thorized to acquire a limited amount of real estate such as the 
 legislature may conceive to be useful and necessary to the pur- 
 pose for which they are organized, or to take property for 
 specific uses, in which the question as to whether they have ex- 
 5
 
 § 70 SUMMARY OF CORPORATION LAW. 66 
 
 ceeded that amount or perverted the use may be one for the 
 state alone and not of any private citizen. But the positive 
 declaration that a corporation shall not purchase or hold real 
 estate, which is not a grant of power, but an express denial 
 of its power to hold any real estate under the circumstances 
 mentioned, is, in my opinion, destructive of the right to hold 
 any real estate at ail under those circumstances. Whenever it 
 is shown that any of these corporations have not complied with 
 the requirements of the statute, they are forbidden to purchase 
 or hold real estate. Any such purchase is therefore void. It 
 is the positive declaration of the law of the land. The title 
 does not pass, and it needs no inquest on the part of the state 
 to establish that fact. The title which would have passed if 
 the corporation had a right to purchase does not pass. It re- 
 mains in the party who attempted to grant or convey it. The 
 grantee can neither purchase nor hold real estate. The as- 
 sumption of the opinion of the court is that it may purchase 
 and it may hold real estate." 
 
 § 70. In holding that the court would not enforce an un- 
 executed contract for the conveyance of lands to a corporation 
 unauthorized by its charter to hold the lands, Miller, J., in 
 Case V. Kelly, 133 U. S. 21, p. 28, said: 
 
 "It is next objected to the principle adopted by the court 
 that the limitation upon the power of the corporation to re- 
 ceive land is one which concerns the state alone, and the title 
 to such lands in a corporation can only be defeated by a pro- 
 ceeding in the nature of a quo warranto on behalf of the state. 
 The case of National Bank v. Matthews, 98 U. S. 621, is strenu- 
 ously relied on to support this view. We need not stop here 
 to inquire whether this company can hold title to lands which 
 it is impliedly forbidden to do by its charter, because the case 
 before us is not one in which the title to the lands in ques- 
 tion has ever been vested in the railroad company or attempted 
 to be so vested. The railroad company is plaintiff in this ac- 
 tion and is seeking to obtain the title to such lands. It has 
 no authority by the statute to receive such title and to own 
 such lands, and the question here is not whether the courts 
 would deprive it of such lands if they had been conveyed to 
 it, but whether they will aid it to violate the law and obtain a 
 title which it has no power to hold. We think the questions 
 are very different ones, and that while a court might hesitate 
 to declare the title to lands received already and in the posses- 
 sion and ownership of the company void, on the principle that 
 they had no authority to take such lauds, it is very clear that
 
 67 ULTRA VIRES TRANSACTIONS. § 71 
 
 it will not make itself the active agent in behalf of the com- 
 pany in violating the law and enabling the company to do that 
 which the law forbids." 
 
 In holding a bequest to a corporation of property in excess 
 of the amount authorized by the charter valid, Gray, J., in 
 Jones V. Habersham, 107 U. S. 174, p. 188, said: 
 
 "Restrictions imposed by the charter of a corporation upon 
 the amount of property that it may hold cannot be taken 
 advantage of collaterally by private persons, but only in a 
 direct proceeding bv the state which created it. Runyan v. 
 Coster, 14 Pet. 122,^131; Smith v. Shelley, 12 Wall. 358, 361; 
 Bogardus v. Trinity Church, 4 Sand. Ch. (N. Y.) 633, 758; 
 De^Camp v. Dobbins, 29 N. J. Eq. 36 ; Davis v. Old Colony R. 
 R. Co., 131 Mass. 258, 273." 
 
 § 71. In view of Case v. Kelly, supra, however, it is prob- 
 able that this rule expressed in Jones v. Habersham will be 
 confined, in instances of statutory prohibition, to cases where 
 contracts and transactions have so far been executed that 
 it is practically impossible for the court to do justice to the 
 parties by its interposition. 
 
 It is to be noted, moreover, that in cases where a corporation 
 is authorized by its charter to hold land for certain purposes, 
 the question whether any particular piece of land is within the 
 authorized purposes may not be inquired into collaterally, for 
 the reason, among others, that the public, in dealing with the 
 corporation, should not be required, for obvious reasons of pub- 
 lic policy, to take the risk of a right or erroneous decision upon 
 the question for the determination of which they cannot ordi- 
 narily have requisite facts and data. 
 
 In Cowell V. Springs Co., 100 U. S. 55, p. 60, Field, J., said: 
 
 ** A corporate body competent to exercise some of the powers 
 mentioned was created, and under the statute of the territory 
 could acquire and hold or convey, by deed or otherwise, any 
 real or personal estate whatever, necessary to enable it to carry 
 on its business. Whether the particular premises in contro- 
 versy are necessary for that business is not important; that is 
 a matter between the government of the state, succeeding that 
 of the territory and the corporation and is no concern of the 
 defendant. It Avould create great inconvenience, and embar- 
 rassments if in actions by corporations to recover the posses-
 
 § 75 SUMMARY OF CORPORATION LAW. 68 
 
 sion of their real property an investigation was permitted into 
 the necessity of such property for the purposes of their incor- 
 poration and the title made to rest upon the proof of that 
 necessity. Natoma Water & Mining Co. v. Clarkin, 14 Cal. 
 552." 
 
 ESTOPPEL TO SET UP ULTRA VIRES AS A 
 
 DEFENSE. 
 
 § 75. Generally speaking, a person who has held out par- 
 ticular facts as true and has thereby induced others to act 
 in reliance thereon to their detriment, is held estopped from 
 setting up the contrary to be the actual fact. 
 
 This rule has been invoked in some jurisdictions to permit 
 recovery on a contract of a corporation ultra vires its charter 
 powers where the contract has been partly performed to the 
 benefit of one of the parties, on the ground that it is unjust 
 to allow the party to receive the benefit and then set up his 
 own wrongdoing as an excuse to avoid responsibility to per- 
 form his part. It is frequently said that the plea of ultra 
 vires should not be allowed to prevail where it would not 
 advance justice, but, on the contrary, would accomplish a 
 legal wrong. 
 
 This sounds plausible, but will hardly bear cursory inspec- 
 tion, for it assumes the conclusion as to legal wrong and 
 ignores the very fact that an ultra vires contract is unlawful, 
 and therefore at best it amounts to saying that the court will 
 enforce a legal wrong to avoid a legal wrong. If contracts 
 ultra vires corporate charters be contrary to public policy, as 
 generally conceded, then their enforcement because partially 
 executed ignores the public wrong for the sake of doing ap- 
 parent justice between the parties in the particular case at 
 bar. Estoppel cannot be invoked to support illegal transac- 
 tions. Contracts to perform tortious or other illegal acts are 
 unenforceable, and no partial performance will estop the de- 
 fense. It would seem that ultra vires contracts are not less 
 unlawful merely because not expressly prohibited. The im- 
 mediate injustice between the parties at bar, as abundantly 
 appears elsewhere, can be adequately remedied otherwise than
 
 69 ULTRA VIRES TRANSACTIONS. § 76 
 
 by subverting public policy, thus giving legal sanction to 
 wrong on the plea of preventing wrong. 
 
 § 76. Several state jurisdictions, however, enforce ultra 
 vires contracts on the basis of estoppel, as is illustrated by the 
 following cases. 
 
 In Bissell v. Michigan S. & N. I. R. Co., 22 N. Y. 262, it 
 was held that where two railroad companies, in excess of their 
 powers, combined to operate a third road, they were liable 
 for injuries sustained by a passenger on such road, resulting 
 from their negligence. Comstoek, C. J., held the companies 
 estopped to set up the defense of ultra vires and liable on 
 their contracts. Selden, J., held the contract, being ultra 
 vires, was void, but the defendant companies were liable for 
 their negligent torts nevertheless. 
 
 Comstoek, C. J., in the course of his opinion, said: 
 
 "Let us now concede that the unauthorized contracts of a 
 corporation are illegal in the sense contended for; it by no 
 means follows that they are never to be enforced. An agree- 
 ment declared by statute to be void cannot be enforced be- 
 cause such is the legislative will; but when, without any such 
 declaration, it is simply illegal, it is capable of enforcement 
 where justice plainly requires it. Circumstances may, and 
 often do, exist which estop the offender from taking advantage 
 of his own wrong. The contract may be entered into on the 
 one side without any participation in the guilt and without 
 any knowledge even of the vice which contaminates it. An 
 innocent person may part with value, or otherwise change his 
 situation upon the faith of the contract. A railroad corpora- 
 tion, for example, may purchase iron rails and give its obliga- 
 tion to pay for them, with a design to sell them again on spec- 
 ulation instead of using them for continuing its track. Such 
 a transaction is clearly unauthorized, and is therefore said 
 to be illegal. But if the corporation is deemed to make the 
 contract — in other words, if, as I have above shown, it is 
 a legal possibility for corporations to make contracts outside 
 of their just powers, how can its illegality be set up against 
 the other party who knows nothing of the unlawful purpose? 
 So an incorporated bank may purcha.se land, having power 
 to do so for a banking-house, but actually intending to specu- 
 late in the transaction. This is also ultra vires, but can the 
 want of authoritj^ be interposed, in repudiation of a just 
 obligation to pay for the same land, the vendor not being
 
 § 77 SUMMARY OF CORPORATION LAW. 70 
 
 in pari delicto? Such a doctrine is not only shocking to the 
 reason and conscience of mankind, but it goes beyond the law 
 in regard to the illegal contracts of individuals." 
 
 § 77. In Whitney Arms Co. v. Barlow, 63 N. T. 62, it was 
 held that where a corporation has fully performed a contract 
 on its part to manufacture and deliver certain articles, it is no 
 defense to an action brought to recover the purchase price 
 that the contract was not within the chartered powers of the 
 corporation. Allen, J., said: 
 
 "The plea of ultra vires should not, as a general rule, pre- 
 vail, whether interposed for or against a corporation, when it 
 would not advance justice, but, on the contrary, would accom- 
 plish a legal wrong. ' ' 
 
 In Woodruff v. Erie Ry. Co., 93 N. Y. 609, it was held that 
 where a railroad company leased its property and privileges 
 to an individual, the lessee was estopped to set up the defense 
 that the lease was ultra vires. (Nassau Bank v. Jones, 95 
 N. Y. 123.) 
 
 In Bath Gaslight Co. v. Claffy, 151 N. Y. 24, it was held 
 that though the lease of all the property and franchises of a 
 gaslight company was ultra vires, that constituted no defense 
 to an action for rent. Andrews, C. J., said: 
 
 "But in not infrequent instances corporations enter into un- 
 authorized contracts which are neither mala in se nor mala pro- 
 hibita, or when the only prohibition or restriction is implied 
 from the grant of specified powers. It is this class of eases 
 which opens the field of controversy. Is such a contract per- 
 formed by one party, but not performed by the other, void as 
 between them to all intents and purposes, so that no recovery 
 can be had under it against the party who has received the con- 
 sideration for his promise, but neglects or refuses to perform 
 it, or is it so tainted with illegality that the courts mast refuse 
 to recognize it under any circumstances or enforce its obli- 
 gation, whether as to past or future transactions? .... 
 
 "The courts in this state, from an early day commencing 
 as far back as the Utica Insurance cases, have sought to regu- 
 late and restrict the defense of ultra vires so as to make it 
 consistent with the obligations of justice. Insurance Co. v. 
 Scott, 19 Johns. 1; Curtis v. Leavitt, 15 N. Y. 9; Bissell v. 
 Railroad Cos., 22 N. Y. 260, opinion of Comstock, C. J.; 
 Parish v. Wheeler, Id. 495; Arms Co. v. Barlow, 63 N. Y. 62;
 
 71 ULTRA VIRES TRANSACTIONS. § 78 
 
 Pratt V. Short, 79 N. Y. 437; Woodruff v. Railway Co., 93 
 
 N. Y. 609 ; Starin v. Edson, 112 N. Y. 206, 19 N. E. 670 
 
 The lease now in question was not in any true sense of the 
 word illegal. It was undoubtedly void as against the state. 
 The parties to the lease assumed it to be valid. It was con- 
 templated, as the provisions of the lease show, that the lessee 
 would continue and extend the business before carried on by 
 the plaintiff, and it is not suggested that it did not during 
 its occupation discharge all the obligations to the public which 
 rested on the plaintiff. The state has not intervened, and 
 the possession of the property has now been restored to its 
 original proprietors. The contract has been terminated as to 
 the future, and all that remains undone is the payment by 
 the lessee of the unpaid rent. We think the demands of 
 public policy are fully satisfied by holding that as to the 
 public the lease was void, but that, as between the parties, 
 so long as the occupation under the lease continued, the lessee 
 was bound to pay the rent, and that its recovery may be 
 enforced by action on the covenant." 
 
 § 78. But in New York an ultra vires contract, if still ex- 
 ecutory, will not be enforced. (Nassau Bank v. Jones, 95 N. Y. 
 115.) In this case, in holding that a bank could not enforce a 
 contract to share in a purchase of stock in a railroad company, 
 Ruger, C. J., said : 
 
 "While executed contracts made by corporations in excess 
 of their legal, powers have, in some cases, been upheld by 
 the courts, and parties have been precluded from setting up 
 as a defense to actions brought by corporations their want of 
 power to enter into such contracts (Bissel v. M. S. & N. I. R. 
 R. Co., 22 N. Y. 258; Whitney Arms Co. v. Barlow, 63 Id. 
 62; Woodruff v. E. R. R. Co., 93 Id. 618), this doctrine has 
 never been applied to a mere executory contract which is 
 sought to be made the foundation of an action either by or 
 against such corporations." 
 
 In Jamison et al. v Citizens' Bank, 122 N. Y. 135, in an 
 action to recover from the bank for losses sustained by it in 
 dealing through plaintiff's brokers in cotton futures, it was 
 held that the bank never having received any benefit was 
 entitled to avail itself of ultra vires as a defense. In speak- 
 ing of the rule of estoppel to plead ultra vires to an executed 
 contract as being inapplicable to the case at bar, Haight, J,, 
 said;
 
 § 79 SUMMARY OF CORPORATION LAW. 72 
 
 **It is contended that the defense of ultra vires is not 
 available in this case, for the reason that the contract had 
 been executed on the part of the plaintiffs, and that the de- 
 fendant is estopped from setting up the defense. In the case 
 of Arms Co. v. Barlow, 63 N. Y. 62, the plaintiff was a 
 corporation organized for the purpose of manufacturing every 
 variety of firearms and other implements of war, and all 
 kinds of machinery adapted to the construction thereof. It 
 entered into a contract with the American Seal Lock Com- 
 pany to manufacture and deliver ten thousand locks. The 
 locks having been delivered, it was held that the contract was 
 fully executed, and that the plea of ultra vires would not 
 prevail as a defense to an action brought to recover the con- 
 tract price. We do not question the rule thus invoked. It 
 has been repeatedly declared in other cases, as, for instance, 
 in Parish v. Wheeler, 22 N. Y. 494, in which it was held that 
 a railroad company, having purchased and received a steam- 
 boat, could be compelled to pay for it, although the power 
 to purchase was not included in its charter; but this doctrine 
 has no application to executory contracts which are sought 
 to be made the foundation of an action, or to contracts that 
 are prohibited as against public policy or immoral." 
 
 § 79. In Kadish v. Garden City etc. Assn., 151 111. 531, it 
 was held that a loan made by a building and loan association 
 to one for the benefit of a corporation was ultra vires ; but the 
 transaction, being executed, was binding. Wilkin, J., said : 
 
 "There is, as above shown, no prohibition in the statute 
 against corporations becoming members of homestead loan 
 associations for the purpose of borrowing money. Neither is 
 there any prohibition therein against loaning money for 
 other than business purposes. In other words, the transac- 
 tions were at most ultra vires, in the commonly understood 
 sense of those words, and nothing more All the de- 
 cisions on this question naturally rest upon the rule 'that 
 where a party has accepted and made his own the benefit of 
 a contract, he has estopped himself from denying in the courts 
 the validity of the instrument by which these benefits came to 
 him.' .... While a contract ultra vires remains executory 
 courts will interfere to prevent its enforcement, or on the 
 application of a shareholder or other authorized person pre- 
 vent its execution; but when it has been carried into effect 
 and the corporation has received the benefit of it, it cannot 
 plead the excess of its power in discharge of its liability."
 
 73 ULTRA VIRES TRANSACTIONS. § 80 
 
 In Wright v. Hughes, 119 Ind. 324, it was held that the 
 fact that a loan made by a corporation was ultra vires was 
 no defense to the enforcement of the mortgage given to 
 secure it. ]\Iitchell, J., said: 
 
 "The rule is now too thoroughly established to be longer 
 open to question that where a contract has been executed 
 and fully performed on the part of the corporation, or of 
 the party with whom it contracted, neither will be permitted 
 to insist that the contract was not within the power of the 
 corporation." 
 
 § 80. In State v. Corning State Savings Bank, 136 Iowa, 
 79, it was held that there could be no recovery on a certificate 
 of deposit prohibited by statute, the court (Diemer, J,), say- 
 ing: 
 
 "If the contract were simply ultra vires, the bank having 
 received the benefit thereof would be estopped to deny its 
 liability. Church v. Johnson, 93 Iowa, 54, 61 N. W. "916 ; 
 Aldrich v. Bank, 176 U. S. 618, 44 L. ed. 611, 20 Sup. Ct. 
 Rep. 498. But if the contract be one prohibited by law, and 
 therefore unlawful, then no recovery may be had thereon. 
 In re Insurance Co., 107 Iowa, 148, 70 Am. St. Rep. 149, 
 77 N. W. 868 ; Steever v. Railroad Co., 62 Iowa, 371, 17 N. 
 W. 595; Stover v. Flower, supra; Page on Contracts, §§ 1083, 
 1084 ; State Bank v. Coquillard, 6 Ind. 232 ; Siter v. Sheets, 
 7 Ind. 133 ; Bank v. Parsons, 21 Vt. 199 ; Dillon v. Allen, 46 
 Iowa, 299, 26 Am. Rep. 145." 
 
 In Zinc Carbonate Co. v. First Nat. Bank, 103 Wis. 125, 
 in holding that a corporation could not shield itself from 
 liability to remedy a wrong by setting up ultra vires as a 
 defense, the court said: 
 
 "If such a body transcend its powers, it commits a wrong 
 against the state, and oi'dinarily it is for the state only to 
 call it to account for such violation. Farwell Co. v. Wolf, 
 96 Wis. 10, 70 N. W. 289, 71 N. W. 109; Winterfield v. 
 Brewing Co., 96 Wis. 239, 71 N. W. 101 ; McElroy v. Minne- 
 sota Percheron Horse Co., 96 Wis. 317. 71 N. W. 652; Hub- 
 bard V. Haley, 96 Wis. 578, 71 N. W. 1036." 
 
 In Denver Fire Ins. Co. v. McClelland, 9 Colo. 11, a policy 
 of insurance ultra vires the company was held binding on 
 the company in favor of the policy-holder, the court citing 
 and following the New York cases.
 
 §§81,82 SUMMAPwY OF CORPORATION LAW. 74 
 
 In McQuaig v. Gulf Naval Stores Co. (Fla.), 47 South. 
 2, a contract for commissions for finding a purchaser for real 
 estate, though ultra vires, was held enforceable against the 
 company, Whitfield, J., saying: 
 
 "While those dealing with a private corporation are 
 charged with some degree of care to ascertain the powers of 
 the corporation with reference to the transaction, if the trans- 
 action has some fair relation to the matters within the cor- 
 porate authority, the defense of ultra vires will not, in gen- 
 eral, be available to afford injustice or imposition," 
 
 § 81. In Carson City Sav. Bank v. Carson City Elevator 
 Co., 90 Mich. 550, where the articles of the corporation included 
 "buying and selling of grain and other commodities," it was 
 held that the corporation was liable on notes given for grain, 
 whether the statute under which the corporation was formed 
 permitted such a purpose or not, Morse, C. J., saying : 
 
 "The plea of ultra vires should not, as a general rule, 
 prevail, whether interposed for or against a corporation, 
 where it would not advance justice but, on the contrary, would 
 accomplish a legal wrong." 
 
 In Central Bldg. & Loan Assn. v. Lampson, 60 Minn. 422, 
 the plea of ultra vires was held no defense to the recovery of a 
 loan made by the corporation to the defendant on the ground 
 that the plea would not be allowed in the case of an executed 
 contract where it works injustice. 
 
 Similarly, Union Hardware Co. v. Mfg. Co., 58 Conn. 219 ; 
 Third Avenue Sav. Bank v. Dimock, 24 N. J. Eq. 26 ; Camden 
 & A. R. Co. V. May's Landing etc. R. Co., 48 N. J. L. 530; 
 Wright V. Pipe Line Co., 101 Pa. 204; Burke etc. Co. v. 
 Wells-Fargo & Co., 7 Idaho, 42. 
 
 § 82. The weight of authority of the state courts, however, 
 supports the strict rule recognizing ultra vires as a defense not 
 estopped by performance, as appears from the following: 
 
 In Davis v. Old Colony R. R., 131 Mass. 258, it was held 
 that no action could be maintained on an ultra vires guar- 
 anty, though acted upon at great outlay. Gray, C. J., fully 
 discussing the English and United States supreme court 
 cases, said:
 
 75 XJLTILV VIRES TRANSACTIONS. § 83 
 
 "A corporation has power to do such business only as it 
 is authorized by its act of incorporation to do, and no other. 
 It is not held out by the government nor by the stockholders 
 as authorized to make contracts which are beyond the pur- 
 poses and scope of its charter. It is not vested with all the 
 capacities of a natural person or of an ordinary partnership, 
 but with such only as its charter confers. If it exceeds its 
 charter powers, not only may the government take away its 
 charter, but those who have subscribed to its stock may avoid 
 any contract made by the corporation in clear excess of its 
 powers. If it makes a contract manifestly beyond the powers 
 conferred by its charter, and therefore unlawful, a court of 
 chancery, on the application of a stockholder, will restrain 
 the corporation from carrying out its contract ; and a court 
 of common law will sustain no action on the contract against 
 the corporation. 
 
 "Every person who enters into a contract with a corpora- 
 tion is bound, at his peril, to take notice of the legal limits of 
 its capacity, especially where, as in this commonwealth, all 
 acts of incorporation are deemed public acts, and every cor- 
 poration organized under general laws is required to file in 
 the office of the secretary of the commonwealth a certificate 
 showing the purpose for which the corporation is constituted. 
 Gen. Stats., c. 3, § 5; Stats. 1870, c. 224, §§ 7, 11; Whitenton 
 Mills V. Upton, 10 Gray, 582, 598 ; Richardson v. Sibley, 11 
 Allen, 65, 72; Pearce v. Madison & Indianapolis R. R., 21 
 How. 441, 443; East Anglian Rys. v. Eastern Counties Ry., 
 11 C. B. 775, 811; Ashbury Ry. Carriage & Tran. Co. v. 
 Riche, L. R. 7 H. L. 653. 
 
 "There is a clear distinction, as was pointed out by Mr. 
 Justice Campbell in Zabriskie v. Cleveland, C. & C. R. R., 23 
 How. 381, 398, by Mr. Justice Hoar in Monument Bank v. 
 Globe Works, 101 Mass. 57, 58, and by Lord Chancellor 
 Cairns and Lord Hatherly in Ashbury Ry. Carriage & Tran. 
 Co. V. Riche, L. R. 7 H. L. 668, 684, between the exercise 
 by a corporation of a power not conferred upon it, varying 
 from the objects of its creation as declared in the law of its 
 organization, of which all persons dealing with it are bound 
 to take notice, and the abuse of a general power, or the fail- 
 are to comply with prescribed formalities or regulations, in 
 a particular instance, where such abuse or failure is not 
 Imown to the other contracting party." 
 
 § 83. In Buckeye Marble & Freestone Co. v. Harvey, 92 
 Tenn. 115, it was held that the sale of stock to a foreign cor- 
 poration was ultra vires, and that the defendant president of
 
 § 84 SUMMARY OF CORPORATION LAW. 76 
 
 the domestic corporation, though he had received the benefit of 
 the contract for such sale, was nevertheless, when sued on the 
 contract, entitled to set up the defense of ultra vires. Lurton, 
 J., said: 
 
 "The passage cited by counsel from Railway Co. v. Mc- 
 Carthy, 96 U. S. 267, 'that the doctrine of ultra vires, when 
 invoked for or against a corporation, should not be allowed 
 to prevail when it would defeat the ends of justice or work a 
 legal wrong,' is misleading, and if literally construed, would 
 result in an erroneous practical extension of the powers of 
 corporations. We do not understand that a result required 
 by adherence to the law would be either unjust or a legal 
 wrong. The learned judge doubtless intended to be under- 
 stood that the defense would be a legal wrong only when the 
 law did not require its consideration by the court." 
 
 In Metropolitan Stock Exch. v. Lyndonville Nat. Bank, 76 
 Vt. 303, it was held, citing the United States supreme court 
 cases, that a corporation could not be estopped from mal\ing 
 the defense of ultra vires. 
 ^ In Washington Mill Co. v. Sprague Lumber Co., 19 Washy/ 
 165, it was held that the corporation had no power to mort- 
 gage its property to secure the individual debt of one of its 
 stockholders, and such mortgage w^as void as to creditors, 
 though assented to by all the stockholders. 
 
 § 84. In Franklin Co. v. Lewiston Savings Bank, 62 Me. 43, 
 it was held that the savings bank had no power to subscribe 
 for stock in another corporation, and that notes given by the 
 bank upon such a subscription were void as ultra vires, and 
 that though acted upon, the bank was not estopped from set- 
 ting up ultra vires as a defense, and that the bank having 
 received no benefit, no recovery on a quantum meruit against 
 the bank could be had. Walton, J., said : 
 
 "And with respect to such acts and contracts, it has been 
 very aptly said that the powers and franchises of corpora- 
 tions are grants from the government; that it would be just 
 as reasonable and just as legal to allow one who has a patent 
 for one hundred acres of land to take possession of two hun- 
 dred acres as to allow a corporation to usurp and exercise 
 a power not conveyed to it in its charter."
 
 77 ULTRA VIRES TRANSACTIONS. § 85 
 
 In Hood V. New York & New Haven R. R., 22 Conn. 501, 
 it was held that the plaintiff, though he had paid the con- 
 sideration, could not enforce a contract ultra vires and beyond 
 the corporate powers of the defendant to make, and that the 
 defendants were not estopped from setting up the defense. 
 Ellsworth, J., said : 
 
 "We place our judgment upon a plain principle of equity 
 and law, viz., that these defendants are not bound by a con- 
 tract they had no power to make, and are not estopped setting 
 up this matter in defense." 
 
 § 85. In Miners' Ditch Co.- v. Zellcrbach, 37 Cal. 543, it 
 was held that in a contract between a corporation and parties 
 other than stockholders, when the act in question is one which 
 the corporation has no power to perform under any circum- 
 stances, the corporation may in any case avail itself of the 
 defense of ultra vires; but when the act in question may be 
 performed by the corporation for some purposes but not for 
 others, then, though the act be ultra vires in fact, the cor- 
 poration may be estopped by the circumstances of the par- 
 ticular case from setting up the defense, and further cor- 
 porate acts are presumed to be within the corporate powers 
 until the contrary is established. 
 
 In Portland Lumbering & Mfg. Co. v. City of Portland, 
 18 Or. 21, in an action to recover for materials furnished the 
 city used in making a street improvement, it was held that 
 ultra vires was not a defense where the power existed but 
 there was a departure from the strict requirement of the 
 law in its exercise. 
 
 In Re Assignment of P. H. Co., 24 Or. 330, it was held 
 that the claim of a creditor of the insolvent company for lime 
 sold the company was valid, though dealing in lime was 
 ultra vires the company, the latter having had the lime and 
 therefore being in justice bound to pay for it. It does not 
 appear whether the claim was allowed on the basis of the 
 contract price or on a quantum meruit. So far as the opinion 
 of the court goes, the decision is consistent with the Massa- 
 chusetts and United States supreme court rule.
 
 § 86 SUMMARY OP CORPORATION LAW. 78 
 
 In Chewacla Lime Works v. Dismukes, 87 Ala. 344, it was 
 held that "The established rule in this state is that a cor- 
 poration is not estopped, by reason of having received the 
 benefits of a contract which is ultra vires, from setting up 
 its invalidity in defense of a suit brought to enforce it." 
 
 Strict rule of United States supreme court folloAved in 
 White V. Bank, 22 Pick. 181; Morville v. Society, 25 Am. 
 Rep. 40; Davis v. Railroad Co., 41 Am. Rep. 221; Paul v. 
 Kenasha, 94 Am. Dec. 598; Moore v. Tanning Co., 60 Vt. 459; 
 Anthony v. Sewing Mach. Co., 16 R. I. 571 ; Harriman v. 
 First etc. Church, 66 Ga. 186; Day v. Buggy Co., 57 Mich. 
 146. 
 
 i§ 86. Where, however, the power is existent by the terms of 
 the charter but has been exceeded or otherwise abused without 
 practicable means of ascertainment by one dealing with the 
 corporation, it is generally agreed that the party at fault 
 may be estopped from setting up the abuse or ultra vires 
 act. (National Bank v. Case, 99 U. S. 628 ; Ossipee Hosiery 
 & Woolen Mfg. Co. v. Canney, 54 N. H. 295 ; Prescott Nat. 
 Bank v. Butler, 157 Mass. 548; National Bank v. Whitney, 
 103 U. S. 99 ; Humphrey v. Patrons Mercantile Assn., 50 Iowa, 
 607; Little v. O'Brien, 9 Mass. 423.) 
 
 The law presumes the corporation to be acting within its 
 corporate powers until the contrary is proved. (Louisville 
 etc. Ry. Co. v. Louisville Trust Co., 174 U. S. 552; Inter- 
 national Bldg. etc. Assn. v. Wall, 153 Ind. 554 j Thomp. Corp., 
 § 2779.)
 
 79 CORPORATE CRIMES AND TORTS. § 90 
 
 CHAPTER V. 
 
 CORPORATE CRIMES AND TORTS. 
 
 § 90. Just as a contract of a corporation ultra vires its 
 charter powers is a nullity as creating no valid contractual ob- 
 ligation, so a corporate authority, express or implied , to do a 
 public or private wrong recognized as a crime or a tort is a 
 nullity as conferring no valid authority so to do; nevertheless 
 it is true that such corporate action if it does occur is not right- 
 ful but wrongful, and therefore if because of, and pursuant to, 
 such wrongful action an agent or agents of the corporation 
 commits the wrong to the public or individual, the corporation 
 is responsible, and is held liable for the crime or tort as the 
 case may be. In the case of torts, the corporation is answer- 
 able in damages ; in the case of crimes, the corporation may be 
 fined, its property sequestered or its charter forfeited. 
 
 In National Bank v. Graham, 100 U. S. 699, in holding a 
 national bank liable in damages occasioned by its gross negli- 
 gence in losing a special deposit which it received ultra vires 
 its charter, Swayne, J., said (p. 702) : 
 
 "Corporations are liable for every wrong they commit, and 
 in such cases the doctrine of ultra vires has no application. 
 
 "They are also liable for the acts of their servants while 
 such servants are engaged in the business of their principal, 
 in the same manner and to the same extent that individuals are 
 liable under like circumstances. Merchants' Bank v. State 
 Bank, 10 Wall. 604. An action may be maintained against a 
 corporation for its malicious or negligent torts, however 
 foreign they may be to the object of its creation or beyond its 
 granted powers. It may be sued for assault and battery, for 
 fraud and deceit, for false imprisonment, for malicious prose- 
 cution, for nuisance and for libel. In certain cases it may be 
 indicted for misfeasance or nonfeasance touching duties im- 
 posed upon it in which the public are interested. Its offenses 
 may be such as will forfeit its existence. Philadelphia, Wil- 
 mington & Baltimore R. R. Co. v. Quigley, 21 How. 209; 2 
 Wait on Actions and Defenses, pp. 337-339 ; Angell & Ames 
 on Corporations, sees. 186, 385; Cooley on Torts, pp. 119, 
 120."
 
 §§ 91, 92 SUMMARY OF CORPORATION LAW. 80 
 
 MONOPOLIES, TRUSTS AND RESTRAINTS OF TRADE. 
 
 § 91. The derivative meaning and as weU the common, ordi- 
 nary significance of the term "monopoly" is sole possession of 
 wealth. At the common law it came to be applied specifically 
 to designate the exclusive control of the manufacture or 
 sale of some product or commodity, and as incidental to this 
 the term is frequently used in a secondary sense or signifi- 
 cance to denote the elimination of competition in production 
 or distribution, manufacture, trade or commerce. 
 
 In these different cognate senses it is applied to denote 
 all sorts of combinations and contracts having for their pur- 
 pose the control of wealth and its production and distribution, 
 particularly restrictions of competi-tion, usually termed re- 
 straints of trade. 
 
 The term "trust" originated in the particular form of 
 combination attempted by corporations by placing the entire 
 stock of several corporations in a single trustee or trustees, 
 with full power to manage the several corporations thus 
 united ; e. g.. People v. North River Sugar Refining Co., 121 
 N. Y. 582. From this the term "trust" came to be applied 
 to all sorts of large corporations or combinations whose 
 apparent tendency is to control the manufacture or sale of a 
 particular product or commodity. 
 
 At common law, contracts having for their purpose the re- 
 striction of competition, and thus being in restraint of trade, 
 are held void and unenforceable as being contrary to public 
 policy, excepting, however, certain contracts partially restrict- 
 ing competition to the extent reasonably necessary to protect 
 the main object of the contract in question, e. g.. in the case 
 of the sale of a business, the vendor agreeing not to compete 
 within certain localities for a certain period of time, such 
 agreements, though restricting competition and in restraint 
 of trade strictly, being held not to be contrary to public 
 policy where reasonably necessary. 
 
 § 92. In Oregon Steam Navigation Co. v. Winsor (1873), 
 20 Wall. (U. S.) 64, an agreement made, on the sale of a 
 steamer, that it should not be employed for ten years in Cali-
 
 81 CORPORATE CRIMES AND TORTS. § 92 
 
 fornia waters was held not to be in restraint of trade, and 
 valid. Bradley, J., said : 
 
 "It is a well-settled rule of law that an agreement in gen- 
 eral restraint of trade is illegal and void; but an agreement 
 which operates merely in partial restraint of trade is good, 
 provided it be not unreasonable and there be a consideration 
 to support it. In order that it may not be unreasonable, the 
 restraint imposed must not be larger than is required for the 
 necessary protection of the party Avith whom the contract is 
 made. A contract, even on good consideration, not to use a 
 trade anywhere in England, is held void in that country as 
 being too general a restraint of trade; but a contract not to 
 use a trade at a particular place, if it be founded on a good 
 consideration and be made for a proper and useful purpose, 
 is valid. Of course, a contract not to exercise a trade gener- 
 ally would be obnoxious to the rule, and would be void 
 
 There are two principal grounds on Avhich the doctrine is 
 founded that a contract in restraint of trade is against public 
 policy. One is the injury to the public by being deprived of 
 the restricted party's industry; the other is the injury to the 
 party himself by being precluded from pursuing his occupa- 
 tion, and thus being prevented from supporting himself and 
 his family. It is evident that both these evils occur when 
 the contract is general- — not to pursue one's trade at all, or 
 not to pursue it in the entire realm or country. The country 
 suffers the loss in both cases; and the party is deprived of his 
 occupation, or is obliged to expatriate himself in order to 
 follow it. A contract that is open to such grave objection is 
 clearly against public policy. But if neither of these evils 
 ensue, and if the contract is founded on a valid consideration 
 and a reasonable ground of benefit to the other, it is free from 
 objection, and may be enforced. 
 
 "In accordance with these principles it is well settled that 
 a stipulation by a vendee of any trade, business or establish- 
 ment that the vendor shall not exercise the same trade or 
 business or erect a similar establishment within a reasonable 
 distance, so as not to interfere with the value of the trade, 
 business or thing purchased, is reasonable and valid. In like 
 manner a stipulation by the vendor of an article to be used 
 in a business or trade in which he is himself engaged that it 
 shall not be used within a reasonable region or distance, so as 
 not to interfere with his said business or trade, is also valid 
 and binding." 
 6
 
 § 93 SUMMARY OF CORPORATION LAW. 82 
 
 § 93. In Fowle v. Park, 131 U. S. 88, a contract, whereby 
 the sale of a patent medicine by one of the parties was pro- 
 hibited in certain states and territory, was held valid. 
 
 In Gibbs v. Baltimore Gas Co., 130 U. S. 396, an agreement 
 between two gas companies for the regulation of rates, and 
 whereby one should cease laying pipes in violation of the 
 state statute, was held unenforceable. 
 
 In Chicago & R. R. Co. v. Pullman Car Co. (1890), 139 
 U. S. 79, Harlan, J,, held an agreement giving the Pullman 
 company the exclusive right to run its cars over the railroad 
 company's lines was not in restraint of trade at common law. 
 
 In Carter v. Ailing, 43 Fed. 208, an agreement by a trav- 
 eling salesman not to enter employment of a competitor for 
 a period of three years was held valid. 
 
 In Durber Co. v. Howard Co., 66 Fed. 643, an agreement 
 among several not to buy watch-cases of plaintiff was held 
 only a partial restraint of trade and not invalid. 
 
 In American Strawboard Co. v. Haldeman Paper Co., 83 
 Fed. 619, an agreement by a lessee of a paper-mill not to 
 manufacture certain classes of paper for a period of years 
 was held valid. 
 
 In Fisheries Co. v. Lennen, 116 Fed. 217 and 130 Fed. 533, 
 an agreement by sellers of property not to deal in certain 
 fish on the Atlantic seaboard for a period of years was held 
 valid. 
 
 In Harrison v. Glucose Sugar Ref. Co., 116 Fed. 304, a 
 stipulation in a contract of employment, whereby the em- 
 ployee covenanted not to be interested in the same business 
 for the period of the contract within fifteen hundred miles 
 of Chicago except under the contract, was held valid. 
 
 In National Enameling & Stamping Co. v. Haberman, 120 
 Fed. 415, a general restrictive covenant, unlimited as to time 
 and covering the entire United States, was held valid. 
 
 In A. Booth & Co. v. Davis, 127 Fed. 875, a covenant by 
 stockholders of a company which sold its business not to en- 
 gage in the same business in the same or adjacent territory 
 for ten years was held valid. 
 
 In Robinson v. Suburban Brick Co., 127 Fed. 804, a cove- 
 nant in a contract by which owners of a brick plant conveyed
 
 83 CORPORATE CRIMES AND TORTS. § 94 
 
 it to a corporation, agreeing not to engage in competing busi- 
 ness within fifty miles for ten years, was held valid. 
 
 § 94. In United States v. Addyston Pipe & Steel Co., 85 
 Fed. 271, in holding that a restrictive covenant, to be upheld, 
 whether it be in partial or general restraint of trade, must be 
 ancillary to a lawful contract, and where the main contract 
 was in restraint of trade, it is in violation of the Sherman 
 Act of 1890, Taft, J., said: 
 
 "For the reasons given, then, covenants! in partial restraint 
 of trade are generally upheld as valid when they are agree- 
 ments (1) by the seller of property or business not to com- 
 pete with the buyer in such a way as to derogate from the 
 value of the property or business sold; (2) by a retiring 
 partner not to compete with the firm; (3) by a partner pend- 
 ing the partnership not to do anything to interfere, by com- 
 petition or otherwise, with the business of the firm; (4) by 
 the buyer of property not to use the same in competition with 
 the business retained by the seller; and (5) by an assistant 
 servant or agent not to compete with his master or employer 
 after the expiration of his time of service. Before such agree- 
 ments are upheld, however, the court must find that the re- 
 straints attempted thereby are reasonably necessary (1, 2 
 and 3) to the enjoyment by the buyer of the property, good- 
 will or interest in the partnership bought; or (4) to the 
 legitimate ends of the existing partnership; or (5) to the 
 prevention of possible injury to the business of the seller from 
 use by the buyer of the thing sold; or (6) to protection from 
 the danger of loss to the employer's business, caused by the 
 unjust use on the part of the employee of the confidential 
 knowledge acquired in such business. Under the first class 
 come the cases of Mitchell v. Revnolds, 1 P. Wms. 181; 
 Fowle V. Parke, 131 U. S. 88, 9 Sup. Ct. 658; Nordenfeldt 
 V. Maxim Nordenfeldt Co. (1894), App. Cas. 534; Rousillon 
 V. Rousillon, 14 Ch. Div. 351; Cloth Co. v. Lorsont, L. R. 
 9 Eq. 345; Whittaker v. Howe, 3 Beav. 383; Match Co. v. 
 Roeber, 106 N. Y. 473, 13 N. E. 419; Tode v. Gross, 127 
 N. Y. 480, 28 N. E. 469; Beal v. Chase, 31 Mich. 490; Hub- 
 bard v. Miller, 27 Mich. 15; National Ben. Co. v. Union 
 Hospital Co., 45 Minn. 272, 47 N. W. 806 ; Whitney v. Slay- 
 ton, 40 Me. 224; Pierce v. Fuller, 8 Mass. 222; Richards v. 
 Seating Co., 87 Wis. 503, 58 N. W. 787. In the second class 
 are Tallis v. Tallis, 1 El. & Bl. 391, and Lange v. Werk, 2 
 Ohio St. 520. In the third class are Machinery Co. v. Dolph,
 
 § 95 SUMMARY OP CORPORATION LAW. 84 
 
 138 tr. S. 617, 11 Sup. Ct. 412, Id. 28 Fed. 553, and Matthews 
 V. Associated Press, 136 N. Y. 333, 32 N. E. 981. In the 
 fourth class are American Strawboard Co. v. Haldeman Paper 
 Co., 83 Fed. 619, and Hitchcock v. Anthony, Id. 779, both 
 decisions of this court; Navigation Co. v. Winsor, 20 Wall. 
 64 ; Dunlop V. Gregory, 10 N. Y. 241 ; Hodge v. Sloan, 107 
 N. Y. 244, 17 N. E. 335. While in the fifth class are the 
 cases of Homer v. Ashford, 3 Bing. 322; Horner v. Graves, 
 7 Bing. 735 ; Hitchcock v. Coker, 6 Adol. & E. 454 ; Ward v. 
 Byrne, 5 Mees. & W. 547; Dubowski v. Goldstein (1896), 1 
 Q^ B. 478; Peels v. Saalfeld (1892), 2 Ch. 149; Taylor v. 
 Blanchard, 13 Allen, 370; Keeler v. Taylor, 53 Pa. St. 467; 
 Herreshoff v. Boutineau, 17 R. I. 3, 19 Atl. 712." 
 
 § 95. In Gamewell Fire Alarm Tel. Co. v. Crane (Mass. 
 1893), 35 N. E. 98, a covenant by a manufacturer of fire-alarm 
 apparatus made on the sale of his plant and stock not to enter 
 into competition with the purchaser for ten years was held 
 void, as being unrestricted as to place. 
 
 In Hurren v. Gavin (111. 1896), 44 N. E. 735, a covenant 
 made by seller of an undertaking business not to engage in 
 the business in the city for five years was held not to be in- 
 valid as being in restraint of trade. 
 
 In Anchor Electric Co. v. Hawkes (Mass. 1898), 50 N. E. 
 509, a covenant made by officers of corporations manufactur- 
 ing and dealing in electric goods, on the sale of the business 
 to a new corporation, in which they became officers, not to 
 engage in competition for five years was held valid, the Crane 
 case being distinguished on the ground that there the re- 
 strictive covenant was not incidental. 
 
 In Trentman v. Wahrenburg (Ind. 1903), 65 N. E. 1057, 
 an agreement by a dealer in building materials, on selling 
 out the business, to refrain from engaging therein for a 
 period of five years wdthin a specified county was held valid, 
 the limitation as to time and the restriction as to place being 
 reasonable. 
 
 In Palmer v. Toms (Wis. 1897), 71 N. W. 654, a covenant 
 by the seller of a livery business not to engage in that busi- 
 ness in the same city for five years was held valid. 
 
 In Swigert & Howard v. Tilden (Iowa, 1903), 97 N. W. 82, 
 a covenant by a seller of mail order shirt business not to
 
 85 CORPORATE CRIMES AND TORTS. § 96 
 
 engage or lend his assistance in the manufacture of shirts 
 within one hundred miles of Des Moines, Iowa, nor engage 
 in selling shirts made to order for ten years in Iowa and 
 Nebraska, was held valid. 
 
 In Moore & Handley Hardware Co. v. Towers Hardware 
 Co. (Ala. 1889), 6 South. 41, where one of two competing 
 firms sold out to the other, an agreement by those selling not 
 to handle goods in competition with the buyers in a specified 
 territory was held valid, but not binding on a corporation 
 afterward formed in which the sellers were stockholders. 
 
 In Cowan v. Fairbrother (N. C. 1896), 24 S. E. 212, a 
 covenant by a seller of a newspaper not to edit or print a 
 newspaper within a certain locality was held valid. 
 
 In Tardy v. Creasy (1886), 81 Va. 553, a covenant, on 
 sale of land, restricting all sorts of business thereon, was held 
 invalid as in restraint of trade. 
 
 In Monongahela Coal Co. v. Jutte, 210 Pa. 288, it was held 
 that a contract, one of several, made by a coal combination 
 with an individual selling his mines, etc., to the coal com- 
 pany, whereby he agreed not to engage, directly or indi- 
 rectly, in the mining of coal for ten years within territory 
 traversed by certain rivers and covering several states, was 
 in violation of the federal anti-trust act. 
 
 § 96. In Davis v. A. Booth & Co., 131 Fed. 31, it was held 
 that a restrictive covenant ancillary to sale of business was not 
 invalidated by the federal anti-trust act. To same effect, 
 Robinson v. Suburban Brick Co., 127 Fed. 804- Walsh v. 
 Dwight, 40 App. Div. (N. Y.) 513; Britt v. Ebel, 29 App. 
 Div. 256; Bancroft v. Union Embossing Co., 72 N. H. 402; 
 Phillips V. lola Cement Co., 125 Fed. 593. And in Cincin- 
 nati, P. B. S. & P. Packet Co. v. Bay (1906), 200 U. S. 
 179, it was held that a contract for the sale of vessels engaged 
 in interstate commerce is not invalidated by an agreement 
 of the vendors to withdraw from business for a specified time. 
 
 It has also been generally held that similar restrictive cove- 
 nants ancillary to contracts for sale of business are not in 
 violation of state anti-trust laws (Walsh v. Dwight, 40 App. 
 Div. 513; Espenson v. Koepke, 93 Minn. 278; Downing v.
 
 §§ 97-99 SUMMARY OP CORPORATION LAW. 86 
 
 Lewis, 56 Neb. 386; Queen Ins. Co. v. State, 86 Tex. 250; 
 Gates V. Hooper, 90 Tex. 563) ; but where the main contract 
 is restrictive of trade, it is void. (Merchants' Ad-Sign Co. 
 V. Sterling, 124 Cal. 429; Bingham v. Brands, 119 Mich. 255; 
 Texas & P. Coal Co. v. Lawson, 89 Tex. 394.) 
 
 § 97. Contracts giving exclusive right to handle goods in a 
 particular locality are generally held valid. (Central Shade 
 Eoller Co. v. Cushman, 143 Mass. 353; State v. St. Paul 
 Ga.s Light Co., 92 Minn. 467 ; Over v. Byram Foundry Co., 
 37 Ind. App. 452 ; Heimbuecher v. Goff, Horner & Co., 119 111. 
 App. 373 ; Schwalm v. Holmes, 49 Cal. 665 ; Standard Fireproof- 
 ing Co. V. St. Louis Fireproofmg Co., 177 Mo. 559 ; Woods v. 
 Hart, 50 Neb. 497 ; Clark v. Crosby, 37 Vt. 188 ; Roller v. Ott, 
 14 Kan. 609 ; Keith v. Herschberg Optical Co., 48 Ark. 138 ; 
 Hauck V. Wright, 77 Miss. 476 ; Welch v. Phelps etc. Mill Co., 
 
 89 Tex. 653.) But where the contract is with one acquiring a 
 monopoly, and for the furtherance of such monopoly, it is void. 
 (Detroit Salt Co. v. National Salt Co., 134 Mich. 103; Texas 
 V. Brewing Co., 90 Tex. 277; Fuqua v. Pabst Brewing Co., 
 
 90 Tex. 298; Simmons v. Terry (Tex. Civ. App.), 79 S. W. 
 1103.) 
 
 § 98. An agreement restricting the class of persons to whom 
 goods shall be sold and from whom they shall be bought is 
 generally invalid. (Montague & Co. v. Lowry, 193 U. S. 38; 
 Loder v. Jayne, 142 Fed. 1010; Ellis v. Inman, 131 Fed. 182; 
 Bailey v. Master Plumbers' Assn., 103 Tenu. 99; Walsh v. 
 Master Plumbers' Assn., 97 Mo. App. 280; Ferd Heim Brew- 
 ing Co. V. Belinder, 97 Mo. App. 64; Straus v. American 
 Publishers' Assn., 177 N. Y. 473; Bobbs Merrill Co. v. Straus, 
 139 Fed. 155.) But such agreements have been held not in- 
 valid under exceptional circumstances. (Gladish v. Kansas 
 City Livestock Exchange, 113 Mo. App. 726; Park Sons 
 Co. V. National Assn., 175 N. Y. 1 ; Brewster v. Millers Sons 
 Co., 101 Ky. 368; Whitwell v. Continental Tobacco Co., 125 
 Fed. 454.) 
 
 § 99. Moreover, whenever it appeared that any combina- 
 tion, by way of contract, agreement, trust, or whatever the
 
 87 CORPORATE CRIMES AND TORTS. § 100 
 
 plan of procedure, had for its real object monopoly as gen- 
 erally understood, such combination was held illegal and void 
 at common law. 
 
 § 100. In People v. North River Sugar Refining Co. (1890), 
 121 N. Y. 582, the defendant company had joined a combina- 
 tion of twenty similar companies, under an agreement whereby 
 the capital stock was vested in a managing board as trustees, 
 with full power to manage the business of the companies 
 severally and collectively. It was held that the company had 
 violated its corporate duties and obligations by becoming 
 party to such a trust, and must be dissolved. Finch, J,, in 
 delivering the opinion of the court, said : 
 
 "The combination, therefore, framed by the deed was a 
 trust ; and if created by the corporations or in any respect 
 the consequence or product of their action, some inevitable 
 
 results would be certain to follow As corporate grants 
 
 are always assumed to have been made for the public benefit, 
 any conduct which destroys their normal functions and maims 
 and cripples their separate activity, and takes away their free 
 and independent action, must so far disappoint the purpose 
 of their creation as to affect unfavorably the public interest; 
 and that to a much greater extent when, beyond their own 
 several aggregations of capital, they compact them all into 
 one combination, Avhich stands outside of the ward of the 
 state, which dominates the range of an entire industry, and 
 puts upon the market a capital stock, proudly defiant of actual 
 values and capable of unlimited expansion. It is not a suffi- 
 cient answer to say that similar results may be lawfully ac- 
 complished; that an individual having the necessary wealth 
 might have bought all these refineries, manned them with his 
 own chosen agents, and managed them as a group at his sover- 
 eign will ; for it is one thing for the state to respect the rights 
 of ownership and protect them out of regard to the business 
 freedom of the citizen, and quite another thing to add to that 
 possibility a further extension of those consequences by creat- 
 ing artificial persons to aid in producing such aggregations. 
 .... Without either approval or disapproval of the views 
 expressed upon that branch of the case by the courts below, 
 we are enabled to decide that in this state there can be 
 no partnerships of separate and independent corporations, 
 whether directly or indirectly, through the medium of a trust ; 
 no substantial consolidations which avoid and disregard the
 
 § 101 SUMMARY OF CORPORATION LAW. 88 
 
 statutor}'- permissions and restraints; but that manufactur- 
 ing corporations must be and remain several as they were cre- 
 ated or become one under the statute." 
 
 § 101. In State v. Standard Oil Co. (1892), 49 Ohio St. 
 137, in holding that the Standard Oil Company of Ohio should 
 be ousted from carrying out an agreement whereby its stock 
 should, with that of other similar companies, be vested in a 
 board of managing trustees, Minshall, J., said: 
 
 "Much has been said in favor of the objects of the Standard 
 Oil Trust and what it has accomplished. It may be true 
 that it has improved the quality and cheapened the costs of 
 petroleum and its products to the consumer. But such is not 
 one of the usual or general results of a monopoly, and it is 
 the policy of the law to regard not what may, but what 
 usually, happens. Experience shows that it is not wise to 
 trust human cupidity where it has the opportunity to aggran- 
 dize itself at the expense of others. The claim of having 
 cheapened the price to the consumer is the usual pretext on 
 which monopolies of the kind are defended, and is well an- 
 swered in Richardson v. Buhl, 77 Mich. 632, 43 N. AV. 1102. 
 After commenting on the tendency of the combination known 
 as the 'Diamond Match Company' to prevent fair competi- 
 tion and to control prices, Champlin, J., said: 'It is no answer 
 to say that this monopoly has reduced the price of friction 
 matches. That policy may have been necessary to crush com- 
 petition. The fact exists that it rests in the discretion of this 
 company at any time to raise the price to an exorbitant de- 
 gree.' IMonopolies have always been regarded as contrary to 
 the spirit and policy of the common law. The objections are 
 stated in the 'Case of Monopolies,' Darcy v. Allein, Coke 
 pt. II, 84b. They are these: (1) 'That the price of the same 
 commodity will be raised, for he who has the sole selling of 
 any commodity may well make the price as he pleases.' (2) 
 'The incident to a monopoly is that after the monopoly is 
 granted, the commodity is not so good and merchantable as 
 it was before; for the patentee having the sole trade regards 
 only his private benefit and not the com.monwealth.' (3) 'It 
 tends to the impoverishment of divers artificers arid others, 
 who before, by the labor of their hands in their art or trade, 
 had maintained themselves and their families, who will now 
 of necessity be constrained to live in idleness and beggary.' 
 The third objection, though frequently overlooked, is none 
 the less important. A society in which a few men are the 
 employers and the great body are merely employees or ser-
 
 89 CORPORATE CRIMES AND TORTS. § 102 
 
 vants is not the most desirable in a republic; and it should be 
 as much the policy of the laws to multiply the members en- 
 gao-ed in independent pursuits or in the profits of production 
 as to cheapen the price to the consumer. Such policy would 
 tend to an equality of fortunes among its citizens, thought 
 to be so desirable in a "republic, and lessen the amount of 
 pauperism and crime. It is true that in the case just cited 
 the monopoly had been created by letters patent. But the 
 objections lie not to the manner in Mdiich the monopoly is 
 created. The effect on industrial liberty and the price of 
 commodities will be the same, whether created by patent or 
 by an extensive combination among those engaged in similar 
 industries controlled by one management. By the invariable 
 laws of human nature, competition will be excluded and prices 
 controlled in the interest of those connected with the combina- 
 tion or trust." 
 
 § 102. In Mogul Steamship Co. v. McGregor (1889), L. R. 
 23 Q. B. Div. 598, affirmed (1892), H. L. App. Cas. 25, in hold- 
 ing that a combination of ship owners, for the purpose of cut- 
 ting rates in the shipment of tea and thus keeping the business 
 in their own control, driving the plaintiffs from the field, was 
 not an unlawful conspiracy in restraint of trade, Bowen, L. J., 
 said: 
 
 "If, indeed, it could be plainly proved that the mere forma- 
 tion of 'conferences,' 'trusts' or 'associations' such as these 
 were always necessarily injurious to the public — a view which 
 involves, perhaps, the disputable assumption that, in a coun- 
 try of free tracle, and one which is not under the iron regime 
 of statutory monopolies, such confederations can ever be 
 really successful — and if the evil of them were not sufficiently 
 dealt with by the common-law rule, which held such agree- 
 ments to be void as distinct from holding them to be criminal, 
 there might be some reason for thinking that the common law 
 ought to discover within its arsenal of sound common-sense 
 principles some further remedy commensurate with the mis- 
 chief. Neither of these assumptions are, to my mind, at all 
 evident, nor is it the province of judges to mold and stretch 
 the law of conspiracy in order to keep pace with the calcula- 
 tions of political economy. If peaceable and honest combina- 
 tions of capital for purposes of trade competition are to be 
 struck at, it must, I think, be by legislation, for I do not see 
 that they are under the ban of the common law."
 
 §§ 103, 104 SUMMARY OF CORPORATION LAW. 90 
 
 § 103. In 1890, it being conceded, by consensus of opinion 
 more or less general, that large corporate aggregations, as dis- 
 tinguished from combinations by way of agreement, were not 
 merely, by reason of their largeness, illegal at common law as 
 conspiracies, monopolies or restraints of trade, the so-called 
 Sherman Anti-Trust Act was enacted by Congress, afterward 
 supplemented by the act of 189-4, by which contracts, combina- 
 tions in the form of trust or otherwise, or conspiracies in re- 
 straint of interstate trade or commerce, were declared illegal 
 and void. 
 
 § 104. In the application of these statutory provisions to 
 particular cases, two questions have always been presented for 
 answer: (1) Is the contract, combination or corporation a 
 transaction in interstate or foreign commerce? (2) Is it in re- 
 straint of trade? This latter requires that a construction 
 be placed on the term "restraint of trade," and there has 
 been voluminous discussion as to whether that means much, 
 nothing, or something. It has been recently construed to 
 mean something, in the particular circumstances of a particu- 
 lar case, to be spotted in the "light of reason." 
 
 In United States v. E. C. Knight Co. (1894), 156 U. S. 1, 
 a bill was filed by the United States government to have de- 
 clared void and enjoined an agreement whereby the American 
 Sugar Eefining Company agreed to take over the stock of 
 several Pennsylvania sugar refineries, thereby obtaining prac- 
 tical control of the manufacture of sugar in the United States. 
 The supreme court affirmed the decree of the courts below 
 dismissing the bill. Fuller, C. J., in the opinion of the court, 
 held that while the agreements did tend to bring about 
 monopoly in the manufacture of sugar in the several states, 
 manufacture was not trade or commerce, and the agreements 
 controlling manufacture within the states did not restrain 
 interstate trade or commerce, and were not subject to regula- 
 tion by Congress; Harlan, J., dissenting on the ground that 
 control of manufacture controlled prices and therefore af- 
 fected interstate commerce, and therefore was subject to the 
 provisions of the act.
 
 91 CORPORATE CRIMES AND TORTS. §§ 105, 106 
 
 § 105. In United States v. Freight Assn. (1896), 166 U. S. 
 290, an agreement among several railroad companies made in 
 1889 to maintain rates and regulate traffic was declared illegal, 
 as in restraint of interstate commerce, four justices, including 
 White, J., dissenting, on the ground that it was not an unrea- 
 sonable restraint. 
 
 In United States v. Joint Traffic Assn. (1898), 171 U. S. 
 505, a traffic agreement similar to the Freight Association 
 agreement was held invalid as a restraint of trade, with the 
 same dissenting justices. 
 
 In Addyston Pipe & Steel Co. v. United States (1899), 175 
 U. S. 211, a combination of pipe nuanufacturers regulating 
 the manufacture and the marketing and sale of pipe from one 
 state to another was held, by reason of the latter, distinguish- 
 able from the Knight case, and to be a restraint of interstate 
 trade within the statute, which also was held constitutional as 
 within the power of Congress to regulate interstate commerce. 
 
 In Connolly v. Union Sewer-Pipe Co. (1902), 184 U. S. 
 540, it was held that while a combination might be illegal as 
 such, that did not prevent recovery for product sold. 
 
 In Montague & Co. v. Lowry (1903), 193 U. S. 38, a com- 
 bination of manufacturers of tiles in California and elsewhere, 
 regulating the manufacture and sale of tiles, was held illegal, 
 and the parties injured entitled to treble damages under the 
 statute. 
 
 § 106. In Northern Securities Co. v. United States (1904), 
 193 U. S. 197, it was held, Harlan, J., delivering the opinion of 
 the court, that a holding company formed to acquire a ma- 
 jority of the stock of two great competing railroads was a 
 combination in restraint of trade within the statute, and was 
 illegal, and the holding company was enjoined from voting 
 or otherwise controlling the stock of the respective railroad 
 companies; "White, Fuller, C. J., Peckham and Holmes, JJ., 
 dissenting on the ground that such a construction and exten- 
 sion of the Sherman Act was in excess of the power of Con- 
 gress and in violation of fundamental property rights. 
 
 In Loewe v. Lawlor (1908), 208 U. S. 274, it was held that a 
 combination of labor organizations to compel a manufacturer
 
 § 107 SUMMARY OF CORPORATION LAW. 92 
 
 to unionize his shops or boycott his business in different states 
 was an illegal combination in restraint of trade in violation 
 of the act. 
 
 In Shawnee Co. v. Anderson (1908), 209 U. S. 423, a lease 
 by a comipany of its goodwill and business was held void, as 
 being, under the circumstances of the case, in restraint of 
 interstate commerce. 
 
 In Swift & Co. V. United States (1905), 196 U. S. 375, it 
 was held, in an opinion by Holmes, J., that a combination 
 of meat-packers regulating prices and shipments was in viola- 
 tion of the Sherman Act, as being in restraint of commerce, 
 being distinguished from the Knight case, as that involved 
 only a combination in manufacture. 
 
 § 107. In Standard Oil Co. v. United States (1911), 221 
 U. S. 1, the Standard Oil Company was held to be a combina- 
 tion in restraint of trade within the statute, and ordered dis- 
 solved ; White, C. J., in the opinion of the court, stating, as 
 part of the reasoning on which the decision was reached, that 
 the act must be construed in the light of reason, and the mean- 
 ing of "restraint of trade" must be determined, with reference 
 to the scope of its usage at the time of the passage of the act, 
 not to be any and every restraint in the strictest sense, but 
 restraints found, on fair inspection of the circumstances sur- 
 rounding a particular case, to be reasonably calculated to 
 produce the evil aimed at in the act; Harlan, J.,. concurring 
 in the result, but dissenting from the reasoning of the chief 
 justice, insisting on a strict and literal construction of the 
 term "restraint of trade." 
 
 Similarly, United States v. American Tobacco Co. (1911), 
 221 U. S. 106.
 
 93 STOCKHOLDERS. §§ HO, HI 
 
 CHAPTER VI. 
 
 STOCKHOLDERS. 
 
 § 110. A corporation, by reason of its peculiar character 
 as a legal entity purely the creature of statute, has marked 
 characteristics in its mutual relations with certain individuals 
 and groups of individuals composed of its membership, or 
 stockholders, directors and officers. 
 
 The mutual rights, duties and liabilities existing between 
 the corporation and these individuals and groups of individ- 
 uals are for the most part contractual, the terms and limits 
 of the contractual rights, duties and obligations being partly 
 statutory and partly by way of express agreement between 
 the parties and the corporation and the parties. In the first 
 place, the rights, duties and liabilities of stockholders as 
 between themselves, the corporation and third parties will 
 be summarily stated. 
 
 § 111. An individual by becoming a stockholder in a cor- 
 poration, whether by subscription to its stock on its formation 
 or by purchase of stock later, may with precision be said to as- 
 sume a contractual status, as distinguished from a right of 
 property or a chose in action, in relation to the corporation in 
 question, defined by the governing corporation law, the char- 
 ter, tlie by-laws and the particular terms embodied in the 
 stock subscription and stock certificate. It is not a right of 
 property, for the stockholder does not own any part of the 
 corporate property, even his certificate of stock being simply 
 evidence of his status as a stockholder. It is not a chose in 
 action, for the corporation is under no pecuniary liability to 
 the stockholder as such. It may, however, in various events 
 give rise to a chose in action; as, for instance, in case a divi- 
 dend is declared and not paid, and in the event of dissolution 
 or other termination of the corporation the stockholder is en- 
 titled to have his pro rata share of the assets over liabilities 
 paid and delivered over to him.
 
 §§ 112, 113 SUMMARY OF CORPORATION LAW. 94 
 
 § 112. On subscribing to the stock of a corporation the sub- 
 scriber becomes liable to pay the amount of his subscription, 
 which is the limit of his liability, unless otherwise provided by 
 statute. He becomes by so subscribing a member and stock- 
 holder of the corporation, having the right to participate as 
 such in the management of the corporation, by voting at 
 stockholders' meetings and otherwise in accordance with the 
 charter and by-laws when adopted, to have a stock certificate 
 as evidence of membership, and to share in any dividends de- 
 clared and in the assets of the corporation on its termination, 
 by dissolution or otherwise. The stockholder has a right to 
 have the corporation managed and conducted for the benefit 
 of the whole body of stockholders in accordance with the 
 charter, but the judgment and action of that majority of the 
 stockholders required by the by-laws for action in the partic- 
 ular case, whether acting directly or through the directors 
 and officers, is conclusive and binding in and out of court, 
 unless fraud or a violation of the charter is clearly shown. 
 
 On the transfer of stock the transferee succeeds to the 
 rights and liabilities of the transferrer, except that the trans- 
 feree must enforce his right to have the transfer recorded 
 in the books of the company before he will be recognized as 
 a stockholder and member of the corporation, at the same 
 time obtaining a stock certificate in his own name as evidence 
 of membership. 
 
 § 113, In holding that a corporation owning stock in an- 
 other corporation had no interest in the property of the latter 
 which it could mortgage. Field, J., in Humphreys v. McKis- 
 sock, 140 U. S. 304, p. 312, said: 
 
 "The property of a corporation is not subject to the con- 
 trol of individual members, whether acting separately or 
 jointly. They can neither encumber nor transfer that prop- 
 erty 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 only 
 through its officers, subject to the conditions prescribed by 
 law. 
 
 "In Smith v. Hurd, 12 Met. 371, 385, the relations of stock- 
 holders to the rights and property of a banking corporation 
 are stated with his usual clearness and precision by Chief
 
 95 STOCKHOLDERS. § 114 
 
 Justice Shaw, speaking for the supreme court of Massachu- 
 setts, and the same doctrine applies to the relations of stock- 
 holders in all business corporations. Said the chief justice: 
 'The individual members of a corporation, whether thev 
 should 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, agent or servant to account or discharge 
 Ihem from any liability. Should all the stockholders join 
 in a power of attorney to anyone, he could not take posses- 
 sion of any real or personal estate, any security or chose in 
 action ; could not collect a debt or discharge a claim, or re- 
 lease damage arising from any default ; simply because they 
 are not the legal owners of the property, and damage done 
 to such property is not an injury to them. Their rights and 
 their powers are limited and well defined.' " 
 
 While the stockholders do not own the corporate property, 
 they nevertheless control corporate action, and in holding that 
 corporate action approved by the stockholders but not formally 
 acted upon by the directors was valid, Fuller, C. J., in Union 
 Pacific Ry. Co. v. Chicago etc. Ry. Co., 163 U. S. 564, p. 596, 
 said: 
 
 "When by the charter of a corporation its powers are 
 vested in its stockholders, and this was the common-law rule 
 when the charter was silent, the ultimate determination of 
 the management of the corporate affairs rests with its stock- 
 holders, and the charter of the Pacific Company did not com- 
 mit the exclusive control to the board of directors." 
 
 § 114. In Jellenik v. Huron Copper Mining Co., 177 TJ. S. 
 1, Harlan, J., in holding that stock in a corporation had its situs 
 for the purpose of conferring jurisdiction at the domicile of 
 the company, said (p. 13) : 
 
 "The certificates are only evidence of the ownership of the 
 shares, and the interest represented by the shares is held by 
 the company for the benefit of the true owner. As the habi- 
 tation or domicile of the company is and must be in the state 
 that created it, the property represented by its certificates of 
 stock may be deemed to be held by the company within the 
 state whose creature it is, whenever it is sought by suit to 
 determine who is its real owner. This principle is not 
 affected by the fact that the defendant is authorized by the 
 laws of Michigan to have an office in another state at which 
 a book showing the transfers may be kept."
 
 §§ 115, 116 SUMMARY OF CORPORATION LAW. 96 
 
 § 115. In holding that one in whose name stock stood as 
 trustee and by way of collateral security could vote the stock 
 without thereby becoming beneficial owner and liable as such, 
 Bradley, J., in Burgess v. Seligman, 107 U. S. 20 (p. 29), said: 
 
 "When the law provides that if a person holds stock as a 
 trustee, or by way of collateral security only, he shall not be 
 personally liable for the company's debts, it supposes that 
 the stock shall be holden and that the pledgee or trustee shall 
 be the holder. If, then, the law is to have any force or effect, 
 the mere fact of holding cannot be set up as a bar or estoppel 
 against proof of the manner and character of such holding. 
 And if such pledgee or trustee may be a holder of the stock 
 in that character, is he bound to be perfectly passive in his 
 holding? He will not be entitled to any dividends or profits, 
 it is true ; or if he receives dividends or profits he must ac- 
 count therefor; but is it certain that he may not lawfully 
 vote on the stock? An executor, administrator, guardian or 
 trustee certainly may vote ; and vrhere is the rule to be found 
 that a holder for collateral security under a law which per- 
 mits such holding may not vote on the stock so held without 
 losing his character as a mere pledgee? But as before said, 
 if the pledgee in voting the stock exceeds his rights as such 
 pledgee, it cannot have the effect of making the stock his 
 own." 
 
 § 116. In holding a subscription valid where enough had 
 been done to constitute a contract and that the subscriber was 
 not relieved by the subsequent consolidation of the company 
 with another authorized by the statute at the time of the sub- 
 scription. Strong, J., in Nugent v. Supervisors, 19 Wall. 241 
 (p. 247), said: 
 
 "The fact that no subscription was formally made upon 
 
 the books of the company is quite immaterial There 
 
 was not only the resolution declaring the subscription made, 
 but there was an acceptance by the railroad company and 
 notice of the acceptance. The minds of the parties came 
 together." 
 
 Again (p. 250) : 
 
 "In a multitude of cases decided in England and in this 
 country it has been determined that a subscriber for the stock 
 of a company is not released from his engagement to take 
 it and pay for it by any alteration of the organization or
 
 97 STOCKHOLDERS. §§ 117, 118 
 
 purposes of the company which at the time the subscription 
 was made were authorized either by the general law or by 
 the special charter, and a clear distinction is recognized 
 between the effect of such alterations and the effect of those 
 made under legislation subsequent to the contract of sub- 
 scription They uniformly assert that the subscriber 
 
 for stock is released from his subscription by a subsequent 
 alteration of the organization or purposes of the company 
 only when such alteration is both fundamental and not pro- 
 vided for or contemplated by either the charter itself or the 
 general laws of the state." 
 
 § 117. In holding that an action lay for the conversion of 
 stock transferred in blank, Waite, J., in McAllister v. Kuhn, 96 
 U.S. 87, p. 89, said: 
 
 "There can be no doubt that shares of stock in a corpora- 
 tion may be transferred by means of an assignment and de- 
 livery of certificates. It is true that a certificate of stock 
 is not the stock itself; but it is documentary evidence of title 
 to stock, and may be used for the purposes of symbolical de- 
 livery, as the stock itself is incapable of actual delivery. A 
 blank indorsement of a certificate may be filled up by writ- 
 ing an assignment and power of attorney over the signature 
 indorsed, and in this way an actual transfer of the stock on 
 the books of the corporation may be perfected. A wrongful 
 use of such an indorsed certificate for such a purpose may 
 operate as a conversion of the stock." 
 
 § 118. In holding that a transfer of stock is complete when 
 registered on the books of the company irrespective of the 
 stock certificate to which, however, the transferee is entitled, 
 Matthews, J., in National Bank v. Watsontown Bank, 105 
 U. S. 217, p. 222, said: 
 
 "A complete transfer of the title to the stock upon the 
 books of the bank, it is not doubted, would have the effect 
 to vest it in the transferee, free from any claim or lien of the 
 bank. The consent of the bank, made necessary to such 
 transfer, is the waiver of its right, as its refusal would be the 
 assertion of it. The transfer when thus consummated de- 
 stroys the relation of membership between the corporation 
 and the old stockholder with all its incidents, and creates 
 an original relation with the new member free from all ante- 
 cedent obligations. This legal relation and proprietary inter- 
 7
 
 §§ 119, 120 SUMMARY OF CORPORATION LAW. 98 
 
 est on -which it is based are quite independent of the 
 certificate of ownership, which is mere evidence of title. The 
 complete fact of title may very well exist without it. All 
 that is necessary, when the transfer is required by law to be 
 made upon the books of the corporation, is that the fact 
 should be appropriately recorded in some suitable register or 
 stock list, or otherwise formally entered upon its books." 
 
 § 119. In holding that a transferee in blank of stock takes 
 subject to liens imposed by statute, Brewer, J., in Hammond v. 
 Hastings, 134 U. S. 401, p. 404, said: 
 
 "Repeated efforts have been made to have certificates of 
 stock declared negotiable paper, but they have been unsuc- 
 cessful. Such a certificate is not negotiable in either form or 
 character; and like every non-negotiable paper, whoever 
 takes it does so subject to its equities and burdens; and 
 though ignorant of such equities and burdens, his ignorance 
 does not relieve the paper therefrom, or enable him to hold 
 it discharged therefrom." 
 
 § 120. In holding that a transfer of stock on the books of a 
 company under and pursuant to a forged transfer in blank was 
 invalid against the true owner, Field, J., in Telegraph Co. v. 
 Davenport, 97 U. S. 369, p. 371, said: 
 
 "Forgery can confer no power nor transfer any rights. 
 The officers of the company are the custodians of its stock- 
 books, and it is their duty to see that all transfers of shares 
 are properly made, either by the stockholders themselves or 
 persons having authority from them. If upon the presenta- 
 tion of a certificate for transfer they are at all doubtful of 
 the identity of the party offering it with its owner, or if not 
 satisfied of the genuineness of a power of attorney produced, 
 they can require the identity of the party in the one case and 
 the genuineness of the document in the other, to be satis- 
 factorily established before allowing the transfer to be made. 
 In either case they must act upon their own responsibility. 
 In many instances they may be misled without any fault of 
 their own, just as the most careful person may sometimes be 
 induced to purchase property from one who has no title and 
 who may perhaps have acquired its possession by force or 
 larceny. Neither the absence of blame on the part of the 
 officers of the company in allowing an unauthorized transfer 
 of stock nor the good faith of the purchaser of stolen prop-
 
 99 STOCKHOLDERS. § 121 
 
 erty will avail as an answer to the demand of the true 
 owner." 
 
 § 121. In holding a transferee of stock on the books of a 
 company bound to pay unpaid balances on stock, Strong, J., in 
 Webster v. Upton, Assignee, 91 U. S. 64 (p. 67), said: 
 
 "Stockholders become such in several ways, — either by 
 original subscription, or by assignment of prior holders, or 
 by direct purchase from the company. An express promise 
 is almost unknown, except in the case of an original subscrip- 
 tion; and oftener than otherwise it is not made in that. The 
 subscriber merely agrees to take stock. He does not ex- 
 pressly promise to pay for it. Practically, then, unless the 
 ownership of such stock carries with it the legal duty of pay- 
 ing all legitimate calls made during the continuance of the 
 ownership, the fund held in trust for creditors is only that 
 portion of each share which was paid prior to the organiza- 
 tion of the company, — in many cases not more than five per 
 cent ; in the present case only twenty. Then the company 
 commences business and incurs obligations, representing all 
 the while to those who deal with it that its capital is the 
 amount of stock taken, when in truth the fund which is held 
 in trust for creditors is only that part of the stock which has 
 been actually paid in. This cannot be 
 
 "The plain object of the statute, therefore, would be de- 
 feated if there was no liability of the stockholder to pay the 
 full prescribed amount of each share of his stock. With this 
 plain object of the legislature in view, it must be assumed, 
 after the verdict of the jury, the defendant voluntarily be- 
 came a stockholder. Either he must have designed to de- 
 feat the legislative intent, or he must have consented to carry 
 it out. The former is not to be presumed, and if the latter 
 was the fact, coming as he did into privity with the company, 
 there is a necessary; implication that he undertook to com- 
 plete the payment of all that was unpaid of the shares he 
 held whenever it should be demanded. To constitute a prom- 
 ise binding in law, no form of words is necessary. An im- 
 plied promise is proved by circumstantial evidence ; by proof 
 of circumstances that show the party intended to assume an 
 obligation. A party may assume an obligation by putting 
 himself into a position which requires the performance of 
 duties But if the law implies a promise by the orig- 
 inal holders or subscribers to pay the full par value when it 
 may be called, it follows that an assignee of the stock when 
 he has come into privity with the company by having stock
 
 § 122 SUMMARY OP CORPORATION LAW. 100 
 
 transferred to him on the company's books is equally liable. 
 The same reasons exist for implying a promise by him as 
 exist for raising up a promise by his assignor. And such is 
 the law as laid down by the textwriters generally, and by 
 
 many decisions of the courts In Angell and Ames on 
 
 Corporations, section 534, it is said: 'When an original sub- 
 scriber to the stock of an incorporated company, who is so 
 bound to pay the installments on his subscription from time 
 to time, as they are called in by the company, transfers his 
 stock to another person, such other person is substituted not 
 only to the rights, but to the obligations, of the original sub- 
 scriber, and he is bound to pay up the installments called 
 for after the transfer to him. The liability to pay the in- 
 stallments is shifted from the outgoing to the incoming 
 stockholder. A privity is created between the two by the 
 assignment of the one and the acceptance of the other, and 
 also between them and the corporation ; for it would be ab- 
 surd to say, upon general reasoning, that, if the original sub- 
 scribers have the power of assigning their shares, they 
 should, after disposing of them, be liable to the burdens 
 which are thrown upon the owners of the stock.' 
 
 "So in Redfield on Railways, 53, it is said the cases agree 
 that whenever the name of the vendee of shares is trans- 
 ferred to the register of shareholders, the vendor is exoner- 
 ated, and the vendee becomes liable for calls. We think, 
 therefore, the transferee of stock in an incorporated com- 
 pany is liable for calls made after he has been accepted by 
 the company as a stockholder and his name has been regis- 
 tered on the stock-books as a corporator; and, being thus 
 liable, there is an implied promise that he will pay calls when 
 made while he continues the owner." 
 
 § 122. In holding a stockholder liable for unpaid install- 
 ments of stock regardless of agreements or representations to 
 the contrary by the company or its agents. Hunt, J., in Upton 
 V. Tribilcock, 91 U. S. 45, p. 47, said : 
 
 "The acceptance and holding of a certificate of shares in 
 an incorporation makes the holder liable to the responsibili- 
 ties of a shareholder. Brigham v. Mead, 10 Allen, 245 ; Buff 
 City R. R. Co. v. Douglass, 14 N. Y. 336 ; Seymour v. Sturges, 
 26 Id. 134. The capital stock of a moneyed corporation is 
 a fund for the payment of its debts. It is a trust fund of 
 which the directors are the trustees. It is a trust to be man- 
 aged for the benefit of its shareholders during its life, and
 
 101 STOCKHOLDERS. § 123 
 
 for the benefit of its creditors in the event of its dissolution. 
 This duty is a sacred one and cannot be disrej^arded. Its 
 violation will not be undertaken by any just-minded man, 
 and will not be permitted by the courts. The idea that the 
 capital of a corporation is a football to be thrown into the 
 market for the purpose of speculation, that its value may be 
 elevated or depressed to advance the interests of its man- 
 agers, is a modern and wicked invention. Equally unsound 
 is the opinion that the obligation of a subscriber to pay his 
 subscription may be released or surrendered to him by the 
 trustees of the company. This has often been attempted, but 
 never successfully. The capital paid in, and promised to be 
 paid in, is a fund which the trustees cannot squander or give 
 away. They are bound to call in what is unpaid, and care- 
 fully to husband it when received. Sawyer v. Hoag, 17 Wall. 
 610; Tuckerman v. Brown, 33 N. Y. 297 ; Ogilvie v. Knox Ins. 
 Co., 22 How. 380; Osgood v. Laytin, 3 Keys, 521." 
 
 § 123. In a suit by a judgment creditor to enforce liability 
 of stockholders to whom stock had been issued for property, 
 Coit V. Gold Amalgamating Co., 119 U. S. 343, Field, J., hold- 
 ing the stockholder not liable in the absence of fraud, said: 
 
 "The plaintiff contends, and it is the principal basis of his 
 suit, that the valuation thus put upon the property was ille- 
 gally and fraudulently made at an amount far above its 
 actual value, averring that the property consisted only of a 
 machine for crushing ores, the right to use a patent called 
 the Crosby process, and the charter of the proposed organiza- 
 tion; that the articles had no market or actual value, and, 
 therefore, that the capital stock issued thereon was not fully 
 paid, or paid to any substantial extent, and that the holders 
 thereof were still liable to the corporation and its creditors 
 for the unpaid subscription. 
 
 ''If it were proved that actual fraud was committed in the 
 payment of the stock, and that the complainant had given 
 credit to the company from a belief that its stock was fully 
 paid, there would undoubtedly be substantial ground for the 
 relief asked. But where the charter authorizes capital stock 
 to be paid in property, and the shareholders honestly and in 
 good faith put in property instead of money in payment of 
 their subscriptions, third parties have no ground of com- 
 plaint. The case is very different from that in which sub- 
 scriptions to stock are payable in cash, and where only a part 
 of the installments has been paid. In that case there is still
 
 § 124 SUMMARY OF CORPORATION LAW. 102 
 
 a debt due to the corporation, which if it becomes insolvent, 
 may be questioned in equity by the creditors, as a trust fund 
 liable to the payment of their debts. But where full paid 
 stock is issued for property received, there must be actual 
 fraud in the transaction to enable creditors of the corpora- 
 tion to call stockholders to account. A gross and obvious 
 overvaluation of property would be strong evidence of fraud. 
 Boynton v. Hatch, 47 N. Y. 225 ; Van Cott v. Van Brunt, 82 
 N. Y. 535; Carr v. Le Fevre, 27 Pa. 413." 
 
 Where stock was issued for property fraudulently over- 
 valued, Shiras, J., in holding bona fide creditors entitled to 
 enforce actual payment by the subscribers in Lloyd v. Pres- 
 ton, 146 U. S. 630, said (p. 642) : 
 
 "It having been found, on convincing evidence, that the 
 overvaluation of the property transferred to the railway com- 
 pany by Harper, in pretended payment of the subscriptions 
 to the capital stock, was so gross and obvious as, in connection 
 with the other facts in the case, to clearly establish a case of 
 fraud, and to entitle bona fide creditors to enforce actual pay- 
 ment by the subscribers, it only remains to consider the effect 
 of the defenses set up." 
 
 § 124. In holding that the unpaid balance of a stock sub- 
 scription could not be satisfied by setoff of an ordinary debt 
 due by the company to one of its creditors, for the reason that 
 the capital stock of a corporation is a trust fund for the benefit 
 of creditors. Miller, J., in Sawyer v. Hoag, 17 Wall. 610, said 
 (p. 620) : 
 
 "Though it be a doctrine of modern date, we think it now 
 well established that the capital stock of a corporation, espe- 
 cially its unpaid subscriptions, is a trust fund for the benefit 
 of the general creditors of the corporation. And when we 
 consider the rapid development of corporations as instru- 
 mentalities of the commercial and business world in the last 
 few years, with the corresponding necessity of adapting legal 
 principles to the new and varying exigencies of thi.s business, 
 it is no solid objection to such a principle that i-t is modern, 
 for the occasion for it could not sooner have arisen. 
 
 "The principle is fully asserted in two recent cases in this 
 court, namely, Burke v. Smith, 16 Wall. 390, and in New 
 Albany v. Burke, 11 Wall. 96. Both these cases turned upon 
 the doctrine we have stated, and upon the necessary infer- 
 ence from that doctrine that the governing officers of a cor-
 
 103 STOCKHOLDERS. § 125 
 
 poration cannot by agreement or other transaction with the 
 stockholder release the latter from his obligation to pay, to 
 the prejudice of its creditors, except by fair and honest deal- 
 ing and for a valuable consideration It is very true 
 
 that by the power of the legislature there is created in all 
 acts of incorporation a legal entity which can contract with 
 its shareholders in the ordinary transactions of business as 
 with other persons. It can buy of them, sell to them, make 
 loans to them, and, in insurance companies, make contracts 
 of insurance with them, in all of which both parties are 
 bound by the ordinary laws of contract. The stockholder is 
 also relieved from personal liability for the debts of the com- 
 pany. But after all, this artificial body is but the representa- 
 tive of its stockholders, and exists mainly for their benefit, 
 and is governed and controlled by them through the officers 
 whom they elect. And the interest and power of legal con- 
 trol of each stockholder is in exact proportion to the amount 
 of his stock. It is therefore but just that when the interest 
 of the public, or of strangers dealing with this corporation, 
 is to be affected by any transaction between the stockholders 
 who own the corporation and the corporation itself, such 
 transaction should be subject to a rigid scrutiny, and if found 
 to be infected with anything unfair toward such third person 
 calculated to injure him, or designed intentionally and in- 
 equitably to screen the stockholder from loss at the expense 
 of the general creditor, it should be disregarded or annulled 
 so far as it may inequitably affect him." 
 
 In holding a stockholder of record liable for statutory 
 assessments on the stock, Clifford, J., in TurnbuU v. Payson, 
 95 U. S. 418, said (p. 421) : 
 
 "Where the name of an individual appears on the stock- 
 book of a corporation as a stockholder, the prima facie pre- 
 sumption is that he is the owner of the stock, in a case where 
 there is nothing to rebut that presumption; and in an action 
 against him as a stockholder, the burden of proving that he 
 is not a stockholder or of rebutting that presumption is cast 
 upon the defendant." 
 
 § 125. In Handley v. Stutz, 139 U. S. 417, it was held that 
 where a corporation, not insolvent but being under the neces- 
 sity of raising additional capital, increased its capital stock, dis- 
 tributed part of such increased stock gratuitously among its 
 existing stockholders, but sold the balance with bonds at less
 
 § 125 SUMMARY OF CORPORATION LAW. 104 
 
 than par but at the best price obtainable, the gratuitous dis- 
 tributees were liable as original subscribers, to creditors gen- 
 erally, but the bond and stock purchasers were liable for 
 balances between the sale price and the par value only to 
 creditors who had become such subsequently to the increase 
 of capital stock. Brown, J., in the opinion of the court said 
 (p. 427) : 
 
 "Ever since the case of Sawyer v. Hoag, 17 Wall. 610, it 
 has been the settled doctrine of this court that the capital 
 stock of an insolvent corporation is a trust fund for the pay- 
 ment of its debts ; that the law implies a promise by the orig- 
 inal subscribers of stock who did not pay for it in money or 
 other property to pay for the same when called upon by 
 creditors; and that a contract between themselves and the 
 corporation that the stock shall be treated as fully paid and 
 nonassessable, or otherwise limiting their liability therefor, 
 is void as against creditors. The decisions of this court upon 
 this subject have been frequent and uniform, and no relax- 
 ation of the general principle has been admitted. Upton v. 
 Tribilcock, 91 U. S. 45 ; Sanger v. Upton, 91 U. S. 56 ; Webster 
 v Upton, 91 U. S. 65 ; Chubb v. Upton, 95 U. S. 665 ; Pullman 
 V. Upton, 96 U. S. 328 ; County of Morgan v. Allen, 103 U. S. 
 498 ; Hawkins v. Glenn, 131 U. S. 319 ; Graham v. Railroad 
 Co., 102 U. S. 148, 161; Richardson v. Green, 134 U. S. 
 
 30.'. . . . 
 
 "If the corporation has no right as against creditors to sell 
 or dispose of this stock with an agreement that no further 
 assessment shall be made upon it, much less has it the right 
 to give it away or distribute it among shareholders without 
 receiving a fair equivalent therefor, and thereby induce the 
 public to deal with it upon the credit of such shares as repre- 
 senting the assets of the corporation Somewhat dif- 
 ferent considerations apply to those who subscribe for the 
 bonds of the company with the understanding that they were 
 to receive an amount of stock equal to the bonds as an addi- 
 tional inducement to their subscription The case then 
 
 resolves itself into the question whether an active corpora- 
 tion or, as it is called in some cases, a 'going concern' find- 
 ing its original capital impaired by loss or misfortune, may 
 not, for the purpose of recuperating itself and providingnew 
 conditions for the successful prosecution of its business, issue 
 new stock, put it upon the market, and sell it for the best 
 price that can be obtained. The question has never been 
 directly raised before in this court, and we are not conse-
 
 105 STOCKHOLDERS. § 125 
 
 quently embarrassed by any previous decisions on the point. 
 In the Upton cases, arising out of the failure of the Great 
 Western Insurance Company , in Hatch v. Dana, 101 U. S. 
 205, and in Hawkins v. Glenn, 131 U. S. 319, the defendants 
 were either original subscribers to the increased stock at a 
 price far below its par value, or transferees of such sub- 
 scribers; and the stock was issued not, as in this case, to pur- 
 chase property or raise money to add to the plant, and 
 facilitate the operations of the company, but simply to in- 
 crease its original stock in order to carry on a larger busi- 
 ness, and the stock thus issued was treated as if it formed 
 a part of the original capital. In County of Morgan v. Allen, 
 103 U. S. 498, the same principle was applied to a subscrip- 
 tion by a county to the capital stock of a railroad company, 
 for which it had issued its bonds, although such bonds had 
 been surrendered to the county with the consent of certain 
 of its creditors. 
 
 "To say that a corporation may not, under the circum- 
 stances above indicated, put its stock upon the market and 
 sell it to the highest bidder, is practically to declare that a 
 corporation can never increase its capital by a sale of shares, 
 if the original stock has fallen below bar. The wholesome 
 doctrine, so many times enforced by this court, that the 
 capital stock of an insolvent corporation is a trust fund for 
 the payment of its debts," rests upon the idea that the cred- 
 itors have a right to rely upon the fact that the subscribers 
 to such stock have put into the treasury of the corporation, 
 in some form, the amount represented by it ; but it does not 
 follow that every creditor has a right to trace each share of 
 stock issued by such corporation, and inquire whether its 
 holder, or the person of whom he purchased, has paid its par 
 value for it. It frequently happens that corporations, as 
 well as individuals, find it necessary to increase their capital 
 in order to raise money to prosecute their business success- 
 fully, and one of the most frequent methods resorted to is 
 that of issuing new shares of stock and putting them upon 
 the market for the best price that can be obtained ; and so 
 long as the transaction is bona fide and not a mere cover for 
 'watering' the stock, and the consideration obtained repre- 
 sents the actual value of such stock, the courts have shown 
 no disposition to disturb it. Of course, no one would take 
 stock so issued at a greater price than the original stock 
 could be purchased for, and hence the ability to negotiate 
 the stock and to raise the money must depend upon the fact 
 whether the purchaser shall or shall not be called upon to 
 respond for its par value. While, as before observed, the
 
 §§ 126, 127 SUMMARY OF CORPORATION LAW. 103 
 
 precise question has never been raised in this court, there are 
 numerous decisions to the effect that the general rule that 
 holders of stock in favor of creditors mnst respond for its par 
 value is subject to exceptions where the transaction is not 
 
 a mere cover for an illegal increase We have no 
 
 doubt the learned circuit judge held correctly that it was 
 only subsequent creditors who were entitled to enforce their 
 claims against these stockholders, since it is only they who 
 could by any legal presumption have trusted the company 
 upon the faith of the increased stock. First National Bank 
 of Deadwood v. Gustin Minerva Consolidated Mining Com- 
 pany, 44 N. W. 198; 2 Morawetz on Corporations, §§ 832-3; 
 Coit V. N. C. Gold Amalgamating Co., 14 Fed. 12. We 
 also agree with him that creditors who became such after 
 the increase was voted in May, 1886, are entitled to look to 
 those who subsequently received the stock, notwithstanding 
 the}^ did not receive it until after the debts had been con- 
 tracted." 
 
 § 126. In holding that individual liability of stockholders 
 over and above stock subscriptions is entirely a matter of stat- 
 ute, Waite, C. J., in Terry v. Little, 101 U. S. 216, said : 
 
 "The individual liability of stockholders in a corporation 
 is always a creature of statute. It does not exist at common 
 law. The first thing to be determined in all such cases is, 
 therefore, what liability has been created. There will always 
 be difficulty in attempting to reconcile cases of this class in 
 which the general question of remedy has arisen unless spe- 
 cial attention is given to the precise language of the statute 
 under consideration. The remedy must always be such as is 
 appropriate to the liability to be enforced. The statute, 
 which creates the liability may declare the purposes of its 
 creation and provide direetlj'- or indirectly a remedy for its 
 enforcement. If the object is to provide a fund out of which 
 all creditors are to be paid share and share alike, it needs 
 no argument to show that one creditor should not be per- 
 mitted to appropriate to himself, without regard to the rights 
 of others, that which is to make up the fund." 
 
 § 127. In holding that a bank, pledgee of stock transferred 
 into its name on the books of the corporation, was liable as a 
 stockholder and could not evade that liability by having the 
 stock transferred to a dummy on the books of the company,
 
 107 STOCKHOLDERS. § 127 
 
 Strong, J., in National Bank v. Case, 99 U. S. 628, said (p. 
 631): 
 
 "Such being the facts of the case, there can be no serious 
 controversy respecting the principles of law applicable to 
 them. It is thoroughly established that one to whom stock 
 has been transferred in pledge or as collateral security for 
 money loaned, and who appears on the books of the corpora- 
 tion as the owner of the stock, is liable as a stockholder for 
 the benefit of creditors. We so held in Pullman v. Upton, 
 96 U. S. 328 ; and like decisions abound in the English courts 
 and in numerous American cases, to some of which we refer: 
 Adderly v. Storm, 6 Hill (N. Y.), 624; Roosevelt v. Brown, 
 11 N. Y. 148; Ilolyoke Bank v. Burnham, 11 Cush. (Mass.) 
 183; Magruder v. Colston, 44 Md. 349; Crease v. Babcock, 
 10 Met. (Mass.) 525; Wheelock v. Kost, 77 111. 296; Empire 
 City Bank, 18 N. Y. 199 ; Hale v. Walker, 31 Iowa, 344. For 
 this several reasons are given. One is, that he is estopped 
 from denying his liability by voluntarily holding himself out 
 to the public as the owner of the stock, and his denial of 
 ownership is inconsistent with the representations he has 
 made; another is, that by taking the legal title he has re- 
 leased the former owner; and a third is, that after having 
 taken the apparent ownership and thus become entitled to 
 receive dividends, vote at elections, and enjoy all the privi- 
 leges of ownership, it would be inequitable to allow him to 
 refuse the responsibilities of a stockholder. This subject is 
 well treated in Mr. Thompson's recently published work on 
 'The liability of stockholders,' where may be found not only 
 a full collection of authorities, but a careful analysis of what 
 the authorities contain. Vide, e. 13. 
 
 "When, therefore, the stock was transferred to the Ger- 
 mania Bank, though it continued to be held merely as a col- 
 lateral security, the bank became subject to the liabilities of 
 a stockholder, and the liability accrued the instant the trans- 
 fer was made. At that instant the liability of Phelps, McCul- 
 lough & Co. ceased. We have, then, only to inquire whether 
 the bank succeeded in throwing oif that liability by its trans- 
 fer to its clerk, Waldo. It certainly did not thereby devest 
 itself of its substantial ownership. It is not every transfer 
 that releases a stockholder from his responsibility as such. 
 While it is true that shareholders of the stock of a corpora- 
 tion generally have a right to transfer their shares, and thus 
 disconnect themselves from the corporation and from any 
 responsibility on account of it, it is equally true that there 
 are some limits to this right. A transfer for the mere pur-
 
 § 128 SUMMARY OP CORPORATION LAW. 108 
 
 pose of avoiding his liability to the company or to its cred- 
 itors is fraudulent and void, and he remains still liable. The 
 English cases, it is admitted, give effect to such transfers, if 
 they are made, as it is called, 'out-and-out'; that is, com- 
 pletely, so as to devest the transferrer of all interest in the 
 stock. But even in them it is held that if the transfer is 
 merely colorable, or, as sometimes coarsely denominated, a 
 sham, — if, in fact, the transferee is a mere tool or nominee 
 of the transferrer so that as between themselves there has 
 been no real transfer, 'but in the event of the company becom- 
 ing prosperous the transferrer would become interested in the 
 profits, the transfer will be held for naught and the trans- 
 ferrer will be put upon the list of contributories.' Williams' 
 Case, L. R. 9 Eq. 225, note, where the transfer was, as in the 
 present case, made to a clerk of the transferrer without con- 
 sideration ; Payne's Case, Id. 223; Kintrea's Case, L. R. 5 
 Ch. 9'5. See, also, L-indley on Partnership, 2d ed., p. 1352; 
 Chinnock's Case, 1 Johns. Ch. (Eng.) 714; Hyam's Case, 1 
 De Gex, F. & J. 75 ; Budd's Case, 3 Id. 296. The American 
 doctrine is even more stringent. Mr. Thompson states it 
 thus, and he is supported by the adjudicated cases: *A trans- 
 fer of shares in a failing corporation made by the transferrer 
 with the purpose of escaping his liability as a shareholder, to 
 a person who from any cause is incapable of responding in 
 respect to such liability, is void as to the creditors of the 
 company and as to other shareholders, although as between 
 the transferrer and the transferee it was out-and-out.' 
 Nathan v. Whitlock, 9 Paige (N. Y.), 152; McClaren v. Fran- 
 ciseus, 43 Mo. 452 ; Marcy v. Clark, 17 Mass. 329 ; Johnson v. 
 Laflin, by Dillon, J., 6 Cent. L. J. 131." 
 
 § 128. In holding that preferred stockholders who had be- 
 come such in lieu of their prior position as creditors had no lien 
 or claim on the corporate property superior to that of cred- 
 itors under debts contracted by the company subsequently to 
 the issue of preferred stock, and that their only valid claim 
 was one to a priority over the holders of common stock, 
 Blatchford, J., in Warren v. King, 108 U. S. 389, said (p. 
 396): 
 
 "The rights of the holders of preferred stock in this case 
 must be determined by the language of the stock certificate. 
 That is exactly the same as the language of the written in- 
 struments which preceded the issuing of the certificates. 
 The shares are shares of the capital stock of the company,
 
 109 STOCKHOLDERS. § 128 
 
 though shares with different privileges from shares of the 
 common stock. The certificate declares the quality of the 
 preferred stock in two respects — (1) its relation to the prop- 
 erty of the company; (2) its relation to the net earnings. 
 
 "As to the property, it is declared that the preferred stock 
 is to be and remain a first claim on the property of the com- 
 pany 'after its indebtedness.' But it is stock, and part of 
 the capital stock with the characteristics of capital stock. 
 One of such characteristics is that no part of the property 
 of a corporation shall go to reimburse the principal of capital 
 stock until all the debts of the corporation have been paid. 
 It would require the clearest language to admit of the ap- 
 plication of a different rule to any capital stock There 
 
 is a unity of right in the claim of the preferred stock on 
 the property of the company and in the title of its holder 
 to receive a share of the net earnings of that property. His 
 proprietorship in those earnings is a right to receive from 
 them so much a year, if earned, before the common stock re- 
 ceives any dividend therefrom. And when the two classes 
 of stock have each received the same specified amount out 
 of the year's net earnings, he has the right to share equally 
 in the surplus with the holder of common stock. Thus he 
 can have no income on his stock unless there are net earn- 
 ings. Those net earnings are what is left after paying cur- 
 rent expenses and interest on debt and everything else which 
 the stockholders, preferred and common, as a body corporate 
 are liable to pay. The holders of preferred stock have the 
 same relation, by virtue of the certificate, to the corpus of 
 the property which they have to its net earnings. Their 
 position in regard to both is one inferior to that of all cred- 
 itors Whatever position the holders of preferred cer- 
 tificates occupied before they accepted preferred stock, 
 whatever special rights of lien they had, they became cor- 
 porators, proprietors, shareholders, and abandoned the posi- 
 tion of creditors, and took up toward existing and future 
 creditors the same position which every stockholder in a cor- 
 poration occupies toward existing and future creditors. His 
 chance of gain, by the operations of the corporation, throws 
 on him, as respects creditors, the entire risk of the loss of his 
 share of the capital, which must go to satisfy the creditors in 
 case of misfortune. He cannot be both creditor and debtor 
 by virtue of the ownership of stock. In this case, all the par- 
 ties holding trustees' certificates united to form the new cor- 
 poration and converted themselves into stockholders in it."
 
 ^ 129 SUMMARY OP CORPORATION LAW, 110 
 
 § 129, In holding that a preferred stockholder was not en- 
 titled to dividends until "declared," nor to compel a declara- 
 tion of dividends without showing abuse of discretion by the 
 directors of the corporation in failing to do so, Harlan, J., in 
 New York etc. R. R. v. Nickals, 119 U. S. 296, said (p. 306) : 
 
 "A declaration of profits, as in itself and without further 
 action by the directors, entitling shareholders to dividends 
 is unknown in the law or practice of corporations. Divi- 
 dends are 'declared' by some formal act of the corporation — 
 the question whether there are or are not profits being set- 
 tled entirely by the accounts of the company as kept by sub- 
 ordinate officers, not by the mere statement of directors as 
 
 to what appears upon its books We are of opinion 
 
 that while the agreement of 1877 and the articles of associa- 
 tion sustain the claim of preferred stockholders to a six per 
 cent dividend in advance of common stockholders, the former 
 are not entitled, of right, to dividends, payable out of the 
 net profits accruing in any particular year, unless the direct- 
 ors of the company formally declare, or ought to declare, a 
 dividend payable out of such profits; and whether a divi- 
 dend should be declared in any year is a matter belonging 
 in. the first instance to the directors to determine, with refer- 
 ence to the condition of the company's property and affairs 
 as a whole. As the evidence shows that the profits for the 
 year ending September 30, 1880, were applied to objects that 
 were legitimate and proper, and as the condition of the com- 
 pany was not such as to make the declaration of a dividend 
 a duty upon the part of the directors, we perceive no ground 
 upon which the claim of the appellees can be sustained." 
 
 In holding that certain preferred stockholders were not 
 in a position to question the validity of the contract in ques- 
 tion, Bradley, J., in Branch v. Jesup, 106 U. S. 468, said (p. 
 475): 
 
 "The appellants are stockholders of the Atlantic and Gulf 
 Railroad Company. Their stock is a preferred stock, it is 
 true, entitling them to interest on its face before any di^a- 
 dends can be made to the common stockholders. But this 
 is not inconsistent with its being stock. 
 
 "It is a very common thing in this country to issue stock 
 of this kind. The interest accruing thereon is in the nature 
 of a preferred dividend, and is sometimes so called. Though 
 after it has accrued it may become a debt, so also does a 
 dividend become a debt after it has been declared and has
 
 Ill STOCKHOLDERS. § 130 
 
 become payable. It has no priority over other debts, if, in- 
 deed, it has an equality with them." 
 
 § 130. In holding that stock dividends, i. e., dividends de- 
 clared and distributed in stock of the company, are an accre- 
 tion to the principal, not the income of an estate held in trust, 
 Gray, J., in Gibbons v. Mahon, 136 U. S. 549, said (p. 557) : 
 
 "The distinction between the title of a corporation and the 
 interest of its members or stockholders in the property of a 
 corporation is familiar and well settled. The ownership of 
 that property is in the corporation and not in the holders of 
 shares of its stock. The interest of each stockholder con- 
 sists in the right to a proportionate part of the profits when- 
 ever dividends are declared by the corporation during its 
 existence under its charter, and to a like proportion of the 
 property remaining, upon the termination or dissolution of 
 the corporation after pavment of its debts. Van Allen v. 
 Assessors, 3 Wall. 573, 584; Delaware Railroad Tax, 18 Wall. 
 306, 230; Tennessee v. Whitworth, 117 U. S. 129, 136; New 
 Orleans v. Houston, 119 U. S. 265, 277. Money earned by 
 a corporation remains the property of the corporation, and 
 does not become the property of the stockholders unless and 
 until it is distributed among them by the corporation. The 
 corporation may treat it and deal with it either as profits of 
 its business or as an addition to its capital. Acting in good 
 faith and for the best interests of all concerned, the corpora- 
 tion may distribute its earnings at once to the stockholders 
 as income ; or it may reserve part of the earnings of a pros- 
 perous year to make up for a possible lack of profits in 
 future years; or it may retain portions of its earnings and 
 allow them to accumulate, and then invest them in its own 
 works and plant, so as to secure and increase the permanent 
 value of its property. Which of these courses shall be pur- 
 sued is to be determined by the directors, with due regard 
 to the condition of the company's property and affairs as a 
 whole ; and, unless in case of fraud or bad faith on their 
 part, their discretion in this respect cannot be controlled by 
 the courts, even at the suit of owners of preferred stock, en- 
 titled by express agreement with the corporation to divi- 
 dends at a certain yearly rate 'in preference to the payment 
 of any dividend on the common stock, but dependent on the 
 profits of each particular year as declared by the board of 
 directors. ' New York, Lake Erie & Western R. R. v. Nickals, 
 119 U. S. 296, 304, 307.
 
 § 130 SUMMARY OF CORPORATION LAW. 112 
 
 "Reserved and accumulated earnings, so long as they are 
 held and invested by the corporation, being part of its cor- 
 porate property, it follows that the interest therein, repre- 
 sented by each share, is capital and not income of that share 
 as between the tenant for life and the remainderman, legal 
 or equitable thereof. 
 
 "Whether the gains and profits of a corporation should 
 be so invested and apportioned as to increase the value of 
 each share of stock, for the benefit of all persons interested 
 in it, either for a term of life or of years, or by way of re- 
 mainder in fee, or should be distributed and paid out as 
 income to the tenant for life or for years, excluding the re- 
 mainderman from any participation therein, is a question 
 to be determined by the action of the corporation itself at 
 such times and in such manner as the fair and honest admin- 
 istration of its whole property and business may require or 
 permit, and by a rule applicaisle to all holders of like shares 
 of its stock; and cannot, without producing great embarrass- 
 ment and inconvenience, be left open to be tried and deter- 
 mined by the courts as often as it may be litigated between 
 persons claiming successive interests under a trust created 
 by the will of a single shareholder and by a distinct and 
 separate investigation, through a master in chancery or 
 otherwise, of the affairs and accounts of the corporation, as 
 of the dates when the provisions of the will of that share- 
 holder take effect and with regard to his shares only. 
 
 "In ascertaining the rights of such persons the intention 
 of the testator, so far as manifested by him, must of course 
 control; but when he has given no special direction upon the 
 question as to what shall be considered principal and what 
 income, he must be presumed to have had in view the lawful 
 power of the corporation over the use and apportionment of 
 its earnings, and to have intended that the determination of 
 that question should depend upon the regular action of the 
 corporation with regard to all its shares. 
 
 "Therefore, when a distribution of earnings is made by a 
 corporation among its stockholders, the question whether 
 such distribution is an apportionment of additional stock 
 representing capital or a division of profits and income de- 
 pends upon the substance and intent of the action of the cor- 
 poration as manifested by its vote or resolution; and ordi- 
 narily a dividend declared in stock is to be deemed capital, 
 and a dividend in money is to be deemed income of each 
 
 share. 
 
 "A stock dividend really takes nothing from the property 
 of the corporation and adds nothing to the interests of the
 
 113 STOCKHOLDERS. § 131 
 
 shareholders. Its property is not diminished and their inter- 
 ests are not increased. After such a dividend, as before, the 
 corporation has the title in all the corporate property; the 
 aggregate interests therein of all the shareholders are repre- 
 sented by the whole number of shares and the proportional 
 interest of each shareholder remains the same. The only 
 change is in the evidence which represents that interest, the 
 new shares and the original shares together representing the 
 same proportional interest that the original shares repre- 
 sented before tlie issue of new ones." 
 
 § 131. In holding that where the directors of a bank re- 
 fused to resist the collection of a tax imposed on the bank by 
 the state in violation of its contract with the bank, an individ- 
 ual stockholder in a suit, making the bank, its directors and the 
 tax collector parties defendant, was entitled to an injunction, 
 Wayne, J., in Dodge v. Woolsey, 18 How. (U. S.) 331, said 
 (p. 341) : 
 
 **It is now no longer doubted either in England or the 
 United States that courts of equity, in both, have a jurisdic- 
 tion over corporations, at the instance of one or more of their 
 members, to apply preventive remedies by injunction, to re- 
 strain 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 re- 
 sult 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. And the juris- 
 diction extends to inquire into and to enjoin, as the case 
 may require that to be done, any proceedings by individuals 
 in whatever character they may profess to act if the sub- 
 ject of complaint is an imputed violation of a corporate fran- 
 chise or the denial of a right growing out of it, for which 
 there is not an adequate remedy at law. CunliflPe v. Man- 
 chester and Bolton Canal Co., 2 Russ. & Mylne Ch. R. 480n ; 
 Ware v. Grand Junction Water Co., 2 Russ. & Mylne, 470; 
 Bayshaw v. Eastern Counties Ry. Co., 7 Harr. Ch. R. 
 114; Angell & Ames, 4th ed., 424, and the other cases there 
 cited 
 
 "The result of the cases is well stated in Angell & Ames, 
 paragraphs 391, 393: 'In cases where the legal remedy 
 against a corporation is inadequate, a court of equity will 
 
 a
 
 §§ 132, 133 SUMMARY OF CORPORATION LAW. 114 
 
 interfere, is well settled, and there are cases in which a bill 
 in equity will lie against a corporation by one of its mem- 
 bers.' 'Though the result of the authorities clearly is, that 
 in a corporation, when acting within the scope of and in 
 obedience to the provisions of its constitution, the will of 
 the majority, duly expressed at a legally constituted meeting, 
 must govern , yet beyond the limits of the act of incorpora- 
 tion the will of the majority cannot make an act valid; and 
 the powers of a court of equity may be put in motion at the 
 instance of a single shareholder, if he can show that the cor- 
 porations are employing their statutory powers for the 
 accomplishment of purposes not within the scope of their 
 institution. Yet it is to be observed that there is an impor- 
 tant distinction between this class of cases and those in which 
 tliere is no breach of trust, but only error and misapprehen- 
 sion or simple negligence on the part of the directors.' " 
 
 § 132. In holding that the corporation must be made party 
 defendant in a suit by a stockholder to restrain the collection 
 of a tax, and on that ground sustaining the demurrer to the 
 bill, Davis, J., in Davenport v. Dows, 18 Wall. 626, said: 
 
 "That a stockholder may bring a suit when a corporation 
 refuses is settled in Dodge v. Woolsey, but such a suit can 
 only be maintained on the ground that the rights of the cor- 
 poration are involved. These rights the individual sliare- 
 holder is allowed to assert in behalf of himself and associates, 
 because the directors of the corporation decline to take the 
 proper steps to assert them. Manifestly, the proceedings for 
 this purpose should be so conducted that any decree which 
 shall be made on the merits shall conclude the corporation. 
 This can only be done by making the corporation a party 
 defendant. The relief asked is on behalf of the corporation, 
 not the individual shareholder, and if it be granted, the com- 
 plainant derives only an incidental benefit from it. It would 
 be wrong, in case the shareholder were unsuccessful, to allow 
 the corporation to renew the litigation in another suit involv- 
 ing precisely the same subject matter. To avoid such a re- 
 sult a court of equity will not take cognizance of a bill 
 brought to settle a question in which the corporation is the 
 essential party in interest, unless it is made a party to the 
 litigation." 
 
 § 133. In holding that there must be a real persistent re- 
 fusal to perform their duty or wrong done to the corporation
 
 115 STOCKHOLDERS. § 133 
 
 in order to justify a stockholder in bringing suit in lieu of a 
 corporation to enforce a corporate right against a third party, 
 Miller, J., in Hawes v. Oakland, 104 U. S. 450, said (p. 452) : 
 
 "Since the decision of this court in Dodge v. Woolsey (18 
 How. 331), the principles of which have received more than 
 once the approval of this court, the frequency with w^hich the 
 most ordinary and usual chancery remedies are sought in 
 the federal courts by a single stockholder of a corporation 
 who possesses the requisite citizenship in cases where the 
 corporation whose rights are to be enforced cannot sue in 
 those courts seems to justify a consideration of the grounds 
 on which that case was decided and of the just limitation of 
 the exercise of those principles That the vast and in- 
 creasing proportion of the active business of modern life 
 which is done by corporations should call into exercise the 
 beneficent powers and flexible methods of courts of equi-ty 
 is neither to be wondered at nor regretted; and this is espe- 
 cially true of controversies growing out of the relations be- 
 tween the stockholder and the corporation of which he is a 
 member. The exercise of this power in protecting the stock- 
 holder against the frauds of the governing body of directors 
 or trustees and in preventing their exercise, in the name of 
 the corporation, of powers which are outside of their charters 
 or articles of association, has been frequent, and is most bene- 
 ficial and is undisputed. These are real contests, however, 
 between the stockholder and the corporation of which he is 
 a member 
 
 "The principle involved in the case of Dodge v. Woolsey 
 permits the stockholder in one of these corporations to step 
 in betAveen that corporation and the party with whom it has 
 been dealing, and institute and control a suit in which the 
 rights involved are those of the corporation, and the contro- 
 versy is one really between that corporation and the other 
 party, each being entirely capable of asserting its own rights. 
 This is a very different affair from a controversy between 
 the shareholder of a corporation and that corporation itself 
 or its managing directors or trustees, or the other share- 
 holders, who may be violating his rights or destroj'ing the 
 property in which he has an interest. Into such a contest 
 the outsider, dealing with the corporation through its man- 
 aging agents in a matter within their authority, cannot be 
 dragged, except where it is necessary to prevent an absolute 
 failure of justice in eases which have been recognized as ex- 
 ceptional in their character and calling for the extraordinary
 
 § 133 SUMMARY OF CORPORATION LAW. 116 
 
 powers of a court of equity. It is therefore always a ques- 
 tion of equitable jurisprudence, and as such has within the 
 last forty years received the repeated consideration of the 
 highest courts of England and of this country 
 
 "This examination of Dodge v. Woolsey satisfies us that 
 it does not establish, nor was it intended to establish, a doc- 
 trine on this subject different in any material respect from 
 that found in the cases in the English and in other American 
 courts, and that the recent legislation of Congress referred 
 to leaves no reason for any expansion of the rule in that case 
 beyond its fair interpretation. 
 
 "We understand that doctrine to be that to enable a stock- 
 holder in a corporation to sustain in a court of equity, in his 
 owTi name, a suit founded on a right of action existing in the 
 corporation itself, and in which the corporation itself is the 
 appropriate plaintiff, there must exist as the foundation of 
 the suit some action or threatened action of the managing 
 board of directors or trustees of the corporation which is 
 beyond the authority conferred on them by their charter or 
 other source of organization ; or such a fraudulent transac- 
 tion completed or contemplated by the acting managers in 
 connection with some other party, or among themselves or 
 with other shareholders, as will result in serious injury to 
 the corporation or to the interests of the other shareholders; 
 or where the board of directors or a majority of them are 
 acting for their own interest, in a manner destructive of 
 the corporation itself or of the rights of the other share- 
 holders; or where the majority of shareholders themselves 
 are oppressively and illegally pursuing a course in the name 
 of the corporation, which is in violation of the rights of the 
 other shareholders, and which can only be restrained by the 
 aid of a court of equity. 
 
 "Possibly other cases may arise in which to prevent ir- 
 remediable injury, or a total failure of justice, the court 
 would be justified in exercising its powers, but the foregoing 
 may be regarded as an outline of the principles which govern 
 this class of cases. 
 
 "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 corpora- 
 tion, he should show to the satisfaction of the court that he 
 has exhausted all the means within his reach to obtain, within 
 the corporation itself, the redress of his grievances or action 
 in conformity with his wishes. He must make an earnest,
 
 117 STOCKHOLDERS. § 134 
 
 not a simulated, effort, with the managing body of the cor- 
 poration, 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 stock- 
 holders 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 complainant desires 
 on the part of the directors, and of the shareholders when 
 that is necessary, and the cause of failure in these efforts, 
 should be stated with particularity, and an allegation that 
 complainant was a shareholder at the time of the transactions 
 of which he complains, or that his shares have devolved on 
 him since by operation of law, and that the suit is not a collu- 
 sive one to confer on a court of the United States jurisdiction 
 in a case of which it could otherwise have no cognizance, 
 should be in the bill, which should be verified by affidavit." 
 
 § 134. In stating the position of stockholders and bond- 
 holders occupying the position of promoters, Brown, J., in 
 Dickerman v. Northern Trust Co., 176 U. S. 181, said (p. 203) : 
 
 "Somewhat different considerations apply to those who 
 took part in the organization of the company and in the 
 purchase of the thirty-nine mills, and who received the 
 bonds and stock of the paper company with notice of the 
 fraudulent character of the scheme. We are not disposed 
 to condone the offenses of those who, through Beard and 
 Ramsdell and their assignee Stein, as their agents, purchased 
 these plants for $2,788,000, and immediately thereafter went 
 through the form of repurchasing of their own agents (in 
 fact, of themselves) the same properties at $5,000,000. 
 These men stood in the light of promoters of the Straw 
 Paper Company. A promoter is one who 'brings together 
 the persons v/ho become interested in the enterprise, aids 
 in procuring subscriptions and sets in motion the machinery 
 which leads to the formation of the corporation itself.' 
 Cook on Stock and Stockholders, see. 661. Or, as defined 
 by the English statute of 7 & 8 Vict., chapter 110, section 3, 
 'Every person acting by whatever name in the forming and 
 establishing of a company at any period prior to the com- 
 pany' becoming fully incorporated. See, also, Lloyd on 
 Corporate Liability for Acts of Promoters, 17. He is treated 
 as standing in a confidential relation to the proposed com- 
 pany, and i^ bound to the exercise of the utmost good faith.
 
 § 135 SUMMARY OF COKPORATION LAW. 118 
 
 Lloyd's Corporate Liability; 18; Densmore Oil Co. v. Dens- 
 more, 64 Pa. 43; Bosher v. Land Co., 89 Va. 455. The pro- 
 moter is the agent of the corporation and sulDJect to the 
 disabilities of an ordinary asrent. His acts are scrutinized 
 carefully, and he is precluded from taking a secret advan- 
 tage of the other stockholders. Cook on Stock and Stock- 
 holders, sec. 651. 'Accordingly, it has been held that, if per- 
 sons start a company, and induce others to subscribe for 
 shares, for the purpose of selling property to the company 
 when organized, they must faithfully disclose all facts relat- 
 ing to the property which would influence those who form 
 the company in deciding upon the judiciousness of the pur- 
 chase. If the promoters are guilty of any misrepresenta- 
 tion of facts, or suppression of the truth in relation to the 
 character and value of the property or their personal in- 
 terest in the proposed sale, the company will be entitled to 
 set aside the transaction or recover compensation for any 
 loss which it has suffered.' Morawetz on Corporations, sees. 
 291, 294, 546; New Sombrero Phosphate Co. v. Erlanger, 5 
 Ch. Div. 73; Bagnall v. Carlton, 6 Ch. Div. 371; Emma Silver 
 Mining Co. v. Grant, 11 Ch. Div. 918. 
 
 " *In those cases where the scheme of organization gives 
 the promoters the power of selecting the directors who are 
 to represent the company in the proposed purchase, they 
 are bound to select competent and trustworthy persons who 
 will act honestly in the interest of the shareholders. A pur- 
 chase made from the promoters under these circumstances 
 ■will not bind the company unless it was a fair and honest 
 bargain.' Morawetz on Corporations, sec. 546; The New 
 Sombrero Phosphate Co. v. Erlanger, L. R. 5 Ch. Div. 73; 
 Brewster v. Hatch, 122_N. Y. 349; Simons v. Vulcan Oil & 
 Mining Co., 61 Pa. 202; Twycross v. Grant, L. R. 2 C. P. 
 Div. 469, 503; Whalev Bridge Calico Printing Co. v. Green, 
 L. R. 5 Q. B. Div. 109, 111 ; Thompson on Liability of 0. & 
 A. 218, sec. 20." 
 
 VOTING BY PROXY AND VOTING TRUSTS. 
 
 § 135. The charter of a corporation, whether general or 
 special, is a regulation of status, and the incorporators, by ac- 
 cepting the franchise in the particular instance, adopt the 
 status thereby conferred. This new status thus adopted car- 
 ries with it both rights and duties of the several individuals in 
 relation to each other and to the corporation. Of the most im-
 
 119 STOCKHOLDERS. § 136 
 
 portant is the right and duty to participate in the control and 
 management of the corporation by voting in elections of officers 
 and upon the adoption of measures. This is clearly apparent 
 to all in the case of a public or political corporation. It is 
 none the less true in the case of a corporation for economic 
 as distinguished from political purposes — in the nature of 
 things, not less true of an incorporated business concern than 
 of a municipality. 
 
 § 136. It is of some considerable importance to bear this in 
 mind, for the fact is often lost to view that a stockholder in a 
 corporation has anything more than an ordinary propertj^ in- 
 terest therein, which he is at liberty to deal with as suits his 
 pleasure. To be sure, as any valuable interest may be con- 
 sidered property, so may the stockholder's status and interest 
 in the corporation, but it is a peculiar property, a participa- 
 tion in the corporate franchise, carrying with it duties as well 
 as rights. Of these the most im^portant is that of voting, 
 which is both a right and a duty, not to be regarded purely 
 from the standpoint of the individual concerned. The con- 
 trol of the corporation is in the majority of the individual 
 units, and thus the exercise of discretion by the individual is 
 a contributing factor, important to himself and to all the in- 
 dividuals concerned in the corporation. This power of vot- 
 ing, both in the public and private corporation, is a delegated 
 power of discretion, and must be personally exercised on the 
 principle, "Delegata potestas non potest delegari." 
 
 This rule has been strictly adhered to in public corpora- 
 tions, and the citizen can lawfully vote in a municipal elec- 
 tion only in person. The reasons for the rule in the public 
 corporation apply with equal, if not greater, force in case of 
 the private business corporation, where the stockholder always 
 has a stake in the successful conduct of the corporation, which 
 is not universally true of citizen voters. In the long run, 
 the judgment of the few has been found by experience to 
 be inferior to that of the many, and in municipal and city 
 governments oligarchies have been replaced by democracies, 
 founded principally on an inalienable right of franchise in the 
 citizen voter.
 
 §§ 137, 138 SUMMARY OF CORPORATION LAW. 120 
 
 § 137. At the common law, voting by proxy was no more 
 recognized or permitted in the private corporation than in the 
 public corporation, but the rule was relaxed by the courts, 
 and finally the various state legislatures expressly authorized 
 stockholders in private corporations to vote by proxy. As a 
 consequence, voting by proxy is now very general in the 
 larger corporations, and with the voting trusts has resulted 
 in the control of the business corporations being wrested away 
 from the real stockholders into the hands of little oligarchies 
 of manipulating financiers. 
 
 In Taylor v. Griswold (1834), 14 N. J. L. 223, it was held 
 that a by-law authorizing voting by proxy was void, and that 
 each stockholder was entitled to one vote and no more. Horn- 
 blower, C. J., said: 
 
 ''When the Crown creates a corporation, it grants to it by 
 implication all powers that are necessary for carrying into 
 effect the object for which it was created. This is according 
 to the legal principle expressed in the maxim, 'Qui coneedit 
 aliquid concedere videtur et id, sine quo res ipsa non potest.' 
 11 Co. 52. It is therefore incidental to every corporation to 
 have the power of making by-laws, regulations and ordinances 
 relative to the purposes for which it was instituted. Sutton's 
 IIosp. Case, 10 Co. 31b; Norris v. Stapps, Hob. 211; City of 
 London v. Vanacker, 1 Ld. Raym. 496; Rex v. Westwood, 
 7 Bing. 1; S. C, 20 Eng. Com. Law Rep. 1159; Company 
 of Feltmakers v. Davis, 1 Bos. & Pul. 100; Rex v. Lyme Regis, 
 Doug. 158. But this incidental power of legislation is lim- 
 ited not only by the terms of the charter according to the 
 maxim, 'Expressum facit cessare tacitum' (Co. Lit. 210a), 
 but by the spirit and design of the charter, the purpose for 
 which it was created, the object which the crown or the 
 legislature had in view, and the general principles and policy 
 of the common law. Angell & Ames on Corporations, 184, 
 and cases there cited. Sutton's Hosp. Case, 10 Co. 30; Child 
 V. Hudson Bay Co., 2 P. Wms. 207 ; People v. Utica Ins. Co., 
 15 Johns. 383; FiremiCn's Ins. Co. v. Ely, 2 Cow. 699; People 
 v. Tibbits et al., 2 Cow. 358 ; People v. Kip et al., 4 Cow. 382, 
 note; Angell & Ames on Corporations, 188, sec. 4. 
 
 § 138. "If, in view of these first and elementary principles, 
 we repeat the question whether the right to make a by-law dis- 
 pensing with the personal attendance of members and permit- 
 ting them to appear and vote by proxy is incident to a cor-
 
 121 STOCKHOLDERS. § 138 
 
 poration, the answer must be in the negative. Such a power 
 is not essential, nor even apparently necessary, to carry into 
 effect the objects for which corporations are generally created. 
 If the question is again asked in reference to this particular 
 corporation, the same answer must be given, and more em- 
 phatically for the same reason. 'The true test of all by-laws,' 
 says Mr. Justice Wilmot, 'is the intention of the crown in 
 granting the charter and the apparen-t good of the corpora- 
 tion.' Rex V. Spencer, 3 Burr. Rep. 1838. What, then, was 
 the object and design of the legislature in creating this corpo- 
 ration? That it was not for the purpose of instituting a stock 
 company merely or principally for the acquisition of prop- 
 erty will appear in the sequel of this investigation. But it 
 was to enable the owners or lessees of certain existing prop- 
 erty, in the preservation and good management of which the 
 public had a deep and important interest, to adopt such 
 measure as would give permanency and security to the insti- 
 tution and be calculated to promote their own and the public 
 benefit. If, from the nature of things, this charter would 
 be inoperative, or in any measure fail to effect or secure the 
 benign objects the legislature had in view, unless we annex to 
 it the power of making such a by-law as the one under con- 
 sideration, then it follows that the corporation has the power 
 by implication and as an incident to the charter. But that 
 the right of voting by proxy is essential to the attainment of 
 the object and design of the charter will not be seriously pre- 
 tended. If we test the validity of the by-law in question, or 
 the incidental right of the corporation to make it, by the 
 latter branch of the rule just quoted, viz., 'the apparent good 
 of the corporation,' the claim will be found equally unten- 
 able. It may be for the personal convenience of members, but 
 it cannot be for the good of the corporation, that its business 
 or election should be conducted by proxies. The interest of 
 the company, the good of the public, would be better promoted 
 and more effectually secured by the personal attendance of, 
 and mutual interchange of, opinions among the members than 
 by the action of proxies. At least, this is the fair and legal 
 presumption. If one member may appear and vote by proxy 
 at elections and on other matters of vital importance to the 
 institution, then all may, and so the welfare and interest of 
 the company and the public be utterly neglected. In short, 
 so far from its being incident to a corporation to make such 
 a regulation, it is at variance with the spirit and 'with the 
 fundamental principles of our civil and political institutions.' 
 And it is confidently believed that not an authority can be 
 found nor a case produced in support of the position that the
 
 § 139 SUMMARY OF CORPORATION LAW. 122 
 
 right of miaking such a by-law is incident to a corporation of 
 any description, public or private. Speculations upon the 
 evil consequences that have resulted to many of our incorpo- 
 rated institutions, and especially to our banks, by this and 
 other innovations upon the salutary principles and rules of 
 the common law do not become this place or occasion ; but may 
 well deserve the grave consideration of another department 
 of the government." 
 
 § 139. And upon the question whether one member or 
 stockholder was entitled to more than one vote : 
 
 "The charter, if not in terms, yet in its spirit and legal in- 
 tendment, gives each member the same rights and consequently 
 but one vote ; whereas this by-law gives them unequal rights and 
 an unequal number of votes. It makes one a member for one 
 purpose and another a member for another purpose. It im- 
 poses a test or qualification unkno\ra to the charter, by which 
 to determine how many votes a member may give — whether 
 one, five, ten or fifty. In short, a by-law excluding a member 
 from office, or from the right to vote at all unless he owns five 
 or ten or twenty shares, would not be a more palpable, though 
 it might be a more flagrant, violation of the charter. A man 
 with one share is as much a -member as a man with fift}'; and 
 it is difficult to perceive any substantial difference between a 
 by-law excluding a member with one share from voting at all 
 and a by-law reducing his one vote to a cipher, by giving 
 another member fifty or a hundred votes. ' ' 
 
 Again : "Finally, the by-law in question is not authorized by 
 the charter; is inconsistent with the popular spirit and design 
 of the institution ; is not essential or necessary to effect the ob- 
 ject the legislature had in view; is contrary to the great prin- 
 ciples and policy of our laws ; and is not even for the apparent 
 good of the company itself. It is therefore void. The object 
 of the legislature was to give permanency and protection to the 
 public improvements that had been erected, and security to 
 the individuals who had embarked in the enterprise. Instead 
 of promoting and securing these legitimate designs, the tend- 
 ency — at least the apparent tendency — of the by-law in ques- 
 tion is to encourage speculation and monopoly, to lessen the 
 rights of the smaller stockholders, depreciate the value of 
 their shares, and throw the whole property and government 
 of the company into the hands of a few capitalists; and it 
 may be to the utter neglect or disregard of the public con- 
 venience and interest. I do not say that such was the design, 
 or that such has been the effect, but only that the natural or
 
 123 STOCKHOLDERS. § 140 
 
 probable tendency of the by-law in question is to produce such 
 a result." (Pemberton v. Allen, Davis Rep. 116 (Eng. 
 1607), Attorney General v. Scott, 1 Ves. 413 (Lord llard- 
 wicke, 1750), Phi-llips v. Wickham, 1 Paige Rep. 590 (Ch. 
 Walworth, N. Y.), cited in support; State v. Tudor, 5 Day's 
 Rep. (Conn.) contra.) 
 
 § 140. Craig v. First Presbyterian Church (1878), 88 Pa. 
 42 : The right of voting at an election of an incorporated com- 
 pany by proxy is not a general right, and the party who claims 
 it must show a special authority for that purpose (citing Tay- 
 lor V. Griswold). 
 
 People V. Twaddell (1879), 18 Hun, 427: Held, following 
 Phillipsi V. Wickham, that the right of voting by proxy is not 
 a general right, and the party who claims it must show a spe- 
 cial authority for that purpose. 
 
 Commionwealth v. Bringhurst (1883), 103 Pa. 134: Mem- 
 bers of a corporation may not vote by proxy unless author- 
 ized by charter or by-law. 
 
 McKee v. Home Savings & Trust Co. (1904), 122 Iowa, 731 : 
 Held, that a stockholder could vote by proxy only when au- 
 thorized by statute, articles or by-laws, and then only upon 
 matters specified in the proxy. 
 
 In Detwiller v. Commonwealth (1890), 131 Pa. 614, in 
 holding that in absence of statute a by-law allowing one vote 
 for every ten shares and also voting by proxy is reasonable 
 and binding, Williams, J., citing no cases, said: 
 
 "A corporation is a voluntary association of persons en- 
 gaged in a common enterprise. When the methods of voting 
 are not fixed by general law, the corporators may make the 
 law for themselves, subject to the qualification that such laws 
 and regulations as they make shall not conflict with the laws 
 of the state or of the United States. The general law did not 
 touch either of the questions now raised, and for that reason 
 the corporators or stockholders took them up and made a 
 law for themselves covering both subjects. They have pro- 
 vided that stockholders shall have one vote for each share 
 held by them up to ten shares, and they have fixed the pro- 
 portion which his votes shall bear to his shares above that 
 number. This is a reasonable regulation. It is uniform in 
 its action, it conflicts with no law, and it is binding on all the
 
 § 141 SUMMARY OF CORPORATION LAW. 124 
 
 shareholders. The same thing may be said in regard to voting 
 by proxy." 
 
 In People v. Crossley (1873), 69 111. 195, where the charter 
 of a benevolent society authorized the society to elect its 
 "directors or managers at such time and place and in such 
 manner as may be specified in its by-laws," held, a by-law 
 authorizing voting by proxy valid. Sheldon, J., in delivering 
 the opinion of the court, said, after stating the decisions in 
 Taylor v. Griswold and The State v. Tudor : 
 
 "The rule of the latter case appears to be one promotive 
 of convenience, and has to recommend it that it allows mem- 
 bers of a private corporation instituted for merely private 
 purposes to regulate their manner of voting in a way to suit 
 their own sense of convenience and interest. In view of the 
 statutory authority to elect the directors in such manner as 
 might be specified in the by-laws of the society, we are disposed 
 to concur with the latter authority above cited, and hold the 
 by-law authorizing the voting by proxy in elections to be 
 valid, especially so in view of section 3, article II of the 
 present constitution of the state, which directs that 'The Gen- 
 eral Assembly shall provide by law, that in all elections for 
 directors or managers of incorporated companies, every stock- 
 holder shall have the right to vote in person or by proxy, for 
 the number of shares of stock owned by him for as many per- 
 sons as there are directors or managers to be elected or to 
 cumulate said shares.' " 
 
 In Market St. Ry. Co. v. Hellman (1895), 109 Cal. 571, in 
 holding that voting by proxy to authorize a bond issue, under 
 a by-law and code provision authorizing and recognizing vot- 
 ing by proxy, was valid and efi^ectual, Searls, C, said: 
 
 "The modern law-writers upon corporations without ex- 
 ception, so far as we have observed, recognize the right of a 
 private corporation, in the absence of any statute on the sub- 
 ject, to provide by by-law for the stockholders to vote by 
 proxy. Taylor, at section 579, of his work on Corporations, 
 says: 'It is held that stockholders have no implied right to 
 vote by proxy, but it is competent for a corporation by a by- 
 law to authorize votes to be cast in that manner'; citing 
 People V. Crossley, 69 111. 195; State v. Tudor, 5 Day, 329." 
 
 § 141. It is generally conceded that a proxy is always rev- 
 ocable, though in terms made irrevocable. In Schmidt v. 
 Mitchell (1897), 101 Ky. 570, in holding that a proxy given by
 
 125 STOCKHOLDERS. § 142 
 
 one of several executors, to remain in force until revoked by 
 him, does not prevent its revocation by another executor, Du 
 Relle, J., said: 
 
 "Nor can we concur in the contention that the provision 
 in the proxy given to Dietz by Lowman, that it should remain 
 in force until 'revoked by me by giving the secretary of said 
 company notice over my own signature that it had been re- 
 voked, ' rendered the proxy irrevocable except in the mode pre- 
 scribed. *A proxy is always revocable. Even when by its 
 terms it may be irrevocable, the law allows the stockholder to 
 revoke it.' 1 Cook, Stock, Stockh. & Corp. Law, § 610. A 
 proxy-holder is a mere agent. His powers exist only at the 
 will of his principal and may be revoked by the latter at any 
 time." 
 
 In Woodruff v. Dubuque & S. C. R. Co. (1887), 30 Fed. 91, 
 it was held that a stockholder, who with others constituting a 
 majority had deposited his stock with bankers, authorizing 
 them under an agreement to dispose of the stock and to vote 
 it, remained the owner until sale of the stock, with right to 
 control the vote on it, and therefore to revoke the proxy. 
 Cook, § 610. 
 
 In Cone v. Russell, 48 N. J. Eq. 208, it was held that a 
 proxy, irrevocable m. terms for five years, given by executors 
 and trustees holding stock as such was revocable, as being 
 otherwise both contrary to public policy and a breach of trust. 
 
 § 142. In New York an irrevocable proxy is prohibited by 
 statute, and a proxy, though irrevocable in terms, given with a 
 pledge of stock as collateral is revocable (In re Germicide Co., 
 65 Hun, 206 ; In re Glen Salt Co., 17 App. Div. 234) ; but 
 where stock was issued to two jointly, an irrevocable proxy 
 by one to the other was upheld, on the ground that otherwise 
 the stock could not be voted anyway without mutual assent. 
 (Hey V. Dolphin, 92 Hun, 230.) 
 
 On the other hand, there is more recent authority for the 
 proposition that a proxy, irrevocable in terms, where coupled 
 with an interest and appearing to be for a purpose not illegal 
 or contrary to public policy for some special reason, is valid. 
 (Chapman v. Bates, 61 N. J. Eq. 658; Mobile etc. Co. v. 
 Nicholas, 98 Ala. 92 ; Whitehead v. Sweet, 126 Cal. 67 ; Clowes 
 V. Miller, 60 N. J. Eq. 179 ; Gage v. Fisher, 5 N. D. 297.)
 
 §§ 143, 144 SUMMARY OF CORPORATION LAW. 126 
 
 VOTING TRUSTS. 
 
 § 143, Shrewd managers of corporations have resorted to 
 various devices to enable them to sell to the public a majority 
 of the stock and at the same time retain control in themselves, 
 usually for the ostensible benefit of the corporation, sometimes 
 for its real better management, and oftentimes, if not quite 
 always, for the incidental main purpose of their own en- 
 richment. 
 
 Cook on Corporations, sixth edition, section 622, says: 
 
 "The control of a corporation generally determines its suc- 
 cess or failure. The control also gives power, patronage, per- 
 quisites, salaries and position. Hence it is sought for. In 
 a large corporation the absolute control generally requires 
 more money than one man is able or willing to invest, conse- 
 quently for many reasons several unite to obtain and retain the 
 control. There is always danger, however, that some of these 
 stockholders may die or sell their stock, or unite with some 
 other parties to obtain control. Hence for twenty years last 
 past the business community and the lawyers have been try- 
 ing to find some legal way of so tying up a majority of the 
 stock of a corporation as to prevent its being lost." 
 
 An obvious method adopted in certain cases is for the ma- 
 jority to agree for a certain period to vote as a unit. Diffi- 
 culty of enforcement was one serious objection to this. 
 
 With the recognition of voting by proxy, attempts were 
 made to retain control of the corporation by taking irrevo- 
 cable proxies. These, however, were not countenanced by the 
 courts, and were held invalid, and in some cases, e. g., in New 
 Tork, were prohibited by statute. 
 
 § 144. Finally, the plan was devised of transferring the 
 stock to trustees for a certain period under a voting trust 
 agreement, the trustees issuing beneficial stock trust certificates 
 to the real owners. This plan had the merit, from the man- 
 ager's standpoint, of giving the trustees the nine points' ad- 
 vantage of possession. This was early condemned and repudi- 
 ated by the courts of Connecticut and New Jersey as contrary 
 to public policy, and void per se, on the ground that it took the 
 control and exercise of discretionary voting power from those
 
 127 STOCKHOLDERS. § 145 
 
 beneficially interested, vesting it in the hands of a few in a 
 measure adversely interested, and opening wide the door to 
 fraudulent practices, manipulation and monopoly, in the long 
 run contrary to the public good, whatever the apparent tempo- 
 rary benefit. This attitude has been strongly approved for 
 clearly and forcibly stated reasons and weighty considerations 
 by the courts of North Carolina and Georgia, 
 
 In New York, voting trusts are expressly authorized by 
 statute for a limited period of five years. In other states, 
 e. g., Massachusetts, Virginia, Maine, California and Wash- 
 ington, voting trusts are held not void per se, and are coun- 
 tenanced where the apparent benefit, in the opinion of the 
 court, warrants recognition. Nowhere, however, is the rea- 
 soning of the Connecticut and North Carolina courts an- 
 swered, voting trusts, where countenanced, being merely de- 
 clared, without more, not to be contrary to public policy. 
 
 In the Massachusetts and Virginia cases the voting trust 
 is supported on the grounds merely that the majority may 
 agree to act together, and that the right to vote incident to 
 stock is a beneficial property right, and therefore the voting 
 trust is an active trust and not a dry trust. 
 
 First, assuming it to be true that a majority may agree to 
 act together, it by no manner of means follows from that 
 premise that the majority may agree to follow the dictates 
 of one or more for a period of time, subordinating their own 
 discretion and judgment. 
 
 Secondly, no one will deny that, as Mr. Cook says, the "con- 
 trol of a corporation gives power, patronage, perquisites, sal- 
 aries and position," and that the right to vote is a beneficial 
 interest and a voting trust an active trust, and still no answer 
 is made to the contention that the voting trust separates the 
 voting control of the corporation from the beneficial owner- 
 ship, substantially speaking, of the corporation. 
 
 § 145. In Bostwick V. Chapman (the Shepaug Voting Trust 
 Cases), 60 Conn. 553, in holding that a voting trust, created 
 by a majority of the stockholders vesting their legal title to 
 their stock in a trust company for five years to vote on the
 
 § 145 SUMMARY OF CORPORATION LAW. 128 
 
 stock, was void on the ground that it was against public policy 
 for the voting power to be separated from the beneficial in- 
 terest, Robinson, J., said: 
 
 "It is the policy of our law that an untrammeled power 
 to vote shall be incident to the ownership of the stock ; and a 
 contract by which the real owner's power is hampered by a 
 provision therein that he shall vote just as somebody else 
 dictates is objectionable. I think it against the policy of our 
 law for a stockholder to contract that his stock shall be voted 
 just as someone who has no beneficial interest or title in or 
 to the stock directs ; saving to himself simply the title, the 
 right to dividends, and perhaps the right to cast the vote 
 directed, willing or imwilling, whether it be for his interest, 
 for the interest of other stockholders, or for the interest of 
 the corporation, or otherwise. This I conceive to be against 
 the policy of the law, whether the power so to vote be for five 
 years or for all time. It is the policy of our law that owner- 
 ship of stock shall control the property and management of 
 the corporation, and this cannot be accomplished, and this 
 good policy is defeated, if stoclvholders are permitted to sur- 
 render all their discretion and will in the important matter 
 of voting, and sufi:er themiselves to be mere passive instru- 
 ments in the hands of some agent, who has no interest in the 
 stock, equitable or legal, and no interest in the general pros- 
 perity of the corporation. And this is not entirely for the 
 protection of the stockholder himself, but to compel a com- 
 pliance with the duty which each stockholder owes his fellow- 
 stockholder to so use such power and means as the law and 
 his ownership of stock give him that the general interest of 
 stockholders shall be protected and the general welfare of 
 the corporation sustained, and its business conducted by its 
 agents, managers and officers, so far as may be, upon prudent 
 and honest business principles, and with just as little tempta- 
 tion to, and opportunity for, fraud and the seeking of in- 
 dividual gains, at the sacrifice of the general welfare, as is 
 possible." 
 
 To the same effect, Kreissl v. Distilling Co., 61 N. J. Eq. 
 5 ; Harvey v. Linville Improv. Co., 118 N. C. 693 ; White v. 
 Thomas Inflatable Tire Co., 52 N. J. Eq. 183; Bridgers v. 
 Staton, 150 N. C. 216; Sheppard v. Rockingham Power Co., 
 150 N. C. 776; Bridgers v. First Nat. Bank, 152 N. C. 293 j 
 .Warren v. Pine, 66 N. J. Eq. 353.
 
 129 STOCKHOLDERS. §§ 146, 147 
 
 § 146. In Morel v. Hoge (1908), 130 Ga. 625, it was held 
 that an agreement made antecedent to the formation of a com- 
 pany that certain stockholders subscribing to fifty per cent of 
 the capital stock should indefinitely control the company, nam- 
 ing three out of five directors, was void, as against public 
 policy, in that it deprived the majority of control. Fish, C. J., 
 after citing with approval, among others, Shepaug Voting 
 Trust Cases, 60 Conn. 579, Cone v. Russell, 48 N. J. Eq. 208, 
 White V. Thomas Inflatable Tire Co., 52 N. J. Eq. 178, Harvey 
 v. Linville Improv. Co., 118 N. C. 693, said: 
 
 "We are aware that there are some cases in which a con- 
 trary principle is announced, but in our opinion the cases 
 
 cited announce the better doctrine Our conclusion is 
 
 that the contract set up by the respondents to the rule as 
 cause why mandamus absolute should not be granted is 
 against public policy, and therefore void, because it indefi- 
 nitely deprives the owners of the stock constituting the Hilton 
 faction, though they have a majority of the stock, of the power 
 to exercise their right, as well as their duty, to the stockhold- 
 ers, present or future, and to the public, to so vote in the 
 election of directors for the company as will, in their judg- 
 ment, promote its prosperity and best enable it to perform its 
 duties to the public, and because it gives the shareholders of 
 the Morel faction, even though they may own but a small 
 minority of the stock, the right to indefinitely control the 
 affairs of the corporation, including the right to fix the com- 
 pensation of its officers and agents and to fill any of such 
 positions from among its own members." 
 
 § 147. In Smith v. San Francisco & N. P. Ry. Co. (1897), 
 115 Cal. 584, it was held that an agreement by several persons 
 purchasing stock of the company to vote the whole as a 
 unit for five years was valid and not contrary to public 
 policy. Harrison, J., in the opinion of the court, held the 
 agreement valid, as not being in restraint of trade, and on the 
 ground that it is neither illegal nor against public policy to 
 separate the voting power from the beneficial interest of 
 stock, citing in support of this position, among others, the 
 Shepaug Voting Trust Cases, 60 Conn. 553. Beatty, C. J., 
 dissented, saying: 
 9
 
 § 148 SUMMARY OF CORPORATION LAW. 130 
 
 "There is not time at my comanand to go over the decisions, 
 but I am satisfied that the weight of authority is against the 
 validity of any contract by which the sole owner of stock 
 parts irrevocably with the right to vote it with the effect 
 of putting a minority in control of the corporation." 
 
 In Mobile & 0. R. Co. v. Nicholas (1893), S8 Ala. 92, a 
 voting trust, created by the stockholders executing an irrev- 
 ocable power of attorney or proxy to trustees to vote the 
 stock until debenture bonds should be paid, was held valid, 
 Coleman, J., without citation of the cases, saying: 
 
 "We have examined case after case, and find generally that 
 the agreements declared void by the courts, where the power 
 to vote was separated from the stockholder and vested in 
 third persons, were under circumstances which showed that 
 the purpose to be accomplished v^as unlawful — such as the 
 courts would not sanction if the principal had voted and not 
 a proxy ; and in case of a mere dry trust, it is held that the 
 stockholder might revoke a power of attorney in form irrev- 
 ocable Tested by any principle of law, legal or equi- 
 table, the agreement was not only valid, but fair, at least, to 
 the corporation company and stockholders." 
 
 In Faulds v. Yates (1870), 57 111. 416, it was held that an 
 agreement between stockholders owning a majority of the 
 stock to vote their stock as a unit for directors was, under 
 the circumstances of that case, valid, Thornton, J., stating 
 the ground of decision as follows: 
 
 "The agreement in this case was not for the injury of the 
 minority stockholders. It could not have been so intended, 
 
 and we cannot perceive that it could so operate A 
 
 careful reading of the contract shows no hidden advantage in- 
 tended, no fraud, no dishonesty." 
 
 § 148. In Brightman v. Bates (1900), 175 Mass. 105, a 
 syndicate agreement for the purchase of stock in a company, 
 containing the clause that the stock "shall be voted at each 
 annual meeting" for three years for a board of directors 
 named by the committee, assuming that it was to be carried out 
 by placing the stock in trustees under a voting trust agree- 
 ment, was held valid; Holmes, C. J., said: 
 
 "We know nothing in the policy of our law to prevent a 
 majority of stockholders from transferring their stock to a
 
 131 STOCKHOLDERS. § 148 
 
 trustee with unrestricted power to vote upon it. Brown v. 
 Steamship Co., 5 Blatchf. 525, 527, Fed. Cas. No. 2025. See 
 Green v. Nash, 85 Me. 148, 26 Atl. 1114. Supposing that 
 the committee had been trustees, what would the syndicate 
 agreement have amounted to then? Merely an agreement by 
 each of the trustees to vote as they should jointly agree to 
 vote, and an agreement by the subscribers not to demand back 
 their shares for three years. The latter term is not illegal, 
 whether valid or not. A stockholder has a right to put his 
 shares in trust, whatever his motive. If the trust is an active 
 one. he cannot terminate it at will; and the attempt to cut 
 himself oil' by contract, instead of by the imposition of duties 
 from ending it, certainly is not enough to poison the covenant 
 with the plaintiff. See "Williams v. Montgomery, 148 N. Y. 
 519, 525, 43 N. E. 57. It might be held that the duty of 
 voting incident to the legal title made such a trust an active 
 one in all cases. As to the arrangement for the trustees 
 uniting to elect their candidates, the decisions of other states 
 show that such arrangements have been upheld, and we do 
 not think it needs argument to prove that they are lawful. 
 If stockholders want to make their power felt, they must 
 unite. There is no reason why a majority should not agree 
 to keep together. Faulds v. Yates, 57 111. 416 ; Smith v. 
 Railway Co., 115 Cal. 584, 57 Pac. 582, 35 L. R. A. 309; 
 Havemeyer v. Havemeyer, 43 N. Y. Super. Ct. 506, 512, 513, 
 affirmed according to Beach Priv. Corp., § 504, note 6, and 
 Fisher v. Bush, 35 Hun, 641, in 86 N. Y. 618. See Brown 
 v. Steamship Co., 5 Blatchf. 525, 527, Fed. Cas. No. 2025." 
 
 In Williams v. Montgomery, 148 N. Y. 519, it was merely 
 held that an agreement to deposit certain stock in a trust 
 company and not withdraw it for six months was valid. 
 
 In Brown v. Pacific Mail Steamship Co. (1867), Fed. Cas. 
 No. 2025, Blatchford, J., held an agreement not to sell certain 
 stock for a certain period, with a power of attorney in terms 
 irrevocable but really revocable at any time, not "contrary 
 to public policy or anywise open to objection." No discus- 
 sion of authorities or principles. 
 
 In Fisher v. Bush, 35 Hun, 641, it was held that an agree- 
 ment not to sell stock nor vote the same by proxy was with- 
 out consideration, and also void as against public policy. 
 
 In Greene v. Nash (1892), 85 Me. 148, the court refused 
 to rescind a deposit of stock with voting trustees by the duly 
 authorized attorney of the stockholder, the voting trust agree-
 
 § 149 SUMMARY OF CORPORATION LAW. 132 
 
 ment having been acted on by all parties. There was no 
 discussion of principles or authorities, the court merely say- 
 ing: 
 
 ' ' The court should be very careful in setting aside contracts 
 
 and agreements which have been acted upon in good faith by 
 others." 
 
 § 149. In Carnegie Trust Co. v. Security L. Ins. Co. (Va. 
 1910), 68 S. E. 412, a voting trust agreement, under which 
 stock was transferred to trustees for twenty-five years to vote 
 and deal with as if they were owners, the real owners receiving 
 beneficial certificates, was held an active trust, not void per 
 se, and not against public policy in that particular case. 
 After reviewing the authorities at length, Keith, P., in deliv- 
 ering the opinion of the court, said : 
 
 "It is impossible to read the argument of counsel and the 
 cases and text-writers cited without perceiving that the force 
 of the attack upon such agreements as that under con- 
 sideration rests upon the proposition that the trustees are 
 clothed only with the naked or dry trust, wholly separated 
 or 'divorced,' as it is sometimes described, from the beneficial 
 interest in the stock. If the analysis of the elements of 
 property in the ownership of a share of stock given by Cook 
 on Corporations, sixth edition, section 312, be sound — and 
 we think it cannot be controverted — then the right to vote 
 the stock is, in itself and of itself, a valuable right of prop- 
 erty, and such a trust becomes, by virtue of that right, an 
 active and not a passive or dry trust. If this view be cor- 
 rect, it of course answers the other branch of the proposition, 
 and there would be no separation — certainly no complete sep- 
 aration — or 'divorce,' such as is contended for, of the owner- 
 ship of the stock from the beneficial interest in it. 
 
 "Passing from definitions as given by writers upon the 
 law of corporations and considering it as a practical subject, 
 does not common experience prove that the power to manage 
 and control property is a valuable right ; that the right to 
 manage and control a great corporation to direct its policies, 
 involving in many cases the rightful levy and expenditure 
 of vast sums of money, is in itself and of itself a right of 
 great value? Is it not a matter of common knowledge that 
 the common stock of many corporations which have never 
 paid a dividend has a considerable market value growing out 
 of and dependent upon the right to vote the common stock
 
 133 STOCKHOLDERS. § 150 
 
 which is the power of control? It may be that the expression 
 used by Mr. Justice Holmes, of the supreme court of Massa- 
 chusetts in Brightman v. Bates, supra, was in the particular 
 case an obiter dictum, but his observation is none the less 
 true that it might with propriety be held 'that the duty of 
 voting incident to the legal title makes such a trust an active 
 one in all cases.' 
 
 "Let it be remembered that in this case the trustees were 
 the absolute owners of the stock, and that when they sold 
 the trust certificates they agreed to sell, and the purchasers 
 of those certificates only bought the right to receive payments 
 equal to the dividends upon the shares of stock, less the 
 expense, if any, incurred by the trustees, and on the 1st 
 of February, 1932, to call for certificates for full paid shares 
 of stock at their par value, and that in the meantime the 
 right to vote remained in the trustees, in order to promote 
 and to protect the value of the stock and to secure the satis- 
 factory management of the security company. 
 
 "As we have said, there is no case in this state upon the 
 subject; and upon an examination of the authorities else- 
 where, we are unable to say that the contract under considera- 
 tion should be held violative of the public policy of this com- 
 monwealth." 
 
 § 150. In Boyer v. Nesbitt (1910), 227 Pa. 398, a voting 
 trust was held valid on the ground that in that case it was 
 coupled with an interest in the trustees who were given a right 
 to purchase stock, and further, that while the general policy of 
 the law prohibits the separation of the voting power from the 
 beneficial interest, it was found as a fact in that case that a 
 property interest and a definite policy of beneficial interest to 
 the corporation was to be carried out by the voting trust. 
 
 In Winsor v. Commonwealth Coal Co. (1911), 63 Wash. 62, 
 114 Pac. 908, an agreement to pool stock for a term of years 
 was held valid on the ground that persons owning stock have 
 the unqualified right to combine their interests to secure the 
 management of the corporation when such management is fair 
 to all stockholders alike.
 
 §§ 155, 156 SUMMARY OF COEPOBATION LAW. 134 
 
 CHAPTER VII, 
 
 DIRECTORS AND OFFICEKS. 
 
 § 155. Directors are agents of a corporation appointed by 
 the stockholders ; officers are agents of a corporation appointed 
 by the directors. 
 
 A corporation being purely a statutory unit person or 
 entity, it can only act by the concerted authority of its mem- 
 bership executed by agents. While in most jurisdictions 
 certain corporate acts are deemed of such fundamental im- 
 portance as to require the express authorization by the mem- 
 bership or stockholders, as, for example, the increase of the 
 capital stock, it would be cumbersome and impracticable in 
 the large majority of cases to require the membership or 
 stockholders of the corporation to convene for the purpose 
 of considering and passing upon routine acts in the exercise 
 of the corporate powers. 
 
 For this reason the exercise by the corporation of its gen- 
 eral corporate powers is usually committed by the stock- 
 holders, either expressly by virtue of the statute or indirectly 
 by the by-laws, to a managing board commonly called di- 
 rectors or trustees. This managing board represents the 
 body of stockholders in the management of the corporate 
 affairs and the corporate entity itself as agent and agents 
 in dealing with the outside public. Being representatives 
 and agents of the corporation, the directors or trustees do 
 not own the corporate property and are not vested with any 
 legal title to it, and can only deal with it in the corporate 
 name, being in their dealings subject to the usual rules and 
 limitations applicable to agents dealing for principals. 
 
 § 156. As regards the corporations and the stockholders, 
 the directors or trustees are limited to the powers actually con- 
 ferred upon them expressly or by implication in fact, but their 
 power to bind the corporation in dealing with the public is 
 limited only by their ostensible authority, and that in most
 
 135 DIRECTORS AND OFFICERS. § 157 
 
 cases is limited only by the charter powers of the corpora- 
 tion. Ostensible authority is that authority held out to the 
 public expressly or by acts and dealings. In the case of 
 corporations, the directors are held out as managers gen- 
 erally, and in the absence of express limitation brought home 
 to parties dealing with the directors, their ostensible powers 
 are coextensive with the powers of the corporation as ex- 
 pressed in the charter and statutes. It is a principle of 
 agency that any act of an agent, though it be unauthorized, 
 yet if it be not unlawful, may be ratified by the principal. 
 The rule applies equally well in the case of directors as of 
 other agents. Acts of directors, though they be ultra vires, 
 i. e., beyond their express powers as directors and therefore 
 unauthorized, yet if they be not ultra vires the corporation, 
 i. e., not beyond the charter powers and therefore not un- 
 lawful, may be ratified by the stockholders, and ratification 
 in turn may be express or implied; i. e., by allowing acts to 
 pass without objection until others in reliance thereon have 
 acted or changed their position to their detriment. Acts 
 of directors in the corporate name, within the corporate 
 powers, where expressly authorized or ratified or not ob- 
 jected to seasonably before others have acted in rightful re- 
 liance thereon, are binding on the corporation. 
 
 § 157. Officers differ from directors only in these respects, 
 namely, that they are usually appointed by the directors and 
 not by the stockholders, and the scope of their authority is spe- 
 cial, not general, as is that of directors. The employment of 
 an officer of a corporation as that of president, treasurer or 
 secretary is a special employment, and the ostensible au- 
 thority of an officer is not per se coextensive with the cor- 
 porate powers, as is that of directors, but exceeds express 
 authority conferred only to the extent that the course of 
 dealing, the acts or inaction, the speech or silence of the 
 directors and body of stockholders import approval, and 
 therefore imply authority. 
 
 The appointment and authority of other agents are governed 
 by substantially the same rules as those applicable to officers.
 
 §§158,159 SUMMARY OF CORPORATION LAW. 136 
 
 § 158. The directors, officers and other agents of a corpora- 
 tion occupy a fiduciary relation toward the corporation and 
 stockholders and are in duty bound to exercise reasonable 
 capacity, diligence and energy in the management of the cor- 
 porate affairs bona fide for the benefit of the corporation and 
 the stockholders, and in all their dealings in the name of the 
 corporation and for the corporation they are bound to exercise 
 the utmost good faith and to subordinate their individual 
 interests to those of the corporation and the stockholders. 
 Just as an agent of an individual may not deal in the name 
 of his principal with himself as agent, so the directors of a 
 corporation can only deal in the name of the corporation with 
 themselves as individuals with the assent of the stockholders, 
 and any dealing of the directors of a corporation with the 
 corporation or in its name for the benefit, directly or indi- 
 rectly, of themselves as individuals, is, until the contrary is 
 shown, presumed to be fraudulent, and while not wholly void 
 per se, is voidable at the election of the stockholders. 
 
 § 159. Directors, officers and agents of a corporation are 
 accountable to the corporation and through it to the stock- 
 holders and creditors for their dealings with or in the name of 
 the corporation. 
 
 In holding that where the charter of a corporation contem- 
 plates transaction of corporate business by a special body or 
 board of directors, any act in the corporate name by any agent 
 or officer authorized by the board of directors and within the 
 charter powers of the corporation is binding on the corpora- 
 tion. Story, J., in Fleckner v. United States Bank, 8 Wheat. 
 338, said (p. 356) : 
 
 "The first objection urged against this evidence is, that the 
 corporation could not authorize any act to be done by an agent, 
 by a mere vote of the directors, but only by an appointment 
 under its corporate seal. And the ancient doctrine of the 
 common law that a corporation can only act through the in- 
 strumentality of its common seal has been relied upon for this 
 purpose. Whatever may be the original correctness of this 
 doctrine, as applied to corporations existing by the common 
 law, in respect even to which it has been certainly broken in 
 upon in modern times, it has no application to corporations
 
 137 DIRECTORS AND OFFICERS. § 160 
 
 created by statute, whose charters contemplate the business of 
 the corporation to be transacted exclusively by a special body 
 or board of directors. And the acts of such body or board, 
 evidenced by a written vote, are as completely binding upon 
 the corporation, and as complete authority to their agents, 
 as the most solemn acts done under the corporate seal. In re- 
 spect to banks, from the very nature of their operations, in 
 discounting notes, in receiving deposits, in paying checks, and 
 other ordinary and daily contracts, it would be impracticable 
 to affix the corporate seal as a confirmation of each individual 
 act. And if a general authority for such purposes, under the 
 corporate seal, would be binding upon the corporation, be- 
 cause it is the mode prescribed by the common law, must not 
 the like authority, exercised by agents appointed in the mode 
 prescribed by the charter, and to whom it is exclusively given 
 by the charter, be of as high and solemn a nature to bind the 
 corporation ? To suppose otherwise is to suppose that the 
 common law is superior to the legislative authority ; and that 
 the legislature cannot dispense with forms or confer authori- 
 ties which the common law attaches to general corporations. 
 Where corporations have no specific mode of acting prescribed, 
 the common-law mode of acting may be properly inferred; 
 but every corporation created by statute may act as the stat- 
 ute prescribes, and the common law cannot control by implica- 
 tion that which the legislature has expressly sanctioned. 
 Indeed, this very point has been repeatedly under the con- 
 sideration of this court ; and in the case of Bank of Columbia 
 V. Patterson (7 Cranch, 299) and Mechanics' Bank of Alex- 
 andria V. Bank of Columbia (5 Wheat. 326), principles were 
 established which settle the point that the corporation may 
 be bound by contracts not authorized or executed under its 
 corporate seal and by contracts made in the ordinary discharge 
 of the official duty of its agents and officers. We have no 
 doubt, therefore, upon the principles of the common law, that 
 a vote of the board of directors of the Planters' Bank was as 
 full authority for any act of this nature to bind the corpora- 
 tion as if it had passed under the common seal." 
 
 § 160. In holding the question whether a cashier had acted 
 within his ostensible authority to be for the jury to determine, 
 Swayne, J., in Merchants' Bank v. State Bank, 10 Wall. 604, 
 said (p. 644) : 
 
 "It should have been left to the jury to determine whether 
 from the evidence as to the powers exercised by the cashier, 
 with the knowledge and acquiescence of the directors, and the
 
 § 161 SUMMARY OF CORPORATION LAW. 138 
 
 usage of other banks in the same city, it might not fairly be 
 inferred that Smith had authority to bind the defendant by 
 the contract which he made with the INIerchants' Bank. 
 
 "Where a party deals with a corporation in good faith — the 
 transaction is not ultra vires — and he is unaware of any de- 
 fect of authority or other irregularity on the part of those 
 acting for the corporation, and there is nothing to excite sus- 
 picion of such defect or irregularity, the corporation is bound 
 by the contract, although such defect or irregularity in fact 
 exists 
 
 "Corporations are liable for the acts of their servants while 
 engaged in the business of their employment in the same 
 manner and to the same extent that individuals are liable 
 under like circumstances." 
 
 § 161. In holding that an obligation incurred in the name 
 of a company by its de facto officers was binding on the com- 
 pany, Harlan, J., in Mining Co. v. Anglo-Californian Bank, 
 104 U. S. 192, said (p. 194) : 
 
 "Upon the board of directors of the mining company was 
 imposed, by the laws of California (Civil Code, sec. 305), the 
 duty of exerting its corporate powers, and of conducting and 
 controlling its business and property. Among the powers 
 which the company had (Civil Code, sec. 354) was the power 
 *to enter into any obligations or contracts essential to the 
 transaction of its ordinary affairs or for the purposes for 
 which it was created.' Necessarily, therefore, the board had 
 authority not only to designate the banking institution in 
 which the money of the company should be deposited, but to 
 prescribe the mode in which and the officers by whom it should 
 be withdrawn, from time to time, for use of the company. It 
 is equally clear that the board had, as incident to the general 
 powers conferred by law upon the company, power to borrow 
 money for the purposes of the corporation, and to invest cer- 
 tain officers with authority to negotiate loans, to execute notes, 
 and to sign checks drawn against its bank account, and it is 
 settled law that the existence of such authority in a subordi- 
 nate officer may, in the absence of express statutory prohibi- 
 tion, be shown otherwise than by the official record of the 
 proceedings of the board. It may be established by proof of 
 the course of business between the parties themselves ; by the 
 usages and practice which the company may have permitted 
 to grow up in its business ; and by the knowledge w^hich the 
 board charged with the duty of controlling and conducting the 
 transactions and property of the corporation had, or must be
 
 139 DIRECTORS AND OFFICERS. § 162 
 
 presumed to have had, of the acts and doincrs of its subordi- 
 nates in and about the affairs of the corporation." 
 
 § 162. In ho]din]o: notes ultra vires, made pursuant to an 
 ultra vires contract, not enforceable, Campbell, J., in Pearce 
 V. R. R. Cos., 21 How. 441, said (p. 443) : 
 
 "Now. persons dealinsf with the manasrers of a corporation 
 must take notice of the limitations imposed upon their author- 
 ity bv the act of incorporation. Their powers are conceded in 
 consideration of the advantage the public is to receive from 
 their discreet and intelligent employment, and the public have 
 an interest that neither the managers nor stockholders of the 
 corporation shall transcend their authority." 
 
 In holding that a county having authority to issue bonds 
 had ratified an issue irregularly made, Clifford, J., in Super- 
 visors v. Schenck, 5 Wall. 772, said (p. 781) : 
 
 "Questions of ratification most frequently arise in respect 
 to the acts or omissions of agents, but the general rule is the 
 same in all cases where the act done was one which it was com- 
 petent for the party attempted to be charged to do. When 
 the principal, upon a full knowledge of all the circumstances 
 of the case, deliberately ratifies the acts, doings or omissions 
 of his agent, he will be bound thereby as fully, to all intents 
 and purposes, as if he had originally given him direct author- 
 ity in the premises to the extent which such acts, doings or 
 omissions reach. 
 
 "Ratification is inoperative if the party attempted to be 
 charged was not competent to make the contract in question 
 when the same was made nor when the supposed acts of rati- 
 fication were performed, or if the contract was illegal, immoral 
 or against public policy. Like an individual, a corporation 
 may ratify the acts of its agents done in excess of authority, 
 and such ratification may, in many cases, be inferred from 
 acquiescence in those acts, as well as from express adoption. 
 Such ratification may be by express consent, or by acts and 
 conduct of the principal inconsistent with any other hypothesis 
 than that he approved and intended to adopt what had been 
 done in his name ; and it was held in Peterson v. The Mayor 
 of New York, 17 N. Y. 453, that the principle is as applicable to 
 corporations as to individuals. Where the officers of the cor- 
 poration openly exercise powers att"ecting the interests of third 
 persons, which presupposes a delegated authority for the pur- 
 pose, and other corporate acts subsequently performed show 
 that the corporation must have contemplated the legal exist-
 
 ■§§ 163, 164 SUMMARY OF CORPORATION LAW. 140 
 
 ence of such authority, the acts of such officers will be deemed 
 ri<?htful and the delep:ated authority will be presumed." 
 (Bank v. Dandridge, 12 Wheat. 70.) 
 
 In holding that a transaction ultra vires the charter powers 
 of a corporation could not be ratified, White, J., in California 
 Bank v. Kennedy, 167 U. S. 362, p. 371, said : 
 
 "It would be a contradiction in terras to assert that there 
 was a total want of power by any act to assume the liability, 
 and yet to say that by a particular act the liability resulted. 
 The transaction being absolutely void could not be confirmed 
 or ratified. As was said by this court in Union PaciJSc Ry, 
 V. Chicago etc. Ry., 163 U. S. 564, speaking through Mr. Chief 
 Justice Puller (p. 581) : 'A contract made by a corporation 
 beyond the scope of its powers, express or implied, on a proper 
 construction of its charter, cannot be enforced or rendered en- 
 forceable by the application of the doctrine of estoppel.' " 
 
 § 163. In holding that directors must account to stock and 
 bond holders for all money and property received from a col- 
 lusive and fraudulent sale of the property of the corporation, 
 Strong, J., in Jackson v. Ludeling, 21 Wall. 616, said (p. 631) : 
 
 "That the property was sacrificed by means of an unlawful 
 and widespread combination is abundantly proved^ and that 
 the directors who were parties to it, and who became the pur- 
 chasers, were guilty of an inexcusable violation of confidence 
 
 reposed in them admits of no doubt The defendants 
 
 can take nothing from such a sale thus made. Were we to 
 sustain it we should sanction a great moral and legal wrong, 
 give encouragement to faithlessness to trusts and confidence 
 reposed, and countenance combinations to wrest by the forms 
 of law from the uninformed and confiding their Just rights." 
 
 § 164. Where a director loaned money to the corporation 
 secured by a deed of trust on the corporate property and after- 
 ward purchased the property individually under the power of 
 sale in the deed. Miller, J., in holding that the transaction, if 
 voidable, had not been rescinded wdthin a reasonable time in 
 Twin Lick Oil Co. v. Marbury, 91 U. S. 587, said (p. 588) : 
 
 "That a director of a joint stock corporation occupies one 
 of those fiduciary relations where his dealings with the sub- 
 ject matter of his trust or agency, and with the beneficiary 
 or party whose interest is confided to his care, is viewed with
 
 141 DIRECTORS AND OFFICERS. § 164 
 
 jealousy Ly the courts, and may be set aside on slight grounds, 
 is a doctrine founded on the soundest morality, and which has 
 received the clearest recognition in this court and in others. 
 Koehler v. Black River Falls Iron Co., 2 Black, 715; Drury 
 V. Cross, 7 Wall. 299; Luxemburg R. R. Co. v. Maquav, 25 
 Beav. 586; The Cumberland Co. v. Sherman, 30 Barb. "553; 
 16 Md. 456. The general doctrine, however, in regard to con- 
 tracts of this class is, not that they are absolutely void, but 
 that they are voidable at the election of the party whose inter- 
 est has been so represented by the party claiming under it. 
 We say this is the general rule ; for there may be cases where 
 such contracts would be void ab initio ; as when an agent to sell 
 buys of himself and by his power of attorney conveys to him- 
 self that which he was authorized to sell. But, even here, acts 
 which amount to a ratification by the principal may validate 
 the sale. 
 
 "The present case is not one of that class. While it is true 
 that the defendant, as a director of the corporation, was boimd 
 by all those rules of conscientious fairness which courts of 
 equity have imposed as the guides for dealing in such cases, 
 it cannot be maintained that any rule forbids one director 
 among several from loaning money to the corporation when 
 the money is needed and the transaction is open and otherwise 
 free from blame. No adjudged case has gone so far as this. 
 Such a doctrine, while it would afford little protection to the 
 corporation against actual fraud or oppression, would deprive 
 it of the aid of those most interested in giving aid judiciously, 
 and best qualified to judge of the necessity of that aid and 
 of the extent to which it may safely be given. 
 
 "There are in such a transaction three distinct parties whose 
 interest is affected by it; namely, the lender, the corporation 
 and the stockholders of the corporation. 
 
 "The directors are the oiRcers or agents of the corporation, 
 and represent the interests of that abstract legal entity and of 
 those who own the shares of its stock. One of the objects 
 of creating a corporation by law is to enable it to make con- 
 tracts ; and these contracts may be made with its stockholders 
 as well as with others. In some classes of corporations, as in 
 mutual insurance companies, the main object of the act of 
 incorporation is to enable the company to make contracts with 
 its stockholders, or with persons who become stockholders by 
 the very act of making the contract of insurance. It is very 
 true that as a stocldiolder, in making a contract of any kind 
 with the corporation of which he is a member, is in some sense 
 dealing with a creature of which he is a part and holds a com- 
 mon interest with the other stockholders, who with him consti-
 
 § 165 SUMMARY OF CORPORATION LAW. 142 
 
 tute the whole of that artificial entity, he is properly held to a 
 larger amount of candor and good faith than if he were not 
 a stockholder. So when the lender is a director, charged, with 
 others, with the control and management of the affairs of the 
 corporation, representing in this regard the aggregated inter- 
 est of all the stockholders, his obligation, if he becomes a 
 party to a contract with the company, to candor and fair 
 dealing is increased in the precise degree that his representa- 
 tive character has given him power and control derived from 
 the confidence reposed in him by the stockholders who ap- 
 pointed him their agent. If he should be a sole director or one 
 of a smaller number vested with certain powers, this obliga- 
 tion would be still stronger and his acts subject to more severe 
 scrutiny, and their validity determined by more rigid prin- 
 ciples of morality and freedom from motives of selfishness. 
 .... The authorities to the point of the necessity of the exer- 
 . cise of the right of rescinding or avoiding a contract or trans- 
 action as soon as it may be reasonably done, after the party 
 with whom that right is optional is aware of the facts which 
 give him that option, are numerous and well collected in the 
 brief of appellee's counsel. The more important are as fol- 
 lows: Badger v. Badger, 2 Wall. 87; Ilarwood v. R. R. Co., 
 17 Id. 78 ; karsh v. Whitman, 21 Id. 178 ; Vigers v. Pike, 8 CI. 
 & Fin. 650 ; Wentworth v. Lloyd, 32 Beav. 467 ; Follansbee v. 
 Kilbreth, 17 111. 522." 
 
 LIABILITY, AS INDIVIDUALS, OF DIRECTORS AND 
 OFFICERS OF CORPORATIONS FOR ACTS OR 
 FAILURE TO ACT WHILE ENGAGED IN SUCH 
 CAPACITY. 
 § 165. Officers and directors of corporations are not, gen- 
 erally speaking, liable for corporate acts, but they are liable 
 for their own acts or failure to act to the extent that an agent 
 is ordinarily liable for acts or failure to act when about the 
 business of his principal. In the case of torts, the liability 
 of the officer or director is determined by the extent of his 
 participation therein; in the case of contracts, by the extent 
 of individual liability assumed, ascertained from a proper con- 
 struction of the facts proving the contract, oral or written. 
 In Arthur v. Griswold, 55 N. Y. 400, it was held that 
 directors of a corporation were not liable for damages suf- 
 fered through the false representations of an agent of the
 
 143 DIRECTORS AND OFFICERS. § 166 
 
 corporation upon which the plaintiff had been induced to 
 make loans to the corporation. Church, C. J., said: 
 
 "To maintain an action for obtaining money or property 
 by fraudulent representations, it must be shown that the 
 person charged made the representations, that they were false 
 to his knowledge, and that the representations were relied 
 upon, and were the inducing cause for parting with the prop- 
 erty. There is a significant weakness in the plaintiff's case 
 to establish the first branch of the rule of liability against 
 the defendant Corning. He had no interest in the property 
 transferred to the company and did not participate in its or- 
 ganization. It does not appear that he ever attended a meet- 
 ing of the directors, or that he was ever in Essex county, 
 where the property is located, or in the office in New York, 
 where the financial business was transacted, and, as to the 
 prospectus, which contains the principal alleged false repre- 
 sentations, it does not appear that he ever saw it or knew of 
 its existence. The only evidence against him was that he 
 was named as a director, and one hundred shares of stock 
 were issued in his name on the books of the company, the 
 certificates of which were mailed to him. But for the infer- 
 ence which may result from the admission in his answer that 
 he was a director, there would be no evidence that he knew 
 that he occupied that position. We think the evidence was 
 insufficient to maintain a charge of fraud. 
 
 "The mere fact of being a director and stockholder is not 
 per se sufficient to hold a party liable for the frauds and 
 misrepresentations of the active managers of a corporation. 
 Some knowledge of and participation in the act claimed to be 
 fraudulent must be brought home to the person charged. (51 
 N. Y. 27.) The pamphlet or prospectus was, in fact, printed 
 before the organization of the company, and was mainly pre- 
 pared by one Remington, who was the active promoter and 
 manager of the company; but that Mr. Corning had any con- 
 nection with it or knowledge of its existence is not shown." 
 
 Similarly, Wakeman v. Dalley, 51 N. Y. 27. 
 
 § 166. "Where, however, a person participates in a positive 
 tortious act, he is liable, though he acted in the capacity of an 
 officer or director of a corporation. 
 
 In National Car Brake Shoe Co. v. Terre Haute Car & 
 Mfg. Co., 19 Fed. 514, in holding officers of a company as 
 well as the corporation liable in an action on the case for 
 infringement of a patent, Woods, J., said:
 
 § 167 SUMMARY OF CORPORATION LAW. 144 
 
 "The action is in the form of a suit in trespass on the 
 case, and consequently, if all the defendants have participated 
 in the infringement, they are all liable, though the individvials 
 were acting simply as officers of the company in doing it. 
 All parties who take part in a tort or trespass are liable. 
 A man cannot retreat behind a corporation and escape lia- 
 bility for a tort in which he actively participates." (Hemp- 
 fling V. Burr, 59 Mich. 294; United Societv of Shakers v. 
 Underwood, 72 Ky. 609 ; Peck v. Cooper, 112 111. 192 ; Nun- 
 nelly V. Southern Iron Co., 94 Tenn. 397; Chenango Bridge 
 Co. V. Paige, 83 N. Y. 178; Cahoone Barnet Mfg. Co. v. 
 Rubber & Celluloid Harness Co., 45 Fed. 582; Edison Electric 
 Light Co. v. Packard Electric Co., 61 Fed. 1002; Belo v. 
 Fuller, 84 Tex. 450 ; Bates v. Van Pelt, 1 Tex. Civ. App. 185 , 
 Contra, Bath v. Caton, 37 Mich. 199; United Nickel Co. v. 
 Worthington, 13 Fed. 392; Hewitt v. Swift, 3 Allen, 420.) 
 
 § 167. In cases where damage has been caused by negli- 
 gence, if an officer, director or other agent of a corporation is 
 placed in a position raising a duty on his part to exercise care, 
 he is liable for damages, caused to persons without blame them- 
 selves, by his failure to use reasonable care under the circum- 
 stances. 
 
 A distinction is made in many cases between nonfeasance 
 and misfeasance, but this is not very intelligible, for there 
 can be no actual case of nonfeasance unless where a person 
 has done nothing whatever, however remote, in connection 
 with the matter involved, and so this distinction really re- 
 duces itself to saying that there is no liability for negligent 
 conduct unless it be the proximate cause of damage suffered. 
 
 In Mayer v. Thompson-Hutchinson Bldg. Co. (Ala.), 16 
 South. 620, in holding that the president and manager of 
 the corporation were liable equally with the company for 
 damages resulting from negligent failure to erect proper 
 scaffolding in building construction, to prevent falling of 
 bricks upon persons, Coleman, J., said: 
 
 "The second count charges the defendants with neglect, in 
 their failure or omission to erect scaffold or guards so as to 
 prevent brick from falling to the ground. On this proposi- 
 tion the defendant Thompson invokes the doctrine that an 
 agent or servant is not liable for a mere omission or non- 
 feasance. The rule is stated as contended for in Story Ag.,
 
 145 DIRECTORS AND OFFICERS. § 167 
 
 § 308, and in Story Cont., § 171, and there are numerous 
 decisions which fully sustain the text. There are courts of 
 high authority which hold differently. Our attention has not 
 be,f^n called to any decision of the question in this state, and 
 in declaring the law which shall govern we have carefully 
 considered both lines of decisions. The principle upon which 
 the rule is founded as declared by Story is that there is no 
 privity between the servant or agent and third persons, but 
 the privity exists only between him and the master or prin- 
 cipal. This relation of privity is that from which arises the 
 maxim 'respondeat superior.' The liability of the principal 
 or master to third persons dees not depend upon any privity 
 between him and such third persons. It is the privity be- 
 tween the master and servant that creates the liability of 
 the master for injuries sustained b.y third persons on account 
 of misfeasance and nonfeasance of the servant or agent. It 
 is difficult to apply the same principles w^hich govern in 
 matters of contract between an agent and third persons to the 
 torts of an agent which inflict injury on third persons, whether 
 they be of misfeasance or nonfeasance, or to give a sound 
 reason wh}^ a person who, acting as principal, would be in- 
 dividually liable to third persons for an omission of duty, 
 becomes exempt from liability for the same omission of duty 
 because he was acting as servant or agent. The tort is none 
 the less a tort to the third person, whether suffered from one 
 acting as principal or agent, and his rights ought to be the 
 same against the one whose neglect of duty has caused the 
 injury. We think the better rule declared in Baird v. Ship- 
 man, "22 Am. St. Rep. 504, 132 111. 16, 23 N. E. 384, in which 
 it is held that 'an agent of the owner of property, who has 
 the complete control and management of the premises, and 
 who is bound to keep them in repairs, is liable to third per- 
 sons for injuries resulting to the latter while using the prem- 
 ises in an ordinary and appropriate manner, through the 
 neglect of such agent. And the agent cannot excuse himself 
 on the plea that his principal is liable. It is not his contract 
 that exposes him to liability to third persons, but his common- 
 law obligation to so use that which he controls as not to injure 
 another.' See notes to this case in 22 Am. St. Rep. 504. In 
 Ellis V. McNaughton, 76 Mich. 237, 42 N. W. 1113, we find 
 this language: 'Misfeasance may involve the omission to do 
 something which ought to be done, as when an agent engaged 
 in the performance of his undertaking omits to do something 
 which it is his duty to do under the circumstances ; as that 
 when he does not exercise that degree of care which due re- 
 gard for the rights of others requires.' In Campbell v. 
 10
 
 §§ 168, 169 SUMMARY OF CORPORATION LAW. 146 
 
 Sugar Co., 62 Me. 552, it is said: 'It is the actual personal 
 ne5?:ligence of the agents which constitutes the constructive 
 negligence of the corporation. The corporation acts through 
 and by them, and they act for the corporation; and when their 
 acts or neglects result in injury to third persons, they are 
 equally responsible with their principal.' The rule is broadly 
 stated in 14 Am. & Eng. Ency. Law, 814. We might cite 
 other decisions if deemed necessary. We hold that the mere 
 relation of agency does not exempt a person from liability 
 for any injury to third persons, resulting from his neglect of 
 duty, for which he would otherwise be liable." 
 
 § 168. In Nunnelly v. Southern Iron Co., 94 Tenn. 397, in 
 holding officers of the corporation liable, as well as the com- 
 pany, for allowing muddy water to be discharged into a stream 
 running through plaintiff's premises, Hatcher, special justice, 
 said: 
 
 "When a person enters into a contract with a corporation, 
 through its agents or officers, fairly and in good faith, there 
 can, under no circumstances, any liability attach to such 
 agents or officers in respect to the contract, unless so stipu- 
 lated. In such a case the person gets just what he bargained 
 for, a liability against or a contract with a corporation alone. 
 But the torts or wrongs of corporations through its agents 
 or officers are governed by an entirely different principle of 
 law. If the agent of a corporation or of an individual com- 
 mits a tort, the agent is clearly liable for the same; and it 
 matters not what liability may attach to the principal for 
 the tort, the agent must respond in damages, if called upon 
 to do so." 
 
 Similarly, Greenberg v. Whitcomb Lumber Co. (Wis.), 63 
 N. W. 93 ; Jeune v. Sutton, 43 N. J. L. 257. 
 
 § 169. In the case of contracts, the question of the liability, 
 individually, of officers or directors making the contract is a 
 question of construction to determine the intention expressed, 
 orally or in writing, as the case may be. The question often 
 arises in connection with negotiable instruments signed by 
 individuals, with the words "president" or "secretary" 
 added, still leaving it doubtful on the instrument whether 
 the note or other obligation is that of the corporation or of 
 the individuals, or both. The mere addition of such words,
 
 147 DIRBCTOBS AND OFFICERS. § 169 
 
 however, is not sufficient to make the obligation other than 
 that of the parties signing, and to create a corporate obliga- 
 tion there must be expressed intention so to do. (Draper v. 
 Mass. S. H. Co., 5 Allen, 338; McCandless v. Belle Plane 
 Co., 78 Iowa, 161; Guthrie v. Imbrie, 12 Or. 182; note, 19 L. 
 R. A. 676.)
 
 §§175,176 SUMMARY OF CORPORATION LAW. 148 
 
 CHAPTER VIII. 
 CONSOLIDATION AND MERGER. 
 
 § 175. There are two distinct ways of uniting two or more 
 existing corporations into one corporation ; one is by forming a 
 new corporation which takes over all or part of the property, 
 franchises, rights and liabilities of two or more pre-existing 
 corporations, whose existence becomes thereupon terminated; 
 the other occurs where of two or more existing corporations one 
 continues in existence under the same or a different corporate 
 name and takes over the property, franchises, rights and 
 liabilities of the other one or more corporations whose existence 
 becomes thereupon terminated. The former method of unit- 
 ing corporations is usually termed a consolidation ; the latter 
 is termed a merger. While the name by which it is called 
 matters little, it is often important before the event to deter- 
 mine which method should be adopted and after a union has 
 been effected what method was followed, since upon it turns 
 the question whether a right or privilege conferred by statute 
 upon a new corporation has been or should be acquired, or 
 whether a privilege or exemption conferred by the statute in 
 the past on the pre-existing corporation is worth preserving 
 or has been lost. Neither consolidation nor merger can be 
 effected except under and by virtue of statutory authority, 
 and therefore the question whether a consolidation or merger 
 takes place and what property rights and liabilities are ac- 
 quired or lost is to be determined by the terms of the statute 
 under which the merger or consolidation takes place and the 
 terms of the agreement and certificate of the consolidation or 
 merger. 
 
 § 176. It is laid down as a rule that until the contrary ap- 
 pears from the statute or agreement and certificate of consoli- 
 dation or merger, the presumption is that all the rights and 
 liabilities of each of the old companies are acquired and as- 
 sumed by the new company, and the question whether the new
 
 149 CONSOLIDATION AND MERGER. §§ 177, 178 
 
 company is a newly created corporation or one of the pre-exist- 
 ing corporations continued in existence resolves ilself into the 
 question whether tlie language of the authorizing statute con- 
 tains words creative of a new corporation or merely words con- 
 tinuing the existence of a pre-existing corporation. 
 
 § 177. In holding that a consolidated company under the 
 act providing for the consolidation was a new company and 
 not entitled to a certain exemption from taxation contained in 
 the original charters of the constituent companies, Field, J., in 
 Railroad Co. v. Maine, 96 U. S. 499, p. 509, said: 
 
 "The provision in the act authorizing consolidation that the 
 new company should have all the powers, privileges and immu- 
 nities of the original companies must therefore be taken with 
 the qualification that it should have them so far as they could 
 1)6 exercised or enjoyed by it with its different officers and 
 distinct constitution. Where their exercise or enjoyment re- 
 quired other officers or a different constitution, the grant was 
 to that extent necessarily inoperative. 
 
 "The Maine Central Railroad Company was, upon the con- 
 solidation of the original companies, a new corporation, as dis- 
 tinct from them as though it had been created before their 
 existence. The fact that the powers, privileges and immuni- 
 ties which they had possessed were conferred upon the new 
 company, so far as they could be exercised or enjoyed by it, 
 in no respect affected its character as a distinct body. A new 
 corporation may be as readily created by the union of two or 
 more corporations as by the union of individuals; and its 
 powers and privileges may as well be designated by reference 
 to the charters of other companies as by special enumeration." 
 
 § 178. In holding that the question whether in case of con- 
 solidation of two or more companies a new company is created 
 or the pre-existing companies continue merged in one is one 
 of the proper construction to be placed on the statute au- 
 thorizing the consolidation, and in that case before the 
 court there was no new company but a merger. Strong, J. 
 in Central R. R. Co. v. Georgia, 92 U. S. 665, said (p. 670) : 
 
 "It may be that the consolidation of two corporations or 
 amalgamation, as it is called in England, if full and complete, 
 may work a dissolution of them both, and its effect may be the 
 creation of a new corporation. Whether such be the effect
 
 § 179 SUMMARY OF CORPORATION LAW. 150 
 
 or not must depend upon the statute under which the consoli- 
 dation takes place and of the intention therein manifested. If 
 in the statute there be no words of grant of corporate powers, 
 it is difficult to see how a new corporation is created. If it is, 
 it must be by implication, and it is an unbending rule that 
 
 a grant of corporate existence is never implied If, then, 
 
 this construction of the act of August 24, 1872, be correct 
 (and we cannot doubt that it is), that act contemplated and 
 authorized no such union and consolidation of the two com- 
 panies as should work a surrender of their charter by both 
 of them and the creation of a new company. At most it in- 
 tended a merger of the Macon & "Western Railroad Company 
 into the other, a mode of transfer of that compan.v's franchise 
 and property and a payment therefor with stock of the Cen- 
 tral Company. It is of no importance to the inquiry whether 
 a new corporation was created by the union and consolidation, 
 that the Central acquired under the act new and enlarged 
 powers as well as new stockholders. It was authorized to own 
 and operate a railroad from Macon to Atlanta; to operate 
 it as its own. It was also authorized to increase its capital 
 stock. But the gift of new powers to a corporation has never 
 been thought to destroy its identity, much less to change it 
 into a new being. Such a gift i:j not a grant of corporate 
 existence. It assumes corporate life already existing. Nor 
 is it a necessary inference from the provision of the act of 
 August 25, 1872, requiring the board of directors of each com- 
 pany to certify the union and consolidation to the governor 
 of the state, that the union was intended to be a surrender 
 of the charter of both companies and the acceptance of a new 
 charter. There were sufficient reasons for that requirement 
 without the large inference attempted to be drawn from it. 
 They were that it might appear in the office of the Secretary 
 of State that the Macon and Western Railroad Company was 
 no longer in existence, and that the capital stock of the Cen- 
 tral Company had been increased. 
 
 "Our opinion therefore is, that the charter granted to the 
 Central Railroad and Banking Company of Georgia by the 
 act of 1835 was not surrendered by its action under the later 
 act of 1872 ; that it still has all the rights that were originally 
 conferred upon it holding them under the charter originally 
 granted to it ; and consequently that it is not in the power of 
 the legislature to impose upon it a greater tax than one-half 
 of one per centum of its net annual income." 
 
 § 179. In holding that a corporation into which had been 
 merged certain railroad companies was entitled to the exemp-
 
 151 CONSOLIDATION AND MERGER. § 180 
 
 tion of its stock from taxation enjoyed by one of the constituent 
 companies, Waite, C. J., in Tennessee v. Whitworth, 117 
 U. S. 139, p. 147, said: 
 
 **When two railroad companies nnite or become consoli- 
 dated under the authority of law, the presumption is, until 
 1he contrary appears, that the united or consolidated com- 
 ]>any has all the powers and privileges, and is subject to all 
 the restrictions and liabilities, of those out of which it was 
 created. Tomlinson v. Branch, 15 Wall. 460; Branch v. 
 Charleston, 92 U. S. 677, 682 ; County of Scotland v. Thomas, 
 94 U. S. 682, 690; Railroad Co. v. Maine, 96 U. S. 499, 512; 
 Green County v. Conness, 109 U. S. 104. From this it fol- 
 lows that as the capital stock of both the original Tennessee 
 corporations was exempt from taxation, the capital stock of 
 the united or consolidated company formed by the simple 
 aggregation of that of the two old ones is also exempt unless 
 it has been provided to the contrary. Is there anything in 
 the statute authorizing the union which rebuts this presump- 
 tion? We think there is not." 
 
 HOLDING STOCK OF ITSELF OR OF OTHER COM- 
 PANIES BY CORPORATION. 
 
 § 180. Since a corporation has only such powers as are con- 
 ferred upon it, expressly or impliedly, by its charter, it follows 
 that a corporation cannot acquire nor hold its own stock ordi- 
 narily, nor that of other companies, unless authorized so to do 
 by statute. 
 
 In De La Vergne Co. v. German Savings Inst., 175 U. S. 40, 
 in holding that a contract for the purchase by one corporation 
 of the stock of another for the purpose of controlling its man- 
 agement, not being expressly authorized by statute, was ultra 
 vires, and therefore unenforceable, Brown, J., said (pp. 54- 
 58): 
 
 "But as the powers of corporations, created by legislative 
 act, are limited to such as the act expressly confers, and the 
 enumeration of these implies the exclusion of all others, it 
 follows that, unless express permission be given to do so, it is 
 not within the general powers of a corporation to purchase 
 the stock of other corporations for the purpose of controlling 
 their management. First National Bank v. National Ex- 
 change Bank, 92 U. S. 122, 128 ; Sumner v. Marcy, 3 Wood &
 
 § 180 SUMMARY OF CORPORATION LAW. 152 
 
 Minot, 105; Morawetz on Corp.. sec. 431 ; 1 Thompson on Corp., 
 sec. 1102 ; People v. Chicago Gas Trust Co., 130 Illinois, 268 ; 
 Milbank v. New York, Lake Erie & Western Railroad, 64 How. 
 Pr. 20; Mechanics' etc. Bank v. Meriden Co., 24 Connecticut, 
 159 
 
 "Our conclusion upon this branch of the case is that, as the 
 main, if not the sole, object of the purchase from the plaintiffs 
 was to acquire their stock in the Consolidated Company, such 
 purchase was ultra vires the Refrigerating Company. 
 
 "2. Is this defense available to the Refrigerating Company? 
 "Whatever doubts might have been once entertained as to the 
 power of corporations to set up the defense of ultra vires to 
 defeat a recovery upon an executed contract, the rule is now 
 well settled, at least in this court, that where the action is 
 brought upon the illegal contract, it is a good defense that the 
 corporation was prohibited by statute from entering into such 
 contract, although in an action upon a quantum meruit it may 
 be compelled to respond for the benefit actually received. 
 
 "The earliest case in which this doctrine is distinctly laid 
 dowTi is that of Pearce v. Madison & Indianapolis Railroad, 21 
 How. 441, in which it appears that two railroad companies, 
 which had been consolidated, gave their promissory notes in 
 payment for a steamboat to run in connection with the rail- 
 roads. It was held that, as there was no authority in the rail- 
 road companies to engage in running steamboats, there could 
 be no recovery on the notes, and that as the plaintiii was not 
 the owner of the boat and had sued upon the notes as an in- 
 dorsee, there could be no recovery. The same doctrine has 
 been applied to leases ultra vires a corporation, and it has 
 been uniformly held that there could be no recovery upon the 
 lease itself, though there might be in an action for use and 
 occupation of the property. Pittsburgh, Cincinnati etc. Rail- 
 way V. Keokulv & Hamilton Bridge Co., 131 U. S. 371, 384 ; 
 Central Transportation Co. v. Pullman's Palace Car Co., 139 
 U. S. 24, 48 ; S. C, 171 U. S. 138 ; McCormick v. Market Bank, 
 165 U. S. 538, 550; Thomas v. Railroad Co., 101 U. S. 71; 
 California Bauk v. Kennedy, 167 U. S. 362 ; Marble Co. v. 
 Harvey, 92 Tennessee, 116; Union Pacific Railway v. Chicago, 
 Rock island and Pacific Railway Co., 163 U. S. 564. 
 
 "The doctrine that no recovery can be had upon the con- 
 tract is based upon the theory that it is for the interest of the 
 public that corporations should not transcend the limits of 
 their charters; that the property of stockholders should not 
 be put to the risk of engagements which they did not under- 
 take ; that if the contract be prohibited by statute, everyone 
 dealing with the corporation is bound to take notice of the
 
 153 CONSOLIDATION AND MERGER. § 181 
 
 restrictions in its charter, whether such charter be a private 
 act or a general law under which corporations of this class are 
 organized. Zabriskie v. Cleveland etc. Railroad, 23 How. 
 381, 398; Thomas v. Railroad Co., 101 U. S. 71; Pennsvlvania 
 Co. V. St. Louis, Alton & Terre Haute Railroad, 118 U. S. 290, 
 G30 ; Oregon Railway Co. v. Oregonian Railway Co., 130 U. S, 
 1, 25 ; Railway Companies v. Keokuk Bridge Co., 131 U. S. 371, 
 384. 
 
 "As the action in this ease is upon the contract, and as the 
 contract was prohibited by the charter of the Refrigerating 
 Company, there can be no recovery upon it." (Valley R. Co. 
 V. Lake Erie Iron Co., 46 Ohio St. 44; Holmes & G. Mfg. Co. 
 V. Holmes Metal Co., 127 N. Y. 252; Mechanics & W. Mut. 
 Sav. & Building Assn. v. Meriden Agency Co., 24 Conn. 159 ; 
 Talmage v. Pell, 7 N. Y. 328 ; Franklin Co. v. Lewiston Sav. 
 Inst., 68 Me. 43; First Nat. Bank of Charlotte v. National 
 Exch. Bank, 92 U. S. 122 ; People v. Chicago Gas Trust Co., 
 130 111. 268.) 
 
 § 181. But though a corporation has no power to acquire 
 and hold stock in another corporation, such power is implied 
 as of necessity in cases where it be necessary in order to ob- 
 tain payment of debt, the stock being taken not to be held, but 
 to be disposed of and realized in cash. (First Nat. Bank v. 
 National Bank, 92 U. S. 128 ; Howe v. Boston Carpet Co., 16 
 Gray, 495 ; Hodges v. New England Screw Co., 1 R. I. 312 ; 
 Taylor County Ct. v. Baltimore & 0. R. Co., 35 Fed. 161.) 
 
 In First Nat. Bank v. Nat. Exch. Bank, 92 U. S. 122, in 
 holding that a corporation not authorized to purchase and hold 
 stock in other companies might accept stock in satisfaction of a 
 doubtful debt with a view to its reduction into money to pre- 
 v^ent anticipated loss, Waite, C. J., said (p. 128) : 
 
 "Dealing in stocks is not expressly prohibited; but such a 
 prohibition is implied from the failure to grant the power. In 
 the honest exercise of the power to compromise a doubtful 
 debt owing to a bank, it can hardly be doubted that stocks 
 may be accepted in payment and satisfaction, with a view to 
 their subsequent sale or conversion into money so a^ to make 
 good or reduce an anticipated loss. Such a transaction would 
 not amount to a dealing in stocks. It Avas, in efpect, so de- 
 cided in Fleckner v. Bank U. S., 8 Wheat. 351, where it was 
 held that a prohibition against trading and dealing was noth- 
 ing more than a prohibition against engaging in the ordinary
 
 § 182 SUMMARY OF CORPORATION LAW. 15-4 
 
 business of buying and selling for profit, and did not include 
 purchases resulting from ordinary banking transactions. For 
 this reason, among others, the acceptance of an indorsed note 
 in payment of a debt due was decided not to be a 'dealing' in 
 notes. Of course, all such transactions must be compromises 
 in good faith, and not mere cloaks or devices to cover un- 
 authorized practices." 
 
 § 182. A corporation may not acquire its own stock ordi- 
 narily unless authorized by statute, for a purchase of its own 
 stock is tantamount to a decrease of its capital. (Johnston v. 
 Allis, 71 Conn. 207; Holladay v. Elliott, 8 Or. 84; Oliver v. 
 Rahway Ice Co., 64 N. J. Eq. 596.) If authorized, however., 
 the corporation, acting in good faith, may buy and sell its own 
 shares of stock. (Republic L. Ins. Co. v. Swigert, 135 111. 150; 
 First Nat. Bank of Salem v. Salem Capital Flour-mills, 39 
 Fed. 89 ; Blalock v. Kernersville Mfg. Co., 110 N. C. 99 ; Iowa 
 Lumber Co. v. Foster, 49 Iowa, 25 ; Oliver v. Rahway Ice 
 Co., 64 N. J. Eq. 596.) So a corporation may acquire its 
 own stock where necessary in order to obtain payment of a 
 debt. (Columbus City Bank v. Bruce, 17 N. Y. 507; Tay- 
 lor v. Miami Exporting Co., 6 Ohio, 176 ; Union Nat. Bank 
 v. Hunt, 7 Mo. App. 42.) But a corporation cannot ac- 
 quire its own stock to the prejudice of its creditors. (Heg- 
 gie V. People's Bldg. & Loan Assn., 107 N. C. 581; St. 
 Louis Carriage Mfg. Co. v. Hilbert, 24 Mo. App. 338, and 
 authorities supra. For further authorities, see Thompson, 
 2d ed., §§ 650-654; 18 L. R. A. 252, note; 61 L. R. A. 621; 
 note.)j
 
 155 EECBIVERS. §§ 185, 186 
 
 CHAPTER IX. 
 
 RECEIVERS. 
 
 § 185. A receiver is an officer of the court, and is appointed 
 by the court in a pending suit or proceeding to take custody, 
 possession, or title, as the case may be, to certain property 
 which is of the subject matter of the pending litigation, for 
 the safe-keeping, preservation and, where necessary, realiza- 
 tion of the property in money, and for the benefit of those 
 persons, parties to the litigation or others, who may be de- 
 termined in the litigation to be entitled to it. 
 
 It is to be borne in mind that a receiver is merely the 
 agent or arm of the court, and that property in the hands 
 of a receiver is in the possession of the court, in custodia 
 legis. A receivership is not an end in itself, is not final 
 relief in itself, but is incidental merely to some equitable 
 relief prayed, and is in fact a means to an end, an instru- 
 mentality adopted by the court to conserve property in order 
 that relief prayed for in a pending suit may be effectual 
 when decreed, and may not be rendered futile by the waste, 
 destruction or misappropriation of the subject-matter prop- 
 erty during the time required for the determination of the 
 subject of the suit. 
 
 § 186. The rights, duties and powers of a receiver are limi- 
 ted by the terms of the order appointing the receiver which in 
 turn is limited in its extent and scope by the jurisdiction 
 of the court over the parties, over the subject matter of the 
 suit and over the subject-matter property usually governed 
 by the statute authorizing the appointment of the receiver. 
 From this it is not to be inferred that the jurisdiction to 
 appoint a receiver is always statutory. On the contrary, 
 wherever the jurisdiction of a court of equity extends to the 
 determination of rights to specific property, it will, in a 
 proper case, appoint a receiver to conserve the property 
 pending the determination of its final disposition. In the
 
 § 187 SUMMARY OF CORPORATION LAW. 156 
 
 absence of statutory provision, however, a receiver is a cus- 
 todian merely, and takes neither title nor right of posses- 
 sion, except the relative right of the parties to the suit. 
 Since, therefore, a receiver is the custodian of the court, 
 limited in his powers and functions by the jurisdiction of 
 the court in its territorial extent as well as otherwise, a re- 
 ceiver of a corporation has a right to the custody of only 
 such property of the corporation as is within the territorial 
 jurisdiction of the court, except in cases where, by virtue 
 of a statute or otherwise, the court gets such jurisdiction 
 of the corporate entity itself that it can and does clothe the 
 receiver either with title or right to possession generally as 
 distinct from mere custody of the property of the corpora- 
 tion wherever located. In cases where suits are pending 
 in different courts, the custody of one receiver once ob- 
 tained will not be ousted nor interfered with except through 
 an application made and passed upon by the court appoint- 
 ing the receiver whose right of custody is in question ; this 
 rule is based on the comity of procedure and respect of one 
 judicial tribunal for another and on the necessity of a digni- 
 fied and decorous administration of justice. Whether a 
 receiver will be appointed in a particular case will depend 
 on two considerations — (1) whether the court in which the 
 application is made has jurisdiction; (2) whether the ap- 
 pointment of a receiver is necessary to conserve the prop- 
 erty in question. 
 
 § 187. Since a receivership is not competent relief in itself, 
 the jurisdiction of the court depends on whether a suit is pend- 
 ing or may be instituted for some relief like an accounting 
 or reduction of assets in a judgment creditor's suit or other 
 relief recognized as proper ; then the party or parties plain- 
 tiff must be shown to have a standing in court to ask for the 
 relief prayed, and jurisdiction over the defendant corpora- 
 tion or its property must be had in fact or at least obtain- 
 able. For example, whatever might be the merits, a simple 
 contract creditor would have no standing to institute or 
 maintain a pending suit for the appointment of a receiver
 
 157 RECEIVERS. §§ 188, 189 
 
 and the application of assets of an insolvent corporation, 
 since he must first reduce his claim to judgment in order 
 to be in a position to ask the equitable relief recognized as 
 competent in a judgment creditor's bill. Again, the court 
 Avould not have jurisdiction and would not appoint a re- 
 ceiver of a foreign corporation not doing business in the 
 state, not having submitted itself to the jurisdiction and not 
 having property within the territorial jurisdiction of the 
 court. On the otlier hand, in a suit by a judgment creditor 
 pending or about to be instituted against an insolvent do- 
 mestic corporation to compel payment of unpaid subscrip- 
 tions by stockholders, the court would have jurisdiction and 
 in a proper case will appoint a receiver. 
 
 § 188. Whether the appointment of a receiver is proper 
 depends on all the circumstances as to the necessity for such in- 
 terference by the court with the possession of the corporation 
 or other party. Mere insolvency of a corporation without 
 more is not sufficient, though usually where a corporation 
 is insolvent sufficient will exist to constitute a proper case 
 and warrant the interference by the court. 
 
 The appointment of a receiver by a court having juris- 
 diction of the parties and the subject matter is discretionary 
 with the court, but since by such appointment the court 
 interferes with the possession of its property by a corpora- 
 tion or other party, a case must be made out showing the 
 necessity therefor and that on all the facts and circumstances 
 a receiver is in fact necessary to conserve the property for 
 all the parties in interest. In such case the court will ap- 
 point a receiver, with right of possession or custody dating 
 from the appointment, either temporarily or permanent, as 
 the case may require, to conserve, safeguard and realize the 
 property of the corporation party defendant, of course sub- 
 ject to the further orders of the court. 
 
 § 189. In holding that a statutory receiver of a corporation 
 takes the title given by the statute to all the corporate prop- 
 erty wherever situated, Waite, J., in Relf e v. Rundle, 103 U. S. 
 222 (p. 225), said:
 
 § 190 SUMMARY OF CORPORATION LAW. 158 
 
 "We are aware that except by virtue of some statutory 
 authority, an administrator appointed in one state cannot 
 generally sue in another, and that a receiver appointed by 
 a state court has no extraterritorial power; but a corpora- 
 tion is the creature of legislation and may be endowed with 
 such powers as its creator sees fit to ^ive. Necessarily it 
 must act through agents, and the state which creates it 
 may say who those agents shall be. One may be its repre- 
 sentative when in active operation and in full possession of 
 its powers, and another if it has forfeited its charter and 
 has no lawful existence except to wind up its affairs. No 
 state need allow the corporations of other states to do busi- 
 ness within its jurisdiction unless it chooses, with perhaps 
 the exception of commercial corporations ; but if it does 
 without limitation, express or implied, the corporation comes 
 in as it has been created. Every corporation necessarily 
 carries its charter wherever it goes, for that is the law of 
 it existence. It may be restricted in the use of some of its 
 powers Avhile doing business away from its corporate home, 
 but every person who deals with it everywhere is bound to 
 take notice of the provisions which have been made in its 
 charter for the management and control of its affairs both 
 in life and after dissolution." 
 
 § 190. Where the court had placed a railroad in the hands 
 of its receiver and operated it at the suit of an unsecured judg- 
 ment creditor, Harlan, J., holding that such creditor was 
 entitled to have his debt satisfied out of earnings in the 
 hands of the receiver as against a trustee under a mortgage 
 in Sage v. Memphis etc. R. R. Co., 125 U. S. 361, said (p. 376) : 
 
 "In the present case it is true Sage did not sue out execu- 
 tion upon his judgment and have a return of nulla bona. 
 But that point has become immaterial. The railroad com- 
 pany made no such objection at the time the receiver was 
 appointed. Besides, suing out an execution would, accord- 
 ing to the facts and the admission of the parties, have been 
 an idle ceremony, causing useless expense, and bringing no 
 real benefit to the plaintiff. It is true, also, that Sage did 
 not sue in behalf of all the creditors of the company or of 
 such as might come in and contribute to the expense of the 
 litigation. He \vas not bound to pursue that course. It was 
 his privilege under the law to sue for his own benefit, and 
 it was within the power of the court for his protection as 
 a judgment creditor to place the property of the debtor 
 company in the hands of a receiver for administration under
 
 159 RECEIVERS. § 191 
 
 its orders. "We do not mean to say that a single judgment 
 creditor or an}' number of such creditors of a railroad com- 
 pany are entitled, as a matter of right, to have its property 
 put in the hands of a receiver merely because of its failure 
 or refusal to pay its debts. Whether a receiver shall be 
 appointed is always a matter of discretion to be exercised 
 sparingly and with great caution in the case of quasi-public 
 corporations operating a public highway, and always with 
 reference to the special circumstances of each case as it 
 arises. All that Ave say in this connection is that under the 
 circumstances presented in this case the appointment of 
 the receiver was within the power of the court." 
 
 § 191. In holding that a simple contract creditor could not 
 maintain a suit in equity against an insolvent corporation for 
 the appointment of a receiver and distribution of assets of the 
 corporation, Brewer, J., in Ilollins v. Brierfield Coal & Iron 
 Co., 150 U. S. 371, said (p. 378) : 
 
 "The plaintiffs were simple contract creditors of the com- 
 pany; their claims had not been reduced to judgment, and 
 they had no express lien by mortgage, trust deed or other- 
 wise. It is the settled law of this court that such creditors 
 cannot come into a court of equity to obtain the seizure of 
 the property of their debtor and its application to the satis- 
 faction of their claims; and this, notwithstanding a statute 
 of the state may authorize such a proceeding in the courts 
 of the state. The line of demarcation betv/een equitable and 
 legal remedies in the federal courts cannot be obliterated by 
 state legislation. Scott v. Neely, 140 U. S. 106; Cates v. 
 Allen, 149 U. S. 451. Nor is it otherwise in case the debtor 
 is a corporation and an unpaid stock subscription is sought 
 to be reached. National Tube Works Co. v. Ballon, 146 
 U. S. 517 ; Swan Land & Cattle Co. v. Frank, 148 U. S. 603. 
 .... But it is earnestly insisted that it has been held by 
 this court in Case v. Beauregard, 101 U. S. 688, that when- 
 ever a creditor has a trust in his favor, or a lien upon prop- 
 erty for a debt due him, he may go into equity without 
 exhausting his legal remedies ; that it has also frequently 
 been affirmed that the capital stock and assets of a cor- 
 poration constitute a trust fund for the benefit of its cred- 
 itors which neither the officers nor stockholders can divert 
 or waste, and several cases are cited, among them that of 
 Sanger v. Upton, 91 U. S. 56, in which perhaps the proposi- 
 tion is asserted in the most direct and emphatic language, 
 and Terry v. Anderson, 95 U. S. 628, 636, in which Chief
 
 § 191 SUMMARY OP CORPORATION LAW. 160 
 
 Justice Waite made these observations: 'Ordinarily, a cred- 
 itor must put his demand into judgment against his debtor 
 and exhaust his remedies at law before he can proceed in 
 equity to subject choses in action to its payment. To this 
 rule, however, there are some exceptions; and we are not 
 prepared to say that a creditor of a dissolved corporation 
 may not, under certain circumstances, claim to be exempted 
 from its operation. If he can, hoAvever, it is upon the ground 
 that the assets of the corporation constitute a tmst fund 
 which will be administered by a court of equity in the ab- 
 sence of a trustee ; the principle being that equity will not 
 permit a trust to fail for want of a trustee.' 
 
 "While it is true language has been frequently used to 
 the effect that the assets of a corporation are a trust fund 
 held by a corporation for the benefit of creditors, this has 
 not been to convey the idea that there is a direct and express 
 trust attached to the property. As said in 2 Pomeroy's 
 Equity Jurisprudence, section 1046, they 'are not in any 
 true and complete sense trusts, and can only be called so 
 by v/ay of analogy or metaphor.' To the same effect are 
 decisions of this court. The case of Graham v. Railroad Co., 
 102 U. S. 148, was an action by a subsequent creditor to 
 subject certain property alleged to have been wrongfully 
 conveyed by the corporation debtor to the satisfaction of 
 his judgment. And the very proposition here presented 
 w^as then considered, and in respect to it the court, by Mr. 
 Justice Bradley, said (p. 160): 'It is contended, however, 
 by the appellant that a corporation debtor does not stand 
 on the same footing as an individual debtor; that whilst 
 the latter has supreme dominion over his own property, a 
 corporation is a mere trustee, holding its property for the 
 benefit of its stockholders and creditors ; and that if it fail 
 to pursue its rights against third persons, whether arising 
 out of fraud or otherwise, it is a breach of trust, and cred- 
 itors may come into equity to compel an enforcement of the 
 corporate duty. This, as we understand, is the substance of 
 the position taken. 
 
 " 'We do not concur with this view. It is at war with the 
 notions which we derive from the English law with regard 
 to the nature of corporate bodies. A corporation is a dis- 
 tinct entity. Its affairs are necessarily managed by officers 
 and agents, it is true; but in law it is as distinct a being 
 as an Individual is, and is entitled to hold property (if not 
 contrary to its charter) as absolutely as an individual can 
 hold it. Its estate is the same, its interest is the same, its 
 possession is the same. Its stockholders may call the officers
 
 161 RECEIVERS. § 191 
 
 to account, and may prevent any malversation of funds 
 or fraudulent disposal of property on their part. But that 
 is done in the exercise of their corporate rights, not adverse 
 to the corporate interests, but coincide with them. When 
 a corporation becomes inS'Olvent, it is so far civilly dead 
 that its property may be administered as a trust fund for 
 the benefit of its stockholders and creditors. A court of 
 equity, at the instance of the proper parties, w^ill then make 
 those funds trust funds which in other circumstances are 
 as much the absolute property of the corporation as any 
 man's property is his.' 
 
 "With reference to the sugo:estion in this last paragraph 
 it may be observed that the court does not attempt to de- 
 termine who are proper parties to maintain a suit for the 
 administration of the assets of an insolvent corporation. All 
 that it decides is that when a court of equity does take into 
 its possession the assets of an insolvent corporation, it will 
 administer them on the theory that they in equity belong 
 to the creditors and stockholders rather than to the corpo- 
 ration itself. In other words, and that is the idea wdiich 
 underlies all these expressions in reference to 'trust' in con- 
 nection with the property of a corporation, the corporation is 
 an entity, distinct from its stockholders as from its creditors. 
 Solvent it holds its property as any individual holds his, free 
 from the touch of a creditor who has acquired no lien ; free, 
 also, from the touch of a stockholder, who, though equitably 
 interested in, has no legal right to, the property. Becom- 
 ing insolvent the equitable interest of the stockholders in 
 the property, together wuth their conditional liability to 
 the creditors, places the property in a condition of trust 
 first for the creditors and then for the stockholders. What- 
 ever of trust there is arises from the peculiar and diverse 
 equitable rights of the stockholders as against the corpo- 
 ration in its property and their conditional liability to its 
 creditors. It is rather a trust in the administration of the 
 assets after possession by a court of equity than a trust 
 attaching to the property as such for the direct benefit of 
 either creditor or stockholder 
 
 "A party may deal with a corporation in respect to its 
 property in the same manner as with an individual owner, 
 and with no greater danger of being held to have received 
 into his possession property burdened with a trust or lien. 
 The officers of a corporation act in a fiduciary capacity in 
 respect to its property in their hands, and may be called to 
 an account for fraud or sometimes even mere mismanage- 
 ment in respect thereto ; but as betw^een itself and its cred- 
 11
 
 § 192 SUMMARY OF CORPORATION LAW. 162 
 
 itors the corporation is simply a debtor, and does not hold its 
 properly in trust or subject to a lien in their favor in any 
 other sense than does an individual debtor. That is cer- 
 tainly the general rule, and if there be any exceptions 
 thereto, they are not presented by any of the facts in this 
 case. Neither the insolvency of the corporation nor the 
 execution of an illegal trust deed, nor the failure to collect 
 in full all stock subscriptions, nor all together, gave to these 
 simple contract creditors any lien upon the property of the 
 corporation, nor charged any direct trust thereon." 
 
 § 192. "Where a state court had appointed a receiver of the 
 property of a corporation, Gray, J., in holding a stockholder's 
 bill in the federal court not making the receiver party de- 
 fendant demurrable for that reason, and for the further 
 reason that a federal court would not interfere where a 
 state court had taken jurisdiction and possession through 
 its receiver, in Porter v. Sabin, 149 U. S. 473, said (p. 479) : 
 
 "When a court exercising jurisdiction in equity appoints 
 a receiver of all the propert}^ of a corporation, the court as- 
 sumes the administration of the estate ; the possession of the 
 receiver is the possession of the court, and the court itself 
 holds and administers the estate, through the receiver as its 
 officer, for the benefit of those whom the court shall ulti- 
 mately adjudge to be entitled to it. Wiswall v. Sampson, 
 14 How. 52, 65; Peale v. Phipps, 14 How. 368, 374; Booth 
 v. Clark, 17 How. 322, 331 ; Union Bank v. Kansas City Bank, 
 136 U. S. 223; Thompson v. Phenix Ins. Co., 136 U. S. 287, 
 297. It is for that court, in its discretion, to decide whether 
 it will determine for itself all claims of or against the re- 
 ceiver, or will allow them to be litigated elsewhere. It 
 may direct claims in favor of the corporation to be sued on 
 by the receiver in other tribunals, or may leave him to ad- 
 just and settle them without suit, as in its judgment may be 
 most beneficial to those interested in the estate. Any claim 
 against the receiver or the corporation the court may permit 
 to be put in suit in another tribunal against the receiver or 
 may reserve to itself the determination of; and no suit, 
 unless expressly authorized by statute, can be brought 
 against the receiver without the permission of the court 
 which appointed him. Barton v. Barbour, 104 U. S. 126; 
 Texas & Pacific Ry. v. Cox, 145 U. S. 593, 601. The rea- 
 sons are yet stronger for not alloAving a suit against a re- 
 ceiver appointed by a state court to be maintained, or the
 
 163 EECEIVERS. § 192 
 
 administration by that court of the estate in the receiver's 
 hands to be interfered with by a court of the United States 
 deriving its authority from another government, though ex- 
 ercising jurisdiction over the same territory. The whole 
 property of the corporation within the jurisdiction of the 
 court which appointed the receiver, including all its rights 
 of action, except so far as already lawfully disposed of under 
 orders of that court, remains in its custody to be administered 
 and distributed by it. Until the administration of the es- 
 tate has been completed and the receivership terminated no 
 court of the one government can by collateral suit assume 
 to deal with rights of property or of action constituting part 
 of the estate within the exclusive jurisdiction and control 
 of the courts of the other. Wiswall v. Sampson, Peale v. 
 Phipps and Barton v. Barbour above cited; Williams v. Bene- 
 dict, 8 How. 107; Pulliam v. Osborne, 17 How. 471, 475; 
 People's Bank v. Calhoun, 102 U. S. 256; Heidritter v. Eliza- 
 beth Oil Cloth Co., 112 U. S. 294; In re Tyler, ante, 164."
 
 §§ 195, 196 SUMMARY OF CORPORATION LAW. 164 
 
 CHAPTER X. 
 
 TERMINATION OF CORPORATE EXISTENCE. 
 
 § 195. The termination of a corporation, like all matters of 
 corporation law, is governed by the terms of the controlling 
 statute. 
 
 A corporation is terminated in one of three ways: (1) 
 by the expiration of the term of corporate existence set in 
 the charter; (2) by voluntary dissolution; and (3) by forced 
 dissolution or forfeiture. 
 
 At the time positively set by the statute, with due refer- 
 ence to the period fixed by the charter, as the limit of the 
 corporate existence, the corporation ceases ipso facto to 
 exist. Where, however, it is provided by the statute that 
 the charter shall be forfeited or become void or other pro- 
 vision is made by the statute for the termination on the per- 
 formance or failure to perform certain acts within the stated 
 period of corporate existence, such provisions are generally 
 construed not to be self-executing, and the corporation is 
 not in such case ipso facto terminated, and its charter is 
 simply held to be voidable on the institution by the state 
 of a proper proceeding for the purpose. 
 
 It was formerly questioned whether in case of termina- 
 tion of a corporation the corporate property and assets re- 
 verted to the grantor or donor, or escheated to the state, or be- 
 longed to the stockholders or members of the corporation 
 and should be divided among them. 
 
 § 196. It is now, however, clearly established that in case 
 of dissolution or forfeiture or other termination of the corpora- 
 tion its capital assets and property are to be reduced to 
 cash, and after payment of the corporate debts are to be dis- 
 tributed among the stockholders or members of the cor- 
 poration. This purpose is accomplished in different ways. 
 In most jurisdictions it is now provided by statute that the 
 positive limit of corporate existence shall not be reached
 
 165 TERMINATION OF CORPORATE EXISTENCE. §§ 197, 198 
 
 until the assets have been reduced and the corporate debts 
 paid, it being usually provided that until then the corpora- 
 tion shall continue in existence for the purpose of suing or 
 being sued, or that the trustees or directors, as the case 
 may be, shall be continued in office for the reduction of as- 
 sets and payment of debts, or both. In case the corporation 
 has actually terminated under the statute, the court will 
 appoint a receiver or trustee to wind up the corporate affairs, 
 in a proper proceeding instituted for that purpose. In any 
 event, and whatever the method and manner of the termina- 
 tion of corporate existence, the court will, at the instance of 
 judgment creditors or stockholders, appoint a receiver to con- 
 serve and safeguard assets where the case shows a necessity 
 for such appointment. Likewise, in any event the stockholders 
 and members of a corporation on its termination are prac- 
 tically cotenants, entitled to divide the corporate property and 
 assets remaining after the payment of the corporate debts and 
 obligations. 
 
 § 197. In holding that a bank is not dissolved by the ap- 
 pointment of a receiver on the failure of the bank to pay its 
 circulating notes, Clifford, J., in Bank of Bethel v. Pahquioque 
 Bank, 14 Wall. 383, p. 400, said: 
 
 "Beyond doubt the appointment of a receiver supersedes 
 the power of the directors to exercise the incidental powers 
 necessary to carry on the business of banking, as the re- 
 ceiver is required to take possession of the books, records and 
 assets of every description of the association, and from that 
 moment the association is forbidden to pay out any of its 
 notes, discount any notes or bills, or otherwise prosecute the 
 business of banking, but the corporate franchise of the asso- 
 ciation is not dissolved, and the association as a legal entity 
 continues to exist, as is shown to a demonstration by the fact 
 that it is required safely to keep the money on hand belong- 
 ing to it, and may deliver special deposits in its keeping to 
 the rightful owners." 
 
 § 198, In holding that a ground of forfeiture of the char- 
 ter could not be taken advantage of by an individual but only 
 by the state in a judicial proceeding for a dissolution. Nelson, 
 J., in Frost v. Frostburg Coal Co., 24 How. 278, p. 283, said :
 
 §§ 199, 200 SUMMARY OF CORPORATION LAW. 166 
 
 "Without pursuing the case further, the main ground upon 
 which we intend to place the judgment of the court is, that 
 the defendants were made a corporation by the charter, the 
 persons named in it constituting the corporate body, clothed 
 with the powers and privileges conferred upon it, and were 
 capable of taking and holding real estate; and, second, even 
 if it were otherwise, and some irregularities occurred in the 
 organization of the company, inasmuch as no act made a con- 
 dition precedent to the existence of the corporation has been 
 omitted, or its nonperformance shown, a party dealing with 
 the company is not permitted to set up the irregularity. The 
 courts are bound to regard it as a corporation, so far as third 
 persons are concerned, until it is dissolved by a judicial pro- 
 ceeding on behalf of the government that created it." 
 
 § 199. In holding that where a corporation was dissolved 
 by a quo warranto proceeding forfeiting its charter and its 
 property turned over to a trustee, the stockholders were en- 
 titled to maintain a bill in equity against the trustee for an 
 accounting, Campbell, J., in Bacon et al. v. Robertson et al., 18 
 How. (U. S.) 480, after an elaborate examination of English 
 authorities, said (p. 488) : 
 
 "All the other trusts having been fulfilled, the stockholders 
 are entitled to such an administration as will be most bene- 
 ficial to them, or to a sale of the trust property in the manner 
 prescribed by the statute of Mississippi. Nor is the objection 
 to the form of the suit tenable. If the trust estate had been 
 liquidated and the interests of the stockholders ascertained, 
 any stockholder might have maintained a suit for his aliquot 
 share without including any other stockholder. Smith v. 
 Snow, 3 Mad. C. R. 310." 
 
 § 200. In holding a debt due the corporation not extin- 
 guished by forfeiture of the charter, Davis, J., in Lum v. 
 Robertson, 6 Wall. 277, p. 279, said : 
 
 "The decision of this court in Bacon et al. v. Robertson dis- 
 poses of this case. 
 
 "The Commercial Bank of Natchez, Mississippi, by judicial 
 forfeiture, was deprived of its charter, and Robertson ap- 
 pointed a trustee to wind up its affairs. In discharge of his 
 trust, having paid all the debts of the insolvent corporation, 
 a large surplus remained. The object of the suit in Bacon v. 
 Robertson was to establish the title of the stockholders to this 
 surplus. Robertson refused to distribute the effects in his
 
 167 TERMINATION OF CORPORATE EXISTENCE. §§201,202 
 
 hands, claiming that, since the dissolution of the corporation, 
 the stockholders had no rights which this court could recognize. 
 But the court in an elaborate opinion decide that the trustee 
 cannot deny the title of the stockholders to a distribution, and 
 that, by the laws of Mississippi and the general principles of 
 equity jurisprudence, the surplus of the assets which may re- 
 main after the payment of the debts and expenses belongs to 
 
 the stockholders of the bank Lum, a delinquent debtor 
 
 of the bank, cannot plead the extinguishment of his debt by 
 the judgment of forfeiture, for the court (in the case cited) 
 say the debt exists and can be recovered, and that it is the 
 duty of the trustee to reduce the property of the bank to 
 money and distribute it among the stockholders." 
 
 § 201. In holding that a judgment could not be revived by 
 scire facias against a corporation which had surrendered its 
 charter. Story, J., in Mumma v. Potomac Co., 8 Pet. 280, said 
 (p. 286) : 
 
 **A corporation by the Yery terms and nature of its political 
 existence is subject to dissolution, by a surrender of its cor- 
 porate franchises, and by a forfeiture of them for willful mis- 
 user and nonuser. Every creditor must be presumed to 
 understand the nature and incidents of such a body politic 
 and to contract with reference to them. And it would be a 
 doctrine new in the law that the existence of a private con- 
 tract of the corporation should force upon it a perpetuity of 
 existence contrary to public policy and the nature and objects 
 of its charter. 
 
 "The obligation of those contracts survives; and the cred- 
 itors may enforce their claims against any property belonging 
 to the corporation which has not passed into the haiads of bona 
 fide purchasers ; but is still held in trust for the company or 
 for the stockholders thereof, at the time of its dissolution in 
 any mode permitted by the local laws." 
 
 § 202, In holding that a state could, without impairing the 
 obligation of its contract, perpetually enjoin an insolvent life 
 insurance company from doing business in a proceeding insti- 
 tuted to terminate its existence, Harlan, J., in Chicago Life 
 Ins. Co. V. Needles, 113 U. S. 574, p. 580, said : 
 
 "The right of the plaintiff in error to exist as a corpora- 
 tion, and its authority, in that capacity, to conduct the par- 
 ticular business for which it was created, were granted subject 
 to the condition that the privileges and franchises conferred
 
 § 203 SUMMARY OP CORPORATION LAW. 168 
 
 upon it should not be abused, or so employed as to defeat the 
 ends for which it was established, and that when so abused or 
 misemployed, they might be withdrawn or reclaimed by the 
 state, in such way and by such modes of procedure as were 
 consistent with law. Although no such condition is expressed 
 in the company's charter, it is necessarily implied in every 
 grant of corporate existence. Terret v. Taylor, 9 Cranch, 43, 
 51; Angell & Ames on Corporations, 9tli ed., § 774, note." 
 (See, also, Wells Co. v. Gastonia Cotton Mfg. Co., 198 U. S. 
 177.) 
 
 § 203. In holding that on the dissolution of a corporation 
 at the expiration of its chartered term of existence each stock- 
 holder is entitled to have the corporate property converted into 
 money for distribution and that the majority of the stock- 
 holders cannot otherwise dispose of the property without the 
 consent of each minority stockholder, Miller, J., in Mason v. 
 Pewabic Mining Co., 133 U. S. 50, p. 58, said: 
 
 "With regard to the main question, the power of the di- 
 rectors and of the ma.iority of the corporation to sell all of 
 the assets and property of the Pewabic Mining Company to 
 the new corporation under the existing circumstances of this 
 case, we concur with the circuit court. It is earnestly argued 
 that the majority of the stockholders — such a relatively large 
 majority in interest — have a right to control in this matter, 
 especially as the corporation exists for no other purpose but 
 that of winding up its affairs, and that, therefore, the major- 
 ity should control in determining what is for the interest of 
 the whole, and as to the best manner of effecting this object. 
 It is further said that in the present case the dissenting stock- 
 holders are not compelled to enter into a new corporation with 
 a new set of corporators, but have their option, if they do not 
 choose to do this, to receive the value of their stock in money. 
 
 "It seems to us that there are two insurmountable objec- 
 tions to this view of the subject. The first of these is that 
 the estimate of the value of the property which is to be trans- 
 ferred to the new corporation and the new set of stockholders 
 is an arbitrary estimate made by this majority, and without 
 any power on the part of the dissenting stockholders to take 
 part or to exercise any influence in making this estimate. 
 They are therefore reduced to the proposition that they must 
 go into this new company, however much they may be con- 
 vinced that it is not likely to be successful or whatever other 
 objections they may have to becoming members of that cor- 
 poration, or they must receive for the property which they
 
 169 TERMINATION OF CORPORATE EXISTENCE. § 203 
 
 have in the old company a sum which is fixed by those who 
 are buying them out. The injustice of this needs no comment. 
 If this be established as a principle to govern the winding up 
 of dissolving corporations, it places any unhappy minority, as 
 regards the interest which they have in such corporation, 
 under the absolute control of a majority, who may themselves, 
 as in this ease, constitute the new company, and become the 
 purchasers of all the assets of the old company at their own 
 valuation. 
 
 "The other objection is that there is no superior right in 
 two or three men in the old company, who may hold a pre- 
 ponderance of the stock, to acquire an absolute control of the 
 whole of it, in the way which may be to their interest, or which 
 they may think to be for the interest of the whole. So far 
 as any legal right is concerned, the minority of the stock- 
 holders has as much authority to say to the majority as the 
 majority has to say to them, 'We have formed a new company 
 to conduct the business of this old corporation, and we have 
 fixed the value of the shares of the old corporation. We pro- 
 pose to take the whole of it and pay you for your shares at 
 that valuation unless you come into the new corporation tak- 
 ing shares in it in payment of your shares in the old one.' 
 When the proposition is thus presented, in the light of an 
 offer made by a very small minority to a very large majority 
 who object to it, the injustice of the proposition is readily 
 seen ; yet we know of no reason or authority why those holcl- 
 ing a majority of the stock can place a value upon it at which 
 a dissenting minority must sell or do something else which 
 they think is against their interest more than a minority 
 can do. 
 
 "We do not see that the rights of the parties in regard to 
 the assets of this corporation differ from those of a partner- 
 ship on its dissolution, and on that subject Lindley on Partner- 
 ship says, book 3, chapter 10, section 6, subdivision 4, page 
 555, original edition : 
 
 " 'In the absence of a special agreement to the contrary, 
 the right of each partner on a disfsolution is to have the part- 
 nership property converted into money by a sale, even though 
 a sale may not be necessary to the payment of debts. This 
 mode of ascertaining the value of the partnership effects is 
 adopted by courts of ecjuity, unless some other course can be 
 followed consistently with the agreement between the part- 
 ners, and, even where the partners have provided that their 
 shares shall be ascertained in some other way, still if, owing to 
 any cireiimstance, their agreement in this respect cannot be 
 carried out, or if their agreement does not extend to the event
 
 §§ 204, 205 SUMMARY OF CORPORATION LAW. 170 
 
 which has in fact arisen, realization of the property by a sale 
 is the only alternative which a court of equity can adopt. 
 .... We do not say that there may not be circumstances pre- 
 sented to a court of chancery which is winding up a dissolved 
 corporation and distributing its assets that will justify a de- 
 cree ascertaining their value or the value of certain parts of 
 them and making a distribution to partners or stockholders on 
 that basis ; but this is not the general rule by which the prop- 
 ertv in such cases is disposed of in the absence of an agree- 
 ment.' " 
 
 PERIOD OF CORPORATE EXISTENCE. 
 
 § 204. The period of existence of a corporation is matter 
 of construction of the charter, and where no time is specified 
 other than to give "perpetual succession," the period is con- 
 strued as indefinite (Snell v. Chicago, 133 111. 413; State ex 
 rel. Walker v. Payne, 129 Mo. 468) ; but language indicating a 
 particular period for exercise of corporate powers will con- 
 trol (State ex rel. Walker v. Payne, 129 Mo. 468), and the 
 time limited may be extended by the legislature in absence of 
 constitutional restriction. (Attorney General v. Perkins, 73 
 Mich. 303.) Where the certificate or license of the Secretary 
 of State specifies a different period than the articles of agree- 
 ment, the certificate governs (Bushnell v. Consol. Ice Mach. 
 Co., 138 111. 67) ; and in case the articles specify a period 
 exceeding the period authorized or permitted by statute, the 
 excess period is merely disregarded. (People v. Cheese- 
 man, 7 Colo. 376.) 
 
 § 205. On the expiration of the time limited by the charter 
 as properly construed, the corporation is at an end, unless its 
 life be extended by the legislature. (Sturges v. Vanderbilt, 
 73 N. Y. 384; Asheville etc. T. v. Aston, 92 N. C. 578.) An 
 action against an expired company is properly abated (Bank 
 V. McLaughlin, 2 Cranch C. C. 20; Foster v. Essex Bank, 
 16 Mass. 244; People v. Anderson etc. Co., 76 Cal. 190; 
 Meilrel v. German Sav. Fund Soc, 16 Ind. 181), but other- 
 wise if the statute has extended the period for the company 
 to wind up (Pomeroy v. State Bank, 68 U. S. 23; Miller v.
 
 171 TERMINATION OF CORPORATE EXISTENCE. § 205 
 
 Newburg Arrel Coal Co., 31 W. Va. 836; Foster v. Essex 
 Bank, 16 Mass. 244). Estoppel will not avail to prevent 
 setting up expiration of corporate existence. (Ensey v. 
 Cleveland & St. L. R. Co., 10 Ind. 178 ; Krutz v. Paola Town 
 Co., 20 Kan. 397; Dobson v. Simonton, 86 N. C. 492; Ft. 
 Wayne & B. Tump. Co. v. Deam, 10 Ind. 563.) 
 
 In the absence of express statutory limitation, the cor- 
 poration continues until dissolved by decree (People v. Cheese- 
 man, 7 Colo. 376 ; Brooklyn Steam Transit Co. v. Brooklyn, 
 78 N. Y. 524), but where the charter fixes a definite time, 
 the corporation at the time fixed ceases without decree of 
 court. (People v. Anderson etc. Road Co., 76 Cal. 190, 18 
 Pac. 308. For further authorities, see Thompson, 2d ed., § 
 267; 33 L. R. A. 576, note.)
 
 §§ 210, 211 SUMMARY OP CORPORATION LAW. 172 
 
 CHAPTER XI. 
 
 FOREIGN CORPORATIONS. 
 
 § 210. A corporation exists only within the territorial jur- 
 isdiction of the statute under which it is created. 
 
 It may be and is, however, recog'nized in other states or ter- 
 ritorial jurisdictions as so existing in its home state, and it 
 is now well established that if authorized by its charter, it 
 may through agents sue, contract and otherwise exercise it? 
 charter powers in other states, unless affirmatively prohibited 
 from or restricted in so doing by the statutes of the extra- 
 territorial state or jurisdiction. A corporation in its outside 
 dealings, i. e., a foreign corporation, is governed as to its 
 powers, rights and liabilities by its charter and the laws of 
 its home state, subject to the positive limitations of the outside 
 state. It is well established that the outside state may impose 
 such restrictions as it deems wise on the exercise within its 
 borders of powers by foreign corporations, provided its regu- 
 lations are within the scope of its legislative body and not un- 
 constitutional, as is, e. g., an attempt to deny the right to sue 
 in the federal courts or any attempted regulation of interstate 
 commerce. 
 
 § 211. In holding that a banking corporation of Georgia 
 could, through its agent, legally discount a bill of exchange in 
 Alabama, Taney, C. J., in Bank of Augusta v. Earle, 13 Pet. 
 517, said (p. 587) : 
 
 "The nature and character of a corporation created by a 
 statute and the extent of the powers which it may lawfully 
 exercise have upon several occasions been under consideration 
 in this court. In the case of Head v. Providence Ins. Co., 2 
 Cranch, 127, Chief Justice Marshall, in delivering the opinion 
 of the court, said: 'Without ascribing to this body, which in 
 its corporate capacity is the mere creature of the act to which 
 it owes its existence, all the qualities and disabilities annexed 
 by the common law to ancient institutions of this sort, it may 
 correctly be said to be precisely what the incorporating act 
 has made it; to derive all its powers from that act, and to
 
 173 FOREIGN CORPORATIONS. § 211 
 
 be capable of exerting its faculties only in the manner which 
 that act authorizes. To this source of its bein.s^, then, we 
 must recur to ascertain its powers ; and to determine whether 
 it can complete a contract by such communications as are in 
 this record.' In the case of Dartmouth College v. Woodward, 
 4 Wheat. 636, the same principle was again decided by the 
 court. 'A corporation,' said the court, 'is an artificial being, 
 invisible, intangible, and existing only in contemplation of 
 law. Being a mere creature of the law, it possesses only those 
 properties which the charter of its creation confers upon it, 
 either expressly or as incidental to its very existence.' And 
 in the case of the Bank of the United States v. Dandridge, 12 
 Wheat. 64, where the question in relation to the powers of 
 corporations and their mode of action were very carefully con- 
 sidered, the court said: 'But whatever may be the implied 
 powers of aggregate corporations by the common law and the 
 modes by which those powers are to be carried into operation, 
 corporations created by statute must depend, both for their 
 powers and the mode of exercising them upon the true con- 
 struction of the statute itself.' 
 
 "It cannot be necessary to add to these authorities. And 
 it may be safely assumed that a corporation can make no con- 
 tracts and do no acts, either within or without the state which 
 creates it, except such as are authorized by its charter; and 
 those acts must also be done by such officers or agents and in 
 such manner as the charter authorizes. And if the law creat- 
 ing a corporation does not, by the true construction of the 
 words used in the charter, give it the right to exercise its 
 powers beyond the limits of the state, all contracts made by 
 it in other states would be void. The charter of the Bank of 
 Augusta authorizes it in general terms to deal in bills of ex- 
 change, and, consequently, gives it the power to purchase 
 foreign bills as well as inland ; in other words, to purchase 
 bills payable in another state. The power thus given clothed 
 the corporation witli the right to make contracts out of the 
 state in so far as Georgia could confer it. For whenever it 
 purchased a foreign bill and forwarded it to an agent to pre- 
 sent for acceptance, if it was honored by the drawee, the con- 
 tract of acceptance was necessarily made in another state ; 
 and the general power to purchase bills, without any restric- 
 tion as to place, by its fair and natural import, authorized the 
 bank to make such purchases wherever it was found most 
 convenient and profitable to the institution, and also to em- 
 ploy suitable agents for that purpose. The purchase of the 
 bill in question was therefore the exercise of one of the powers 
 which the bank possessed under its charter, and was sanctioned
 
 § 212 SUMMARY OF CORPORATION LAW. 17 J: 
 
 by the law of Georgia creating the corporation so far as that 
 state could authorize a corporation to exercise its powers be- 
 yond the limits of its own jurisdiction. 
 
 !§ 212. "But it has been urged in the argument that not- 
 withstanding the powers thus conferred by the terms of the 
 charter, a corporation, from the very nature of its being, can 
 have no authority to contract out of the limits of the state ; that 
 the laws of a state can have no extraterritorial operation, and 
 that as a corporation is the mere creature of a law of the state, 
 it can have no existence beyond the limits in which that law 
 operates, and that it must necessarily be incapable of making 
 a contract in another place. It is very true that a corpora- 
 tion can have no legal existence out of the boundaries of the 
 sovereignty by which it is created. It exists only in contem- 
 plation of law and by force of the law; and where that law 
 ceases to operate and is no longer obligatory, the corporation 
 can have no existence. It must dwell in the place of its 
 creation, and cannot migrate to another sovereignty. But 
 although it must live and have its being in that state only, yet 
 it does not by any means follow that its existence there will 
 not be recognized in other places; and its residence in one 
 state creates no insuperable objection to its power of contract- 
 ing in another. It is indeed a mere artificial being, invisible 
 and intangible ; yet it is a person for certain purposes, in con- 
 templation of law, and has been recognized as such by the 
 decisions of this court. It was so held in the case of the 
 United States v. Amedy, 11 Wheat. 412, and in Beaston v. 
 Farmers' Bank of Delaware, 12 Pet. 125. Now, natural per- 
 sons, through the intervention of agents, are continually mak- 
 ing contracts in countries in which they do not reside and 
 where they are not personally present when the contract is 
 made, and nobody has ever doubted the validity of these agree- 
 ments. And what greater objection can there be to the capa- 
 city of an artificial person by its agents to make a contract 
 within the scope of its limited powers in a sovereignty in which 
 it does not reside, provided such contracts are permitted to be 
 made by them by the laws of the place ? 
 
 "The corporation must no doubt show that the law of its 
 creation gave it authority to make such contracts through such 
 agents. Yet, as in the case of a natural person, it is not 
 necessary that it should actually exist in the sovereignty in 
 which the contract is made. It is sufficient that its existence 
 as an artificial person in the state of its creation is acknowl- 
 edged and recognized by the law of the nation where the deal-
 
 175 FOREIGN CORPORATIONS. §§ 213, 214 
 
 ing takes place ; and that it is permitted by the laws of that 
 place to exercise there the powers with which it is endowed. 
 
 |§ 213. "Every power, however, of the description of which 
 we are speaking, which a corporation exercises in another state, 
 depends for its validity upon the laws of the sovereignty in 
 which it is exercised ; and a corporation can make no valid con- 
 tract without their sanction, express or implied. And this 
 brings us to the question which has been so elaborate!}^ dis- 
 cussed, whether by the comity of nations, and between these 
 states, the corporations of one state are permitted to make 
 contracts in another. It is needless to enumerate here the 
 instances in which, by the general practice of civilized coun- 
 tries, the laws of the one will, by the comity of nations, be 
 recognized and executed in another, where the rights of indi- 
 viduals are concerned. The cases of contracts made in a 
 foreign country are familiar examples ; and courts of justice 
 have always expounded and executed them according to the 
 laws of the place in which they were made ; provided, that law 
 was not repugnant to the laws or policy of their own country. 
 The comity thus extended to other nations is no impeachment 
 of sovereignty. It is the voluntary act of the nation by which 
 it is offered, and is inadmissible when contrary to its policy. 
 or prejudicial to its interests. But it contributes so largely 
 to promote justice between individuals and to produce a 
 friendly intercourse between the sovereignties to which they 
 belong, that courts of justice have continually acted upon it, 
 as a part of the voluntary law of nations. It is truly said in 
 Story's Conflict of Laws, 37, that 'In the silence of any posi- 
 tive rule affirming or denying or restraining the operation of 
 foreign laws, courts of justice presume the tacit adoption of 
 them by their own government, unless they are repugnant to 
 its policy or prejudicial to its interests. It is not the comity 
 of the courts, but the comity of the nations, which is admin- 
 istered and ascertained in the same way, and guided by the 
 same reasoning by which all other principles of municipal 
 law are ascertained and guided.' 
 
 § 214. "Adopting, as we do, the principle here stated, we 
 proceed to inquire whether, by the comity of nations, foreign 
 corporations are permitted to make contracts within their jur- 
 isdiction ; and we can perceive no sufficient reason for exclud- 
 ing them, when they are not contrary to the known policy of the 
 state or injurious to its interests. It is nothing more than the 
 admission of the existence of an artificial person created by the 
 law of another state and clothed with the power of making
 
 § 215 SUMMARY OF CORPORATION LAW. 176 
 
 certain cr^ntracts; it is but the usual comity of recognizing the 
 law of another state. In England, from which we have re- 
 ceived our general principles of jurisprudence, no doubt ap- 
 pears to have been entertained of the right of a foreign 
 corporation to sue in its courts, since the case of Henriques v. 
 Dutch West India Co., decided in 1729. 2 Ld. Raym. 1532. 
 And it is a matter of history which this court are bound to 
 notice that corporations created in this country have been in 
 the open practice for many years past of making contracts in 
 England of various kinds and to very large amounts ; and we 
 have never seen a doubt suggested there of the validity of 
 these contracts by any court or any jurist. It is impossible 
 to imagine that any court in the United States would refuse 
 to execute a contract by which an American corporation had 
 borrowed money in England; yet if the contracts of corpora- 
 tions made out of the state by which they were created are 
 void, even contracts of that description could not be enforced. 
 
 § 215. "It has, however, been supposed that the rules of 
 comity between foreign nations do not apply to the states of 
 this Union ; that they extend to one another no other rights than 
 those which are given by the constitution of the United States ; 
 and that the courts of the general government are not at 
 liberty to presume, in the absence of all legislation on the sub- 
 ject, that a state has adopted the comity of nations toward 
 the other states, as a part of its jurisprudence ; or that it ac- 
 knowledges any rights but those which are secured by the con- 
 stitution of the United States. The court think otherwise. 
 The intimate union of these states, as members of the same 
 great political family, the deep and vital interests which bind 
 them so closely together, should lead us, in the absence_ of 
 proof to the contrary, to presume a greater degree of comity, 
 and friendship and kindness toward one another than we 
 should be authorized to presume between foreign nations. 
 And when (as without doubt must occasionally happen) the 
 interest or policy of any state requires it to restrict the rule, 
 it has but to declare its will and the legal presumption is at 
 once at an end. But until this is done^ upon what grounds 
 could this court refuse to administer the law of international 
 comity between these states? They are sovereign states, and 
 the history of the past and the events which are daily occur- 
 ring furnish the strongest evidence that they have adopted 
 toward each other the laws of comity in their fullest extent. 
 Money is frequently borrowed in one state by a corporation 
 created in another. The numerous banks established by dif- 
 ferent states are in the constant habit of contracting and deal-
 
 177 FOREIGN CORPORATIONS. § 216 
 
 ing with one another. Agencies for corporations engaged in 
 the business of insurance and of banking have been established 
 in other states and suffered to make contracts, without any 
 objection on the part of the state authorities. These usages 
 of commerce and trade have been so general and public and 
 have been practiced for so long a period of time, and so gen- 
 erally acquiesced in by the states, that the court cannot over- 
 look them when a question like the one before us is under 
 consideration. The silence of the state authorities while these 
 events are passing before them show their assent to the ordi- 
 nary laws of comity which permit a corporation to make con- 
 tracts in another state. But we are not left to infer it merely 
 from the general usages of trade and the silent acquiescence 
 of the states. It appears from the cases cited in the argument, 
 which it is unnecessary to recapitulate in this opinion, that 
 it has been decided in many of the state courts, — we believe 
 in all of them where the question has arisen, — that a corpora- 
 tion of one state may sue in the courts of another. If it may 
 sue, why may it not make a contract? The right to sue is 
 one of the powers which it derives from its charter. If the 
 courts of another country take notice of its existence as a 
 corporation, so far as to allow it to maintain a suit and per- 
 mit it to exercise that power, why should not its existence be 
 recognized for other purposes and the corporation permitted 
 to exercise another power which is given to it by the same 
 law and the same sovereignty — where the last-mentioned 
 power does not come in conflict with the interest or policy of 
 the state? There is certainly nothing in the nature and char- 
 acter of a corporation which could justly lead to such a dis- 
 tinction, and which should extend to it the comity of suit and 
 refuse to it the comity of contract. If it is allowed to sue, 
 it would of course be permitted to compromise, if it thought 
 proper, with its debtor ; to give him time ; to accept something 
 else in satisfaction ; to give him a release ; and to employ an at- 
 torney for itself to conduct its suit. These are all matters of 
 contract, and yet are so intimately connected with the right 
 to sue, that the latter could not be effectually exercised if the 
 former were denied. 
 
 § 216. "We turn, in the next place, to the legislation of the 
 states. So far as any of them have acted on this subject, it is 
 evident that they have regarded the comity of contract as well 
 as the comity of suit to be a part of the law of the state unless 
 restricted by statute. Thus a law was passed by the state of 
 Pennsylvania March 10, 1810, which prohibited foreigners and 
 foreign corporations from making contracts of insurance 
 12
 
 § 216 SUMMARY OF CORPORATION LAW, 178 
 
 against fire and other losses mentioned in the law. In New 
 York, also, a law was passed March 18, 1814, which prohibited 
 foreigners and f oreif?n corporations from making in that state 
 insurances against fire; and by another law passed April 21. 
 1818, corporations chartered by other states are prohibited 
 from keeping any office of deposit for the purpose of discount- 
 ing promissory notes or carrying on any kind of business which 
 incorporated banks are authorized by law to carry on. The 
 prohibition of certain specified contracts by corporations in 
 these laws is by necessary implication an admission that other 
 contracts may be made by foreign corporations in Pennsyl- 
 vania and New York; and that no legislative permission is 
 necessary to give them validity. And the language of these 
 prohibitory acts most clearly indicates that the contracts for- 
 bidden by them might lawfully have been made before these 
 laws were passed. IMaryland has gone still further in recog- 
 nizing this right. By a law passed in 1834 that state has 
 prescribed the manner in which corporations not chartered by 
 the state 'which shall transact or shall have transacted busi- 
 ness' in the state may be sued in its courts upon contracts 
 made in the state. The law assumes in the clearest manner 
 that such contracts were valid, and provides a remedy by 
 which to enforce them. 
 
 "In the legislation of Congress, also, where the states and 
 the people of the several states are all represented, we shall 
 find proof of the general understanding in the United States 
 that by the law of comity among the states, the corporations 
 chartered by one were permitted to make contracts in the 
 others. By the act of Congress of June 23, 1836 (5 U. S. 
 Stats. 52),"^regulating the deposits of public money, the Secre- 
 tary of the Treasury was authorized to make arrangements 
 with some bank or banks to establish an agency in the states 
 and territories where there was no bank or none that could be 
 employed as a public depository to receive and disburse_ the 
 public money which might be directed to be there deposited. 
 Now, if the proposition be true that a corporation created by 
 one state cannot make a valid contract in another, the con- 
 tracts made through this agency in behalf of the bank out of 
 the state where the bank itself was chartered would all be 
 void, both as respected the contracts with the government and 
 the individuals who dealt with it. How could such an agency, 
 upon the principles now contended for, have performed any 
 of the duties for which it was established 1 
 
 "But it cannot be necessary to pursue the argument far- 
 ther. We think it is well settled that by the law of comity 
 among nations a corporation created by one sovereignty is per-
 
 179 FOREIGN CORPORATIONS., §§217,218 
 
 mitted to make contracts in another and to sue in its courts, 
 and that the same law of comity prevails amonir the several 
 sovereignties of this Union. The public and well-known and 
 long-continued usages of trade; the general acquiescence of 
 the states ; the particular legislation of some of them, as well 
 as the legislation of Congress, — all concur in proving the truth 
 of this proposition. 
 
 "But we have already said that this comity is presumed from 
 the silent acquiescence of the state. Whenever a state suffi- 
 ciently indicates that contracts which derive their validity 
 from its comity are repugnant to its policy or are considered 
 as injurious to its interests, the presumption in favor of its 
 adoption can no longer be made." 
 
 § 217. In holding that a corporation is to be regarded as a 
 citizen of the state of its creation for the purpose of determin- 
 ing the question of diversity of citizenship, Field, J., in Rail- 
 way Co. V. Whitton, 13 Wall. 270, said (p. 283) : 
 
 "Although a corporation, being an artificial body created 
 by legislative power, is not a citizen within several provi- 
 sions of the Constitution, yet it has been held, and that must 
 now be regarded as settled law, that where rights of action 
 are to be enforced, it will be considered as a citizen of the 
 state where it was created within the clause extending the 
 judicial powers of the United States to controversies between 
 citizens of the different states," 
 
 § 218. In holding that a corporation chartered in Virginia, 
 whose charter was re-enacted in Maryland and which was au- 
 thorized by Congress to extend its road through the District 
 of Columbia, was one corporation amenable to the courts of 
 the District, Swayne, J,, in Railroad Co. v. Harris, 12 Wall. 
 65, said (p. 81) : 
 
 "A corporation is in law, for civil purposes, deemed a 
 person. It may sue and be sued, grant and receive and da 
 all other acts not ultra vires which a natural person could 
 do. The chief point of difference between the natural and 
 the artificial person is that the former may do whatever is 
 not forbidden by law ; the latter can do only what is au- 
 thorized by its charter. It cannot migrate, but may exer- 
 cise its authority in a foreign territory upon such conditions 
 as may be prescribed by the law of the place. One of these 
 conditions may be that it shall consent to be sued there. If 
 it do business there, it will be presumed to have assented,
 
 § 219 SUIkfMARY OF CORPORATION LAW. 180 
 
 and will be bound accordingly. For the purposes of federal 
 jurisdiction it is regarded as if it were a citizen of the state 
 where it was created, and no averment or proof as to the 
 citizenship of its members elsewhere will be permitted. 
 There is a presumption of law which is conclusive. 
 
 "We see no reason why several states cannot by competent 
 legislation unite in creating the same corporation or in com- 
 bining several pre-existing corporations into a single one. 
 .... Nor do we see any reason w^hy one state may not make 
 a corporation of another state, as there organized and con- 
 ducted, a corporation of its own quo ad hoc any property 
 within its territorial jurisdiction. That this may be done 
 was distinctly held in the Ohio and Mississippi R. R. Co. v. 
 Wheeler, 1 Black, 297. It is well settled that corporations of 
 one state may exercise their faculties in another so far and on 
 such terms and to such extent as may be permitted by the 
 latter. We hold that the case before us is within this latter 
 category. The question is always one of legislative intent and 
 not of legislative power or possibility." 
 
 § 219. In holding that bondholders in a Canadian corpora- 
 tion held the bonds subject to a certain "Arrangement Act" of 
 the Canadian parliament modifying the bonds in certain 
 ways, Waite, C. J., in Canada Southern R. Co. v. Gebhard, 109 
 U. S. 527, said (p. 537) : 
 
 "A corporation 'must dwell in the place of its creation 
 and cannot migrate to another sovereignty' (Bank of Au- 
 gusta V. Earle, 13 Pet. 588), though it may do business in all 
 places where its charter allows and the local laws do not 
 forbid. Railroad v. Koontz, 104 U. S. 12. But wherever 
 it goes for business it carries its charter, as that is the law 
 of its existence (Relf v. Rundel, 103 U. S. 226), and the 
 charter is the same abroad that it is at home. Whatever 
 disabilities are placed upon the corporation at home it re- 
 tains abroad, and whatever legislative control it is subjected 
 to at home must be recognized and submitted to by those 
 who deal with it elsewhere. A corporation of one country 
 may be excluded from business in another country (Paul 
 V. Virginia, 8 Wall. 168), but if admitted it must, in the 
 absence of legislation equivalent to making it a corporation 
 of the latter country, be taken both by the government and 
 those who deal with it as a creature of the law of its own 
 country, and subject to all the legislative control and direc- 
 tion that may be properly exercised over it at the place of its 
 creation. Such being the lav/, it follows that every person
 
 181 FOREIGN CORPORATIONS. § 220 
 
 who deals with a foreign corporation impliedly subjects 
 himself to such laws of the foreign government affecting the 
 powers and obligations of the corporation with which he 
 voluntarily contracts as the known and established policy 
 of that government authorizes. To all intents and purposes, 
 he submits his contract with the corporation to such a 
 policy of the foreign government, and Avhatever is done by 
 that government in furtherance of that policy which binds 
 those in like situation with himself who are subjects of the 
 government in respect to the operation and effect of their 
 contracts with the corporation will necessarily bind him. 
 He is conclusively presumed to have contracted with a view 
 to such laws of that government, because the corporation 
 must of necessity be controlled by them, and it has no power 
 to contract with a view to any .other laws with which they 
 are not in entire harmony. It follows, therefore, that any- 
 thing done at the legal home of the corporation under the 
 authority of such laws which discharges it from liability 
 there discharges it everywhere." 
 
 § 220. In holding that the making by an Ohio corporation 
 of a single contract in Colorado was not doing business in the 
 state, subjecting the company to the statutory regulations of 
 Colorado, "Woods, J., in Cooper Mfg. Co. v. Ferguson, 113 
 U. S. 727, said (p. 732) : 
 
 "The right of the people of a state to prescribe generally 
 by its constitution and laws the terms upon which a foreign 
 corporation shall be allowed to carry on its business in the 
 state has been settled by this court. Bank of Augusta v. 
 Earle, 13 Pet. 519; Paul v. Virginia, 8 Wall. 168; Ducat v. 
 Chicago, 10 Wall. 410. The plaintiff in error does not deny 
 this right, but insists that upon a proper construction of 
 section 10 of article 15 of the Constitution of Colorado, and 
 of section 23 of the act of 1877, its contract with the de- 
 fendant was valid, and that its suit should have been main- 
 tained. 
 
 *'As the clause in the Constitution and the act of the legis- 
 lature relate to the same subject like statutes in pari materia, 
 they are to be construed together. Eskridge v. State, 25 
 Ala. 30. The act was passed by the tirst legislature that as- 
 sembled after the adoption of the Constitution and has been 
 allowed to remain upon the statute book to the present time. 
 It must therefore be considered as a contemporary interpre- 
 tation entitled to much weight. Stuart v. Laird, 1 Cranch,
 
 § 220 SUMMARY OP CORPORATION LAW. 182 
 
 299; Martin v. Hunter, 1 Wheat. 304; Cohens v. Virginia, 
 6 Wheat. 264 ; Adams v. Story, 1 Paine, 79, 90. 
 
 "It must be conceded that if the contract on which the 
 suit was brought was made in violation of a law of the 
 state, it cannot be enforced in any court sitting in the state 
 charii'ed with the interpretation and enforcement of its laws. 
 Bank of the United States v. Owens, 2 Pet. 527; Groves v. 
 Slaughter, 15 Pet. 448 ; Harris v. Runnels, 12 How. 79 ; Brown 
 V. Tarkington, 3 Wall. 377 ; Davidson v. Lanier, 4 Wall. 447 ; 
 Hanauer v. Doane, 12 Wall. 342; Wheeler v. Russell, 17 
 Mass. 258; Law v. Hodson, 11 East, 300; Little v. Poole, 9 
 B. & C. 192 ; Thorne v. Travelers' Ins. Co., 80 Pa. 15 ; Allen v. 
 Hawks, 13 Pick. 79, 82; Roche v. Ladd, 1 Allen, 436, 441; 
 In re Comstock, 3 Saw. 218. So far as appears by the record, 
 the plaintiff had no principal place of business nor any place 
 of business whatever in the state of Colorado, and the mak- 
 ing of the contract set out in the complaint was the only 
 business ever done by it or that it ever purposed to do in that 
 state. 
 
 "The question therefore is, whether upon a true construc- 
 tion of the Constitution and statute the making of the con- 
 tract which the plaintiff seeks to enforce was, under the 
 circumstances stated, forbidden. 
 
 "The contention of the defendants in error is that the 
 prohibition against the doing of any business in the state by 
 a foreign corporation except upon the prescribed condition 
 includes the doing of any single and isolated act of business 
 whatever. Thus broadly stated, it is clear that the inter- 
 pretation of the defendants cannot be sustained. In a case 
 involving the construction of the statute, the supreme court 
 of Colorado held that a foreign corporation might, without 
 complying with the provisions of the statute, maintain an 
 action in the courts of the state to recover damages for 
 trespass to its real estate. The court said: 'The prohibition 
 extends to doing business before the compliance with the 
 terms of the statute. We do not think this an abridgment 
 of the right of a foreign corporation to sue. It extends only 
 to the exercise of the powers by which it may be said to ordi- 
 narily transact or carry on its business. To what extent 
 the exercise of these pov.-ers is affected we do not decide.' 
 Utley V. The Clark Gardner Min. Co., 4 Colo. 369. So it 
 is clear the statute cannot be construed to impose upon a 
 foreign corporation limitations of its right to make con- 
 tracts in the state for carrying on conunerce between the 
 states, for that would make the act an invasion of the exclu- 
 sive right of Congress to regulate commerce among the sev-
 
 183 FOREIGN CORPORATIONS. §§221,222 
 
 eral states. Paul v. Virginia, 8 Wall. 168. The prohibition 
 against doing any business cannot, therefore, be literally 
 interpreted." 
 
 § 221. In holding that a provision in a state statute requir- 
 ing a foreign corporation to stipulate that it would not remove 
 suits to the federal courts to be void, Blatehford, J., in Barron 
 V. Bumside, 121 U. S. 186, said, relative to the right of the 
 corporation to remove suits (p. 200) : 
 
 "Its right equally with any individual citizen to remove 
 into the federal court under the laws of the United States 
 such suits as are mentioned in the third section of the Iowa 
 statute is too firmly established by the decisions of this court 
 to be questioned at this day; and the state of Iowa might 
 as well pass a statute to deprive an individual citizen of 
 another state of his right to remove such suits. 
 
 "As the Iowa statute makes the right to a permit de- 
 pendent upon the surrender by the foreign corporation of a 
 privilege secured to it by the constitution and laws of the 
 United States, the statute requiring the permit must be held 
 to be void. 
 
 "The question as to the right of a state to impose upon 
 a corporation engaged in interstate commerce the duty of 
 obtaining a permit from the state as a condition of its right 
 to carry on such commerce is a question which it is not neces- 
 sary to decide in this case. In all the cases in which this 
 court has considered the subject of the granting by a state 
 to a foreign corporation of its consent to the transaction of 
 business in the state, it has uniformly asserted that no 
 conditions can be imposed by the state which are repugnant 
 to the constitution and laws of the United States. La Fay- 
 ette Ins. Co. V. French, 18 How. 404, 407; Ducat v. Chicago, 
 10 Wall. 410, 415 ; Insurance Co. v. Morse, 20 Wall. 445, 456 ; 
 St. Clair v. Cox, 106 U. S. 350, 356 ; Phila. Fire Assn. v. New- 
 York, 119 U. S. 110, 120." 
 
 ACTIONS AND SUITS BY AND AGAINST FOREIGN 
 CORPORATIONS. 
 
 § 222. A nonresident may sue another nonresident in the 
 jurisdiction where the defendant is personally served with pro- 
 cess. (Rice V. Brown, 81 Me. 56; Johnston v. Trade Ins. Co., 
 132 Mass. 432.)
 
 § 223 SUMMARY OF CORPORATION LAW. 184 
 
 Since corporations do not and cannot exist in fact outside 
 the jurisdiction of the laws under which they are created and 
 exist, foreign corporations or those not created by the state 
 of the jurisdiction invoked are necessarily and essentially 
 nonresident. (Nelins v. Edinburg American Land Mortgage 
 Co., 92 Ala. 157.) 
 
 Foreign corporations, therefore, are, like nonresidents, al- 
 lowed to sue wherever jurisdiction of the defendant, whether 
 a natural or artificial person, is obtained. (National Teleph. 
 Mfg. Co. V. Du Bois, 165 Mass. 117 ; Bank of Augusta v. Earle, 
 13 Pet. 519; Pullman Palace Co. v. Lawrence, 74 Miss. 782; 
 Lumbard v. Aldrich, 8 N. II. 31 ; Silver Lake Bank v. North, 
 4 Johns. Ch. 370; Hibernia Nat. Bank v. Lacombe, 84 N. Y. 
 367.) Since a person, whether natural or artificial, cannot 
 be sued unless in some manner served with process, it is the 
 established rule that a foreign corporation cannot be sued 
 unless it has subjected itself to the jurisdiction in question, 
 and that process cannot be served upon it, without its con- 
 sent, express or ionplied, outside the jurisdiction of its crea- 
 tion. (Barnett v. Chicago & L. H. R. Co., 4 Hun, 114; Pull- 
 man Palace Car Co. v. Harrison, 122 Ala. 149 ; Aldrich v. 
 Anchor etc. Co., 24 Or. 32; Lathrop v. Union P. P. Co., 7 
 D. C. m.) 
 
 A corporation may, however, voluntarily submit itself to be 
 served with process in jurisdictions foreign to its creation, 
 and where a state prescribes conditions with which foreign 
 corporations must comply in order to do business in the state, 
 a corporation doing business in the state is held thereby to 
 have tacitly submitted itself to the service of process and 
 to the jurisdiction of the courts of the state. 
 
 § 223. In St. Clair v. Cox, 106 U. S. 350, in holding that in 
 an action in the federal court a judgment obtained in the state 
 courts against a foreign corporation was not admissible in 
 evidence, for the reason that the state court did not obtain 
 jurisdiction of the corporation, since though its agent was 
 served within the state it did not appear that the corporation 
 was doing business in the state, and therefore had not sub-
 
 185 FOREIGN CORPORATIONS. § 229 
 
 mitted itself to the jurisdiction of the state courts, Field, J"., 
 said (p. 354) : 
 
 "Formerly, it was held that a foreign corporation could 
 not be sued in an action for the recovery of a personal 
 demand outside of the state by which it was chartered. The 
 principle that a corporation must dwell in the place of its 
 creation, and cannot, as said by Mr. Chief Justice Taney, 
 migrate to another sovereignty, coupled with the doctrine that 
 an officer of the corporation does not carry his functions with 
 him when he leaves his state, prevented the maintenance of 
 personal actions against it. There was no mode of compelling 
 its appearance in the foreign jurisdiction. Legal proceedings 
 there against it were, therefore, necessarily confined to the 
 disposition of such property belonging to it as could be there 
 found ; and to authorize them legislation was necessary. 
 
 "In McQueen v. Middleton Manufacturing Co., decided in 
 1819, the supreme court of New York, in considering the ques- 
 tion whether the law of that state authorized an attachment 
 against the property of a foreign corporation, expressed the 
 opinion that a foreign corporation could not be sued in the 
 state, and gave as a reason that the process must be served 
 on the head or principal officer within the jurisdiction of the 
 sovereignty where the artificial body existed ; observing that 
 if the president of a bank went to New York from another 
 state, he would not represent the corporation there; and that 
 'his functions and his character would not accompany him 
 when he moved beyond the jurisdiction of the government un- 
 der whose laws he derived this character.' 16 Johns. (N. Y.) 
 5. The opinion thus expressed was not, perhaps, necessary to 
 the decision of the case, but nevertheless it has been accepted 
 as correctly stating the law. It was cited with approval by 
 the supreme court of Massachusetts, in 1834, in Peckham v. 
 North Parish in Haverhill, the court adding that all foreign 
 corporations were without the jurisdiction of the process of 
 the courts of the commonwealth. 16 Pick. (Mass.) 274. Sim- 
 ilar expressions of opinion are found in numerous decisions, 
 accompanied sometimes with suggestions that the doctrine 
 might be otherwise if the foreign corporation sent its officer 
 to reside in the state and transact business there on its ac- 
 count. Libbey v. Plodgdon, 9 N. H. 394; Moulin v. Trenton 
 Insurance Co., 24 N. J. L. 222. 
 
 § 229. "This doctrine of the exemption of a corporation 
 from suit in a state other than that of its creation was the cause 
 of much inconvenience and often of manifest injustice. The
 
 § 230 SUMMARY OF CORPORATION LAW. 186 
 
 great increase in tlie number of corporations of late years, 
 and the immense extent of their business, only made this 
 inconvenience and injustice more frequent and marked. Cor- 
 porations now enter into all the industries of the country. 
 The business of banking, mining, manufacturing, transporta- 
 tion and insurance is almost entirely carried on by them, and 
 a large portion of the wealth of the country is in their hands. 
 Incorporated under the laws of one state, they carry on the 
 most extensive operations in other states. To meet and obvi- 
 ate this inconvenience and injustice, the legislatures of several 
 states interposed, and provided for service of process on 
 officers and agents of foreign corporations doing business 
 therein. Whilst the theoretical and legal view, that the domi- 
 cile of a corporation is only in the state where it is created, 
 was admitted, it was perceived that when a foreign corpora- 
 tion sent its officers and agents into other states and opened 
 offices, and carried on its business there, it was, in effect, as 
 much represented by them there as in the state of its creation. 
 As it was protected by the laws of those states, allowed to 
 carry on its business within their borders, and to sue in their 
 courts, it seemed only right that it should be held responsible 
 in those courts for obligations and liabilities there incurred. 
 
 "All that there is in the legal residence of a corporation in 
 the state of its creation consists in the fact that by its laws 
 the corporators are associated together and allowed to exer- 
 cise as a body certain functions, with a right of succession 
 in its members. Its officers and agents constitute all that is 
 visible of its existence ; and they may be authorized to act 
 for it without as well as within the state. There v/ould seem, 
 therefore, to be no sound reason why, to the extent of their 
 agency, they, should not be equally deemed to represent it 
 in the states for which they are respectively appointed when 
 it is called to legal responsibility for their transactions. 
 
 "The case is unlike that of suits against individuals. They 
 can act by themselves, and upon them process can be di- 
 rectly served, but a corporation can only act and be reached 
 through agents. Serving process on its agents in other states, 
 for matters within the sphere of their agency, is, in effect, 
 serving process on it as much so as if such agents resided in 
 the state where it was created. 
 
 § 230. "A corporation of one state cannot do business in 
 another state without the latter 's consent, express or implied, 
 and that consent may be accompanied with such conditions as 
 it may think proper to impose. As said by this court in Lafay- 
 ette Insurance Co. v. French, ' These conditions must be deemed
 
 187 FOREIGN CORPORATIONS. § 230 
 
 valid and effeetual by other states and by this court, pro- 
 vided they are not repugnant to the constitution or laws of 
 the United States, or inconsistent with those rules of public 
 law which secure the jurisdiction and authority of each state 
 from encroachment by all others, or that principle of natural 
 justice which forbids condemnation without opportunity for 
 defense. ' 18 How. 404 ; Paul v. Virginia, 8 Wall. 168. 
 
 "The state may, therefore, impose as a condition upon 
 w^hich a foreign corporation shall be permitted to do business 
 within her limits, that it shall stipulate that in any litigation 
 arising out of its transactions in the state, it will accept as 
 sufficient the service of process on its agents or persons 
 specially designated; and the condition would be eminently 
 fit and just. And such condition and stipulation may be 
 implied as well as expressed. If a state permits a foreign 
 corporation to do business within her limits, and at the same 
 time provides that in suits against it for business there done, 
 process shall be served upon its agents, the provision is to 
 be deemed a condition of the permission ; and corporations 
 that subsequently do business in the state are to be deemed 
 to assent to such condition as fully as though they had 
 specially authorized their agents to receive service of the 
 process. Such condition must not, however, encroach upon 
 that principle of natural justice which requires notice. of a 
 suit to a party before he can be bound by it. It must be 
 reasonable, and the service provided for should be only upon 
 such agents as may be properly deemed representatives of 
 the foreign corporation. The decision of this court in Lafay- 
 ette Ins. Co. V. French, to which we have already referred, 
 sustains these views. 
 
 "The state of Michigan permits foreign corporations to 
 transact business within her limits. Either by express enact- 
 ment, as in the case of insurance companies, or by her acqui- 
 escence, they are as free to engage in all legitimate business 
 as corporations of her own creation. Her statutes expressly 
 provide for suits being brought by them in her courts ; and 
 for suits by attachment being brought against them in favor 
 of residents of the state. And in these attachment suits they 
 authorize the service of a copy of the writ of attachment, 
 with a copy of the inventory of the property attached, on 
 'any officer, member, clerk or agent of such corporation' 
 within the state, and give to a personal service of a copy of 
 the writ and of the inventory on one of these persons the 
 force and effect of personal service of a summons on a de- 
 fendant in suits commenced by summons.
 
 § 231 SUMMARY OF CORPORATION LAW. 188 
 
 § 231. "It thus seems that a writ of foreign attachment in 
 that state is made to serve a double purpose — as a command to 
 the officer to attach property of the corporation, and as a 
 summons to the latter to appear in the suit. We do not, how- 
 ever, understand the laws as authorizing the service of a 
 copy of the writ, as a summons, upon an agent of a foreign 
 corporation, unless the corporation be engaged in business in 
 the state, and the agent be appointed to act there. We so 
 construe the words 'agent of such corporation within this 
 state.' They do not sanction service upon an officer or agent 
 of the corporation who resides in another state and is only 
 casually in the state, and not charged with any business of 
 the corporation there. The decision in Newell v. Great West- 
 em. Railway Co., reported in the 19th of Michigan reports, 
 supports this view, although that was the case of an attempted 
 service of a declaration as the commencement of the suit. 
 The defendant was a Canadian corporation, owning and 
 operating a railroad from Suspension Bridge in Canada to 
 the Detroit line at Windsor, opposite Detroit, and carrying 
 passengers in connection with the Michigan Central Railroad 
 Company, upon tickets sold by such companies respectively. 
 The suit was commenced in Michigan, the declaration alleging 
 a contract by the defendant to carry the plaintiff over its 
 road, and its violation of the contract by removing him from 
 its cars at an intermediate station. The declaration was 
 served upon Joseph Price, the treasurer of the corporation, 
 who was only casually in the state. The corporation appeared 
 specially to object to the jurisdiction of the court, and pleaded 
 that it was a foreign corporation and had no place of busi- 
 ness or agent or officer iu the state, or attorney to receive 
 service of legal process, or to appear for it; and that Joseph 
 Price was not in the state at the time of service on him on 
 any official business of the corporation. The plaintiff having 
 demurred to this plea, the court held the service insufficient. 
 'The corporate entity,' said the court, 'could by no possi- 
 bility enter the state, and it could do nothing more in that 
 direction than to cause itself to be represented here by its offi- 
 cers or agents. Such representation would, however, neces- 
 sarily imply something more than the mere presence here of 
 a person possessing, when in Canada, the relation to the com- 
 pany of an officer or agent. To involve the representation 
 of the company here, the supposed representative would have 
 to hold or enjoy in this state an actual present official or rep- 
 resentative status. He would be required to be here as an 
 agent or officer of the corporation, and not as an isolated in- 
 dividual. If he should drop the official or representative
 
 189 FOREIGN CORPORATIONS. § 232 
 
 character at the frontier, if he should bring that character 
 no further than the territorial boundary of the government 
 to whose laws the corporate body itself, and consequently the 
 official positions of its officers also, would be constantly in- 
 debted for existence, it could not, with propriety, be main- 
 tained that he continued to possess such character by force 
 of our statute. Admitting, therefore, for the purpose of this 
 suit, that in given cases the foreign corporation would be 
 bound by service on its treasurer in Michigan, this could only 
 be so when the treasurer, the then official, the officer then in 
 a manner impersonating the company, should be served. 
 Joseph Price was not here as the treasurer of the defend- 
 ants. He did not then represent them. His act in coming was 
 not the act of the company, nor was his remaining the busi- 
 ness or act of any besides himself. He had no principal, and 
 he was not an agent. He had no official status or representa- 
 tive character in this state.' p. 344. 
 
 "According to the view thus expressed by the supreme 
 court of Michigan, service upon an agent of a foreign corpo- 
 ration will not be deemed sufficient, unless he represents the 
 corporation in the state. This representation implies that 
 the corporation does business, or has business, in the state for 
 the transaction of which it sends or appoints an agent there. 
 If the agent occupies no representative character with respect 
 to the business of the corporation in the state, a judgment 
 rendered upon service on him would hardly be considered in 
 other tribunals as possessing any probative force. In a case 
 where similar service was made in New York upon an officer 
 of a corporation of New Jersey accidentally in the former 
 state, the supreme court of New Jersey said that a law of 
 another state which sanctioned such service upon an officer 
 accidentally within its jurisdiction was 'so contrary to natural 
 justice and to the principles of international law, that the 
 courts of other states ought not to sanction it.' Moulin v. 
 Trenton Insurance Co., 24 N. J. L. 222, 234." 
 
 § 232. In Barrow Steamship Co. v. Kane, 170 U. S. 100, it 
 was held that a resident of New Jersey could maintain in the 
 United States circuit court for the southern district of New 
 York an action, for a tort committed in Ireland, against the 
 defendant, a foreign corporation doing business in New York 
 through duly accredited agents, but not having designated 
 an agent under the statute. Gray, Justice, saying (p. 105) : 
 
 "It was contended in behalf of the steamship company that 
 being a foreign corporation, no suit could be maintained
 
 §§233,234 SUMMARY OF CORPORATION LAW. 190 
 
 against it in personam in this country without its consent, 
 express or implied; that by doing business in the state of New 
 York it consented to be sued only as authorized by the stat- 
 utes of the state ; that the jurisdiction of the courts of the 
 United States held within the state depended on the authority 
 given by those statutes; that the statutes of New York con- 
 ferred no authority upon any court to issue process against 
 a foreign corporation in an action by a nonresident, and for 
 a cause not arising within the state ; and therefore that the 
 circuit court acquired no jurisdiction of this action brought 
 against a British corporation by a citizen and resident of New 
 Jersey 
 
 § 233. "The manifest injustice which would ensue if a 
 foreign corporation, permitted by a state to do business therein 
 and to bring suits in its courts, could not be sued in those courts, 
 and thus, while allowed the benefits, be exempt from the bur- 
 dens of the laws of the state, has induced many states to pro- 
 vide by statute that a foreign corporation making contracts 
 within the state shall appoint an agent residing therein, upon 
 whom process may be served in actions upon such contracts. 
 This court has often held that wherever such a statute exists, 
 service upon an agent so appointed is sufficient to support 
 jurisdiction of an action against the foreign corporation, 
 either in the courts of the state or, when consistent with the 
 acts of Congress, in the courts of the United States held 
 within the state ; but it has never held the existence of such 
 a statute to be essential to the jurisdiction of the circuit courts 
 of the United States. Lafayette Ins. Co. v. French, 18 How. 
 404; Ex parte Schollenberger, 96 U. S. 369; New England 
 Ins. Co. V. Woodworth, 111 U. S. 138, 146 ; Shaw v. Quincy 
 Mining Co., 145 U. S. 444, 452 The liability of a for- 
 eign corporation to be sued in a particular jurisdiction need 
 not be distinctly expressed in the statutes of that jurisdiction, 
 but may be implied from a grant of authority in those stat- 
 utes to carry on its business there In England, the 
 
 right of a foreign corporation doing business in England to 
 sue in the English courts was long ago recognized; and its 
 liability to be subjected to suit in those courts by service made 
 upon one of its principal officers residing and representing it 
 within the realm has been fully established by recent deci- 
 sions. Newby v. Van Oppen, L. R. 7 Q. B. 293; Haggin v. 
 Comptoir d'Escompte de Paris, 23 Q. B. D. 519. 
 
 § 234. "In the courts of several states of the Union the like 
 view has prevailed. Libbey v. Hodgdon, 9 N. H. 394; March v.
 
 191 FOREIGN CORPORATIONS. § 234 
 
 Eastern Railroad Co., 40 N. H. 548, 579 ; Day v. Essex County 
 Bank, 13 Vermont, 97 ; Moulin v. Trenton InvS. Co., 1 Dutchcr 
 (25 N. J. L.), 57; Bushel v. Commonwealth Ins. Co., 15 S. & 
 R. 173 ; North Missouri Railroad v. Akers, 4 Kansas, 453, 469 ; 
 Council Bluffs Co. v. Omaha Co., 49 Nebraska, 537. The 
 courts of New York and Massachusetts, indeed, have declined 
 to take jurisdiction of suits against foreign corporations, ex- 
 cept so far as it has been expressly conferred by statutes of 
 the state. McQueen v. Middleton Manuf. Co., 16 Johns. 5; 
 Robinson v. Oceanic Steam Navigation Co., 112 N. Y. 315; 
 Desper v. Continental Water Meter Co., 137 Mass. 252. But 
 the jurisdiction of the circuit courts of the United States is 
 not created by, and does not depend upon, the statutes of the 
 several states. In the circuit courts of the United States 
 there have been conflicting opinions, but the most satisfactory 
 ones are those of Judge Drummond and Judge Lowell in favor 
 of the liability of foreign corporations to be sued. Wilson 
 Packing Co. v. Hunter, 8 Bissell, 429 ; Hayden v. Androscoggin 
 Mills, 1 Fed. Rep. 93 On the other hand, upon the funda- 
 mental principle that no one shall be condemned unheard, it 
 is well settled that in a suit against a corporation of one state 
 brought in a court of the United States held within another 
 state, in which the corporation neither docs business nor has 
 authorized any person to represent it, service upon one of its 
 officers or employees found within the state will not support 
 the jurisdiction, notwithstanding that such service is recog- 
 nized as sufficient by the statutes or the judicial decisions of 
 the state. St. Clair v. Cox, 106 U. S. 350 ; Fitzgerald Co. v. 
 Fitzgerald, 137 U. S. 98, 106 ; Goldey v. Morning News, 156 
 U. S. 518. See, also, Mexican Central Railway v. Pinkney, 
 
 149 U. S. 194 The present action was brought by a 
 
 citizen and resident of the state of New Jersey, in a circuit 
 court of the United States held within the state of New York, 
 against a foreign corporation doing business in the latter 
 state. It was for a personal tort committed abroad, such as 
 would have been actionable if committed in the state of New 
 York or elsewhere in this country, and an action for which 
 might be maintained in any circuit court of the United States 
 which acquired jurisdiction of the defendant. Railroad Co. 
 V. Harris, above cited (12 Wall. 65) ; Dennick v. Railroad 
 Co., 103 U. S. 11 ; Huntington v. Attrill, 146 U. S. 657, 670, 
 675; Stewart v. Baltimore & Ohio Railroad, 168 U. S. 445. 
 The summons was duly served upon the regularly appointed 
 agents of the corporation in New York. In re Hohorst above 
 cited. The action was within the general jurisdiction con- 
 ferred by Congress upon the circuit courts of the United
 
 § 235 SUMMARY OF CORPORATION LAW. 192 
 
 States. The fact that the legislature of the state of New 
 York has not seen fit to authorize like suits to be brought in 
 its own courts by citizens and residents of other states cannot 
 deprive such citizens of their right to invoke the jurisdiction 
 of the national courts under the constitution and laws of the 
 United States." 
 
 Similarly, H. N. Reeves v. Southern Ry. Co., 121 Va. 561; 
 Sullivan v. Sullivan Timber Co., 103 Ala. 371; Aldrich v. 
 Anchor Coal & Development Co., 24 Or. 32; Granite State 
 Provident Assn. v. Lloyd, 145 111. 620; Harding v. American 
 Glucose Co., 182 111. 551 ; State v. U. S. Mut. Ace. Assn., 67 
 Wis. 624; Ins. Co. v. Gillett, 54 Md. 212. 
 
 § 235. The question then arises. What constitutes "doing 
 business"? 
 
 This is a question of fact, dependent partly on acts and 
 partly on intention, as is the similar ciuestion of domicile. 
 As was said by the circuit court of appeals for the sixth cir- 
 cuit, in Oakland Sugar Mill Co. v. Wolfe Co., 118 Fed. 239, 
 it is properly one for determination by a jury. The test to 
 be gathered from the authorities is whether a single act or 
 more has been performed by the corporation through its 
 agent or agents within the state of the kind characteristic 
 of the business objects of the corporation and with apparent 
 intent to continue such performance. 
 
 In Neyens v. Worthington, 150 Mich. 580, 114 N. W. 404, it 
 was held that a contract made in Michigan by an Illinois cor- 
 poration appointing an agent for the continued sale of its 
 products for the period of fifteen years was doing business 
 within the state, McAlvay, C. J., saying: 
 
 "There is a conflict in the authorities as to what, under 
 these regulating statutes, constitutes 'carrying on its business' 
 in a state by an unauthorized foreign corporation. The 
 weight of authority holds that a single sale of goods, or a 
 single business transaction by such corporation, cannot be held 
 to amount to carrying on business where there is no purpose 
 to do any further business. 19 Cyc. Law & Proc, p. 1268, 
 and cases cited. The case at bar is distinguishable from 
 either of the classes of cases above mentioned. This agree- 
 ment by its terms was an invasion of this state by a foreign 
 corporation, not simply to make sales of products manufac-
 
 193 FOREIGN CORPORATIONS. § 236 
 
 tured and delivered in a foreign state, nor was it a single act 
 of business without intent or purpose to do any other busi- 
 ness; but it was for the express purpose of extending and 
 establishing its business permanently within the state. The 
 agreement was made within the state, with a citizen of the 
 state, to be executed by him wholly within its territory. It 
 covered a term of fifteen years, and for the rights granted 
 under it a large consideration was received by the company. 
 This transaction will, in our opinion, bear no other construc- 
 tion than that this corporation was carrying on its business 
 within this state with the express intention of continuing so 
 to do. None of the authorities question the proposition that, 
 if the acts of a foreign corporation, in coming within a state, 
 amount to carrying on business, such corporation must con- 
 form with the requirements of the statute, or be subjected to 
 its penalties and restrictions. The cases cited by plaintiff as 
 sustaining his contention that this was not 'carrying on busi- 
 ness' recognize the doctrine that, where an act of business is 
 transacted by a foreign corporation within a state with the 
 intention to continue to transact its business in such state, 
 the corporation is carrying on its business within such state. 
 Cooper Mfg. Co. v. Ferguson, 113 U. S. 735, 28 L. Ed. 1139, 
 5 Sup. Ct. Rep. 739; Commercial Bank v. Sherman, 28 Or. 
 576, 52 Am. St. Rep. 811, 43 Pac. 658; Florsheim Bros. Dry 
 Goods Co. V. Lester, 60 Ark. 120, 27 L. R. A. 505, 46 Am. St. 
 Rep. 162, 29 S. W. 34. See, also. People v. Horn Silver Min. 
 Co., 105 N. Y. 76, 11 N. E. 155. In Vaughn Mach. Co. v. Light- 
 house, 64 App. Div. 142, 71 N. Y. Supp. 801, the court said : 
 'The crucial test in doing business within the meaning of this 
 statute is not an isolated transaction within the state, or the 
 transshipment of goods from the home office pursuant to 
 orders taken by drummers within the state, but it is the es- 
 tablishment of an agency or branch office within our state 
 limits.' " 
 
 § 236. In Diamond Glue Co. v. United States Glue Co., 
 187 U. S. 611, it was held that where an Illinois corporation 
 contracted in Wisconsin with a Wisconsin corporation to ereci 
 a factory for the latter in Wisconsin, and proceeded to act un- 
 der the contract, it was doing business in Wisconsin. Holmes, 
 J., said : 
 
 "According to the undisputed testimony of the plaintiff's 
 vice-president, who executed the contract, the instrument was 
 signed in Wisconsin, and at all events, if it was executed ■with 
 13
 
 § 237 SUMMARY OF CORPORATION LAW. 194 
 
 a view to the carrying on of business in that state by the 
 plaintiff, the law of Wisconsin must be applied. London 
 Assurance v. Companhia de Moagens do Barreiro, 167 U. S. 
 149, 160, 161; Graves v. Johnson, 156 Massachusetts, 211." 
 
 In People ex rel. Southern Cotton Oil Co. v. Wemple, 131 
 N. Y. 64, it was held that a New Jersey corporation which had 
 a sales agency in New York, and for a period of three years 
 sold about one-third of its product in New York, was doing 
 business in New York. 
 
 Similarly, United States Rubber Co. v. Butler & Shoe Co., 
 132 Fed. 398; Farmers' Loan & Trust Co. v. Lake etc. R. Co., 
 173 111. 439 ; John Deere Plow Co. v. Wyland, 69 Kan. 255. 
 So likewise is the investment of capital and management of 
 property in the state doing business therein. People v. Miller, 
 181 N. Y. 328; People's Building etc. Assn. v. Markley, 27 
 Ind. App. 128, 60 N. E. 1013; Groel v. United Electric Co., 
 69 N. J. Eq. 397. 
 
 § 237. The doing of a single act or making a single con- 
 tract may, under the particular statute or the circumstances of 
 the particular case, be doing business in the state (State v. 
 Bristol Savings Bank, 108 Ala. 3, 18 South. 533 ; Pennsylvania 
 Co. v. Bauerle, 143 111. 459, 33 N. E. 166 ; Lamb v. Lamb, 14 
 Fed. Cas. 8018 ; International Text-book Co. v. Lynch, 81 Vt. 
 101, 69 Atl. 541) ; or it may not be doing business, as the case 
 may be. (Sigel Campion Livestock etc. Co. v. Haston, 68 Kan, 
 749, 75 Pac. 1028 ; Florsheim Bros. Dry Goods Co. v. Lester, 
 60 Ark. 120, 29 S. W. 34; Colorado Iron Works v. Sierra 
 Grande Min. Co., 15 Colo. 499, 25 Pac. 325 ; Delaware & Canal 
 Co. V. Mahlenbrock, 63 N. J. L. 281, 43 Atl. 978; Commercial 
 Bank v. Sherman, 28 Or. 573, 43 Pac. 658; Keene Guaranty 
 Sav. Bank v. Lawrence, 32 Wash. 572, 73 Pac. 680 ; Chicago 
 Title €tc. Co. V. Bashf ord, 120 AVis. 281, 97 N. W. 940 ; Ware 
 Cattle Co. V. Anderson, 107 Iowa, 231, 77 N. W. 1026 ; Empire 
 Milling etc. Co. v. Tombstone etc. Min. Co., 100 Fed. 910 ; Kil- 
 gore v? Smith, 122 Pa. 48, 15 Atl. 698; Meddis v. Kenney, 176 
 Mo. 200, 75 S. W. 633 ; Holder v. Aultman & Co., 169 U. S. 81 ; 
 Bamberger v. Schoolfield, 160 U. S. 149 ; McNaughton Co. v. 
 McGirl, 20 Mont. 124, 49 Pac. 651.) On the other hand, in-
 
 195 FOREIGN CORPORATIONS. § 237 
 
 terstate commerce transactions, be they single or continuous, 
 amounting in substance to the sale of goods by corporations 
 outside the state for shipment into and delivery within the 
 state, are not doing business in the state. (Morgan v. White, 
 101 Ind. 413; Boardman v. McClure Co., 123 Fed. 614; Ware 
 V. Hamilton Brown Shoe Co., 92 Ala. 145, 9 South. 136 ; John 
 Spry Lumber Co. v. Chappell, 184 111. 539, 56 N. E. 794; Wil- 
 cox Cordage etc. Co. v. Mosher, 114 Mich. 64, 72 N. W. 117 ; 
 North Wisconsin Cattle Co. v. Oregon etc. R. Co., 105 Minn. 
 198, 117 N. W. 391 ; Wolff Dryer Co. v. Bigler, 192 Pa. 466, 43 
 Atl. 1092 ; Rich v. Chicago etc. R. Co., 34 Wash. 14, 74 Pac. 
 1008 ; Green v. Chicago etc. R. Co., 205 U. S. 530j Grace Co. 
 V. Henry Martin etc. Co., 174 Fed. 131.)
 
 EMINENT DOMAIN. 
 
 CHAPTER XIL 
 
 PUBLIC USE. 
 
 § 250. Every sovereign state has in the last analysis the ab- 
 solute dominion and disposal of its citizens and their property. 
 It is the source alike of all legal rights and of all legal duties 
 and obligations. Subject only to self-imposed limitations, it 
 may create and destroy rights and impose or relax and annul 
 duties and obligations. 
 
 With us, ultimate sovereignty is in the people, delegated to 
 the federal and state governments, subject to certain limita- 
 tions, and among the sovereign functions recognized as per- 
 taining to our federal and state governments is the right or 
 power of eminent domain. These words, "eminent domain," 
 are used to denote the sovereign power to appropriate prop- 
 erty to such purposes and objects as may be determined by 
 government to require its use. 
 
 This right and power in the government termed "eminent 
 domain" is subjected to the constitutional limitations (1) that 
 no person shall be deprived of his life, liberty or property 
 without due process of law; (2) that private property shall 
 not be taken for public use without just compensation. 
 
 These limitations contained in the federal constitution are 
 controlling to the extent that no state constitution can lessen 
 their force, whatever more stringent limitation may be added. 
 
 It is generally agreed that the institution of private prop- 
 erty being recognized by the constitution, by virtue, therefore, 
 of this recognition, and of the express constitutional limita- 
 tions above mentioned, private property may not be taken 
 for private use, irrespective of any question of compensation, 
 i. e., that private property may not, by legislative or other 
 sovereign fiat, be taken from one private individual and 
 
 (197)
 
 §§251,252 EMINENT Domain. 198 
 
 vested in another private individual for the private use of 
 that or any person or persons. 
 
 § 251. The scope, therefore, of the exercise of the right and 
 power of eminent domain resolves itself into the question, 
 What is a taking of private property by due process of law for 
 public use upon just compensation made 1 
 
 Various rules have been tentatively established by the state 
 courts, but little more is attempted here than to illustrate the 
 standard set by the supreme court of the United States, to 
 which all must conform. 
 
 First to be determined is the question. What is a public 
 use? Upon this question is perhaps the widest variance of 
 authority, some confining the application of the term to the 
 more determinate and less elastic class of cases similar to the 
 ancient trinoda necessitas, i. e., to cases where the public, as 
 such, may continually participate in the use, e, g., a bridge, 
 a railroad, or other similar public utility, while other author- 
 ities apply a different test, namely, whether the intended use 
 be one requisite to enhance the public welfare. This latter 
 test is much less easy of determination and application, but, 
 by reason of its very elasticity, is better conformable to the 
 changing conditions of a growing, expanding and progressive 
 people. 
 
 This latter has been approved by the supreme court of the 
 United States as the standard to be applied, and in a com- 
 paratively recent case it was held to be a question essentially 
 in the last resort for judicial determination, and whether, 
 upon all the facts and circumstances surrounding the particu- 
 lar case, the use for which the property is proposed to be 
 taken is shown to be a public use. 
 
 § 252. In Cole v. La Grange, 113 U. S. 1, in holding that a 
 state legislature could not authorize a city to issue bonds by 
 way of donation to a private manufacturing company, Gray, 
 J., said : 
 
 "The general grant of legislative power in the constitu- 
 tion of a state does not enable the legislature, in the exercise 
 either of the right of eminent domain or of the right of taxa-
 
 199 PUBLIC USE. § 253 
 
 tion, to take private property, without the owner's consent, 
 for any but a public object. Nor can the legislature author- 
 ize counties, cities or towns to contract, for private objects, 
 debts which must be paid by taxes. It cannot, therefore, au- 
 thorize them to issue bonds to assist merchants or manufac- 
 turers, whether natural persons or corporations, in their pri- 
 vate business. These limits of the legislative power are now 
 too firmly established by judicial decisions to require extended 
 argument upon the subject." 
 
 § 253. In West River Bridge Co. v. Dix, 6 How. 507, it was 
 held that a charter of a corporation is subject to the right of 
 eminent domain in the state, and that a bridge held by an in- 
 corporated company under a charter from a state may be con- 
 demned and taken as part of a public road under the laws of 
 the state, without impairing the obligation of the contract of 
 the charter. Daniel, J., in the opinion of the court, said: 
 
 "No state, it is declared, shall pass a law impairing the 
 obligation of contracts; yet with this concession constantly 
 yielded, it cannot be justly disputed that in every political 
 sovereign community there inheres necessarily the right and 
 the duty of guarding its own existence, and of protecting and 
 promoting the interests and welfare of the community at 
 large. This power and this duty are to be exerted not only 
 in the highest acts of sovereignty and in the external rela- 
 tions of governments; they reach and comprehend likewise 
 the interior polity and relations of social life, which should 
 be regulated with reference to the advantage of the whole 
 society. This power denominated the eminent domain of the 
 state is, as its name imports, paramount to all private rights 
 vested under the government, and these last are, by necessary 
 implication, held in subordination to this power, and must 
 yield in every instance to its proper exercise. 
 
 "The constitution of the United -States, although adopted 
 by the sovereign states of this Union and proclaimed in its 
 own language to be the supreme law for their government, 
 can, by no rational interpretation, be brought to conflict with 
 this attribute in the states. There is no express delegation 
 of it by the constitution, and it would imply an incredible 
 fatuity in the states to ascribe to them the intention to relin- 
 quish the power of self-government and self-preservation. A 
 correct view of this matter must demonstrate, moreover, that 
 the right of eminent domain in government in no wise inter- 
 feres with the inviolability of contracts; that the most sancti-
 
 § 254 EMINENT DOMAIN. 200 
 
 monious regard for the one is perfectly consistent with the 
 possession and exercise of the other. 
 
 § 254. "Under every established government, the tenure of 
 property is derived, mediately or immediately, from the sover- 
 eign power of the political body, organized in such mode or ex- 
 erted in such way as the community or state may have thought 
 proper to ordain. It can rest on no other foundation, can 
 have no other guaranty. It is owing to these characteristics 
 only, in the original nature of tenure, that appeals can be 
 made to the laws either for the protection or assertion of the 
 rights of property. Upon any other hypothesis, the law of 
 property would be simply the law of force. Now, it is un- 
 deniable that the investment of property in the citizen by the 
 government, whether made for a pecuniary consideration or 
 founded on conditions of civil or political duty, is a contract 
 between the state, or the government acting as its agent, and 
 the grantee ; and both the parties thereto are bound in good 
 faith to fulfill it. But into all contracts, whether made be- 
 tween states and individuals or between individuals only, 
 there enter conditions which arise not out of the literal terms 
 of the contract itself ; they are superinduced by the pre-ex- 
 isting and higher authority of the laws of nature, of nations, 
 or of the community to which the parties belong; they are 
 always presumed, and must be presumed, to be known and 
 recognized by all, are binding upon all, and need never, there- 
 fore, be carried into express stipulation, for this could add 
 nothing to their force. Every contract is made in subordina- 
 tion to them, and must yield to their control, as conditions, 
 inherent and paramount, wherever a necessity for their exe- 
 cution shall occur. Such a condition is the right of eminent 
 domain. This right does not operate to impair the contract 
 effected by it, but recognizes its obligation in the fullest ex- 
 tent, claiming only the fulfillment of an essential and insepa- 
 rable condition. Thus, in claiming the resumption or qualifi- 
 cation of an investiture, it insists merely on the true nature 
 and character of the right invested. The impairing of con- 
 tracts inhibited by the constitution can scarcely, by the 
 greatest violence of construction, be made applicable to the 
 enforcing of the terms or necessary import of a contract ; the 
 language and meaning of the inhibition were designed to em- 
 brace proceedings attempting the interpolation of some new 
 term or condition foreign to the original agreement, and 
 therefore inconsistent with and violative thereof. It, then, 
 being clear that the power in question not being within the 
 purview of the restriction imposed by the tenth section of
 
 201 PUBLIC USE. § 254 
 
 the first article of the constitution, it remains with the states, 
 to the full extent in which it inheres in every sovereicrn gov- 
 ernment, to he exercised by them in that degree that shall by 
 them be deemed commensurate with public necessity. So 
 long as they shall steer clear of the single predicament de- 
 nounced by the constitution, shall avoid interference with the 
 obligation of contracts, the wisdom, the modes, the policy, the 
 hardship of any exertion of this power are subjects not witliin 
 the proper cognizance of this court. This is in truth purely 
 a question of power; and conceding the power to reside in the 
 state government, this concession would seem to close the door 
 upon all further controversy in connection with it. The in- 
 stances of the exertion of this power, in some mode or other, 
 from the very foundation of civil government, have been so 
 numerous and familiar, that it seems somewhat strange at 
 this day to raise a doubt or question concerning it. In fact, 
 the whole policy of the country relative to roads, mills, bridges 
 and canals rests upon this single power, under which lands 
 have been always condemned, and without the exertion of this 
 power, not one of the improvements just mentioned could be 
 constructed. In our country it is believed that the power 
 was never, or, at any rate, rarely, questioned, until the opinion 
 seems to have obtained that the right of property in a char- 
 tered corporation was more sacred and intangible than the 
 same right could possibly be in the person of the citizen ; an 
 opinion which must be without any grounds to rest upon until 
 it can be demonstrated either that the ideal creature is more 
 than a person, or the corporeal being is less. For as a ques- 
 tion of the power to appropriate to public uses the property 
 of private persons, resting upon the ordinary foundations of 
 private right, there would seem to be room neither for doubt 
 nor difficulty. A distinction has been attempted in argument 
 between the power of a government to appropriate for public 
 uses property which is corporeal or may be said to be in being 
 and the like power in the government to resume or extinguish 
 a franchise. The distinction thus attempted we regard as a 
 refinement which has no foundation in reason, and one that 
 in truth avoids the true legal or constitutional question in 
 these causes, namely, that of the right in private persons, in 
 the use or enjoyment of their private property, to control and 
 actually to prohibit the power and duty of the government 
 to advance and protect the general good. We are aware of 
 nothing peculiar to a franchise which can class it higher or 
 render it more sacred than other property. A franchise is 
 property, and nothing more ; it is incorporeal property, and 
 is so defined by Justice Blackstone when treating in his second
 
 § 255 EMINENT DOMAIN. 202 
 
 volume, cliapter 3, pae;e 20, of the Rights of Things. It is 
 its character of property only which imparts to it value and 
 alone authorizes in individuals a right of action for invasions 
 or disturbances of its enjoyment. Vide, Bl. Cora., vol. Ill, 
 eh. 16, p. 236, as to injuries to this description of private 
 property and the remedies given for redressing them. A 
 franchise, therefore, to erect a bridge or construct a road to 
 keep a ferry and to collect tolls upon them, granted by the 
 authority of the state, we regard as occupying the same posi- 
 tion, with respect to the paramount power and duty of the 
 state to promote and protect the public good, as does the right 
 of the citizen to the possession and enjoyment of his land 
 under his patent or contract with the state, and it can no more 
 interpose any obstruction in the way of their just exertion. 
 Such exertion we hold to be not within the inhibition of the 
 constitution, and no violation of a contract. The power of a 
 state, in the exercise of eminent domain, to extinguish imme- 
 diately a franchise it had granted appears never to have been 
 directly brought here for adjudication, and consequently has 
 not been heretofore formally propounded from this court; but 
 in England, this power, to the fullest extent, was recognized 
 in the case of the Governor and Company of the Cast Plate 
 Manufacturers v. Meredith, 4 T. R. 794, and Lord Kenyon, 
 especially in that case, founded solely upon this power the 
 entire policy and authority of all the road and canal laws of 
 the kingdom. " 
 
 § 255. And Woodbury, J., said: 
 
 "I take the liberty to say, then, as to the cardinal principle 
 involved in this case, that in my opinion all the property in 
 a state is derived from, or protected by, its government, and 
 hence is held subject to its wants in taxation, and to certain 
 important public uses, both in war and peace. Vattel, B. 1, 
 ch. 20. § 244 ; 2 Kent Com. 270 ; 37 Am. Jur. 121 ; 1 Bl. Com. 
 139; 3 Wils. 303; 3 Story Const. 661; 3 Dall. 95. Some 
 ground this public right on sovereignty. 2 Kent Com. 339 ; 
 Grotius, B. 1, ch. 1, § 6. Some on necessity. 2 Johns. (N. 
 Y.) Ch. 162; 11 Wend. (N. Y.) 51; 14 id. 56; 1 Rice (S. C), 
 383; Vanhorne's Lessee v. Dorrance, 2 Dall. 310; Dyer v. 
 Tuscaloosa Bridge, 2 Port. (Ala.) 303; Harding v. Goodlett, 
 3 Yerg. (Tenn.) 53. Some on implied compact. Raleigh 
 & Gaston Railroad Co. v. Davis, 2 Dev. & B. (N. C.) 456; 2 
 Bay 36, in S. Car.; 3 Yerg. (Tenn.) 53. 
 
 "When a charter is granted after laws exist to condemn 
 property when needed for public purposes, others might well 
 rest such a right on the hypothesis that such laws are virtually
 
 203 PUBLIC USB. §256 
 
 a part and condition of the grant itself, as much as if in- 
 scribed in it totidem verbis. Towne v. Smith, 1 Woodb. & M. 
 134; 2 How. 608, 617; 1 id. 311; 3 Story Const., §§ 1377, 1378, 
 quaere. 
 
 "But however derived, this eminent domain exists in all 
 governments, and is distinguished from the public domain, as 
 that consists of public lands, buildings, etc., owned in trust 
 exclusively and entirely by the government (3 Kent. Com. 
 339; Memphis v. Overton, 3 Yerg. (Tenn.) 389) ; while this 
 consists only in the right to use the property of others, when 
 needed for certain public purposes. Without now going fur- 
 ther into the reasons or extent of it, and under whatever 
 name it is most appropriately described, I concur in the views 
 of the court, that it still remains in each state of the Union 
 in a case like the present, having never been granted to the 
 general government so far as respects the public highways of 
 a state, and that it extends to taking for public use for a road 
 any property in the state suitable and necessary for it. 
 Tuckahoe Canal Case, 11 Leigh (Va.), 75; 11 Pet. 560; 20 
 Johns. (N. Y.) 724 J 3 Paige (N. Y.), 45; 7 Pick. (Mass.) 
 459." 
 
 § 256. In Kohl et al. v. United States, 91 U. S. 367, in hold- 
 ing that the right of eminent domain existed in the United 
 States government to condemn a parcel of land in Cincinnati 
 for a postoffice, and that the circuit court of the United States 
 had jurisdiction of the condemnation proceeding, Strong, J., 
 said: 
 
 "No one doubts the existence in the state governments of 
 the right of eminent domain — a right distinct from and para- 
 mount to the right of ultimate ownership. It grows out of 
 the necessities of their being, not out of the tenure by which 
 lands are held. It may be exercised, though the lands are 
 not held by grant from the government, either mediately or 
 immediately, and independent of the consideration whether 
 they would escheat to the government in case of a failure of 
 heirs. The right is the offspring of political necessity ; and 
 it is inseparable from sovereignty, unless denied to it by its 
 fundamental law. Vattel, c. 20, 34; Bynk., lib. 2, c. 15; 
 Kent's Com. 338, 340; Cooley on Const. Lim. 584 et seq. But 
 it is no more necessar}^ for the exercise of the powers of a 
 state government than it is for the exercise of the conceded 
 powers of the federal government. That government is as 
 sovereign within its sphere as the states are within theirs. 
 True, its sjphere is limited. Certain subjects only are com-
 
 § 257 EMINENT DOMAIN. 204 
 
 mitted to it ; but its power over those subjects is as full and 
 complete as is the power of the states over the subjects to 
 which their sovereignty extends. The power is not changed 
 by its transfer to another holder. 
 
 "But if the right of eminent domain exists in the federal 
 government, it is a right which may be exercised within the 
 states, so far as is necessary to the enjoyment of the powers 
 conferred upon it by the constitution. In Ableman v. Booth, 
 21 How. 523, Chief Justice Taney described in plain lan- 
 guage the complex nature of our government, and the exist- 
 ence of two distinct and separate sovereignties, within the 
 same territorial space, each of them restricted in its powers, 
 and each within its sphere of action prescribed by the con- 
 stitution of the United States independent of the other. 
 Neither is under the necessity of applying to the other for 
 permission to exercise its lawful powers. Within its own 
 sphere it may employ all the agencies for exerting them which 
 are appropriate or necessar.y, and which are not forbidden by 
 the law of its being. "When the power to establish postoffices 
 and to create courts within the states was conferred upon 
 the federal government, included in it was authority to obtain 
 sites for such offices and for courthouses, and to obtain them 
 by such means as were known and appropriate. The right 
 of eminent domain was one of those means well known when 
 the constitution was adopted, and employed to obtain lands 
 for public uses. Its existence, therefore, in the grantee of 
 that power ought not to be questioned. The constitution 
 itself contains an implied recognition of it beyond what may 
 justly be implied from the express grants. The fifth amend- 
 ment contains a provision that private property shall not 
 be taken for public use without just compensation." 
 
 § 257. And respecting the jurisdiction of the circuit 
 courts : 
 
 "When, in the eleventh section of the Judiciary Act of 
 1789, jurisdiction of suits of a civil nature at common law or 
 in equity was given to the circuit courts, it was intended to 
 embrace not merely suits which the common law recognized 
 as among its old and settled proceedings, but suits in which 
 legal rights were to be ascertained and determined as distin- 
 guished from rights in equity, as well as suits in admiralty. 
 The right of eminent domain always was a right at common 
 law. It was not a right in equity, nor was it even the creature 
 of a statute. The time of its exercise may have been pre- 
 scribed by statute ; but the right itself was superior to any 
 statute. That it was not enforced through the agency of a
 
 205 PUBLIC USE. §§258,259 
 
 jury is immaterial ; for many civil as well as criminal pro- 
 ceedings at common law were without a jury. It is difficult, 
 then, to see why a proceeding to take land in virtue of the 
 government's eminent domain, and determining the compen- 
 sation to be made for it, is not within the meaning of the 
 statute a suit at common law when initiated in a court. It 
 is an attempt to enforce a legal right. It is quite immaterial 
 that Congress has not enacted that the compensation shall be 
 ascertained in a judicial proceeding. That ascertainment is 
 in its nature, at least, quasi judicial." 
 
 § 258. In Kaukauna Water Power Co. v. Green Bay etc. 
 Canal, 142 U. S. 254, it was held that while the erection of a 
 dam for furnishing water for manufacturing purposes solely 
 was not a public use, the erection of a dam to improve navi'ga- 
 tion of a river was a public use, and any excess of water over 
 that needed for the public use might be sold for manufactur- 
 ing purposes. Brown, J., said: 
 
 "The improvement of the navigation of a river is a public 
 purpose, and the sequestration or appropriation of land or 
 other property, therefore, for such purpose is doubtless a 
 proper exercise of the authority of the state under its power 
 of eminent domain. Upon the other hand, it is probably true 
 that it is beyond the competency of the state to appropriate 
 to itself the property of individuals for the sole purpose of 
 creating a water-power to be leased for manufacturing pur- 
 poses. This would be a case of taking the property of one 
 man for the benefit of another, which is not a constitutional 
 exercise of the right of eminent domain." 
 
 § 259. Upon the question of compensation for property 
 taken, in holding that complainant had waived its rights for 
 damages by not complying with the act while in force, Brown, 
 J., said : 
 
 "Where a statute for the condemnation of lands provides a 
 definite and complete remedy for obtaining compensation, this 
 remedy is exclusive; the common-law remedy or proceeding 
 is superseded by the statute, and the owner must pursue the 
 course pointed out by it. Mills on Eminent Domain, sees. 
 87, 88. It is true that, if the statutory remedy be incomplete 
 or imperfect, the owner is not thereby debarred from his 
 common-law remedy, and may recover his damages in an ac- 
 tion of trespass or ejectment."
 
 § 260 EMINENT DOMAIN. 206 
 
 § 260. In Fallbrook Irrigation District v. Bradley, 164 
 U. S. 112, it was held that taking land for irrigation by way of 
 enforcing an assessment under an act establishing an irrigation 
 district of arid lands was not taking property without due 
 IDrocess of law, irrigation of such lands being a public use 
 under the circumstances of the case at bar. Peckham, J., 
 said: 
 
 "It has often been said to be extremely difficult to give any 
 sufficient definition of what is embraced within the phrase 
 'due process of law,' as used in the constitutional amendment 
 under discussion. None will be attempted here. It was 
 stated by Mr. Justice Miller, in Davidson v. New Orleans, 96 
 U. S. 97, 104, that there was 'abundant evidence that there 
 exists some strange misconception of the scope of this pro- 
 vision as found in the fourteenth amendment. In fact, it 
 would seem from the character of many of the cases before 
 us, and the arguments made in them, that the clause under 
 consideration is looked upon as a means of bringing to the 
 test of the decision of this court the abstract opinions of every 
 unsuccessful litigant in a state court of the justice of the 
 decision against him and of the merits of the legislation on 
 which such a decision may be founded.' Of course, no such 
 jurisdiction exists or is claimed to exist by the parties here. 
 It is at the same time most difficult to set certain and clear 
 bounds to the right of this court and consequently to its duty 
 to review questions arising under state legislation with refer- 
 ence to this amendment as to due process of law. 
 
 "It never was intended that the court should, as the effect 
 of the amendment, be transformed into a court of appeal, 
 where all decisions of state courts involving merely questions 
 of general justice and equitable considerations in the taking 
 of property should be submitted to this court for its deter- 
 mination. The final jurisdiction of the courts of the states 
 would thereb}^ be enormously reduced and a corresponding 
 increase in the jurisdiction of this court would result, and it 
 would be a great misfortune in each case. IMobile County 
 V. Kimball, 102 U. S. 691, 704; Missouri Pacific Railway v. 
 Humes, 115 U. S. 512, 520. We reiterate the statement made 
 in Davidson v. New Orleans, supra, that 'whenever by the 
 laws of the state or by state authority a tax, assessment, ser- 
 vitude or other burden is imposed upon property for the 
 public use, whether it be for the whole state or of some more 
 limited portion of the community, and those laws provide for 
 a mode of confirming or contesting the change thus imposed 
 in the ordinary courts of justice, with such notice to the per-
 
 207 PUBLIC USE. § 261 
 
 son or such proceeding in regard to the property as is appro- 
 priate to the nature of the case, the judgment in such pro- 
 ceedings cannot be said to deprive the owner of his property 
 without due process of law, however obnoxious it may be to 
 the other objections.' 
 
 § 261. "Coming to a review of these various objections, we 
 think the first, that the water is not for a public use, is not well 
 founded. The question, what constitutes a public use, has 
 been before the courts of many of the states, and their de- 
 cisions have not been harmonious, the inclination of some of 
 these courts being toward a narrower and more limited defi- 
 nition of such use than those of others. 
 
 "There is no specific prohibition in the federal constitution 
 which acts upon the states in regard to their taking private 
 property for any but a public use. The fifth amendment, 
 which provides, among other things, that such property shall 
 not be taken for public use without ju.st compensation, ap- 
 plies only to the federal government, as has many times been 
 decided. Spies v. Illinois, 123 U. S. 131; Thorington v. 
 Montgomery, 147 U. S. 490. In the fourteenth amendment 
 the provision regarding the taking of private property is 
 omitted, and the prohibition against the state is confined to 
 its depriving any person of life, liberty or property Avithout 
 due process of law. It is claimed, however, that the citizen 
 is deprived of his property without due process of law if it 
 be taken by or under state authority for any other than 
 a public use, either under the guise of taxation or by the 
 assumption of the right of eminent domain. In that way 
 the question whether private property has been taken for 
 any other than a public use becomes material in this court, 
 even where the taking is under the authority of the state 
 instead of the federal government. 
 
 "Is this assessment, for the nonpayment of which the land 
 of the plaintiff was to be sold, levied for a public purpose? 
 The question has, in substance, been answered in the affirma- 
 tive by the people of California, and by the legislative and 
 judicial branches of the state government. The people of 
 the state adopted a constitution, which contains this pro- 
 vision : 
 
 " 'Water and Water Rights. — Sec. 1. The use of all water 
 now appropriated or that may hereafter be appropriated, for 
 sale, rental or distribution, is hereby declared to be a public 
 use and subject to the regulation and control of the state 
 in the manner to be prescribed by law.' Constitution of 
 California, art, 14.
 
 § 262 EMINENT DOMAIN. 208 
 
 "The latter part of § 12 of the act now under considera- 
 tion, as amended in March, 1891, reads as follows: 
 
 " 'The use of all water required for the irrigation of the 
 lands of any district formed under the provisions of this act 
 together with the rights of way for canals and ditches, sites 
 for reservoirs, and all other property required in fully car- 
 rying out the provisions of this act is hereby declared to be 
 a public use, subject to the regulation and control of the 
 state, in the manner prescribed by law,' 
 
 § 262. "The supreme court of California has held in a num- 
 ber of cases that the irrigation act is in accordance with the 
 state constitution, and that it does not deprive the land owners 
 of any property without due process of law ; that the use of 
 the water for irrigating purposes under the provisions of 
 the act is a public use, and the corporations organized by 
 virtue of the act for the purpose of irrigation are public 
 municipal corporations, organized for the promotion of the 
 prosperity and welfare of the people. Turlock Irrigation 
 District v. Williams, 76 California, 360; Central Irrigation 
 District v. De Lappe, 79 California, 351 ; In re Madera Irri- 
 gation District, 92 California, 296. We do not assume that 
 these various statements, constitutional and legislative, to- 
 gether with the decisions of the state court, are conclusive 
 and binding upon this court upon the question as to what is 
 due process of law, and, as incident thereto, what is a public 
 use. As here presented, these are questions which also arise 
 under the federal constitution, and we must decide them in 
 accordance with our views of constitutional law. It is obvious, 
 however, that what is a public use frequently and largely 
 depends upon the facts and circumstances surrounding the 
 particular subject matter in regard to which the character of 
 the use is questioned. 
 
 "To provide for the irrigation of lands in states where 
 there is no color of necessity therefor within any fair mean- 
 ing of the term, and simply for the purpose of gratifying 
 the taste of the owner, or his desire to enter upon the culti- 
 vation of an entirely new kind of crop, not necessary for the 
 purpose of rendering the ordinary cultivation of the land 
 reasonably remunerative, might be regarded by courts as an 
 improper exercise of legislative will, and the use might not 
 be held to be public in any constitutional sense, no matter 
 how many owners were interested in the scheme. On the 
 other hand, in a state like California, which confessedly em- 
 braces millions of acres of arid lands, an act of the legis- 
 lature providing for their irrigation might well be regarded
 
 209 PUBLIC USE. §263 
 
 as an act devoting the water to a public use, and therefore 
 as a valid exercise of the legislative power. The people of 
 California and the members of her legislature must, in the 
 nature of things, be more familiar with the facts and circum- 
 stances which surround the subject and with the necessities 
 and the occasion for the irrigation of the land.5 than can any- 
 one be who is a stranger to her soil. This knowledge and 
 familiarity must have their due weight with the state courts 
 which are to pass upon the question of public use in the 
 light of the facts which surround the subject in their own 
 state. For these reasons, while not regarding the matter as 
 concluded by these various declarations and acts and decisions 
 of the people and legislature and courts of California, we yet, 
 in the consideration of the subject, accord to and treat them 
 with very great respect, and we regard the decisions as em- 
 bodying the deliberate judgment and matured thought of the 
 courts of that state on this question, 
 
 § 263. "Viewing the subject for ourselves and in the light 
 of these considerations, we have very little difficulty in coming 
 to the same conclusion reached by the courts of California. 
 
 "The use must be regarded as a public use, or else it would 
 seem to follow that no general scheme of irrigation can be 
 formed or carried into effect. In general, the water to be 
 used must be carried for some distance and over or through 
 private property which cannot be taken in invitum if the 
 use to which it is to be put be not public, and if there be 
 no power to take property by condemnation, it may be impos- 
 sible to acquire it at all. The use for which private property 
 is to be taken must be a public one, whether the taking be 
 by the exercise of the right of the eminent domain or by 
 that of taxation. Cole v. La Grange, 113 U. S. 1. A pri- 
 vate company or corporation without the power to acquire 
 the land in invitum would be of no real benefit, and, at any 
 rate, the cost of the undertaking would be so greatly enhanced 
 by the knowledge that the land must be acquired by pur- 
 chase, that it would be practically impossible to build the 
 works or obtain the water. Individual enterprise would be 
 equally ineffectual; no one owner would find it possible to 
 construct and maintain waterworks and canals any better than 
 private corporations or companies; and unless they had the 
 power of eminent domain, they could accomplish nothing. 
 If that power could be conferred upon them, it could only 
 be upon the ground that the property they took was to be 
 taken for a public purpose. 
 14
 
 § 264 EMINENT DOMAIN. 210 
 
 "While the consideration that the work of irrigation must 
 be abandoned if the use of the water may not be held to be 
 or constitute a public use is not to be regarded as conclusive 
 in favor of such use, yet that fact is in this case a most 
 important consideration. Millions of acres of land otherwise 
 cultivable must be left in their present arid and worthless 
 condition, and an effectual obstacle will therefore remain in 
 the way of the advance of a large portion of the state in 
 material wealth and prosperity. To irrigate and thus to 
 bring into possible cultivation these large masses of otherwise 
 worthless lands would seem to be a public purpose, and a 
 matter of public interest not confined to the land owners or 
 even to any one section of the state. The fact that the use 
 of the water is limited to the land owner is not, therefore, a 
 fatal objection to this legislation. It is not essential that the 
 entire community, or even any considerable portion thereof, 
 should directly enjoy or participate in an im.provement in 
 order to constitute a public use. All land owners in the 
 district have the right to a proportionate share of the water, 
 and no one land owner is favored above his fellow in his 
 right to the use of the water. It is not necessary, in order 
 that the use should be public, that every resident in the dis- 
 trict should have the right to the use of the water. The 
 water is not used for general domestic or drinking purposes, 
 and it is plain from the scheme of the act that the water is 
 intended for the use of those who will have occasion to use 
 it on their lands. Nevertheless, if it should so happen that 
 at any particular time the land ovv^ner should have more 
 water than he wanted to use on his land, he has the right 
 to sell or assign the surplus or the whole of the water as he 
 may choose. 
 
 § 264. "The method of the distribution of the water for 
 irrigation purposes, provided for in section 11 of the act, is 
 criticised as amounting to a distribution to individuals and not 
 to lands, and on that account it is claimed that the use for irri- 
 gation may not be achieved, and therefore the only purpose 
 which could render the use a public one may not exist. This 
 claim we consider not well founded in the language and true 
 construction of the act. It is plain that some method for ap- 
 portioning the use of the water to the various lands to be 
 benefited must be employed, and what better plan than to 
 say that it shall be apportioned ratably to each land owner 
 upon the basis which the last assessment of such owner for 
 district purposes within the district bears to the whole sum 
 assessed upon the district 1 Such an apportionment, when f ol-
 
 211 PUBLIC USE. § 265 
 
 lowed by the right to assign the whole or any portion of the 
 waters apportioned to the land owner, operates with as near 
 an approach to justice and equality as can be hoped for in 
 such matters, and does not alter the use from a public to a 
 private one. This right of assignment may be availed of 
 also by the owner of any lands which, in his judgment, would 
 not be benefited by irrigation, although the board of super- 
 visors may have otherwise decided. We think it clearly ap- 
 pears that all who by reason of their ownership of or connec- 
 tion with any portion of the lands would have occasion to 
 use the water, would in truth have the opportunity to use it 
 upon the same terms as all others similarly situated. In this 
 way the use, so far as this point is concerned, is public, be- 
 cause all persons have the right to use the water under the 
 same circumstances. This is sufficient 
 
 § 265. "It is insisted that the basis of the assessment upon 
 the lands benefited, for the cost of the construction of the works, 
 is not in accordance with, and in proportion to, the benefits con- 
 ferred by the improvement, and therefore there is a violation of 
 the constitutional amendment referred to, and a taking of the 
 property of the citizen without due process of law. Although 
 there is a marked distinction between an assessment for a 
 local improvement and the levy of a general tax, yet the 
 former is still the exercise of the same power as the latter, 
 both having their source in the sovereign power of taxation. 
 Whatever objections may be urged, to this kind of an assess- 
 ment, as being in violation of the state constitution, yet as 
 the state court has held them to be without force, we follow 
 its judgment in that case, and our attention must be directed 
 to the question whether any violation of the federal constitu- 
 tion is shown in such an assessment. Can an ad valorem 
 assessment on the land benefited, or, in other words, can such 
 an assessment as is provided for in sections 18, 20, 21 and 
 22 of the act, be legally levied in such a case as this ? Assume 
 that the only theory of these assessments for local improve- 
 ments upon which they can stand is that they are imposed 
 on account of the benefits received, and that no land ought 
 in justice to be assessed for a greater sum than the benefits 
 received by it, yet it is plain that the fact of the amount 
 of benefits is not susceptible of that accurate determination 
 which appertains to a demonstration in geometry. Some 
 means of arriving at this amount must be used, and the same 
 method may be more or less accurate in different cases in- 
 volving different facts. Some choice is to be made, and 
 where the fact of some benefit accruing to all the lands has
 
 § 266 EMINENT DOMAIN. 212 
 
 been legally found, can it be that the adoption of an ad 
 valorem method of assessing the lands is to be held a violation 
 of the federal constitution? It seems to us clearly not. It 
 is one of those matters of detail in arriving at the proper and 
 fair amount and proportion of the tax that is to be levied on 
 the land with regard to the benefits it has received which 
 is open to the discretion of the state legislature, and with 
 which this court ought to have nothing to do. The way of 
 arriving at the amount may be in some instances inequitable 
 and unequal, but that is far from rising to the level of a 
 constitutional problem and far from a case of taking prop- 
 erty without due process of law An objection is also 
 
 urged that it is delegating to others a legislative right, that of 
 the incorporating of public corporations, inasmuch as the 
 act vests in the supervisors and the people the right to say 
 whether such a corporation shall be created, and it is said 
 that the legislature cannot so delegate its power, and that 
 any act performed by such a corporation by means of which 
 the property of the citizen is taken from him, either by the 
 right of eminent domain or by assessment, results in taking 
 such property without due process of law. 
 
 "We do not think there is any validity to the argument. 
 The legislature delegates no power. It enacts conditions, 
 upon the performance of which the corporation shall be re- 
 garded as organized with the powers mentioned and described 
 in the act." 
 
 §•266. In support of the rule that public use means pur- 
 poses promotive and productive of public benefit, the following 
 cases are noted : Olmstead v. Camp, 33 Conn. 532 ; Beekman v. 
 R. Co., 3 Paige (N. Y.), 45; Seeley v. Sebastian, 4 Or. 25; 
 Hand Gold Mining Co. v. Parker, 59 Ga. 419 ; Nash v. Clark, 
 27 Utah, 158, 75 Pac. 371, 198 U. S. 361; Strickley v. 
 Mining Co., 28 Utah, 215, 78 Pac. 296, 200 U. S. 527 ; Talbot 
 v. Hudson, 16 Gray, 417; Pittsburgh v. Scott, 1 Pa. 309, 314; 
 Jacobs V. Clearview Co., 220 Pa. 388. 
 
 The following decisions, on the other hand, are strongly to 
 the effect that the use must involve use by the public to be 
 a public use : Sholl v. German Coal Co., 118 111. 427 ; Matter 
 of Eureka etc. Co., 96 N. Y. 42 ; Healy Lumber Co. v. Morris, 
 33 Wash. 490, 74 Pac. 681 ; State v. White River Power Co., 
 39 Wash. 648, 82 Pac. 150; Varner v. Martin, 21 W. Va. 
 534; Matter of Split Rock Cable R. R. Co., 128 N. Y. 408,
 
 213 PUBLIC USE. § 266 
 
 28 N. E. 506 ; Sisson v. Board, 128 Iowa, 442, 104 N. W. 454 ; 
 Arnsperger v. Crawford, 101 Md. 247 ; Berrien Co. v. Judge, 
 133 Mich. 48, 94 N. W. 379; Minn. Canal & Power Co. v! 
 Koochiching Co., 97 Minn. 429, 107 N. W. 405; Matter of 
 Tuthill, 163 N. Y. 133, 57 N. E. 303 ; Cozard v. Kanawha Hard- 
 wood Co., 139 N. C. 283, 51 S. E. 932; State v. Superior Court, 
 4:2 Wash. 660, 85 Pac. 666.
 
 § 270 EMINENT DOMAIN. 214 
 
 CHAPTER XIII. 
 TAKING OF PRIVATE PROPERTY. 
 
 § 270. Private property includes all rights appropriated 
 and owned by individual persons, natural and artificial, to the 
 exclusion of others. Such private rights pertaining to land 
 are termed "real property"; such private rights not pertain- 
 ing to land are termed "personal property." Real property 
 rights, often classed as corporeal and incorporeal, may per- 
 haps, for some purposes, be more accurately and clearly 
 classed as possessory and nonpossessory ; possessory including 
 all rights of immediate or future possession, e. g., estates at 
 will, or for years or for life or in fee, and as well reversious, 
 remainders, executory devises and all future interests; non- 
 possessory rights of real property including easements, com- 
 mons and appurtenances of every kind in and upon lands of 
 others or in any particular lands, irrespective of the right 
 of possession. 
 
 So, likewise, personal property rights may be classed as 
 possessory, including all rights of immediate or future pos- 
 session of particular chattels or chattel interests, and non- 
 possessory, arising out of grant or contract, without regard 
 to particular chattels, as, e. g., franchises, annuities, nego- 
 tiable instruments, and the like. 
 
 The appropriation or destruction for public purposes or 
 objects of any of these rights under the power of eminent 
 domain constitutes a taking of private property, for which 
 compensation must be made. 
 
 Legislation, however, regulating matters of public import, 
 such as the navigability of a river or a health statute under 
 the police power, may indirectly damage or lessen the value 
 of such rights, and still not constitute a taking of private 
 property for which compensation must be made. 
 
 Again, the legislature may, under its general law-making 
 power, regulate the uses to which persons may put their prop- 
 erty, in proper cases requiring compensation to be made for
 
 215 TAKING OF PRIVATE PROPERTY. § 271 
 
 damage caused; for example, authorizing riparian owners 
 to build dams upon their land, causing water to overflow 
 others' property and requiring damages to be assessed and 
 paid therefor, but this is rather a property regulation than 
 a taking of property for public use. 
 
 So, too, the exercise of the power of taxation, while it is 
 a taking of private property for public use, is not a taking 
 in the sense of the word employed in connection with the 
 power of eminent domain, for in taxation the taking is gen- 
 eral, and the benefits and protection of life and property 
 afforded by government are recognized as sufficient compen- 
 sation, but the taking of property under the power of eminent 
 domain is not a general, but a particular, taking, for which, 
 therefore, special compensation must be made. 
 
 § 271. In Pumpelly v. Green Bay Company, 13 Wall. 166, 
 it was held that a dam causing water to overflow plaintiff's 
 land was a taking of property that must be compensated. 
 Miller, J., said: 
 
 "In the case of Gardner v. Newburgh (2 Johnson's Chan. 
 N. Y. 162), Chancellor Kent granted an injunction to pre- 
 vent the trustees of Newburg from diverting the water of a 
 certain stream flowing over plaintifi"s land from its usual 
 course, because the act of the legislature which authorized 
 it had made no provision for compensating the plaintiff for 
 the injury thus done to his land. And he did this though 
 there was no provision in the constitution of New York such 
 as we have mentioned, and though he recognized that the 
 water was taken for a public use. After citing several con- 
 tinental jurists on this right of eminent domain, he says that 
 while they admit that private property may be taken for 
 public uses when public necessity or utility requires, they 
 all lay it down as a clear principle of natural equity that 
 the individual whose property is thus sacrificed must be 
 indemnified. And he adds that the principles and practice 
 of the English government are equally explicit on this point. 
 It will be seen in this case that it was the diversion of the 
 water from the plaintiff's land which was considered as 
 taking private property for public use, but which, under the 
 argument of defendants' counsel, would, like overflowing the 
 land, be called only a consequential injury. 
 
 "If these be correct statements of the limitations upon the 
 exercise of the right of eminent domain, as the doctrine was
 
 § 272 EMINENT DOMAIN. 216 
 
 understood before it had the benefit of constitutional sanc- 
 tion, by the construction now sought to be placed upon the 
 constitution it would become an instrument of oppression 
 rather than protection to individual rights. 
 
 "But there are numerous authorities to sustain the doc- 
 trine that a serious interruption to the common and neces- 
 sary use of property may be, in the language of Mr. Angell, 
 in his work on Watercourses, equivalent to the taking of it, 
 and that under the constitutional provisions it is not neces- 
 sary that the land should be absolutely taken 
 
 "We are not unaware of the numerous cases in the state 
 courts in which the doctrine has been successfully invoked 
 that for a consequential injury to the property of the indi- 
 vidual arising from the prosecution of improvements of roads, 
 streets, rivers, and other highways, for the public good, there 
 is no redress; and we do not deny that the principle is a 
 sound one, in its proper application to many injuries to 
 property so originating. And when, in the exercise of our 
 duties here, we shall be called upon to construe other state 
 constitutions, we shall not be unmindful of the weight due 
 to the decisions of the courts of those states. But we are of 
 the opinion that the decisions referred to have gone to the 
 uttermost limit of sound judicial construction in favor of 
 this principle, and in some cases beyond it, and that it 
 remains true that where real estate is actually invaded by 
 superinduced additions of water, earth, sand, or other mate- 
 rial, or by having any artificial structure placed on it, so as 
 to efi'ectually destroy or impair its usefulness, it is a taking 
 within the meaning of the constitution, and that this prop- 
 osition is not in conflict with the weight of judicial authority 
 in this country, and certainly not with sound principle." 
 
 § 272. In N. Y. Elevated R. R. v. Fifth Nat. Bank, 135 
 U. S. 432, it was held that owners of property abutting a street 
 on which an elevated railroad was constructed had an ease- 
 ment of way, light and air, for deprivation of which they 
 were entitled to compensation. Gray, J., said: 
 
 "The owners of lands abutting on a street in the city of 
 New York have an easement of way, and of light and air 
 over it; and through a bill in equity for an injunction may 
 recover of the elevated railroad company full compensation 
 for the permanent injury to this easement." 
 
 In Spokane Falls & N. R. Co. v. Ziegler, 167 U. S. 65, it 
 was held that a settler or pre-emption claimant had a right
 
 217 TAKING OF PRIVATE PROPERTY. § 273 
 
 of property, for which he was entitled to compensation on 
 the land being seized by a railroad company. Shiras, J., 
 said: 
 
 "Passing from the question of jurisdiction, we come to the 
 contention of the plaintiff in error that Ziegler, as a mere 
 settler upon the lands of the United States, although with 
 an intention to obtain title to the same under the pre-emption 
 laws, did not have such a vested interest in the land as would 
 avail against the railway company in asserting its right of 
 way conferred by the act of Congress. An answer to this 
 question is furnished by the case of Washington & Idaho 
 Railroad Co. v. Osbom, 160 U. S. 103, where it was held 
 that a railroad company whose road is laid out so as, under 
 the provisions of the act of March 3, 1875, to cross a part 
 of the public lands, cannot take part thereof in the actual 
 possession and occupation of a settler who is entitled to claim 
 a pre-emption right thereto when the proper time shall come, 
 and who has made improvements on the land so occupied by 
 
 him, without making proper compensation therefor 
 
 And it was held that the right of a settler in possession of 
 unsurv-eyed lands of the United States, who had made im- 
 provements with the intention of procuring a title under the 
 pre-emption laws as soon as the same should be surveyed by 
 the government, was a possessory claim within the meaning 
 of the statute, for which compensation must be made by a 
 railroad company seeking to appropriate a part of it for its 
 tracks. ' ' 
 
 § 273. In Railway Co. v. Renwick, 102 U. S. 180, where a 
 riparian owner abutting the Mississippi, a navigable river, had 
 constructed a pier or boom between high and low water mark, 
 it was held that though the state owned the land below 
 high-water mark, and the pier had been constructed without 
 authority and was seemingly subject to removal at the in- 
 stance of the public, yet it was private property, and the 
 railway company could not cross it or appropriate it without 
 making compensation. Waite, C. J., said: 
 
 "The public does not complain, but the railroad company 
 wants the improvements. In the hands of the company they 
 will be just as much a nuisance, so far as the public is con- 
 cerned, as they can be if kept up by the owner. As between 
 these two parties the improvements are the property of the 
 riparian proprietor, and if the company wants them for its 
 own use, it must make compensation."
 
 §§274,275 EMINENT DOMAIN. 218 
 
 Respecting title to tide lands, see Shiveley v. Bowlby, 152 
 U. S. 1. 
 
 § 274. In Hot Springs R. R. Co. v. Williamson, 136 U. S. 
 121, in affirming a decision of the supreme court of Arkansas 
 that a railroad company constructing its road in a public street 
 is, under the constitution of Arkansas, liable to abutting 
 owners for consequential damages to their property, Lamar, 
 J., said respecting the decision of the state court: 
 
 "It further held that the contention of the plaintiff in 
 error that the act of Congress invested it with an absolute 
 title to the street along which its road was located, and ex- 
 empted it from any liability for consequential damages re- 
 sulting to an abutting owner from the laying of its track in 
 a proper and skillful manner, was founded upon cases aris- 
 ing under the familiar constitutional restriction that private 
 property shall not be taken for public use without compensa- 
 tion, which decisions generally turned upon the question. 
 What is a taking within the meaning of such provision? 
 That the constitution of that state of 1878, which provides 
 that 'private property shall not be taken, appropriated or 
 damaged for public use without just compensation,' has 
 changed that rule; that all the decisions rendered under sim- 
 ilar constitutional provisions concur in holding that the use 
 of a street by a railroad company as a site for its track, 
 under legislative or municipal authority, when it interferes 
 with the rights of adjoining lot owners to the use of the 
 street as a means of ingress and egress, subjects the railroad 
 company to an action for damages, on account of the diminu- 
 tion of the value of the property caused by such use; and 
 lastly, that even conceding the authority of the towTi of Hot 
 Springs to pass the ordinance authorizing the company to 
 construct and maintain the railroad embankment track and 
 turntable complained of, it cannot impair the constitutional 
 right of the defendant in error to compensation." 
 
 § 275. In Richmond etc. R. R. Co. v. Louisa R. R. Co., 13 
 How. 70, in holding that a state legislature, although it had 
 given one company an exclusive right to build a railroad be- 
 tween two points, could authorize a second company to cross 
 the road of the first company without impairing the obligation 
 of contracts, Grier, J., said: 
 
 "The grant of a franchise is of no higher order and confers 
 no more sacred title than a grant of land to an individual;
 
 219 TAKING OF PRIVATE PROPERTY. § 276 
 
 and when the public necessities require it, the one, as well 
 as the other, may be taken for public purposes on making 
 suitable compensation ; nor does such an exercise of the right 
 of eminent domain interfere with the inviolability of con- 
 tracts. See West River Bridge Co. v. Dix, 6 How. 507." 
 
 But the legislature will not be presumed to have abandoned 
 the former use for the new one without clear expression of 
 such intention. (Matter of N. Y. etc. R. R. Co., 20 Hun 
 (N. Y.), 201.) 
 
 In Greenwood v. Freight Co., 105 U. S. 13, in holding that 
 a legislature having power of repeal could repeal the char- 
 ter of an old company and authorize a new company to 
 take such of the property and franchises of the old company 
 as are necessary for public use on making due compensation 
 therefor, Miller, J., said: 
 
 "That in creating the later corporation, whose object was 
 to fulfill a public use, it could authorize it to take such 
 propeirty of other corporations as might be necessary to 
 that use as well as that of individuals, can hardly admit of 
 question. Section 4 of the act gives this power to the Union 
 company, with reference to the tracks of all street railroads 
 in the city, and provides that in the event of an inability to 
 a^ree with the owners of these tracks as to compensation, 
 that shall be determined in accordance with the provisions 
 of general laws previously enacted on that subject. To this 
 there can be no valid legal objection. The property of cor- 
 porations, even including their franchises, when that is neces- 
 sary, may be taken for public use under the power of eminent 
 domain on making due compensation. "West River Bridge 
 Co, V. Dix, 6 How. 507; Central Bridge Corporation v. 
 City of Lowell, 4 Gray (Mass.), 474; Boston Water Power 
 Co. V. Boston & Worcester R. R. Corporation, 23 Pick. 
 (Mass.) 360; Richmond etc. Railroad Co. v. Louisa R. R. Co., 
 13 How. 71." 
 
 § 276. In Long Island Water Supply Co. v. Brooklyn, 166 
 U. S. 685, where a city had contracted with the water company 
 for water supply for twenty-five years, it was held that the 
 water system was subject to condemnation within the period, 
 and, the statutes so providing, that the assessment of damages 
 by commissioners instead of a jury was no denial of due pro- 
 cess of law. Brewer, J., said :
 
 § 277 EMINENT DOMAIN. 220 
 
 "The true view is that the condemnation proceedings do 
 not impair the contract, do not break its obligations, but 
 appropriate it, as they do the tangible property of the com- 
 pany to public uses Neither can it be said that there 
 
 was not 'due process of law' in these condemnation proceed- 
 ings. It is not essential that the assessment of damages be 
 made by a jury. Such award may be made by commissioners 
 at least where there is provision for a review of their pro- 
 ceedings in the courts. Central Branch Union Pacific Rail- 
 road V. Atchison, Topeka & Santa Fe Railroad, 28 Kansas, 
 453, 463 ; Cooley on Const. Lim., 563. And sections 9 and 10 
 of the act of 1892, under which these proceedings were had, 
 require that the commissioners make and file a report of 
 their proceedings and determination in the supreme court 
 of the county of Kings, and that application must be made 
 to that court for a confirmation of the report; that notice 
 of such application must be given, and that 'upon such 
 application the court may confirm the report, or may set it 
 aside for irregularity, or for error of law in the proceedings 
 before the commissioners, or upon the ground that the award, 
 in part or in whole, is excessive or is insufficient'; and appeal 
 was allowed from the decision of that court to a higher. We 
 do not question the proposition that form is not the only 
 thing essential to due process. We said in the recent case 
 of Chicago, Burlington & Quincy Railroad v. Chicago, 166 
 U. S. 226, 'The mere form of the proceeding instituted 
 against the owner, even if he be admitted to defend, cannot 
 convert the process used into due process of law, if the neces- 
 sary result be to deprive him of his property without com- 
 pensation. ' 
 
 "It may be true, as contended, that as construed by the 
 court of appeals, the determination of the commissioners is 
 conclusive as to the mere value of the property, but there 
 is no denial of due process in making the findings of fact by 
 the triers of fact, whether commissioners or a jury, final as 
 to such facts, and leaving open to the courts simply the in- 
 quiry as to whether there was any erroneous basis adopted 
 by the triers in their appraisal, or other errors in their pro- 
 ceedings. ' ' 
 
 § 277. In Holyoke Co. v. Lyman, 15 Wall. 500, in holding 
 that a company authorized by the legislature of Massachusetts 
 to construct a dam across the Connecticut was not, even if it 
 could have been, exempted from constructing fishways, Clif- 
 ford, J., said:
 
 221 TAKING OP PRIVATE PROPERTY. § 278 
 
 "Public rights, in all jurisdictions, are subject to legis- 
 lative control, and it is settled law in Massachusetts, and 
 has been for a century and a half, including her colonial 
 history, that the right of fishery in such rivers as the Con- 
 necticut and Merrimac, even above the point where they are 
 navigable for boats or rafts, and the right to erect and main- 
 tain dams to create water-power for mill purposes, are 
 public rights, and that the owners of such rights are bound 
 by such reasonable regulations as the state may make and 
 ordain for their protection and enjoyment 
 
 "Such a charter may doubtless be granted to build a dam 
 across a river whose whole course is within the state granting 
 the franchise, with a provision exempting the corporation 
 from all obligation to construct such fishway for the free 
 passage of the fish, as the enterprise of erecting a dam to 
 create power to operate mills is so far public in its nature 
 that it is competent for the legislature to exercise the power 
 of eminent domain to accomplish the purpose, if suitable pro- 
 vision is made to compensate the owners of the property or 
 rights condemned under that power, but it may be more 
 doubtful whether the legislature of a state can make a con- 
 tract with such a corporation authorizing them to construct a 
 dam across a river flowing through two or more states which 
 shall permanently exempt the grantees from all such obliga- 
 tion and destroy forever the rights of fishery in the river 
 throughout its whole course from its source to its confluence 
 with tide waters." 
 
 § 278. In Scranton v. Wheeler, 17» U. S. 141, it was held 
 that the erection by authority of Congress of a pier on lands 
 under navigable water in front of uplands owned by an individ- 
 ual and cutting off access by the individual was not a taking of 
 private property, and therefore compensation was not neces- 
 sary, Shiras, Gray and Peckham, Justices, dissenting on the 
 ground that, though the land under navigable water belongs 
 to the state, access by adjacent owner to the navigable water 
 is private property, the taking of which without compensation 
 could not be justified. Harlan, J., in the opinion of the 
 court, said : 
 
 "The vital question, therefore, is the one heretofore men- 
 tioned, namely, whether the prohibition in the constitution of 
 the United States of the taking of private property for pub- 
 lic use without just compensation has any application to the 
 case of an owner of land bordering on a public navigable
 
 § 278 EMINENT DOMAIN. 222 
 
 river whose access from his land to navigability is perma- 
 nently lost by reason of the construction of a pier restinsf on 
 submerged lands away from, but in front of, his upland, and 
 which pier was erected by the United States, not with any 
 intent to impair the rights of riparian owners, but for the 
 purpose only of improving the navigation of such river. 
 
 "Undoubtedly, compensation must be made or secured to 
 the owner M'hen that which is done is to be regarded as a 
 taking of private property for public use within the mean- 
 ing of the fifth amendment of the constitution ; and of course, 
 in its exercise of the power to regulate commerce. Congress 
 may not override the provision that just compensation must 
 be made when private property is taken for public use. What 
 is private property within the meaning of that amendment, 
 or what is a taking of private property for public use, is not 
 always easy to determine. No decision of this court has an- 
 nounced a rule that will embrace every case. But what has 
 been said in some cases involving the general question will 
 a.ssist us in determining whether the present plaintiff has 
 been denied the protection secured by the constitutional pro- 
 vision in question But the contention is that compensa- 
 tion must be made for the loss of the plaintiff's access from 
 his upland to navigability incidentally resulting from the 
 occupancy of the submerged lands, even if the construction 
 and maintenance of a pier resting upon them be necessary 
 or valuable in the proper improvement of navigation. We 
 cannot assent to this view. If the riparian owner cannot 
 enjoy access to navigability because of the improvement of 
 navigation by the construction away from the shore line of 
 works in a public navigable river or water, and if such right 
 of access ceases alone for that reason to be of value, there is 
 not, within the meaning of the constitution, a taking of pri- 
 vate property for public use, but only a consequential injury 
 to a right which must be enjoyed, as was said in the Yates 
 Case, 10 Wall. 497, 'in due subjection to the rights of the 
 public' — an injury resulting incidentally from the exercise 
 of a governmental power for the benefit of the general public, 
 and from which no duty arises to make or secure compensa- 
 tion to the riparian owner. The riparian owner acquired the 
 right of access to navigability, subject to the contingency that 
 such right might become valueless in consequence of the erec- 
 tion, under competent authority, of structures on the sub- 
 merged lands in front of his property for tlie purpose of im- 
 proving navigation. When erecting the pier in question, the 
 government had no object in view except, in the interest of 
 the public, to improve navigation. It was not designed, arbi-
 
 223 TAKING OF PRIVATE PROPERTY. § 279 
 
 trarily or capriciously, to destroy rights belonging to any 
 riparian owner. What was done was manifestly necessary 
 to meet the demands of international and interstate commerce. 
 In our opinion, it was not intended that the paramount au- 
 thority of Congress to improve the navigation of the pul)lic 
 navigable waters of the United States should be crippled by 
 compelling the government to make compensation for the in- 
 jury to a riparian owner's right of access to navigability 
 that might incidentally result from an improvement ordered 
 by Congress. The subject with which Congress dealt was 
 navigation. That which was sought to be accomplished was 
 simply to improve navigation on the waters in question, so 
 as to meet the wants of the vast commerce passing and to 
 pass over them. Consequently, the agents designated to per- 
 form the work ordered or authorized by Congress had the 
 right to proceed in all proper ways without taking into ac- 
 count the injury that might possibly or indirectly result from 
 such work to the right of access by riparian owners to navi- 
 gability." 
 
 § 279. In Gibson v. United States, 166 U. S. 269, it was 
 held that the construction of a dike by the United States in the 
 Ohio river opposite claimant's land, practically destroying her 
 landing, was not a taking entitling claimant to compensation. 
 Fuller, C. J., said: 
 
 "All navigable waters are under the control of the United 
 States for the purpose of regulating and improving naviga- 
 tion, and although the title to the shore and submerged soil 
 is in the various states and individual owners under them, it 
 is always subject to the servitude in respect of navigation 
 created in favor of the federal government by the constitu- 
 tion. South Carolina v. Georgia, 93 U. S. 4 ; Shivelv v. 
 Bowlby, 152 U. S. 1 ; Eldridge v. Trezevant, 160 U. S. 452. 
 
 "In South Carolina v. Georgia a proposed improvement of 
 the Savannah River consisted of the practical closing of one 
 channel around an island and the throwing of water into other 
 channels, to the substantial improvement of the harbor of 
 Savannah. This court held that, in view of the general rule, 
 although structures deemed by Congress to be in aid of navi- 
 gation might in fact be in obstruction of certain methods of 
 navigation of the particular stream, their construction was, 
 nevertheless, within the federal power, and Mr. Justice 
 Strong, delivering the opinion of the court, said : 
 
 " 'It is not, however, to be conceded that Congress has no 
 power to oixler obstructions to be placed in the navigable
 
 § 280 EMINENT DOMAIN. 224 
 
 waters of the United States, either to assist navigation or to 
 change its direction by forcing it into one channel of a river 
 rather than the other. It may build lighthouses in the bed 
 of the stream. It may construct jetties. It may require all 
 navigators to pass along a prescribed channel, and may close 
 any other channel to their passage. If, as we have said, the 
 United States have succeeded to the powers and rights of the 
 several states, so far as control over interstate and foreign 
 commerce is concerned , this is not to be doubted. Upon this 
 subject the case of Pennsylvania v. The Wheeling & Belmont 
 Bridge Co., 18 How. 421, is instructive. There it was ruled 
 that the power of Congress to regulate commerce includes 
 the regulation of intercourse and navigation, and conse- 
 quently the power to determine what shall or shall not be 
 deemed, in the judgment of law, an obstruction of navigation. 
 .... The case of The Clinton Bridge, 10 Wall. 454, is in 
 full accord with this decision. It asserts plainly the power 
 of Congress to declare what is and what is not an illegal ob- 
 struction in a navigable stream.' 
 
 "In Shively v. Bowlby, the leading authorities of the courts 
 of the United States, and of most of the states and of Great 
 Britain, as to the character of the title to submerged land are 
 considered, and the conclusion announced that the title is in 
 each state, with full power in the state legislature to confer 
 it on individuals, subject at all times to the servitude of the 
 federal government for regulation and improvement of navi- 
 gation 
 
 § 280. "The fifth amendment to the constitution of the 
 United States provides that private property shall not ' be taken 
 for public use without just compensation.' Here, however, the 
 damage of which Mrs. Gibson complained was not the result 
 of the taking of any part of her property, whether upland or 
 submerged, or a direct invasion thereof, but the incidental 
 consequence of the lawful and proper exercise of a govern- 
 mental power. 
 
 "The applicable principle is expounded in Transportation 
 Co. V. Chicago, 99 U. S. 635. In that case, plaintiff, being 
 an owner of lands situated at the intersection of La Salle 
 street, in Chicago, with the Chicago River, upon which it had 
 valuable dock and warehouse accommodations, with a numer- 
 ous line of steamers accustomed to land at that dock, was 
 interrupted in his use thereof by the building of a tunnel 
 under the Chicago River by authority of the state legislature, 
 in accomplishing which work it was necessary to tear up La 
 Salle street, which precluded plaintiff from access to his prop-
 
 225 TAKING OP PRIVATE PROPERTY. § 281 
 
 erty for a considerable time ; also to build a cofTer-dam in the 
 Chicago River, which excluded his vessels from access to his 
 docks ; and such an injury was held to be damnum absque 
 injuria. This court said, again speaking through Mr. Justice 
 Strong: 'But acts done in the proper exercise of governmental 
 powers, and not directly encroaching upon private property, 
 though their consequences may impair its use, are universally 
 held not to be a taking within the meaning of the constitutional 
 provision. They do not entitle the owner of such property to 
 compensation from the state or its agents, or give him any right 
 of action. This is supported by an immense weight of author- 
 ity. Those who are curious to see the decisions will find them 
 collected in Cooley on Constitutional Limitations, page 542, and 
 notes. The extremest qualification of the doctrine is to be 
 found, perhaps, in Pumpelly v. Green Bay Company, 13 
 Wall. 1&6, and in Eaton v. Boston Concord etc. Railroad, 51 
 N. H. 504. In those cases it was held that permanent flood- 
 ing of private property may be regarded as a "taking." In 
 those cases there was a physical invasion of the real estate of 
 the private owner and a practical ouster of his possession. 
 But in the present case there was no such invasion. No entry 
 was made upon the plaintiff's lot. All that was done was for 
 a time to render its use more inconvenient.' 
 
 "Moreover, riparian ownership is subject to the obligation 
 to suffer the consequences of the improvement of navigation 
 in the exercise of the dominant right of the government in 
 that regard. The legislative authority for these works con- 
 sisted simply in an appropriation for their construction, but 
 this was an assertion of a right belonging to the government, 
 to which riparian property was subject, and not of a right 
 to appropriate private property, not burdened with such servi- 
 tude, to public purposes." 
 
 § 281. In United States v. Alexander, 148 U. S. 186, it was 
 held that the owner of a well on land near to but not on the 
 line of the Washington aqueduct, which was destroyed in the 
 construction of that work, was entitled to recover its value 
 from the United States under the provisions of the act of Con- 
 gress authorizing the work. Shiras, J., said : 
 
 " 'There may be,' said this court in the case of Pumpelly 
 v. Green Bay Co., 13 Wall. 166 (syllabus), 'such serious in- 
 terruption to the common and necessary use of property 
 as will be equivalent to a taking within the meaning of the 
 constitution.' The cases which hold that remote and conso- 
 ls
 
 § 282 EMINENT DOMAIN. 226 
 
 quential injury to private property by reason of authorized 
 public improvements is not taking such property for public 
 use have many of them gone to the utmost limit of that prin- 
 ciple, and some beyond it, though the principle is a sound 
 one in its proper application to many injuries so originating. 
 "We do not find it necessary to consider on which side of 
 the line thus suggested the present case would fall, for we 
 agree with the court below in thinking that, in the act of Con- 
 gress, under which this public work was done, are found pro- 
 visions giving an express remedy for property damaged 
 though not actuallv taken." (See 188 U. S. 445; 192 U. S. 
 224; 197 U. S. 577.) 
 
 § 282. In Barney v. Keokuk, 94 U. S. 324, where a riparian 
 owner adjacent to the Mississippi, in Iowa, had dedicated a 
 street above and along high-water mark, it was held that under 
 the laws of Iowa railway tracks might be laid in the streets by 
 public authority, without the consent of the abutting owner 
 and without compensation, and that whether the legal title 
 to land below high-water mark was in the state or in the 
 riparian owner, wharves below the street in the case at bar 
 were incidental to the public use for which the street wa^ 
 dedicated. Bradley, J"., said: 
 
 "We agree with the court below that the dedication of the 
 streets of Keokuk was a dedication at the common law, and 
 not under the statute; and that in making this dedication the 
 original proprietors of the tract reserved the title to the soil 
 in the street, particularly in Water street; and that this title 
 went with the several lots fronting on the street and extended 
 to the Mississippi river. Whether, under the laws of Iowa, 
 it also attached to the new ground formed by filling in upon 
 the bed of the river is not so clear. It appears to be the 
 settled law of that state that the title of the riparian pro- 
 prietors on the banks of the Mississippi extends only to ordi- 
 nary high-water mark, and that the shore between high and 
 low water mark, as well as the bed of the river, belongs to 
 the state. This is also the common law with regard to navi- 
 gable waters; although in England no waters are deemed 
 navigable except those in which the tide ebbs and flows. In 
 this country, as a general thing, all waters are deemed navi- 
 gable which are really so; and especially it is true with re- 
 gard to the IMississippi and its principal branches. The ques- 
 tion as to the extent of the riparian title was elaborately 
 discussed in the case of McManus v. Carmichael, 3 Iowa, 1.
 
 227 TAKING OF PRIVATE PROPERTY. §§283,284 
 
 The above conclusion was reached, and has always been ad- 
 hered to in that state. Haight v. The City of Keokuk, 4 
 Iowa, 199 ; Tomlin v. Dubuque etc. Railroad Co., 32 id. 106. 
 
 § 283. "On the general question as to the rights of the pub- 
 lic in a city street, we cannot see any material difference in 
 principle, with regard to the extent of those rights, whether the 
 fee is in the public or in the adjacent land owner or in some 
 third person. In either case, the street is legally open and 
 free for the public passage and for such other public uses as 
 are necessary in a city, and do not prevent its use as a 
 thoroughfare, such as the laying of water-pipes, gas-pipes and 
 the like; and, according to the laws of Iowa (which must be 
 taken to govern the case), it may be occupied by those im- 
 proved iron ways for public passage which modern skill has 
 devised, and which the advance of general improvement re- 
 quires 
 
 "By the construction given to this act (Iowa statute) by 
 the supreme court of the state, railroads, especially when 
 located and constructed under municipal regulation and con- 
 trol, are not regarded as obstructions to a highway in the legal 
 sense, nor as creating, when laid thereon, any injury to the 
 proprietors of the adjacent lands, for which they are entitled 
 to compensation." (14 L. R. A. 381; 43 L. R. A. 554; 17 L. 
 R. A. 474 ; 24 L. R. A. 721 ; 2 L. R. A., N. S., 598 ; 3 L. R. A., 
 N. S., 323; 4 L. R. A., N. S., 202; 7 L. R. A., N. S., 87, 506.) 
 
 § 284. In County of Mobile v. Kimball, 102 U. S. 691, in 
 holding that an issue of county bonds for a river improvement 
 to be ultimately paid by taxation was not a taking of private 
 property for public use within the meaning of the constitution. 
 Field, J., distinguishing taxation, said: 
 
 "The issue by the president and commissioners of revenue 
 of Mobile county of bonds for the improvement of the river, 
 bay and harbor of INIobile was not a taking of private property 
 for public use within the meaning of the constitutional clause. 
 It was a loan of the credit of the county for a work public in 
 its character designed to be of general benefit to the state, but 
 more especially and immediately to the county. The expenses 
 of the work were of course to be ultimately defrayed by 
 taxation upon the property and people of the county. But 
 neither is taxation for a public purpose, however great, the 
 taking of private property for public use, in the sense of the 
 constitution. Taxation only exacts a contribution from indi-
 
 § 285 EMINENT DOMAIN. 228 
 
 viduals of the state or of a particular district, for the support 
 of the government, or to meet some public expenditure au- 
 thorized by it, for which they receive compensation in the 
 protection which government affords, or in the benefits of the 
 special expenditure. But when private property is taken for 
 public use, the owner receives full compensation. The taking 
 differs from a sale by him only in that the transfer of title 
 may be compelled, and the amount of compensation be deter- 
 mined by a jury or officers of the government appointed for 
 that purpose. In the one case the party bears only a share 
 of the public burdens; in the other he exchanges his prop- 
 erty for its equivalent in money. The two things are essen- 
 tially different." 
 
 § 285. In Head v. Amoskeag Mfg. Co., 113 U. S. 9, in hold- 
 ing that a statute of a state authorizing any person to erect and 
 maintain on his own land a w^ater-mill and mill dam and across 
 any stream not navigable, paying to the owners of lands 
 flowed damages assessed in a judicial proceeding, is a proper 
 regulation of the property rights of riparian owners, and does 
 not deprive them of their property without due process of 
 law. Gray, J., said: 
 
 "It has been held in many cases of high authority that spe- 
 cial acts of incorporation, granted by the legislature for the 
 establishment of dams to increase and improve the water- 
 power of rivers and navigable waters for mechanical and 
 manufacturing purposes, are for a public use. Scudder v. 
 Trenton Delaware Falls Co., Saxton, 694, 728, 729 ; Boston & 
 Roxbury Mill Corporation v. Newman, 12 Pick. 467 ; Hazen v. 
 Essex Co., 12 Cush. 475; Commonwealth v. Essex Co., 13 
 Gray, 239, 251, 252 ; Hankins v. Lawrence, 8 Blackford, 266 ; 
 Great Falls Manufacturing Co. v. Fernald, 47 N. H. 444. 
 In some of those cases the authority conferred by general 
 mill acts upon any owner of land upon a stream to erect and 
 maintain a mill on his own land and to flow the land of others 
 for manufacturing purposes has been considered as resting on 
 the right of eminent domain, by reason of the advantages 
 inuring to the public from the improvement of water-power 
 and the promotion of manufactures. See, also, Holyoke Co. 
 V. Lyman, 15 Wall. 500, 506, 507 ; Beekman v. Saratoga & 
 Schenectady Railroad, 3 Paige, 45, 73 ; Talbot v. Hudson, 16 
 Gray, 417, 426. And the validity of general mill acts, when 
 directly controverted, has often been upheld upon that 
 ground, confirmed by long usage or prior decisions. Jordan
 
 229 TAKING OF PRIVATE PROPERTY. § 285 
 
 V. "Woodward, 40 Maine, 317; Olmstead v. Camp, 33 Conn. 
 532; Todd v. Austin, 34 Conn. 78; Venard v. Cross, 8 Kansas, 
 248; Harding v. Funk, 8 Kansas, 315; Miller v. Troost, 14 
 Minnesota, 282; Newcomb v. Smith, 1 Chandler, 71; Fisher 
 V. Horican Co., 10 Wisconsin, 351; Babb v. Mackey, 10 Wis- 
 consin, 314; Burnham v. Thompson, 55 Iowa, 421 The 
 
 question whether the erection and maintenance of mills for 
 manufacturing purposes under a general mill act, of which 
 any owner of land upon a stream not navigable may avail 
 himself at will, can be upheld as a taking, by delegation of 
 the right of eminent domain, of private property for public 
 use in the constitutional sense, is so important and far-reach- 
 ing, that it does not become this court to express an opinion 
 upon it when not required for the determination of the rights 
 of the parties before it. We prefer to rest the decision of 
 this case upon the ground that such a statute, considered as 
 regulating the manner in which the rights of proprietors of 
 lands adjacent to a stream may be asserted and enjoyed, with 
 a due regard to the interests of all and to the public good, is 
 
 within the constitutional power of the legislature The 
 
 right to the use of running water is publici juris, and common 
 to all the proprietors of the bed and banks of the stream from 
 its source to its outlet. Each has a right to the reasonable 
 use of the water as it flows past his land, not interfering with 
 a like reasonable use by those above or below him. One 
 reasonable use of the water is the use of the power, inherent 
 in the fall of the stream and the force of the current to drive 
 mills. That power cannot be used without damming up the 
 water and thereby causing it to flow back. If the water thus 
 dammed up by one riparian proprietor spread over the lands 
 of others, they could at common law bring successive actions 
 against him for the injury so done them, or even have the 
 dam abated. Before the mill acts, therefore, it was often im- 
 possible for a riparian proprietor to use the water-power at 
 all without the consent of those above him. The purpose of 
 these statutes is to enable any riparian proprietor to erect 
 a mill and use the water-power of the stream, provided he 
 does not interfere with an earlier exercise by another of a like 
 right or with any right of the public ; and to substitute, for 
 the common-law remedies of repeated actions for damages and 
 prostration of the dam, a new form of remedy, by which any- 
 one whose land is flowed can have assessed once for all, either 
 in a gross sum or by way of annual damages, adequate com- 
 pensation for the injury."
 
 §§286,287 EMINENT DOMAIN. 230 
 
 § 286. In Henderson Bridge Co. v. Henderson City, 173 
 U. S. 592, in upholding the taxation of a railroad bridge by a 
 municipality, Harlan, J., said : 
 
 "It is conceivable that taxation may be of such a nature 
 and so burdensome as properly to be characterized a taking 
 of private property for public use without just compensation. 
 But in order to bring taxation imposed by a state or under 
 its authority within the scope of the fourteenth amendment 
 of the national constitution, the case should be so clearly and 
 palpably an illegal encroachment upon private rights as to 
 leave no doubt that such taxation, by its necessary operation, 
 is really spoliation under the guise of exerting the power to 
 tax." 
 
 § 287. In Norwood v. Baker, 172 U. S. 269, it was held 
 that a special assessment against property abutting a street im- 
 provement, made on a basis and under a rule excluding inquiry 
 as to benefits received by or accruing to the abutting property, 
 was illegal, as taking property without due process of law 
 to the extent of the excess of the cost of opening the street 
 in question over any special benefits accruing to the abutting 
 property. Harlan, J., said : 
 
 "The taking of the plaintiff's land for the street was under 
 the power of eminent domain — a power which this court has 
 said was the offspring of political necessity, and inseparable 
 from sovereignty unless denied to it by the fundamental law. 
 Searl v. Lake County School District, 133 U. S. 553. But 
 the assessment of the abutting property for the cost and ex- 
 pense incurred by the village was an exercise of the power of 
 taxation. Except for the provision of the constitution of 
 Ohio above quoted, the state could have authorized benefits 
 to be deducted from the actual value of the land taken, with- 
 out violating the constitutional injunction that compensation 
 be made for private property taken for public use ; for the 
 benefits received could be properly regarded as compensation 
 pro tanto for the property appropriated to public use. But 
 does the exclusion of benefits from the estimate of compensa- 
 tion to be made for the property actually taken for public 
 use authorize th(3 public to charge upon the abutting property 
 the sum paid for it, together with the entire costs incurred 
 in the condemnation proceedings, irrespective of the question 
 whether the property was benefited by the opening of the 
 street? Undoubtedly, abutting owners may be subjected to 
 special assessments to meet the expenses of opening public
 
 231 TAKING OF PRIVATE IMIOPERTY. § 287 
 
 highways in front of their property — such assessments, ac- 
 cording to well-established principles, resting upon the ground 
 that special burdens may be imposed for special or peculiar 
 benefits accruing from public improvements. Mobile County 
 V. Kimball, 102 U. S. 691, 703, 704; Illinois Central Railroad 
 V. Decatur, 147 U. S. 190, 202; Bauman v. Ross, 167 U. S. 
 548, 589, and authorities there cited. And according to the 
 weight of judicial authority, the legislature has a large dis- 
 cretion in defining the territory to be deemed specially bene- 
 fited by a public improvement, and which may be subjected 
 to special assessment to meet the cost of such improvements. 
 In Williams v. Eggleston, 170 U. S. 304, 311, where the only 
 question, as this court stated, was as to the power of the legis- 
 lature to cast the burden of a public improvement upon cer- 
 tain towns, which had been judicially determined to be towns 
 benefited by such improvement, it was said: 'Neither can it 
 be doubted that if the state constitution does not prohibit, the 
 legislature, speaking generally, may create a new taxing dis- 
 trict, determine what territory shall belong to such district 
 and what property shall be considered as benefited by a pro- 
 posed improvement.' But the power of the legislature in 
 these matters is not unlimited. There is a point beyond 
 which the legislative department, even w^hen exerting the 
 power of taxation, may not go consistently with the citizen's 
 right of property. As already indicated, the principle under- 
 lying special assessments to meet the cost of public improve- 
 ments is that the property upon which they are imposed is 
 peculiarly benefited, and therefore the owners do not, in fact, 
 pay anything in excess of what they receive by reason of such 
 improvement. But the guaranties for the protection of pri- 
 vate property would be seriously impaired if it were estab- 
 lished, as a rule of constitutional law, that the imposition by 
 the legislature upon particular private property of the entire 
 cost of a public improvement, irrespective of any peculiar 
 benefits accruing to the owner from such improvement, could 
 not be questioned by him in the courts of the country. It is 
 one thing for the legislature to prescribe it as a general rule 
 that property abutting on a street opened by the public shall 
 be deemed to have been specially benefited by such improve- 
 ment, and therefore should specially contribute to the cost 
 incurred by the public. It is quite a different thing to lay 
 it down as an absolute rule that such property, whether it is 
 in fact benefited or not by the opening of the street, may be 
 assessed by the front foot for a fixed sum representing the 
 whole cost of the improvement, and without any right in the 
 property owner to show, when an assessment of that kind is
 
 § 288 EMINENT DOMAIN. 232 
 
 made or is about to be made, that the sum so fixed is in excess 
 of the benefits received. In our judgment, the exaction from 
 the owner of private property of the cost of a public improve- 
 ment in substantial excess of the special benefits accruing to 
 him is, to the extent of such excess, a taking under the guise 
 of taxation of private property for public use without com- 
 pensation. We say 'substantial excess,' because exact equal- 
 ity of taxation is not alwaj^s attainable, and for that reason 
 the excess of cost over special benefits, unless it be of a mate- 
 rial character, ought not to be regarded by a court of equity 
 when its aid is invoked to restrain the enforcement of a spe- 
 cial assessment." 
 
 § 288. Brewer, J., dissenting on the ground that the legis- 
 lative act was itself a determination of the benefits accruing to 
 the area assessed, said : 
 
 "The legislative act charging the entire cost of an improve- 
 ment upon certain described property is a legislative deter- 
 mination that the property described constitutes the area 
 benefited, and also that it is benefited to the extent of such 
 cost. It is unnecessary to inquire how far courts might be 
 justified in interfering in a case in which it appeared that 
 the legislature had attempted to cast the burden of a public 
 improvement on property remote therefrom and obviously in 
 no way benefited thereby, for here the property charged with 
 the burden of the improvement is that abutting upon such 
 improvement, the property prima facie benefited thereby, and 
 the authorities which I have cited declare that it is within 
 the legislative power to determine the area of the property 
 benefited and the extent to which it is benefited. It seems 
 to me strange to suggest that an act of the legislature or an 
 ordinance of a city casting, for instance, the cost of a sewer 
 or sidewalk in a street upon all the abutting property, is in- 
 valid unless it provides for a judicial inquiry whether such 
 abutting property is in fact benefited, and to the full cost of 
 the improvement, or whether other property might not also be 
 to some degree benefited, and therefore chargeable with part 
 of the cost."
 
 233 COMPENSATION. §§ 290, 291 
 
 CHAPTER XIV. 
 
 COMPENSATION. 
 
 § 290. The right to compensation for private property 
 taken for public use is fully established under the provisions of 
 the federal and state constitutions. A statute cannot, there- 
 fore, validly authorize, directly or indirectly, the taking of 
 private property for public uses except upon compensation 
 first made. 
 
 This applies as well to the national government as to the 
 state governments or their agencies. Until compensation duly 
 ascertained is paid to the owner or into court for him, title 
 to the property condemned remains in the private owner, and 
 while a company may enter into possession on the institution 
 of proceedings, if it attempts to retain the land appropriated 
 without malting compensation it is but a trespasser. On the 
 payment of compensation duly ascertained title passes. 
 
 § 291. In Monongahela Nav. Co. v. United States, 148 U. S. 
 312, under an act of Congress authorizing the Secretary of War 
 to purchase or condemn a lock and dam for water improve- 
 ments, providing that in determining the sum to be paid, the 
 franchise to take tolls should not be estimated, it was held 
 that the franchise could be taken only upon making com- 
 pensation. Brewer, J., said: 
 
 "Upon what does the right of Congress to interfere in the 
 matter rest? Simply upon the power to regulate commerce. 
 This is one of the great powers of the national govern- 
 ment — one whose existence and far-reaching extent have been 
 affirmed again and again by this court in its leading opinions, 
 and the power of Congress over such natural highways as 
 navigable streams is confessedly supreme 
 
 "But like the other powers granted to Congress by the con- 
 stitution, the power to regulate commerce is subject to all the 
 limitations imposed by such instrument, and among them is 
 that of the fifth amendment we have heretofore quoted. Con- 
 gress has supreme control over the regulation of commerce, 
 but if, in exercising that supreme control, it deems it neces- 
 sary to take private property, then it must proceed subject
 
 § 291 EMINENT DOMAIN. 231 
 
 to the limitations imposed by this fifth amendment, and can 
 take only on payment of just compensation. The power to 
 regulate commerce is not given in any broader terms than 
 that to establish postoffices and post roads; but if Congress 
 wishes to take private property upon which to build a post- 
 office, it must either agree upon the price M^ith the owner, or 
 in condemnation pay just compensation therefor. And if 
 that propert}^ be improved under authority of a charter 
 granted by the state, Avith a franchise to take tolls for the 
 use of the improvement, in order to determine the just com- 
 pensation, such franchise must be taken into account. Be- 
 cause Congress has power to take the property it does not 
 follow that it may destroy the franchise without compensa- 
 tion. "Whatever be the true value of that which it takes from 
 the individual owner must be paid to him before it can be 
 said that just compensation for the property has been made. 
 And that which is true in respect to a condemnation of prop- 
 erty for a postoffice is equally true when condemnation is 
 sought for the purpose of improving a natural highway. 
 Suppose, in the improvement of a navigable stream, it was 
 deemed essential to construct a canal with locks, in order to 
 pass around rapids or falls. Of the power of Congress to 
 condemn whatever land may be necessary for such canal, 
 there can be no question; and of the equal necessity of pay- 
 ing full compensation for all private property taken, there 
 can be as little doubt. If a man's house must be taken, that 
 must be paid for ; and if the property is held and improved 
 under a franchise from the state, with power to take tolls, that 
 franchise must be paid for, because it is a substantial element 
 in the value of the property taken. So coming to the case 
 before us, while the power of Congress to take this property 
 is unquestionable, yet the power to take is subject to the con- 
 stitutional limitation of just compensation. It should be no- 
 ticed that here there is unquestionably a taking of the prop- 
 erty and not a mere destruction. It is not a case in which 
 the government requires the removal of an obstruction. 
 What differences would exist between the two cases, if any, 
 it is unnecessary here to inquire. All that we need consider 
 is the measure of compensation when the government, in the 
 
 exercise of its sovereign power, takes the property It 
 
 is also suggested that the government does not take this fran- 
 chise; that it does not need any authority from the state for 
 the exaction of tolls, if it desires to exact them; that it only 
 appropriates the tangible property, and then either makes the 
 use of it free to all, or exacts such tolls as it sees fit, or trans- 
 fers the property to a new corporation of its own creation,
 
 235 COMPENSATION. § 292 
 
 with such a franchise to take tolls as it chooses to give. But 
 this franchise goes with the property; and the navigation 
 company, which owned it, is deprived of it. The government 
 talces it away from the company, whatever use it may make 
 of it; and the question of just compensation is not determined 
 by the vahie to the government which takes, but the value 
 to the individual from whom the property is taken ; and when 
 by the taking of the tangible property the owner is actually 
 deprived of tlie franchise to collect tolls, just compensation 
 requires payment not merely of the value of the tangible 
 properly itself, but also of that of the franchise of which he 
 
 is deprived Our conclusions are that the navigation 
 
 company rightfully placed this lock and dam in the Monon- 
 gahela River; that with the ownership of the tangible prop- 
 erty legally held in that place, it has a franchise to receive 
 tolls for its use; that such franchise was as much a vested 
 right of property as the ownership of the tangible property ; 
 that the right of the national government, under its grant of 
 power to regulate commerce to condemn and appropriate this 
 lock and dam belonging to the navigation company, is sub- 
 ject to the limitations imposed by the fifth amendment ; that 
 private property shall not be taken for public uses without 
 just compensation; that just compensation requires payment 
 for the franchise to take tolls, as w-ell as for the value of the 
 tangible property; and that the assertion by Congress of its 
 purpose to take the property does not destroy the state fran- 
 chise, ' ' 
 
 § 282. In Sweet v. Rechel, 159 IT. S. 380, it was held that a 
 health act of Massachusetts, authorizing the condemnation of 
 lands by the city of Boston, providing for compensation but 
 not requiring it to be paid before the land was taken, was valid 
 and constitutional. Harlan, J., in the opinion said: 
 
 "We must, therefore, assume that the act of 1867 had for 
 its real object the protection of the public health and not the 
 mere acquisition of the property in question for purposes of 
 sale or profit, after it had increased in value by reason of the 
 grade being raised. It is not alleged in the pleadings, nor 
 was there any evidence tending to show, that the cost of rais- 
 ing the grade would have been so slight, compared with the 
 real value of the property, that a due regard to the consti- 
 tution demanded that the owner should have been given op- 
 portunity to raise the grade at his own expense and retain 
 the property in its improved condition. On the contrary, it 
 appeal's that the public health justified prompt action and
 
 § 292 EMINENT DOMAIN. 236 
 
 the use of such means as could be effectively supplied only 
 by municipal authority acting under legislative sanction. 
 .... But the validity of the act of 1867 is questioned on 
 the ground' — not suggested in Dingley v. Boston — that it did 
 not provide for compensation to be made to the owners of the 
 property in advance of its actual appropriation by the com- 
 monwealth. 
 
 "Upon this point the defendant insists that the statute was 
 enacted under the authority to ordain and establish laws and 
 regulations reasonably adapted to secure the good and welfare 
 of the people, and that statutes having such objects in view, 
 which deprive individuals of the control and use of their 
 property, need not make provision at all for compensation to 
 such individuals Undoubtedly, the state, without tak- 
 ing the title to itself, may in some appropriate mode, and 
 without compensation to the owner, forbid the use of specified 
 private property where such use would be injurious to the 
 public health. For, as said by Chief Justice Shaw in Com- 
 monwealth V. Alger, 7 Cush. 53, 84, 'it is a settled principle, 
 growing out of the nature of well-ordered civil society, that 
 every holder of property, however absolute and unqualified 
 may be his title, holds it under the implied liability that his 
 use of it shall be so regulated that it be not injurious to the 
 equal enjoyment of others having an equal right to the enjoy- 
 ment of their property, nor injurious to the rights of the com- 
 munity. ' 'Rights of property, like all other social and 
 conventional rights, are subject to such reasonable limitations 
 in their enjoyment as shall prevent them from being injuri- 
 ous, and to such reasonable restraints and regulations estab- 
 lished by law as the legislature, under the governing and 
 controlling power vested in them by the constitution, may 
 think necessary and expedient.' This, the court said, was 
 not the power of eminent domain, but rather the police power, 
 'the power vested in the legislature by the constitution to 
 make, ordain and establish all manner of wholesome and rea- 
 sonable laws, statutes and ordinances, either with penalties 
 or without, not repugnant to the constitution, as they shall 
 judge to be for the good and welfare of the commonwealth 
 and of the subjects of the same.' When, however, the legis- 
 lature provides for the actual taking and appropriation of 
 private property for public uses, its authority to enact such 
 a regulation rests upon its right of eminent domain — a right 
 vital to the existence and safety of the government. But it 
 is a condition precedent to the exercise of such power that 
 the statute make provision for reasonable compensation to the 
 owner
 
 237 COMPENSATION. § 293 
 
 § 293. "But must compensation be actually made or ten- 
 dered in advance of such taking or appropriation? Is it not 
 sufficient, in order to meet the requirements of the constitution, 
 if adequate provision be made for compensation? The consti- 
 tutions of some of the states expressly require that compensa- 
 tion be first made to the owner before the rights of the public 
 can attach. But neither the constitution of Massachusetts nor 
 the constitution of the United States contains any such pro- 
 vision. The former only requires that the owner 'shall re- 
 ceive a reasonable compensation'; the latter that private 
 property shall not be taken for public use 'without just com- 
 pensation.' Reasonable compensation and just compensation 
 mean the same thing. 
 
 "In Haverhill Bridge Proprietors v. Essex County Com- 
 missioners, 103 Mass. 120, 124, the court said: 'The duty of 
 paying an adequate compensation for private property taken 
 is inseparable from the exercise of the right of eminent 
 domain. The act granting the power must provide for com- 
 pensation and a ready means of ascertaining the amount. 
 Payment need not precede the seizure; but the means for 
 securing indemnity must be such that the owner will be put to 
 no risk or unreasonable delay. ' 
 
 "A leading case upon this point is Connecticut River Rail- 
 road V, Franklin County Commissioners, 127 Mass. 50, 52, 54, 
 55, 56. That case arose under a statute of Massachusetts 
 authorizing the manager of a railroad owned by the common- 
 wealth to take land for a passenger station to be used by 
 that and other railroads, and providing no other mode of 
 compensation to the owner than that the land should be paid 
 for out of the earnings of the railroad. The statute was 
 held to be void 
 
 "In view of these authorities, it is clear that as the con- 
 stitution of Massachusetts does not require compensation to 
 be first actually made or tendered before the rights of the 
 public in the property taken or applied become complete, the 
 requirements of that instrument are fully met where the stat- 
 ute makes such provision for reasonable compensation as will 
 be adequate and certain in its results. It is equally clear that 
 an adequate provision is made when the statute, authorizing a 
 public municipal corporation to take private property for 
 public uses directs the regular ascertainment, without im- 
 proper delay and in some legal mode, of the damages sus- 
 tained by the owner, and gives him an unqualified right to a 
 judgment for the amount of such damages which can be 
 enforced, that is collected by judicial process.
 
 §§294,295 EMINENT DOMAIN. 238 
 
 § 294. "Substantially the same principles have been an- 
 nounced by this court when interpreting the clause of the con- 
 stitution of the United States that forbids the taking of private 
 property for public use without just compensation. In Chero- 
 kee Nation v. Southern Kansas Kailway, 135 TJ. S. 641, 659, it 
 was suggested that the act of Congress there involved vio- 
 lated the constitution of the United States, in that it did not 
 provide for compensation to be made to the plaintiff before 
 the defendant entered upon the lands taken for the purpose 
 of constructing its road over them. This objection was not 
 sustained. The court said: 'The constitution declares that 
 private property shall not be taken "for public use without 
 just compensation." It does not provide or require that com- 
 pensation shall be actually paid in advance of the occupancy 
 of the land to be taken. But the owner is entitled to reason- 
 able, certain and adequate provision before his occupancy is 
 disturbed. Whether a particular provision be sufficient to 
 secure the compensation to which, under the constitution, he 
 is entitled is sometimes a question of difficulty. In the pres- 
 ent case, the requirements of the constitution have, in our 
 judgment, been fully met. The third section provides that 
 before the railway shall be constructed through any lands pro- 
 posed to be taken, full compensation shall be made to the 
 owner for all property to be taken or damage done by reason 
 of the construction of the road. In the event of an appeal 
 from the finding of the referees, the company is required to 
 pay into court double the amount of the award to abide its 
 judgment; and that being done, the company may enter upon 
 the property sought to be condemned, and proceed with 
 the construction of its road. We are of the opinion that this 
 provision is sufficiently reasonable, certain and adequate to 
 secure the just compensation to which the owner is entitled.* 
 .... We are of opinion that, upon both principle and au- 
 thority, it was competent for the legislature, in the exercise 
 of the police powers of the commonwealth, and of its power 
 to appropriate private property for public uses, to authorize 
 the city to take the fee in the lands described in the statute 
 prior to making compensation, and that the provision made 
 for compensating the owner was certain and adequate." 
 
 § 295. In Kennedy v. Indianapolis, 103 U. S. 599, it was 
 held that where land was appropriated for a canal, while the 
 right to enter and use the property was complete as soon as 
 it was appropriated, the title did not pass until just com- 
 pensation was made. Waite, C. J., said:
 
 230 ■ CO-MPENSATION. § 295 
 
 "The constitution of the state (Indiana) adopted in 1816, 
 which was in force M'hen this act was passed, and until all 
 the rights of the state under it had been acquired, contains 
 the following as article I, section 7: 'That no man's par- 
 ticular services shall be' demanded, or property taken or ap- 
 plied to public use, without the consent of his representatives, 
 or without a just compensation being made therefor.' . . . . 
 Not to multiply cases further, it seems to us that both on' 
 principle and authority the rule is, under such a constitution 
 as that of Indiana, that the right to enter on and use the 
 property is complete as soon as the property is actuallj'- ap- 
 propriated under the authority of the law for a public use, 
 but that the title does not pass from the owner without his 
 consent until just compensation has been made to him. 
 
 "We proceed now to apply this rule to the facts. It is not 
 contended that compensation in money was made for any 
 of the land in dispute. Van Blaricum claimed money, but 
 the tribunal to which, under the statute, his application was 
 referred, decided against him. In effect he was told, in an- 
 swer to his application, that the benefits he would receive 
 from the construction of the canal would be 'just compensa- 
 tion' to him for his property taken. The town and the lot 
 owners adjoining Missouri Street made no claim for compen- 
 sation. Neither did Coe, the owner of lot 126. In this way 
 these parties signified, under the law, their willingne;-'s to 
 take as their compensation the benefits which would result 
 to them respectively from the construction of the canal. The 
 appropriation was for public use by means of a canal, and 
 the owners were to be paid their compensation for the land 
 taken by the construction of a canal thereon. It would seem 
 to follow that if the canal was constructed, the compensation 
 which the constitution guaranteed the owner would be made ; 
 otherwise not. If the canal was in law built, therefore, the 
 title passed to the state ; if not, it remained in the owner. 
 The failure to claim damages within the two years was no 
 more than a waiver of all compensation except such as grew 
 out of the benefits resulting from the construction of the work 
 for which the appropriation was made. To hold that the 
 title passed by mere appropriation, if no claim for damages 
 was made within the two years, would be in ef¥ect to decide 
 that if the state entered on land for a particular use and 
 kept possession as against the owner for two years, it got a 
 title in fee whether the property was actually put to the use 
 or not. Such we cannot believe to be the law."
 
 §§300,301 EMINENT DOMAIN. ' 240 
 
 CHAPTER XY. 
 
 PROCEDURE. 
 
 § 300. No special form of procedure for the condemnation 
 of land and the determination of the compensati-on to be made, 
 except that there must be a judicial determination of the mat- 
 ters involved, with an opportunity given to the parties, is 
 required by the federal constitution. Except as required by 
 the constitution of the state involved in the particular case, 
 a legislative provision authorizing land to be condemned for 
 certain purposes and the compensation to be assessed by 
 commissioners is valid. Nor is it necessary that the owner 
 have actual notice of the proceedings, provided the proceeding 
 is a judicial one upon such notice as may be reasonably given. 
 A published notice, e. g., is sufficient notice to a nonresident 
 owner, who must therefore at his peril ascertain any con- 
 demnation proceedings pending against his property. 
 
 So, too, the method of determining the compensation is 
 discretionary with the legislature, and a jury trial is not a 
 matter of right unless especially required by the state con- 
 stitution. 
 
 "While the proceedings until the compensation is actually 
 ascertained and paid are in the control of the state and its 
 court, yet when once title has passed upon the payment of 
 compensation, the matter becomes res adjudicata and may not 
 be reopened. Nor upon appeal will the appellate court re- 
 vise the amount of compensation awarded, for the reason 
 that the appellate court has not and cannot have before it 
 the data and real evidence upon which the discretionary 
 tribunal made its finding. 
 
 § 301. In Shoemaker v. United States, 147 U. S. 282, it was 
 held the appellate court would not interfere with commis- 
 sioners as to their findings, and that the claimant was not en- 
 titled to interest from the time of the initiation of the proceed- 
 ings. Shiras, J., in the opinion of the court, said:
 
 241 ' PROCEDURE. § 302 
 
 "The theory of appraisement asked for by the plaintiffs 
 in error difCered from the one adopted by the court chiefly in 
 two particulars: first, it treats the case as if it were one 
 before an ordinary jury, whose action is determined by the 
 evidence adduced; and second, that the evidence might have 
 reference to and include any supposed or speculative value 
 given to the property taken by reason of the act of Congress 
 creating the park project; whereas the court regarded the 
 functions of the appraisers as including their own judgment 
 and inspection of the lands taken as well as a consideration 
 of the evidence adduced by the parties. 
 
 "We approve of the instructions given by the court in both 
 particulars. The scope of action of the board of commis- 
 sioners was plainly, by the terms of the act and the nature 
 of the inquiry, not restricted to a mere consideration of the 
 evidence and allegations of the parties, but included the exer- 
 cise of those powers of judgment and observation which led 
 to their selection as fit persons for such a position. 
 
 "While the board should be allowed a wide field in which 
 to extend their investigation, yet it has never been held that 
 they can go outside of the immediate duty before them, viz., 
 to appraise the tracts of land proposed to be taken, by re- 
 ceiving evidence of conjectural or speculative values, based 
 upon the anticipated effect of the proceedings under which 
 the condemnation is had. Kerr v. South Park Commission- 
 ers, 117 U. S. 379, 380. 
 
 § 302. "In connection with this part of the subject, we may 
 appropriately consider the objection made to the action of the 
 court below in declining to review and pass upon the evidence 
 that had been produced before the commissioners. 
 
 "If, as we have said, the court below was right in refusing 
 to restrict the commissioners to a mere consideration of the 
 evidence adduced, then it would seem to follow that the 
 court could not be legitimately asked, in the absence of any 
 exceptions based upon charges of fraud, corruption or plain 
 mistake on the part of the appraisers, to go into a considera- 
 tion of the evidence. The court cannot bring into review be- 
 fore it the various sources and grounds of judgment upon 
 which the appraisers have proceeded. The attempt to do so 
 would transfer the function of finding the values of the lands 
 from the appraisers to the court. Such a course would have 
 presented a much more serious allegation of error than we 
 find in the objection as made. 
 
 "The rule on this subject is so well settled that we shall 
 content ourselves with repeating an apt quotation from Mills 
 16
 
 § 303 EMINENT DOMAIN. 242 
 
 on Eminent Domain, 246, made in the opinion of the court 
 below: 'An appellate eourt will not interfere with the report 
 of commissioners to correct the amount of damages except 
 in cases of gross error showing prejudice or corruption. The 
 commissioners hear the evidence and frequently make their 
 principal evidence out of a view of the premises, and this evi- 
 dence cannot be carried up so as to correct the report as 
 being against the weight of evidence. Hence, for an error 
 in the judgment of commissioners in arriving at the amount 
 of damages there can be no correction, especially where the 
 evidence is conflicting. Commissioners are not bound by the 
 opinions of experts or by the apparent weight of evidence, 
 but may give their own conclusions.' .... 
 
 § 303. "The fourteenth assignment charges the court -unth 
 error in refusing to allow interest on the amounts assessed as 
 the values for lands selected for the Rock Creek Park. The ar- 
 gument shows that the interest claimed was for the time that 
 elapsed between the initiation of the proceedings and the 
 payment of the money into court. The vice of this contention 
 is in the assumption that the lands were actually condemned 
 and withdrawn from the possession of their owners by the 
 mere filing of the map. Interest accrues either by agreement 
 of the debtor to allow it for the use of money or in the nature 
 of damages, by reason of the failure of the debtor to pay 
 the principal when due. Of course, neither ground for such 
 a demand can be found in the present case. No agreement 
 to pay the interest demanded is pointed to, and no failure to 
 pay the amount assessed took place. That amount was not 
 fixed and ascertained till the confirmation of the report. 
 Then some of those entitled to the assessments accepted their 
 money, the plaintiffs in error declined to accept, and the 
 amounts assessed in their favor were paid into court, which 
 must be deemed equivalent to payment. 
 
 "It is true that, by the institution of proceedings to con- 
 demn the possession and enjoyment by the owner are to some 
 extent interfered with. He can put no permanent improve- 
 ments on the land, nor sell it except subject to the condemna- 
 tion proceedings. But the owner was in receipt of the rents, 
 issues and profits during the time occupied in fixing the 
 amount to which he was entitled, and the inconveniences to 
 which he was subjected by the delay are presumed to be con- 
 sidered and allowed for in fixing the amount of compensation. 
 Such is the rule laid down in cases of the highest authority. 
 Reid V. Hanover Branch Railroad, 105 Mass. 303; Kidder v. 
 Oxford, 116 Mass. 165; Hamersley v. New York City, 56
 
 243 PROCEDURE. § 304 
 
 N. Y. 533; Norris v. Philadelphia, 70 Penn. St. 332; Chicago 
 V. Palmer, 93 Illinois, 125; Phillips v. South Park Commis- 
 sion, 119 Illinois, 626." 
 
 § 304. In Secombe v. Railroad Company, 23 "Wall. 108, in 
 holding that the title of a railroad company to lands con- 
 demned in compliance with a legislative act could not be ques- 
 tioned collaterally, Davis, J., said : 
 
 "Whether the Minnesota Central Railroad Company, under 
 whom the defendant claims — and which occupied for railroad 
 purposes the land in question long before the deeds of quit- 
 claim under which the plaintiff sets up title were made — 
 whether this company had the right to condemn the land and 
 took the proper steps to condemn it, depends, of necessity, 
 on the laws of the state ; and if these laws have been construed 
 by the highest court of the state in a case similar to the one 
 before us, the federal courts are relieved of all difficulty. 
 
 "We do not feel called upon to enter into an examination 
 of the several acts on this subject, both public and private, 
 which are quite numerous, in order to show that the Minne- 
 sota Central Company had a corporate existence, and was 
 therefore capable of performing an act of condemnation. It 
 is enough to say that the point is settled in favor of the 
 company by the decision and reasoning of the supreme court 
 of Minnesota in St. Paul and Pacific Railroad Company v. 
 Parcher (14 Minn. 297). 
 
 "The Minnesota Central. Company was authorized by law 
 to procure the condemnation of land for the use of its road, 
 and from the findings of fact by the circuit court it suffi- 
 ciently appears that the statutory provisions on the subject 
 were observed. 
 
 "It is no longer an open question in this country that the 
 mode of exercising the right of eminent domain, in the ab- 
 sence of any provision in the organic law prescribing a con- 
 trary course, is within the discretion of the legislature. 
 There is no limitation upon the power of the legislature in 
 this respect, if the purpose be a public one, and just com- 
 pensation be paid or tendered to the owner for the property 
 taken. This general rule has received the sanction of the 
 supreme court of Minnesota in analogous cases to the one 
 at bar. It hardly need be said that the taking of private 
 property in order that a railroad may be constructed is a 
 public necessity. It is urged that the property in controversy 
 was occupied before the proceedings in condemnation were 
 begun, but there is nothing in the findings of fact to show
 
 §§ 305, 306 EMINENT DOMAIN. 244 
 
 that this was so. Even if the plaintiff were in a situation 
 to make the objection, it would not avail him, for prior occu- 
 pation without authority of law would not preclude the com- 
 pany from taking subsequent measures authorized by law 
 to condemn the land for their use. If the company occupied 
 the land before condemnation without the consent of the 
 owners, and without any law authorizing it, they are liable 
 in trespass to the persons who owned the land at the time, 
 but not to the present plaintiff. 
 
 § 305. "It is urged, also, against the validity of the award 
 of the commissioners that it was not made in reasonable time, 
 or the amount of it ever paid or tendered to the parties in in- 
 terest. Whether this be so or not does not concern the plain- 
 tiff. It is enough for him to know that a judgment was en- 
 tered confirming the award, and the money paid into the 
 court for the use of Pinney and Osborne, and is there now, 
 unless they have seen fit to withdraw it. It is a fair pre- 
 sumption, as both these persons had notice, actual or con- 
 structive, of the proceedings in condemnation and took no 
 steps to review them, that they were either satisfied with the 
 award or concluded they could not make successful opposition 
 to it. 
 
 "This suit is an effort to question the propriety of the 
 condemnation and sale of the property in a collateral pro- 
 ceeding, not by the party even whose land was appropriated, 
 but by a stranger to the original proceeding, who, whatever 
 his motive in buying, got no other estate than the original 
 owners could convey — a fee subject to the easement of the rail- 
 road company. The judgment of condemnation in this case 
 was rendered by a competent court charged with a special statu- 
 tory jurisdiction, and all the facts necessary to the exercise of 
 this jurisdiction are shown to exist. A judgment thus ob- 
 tained is no more subject to impeachment in a collateral pro- 
 ceeding than the judgment of any other court of exclusive 
 jurisdiction. If it were so, railroad companies would have 
 no assurance that the steps taken by them to procure the 
 right of way would conclude anyone, and they would be con- 
 stantly subject to vexatious litigation." 
 
 § 306. In Huling v. Kaw Valley Railway, 130 U. S. 559, it 
 was held that in a condemnation proceeding under a state stat- 
 ute publication of notice as required by the statute was suffi- 
 cient notice to a nonresident o^vner, and, secondly, the fact that 
 one of the commissioners appointed to fix the value and com-
 
 245 PROCEDURE. § 306 
 
 pensation was not a freeholder, as required by the statute, 
 could not be taken advantage of subsequent to the proceed- 
 ings in a collateral action of trespass. Miller, J., in the 
 opinion of the court, said: 
 
 "The transcript on its face seems to be regular in every 
 particular, showing a full compliance with all the require- 
 ments of the statute on the subject. There was proper pub- 
 lication made in the newspaper, and, indeed, so far as the 
 face of the record is concerned, no objection seems to be made 
 to it, except that it is very urgently argued that the notice 
 published was not sufficient, because it did not apprise the 
 party of what land was to be taken ; and if in that respect 
 it was a sufficient compliance with the statute, it is then 
 insisted that the statute itself was void as authorizing the 
 taking of private property without due process of law. 
 
 "In regard to this objection we do not see how the notice 
 is deficient, if any notice short of one actually served upon 
 the party can be sufficient. With regard to the description 
 of the property, the notice gives all that could be known at 
 the time it was published. As the commissioners had the 
 power to determine the precise location of the road, that loca- 
 tion could not be described with more precision than it is 
 in the newspaper publication set out in the proceedings. It 
 is directed to all pensons o\\Tiing lands on the line of the 
 railroad as the same is now or may be located through section 
 23, township 11, range 25, in the county of Wyandotte and 
 state of Kansas; and it notified persons owning land in that 
 section that the commissioners duly appointed would, on 
 Monday, the 22d of May, 1882, proceed to lay off the route 
 for said' road through said section, and appraise the value 
 and assess the damages to each quarter section through and 
 over which the railroad might be located. To the plaintiffs 
 in this case, who are the owners of a quarter section of land 
 in section 23 of that to\^^lship, this was a sufficient warning 
 that the road might run through their land at that point, 
 and sufficient notice of the time and place where this matter 
 would be determined, as also the amount to which they would 
 be entitled for the appropriation of their land. If this notice 
 had been read by the plaintiffs, it was a clear and distinct 
 notification to them that it would be determined at that time 
 whether any, and how much, of their land in section 23 would 
 be taken for the railroad, and the value to be set upon it by 
 the commissioners; and we think that this was all the notice 
 they had a right to require. Of course the statute goes upon 
 the presumption that, since all the parties cannot be served
 
 §§ 307, 308 EMINENT DOMAIN. 246 
 
 personally with such notice, the publication, which is designed 
 to meet the eyes of everybody, is to stand for such notice. 
 The publication itself is sufficient if it had been in the form 
 of a personal service upon the party himself within the 
 county. Nor have we any doubt that this form of warning 
 owners of property to appear and defend their interests, 
 where it is subject to demands for public use when authorized 
 by statute, is sufficient to subject the property to the action 
 of the tribunals appointed by proper authority to determine 
 those matters. 
 
 § 307. * ' The owner of real estate, who is a nonresident of the 
 state within which the property lies, cannot evade the duties 
 and obligations which the law imposes upon him in regard to 
 such property, by his absence from the state. Because he 
 cannot be reached by some process of the courts of the state, 
 which, of course, have no efficacy beyond their own borders, 
 he cannot, therefore, hold his property exempt from the lia- 
 bilities, duties and obligations which the state has a right 
 to impose upon such property; and in such cases some sub- 
 stituted form of notice has always been held to be a sufficient 
 warning to the owner of the proceedings which are being 
 taken under the authority of the state to subject his property 
 to those demands and obligations. Otherwise the burdens of 
 taxation, and the liability of such property to be taken under 
 the power of eminent domain, would be useless in regard to a 
 very large amount of property in every state of the Union. 
 
 "It is therefore the duty of the owner of real estate who 
 is a nonresident, to take measures that in some way he shall 
 be represented when his property is called into requisition; 
 and if he fails to do this, and fails to get notice by the 
 ordinary publications which have usually been required in 
 such cases, it is his misfortune, and he must abide the conse- 
 quences. Such publication is 'due process of law' as applied 
 to this class of cases. Harvey v. Tyler, 2 Wall. 328 ; Secombe 
 V. Railroad Co., 23 Wall. 108; Pennoyer v. Neff, 95 U. S. 
 714, 722, 743, 744; Hagar v. Reclamation District, 111 U. S. 
 70l'; McMillen v. Anderson. 95 U. S. 37; Davidson v. New 
 Orleans, 96 U. S. 97, 105; Boom Co. v. Patterson, 98 U. S. 
 403, 406. 
 
 § 308. "Conceding that these proceedings subjected the land 
 in controversy to the jurisdiction of the commissioners ap- 
 pointed by the district judge of Wyandotte County, the ques- 
 tion as to whether one of those commissioners was a freeholder 
 or not is not open to consideration in this suit. The commission-
 
 247 PROCEDURE. § 309 
 
 ers were regularly appointed by the proper officer, and took 
 the proper oath, and have discharged their duties in the 
 nisnner required by law. The railroad company has paid 
 the money and taken possession of the land which was con- 
 demned by those commissioners. The plaintiffs cannot re- 
 cover in the present action without a holding in this collateral 
 proceeding that all that was done by those commissioners is 
 void by reason of this want of qualification in one of their 
 number. The proper time for these plaintiffs to have taken 
 their objection to Mr. Wood, as a commissioner, was either 
 at the time of his appointment or at the time he proceeded 
 to act as commissioner. If it be ob.jected that they could not 
 be supposed to have any notice of the application for the 
 appointment of these commissioners and of the time and place 
 when the judge would act on that application, the law pre- 
 sumes that they had notice, and might have attended at the 
 time the commissioners entered upon their duties. If this 
 objection had been then taken it might have been sustained, 
 or it could have been taken by way of appeal from the 
 proceedings of the commissioners; but to permit such an ob- 
 jection as this to prevail at this time, and thus defeat the 
 whole of the proceedings upon this narrow ground, is a prop- 
 osition unsupported by sound principle or by authority. It 
 is a collateral attack upon a proceeding which has been 
 completed according to the forms of law. There is no more 
 reason why this want of qualification should, when shown at 
 this stage of the proceeding, invalidate it all, than there is 
 why the discovery, after a judgment and after that judgment 
 has passed beyond the control of the court, that one of the 
 jurors was disqualified should make absolutely void the ver- 
 dict and judgment. It is only one of those cases frequently 
 occurring in the administration of the law, in which it is 
 better that errors not pointed out at the proper time should 
 be disregarded than that by attempts to correct them evils 
 much worse should follow than those incident to the error. 
 Commrs. of Leavenworth Co. v. Espen, 12 Kansas, 531 ; 
 Veuard v. Cross, 8 Kansas, 248 ; Cooper v. Reynolds, 10 Wall. 
 308; Voorhees v. Bank of the United States, 10 Pet. 449." 
 
 § 309. In United States v. Jones, 109 U. S. 513, it was held 
 that the liability to make compensation for property taken for 
 public uses under eminent domain is a limitation of the right 
 of eminent domain which is incident to sovereignty, and the 
 determination of the compensation may be delegated by the
 
 § 310 EMINENT DOMAIN. 248 
 
 United States government to any tribunal, state or special. 
 Field, J., said: 
 
 "The power to take private property for public uses, gen- 
 erally termed the right of eminent domain, belongs to every 
 independent government. It is an incident of sovereignty, 
 and as said in Boone v. Patterson, 98 U. S. 106, requires no 
 constitutional recognition. The provision found in the fifth 
 amendment to the federal constitution, and in the constitutions 
 of the several states, for just compensation for the property 
 taken is merely a limitation upon the use of the power. _ It 
 is no part of the power itself, but a condition upon which 
 the power may be exercised. It is undoubtedly true that the 
 power of appropriating private property to public uses vested 
 in the general government — its right of eminent domain, 
 which Vattel defines to be the right of disposing, in case of 
 necessity and for the public safety, of all the wealth of the 
 country — cannot be transferred to a state any more than 
 its other sovereign attributes; and that, when the use to 
 which the property taken is applied is public, the propriety 
 or expediency of the appropriation cannot be called in ques- 
 tion by any other authority. But there is no reason why 
 the compensation to be made may not be ascertained by any 
 appropriate tribunal capable of estimating the value of the 
 property. There is nothing in the nature of the matter to 
 be determined which calls for the establishment of any special 
 tribunal by the appropriating power. 
 
 § 310. "The proceeding for the ascertainment of the value 
 of the property and consequent compensation to be made is 
 merely an inquisition to establish a particular fact as a prelim- 
 inary to the actual taking; and it may be prosecuted before 
 commissioners or special boards or the courts, with or without 
 the intervention of a jury, as the legislative power may desig- 
 nate. All that is required is that it shall be conducted in 
 some fair and just manner, with opportunity to the owners 
 of the property to present evidence as to its value and to be 
 heard thereon. Whether the tribunal shall be created directly 
 by an act of Congress or one already established by the states 
 shall be adopted for the occasion is a mere matter of legis- 
 lative discretion. Undoubtedly it was the purpose of the 
 constitution to establish a general government independent 
 of, and in some respects superior to, that of the state govern- 
 ments — one which could enforce its own laws through its own 
 officers and tribunals; and this purpose was accomplished. 
 That government can create all the officers and tribunals re-
 
 249 PROCEDURE. § 311 
 
 quired for the execution of its powers. Upon this point there 
 can be no question. Kohl v. United States, 91 U. S. 367. 
 Yet from the time of its establishment that government has 
 been in the habit of using, with the consent of the states, 
 their officers, tribunals and institutions as its agents. Their 
 use has not been deemed violative of any principle or as in 
 any manner derogating from the sovereign authority of the 
 federal government; but as a matter of convenience and as 
 tending to a great saving of expense." 
 
 § 311. In Garrison v. City of New York, 21 Wall. (88 
 U. S.) 196, in holding that an award in condemnation proceed- 
 ings could be vacated at any time before payment when title 
 passed, that the award was not a contract, and that a statute 
 authorizing its vacation was not unconstitutional, Field, J., 
 said: 
 
 "In the proceeding to condemn the property of the plain- 
 tiff for a public street there was nothing in the nature of 
 a contract between him and the city. The state, in virtue 
 of her right of eminent domain, had authorized the city 
 to take his property for a public purpose, upon making to 
 him just compensation. All that the constitution or justice 
 required was that a just compensation should be made to him, 
 and his property would then be taken whether or not he as- 
 sented to the measure. The proceeding to ascertain the 
 benefits or losses which will accrue to the owner of property 
 when taken for public use, and thus the compensation to be 
 made to him, is in the nature of an inquest on the part of the 
 state, and is necessarily under her control. It is her duty 
 to see that the estimates made are just, not merely to the 
 individual whose property is taken, but to the public which 
 is to pay for it. And she can to that end vacate or authorize 
 the vacation of any inquest taken by her direction to ascer- 
 tain particular facts for her guidance, where the proceeding 
 has been irregularly or fraudulently conducted, or in which 
 error has intervened, and order a new inquest, provided such 
 methods of procedure be observed as will secure a fair hear- 
 ing from the parties interested in the property. Nor do we 
 perceive how this power of the state can be affected by the 
 fact that she makes the finding of the commissioners upon 
 the inquest subject to the approval of one of her courts. 
 That is but one of the modes which she may adopt to prevent 
 error and imposition in the proceedings. There is certainly 
 nothing in the fact that an appeal is not allowed from the 
 action of the court in such cases, which precludes a resort
 
 § 311 EMINENT DOMAIN. 250 
 
 to other methods for the correction of the finding where irreg- 
 ularity, mistake or fraud has intervened. • 
 
 "Until the property is actually taken and the compensation 
 is made as provided, the power of the state over the matter 
 is not ended. Any declaration in the statute that the title 
 will vest at a particular time must be construed in subordina- 
 tion to the constitution, which requires, except in cases of 
 emergency admitting of no delay, the payment of the com- 
 pensation or provision for its payment, to precede the taking 
 or, at least, to be concurrent with it."
 
 EXISTING COEPOEATION LAWS 
 
 OF THE 
 
 STATE OF WiSHINGTOI 
 
 RELATING TO 
 
 THE ORGANIZATION AND REGULATION OF CORPO- 
 RATIONS AND DEFINING THEIR POWERS 
 AND PRIVILEGES 
 
 INCLUDING 
 
 LAWS RELATING TO THE ADMISSION OF FOREIGN CORPO- 
 EATIONS DESIRING TO DO BUSINESS IN THE STATE
 
 EXISTING CORPORATION LAWS, 1913 
 
 FORMATION OF GENERALLY 
 
 § 401. How Organized — Conditions and Liabilities. 
 
 [§ 3677, Rem.-Bal.] Corporations for manufacturing, 
 mining, milling, wharfing and docking, mechanical, banking, 
 mercantile, improvement and building purposes, or for the 
 building, equipping and managing water flumes for the trans- 
 portation of wood and lumber, or for the purpose of building, 
 equipping and running railroads, or constructing canals or 
 irrigation canals, or engaging in any other species of trade 
 or business, may be formed according to the provisions of this 
 chapter; such corporations and the members thereof being 
 subject to all the conditions and liabilities herein imposed, and 
 to none others : Provided, that no such corporation shall com- 
 mence business or institute proceedings to condemn land for 
 corporate purposes until the whole amount of its capital stock 
 has been subscribed: And provided further, that the pro- 
 visions of the foregoing proviso shall not apply to corporations 
 engaged exclusively in loaning money on real estate, nor to 
 corporations engaged exclusively in raising money from, and 
 loaning, or repaying it to, their own members, and which con- 
 fine their loaning and business operations wholly to the coun- 
 ties of their principal place of business, respectively, and to 
 the counties adjacent and adjoining thereto. [Laws 1895, 
 § 1, p. 338; Cd. 1881, § 2421; 1 H. C, § 1497; Bal., § 4250.] 
 
 Loaning money on real estate excepted from statutory restriction 
 on doing business before whole amount of capital stock subscribed. 
 (Brown v. Elwell, 17 Wash. 442, 4& Pac. 1068.) 
 
 The fact that the corporation has not complied with the statutory 
 requirement that entire stock be subscribed before doing business can- 
 not be raised to the injury of third parties. (Spokane v. Amsterdamsoh 
 Trustees Kantoor, 22 Wash. 172, 6t) Pac. 141.) 
 
 (253)
 
 § 401 EXISTING CORPORATION LAWS, 1913. 254 
 
 Subscribers to stock of company, which has begun business before 
 all its stock is subscribed, are not liable on the subscriptions unless they 
 have by their acts and conduct waived the conditions. Part payment 
 of subscriptions without notice not a waiver. (Birge v. Browning, 
 11 Wash. 249, 39 Pac. 643.) 
 
 A subscription to capital stock not enforceable until the entire 
 capital stock is subscribed. (Denny Hotel Co. v. Schram, 6 Wash. 
 134, 32" Pac. 1002; Denny Hotel Co. v. Gilmore, 6 Wash. 152, 32 Pac. 
 1004; Elderkin v. Peterson, 8 Wash. 674, 36 Pac. 1089.) 
 
 That all the capital stock was never subscribed is a good defense 
 to an action on a stock subscription. (Birge v. Browning, 11 Wash. 
 249, 39 Pac. 643.) 
 
 A corporation is a citizen within the statute (24 Stats, at Large, 
 557) authorizing citizens to buy government lands. (Ramsay v. 
 Taeoma Land Co., 31 Wash. 351, 71 Pac. 1024.) 
 
 A corporation not liable on contract between stockholders prior to 
 incorporation. (Bash v. Culver Gold Min. Co., 7 Wash. 122, 34 Pac. 
 462.) 
 
 Corporation liable for malicious prosecution. (Nichelson v. Cam- 
 eron Lumber Co., 39 Wash. 569, 81 Pac. 1059.) 
 
 A national bank is liable for a fraud committed by it. (Pronger v. 
 Old Nat. Bank, 20 Wash. 618, 56 Pac. 391.) 
 
 A corporation organized under laws of this state is domestic though 
 majority of stock owned by aliens. (Hastings v. Anacortes Packing 
 Co., 29 Wash. 224, 69 Pac. 776.) 
 
 Transaction of business by a corporation before all its stock sub- 
 scribed does not render the oflScers liable for debts of the company 
 when insolvent, their liability being prescribed by Ballinger's Code, 
 sections 4265, 4266. (American Radiator Co. v. Kinnear, 56 Wash. 
 210, 105 Pac. 630.) 
 
 Parties dealing with a corporation estopped to deny its legal 
 existence. (Carroll v. Pacific Nat. Bank, 19 Wash. 639.) 
 
 General demurrer to complaint will not raise question of incorpora- 
 tion. (Sly V. Palo Alto Gold Mining Co., 28 Wash. 485.) 
 
 Stock-books presumptive evidence that all stock subscribed. (State 
 ex rel. Columbia Valley R. Co. v. Superior Court, 45 Wash. 316.) 
 
 Subscription by stenographer held valid to complete total sub- 
 scription. (State ex rel. Northern Pacific R. Co. v. Superior Court, 
 49 Wash. 390.) 
 
 Articles of incorporation of railroad need not state route, length 
 or termini. (State ex rel. Milwaukee Term. R. Co. v. Superior Court, 
 54 Wash. 365, 103 Pac. 469, 104 Pac. 175.) 
 
 Subscription to entire capital stock must be alleged and proved by 
 the railroad company in condemnation proceedings. (State ex rel. 
 Hulrae V. Gray's Harbor etc. Co., 54 Wash. 530, 103 Pac. 809.)
 
 255 FORMATION OF GENERALLY. § 402 
 
 § 402. Articles of Incorporation to be Filed — Contents, etc. 
 
 [§ 3679, Rem.-Bal.] Any two or more persons, who may 
 desire to form a company for one or more of the purposes 
 specified in the preceding section, shall make and subscribe 
 written articles of incorporation in triplicate, and acknowledge 
 the same before any officer authorized to take the acknowledg- 
 ment of deeds, and file one of such articles in the office of the 
 Secretary of State, and another in the office of the county au- 
 ditor of the county in which the principal place of business of 
 the company is intended to be located, and retain the third in 
 the possession of the corporation. Said articles shall state the 
 corporate name of the company, the objects for which the 
 same shall be formed, the amount of its capital stock, the time 
 of its existence, not to exceed fifty years, provided, that this 
 limit of existence shall not apply to any life, accident and 
 health insurance company; the number of shares of which 
 the capital stock shall consist, the number of trustees and their 
 names, who shall manage the concerns of the company for 
 such length of time (not less than two nor more than six 
 months) as may be designated in such certificate, and the 
 name of the city, town or locality and county in which the 
 principal place of business of the company is to be located. 
 Amendments may be made to the articles of incorporation by 
 a majority vote of its trustees and the vote or written assent 
 of two-thirds of the capital stock of such corporation. If the 
 written assent of two-thirds of the capital stock has not been 
 obtained then the vote of said stock may be taken at any 
 regular meeting of the stockholders or at any special meeting 
 of the stockholders called for that purpose in the manner 
 provided in the by-laws of such corporation for special meet- 
 ings of the stockholders. The president and secretary of said 
 corporation shall certify said amendments in triplicate under 
 the seal of said corporation to be correct and file and keep 
 the same as in the case of original articles, and from the time 
 of filing said amendments such corporation shall have the 
 same powers, and it and the stockholders thereof shall be 
 subject to the same liabilities as if such amendments had been 
 embraced in the original articles of incorporation. Nothing
 
 § 402 EXISTING CORPORATION LAWS, 1913. 256 
 
 contained in this section shall be construed to cure or amend 
 any defect existing in any original articles of incorporation in 
 that such articles did not set forth the matters required to 
 make the same valid at the time of filing, nor to cure or amend 
 any defect in the execution thereof. The time of existence 
 of such corporation shall not be extended by amendments be- 
 yond the time fixed in the original articles of incorporation. 
 '[Laws 1905, § 1, e. 11, p. 228; Cd. 1881, § 2422; 1 H. C, 
 §1498; Bal., §4251.] 
 
 Person construed to be individual as distinct from corporation. 
 (Denny Hotel Co. v. Schram, 6 Wash. 134.) 
 
 Articles of incorporation cannot confer greater power than statute 
 authorizes. (Spokane v. Amsterdamsch Trustees, 22 Wash. 172, 60 
 Pac. 141; Parsons v. Tacoma Smelting Co., 25 Wash. 492, 65 Pac, 765.) 
 
 Unless authorized by the articles of incorporation, a lease of all 
 the corporate property cannot be made without the consent of all the 
 stockholders. (Parsons v. Tacoma Smelting & Refining Co., 25 Wash. 
 492, 65 Pac. 765.) 
 
 Mere use of corporate name, no articles being filed, does not con- 
 stitute de facto corporation, (Bash v. Culver Gold Min. Co., 7 Wash. 
 122, 34 Pac. 462.) 
 
 Whether a corporation is de jure or de facto can be raised only in 
 an appropriate proceeding. (State ex rel. Amsterdamsch Trustees 
 Kantoor v. Superior Court, 15 Wash. 668, 47 Pac. 31.) 
 
 Objection that corporation is not legally formed cannot be raised to 
 injury of third parties with whom it has done business. (Carroll v. 
 Pacific Nat. Bank, 19 Wash. 639, 54 Pac. 32.) 
 
 General demurrer does not raise question of incorporation. (Sly v. 
 Palo Alto Gold Mining Co., 28 Wash. 485, 68 Pac. 871.) 
 
 Mandamus will not issue to compel secretary to file improper arti- 
 cles. (State ex rel. Baker etc. R. Co. v. Nichols, 51 Wash. 619, 99 
 Pac. 876.) 
 
 Corporation whose business is confined to loaning on real estate ex- 
 cepted from statutory restriction upon doing business before stock 
 subscribed. (Brown v. Elwell, 17 Wash. 442, 49 Pac. 1068.) 
 
 Articles of incorporation constitute a contract between all stock- 
 holders, and cannot be abrogated without consent of all. (Parsons v. 
 Tacoma Smelting & Refining Co., 25 Wash. 492, 65 Pac. 765.) 
 
 Domestic corporation organized by aliens not an alien or foreign 
 corporation. (Hastings v. Anacortes Packing Co., 29 Wash. 224, 69 
 Pac. 776.)
 
 257 FORMATION OF GENERALLY. §§ 403-405 
 
 § 403. List of Officers to be Filed. 
 
 [§3691, Rem.-Bal.] Every corporation heretofore organ- 
 ized under the laws of the territory or state of Washington, 
 and every corporation which may hereafter be organized under 
 the laws of this state, shall, on or before the second Tuesday of 
 January of each year, and at such other times as such cor- 
 porations may elect so to do, file with the county auditor of the 
 county in which such corporation has its principal place of 
 business, a statement, sworn to by its president and attested 
 by its secretary and sealed with its corporate seal, containing 
 a list of all its officers and their respective titles of office, 
 names and addresses, and the term of office for which they 
 have been chosen. [Laws 1895, § 1, p. 355; Bal., § 4259.] 
 
 § 404. Corporations Hereafter Organized to File Statement. 
 
 [§ 3692, Rem.-Bal.] Every corporation which shall be 
 hereafter organized under the laws of this state, shall, within 
 thirty days after it shall have filed its certificate of incor- 
 poration with the county auditor of the county in which it 
 has its principal place of business, file with such county auditor 
 a statement, sworn to by its president and attested by its 
 secretary and sealed with its corporate seal, containing a list 
 of all of its officers and their respective titles of office, names 
 and address, and the term of office for which they have been 
 chosen. [Laws 1895, §2, p. 355; Bal., §4260.] 
 
 Failure to file list does not warrant service on one who had ceased to 
 be connected with the company. (Lushington v. Seattle etc. Club, 60 
 Wash. 546, 111 Pac. 785.) 
 
 § 405. Copy of Articles as Evidence. 
 
 [§ 3682, Rem.-Bal.] A copy of any certificate of incorpo- 
 ration filed in pursuance of this chapter, and certified by the 
 auditor of the county in which it is filed, or his deputy, or by 
 the Secretary of State, shall be received in all courts and 
 places as prima facie evidence of the facts therein stated. 
 [Laws 1873, §3, p. 399; Cd. 1881, §2423; 1 H. C, §1499; 
 Bal., § 4252.] 
 17
 
 § 406 EXISTING CORPORATION LAWS, 1913. 258 
 
 Parol evidence that a company is doing a national banking business 
 is prima facie evidence that it is a corporation. (Yakima National Bank 
 V. Knipe, 6 Wash. 348, 33 Pac. 834.) 
 
 Oral evidence of existence of corporation competent prima facie 
 case thereof. (National Bank of Commerce v. Galland, 14 Wash. 502, 
 45 Pac. 35.) 
 
 Certificate of county auditor showing corporate existence under Bal- 
 linger's Code, section 4252, prima facie proof thereof. (Spokane & 
 Idaho Lumber Co. v, Loy, 21 Wash. 501, 58 Pac. 672, 60 Pac. 1119.) 
 
 Testimony that a person is president of a company and that the com- 
 pany owns certain premises is prima facie proof of existence of the com- 
 pany. (Stanford Land Co. v. Steidle, 28 Wash. 72, 68 Pac. 178.) 
 
 Oral proof of existence of corporation when admitted without objec- 
 tion is sufficient substitute for certified copy of articles. (State v. 
 Pittam, 32 Wash. 137, 72 Pac. 1042.) 
 
 Corporate existence is admitted by filing an answer as that of the 
 company. (Frost v. Ainslee Lumber Co., 3 Wash. 241, 28 Pac. 354, 915; 
 Sengf elder v. Mutual Life Ins. Co., 5 Wash. 121, 31 Pac. 428; Garneau 
 v. Port Blakely Mill Co., 8 Wash. 467, 36 Pac. 463.) 
 
 Principal and sureties on bond to attach property of corporation es- 
 topped to deny its existence. (Seattle Crockery Co. v. Haley, 6 Wash. 
 302, 33 Pac. 650.) 
 
 Mere use of corporate name will not constitute estoppel to deny cor- 
 porate existence. (Bash v. Culver Gold Min. Co., 7 Wash. 122, 34 Pac. 
 462.) 
 
 Partial payments on stock subscriptions do not necessarily raise es- 
 toppel to deny corporate existence. (Birge v. Browning, 11 Wash. 249, 
 39 Pac. 643.) 
 
 Failure to allege corporate capacity on the part of a defendant cor- 
 poration is only bad on demurrer. (Tobnie v. Dean, 1 Wash. Ter. 46; 
 Sengf elder v. Mutual Life Ins. Co., 5 Wash. 121, 31 Pac. 428; Garneau v. 
 Port Blakely Mill Co., 8 Wash. 467, 36 Pac. 463.) 
 
 Certified copy of articles not exclusive method of proof. (State ex 
 rel. Clark v. Clallam, 62 Wash, 612, 114 Pac. 444.) 
 
 § 406. Corporate Powers Enumerated. 
 
 [§3683, Rem.-Bal.] When the certificate [articles] shall 
 have been filed, the persons who shall have signed and acknowl- 
 edged the same, and their successors, shall be a body corporate 
 and politic in fact and in name, by the name stated in their 
 certificate, and by their corporate name have succession for the 
 period limited, and shall have power — 
 
 1, To sue and be sued in any court having competent juris- 
 diction.
 
 259 FORMATION OF GENERALLY. § 406 
 
 2. To make and use a common seal, and to alter the same 
 at pleasure. 
 
 3. To purchase, hold, mortgage, sell and convey real and 
 personal property. 
 
 4. To appoint such officers, agents, and servants as the 
 business of the corporation shall require, to define their 
 powers, prescribe their duties, and fix their compensation. 
 
 5. To require of them such security as may be thought 
 proper for the fulfillment of their duties, and to remove them 
 at will ; except that no trustee shall be removed from office 
 unless by a vote of two-thirds of the stockholders as here- 
 inafter provided. 
 
 6. To make by-laws not inconsistent with the laws of this 
 state or the United States. 
 
 7. The management of its property, the regulation of its 
 affairs, the transfer of its stock, and for carrying on all kinds 
 of business within the objects and purposes of the company 
 as expressed in the articles of incorporation. [Laws 1873, 
 § 4, p. 399 ; Cd. 1881, § 2424 ; 1 H. C, § 1500 ; Bal., § 4253.] 
 
 Articles of incorporation cannot confer greater power than the statute 
 authorizes. (Spokane v. Amsterdamsch Trustees, 22 Wash. 172, 60 Pac. 
 141; Parsons v. Tacoma Smelting Co., 25 Wash. 492, 65 Pac. 765.) 
 
 A by-law may be abrogated by the stockholders by their acquiescence 
 in its disregard by the directors. (Blair v. Metropolitan Savings Bank, 
 27 Wasn. 192, 67 Pac. 609.) 
 
 A by-law providing for certain dividends has force of a contract. 
 (Seattle Trust Co. v. Pitner, 18 Wash. 401, 51 Pac. 1048.) 
 
 Stockholders employed by the corporation are entitled to reasonable 
 remuneration. (Cors & Wegener v. Ballard Iron Works, 41 Wash. 390, 
 83 Pac. 90O.) 
 
 A stockholder may, under Ballinger's Code, sections 5780, 5781, by 
 quo -warranto proceeding, oust an officer of the company illegally holding 
 office. (State ex rel. Mitchell v. Horan, 22 Wash. 197, 60 Pac. 135.) 
 
 Title to corporate office cannot be tried in action of replevin to recover 
 property of the company. (Standard Gold Min. Co. v. Byers, 31 Wash. 
 100, 71 Pac. 766.) 
 
 Appointment of counsel of company by vice-president in absence of 
 president valid and binding. (Fernald v. Spokane & B. C. Tel. Co., 31 
 Wash. 672, 72 Pac. 462.) 
 
 Trustees elected by minority of old board de facto officers, (Baggot 
 V. Turner, 21 Wash. 339, 58 Pac. 212.)
 
 § 406 EXISTING CORPOR.VTION LAWS, 1913. 260 
 
 De facto trustees have capacity to transact corporate business. (Spo- 
 kane V. Amsterdamsch Trustees Kantoor, 23 Wash. 172, 60 Pac. 141.) 
 
 Trustee selling his stock ipso facto ceases to be trustee under Bal- 
 linger's Code, section 4255. (Oudin & Bergman etc. Min. Co. v. Conlan, 
 34 Wash. 216, 75 Pac. 798.) 
 
 To expel trustee from office under Ballinger's Code, section 4255, vote 
 of two-thirds of shares of stock required. (State ex rel. Mitchell v. 
 Horan, 22 Wash. 197, 60 Pac. 135.) 
 
 Meeting of board of trustees presumed to be regularly called. Notice 
 not spread on records may be proved aliunde. (Budd v. Walla Walla 
 etc. Co., 2 Wash. Ter. 347, 7 Pac. 896.) 
 
 Same person may be president and secretary of board of trustees. 
 (Budd V. Walla Walla etc. Co., 2 Wash. Ter. 347, 7 Pac. 896.) 
 
 Trustee cannot recover for services within his duties as trustee unless 
 there is some provision therefor other than by the trustees. (Burns v. 
 Commencement Bay Land Co., 4 Wash. 558, 30 Pac. 668, 709.) 
 
 One bona fide claiming to be officer and in possession of books, rec- 
 ords, etc., will not be ousted by injunction pending the determination 
 of the right. (Standard Gold Min. Co. v. Byers, 31 Wash. 100, 71 Pac. 
 766.) 
 
 Officers of company liable to creditors and others imjured for using 
 corporate name and pr ^perty in their individual business. (Morrison v. 
 Blue Star Nav. Co., 26 Wash. 541, 67 Pac. 244.) 
 
 A trustee may contract with the corporation if his conduct be open and 
 fair. (Budd v. Walla Walla etc. Co., 2 Wash. Ter. 347, 7 Pac. 896.) 
 
 Contracts by directors of corporation with themselves not avoided 
 where proof of consideration and good faith. (Roy & Co. v. Scott, 
 Hartley Co., 11 Wash. 399, 39 Pac. 679.) 
 
 No violation of his official trust for an officer of a company to buy 
 corporate stock from a stockholder. (O'Neile v. Ternes, 32 Wash. 528, 
 73 Pac. 692.) 
 
 Contract between two corporations having same board of trustees not 
 void but voidable, and capable of ratification. (Roberts v. Washington 
 Nat. Bank, 11 Wash. 550, 40 Pac. 225.) 
 
 Whether fraud in the issue of warrant to trustee of company question 
 of fact for jury. (Budd v. Walla Walla etc. Co., 2 Wash. Ter. 347, 7 
 Pac. 896.) 
 
 General powers of corporation include right to loan money. (Brown 
 V. Elwell, 17 Wash. 442, 49 Pac. 1068.) 
 
 A company may be organized to do several kinds of business. (Kig- 
 gins v. Munday, 19 Wash. 233, 52 Pac. 855.) 
 
 A corporation has only such powers as are conferred upon it expressly 
 or are necessarily incidental to its purposes. (Washington Mill Co. V. 
 Sprague Lumber Co., 19 Wash. 165, 52 Pac. 1067.)
 
 261 FORMATION OF GENERALLY. § 406 
 
 "Water rights" construed as used incidentally to powers of mining 
 company, and not to give right of eminent domain as water company. 
 (State ex rel. Morrell v. Superior Court, 33 Wash. 542, 74 Pac. 686.) 
 
 A farming corporation may act and sue as trustee. (Thorpe v. Tenem 
 Ditch Co., 1 Wash. 566, 20 Pac. 588.) 
 
 A lumber company construed not to have power to become accom- 
 modation surety. (Washington Mill Co. v. Sprague Lum. Co., 19 Wash. 
 165, 52 Pac. 1067.) 
 
 A contract ultra vires the charter is void. (Washington Mill Co. v. 
 Sprague Lumber Co., 19 Wash. 165, 52 Pac. 1067.) 
 
 A loan originally ultra vires subsequently authorized by amendment 
 of charter and ratified binding on the corporation. (Blair v. Metro- 
 politan Savings Bank, 27 Wash. 192, 67 Pac. 609.) 
 
 A franchise granted by public oflScers ultra vires cannot be ratified 
 or supported by estoppel. (State ex rel. Spring Water Co. v. Monroe, 
 40 Wash. 545, 82 Pac. 888.) 
 
 Lessee cannot question power of lessor corporation to make lease. 
 (Hall & Paulson Furn. Co. v. Wilbur, 4 Wash. 644, 30 Pac. 665.) 
 
 Corporation having received benefit of contract estopped to plead 
 ultra vires. (Tootle v. First Nat. Bank, 6 Wash. 181, 33 Pac. 345; Allen 
 V. Olympia Light & Power Co., 13 Wash. 307, 43 Pac. 55 ; Wheeler, Os- 
 good & Co. V. Everett Land Co., 14 Wash. 630, 45 Pac. 316; Spokane v. 
 Amsterdamsch Trustees Kantoor, 22 Wash. 172, 60 Pac. 141; Graton & 
 Knight Mfg. Co. v. Kedelsheimer, 28 Wash. 370, 68 Pac. 879; Krisch v. 
 Interstate Fisheries Co., 39 Wash. 381, 81 Pac. 855.) 
 
 De facto trustees may transact business for the corporation. (Spokane 
 ▼. Amsterdamsch Trustees Kantoor, 22 Wash. 172, 60 Pac. 141.) 
 
 Resolution of board not necessary to create authority in agent of cor- 
 poration. (Roberts v. Washington Nat. Bank, 11 Wash. 550, 40 Pac. 
 225.) 
 
 Transactions between two corporations carried on by one common 
 agent not necessarily invalid for that reason. (Roberts v. Washington 
 Nat. Bank, 11 Wash. 550, 40 Pae. 225.) 
 
 Where manager of corporation stated that he was acting as manager of 
 the company, the transaction is to be regarded as made in his representa- 
 tive capacity. (Sutter v. Moore Inv. Co., 30 Wash. 333, 70 Pae. 746.) 
 
 A transaction extrinsic to the general business of a corporation and 
 not within authority of the general manager not binding on the corpora- 
 tion. (Cosh-Murray Co. v. Adair, 9 Wash. 686, 38 Pac. 749.) 
 
 Authority to make contracts is not authority to rescind contracts. 
 (Wallace v. Oceanic Packing Co., 25 Wash. 143, 64 Pac. 938.) 
 
 Authority to sign bond as surety would be presumably for bond for 
 penalty, not liquidated damages. (Roberts v. Washington Water Power 
 Co., 19 Wash. 392, 53 Pac. 664.)
 
 § 406 EXISTING CORPORATION LAWS, 1913. 262 
 
 Acts of officers customarily performed and ratified are as binding on 
 the company as if expressly authorized. (Duggan v. Pacific Boom Co., 
 6 Wash. 593, 34 Pac. 157; Miller v. Washington T. R. Co., 11 Wash. 
 414, 39 Pac. 673; Tootle v. First Nat. Bank, 6 Wash. 181, 33 Pac. 345; 
 Seal V. Puget Sound Loan & Inv. Co., 5 Wash. 422, 32 Pac. 214.) 
 
 Corporation not bound by unratified acts of agent without authority, 
 express or implied. (Elvvell v. Puget Sound etc. R. Co., 7 Wash. 487, 
 35 Pac. 376.) 
 
 Deed by de facto officers not void but voidable. (Baggot v. Turner, 
 21 Wash. 339, 58 Pac. 212.) 
 
 Acts of one held out as manager or officer of corporation or ac- 
 quiesced in binding on the corporation. (Carrigan v. Port Crescent 
 Imp. Co., 6 Wash. 590, 34 Pac. 148; Anderson v. Wallace Lumber & 
 Mfg. Co., 30 Wash. 147, 70 Pac. 247; Seal v. Puget Sound Loan etc. 
 Co., 5 Wash. 422, 32 Pac. 214; Miller v. Washington So. R. Co., 11 
 Wash. 414, 39 Pac. 673 ; Saunders v. United States Marble Co., 25 Wash. 
 475, 65 Pac. 782; Duggan v. Pacific Broom Co., 6 Wash. 593, 34 Pac. 
 157; Roy & Co. v. Scott, Hartley & Co., 11 Wash. 399, 39 Pac. 679; 
 Atlantic Trust Co. v. Behrend, 15 Wash. 466, 46 Pac. 642; West Seattle 
 Land Co. v. Novelty Mill Co., 31 Wash. 435, 72 Pac. 69.) 
 
 When a company for two years makes no move to rescind a sale of 
 real estate by an officer without authority, the company is bound. 
 (Coolidge v. Schering, 32 Wash. 557, 73 Pac. 682.) 
 
 A corporation accepting and retaining benefits of transactions is es- 
 topped from denying authority of the officers making the transaction. 
 (Dexter Horton & Co. v. Long, 2 Wash. 435, 27 Pac. 271; Allen v. 
 Olympia Light & Power Co., 13 Wash. 307, 43 Pac. 55; Windsor v. 
 St. Paul Min. R. Co., 37 Wash. 156, 79 Pac. 613; Leslie v. Wilshire, 
 6 Wash. 282, 33 Pac. 505.) 
 
 A contract may be ratified by an admission of its execution in a 
 pleading. (Tingley v. Bellingham Bay Boom Co., 5 Wash. 644, 32 
 Pac. 737, 33 Pac. 1055.) 
 
 Where an indorsement of a promissory note by a corporation payee 
 is regular in form, it raises presumption of authority. (Citizens' 
 Nat. Bank of Tacoma v. Wintler, 14 Wash. 558, 45 Pac. 38.) 
 
 Charter of company showing authority of agent is admissible in evi- 
 dence for that purpose. (Pacific Nat. Bank v. Aetna Indemnity Co., 
 33 Wash. 428, 74 Pac. 590.) 
 
 Whether the facts show authority in the agent of the corporation is 
 a question for the jury. (Saunders v. United States Marble Co., 25 
 Wash. 475, 65 Pac. 782.) 
 
 An ultra vires lease is voidable. (Parsons v. Tacoma Smelting & 
 Refining Co., 25 Wash. 492, 65 Pac. 765.) 
 
 An agreement to sell all the corporate property to another company 
 is in violation of Ballinger's Code, section 4265, and fraudulent. (Ta-
 
 263 FORMATION OF GENERALLY. § 406 
 
 coma Ledger Co. v. Western Home Blclg. Assn., 37 Wash. 467, 79 Pac. 
 992.) 
 
 Stockholders of insolvent corporation cannot dispose of the assets of 
 the company to the detriment of the creditors. (Mitchell v. Jordan, 
 36 Wash. 645, 79 Pac. 311.) 
 
 A sale of all the assets of a company to a reorganized company in the 
 absence of fraud is not ultra vires and void as to minority stockholders. 
 (Pitcher v. Lone Pine Surprise etc. Min. Co., 39 Wash. 608, 81 Pac. 1047.) 
 
 A contract ultra vires the charter is void as to creditors. (Washington 
 Mill Co. v. Sprague Lumber Co., 19 Wash. 165, 52 Pac. 1067.) 
 
 Contract of employment by corporation may be shown by the facts. 
 (Meals V. De Soto Placer Mines Co., 33 Wash. 302, 74 Pac. 470.) 
 
 A trading corporation has implied pov^er to purchase and indorse 
 bills and notes. (Jamieson. & McFarland v. Heim, 43 Wash. 153, 86 
 Pac. 165.) 
 
 Conditions inserted in mortgage not specifically authorized by resolu- 
 tion authorizing the mortgage do not render the mortgage void. (Vin- 
 cent V. Snoqualmie Mill Co., 7 Wash. 566, 35 Pac. 396.) 
 
 Lumber company has implied power to become surety on bond of 
 contractor to whom it furnishes material, such being the custom. 
 (Wheeler, Osgood & Co. v. Everett Land Co., 14 Wash. 630, 45 Pac. 316.) 
 
 A corporation employing a physician to care for sick employees as a 
 charity and not for profit is not liable for the malpractice or negligence 
 of the physician, but only for reasonable care in his selection. (Rich- 
 ardson v. Carbon Hill Coal Co., 10 Wash. 648, 39 Pac. 95.) 
 
 Only the state can question the ultra vires acts of a company. (Frost 
 V. Puget Sound Realty Associates, 57 Wash. 629, 107 Pac. 1029.) 
 
 Promise by treasurer, "I will upon demand accept a return of his 
 
 stock and refund to him the money he has paid," signed, " , 
 
 Treas.," held to bind the treasurer personally. (Gavazza v. Plummer, 
 53 Wash. 14, 101 Pac. 370.) 
 
 In the absence of charter authority, a corporation cannot become 
 surety on a note. (Spencer v. Alki Point Transp. Co., 53 Wash. 77, 
 101 Pac. 509.) 
 
 Insurance company cannot set up plea of ultra vires to note for which 
 it had received benefits. (Jackson v. Mercantile Mut. Fire Ins. Co., 
 45 Wash. 244, 88 Pac. 127.) 
 
 Where a corporation holds one out as its agent, and persons act with 
 the agent as with the company, the corporation is estopped to deny 
 the agent's authority. (Chilcott v. Wash. State Colonization Co., 45 
 Wash. 148, 88 Pac. 113; Russell v. Schade Brewing Co., 49 Wash. 362, 
 95 Pac. 327; Moses Land Scrip & Realty Co. v. Stack, Gibbs Lumber 
 Co., 56 Wash. 529, 106 Pac. 207; Livieratos v. Commonwealth Sec. Co., 
 57 Wash. 376, 106 Pac. 1125; Rowland v. Carroll Loan & Inv. Co., 44 
 Wash. 413, 87 Pac. 482; Harvey v. Sparks Bros., 45 Wash. 578, 88 
 Pac. 1108; lona Warehouse Co. v. Van Buren, 50 Wash. 375, 97 Pac.
 
 / 
 
 § 407 EXISTING CORPORATION LAWS, 1913. 264 
 
 291; Nelson v. Western Steam Nav. Co., 52 Wash. 177, 100 Pac. 325; 
 McKinley v. Mineral Hill Consol. Min. Co., 46 Wash. 162, 89 Pac. 495; 
 National Bank of Commerce v. Puget Sound Biscuit Co., 61 Wash. 192, 
 
 112 Pac. 265.) 
 
 Where the president and general manager of a corporation directs a 
 trespass to be committed, both are jointly and severally liable for the 
 torts of the company. (Lytle Logging etc. Co. v. Humptulips Driv- 
 ing Co., 60 Wash. 559, 111 Pac. 774.) 
 
 Where an officer and trustee owning half the stock increases his own 
 salary by his own and the votes of subservient trustees, such action is 
 fraudulent. (Boothe v. Summit Coal Min. Co., 55 Wash. 167, 104 Pac. 
 207.) 
 
 Secretary and manager of corporation cannot purchase its property 
 at tax sale withoiH color of fraud. (Collins v. Hoffman, 62 Wash. 278, 
 
 113 Pac. 625.) 
 
 An officer owning only two shares of stock presumed to be entitled to 
 reasonable wages and entitled to offset claim for wages against claim 
 for material sold to him by the company. (Argo Mfg. Co. v. Parker, 
 52 Wash. 100, 100 Pac. 188.) 
 
 Fact that defendant corporation had knowledge of pending suit against 
 it will not dispense with proper service upon it. (Osborne v. Columbia 
 etc. Co., 9 Wash. 666, 38 Pac. 160.) 
 
 If an action is begun against a corporation in the wrong county, the 
 court gets no jurisdiction of the company. (McMaster v. Thresher Co., 
 10 Wash. 147, 38 Pac. 760.) 
 
 All meetings of the company presumed regular, and the fact that one 
 person acted as president, chairman and secretary would not invalidate 
 the proceedings. (Budd v. W. W. P. & P. Co., 2 Wash. Ter. 347, 7 Pac. 
 896.) 
 
 In showing proceedings of the board of directors, all that was said 
 and done at the meeting is admissible. (Tibbals v. Mt, Olympus Water 
 Co., 10 Wash. 329, 38 Pac. 1120.) 
 
 Where the receiver of a company has been appointed, officers of the 
 company cannot be examined in supplementary proceedings. (Allen v. 
 Stallcup, 13 Wash. 631, 43 Pac. 884.) 
 
 Conveyance of real estate to the company for purpose outside its 
 charter authority may be voidable, but is not void. (Milton v. Craw- 
 ford, 65 Wash. 145, 118 Pac. 32.) 
 
 Power of removal (subdivision 5) held to constitute part of a con- 
 tract of employment. (Llewellyn v. Aberdeen Brewing Co., 65 Wash. 
 319, 118 Pac. 30.) 
 
 § 407. Corporate Powers, How Exercised — By-laws, etc. 
 
 [§ 3686. Rem.-Bal.] The corporate powers of a corpora- 
 tion shall be exercised by a board of not less than two trus-
 
 265 FORMATION OF GENERALLY. § 407 
 
 tees, who shall be stockholders in the company, and at least 
 one of whom shall be a resident of the state of Washington, 
 and a majority of them citizens of the United States, who 
 shall, before entering upon the duties of their office, respec- 
 tively take and subscribe to an oath, as provided by the laws 
 of this state, and who shall, after the expiration of the term 
 of the trustees first elected, be actually elected by the stock- 
 holders, at such time and place, within this state, and upon 
 such notice, and in such manner, as shall be directed by the 
 by-laws of the company, but all elections shall be by ballot, 
 and each stockholder, either in person or by proxy, shall 
 be entitled to as many votes as he may own, or represent by 
 proxy, shares of stock, and the person or persons receiving 
 the greatest number of votes shall be trustee or trustees : 
 Provided, that nothing herein contained shall prevent any 
 corporation, by their by-laws, limiting such bona fide share- 
 holder to a single vote, or one vote for every full share of 
 paid-up stock, or its equivalent in assessable stock, disregard- 
 ing the number of shares of stock he may own. It shall be 
 competent, at any time, for two-thirds of the stockholders of 
 any corporation organized under this chapter to expel any 
 trustee from office, and to elect another to succeed him. In 
 all cases where a meeting of the stockholders is called for 
 the purpose of expelling a trustee and electing his successor, 
 such notice shall be given of the meeting as the by-laws of 
 the company may require. Whenever any vacancy shall 
 happen among the trustees by death, resignation or other- 
 wise, except by removal, and the election of his successor as 
 herein provided, it shall be filled by appointment of the board 
 of trustees. Every such corporation shall at all times keep 
 at its principal place of business in this state an officer or 
 officers, agent or agents, upon whom service of legal process 
 may be made in conformity with the law: Provided, that 
 service of such process may be made at any time upon any 
 resident trustee of such corporation. [Laws 1895, § 1, p. 61 ; 
 Cd. 1881, § 2425 ; 1 H. C, § 1502 ; Bal., § 4255.] 
 
 Articles of incorporation cannot confer greater power tlian the stat- 
 ute authorizes. (Spokane v. Anisterdamsch Trustees, 22 Wash. 172, 60 
 Pac. 141; Parsons v. Tacoma Smelting Co., 25 Wash. 492, 65 Pac. 765.)
 
 § 407 EXISTING CORPOR.VTION LAWS, 1913. 266 
 
 Lease of corporate property voidable at complaint of stockhoMer when 
 one of the trustees of the lessor company necessary to constitute major- 
 ity required by statute also interested in lessee company. (Parsons v. 
 Tacoma Smelting & Refining Co., 25 Wash. 492, 65 Pac. 765.) 
 
 A stockholder has no right against a trustee to the possession or con- 
 trol of corporate property. (Oudin & Bergman etc. Min. Co. v. Conlan, 
 34 Wash. 216, 75 Pac. 798.) 
 
 An action by a stockholder and creditor against another stockholder 
 and officer of company which was not a party to restrain fraudulent 
 sale maintainable, complaint not demurrable. (Cross v. Johnson, 20 
 Wash. 124, 54 Pac. 1000.) 
 
 After a corporation has ceased to do business, a trustee having ceased 
 to be such is no longer in a fiduciary position, and may purchase out- 
 standing obligations of the corporation and enforce them for his own 
 benefit. (Stanton v. Gilpin, 38 Wash. 191, 80 Pac. 290.) 
 
 Trustee cannot recover for services within his duties as trustee unless 
 there is some provision therefor other than by the trustees. (Burns v. 
 Commencement Bay Land Co., 4 Wash. 558, 30 Pac. 668, 709.) 
 
 Corporation held estopped to question validity of purchase of its own 
 shares of stock, money having been paid and no question raised for 
 two years. (Miller v. Washington Southern R. Co., 11 Wash. 414, 39 
 Pac. 673.) 
 
 A corporation may take its own stock in payment of debt if trans- 
 action bona fide. (Barto v. Nix, 15 Wash. 563, 46 Pac. 1033.) 
 
 A claim owned by a corporation suflSciently assigned by officers own- 
 ing practically all the stock of the company. (Glover v. Rochester- 
 German Ins. Co., 11 Wash. 143, 39 Pac. 380.) 
 
 Mortgage given by one corporation to another, the same person being 
 president of both, not necessarily fraudulent for that reason. (Roy & 
 Co. V. Scott, Hartley & Co., 11 Wash. 399, 39 Pac. 679.) 
 
 Where a company for two years makes no move to rescind a sale of 
 real estate by an officer without authority, the company is bound. 
 (Coolidge V. Schering, 32 Wash. 557, 73 Pac. 682.) 
 
 A corporation accepting and retaining benefits of transactions is es- 
 topped from denying authority of the officers making the transaction. 
 (Dexter Horton & Co. v. Long, 2 Wash. 435, 27 Pac. 271; Allen v. 
 Olympia Light & Power Co., 13 Wash. 307, 43 Pac. 55; Windsor v. St. 
 Paul Min. R. Co., 37 Wash. 156, 79 Pac. 613; Leslie v. Wilshire, 6 
 Wash. 282, 33 Pac. 505.) 
 
 A contract may be ratified by an admission of its execution in a 
 pleading. (Tingley v. Bellingham Bay Boom Co., 5 Wash. 644, 32 Pac. 
 737, 33 Pac. 1055.) 
 
 Statute that powers of corporation shall be exercised by directors does 
 not exclude acts by agents authorized or ratified by stockholders directly. 
 (Kirwin v. Washington Match Co., 37 Wash. 285, 79 Pac. 928.) 
 
 Circumstances may show ratification by eorporuliun. (Austin v. Elk 
 Mercantile Co., 38 Wash. 365, 80 Pac. 525.)
 
 267 FORMATION OF GENERALLY. § 407 
 
 Proof of implied authority of officers of corporation to execute nego- 
 tiable paper must be clear. (Elwell v. Puget Sound & Chehalis R. Co., 
 7 Wash. 487, 35 Pac. 376.) 
 
 Where indorsement of promissory note by corporation payee is regular 
 in form, it raises presumption of authority. (Citizens' Nat. Bank of 
 Tacoma v. Wintler, 14 Wash. 558, 45 Pac. 38.) 
 
 Transfer of property bj' insolvent company, while fraudulent pref- 
 erence, will not warrant attachment of the property. (Holbrook v. 
 Peters & Miller Co., 8 Wash. 344, 36 Pac. 256.) 
 
 Insolvency of corporation does not alone make sale by it fraudulent. 
 (Mayer v. Woolery, 10 Wash. 354, 39 Pac. 135; Egberts v. Washington 
 Nat. Bank, 11 Wash. 550, 40 Pac. 225.) 
 
 Directors of insolvent corporation are trustees of assets for creditors. 
 (Potvin V. Denny Hotel Co., 26 Wash. 309, 66 Pac. 376; Tacoma Ledger 
 Co. V. Western Home Assn., 37 Wash. 467, 79 Pac. 992.) 
 
 Mortgage of property by insolvent company to trustee to secure in- 
 debtedness, the company to continue in possession, voidable by creditors. 
 (Thompson v. Huron Lumber Co., 4 Wash. 600, 30 Pac. 741, 31 Pac. 25.) 
 
 Chattel mortgage by insolvent corporation not necessarily held void. 
 (Leslie v. Wilshire, 6 Wash. 282, 33 Pac. 505.) 
 
 Mortgage by insolvent corporation by way of voluntary preference is 
 void as to creditors. (Biddle Purchasing Co. v. Pt. Townsend Steel 
 Co., 16 Wash. 681, 48 Pac. 407; Cook v. Moody, 18 Wash. 114, 50 Pac. 
 1020; Van Brocklin v. Queen City Print Co., 19 Wash. 552, 53 Pac. 822.) 
 
 Creditor who has consented and received benefit estopped from assert- 
 ing mortgage by insolvent company void. (Bank of California v. Puget 
 Sound Loan & T. Co., 20 Wash. 636, 56 Pac. 395.) 
 
 Mortgage not fraudulent where company solvent at time of itr being 
 made, though it subsequently became insolvent. (Strohl v. Seattle 
 Nat. Bank, 25 Wash. 28, 64 Pac. 916.) 
 
 Property of insolvent corporation is trust fund for creditors and a 
 voluntary preference is void. (Mitchell v. Jordan, 36 Wash. 645, 79 
 Pac. 311; Allen v. Baxter, 42 Wash. 434, 85 Pac. 26; McKay v. Elwood, 
 12 Wash. 579, 41 Pac. 919; Compton v. Swabacher Bros. & Co., 15 Wash. 
 30-6, 46 Pac. 338; Washington Liquor Co. v. Alladio Cafe Co., 28 Wash. 
 176, 68 Pac. 444; Wilson v. Book, 13 Wash. 676, 43 Pac. 939; Watterson 
 v. Masterson, 15 Wash. 511, 46 Pac. 1041; Carrol v. Pacific Nat. Bank, 19 
 Wash. 639, 54 Pac. 32; Burrell v. Bennett, 20 Wash. 644, 56 Pac. 375; 
 Stewart v. Gould, 8 Wash. 367, 36 Pac. 277; Smith v. Hopkins, 10 Wash. 
 77, 38 Pac. 854.) 
 
 Transfer of property by insolvent corporation at its full value not 
 fraudulent preference. (Klosterman v. Mason County etc. B. Co., 8 
 Wash. 281, 36 Pac. 136.) 
 
 Remedy of creditor in case of fraudulciit transfer by insolvent com- 
 pany is by complaint in equity to subject all a.ss.ets to equal distribu- 
 tion. (Holbrook v. Peters & Miller Co., 8 Wash. 344, 36 Pac. 256; 
 Wooding V. Wooding Co., 10 Wash, 531, 39 Pac. 137; Allen v. Stall-
 
 § 407 EXISTING CORrORATION LAWS, 1913. 268 
 
 cup, 13 Wash. 631, 43 Pac. 884; Sligh v. Shelton Southwestern E. C!o., 20 
 Wash. 16, 54 Pac. 763.) 
 
 Insolvent company may make common-law assignment for benefit of 
 creditors. (Nyman v. Berry, 3 Wash. 734, 29 Pac. 557; McKay t, 
 Elwood, 12 Wash. 579, 41 Pac. 919; Cerf, Schloss & Co. t. Wallace, 14 
 Wash. 249, 44 Pac. 264.) 
 
 Eeceiver is entitled to possession of assets as against assignee. (Ole- 
 son V. Bank of Tacoma, 15 Wash. 148, 45 Pac. 734.) 
 
 Receiver may be appointed for insolvency of corporation under Bal- 
 linger's Code, section 5456. (Washington Liquor Co. v. Alladio Cafe 
 Co., 28 Wash. 176, 68 Pac. 444; Davis v. Edwards, 41 Wash. 480, 84 
 Pac. 22; Thompson v. Huron Lumber Co., 4 Wash. 600, 30 Pac. 741, 
 31 Pac. 25; New York Nat. Exch. Bank v. Met. Sav. Bank, 28 Wash. 
 553, 68 Pac. 905; Oleson v. Bank of Tacoma, 15 Wash. 148, 45 Pac. 
 734; State ex rel. Strohl v. Superior Court, 20 Wash. 545, 56 Pac. 35.) 
 
 Receiver may be appointed for fraud, waste or maladministration of 
 assets. (Cameron v. Groveland Imp. Co., 20 Wash. 169, 54 Pac. 1128; 
 Fernald v. Spokane & B. C. Tel. Co., 31 Wash. 672, 72 Pac. 462.) 
 
 Appointment of receiver does not oust sheriff in actual possession 
 and not made party. (State ex rel. Hunt v. Superior Ct., 8 Wash. 210, 
 35 Pac. 1087; State ex rel. Shelly v. Superior Court, 8 Wash. 659, 35 
 Pac. 1092; State ex rel. Perkins v. Graham, 9 Wash. 528, 36 Pac. 1085.) 
 
 Appointment of receiver does not work dissolution of corporation. 
 (Allen V. Olympia Light & Power Co., 13 Wash. 307, 43 Pac, 55.) 
 
 Receiver of insolvent company is trustee for stockholders and cred- 
 itors. (Thompson v. Huron Lumber Co., 4 Wash. 600, 30 Pac. 741, 31 
 Pac. 25; Washington Mill Co. v. Sprague Lumber Co., 19 Wash. 165, 
 52 Pac. 1067'; Wilson v. Book, 13 Wash. 676, 43 Pac. 939; Watterson 
 V. Masterson, 15 Wash. 511, 46 Pac. 1041; Mitchell v. Jordan, 36 Wash. 
 645, 79 Pac. 311.) 
 
 Where a mining company was formed to "buy, sell and deal in" mines, 
 the trustees may sell all the property and assets of the company against 
 objection of minority stockholders, since such sale is within the cor- 
 porate purposes of the company. (Lange v. Reservation Min. & Smelt- 
 ing Co., 48 Wash. 167, 93 Pac. 208.) 
 
 A corporation held bound by the sale of its land by the president 
 as his individual property where he owned all but two shares of the 
 stock. (Roberts v. Hilton Land Co., 45 Wash. 464, 88 Pac. 946.) 
 
 A trustee receiving individually part of the consideration for the sale 
 of the corporate assets is liable to creditors of the company. (Carstens 
 & Earles v. Hofius, 44 Wash. 456, 87 Pac. 631.) 
 
 Director cannot recover for services rendered the corporation unless 
 clearly outside his ordinary duties and there is clear understanding that 
 the services are to be paid for. (Dial v. Inland Logging Co., 52 Wash. 
 81, 100 Pac. 157.) 
 
 Where syndicate of officers and stockholders purchased a competing 
 business and resold it to the company at a profit, there being no fraud,
 
 269 FORMATION OF GENERALLY. § 408 
 
 a minority stockholder who had waived any objections held estopped 
 from maintaining suit to set aside the transaction. (Baker v. Seattlc- 
 Tacoma Power Co., 61 Wash. 578, 112 Pae. 647.) 
 
 In suit by stockholders it is unnecessary to show demand for cor- 
 porate action where such demand would be useless. (Williams v. Erie 
 Mountain Consol. Min. Co., 47 Wash. 360, 91 Pac. 1091.) 
 
 Equity will not entertain suit by stockholders to set aside corporate 
 contract where it is not shown that redress within the corporation was 
 sought nor excuse shown for failure so to do. (Elliott v. Puget Sound 
 Wood Products Co., 52 Wash. 637, 101 Pac. 228.) 
 
 Stockholder's proxy binds the owner in the absence of fraud. (Baker 
 V. Seattle Tacoma Power Co., 61 Wash. 578, 112 Pac. 647.) 
 
 Complaint by minority stockholders for "freeze-out" demurrable where 
 they fail to show that they have exhausted their remedies within the 
 company nor excuse such failure. (Seattle & Northern R. Co. v. Bow- 
 man, 53 Wash. 416, 102 Pac. 27.) 
 
 Minority stockholder cannot object to action of majority intra vires 
 and not fraudulent. (Theis v. Spokane Falls Gaslight Co., 49 Wash. 
 477, 95 Pac. 1074.) 
 
 Promoter's contract afterward adopted by the company is binding 
 upon it. (Chilcott v. Wash. State Colonization Co., 45 Wash. 148, 88 
 Pac. 113.) 
 
 Provision in contract that one party may vote another's stock is valid. 
 (Winsor v. Commonwealth Coal Co., 63 Wash. 62, 114 Pac. 908.) 
 
 A corporation not able to pay its debts in due course is insolvent. 
 (Nixon v. Hendy Machine Works, 51 Wash. 419, 99 Pac. 11.) 
 
 A corporation taking over the assets of another company, knowing 
 it to be unable to pay its creditors, assumes the obligations of such 
 insolvent corporation. (Carstens & Earles v. Hofius, 44 Wash. 456, 87 
 Pac. 631.) 
 
 That the assets of an insolvent corporation are a trust fund for 
 creditors does not affect the sale under a mortgage given when the com- 
 pany was solvent. (Boyes v. Turk Min. Co., 56 Wash. 515, 106 Pac. 
 475.) 
 
 Purchase of corporate assets by part of stockholders not fraud per se. 
 (Boyes v. Turk Min. Co., 56 Wash. 515, 106 Pac. 475.) 
 
 While knowledge of a single officer not imputable to the corporation, 
 it may put the trustees on inquiry and bo constitute notice. (Poultry 
 Producers' Union v. Williams, 58 Wash. 64, 107 Pac. 1040.) 
 
 § 408. May Hold, Own and Vote Stock of Other Companies. 
 
 [§ 3684, Rem.-Bal.] That any corporation heretofore or 
 hereafter organized under the laws of this state or of any 
 other state or territory of the United States and doing busi- 
 ness in this state shall have power and authority to subscribe 
 for, acquire by purchase or otherwise, and to own, hold, sell,
 
 §§409,410 EXISTING CORPORATION LAWS, 1913. 270 
 
 assign and transfer shares of the capital stock of any other 
 corporation and by its dnly authorized officer or proxy to 
 vote such shares at any and all stockholders' meetings of the 
 corporation whose shares are so held and to have and exer- 
 cise all the rights, powers and privileges of any other stock- 
 holder, except that such corporate OAvner cannot be a mem- 
 ber of the board of trustees. All existing holdings by any 
 such corporation in the shares of the capital stock of any 
 other corporation are hereby validated. [Laws 1905, § 1, 
 c. 27, p. 51.] 
 
 Articles of incorporation cannot confer greater power than the stat- 
 ute authorizes. (Spokane v. Amsterdamsch, 22 Wash. 172, 60 Pac. 
 141; Parsons v. Tacoma Smelting Co., 25 Wash. 492, 65 Pac. 765.) 
 
 Though authorized by the articles of incorporation to own stock in 
 other companies, a company owning such stock cannot vote it in absence 
 of statutory authority. (Parsons v. Tacoma Smelting & Kefining Co., 
 25 Wash. 492, 65 Pac. 765.) - 
 
 Corporation held estopped to question validity of purchase of its own 
 shares of stock, money having been paid and no question raised for two 
 years. (Miller v. Washington Southern R. Co., 11 Wash. 414, 39 Pac. 
 673.) 
 
 A corporation may take its own stock in payment of debt if trans- 
 action bona fide. (Barto v. Nix, 15 Wash. 563, 46 Pac. 1033.) 
 
 Laws of 1905, page 51, authorizing corporations to own and hold stock 
 in other corporations is constitutional. (State ex rel. Mcintosh v. Su- 
 perior Court, 56 Wash. 214, 105 Pac. 637.) 
 
 Banks may not hold stock in other banks. (Rem.-Bal., sec. 3224.) 
 
 § 409. Lapse of Election of Trustees. 
 
 [§ 3687, Rem.-Bal.] If it shall happen at any time that an 
 election of trustees shall not be made on the day designated 
 by the by-laws of the company, the corporation shall not. for 
 that reason, be dissolved; but it shall be lawful on any other 
 day to hold an election for trustees, in such manner as shall 
 be provided for in the by-laws of the company, and all acts 
 of the trustees shall be valid and binding upon the company 
 until their successors ^re elected and qualified. [Laws 1873, 
 § 6, p. 400; Cd. 1881, § 2426; 1 H. C, § 1503; Bal., § 4256.] 
 
 § 410. Quonim. 
 
 [§ 3688, Rem.-Bal.] A majority of the whole number of 
 trustees shall form a board for the transaction of business,
 
 271 FORMATION OF GENERALLY. §§411,412 
 
 and every decision of a majority of the persons duly as- 
 sembled as a board shall be valid as a corporate act. [Laws 
 1873, §7, p. 401; Cd. 1881, §2427; 1 H. C, §1504; Bal., 
 § 4257.] 
 
 § 411. Meetings, Where Held. 
 
 [§3690, Rem.-Bal.] Meetings of the stockholders of a 
 corporation shall be held at its principal place of business 
 within this state. Meetings of the board of trustees or di- 
 rectors of corporations, organized and existing under the 
 laws of this state, may be held at such place or places within 
 or without the state as may be designated in the articles of 
 incorporation or by-laws. In case the meetings of the board 
 of directors or trustees of a corporation shall be held outside 
 of the state of Washington, either the original or full and 
 complete copies or duplicate of all proceedings had at such 
 meeting or meetings certified by the secretary under the 
 corporate seal shall be sent to and kept at the principal office 
 or place of business of the corporation in this state and shall 
 be part of the records of the corporation in this state. 
 [Laws 1907, § 1, p. 205.] 
 
 A stockholder cannot bring action against third parties for wrong done 
 the corporation where the corporation has not refused to act. (Ninne- 
 man v. Fox, 43 Wash. 43, 86 Pac. 213.) 
 
 A stockholder may not intervene in a suit affecting the company as 
 such unless the company refuses, and such intervention is clearly neces- 
 sary to protect the stockholders' rights. (Bissell v. Taylor, 7 Wash. 
 324, 35 Pac. 68.) 
 
 § 412. First Meeting — Notice, etc. 
 
 [§ 3689, Rem.-Bal.] The first meeting of the trustees shall 
 be called by a notice, signed by one or more persons named as 
 trustees in the certificate, setting forth the time and place of 
 meeting, which notice shall be delivered personally to each 
 trustee, or published at least twenty days in some news- 
 paper in the county in which the principal place of business 
 of the corporation, or if no newspaper is published in the 
 county, then in some newspaper nearest thereto in the state. 
 [Laws 1873, §8, p. 401; Cd. 1881, §2428; 1 H. C, §1505; 
 Bal., § 4258.]
 
 § 413 j:xisting corporation laws, 1913. 272 
 
 Proof of notice of meeting may be made other than by its records. 
 (Budd V. Co., 2 Wash. Ter. 347.) 
 
 § 413. Stock Personal Estate — Transfer of. 
 
 [§ 3693, Rem.-Bal.] The stock of the company shall be 
 deemed personal estate, and shall be transferable in such 
 manner as shall be prescribed by the by-laws of the com- 
 pany ; but no transfer shall be valid except between the par- 
 ties thereto, until the same shall have been entered upon the 
 books of the company, so as to show the names of the par- 
 ties, by and to w^hom transferred, the numbers and designa- 
 tion of the shares, and the date of the transfer. [Laws 1873, 
 § 9, p. 401 ; Cd. 1881, § 2429 ; 1 H. C, § 1506 ; Bal., § 4261.] 
 
 One who purchases stock with agreement to sell it back becomes a 
 stockholder on receiving the stock, as distinguished from debtor and 
 creditor relation. (Yeaton v. Eagle Oil & Refining Co., 4 Wash. 183, 
 29 Pac. 1051.) 
 
 Purchase and sale of stock may be rescinded for fraud. (Mulholland 
 V. Wash. Match Co., 35 Wash. 315, 77 Pac. 497; Krisch v. Interstate 
 Fisheries Co., 39 Wash. 381, 81 Pac. 855.) 
 
 A transfer of stock not registered is binding between the parties under 
 Code of 1882, section 2429, and passes title against a subsequent pur- 
 chaser on execution sale against transferrer. (Port Townsend Nat. Bank 
 V. Port Townsend etc. Co., 6 Wash. 597, 34 Pac. 155; Dearborn v. 
 Washington Sav. Bank, 18 Wash. 8, 50 Pac. 575.) 
 
 Where no stock register is kept, transfer on records of company ac- 
 cording to custom of the company binds the company. (Stewart v. 
 Walla Walla P. & P. Co., 1 Wash. 521, 20 Pac. 605.) 
 
 Stock in a corporation may be garnished and sold to the extent of 
 the judgment debtor's interest. (Hardin v. White Swan Min. etc. Co., 
 26 Wash. 583, 67 Pac. 236.) 
 
 A company may waive provision under Ballinger's Code, section 4261, 
 that transfer of stock is void until entered in books of company. (Van 
 Horn V. New Western Shingle Co., 54 Wash. 117, 103 Pac. 42.) 
 
 Undisclosed owner of stock standing in the name of another not en- 
 titled to notice of stockholders' meeting. (Wright v. Tacoma Gas & 
 Elec. Light Co., 53 Wash. 262, 101 Pac. 865.) 
 
 A corporation held entitled to have spurious stock fraudulently issued 
 by the secretary canceled. (Dreyfus Min. Co. v. Willard, 46 Wash. 345, 
 &9 Pac. 935.) 
 
 Where stock is assigned and certificate issued to another than desig- 
 nated owner, the company cannot forfeit the stock for failure of vendor 
 to pay subscription. (Falk v. Schmitz etc. Min. Co., 44 Wash. 612, 
 87 Pac. 927.)
 
 273 FORMATION OF GENERALLY. § 414 
 
 Where the company kept only stock certificate and stub-book but 
 no transfer or record book, held company and others bound by record 
 of stock transfer as shown by the record actually kept. (Iverson v. 
 Bradrick, 54 Wash. 633, 104 Pac. 130.) 
 
 § 414. Subscriptions, Assessments, Sale of Shares, etc. 
 
 [§ 3694, Kem.-Bal.] The stockholders of any corporation 
 formed under this chapter may, in the by-laws of the com- 
 pany, prescribe the times, manner and amounts in which pay- 
 ments of the sum subscribed by them respectively, shall be 
 made ; but in case the same shall not be so prescribed, the 
 trustees shall have the power to demand and call in from 
 the stockholders the sums by them subscribed, at such time, 
 and in such manner, payments or installments, as they may 
 deem proper. In all cases notice of each assessment shall 
 be given to the stockholders personally, or by publication 
 in some newspaper published in the county in which the 
 principal place of business of the company is located; and if 
 none be published in such county, then in the newspaper 
 nearest to said principal place of business in the state. If 
 after such notice has been given any stockholders shall make 
 default in the payment of assessments upon the shares held 
 by him, so many of said shares may be sold as will be neces- 
 sary for the payment of the assessment upon all the shares 
 held by him, her or them. The sale of said shares shall be 
 made as prescribed in the by-laws of the company, but shall 
 in no case be made at the office of the company. No sale 
 shall be made except at public auction, to the highest bidder, 
 after a notice of four weeks, published as above directed in 
 this section, and at such sale the person who shall pay the 
 assessment so due, together with the expenses of advertising 
 and sale for the smallest number of shares, or portion of a 
 share, as the case may be, shall be deemed the highest bidder. 
 Provided, that the amount of the capital stock of any bank 
 incorporated under this act shall not be less than twenty-five 
 thousand dollars, to be divided into shares of one hundred 
 dollars each, all of which shares shall be subscribed, and 
 three-fifths of such capital stock shall be paid in before com- 
 mencement of business, the remainder to be subject to the 
 18
 
 § 414 EXISTING CORPORATION LAWS, 1913, 274 
 
 call of the trustees, and it shall be the duty of the directors 
 of any such bank to file with their articles of incorporation 
 their affidavit that three-fifths of the capital stock of such 
 bank has been actually paid in. [Cd. 1881, § 2430; 1 H. C, 
 §1507; Bal., §4262.] 
 
 As to banks, modified' by Rem. -Bal., sec. 3317. 
 
 Laws of 1886, page 84, amending Code of 1881, section 2421, pro- 
 viding forfeiture of stock for failure to pay subscriptions, does not 
 relieve from liability for unpaid subscriptions by limiting remedy to 
 forfeiture. (Puget Sound & Cbehalis E. Co. v. Ouellette, 7 Wash. 265, 
 34 Pac. 929.) 
 
 Joint subscription by trustees to complete subscription enforceable 
 contract. (Hardin v. Sweeney, 14 Wash. 129, 44 Pac. 138; Hardin v. 
 Mullen, 16 Wash. 647, 48 Pac. 349.) 
 
 Part payment of subscription does not stop subscribers from denying 
 authority of corporation to sue. (Denny Hotel Co. v. Gilmore, 6 Wash. 
 152, 32 Pac. 1004.) 
 
 Subscribers to stock of company which has begun business before all 
 its stock is subscribed not liable on the subscriptions unless they have 
 by their acts and conduct waived the conditions. Part payment of sub- 
 scriptions without notice not a waiver. (Birge v. Browning, 11 Wash. 
 249, 39 Pac. 643.) 
 
 A subscription to capital stock not enforceable until the entire capital 
 stock is subscribed. (Denny Hotel Co. v. Schram, 6 Wash. 134, 32 Pac. 
 1002; Denny Hotel Co. v. Gilmore, 6 Wash. 152, 32 Pac. 1004; Elderkin 
 V. Peterson, 8 Wash. 674, 36 Pac. 1089.) 
 
 Property may be taken in payment for a stock subscription. (Man- 
 hattan Trust Co. V. Seattle Coal & Iron Co., 16 Wash. 499, 48 Pac. 333, 
 737; Kroenert v. Johnston, 19 Wash. 96, 52 Pac. 605.) 
 
 Property taken in payment of stock must be fairly valued and stock- 
 holder's valuation is not conclusive. (Dunlap v. Ranch, 24 Wash. 620, 
 64 Pac. 807; Manhattan Trust Co. v. Seattle Coal & Iron Co., 19 Wash. 
 493, 53 Pac. 951.) 
 
 "Calls" and "assessments" are used interchangeably. (Stewart v. 
 Walla Walla etc. Pub. Co., 1 Wash. 521, 20 Pac. 605.) 
 
 Notice of assessment must be given before suit brought on unpaid 
 subscription. (Elderkin v. Peterson, 8 Wash. 674, 36 Pac. 1089.) 
 
 A prior call unnecessary where the action is by creditors of an in- 
 solvent corporation or after an assignment for the benefit of creditors. 
 (Adamant Mfg. Co. v. Wallace, 16 Wash. 614, 48 Pac. 415; McKay v. 
 Elwood, 12 Wash. 579, 41 Pac. 919.) 
 
 A subscription may be enforced as a contract for payment of money 
 and the shares sold under execution. (Code of 1881, sees. 2421, 2430; 
 Puget Sound & C. R. R. Co. v. Ouellette, 7 Wash, 265, 34 Pac. 929; 
 Dearborn v. Washington Sav. Bank, 18 Wash. 8, 50 Pac 575.)
 
 275 FORMATION OF GENERALLY. § 414 
 
 Complaint to recover stock subscription not demurrable for failure to 
 allege entire stock subscribed. (McKay v. Elwood, 12 Wash. 579, 41 
 Pac. 919.) 
 
 Stock must be paid for in money or money's worth. (Turner v. 
 Bailey, 12 Wash. 634, 42 Pac. 115; Adamant Mfg. Co. v. Wallace, 16 
 Wash. 614, 48 Pac. 415.) 
 
 Under the provisions of 1 Hill's Code, section 1507, shares of stock 
 cannot be sold for nonpayment of assessments unless so provided in the 
 by-laws. (Dearborn v. Washington Savings Bank, 18 Wash. 8, 50 
 Pac. 575.) 
 
 Where fully paid stock is issued for property, there must be actual 
 fraud to enable creditors to call stockholders to account as for unpaid 
 subscriptions. (Turner v. Bailey, 12 Wash. 634, 42 Pac. 115.) 
 
 A purchase of stock may be rescinded for fraud and the defrauded 
 stockholder is not estopped by attending a stockholders' meeting and 
 voting the stock. (Landis v. Wintermute, 40 Wash. 673, 82 Pac. 1000.) 
 
 In case of pledge of stock, the corporation must proceed against the 
 pledgor for any unpaid subscriptions, and the corporation transfers the 
 stock without requiring the production of the outstanding certificate at 
 its peril. (Brown v. Union Sav. & Loan Assn., 28 Wash. 657, 69 Pac. 
 383.) 
 
 Subscriber to stock of corporation who has bona fide transferred his 
 shares, the transfer being registered, is not liable for an assessment 
 afterward made. (Stewart v. Walla Walla etc. Pub. Co., 1 Wash. 521, 
 20 Pac. 605.) 
 
 Corporations have no common-law lien upon their stock for the debts 
 of their stockholders, nor does the code give lien — 1 Hill's Code, sec. 
 1507; Bal. Code, see. 4262. (Dearborn v. Washington Sav. Bank, 18 
 Wash. 8, 50 Pac. 575.) 
 
 Liability for unpaid subscriptions, under Code of 1881, section 2434, 
 is declaratory of the common law securing a trust fund for creditors 
 that can be reached only by an equitable action. (Burch v. Taylor, 
 1 Wash. 245, 24 Pac. 438.) 
 
 .An action by a creditor to enforce unpaid subscriptions is in the 
 nature of a creditor's bill, and it is unnecessary first to obtain judg- 
 ment against the company where so doing would be simply futile and 
 the cause of action accrues at the time the corporation is declared insol- 
 vent. (Chilberg v. Siebenbaum, 41 Wash. 663, 84 Pac. 598.) 
 
 Stock subscriptions must be fully paid in property or cash, irre- 
 spective of understandings among the stockholders. (Adamant Mfg. 
 Co. V. Wallace, 16 Wash. 614, 48 Pac. 415.) 
 
 When stock is fully paid by property at its fair valuation, the stock- 
 holders do not become subsequently liable by the subsequent depreciation 
 of the property. (Turner v. Bailey, 12 Wash. 634, 42 Pac. 115.) 
 
 The fact that a stock certificate purports on its face to be fully paid 
 is not conclusive. (Elderkin v. Peterson, 8 Wash. 674, 36 Pac. 1089.)
 
 § 414 EXISTING CORPORATION LAWS, 1913. 276 
 
 Receiver of insolvent corporation may enforce all the rights that 
 the creditors have. (Cole v. Satsop R. Co., 9 Wash. 487, 37 Pac. 700.) 
 
 Where a subscription to stock is made by a "trustee" or agent for 
 others, it may be enforced against the real parties. (Cole v. Satsop, 
 9 Wash. 487, 37 Pac. 700.) 
 
 A stockholder owning a majority of stock by way of security for 
 advances made by him to the company is nevertheless a stockholder 
 to answer obligations of creditors. (Mitchell v. Jordan, 36 Wash. 645, 
 79 Pac. 311.) 
 
 In an action by a receiver of an insolvent company, defendant may 
 set off contract claim against the company existing at time of com- 
 mencement of action. (Sheafe v. Hastie, 16 Wash. 563, 48 Pac. 246.) 
 
 Notice of assessment required by 1 Hill's Code, section 1507 (1 
 Bal. Code, sec. 4262), must be given when assessment made by court 
 as well as otherwise. (Elderkin v. Peterson, 8 Wash. 674, 36 Pac. 
 10S9.) 
 
 Stockholders cannot escape liability to creditors for unpaid sub- 
 scriptions on the ground that part of the stock was illegally sub- 
 scribed. (Cole V. Satsop R. Co., 9 Wash. 487, 37 Pac. 700.) 
 
 That all the capital stock was never subscribed is a good defense 
 to an action on a stock subscription. (Birge v. Browning, 11 Wash. 
 249, 39 Pac. 643.) 
 
 That no call was made prior to an assignment to a trustee is no 
 defense to an action by a trustee to enforce unpaid subscriptions. 
 (McKay v. Elwood, 12 Wash. 579, 41 Pac. 919.) 
 
 A judgment for contingent liability over the par value of stock 
 is no bar to action for unpaid subscriptions. (Barto v. Nix, 15 Wash. 
 563, 46 Pac. 1033.) 
 
 Complaint in action for unpaid subscriptions failing to allege de- 
 fendant had notice of the call for assessments is demurrable under 
 1 Hill's Code, section 1507 (1 Bal. Code, sec. 4262). (Elderkin v. 
 Peterson, 8 Wash. 674, 36 Pac. 1089.) 
 
 Dividends are to be declared on unpaid as well as paid-up stock in 
 compliance with by-laws. (Gellerman v. Atlas Foundry & Machine 
 Co., 45 Wash. 114, 87 Pac. 1059.) 
 
 Agreement that a stockholder was to receive his stock "free of 
 assessment" does not mean free from payment therefor. (Cunning- 
 ham V. Independence Consol. Min. Co., 58 Wash. 371, 108 Pac. 956.) 
 
 Change in name of company does not release subscribers to stock. 
 (Cox V. IMckie, 48 Wash. 264, 93 Pac. 523.) 
 
 Stock issued to promoters for property not canceled in absence 
 of actual fraud. (Inland Nursery & Floral Co. v. Rice, 57 Wash. 
 67, 106 Pac. 499.) 
 
 Where a receiver of an insolvent corporation sues for unpaid sub- 
 Bcriptions, it is no defense that tbe stockholder took the stock bona
 
 277 FORMATION OF GENERALLY. §§ 415-417 
 
 fide, believing it fully paid. (Cox v. Dickie, 48 Wash. 264, 93 Pac. 
 523.) 
 
 A promoter's contract binding the corporation inequitably not en- 
 forceable. (Hampton v. Buchanan, 51 Wash. 155, 98 Pac. 374; Man- 
 gold V, Adrian Irr. Co., 60 Wash. 286, 111 Pac, 173.) 
 
 § 415. Executor may Vote Stock. 
 
 [§ 3695, Rem.-Bal.] Whenever any stock is held by a 
 person as executor, administrator, guardian, or trustee, he 
 shall represent such stock at all meetings of the company, 
 and may vote accordingly as a stockholder. [Laws 1873, 
 § 11, p. 402; Cd. 1881, § 2431; 1 H. C, § 1508; Bal., § 4263.] 
 
 § 416. Pledge of Stock, Effect of. 
 
 [§ 3696, Rem.-Bal.] Any stockholder may pledge his 
 stock by a delivery of the certificates or other evidence of his 
 interest, but may, nevertheless, represent the same at all meet- 
 ings, and vote as a stockholder. [Laws 1873, § 12, p. 402 ; 
 Cd. 1881, § 2432 ; 1 H. C, § 1509 ; Bal., § 4264.] 
 
 § 417. Dividends — Capital Stock, How Reduced — Liabili- 
 ties of Trustees. 
 [§ 3697, Rem.-Bal.] It shall not be lawful for the trus- 
 tees to make any dividend except from the net profits arising 
 from the business of the corporation, nor divide, withdraw, 
 or in any way pay to the stockholders, or any of them, any 
 part of the capital stock of the company, nor to reduce the 
 capital stock of the company unless in the manner prescribed 
 in this chapter, or the articles of incorporation or by-laws; 
 and in case of any violation of the provisions of this section, 
 the trustees under whose administration the same may have 
 happened, except those who may have caused their dissent 
 therefrom to be entered at large on the minutes of the board 
 of directors at the time, or were not present when the same 
 did happen, shall, in their individual or private capacities, be 
 jointly or severally liable to the corporation, and the cred- 
 itors thereof in the event of its dissolution, to the full amount 
 so divided, or reduced, or paid out: Provided, that this sec- 
 tion shall not be construed to prevent a division and distribu-
 
 § 418 EXISTING CORPORATION LAWS, 1913, 278 
 
 tion of the capital stock of the company, which shall remain 
 after the payment of all its debts upon the dissolution of the 
 corporation or the expiration of its charter. [Laws 1873, 
 § 13, p. 402; Cd. 1881, § 2433; 1 H. C, § 1510; Bal., § 4265.] 
 
 A by-law providing for certain dividends has force of a contract. 
 (Seattle Trust Co. v. Pittner, 18 Wash. 401, 51 Pac. 1048.) 
 
 Under Ballinger's Code, section 4265, it is unlawful to reduce the 
 capital stock by paying any portion of it to the stockholders. (Tait 
 V. Pigott, 32 Wash. 344, 73 Pac. 364, 38 Wash. 59, 80 Pac. 172; Tacoma 
 Ledger Co. v. Western Home Bldg. Co., 37 Wash. 467, 79 Pac. 992.) 
 
 Stockholder has no right to profits in the treasury of the company 
 until declared as dividends. (Seattle Trust Co. v. Pittner, 18 Wash. 
 401, 51 Pac. 1048.) 
 
 Where the property of an insolvent company has been transferred 
 to a director to avoid claims of creditors, the sale may be set aside 
 by a creditor. (Potvin v. Denny Hotel Co., 26 Wash, 309, 66 Pac. 
 376.) 
 
 Eecord of by-law as to past dividends cannot be changed after 
 purchase of stock to detriment of such purchaser. (Gellerman v. 
 Atlas Foundry & Machine Co., 45 Wash. 114, 87 Pac. 1059.) 
 
 Dividends are to be declared on unpaid as well as paid-up stock 
 in compliance with by-laws. (Gellerman v. Atlas Foundry & Machine 
 Co., 45 Wash. 114, 87 Pac. 1059.) 
 
 Trustee's individual liability noticed. (American Radiator Co. v. 
 Kinnear, 56 Wash. 210, 214, 105 Pac. 630, 631.) 
 
 § 418. Power to Issue Negotiable Paper. 
 
 [§ 3698, Rem.-Bal.] No corporation organized under this 
 chapter shall, by any implication or construction, be deemed 
 to possess the power of issuing bills, notes, or other evidence 
 of debt for circulation as money, except bonds by railroad 
 companies, which shall at no time exceed double the amount 
 of paid-up stock issued by said company. Each and every 
 stockholder shall be personally liable to the creditors of the 
 company, to the amount of what remains unpaid upon his 
 subscription to the capital stock, and not otherwise : Pro- 
 vided, that the stockholders of every bank incorporated 
 under this act or the territory of Washington shall be held 
 individually responsible, equally and ratably, and not one 
 for another, for all contracts, debts and engagements of such 
 association accruing while they remain such stockholders,
 
 279 FORMATION OF GENERALLY. § 418 
 
 to the extent of the amount of their stock therein at the 
 par value thereof in addition to the amount invested in 
 such shares, and all such banking corporations shall file, on 
 the first Monday in June, each year, with the state auditor, 
 a report sworn to by its president, vice-president, or 
 cashier, of the resources and liabilities, stating the amount of 
 deposits, the aggregate of loans and the amount upon each 
 class of securities, the names and residences of the share- 
 holders and number of their shares, the directors or officers 
 for the time being, and any other matters affecting the 
 safety of their deposits or the interest of their creditors; 
 and such banking corporations shall have power to exercise, 
 by its board, of trustees, or duly authorized officers or agents, 
 all such incidental powers as shall be necessary to carry on 
 the business of banking, by discounting and negotiating 
 promissory notes, drafts, bills of exchange, and other evi- 
 dence of debt; by receiving deposits, buying and selling ex- 
 change, coin and bullion, by loaning money on real estate 
 or personal security; to accept and execute all trusts, fidu- 
 ciary or otherwise, as may be committed to such bank or 
 corporation, by any person, persons or corporation, or by 
 the order or direction of any court, and may do any other 
 business pertaining to banking. [See Laws 1911, c. 80.] 
 Provided further, that the provisions of this section shall 
 not apply to the debentures or bonds of any company duly 
 incorporated under the provisions of this chapter, the pay- 
 ment of which debentures or bonds shall be secured by an 
 actual transfer of real estate securities for the benefit and 
 protection of purchasers of said debentures or bonds, such 
 securities to be at least equal in amount to the par value of 
 such bonds or debentures, and to be first liens upon the un- 
 encumbered real estate vv'orth at least twice the amount 
 loaned thereon : Provided further, however, that such issue 
 of debentures or bonds shall in no case exceed ten times the 
 capital stock of the issuing corporation. [Laws 1888, § 1, 
 p. 65; Cd. 1881, § 2434; 1 H. C, § 1511; Bal, § 4266.] 
 
 Coal mining is not within section 34, and where property in a coal 
 mine is knowingly taken by the company at overvaluation for stock,
 
 § 419 EXISTING CORPORATION LAWS, 1913. 280 
 
 stockholder is liable to creditor for amount unpaid on subscription. 
 (Davies v. Ball, 64 Wash. 292, 116 Pac. 833.) 
 
 § 419. Liability of Executor, etc., Holding Stock as Col- 
 lateral. "^ 
 [§ 3700, Rem.-Bal.] No person holding stock as executor, 
 administrator, guardian, or trustee, or holding it as collateral 
 security or in pledge, shall be personally subject to any lia- 
 bility as a stockholder of the company; but the person pledg- 
 ing the stock shall be considered as holding the same, and 
 shall be liable as a stockholder, and the estate and funds 
 in the hands of the executor, administrator, or guardian or 
 trustee shall be liable in like manner and to the same extent 
 as the testator or intestate, or the ward or person interested 
 in the trust fund would have been if he or she had been living 
 and competent to act and hold the stock in his or her name. 
 [Laws 1873, § 15, p. 403 ; Cd. 1881, § 2435 ; 1 H. C, § 1512 ; 
 Bal., § 4268.] 
 
 In case of pledge of stock, the corporation must proceed against 
 the pledgor for any unpaid subscriptions, and the corporation trans- 
 fers the stock without requiring the production of the outstanding 
 certificate at its peril. (Brown v. Union Sav. & Loan Assn., 28 Wash. 
 657, 69 Pac. 383.) 
 
 Interest of pledgee of stock cannot be divested by execution sale 
 against pledgor or owner. (Port Townsend Nat. Bank v. Port Town- 
 send etc. Co., 6 Wash. 597, 34 Pac. 155.) 
 
 The remedy of the pledgee is to foreclose the pledge. (Port 
 Townsend Nat. Bank v. Port Townsend etc. Co., 6 Wash. 597, 34 Pac. 
 155; American Bonding etc. Co. v. Pacific Brewing Co., 34 Wash. 10, 
 74 Pac. 826.) 
 
 Pledgor of stock entitled to vote it. (Spokane v. Amsterdamsch 
 Trustees Kantoor, 22 Wash. 172, 60 Pac. 141.) 
 
 Pledgee of stock who has reduced his lien to judgment not entitled 
 to possession of the certificate of stock, which should remain with the 
 clerk of court until redemption or sale. (American Bonding Co. v. 
 Loeb, 50 Wash. 104, 96 Pac. 692.) 
 
 Pledgee of stock standing in his name as owner on the books of 
 the company not liable for unpaid subscriptions. (Johnstone v. Black, 
 59 Wash. 144, 109 Pac. 367.) 
 
 Stockholder of insolvent corporation who transferred his stock while 
 the company was solvent relieved of liability. (Iverson v. Bradrick, 
 54 Wash. 633, 104 Pac. 130.)
 
 281 FORMATION OF GENERALLY. § 420 
 
 § 420. Record of Stockholders — Inspection. 
 
 [§.3701, Rem.-Bal] It shall be the duty of the trustees 
 of every company incorporated under this chapter to keep a 
 book containing the names of all persons, alphabetically ar- 
 ranged, who are or shall be stockholders of the corporation, 
 and showing the number of shares of stock held by them re- 
 spectively, and the time when they became the owners of 
 such shares, which book during the usual business hours of 
 the day, on every day excepting Sunday and the legal holidays, 
 shall be open for the inspection of stockholders and creditors 
 of the company, at the office or principal place of business 
 of the company; and any stockholder or creditor of the com- 
 pany shall have the right to make extracts from such book, 
 or to demand and receive from the clerk or other officer 
 having the charge of such book a certified copy of any entry 
 therein, or to demand and receive from any clerk or officer 
 a certified copy of any paper placed on file in the office of 
 the company ; and such book and certified copy shall be pre- 
 sumptive evidence of the fact therein stated in any action or 
 proceeding against the company or any one or more of the 
 stockholders. [Laws 1873, §16, p. 403; Cd. 1881, §2436; 
 1 H. C, §1513; Bal., §4269.] 
 
 A stockholder may enforce his right to inspect the books by man- 
 damus proceedings, and the burden of showing that he is not pro- 
 ceeding in good faith is on the officers of the company. (State ex 
 rel. Weinberg v. Pacific Brewing & Malting Co., 21 Wash. 451, 58 
 Pac. 584.) 
 
 A stockholder dealing with his corporation through an agent of the 
 corporation is presumed to know the scope of the agent's authority. 
 (Hardin v. Sweeney, 14 Wash. 129, 44 Pac. 138.) 
 
 Remington and Ballinger's Code, sections 3701, 3702, providing a 
 penalty for failure to keep stock books open to inspection, is penal 
 and construed strictly. (Brown v. Kildea, 58 Wash. 184, 108 Pac. 
 452, 1135.) 
 
 For inspection of books and papers of company, demand must be 
 made by party having right to inspect "named book or designated 
 paper." General demand to inspect "books and papers" not suffi- 
 cient. (Brown v. Kildea, 58 Wash. 184, 108 Pac. 452, 1135.) 
 
 Where company kept only stock certificate and stock book, but no 
 transfer or record book, held company and others bound by record
 
 §§421,422 EXISTING CORPORATION LAWS, 1913. 282 
 
 of stock transfer as shown by the record actually kept. (Iverson v. 
 Bradrick, 54 Wash. 633, 104 Pac. 130.) 
 
 To subject officer to penalty there must be demand by person inter- 
 ested for designated papers. (Brown v. Kildea, 58 "Wash. 184, 108 
 Pac. 452, 1135.) 
 
 § 421. False Entries — Misdemeanors. 
 
 [§ 3702. Rem.-Bal.] If at any time the clerk or other 
 officer having charge of such book shall make any false 
 entry, or neglect to make any proper entry therein, or hav- 
 ing the charge of any papers of the company shall refuse or 
 neglect to exhibit the same, or allow the same to be inspected 
 or extracts to be taken therefrom, or to give a certified copy 
 of any entry, as provided in the preceding section, he shall 
 be deemed guilty of a misdemeanor, and shall forfeit and 
 pay to the injured party a penalty of not less than one hun- 
 dred dollars nor more than one thousand dollars, and all 
 damages resulting therefrom, to be recovered in any action 
 of debt in any court having competent jurisdiction; and for 
 neglecting to keep such book for inspection as aforesaid, the 
 corporation shall forfeit to the people the sum of one hun- 
 dred dollars for every day it shall so neglect, to be sued for 
 and recovered in the name of the people in the superior court 
 of the county in which the principal place of business of the 
 corporation is located. [Laws 1873, § 17, p. 404; Cd. 1881, 
 § 2437; 1 H. C, § 1514; Bal., § 4270.] 
 
 Corporations entitled to have spurious stock fraudulently issued by 
 the secretary canceled. (Dreyfus Min. Co. v. Willard, 46 Wash. 345, 
 89 Pac. 935.) 
 
 To subject an officer to penalty there must be demand by the person 
 interested for designated papers. (Brown v. Kildea, 58 Wash. 184, 
 108 Pac. 452, 1135.) 
 
 § 422. Right of Stockholder in Mining Companies to In- 
 spect Property. 
 [§ 7348, Rem.-Bal.] Any owner of stock to the amount of 
 one thousand shares, in any corporation doing business under 
 the laws of the state of Washington for the purposes of 
 mining, shall at all hours of business or labor on or about 
 the premises or property of such corporation, have the right
 
 283 FORMATION OF GENERALLY. §§ 423-424 
 
 to enter upon such property and examine the same, either 
 on the surface or underground. And it is hereby made the 
 duty of any and all officers, managers, agents, superintend- 
 ents, or persons in charge, to allow any such stockholder to 
 enter upon and examine any of the property of such corpora- 
 tion at any time during the hours of business or labor; and 
 the presentation of certificates of stock in the corporation 
 of the amount of one thousand shares, to the officer or per- 
 son in charge, shall be prima facie evidence of ownership 
 and right to enter upon or into, and make examinations of 
 the property of the corporation. [Laws 1901, § 1, p. 258.] 
 
 § 423. Liability for Refusal to Comply. 
 
 [§ 7349, Rem.-Bal.] Any violation of any of the provi- 
 sions of this act by any officer or agent of such corporation 
 shall constitute a misdemeanor, and upon conviction thereof 
 every such officer or agent shall be fined in a sum not greater 
 than two hundred dollars for each offense. [Laws 1901, 
 § 2, p. 259.] 
 
 § 423a. Penalty for Failure to Furnish Statement. 
 
 [§ 7350, Rem.-Bal.] In case such corporation shall fail 
 and neglect to furnish the statement provided for in section 
 1 [Rem.-Bal., § 7348], within sixty days from and after such 
 demand, the franchise of said corporation may be annulled 
 in any action brought by such stockholder in the name of 
 the state of Washington, in any superior court in the county 
 in which said mining property is situated or in which the 
 principal place of business of the corporation may be located. 
 [Laws 1901, p. 259, § 3.] 
 
 § 424. Increase or Decrease of Capital Stock. 
 
 [§ 3704, Rem.-Bal.] Any company incorporated under 
 this chapter may, by complying with the provisions herein 
 contained, increase or diminish its capital stock to any 
 amount which may be deemed sufficient and proper for the 
 purposes of the corporation ; but before any corporation shall 
 be entitled to diminish the amount of its capital stock, if 
 the amount of its debts and liabilities shall exceed the sum
 
 § 425 EXISTING CORPORATION LAWS, 1913. 284 
 
 to which the capital is proposed to be diminished, such 
 amount shall be satisfied and reduced so as not to exceed 
 the diminished amount of the capital: Provided, that the 
 deposits in any trust company or banking corporation shall 
 not be included in ascertaining the debts and liabilities of 
 such trust company or banking corporation for the purposes 
 of this section : Provided, further, that this act shall not re- 
 lieve such trust company or banking corporation or the 
 stockholders of any such trust company or banking corpora- 
 tion from liability, although contingent, or remote, incurred 
 or entered into by such trust company or banking corpora- 
 tion prior to the reduction of its capital, including liability 
 for deposits: Provided further, that before any banking 
 corporation, or trust company, can reduce its capitalization, 
 a notice, in writing, must be mailed to the last known post- 
 office address of its depositors setting forth the fact that the 
 said banking corporation, or trust company, intends to de- 
 crease its capitalization, showing the amount of its capitaliza- 
 tion and the amount to which it intends to decrease same; 
 and proof of the mailing of such notices shall be made by 
 affidavit of the party mailing the same, showing the names 
 and addresses of the persons to whom mailed. [Laws 1899, 
 § 1, p. 174. See §§ 3326, 3697, Rem.-Bal. ; Cd. 1881, § 2438; 
 IH. C, §1515;Bal., §4271.] 
 
 § 425. Notice of Meeting Called to Increase or Diminish 
 >C Stock. 
 
 [§ 3705, Rem.-Bal.] Whenever it is desired to increase 
 or diminish the amount of capital stock, a meeting of the 
 stockholders shall be called, by a notice signed by at least 
 a majority of the trustees, and published at least eight weeks 
 in some newspaper published in the county where the prin- 
 cipal place of business of the company is located, or if no 
 newspaper is published in the county, then the newspaper 
 nearest thereto in the state, which notice shall specify the 
 object of the meeting, the time and place where it is to be 
 held, and the amount to which it is proposed to increase or 
 diminish the capital, and a vote of two-thirds of all the
 
 285 FORMATION OF GENERALLY. §§426,427 
 
 shares of the stock shall be necessary to increase or diminish 
 the amount of the capital stock. [Laws 1873, § 19, p. 404; 
 Cd. 1881, § 2439 ; 1 H. C, § 1516 ; Bal., § 4272.] 
 
 § 426. Certificate to be Made, Filed, etc. — Amount to be 
 Specified. 
 [§ 3706, Rem.-Bal.] If, at a meeting so called, a sufficient 
 number of votes have been given in favor of increasing or 
 diminishing the amount of capital, a certificate of the pro- 
 ceedings showing a compliance with these provisions, the 
 amount of capital actually paid in, the whole amount of 
 debts and liabilities of the company and the amount to which 
 the capital stock is to be increased or diminished, shall be 
 made out, and signed, and verified, by the affidavit of the 
 chairman and secretary of the meeting, certified to by a ma- 
 jority of the trustees, and filed as required by section 2 
 [§ 3679, Rem.-Bal.] and when so filed, the capital stock of 
 the corporation shall be increased or diminished to the 
 amount specified in the certificate. [Laws 1873, sec. 20, p. 
 405; Cd. 1881, § 2440; 1 H. C, § 1517; Bal., § 4273.] 
 
 § 427. Powers of Trustees upon Dissolution of Corporation. 
 
 [§ 3707, Rem.-Bal.] Upon the dissolution of any corpora- 
 tion formed under the provisions of this chapter, the trus- 
 tees at the time of the dissolution shall be trustees of the 
 creditors and stockholders of the corporation dissolved, and 
 shall have full power and authority to sue for and recover 
 the debts and property of the corporation by the name of 
 the trustees of such corporation, collect and pay outstanding 
 debts, settle all its affairs, and divide among the stockholders 
 the money and other property that shall remain after the 
 payment of the debts and necessary expenses. [Laws 1873 
 § 21, p. 405; Cd. 1881, § 2441; 1 H. C, § 1518; Bal., § 4274.]' 
 
 Section applicable to voluntary dissolutions. (Conlon v. Oudin, 49 
 Wash. 240.) 
 
 After a corporation has ceased to do business, a trustee having 
 ceased to be such is no longer in a fiduciary position, and may pur- 
 chase outstanding obligations of the corporation and enforce them 
 for his own benefit. (Stanton v. Gilpin, 38 Wash. 191, 80 Pac. 290.) 
 
 X
 
 § 428 EXISTING CORPORATION LAWS, 1913. 286 
 
 After a corporation has ceased to do business and a trustee and 
 director has ceased to be such, service on such person is not service 
 on the corporation binding on other stockholders. (Stanton v. Gilpin, 
 
 38 Wash. 191, 80 Pac. 290.) 
 
 A trustee, long after the corporation has ceased doing business, may 
 purchase notes and judgments against the company. (Stanton v. 
 Gilpin, 38 Wash. 191, 80 Pac. 290.) 
 
 Mere fact that indebtedness exceeds assets no proof of insolvency 
 of corporation. (Brooks v. Skookum Mfg. Co., 9 Wash. 80, 37 Pac. 
 284.) 
 
 Sufficiency of evidence of insolvency in particular cases. (Smith 
 v. Hopkins, 10 Wash. 77, 38 Pac. 854; Conover v. Hull, 10 Wash. 673, 
 
 39 Pac. 166; State ex rel. Jenkins v. Equitable Indem. Assn., 18 Wash. 
 514, 52 Pac. 234.) 
 
 Subsequent insolvency does not affect prior transaction valid when 
 made. (Bank of California v. Puget Sound Loan etc. Co., 20 Wash. 
 636, 56 Pac. 395.) 
 
 Code of 1881, chapter 143, applicable to discharge of insolvent 
 debtor, does not apply to corporations. (Nyman v. Berry, 3 Wash. 
 734, 29 Pac. 557.) 
 
 Purchase money mortgage not fraudulent as to creditors. (Vin- 
 cent v. Snoqualmie Mill Co., 7 Wash. 566, 35 Pac. 396.) 
 
 Trustees act as trustees for stockholders and creditors to exclusion 
 of receiver only in ease of petition, under section 4275 of Ballinger's 
 Code. (New York Nat. Bank v. Met. Sav. Bank, 28 Wash. 553, 68 
 Pac. 905.) 
 
 § 428. Dissolution Proceedings. 
 
 [§3708, Rem.-Bal.] Any corporation formed under this 
 chapter may dissolve and disincorporate itself by presenting 
 to the superior judge of the county in which the office of the 
 company is located a petition to that effect, accompanied 
 by a certificate of its proper officers, and setting forth that 
 at a meeting of the stockholders, called for the purpose, it 
 was decided, by a vote of two-thirds of all the stockholders, 
 to disincorporate and dissolve the corporation. Notice of 
 the application shall then be given by the clerk, which notice 
 shall set forth the nature of the application, and shall specify 
 the time and place at which it is to be heard, and shall be 
 published in some newspaper of the county once a week for 
 eight weeks, or if no newspaper is published in the county, 
 by publication in the newspaper nearest thereto in the state. 
 At the time and place appointed, or at any other time to
 
 287 FORMATION OF GENERALLY. § 429 
 
 which it may be postponed by the judge, he shall proceed 
 to consider the application, and if satisfied that the cor- 
 poration has taken necessary preliminary steps and obtained 
 the necessary vote to dissolve itself, and that all claims 
 against the corporation are discharged, he shall enter an 
 order declaring it dissolved. [Laws 1873, §22, p. 405; Cd. 
 1881, § 2442; 1 H. C, § 1519; Bal., § 4275.] 
 
 After a corporation has ceased to do business, a trustee having 
 ceased to be such is no longer in a fiduciary position, and may pur- 
 chase outstanding obligations of the corporation and enforce them 
 for his own benefit. (Stanton v. Gilpin, 38 Wash. 191, 80 Pac. 290.) 
 
 After a corporation has ceased to do business and a trustee and 
 director has ceased to be such, service on such person is not service 
 on the corporation binding on other stockholders. (Stanton v. Gil- 
 pin, 38 Wash. 191, 80 Pac. 290.) 
 
 A trustee, long after the corporation has ceased doing business, 
 may purchase notes and judgments against the company. (Stanton 
 V, Gilpin, 38 Wash. 191, 80 Pac. 290.) 
 
 Decree of dissolution warranted where company shown to be in- 
 solvent. (State ex rel. Jenkins v. Equitable Indem. Co., 18 Wash. 
 514, 52 Pac, 234.) 
 
 Court has no jurisdiction to appoint receiver on quo warranto pro- 
 ceeding under 2 Hill's Code, section 689 (2 Bal. Code, sec. 5790). 
 (State ex rel. Amsterdamsch Kantoor v. Superior Court, 15 Wash. 
 668, 47 Pac. 31.) 
 
 A corporation is not enjoined from selliDg all its property where 
 there is no fraud. (Smith v. Flathead Biver Coal Co., 66 Wash. 408, 
 119 Pac. 858.) 
 
 § 429. Removing Principal Place of Business — Notice. 
 
 [§ 37081/2, Rem.-Bal.] Any corporation desiring at any 
 time to remove its principal place of business into some other 
 county in the state shall file in the office of the county auditor 
 a certified copy of its certificate of incorporation. If it is 
 desired to remove its principal place of business to some 
 other city, town, or locality within the same county, publi- 
 cation shall be made of such removal at least once a week 
 for four weeks in the newspaper published nearest to the 
 city, town or locality from which the principal place of 
 business of such corporation is desired to be removed. The 
 formation or corporate acts of any corporation hereafter
 
 § 430 EXISTING CORPORATION LAWS, 1913. 288 
 
 formed under this chapter shall not be rendered invalid by 
 reason of the fact that its principal place of business may 
 not have been designated in its certificate of incorporation : 
 Provided, that within three months from the passage of this 
 chapter, such corporation shall cause publication to be made 
 once a week for at least four weeks in the newspaper pub- 
 lished nearest the city, town, or locality, and where the prin- 
 cipal place of business of such corporation has been in fact 
 located, designating the city, town or locality and county 
 where its principal place of business shall be located. On 
 compliance with the provisions of the section in the several 
 cases herein mentioned, the principal place of business of any 
 corporation shall be deemed established or removed at or to 
 any designated city, town, or locality and county in the state. 
 [Laws 1873, § 24, p. 406; Cd. 1881, § 24^14; 1 H. C, § 1520; 
 Bal., § 4276.] 
 
 § 430. Supplemental Articles — Statement to be Filed. 
 
 [§ 3681, Rem.-Bal.] That whenever any corporation 
 heretofore or hereafter organized under the laws of this 
 state (including such as were organized under the laws of 
 the territory of Washington) shall execute and file in the 
 office of the Secretary of State and in the office of the county 
 auditor of the proper county supplemental articles of in- 
 corporation changing its corporate name, such corporation 
 shall file in the office of such county auditor, at the time of 
 filing such supplemental articles or within ten days there- 
 after, a written notice, signed by its president, vice-president 
 or secretary, setting forth its former corporate name and 
 its corporate name as changed and stating that supple- 
 mental articles making such change of name have been filed 
 in the office of the Secretary of State and in the office of the 
 county auditor of the county (naming it). It shall be the 
 duty of the county auditor, on payment of the proper re- 
 cording fee, to record such notice as deeds are recorded and 
 to index such notice in the general index in his office under 
 the former corporate name as grantor and under the changed 
 corporate name as grantee. A like notice may at the option
 
 289 FORMATION OF GENERALLY. §§431,432 
 
 of such corporation be filed in the office of the county auditor 
 of any other county, and the county auditor of such other 
 county shall record and index the same in the manner here- 
 inbefore provided. Corporations which have heretofore filed 
 supplemental articles changing their corporate names shall 
 file the notice herein provided for within six months after the 
 taking effect of this act. [Laws 1905, § 1, c. 109, p. 215.] 
 
 Though an attempt to change the name of a company is mere futility, 
 a judgment will not be set aside where enough appears in the com- 
 plaint to identify the company. (King v. Ilwaco E. & Nav. Co., 1 
 Wash. 127, 23 Pac. 924.) 
 
 § 431. Provisions, etc., Extend to Water Companies. 
 
 [§ 3678, Rem.-Bal.] The provisions of this act shall ex- 
 tend to and apply to all associations already formed under 
 any law of this state, or hereafter to be formed under the pro- 
 visions of this act for the purpose of supplying any cities or 
 towns in this state, or the inhabitants thereof, with pure and 
 fresh water. [Laws 1873, §27, p. 408; Cd. 1881, §2447; 
 1 H. C, § 1521 ; Bal., § 4277.] 
 
 § 432. Water Company may Acquire Lands and Water. 
 
 [§9504, Rem.-Bal.] Such water companies, incorporated 
 for the purposes specified in the preceding section, shall have 
 the right to purchase or take possession of and use and hold 
 such lands and waters for the purposes of the company, lying 
 without the limits of the city or town intended to be supplied 
 with water, upon making compensation therefor. The mode 
 of proceeding to obtain possession of such lands for the use 
 of the company, right of way for laying pipes, aqueducts for 
 the use of the company, when the parties cannot agree, shall, 
 so far as the same be applicable, be, as prescribed in section 
 51 of this compilation: Provided, that nothing therein con- 
 tained shall be so construed as to authorize the appropriation 
 of water belonging to any person, unless the owner thereof 
 shall refuse to supply said city or town with water, after 
 being requested so to do by the town board or city council. 
 19
 
 §§433,434 ExiSTiNC corporation laws, 1913. 290 
 
 [Laws 1883, § 8, p. 45; Cd. 1881, § 2448; 1 H. C, § 1522; BaL, 
 § 4278.] 
 
 § 433. Water Companies must Obtain Right or Privilege 
 from City. 
 [§ 9505, Rem.-Bal.] Water companies hereafter incorpo- 
 rating under the provisions of this chapter, must first obtain 
 from the corporate authorities of a city or town intended to 
 be supplied with water the right or privilege so to do; but 
 nothing herein contained shall affect parties now acting 
 under legislative grants or franchises. [Laws 1873, § 29. 
 p. 408 ; Cd. 1881, § 2449 ; 1 H. C, § 1523 ; Bal., § 4279.] 
 
 § 434. Mining Corporation — Subscription of Stock. 
 
 [§ 7347, Rem.-Bal.] In incorporations already formed, or 
 which may hereafter be formed under this chapter, where the 
 amount of the capital stock of such corporation consists of 
 the aggregate valuation of the whole number of feet, shares, 
 or interest in any claim in any mining claim in this state, for 
 the working and development of which such corporation shall 
 be or have been formed, no actual subscription to the capital 
 stock of such corporation shall be necessary ; but each owner 
 in said mining claim shall be deemed to have subscribed such 
 an amount to the capital stock of such corporation as under 
 its by-laws will represent the value of so much of his inter- 
 est in said mining claim, the legal title to which he may by 
 deed, deed of trust or other instrument vest or have vested 
 in such corporation for mining purposes; such subscription 
 to be deemed to have been made on the execution and de- 
 livery to such corporation of such deed, deed of trust or other 
 instrument ; nor shall the validity of any assessment levied 
 by the board of trustees of such corporation be affected by 
 the reason of the fact that the full amount of the capital 
 stock of such corporation, as mentioned in its certificate of 
 incorporation, shall not have been subscribed as provided in 
 this section: Provided, that the greater portion of said 
 amount of capital stock shall have been so subscribed: And 
 provided further, that this section shall not be so construed as
 
 291 FORMATION OF GENERALLY. §§ 435-437 
 
 to prohibit the stockholders of any corporation formed, or 
 which may be formed for mining purposes as provided in this 
 section, from regulatinf^ the mode of makinf? subscriptions to 
 its capital stock and calling in the same by by-laws or ex- 
 press contract. [Laws 1873, § 26, p. 407 ; Cd. 1881, § 2446 ; 1 
 H. C, §1588;Bal., §4280.] 
 
 § 435, Corporations Prior to 1872 may Hold Property. 
 
 [§ 3685, Rem.-Bal.] All private corporations incorporated 
 by the legislative assembly of the territory of Washington, 
 prior to the tenth day of June, eighteen hundred and seventy- 
 two, other than for religious purposes, be and they are hereby 
 authorized to hold, acquire, own and possess real and per- 
 sonal property to the extent and to such amount as to said 
 eorporation may seem meet, anything in the acts incorporat- 
 ing said private corporations to the contrary notwithstand- 
 ing. [Laws 1891, § 1, p. 73; 1 H. C, § 1501; Bal., § 4254.] 
 
 § 436. Corporations Prior to 1862 may Make and Secure 
 Debts. 
 
 [§ 3699, Rem.-Bal.] That all private corporations incor- 
 porated by the legislative assembly of the territory of Wash- 
 ington prior to the first day of January, 1862, other than cor- 
 porations created for religious purposes, be and they hereby 
 are authorized and empowered to issue notes, bonds, mort- 
 gages or other evidence of indebtedness and to secure the 
 payment of the same by mortgage, trust deed or otherwise 
 encumbering any real or personal property owned by said 
 corporations. Said corporations shall have power to buy, 
 sell or otherwise deal in notes, bonds and stocks of other cor- 
 porations, and shall have power through their duly author- 
 ized officers to execute any and all instruments necessary to 
 carry out the powers conferred upon said corporations by 
 the provisions of this act. [Laws 1893, §1, p. 279; Bal,, 
 §4267.] 
 
 § 437. Corporate Names not to be Duplicated. 
 
 [§ 3680, Rem.-Bal.] Private corporations may be formed 
 in the manner prescribed by the laws of this state governing
 
 § 438 EXISTING CORPORATION LAWS, 1913. 292 
 
 corporations for any purpose for which individuals may law- 
 fully associate. No corporation shall take the name of a cor- 
 poration theretofore [heretofore] organized under the laws 
 of this state, nor of any foreign corporation having com- 
 plied with the laws of this state, nor one so nearly resembling 
 the name of such other corporation as to be misleading. 
 The Secretary of State shall refuse to file said articles of in- 
 corporation of any association or corporation violating the 
 provisions of this act. [Laws 1903, § 1, p. 124.] 
 
 Mandamus will not issue to compel a secretary to strike from the 
 records the name of the company delinquent in license fees for use 
 of another company. (State ex rel. Harper v. Howell, 56 Wash. 694, 
 106 Pac. 470.) 
 
 A foreign company, by complying with the laws of the state, can- 
 not use its corporate name in unfair competition with a local part- 
 nership, (Eastern Outfitting Co. v. Manheim, 59 Wash. 428, 110 
 Pac. 23.) 
 
 § 438. Protection of Stockholders from Fraudulent Report. 
 [§ 3703, Rem.-Bal.] Any superintendent, director, secre- 
 tary, manager, agent or other officer of any corporation 
 formed or existing under the laws of this state, or transact- 
 ing business in this state, or any person pretending or hold- 
 ing himself out as such superintendent, director, secretary, 
 manager, agent or other officer, who shall willfully subscribe, 
 sign, indorse, verify or otherwise assent to the publication, 
 either generally or privately, to the stockholders or to other 
 persons dealing with such corporation, or its stock, any will- 
 fully untrue or willfully and fraudulently exaggerated re- 
 port, prospectus, account, statement of operations, values, 
 business profits, expenditures or prospects, or other paper or 
 document intended to produce or give, or having a tendency 
 to produce or give, to the shares of stock in such corpora- 
 tion a greater value than they really possess, or with the in- 
 tention of defrauding any particular person or persons, or 
 the public or persons generally, shall be deemed guilty of an 
 offense against the laws of the state of Washington, and, 
 upon conviction thereof, shall be punished by imprisonment 
 in the penitentiary, not less than one nor more than five
 
 293 FORMATION OF GENERALLY. §§439,440 
 
 years, or in the county jail not more than one year, or by a 
 fine not exceeding two thousand dollars or by both. [Laws 
 1903, § 1, p. 141.] 
 
 § 439, Fraud in Stock Subscription. 
 
 [§ 2638, Rem.-Bal.] Every person who shall sign the 
 name of a fictitious person to any subscription for or any 
 agreement to take stock in any corporation existing or pro- 
 posed, and every person who shall sign to any such subscrip- 
 tion or agreement the name of any person, knowing that 
 such person does not intend in good faith to comply with the 
 terms thereof, or upon any understanding or agreement that 
 the terms of such subscription or agreement are not to be 
 complied with or enforced, shall be guilty of a gross mis- 
 demeanor. [Laws 1909, § 386, p. 1009.] 
 
 § 440. Fraudulent Issue of Stock, Scrip, etc. 
 
 [§ 2639, Rem.-Bal.] Every officer, agent or other person 
 in the service of a joint stock company or corporation, domes- 
 tic or foreign, who, willfully and knowingly with intent to 
 defraud, shall — 
 
 1. Sell, pledge or issue or cause to be sold, pledged or 
 issued, or sign or execute or cause to be signed or executed, 
 with intent to sell, pledge or issue, or cause to be sold, 
 pledged or issued, any certificate or instrument purporting 
 to be a certificate or evidence of ownership of any share or 
 shares of such company or corporation, or any conveyance 
 or encumbrance of real or personal property, contract, bond, 
 or evidence of debt, or writing purporting to be a conveyance 
 or encumbrance of real or personal property, contract, bond 
 or evidence of debt of such company or corporation, with- 
 out being first duly authorized by such company or corpora- 
 tion, or contrary to the charter or laws under which such 
 company or corporation exists, or in excess of the power of 
 such company or corporation, or of the limit imposed by law 
 or otherwise upon its power to create or issue stock or evi- 
 dence of debt ; or, 
 
 2. Reissue, sell, pledge or dispose of, or cause to be 
 reissued, sold, pledged or disposed of, any surrendered or
 
 §§ 441-443 EXISTING CORPORATION LAWS, 1913. 294 
 
 canceled certificate or other evidence of the transfer of 
 ownership of any such share or shares — 
 
 Shall be punished by imprisonment in the state peniten- 
 tiary for not more than ten years, or by a fine of not more 
 than five thousand dollars, or by both. [Laws 1909, § 387, 
 p. 1010.] 
 
 § 441. Insolvent Bank Receiving Deposit. 
 
 [§ 2640, Rem.-Bal.] Every owner, officer, stockholder, 
 agent or employee of any person, firm, corporation or asso- 
 ciation engaged, wholly or in part, in the business of bank- 
 ing or receiving money or negotiable paper as securities on 
 deposit or in trust, who' shall accept or receive, with or with- 
 out interest, any deposit, or who shall consent thereto or 
 connive thereat, when he knows or has good reason to be- 
 lieve that such person, firm, corporation or association is 
 unsafe or insolvent, shall be punished by imprisonment in 
 the state penitentiary for not more than ten years, or by a 
 fine of not more than ten thousand dollars. [Laws 1909, § 
 388, p. 1010.] 
 
 The section does not apply to private bankers. (State v. Young- 
 bluth, 60 Wash. 383, 111 Pac. 240.) 
 
 It is immaterial whether the owner, officer, etc., is present or 
 absent at the time the deposit is received. (State r. Welty, 65 Wash. 
 244, 118 Pac. 9.) 
 
 § 442. Corporation Doing Business Without License. 
 
 [§ 2641, Rem.-Bal.] Every corporation, whether domestic 
 or foreign, and every person representing or pretending to 
 represent such corporation as an officer, agent or employee 
 thereof, who shall transact, solicit or advertise for any busi- 
 ness in this state, before such corporation shall have ob- 
 tained from the officer lawfully authorized to issue the same, 
 a certificate that such corporation is authorized to transact 
 business in this state, shall be guilty of a gross misdemeanor. 
 [Laws 1909, § 389, p. 1011.] 
 
 § 443. False Report of Corporation. 
 
 [§2642, Rem.-Bal.] Every director, officer or agent of 
 any corporation or joint stock association, and every person
 
 295 FORMATION OP GENERALLY. §§ 444, 445 
 
 engaged in organizing or promoting any enterprise, who 
 shall knowingly make or publish or concur in making or 
 publishing any written prospectus, report, exhibit or state- 
 ment of its affairs or pecuniary condition, containing any 
 material statement that is false or exaggerated, shall be pun- 
 ished by imprisonment in the state penitentiary for not more 
 than ten years, or by a fine of not more than five thousand 
 dollars. [Laws 1909, § 390, p. 1011.] 
 
 § 444. Warehouseman or Carrier Refusing to Issue Receipt. 
 
 [§ 2643, Rem.-Bal.] Every person or corporation, and 
 every officer, agent and employee thereof, receiving any 
 goods, wares or merchandise, for sale or on commission, for 
 storage, carriage or forwarding, who, having an opportunity 
 to inspect the same, shall fail or refuse to deliver to the 
 owner thereof a receipt duly signed, bearing the date of issu- 
 ance, describing the goods, wares or merchandise received 
 and the quantity, quality and condition thereof, and specify- 
 ing the terms and conditions upon which they are received, 
 shall be guilty of a misdemeanor. [Laws 1909, § 391, p. 
 1011.] 
 
 § 445. Fictitious Bill of Lading and Receipt. 
 
 [§ 2644, Rem.-Bal.] Every person or corporation engaged 
 wholly or in part in the business of a common carrier or 
 warehouseman, and every officer, agent or employee thereof, 
 who shall issue any bill of lading, receipt or other voucher 
 by which it shall appear that any goods, wares or merchan- 
 dise have been received by such carrier or warehouseman, 
 unless the same have been so received and shall be at the 
 time actually under his control, or who shall issue any bill 
 of lading, receipt or voucher containing any false statement 
 concerning any material matter, shall be guilty of a gross 
 misdemeanor. But no person shall be convicted under this 
 section for the reason that the contents of any barrel, box, 
 case, cask or other closed vessel or package mentioned in 
 the bill of lading, receipt or voucher did not correspond with 
 the description thereof in such instrument, if such descrip- 
 tion corresponds substantially with the mark on the outside
 
 §§ 446-449 EXISTING corporation laws, 1913. 296 
 
 of such barrel, box, case, cask, vessel or package, unless it 
 appears that the defendant knew that such marks were un- 
 true. [Laws 1909, § 392, p. 1012.] 
 
 § 446. Warehouseman Fraudulently Mixing Goods. 
 
 [§ 2645, Rem.-Bal.] Every person mentioned in section 
 392 of this act [2644, Rem.-Bal.] , who shall fraudulently mix 
 or tamper with any goods, wares or merchandise under his 
 control, shall be guilty of a gross misdemeanor. [Laws 1909, 
 § 393, p. 1012.] 
 
 § 447. Duplicate Receipt. 
 
 [§ 2646, Rem.-Bal.] Every person mentioned in section 
 392 of this act [2644, Rem.-Bal.], who shall issue any second 
 or duplicate receipt or voucher of the kind specified in said 
 section, while a former receipt or voucher for the goods, 
 wares or merchandise specified in such second receipt is out- 
 standing and uncanceled, without writing across the face of 
 the same the word "Duplicate," in a plain and legible man- 
 ner, shall be guilty of a misdemeanor. [Laws 1909, § 394, 
 p. 1012.] 
 
 § 448. Bill of Lading or Receipt must be Canceled on Re- 
 delivery of Property. 
 
 [§ 2647, Rem.-Bal.] Each person mentioned in section 
 392 of this act [2644 Rem.-Bal.] who shall deliver to another 
 any goods, wares or merchandise for which a bill of lading, 
 receipt or voucher has been issued, unless such bill of lading, 
 receipt or voucher is surrendered and canceled or a lawful 
 and sufficient bond or undertaking is given therefor at the 
 time of such delivery, or unless, in case of a partial delivery, 
 a memorandum thereof is indorsed upon such bill of lading, 
 receipt or voucher, shall be guilty of a misdemeanor. [Laws 
 1909, § 395, p. 1013.] 
 
 § 449. Regulating Sale of Passage Tickets. 
 
 [§ 2648, Rem.-Bal.] It shall be the duty of every person 
 or corporation engaged wholly or in part in the business of 
 carrying passengers for hire, to provide every agent author- 
 ized to sell its passage tickets in this state, with a certificate
 
 297 FORMATION OF GENERALLY. § 450 
 
 of his authority, attested by its seal and the signature of its 
 manager, secretary or general passenger agent, which shall 
 contain a designation of the place of business at which such 
 authority shall be exercised. 
 
 Every person and every corporation or association, and 
 every officer, agent or employee thereof who shall sell, ex- 
 change or transfer, or have in his possession with intent to 
 sell, exchange or transfer, or maintain, conduct or operate 
 any office or place of business for the sale, exchange or trans- 
 fer of any passage ticket or pass or part thereof, or any 
 other evidence of a right to travel upon any railroad or boat, 
 whether the same be owned or operated within or without 
 the limits of this state, in any place except his place of busi- 
 ness, or within such place of business without having right- 
 fully in his possession and posted in a conspicuous place 
 therein the certificate of authority hereinabove provided for, 
 shall be guilty of a misdemeanor. [Laws 1909, § 396, p. 
 1013.] 
 
 § 450. Redemption of Unused Passage Ticket. 
 
 [§ 2649, Rem.-Bal.] Every person or corporation engaged 
 wholly or in part in the business of carrying passengers for 
 hire in this state, and every authorized ticket agent thereof, 
 to whom there shall be presented by the holder thereof, 
 within one year after its expiration, any passage ticket or 
 part thereof, or other evidence of right to travel, wholly or 
 in part upon the railroad or boat of such person or corpora- 
 tion, which shall be wholly or partially unused, who shall 
 fail to redeem the same within three days after presentation, 
 upon the following terms, to wit : 
 
 1. "When wholly unused, for the price paid therefor; and 
 
 2. When partially unused, for the price paid therefor, less 
 the regular toll or charge for the passage had; 
 
 Shall be punished by a fine of not more than five hundred 
 dollars, and in addition thereto shall forfeit to the holder of 
 such ticket or part thereof or other evidence of a right to 
 travel, three times the redeemable value thereof. [Laws 
 1909, § 397, p. 1013.]
 
 § 451 EXISTING CORPORATION LAWS, 1913. 298 
 
 § 451. Acknowledgment — Form of by Corporation. 
 
 [§ 87611/2, Rem.-Bal.] Certificates of acknowledgment of 
 an instrument acknowledgedi by a corporation substantially 
 in the following form shall be sufficient: 
 
 State of 
 
 County of , — ss. 
 
 On this day of , A. D. 19 , before me 
 
 personally appeared to me known to be the [presi- 
 dent, vice-president, secretary, treasurer, or other authorized 
 officer or agent, as the case may be] of the corporation that 
 executed the within and foregoing instrument, and acknowl- 
 edged the said instrument to be the free and voluntary act 
 and deed of said corporation, for the uses and purposes 
 therein mentioned, and on oath stated that he was author- 
 ized to execute said instrument, and that the seal affixed is 
 the corporate seal of said corporation. 
 
 In witness whereof, I have hereunto set my hand and 
 affixed my official seal the day and year first above written. 
 
 [Signature and title of officer.] 
 
 [Laws 1903, § 1, p. 245.] 
 
 § 451a. Notaries Public. 
 
 It shall be lawful for any notary public who is a stock- 
 holder, director, officer or employee of a bank or other corpo- 
 ration to take the acknowledgment of any party to any 
 written instrument executed to or by such corporation, or 
 to protest for nonacceptance or nonpayment bills of ex- 
 change, drafts, checks, notes and other negotiable instru- 
 ments which may be owned or held for collection by such 
 corporation: Provided, it shall be unlawful for any notary 
 public to take the acknowledgment of an instrument by or 
 to a bank or other corporation of which he is a stockholder, 
 director, officer or employee, where such notary is a party 
 to such instrument individually or to protest any negotiable 
 instrument owned or held for collection by such corporation, 
 where such notary is individually a party to such instru- 
 ment. [Laws 1913, e. 32.J
 
 299 FOREIGN CORPORATIONS. § 452 
 
 FOREIGN CORPORATIONS. 
 
 § 452. Power of, to Do Business in This State. 
 
 [§ 3720, Rem.-Bal.] Any corporation incorporated under 
 the laws of any state or territory in the United States, or of 
 any foreign country, state or colony, for any of the purposes 
 which domestic corporations are authorized to be formed 
 under the laws of this state, shall have full power and is 
 hereby authorized to sue and to be sued in any court having 
 competent jurisdiction, to acquire, purchase, hold, mortgage, 
 sell, convey, or otherwise dispose of, in the corporate name, 
 all real estate or personal property necessary or convenient 
 to carry into effect the objects and purposes of its corpora- 
 tion, and also any interest in real estate, by mortgage or 
 otherwise do [due] to or loans made by such foreign cor- 
 porations within the boundaries of this state, either prior 
 to or after the passage of this act, and generally do and 
 perform every act and transact every kind of business within 
 this state in the same manner and to the same extent as cor- 
 porations incorporated and organized under the laws of this 
 state are authorized to do under the laws of this state, by 
 a compliance with all the conditions prescribed by the next 
 two succeeding sections of this chapter: Provided, however, 
 that this act shall not be [so] construed as to allow such 
 foreign corporation to transact business within the state 
 on more favorable conditions than are prescribed by law for 
 a similar corporation organized under the laws of this state : 
 And provided further, that no corporation, the majority of 
 the capital stock of which is owned by aliens, other than 
 those who in good faith have declared their intention to be- 
 come citizens of the United States, shall acquire the owner- 
 ship of any lands in this state other than lands containing 
 valuable deposits of minerals, metals, iron, coal or fireclay, 
 and the necessary land for mills and machinery to be used 
 in the development thereof, and the manufacture of the 
 products therefrom, except where acquired under mortgage, 
 or in good faith in the ordinary course of justice in the col-
 
 § 452 EXISTING CORPORATION LAWS, 1913. 300 
 
 lection of debts: Provided further, that no foreign corpora- 
 tion which is hereafter organized which has among its other 
 powers the business of dealing in real estate, and buying and 
 selling the same, and for the purpose of carrying on -a real 
 estate brokerage business shall be permitted to transact such 
 business of buying and selling and dealing in real estate, and 
 carrying on a brokerage business therein, in this state ; but 
 this prohibition shall not extend to any other business for the 
 transaction of which such corporation may be organized. 
 [Laws 1890, §1, p. 288; Cd. 1881, §2479; 1 H. C, §1524; 
 Bal., § 4291.] 
 
 The fact that a fishing company had its active place of business 
 outside the state did not make it a nonresident. (Hastings v. Ana- 
 cortes Packing Co., 29 Wash. 224, 69 Pac. 776.) 
 
 A foreign corporation organized prior to the act of March 28, 1890, 
 prohibiting foreign corporations from dealing as brokers of real estate 
 is not within that statute. (Realty Co. v. Appolonio, 5 Wash. 437, 
 32 Pac. 219.) 
 
 In the absence of proof, a foreign corporation is presumed to have 
 power to purchase its own stock. (Yeaton v. Eagle Oil & Ref, Co., 
 4 Wash. 183, 29 Pac. 1051.) 
 
 A contract cannot be repudiated on the ground that the foreign 
 company has not complied with the statute for authority to do busi- 
 ness. (Whitman Agr. Co. v. Strand, 8 Wash. 647, 36 Pac. 682.) 
 
 Though a foreign corporation has failed to comply with the statute 
 for authority to do business, its contracts are binding on it. (Edison 
 Gen. Electric Co. v. Canadian Pac. Nav. Co., 8 Wash. 370, 36 Pac. 260; 
 Horrell v. California etc. Assn., 40 Wash. 531, 82 Pac. 889.) 
 
 A deed delivered to a corporation after compliance with the statute 
 but executed prior thereto is not void. (Sayward v. Gardner, 5 Wash. 
 247, 31 Pac. 761, 33 Pac. 389.) 
 
 Compliance with the statute* by a foreign company after filing of 
 lien notice, but before suit to foreclose the same, is sufficient in the 
 suit. (Huttig Bros. Mfg. Co. v. Denny Hotel Co., 6 Wash, 122, 32 
 Pac, 1073.) 
 
 A party contracting with a foreign corporation is estopped to set 
 up failure to comply with the statute. (Rathbone, Sard & Co. v. 
 Frost, 9 Wash. 162, 37 Pac. 298.) 
 
 A fishing license is not within the constitutional provision pro- 
 hibiting aliens from holding land. (Hastings v. Anacortes Packing 
 Co., 29 Wash. 224, 69 Pac. 776.)
 
 301 FOREIGN CORPORATIONS. § 452 
 
 A foreign corporation may sue in this state without the appointment 
 of an agent. (Dearborn Foundry Co. v. Augustine, 5 Wash. 67, 31 
 Pac. 327; La France Fire Engine Co. v. Mt. Vernon, 9 Wash. 142, 37 
 Pac. 287, 38 Pac. 80; Marble Savings Bank v. Williams, 23 Waijh. 766, 
 63 Pac. 511.) 
 
 It was held that the court had jurisdiction of a foreign corporation 
 defendant which was doing business in the state and whose officers 
 were residents of the state. (Lively v. Husebye, 60 Wash. 47, 110 
 Pac. 673.) 
 
 Ballinger's Code, section 4854, requiring actions against corpora- 
 tions to be brought in the county where the company has an office 
 or person upon whom service may be made resides does not apply 
 to foreign corporations having no office or place of business in the 
 state. (Butler v. Supreme Court of Foresters, 48 Wash. 147, 93 Pac. 
 66; Campbell v. Order of Washington, 53 Wash. 398, 102 Pac. 410.) 
 
 A general appearance to dismiss an action against a foreign com- 
 pany where the court has no jurisdiction of the subject matter does 
 not confer jurisdiction. (Hammel v. Fidelity Mutual Aid Assn., 43 
 Wash. 448, 85 Pac. 35.) 
 
 A foreign corporation may be indicted for creating a public nui- 
 sance. (State V. Paggett, 8 Wash. 579, 36 Pac. 487.) 
 
 Where a foreign corporation is not doing business in the state, 
 service on an officer temporarily in the state does not give jurisdic- 
 tion. (Carstens & Earles v. Leidigh & Havens Lumber Co., 18 Wash. 
 450, 51 Pac. 1051.) 
 
 A foreign corporation not doing business in the state cannot be re- 
 quired to answer in an action in personam. (Rich v. Chicago etc. R. 
 Co., 34 Wash. 14, 74 Pac. 1008.) 
 
 Where a company has an agent located within the state who does 
 business for the company, it is doing business in the state. (Lee v. 
 Fidelity Storage etc. Co., 51 Wash. 208, 98 Pac. 658; Womach v. Case 
 etc. Co., 62 Wash. 661, 114 Pac. 509.) 
 
 Routing of freight over a foreign railway by soliciting agent is 
 not doing business within the state. (Arrow Lumber etc. Co. v. Union 
 Pac. R. Co., 53 Wash. 629, 102 Pac. 650.) 
 
 A foreign company with trust company powers must comply with 
 the trust company laws of this state. (State v. Nichols, 47 Wash. 
 117, 91 Pac. 632.) 
 
 A foreign company authorized to do brokerage business in real estate 
 may file its articles and do such other business as its charter and the 
 law permits. Section 4291 of Ballinger's Code does not prevent. 
 (State V. Nichols, 48 Wash. 605, 94 Pac. 196.) 
 
 A foreign corporation by complying with the laws of this state can 
 not use its corporate name in unfair competition with a local partner- 
 ship. (Eastern Outfitting Co. v. Manheim, 59 Wash. 428, 110 Pac. 23.)
 
 § 453 EXISTING CORPORATION LAWS, 1913. 302 
 
 § 453. Certified Copy of Charter, etc., to be Filed and Re- 
 corded. 
 
 [§ 3721, Rem.-Bal.] Such corporation shall cause to be 
 filed and recorded in the office of the Secretary of State a 
 copy of its charter, articles of incorporation, memorandum 
 of 'association, or certificate of incorporation, certified to by 
 the officer who is the custodian of the same according to the 
 laws of the state or territory, country or colony where such 
 corporation is incorporated, or who is authorized to issue 
 certificates of incorporation according to laws of such state, 
 territory or foreign country or colony. The instruments 
 herein required to be filed and recorded shall be attested by 
 such certifying officer under his hand and seal of office, which 
 attestation shall be prima facie proof of the facts herein 
 stated, and the genuineness of the certificate. If such officer 
 has no official seal, his certificate shall state that fact over 
 his signature, and thereupon the Secretary of State or of 
 the territory, in case of corporations within the United 
 States, and the consul-general, consul, vice-consul, deputy 
 consul, consular agent, or commercial agent of the United 
 States, at or nearest to the place where such certificate is 
 made, in the case of corporations not within the United 
 States, shall certify under his hand and seal of office to the 
 genuineness of the signature of the officer making the cer- 
 tificate, and to the fact that at the time of making such cer- 
 tificate the person making the same held the office described 
 in the certificate. [Laws 1890, § 2, p. 289; Cd. 1881, § 2480; 
 1 H. C, §1525; Bal., §4292.] 
 
 Copy of articles of incorporation and certified copy of appointment 
 of agent prima facie evidence of right of foreign corporation to do busi- 
 ness. (Knapp, Burrell Co. v. Strand, 4 Wash. 686, 30 Pac, 1063.) 
 
 Special act incorporating foreign company not presumed unconsti- 
 tutional. (Fidelity Insurance Co. v. Nelson, 30 Wash. 340, 70 Pac. 
 961.) 
 
 Purpose of 1 Hill's Code, sections 1524-1531 (1 Bal. Code, sees. 
 4291-4298), requiring foreign corporations to file certified copies of 
 their articles and appoint an agent to receive service, is to prevent 
 imposition and provide means of obtaining service. (Dearborn Foundry 
 Co. V. Augustine, 5 Wash. 67, 31 Pac. 327.)
 
 303 FOREIGN CORPORATIONS. § 454 
 
 No comity involved in foroign corporation filing articles under laws 
 of this state. (State ex rel. Baker etc. Co. v. Nichols, 51 Wash. 619, 
 99 Pac. 876.) 
 
 § 454. Appointment of Agent to be Filed and Recorded. 
 
 [§ 3722, Rem.-Bal.] Such corporations shall also consti- 
 tute and appoint an agent, who shall reside at the place in 
 the state where the principal business of the corporation is 
 to be carried on, to be designated as hereinafter required. 
 Such appointment shall be in writing, signed by the presi- 
 dent or chief officer of such corporation, and shall be attested 
 by its corporate seal, and shall contain the name of the agent, 
 his place of residence sind the place where the principal 
 business of such corporation is to be carried on, and shall 
 authorize such agent to accept service of process in any ac- 
 tion or suit pertaining to the property, business or transac- 
 tions of such corporation within this state in which such 
 corporation may be a party. The signature of such presi- 
 dent or chief officer, attested by the corporate seal to such 
 written appointment, shall be sufficient proof of the appoint- 
 ment of such agent. Such appointment, when duly executed, 
 shall be filed for record in the office of the Secretary of State 
 by such corporation, and shall be there recorded; and such 
 corporation shall have and keep continually some resident 
 agent, empowered as aforesaid during all the time such cor- 
 poration shall conduct or carry on any business within this 
 state, and service of any process, pleading, notice or other 
 paper shall be taken and held as due service on such corpora- 
 tion. Such corporation may change its agent or its prin- 
 cipal place of business, from time to time, by filing and 
 recording with the Secretary of State a new appointment, 
 stating the change of such agent or the change in the prin- 
 cipal place of business; and in the event such foreign cor- 
 poration shall withdraw from this state and cease to trans- 
 act business therein it shall continue to keep and maintain 
 such agent within this state upon whom service of process, 
 pleadings and papers may be made, until the statute of limi- 
 tations shall have run against anyone bringing an action 
 against said corporation, which accrued prior to its with-
 
 § 455 EXISTING CORPORATION LAWS, 1913. 304 
 
 drawal from this state. In case said corporation shall 
 revoke the authority of its designated agent after its with- 
 drawal from this state and prior to the time when the stat- 
 utes of limitations would have run against causes of action 
 accruing against it, then in that event service of process, 
 pleadings and papers in such actions may be made upon the 
 Secretary of State of the state of Washington, and the same 
 shall be held as due and sufficient service upon such corporation. 
 [Laws 1909, § 3, p. 72; 1 H. C, § 1526 ; Bal., § 4293.] 
 
 Sherifif's return must show service on agent within the statute. 
 (Cunningham v. Spokane H. Co., 18 Wash. 524, 52 Pac. 235.) 
 
 Under Ballinger's Code, section 4893, service on a statutory agent 
 of a foreign corporation is insufficient. (Bennett v. Supreme Tent 
 Maccabees, 40 Wash. 431, 82 Pac. 744.) 
 
 Laws of 1895, page 157, not exclusive method of service on agent, 
 and service as provided in Ballinger's Code, section 4875, is sufficient. 
 (Tatum V. Niagara Fire Ins. Co., 43 Wash. 373, 86 Pac. 660.) 
 
 Appearance waives defective service. (Dittenhofer v. Coeur 
 D'Alene etc. Co., 4 Wash. 519, 30 Pac. 660.) 
 
 Unnecessary that appointment of attorney verifying mechanic's 
 lien notice for foreign company be filed in office of Secretary of State. 
 (Huttig Bros. Mfg. Co. v. Denny Hotel Co., 6 Wash. 122, 32 Pac. 1073.) 
 
 Under Ballinger's Code, section 4854, superior court in county where 
 foreign company has no agent gets no jurisdiction by service on agent 
 in another county. (Hammel v. Fidelity Mutual Aid Assn., 42 Wash. 
 448, 85 Pac. 35.) 
 
 § 455. Penalty. 
 
 [§ 3723, Rem.-Bal.] Any foreign corporation doing busi- 
 ness in this state which shall fail to comply with the provi- 
 sions of sections 3721 and 3722, Rem.-Bal. Code of Washing- 
 ton, shall be subject to a penalty of two hundred and fifty dol- 
 lars to be recovered in a civil action to be instituted by the at- 
 torney general in the name of the state of Washington, upon 
 his being furnished with a sworn statement of facts sufficient 
 to justify such action. [Laws 1899, § 1, p. 100.] 
 
 Purchase of a single promissory note or mortgage is not doing busi- 
 ness in the state within the statute applicable to foreign corporations. 
 (Keene Guaranty Savings Bank v. Lawrence, 32 Wash. 572, 73 Pac. 
 680.) 
 
 Maintaining advertising agent is not doing business in the state. 
 (Kich V. Chicago B. & Q. R. Co., 34 Wash. 14, 74 Pac, 1008.)
 
 305 FOREIGN CORPORATIONS. § § 456^58 
 
 Statutory penalty for failure to comply with the statute is exclu- 
 sive. (La France Fire Engine Co. v. Mt. Vernon, 9 Wash. 142, 37 
 Pac. 287, 38 Pac. 80; Rathbone, Sard & Co. v. Frost, 9 Wash. 162, 37 
 Pac. 298.) 
 
 Failure of foreign company to file copy of charter and appoint agent 
 does not render its contract void. (Dearborn Foundry Co. v. Augus- 
 tine, 5 Wash. 67, 31 Pac. 327.) 
 
 Contract cannot be repudiated on ground that the foreign company 
 has not complied with the statute for authority to do business. (Whit- 
 man Agr. Co. v. Strand, 8 Wash. 647, 36 Pac. 682.) 
 
 Only the state has the right to question authority of foreign cor- 
 poration to hold land in this state. (Oregon Mtg. Co. v. Carstens, 16 
 Wash. 165, 47 Pac. 421; Goon Gan v. Richardson, 16 Wash. 373, 47 
 Pac. 762; State ex rel. Winston v. Hudson Land Co., 19 Wash. 85, 
 52 Pac. 574.) 
 
 § 456. Penalty Goes to State Treasurer. 
 
 [§ 3724, Rem.-Bal.] All penalties so recovered shall be 
 paid into the general fund of the state treasury. [Laws 
 1899, § 2, p. 100.] 
 
 § 457. Act does not Apply to Companies — When. 
 
 [§ 3725, Rem.-Bal.] No corporation which has heretofore 
 complied with the laws of the state or territory of Washing- 
 ton hitherto existing, regarding foreign corporations, and 
 has kept a duly appointed agent within the boundaries of the 
 state as heretofore required, shall be required to file for rec- 
 ord, or cause to be recorded, the certified copies required by 
 this act, or to execute or file for record, or cause to be re- 
 corded, a new appointment of agent as herein required. 
 [Laws 1890, § 4, p. 290; 1 H. C, § 1527; Bal., § 4294.] 
 
 § 458. County Assessor Shall Report to County Auditor. 
 
 [§ 3726, Rem.-Bal.] It shall be the duty of each and every 
 county assessor in this state to ascertain each and every year, 
 at the time of the tax assessment of his county, the name of 
 every foreign corporation doing business by agent or other- 
 wise within his county, the nature of such business, and the 
 name of the agent of each of such corporations, if any there 
 be, together with such agent's place of address, and shall, 
 within ten days from and after the compilation of such as- 
 20
 
 §§459,460 EXISTING CORPORATION LAWS, 1913. 306 
 
 sessment, make out and deliver to the county auditor of his 
 county a full and complete list of the names of such corpora- 
 tions doing business in his county, together with the nature 
 of the business so carried on by each of such corporations 
 and the name of the resident agent of each of such corpora- 
 tions, if any there be, and the place of residence of each of 
 such agents. [Cd. 1881, § 2482 ; 1 H. C, § 1528 ; Bal., § 4295.] 
 
 § 459. County Auditor to Report to Secretary of State. 
 
 [§ 3727, Rem.-Bal.] It shall be the duty of each and every 
 county auditor in this state to make out and transmit to the 
 Secretary of State, within thirty days after the receipt by 
 him from such county assessor of the lists provided in sec- 
 tion fifteen hundred and twenty-eight of this volume of gen- 
 eral statutes [3726, Rem.-Bal.], a full, true and concise state- 
 ment of the names of such corporations, their place of busi- 
 ness, the nature of business conducted by such corporations, 
 and the name of each and every agent of each of such cor- 
 porations, if any there be, and the places of residence of such 
 agents. [Cd. 1881, sec. 2483 ; 1 H. C, § 1529 ; Bal., § 4296.] 
 
 § 459a. Recording Fees. 
 
 [§3728, Rem.-Bal.] The fees for recording, under the 
 provisions of this chapter, shall be the same as are allowed 
 by law to the Secretary of State for certified copies of papers 
 on file in his office. [Cd. 1881, § 2484; 1 H. C, § 1530; Bal., 
 § 4297.] 
 
 § 460. Agent's Liability. 
 
 [§ 3729, Rem.-Bal.] Any agent of any foreign corpora- 
 tion conducting or carrying on business within the limits of 
 this state, for and in the name of such corporation, contrary 
 to any of the provisions of this chapter, shall be deemed guilty 
 of a misdemeanor, and upon conviction thereof, shall be pun- 
 ished by a fine not exceeding two hundred dollars, or by im- 
 prisonment in the county jail for a term not exceeding three 
 months, or by both such fine and imprisonment. [Cd. 1881, 
 § 2485 ; 1 H. C, § 1531 ; Bal, § 4298.]
 
 307 FOREIGN CORPORATIONS. § 461 
 
 § 461. County Officers' Liability. 
 
 [§ 3730, Rem.-Bal.] Any county assessor failing to make 
 out and deliver to the county auditor of his county a list 
 within the time and in the manner provided in section 2485, 
 [Rem.-Bal., § 3726] and any county auditor failing to make 
 out and transmit to the Secretary of State a statement, within 
 the time and in the manner provided in section 2482 [Rem.- 
 Bal., § 3727] shall be deemed guilty of a misdemeanor, and, 
 upon conviction thereof, shall be punished by a fine not exceed- 
 ing three hundred dollars. [Cd. 1881, § 2486 ; 1 H. C, § 1532 ; 
 Bal., § 4299.]
 
 § 462 EXISl'ING CORPORATION LAWS, 1913. 308 
 
 RIGHT OF EMINENT DOMAIN BY 
 CORPORATION. 
 
 § 462. Right to Appropriate Water and Build Dams, etc. 
 
 [§ 9509, Rem.-BaL] Any person or persons, or company 
 now incorporated, or that may hereafter become incorporated 
 under the laws of this state, for the purpose of mining or 
 manufacturing, shall have the right to purchase or appropri- 
 ate and take possession of and divert from its natural chan- 
 nel, and use and hold the waters of any river, creek or 
 stream in this state that may be required for the mining 
 and manufacturing purposes of any such person or persons, 
 corporation or corporations, and to construct all dams, 
 canals, reservoirs, ditches, pipes, flumes and aqueducts suit- 
 able and necessary for the controlling, directing, and running 
 such waters to their mines or manufacturing establishments 
 of any such person or persons, corporation or corporations, 
 where the same may be intended to be utilized for such pur- 
 poses: Provided, that no such appropriation or diversion of 
 the water of any such river, creek, or stream from its natural 
 channel, nor shall any such dam, canal, reservoir, ditch, pipe, 
 flume or aqueduct be constructed, to the detriment of any 
 person or persons, corporation or corporations, occupying the 
 lands or being located below the point or place of such ap- 
 propriation or diversion on any such stream or its tributaries, 
 or above or below such dam, canal, reservoir, ditch, pipe, 
 flume, or aqueduct, or the owners of the land through which 
 the waters run in the natural course for the deprivation of 
 the same, or the owners of the land through or upon which 
 such dam, canal, reservoir, ditch, pipe, flume, or aqueduct 
 may pass through or over, or be situated upon, unless just 
 and adequate compensation be previously ascertained and 
 paid therefor. [Laws 1879, § 1, p. 124; 1 H. C, § 1589 ; Bal., 
 § 4281.]
 
 309 RIGETT OF EMINENT DOMAIN BY CORPORATION. § 463 
 
 A company may condemn land in accordance with its special char- 
 ter or subsequent general law. (Cascades R. Co. v. Johns, 1 Wash. 
 Ter. 557.) 
 
 Water for manufacturing purposes not public use. (State ex rel. 
 Tacoma Indust. Co. v. White River Power Co., 39 Wash. 648, 82 Pac. 
 150; Sievers v. Dalles P. & A. Nav. Co., 24 Wash. 302, 64 Pac. 539.) 
 
 § 463. Appropriation — Procedure — Petition — Requisites of. 
 
 [§ 921, Rem.-Bal.] Any corporation authorized by law to 
 appropriate land, real estate, premises, or other property for 
 right of way or any other corporate purposes, may present to 
 the superior court of the county in which any land, real estate, 
 premises, or other property sought to be appropriated shall 
 be situated, or to the judge of such superior court, in any 
 county where he has jurisdiction or is holding court, a peti- 
 tion in which the land, real estate, premises, or other prop- 
 erty sought to be appropriated, shall be described with 
 reasonable certainty, and setting forth the name of each and 
 every owner, encumbrancer or other person or party in- 
 terested in the same, or any part thereof, so far as the same 
 can be ascertained from the public records, the object for 
 which the land is sought to be appropriated, and praying 
 that a jury be impaneled to ascertain and determine the com- 
 pensation to be made in money, irrespective of any benefit 
 from any improvement proposed by such corporation, to such 
 owner or owners, respectively, and to all tenants, encum- 
 brancers, and others interested, for the taking or injuriously 
 affecting such lands, real estate, premises, or other property, 
 or in case a jury be waived, as in other civil cases in courts 
 of record in the manner prescribed by law, then that the com- 
 pensation to be made, as aforesaid, be ascertained and de- 
 termined by the court, or judge thereof. [Laws 1890, § 1, 
 p. 294; 2 H. C, § 648; Bal., § 5637.] 
 
 Taking of land by eminent domain not strictly action in rem. 
 (Smith's Petition, 9 Wash. 85, 37 Pac. 311, 494.) 
 
 Taking of private property for public use one of the recognized 
 powers of sovereignty. (Samish River Boom Co. v. Union Boom Co., 
 32 Wash. 586, 73 Pac. 670.) 
 
 Statutes authorizing condemnation are strictly construed. (Spo- 
 kane v. Colby, 16 Wash. 610, 48 Pac. 248; Seattle v. Fidelity Trust
 
 § 463 EXISTING CORPORATION LAWS, 1913. 310 
 
 Co., 22 Wash. 154, 60 Pac. 133; State v. Superior Court, Chelan, 36 
 Wash. 381, 78 Pac. 1011.) 
 
 One company cannot condemn for another. (Seattle & M. R. Co. v. 
 State, 7 Wash. 150, 34 Pac. 551.) 
 
 PUBLrC USE. 
 
 Boom companies are quasi public and may be given right to con- 
 demn. (North River Boom Co. v. Smith, 15 Wash. 138, 45 Pac. 750.) 
 
 Ballinger's Code, section 4379, gives boom company right to con- 
 demn the land selected in its "plat of survey." (Samish River Boom 
 Co. V. Union Boom Co., 32 Wash. 586, 73 Pac. 670.) 
 
 Railroad company constructing its road will be protected from ap- 
 propriation of its terminals. (State ex rel. Spokane Falls & N. R. 
 Co. V. Superior Court, 40 Wash. 389, 82 Pac. 417.) 
 
 Question of public use is judicial question determined by character, 
 not extent of use. (Peterson v. Smith, 6 Wash. 163, 32 Pac, 1050; 
 Healy Lumber Co. v. Morris, 33 Wash. 490, 74 Pac. 681; Samish River 
 Boom Co. V. Union Boom Co., 32 Wash. 586, 73 Pac. 670; State ex rel. 
 Ami Co. V. Superior Court, 42 Wash. 675, 85 Pac. 669; North River 
 Boom Co. V. Smith, 15 Wash. 138, 45 Pac. 750; Lewis County v. 
 Gordon, 20 Wash. 80, 54 Pac. 779.) 
 
 The use in eminent domain must be by the public or some quasi- 
 public agency. (Healy Lumber Co. v. Morris, 33 Wash. 490, 74 Pac. 
 681.) 
 
 Water for manufacturing purposes not public use. (State ex rel. 
 Tacoma Indust. Co. v. White River Power Co., 39 Wash. 648, 82 Pac. 
 150.) 
 
 Street railway public use. (State ex rel. Harlan v. Centralia Co., 
 42 Wash. 632, 85 Pac. 344.) 
 
 Sale of electric power to public not public use. (State ex rel. 
 Harris v. Superior Court, 42 Wash. 660, 85 Pac. 666.) 
 
 Highway or public street is public use. (State ex rel. Schroeder v. 
 Superior Court, 29 Wash. 1, 69 Pac. 366; State ex rel. Thomas v. 
 Superior Court, 42 Wash. 521, 85 Pac. 256.) 
 
 Right of way for logging roads and lumbering purposes not public 
 use. (Healy Lumber Co. v. Morris, 33 Wash. 490, 74 Pac. 681; 
 Matthews v. Belfast Mfg. Co., 35 Wash. 662, 77 Pac. 1046.) 
 
 Right of way for railroad public use. (State ex rel. Smith v. 
 Superior Court, 30 Wash. 219, 70 Pac. 484; State ex rel. Trimble v. 
 Superior Court, 31 Wash. 445, 72 Pac. 89; State ex rel. Harlan v. Cen- 
 tralia Co., 42 Wash. 632, 85 Pac. 344.) 
 
 Boom company public carrier of logs as distinguished from private 
 company is quasi public and may condemn land for its public use. 
 (North River Boom Co. v. Smith, 15 Wash. 138, 45 Pac. 750; Matthews 
 V. Belfast Mfg. Co., 35 Wash. 662, 77 Pac. 1046.)
 
 311 RIGHT OF EMINENT DOMAIN BY CORPORATION. § 463 
 
 Irrigation ditch is public use. (Prescott Trr. Co. v. Flathers, 20 
 Wash. 454, 55 Pac. 635; Weed v. Goodwin, 36 Wash. 31, 78 Pac. 36.) 
 
 Levees and dikes a public use. (Hansen v. Hammer, 15 Wash. 315, 
 46 Pac. 332.) 
 
 Drainage of lands public use. (Lewis County v. Gordon, 20 Wash. 
 ^ 80, 54 Pac. 779.) 
 
 Tide lands, school lands or other public property may not be taken 
 by condemnation. (Seattle & M. E. Co. v. State, 7 Wash. 150, 34 
 Pac. 551; North River Boom Co. v. Smith, 15 Wash. 138, 45 Pac. 750; 
 Samish Boom Co. v. Callvert, 27 Wash. 611, 68 Pac. 367; State ex 
 rel. Trimble v. Superior Court, 31 Wash. 445, 72 Pac. 89.) 
 
 One public or quasi-public corporation may condemn property of 
 another not interfering with the public use by the latter company, 
 e. g., railroad crossings and connections. (Seattle & M. R. Co. v. Bel- 
 lingham Bay & E. R. Co., 29 Wash. 491, 69 Pac. 1107; Samish River 
 Boom Co. V. Union Boom Co., 32 Wash. 586, 73 Pac. 670; Seattle & M. 
 R. Co. v. State, 7 Wash. 150, 34 Pac. 551; State ex rel. Spokane Falls & 
 N. R. Co. v. Superior Court, 40 Wash. 389, 82 Pac. 417.) 
 
 Section 6326, Remington and Ballinger's Code, authorizing condemna- 
 tion of land for irrigation ditches by private owner, constitutional. 
 (State ex rel. Galbraith v. Superior Court, 59 Wash. 621, 110 Pac. 429.) 
 
 A private use incidental to the public use does not deprive a com- 
 pany of right of condemnation. (State ex rel. Harris v. Olympia 
 L. & P. Co., 46 Wash. 511, 90 Pac. 656; State ex rel. Burrows v. 
 Superior Court, 48 Wash. 277, 93 Pac. 423; State ex rel. Shropshire 
 V. Superior Court, 51 Wash 386, 99 Pac. 3; State ex rel. Dominick 
 V. Superior Court, 52 Wash. 196, 100 Pac. 317; State ex rel. Mcintosh 
 T. Superior Court, 56 Wash. 214, 105 Pac. 637; Tacoma v. Nisqually 
 Power Co., 57 Wash. 420. 107 Pac. 199; State ex rel. Clark v. Superior 
 Court, 62 Wash. 612, 114 Pac. 444.) 
 
 A county road or an alley is a public use. (State ex rel. Jones v. 
 Superior Court, 44 Wash. 476, 87 Pac. 521; State ex rel. Paget v. 
 Superior Court, 47 Wash. 11, 91 Pac. 241.) 
 
 The public use of a right of way not affected by the agreement of 
 railway company as health requirement not to maintain stations 
 thereon. (State ex rel. Kent Lumber Co. v. Superior Court, 46 Wash. 
 516, 90 Pac. 663.) 
 
 A railway terminal company connecting business establishments with 
 terminals by tracks and ferries is a railroad company entitled to 
 exercise right of eminent domain. (State ex rel. Milwaukee Term. 
 R. Co. V. Superior Court, 54 Wash. 365, 103 Pac. 469, 104 Pac. 175.) 
 
 Toll-logging road as public carrier is public use. (State ex rel. 
 Clark V. Superior Court, 62 Wash. 612, 114 Pac. 444.) 
 
 Use of banks of stream by boom company for artificial freshets is 
 public use. (State ex rel. Wilson v, Superior Court, 47 Wash. 397,
 
 § 463 EXISTING CORPORATION LAWS, 1913. 312 
 
 92 Pac. 2G9; State ex rel. Pealer v. Superior Court, 58 "Wash. 565, 
 109 Pac. 340.) 
 
 Land necessary for freight warehouse for railroad is public use. 
 (State ex rel. True v. Superior Court, 56 Wash. 249, 105 Pac. 639.) 
 
 Right of way of private railroad may be condemned. (State ex 
 rel. Kent Lumber Co. v. Superior Court, 46 Wash. 516, 90 Pac. 663.) 
 
 Remington & Ballinger's Code, sections 5717, 5718, authorizing con- 
 demnation by railroads, do not authorize condemnation of city street. 
 (State ex rel. Schade Brew. Co. v. Superior Court, 62 Wash. 96, 113 
 Pac. 576.) 
 
 Property already devoted to public use may be condemned where 
 necessary. (Tacoma v. Nisqually Power Co., 57 Wash. 420, 107 Pac. 
 199; State ex rel. Columbia Valley R. Co. v. Superior Court, 45 Wash. 
 316, 88 Pac. 332; North Coast R. v. Northern Pac. R. Co., 48 Wash. 
 529, 94 Pac. 112; State ex rel. Milwaukee Terminal R. Co. v. Superior 
 Court, 54 Wash. 365, 103 Pac. 469, 104 Pac. 175; State ex rel. Everett & 
 Cherry Valley Tr. Co. v. Superior Court, 59 Wash. 598, 110 Pac. 
 428; State ex rel. Portland & Seattle R. Co. v. Superior Court, 45 
 Wash. 270, 88 Pac. 201; State ex rel. Kent Lumber Co. v. Superior 
 Court, 46 Wash. 516, 90 Pac. 663; State ex rel. North Coast R. v. 
 Northern Pacific R. Co., 49 Wash. 78, 94 Pac. 907.) 
 
 Riparian rights on navigable and non-navigable waters may be 
 condemned under Ballinger's Code, section 4143, except so far as 
 needed by owner for irrigation of his own lands. (State ex rel. 
 Kettle Falls etc. Co. v. Superior Court, 46 Wash. 500, 90 Pac. 650; 
 State ex rel. Burrows v. Superior Court, 48 Wash. 277, 93 Pac. 423; 
 State ex rel. Wilson v. Gray's Harbor etc. R. Co., 60 Wash. 32, 110 
 Pac. 676; State ex rel. Liberty Lake Irr. Co. v. Superior Court, 47 
 Wash. 310, 91 Pac. 968; Spokane Valley Land & Water Co. v. Jones 
 & Co., 53 Wash. 37, 101 Pac. 515.) 
 
 TAKING OF PRIVATE PROPERTY. 
 
 The entire fees or such interest as is necessary may be condemned. 
 (Oregon R. & Nav. Co. v. Owsley, 3 Wash. Ter. 38, 13 Pac. 186; 
 Nicomen Boom Co. v. North Shore Boom Co., 40 Wash. 315, 82 Pac. 
 412.) 
 
 Word "damaged" in constitution, article 1, section 16, does not 
 mean same as "taken." (Brown v. Seattle, 5 Wash. 35, 31 Pac. 313, 
 32 Pac. 214.) 
 
 What is taking is judicial question. (Bowes v. Aberdeen, 58 Wash. 
 535, 109 Pac. 369.) 
 
 Building of wharves on shores of navigable waters neither taking 
 nor damaging. (Eisenbach v. Hatfield, 2 Wash. 236, 26 Pac. 539.) 
 
 Construction of slopes on abutting property on lowering grade of 
 street is damaging, not taking. (Compton v. Seattle, 38 Wash. 514, 
 80 Pac. 757.)
 
 313 RIGHT OP EMINENT DOMAIN BY CORPORATION. § 463 
 
 A statute authorizing the taking of private property without assess- 
 ment of damages or payment of compensation is unconstitutional. 
 (Askham v. King County, 9 Wash. 1, 36 Pac. 1097; Skagit County v. 
 Stiles, 10 Wash. 388, 39 Pac. 116; Snohomish County v. Hayward, 11 
 Wash. 429, 39 Pac. 652.) 
 
 The property owner has the constitutional right to have compen- 
 sation paid before his property is taken. (Peterson v. Smith, 6 Wash. 
 163, 32 Pac. 1060; In re Smith's Petition, 9 Wash. 85, 37 Pac. 311, 
 494; Puyallup v. Lacey, 43 Wash. 110, 86 Pac. 215; Adams County v. 
 Dobschlag, 19 Wash. 356, 53 Pac. 339 ; Olson v. Seattle, 30 Wash. 687, 71 
 Pac. 201.) 
 
 A property owner may waive his right to compensation. (Oregon 
 E. & Nav. Co. V. Owsley, 3 Wash. Ter. 38, 13 Pac. 186; Oregon R. & 
 Nav. Co. v. Day, 3 Wash. Ter. 252, 14 Pac. 588; Lewis v. Seattle, 5 
 Wash. 741, 32 Pac. 794; Kaufman v. Tacoma, O. & G. H. E. Co., 11 
 Wash. 632, 40 Pac. 137.) 
 
 A lessee of land has property right for which he is entitled to dam- 
 ages in condemnation by railroad. (Seattle & M. R. Co. v. Scheike, 
 3 Wash. 625, 29 Pac. 217, 30 Pac. 503.) 
 
 So has a vendee in contract for state tide lands. (State ex rel. 
 Trimble v. Superior Court, 31 Wash. 445, 72 Pac. 89.) 
 
 So a claimant under timber culture entry. (Yakima County t. 
 Tullar, 3 Wash. Ter. 393, 17 Pac. 885.) 
 
 So a claimant under pre-emption entry of public lands. (Enoch 
 V. Spokane Falls etc. E. Co., 6 Wash. 393, 33 Pac. 966.) 
 
 So an abutting owner's easement of light, air and access to street. 
 (State ex rel. Smith v. Superior Court, 30 Wash. 219, 70 Pac. 484.) 
 
 COMPENSATION. 
 
 Injunction will issue to restrain the taking of private property for 
 public use without first making compensation. (Brown v. Seattle, 
 5 Wash. 35, 31 Pac. 313, 32 Pac. 214; Olson v. Seattle, 30 Wash. 687, 71 
 Pae. 201; Swope v. Seattle, 36 Wash. 113, 78 Pac. 607; Seattle Transfer 
 Co. v. Seattle, 27 Wash. 520, 68 Pac. 90.) 
 
 Elements of compensation in condemnation: Destruction of valuable 
 springs. (Yakima County v. Tullar, 3 W^ash. Ter. 393, 17 Pac. 885.) 
 Discharge of water on owner's premises. (Wendel v. Spokane Co., 
 27 Wash. 121, 67 Pae. 576.) Obstruction of stream of water. (Seat- 
 tle & M. E. Co. V. Boeder, 30 Wash. 244, 70 Pac. 498.) Obstruction 
 of access to property. (Patton v. Olympia Door etc. Co., 15 Wash. 
 210, 46 Pac. 237; Hatch v. Tacoma etc. E. Co., 6 Wash. 1, 32 Pac. 
 1063; Schwede v. Hemrich Bros. Brew. Co., 29 Wash. 21, 69 Pac. 
 362.) Obstruction of light and air. (Brown v. Seattle, 5 Wash. 35, 
 31 Pac. 313, 32 Pac. 214; State ex rel. Smith v. Superior Court, 26 Wash. 
 278, 66 Pac. 385; Seattle Transfer Co. v. Seattle, 27 Wash. 520, 68 
 Pac. 90.) Fencing and crossings made necessary by the condemnation.
 
 § 4-63 EXISTING CORPORATION LAWS, 1913. 314 
 
 (Seattle & M. E. Co. v. Gilchrist, 4 Wash. 509, 30 Pac. 738; Seattle & 
 Mont. R. Co. V. MurpMne, 4 Wash. 448, 30 Pac. 720.) Soot, cinders, 
 smoke, odors, vibration. (Smith v. St. Paul etc. R. Co., 39 Wash. 355, 
 81 Pac. 840.) New use as telephone line in addition to pipe-line. (Spo- 
 kane V. Colby, 16 Wash. 610, 48 Pac. 248.) Itestruction of growing 
 crops. (Seattle & M. R. Co. v. Scheike, 3 Wash. 625, 29 Pac. 217, 30 Pac. 
 503.) Value for special use. (Seattle & M. E. Co. v. Murphine, 4 
 Wash. 448, 30 Pac. 720; Seattle & M. R. Co. v. Roeder, 30 Wash. 244, 
 70 Pac. 498.) 
 
 Owner by stipulating compensation waives objection and rights. 
 (Pearl Oyster Co. v. Seattle & Montana R. Co., 53 Wash. 101, 101 
 Pac. 503.) 
 
 Owner of tide lands entitled to compensation for the lands taken, 
 the damage to lands not taken and the value of statutory lease rights, 
 and immaterial that owner became such after proceedings begun. 
 (State ex rel. Hulme v. Gray's Harbor etc. R. Co., 54 Wash. 530, 103 
 Pac. 809.) 
 
 Current for water power being destroyed is element of damages. 
 (Inland Empire R. Co. v. McKinley, 48 Wash. 675, 94 Pac. 644.) 
 
 Boom-site on tide lands not appurtenant to uplands and its value 
 not assessable as damages. (Gray's Harbor Boom Co. v. Lownsdale, 
 54 Wash. 83, 102 Pae. 1041, 104 Pac. 267.) 
 
 Otherwise where defendants own the shore. (Columbia etc. Co. v. 
 Hutchinson, 56 Wash. 323, 105 Pac. 636.) 
 
 Right of ingress and egress to lots abutting on a street is property 
 to be compensated. (Lund v. Idaho etc. R., 50 Wash. 574, 97 Pac. 
 665.) 
 
 Remote damage not compensated. (Chicago M. & St. P. R. Co. v 
 Alexander, 47 Wash. 131, 91 Pac. 626; Gray's Harbor Boom Co. v 
 Lownsdale, 54 Wash. 83, 102 Pac. 1041, 104 Pac. 267.) 
 
 Abutting owner's interest in maintenance of street must be com 
 pensated. (Brazell v. Seattle, 55 Wash. 180, 104 Pac. 155; Smith v. 
 Centralia, 55 Wash. 573, 104 Pac. 797.) 
 
 Neighboring property not abutting street or right of way not enti 
 tied to compensation. (In re Fifth Avenue, 62 Wash. 218, 113 Pac 
 762; Clute v. North Yakima etc. R. Co., 62 Wash. 531, 114 Pac. 513.) 
 
 Measure of compensation is the value of lands taken irrespective of 
 benefits and damage to lands not taken (Olympia Light & Power 
 Co. V. Harris, 58 Wash. 410, 108 Pac. 940; Gray's Harbor etc. Co. v. 
 Kauppinen, 53 Wash. 238, 101 Pac. 835); but Remington and Bal- 
 linger's Code, section 7725, does not authorize compensation for dam- 
 age to contiguous lot appropriated to distinct use. (Seattle v. Atwood, 
 59 Wash. 112, 109 Pac. 326.) 
 
 The constitutional requirement, article 1, section 16, that property 
 taken or damaged be paid for irrespective of benefits, does not apply
 
 315 RIGHT OF EMINENT DOMAIN BY CORPORATION. § 463 
 
 to county road. (Kitsap County v. Melker, 50 Wash. 29, 96 Pac. 69.5; 
 Tacoma v. Wetherby, 57 Wash. 295, 106 Pac. 903.) 
 
 Award of damages in condemnation draws interest from verdict to 
 entry of judgment. (North Coast E. Co. v. Aumiller, 61 Wash. 271, 
 112 Pac. 384.) 
 
 As between two public service companies seeking condemnation of 
 the same lands, the one prior in time is prior in right. (State ex rel. 
 Cascade etc. Co. v. Superior Court, 53 Wash. 321, 101 Pac. 1094; State 
 ex rel. Kettle Falls etc. Co. v. Superior Court, 46 Wash. 500, 90 Pac. 
 650.) 
 
 Where owners had been compensated by legislative act, they were 
 held not entitled to compensation in condemnation proceedings. 
 (Lewis County v. McGeorge, 47 Wash. 414, 92 Pac. 268.) 
 
 Measure of damages in condemnation is fair market value of land 
 taken at time of appropriation, though enhanced by the proposed 
 improvement, together with damage to land not taken, irrespective of 
 benefits from the improvement. (Enoch v. Spokane Falls etc. E. Co., 
 6 Wash. 393, 33 Pac. 966; Seattle & M. E. Co. v. Boeder, 30 Wash. 
 244, 70 Pac. 498.) 
 
 PEOCEDUEE. 
 
 A person in possession must be made a party defendant and notice 
 must be given to all interested parties. (Owen v. St. Paul etc. E. 
 Co., 12 Wash. 313, 41 Pac. 44; Chehalis County v. Ellingson, 21 Wash. 
 638, 59 Pac. 485; Weed v. Goodwin, 36 Wash. 31, 78 Pac. 36; State 
 ex rel. Trimble v. Superior Court, 31 Wash. 445, 72 Pac. 89.) 
 
 Service may be made by publication where personal service impos- 
 sible. (Moynahan v. Superior Court, 42 Wash. 172, 84 Pac. 655; State 
 ex rel. Thomas v. Superior Court, 42 Wash. 521, 85 Pac. 256.) 
 
 Petition sufficient if it plainly notifies defendants of the issues. 
 (Lewis County v. Schobey, 31 Wash. 357, 71 Pac. 1029; Chelan County 
 V. Navarre, 38 Wash. 684, 80 Pac. 845.) 
 
 No plea or answer is necessary. (Seattle & M. E. Co. v. Murphine, 
 4 Wash. 448, 30 Pac. 720; State ex rel. Ami Co. v. Superior Court, 
 42 Wash. 675, 85 Pac. 669.) 
 
 The petitioner company has the burden of proof and the right to 
 open and close. (Bellingham Bay etc. E. Co. v. Strand, 4 Wash. 311, 
 30 Pac. 144; Seattle & M. E. Co. v. Murphine, 4 Wash. 448, 30 Pac. 
 720; Seattle & M. E. Co. v, Gilchrist, 4 Wash. 509, 30 Pac. 738.) 
 
 It is within the discretion of the court to permit the jury to view 
 the premises. (Bellingham Bay etc. E. Co. v. Strand, 4 Wash. 311, 30 
 Pac. 144; Seattle & M. E. Co. v. Eoeder, 30 Wash. 244, 70 Pac. 498.) 
 
 Question of future damages may be submitted to the jury. (Swope 
 ▼. Seattle, 36 Wash. 113, 78 Pac. 607.) 
 
 Assessment of damages by commissioners unconstitutional. Ques- 
 tion of damages must be submitted to jury. (Peterson v. Smith, 6 
 Wash, 163, 32 Pac. 1050; In re Smith's Petition, 9 Wash. 85, 37 Pac.
 
 § 463 EXISTING CORPORATION LAWS, 1913. 316 
 
 311, 494; Seanor v. County Commrs., 13 Wash. 48, 42 Pac. 552; Sno- 
 homish County V. Hayward, 11 Wash. 429, 39 Pac. 652.) 
 
 Petitioner may abandon proceedings for condemnation before pos- 
 session taken but not after possession taken and verdict. (Port 
 Angeles Pac. R. Co. v. Cooke, 38 Wash. 184, 80 Pac. 305; Bellingham 
 Bay B. C. R. Co. r. Strand, 14 Wash. 144, 44 Pac. 140, 46 Pac. 238.) 
 
 APPEALS. 
 
 Appeals must be taken in compliance with the provision therefor 
 in the condemnation law; not governed by the general law. (Western 
 American Co. v. St. Ann Co., 22 Wash. 158, 60 Pac. 158; Seattle & 
 M. R. Co. v. O'Meara, 4 Wash. 17, 29 Pac. 835; Pearson v. Island 
 County, 3 Wash. 497, 28 Pac. 1108.) 
 
 Certiorari will lie to review questions in condemnation proceedings 
 only where they cannot be reviewed on appeal. (Seattle & M. R. Co. 
 V. State, 5 Wash. 807, 32 Pac. 744; Parker v. Superior Court, 25 
 Wash. 544, 66 Pac. 154; Seattle & M. R. Co. v. Bellingham etc. R. Co., 
 
 29 Wash. 491, 69 Pac. 1107; State ex rel. Smith v. Superior Court, 
 
 30 Wash. 219, 70 Pac. 484; State. ex rel. Trimble v. Superior Court, 
 
 31 Wash. 445, 72 Pac. 89; Samish River Boom Co. v. Union Boom 
 Co., 32 Wash. 586, 73 Pac. 670; Healy Lumber Co. v. Morris, 33 Wash. 
 490, 74 Pac. 681; State ex rel. Morrell v. Superior Court, 33 Wash. 
 542, 74 Pac. 686; State ex rel. Nelson v. Superior Court, 31 Wash. 
 32, 71 Pac. 601; State ex rel. Ami Co. v. Superior Court, 42 Wash. 
 675, 85 Pac. 669; State ex rel. Alexander v. Superior Court, 42 Wash. 
 684, 85 Pac. 673; State ex rel. Young v. Superior Court, 43 Wash. 
 34, 85 Pac. 989; State ex rel. McCormick v. Superior Court, 43 Wash. 
 91, 86 Pac. 205.) 
 
 MISCELLANEOUS. 
 
 Costs in condemnation proceedings are taxed against the petitioner, 
 not against nonassenting owner. (Owsley v. Oregon R. & Nav. Co., 
 1 Wash. 491, 20 Pac. 782; Adams County v. Dobschlag, 19 Wash. 356, 
 53 Pac. 339; Lewis County v. Schobey, 31 Wash. 357, 71 Pac. 1029.) 
 
 Statutes of eminent domain are strictly construed. (North Coast 
 R. Co. V. Aumiller, 61 Wash. 271, 112 Pac. 384.) 
 
 A private company generating power to be sold at profit cannot, 
 by offering to serve the public, acquire right of eminent domain. 
 (State ex rel. Tolt Power etc. Co. v. Superior Court, 50 Wash. 13, 
 96 Pac. 519.) 
 
 An abutter on street whose interests are being condemned by rail- 
 road company has interest to question right of condemnation. (State 
 ex rel. Sylvester v. Superior Court, 60 Wash. 279, 111 Pac. 19.) 
 
 City council proper authority to determine question of public use 
 and necessity. (Seattle v. Byers, 54 Vv'ash. 518, 103 Pac. 791; Tacoma 
 v. Titlow, 53 Wash. 217, 101 Pac. 827; In re Mercer St., 55 Wash. 116, 
 104 Pac. 133.)
 
 317 RIGHT OF EMINENT DOMAIN BY CORPORATION. § 464 
 
 Section 4250, Ballinger's Code, that no railroad company shall con- 
 demn land until the whole of its capital stock subscribed, is rule of 
 public policy and not waived by failure of owner to set up the defect. 
 (State ex rel. Hulme v. Gray's Harbor etc. R. Co., 54 Wash. 530, 103 
 Pac. 809.) 
 
 A town may condemn land for an alley on its own initiative and 
 petition by majority of property owners affected not jurisdictional 
 prerequisite. (State ex rel. Jones v. Superior Court, 44 Wash. 476, 87 
 Pac. 521.) 
 
 A railroad company cannot condemn an abutter's interest in a city 
 street without first obtaining a franchise from the city to use the 
 streets. (State ex rel. Sylvester y. Superior Court, 60 Wash. 279, 111 
 Pac. 19; State ex rel. Schade Brew. Co. v. Superior Court, 62 Wash. 
 96, 113 Pac. 576.) 
 
 Attempt to agree with owner not condition precedent to condemna- 
 tion. (State ex rel. Skamania Boom Co. v. Superior Court, 47 Wash. 
 166, 91 Pac. 637; State ex rel, Wilson v. Superior Court, 47 Wash. 
 397, 92 Pac. 269; State ex rel. Burrows v. Superior Court, 48 Wash. 
 277, 93 Pac. 423.) 
 
 Laches in building line no defense in condemnation proceedings. 
 (State ex rel. Mcintosh v. Superior Court, 56 Wash. 214, 105 Pac. 637.) 
 
 A person in possession must be made a party defendant and notice 
 must be given all interested parties. (Owen v. St. Paul etc. R. Co., 
 12 Wash. 313, 41 Pac. 44; Chehalis County v. Ellingson, 21 Wash. 638, 
 59 Pac. 485; Weed v. Goodwin, 36 Wash. 31, 78 Pac. 36; State ex 
 rel. Trimble v. Superior Court, 31 Wash. 445, 72 Pac. 89.) 
 
 Notice is properly served on mortgagee lien claimant and city having 
 lien for assessments making them parties. (North Coast R. Co. v. 
 Hess, 56 Wash. 335, 106 Pac. 853.) 
 
 § 464. Notice — Contents of and Service, 
 
 [§ 922, Rera.-Bal.] A notice, stating briefly the objects of 
 the petition, and containing a description of the land, real 
 estate, premises, or property sought to be appropriated, and 
 stating the time and place when and where the same will be 
 presented to the court, or the judge thereof, shall be served 
 on each and every person named therein as owner, encum- 
 brancer, tenant, or otherwise interested therein, at least ten 
 days previous to the time designated in such notice for the 
 presentation of such petition. Such service shall be made 
 by delivering a copy of such notice to each of the persons 
 or parties so named therein, if a resident of the state; or in 
 case of the absence of such person or party from his or her
 
 § 464 EXISTING CORPORATION LAWS, 1913. 318 
 
 usual place of abode, by leaving a copy of such notice at his 
 or her usual place of abode, or in case of a foreign corporation, 
 at its principal place of business in this state, with some person 
 of more than sixteen years of age. In ease of domestic cor- 
 porations, such service shall be made upon the president, sec- 
 retary, or other director or trustee of such corporation. In 
 case of minors on their guardians, or in case no guardian 
 shall have been appointed, then on the person who has the 
 care and custody of such minor. In case of idiots, lunatics, 
 or distracted persons, on their guardian ; or in case no guard- 
 ian shall have been appointed, then on the person in whose 
 care or charge they are found. In case the land, real estate, 
 premises, or other property sought to be appropriated is 
 state school, or county land, the notice shall be served on 
 the auditor of the county in which the land, real estate, 
 premises or other property sought to be appropriated is sit- 
 uated. In all cases where the owner or person claiming an 
 interest in such real or other property is a nonresident of 
 this state, or where the residence of such owner or person is 
 unknown, and an affidavit of the agent or attorney of the 
 corporation shall be filed that such owner or person is a non- 
 resident of this state, or that, after diligent inquiry his resi- 
 dence is unknown, or cannot be ascertained by such de- 
 ponent, service may be made by publication thereof in anj' 
 newspaper published in the county where such lands are 
 situated, once a week for two successive weeks; and in case 
 no newspaper is published in said county, then such publica- 
 tion may be had in a newspaper published in the county 
 nearest to the county in which lies the land sought to be ap- 
 propriated. And such publication shall be deemed service 
 upon each of nonresident person or persons whose residence 
 is unknown. Such notice shall be signed by the president, 
 manager, secretary, or attorney of the corporation ; and in 
 case the proceedings provided for in this act are insti- 
 tuted by the owner or any other person or party interested 
 in the land, real estate, or other property sought to be appro- 
 priated, then such notice shall be signed by such owner, 
 person or party interested, or his, her, or its attorney. Such
 
 319 RIGHT OF EMINENT DOMAIN BY CORPORATION. §§ 464a-466 
 
 notice may be served by any competent person over twenty- 
 one years of age. Due proofs of the service of such notice, 
 by affidavit of the person serving the same, or by the 
 printer's affidavit of publication, shall be filed with the clerk 
 of such superior court before or at the time of the presenta- 
 tion of such petition. Want of service of such notice shall 
 render the subsequent proceedings void as to the person not 
 served; but all persons or parties having been served with 
 notice as herein provided, either by publication or otherwise, 
 shall be bound by the subsequent proceedings. In all other 
 cases not otherwise provided for, service of notices, order, 
 and other papers in the proceedings authorized by this act 
 may be made as the superior court, or the judge thereof 
 may direct. [Laws 1890, §2, p. 295; 2 H. C, §649; Bal., 
 §5638.] 
 
 Notice must be served personally or by publication on all parties in- 
 terested. (Moynahan v. Superior Court, 42 Wash. 172; State ex rel. 
 Trimble v. Superior Court, 31 Wash. 445; Chehalis County v. Ellingson, 
 21 Wash. 638; Weed v. Goodwin, 36 Wash. 31; Thomas v. Superior 
 Court, 42 Wash. 521; Spokane etc. Ry. Co. v. Connelly, 48 Wash. 515; 
 King County v. Melker, 50 Wash. 29; Hanson v. Hammer, 15 Wash. 315.) 
 
 § 464a. Lands Owned by State. 
 
 [§ 923, Rem.-Bal.] In all condemnation proceedings 
 brought for the purpose of appropriating any land owned 
 by the state or in which it has an interest, service of process 
 shall be made upon the commissioner of public lands. [Laws 
 1907, p. 507, § 1.] 
 
 § 465. Adjournment of Proceedings. 
 
 [§ 924, Rem.-Bal.] The court or judge may, upon the ap- 
 plication of the petitioner or of any owner or party inter- 
 ested, for reasonable cause, adjourn the proceedings from 
 time to time, and may order new or further notice to be 
 given to any party whose interest may be affected. [Laws 
 1890, § 3, p. 297 ; 2 H. C, § 650 ; Bal., § 5639.] 
 
 § 466. Jury shall be Summoned. 
 
 [§925, Rem.-Bal.] At the time and place appointed for 
 hearing said petition, or to which the same may have been
 
 § 466 EXISTING CORPORATION LAWS, 1913. 320 
 
 adjourned, if the court, or judge thereof, shall have satisfac- 
 tory proof that all parties interested in the land, real estate, 
 premises, or other property described in said petition have 
 been duly served with said notice as above prescribed, and 
 shall be further satisfied,, by competent proof, that the con- 
 templated use for which the land, real estate, premises, or 
 other property sought to be appropriated is really a public 
 use, or is for a private use for a private way of necessity, 
 and that the public interest requires the prosecution of 
 such enterprise, or the private use is for a private way 
 of necessity, and that the land, real estate, premises, or 
 other property sought to be appropriated are required and 
 necessary for the purposes of such enterprise, the court, or 
 judge thereof, may make an order, to be recorded in the 
 minutes of said court, directing the sheriff to summon from 
 the citizens of the county in which any lands, real estate, 
 premises, or other property sought to be appropriated shall 
 be situated as many qualified persons as may be necessary 
 in order to form a jury of twelve persons, unless the parties 
 to the proceedings consent to a less number (such number 
 to be not less than three), and such consent shall be entered 
 by the clerk in the minutes of the trial. If necessary to com- 
 plete the jury, the sheriff, under direction of the court, or 
 judge thereof, shall summon as many qualified persons as 
 may be required to complete the jury from the bystanders, 
 citizens of the county where the land, real estate, premises, 
 or other property is situated. [Laws 1897, § 1, p. 63 ; 2 H. C, 
 §651; Bal., §5640.] 
 
 Assessment of damages by commissioners, unconstitutional; ques- 
 tion of damages must be submitted to jury. (Peterson v. Smith, 6 
 Wash. 163, 82 Pac. 1050; In re Smith's Petition, 9 Wash, 85, 37 Pac. 
 311, 494; Seanor v. County Commrs., 13 Wash. 48, 42 Pae, 552; 
 Snohomish County v. Hayward, 11 Wash. 429, 39 Pac. 652.) 
 
 It is for the court to determine whether there is proof that the 
 land sought to be condemned is required and necessary. (State ex 
 rel. Postal Tel. etc. Co. v. Superior Court, 64 Wash. 189, 116 Pac. 855.) 
 
 The selection by the condemner makes prima facie case of neces- 
 sity. (State ex rel. Sylvester v. Superior Court, 64 Wash. 594, 117 
 Pae. 487.)
 
 321 RIGHT OF EMINENT DOMAIN BY CORPORATION. § 467 
 
 Question of public use is for the court and its adjuflication is con- 
 clusive. (Peterson v. Smith, 6 Wash. 163; Healy Lumber Co. v. Morris, 
 33 V.'ash. 490; Sulton W. & P. Co. v. Weyerhauser etc. Co., 31 Wash. 
 558.) 
 
 Property cannot be taken for private use. (Harris v. Superior Court, 
 42 Wash. 660.) 
 
 And necessity of the taking for public us€ must be shown. (State 
 ex rel. Ami Co. v. Superior Court, 42 Wash. 675.) 
 
 But it is the character and not the extent of the use that governs. 
 (State ex rel. Ami Co. v. Superior Court, 42 Wash. 675; Lewis County 
 V. Gordon, 20 Wash. 80.) 
 
 As to latter part in regard to summoning of jury, see Laws 1905, p. 
 270, repealing same; O. E. & N. Co. v. McCormick, 46 Wash. 45. 
 
 § 467. Trial — Assessment of Damages — Judgment. 
 
 [§ 926, Rem.-Bal.] A judge of the superior court shall 
 preside at the trial, which shall be held at such time as the 
 court, or judge thereof, may direct, at the courthouse in the 
 county where the land, real estate, premises, or other prop- 
 erty sought to be appropriated is situated, and the jurors at 
 such trial shall make in each case a separate assessment of 
 damages which shall result to any person, corporation or 
 company, or to the state, or to any county, by reason of the 
 appropriation and use of such land, real estate^ premises or 
 other property by such corporation as aforesaid for any and 
 all corporate purposes, and shall ascertain, determine, and 
 award the amount of damages to be paid to said owner or 
 owners respectively, and to all tenants, encumbrancers, and 
 others interested, for the taking or injuriously affecting 
 such land, real estate, premises, or other property, for the 
 purpose of such enterprise, irrespective of any benefit from 
 any improvement proposed by such corporation. Upon the 
 trial, witnesses may be examined in behalf of either party 
 to the proceedings, as in civil actions; and a witness served 
 with a subpoena in such proceeding shall be punished for 
 failure to appear at such trial, or for perjury, as upon a trial 
 of a civil action. Upon the verdict of the jury, judgment 
 shall be entered for the amount of the damages awarded to 
 such owner or owners respectively, and to all tenants, en- 
 cumbrancers, and others interested, for the taking or in- 
 21
 
 § 468 EXISTING CORPORATION LAWS, 1913. 322 
 
 juriously affecting such land, real estate, premises, or other 
 property. In case a jury is waived as in civil cases in courts 
 of record in the manner prescribed by law, the compensation 
 to be paid for the property sought to be appropriated shall 
 be ascertained and determined by the court, or the judge 
 thereof, and the proceedings shall be the same as in trials of 
 an issue of fact by the court. [Laws 1890, § 5, p. 297; 2 
 H. C, §652;Bal., 5641.] 
 
 Property cannot be taken until payment is made (Puyallup v. Lacey, 
 43 Wash. 110), and the measure of damages is the value of the land 
 taken and the depreciation of land not taken (Seattle etc. Co. v. 
 Eoeder, 30 Wash. 244), without allowance for benefits. (Enoch v. 
 Railway Co., 6 Wash. 393.) 
 
 Except that benefits may be allowed municipality. (Lincoln County 
 V. Brock, 37 Wash. 14; Jones v. Seattle, 23 Wash. 753.) 
 
 No formal pleadings or issues are required by the statute. (Railway 
 Co. V. Murphine, 4 Wasi. 448.) 
 
 The value of land is not determined by the unwillingness of owner to 
 sell or by price which adjacent owners ask, but by the uses to which it 
 may be put and the value thereof. (Port Townsend R. Co. v. Barbare, 
 46 Wash. 275; Chicago etc. R. Co. v. Alexander, 47 Wash. 131; Seattle 
 etc. R. Co. v. Roeder, 30 Wash. 244.) 
 
 Petitioner has burden of proof and privilege to open and close on 
 question of damages. (Bellingham etc. Ry. Co. v. Strand, 4 Wash. 311.) 
 
 It is discretionary with the court to allow the jury to view the premises. 
 (Seattle etc. R. Co. v. Roeder, 30 Wash. 244.) 
 
 § 468. Judgment and Decree of Appropriation. 
 
 [§ 927, Rem.-Bal.] At the time of rendering judgment for 
 damages, whether upon default or trial, if the damages 
 awarded be then paid, or upon their payment, if not paid at 
 the time of rendering such judgment, the court, or judge 
 thereof, shall also enter a judgment or decree of appropriation 
 of the land, real estate, premises, right of way, or other prop- 
 erty sought to be appropriated, thereby vesting the legal title 
 to the same in the corporation seeking to appropriate such 
 land, real estate, premises, right of way, or other property for 
 corporate purposes. Whenever said judgment or decree of 
 appropriation shall affect lands, real estate, or other premises, 
 a certified copy of such judgment or decree of appropriation 
 may be filed for record in the office of the auditor of the county
 
 323 RIGHT OF EMINENT DOMAIN BY CORPORATION. § 468a 
 
 where the said land, real estate, or other premises are situated, 
 and shall be recorded by said auditor like a deed of real estate, 
 and with like effect. If the title to said land, real estate, 
 premises, or other property attempted to be acquired is found 
 to be defective from any cause, the corporation may again 
 institute proceedings to acquire the same, as in this chapter 
 provided. [Laws 1891, §1, p. 84; 2 H. C, §653; Bal., § 
 5642.] 
 
 Qualified title only, i. e., so far as is necessary for the public nse, is 
 vested in the condemner. (Neitzel v. Spokane Int. R. Co., 65 Wash. 
 100, 117 Pac. 864.) 
 
 Judgment and adjudication not binding on owner not made party 
 (Owen V. St. Paul etc. Ry. Co., 12 Wash. 314); but the judgment is con- 
 clusive on parties in interest served (Compton v. Seattle, 38 Wash. 514) ; 
 unless it be irregular on its face, when it will be set aside (Seattle etc. 
 Ry. Co. V. Johnson, 7 Wash. 97). 
 
 Title acquired is not absolute but to the extent required for the public 
 use. (Kakeldy v. Columbia etc. R. Co., 37 Wash. 675; Nicomen Boom 
 Co. V. North Shore etc. Co., 40 Wash. 315.) 
 
 Where property taken for public use is subject to mortgage, the mort- 
 gage attaches to the damages awarded. (National Bank of Seattle v. 
 Johnson, 16 Wash. 536.) 
 
 § 468a. Filing Decree in Case of Lands Owned by State. 
 
 [§ 928, Rem.-Bal.] "When a decree is entered appropriat- 
 ing lands owned by the state, or in which the state has an 
 interest, before any such decree shall be effective, the plain- 
 tiff shall cause to be filed in the office of the Commissioner 
 of Public Lands a certified copy of such decree, together 
 with a plat of the lands appropriated and contiguous thereto, 
 in form and substance as prescribed and required by the 
 Board of State Land Commissioners, showing in detail the 
 lands appropriated, together with the amount of damages 
 fixed and awarded in the decree. Upon receipt of such de- 
 cree, plat and damages, the Commissioner of Public Lands 
 shall examine the same, and if he shall find that the final 
 decree and proceedings comply with the original petition 
 and notice and any amendment duly authorized, and that 
 no additional interest of the state has been taken or ap- 
 propriated through error or mistake, he shall cause nota-
 
 § 469 EXISTING CORPORATION LAWS, 1913. 324 
 
 tions thereof to be made upon the abstracts, records and 
 tract books of his office, and shall issue to the plaintiff his 
 certificate, reciting compliance, in substance, with the re- 
 quirements of this act, particularly describing the lands ap- 
 propriated, and thereupon the appropriation shall become 
 effective and the Commissioner of Public Lands shall forth- 
 with transmit the amount received as damages to the State 
 Treasurer, as in the case of the sale of land, and the sub- 
 division of land through which such right of way is appro- 
 priated shall thereafter be sold or leased subject to the right 
 of way. [Laws 1909, p. 625, § 1.] 
 
 § 469. Damages may be Paid into Court. 
 
 [§ 929, Rem.-Bal.] Upon the entry of judgment upon the 
 verdict of the jury, or the decision of the court, or judge 
 thereof, awarding damages, as hereinbefore prescribed, the pe- 
 titioner, or any officer of or other person duly appointed by 
 said corporation, may make payment of the damages assessed 
 to the parties entitled to the same, and of the costs of the pro- 
 ceedings, by depositing the same with the clerk of said superior 
 court, to be paid out under the direction of the court, or judge 
 thereof ; and upon making such payment into the court of the 
 damages assessed and allowed, and of the costs to any land, 
 real estate, premises, or other property mentioned in said 
 petition, such corporation shall be released and discharged 
 from any and all further liability therefor, unless upon appeal 
 the owner, or other person or party interested, shall recover 
 a greater amount of damages; and in that case, only for the 
 amount in excess of the sum paid into said court, and the costs 
 of appeal : Provided, that in case of an appeal to the supreme 
 court of the state by any party to the proceedings, the money 
 so paid into the superior court by such corporation as afore> 
 said shall remain in the custody of said court until the final 
 determination of the proceedings by the said supreme court. 
 [Laws 1890, § 7, p. 299; 2 H. C, § 654; Bal, § 5643.] 
 
 Sufifieient for the condemner to pay the amount awarded into court 
 for the party entitled. (Silverstone v. Ham, 66 Wash. 440, 120 Pac. 
 109.)
 
 325 RIGHT OF EMINENT DOMAIN BY CORPORATION. §§ 470, 471 
 
 § 470. Disposition of Money — Conflicting Claims. 
 
 [§ 930, Rem.-Bal.] Any person, corporation, state or 
 county, claiming: to be entitled to any money paid into court, 
 as provided in this chapter may apply to the court therefor, 
 and upon furnishing evidence satisfactory to the court that 
 he or it is entitled to the same, the court shall make an order 
 directing the payment to such claimant the portion of such 
 money as he or it shall be found entitled to ; but if, upon ap- 
 plication, the court, or judge thereof, shall decide that the 
 title to the land, real estate, premises, or other property speci- 
 fied in the application of such claimant, was in such condition 
 as to require that an action be commenced to determine the 
 conflicting claims thereto, he shall refuse such order until 
 such action is commenced, and the conflicting claims to such 
 land, real estate, premises, or other property be determined 
 according to law. [Laws 1890, § 8, p. 299; 2 H. C, § 655; 
 Bal, §5644.] 
 
 § 471. Appeal. 
 
 [§ 931, Rem.-Bal.] Either party may appeal from the 
 judgment for damages entered in the superior court to the 
 supreme court of the state within thirty days after the entry 
 of judgment as aforesaid, and such appeal shall bring before 
 the supreme court the propriety and justness of the amount 
 of damages in respect to the parties to the appeal : Provided, 
 however, that no bond shall be required of any person in- 
 terested in the property sought to be appropriated by such 
 corporation, but in case the corporation appropriating such 
 land, real estate, premises or other property is appellant, it 
 shall give a bond like that prescribed in the next following sec- 
 tion, to be executed, filed, and approved in the same manner: 
 And provided further, that if the owner of the land, real 
 estate, premises, or other property, accepts the sum awarded 
 by the jury, the court, or the judge thereof, he shall be 
 tleemed thereby to have waived conclusively an appeal to the 
 supreme court, and final judgment by default may be ren- 
 dered in the superior court as in other cases. [Laws 1890, 
 §9, p. 300; Bal., §5645.]
 
 §§472,473 EXISTING corporation laws, 1913. Ji26 
 
 No appeal lies except as to justness and propriety of damages 
 awarded. (Olympia L. & P. Co. v. Tumwater etc. Co., 55 Wash. 392, 
 
 104 Pac. 778.) 
 
 Writ of review must be prosecuted within thirty days from entry of 
 judgment. (State ex rel. Tumwater Co. v. Superior Court, 56 "Wash. 287, 
 
 105 Pac. 815.) 
 
 No appeal lies from order refusing to vacate adjudication for public 
 use, (North Coast R. Co. v. Gentry, 58 Wash. 80, 107 Pac. 1059.) 
 
 Verdict of jury cannot be disturbed if there is evidence to sustain it. 
 (Chicago, Milwaukee etc. R. Co. v. Thayer, €5 Wash. 402, 118 Pac. 318.) 
 
 § 472. Appeal shall not Delay Work. 
 
 [§ 932, Rem.-Bal.] The constniction of any railway sur- 
 face tramway, elevated cable tramway or canal, or the prose- 
 cution of any works or improvements, by any corporation 
 as aforesaid, shall not be hindered, delayed or prevented 
 by the prosecution of the appeal of any party to the pro- 
 ceedings: Provided, the corporation aforesaid shall execute 
 and file with the clerk of the court in which the appeal is 
 pending a bond, to be approved by said clerk, with sufficient 
 sureties, conditioned that the persons executing the same shall 
 pay whatever amount may be required by the judgment of the 
 court therein, and abide any rule or order of the court in rela- 
 tion to the matter in controversy. [Laws 1897, §2, p. 64; 
 2H.C., §657; Bal., §5646.] 
 
 Appeal must be taken within thirty days. (Seattle etc. Ey. Co. ▼. 
 O'Meara, 4 Wash. 17.) 
 
 General statute regulating appeals is not applicable (Western etc. Co. 
 V. St. Ann. Co., 22 Wash. 158) ; appeal bond by corporation appellant 
 necessary (Port Angeles etc. E. Co. v. Cooke, 38 Wash. 184). 
 
 Special statute re appeals exclusive. (Tacoma v. Co., 50 Wash, 683.) 
 
 § 473. Appropriation of Right of Way Through Defiles, etc. 
 
 [§ 933, Rem.-Bal.] Any railroad company whose right of 
 way passes through any canyon, pass, or defile shall not pre- 
 vent any other railroad company from the use and occupancy 
 of said canyon, pass, or defile for the purpose of its road in 
 common with the road first located or the crossing of other 
 railroads at grade, and any railroad company, authorized by 
 law to appropriate land, real estate, premises, or other prop-
 
 327 RIGHT OP EMINENT DOMAIN BY CORPORATION. § 473a 
 
 erty for right of way, or any other corporate purposes may 
 present a petition in the manner and form hereinbefore pro- 
 vided for the appropriation of a right of way through any 
 canyon, pass or defile for the purpose of its road, where right 
 of way has already been located, condemned or occupied by 
 some other railroad company through such canyon, pass, or 
 defile for the purpose of its road, and thereupon like proceed- 
 ings shall be had upon such petition as herein provided in 
 other cases; and at the time of rendering judgment for 
 damages, whether upon default or trial, the court, or judge 
 thereof, shall enter a judgment or decree authorizing said 
 railroad company to occupy and use said right of way, road- 
 bed, and tract, if necessary, in common with the railroad com- 
 pany or companies already occupying or owning the same, and 
 defining the terms and conditions upon which the same shall be 
 so occupied and used in common. [Laws 1890, § 12, p. 301; 
 2H. C, §658;Bal., §5647.] 
 
 Section construed. (Seattle etc. Co. v. State, 7 Wash. 150, 164; 
 North. Coast R. Co. v. North. Pac. E. Co., 48 Wash. 529.) 
 
 § 473a. Ways of Necessity. 
 
 An owner, or one entitled to the beneficial use, of land 
 which is so situate with respect to the land of another that 
 it is necessary for its proper use and enjoyment to have and 
 maintain a private way of necessity or to construct and 
 maintain any drain, flume or ditch, on, across, over or 
 through the land of such other, for agricultural, domestic 
 or sanitary purposes, may condemn and may condemn and 
 take lands of such other sufficient in area for the construc- 
 tion and maintenance of such private way of necessity, or 
 for the construction and maintenance of such drain, flume 
 or ditch, as the case may be. The term "private way of 
 necessity," as used in this act, shall mean and include a 
 right of way on, across, over or through the land of another 
 for means of ingress and egress, and the construction and 
 maintenance thereon of roads, logging roads, flumes, canals, 
 ditches, tunnels, tramways and other structures upon, over 
 and through which timber, stone, minerals or other valuable
 
 §§ 473b, 473c existing corporation laws, 1913. 323 
 
 materials and products may be transported and carried. 
 [Laws 1913, c. 133, § 1.] 
 
 § 473b. Condemnation of Ways of Necessity. 
 
 The procedure for the condemnation of land for a private 
 way of necessity or for drains, flumes or ditches under the 
 provisions of this act shall be the same as that provided for 
 the condemnation of private property by railroad companies, 
 but no private property shall be takem or damaged until the 
 compensation to be made therefor shall have been ascer- 
 tained and paid as provided in the case of condemnation by 
 railroad companies. [Laws 1913, c. 133, § 2.] 
 
 § 473c. Duty as Common Carriers. 
 
 That any person or corporation availing themselves of the 
 provisions of this act for the purpose of acquiring a right 
 of way for a logging road, as a condition precedent, con- 
 tract and agree to carry and eonvey over such roads to either 
 termini thereof any of the timber or other produce of the 
 lands through which such right is acquired at any and all 
 times, so long as said road is maintained and operated, and 
 at reasonable prices ; and a failure so to do shall terminate 
 such right of way. The reasonableness of the rate shall be 
 subject to determination by the public service commission. 
 [Laws 1913, c. 133, § 3.]
 
 329 APPROPRIATION OF LANDS AND HIGHWAYS. §§474,475 
 
 APPROPRIATION OF LANDS AND HIGH- 
 WAYS FOR CORPORATE PUR- 
 POSES. 
 
 § 474. Right to Enter Lands for Survey, etc. 
 
 f§ 8739, Rem.-Bal.] A corporation organized for the con- 
 struction of any railway, macadamized road, plank road, clay 
 road, canal or bridge, shall have a right to enter upon any land, 
 real estate or premises, or any of the lands granted to the 
 state of Washington for school, university or other purposes, 
 between the termini thereof, for the purpose of examining, 
 locating and surveying the line of such road or canal, or the 
 site of such bridge, doing no unnecessary damage thereby. 
 [Laws 1895, § 1, p. 146 ; Cd. 1881, § 2455 j 1 H. C, § 1569 ; Bal., 
 §4333.] 
 
 Condemnation of land held in trust for the public as a city street 
 not authorized. (State ex rel. Schade Co. v. Superior Court, 62 Wash. 
 96, 113 Pac. 576.) 
 
 A railroad company having changed its location may condemn land. 
 (State ex rel. Sylvester v. Superior Court, 64 Wash. 594, 117 Pac. 487. 
 See E€m. & Bal. Code, sec. 8738.) 
 
 Tide lands could not be condemned until authorized by statute. (See 
 next section; Seattle & M. Ry. v. State, 7 Wash. 150.) 
 
 § 475. Extent of Right of Appropriation. 
 
 [§8740, Rem.-Bal.] Every corporation organized for the 
 construction of any railway, macadamized road, plank road, 
 clay road, canal or bridge, is hereby authorized and em- 
 powered to appropriate, by condemnation, land and any in- 
 terest in land or contract right relating thereto, including any 
 leasehold interest therein and any rights of way for tunnels 
 beneath the surface of the land, and any elevated rights of Avay 
 above the surface thereof, including lands granted to the state 
 for university, school or other purposes, and also tide and 
 shore lands belonging to the state (but not including harbor 
 areas), which may be necessary for the line of such road, rail- 
 way or canal, or site of such bridge, not exceeding two hun-
 
 § 475 EXISTING CORPORATION LAWS, 1913. 330 
 
 dred feet in width, besides a sufficient quantity thereof for 
 toll-houses, workshops, materials for construction, excavations 
 and embankments and a right of way over adjacent lands or 
 property, to enable such corporation to construct and prepare 
 its road, railway, canal or bridge, and to make proper drains; 
 and in case of a canal, whenever the court shall deem it neces- 
 sary, to appropriate a sufficient quantity of land, including 
 lands granted to the state for university, school or other pur- 
 poses, in addition to that before specified in this section, for 
 the construction and excavation of such canal and of the slopes 
 and bermes thereof, not exceeding one thousand feet in total 
 width; and in case of a railway to appropriate a sufficient 
 quantity of any such land, including lands granted to the 
 state for university, schools and other purposes and also tide 
 and shore lands belonging to the state (but not including har- 
 bor areas) , in addition to that before specified in this section, 
 for the necessary sidetracks, depots and water stations, and the 
 right to conduct water thereto by aqueduct, and for yards, 
 terminal, transfer and switching grounds, docks and ware- 
 houses required for receiving, delivering, storage and handling 
 of freight, and such land, or any interest therein, as may be 
 necessary for the security and safety of the public in the con- 
 struction, maintenance and operation of its railways ; compen- 
 sation therefor to be made to the owner thereof irrespective of 
 any benefit from any improvement proposed by such corpora- 
 tion, in the manner provided by law: And provided further, 
 that if such corporation locate the bed of such railway or 
 canal upon any part of the track now occupied by any estab- 
 lished state or county road, said corporation shall be respon- 
 sible to the county commissioners of said county or counties 
 in which such state or county road so appropriated is located, 
 for all expenses incurred by such county or counties in re- 
 locating and opening the part of such road so appropriated. 
 The term land as herein used includes tide and shore lands 
 but not harbor areas; it also includes any interest in land or 
 contract right relating thereto, including any leasehold in- 
 terest therein. [Laws 1907, § 1, p. 674 j Cd. 1881, § 2456; 1 
 H. C, §1570; Bal., §4334.]
 
 331 APPROPRIATION OP LANDS AND HIGHWAYS. § 476 
 
 Railroad constructing its road will be protected from appropriation of 
 its terminals. (State ex rel. Spokane Falls & N. R. Co. v. Superior 
 Court, 40 Wash. 389, 82 Pac. 417.) 
 
 Right of way for railroad is public use. (State ex rel. Smith v. 
 Superior Court, 30 Wash. 219, 70 Pac. 484; State ex rel. Trimble v. 
 Superior Court, 31 Wash. 445, 72 Pac. 89; State ex rel. Harlan v. 
 Centralia Co., 42 Wash. 632, 85 Pac. 344.) 
 
 No constitutional or statutory prohibition to crossing abutting harbor 
 area. (State ex rel. Hulme v. Gray's Harbor etc. Co., 54 Wash. 530, 103 
 Pac. 809.) 
 
 This section does not permit railways to condemn public avenues. 
 (State ex rel. Schade etc. Co. v. Superior Court, 62 Wash. 96, 113 Pac. 
 576.) 
 
 A railroad company having changed its location may condemn land. 
 (State ex rel. Sylvester v. Superior Court, 64 Wash. 594, 117 Pac. 487.) 
 
 Attempt to agree with owner not condition precedent to condemnation. 
 (State ex rel. Boom Co. v. Superior Court, 47 Wash. 166.) 
 
 Railroad right of way across public land is subject to settler's rights, 
 which must be condemned if appropriated. (Slaght v. Northern Pac. 
 R. Co., 39 Wash. 576.) 
 
 Railway company by constructing its road over unsurveyed public land 
 by such definite location gets title as against subsequent locator of min- 
 ing claim. (Penn. Min. etc. Co, v. Everette etc. R. Co., 29 Wash. 102.) 
 
 § 476. Right to Cross Other Roads, etc. 
 
 [§ 8736, Rem.-Bal.] Every corporation formed under this 
 chapter for the construction of a railroad shall have the power 
 to cross, intersect, join and unite its railway with any other 
 railway before constructed, at any point in its route, and upon 
 the grounds of such other railway company, with the necessary 
 turnouts, sidings, switches and other conveniences in further- 
 ance of the objects of its connections, and every corporation 
 whose railway is or shall be hereafter intersected by any new 
 railway shall unite with the corporation owning such new rail- 
 way in forming such intersections and connections and grant 
 the facilities aforesaid; and if the two corporations cannot 
 agree upon the amount of compensation to be made therefor, 
 or the points and manner of such crossing and connections, the 
 same shall be ascertained and determined in the manner pro- 
 vided by law for the taking of lands and other property which 
 shall be necessary for the construction of its road, and every 
 corporation formed under this chapter for the construction of
 
 S 477 EXISTING CORPORATION LAWS, 1913. 332 
 
 a canal shall have the power to cross and intersect any railway- 
 before constructed at any point in its road and upon the 
 grounds of such other railway company, and every corpora- 
 tion whose railway is or shall hereafter be crossed or inter- 
 sected by any canal shall unite with the corporation owning 
 such canal in forming such crossings and intersections and 
 grant the facilities therefor ; and if the two corporations can- 
 not agree upon the compensation to be made therefor, or the 
 points and manner of such crossings and connections, the same 
 shall be ascertained and determined in the manner provided 
 by law for the taking of lands and other property which shall 
 be necessary for the construction of said canal. [Laws 1895, 
 § 3, p. 148; Cd. 1881, § 24561/2; 1 H. C, § 1571 ; Bal., § 4335.) 
 
 One public or quasi-public corporation may condemn property of an- 
 other not interfering with the public use by the latter company; e. g., 
 railroad crossings and connections. (Seattle & M. R. Co. v. Bellingham 
 Bay & R. Co., 29 Wash. 491, 69 Pac. 1107; Samish River Boom Co. v. 
 Union Boom Co., 32 Wash. 586, 73 Pac. 670; Seattle & M. R. Co. v. 
 State, 7 Wash. 150, 34 Pac. 551; State ex rel. Spokane Falls & N. E, 
 Co. V. Superior Court, 40 Wash. 389, 82 Pac. 417.) 
 
 Question of necessity of crossing a judicial one for the court. (State 
 ex rel. Postal Tel. etc. Co. v. Superior Court, 64 Wash. 189, 116 Pac. 
 855.) 
 
 In condemnation of crossing of existing railroad, installing necessary 
 interlocking device proper element in compensation, but future tracks not 
 so. (State ex rel. North. Coast R. Co. v. R. Co., 49 Wash. 78.) 
 
 Railroad company may condemn crossing over existing railroad where 
 necessary only, but must interfere as little as possible with prior use. 
 (State ex rel. Kent Lumber Co. v. Superior Court, 46 Wash. 516; State 
 ex rel. Portland etc. Co. v. Superior Court, 45 Wash. 270 ; Seattle & M. 
 Ry. Co. V. State, 7 Wash. 150.) 
 
 § 477. Construction Over Rivers, etc.— Conditions. 
 
 [§ 8737, Rem.-Bal.] Every corporation formed under the 
 laws of this state for the construction of railroads or canals 
 shall possess the power to construct its railway or canal, as the 
 case may be, across, along or upon any river, stream of water, 
 watercourses, plank road, turnpike or canal, which the route 
 of such railway or canal shall intersect or touch ; but such cor- 
 poration shall restore the river, stream, watercourse, plank 
 road or turnpike thus intersected or touched to its former state
 
 333 APPROPRIATION OF LANDS AND HIGHWAYS. § § 477a, 478 
 
 as near as may be. and pay any damages caused by such con- 
 struction : Provided, that the construction of any railway or 
 canal by such corporation along, across or upon any of the 
 navigable rivers or waters of this state shall be in such manner 
 as to not interfere with, impede or obstruct the navigation 
 thereof; and all rights, privileges and powers of every de- 
 scription by law conferred upon road or railroad companies 
 are hereby given and granted to canal companies so far as the 
 same may be applicable, and all power and authority possessed 
 by the public or municipal corporations of the state or their 
 local authorities, with reference to road or railroad companies, 
 may be exercised by them with reference to canal companies.. 
 [Laws 1895, § 4, p. 148; 1 H. C, § 1572; Bal, § 4336.] 
 
 No constitutional or statutory prohibition to crossing abutting harbor 
 area. (State ex rel. Hulme v. Gray's Harbor R. Co., 54 Wash. 530, 103 
 Pac. 809.) 
 
 § 477a. Change of Grade or Location. 
 
 [§ 8738, Rem.-Bal.] Any corporation may change the 
 grade or location of its road or canal, not departing from 
 the general route specified in the articles of incorporation, 
 for the purposes of avoiding annoyances to public travel, or 
 dangerous or deficient curves or grades, or unsafe or unsub- 
 stantial grounds or foundation, or for other like reasonable 
 causes, and for the accomplishment of such change shall have 
 the same right to enter upon, examine, survey, and appro- 
 priate the necessary lands and materials as in the original 
 location and construction of such road or canal. [Laws 
 1869, p. 343, §3; Cd. 1881, §2457; 1 H. C, §1573; Bal., § 
 4337.] 
 
 § 478. Eminent Domain— Telegraph and Telephone Com- 
 panies. 
 
 [§ 9300, Rem.-Bal.] The right of eminent domain is 
 hereby extended to all telegraph and telephone corporations 
 and companies organized or doing business in this state 
 [Laws 1890, § 1, p. 292 ; 1 H. C, § 1547 ; Bal., § 4355.]
 
 §§ 479^481 EXISTING CORPORATION LAWS, 1913, 334 
 
 A company may condemn land in accordance with its special charter 
 or subsequent general law. (Cascades E. Co. v. Johns, 1 Wash. Ter. 
 557.) 
 
 § 479. Telegraph and Telephone Companies may Condemn. 
 [§ 9301, Rem.-Bal.] Every corporation incorporated under 
 the laws of this state or any state or territory of the United 
 States for the purpose of constructing, operating or maintain- 
 ing any telegraph or telephone in this state, shall have the 
 right to enter upon any land between the termini of its pro- 
 posed lines of telegraph or telephone for the purpose of ex- 
 amining, locating and surveying the line of such telegraph 
 or telephone, doing no unnecessary damage thereby, [Laws 
 1888, § 1, p. 65; 1 H, C, § 1548; Bal., § 4356.] 
 
 § 480. Extent — Right to Railway Line. 
 
 [§ 9304, Rem.-Bal.] Such telegraph or telephone company 
 may appropriate so much land as may be actually necessary 
 for its line of telegraph or telephone, with the right to enter 
 upon lands immediately adjacent thereto, for the purpose of 
 constructing, maintaining and operating its line and making 
 all necessary repairs. Such telegraph or telephone company 
 may also, for the purpose aforesaid, enter upon and appro- 
 priate such portion of the right of way of any railroad com- 
 pany as may be necessary for the construction, maintenance 
 and operation of its telegraph or telephone line: Provided, 
 however, that such appropriation shall not obstruct such rail- 
 road or the travel thereupon, nor interfere with the operation 
 of such railroad. [Laws 1888, § 2, p. 66 ; 1 H. C, § 1549 ; 
 Bal., § 4359.] 
 
 § 481. Mining Companies — Reduction Works — Eminent 
 Domain. 
 [§ 7344, Rem.-Bal.] The right of eminent domain is hereby 
 extended to all corporations incorporated or that may here- 
 after be incorporated under the laws of this state or any state 
 or territory of the United States, and doing business in this 
 state, for the purpose of acquiring, owning or operating mines,
 
 335 APPROPRIATION OP LANDS AND HIGHWAYS. §§ 482-484 
 
 mills, or reduction works, or mining or milling gold and silver 
 or other minerals, which may desire to erect and operate sur- 
 face tramways or elevated cable tramways for the purpose of 
 carrying, conveying or transporting the products of such 
 mines, mills or reduction works. [Laws 1897, § 1, p. 95 ; Bal., 
 § 4282.] 
 
 A company may condemn land in accordance with its special charter 
 or subsequent general law. (Cascades E. Co. t. Sohms, 1 Wash. Ter. 
 557.) 
 
 § 482. Right to Enter Lands for Survey, etc. 
 
 [§ 7345, Rem.-Bal.] Every corporation incorporated or 
 that may hereafter be incorporated under the laws of this 
 state or any state or territory of the United States, and doing 
 business in this state, for the purpose of acquiring, owning or 
 operating mines, mills or reduction works, or mining or mill- 
 ing gold and silver or other minerals, which may desire to erect 
 and operate surface tramways or elevated cable tramways 
 for the purpose of carrying, conveying or transporting the 
 products of such mines, mills or reduction works, shall have 
 the right to enter upon any land between the termini of the 
 proposed lines for the purpose of examining, locating and 
 surveying such lines, doing no unnecessary damage thereby. 
 [Laws 1897, § 2, p. 95; Bal., § 4283.] 
 
 § 483. Procedure as in Other Cases. 
 
 [§ 7346, Rem.-Bal.] Every such corporation shall have the 
 right to appropriate real estate or other property for right 
 of way in the same manner and under the same procedure as 
 now is or may be hereafter provided by the law in the case of 
 other corporations authorized by the laws of this state to 
 exercise the right of eminent domain. [Laws 1897, § 3, p. 95 j 
 Bal., § 4284.] 
 
 § 484. Electric Railways may Condemn. 
 
 [See §§ 9080, 9081, Rem.-Bal.] The right of eminent do- 
 main is hereby extended to all corporations incorporated or 
 that may hereafter be incorporated under the laws of this state 
 or any state or territory of the United States and doing busi- 
 ness in this state for the purpose of transmitting electric power
 
 §§ 485-487 EXISTING corporation laws, 1913. 336 
 
 by wire, cable or by any other means ; or for operating rail- 
 way's or railroads by electric power: Provided, however, that 
 said right of eminent domain shall not be exercised with re- 
 spect to any residence or business structure or structures, 
 public road or street. [Laws 1899, § 1, p. 147.] 
 
 § 485. Right to Enter Lands for Survey, etc. 
 
 [§ 9083, Kem.-Bal.] Every such corporation shall have the 
 right to enter upon any land between the termini of the pro- 
 posed lines for the purpose of examining, locating and survey- 
 ing such lines, doing no unnecessary damage thereby. [Laws 
 1899, §2, p. 147.] 
 
 "Such" means electric power and electric railroad companies. (Laws 
 1899, sec. 1, p. 147.) 
 
 § 486. Procedure as in Other Cases. 
 
 [See §§ 9080, 9081, Rem.-Bal.] Every such corporation 
 shall have the right, subject to the proviso contained in section 
 1 hereof [9080, Rem.-Bal], to appropriate real estate or other 
 property for right of way or for any corporate purposes in 
 the manner and under the same procedure as now is or may 
 hereafter be provided by law in the case of other corpora- 
 tions authorized by the laws of this state to exercise the 
 right of eminent domain. [Laws 1899, § 3, p. 148.] 
 
 "Such" means electric power and electric railroad companies. (Laws 
 1899, sec. 1, p. 147.) 
 
 § 487. Electric Power Companies may Condemn. 
 
 [§ 934, Rem.-Bal.] The right of eminent domain is here- 
 by extended to all corporations incorporated or that may 
 hereafter be incorporated under the laws of this state or any 
 state or territory of the United States, and doing business in 
 this state, for the purpose of transmitting electric power by 
 wire, cable or by any other means: Provided, however, that 
 said right of eminent domain shall not be exercised in respect 
 to any residence or business structure or structures. [Laws 
 1895, §1, p. 80;Bal., §5648.] 
 
 A company may condemn land in accordance with its special charter 
 or subsequent general law. (Cascades R. Co. v. Sohms, 1 Wash. Ter. 
 557.)
 
 337 APPROPRIATION OF LANDS AND HIGHWAYS. §§ 4:Sa-49() 
 
 A private company generating power to be sold at profit cannot hj 
 offering to serve the public acquire right of eminent domain. (Tolt 
 Power etc. Co. v. Superior Court, 50 Wash. 13, 96 Pac. 519.) 
 
 § 488. Rig-ht to Enter Lands for Survey, etc. 
 
 [§ 935, Rem.-Bal.] Every corporation incorporated or 
 that may hereafter be incorporated under the laws of this 
 state or any state or territory of the United States, and doinc: 
 business in this state, for the purpose of transmitting electric 
 power by wire, cable or any other means, shall have the right 
 to enter upon any land between the termini of the proposed 
 lines for the purpose of examining, locating and surveying 
 such lines, doing no unnecessary damage thereby. [Laws 
 1895, §2, p. 80; Bal., §5649.] 
 
 § 489. Procedure as in Other Cases. 
 
 [§ 936, Rem.-Bal.] Every such corporation shall have the 
 right, subject to the proviso contained in section 1 hereof [934, 
 Rem.-Bal], to appropriate real estate or other property for 
 right of way or for any corporate purposes in the same man- 
 ner and under the same procedure as now is or may be here- 
 after provided by the law in the case of other corporations 
 authorized by the laws of this state to exercise the right of 
 eminent domain. [Laws 1895, § 3, p. 80; Bal, § 5650.] 
 
 § 490. Water Power Companies may Condemn. 
 
 [§ 9506, Rem.-Bal.] The right of eminent domain for the 
 purpose of appropriating real estate is hereby extended to all 
 corporations that are now or that may hereafter be incorpo- 
 rated under the laws of this state, or of any state or territory 
 of the United States and doing business in this state, for the 
 purpose of conveying water by ditches, flumes, pipe-lines, 
 tunnels or any other means for the utilization of water power: 
 Provided, however, that said right of eminent domain shall not 
 be exercised in respect to any residence or business structure 
 or structures. [Laws 1901, § 1, p. 299.] 
 
 A company may condemn land in accordance with its special charter 
 or subsequent general law. (Cascades R. Co. v. Sohms, 1 Wash. Ter. 
 557.) 
 
 22
 
 §§ 491-493 EXISTING CORPORATION LAWS, 1913. 338 
 
 A private company generating power to be sold at profit cannot by 
 offering to serve the public acquire right of eminent domain. (State 
 ex rel. Tolt Power etc. Co. v. Superior Court, 50 Wash. 13, 96 Pac. 519.) 
 
 § 491. Right to Enter Lands for Survey, etc. 
 
 [§ 9507, Rem.-Bal] Every corporation that is now or that 
 may hereafter be incorporated under the laws of this state, or 
 of any other state or territory of the United States and doing 
 business in this state, for the purpose of conveying water by 
 ditches, flumes, pipe-lines, tunnels or any other means for the 
 utilization of water power shall have the right to enter upon 
 any land between the termini of the proposed ditches, flumes, 
 pipe-lines, tunnels or any other means for the utilization of 
 water power, for the purpose of examining, locating and sur- 
 veying such ditches, flumes, pipe-lines, tunnels or any other 
 means for the utilization of water-power, doing no unnecessary 
 damage thereby. [Laws 1901, § 2, p. 299.] 
 
 § 492. Procedure as in Other Cases. 
 
 [§ 9508, Rem.-Bal.] Every such corporation shall have the 
 right, subject to the proviso contained in section 1 hereof 
 [9506, Rem.-Bal.], to appropriate real estate or other prop- 
 erty for a right of way for such ditches, flumes, pipe-lines, 
 tunnels or other means of conveying water, and for any other 
 corporate purposes, in the same manner and under the same 
 procedure as now is or may be hereafter provided by law in 
 the case of other corporations authorized by the laws of the 
 state to exercise the right of eminent domain. [Laws 1901, 
 § 3, p. 300.] 
 
 § 493. Canal and Irrigation Companies may Condemn. 
 
 [§ 9510, Rem.-Bal.] All corporations, authorized to do 
 business in this state, and who have been or may hereafter be 
 organized for the purpose of erecting and maintaining flumes 
 and aqueducts to convey water for consumption for mining, 
 irrigation, milling or other industrial purposes, shall have the 
 same right to appropriate lands for necessary corporate pur- 
 poses, and under the same regulations and instructions as 
 are provided for other corporations; and such corporations 
 organized for such purposes, in order to carry out the object
 
 339 APPROPRIATION OP LANDS AND HIGHWAYS. § 494 
 
 of their incorporation, are authorized to take and use any 
 v/ater not otherwise legally appropriated. [Laws 1879, § 1, 
 p. 134; Cd. 1881, § 2472; 1 H. C, § 1587; Bal., § 4281a.] 
 
 A company may condemn land in accordance with its special charter 
 or subsequent general law. (Cascades R. Co. v. Sohms, 1 Wash. Ter. 
 557.) 
 
 Irrigation company is farming corporation authorized by laws of 
 1873. (Ellis V. Pomeroy Imp. Co., 1 Wash. 572, 21 Pac. 27.) 
 
 § 494. Right of Easement. 
 
 There is hereby granted to persons, firms and corporations 
 organized among other things, for irrigation and power pur- 
 poses, the right to construct and maintain dams and works in- 
 cident thereto, over, upon and across the beds of the rivers of 
 the state of Washington in connection with such power and 
 irrigation purposes, and there is hereby granted to such per- 
 sons, firms and corporations an easement over, upon and across 
 the beds of such rivers for such purposes. Such easement 
 shall be limited, however, to so much of the beds of such rivers 
 as may be reasonably convenient and necessary for such uses. 
 All such dams and works shall be completed within five years 
 after the commencement of construction work upon the same. 
 The rights and privileges granted by this act shall inure to 
 the benefit of such persons, firms or corporations from the date 
 of the commencement of construction work upon such dams 
 and works incident thereto, and such construction work shall 
 be diligently prosecuted to completion, and the rights, privi- 
 leges and easements granted by this act shall continue so long 
 as the same shall be utilized by the grantees for the purposes 
 herein specified, and the failure to maintain and use such 
 dams and works after the same shall have been constructed, 
 for a continuous period of two years, shall operate as a f orf eit^ 
 ure of all the rights hereby granted and the same shall revert 
 to the state of "Washington : Provided, that nothing in this act 
 shall be construed in such a way as to interfere with the use 
 of said rivers for navigation purposes, and all of such rights, 
 privileges and easements granted hereby shall be subject to 
 the paramount control of such rivers for navigation purposes 
 by the United States : And provided further, that the use and
 
 § 495 EXISTING CORPOILVTION LAWS, 1913. 340 
 
 enjoyment of the grants and privileges of this act shall not 
 interfere with the lawful and rightful diversion of the waters 
 of said rivers by other parties under water appropriations in 
 existence at the time any such persons, firms or corporations 
 shall avail themselves of the benefits and privileges of this 
 act, but no such persons, firms or corporations shall have any 
 right to construct any such dams or works over, upon or across 
 the land between ordinary high water and extreme low water 
 of any river of this state without first having acquired the 
 right to do so from the owner or owners of the lands adjoining 
 the land between ordinary high water and extreme low water 
 over or across which said dam or works are constructed. 
 [Laws 1911, p. 436.] 
 
 § 495. May Sell Electric Power and Light — Shall be Deemed 
 Public Service Corporation. 
 [§4974, Rem.-Bal.] Any corporation authorized to do 
 business in this state, which, under the present laws of the 
 state, is authorized to condemn property for the purpose of 
 generating and transmitting electrical power for the operation 
 of railroads or railways, or for municipal lighting, and which 
 by its charter or articles of incorporation, assumes the addi- 
 tional right to sell electric power and electric light to private 
 consumers outside the limits of a municipality and to sell 
 electric power to private consumers within the limits of a 
 municipality, which shall provide in its articles that in respect 
 of the purposes mentioned in this section it will assume and 
 undertake to the state and to the inhabitants thereof the duties 
 and obligations of a public service corporation, shall be 
 deemed to be in respect of such purposes a public service 
 corporation, and shall be held to all the duties, obligations 
 and control, which by law are or may be imposed upon public 
 service corporations. Any such corporation shall have the 
 right to sell electric light outside the limits of a municipality 
 and electric power both inside and outside such limits to 
 private consumers from the electricity generated and trans- 
 mitted by it for public purposes and not needed by it there- 
 for: Provided, that such corporation shall furnish such excess
 
 341 APPROPRIATION OP LANDS AND HIGHWAYS. §496 
 
 power at equal rates, quantity and conditions considered, to 
 all consumers alike, and shall supply it to the first applicants 
 therefor until the amount available shall be exhausted : Pro- 
 vided, further, that no such corporation shall be obliged to 
 furnish such excess power to any one consumer to an amount 
 exceeding twenty-five per cent of the total amount of such 
 excess power generated or transmitted by it. In exercising 
 the power of eminent domain for public purposes it shall not 
 be an objection thereto that a portion of the electric current 
 generated will be applied to private purposes, provided the 
 principal uses intended are public: Provided, that all public 
 service or quasi-public service corporations shall at no time 
 sell, deliver and dispose of electrical power in bulk to manu- 
 facturing concerns at the expense of its public service func- 
 tions, and any person, firm or corporation that is a patron of 
 such corporation as to such public function, shall have the 
 right to apply to any court of competent jurisdiction to cor- 
 rect any violation of the provisions of this act. [Laws 1907 
 § 1, p. 349.] 
 
 A private company generating power to be sold at profit cannot, by 
 offering to serve the public, acquire the right of eminent domain. (State 
 ex rel. Tolt Power etc. Co. v. Superior Court, 50 Wash. 13, 96 Pac. 519.) 
 
 Condemnation of water-power for generating electric power to be 
 supplied municipal and public lighting and common carrying railroads 
 is for authorized public use (State ex rel. Dominick v. Superior Court, 
 52 Wash. 196) ; but generating power for commercial purposes generally 
 ia not public use. (State ex rel. Shropshire v. Superior Court, 51 
 Wash. 386.) 
 
 § 496. Electricity not to be Used for Private Enterprises. 
 
 [§4975, Rem.-Bal.] Whenever any corporation has ac- 
 quired any property by decree of appropriation based on pro- 
 ceedings in court under the provisions of this act, no portion 
 of the electricity generated or transmitted by it by means of 
 the property appropriated under the provisions of this act 
 shall be used or applied by such corporation for or to a busi- 
 ness or trade not under the present laws deemed public or 
 quasi-public conducted by itself. [Laws 1907, § 2, p. 350.]
 
 § 497 EXISTING CORPORATION LAWS, 1913. 342 
 
 Sale of electric power to the public not public use, (State ex rel. 
 Harris v. Superior Court, 42 Wash. 660, 85 Pac. 666.) 
 
 A private company generating power to be sold at profit cannot, by 
 offering to serve the public, acquire the right of eminent domain. (State 
 ex rel. Tolt Power etc. Co. v. Superior Court, 50 Wash. 13, 96 Pac. 519.) 
 
 § 497. Violation Forfeiture of Franchise. 
 
 [§ 4976, Rem.-Bal.] In the event of the violation of any of 
 the requirements of this act by any corporation availing itself 
 of its provisions, an appropriate suit may be maintained in 
 the name of the state upon the relation of the attorney general, 
 or if he shall refuse or neglect to act upon the relation of any 
 individual aggrieved by the violation or violations, complained 
 of, to compel such corporation to comply with the requirements 
 of this act. A violation of this act shall cause the forfeiture 
 of the corporate franchise if the corporation refuses or neglects 
 to comply with the orders with respect thereto made in the 
 suit herein provided for. [Laws 19Q7, § 3, p. 350.]
 
 343 RAILROAD CORPORATIONS, ETC. § 498 
 
 RAILROAD CORPORATIONS AND OTHER 
 TRANSPORTATION COMPANIES. 
 
 § 408. Railroad may Build Branch Lines. 
 
 [§ 8662, Rem.-Bal.] Any railroad corporation chartered 
 by, or organized under, the laws of the state, or of any state 
 or territory, or under the laws of the United States, and au- 
 thorized to do business in this state, may extend its railroad 
 from any point named in its charter or articles of incorpora- 
 tion, or may build branch roads either from any point on its 
 line of road or from any point on the line of any other railroad 
 connecting, or to be connected, with its road, the use of which 
 other road between such points and the connection with its 
 own road such corporation shall have secured by lease or 
 agreement for a term of not less than ten years from its date ; 
 before making any such extension or building any such branch 
 road, such corporation shall, by resolution of its directors or 
 trustees, to be entered in the record of its proceedings, desig- 
 nate the route of such proposed extension or branch by indi- 
 cating the place from and to which said railroad is to be 
 constructed, and the estimated length of such railroad, and the 
 name of each county in this state through or into which it is 
 constructed or intended to be constructed, and file a copy 
 of such record, certified by the president and secretary, in the 
 office of the Secretary of State, who shall indorse thereon the 
 date of the filing thereof and record the same. Thereupon 
 such corporation shall have all the rights and privileges to 
 make such extension or build such branch and receive aid 
 thereto which it would have had if it had been authorized in 
 its charter or articles of incorporation. [Laws 1890, § 1, 
 p. 526; 1 H. C, §1535; Bal., §4303.] 
 
 Charter authority to build specified branch does not authorize branches 
 generally, and under Hill's Code, section 1535 (Bal. Code, sec. 4303), 
 copy of designated route must be filed with the Secretary of State. 
 (Biles V. Tacoma etc. E. Co., 5 Wash. 509, 32 Pac. 211.) 
 
 In the absence of legislation, mandamus will issue to compel a rail- 
 road to stop trains and furnish a depot where public need requires it.
 
 § 498 EXISTING CORPORATION LAWS, 1913. 344 
 
 (Northern Pacific K. Co. v. Territory ex rel. Dustin, 3 Wash. Ter. 303, 
 13 Pac. 604; reversed, 142 U. S. 492.) 
 
 A railroad company which has constructed its road on unsurveyed pub- 
 lic land has right thereto against subsequent locator of mining claim. 
 (Penn. Min. & I. Co. v. Everett & M. C. R. Co., 29 Wash. 102, 69 Pac. 
 628.) 
 
 Grant of railroad right of way across public lands does not attach 
 to settler's land until after condemnation. (Slaght v. Northern Pac. R. 
 Co., 39 Wash. 576, 81 Pac. 1062.) 
 
 A railroad right of way is an easement and not a fee unless latter is 
 granted expressly. (Reichenbach v. Wash. Short Line R. Co., 10 Wash. 
 357, 38 Pac. 1126.) 
 
 Railroad crossing another must accommodate itself to the established 
 way of the latter. (Seattle & M. R. Co. v. State, 7 Wash. 150, 34 
 Pac. 551.) 
 
 Lessor railroad company liable for damages for failure to fence as 
 required by law. (Oregon R. & Nav. Co. v. Dacres, 1 Wash. 195, 23 
 Pac. 415.) 
 
 The fact that a car leaves the track establishes a defect in the track 
 or machinery, or want of proper operation. (Walker v. McNeill, 17 
 Wash. 582, 50 Pac. 518; Roberts v. Port Blakely Mill Co., 30 Wash. 
 25, 70 Pac. 111.) 
 
 The act of 1907, page 530, section 3, conferring on the state railroad 
 commission authority to order trackage connections is not unlawful dele- 
 gation of legislative power. (State ex rel. Oregon R. & Nav. Co. v. 
 Railroad Com., 52 Wash. 17, 100 Pac. 179.) 
 
 Soliciting agent advertised as "general agent" is not agent to receive 
 service of process under Ballinger's Code, section 4875. (Arrow Lumber 
 etc. Co. V. Union Pacific R. Co., 53 Wash. 629, 102 Pac. 650.) 
 
 Under Laws of 1907, page 538, state railroad commission has power 
 to order track connections between different railways. (State ex rel. 
 Oregon etc. R. Co. v. Railroad Commission, 52 Wash. 17, 100 Pac. 179.) 
 
 Where a domestic railway company adopted its location at directors' 
 meeting held in another state, subsequent bringing of condemnation pro- 
 ceedings in the state is sufficient adoption. (State ex rel. Biddle v. 
 Superior Court, 44 Wash. 108, 87 Pac. 40.) 
 
 An order of the railroad commission requiring a railroad depot to be 
 moved five hundred feet in town of seventy-five people to bring it nearer 
 business center unreasonable. (State ex rel. Gt. Northern R. Co. v. 
 Railroad Commission, 60 Wash. 218, 110 Pac. 1075.) 
 
 Railroad fence act of 1893, Remington and Ballinger's Code, section 
 8729, is impliedly repealed by acts of 1903 and 1907, Remington and 
 Ballinger's Code, section 8730, providing that owner shall have right to 
 put in gates. (Huffman v. Oregon R. & Nav. Co., 57 Wash. 494, 107 
 Pac. 362.)
 
 345 RAILROAD CORPORATIONS, ETC. § 499 
 
 § 499. Consolidation of Railroads — Leases, etc. 
 
 [§8665, Rem.-Bal.] That an.y railroad compan.y now or 
 hereafter incorporated, pursuant to the laws of this state or of 
 the United States, or of any state or territory of the United 
 States, may at any time by means of subscription to the capital 
 stock of any other railroad company, or by the purchase of its 
 stock or bonds, or by guaranteeing its bonds, or otherwise, aid 
 such company in the construction of its railroad within or 
 without this state ; and any such company owning or operating 
 a railroad within or without this state, may extend the same 
 into this or any other state or territory, and may build, buy, 
 or lease the whole or any part of any other railroad, together 
 with the franchises, powers and immunities and all other prop- 
 erty and appurtenances appertaining thereto, whether located 
 within or without this state ; or may consolidate with any rail- 
 road or railroads in such other state or territory, or with any 
 other railroad in this state, and may operate the same, and 
 may own such real estate and other property in such other 
 state or territory as may be necessary or convenient in the 
 operation of such road ; and any such railroad company may 
 sell or lease the whole or any part of its railroad and branches, 
 within or without this state, constructed or to be constructed, 
 together with all property, rights, privileges and franchises 
 appertaining thereto, to any railroad company organized or 
 existing pursuant to the laws of the United States or of this 
 state, or of any other state or territory of the United States ; 
 and any railroad company incorporated or existing under the 
 laws of the United States, or of any state or territory of the 
 United States, may extend, construct, maintain and operate 
 its railroad, or any portion or branch thereof, into and through 
 this state, and may build branches from any point on such 
 extension to any place or places within this state, and the 
 railroad company of any other state or territory of the United 
 States which shall so purchase or lease a railroad, or any 
 part thereof in this state, or consolidate with any such rail- 
 road in this state, or shall extend or construct its road, or any 
 portion or branch thereof in this state, shall possess and may 
 exercise and enjoy as to the location, control, management
 
 § 499 EXISTING CORPORATION LAWS, 1913. 346 
 
 and operation of the said road, and as to the location, con- 
 struction and operation of any extension or branch thereof, 
 all the rights, powers, privileges and franchises possessed by 
 railroad corporations organized under the laws of this state, 
 including the exercise of the power of eminent domain. Such 
 purchase, sale, consolidation or lease may be made, or such 
 aid furnished, upon such terms or conditions as may be agreed 
 upon by the directors and trustees of the respective com- 
 panies; but the same shall be approved or ratified by persons 
 holding or representing seventy-five per cent of the capital 
 stock of each of such companies, respectively, at any annual 
 stockholders' meeting, or at a special meeting of the stock- 
 holders called for that purpose, or by the approval in writing 
 of seventy-five per cent of the stockholders of each company, 
 respectively. Articles stating the name selected for such con- 
 solidated corporation and the terms of such consolidation shall 
 be approved by each corporation by the vote of the stock- 
 holders holding seventy-five per cent of the stock, in person 
 or by proxy, at a regular meeting thereof, or a special meeting 
 called for that purpose in the manner provided by the by-laws 
 of the respective consolidating corporations, or by the consent 
 in writing of such seventy-five per cent of such stockholders 
 annexed to such articles ; and a copy thereof, with a copy of 
 the records of such approval or consent, duly certified by the 
 respective presidents and secretaries, with the corporate seals 
 of such corporations affixed thereto, shall be filed for record 
 in the office of the Secretary of State, and a copy thereof be fur- 
 nished to the State Railroad Commission [now Public Service 
 Commission] ; and thereupon such consolidating corporations 
 shall be and become one corporation, by the name so selected, 
 which, within this state, shall possess all the powers, fran- 
 chises, and immunities, including the right of further con- 
 solidation with other corporations, and be subject to all the 
 liabilities and restrictions now or hereafter imposed by law: 
 Provided, that no railroad or transportation corporation shall 
 consolidate its stock, property, or franchises with any other 
 railroad or transportation corporation owning a competing 
 line, or purchase either directly or indirectly, any stock or 
 
 i
 
 347 RAILROAD CORPORATIONS, ETC. § 499 
 
 interest in a railroad or transportation corporation owning 
 or operating a competing line: And provided further, that 
 nothing in the foregoing provisions shall be held or construed 
 as curtailing the right of this state, or of the counties through 
 which any such road or roads may be located, to levy and col- 
 lect taxes upon the same, and upon the rolling stock thereof, 
 in conformity with the provisions of the laws of this state 
 upon that subject, and all roads or branches thereof in this 
 state so consolidated with, purchased or leased, or aided, or 
 extended into this state, shall be subject to taxation and to 
 regulation and control of its operation by the laws of this 
 state in all respects the same as if constructed by corporations 
 organized under the laws of this state; and any corporation 
 of another state or territory or of the United States, being 
 the purchaser or lessee of a railroad within this state, or ex- 
 tending its railroad or any portion thereof into or through 
 this state, shall establish and maintain an office or offices in 
 this state, at some point or points on its line, at which legal 
 process and notice may be served as upon railroad corpora- 
 tions of this state : Provided further, that before any railroad 
 corporation organized under the laws of any other state or 
 territory, or of the United States, shall be permitted to avail 
 itself of the benefits of this act with respect to any railroad 
 constructed, or to be constructed within this state, such cor- 
 poration shall file with the Secretary of State a true copy 
 of its charter or articles of incorporation, and otherwise com- 
 ply with the laws of this state respecting foreign corporations 
 doing business within the state : Provided, that any such con- 
 solidation shall be approved by the State Railroad Commis- 
 sion [now Public Service Commission] : Provided further, 
 that, in no case, shall the capital stock of the company formed 
 by such consolidation exceed the sum of the capital stock of 
 the companies so consolidated, at the par value thereof. 
 [Laws 1909, § 1, p. 698; 1 H. C, § 1536.] 
 
 Minority stockholders may maintain suit to annul illegal traffic agree- 
 ment. (Earl y. Seattle etc. E. Co., 56 Fed. 909.) 
 
 Two competing roads may legally arrange to take each one-half the 
 stock in a new company opening up new territory. (Cascade E. Co. v. 
 Superior Court, 51 Wash. 346.)
 
 §§500,501 EXISTING CORPORATION LAWS, 1913. 348 
 
 § 500. Prior Sales, etc., Legalized. 
 
 [§ 8666, Rem.-Bal.] Any sale or purchase of and any con- 
 solidation by sale, or otherwise, or any lease, or agreement to 
 sell, consolidate with or lease, the whole or any part of any rail- 
 road, or the branch lines of any company, whether organized 
 or located within or without this state, with the franchise ap- 
 pertaining thereto, to, from or with any railroad company 
 organized under the laws of the United States or of this state or 
 any other state or territory, or any consolidation between such 
 companies, heretofore executed by the proper officers of the re- 
 spective companies, parties to such sale, lease or consolidation 
 or contract, is hereby legalized and made in all respects valid 
 and binding from the date of its execution : Provided, that the 
 provisions of this section shall not apply when the railroads or 
 transportation corporations involved are competing lines. 
 [Laws 1909, § 2, p. 701.] 
 
 § 501. Extension in This State of Foreign Lines. 
 
 [§ 8668, Rem.-Bal.] Any railroad corporation chartered by 
 or organized under the laws of the United States, or of any 
 state or territory, whose constructed railroad shall reach or 
 intersect the boundary line of this state at any point, may ex- 
 tend its railroad into this state from any such point or points 
 to any place or places within the state, and may build branches 
 from any point on such extension. Before making such ex- 
 tension or building any such branch road, such corporation 
 shall, by resolution of its directors or trustees, to be entered 
 in the record of its proceedings, designate the route of such 
 proposed extension or branch by indicating the place from 
 and to which such extension or branch is to be constructed, 
 and the estimated length of such extension or branch, and the 
 name of each county in this state through or into which it is 
 constructed or intended to be constructed, and file a copy of 
 such record, certified by the president and secretary, in the 
 office of the Secretary of State, who shall indorse thereon the 
 date of filing thereof, and record the same. Thereupon such 
 corporation shall have all the rights and privileges to make 
 such extension or build such branch and receive such aid
 
 349- RAILROAD CORPORATIONS, ETC. §§502,503 
 
 thereto as it would have had had it been authorized so to do 
 by articles of incorporation duly filed in accordance with the 
 laws of this state. [Laws 1890, § 3, p. 527; 1 H. C, § 1537; 
 Bal., § 4305.] 
 
 Foreign corporation is authorized to construct lines within the state. 
 (Miller v. Griffin, 46 Wash. 489.) 
 
 Adoption of location by domestic company at directors' meeting in 
 another state ratified by condemnation proceedings when instituted within 
 the state. (State ex rel. Biddle v. Superior Court, 44 Wash. 108.) 
 
 § 502. May Construct and Maintain Spur Tracks. 
 
 [§ 8667, Rem.-Bal.] Any railroad corporation organized 
 under the laws of this state or of any other state, and author- 
 ized to do business in this state and owning or operating a 
 railway in this state, may construct, maintain and operate pub- 
 lic spur tracks, from its railroad or any branch thereof, to 
 and upon the grounds of any mill, elevator, storehouse, ware- 
 house, dock, wharf, pier, manufacturing establishment, lum- 
 ber-yard, coal dock or other industry or enterprise, with all 
 sidetracks, storage tracks, wyes, turnouts, and connections 
 necessary or convenient to the use of the same ; and such com- 
 pany may acquire by purchase or condemnation, in the man- 
 ner provided by the laws of this state for the acquisition of 
 real estate for railway purposes, all necessary rights of way 
 for such spur tracks, sidetracks, storage tracks, wyes, turnouts 
 and connections; said spur when constructed to be a public 
 spur for the use of all industries located or thereafter located 
 thereon: Provided, that the right to acquire by condemnation 
 herein granted shall not be exercised over unimproved lands 
 for a greater distance than five miles, or over improved lands 
 for a greater distance than one mile, or over lands within the 
 limits of a municipal corporation for a greater distance than 
 one-fourth of a mile : Provided further, that this act shall not 
 be construed as limiting the rights granted under the operation 
 of the act of March 28, 1890, relating to the construction of 
 branch lines. [Laws 1907, § 1, p. 516.] 
 
 § 503. Subject to Laws of This State. 
 
 [§ 8669, Rem.-Bal.] All such railroad corporations, con- 
 solidated companies and their branches, including their stock
 
 §§ 504, 504a existing corporation laws, 1913. 350 
 
 property and franchises, within the jurisdiction of this state, 
 shall be subject to and controlled by the constitution and laws 
 of this state. [Laws 1890, § 4, p. 528; 1 H. C, § 1538; Bal., 
 § 4306.] 
 
 § 504. May Build Bridges Over Navigable Streams. 
 
 [§8670, Rem.-Bal] Any railroad corporation heretofore 
 duly incorporated and organized under the laws of this state 
 or the territory of Washington, or which may hereafter be 
 duly incorporated and organized under the laws of this state, 
 or heretofore or hereafter incorporated and organized under 
 the laws of any other state or territory of the United States, 
 and authorized to do business in this state and to construct 
 and operate railroads therein, shall have and hereby is given 
 the right to construct bridges across the navigable streams 
 within this state over which the projected line or lines of rail- 
 way of said railroad corporations will run : Provided, that 
 said bridges are constructed in good faith for the purpose of 
 being made a part of the constructed line of said railroad: 
 And provided, that they shall be constructed in the course of 
 the construction of said railroad or thereafter for the more 
 convenient operation thereof : And provided further, that such 
 bridges shall be so constructed as not to interfere with, impede 
 or obstruct the navigation of such streams. [Laws 1890, 
 § 1, p. 53 ; 1 H. C, § 1539 ; Bal., § 4307.] 
 
 No constitutional or statutory prohibition to crossing abutting harbor 
 area. (State ex rel. Hulme v. Gray's Harbor R. Co., 54 Wash. 530, 
 103 Pac. 809.) 
 
 Abutting tide and uplands cannot be taken -without compensation. 
 (North. Pac. R. Co. v. Slade Lumber Co., 61 Wash. 1&5, 112 Pac. 240.) 
 
 § 504a. Right to Construct Bridges. 
 
 [§ 8671, Rem.-Bal. ] .... Any corporation, copartnership, 
 person or trustee heretofore or hereafter by any state or muni- 
 cipal law or ordinance authorized to construct and operate 
 railroads, interurban railroads or street railroads as common 
 carriers within this state, shall have and hereby is given, the 
 right to construct bridges or trestles across waterways here- 
 tofore or hereafter laid out under the authority of the state
 
 351 RAILROAD CORPORATIONS, ETC. §§ 505-507 
 
 f)f Washington over which the projected line or lines of rail- 
 road will run: Provided, such bridges or trestles are con- 
 structed in good faith for the purpose of being made a part 
 of the constructed line of such railroad, and may also have 
 included therewith the purpose of providing a roadway for 
 the accommodation of vehicles and foot-passengers. [Laws 
 1909, p. 605, § 1.] 
 
 § 505. May Guarantee Irrigation Securities. 
 
 [§ 8663, Rem.-Bal.] It shall be lawful for any corporation, 
 whether such corporation is organized under the laws of the 
 territory or state of Washington, the laws of any other state 
 or territory, or the laws of the United States, owning, leasing 
 or operating any line or lines of railway within the state of 
 Washington, or which may own, lease or operate in the future 
 any such line or lines of railway within this state, to take, ac- 
 quire, own, negotiate, sell and guarantee bonds and stocks of 
 companies or corporations which are or may hereafter be or- 
 ganized for the purpose of irrigating and reclaiming lands 
 within this state. [Laws 1890, § 1, p. 529 ; 1 H. C, § 1543 ; 
 Bal., §4311.] 
 
 § 506. May Build Ditches. 
 
 [§ 8664, Rem.-Bal.] It shall be lawful for any such cor- 
 poration to build, own and operate irrigating ditches and 
 canals in this state for the purpose of irrigating and reclaim- 
 ing arid lands, contiguous to or tributary to such line or lines 
 of railway. [Laws 1890, §2, p. 529; 1 H. C, § 1544; Bal., 
 §4312.] 
 
 Irrigation ditch is public use. (Prescott Irr. Co. v. Flathers, 20 
 Wash. 454, 55 Pac. 635; Weed v. Goodwin, 36 Wash. 31, 78 Pac. 36.) 
 
 § 507. Authority to Construct — How and by Whom 
 Granted. 
 
 [§ 4972, Rem.-Bal.] The legislative authority of the city 
 or town having control of any public street or road, or, where 
 such street or road is not within the limits of any incorporated 
 city or town, then the board of county commissioners of the
 
 § 507 EXISTING CORPORATION LAWS, 1913. 352 
 
 county wherein such road or street is situated, may grant au- 
 thority for the construction, maintenance and operation of 
 transmission lines for transmitting electric power, together 
 with poles, wires and other appurtenances, upon, over, along 
 and across any such public street or road, and in granting 
 such authority the legislative authority of such city or town, 
 or the board of county commissioners as the case may be, may 
 prescribe the terms and conditions on which such transmis- 
 sion line and its appurtenances, shall be constructed, main- 
 tained and operated upon, over, along and across such road 
 or street, and the grade or elevation at which the same shall 
 be constructed, maintained and operated: Provided, that 
 hereafter on application being made to the board of county 
 commissioners for such authority, the board shall fix a time 
 and place for hearing the same, and shall cause the county 
 auditor to give public notice thereof at the expense of the ap- 
 plicant, by posting written or printed notices in three public 
 places in the county seat of the county, and in at least one 
 conspicuous place on the road or street or part thereof, for 
 which application is made, at least fifteen days before the 
 day fixed for such hearing, and by publishing a like notice 
 three times in some daily newspaper published in the county, 
 or if no daily newspaper is published in the co-unty, then the 
 newspaper doing the county printing, the last publication to 
 be at least five days before the day fixed for such hearing, 
 which notice shall state the name or names of the applicant 
 or applicants, a description of the roads or streets or parts 
 thereof for which the application is made, and the time and 
 place fixed for the hearing. Such hearing may be adjourned 
 from time to time by order of the board. If after such hear- 
 ing the board shall deem it to be for the public interest to grant 
 such authority in whole or in part, the board may make and 
 enter the proper order granting the authority applied for or 
 such part thereof as the board deems to be for the public 
 interest, and shall require such transmission line and its ap- 
 purtenances to be placed in such location on or alsng the road 
 or street as the board finds will cause the least interference 
 with other uses of the road or street. In case any such trans-
 
 353 RAILROAD CORPORATIONS, ETC. § 508 
 
 mission line is or shall be located in part on private right of 
 way, the owner thereof shall have the right to construct and 
 operate the same across any county road or county street 
 which intersects such private right of way, if such crossing is 
 so constructed and maintained as to do no unnecessary dam- 
 age: Provided, that any person or corporation constructing 
 such crossing or operating such transmission line on or along 
 such county road or county street shall be liable to the county 
 for all necessary expense incurred in restoring such county 
 road or county street to a suitable condition for travel. 
 [Laws 1903, § 1, p. 360.] 
 
 General authority to amend city charter does not authorize amendment 
 overriding statute on special subject. (Benton v. Seattle Electric Co., 
 50 Wash. 157, 96 Pac. 1033.) 
 
 § 508. May Lease or Purchase Property of Other Corpora- 
 tions. 
 
 [§ 4973, Rem.-Bal.] Any corporation incorporated or that 
 may hereafter be incorporated under the laws of this state or 
 any state or territory of the United States, for the purpose of 
 manufacturing, transmitting or selling electric power, may 
 lease or purchase and operate (except in cases where such 
 lease or purchase is prohibited by the constitution of this 
 state) the whole or any part of the plant for manufacturing or 
 distributing electric power or energy of any other corporation, 
 heretofore or hereafter constructed, together with the fran- 
 chises, powers, immunities and all other property or appurte- 
 nances appertaining thereto : Provided, that such lease or 
 purchase has been or shall be consented to by stockholders of 
 record holding at least two-thirds in amount of the capital 
 stock of the lessor or grantor corporation ; and all such leases 
 and purchases heretofore made or entered into by consent of 
 stockholders as aforesaid are for all intents and purposes 
 hereby ratified and confirmed, saving, however, any vested 
 rights of private parties. [Laws 1903, § 3, p. 362.] 
 23
 
 § 510 EXISTING CORPORATION LAWS, 1913. 354 
 
 HIGHWAY AND GRADE CROSSINGS. 
 
 § 510. Definitions. 
 
 The term "commission," when used in this act, means the 
 Public Service Commission of Washington. 
 
 The term "highway," when used in this act, includes all 
 state and county roads, streets, alleys, avenues, boulevards, 
 parkways, and other public places actually open and in use, 
 or to be opened and used, for travel by the public. 
 
 The term "railroad," when used in this act, means every 
 railroad, including interurban and suburban electric rail- 
 roads, by whatsoever power operated, for the public use in 
 the conveyance of persons or property for hire, with all 
 bridges, ferries, tunnels, equipment, switches, spurs, sidings, 
 tracks, stations and terminal facilities of every kind, used, 
 operated, controlled, managed, or owned by or in connec- 
 tion therewith. The said term shall also include every log- 
 ging and other industrial railway owned or operated pri- 
 marily for the purpose of carrying the property of its owners 
 or operators or of a limited class of persons, with all tracks, 
 spurs and sidings used in connection therewith. The said 
 term shall not include street railways operating within the 
 limits of any incorporated city or town. 
 
 The term "railroad company," when used in this act, in- 
 cludes every corporation, company, association, joint stock 
 association, partnership or person, its, their or his lessees, 
 trustees or receivers appointed by any court whatsoever, 
 owning, operating, controlling or managing any railroad, as 
 that term is defined in this section. 
 
 The term "over-crossing," when used in this act, means 
 any point or place where a highway crosses a railroad by 
 passing above the same. 
 
 The term "under-crossing," when used in this act, means 
 any point or place where a highway crosses a railroad by 
 passing under the same. 
 
 The term "over-crossing" or "under-crossing," shall also 
 mean any point or place where one railroad crosses another 
 railroad not at grade.
 
 355 HIGHWAY AND GRADE CROSSINGS. §§ 510a, 510b 
 
 The term "grade crossing," when used in this act, means 
 any point or place where a railroad crosses a highway or a 
 highway crosses a railroad or one railroad crosses another, 
 at a common grade. [Laws 1913, c. 30, § 1.] 
 
 § 510a. Grade Crossing Prohibited. 
 
 All railroads and extensions of railroads hereafter con- 
 structed shall cross existing railroads and highways by pass- 
 ing either over or under the same, when practicable, and 
 shall in no instance cross any railroad or highway at grade 
 without authority first being obtained from the commission 
 to do so. All highways and extensions of highways here- 
 after laid out and constructed shall cross existing railroads 
 by passing either over or under the same, when practicable, 
 and shall in no instance cross any railroad at grade without 
 authority first being obtained from the commission to do so : 
 Provided, that this section shall not be construed to pro- 
 hibit a railroad company from constructing tracks at grades 
 across other tracks owned or operated by it within estab- 
 lished yard limits. In determining whether a separation of 
 grades is practicable, the commission shall take into consid- 
 eration the amount and character of travel on the railroad 
 and on the highway ; the grade and alignment of the rail- 
 road and the highway ; the cost of separating grades ; the 
 topography of the country, and all other circumstances and 
 conditions naturally involved in such an inquiry. [Laws 
 1913, c. 30, § 2.] 
 
 § 510b. Petitions for New Crossings. 
 
 Whenever any railroad company desires to cross any high- 
 way or railroad at grade, it shall file a written petition with 
 the commission setting forth the reasons why the crossing 
 cannot be made either above or below grade, and whenever 
 the county commissioners of any county, or the municipal 
 authorities of any city or town, or the state officers author- 
 ized to lay out and construct state roads, desire to lay out 
 or extend any highway across any railroad at grade, they 
 shall file a written petition with the commission, setting 
 forth the reasons why the crossing cannot be made either
 
 § 510b EXISTING CORPORATION LAWS, 1913. 356 
 
 above or below grade. Upon receiving such petition the 
 commission shall immediately investigate the same, giving 
 at least ten days' notice to the railroad company or com- 
 panies and the county or municipality affected thereby, of 
 the time and place of such investigation, to the end that 
 all parties interested may be present and be heard. If the 
 highway involved is a state road, the state highway commis- 
 sioner shall be notified of the time and place of hearing. 
 The evidence introduced shall be reduced to writing and be 
 filed by the commission. If the commission finds that it is 
 not practicable to cross the railroad or highway either above 
 or below grade, it shall make and file a written order in the 
 cause, granting the right and privilege to construct a grade 
 crossing. The commission, in its discretion, may provide in 
 the order authorizing the construction of a grade crossing, 
 or at any subsequent time, that the railroad company shall 
 install and maintain proper signals, warnings, flagmen, in- 
 terlocking devices, or other devices or means to secure the 
 safety of the public and its employees. If upon investiga- 
 tion the commission shall find that it is impracticable to 
 construct an over-crossing or under-crossing on the estab- 
 lished or proposed highway, arid shall find that by deflect- 
 ing the established or proposed highway a practicable and 
 feasible over-crossing or under-crossing or a safer grade 
 crossing can be provided, it shall continue the hearing on. 
 the petition "and hold a supplemental hearing thereon. At 
 least ten days' notice of the time and place of such supple- 
 mental hearing shall be given to all land owners that may 
 be affected by the proposed change in location of the high- 
 way. At such supplemental hearing the commission shall 
 inquire into the propriety, advisability and neeessity of 
 changing and deflecting the highway as proposed for the 
 purpose of securing an over-crossing, under-crossing, or safer 
 grade crossing. If the proposed change in route of the high- 
 way involves the abandonment and vacation of a portion of 
 an established highway, the owners of land contiguous to 
 the portion of the highway to be vacated and abandoned 
 shall, in like manner, be notified of the time and place of the 
 supplemental hearing. At the conclusion of the hearing on
 
 357 HIGHWAY AND GRADE CROSSINGS. § blOc 
 
 the petition, the commission shall make and file its findings 
 of fact in writing concerning the matters inquired into, and 
 shall determine the location of the crossing which may be 
 constructed, and whether the same shall be an under-cross- 
 ing, over-crossing, or grade crossing, and shall determine 
 whether or not any proposed change in the route of an exist- 
 ing highway, or the abandonment of a portion thereof is 
 advisable or necessary to secure an over-crossing, under- 
 crossing, or safer grade crossing. If the commission shall 
 find and determine that a change in route of an existing 
 highway, or abandonment and vacation of a portion thereof 
 is necessary or advisable, it shall further find and determine 
 what private lands, property, or property rights, if any, it 
 is necessary to take, damage, or injuriously afl'ect, for the 
 purpose of laying out and constructing the highway along 
 a new route, and what private lands, property, or property 
 rights, if any, will be affected by the proposed abandonment 
 and vacation of a portion of an existing highway. The 
 lands, property, and property rights found necessary to be 
 taken, damaged, or affected shall be described in said find- 
 ings with reasonable accuracy, and the right to take, dam- 
 age or injuriously affect the same shall be acquired as here- 
 inafter provided. In any action brought to acquire the right 
 to take, damage, or injuriously affect any such lands, prop- 
 erty, or property rights, the findings of the commission shall 
 be conclusive as to the necessity for taking, damaging, or 
 injuriously affecting the same. A copy of said findings shall 
 be served upon all parties to the cause. [Laws 1913, c. 30, 
 §3.J 
 
 § 510c. Petitions for Change in Existing Crossings. 
 
 The mayor and city council, or other governing body of 
 any city or town, or the county commissioners of any county 
 within which any highway is crossed by any railroad, or 
 any railroad company whose road is crossed by any highway, 
 may file with the commission their or its petition in writing, 
 alleging that the public safety requires an alteration in the 
 method and manner of such crossing, and its approaches, 
 the location of the highway or crossing, the closing or dis-
 
 § 510c EXISTING CORPORATION LAWS, 1913. 358 
 
 continuance of an existing highway crossing, and the diver- 
 sion of travel thereon to another highway or crossing or if 
 not practicable to change such crossing from grade or to 
 close and discontinue the same, the opening of an additional 
 crossing for the partial diversion of travel and praying that 
 the same may be ordered. Upon such petition being filed, 
 the commission shall fix a time and place for hearing the 
 petition and shall give not less than ten days' notice thereof 
 to the petitioner, the railroad company and the municipality 
 or county in which the crossing is situate. If the highway 
 involved is a state highway, like notice shall be given to the 
 state highway commissioner. If the change petitioned for 
 requires that private lands, property, or property rights be 
 taken, damaged, or injuriously affected to open up a new 
 route for the highway, or requires that any portion of any 
 existing highway be vacated and abandoned, ten days' notice 
 of the hearing shall be given to the owner or owners of the 
 private lands, property, and property rights which it is 
 necessary to take, damage or injuriously affect, and to the 
 owner or owners of the private lands, property, or property 
 rights that will be affected by the proposed vacation and 
 abandonment of the existing highway. The commission 
 shall also cause said notice of hearing to be published once 
 in some newspaper of general circulation in the community 
 where such crossing is situate, which publication shall appear 
 at least two days prior to the date of hearing. At the time 
 and place fixed in the notice, all persons and parties inter- 
 ested shall be entitled to be heard and introduce evidence. 
 At the conclusion of the hearing the commission shall make 
 and file its written findings of fact concerning the matters 
 inquired into in like manner as provided in the preceding 
 section for findings of fact upon petition for new crossings. 
 The commission shall also enter its order based upon said 
 findings of fact, which shall specify whether the highway 
 shall continue at grade or whether it shall be changed to 
 cross over or under the railroad or whether said highway 
 shall be closed and travel thereon diverted to another chan- 
 nel, or any other change that the commission may find advis- 
 able or necessary. In case the order made requires that
 
 359 . HIGHWAY AND GRADE CROSSINGS. §§ 510d, 510e 
 
 private lands, property, or property rights be taken, dam- 
 aged, or injuriously affected, the right to take, damage, or 
 injuriously affect the same shall be acquired as hereinafter 
 provided. 
 
 Petition for the change in any existing grade crossing, or 
 for the elimination thereof, may be filed by the commission 
 on its own motion, and proceedings thereon shall be the 
 same as herein provided for the hearing and determination 
 of a petition filed by a railroad company. [Laws 1913, c. 30, 
 §4.] 
 
 § 510d. Duty to Maintain Crossings. 
 
 When a highway crosses a railroad by an over-crossing 
 or under-crossing, the framework and abutments of the 
 over-crossing or under-crossing, as the case may be, shall 
 be maintained and kept in repair by the railroad company, 
 and the roadway thereover or thereunder and approaches 
 thereto shall be maintained and kept in repair by the county 
 or municipality in which the same are situated, or if the 
 highw^ay is a state road, the roadway over or under the 
 railroad shall be maintained and kept in repair as provided 
 by law for the maintenance and repair of state roads : Pro- 
 vided, however, that this section shall not apply to over- 
 crossings or under-crossings constructed prior to the pas- 
 sage of this act under special contracts between a railroad 
 company and any county, municipality, or the state, in which 
 different provisions is made for the maintenance and repair 
 of the under-crossing or over-crossing. [Laws 1913, c. 30, 
 §5.] 
 
 § 510s. Apportionment of Cost of CrossingfS. 
 
 Subdivision A. 
 Whenever, under the provisions of this act, new railroads 
 are constructed across existing highways, or highway changes 
 are made either for the purpose of avoiding grade crossings 
 on such new railroads, or for the purpose of crossing at a 
 safer and more acce.ssible point than otherwise available, the 
 entire expense of crossing above or below the grade of the
 
 § 510e EXISTING CORPORATION LAWS, 1913. 3G0 
 
 existing highway, or changing the route thereof, for the pur- 
 pose mentioned in this subdivision, shall be paid by the rail- 
 road company. 
 
 Subdivision B. 
 Whenever, under the provisions of this act, a new highway 
 is constructed across a railroad, or an existing grade crossing 
 is eliminated or changed, the entire expense of constructing 
 an over-crossing, under-crossing, or safer grade crossing, as 
 the case may be, shall be apportioned by the commission be- 
 tween the railroad, municipality or county affected, or if the 
 highway is a state road, between the railroad and the state, as 
 justice may require, regard being had for the benefits accruing 
 to the railroad, municipality, county, or state by reason of 
 the improvement. If the highway involved is a state road, 
 the amount not apportioned to the railroad company shall be 
 paid as provided by law for constructing such state road. 
 When an existing grade crossing is ordered eliminated by the 
 construction of an over-crossing or under-crossing, the com- 
 mission may in its discretion pay an amount not to exceed ten 
 per cent of the cost thereof out of the appropriation provided 
 in this act, and in such cases the state auditor is hereby au- 
 thorized and required upon the requisition of the commission, 
 to draw warrants on the state treasury payable to the party 
 designated by the commission for such amount, and the state 
 treasurer is hereby authorized and required to pay such war- 
 rants on presentation. 
 
 Subdivision C. 
 
 Whenever two or more lines of railroad owned or operated 
 by different companies cross a highway, or each other, by an 
 over-crossing, under-crossing or grade crossing required or 
 permitted by this act or by an order of the commission, the 
 portion of the expense of making such crossing not chargeable 
 to any municipality, county, or to the state, shall be appor- 
 tioned between said railroad companies by the commission 
 unless said companies shall mutually agree upon an apportion- 
 ment. If it becomes necessary for the commission to make an 
 apportionment between the railroad companies, a hearing for 
 that purpose shall be held, at least ten days' notice of which 
 shall be given. [Laws 1913, c. 30, § 6.]
 
 361 HIGHWAY AND GRADE CROSSINGS. § 510f 
 
 § 510f. Payment of Costs and Apportionment of Con- 
 struction Work. 
 
 In the construction of new railroads across existing high- 
 ways, the railroads shall do or cause to be done all the work 
 of constructing the crossings and road changes that may be 
 required, and shall acquire and furnish whatever property or 
 easements may be necessary, and shall pay, as provided in 
 the preceding section, the entire expense of such work includ- 
 ing all compensation or damages for property or property 
 rights taken, damaged or injuriously affected. In all other 
 cases the construction work may be apportioned by the com- 
 mission between the parties who may be required to contribute 
 to the cost thereof as the parties may agree, or as the com- 
 mission may consider advisable. All work within the limits 
 of railroad rights of way shall in every case be done by the 
 railroad company owning or operating the same. The cost of 
 acquiring additional lands, rights or easements to provide for 
 the change of existing crossings shall, unless the parties other- 
 wise agree, in the first instance be paid by the municipality 
 or county within which the crossing is located ; or in the case 
 of a state road, shall be paid in the manner provided by law 
 for paying the cost of acquiring lands, rights or easements for 
 the construction of state roads. The expense accruing on 
 account of property taken or damaged shall be divided and 
 paid in the manner provided for dividing and paying other 
 costs of construction. Upon the completion of the work and 
 its approval by the commission, an accounting shall be had, 
 and if it shall appear that any party has expended more than 
 its proportion of the total cost, a settlement shall be forth- 
 with made. If the parties shall be unable to agree upon a 
 settlement, the commission shall arbitrate, adjust and settle 
 the account after notice to the parties. In the event of fail- 
 ure and refusal of any party to pay its proportion of the 
 expense, the sum with interest from the date of the settlement 
 may be recovered in a civil action by the party entitled 
 thereto. In cases where the commission has settled the ac- 
 count, the finding of the commission as to the amount due 
 shall be conclusive in any civil action brought to recover the 
 same if such finding has not been reviewed or appealed from
 
 §§ 510g-510i EXISTING CORPORATION LAWS, 1913. 362 
 
 as herein provided, and the time for review or appeal has 
 expired. If any party shall review or appeal from any find- 
 ings or order of the commission apportioning the cost between 
 the parties liable therefor, the superior court or the supreme 
 court, as the case may be, shall cause judgment to be entered 
 in such review proceedings for such sum or sums as may be 
 found lawfully or justly due by one party to another. [Laws 
 1913, c. 30, § 7.] 
 
 § 510g. Plans and Specifications — Proposals. 
 
 Plans and specifications of changes in existing crossings 
 proposed under this act, and an estimate of the expense 
 thereof, shall be submitted to the commission for its approval 
 before the commencement of the work. In case the work is 
 to be done by contract, the proposals of the contractor shall 
 be submitted to the commission and if it shall determine that 
 the bids are excessive it shall have power to require the sub- 
 mission of new proposals. [Laws 1913, c. 30, § 8.] 
 
 § 510h. Temporary Crossings. 
 
 The commission, in ifs discretion, good cause appearing 
 therefor, and upon such conditions as it may prescribe, shall 
 have power, without notice or hearing, to grant a permit to 
 construct and maintain a temporary grade crossing for a 
 period not exceeding six months, and may revoke such permit 
 at any time: Provided, that nothing contained in this sec- 
 tion shall be construed to prohibit the commission, after notice 
 and investigation, from permitting the maintenance of a tem- 
 porary grade crossing for a longer period than six months. 
 Any order granting, refusing to grant, or revoking a permit 
 for a temporary grade crossing shall not be reviewable. 
 [Laws 1913, c. 30, § 9.] 
 
 § 5101. The Commission may Fix Time. 
 
 The commission, in any order requiring work to be done, 
 shall have power to fix the time within which the same shall 
 be performed and completed: Provided, that if any party 
 having a duty to perform within a fixed time under any order 
 of the commission shall make it appear to the commission 
 
 4
 
 363 HIGHWAY AND GRADE CROSSINGS. §§510j, 510k 
 
 that the order cannot reasonably be complied with within the 
 time fixed by reason either of facts arising after the entry 
 of the order or of facts existing prior to the entry thereof 
 that were not presented, and with reasonable diligence could 
 not have been sooner presented to the commission, such party 
 shall be entitled to a reasonable extension of time within which 
 to perform the work. An order of the commission refusing 
 to grant an extension of time may be reviewed as provided 
 for the review of other orders of the commission. [Laws 
 1913, c. 30, § 10.] 
 
 § 510j. Practice and Procedure Before Commission. 
 
 Modes of procedure under this act, unless herein otherwise 
 provided, shall be as provided in The Public Service Commis- 
 sion law, being chapter 117, of the Laws of 1911 for pro- 
 cedure under that act. The commission is hereby given power 
 to adopt rules to govern its proceedings and to regulate the 
 mode and manner of all investigations and hearings under 
 this act. [Laws 1913, c. 30, § 11.] 
 
 § 510k. Notices — Form and Manner of Service. 
 
 All notices required to be served by this act shall be in 
 writing, and shall briefly state the nature of the matter to 
 be inquired into and investigated. Notices may be served in 
 the manner provided by law for the service of summons in 
 civil cases, or by registered United States mail. When ser- 
 vice is made by registered mail, the receipt of the receiving 
 postoffice shall be sufficient proof of service. "When, under 
 the provisions of this act, it is necessary to serve notice of 
 hearing before the commission on owners of private lands, 
 property, or property rights, and such owners cannot be 
 found, service may be made by publication in the manner 
 provided by law for the publication of summons in civil ac- 
 tions, except that publication need be made but once each 
 week for three consecutive weeks, and the hearings may be 
 held at any time after the expiration of thirty days from 
 the date of the first publication of the notice. [Laws 1913, 
 c. 30, § 12.]
 
 §§ 5101-510n EXISTING CORPORATION LAWS, 1913. 36-1 
 
 § 510 1. Review and Appeal. 
 
 Upon the petition of any party to a proceeding before the 
 commission, any finding or findings, or order or orders of the 
 commission, made under color of authority of this act, except 
 as otherwise provided in section 9 [§ 510h, ante], may be re- 
 viewed in the superior court of the county in which the crossing 
 is located and the reasonableness and lawfulness of such finding 
 or findings, order or orders inquired into and determined, as 
 provided in the Public Service Commission Law (Laws 1911, 
 c. 117), for the review of findings and orders made under 
 that act. An appeal may be taken to the supreme court from 
 the judgment of the superior court in like manner as provided 
 in said public service commission law for appeals to the 
 supreme court. [Laws 1913, c. 30, § 13.] 
 
 § 510m. Employment of Engineers and Other Employees. 
 
 The commission may employ temporarily such experts, en- 
 gineers, and inspectors as may be necessary to supervise 
 changes in existing crossings undertaken under this act; the 
 expense thereof shall be paid by the railroad upon the request 
 and certificate of the commission, said expense to be included 
 in the cost of the particular change of grade on account of 
 which it is incurred, and apportioned as provided in this act. 
 
 The commission may also employ such engineers and other 
 persons as permanent employees as may be necessary to prop- 
 erly administer this act, and the expense thereof shall be paid 
 out of the appropriation herein provided. [Laws 1913, c. 30, 
 §14.] 
 
 § 510n. Eminent Domain. 
 
 Whenever to carry out any work undertaken under this 
 act it is necessary to take, damage, or injuriously afi:ect any 
 private lands, property, or property rights, the right so to 
 take, damage, or injuriously affect the same may be acquired 
 Dy condemnation as hereinafter provided. 
 
 Subdivision A. 
 In cases where new railroads are constructed and laid out 
 by railroad company authorized to exercise the power of emi- 
 
 I 
 
 I
 
 365 HIGHWAY AND GRADE CROSSINGS. § 510n 
 
 nent domain, the right to take, damage, or injuriously affect 
 private lands, property, or property rights shall be acquired 
 by the railroad company by a condemnation proceedings 
 brought in its own name and prosecuted as provided by law 
 for the exercise of the power of eminent domain by railroad 
 companies, and the right of eminent domain is hereby con- 
 ferred on railroad companies for the purpose of carrying out 
 the requirements of this act or the requirements of any order 
 of the commission. 
 
 Subdivision B. 
 
 In cases where it is necessary to take, damage, or injuriously 
 affect private lands, property, or property rights to permit the 
 opening of a new highway or highway crossing across a rail- 
 road, the right to take, damage, or injuriously affect such 
 lands, property, or property rights shall be acquired by the 
 municipality or county petitioning for such new crossing by a 
 condemnation proceeding brought in the name of such munici- 
 pality or county as provided by law for the exercise of the 
 power of eminent domain by such municipality or county. If 
 the highway involved be a state highway, then the right to 
 take, damage, or injuriously affect private lands, property, 
 or property rights shall be acquired by a condemnation pro- 
 ceeding prosecuted under the laws relative to the exercise of 
 the power of eminent domain in aid of such state road. 
 
 Subdivision C. 
 In cases where the commission orders changes in existing 
 crossings to secure an under-crossing, over-crossing, or safer 
 grade crossing, and it is necessary to take, damage, or injuri- 
 ously affect private lands, property, or property rights to 
 execute the work, the right to take, damage, or injuriously 
 affect such lands, property, or property rights shall be ac- 
 quired in a condemnation proceeding prosecuted in the name 
 of the state of Washington by the attorney general under 
 the laws relating to the exercise of the power of eminent 
 domain by cities of the first class for street and highway pur- 
 poses: Provided, however, that in the cases mentioned in this 
 subdivision the full value of any lands taken shall be awarded, 
 together with damages, if any accruing to the remainder of
 
 §§ 510o-510q EXISTING CORPORATION LAWS, 1913. 366 
 
 the land not taken by reason of the severance of the part 
 taken, but in computing the damages to the remainder, if 
 any^ the jury shall offset against such damages, if any, the 
 special benefits, if any, accruing to such remainder by reason 
 of the proposed improvement. The right of eminent domain 
 for the purposes mentioned in this subdivision is hereby 
 granted. [Laws 1913, c. 30, § 15.] 
 
 § 51 Oo. Illegal Crossings may be Enjoined or Abated as 
 Nuisances. 
 If an under-crossing, over-crossing, or grade crossing is con- 
 structed, maintained, or operated, or is about to be constructed, 
 operated, or maintained, in violation of the provisions of this 
 act, or in violation of any order of the commission, such con- 
 struction, operation, or maintenance may be enjoined, or may 
 be abated, as provided by law for the abatement of nuisances. 
 Suits to enjoin or abate may be brought by the attorney gen- 
 eral, or by the prosecuting attorney of the county in which 
 the unauthorized crossing is located. [Laws 1913, c. 30, § 16.] 
 
 § 51 Op. Mandamus. 
 
 If any railroad company, county, municipality, or officers 
 thereof, or other person, shall fail, neglect, or refuse to per- 
 form or discharge any duty required of it or them under this 
 act or any order of the commission, the performance of such 
 duty may be compelled by mandamus, or other appropriate 
 proceeding, prosecuted by the attorney general upon the re- 
 quest of the commission. [Laws 1913, c. 30, § 17.] 
 
 § 510q. Penalty for Violation by Railroad. 
 
 If any railroad company shall fail or neglect to obey, com- 
 ply with, or carry out the requirements of this act, or any 
 order of the commission made under it, such company shall 
 be liable to a penalty not to exceed $5,000.00, such penalty 
 to be recovered in a civil action brought in the name of the 
 state of Washington by the attorney general. All penalties 
 recovered shall be paid into the state treasury. [Laws 1913, 
 c. 30, § 18.] 
 
 1
 
 3C7 HIGHWAY AND GRADE CROSSINGS. §§ 510s-510w 
 
 § 510s. Erection and Maintenance of Posts, Piers and Abut- 
 ments in Highways. 
 "Whenever, to carry out any work ordered under this act, it 
 is necessary to erect and maintain posts, piers, or abutments 
 in a highway, the right and authority to erect and maintain 
 the same is hereby granted. [Laws 1913, c. 30, § 19.] 
 
 § 510t. No New Right of Action Conferred. 
 
 Nothing contained in this act shall be construed as confer- 
 ring a right of action for the abandonment or vacation of any 
 existing highway or portion thereof in cases where no right 
 of action exists independent of this act. [Laws 1913, c. 30, 
 §20.] 
 
 § 510u. Act When not Operative. 
 
 This act shall not be operative within the limits of cities 
 authorized to frame their own charters, and it shall not be 
 construed to apply to street railway lines operating in, on, 
 through, along, over, or across any street, alley or other public 
 place within the limits of any incorporated city or town, ex- 
 cept that no street-car line outside of cities authorized to 
 frame their own charters shall cross a railroad at grade with- 
 out express authority from the commission. [Laws 1910, c. 
 30, § 21.] 
 
 § 510v. Constitutionality. 
 
 If any section, subdivision, sentence, or clause of this act 
 is for any reason held to be unconditional, such decision shall 
 not affect the validity of the remaining portions of this act. 
 [Laws 1910, c. 30, § 22.] 
 
 § 510w. Repeal. 
 
 Chapter 162 of the Laws of 1909, entitled, "An act to regu- 
 late the manner in which railroads shall cross highways and 
 other railroads and the manner in which highways shall cross 
 railroads in the State of Washington," approved March 17, 
 1909, and all other acts and parts of acts in conflict with this 
 act, are hereby repealed : Provided, however, that proceed- 
 ings on applications for grade crossings pending before the
 
 § 510x EXISTING CORPORATION LAWS, 1913. 368 
 
 commission at the time this act takes effect may be concluded 
 and determined under existing laws. [Laws 1913, c. 30, § 23.] 
 
 § 510x. Appropriation. 
 
 There is hereby appropriated out of the general fund the 
 sum of twenty-five thousand ($25,000.00) dollars or so much 
 thereof as may be necessary to pay the cost of administering 
 this act and the state's proportion of the cost of grade sepa- 
 ration made under the provisions of this act. [Laws 1913, 
 c. 30, § 24.] 
 
 I
 
 369 ELECTRIC RAILWAY COMPANIES. § 511 
 
 ELECTRIC RAILWAY COMPANIES. 
 
 § 511. Authority to Construct — How and by Whom 
 Granted. 
 
 [§ 9080, Rem.-Bal.] The legislative authority of the city 
 or town having control of any public street or road, or where 
 such street or road is not within the limits of any incorporated 
 city or town, then the board of county commissioners wherein 
 such road or street is situated, may grant authority for the con- 
 struction, maintenance and operation of electric railroads or 
 railways, motor railroads or railways and railroads and rail- 
 ways of which the motive power is any power other than 
 steam, together with such poles, wires and other appurtenances 
 upon, over, along and across any such public street or road 
 and in granting such authority the legislative authority of 
 such city or town or the board of county commissioners, as 
 the case may be, may prescribe the terms and conditions on 
 which such railroads, or railways and their appurtenances 
 shall be constructed, maintained and operated upon, over, 
 along and across such road or street, and the grade or eleva- 
 tion at which the same shall be maintained and operated: 
 Provided, that hereafter, on application being made to the 
 board of county commissioners for such authority, the board 
 shall fix a time and place for hearing the same, and shall 
 cause the county auditor to give public notice thereof at the 
 expense of the applicant, by posting written or printed no- 
 tices in three public places in the county seat of the county, 
 and in at least one conspicuous place on the road or street or 
 part thereof, for which application is made, at least thirty 
 days before the day fixed for such hearing, and by publish- 
 ing a like notice three times in some daily newspaper pub- 
 lished in the county, or if no daily newspaper is published in 
 the county, then the newspaper doing the county printing, 
 the last publication to be at least five days before the day 
 fixed for such hearing, which notice shall state the name or 
 names of the applicant or applicants, a description of the 
 
 21
 
 § 511 EXISTING CORPORATION LAWS, 1913. 370 
 
 roads or streets or parts thereof for which the application is 
 made, and the time and place fixed for the hearing. Such 
 hearing may be adjourned from time to time by order of the 
 board. If, after such hearing, the board shall deem it to be 
 for the public interest to grant such authority in whole or in 
 part, the board may make and enter the proper order grant- 
 ing the authority applied for or such part thereof as the 
 board deems to be for the public interest, and shall require 
 such railroad or railway and its appurtenances to be placed 
 in such location on or along the road or street as the board 
 finds will cause the least interference with other uses of the 
 road or street. In case any such railroad or railway is, or 
 shall be located in part on private right of way, the owner 
 thereof shall have the right to construct and operate the same 
 across any county road or county street which intersects such 
 private right of way, if such crossing is so constructed and 
 maintained as to do no unnecessary damage: Provided, that 
 any person or corporation constructing such crossing or oper- 
 ating such railroad or railway on or along such county road or 
 public street shall be liable to the county for all necessary ex- 
 pense incurred in restoring such county road or public street 
 to a suitable condition for travel. [Laws 1907, § 1, p. 192.] 
 
 Street railway franchise granted by mayor and counsel valid with- 
 out vote of the people. (Benton v. Seattle Elec. Co., 50 Wash. 156, 
 96 Pac. 1033.) 
 
 Laws of 1907, page 192, supersedes city charter of Seattle, requiring 
 franchises to be sold at public auction to highest bidder. (Ewing v. 
 Seattle, 55 Wash. 229, 104 Pac. 259.) 
 
 A city, in granting a franchise to a street railway company, may not 
 devest itself of its police power. (Tacoma v. Boutelle, 61 Wash. 434, 
 112 Pac. 661.) 
 
 An ordinance requiring a street railway to transport passengers to 
 city limits and give transfers for one fare of five cents is operative on 
 territory annexed to the city. (Peterson v. Tacoma R. & Power Co., 
 
 60 Wash. 406, 111 Pac. 338.) 
 
 An ordinance requiring a street-car company to equip its cars with 
 fenders is reasonable police regulation. (Tecker v. Seattle Eenton etc. 
 R. Co., 60 Wash. 570, 111 Pac. 791.) 
 
 A clause in a franchise restricted to existing street railways to be 
 acquired does not apply to old system. (McGilvra v. Seattle Elec. Co., 
 
 61 Wash. 38, 111 Pac. 896.)
 
 371 ELECTRIC RAILWAY COMPANIES. § 512 
 
 A company's franchise requiring the giving of transfers does not 
 compel giving transfers on competing line, the capital stock of which 
 had been acquired by company also holding the stock of the company 
 whose franchise contained said requirement. (State ex rel. Tacoma v. 
 Tacoma K. etc. Co., 61 Wash. 507, 112 Pac. 506.) 
 
 A provision in a franchise requiring two trips a day means minimum 
 service. (Tacoma v. Boutelle, 61 Wash. 434, 112 Pac. 661.) 
 
 A franchise authorizing a company to employ either electricity or cable 
 power authorizes the company to use both at the same time. (McGilvra 
 V. Seattle Elec. Co., 61 Wash. 38, 111 Pac. 896.) 
 
 § 512. Eminent Domain — May Appropriate Land for Right 
 of Way. 
 [§ 9081, Rem.-Bal.] Every corporation incorporated or 
 that may hereafter be incorporated under the laws of this 
 state, or of any other state or territory of the United States 
 and doing business in this state for the purpose of operating 
 railroads or railways by electric power, shall have the right 
 to appropriate real estate and other property for right of way 
 or for any corporate purpose, in the same manner and under 
 the same procedure as now is or may hereafter be provided by 
 law in the case of ordinary railroad corporations authorized 
 by the laws of this state to exercise the right of eminent do- 
 main : Provided, that such right of eminent domain shall not 
 be exercised with respect to any public road or street until 
 the location of the electric railroad or railway thereon has 
 been authorized in accordance with section 1 of this act [9080. 
 Rem.-Bal.]. [Laws 1903, §2, p. 366.] 
 
 A company may condemn land in accordance with its special charter 
 or subsequent general law. (Cascades R. Co. v. Sohms, 1 Wash. Ter. 
 557.) 
 
 Street railway public use. (State ex rel. Harlan v. Centralia Co., 
 42 Wash. 632, 85 Pac. 344.) 
 
 Street railway has power of eminent domain, but proceeding to de- 
 termine damages to easements of light and air by construction of trestle 
 roadway on dedicated street is not condemnation of the street. (State 
 ex rel. Smith v. Superior Court, 30 Wash. 219.) 
 
 Street railway may condemn property for power plant. (State ex 
 rel. Harlan v. Centralia etc. Co., 42 Wash. 632.)
 
 § 513 EXISTING CORPORATION LAWS, 1913. 372 
 
 § 513. May Lease or Purchase Property of Other Corpora- 
 tions. 
 
 [§ 9082, Rem.-Bal.] Any corporation incorporated or that 
 may hereafter be incorporated under the laws of this state or 
 any state or territory of the United States for the purpose of 
 constructing, owning or operating railroads or railways by 
 electric power, may lease or purchase and operate (except in 
 cases where such lease or purchase is prohibited by the consti- 
 tution of this state) the whole or any part of the electric rail- 
 road or electric railway, of any other corporation heretofore or 
 hereafter constructed, together with the franchises, powers, 
 immunities and all other property or appurtenances apper- 
 taining thereto: Provided, that such lease or purchase has 
 been or shall be consented to by stockholders of record hold- 
 ing at least two-thirds in amount of the capital stock of 
 the lessor or grantor corporation ; and all such leases and pur- 
 chases heretofore made or entered into by consent of stock- 
 holders as aforesaid are for all intents and purposes hereby 
 ratified and confirmed, saving, however, any vested rights of 
 private parties. [Laws 1903, § 3, p. 366.] 
 
 [§ 9083, Rem.-Bal.] Every such corporation shall have 
 the right to enter upon any land between the termini of the 
 proposed lines for the purpose of examining, locating, and 
 surveying such lines, doing no unnecessary damage thereby. 
 [Laws 1899, § 2, p. 147.]
 
 373 TELEGRAPH AND TELEPHONE COMPANIES. §§ 514-517 
 
 TELEGRAPH AND TELEPHONE COM- 
 PANIES. 
 
 § 514. Right of Eminent Domain Extended to. 
 
 [§ 9300, Rem.-Bal.] The right of eminent domain is 
 hereby extended to all telegraph and telephone corporations 
 and companies organized or doing business in the state. 
 [Laws 1890, § 1, p. 292; 1 H. C, § 1547; Bal., § 4355.] 
 
 A company may condemn land in accordance with its special charter 
 or subsequent general law. (Cascades R. Co. v. Sohms, 1 Wash. Ter. 
 557.) 
 
 § 515. Right to Enter Lands for Survey, etc. 
 
 [§9301, Rem.-Bal.] Every corporation incorporated un- 
 der the laws of this state, or any state or territory of the 
 United States, for the purpose of constructing, operating or 
 maintaining any telegraph or telephone in this state shall have 
 the right to enter upon any land between the termini of the 
 proposed lines of telegraph or telephone for the purpose of 
 examining, locating and surveying the line of such telegraph 
 or telephone, doing no unnecessary damage thereby. [Ljaws 
 1888, § 1, p. 65 ; 1 H. C, § 1548 ; Bal., § 4356.] 
 
 § 516. May Use Right of Way of Post Road. 
 
 [§ 9302, Rem.-Bal.] Every railroad operated in this state 
 and carrying freight and passengers for hire, or doing business 
 in this state, is and shall be designated a "post road," and the 
 corporation or company owning the same shall allow telegraph 
 and telephone companies to construct and maintain telegraph 
 and telephone lines on and along the right of way of such rail- 
 road. [Laws 1890, § 3, p. 292 ; 1 H. C, § 1545 ; Bal., § 4357.] 
 
 § 517. Discrimination in Rates, Facilities, etc., Prohibited. 
 
 [§ 9303, Rem.-Bal.] No railroad corporation or company 
 organized or doing business in this state shall allow any tele- 
 graph or telephone company, or any individual, any facilities, 
 privileges, or rates for transportation of men or materials, or
 
 §§ 518-520 EXISTING CORPORATION LAWS, 1913. 374 
 
 for repairing their lines, not allowed to all telegraph and tele- 
 phone companies and individuals. [Laws 1890, § 4, p. 292 ; 
 IH. C, §1546;Bal., §4358.] 
 
 § 518. Must Receive and Transmit Messages. 
 
 [§ 9305, Rem.-Bal.] Said corporations and companies shall 
 receive, exchange and transmit each other's messages without 
 delay or discrimination, and all telephone companies shall re- 
 ceive and transmit messages for any person. [Laws 1890, 
 § 2, p. 292; 1 H. C, § 1550; Bal., § 4360.] 
 
 § 519. May Use Highways, for Poles, Wires, etc. 
 
 [§ 9314, Rem.-Bal.] Any telegraph or telephone corpora- 
 tion or company, or the lessees thereof, doing business in this 
 state, shall have the right to construct and maintain all ne- 
 cessary lines of telegraph or telephone for public traffic along 
 and upon any public road, street, or highway, along or across 
 the right of way of any railroad corporation, and may erect 
 poles, piers, or abutments for supporting the insulators, wires 
 and any other necessary fixtures of their lines, in such manner 
 and at such points as not to incommode the public use of the 
 railroad or highway, or interrupt the navigation of the waters. 
 Provided, that when the right of way of such corporation has 
 not been acquired by or through any grant or donation from 
 the United States, or this state, or any county, city or town 
 therein, then the right to construct and maintain such lines 
 shall be secured only by the exercise of right of eminent 
 domain, as provided by law : Provided further, that where the 
 right of way as herein contemplated is within the corporate 
 limits of any incorporated city, the consent of the city council 
 thereof shall be first obtained before such telegraph or tele- 
 phone lines can be erected thereon. [Laws 1890, § 5, p. 292; 
 1 H. C, §1561; Bal., §4369.] 
 
 § 520. Injury to Line — Vessel Dragging Anchor. 
 
 [§ 9315, Rem.-Bal.] Any person who injures or destroys, 
 through want of proper care, any necessary or useful fixtures 
 of any telegraph or telephone corporation or company, is liable 
 to the corporation or company for all damages sustained
 
 375 TELEGRAPH AND TELEPHONE COMPANIES. §§ 521-524 
 
 thereby. Any vessel which, by drapfring its anchor or other- 
 wise, breaks, injures or destroys the subaqueous cable of a 
 telegraph or telephone corporation or company, subjects its 
 owners to the damages hereinbefore specified. [Laws 1890, 
 § 6, p. 293 ; 1 II. C, § 1562 ; Bal., § 4370.] 
 
 § 521. Malicious Injury. 
 
 [§ 9316, Rem.-Bal.] Any person who willfully and mali- 
 ciously does any injury to any telegraph or telephone property 
 mentioned in the preceding section, is liable to the corporation 
 or company for five times the amount of actual damages sus- 
 tained thereby, to be recovered in any court of competent 
 jurisdiction. [Laws 1890, § 7, p. 293; 1 H. C, § 1563; Bal., 
 §4371.] 
 
 § 522. Penalty for Failure to Transmit Messages. 
 
 [§ 9317, Rem.-Bal.] In case of the refusal or neglect of 
 any telegraph or telephone corporation to comply with the 
 provisions of section number two [9305, Rem.-Bal.], the pen- 
 alty for the same shall be a fine of not more than five hundred 
 nor less than one hundred dollars for each offense. [Laws 
 1890, § 8, p. 293; 1 H. C, § 1564; Bal., § 4372.] 
 
 § 523. Railroad Refusing Privileges. 
 
 [§ 9318, Rem.-Bal.] In ease of the refusal or neglect of 
 any railroad company or corporation to comply with the pro- 
 visions of section number three [9302, Rem.-Bal.], said com- 
 pany or corporation shall be liable for damages in the sum of 
 not less than one thousand dollars nor more than five thousand 
 dollars for each offense, and one hundred dollars per day dur- 
 ing the continuance thereof. [Laws 1890, § 9, p. 293; 1 H. C, 
 §1565; Bal., §4373.] 
 
 § 524. Subaqueous Cables to be Marked. 
 
 [§ 9319, Rem.-Bal.] No telegraph or telephone corporation 
 or company can recover damages for the breaking or injury 
 of any subaqueous telegraph cable unless such corporation or 
 company has previously erected on either bank of the waters
 
 § 524 EXISTING CORPORATION LAWS, 1913. 376 
 
 under which the cable is placed, a monument indicating the 
 place where the cable lies, and publishes for one month, in 
 some newspaper most likely to give notice to navigators, a no- 
 tice giving a description and the purpose of the monuments, 
 and the general course, landing and termini of the cable. 
 [Laws 1890, § 10, p. 293; 1 H. C, § 1566; Bal, § 4374.]
 
 377 BOOM COMPANIES. § 525 
 
 BOOM COMPANIES. 
 
 § 525. Boom Companies may Condemn. 
 
 [§ 7110, Rem.-Bal.] Any corporation heretofore or here- 
 after organized in the state of Washington for the purpose of 
 catching, booming, sorting, rafting and holding logs, lumber 
 or other timber products, shall have power to acquire, hold, 
 use and transfer all such real and personal property or estate, 
 by lease or purchase, as shall be necessary for carrying on the 
 business of said corporation. If such corporation shall not be 
 able to agree with persons owning land, shore rights, or other 
 property sought to be appropriated, as to the amount of com- 
 pensation to be paid therefor, the compensation therefor may 
 be assessed and determined and the appropriation made in the 
 manner provided by law for the appropriation of private prop- 
 erty by railways : Provided, that any property acquired under 
 the provisions of this act by the exercise of the right of 
 eminent domain shall be used exclusively for the purposes of 
 this act; and whenever the use of said property as herein con- 
 templated shall cease for a period of one year, the same shall 
 revert to the original owner, his heirs or assigns, upon the 
 repayment of the original cost of same. [Laws 1890, § 1, 
 p. 470; 1 H. C, § 1590; Bal, § 4378.] 
 
 A company may condemn land in accordance with its special charter 
 or subsequent general law. (Cascades R. Co. v. Sohms, 1 Wash. Ter. 
 557.) 
 
 A statutory right to form boom companies is a franchise, but not ex- 
 clusive. (Chehalis Boom Co. v. Chehalis County, 24 Wash. 135, 63 Pac. 
 1123.) 
 
 Boom companies are quasi public and may be given right to condemn. 
 (North River Boom Co. v. Smith, 15 Wash. 138, 45 Pac. 750; Matthews 
 V. Belfast Mfg. Co., 35 Wash. 662, 77 Pac. 1046.) 
 
 Boom companies are common carriers. (State ex rel. Nicomen Co. v. 
 North S. etc. Co., 55 Wash. 1, 103 Pac. 426, 107 Pac. 196.) 
 
 The legislature cannot authorize a boom company to overflow land 
 of riparian owners on navigable river. (Burrows v. Gray's Harbor Boom 
 Co., 44 Wash. 630.) 
 
 Use of tide lands not authorized except by purchase or agreement. 
 (Samish Boom Co. v. Calvert, 27 Wash. 611.)
 
 § 526 EXISTING CORPORATION LAWS, 1913. 378 
 
 Not monopoly for boom company to control booming of a river where 
 more than one company not feasible. (Nicomen Boom Co. v. North Shore 
 Co., 40 Wash. 315.) 
 
 Boom company is quasi-public corporation. (North River Boom Co. v. 
 Smith, 15 Wash. 138.) 
 
 § 526. Filing Plat and Survey. 
 
 [§ 7111, Rem.-Bal.] Any corporation hereafter organized 
 for the purpose mentioned in section one of this act [7110, 
 Rem.-Bal.], shall within ninety days after its articles of in- 
 corporation have been filed, proceed to file in the office of the 
 Secretary of State a plat or survey of so much of the shore 
 lands or the waters of the state and lands contiguous thereto 
 as are proposed to be appropriated for said purpose by said 
 corporation. Any corporation heretofore organized in the 
 territory of Washington for any of the purposes expressed 
 in section one (1) of this act [7110, Rem.-Bal.], shall file 
 such plat within ninety days after the passage of this act. 
 Such plat shall be made from the records of the United 
 States in the surveyor general's office of this state, or by 
 competent surveyor, subsequent to actual survey. Such cor- 
 poration may from time to time whenever it desires to ex- 
 tend its operations to portions of streams not embraced in its 
 original plat, or to other streams tributary to the stream or 
 streams described in such original plat, or any portion of such 
 streams, or in any manner to change, modify or correct its 
 original plat, file additional plats or surveys in the office of 
 the Secretary of State, of so much of the shore lines of the 
 waters of the state and lands contiguous thereto as are pro- 
 posed to be appropriated for said purposes by said corpora- 
 tion, and whenever by reason of floods or otherwise, the chan- 
 nel of any stream shall be so changed as to put such stream 
 beyond the limits of said original plat, or any supplemental 
 or additional plat filed pursuant to the provisions of this sec- 
 tion, such corporation may file in the office of the Secretary 
 of State additional plats or surveys showing the change in said 
 channel and so much of the shore lines of the waters of the 
 state and lands contiguous thereto as are proposed to be ap- 
 propriated for said purposes by said corporation which shall
 
 379 BOOM COMPANIES. §§ 527, 528 
 
 vest it with the same rights that it acquired by the filing of 
 said original plat. [Laws 1907, § 2, p. 76; 1 H. C, § 1591; 
 Bal., § 4379.] 
 
 Ballinger's Code, section 4379, gives a boom company right to condemn 
 the land selected in its plat of survey. (Samish River Boom Co. v. 
 Union Boom Co., 32 Wash. 586, 73 Pac. 670.) 
 
 Riparian rights on navigable river are subject to condemnation by 
 boom company to give public service, and plat showing contiguous land 
 is suflBcient to warrant condemnation of such contiguous land. (Burrows 
 V. Gray's Harbor Boom Co., 44 Wash. 630.) 
 
 A boom company has the power to select the location designated in 
 the plat. (Samish River Boom Co. v. Union Boom Co., 32 Wash. 68G.) 
 
 § 527. Powers of Corporations. 
 
 [§ 7112, Rem.-Bal.] Such corporations shall have power 
 and are hereby authorized, in any of the waters of this state, 
 or the dividing waters thereof, to construct, maintain and use 
 all necessary sheer or receiving booms, dolphins, piers, piles or 
 other structure necessary or convenient for carrying on the 
 business of such corporations: Provided, that such boom or 
 booms, sheer booms or receiving booms shall be so constructed 
 as to allow the free passage between any of such booms and the 
 opposite shore for all boats, vessels or steam crafts of any 
 kind whatsoever, or for ordinary purposes of navigation. 
 [Laws 1890, § 3, p. 471 ; 1 H. C, § 1592 ; Bal., § 4380.] 
 
 Permanent structures violating riparian rights and obstructing navi- 
 gation not authorized. (Burrows v. Gray's Harbor Boom Co., 4-1 
 Wash. &30.) 
 
 § 528. Duty of— Tolls. 
 
 [§ 7113, Rem.-Bal.] After such works shall have been con- 
 structed, such corporation shall catch, hold and assort the logs 
 and timber products of all persons requesting such service, 
 upon the same terms and without discrimination ; and shall 
 have the right, in consideration of the convenience and se- 
 curity afforded to the public in the handling of logs and 
 timber products, to charge and collect tolls on all logs or other 
 timber products, caught within their works and upon the 
 order or request of the owner or owners thereof, and there 
 assorted, boomed or rafted ; said tolls shall not exceed seventy-
 
 § 529 EXISTING CORPORATION LAWS, 1913. 380 
 
 five cents per thousand feet on logs, spars or other large tim- 
 ber, and reasonable rates on all other timber products: 
 Provided, that it shall be the duty of any corporation oper- 
 ating a boom at the mouth of any river, to catch and hold, 
 assort, boom and raft all logs and timber products except such 
 as may be already in charge of its owner or his agente, with- 
 out request of the owner or owners, and shall have the right 
 to charge and collect tolls not to exceed seventy-five cents per 
 thousand feet for such service. The amount of logs or tim- 
 ber is to be board measure, to be ascertained by the usual legal 
 method of scaling; and such corporation shall have a lien 
 upon the logs and timber products for the driving, floating, 
 booming, sorting and rafting thereof, and the right to enforce 
 such liens in any manner provided or that may be provided by 
 law for the enforcement of liens upon personal property. 
 Such corporation shall, as soon as practicable, deliver logs or 
 other timber products caught within their booms, sorted and 
 rafted ready for towing, to the owner or owners thereof, and if 
 required to hold such property for more than thirty days, shall 
 have the right to charge a reasonable rate for such storage for 
 the period of excess. [Laws 1890, § 4, p. 471 ; 1 H. C, § 1593 ; 
 Bal., § 4381.] 
 
 Written contract not essential to recovery for loss of logs. (Tingley V. 
 Bellingham Bay Co., 5 Wash. 644.) 
 
 Tolls must not exceed statutory rates, and must be reasonable. (Cas- 
 cade Boom Co. V. McNeely Log Co., 37 Wash. 203; Gray's Harbor 
 Boom Co. V. Lytle Log etc. Co., 36 Wash. 151; Washongal etc. Co. v, 
 Skamania Log Co., 23 Wash. 89; Gray's Harbor Boom Co. v. McArmont, 
 21 Wash. 465.) 
 
 § 529. Assorting and Separating Logs. 
 
 [§ 7114, Rem.-Bal.] It shall be the duty of all said boom 
 corporations, in assorting, to separate the logs, lumber or other 
 timber products into separate booms ready for towing, so that 
 logs or other timber products shall go to the mills or place in- 
 tended for use or storage in one or more booms: Provided, 
 that in case more than one boom is located on or in the same 
 river or its tributaries, the corporation owning the upper 
 boom or works shall pass free of charge all saw-logs or other
 
 381 BOOM COMPANIES. §§ 530-532 
 
 timber products consigned to the lower boom or booms. 
 [Laws 1890, § 5, p. 472; 1 II. C, § 1594; Bal., § 4382.] 
 
 § 530. Record of Rafts Assorted. 
 
 [§ 7115, Rem.-Bal.] It shall be the duty of every corpora- 
 tion organized and transacting business under the provisions 
 of this act to keep in the office of its secretary, open to public 
 inspection, a book or books in which shall be truly recorded 
 the facts, so far as known, regarding each and every raft by 
 it assorted. Such record shall specify : 1st, names of owners ; 
 2d, marks or brands; 3d, number of logs in each boom; 4th, 
 number of feet in boom; 5th, name of steamer receiving pos- 
 session; 6th, date of departure from boom. [Laws 1890, 
 § 6, p. 472 ; 1 H. C, § 1595 ; Bal., § 4383.] 
 
 § 531. Liability for Damage. 
 
 [§ 7116, Rem.-Bal.] Corporations organized in accordance 
 with the provisions of this act shall be liable to the owner or 
 owners of logs or other timber products for all loss or damage 
 resultant from neglect, carelessness or unnecessary delay on 
 the part of servants of such corporations : Provided, that loss 
 caused by fire and ice, which cannot be reasonably guarded 
 against, shall not be construed as resultant upon neglect or 
 carelessness on the part of the corporation. [Laws 1890, 
 § 7, p. 472 ; 1 H. C, § 1596 ; Bal., § 4384.] 
 
 In action for conversion of logs it is immaterial whether the logs were 
 wrongfullj cut up or converted. (Shields v. Doty etc. Co., 48 Wash. 
 679.) 
 
 § 532. Damages for Neglect. 
 
 [§ 7117, Rem.-Bal.] In addition to such damages as are 
 herein provided for any corporation willfully neglecting to as- 
 sort and deliver such logs and timber products according to 
 the provisions of this act, it shall be liable to a fine not exceed- 
 ing twenty per centum of the value of such property which it 
 shall have failed to deliver, but no such corporation shall be 
 liable to such damages or penalty if said owner or owners of 
 such logs or timber products shall have failed to furnish the
 
 §§ 533-535 EXISTING corporation laws, 1913, 382 
 
 necessary boom sticks and chains to raft the same. [Laws 
 1890, § 8, p. 472; 1 H. C, § 1597; Bal., § 4385.] 
 
 § 533. Public Waterways. 
 
 [§ 7118, Rem.-Bal.] All meandered rivers, meandered 
 sloughs and navigable waters in this state shall be deemed as 
 public highways, and said corporations shall be declared public 
 corporations for the purpose of this act ; and the improvement 
 of such streams, sloughs and waters shall be deemed and de- 
 clared a public use and benefit. [Laws 1890, § 9, p. 473 ; 1 H. 
 C, §1598; Bal., §4386.] 
 
 § 534. Corporations — Powers of. 
 
 [§ 7119, Rem.-Bal.] Any corporation having for its object, 
 in whole or in part, the clearing out and improvement of rivers 
 and streams in this state, and for the purpose of driving, sort- 
 ing, holding and delivering logs and other timber products 
 thereon, may be organized under the laws of this state, and in 
 accordance with the provisions of the codes and statutes of 
 Washington, as set down and numbered in volume 1 of Hill's 
 Annotated Statutes and Codes of Washington, sections 1497 
 to 1520, inclusive, and such corporations shall have all powers 
 and be subject to all the liabilities and duties therein men- 
 tioned. [Laws 1895, § 1, p. 128 ; Bal., § 4387.] 
 
 1 H. C, §§ 1497-1520=Ch. 1, Tit. 25, Eem.-Bal. 
 
 The right to form boom company is a franchise, though not exclusive. 
 (Chehalis Boom Co. v. Chehalis County, 24 Wash. 135.) 
 
 State not necessary party to condemnation by boom company of tide 
 lands. (North River Boom Co. v. Smith, 15 Wash. 138.) 
 
 Allegation of contract for driving logs admission of its ratification. 
 (Tingley v. Bellingham Bay Boom Co., 5 Wash. 644.) 
 
 § 535. Authority and Power of Eminent Domain. 
 
 [§ 7120, Rem.-Bal.] Such corporation shall have power to 
 acquire, hold, use and transfer all such real and personal 
 property or estate, by lease or purchase, as shall be neces- 
 sary for carrying on the business of said corporation. If 
 such corporation shall not be able to agree with persons own- 
 ing land, shore rights or other property sought to be appro- 
 
 I
 
 383 BOOM COMPANIES. § 536 
 
 priated, as to the amount of compensation to be paid therefor, 
 the compensation therefor may be assessed and determined 
 and the appropriation thereof be made in the manner provided 
 by law for the appropriation of private property in chapter 
 6 of title 9, volume 2, Hill's Annotated Statutes and Codes of 
 Washington : Provided, that any property acquired under the 
 provisions of this act for the purposes herein mentioned by 
 the exercise of the right of eminent domain shall be used ex- 
 clusively for the purpose aforesaid; and whenever the use of 
 said property acquired by the right of eminent domain, as 
 herein contemplated, shall cease for a period of one year, the 
 same shall revert to the original owner, his heirs or assigns. 
 [Laws 1895, § 2, p. 129; Bal., § 4388.] 
 
 Ch. 6, Tit. 9, 2 H. C. = Ch. 5, Tit. 6, § 921 et seq., Rem.-Bal. 
 
 Use of banks of stream by boom company for artificial freshets is 
 public use. (State ex rel. Wilson v. Superior Court, 47 Wash. 397, 92 
 Pac. 269; State ex rel. Pealer v. Superior Court, 58 Wash. 565, 109 Pac. 
 340.) 
 
 A riparian owner may enjoin log-driving company from retarding 
 natural flow of stream. (Kalama etc. Co. v. Kalama Driving Co., 48 
 Wash. 612.) 
 
 § 536. Plats, When Filed. 
 
 [§ 7121, Rem.-Bal.] Any corporation organized for the pur- 
 poses mentioned in section one of this act [7119, Rem.-Bal.] 
 shall, within ninety days after its articles of incorporation shall 
 have been filed, proceed to file in the office of the Secretary of 
 State a plat or survey of so much of the shore lines of the waters 
 of the state or of any of the rivers or streams thereof and lands 
 contiguous thereto as are proposed to be appropriated for such 
 purposes by said corporation. Such plat shall be made from 
 the records of the United States in the of^ce of the surveyor 
 general of this state, or by a competent surveyor, after actual 
 survey, from the notes thereof, and whenever such appropria- 
 tion is made upon unsurveyed lands, then by an actual survey 
 made by a competent surveyor. Such corporation may from 
 time to time, whenever it desires to extend its operations to 
 portions of streams not embraced in its original plat, or to 
 other streams tributary to the stream or streams described in
 
 § 537 EXISTING CORPORATION LAWS, 1913. 384 
 
 such original plat, or any portion of such streams, file addi- 
 tional plats in the office of the Secretary of State, and when- 
 ever by reason of floods or otherwise, the channel of any 
 stream shall be so changed as to put such streams beyond the 
 limits of said original plat, or any supplemental or additional 
 plat filed pursuant to the provisions of this section, such cor- 
 poration may file in the office of the Secretary of State sup- 
 plemental plats showing the change in said channel which shall 
 vest it with the same rights that it acquired by the filing of 
 said original plat. [Laws 1905, § 1, p. 232 ; Bal., § 4389.] 
 
 The purpose of the plat is that of notice, and a company may in 
 proper case condemn lands outside the plat. (State ex rel. Gray's 
 Harbor Co. v. Superior Court, 57 Wash. 71, 106 Pac. 481.) 
 
 § 537. General Powers and Duties. 
 
 [§ 7122, Rem.-Bal.] Such corporation shall have power 
 and is hereby authorized in any of the rivers and streams of 
 this state, or the dividing waters thereof, to remove jams, 
 roots, snags and rocks, improve and straighten the channel, 
 build wing dams and sheer booms, construct dams and gates, 
 or otherwise, for the purpose of storing water with which to 
 produce artificial freshets and for the purpose of holding logs 
 and other timber products and in all ways to improve such 
 streams and rivers for the purposes herein mentioned and con- 
 templated: Provided, that no such wing dam, sheer boom, 
 dam with gate or otherwise, shall be so constructed, maintained 
 or used as to in any manner obstruct or impede the outlet of 
 such stream: And provided further, that if any such wing 
 dam, sheer boom, dam with gate or otherwise shall be so con- 
 structed, maintained or used as to interfere with the use for 
 any purpose of the waters of any stream or dammed or used, 
 or any of its tributaries, or in any manner to injure or dam- 
 age any lands adjacent to such stream or its tributaries, com- 
 pensation for such interference with the use of such water and 
 for any such injury or damage shall be first assessed and 
 determined and the appropriation thereof may be made by 
 the exercise of the power of eminent domain in the manner 
 provided in section two of this act : Provided, however, that 
 whenever the owners of more than one-half of the land lying
 
 385 BOOM COMPANIES. § 538 
 
 alongside or abutting on any stream affected by the tide, pro- 
 posed to be improved according to this act, shall file with the 
 board of county commissioners of the county in which said river 
 is situated a remonstrance against any improvements of so 
 much of the stream as is affected by the tide, it shall then be un- 
 lawful for any corporation to take the land or any slough within 
 the territory owned by any such remonstrancers : Provided, that 
 such remonstrance shall be filed with said board within fifteen 
 days from the filing of said plat. Nothing in this act shall 
 be construed to authorize the taking or damaging of any 
 power plant constructed or being constructed for the creation 
 or utilization of water-power. [Laws 1905, § 1, c. 57, p. 108 ; 
 Bal., § 4390.] 
 
 § 2= § 7120, Rem.-Bal. 
 
 Section construed to give by necessary implication right to obstruct 
 restricted navigation on small streams. (State ex rel. Pealer v. Superior 
 Court, 58 Wash. 565, 109 Pac. 340.) 
 
 § 538. Driving Logs — Tolls — Booming and Rafting — Liens. 
 [§ 7123, Rem.-Bal.] After such corporation shall have en- 
 tered upon its duties, which shall be within three months of 
 the filing of its maps of location, such corporation shall come 
 in streams theretofore navigable, upon the request of the own- 
 ers, and in case of logs and other timber products being 
 commingled, or lying in such a position as to obstruct or im- 
 pede the drive, without such request: Provided, that when a 
 navigable stream upon which it was not previously practicable 
 to float logs or other timber products is improved by clearing 
 out rocks, straightening the channel, or the construction of 
 wing dams and sheers by the corporation having a charter 
 thereon, and thereby aiding and assisting the floating of logs 
 and other timber products, a corporation shall be entitled to 
 driving charges on all such logs or other timber products 
 placed in said stream without request to drive the same, and 
 in streams not navigable before such improvements were 
 made, without request, sluice, sack and drive all logs and 
 other timber products of suitable length that may be placed in 
 the beds of the stream improved as aforesaid, or that may be 
 25
 
 § 539 EXISTING CORPORATION LAWS, 1913. 386 
 
 delivered into its ponds, and shall handle all such logs and 
 other timber products of all persons upon the same terms, 
 without discrimination as to time of sluicing, sacking and driv- 
 ing such logs, or other timber products, and shall be entitled 
 to charge and collect reasonable and uniform tolls for such 
 services and improvements, on all logs and other timber prod- 
 ucts so handled, or sheered out of sloughs or off bars by means 
 of such improvements; such tolls shall not exceed one dollar 
 per thousand feet, board measure, on logs, spars, or other 
 large timber, and reasonable compensation on all other tim- 
 ber products, for the use of such improvements, and for 
 sluicing, sacking and driving the same, such charges to be fixed 
 by the board of trustees of such corporation in proportion to 
 the distance such timber is to be driven and the number of 
 dams through which the same is necessarily sluiced or sheered, 
 and in case any such corporation shall be engaged in the boom- 
 ing and rafting of logs and other timber so sluiced, sacked 
 and driven, an additional sum not to exceed sixty cents per 
 thousand feet for logs, spars and other large timber, and rea- 
 sonable compensation on all other timber products may be 
 charged for booming and rafting the same ; the amount of such 
 logs and other products is to be determined by the usual 
 method of scaling, and such corporation shall have a lien upon 
 all logs and other timber products handled for sluicing, sack- 
 ing and driving, and for booming and rafting the same, to 
 be enforced in any manner now or hereafter provided by law 
 for the enforcement of liens for labor on logs. [Laws 1909, 
 §1, p. 816; BaL, §4391.] 
 
 This section is constitutional. (East Hoquiam Boom etc. Co. v. Nee- 
 son, 20 Wash. 142.) 
 
 Boom companies for public service are public corporations. (North 
 River Boom Co. v. Smith, 15 Wash. 138.) 
 
 § 539. Damages for Neglect. 
 
 [§ 7124, Rem.-Bal.] Any corporation acting under and in 
 accordance with the provisions of this act shall be liable to the 
 owner or owners of logs or other timber products for all loss 
 or damage resulting from neglect, carelessness or unnecessary 
 
 I 
 
 I
 
 387 BOOM COMPANIES. §§540,541 
 
 delay on the part of such corporation or its agents. [Laws 
 1895, §6, p. 131; Bal., §4392.] 
 
 § 540. Rights to Cease, When, 
 
 [§7125, Rem.-Bal.] Should any corporation neglect, for 
 the period of eight months after improving any stream or 
 river, to operate its dams, or to otherwise perform its duties 
 as herein provided, then all rights herein conferred to such 
 corporations upon such streams or rivers, or portions thereof, 
 shall cease. [Laws 1895, §7, p. 131; Bal., §4393.] 
 
 Mere lack of business not necessarily nonuser. (State ex rel. Wilson 
 v. Superior Court, 47 Wash. 397.) 
 
 § 541. Boom Companies, Rig-hts of. 
 
 [§ 7126, Rem.-Bal.] Duly organized boom companies at 
 present operating upon any of the streams or rivers of this 
 state may file amended articles of incorporation to embrace 
 the provisions of this act, and for the purpose of time limita- 
 tions mentioned in this act, the time of filing such amended 
 articles of incorporation shall be deemed to be the time of 
 organization thereof, but failure to comply with the provisions 
 of this act shall work forfeiture of the rights of such corpora- 
 tions only so far as the same are subjoined under the provi- 
 sions of this paragraph. [Laws 1895, §8, p. 131 j Bal., § 
 4394.]
 
 §§ 542-544 EXISTING corporation laws, 1913. 388 
 
 TOLL-LOaGING ROADS AND WAYS. 
 
 § 542. Articles of Incorporation. 
 
 [§ 7106, Rem.-Bal.] Any two or more persons may incor- 
 porate a company, having for its principal object the construc- 
 tion, maintenance and operation of logging roads, chutes, 
 flumes and artificial watercourses, or waterways and other 
 ways, for the transportation of logs and other timber products. 
 Such corporation shall have power to acquire, hold, use and 
 transfer all such real and personal property as shall be rea- 
 sonably necessary for carrying on the business of such corpora- 
 tion. [Laws 1905, § 1, p. 161, c. 82.] 
 
 "Person" construed to be individual as distinct from corporation. 
 (Denny Hotel Co. v. Schram, 6 Wash. 134.) 
 
 Company may make its own selection for toll-logging road. (State 
 ex rel. Clark v. Superior Court, 62 Wash. 612, 114 Pac. 444.) 
 
 § 543. Power of Corporation. 
 
 [§ 7107, Rem.-Bal.] Such corporation shall have power to 
 build, construct, maintain and operate logging roads, whether 
 skid roads, railroads or any other kind, also chutes, flumes and 
 artificial watercourses, waterways and other ways, for the 
 transportation of logs or any other timber products, together 
 with all necessary yarding grounds, roUways and landings. 
 [Laws 1905, § 2, p. 161, c. 82.] 
 
 § 544. To Transport Lumber, Logs, etc. — Lien for Services. 
 
 [§ 7108, Rem.-Bal.] After any such logging road, way, 
 chute, flume, or artificial watercourse or other improvements 
 shall have been constructed, such company shall transport all 
 timber products offered to it for carriage as its means of trans- 
 portation are adapted to carry, and such company shall have 
 the right to charge reasonable tolls for the use thereof, which 
 tolls shall be uniform, having due regard to the portion or 
 length of any such logging road, way, chute, flume, or artificial 
 watercourse or other improvements used by any person. Such 
 company shall have a lien for the amount of its reasonable tolls
 
 389 TOLL-LOGGING ROADS AND WAYS. § 545 
 
 and charges upon any and all logs or other timber products 
 transported by it over its logging road, way, chute, flume or 
 artificial watercourse. Notice of such lien shall be filed, and 
 the same shall be enforced, in the same manner as is now or 
 may hereafter be provided for the filing and enforcement of 
 liens on logs by boom companies. [Laws 1905, § 3, p. 162, 
 c. 82.] 
 
 § 545. Deemed Common Cajriers — Right of Eminent Do- 
 main. 
 [§ 7109, Rem.-Bal.] Such companies shall be deemed quasi- 
 public companies and common carriers, and any such company 
 shall have the right of eminent domain, and shall have the 
 right to appropriate and condemn lands and property for its 
 use. Such right of condemnation and of eminent domain shall 
 be exercised in the same man'ner as is now, or may hereafter 
 be, provided by law for the condemnation of property by 
 ordinary railroad corporations exercising the right of eminent 
 domain : Provided, that the right of eminent domain shall not 
 be exercised by any such corporation with respect to any resi- 
 dence : And provided further, that any property acquired by 
 such corporation under the provisions of this act by the exer- 
 cise of the right of eminent domain shall be used exclusively 
 for the purposes of this act; and whenever the use of such 
 property as herein contemplated shall cease for the period of 
 one year, the property shall revert to the original owner, his 
 heirs or assigns. Nothing in this act shall be construed to au- 
 thorize the taking or damaging of any power plant constructed 
 or being constructed for the creation or utilization of water 
 power. [Laws 1905, § 4, p. 162, c. 82.] 
 
 A company may condemn land in accordance with its special charter 
 or subsequent general law. (Cascades R. Co. v. Sohms, 1 Wash. Ter. 
 557.) 
 
 Right of way for logging roads and lumbering purposes not public 
 use. (Healy Lumber Co. v. Morris, 33 Wash. 490, 74 Pac. 681; 
 Matthews v. Belfast Mfg. Co., 35 Wash. 662, 77 Pac. 1046.) 
 
 Toll-logging road as public carrier is public use. (State ex rel. Clark 
 V. Superior Court, 62 Wash. 612, 114 Pac. 444.)
 
 §§ 546, 546a existing corporation laws, 1913. 390 
 
 CO-OPERATIVE ASSOCIATIONS. 
 
 § 546. Co-operative Associations — Wlio may Organize — 
 Purposes. 
 
 Any number of persons, not less than five, may associate 
 themselves together as a co-operative association, society, 
 company or exchange for the transaction of any lawful busi- 
 ness on the co-operative plan. For the purposes of this act 
 the words "association," "company," "exchange," "soci- 
 ety" or "union" shall be construed the same. [Laws 1913, 
 c. 19, § 1.] 
 
 The essential characteristic of a co-operative association is that it 
 has for its object the sharing of profits with laborers and wage-earners 
 as such as well as among investors and stockholders. (Finnegan t. 
 Noerenberg, 52 Minn. 238, 244, 53 N. W. 1150.) 
 
 Co-operative associations are similar to joint stock companies. (Chater 
 T. San Francisco S. R. Co., 19 Cal. 219, 246.) 
 
 Personal liability of stockholder may be waived or limited by agree- 
 ment. (Robinson v. Bidwell, 22 Cal. 379, 388.) 
 
 Co-operative associations incorporated under statute are governed 
 by the same rules applicable to voluntary co-operative associations ex- 
 cept so far as modified by statute. (Atwood v. Dumas, 149 Mass. 167, 
 21 N. E. 236; McCallian v. Hibernia Sav. & Loan Soc, 70 Cal. 163, 12 
 Pac. 114; Mokelumne Hill C. & Min. Co. v. Woodbury, 14 Cal. 424; 
 Bank v. Bean, 124 Mass. 81; Merrill v. Mclntire, 13 Gray (Mass.), 
 157; Baxter v. Mclntire, 13 Gray (Mass.), 168.) 
 
 § 546a. Articles — Contents. 
 
 Every association formed under this act shall prepare 
 articles of association in writing, which shall set forth: 
 
 1. The name of the association. 
 
 2. The purpose for which it was formed. 
 
 3. Its principal place of business. 
 
 4. The term for which it is to exist which shall not exceed 
 fifty years. 
 
 5. The amount of capital stock, the number of shares and 
 the par value of each share. [Laws 1913, c. 19, § 2.]
 
 391 CO-OPERATIVE ASSOCIATIONS. §§ 546b-546d 
 
 § 546b. Articles — Verification — Filing — When Legally Or- 
 ganized. 
 The original articles of associations organized under thia 
 act or a true copy thereof verified to be such by the affidavits 
 of two of the signers thereof, shall be filed with the Secre- 
 tary of State. Whenever a certified copy of the same accom- 
 panied by a certificate of the Secretary of State showing that 
 the same has been filed in his office, is filed with the county 
 auditor of the county in which is located the principal place 
 of business of said association, the said association shall be 
 deemed to be legally organized. [Laws 1913, c. 19, § 3.] 
 
 § 546c. Filing Fees. 
 
 For filing articles of association organized under this act 
 there shall be paid to the Secretary of State the sum of 
 twenty-five dollars and for the filing of an amendment of 
 such articles there shall be paid the sum of ten dollars. For 
 recording such articles of assoeiation or an amendment 
 thereto, the county auditor shall charge the sum of fifteen 
 cents for each one hundred words thereof, and fifteen cents 
 for filing and indexing the same. [Laws 1913, c. 19, § 4.] 
 
 § 546d. Trustees — Election — ^Duties — Election of Officers. 
 
 Every such association shall be managed by a board of 
 not less than three trustees. The trustees shall be elected 
 by and from the stockholders of the assoeiation at such time 
 and for such term of office as the by-laws may prescribe, and 
 shall hold office during the term for which they were elected 
 and until their successors are elected and qualified; but a 
 majority of the stockholders shall have the power at any 
 regular or special meeting, legally called for that purpose 
 to remove any trustee or officer for cause, and fill the 
 vacancy. The officers of every such association shall be a 
 president, one or more vice-presidents, a secretary and a 
 treasurer who shall be elected annually by the trustees. 
 Each of said officers must be a member of the association. 
 All elections shall be by ballot. [Laws 1913, c. 19, § 5.J
 
 §§ 546e-54:6h existing corporation laws, 1913. 392 
 
 § 546e. Amendments — How Adopted — Recording. 
 
 The articles of association may be amended by a majority 
 vote of the stockholders at any regular stockholders' meet- 
 ing or at any special stockholders' meeting called for that 
 purpose, on twenty days' written notice being given to the 
 stockholders. Said power to amend shall include the power 
 to increase or diminish the amount of capital stock and the 
 number of shares : Provided, the amount of the capital stock 
 shall not be diminished below the amount of the paid-up 
 capital stock at the time such amendment is adopted. 
 Within thirty days after the adoption of an amendment to 
 its articles of association, the association shall cause a copy 
 of such amendment adopted to be recorded in the office of 
 the Secretary of State and of the county auditor of the county 
 where its principal place of business is located. [Laws 1913, 
 c. 19, § 6.] 
 
 § 546f. Business Authorized to be Conducted — Lawful 
 Business Defined. 
 An association created under this act, being for mutual 
 welfare, the words "lawful business" shall extend to every 
 kind of lawful effort for business, agricultural, dairy, mer- 
 cantile, mining, manufacturing or mechanical business, on 
 the co-operative plan. [Laws 1913, c. 19, § 7.] 
 
 § 546g. Stock — Issue — Limit — Vote. 
 
 No stockholder in any such association shall own more 
 than one-fifth of the stock of the association, except as here- 
 inafter provided. No stockholder at any meeting shall be 
 entitled to more than one vote. [Laws 1913, c. 19, § 8.] 
 
 § 546h. Subscription of Stock in Other Associations. 
 
 At any regular meeting or any regularly called special 
 meeting at which at least a majority of all the stockholders 
 shall be present, or represented, an association organized 
 under this act may by a majority vote of the stockholders 
 present or represented, subscribe for shares and invest its 
 reserve fund or any part thereof in the capital stock of any 
 other co-operative association. [Laws 1913, c. 19, § 9.]
 
 393 CO-OPERATIVE ASSOCIATIONS. §§ 546i-54Gk 
 
 § 5461. Purchasing Business of Other Associations — Pay- 
 ment — Stock Issued. 
 
 Whenever an association organized under this act shall 
 purchase any stock of another association or the interest or 
 any part thereof of any person or persons, firm or partner- 
 ship engaged in any lawful business as defined in section 7 
 [§ 546, ante] of this act, it may pay for the same in whole or in 
 part by issuing to the selling association or person, firm or part- 
 nership, shares of its capital stock to an amount which at par 
 value, would equal the fair market value of the stock or 
 interest so purchased and in such case the transfer to the 
 association of such stock or interest so purchased at such 
 valuation shall be equivalent to payment in cash for the 
 shares of stock so issued. [Laws 1913, c. 19, § 10.] 
 
 § 546j. Certificates of Stock— When Held in Trust— Issued. 
 
 In case the cash value of such stock or interest so purchased 
 exceeds one-fifth of the par value of the purchasing associa- 
 tion, the trustees of the purchasing association are authorized 
 to hold the shares in excess of one-fifth of the par value of 
 the purchasing association, in trust for the vendor and dis- 
 pose of the same to such person or persons and within such 
 time as may be mutually agreed upon by the parties in in- 
 terest, and shall pay the proceeds thereof as currently received 
 to the former owners thereof. Certificates of stock shall not 
 be issued to any subscriber until fully paid for, but the by- 
 laws of the association may allow subscribers to stock to vote 
 as stockholders: Provided, that one-fifth of the stock sub- 
 scribed for has been paid for by such subscriber. [Laws 
 1913, c. 19, § 11.] 
 
 § 546k. Stockholders may Vote by Mail. 
 
 At any regular, called, general or special meeting of the 
 stockholders, a written vote received by mail from any absent 
 stockholder and signed by him may be read in such meeting 
 and shall be equivalent to a vote of each of the stockholders 
 so signing: Provided, he has been previously notified in writ- 
 ing of the exact motion or resolution upon which such vote
 
 §§ 5461-546n existing corporation laws, 1913, 394 
 
 is taken and a copy of same is forwarded with and attached 
 to the vote so mailed by him. [Laws 1913, c. 19, § 12,] 
 
 § 5461. Eaming-s — Apportionment. 
 
 The trustees shall apportion the net earnings by first pay- 
 ing dividends on the paid up capital stock at a rate not ex- 
 ceeding eight per cent per annum ; then setting aside not 
 less than ten per cent nor more than twenty-five per cent of 
 the remainder annually of the net profits for a reserve fund 
 and the remainder of said net profits by dividends propor- 
 tioned upon the amount of business transacted with said asso- 
 ciation and proportioned upon the wages and salaries of 
 employees: Provided, That nonshareholders shall only be en- 
 titled to one-half as much dividends from said net profits as 
 shareholders: And provided further, That no dividend shall 
 be paid out or declared on any business transacted with the 
 association by any person, persons, firm or corporation en- 
 gaged in the buying, selling or handling of agricultural 
 products for profit or to any sale to said association by any 
 person or persons, firm or corporation engaged as a wholesaler 
 or jobber in the distribution of manufactured products. Divi- 
 dends remaining uncalled for six months after the same have 
 been declared shall revert to the association, [Laws 1913, 
 c. 19, § 13.] 
 
 § 546m. Distribution of Dividends. 
 
 The profits or net earnings of such association shall be dis- 
 tributed to those entitled thereto at such time and in such 
 manner not inconsistent with this act as its by-laws shall pre- 
 scribe, which shall be as often a« once a year, [Laws 1913, 
 c. 19, § 14.] 
 
 § 546n. Annual Reports— Contents— Filing. 
 
 Every association organized under the terms of this act 
 shall, annually on or before the 1st day of March of each year, 
 make a report to the secretary of state ; such report shall con- 
 tain the name of the company, its principal place of business 
 in this state and a general statement as to its business, show- 
 ing the total amount of business transacted, the amount of
 
 395 CO-OPERATIVE ASSOCIATIONS. §§ 546o-546q 
 
 capital stock subscribed for and paid in, the number of stock- 
 holders, the total expenses of operation, the amount of its 
 indebtedness or liability and its profits and losses. [Laws 
 1913, c. 19, § 15.] 
 
 § 546o. Co-operative Associations Heretofore Organized — 
 May Adopt Provisions of This Act. 
 All co-operative associations heretofore organized and doing 
 business under prior statutes, or which have attempted to so 
 organize and do business shall have the benefit of all the pro- 
 visions of this act and be bound thereby on filing with the 
 Secretary of State signed and sworn to by the president and 
 secretary, manager or other officer managing said business, to 
 the effect that said co-operative company or association has by 
 a majority vote of its stockholders decided to accept the bene- 
 fits of and to be bound by the provisions of this act. No 
 association organized under this act shall be required to do or 
 perform anything not specifically required herein in order 
 to become an association or to continue its business as such. 
 [Laws 1913, c. 19, § 16.] 
 
 § 546p. Use of Term "Co-operative" Limited to Associa- 
 tions Under This Act. 
 No corporation or association organized or doing business 
 for profit in this state shall be entitled to use the term "co- 
 operative" as a part of its corporate or other business name 
 or title, unless it has complied with the provisions of this act ; 
 and any corporation or association violating the provisions of 
 this section may be enjoined from doing business under such 
 name at the instance of any stockholder or any association 
 legally organized hereunder. [Laws 1913, c. 19, § 17.] 
 
 § 546q. When to Do Business — Liability. 
 
 No co-operative association organized under the provisions 
 of this act shall be permitted to do business until three-fourths 
 of the capital stock shall have been subscribed for and one- 
 fourth of the capital stock of said association shall have been 
 paid in to said association. The liability of each stockholder 
 shall be limited to the amount remaining unpaid on his sub-
 
 §§ 546r, 546t existing corporation laws, 1913. 396 
 
 scription to the capital stock of said association. [Laws 1913, 
 c. 19, § 18.] 
 
 § 546r. May Pass By-laws. 
 
 Any association formed under this act may pass by-laws to 
 govern itself in the carrying out of the provisions of this act 
 which are not inconsistent with the provisions of this act. 
 [Laws 1913, c. 19, § 19.] 
 
 § 546t. Constitutionality. 
 
 If any section or part of a section of this act shall for any 
 cause be held unconstitutional such fact shall not affect the 
 remainder of this act. [Laws 1913, c. 19, § 20.] 
 
 4
 
 397 PATRONS OF HUSBANDRY. §§ 547, 548 
 
 PATRONS OF HUSBANDRY. 
 
 § 547. Manner of Incorporating a Grange. 
 
 [§ 3765, Rem.-BaL] Any grange of the Patrons of Hus- 
 bandry, desiring hereafter to incorporate, may incorporate 
 and become a body politic in this state by filing in the office of 
 the Secretary of State, and in the office of the county auditor 
 of the county wherein such grange holds its meetings of busi- 
 ness, a certificate or articles embodying : 
 
 1. The name of such grange and the place of holding its 
 meetings. 
 
 2. What elective officers the said grange will have, when 
 such officers shall be elected ; how and by whom the business of 
 the grange shall be conducted and managed, and what officers 
 shall join in the execution of any contract of such grange to 
 give force and effect in accordance with the usages of the order 
 of the Patrons of Husbandry. Such articles shall be sub- 
 scribed by the master of such grange, attested by the secre- 
 tary with the seal of the grange : 
 
 3. A copy of the by-laws of such grange shall also be filed 
 in the said office of the Secretary of State and the county 
 auditor of the proper county ; 
 
 4. The names of all such officers at the time of filing the 
 application, and the time for which they may be respectively 
 elected. When such articles shall have been filed, such grange 
 shall be a body politic and corporate, with all the incidents of 
 a corporation, subject, nevertheless, to the laws now in force 
 or hereafter to be passed regulating corporations. [Laws 
 1875, § 1, p. 97; 1 H. C, § 1643; Bal., § 4460.] 
 
 § 548. Pursuits Such Corporation may Engage in. 
 
 [§3766, Rem.-BaL] Said grange may engage in any in- 
 dustrial pursuit, manufacturing, mining, milling, wharfing, 
 docking, commercial, mechanical, mercantile, building, farm- 
 ing, equipping or running railroads or generally engage in 
 any species of trade or industry ; loan money on security, pur- 
 chase and sell on real estate ; but when desiring to engage in
 
 §549 
 
 EXISTING CORPORATION LAWS, 1913. 
 
 398 
 
 either or any of the above pursuits, or industries, said grange 
 shall be subject to all the conditions, and liabilities imposed 
 hj> the provisions of the general corporation laws, and in addi- 
 tion to the conditions to be performed as recited in the last 
 preceding section, shall file additional articles with said Secre- 
 tary of State, and the county auditor of the proper county, 
 stating the object, business, or industry proposed to be pur- 
 sued or engaged in, the amount of capital stock, the time of 
 its existence, not to exceed fifty years; the number of shares 
 of which the capital stock shall consist, and price per share, 
 and the names of officers necessary to manage said business 
 and the places where said officers shall pursue the same. 
 [Laws 1875, § 2, p. 97 ; 1 H. C, § 1644; Bal, § 4461.] 
 
 § 549. General Rights and Liabilities. 
 
 [§ 3766a, Rem.-Bal.] As a business corporation, said 
 grange, after having complied with the provisions of the last 
 preceding section, shall be to all intents and purposes a do- 
 mestic corporation, with all the rights, privileges, and immuni- 
 ties allowed, and all the liabilities imposed, by the laws of the 
 state relating to corporations engaged in the same kinds of 
 business. [Laws 1875, §3, p. 98; 1 H. C, §1645; Bal., § 
 4462.]
 
 399 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. § 550 
 
 BUILDING, LOAN AND SAVINGS ASSO- 
 CIATIONS. 
 
 Ad Act relating to the orf^anization and to the management, 
 regulation and control of building and loan and savings 
 and loan associations and societies ; providing penalties 
 for the violation thereof; and repealing sections 3601 to 
 3638 inclusive of Remington and Ballinger's Annotated 
 Codes and Statutes of Washington. [Laws 1913, c. 110.] 
 
 § 550. Formation of. 
 
 Ten or more persons, citizens of the state of Washington, 
 may form a savings and loan association or savings and loan 
 society for the purpose of accumulating the savings and funds 
 of its members and lending its shareholder or others the funds 
 so accumulated by making and acknowledging in quadrupli- 
 cate and by filing as hereinafter required articles of incor- 
 poration specifying: 
 
 (a) The name of the proposed association, which shall 
 terminate with the words "Savings and Loan Association," 
 or "Savings and Loan Society." 
 
 (b) The city, town or village and the county wherein the 
 principal place of business of the association is to be located 
 and which must be within the state of Washington. 
 
 (c) The number of its directors, which shall not be less 
 than seven nor more than fifteen. The first board of directors 
 shall hold office for a term to be specified in said articles of 
 not less than two, and not more than six months from the 
 time said association is authorized to do business. 
 
 (d) The names, occupation and postoffice addresses of its 
 first directors. 
 
 (e) The names, occupation and postoffice addresses of the 
 subscribers to the articles of incorporation, and a statement 
 of the number of shares which each has agreed to take. The 
 matured value of the total number of shares so subscribed 
 shall be at least $25,000.00. 
 
 (f) The limit of capital to be accumulated.
 
 § 550 EXISTING CORPORATION LAWS, 1913. 400 
 
 (g) The time of duration of said association, whicli shall 
 not exceed fifty years. 
 
 Said articles shall be filed in the first instance in the office 
 of the state auditor pending his approval thereof and of the 
 by-laws of said association as hereinafter provided for. 
 
 The articles of incorporation may be amended by a vote of 
 at least two-thirds in number of the shareholders voting at 
 any general meeting, or by a special meeting called for that 
 purpose, and a copy of the resolutions making said amend- 
 ment shall be certified in quadruplicate by the president and 
 secretary under the seal of said corporation, and when so cer- 
 tified shall be so filed and kept the same as in the case of 
 original articles, and from the time of said filing, said amend- 
 ment shall have the same effect as if embraced in the original 
 articles of incorporation : Provided, however, that no increase 
 in the authorized capital shall be made unless three-fourths 
 of the capital previously authorized has actually been issued. 
 [Laws 1913, c. 110, § 1. Cf. § 3601, Rem.-Bal.] 
 
 "Person" construed to be individual as distinct from corporation. 
 (Denny Hotel v. Schram, 6 Wash. 134, 32 Pac. 1002.) 
 
 Loans made contrary to by-laws held ratified. (Blair v. Metropolitan 
 Savings Bank, 27 Wash. 192, 67 Pac. 609.) 
 
 Mortgages deposited with state auditor are trust fund for stockholders 
 and cannot be sold to third parties. (Trowbridge v. Hamilton, 18 Wash. 
 686, 52rPac. 328; Hale v. Stenger, 22 Wash. 516, 61 Pac. 156.) 
 
 Contracts by foreign association not having complied with statutory 
 requirements not void. (Horrell v. Homebuilders' Assn., 40 Wash. 531, 
 82 Pac. 889.) 
 
 The relation of stockholder to building and loan association is that 
 of borrower, and he is entitled to have all payments, whether premiums, 
 dues, fines or other, credited on his loan. (Hale v. Stenger, 22 Wash. 
 516, 699, 61 Pac. 156, 63 Pac. 554; United States S. & L. Co. v. 
 Owens, 23 Wash. 790, 63 Pac. 1134; Hopkins v. Hale, 23 Wash. 790, 
 63 Pac. 1134; Interstate S. & L, Assn. v. Cairns, 16 Wash. 215, 47 Pac. 
 509; United States S. & L. Assn. v. Parr, 26 Wash. 115, 66 Pac. 109.) 
 
 Where a note and mortgage contain a provision for declaring the 
 entire amount due on failure to pay installment of interest, default is 
 not fixed until the company elects to so declare. (United States S. & 
 L. Co. V. Cade, 15 Wash. 38, 45 Pac. 656.) 
 
 In computing amount due from a member, the note, mortgage and 
 contract of membership constitute one transaction. (Interstate S. & 
 L. Assn. V. Knapp, 20 Wash. 225, 55 Pac. 48, 931.)
 
 401 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. §§551,552 
 
 § 551. By-laws — Approval. 
 
 Each association shall adopt by-laws for its government and 
 therein describe the manner in which its business shall be 
 transacted, which by-laws shall be in conformity with the pro- 
 visions of this act, and the laws of this state, and at all times 
 be open to the inspection of the state auditor and the members 
 of the association at its home office. All by-laws shall be sub- 
 ject to the approval of the state auditor before going into 
 effect, and in case any provision in such by-laws shall be con- 
 trary to the provisions of this act, or to the laws of this state, 
 or be detrimental to the interests of the members of such or- 
 ganization, or against public policy, he may, under the advice 
 and consent of the attorney general, require the same to be 
 stricken out. [Laws 1913, c. 110, § 2. Cf. § 3603, Rem- 
 Bal.] 
 
 § 552. Approval by State Auditor of By-laws, etc. 
 
 Whenever said articles of incorporation are in due form 
 and regularly executed and the by-laws have been duly ap- 
 proved as above required, the state auditor thereupon shall 
 ascertain from the best source of information at his command 
 the responsibility, character and general fitness of the incor- 
 porators. If he shall be satisfied concerning the several mat- 
 ters specified above, he shall, within a reasonable time, 'issue 
 under his hand and official seal a certificate reciting in sub- 
 stance the filing in his office of the articles of incorporation 
 and by-laws; that said articles and by-laws conform to all 
 the requirements of law ; that he has approved the same, and 
 that he verily believes the incorporators are fit and proper 
 to conduct the business of a savings and loan association as 
 defined in this act and said by-laws. Said certificate shall be 
 made in quadruplicate and attached to each copy of the arti- 
 cles of incorporation, one of which shall be retained by the 
 state auditor and the other three shall be returned to the incor- 
 porators who shall forthwith file one copy thereof in the office 
 of the Secretary of State, one in the office of the auditor of 
 the county in which the chief place of business of said asso- 
 ciation is located, and the other shall be retained by the asso- 
 20
 
 §§ 553-555 EXISTING corporation laws, 1913. 402 
 
 elation, whereupon the incorporation of said association shall 
 be deemed complete. [Laws 1913, c. 110, § 3.] 
 
 § 553. Oath and Bond of Officers and Directors. 
 
 Each officer and director, when appointed or elected, shall 
 take an oath that he will, so far as the duty devolves upon 
 him, diligently and honestly administer the affairs of such 
 association, and will not knowingly violate the by-laws or any 
 of the provisions of law applicable to such association. 
 
 Each officer or agent having the custody of money or secur- 
 ities of an association shall be required to give bond to such 
 association in an amount to be determined by the board of 
 directors of such association commensurate with his liability. 
 [Laws 1913, c. 110, § 4.] 
 
 § 554. Membership. 
 
 The membership of the association shall consist of those per- 
 sons holding shares therein. 
 
 The by-laws may provide for an entrance, membership or 
 withdrawal fee, but the total of such fees shall not exceed two 
 dollars upon each share, and no other fee, penalties, fines or 
 forfeitures shall be charged, except reasonable charges for 
 expenses in closing loans, and for delinquency in making 
 payment on stock and loans. 
 
 The above provision shall not apply to dividends which may 
 revert to the association as provided in section 7 of this act. 
 [Laws 1913, e. 110, § 5.] 
 
 § 555. Capital Stock — Classified Shares. 
 
 The capital of every such association shall consist of the 
 accumulated payments made by its members and dividends 
 credited thereon, and shall be represented by shares. Every 
 share issued shall have a matured value of one hundred dol- 
 lars. Every such association shall be either permanent or 
 serial in character as provided by the terms of its by-laws. 
 A permanent association may issue shares at any time and 
 credit its dividends upon the passbooks of its members. A 
 serial association may issue shares in series and credit its 
 dividends equally upon each share issued in such series. No
 
 403 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. § 555 
 
 shares of a prior series shall fee issued after the issuing of 
 shares in a later series, when issued upon the serial plan, ex- 
 cept at the book value at the last distribution of profits plus 
 the dues and accumulated earnings thereon since such dis- 
 tribution. Shares which have not been transferred to the 
 association as security for the repayment of a loan shall be 
 called free shares. Shares that have been so transferred shall 
 be called pledged shares. 
 
 No preferred stock shall be issued, i. e., stock upon which 
 a different or stipulated rate of dividends shall be guaranteed 
 or paid before or regardless of the amount of dividends dis- 
 tributed to other classes of shares, neither shall any shares 
 be issued which shall be exempt from bearing their pro rata 
 portion of loss : Provided, however, that nothing herein con- 
 tained shall be held to prohibit any association already having 
 reserve stock outstanding from continuing to have an equal 
 amount of such stock outstanding, and from issuing, if neces- 
 sary, additional reserve fund stock so as to equal five per cent 
 of the capital as defined in this section ; and when so provided 
 in its by-laws, such reserve fund stock may participate in all 
 earnings equitably with the general stock and be chargeable 
 with all real estate taken under foreclosure or otherwise in 
 the adjustment of delinquent loans together with all direct 
 losses of whatever nature sustained by the association in the 
 general course of business and in consideration of such guar- 
 anty against loss, and when provided in the by-laws such stock 
 may receive additional dividends, and such stock shall not be 
 subject to withdrawal until all other classes of stock and all 
 other liabilities of the association shall first have been liqui- 
 dated, and any such association may agree to mature its other 
 classes of stock at a fixed time, providing any deficiency aris- 
 ing therefrom shall be chargeable only to such reserve fund 
 stock. 
 
 Any association may issue the shares classified below when 
 so provided by its by-laws: 
 
 (a) Installment shares upon which a regular stipulated 
 payment of dues shall be made at stated periods expressed in 
 the by-laws.
 
 § 556 EXISTING CORPORATION LAWS, 1913. 404 
 
 (b) Savings shares, upon which paj-ments shall be made 
 in such sums and at such times as the holder thereof may elect 
 until the shares reach their matured value or are withdrawn. 
 
 (c) Fully paid shares, upon which a single payment 
 amounting to one hundred dollars per share shall be paid at 
 the time of subscription. 
 
 (d) Juvenile shares. Any association may issue juvenile 
 shares to, or in the name of, any minor which shall be held 
 for the exclusive right and benefit of such minor and free 
 from the control or lien of all other persons ; and the accumu- 
 lated savings on these shares together with the dividends cred- 
 ited thereon shall be paid to the persons in whose name the 
 shares have been issued and the receipt or acquittance of such 
 minor shall be valid and sufficient release and discharge to the 
 association for such accumulated savings, together with the 
 dividends credited thereon or any party thereof. [Laws 1913, 
 c. 110, § 6. Cf. § 3626, Rem.-Bal.] 
 
 § 556. Dividends. 
 
 Profits and losses shall be ascertained and distributed semi- 
 annually or annually. Dividends shall be taken from the net 
 earnings of the association and, subject to the provisions of 
 section 6 [§ 555, ante] relating to reserve fund stock shall be 
 distributed ratably to all classes of shares and to each share in 
 proportion to the accumulation made thereon : Provided, that 
 when stock is withdrawn within two years of its issuance, the 
 withdrawing member shall receive only such proportion of the 
 dividends as may be provided in the by-laws, but when such 
 stock is more than two years old, the withdrawing member shall 
 receive at least seventy-five per cent of the dividends. The 
 remaining dividends may revert to the undivided earnings. 
 No dividends shall be credited or paid except by a vote of the 
 board of directors duly entered upon the minutes, whereupon 
 shall be recorded the vote by ayes and nays. It shall be law- 
 ful for the association, in addition to the contingent fund re- 
 quired by section 13 [§ 562, post] of this act, to hold in its fund 
 of undivided earnings, such sum as the board of directors may 
 from time to time deem necessary or wise ; Provided, however, 
 that when the undivided earnings, including the contingent
 
 405 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. § 557 
 
 fund, exceed fifteen per cent of the dues and dividends cred- 
 ited to members, the board of directors shall declare such extra 
 dividend in excess of the dividend regularly apportioned, as 
 may be necessary to distribute among the shareholders the 
 accumulation in excess of such authorized surplus. [Laws 
 1913, c. 110, § 7. Cf. § 3627, Rem.-Bal.] 
 
 As to withdrawal value in cases of fraud, see Conaway v. Co-opera- 
 tive Home Builders, 65 Wash. 39, 117 Pac. 716. 
 
 § 557. Security for Loans — Bonds. 
 
 For every loan made, except a loan from one association to 
 another, a note or bond secured by first mortgage on improved 
 real estate shall be taken, which security shall be conserva- 
 tively worth at least twice the value of the loan. No mort- 
 gage loan shall be made except upon the report in writing of 
 an appraiser or a committee of appraisers appointed by the 
 board of directors, which report shall state the conservative 
 value of the mortgage security. The directors in their dis- 
 cretion may also loan upon the security of the shares in the 
 association to the amount of ninety per cent of their with- 
 drawal value, and may loan upon or invest in bonds of the 
 United States and of the state of Washington, and in such 
 classes of bands and warrants of the counties, school districts 
 and other municipalities, as well as local improvement dis- 
 tricts, in this state, as the state auditor may from time to time 
 approve. Any association having a surplus for which there 
 is no demand for loaning purposes or for the payment of 
 withdrawals or matured shares, may loan the same to another 
 domestic association, and such association may borrow from 
 other associations or otherwise for loaning purposes or for 
 the payment of withdrawals or matured shares: Provided, 
 that no association shall borrow any amount or amounts which 
 in the aggregate shall exceed twenty-five per cent of the actual 
 value of mortgages on deposit with the state auditor, as shown 
 by the last preceding semi-annual statement of the borrowing 
 associations, as provided in section 9 of this act. 
 
 In borrowing said amount or amounts for the purposes 
 specified, any such association may, at its election, borrow the 
 same or any part thereof upon its debenture bonds, maturing
 
 § 558 EXISTING CORPORATION LAWS, 1913. 406 
 
 on or before five years after date and bearing interest not 
 exceeding six per cent per annum, interest payable semi- 
 annually. In no case shall any such bonds be issued when 
 there are sufficient funds on hand or receivable in time to 
 meet approved applications for loans or for the payment of 
 maturing stock or withdrawals of stock. Such debenture 
 bonds may be retired by action of the board of directors at 
 any time after one year from date of issue, by the secretary 
 of the association giving notice in writing sixty days or more 
 prior to the next interest date to the recorded holders thereof, 
 and on return of said retired bonds, together with the coupons 
 attached, said holders shall receive their par value. At the 
 expiration of said interest period, the bonds so called shall 
 cease to draw interest. Whenever the state auditor shall deem 
 any indebtedness incurred under the provisions of this section 
 to be detrimental to the interests of the shareholders of any 
 such association, he shall notify such association to reduce its 
 indebtedness to such amount as he shall consider reasonable, 
 giving such association such reasonable time as may be neces- 
 sary to effect such reduction of indebtedness. [Laws 1913, 
 c. 110, § 8. Cf. § 3604, Rem.-Bal.] 
 
 § 558. Deposit of Securities. 
 
 Every savings and loan association heretofore or hereafter 
 incorporated under the laws of this state, and governed by 
 this act, shall deposit and keep with the state auditor, or with 
 a duly chartered trust company of this state, approved by the 
 state auditor, in trust for all its members and creditors, all 
 mortgages and notes secured thereby, received by it in the 
 usual course of business. "When deposited with a trust 
 company such company shall certify to the state auditor the 
 possession of such securities, and the same shall not be sur- 
 rendered without the authority or sanction of the state au- 
 ditor. All associations except such as confine their business 
 operations wholly to the county in which such associations are 
 incorporated and adjoining counties, not having or owning 
 mortgages to the amount of twenty-five thousand dollars, shall 
 deposit with the state auditor additional securities to make 
 with the securities so owned and deposited a total value of
 
 407 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. § 558 
 
 not less than twenty-five thousand dollars. Such additional 
 securities shall consist of bonds of the United States and of 
 the state of Washin^^ton, and such classes of bonds and war- 
 rants of the counties, school districts and other municipalities, 
 as well as local improvement districts, in said state, as the 
 state auditor may from time to time approve, and such addi- 
 tional securities may be withdrawn from time to time when 
 mortgage securities of corresponding value shall be deposited, 
 as provided in this act, or when other securities of like char- 
 acter are substituted therefor, and it shall be the duty of the 
 state auditor, from time to time, to examine said associations 
 to ascertain whether all of its securities are deposited, as re- 
 quired by this act: Provided, that all securities heretofore 
 taken in any other state, territory or nation, by any associa- 
 tion organized under the laws of this state, and subject to the 
 provisions of this act, and there deposited under the laws of 
 such state, territory or nation, with some officer, authorized 
 to receive the same, shall not be deposited with the auditor 
 of the state of Washington. But in every such case a certifi- 
 cate of such deposit shall be filed with the auditor of this state, 
 and renewed annually, together with a statement verified by 
 the affidavit of some officer of such association, who has knowl- 
 edge of the facts, show^ing all of the securities taken by such 
 association, in such other state, territory or nation, at the time 
 of the filing of such certificate; and in case any securities 
 taken in any such state, territory or nation are not deposited 
 there, then the same shall be deposited here, as required by 
 this act. 
 
 Every foreign association doing business in this state and 
 governed by this act shall deposit and keep with the auditor 
 of this state, or with a duly chartered trust company of this 
 state, approved by the state auditor, in trust for all its mem- 
 bers and creditors in this state, all mortgages heretofore re- 
 ceived by it in this state and now in eft'eet, and all mortgages 
 hereafter received by it in the usual course of its business in 
 this state. Such securities shall be kept and dealt with by 
 the state auditor or by such trust company in like manner 
 as the securities deposited by savings and loan associations 
 organized under the laws of this state. Every association
 
 §§559,560 EXISTING CORPORATION LAWS, 1913. 408 
 
 governed by this act shall on or before the 1st day of February 
 and on or before the 1st day of August in each year, file with 
 the state auditor a verified statement of the total amount due 
 to the association from the borrowers, upon the mortgage loans 
 on deposit with the state auditor upon respectively the thirty- 
 first day of December and the thirtieth day of June last pre- 
 ceding. Payments upon stock pledged to the association for 
 a loan, which payments are accumulated for the purpose of 
 meeting the loan at or prior to its maturity, shall be considered 
 as payments upon such loan within the intent of this section. 
 [Laws 1913, c. 110, § 9. Cf. §§ 3606 and 3608, Rtm.-Bal.] 
 
 Mortgages deposited with the state auditor are a trust fund for stock- 
 holders and cannot be sold to third parties. (Trowbridge v. Hamilton, 
 18 Wash. 686, 52 Pac. 328; Hale v. Stenger, 22 Wash. 516, 61 Pac. 156.) 
 
 § 559. Surrender of Securities by State Auditor. 
 
 All interest and dividends which may accrue on securities 
 held by the state auditor or such trust company as provided 
 for herein and all dues, or monthly payments, which may be- 
 come payable on stock pledged as security for loans, the notes 
 and mortgages for which are deposited in accordance with 
 the provisions of this act, may be collected and retained by the 
 association depositing such securities or mortgages, so long as 
 such association remains solvent and faithfully performs all 
 contracts with its members, and when any mortgage shall have 
 been fully paid to said association the same shall be surren- 
 dered by said state auditor, or under his order, upon filing 
 with him a certificate of the auditor of the county where the 
 real estate is situated, to the effect that the satisfaction of 
 said mortgage has been filed for record. Any mortgage upon 
 which default has been made may be surrendered as afore- 
 said, upon filing with the state auditor an affidavit sworn to 
 by the president and secretary of the association owning the 
 same, stating that such mortgage is in default and that it is 
 withdrawn for the purpose of foreclosure. [Laws 1913, c. 110, 
 § 10. Cf. § 3607, Rem.-Bal.] 
 
 § 560. Power to Hold Realty. 
 
 Any savings and loan association may purchase at any sale, 
 public or private, any real estate upon which it may have a
 
 409 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. §§561,562 
 
 mortgage, judgment, lien, or other encumbrance or in which 
 it may have any interest, and may sell, convey, lease or mort- 
 gage the same at pleasure to any person or persons, but shall 
 not otherwise acquire or deal in real estate: Provided, that 
 any such association may acquire such real estate or a lease- 
 hold interest therein as may be necessary or convenient for 
 a location for the transaction of its business : Provided fur- 
 ther, that no such association shall use more than ten per 
 cent of its assets at any time in acquiring real estate for its 
 business location: Provided further, that all real estate 
 except that used for its business location shall be sold by 
 said association within five years from and after the time 
 that title thereto is acquired. [Laws 1913, c. 110, § 11. Cf. 
 § 3605, Rem.-Bal.] 
 
 § 561. Checking Accounts Prohibited. 
 
 No savings and loan association shall carry any demand, 
 commercial or checking account and no such association shall 
 receive any savings account or any sum of money on deposit 
 without issuing shares of stock for the same. [Laws 1913, 
 c. 110, § 12.] 
 
 § 562. Contingent Fund. 
 
 At each periodical distribution of profits, unless such asso- 
 ciation already has issued paid-up reserve fund stock equal 
 to five per cent of the amount credited to members to which 
 losses may be chargeable as provided in section 6 [§ 555, ante] 
 of this act, the board of directors shall reserve and carry to a 
 contingent fund, a sum equal to at least five per cent of the net 
 earnings during the period since the last previous dividend was 
 declared, until such contingent fund shall be equal to at 
 least five per cent of the amount credited to members. The 
 directors may at any time carry to such contingent fund any 
 further portion of the undivided earnings that in their dis- 
 cretion may seem wise, except as herein provided. Losses 
 of the association may be paid therefrom, and whenever the 
 contingent fund is reduced below five per cent the board of 
 directors shall at each periodical distribution of profits carry 
 to such contingent fund at least five per cent of the net earn-
 
 §§563,564 EXISTING corporation laws, 1913. 410 
 
 ings during the period since the last dividend was declared 
 until such contingent fund shall again be equal to at least 
 five per cent of the amount credited to members. [Laws 
 1913, c. 110, § 13.] 
 
 § 563. Losses Exceeding Reserve Fund. 
 
 Whenever the losses of an association exceed the con- 
 tingent fund, or the reserve fund, if reserve fund stock has 
 been issued as provided in section 6 [§ 555, ante] of this act, 
 they may be charged against the undivided earnings, if any, and 
 in the event that they also exceed such undivided earnings, shall 
 be charged pro rata against all classes of shares according 
 to the withdrawal value thereof. [Laws 1913, c. 110, § 14.] 
 
 § 564. Limit of Expense Fund. 
 
 The expenses of such association shall be paid from its 
 earnings, and no deduction from dues shall be made either 
 directly or indirectly for that purpose. No such association 
 shall pay or be or become liable to pay either directly or 
 indirectly in the course of any calendar year as salaries, com- 
 missions, fees or other compensation to its officers, directors, 
 auditor, attornej^s, agents, clerks and all other employees 
 and for rent, advertising, and all other operating expenses, 
 sums of money the aggregate of which shall exceed two and 
 one-half per cent of the average amount of assets of such 
 association during such year. The term "operating ex- 
 penses" as used in this connection shall not be construed to 
 include membership fees, taxes, assessments, repairs or in- 
 surance on real estate or commissions on the sale of real 
 estate, or on the placing of loans, or any interest which the 
 association may have paid or become liable to pay, proper 
 legal charges for searching titles or the preparation of legal 
 papers, expenses of foreclosure suits or other bona fide liti- 
 gation, nor charges for examinations made by the direction 
 of the state auditor. The provisions of this section, in so 
 far as they limit the expenditure for expenses, shall not 
 apply to any association whose accumulated capital is less 
 than forty thousand dollars: Provided, however, that the 
 annual expenses of every such latter association shall not
 
 411 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. § 565 
 
 exceed a total of one thousand dollars. The provisions of 
 this section shall apply as well to foreign as to domestic cor- 
 porations doing business under the permission and certificate 
 of the state auditor and said auditor shall not renew such 
 permission or issue such certificate to any corporation that 
 shall have violated the provisions of this section. [Laws 
 1913, c. 110, § 15. Cf. § 3631, Rem.-Bal] 
 
 § 565. Withdrawals by Shareholders — Notice. 
 
 Shares shall not be withdrawn until after a lapse of three 
 months from the time of issuance of such shares and not 
 then except at the option of the association, and after one 
 day's written notice of intention to withdraw such shares 
 shall have been given subsequent to the expiration of such 
 three months; but shares may be withdrawn at any time 
 after one year from the time of issuance and after one day's 
 written notice of such withdrawal has been given to the asso- 
 ciation. The withdrawing shareholder shall be paid the 
 amount of the withdrawal value of the shares, as shown by 
 the last prior distribution of profits and as determined by 
 the by-laws, together with all the dues paid thereon since 
 such distribution: Provided, that upon withdrawal of shares 
 pledged to the association for a stock loan or stock loans, 
 the association shall first deduct therefrom the indebtedness 
 due the association. Withdrawals shall be paid in the order 
 of their filing, except as hereinafter provided, and it shall 
 be the duty of the secretary or other officer discharging such 
 duties to enter upon each notice the order and date of such 
 filing. Except as hereinafter provided, not more than two- 
 thirds of the receipts of the association in any month shall 
 be applied to the payment of withdrawals and matured 
 shares without the consent of the board of directors. When- 
 ever an application for withdrawal shall have been on file 
 or the payment of matured shares demanded and either shall 
 have remained unpaid for a period of six months, all the re- 
 ceipts of the association in any mouth from dues, loans 
 repaid, and the proceeds of all other investments, shall, after 
 the payment of expenses and general indebtedness, be ap- 
 plied toward the payment of withdrawals and matured stock;
 
 §§566,567 EXISTING corporation laws, 1913. 412 
 
 and the board of directors, or the state auditor, in his dis- 
 cretion, may direct that withdrawals be paid upon a ratable 
 and proportionate basis. After filing the notice of with- 
 drawal provided herein, the withdrawing member shall be 
 entitled to the dividends credited to the same class of shares, 
 until the final payment of his shares is made; and member- 
 ship in the association shall remain unimpaired so long as 
 any accumulation remains to his credit. No officer, director, 
 attorney, clerk or agent of such association, and no person 
 in any way interested or concerned in the management of 
 its affairs shall discount or directly or indirectly purchase 
 a share of any such association, whether filed for withdrawal 
 or not, except by payment therefor of the withdrawal value 
 of such share as determined herein. The board of directors 
 of any association may retire all classes of free shares by 
 enforcing withdrawals of the same : Provided, that the by- 
 laws shall clearly state the manner in which such with- 
 drawals may be enforced: And provided also. That the 
 holders thereof shall be paid the full value of the shares, in- 
 cluding, in such case, their proportion of the contingent fund. 
 [Laws 1913, c. 110, § 16. Cf. § 3627, Rem.-Bal.] 
 
 § 566. Exemption of Shares from Taxation. 
 
 Shares held by members shall be exempt from taxation and 
 the association itself shall not be taxable, except that its 
 tangible personal and real property shall be taxed as other 
 tangible personal and real property is taxed. [Laws 1913, 
 c. 110, § 17. Cf. § 3634, Rem.-Bal.] 
 
 § 567. Annual Report — Penalty. 
 
 On or before the first day of September in each year every 
 savings and loan association doing business in this state shall 
 deposit with the state auditor a report of its affairs and 
 operations for the year ending on the 30th day of June im- 
 mediately preceding. Such report shall be verified under 
 oath by the president and secretary or by three directors of 
 the association, and shall contain such information as the 
 state auditor from time to time requests. Upon filing such 
 report, there shall be paid to the state auditor for the state
 
 413 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. § 568 
 
 general fund, in lieu of all other corporation fees or licenses, 
 a fee determined as follows: If the assets of the association 
 as shown by said report amount to fifty thousand dollars or 
 less, a fee of ten dollars ; if more than fifty thousand dollars 
 and less than one hundred thousand dollars a fee of twenty 
 dollars; if more than one hundred thousand dollars and less 
 than two hundred fifty thousand dollars, a fee of thirty dol- 
 lars; if more than two hundred fifty thousand dollars and 
 less than five hundred thousand dollars, a fee of forty dol- 
 lars; if more than five hundred thousand dollars and less 
 than one million dollars, a fee of sixty dollars ; and if more 
 than one million dollars, a fee of one hundred dollars. If 
 such association shall fail to furnish to the auditor of the 
 state any report required by this act, at the time so required, 
 it shall forfeit the sum of twenty-five dollars per day for 
 every day such report shall be delayed or withheld ; and an 
 action shall be started in the name of the state to recover 
 such penalty and the same shall be paid into the treasury 
 of the state. After receiving such report, the auditor, if 
 satisfied that such association has complied with all the pro- 
 visions of this act and is entitled to do business in this state, 
 shall issue a certificate stating the compliance with such pro- 
 visions, and that such association is entitled to do business 
 in this state, which certificate shall be in force for the period 
 of one year unless sooner revoked. [Laws 1913, c. 110, § 18. 
 Cf. § 3618, Rem.-Bal.] 
 
 § 568. Supervision by State Auditor. 
 
 The state auditor shall have supervision of all such asso- 
 ciations doing business in this state, and shall be charged 
 with the execution of the laws of this state relating thereto. 
 At least annually but not oftener than twice a year except 
 in cases of extreme necessity he shall make or cause to be 
 made an examination into the affairs of all such associations 
 doing business in this state. Such examinations shall be 
 made by an inspector of savings and loan associations to be 
 appointed by the state auditor, and who shall hold office dur- 
 ing his pleasure. Such inspector shall be paid for the time 
 actually spent in examining the affairs of any association
 
 § 569 EXISTING CORPORATION LAWS, 1913. 414 
 
 at the rate of eight dollars per diem and railroad fare. Such 
 compensation shall be paid by the association and where 
 several associations are examined in the course of a single 
 trip made by the examiner, the railroad fare shall be equi- 
 tably proportioned by the state auditor among the associa- 
 tions so examined. All examinations made by such inspector 
 shall be full and complete, and in making the same he shall 
 have full access to, and may compel the production of all 
 books, papers, moneys, and records of the association under 
 examination, and may administer oaths to and examine the 
 officers of such association or any person connected there- 
 with as to its business and affairs, and any willful false 
 swearing shall be deemed perjury and be punishable as such: 
 Provided, whenever by the laws of the state under which 
 any foreign association is organized, annual examinations of 
 such association are required and are made pursuant thereto, 
 then such foreign association shall not be examined here- 
 under: Provided, such foreign association shall furnish to 
 the auditor of this state annually a certificate of the proper 
 officer of such other state that he has made an examination 
 pursuant to the laws of such other state, and that the affairs 
 of such associaion are in accord with the laws of such other 
 state : And provided further, that the auditor of this state 
 may, whenever he deems it advisable, cause an examination 
 of such foreign association to be made as is required in the 
 case of associations organized under the laws of this state. 
 [Laws 1913, c. 110, § 19. Cf. § 3619, Rem.-Bal.] 
 
 § 569. When Attorney General Shall Sue. 
 
 Wherever it shall appear to the state auditor that the 
 affairs of any savings and loan association are in an unsound 
 condition or that it is conducting its business in an unsafe 
 or unlawful manner, the state auditor shall at once notify 
 the board of directors of such association, giving them 
 twenty days in which to restore its affairs to a safe and 
 sound condition or to discontinue its illegal practices. If 
 after twenty days such restoration shall not have been made, 
 or such illegal practices shall not have been discontinued, 
 the state auditor shall direct the inspector of savings and
 
 415 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. § 570 
 
 loan associations to take possession of all books, records and 
 assets of every description of such association and hold and 
 retain the possession of same pending the further proceed- 
 ings herein specified. Should the board of directors, secre- 
 tary or person in charge of such association refuse to permit 
 the said inspector to take possession as aforesaid, the state 
 auditor shall communicate such fact to the attorney gen- 
 eral, whereupon it shall become the duty of the attorney 
 general at once to institute such proceedings as may be neces- 
 sary to place such inspector in immediate possession of the 
 property of such association. Upon taking possession of the 
 effects of the association as aforesaid said inspector shall 
 prepare a full and true statement of the affairs and condi- 
 tion of such association, including an itemized statement of 
 its assets and liabilities, and shall receive and collect all 
 debts, dues and claims belonging to it and pay the imme- 
 diate and reasonable expenses of his trust. Said inspector 
 shall be required to execute to the state auditor a good and 
 sufficient bond in a sum required by the state auditor condi- 
 tioned upon the faithful discharge of his duties as custodian 
 of such association, which said bond shall be approved by 
 the state auditor, and the expense of which shall be borne 
 by the association under examination. 
 
 When the condition of such association has been fully as- 
 certained, and it shall appear that the affairs of said asso- 
 ciation are in fact in an unsound condition, or that it is in 
 fact continuing its business in an unsafe or unlawful man- 
 ner, the state auditor shall report the facts to the attorney 
 general and it shall thereupon become the duty of the attor- 
 ney general to institute proceedings in the superior court of 
 the proper county for the appointment of a receiver and for 
 the dissolution of such association, or such other proceedings 
 as the occasion may require. [Laws 1913, c. 110, § 20, Cf. 
 § 3620, Rem.-Bal.] 
 
 § 570. Foreign Corporation Failing to Comply With Act 
 Forfeits Rights. 
 Any savings and loan association organized under the laws 
 of any other state or territory that shall remove any action
 
 §§571,572 EXISTING CORPORATION LAWS, 1913. 416 
 
 that shall be commenced against it in a court of this state 
 to a United States court, or that shall fail to pay any judg- 
 ment rendered against it upon a suit in any court in this 
 state within sixty days after the rendition of final judg- 
 ment in such case, or that shall fail to make reports to the 
 state auditor as provided in this act, or to do any other act 
 to be done or performed as required by law, and after the 
 continued failure to do such act for twenty days after notice 
 in writing from the state auditor of such failure, shall have 
 no right or authority to do or transact any further business 
 within the limits of this state, and the state auditor shall 
 thereupon cause notice of the termination of such authority 
 to do business to be mailed to such association, and to be 
 published in some newspaper of general circulation at the 
 capital of the state, and shall communicate the facts to the 
 attorney general of this state, who shall institute such pro- 
 ceedings in the matter as the case may require : Provided, 
 any such corporation may be again authorized to commence 
 business upon such terms as the state auditor may deem just 
 and proper, and upon full compliance with the provisions 
 of this act. [Laws 1913, c. 110, § 21. Cf. § 3614, Rem.-Bal.} 
 
 § 571. Doing Business Without Authority. 
 
 Any officer, director or agent of any savings and loan 
 association or any other person who shall sell or issue or 
 knowingly cause to be sold or issued to any resident of this 
 state, any stock of said association while said association 
 does not have on deposit with the state auditor as required 
 by this act, securities of the value and at the time herein 
 prescribed, or while such association shall not have the cer- 
 tificate of the state auditor authorizing it to do business as 
 herein prescribed shall be guilty of a gross misdemeanor. 
 [Laws 1913, c. 110, § 22. Cf. § 3623, Rem.-Bal] 
 
 § 572. Compliance With Present Law. 
 
 After the passage and approval of this act, it shall be 
 unlawful for any person, association or persons or domestic 
 associations not already organized and doing business under 
 sections 3601 to 3638, both inclusive, of Remington and Bal- 
 linger's Annotated Codes and Statutes of Washington, to
 
 417 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. §§ 573-575 
 
 conduct a business in the form or of a character similar to 
 that authorized by this act without first incorporating under 
 this act. After the passage and approval of this act no 
 foreign association not already lav^^fully engaged in the 
 state of Washington in the business of a savings and loan 
 association shall be permitted to conduct such a business in 
 this state, and hereafter no savings and loan associations 
 organized under the laws of this state not already lawfully 
 engaged in the business of a savings and loan association 
 outside of the state of Washington shall be permitted to 
 engage in business outside of this state : Provided, that no 
 such association shall loan on property outside of this state 
 more than the aggregate of the amount from time to time 
 standing to the credit of members outside of the state. 
 [Laws 1913, c. 110, § 23. Cf. § 3608, Rem.-Bal.] 
 
 § 573. Advertisements. 
 
 It shall be unlawful for any savings and loan association 
 to make, publish, or circulate any advertisement, sign, cir- 
 cular or statement intended or calculated to induce persons 
 to purchase stock of such association in the belief that such 
 stock is subject to withdrawal on demand or that a stipu- 
 lated or agreed rate of interest or dividend is payable 
 thereon, except as provided in section 6 [§ 555, ante]. [Laws 
 1913, c. 110, § 24.] 
 
 § 574. Names. 
 
 After the passage and approval of this act, no person, 
 association of persons, or corporation conducting a business 
 not in the form and of a character similar to that authorized 
 by this act shall have or continue to use for a part of its 
 title or corporate name any combination, of two or more 
 of the following words, to wit: "building," "savings," 
 " loan, " " home, " " association, " or " society. ' ' [Laws 1913, 
 c. 110, § 25. Cf. § 3602, Rem.-Bal.] 
 
 § 575. Act Applies to Present Companies. 
 
 The powers, rights, duties, privileges and obligations of 
 every association heretofore or hereafter organized and 
 27
 
 §§ 576, 577 EXISTING corporation laws, 1913. 418 
 
 doing business in the form or of a character similar to that 
 authorized by this act, shall be governed, controlled, con- 
 strued, extended, limited and determined by the provisions 
 of this act, to the same extent and effect as if said associa- 
 tion had been organized and incorporated under or pursuant 
 to the provisions of this act, and the articles of incorpora- 
 tion, by-laws, and rules of every such association heretofore 
 made or existing are hereby modified, altered and amended 
 to conform with the provisions of this act and the same are 
 declared void where such articles of incorporation, by-laws 
 or rules are inconsistent with the provisions of this act; 
 except that the obligations of any existing association, 
 whether between such association and its shareholders or 
 any one of them or any other person or persons or any valid 
 contract between the shareholders of such association exist- 
 ing at the time this act takes effect shall not be in any way 
 impaired by the provisions of this act ; and with such excep- 
 tions every savings and loan association shall possess the 
 powers, rights, duties and privileges, and be subject to the 
 obligations, restrictions and liabilities conferred and im- 
 posed by this act, notwithstanding anything to the contrary 
 in its articles of incorporation, by-laws or rules. All obli- 
 gations to any such association heretofore contracted shall 
 be enforceable by it and in its name, and demands, claims and 
 rights of action against any such association may be enforced 
 against it as fully and completely as they might have been 
 enforced before. [Laws 1913, c. 110, § 26. Cf. § 3633, Rem.- 
 Bal.] 
 
 § 576. Penalty for Violations. 
 
 Every officer, director, agent or other employee of any 
 savings and loan association, who shall willfully violate or 
 fail to comply with any of the provisions of this act, shall 
 be guilty of a misdemeanor, [Laws 1913, c. 110, § 27.] 
 
 § 577. Acts Repealed. 
 
 Sec. 28. Sections 3601 to 3638 inclusive of Remington and 
 Ballinger's Annotated Codes and Statutes of Washington,
 
 419 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. § 577 
 
 and all acts and parts of acts in conflict herewith, are hereby 
 repealed. 
 
 Sec. 29. This act shall take effect July first, 1913. 
 
 Passed the House February 14, 1913. 
 
 Passed the Senate March 12, 1913. 
 
 Approved by the Governor March 19, 1913.
 
 § 588 EXISTING CORPORATION LAWS, 1913. 420 
 
 TRUST COMPANIES. 
 
 (Also see State Banking Law following this Act.) 
 
 § 588. Formation of Company. 
 
 [§ 3346, Rem.-Bal.] Seven or more persons of full age 
 may become a trust company on the terms and conditions and 
 subject to the liabilities prescribed in this act; the name of 
 every company formed under this act shall contain the word 
 "trust," but shall not be that of any other existing corpora- 
 tion of this state ; the capital stock of such trust company here- 
 after organized shall not be less than one hundred thousand 
 dollars : Provided, that in cities having less than 25,000 inhabi- 
 tants such companies may be organized with $50,000 capital, 
 and in cities having less than 10,000 inhabitants such com- 
 panies may be organized with $25,000 capital, and shall be 
 divided into shares of one hundred dollars each, all of which 
 shall be paid in cash before any trust company shall be au- 
 thorized to transact any business, and such payment shall be 
 certified to the [Secretary of State] State Bank Examiner un- 
 der oath by the president and treasurer or secretary of the 
 trust company; hereafter no corporation shall be organized 
 for the purpose of carrying on a trust company business in the 
 state of Washington except under this act, and no company 
 hereafter organized under any other act shall use the word 
 "trust" as a part of its name : Provided, that this act shall not 
 apply to any foreign corporations engaged in the business of 
 loaning money on mortgage security which does not accept de- 
 posits or receive from citizens of the state of Washington prop- 
 erty or money in trust or deposit or for investment. In case 
 any foreign corporation whose name contains the word "trust," 
 or whose articles of incorporation empower it to do a tnist 
 business, desires to engage in business of loaning money on 
 mortgage security in this state, it shall file in addition to its 
 articles of incorporation or association, a resolution of its gov- 
 erning board, duly attested by its president and secretary, 
 expressly stating that it will not receive deposits in the state
 
 421 TRUST COMPANIES. § 589 
 
 of Washington or accept from citizens and residents of the 
 state of Washington property and money, or either, in trust 
 for investment. [Laws 1911, p. 500.] 
 
 See Laws 1907, section 50, duties of Secretary of State imposed on 
 State Bank Examiner. 
 
 "Person" construed to be individual as distinct from corporation. 
 (Denny Hotel Co. v. Schram, 6 Wash. 134, 32 Pac. 1002.) 
 
 A provision prohibiting use of word "trust" by other companies is 
 germane to Laws of 1903, page 367, providing for trust companies. 
 (State ex rel. Osborne etc. Co. v. Nichols, 38 Wash. 309, 80 Pac. 462.) 
 
 After the passage of the Laws of 1903, page 367, for trust companies, 
 a pre-existing company could not adopt the word "trust" without comply- 
 ing with that act. (State ex rel. Osborne etc. Co. v. Nichols, 38 Wash. 
 308, 80 Pac. 462.) 
 
 A foreign corporation with trust company powers must comply with 
 the trust company laws of this state. (State v. Nichols, 47 Wash. 117, 
 91 Pac. 632.) 
 
 Foreign company doing business in this state must comply with the 
 law here. (Conaway v. Co-operative Home Builders, 65 Wash. 39, 117 
 Pac. 716.) 
 
 The fact that a realty company is conducting a trust business con- 
 trary to the statute is not ground for the appointment of a receiver in 
 a suit by an individual, since only the state can question the acts of the 
 company. (Frost v. Puget Sound Realty Assn., 57 Wash. 629, 107 Pac. 
 1029.) 
 
 § 589. Certificate of Organization — What to Show. 
 
 [§ 3347, Rem.-Bal.] Such persons shall under their hands 
 and seals execute and acknowledge an organization certificate 
 in triplicate, which shall specifically state : 
 
 (1) The name by which the corporation shall be known. 
 
 (2) The place where its business is to be transacted. 
 
 (3) The amount of its capital stock, and the number of 
 shares into which the same is to be divided. 
 
 (4) The name, residence and postoffice address of each 
 member of the corporation. 
 
 (5) The term of its existence, not exceeding fifty years. 
 [Laws 1903, § 2, p. 368.] 
 
 A corporation to do a trust business cannot be formed otherwise than 
 in compliance with the Laws of 1903, page 317. (State ex rel. Gorman t. 
 Nichols, 40 Wash. 437, 82 Pac. 741.)
 
 § 590 EXISTING CORPORATION LAWS, 1913, 422 
 
 § 590. Filing of Certificate — Examination by State Bank 
 Examiner — Publication of Proof. 
 [§ 3348, Rem.-Bal.] The certificate of incorporation shall 
 be acknowledged as required for deeds of real estate, and shall 
 be recorded in a book kept for that purpose in the office of the 
 county auditor where the principal place of business of such 
 trust company in this state is to be established, and with the 
 Secretary of State: Provided, however, that before the cor- 
 poration shall be authorized to transact business in this state 
 other than such as relates to its formation and organization, 
 the [Secretary of State] State Bank Examiner shall examine 
 or cause to be examined, in order to ascertain whether the re- 
 quisite capital of such corporation has been fully paid in cash, 
 and if it appears from such examination that such capital stock 
 has not been fully paid in cash, a certificate of authorization 
 shall not be granted and no such corporation shall commence 
 business until such certificate of authorization has been granted ; 
 but when it shall appear to the [Secretary of State] State 
 Bank Examiner that the entire capital stock has been paid in, 
 and that such trust company is lawfully entitled to commence 
 business he shall give to such company a certificate under his 
 hand and seal that such company is duly and legally organized 
 under this act as a trust company, and authorized to transact 
 business as such trust company in this state ; the trust com- 
 pany shall cause such certificate of authority of the [Secretary 
 of State] State Bank Examiner, issued in pursuance of this 
 act, to be published once a week for at least four successive 
 weeks next after the issuance thereof, in a newspaper of gen- 
 eral circulation in the place where said trust company is 
 established, and shall file proof of such publication with the 
 [Secretary of State] State Bank Examiner. [Laws 1903, 
 § 3, p. 368.] 
 
 See Laws 1907, section 50, duties of Secretary of State imposed on 
 State Bank Examiner. 
 
 See note to section 3348, Bal.-Rem. 
 
 A corporation to do a trust business cannot be formed otherwise than 
 in compliance with the Laws of IWS, page 317. (State ex rel. Gorman 
 V. Nichols, 40 Wash. 437, 82 Pac. 741.)
 
 423 TRUST coMP.\jsriES. § 591 
 
 § 591. When Authorized to Do Business — Powers of Such 
 Companies. 
 [§ 3349, Rem.-BaL] As soon as the certificate of author- 
 ity is issued by the bank examiner as provided in the pre- 
 ceding section, the persons named in the articles of incorpo- 
 ration and their successors shall thereupon and thereby 
 become a corporation and shall have power: 
 
 (1) To act as the fiscal or transfer agent of any state, 
 municipality, body politic or corporation, and in such capa- 
 city to receive and disburse money. 
 
 (2) To transfer, register and countersign certificates of 
 stock, bonds, or other evidences of indebtedness, and to act 
 as agent of any corporation, foreign or domestic, for any 
 purpose now or hereafter required by statute or otherwise. 
 
 (3) To receive deposits of trust moneys, securities and 
 other personal property from any person or corporation, and 
 to loan money on real or personal securities, and to discount 
 and negotiate promissory notes, drafts, bills of exchange 
 and other evidences of debt; and to buy, sell and exchange 
 coin and bullion. 
 
 (4) To lease, hold, purchase and convey any and all real 
 property necessary for and convenient in the transaction 
 of its business, or which the purposes of the corporation 
 may require, or which it shall acquire in satisfaction or par- 
 tial satisfaction of debts due the corporation under sales, 
 judgments or mortgages, or in settlement or partial settle- 
 ment of debts due the corporation from any of its debtors. 
 
 (5) To act as trustee under any mortgage or bond issued 
 by any municipality, body politic or corporation, and to 
 accept and execute any other municipality or corporate trust 
 not inconsistent with the laws of this state. 
 
 (6) To accept trusts from, and execute trusts for, married 
 women, in respect to their separate property, and to be their 
 agent in the management of such property, or to transact 
 any business in relation thereto. 
 
 (7) To act under the order, or appointment of any court 
 of record as guardian, receiver or trustee of the estate of 
 any minor, and as depository of any. moneys paid into court,
 
 § 591 EXISTING CORPORATION LAWS, 1913. 424 
 
 whether for the benefit of any such minor or other person, 
 corporation or party. 
 
 (8) To take, accept and execute any and all such legal 
 trusts, duties and powers in regard to the holding, manage- 
 ment and disposition of any estate, real or personal, and the 
 rents and profits thereof, or the sale thereof, as may be 
 granted or confided to it by any court of record, or by any 
 person, corporation, municipal or other authority, and it 
 shall be accountable to [all] parties in interest for the faith- 
 ful discharge of every such trust, duty or power which it 
 may so accept. 
 
 (9) To take, accept and execute any and all such trusts 
 and powers of whatever nature or description as may be 
 conferred upon or intrusted or committed to it by any person 
 or persons, or by any body politic, corporation or other au- 
 thority, by grant, assignment, transfer, devise, bequest or 
 otherwise, or which may be intrusted or committed or trans- 
 ferred to it or vested in it by order of any court of record, 
 and to receive and take and hold any property or estate, real 
 or personal, which may be the subject of any such trust. 
 
 (10) To purchase, invest in and sell stocks, promissory 
 notes, bills of exchange, bonds, debentures and mortgages 
 and other securities ; and when moneys [or securities for 
 moneys] are borrowed or received on deposit, or for invest- 
 ment, the bonds or obligations of the company may be given 
 therefor, but it shall have no right to issue bills to circulate 
 as money. 
 
 (11) To be appointed and accept the appointment of as- 
 signee or trustee, under any assignment for the benefit of 
 creditors of any debtor, made pursuant to any statute or 
 otherwise. 
 
 (12) To act under the order or appointment of any court 
 of record or otherwise as receiver or trustee of the estate 
 or property of any person, firm, association or corporation. 
 
 (13) To be appointed and to accept the appointment of 
 executor of, or trustee under, the last will and testament, 
 or administrator with or without the will annexed, of the 
 estate of any deceased person, and to be appointed and to 
 act as guardian of the estate of lunatics, idiots, persons of
 
 425 TRUST COMPANIES. § 591 
 
 unsound mind and habitual drunkards: Provided, however, 
 the power hereby granted to trust companies to aet as 
 guardian or administrator, with or without the will annexed, 
 shall not be construed to deprive parties of the prior right 
 to have issued to them letters of guardianship, or of admin- 
 istration, as such right now exists under the laws of this 
 state ; and, be it further provided, that no trust company 
 or other corporation, organized under this chapter which 
 advertises that it will furnish legal advice, construct and 
 prepare wills or do other legal work for its customers shall 
 be permitted to aet in the capacity as executor, trustee, as- 
 signee or otherwise serve in any fiduciary capacity ; any such 
 trust company or other corporation whose officers or agents 
 shall solicit legal business for and on behalf of such trust 
 company or corporation shall be disqualified from acting as 
 trustee, assignee or from serving in any fiduciary capacity 
 and shall be ineligible for appointment as such in any of the 
 courts of this state. 
 
 (14) To exercise the powers conferred on and to carry 
 on the business of a safe deposit company. 
 
 (15) To collect coupons on, or interest upon, all manner 
 of securities when authorized so to do by the parties deposit- 
 ing the same. 
 
 (16) To receive and manage any sinking fund of any cor- 
 poration, upon such terms as may be agreed upon between 
 such corporation and those dealing with it. 
 
 (17) Generally to execute trusts of every deseription not 
 inconsistent with the laws of this state or of the United 
 States. 
 
 (18) To receive money on deposit to be subject to check 
 or to be repaid in such manner and on such terms, and with 
 or without interest, as may be agreed upon by the depositor 
 and the said trust company. 
 
 (19) To make and certify abstracts of title to real prop- 
 erty and to insure any person or corporation claiming to 
 own or to have any interest in any real property or encum- 
 brance thereon by mortgage, lease, lien, contract or other- 
 wise against loss by reason of liens, encumbrances or imper- 
 fections of title, or any adverse claim of title; Provided,
 
 § 592 EXISTING CORPORATION LAWS, 1913. 426 
 
 however, that no company organized under this chapter 
 shall be subject to any other insurance law of the state 
 of "Washington, Provided, further, that no trust company 
 engaged in the business of banking shall be permitted to 
 do any of the acts mentioned in this subdivision. [Laws 
 1913, c. 177; Laws 1907, § 1, p. 234.] 
 
 § 592, Directors — Election, Qualification and Term of Office. 
 
 [§ 3350, Rem.-Bal.] The affairs of every such corporation 
 shall be managed and its corporate powers exercised by a 
 board of directors of such number, not less than seven nor 
 more than thirty, as from time to time may be prescribed in 
 its by-laM^s. No person can be a director who is not the holder 
 of at least ten shares of the capital stock of the corporation. 
 The persons named in the articles of incorporation shall con- 
 stitute the first board of directors, and may add to their num- 
 ber not exceeding the limit of thirty, and shall severally con- 
 tinue until others are elected to fill their respective places. 
 Within six months from the time when such corporation shall 
 commence business, the first board of directors shall classify 
 themselves by lot into three equal classes, as nearly as may 
 be. The term of office of the first class shall expire on the 
 third Wednesday of January next following such classifica- 
 tion ; the term of office of the second class shall expire one 
 year thereafter; and the term of office of the third class shall 
 expire two years thereafter. At or before the expiration of 
 the term of the first class, and annually thereafter, a number 
 of directors shall be elected equal to the number of directors 
 whose term will then expire, who shall hold office for three 
 years, or until their successors are elected and qualified. Such 
 elections shall be held at the office of the corporation and at 
 such time and upon such public notice not less than ten days, 
 by advertisement in at least one newspaper as shall be pre- 
 scribed in the by-laws. In case of failure to elect any director 
 on the day named, the directors whose term of office does not 
 that year expire may proceed to elect a number of directors 
 equal to the number in the class whose term that year expires, 
 or such number as may have failed of re-election. The per- 
 sons so elected, together with the directors, whose term of
 
 427 TRUST COMPANIES. §§593,594 
 
 office shall not that year expire, shall constitute the board of 
 directors until another election shall be held according to law. 
 Vacancies occurring in the intervals of election shall be filled 
 by the board. Each director when appointed or elected shall 
 take an oath that he will, so far as the duty devolves upon him 
 diligently and honestly administer the affairs of such cor- 
 poration, and will not knowingly violate, or willingly permit 
 to be violated, any of the provisions of law applicable to such 
 corporation, and that he is the owner in good faith and in his 
 own right of the number of shares of stock required by this 
 section, subscribed by him or standing in his name on the 
 books of the corporation, and that the same is fully paid, is 
 not hypothecated or in any way pledged as security for any 
 loan or debt. Such oath shall be subscribed by the director 
 making it, and certified by the officer before whom it is taken 
 and shall be immediately transmitted to the [Secretary of 
 State] State Bank Examiner, and filed and preserved in his 
 office. [Laws 1903, § 5, p. 371.] 
 
 See liaws 1907, section 50, re duties of Secretary of State imposed on 
 State Bank Examiner. 
 
 § 593, Prohibited from Making Loans to Its Officers. 
 
 [§ 3351, Rem.-Bal.] No trust company now in existence or 
 hereafter organized shall make any loan to any officer, stock- 
 holder or employee from its trust funds, and such trust com- 
 pany shall not permit any officer, stockholder or employee to 
 become indebted to it in any way out of its trust funds; any 
 president, vice-president, director, secretary, treasurer, cash- 
 ier, teller, clerk or agent of any such corporation who know- 
 ingly violates this section, or who aids or abets any officer, 
 clerk or agent in any such violation, shall be guilty of a felony 
 and punished accordingly. (Laws 1903, sec. 6, p. 372.) 
 
 § 594. Reports — To State Bank Examiner. 
 
 [§ 3352, Rem.-Bal.] Every such company shall make to 
 the [Secretary of State] State Bank Examiner not less than 
 two reports during each year, according to the forms which 
 may be prescribed by him, verified by the oaths or affirma- 
 tions of the president or vice-president and treasurer or sec-
 
 § 595 EXISTING CORPORATION LAWS, 1913. 428 
 
 retary of such corporation, and attested by the signatures of 
 at least three directors ; every such report shall exhibit in de- 
 tail and under appropriate heads the resources and liabilities 
 of the corporation at the close of business at any day past spe- 
 cified by the [Secretary of State] State Bank Examiner, and 
 shall be transmitted to him within twenty days after the re- 
 ceipt of a request or requisition therefor by him, and an ab- 
 stract or summary of every such report in such form as shall 
 be prescribed by the [Secretary of State] State Bank Ex- 
 aminer shall be published by the trust company once in a 
 newspaper published in the place where such trust company 
 is established, and such proof of publication shall be fur- 
 nished as may be required by the [Secretary of State] State 
 Bank Examiner; such publications shall be made within two 
 weeks after the filing of such report, the expense thereof to be 
 borne by such trust company; the [Secretary of State] State 
 Bank Examiner shall also have the power to call for special re- 
 ports from any trust company whenever in his judgment the 
 same are necessary to a full and complete knowledge of its con- 
 ditions ; every such trust company w^hich fails to make and 
 transmit any report required under this section shall be sub- 
 ject to a penalty of one hundred dollars for each day after the 
 period herein specified that it delays to make and transmit its 
 report, to be sued for and collected by the [Secretary of State] 
 State Bank Examiner in the name and for the benefit of the 
 state. [Laws 1903, § 7, p. 372.] 
 
 See Laws 1907, section 50, re duties of Secretary of State imposed on 
 State Bank Examiner. 
 
 § 595. False Entries, etc., a Misdemeanor. 
 
 [§ 3353, Rem.-Bal.] Every director, officer, agent or clerk 
 of any trust company who willfully and knowingly subscribes 
 or makes any false statement of facts, or false entries in the 
 books of such trust company, or knowingly subscribes or ex- 
 hibits any false paper, with intent to deceive any person au- 
 thorized to examine as to the condition of such trust company, 
 or willfully or knowingly subscribes to or makes any false re- 
 ports, shall be deemed guilty of a misdemeanor and punished 
 accordingly. [Laws 1903, § 8, p. 373.]
 
 429 TRUST COMPANIES. §§ 596-598 
 
 § 596. Not to Loan on Its Own Stock as Security. 
 
 [§ 3354, Rem.-Bal.] No trust company shall make any 
 loan on the security of the shares of its own capital stock, nor 
 be the purchaser or holder of any such shares unless such 
 security or purchase shall be necessary to prevent loss upon 
 a debt previously contracted in good faith ; and stock so pur- 
 chased or acquired shall within one year from the time of its 
 purchase be sold or disposed of at public or private sale : Pro- 
 vided, that nothing in this section contained shall apply to 
 any loan made before the passage of this act. [Laws 1903, 
 § 9, p. 373.] 
 
 § 597. Deposits for Minors. 
 
 [§ 3355, Rem.-Bal.] When any deposit shall be made by or 
 in the name of any minor, the same shall be held for the ex- 
 ■ elusive right and benefit of such depositor, and free from the 
 control and lien of all other persons, except creditors of such 
 minor, and shall be paid, together with the dividends and in- 
 terest thereon, to the person in whose name the deposit shall 
 have been made, and the receipt of acquittance of such minor 
 shall be a valid and sufficient release and discharge for such 
 deposit, or any part thereof, to the trust company. [Laws 
 1903, § 10, p. 374.] 
 
 § 598. State Bank Examiner to Have Supervision Over and 
 Inspect Same. 
 
 [§ 3356, Rem.-Bal.] Every trust company shall be subject 
 to the inspection and supervision of the [Secretary of State] 
 State Bank Examiner, and it shall be the duty of said [Sec- 
 retary of State] State Bank Examiner either personally or 
 by some person or persons to be appointed by him, whenever 
 he shall deem it expedient, or at the request of any such trust 
 company, to examine any such trust company, and it shall 
 be the duty of the officers and employees of such trust com- 
 pany to exhibit its books, securities, records and accounts to 
 the person or persons authorized by said [Secretary of State] 
 State Bank Examiner to conduct the examination, and other- 
 wise to facilitate the same so far as it may be in their power ; 
 the said [Secretary of State] State Bank Examiner, or any ex- 
 aminer appointed by him, shall have pov>'er to examine under
 
 §§599, 600 EXISTING CORPORATION LAWS, 1913. 430 
 
 oath or affirmation the directors, officers and employees of any 
 such trust company relative to its business and affairs, and for 
 that purpose any such examiner shall have power to administer 
 oaths and affirmations. [Laws 1903, § 11, p. 374.] 
 
 § 599. Insolvency — State Bank Examiner to Take Posses- 
 sion — Duty of Attorney General. 
 
 [§ 3357, Rem.-Bal.] Whenever it shall appear to the [Sec- 
 retary of State] State Bank Examiner from any report sub- 
 mitted for examination made under the provisions of this act 
 that the affairs of any trust company are in an unsound con- 
 dition because of illegal or unsafe investments, or that its 
 liabilities exceed its assets, or that it is transacting business 
 without authority or in violation of law, or that it is unsafe 
 or inexpedient for such trust company to continue business, 
 it shall be the duty of the Attorney General, on notice by the 
 [Secretary of State] State Bank Examiner, to institute such 
 proceedings against the trust company as the nature of the 
 case may require; if from any such examination the [Secre- 
 tary of State] State Bank Examiner shall have reason to con- 
 clude that any such trust company is in an unsafe or unsound 
 condition, he may forthwith take possession of such trust 
 company's property and business and retain such possession 
 until the termination of the action or proceeding instituted by 
 the Attorney General, or until the appointment of a receiver ; 
 and pending such possession by the [Secretary of State] State 
 Bank Examiner, or such proceedings by the Attorney General, 
 all the remedies at law or in equity of any creditor or stock- 
 holder against the said trust company shall be suspended. 
 [Laws 1903, § 12, p. 374.] 
 
 See Ijaws 1907, section 5Q, re duties of Secretary of State imposed on 
 State Bank Examiner. 
 
 § 600. Refusal to Submit to Examination — Violation of 
 Law, 
 [§ 3358, Rera.-Bal.] If any trust company shall refuse to 
 submit its books, papers and concerns to the inspection of the 
 [Secretary of State] State Bank Examiner or any examiner 
 appointed by him, or if any director or officer thereof shall re- 
 fuse to submit to be examined upon oath touching the concerns
 
 431 TRUST COMPANIES. §§ 601, 602 
 
 of such trust company, the [Secretary of State] State Bank 
 Examiner may report the fact to the Attorney General, who 
 may proceed against said trust company as the nature of the 
 case may require ; if it shall appear to the [Secretary of State] 
 State Bank Examiner that any trust company has violated its 
 charter or any law of this state binding upon it, or is conduct- 
 ing business in an unsafe or unauthorized manner, he shall by 
 an order under his hand and official seal, addressed to such 
 trust company, direct a discontinuance of such illegal and un- 
 safe practices, and conformity with the requirements of its 
 charter and safety and security in its transactions; in case 
 such trust company shall refuse or neglect to comply with 
 such order, the [Secretary of State] State Bank Examiner 
 may report the fact to the Attorney General, who may proceed 
 against the trust company as an insolvent corporation. [Laws 
 1903, § 13, p. 375.] 
 
 See Laws 1907, section 50, re duties of Secretary of State imposed on 
 State Bank Examiner. 
 
 § 601. Trustees, Executors, etc. — Duty as. 
 
 [§ 3359, Rem.-Bal.] In all cases where any corporation in 
 this state authorized by its charter to act as trustees, executors, 
 administrators or guardians, shall be appointed executor, ad- 
 ministrator or trustee of any estate or guardian of any infant, 
 it shall and may be lawful for the president, cashier, or treas- 
 urer of such corporation to take and subscribe for such cor- 
 poration any and all oaths or affirmations required to be 
 taken or subscribed by such executor, administrator, trustee 
 or guardian. [Laws 1903, § 14, p. 375.] 
 
 § 602. Liability of Stockholders. 
 
 [§ 3360, Rem.-Bal.] If default shall be made in the pay- 
 ment of any debt or liability contracted by such corporation, 
 the stockholders thereof shall be individually responsible, 
 equally and ratably, for the then existing debts of the cor- 
 poration, but no stockholder shall be liable for the debts of the 
 corporation to an amount exceeding the par value of the re- 
 spective shares of stock by him held in such corporation at the 
 time of such default. [Laws 1903, § 15, p. 375.J
 
 §§ 602a, 603 existing corporation laws, 1913. 432 
 
 § 602a. Liability in Case of Forged Check. 
 
 [§ S363, Rem.-Bal.] No bank or trust company shall be 
 liable to a depositor for the payment by said bank or trust 
 company of a forged or raised cheek, unless within sixty days 
 after the return to the depositor of the voucher of such pay- 
 ment, such depositor shall notify the bank or trust company 
 that the check so paid was raised or forged. [Laws 1907, p. 
 31, § 1.] 
 
 § 603. Increase of Capital Stock, Amendments, etc. — How 
 Made. 
 
 [§ 3361, Rem.-Bal.] Every trust company hereafter organ- 
 ized under this act may extend its corporate existence, change 
 its name, increase its capital stock, make such other and 
 further amendment, change or alteration as may be desired, or 
 amend its charter or certificate of incorporation in the man- 
 ner following: The board of directors shall pass a resolution 
 declaring that such amendment, change or alteration is ad- 
 visable and calling a meeting of the stockholders to take action 
 thereon ; the meeting shall be held upon such notice as the by- 
 laws provide, and in the absence of such provisions, upon ten 
 days' notice in writing, given personally, or by mail; if two- 
 thirds in interest of the stockholders shall vote in favor of 
 such amendment, change or alteration, a certificate thereof 
 shall be signed by the president and secretary under the cor- 
 porate seal, acknowledged or proved as in the case of deeds 
 of real estate, and such certificate, together with the written 
 assent, in person or by proxy, of two-thirds in interest of such 
 stockholders, shall be filed in the department of the Secretary 
 of State, and upon the filing of the same, the charter or cer- 
 tificate of incorporation shall be, and be deemed to be amended 
 accordingly : Provided, that the certificate to be made and filed 
 in pursuance to this section shall contain only such provisions 
 as it would be lawful and proper to insert in an original cer- 
 tificate of incorporation made at the time of making such 
 amendment, change or alteration ; no change shall be made in 
 the charter or certificate of incorporation of such trust com- 
 pany whereby the rights, remedies or security of existing cred- 
 itors shall be in any manner impaired; said certificate or a
 
 433 TRUST COMPANIES. §§ 603a, 604 
 
 copy thereof, duly certified by the Secretary of State, shall be 
 evidence in all courts and places. [Laws 1903, § 16, p. 376.] 
 
 § 603a. Joint Deposits. 
 
 [§ 3364, Rem.-Bal.] When a deposit has been made, or 
 shall hereafter be made in any bank or trust company trans- 
 acting business in this state in the name of two or more per- 
 sons, payable to any of such persons, such deposit or any 
 part thereof, or interest, or dividend thereon, may be paid 
 to any of said persons, vi^hether the others be living or not, 
 and the receipt or acquittance of the person so paid shall be 
 a valid and) sufficient release and discharge to such bank 
 or trust company for any payment so made. [Laws 1907, 
 p. 141, § 1 ; Laws 1913, c. 9.] 
 
 § 604. Fees to be Paid Secretary of State and State Bank 
 Examiner. 
 [§ 3362, Rem.-Bal.] The [Secretary of State] State Bank 
 Examiner shall require in advance the following fees : 
 tFor filing articles of incorporation or certified copies 
 of articles, or other certificates required to be filed 
 
 in his office $10.00 
 
 tissuing certificate of authority 10.00 
 
 tFor each renewal certificate of authority 10.00 
 
 tFor filing each semi-annual statement of condition. . . 10.00 
 
 tFor making any examination required by this act 25.00 
 
 For furnishing copies of papers filed in his office, 20 
 cents per folio : Provided, that all fees so collected 
 shall be paid to the State Treasurer. 
 [Laws 1903, sec. 17, p. 376.] 
 Filing articles or certified copy of articles with Secre- 
 tary of State $25.00 
 
 Filing amendments to original articles, each 10.00 
 
 Annual license fee to July first 15.00 
 
 Foreign corporation, filing power of attorney 5.00 
 
 [Laws 1907, p. 270.] 
 
 tAll fees except for filing the articles in the office of the Secretary of 
 State are to be paid to the State Bank Examiner. (Laws 1907, sec. 50.) 
 28
 
 §§ 605-608 EXISTING CORPORATION LAWS, 1913. 434 
 
 BANKS— FORMATION AND REGULATION. 
 
 § 605. Appointment of Examiner. 
 
 [§ 3290, Rem.-Bal.] The Governor shall appoint, by and 
 with the advice of the Senate, a State Examiner for the state 
 of Washington, whose term of office shall be four years, unless 
 sooner removed, and until his successor is appointed and quali- 
 fied. No person shall be appointed to such office who shall not 
 be at the time of his appointment, and for at least two years 
 previous thereto, a citizen of the state of Washington, and who 
 has not had at least four years' experience in the banking 
 business. Nor shall any person be eligible for such office who 
 shall be at the time interested in any bank as owner, officer, 
 or stockholder. [Laws 1909, § 1, p. 692.] 
 
 § 606. Vacancy in This Office to be Filled. 
 
 [§ 3291, Rem.-Bal.] If a vacancy shall occur in the office 
 of State Examiner, by death, resignation, or otherwise, the 
 same shall be filled by appointment of the Governor, and such 
 appointee shall hold office until the next ensuing session of 
 the legislature. [Laws 1907, § 2, p. 518.] 
 
 § 607. Deputy Examiners. 
 
 [§ 3292, Rem.-Bal.] The State Examiner may appoint two 
 deputies and revoke such appointment at pleasure, who shall 
 have the qualifications and possess the powers, and perform 
 the duties attached by law to the office of the examiner. He 
 may also employ from time to time such clerical assistance 
 as shall be necessary to the proper conduct of his office. But 
 in no case shall the expenses incident to the conduct of the 
 office exceed the appropriation provided by legislative action. 
 [Laws 1909, § 2, p. 692.] 
 
 § 60®. Examiner and Deputies to Give Bond. 
 
 [§ 3293, Rem.-Bal.] The State Examiner and his deputies 
 shall, each before entering upon his office, take and subscribe 
 an oath to faithfully discharge the duties of his office, and
 
 435 BANKS — FORMATION AND REGULATION. §§ 609, 610 
 
 shall each execute to the state of Washington a bond in the 
 sum of twenty-five thousand dollars, with some surety com- 
 pany authorized to do business in this state, to be approved 
 by the Governor, as surety, conditioned that he will faithfully 
 and impartially discharge the duties of his office and pay over 
 to the person entitled by law to receive it, all moneys coming 
 into his hands by virtue of his office. The cost of such bonds 
 to be paid by the state. [Laws 1907, § 4, p. 519.] 
 
 § 609. Location of Ofl&ce. 
 
 [§ 3294, Rem.-Bal.] The State Examiner may maintain 
 an office at the state capitol, and there shall be, at his request, 
 assigned to him suitable rooms in the state capitol building 
 for conducting the business of his office; but such office may, 
 with the consent of the Governor, be maintained at some other 
 convenient banking center in the state. [Laws 1909, § 3, 
 p. 693.] 
 
 § 610. The Terms "Banking" and "Branch Bank" De- 
 fined. 
 
 [§3315, Rem.-Bal.] The term "banking" within the 
 meaning of this act shall mean the negotiations for, the dis- 
 counting of, promissory notes, drafts, bills of exchange and 
 other evidence of indebtedness, receiving deposits, selling 
 and buying exchange, coin and bullion, and loaning money 
 on personal, real and other securities, and other kindred 
 financial operations; and shall also be construed and held 
 to mean the receiving of moneys on deposit, or savings 
 account subject to withdrawal by any method within four 
 months from the opening of such account or subject to with- 
 drawal at any subsequent time on less than one month's notice, 
 and shall include any mutual or co-operative savings com- 
 pany or association, or a trust company, receiving money 
 from time to time from persons, associations or corporations, 
 to be held subject to withdrawal as aforesaid, whether re- 
 ceived as a direct deposit or by w^ay of payment on stock 
 or certificates in any such mutual or co-operative associa- 
 tion. The provisions of this act shall not be construed to 
 apply to building and loan nor savings and loan associa-
 
 § 611 KXISTING CORPOKATION LAWS, 1913. 436 
 
 tions organized under or transacting business conformably 
 to the laws of this state. The term "bank" as used in this 
 act shall be taken to mean and include every association, 
 company or corporation (except national banks, and foreign 
 banks not authorized to receive deposits) transacting a 
 banking business in this state. The term "branch bank," 
 as used in this act, shall be taken to mean an office of de- 
 posit or discount other than the bank's principal place of 
 business. [Laws 1913, c. 147, § 1 ; Laws 1909, § 4, p. 693.] 
 
 § 611. Provisions Affect All Corporations Receiving De- 
 posits. 
 [§ 3316, Rem.-Bal.] Any bank, branch bank, or foreign 
 bank which shall receive money on deposit, whether on 
 certificate or subject to check or payment on stock of co- 
 operative savings associations, or other method of demand 
 withdrawal, or subject to withdrawal by any method within 
 four months from the opening of such account or subject to 
 withdrawal at any subsequent time on less than one month's 
 notice shall be considered as doing a banking business. And 
 promissory notes, receipts, certificates or passbooks issued 
 for money received on deposit or for payment on stock of 
 co-operative associations where such promissory notes, re- 
 ceipts, certificates or passbooks authorize the owner or holder 
 to withdraw money as aforesaid shall be held to be certifi- 
 cates of deposit for the purposes of this act. And every such 
 corporation, bank, branch bank or foreign bank receiving de- 
 posits as herein defined and provided shall be subject to all 
 the provisions of this act and shall be subject to the same 
 regulations, visitations and control. [Laws 1913, c. 147, § 2; 
 Laws 1907, § 7, p. 519.] 
 
 The statutory double liability of stockholders of an insolvent bank is 
 a trust fund for the benefit of creditors, but it is secondary, i. e., in the 
 nature of a suretyship, and is personal, not following the stock. (Wilson 
 V. Book, 13 Wash. 676, 43 Pac. 939; Watterson v. Masterson, 15 Wash. 
 511, 46 Pac. 1041; Bennett v. Thorne, 36 Wash. 253, 78 Pac. 936; Shuey 
 V. Holmes, 21 Wash. 223, 57 Pac. 818; Shuey v. Adair, 24 Wash. 378, 
 64 Pac. 536.) 
 
 Transfer by insolvent bank of property as security for loan not fraud- 
 ulent per se. (Roberts v. Wash. Nat. Bank, 11 Wash. 550, 40 Pac. 225.)
 
 437 BANKS — FORMATION AND REGULATION. § 612 
 
 General deposit after insolvency asset for payment of creditors. 
 (Blake v. State Sav. Bank, 12 Wash. 619, 41 Pac. 909.) 
 
 Individual liability of officers of bank for receiving deposit after in- 
 solvency does not preclude criminal liability. (State v. Oleson, 35 Wash. 
 149, 76 Pac. 686; State v. Dix, 33 Wash. 405, 74 Pac. 570.) 
 
 Bank having notice of contract and having acquiesced therein is es- 
 topped to deny agent's authority. (Tootle v. First Nat. Bank, 6 Wash. 
 181, 33 Pac. 345; First Nat. Bank v. Gaddis, 31 Wash. 596, 72 Pac. 460; 
 Roberts v. Wash. Nat. Bank, 11 Wash. 550, 40 Pac. 225; Rattelmiller v. 
 Stone, 28 Wash. 104, 68 Pac. 168; Washington Nat. Bank v. Pierce, 6 
 Wash. 491, 33 Pac. 972.) 
 
 Relation between bank and depositor that of debtor and creditor. 
 (Commercial Bank of Tacoma v. Chilberg, 14 Wash. 247, 44 Pac. 264; 
 Blake v. State Sav. Bank, 12 Wash. 619, 41 Pac. 909.) 
 
 Criminal law of 1893, punishing bank officers receiving deposits know- 
 ing the bank to be insolvent, held applicable to incorporated banks, not 
 to private bankers. (State v. Youngbluth, 60 Wash. 383, 111 Pac. 240.) 
 
 Under Laws of 1907, page 518, branch banks not confined to branches 
 of foreign banks. (State ex rel. Flumerfelt v. Engle, 50 Wash. 207, 96 
 Pac. 1045.) 
 
 Failure to repudiate operation of branch bank within reasonable time 
 after knowledge is ratification. (Ames v. Farmers & Mechanics' Bank, 
 48 Wash. 328, 93 Pac. 530.) 
 
 The bank cashing forged checks is liable to the bank on which they 
 are drawn, which latter negligently in turn pays the check but not chang- 
 ing the position of the bank first cashing the check. (Canadian Bank v. 
 Bingham, 46 Wash. 657, 91 Pac. 185.) 
 
 § 612. Formation of Bankiiig Corporations — Amount of 
 Capital Required. 
 [§ 3317, Rem.-Bal.] Any number of persons, not less than 
 three, may become incorporated, for the purpose of conducting 
 and carrying on a general banking business, and also to estab- 
 lish banks to be known as savings banks, or to establish banks 
 having departments for both classes of business, upon the 
 terms and conditions of, and subject to the liabilities, pre- 
 scribed in this act. It shall be unlawful for any corporation 
 to transact a banking business unless at the time of organiza- 
 tion and commencement of such banking business, such cor- 
 poration has property of cash value as follows : In cities, vil- 
 lages and communities having a population of less than one 
 thousand (1,000), ten thousand dollars ($10,000) ; in cities, 
 villages and communities having a population of one thou-
 
 § 613 EXISTING CORPORATION LAWS, 1913. 438 
 
 sand (1,000) and less than two thousand (2,000) inhabi- 
 tants, fifteen thousand dollars ($15,000) ; in cities having a 
 population of two thousand (2,000) and less than three thou- 
 sand (3,000) inhabitants, twenty thousand dollars ($20,000) ; 
 in cities having a population of three thousand (3,000) and 
 less than five thousand (5,000) inhabitants, twenty-five thou- 
 sand dollars ($25,000) ; in cities having a population of five 
 thousand (5,000) and less than ten thousand (10,000) in- 
 habitants, thirty thousand dollars ($30,000) ; in cities having 
 a population of ten thousand (10,000) and less than twenty- 
 five thousand (25,000) inhabitants, fifty thousand dollars 
 ($50,000) ; in cities having a population of twenty-five thou- 
 sand (25,000) and less than fifty thousand (50,000) inhabi- 
 tants, seventy-five thousand dollars ($75,000) ; and in cities 
 having a population of more than fifty thousand (50,000) 
 inhabitants, one hundred thousand dollars ($100,000). Such 
 property shall be in lawful money as provided in section 12 
 of this act: Provided, that the provisions of this section as to 
 the amount of capital shall not apply to any bank or trust 
 company organized and doing business at the time of the pas- 
 sage of this act : But provided further, that the capital stock 
 of any bank or trust company transacting business in this 
 state, organized prior to the 12th day of June, 1907, shall be 
 paid in full in cash within five months from the date upon 
 which this act shall take effect. And a failure to comply with 
 the provisions of this section shall subject any such bank or 
 trust company to a penalty of one hundred dollars per day 
 for each day of such failure, and such penalty may be col- 
 lected by suit against such bank or trust company on the 
 relation of the State Examiner, or attorney general. [Laws 
 1909, § 5, p. 693.] 
 
 "Person" construed to be individual as distinct from corporation. 
 (Denny Hotel Co. v. Schram, 6 Wash. 134, 32 Pac. 1002.) 
 
 § 613. Articles — ^What to Contain. 
 
 [§ 3318, Rem.-Bal.] The persons incorporating shall exe- 
 cute articles of incorporation, which shall specify:. 
 
 1. The name assumed by such bank.
 
 439 BANKS — FORMATION AND REGULATION. §§ 614, 615 
 
 2. The county and city or village where such bank is to 
 be located and conduct its business. 
 
 3. The nature of its business, whether that of a commercial 
 bank, savings bank or both. 
 
 4. The amount of its capital stock, which shall be divided 
 into shares of one hundred dollars each. 
 
 5. The period for which such bank is organized, which shall 
 not exceed fifty years. 
 
 Such articles shall be acknowledged before any officer au- 
 thorized by the laws of this state to take acknowledgments. 
 [Laws 1907, § 9, p. 521.] 
 
 § 614. Filing of Articles. 
 
 [§ 3319, Rem.-Bal.] Such articles of incorporation shall be 
 executed in quadruplicate, one copy of which shall be re- 
 corded in the office of the county auditor, in the county in 
 which such bank is located ; one filed with the State Examiner, 
 one in the office of the Secretary of State, and one retained 
 by the corporation. Such articles, or duly authenticated 
 copies thereof, may be used as evidence in all courts of this 
 state, for or against such bank. [Laws 1907, § 10, p. 521.] 
 
 § 615, Power of Corporation. 
 
 [§ 3320, Rem.-Bal.] Upon making and filing the articles 
 of incorporation as hereinbefore prescribed, such bank shall 
 become a body corporate, and as such shall have power: 
 
 1. To adopt and use a corporate seal. 
 
 2. To have succession for the term of years mentioned in its 
 articles of incorporation. 
 
 3. To make contracts. 
 
 4. To sue and be sued, the same as a natural person, 
 
 5. To elect directors, who shall have power to appoint such 
 officers as may be necessary or convenient, to define their 
 powers and duties, and to dismiss them at pleasure, and shall 
 also have general superintendence and control of the affairs 
 of such corporation. 
 
 6. To prescribe by its stockholders by-laws not inconsistent 
 with law regulating the manner in which its stock shall be 
 transferred, its directors and officers elected or appointed, its
 
 §§ 616, 617 EXISTING CORPORATION LAWS, 1913. 440 
 
 stockholders convened, for general or special meetings, its 
 property transferred, its general business conducted, and the 
 privileges granted to it by law, exercised and enjoyed. 
 
 7. To exercise by its board of directors or duly authorized 
 officers or agents, subject to law, all such powers as shall be 
 necessary to carry on the business of banking, as defined and 
 regulated by this act : Provided, that no such bank shall 
 transact any business except such as is necessarily preliminary 
 to its organization until it has been authorized by the State 
 Examiner to commence the business of banking. [Laws 1907, 
 § 11, p. 521.] 
 
 § 616. Payment of Capital Stock. 
 
 [§ 3321, Rem.-Bal.] At least fifty per cent of the capital 
 stock of every incorporated bank shall be paid in before it shall 
 be authorized to commence business, and the remainder of the 
 capital of such bank shall be paid in in lawful money, in 
 monthly installments of at least ten per cent of the whole of 
 the capital, payable at the end of each succeeding month from 
 the time it shall be authorized to commence business, and the 
 payment of each installment shall be certified to the State 
 Examiner under oath by the president, cashier, or treasurer 
 of such bank. [Laws 1907, § 12, p. 522.] 
 
 Directors of a bank cannot enter into an agreement with the bank 
 having any legal validity that they shall not be liable for stock subscrip- 
 tions. (Barto V. Nix, 15 Wash. 563, 46 Pac. 1033.) 
 
 Where a director and trustee of a bank took stock of the bank and gave 
 his note for it as an accommodation to the bank until the bank could sell 
 the stock, it being agreed that he should not be liable on the note, held, 
 the bank becoming insolvent, the director was liable in an action brought 
 by a receiver of the bank. (Shuey v. Holmes, 22 Wash. 193, 60 Pac. 
 402.) 
 
 § 617. Stockholders Failing to Pay — Stock to be Sold. 
 
 [§ 3322, Rem.-Bal.] Where any stockholder, or his as- 
 signee, shall fail to pay any installment on his stock when the 
 same is required by the preceding section to be paid, the di- 
 rectors of such bank may sell the stock of such delinquent 
 stockholder at public sale, having first given the delinquent 
 stockholder twenty days' notice, personally or by mail, at his
 
 441 BANKS — FORMATION AND REGULATION. § 618 
 
 last known address. If no bidder can be found who will pay 
 for such stock the amount due thereon, with costs incurred, 
 the amount previously paid shall be forfeited to the bank, and 
 such bank stock shall be sold as the directors may order, within 
 six months from the time of such forfeiture, and if not sold, 
 it shall be canceled and deducted from the capital of the 
 bank. If sold before cancellation, any surplus over the 
 amount due on such stock to said bank, less all costs incurred 
 thereon, with interest for the time delinquent, shall be re- 
 turned to the original stockholder, his heirs or assigns. If 
 such cancellation shall reduce the capital of the bank below 
 the minimum required by this act, the said capital shall, within 
 thirty days thereafter, be increased to the required amount by 
 original subscription, in default of which, a receiver may be 
 applied for by the State Examiner, to close up the business 
 of the bank. [Laws 1907, § 13, p. 522.] 
 
 Where a director and trustee of a bank took stock of the bank and 
 gave his note for it as an accommodation to the bank until the bank could 
 sell the stock, it being agreed that he should not be liable on the note, 
 held, the bank becoming insolvent, the director was liable in an action 
 brought b7 a receiver of bank. (Shuey v. Holmes, 22 Wash. 193, 60 Pac. 
 402.) 
 
 § 618. Banks may Commence Business, When. 
 
 [§3323, Rem.-Bal.] When articles of incorporation are 
 filed with the State Examiner as provided by this act, and 
 the bank transmitting the same notifies the State Examiner 
 that at least fifty per cent of its capital stock has been paid in, 
 and that such bank has complied with the conditions of this 
 act, as required before the bank- shall be authorized to com- 
 mence business, the examiner shall examine into the condition 
 of such bank, and if upon examination it appears that such 
 bank is lawfully entitled to commence business, give to such 
 bank a certificate under his hand and official seal, that it has 
 complied with all the provisions of the law, and is duly au- 
 thorized to transact business: Provided, however, that no 
 foreign bank or branch thereof, except foreign banks now 
 doing business in the state of Washington, shall do a banking 
 business in the state until he or they shall have furnished to
 
 § G19 EXI3TIXG CORPORATION LAWS, 1913. 442 
 
 the State Examiner evidence satisfactory to him that such 
 foreign bank, or branch thereof, has invested in such foreign 
 bank, or branch thereof, an amount of capital equal to that 
 required of corporations engaged in similar business, and shall 
 have received from such examiner a certificate authorizing 
 him or them to do business as required in sections 8 and 12 
 of this act [3317, 3321, Rem.-Bal.] for corporations: Provided 
 further, no bank in this state, or any officer or director thereof, 
 shall hereafter open any branch bank, or any office of deposit 
 or discount other than its principal place of business, and no 
 branch bank heretofore opened shall be hereafter maintained 
 unless the capital of the bank maintaining the branch bank 
 shall be equal to the sum required by section 8 of the act of 
 which this act is an amendment [3317, Rem.-Bal.], and unless 
 the capital of said bank be increased by the amount required 
 by said section 8 [3317, Rem.-Bal.] for each and every such 
 branch, the payment of such increased capital shall be governed 
 by the provisions in sections 12 and 13 of the act of which this 
 act is an amendment [3321, 3322, Rem.-Bal.], and for the 
 maintenance of any branch bank in violation of the provisions 
 of this section every such bank and every such officer or director 
 shall be subject to a penalty in the sum of one thousand dollars 
 for every week during which any such branch bank shall be so 
 maintained. And such penalty may be collected by suit 
 against such bank, or officer, or director, on relation of the 
 State Examiner, or attorney general. [Laws 1909, § 6, p. 
 695.] 
 
 § 619. Transfer of Shares. 
 
 [§ 3324, Rem.-Bal.] The shares of stock of such incorpo- 
 rated bank shall be deemed personal property and shall be 
 transferred on the books of the bank in such a manner as the 
 by-laws thereof shall direct. No bank shall be the purchaser 
 of its own capital stock, or accept its capital stock, or any 
 part of it, as security for loans. No bank shall subscribe for 
 or purchase the stock of any other banking corporation. 
 [Laws 1909, § 7, p. 696.]
 
 443 BANKS — FORMATION A.ND REQULxVTION, §§ 620-622 
 
 § 620. Stock Books. 
 
 [§ 3325, Rem.-Bal.] A book shall be provided and kept by 
 every bank in which shall be entered the name and residence of 
 the stockholders thereof, the number of shares held by each, 
 the time when such person became a stockholder, and also all 
 transfers of stock, stating the time when made, the number 
 of shares, and by whom transferred. In all actions, suits and 
 proceedings, said book shall be presumptive evidence of the 
 facts therein stated. [Laws 1907, § 16, p. 524.] 
 
 § 621. Amendment of Articles of Incorporation. 
 
 [§ 3326, Rem.-Bal.] Any bank may amend its articles of 
 incorporation, in any manner not inconsistent with the provi- 
 sions of this act, by a vote of its stockholders representing 
 two-thirds of the capital, at a regular meeting, or a special 
 meeting duly called for that purpose. A certificate of the 
 fact and terms of the amendment shall be executed by a ma- 
 jority of the directors, and filed as required for articles of in- 
 corporation, but no increase of capital stock shall be valid, 
 until the amount thereof shall have been subscribed and ac- 
 tually paid in, and no reduction of the capital stock shall be 
 made to an amount less than is required in section 8 [3317, 
 Rem.-Bal.], for capital, nor be valid, nor warrant the cancella- 
 tion of stock certificates, nor diminish the personal liability of 
 the stockholders, until such reduction has been approved by the 
 State Examiner. [Laws 1907, § 17, p. 524.] 
 
 § 622. Liability of Stockholders. 
 
 [§ 3327, Rem.-Bal.] The stockholders of every bank shall 
 be individually liabk, equally and ratably, and not one for an- 
 other, for the benefit of the creditors of such bank, to the 
 amount of their stock at par value thereof, in addition to the 
 stock held by them ; but persons holding stock as executors, ad- 
 ministrators, guardians or trustees if such relation of trust 
 shall appear in the stock certificate and on the books of the 
 bank, or as collateral security or in pledge, shall not be person- 
 ally liable as stockholders, but the assets and funds in the 
 hands of such trustee constituting the trust, shall be liable to 
 the same extent as the testator, intestate, ward or person inter-
 
 § 623 EXTSnXG CORPORATION LAWS, 1913. 444 
 
 ested in such funds would be if living or competent to act, 
 and the person pledging such stock shall be deemed a stock- 
 holder, and liable under this section. Such liability may be 
 enforced by an action at law or suit in equity by any such 
 bank in process of liquidation, or by any receiver or other 
 person succeeding to the legal rights of such bank. [Laws 
 1907, § 18, p. 524. J 
 
 When a director and trustee of a bank took stock of the bank and gave 
 his note for it as an accommodation to the bank until the bank could 
 sell the stock, it being agreed that he should not be liable on the note, 
 held, the bank becoming insolvent, the director was liable in an action 
 brought by the receiver of the bank. (Shuey v. Holmes, 22 Wash. 193, 
 60 Pac. 402.) 
 
 The rule that stockholder's liability is secondary does not require pri- 
 mary assets to be exhausted before recourse is had to the stockholders. 
 (Bennett v. Thome, 36 Wash. 253, 78 Pac. 936.) 
 
 The receiver of an insolvent corporation is proper party plaintiff to 
 enforce stockholder's liability. (Childs v. Blethen, 40 Wash. 340, 82 Pac. 
 405.) 
 
 § 623. Directors— Election— Term of OflEice. 
 
 [§ 3328, Rem.-Bal.] The affairs of every such bank shall be 
 managed by not less than three directors, who shall be elected 
 by the stockholders, and hold office for one year, and until 
 their successors are elected and have qualified. A majority of 
 the board of directors shall constitute a quorum for the trans- 
 action of business. In the first instance the directors shall 
 be elected at a meeting held before the bank is authorized to 
 do business by the State Examiner, and afterward at the 
 annual meeting of the stockholders to be held on the second 
 Tuesday in January in each year. If for any cause no elec- 
 tion is held at that time, it may be held at an adjourned meet- 
 ing, or at a subsequent meeting called for that purpose, of 
 which due notice shall be given, as may be provided in the 
 by-laws of such bank. At all the meetings of the stockholders, 
 each share shall be entitled to one vote, and any stockholder 
 may vote by proxy in writing signed by him. Every director 
 must be the owner in his own right of at least five shares of 
 stock. He shall take and subscribe an oath that he will faith- 
 fully and diligently perform the duties of such office, and will
 
 445 BANKS — FORMATION AND REGULATION. § § 624, 625 
 
 not knowingly violate or permit to be violated, any provisions 
 of this act. Such oath shall be transmitted to the State Exam- 
 iner, and filed in his office. Vacancies in the board of direct- 
 ors shall be filled by the board, and directors so appointed 
 shall hold office until the next election, and until their succes- 
 sors shall have been elected and qualified. [Laws 1907, § 19, 
 p. 525.] 
 
 § 624. Dividends. 
 
 [§ 3329, Rem.-Bal.] The directors of any bank transacting 
 business in this state may declare a dividend of so much of the 
 net profits of the bank, after providing for all expenses, inter- 
 est and taxes accrued, or due from such bank, as they shall 
 judge expedient, but before any such dividend is declared, not 
 less than one-tenth of the net profits of the bank for the pre- 
 ceding half-year, or for such period as is covered by the 
 dividend, shall be carried to a surplus, until such surplus shall 
 amount to twenty per cent of its capital stock : Provided, that 
 accrued and uncollected interest on the assets of the bank shall 
 not be distributed as a part of its earnings. [Laws 1909, § 8, 
 p. 696.] 
 
 § 625. Banks may Hold Real Estate, When. 
 
 [§ 3330, Rem.-Bal.] Any bank transacting business in this 
 state, so far as not prohibited by the constitution of this state, 
 may purchase, hold and convey real estate for the following 
 purposes and no other : 
 
 1. Such as shall be necessary for the convenient transaction 
 of its business, including with its banking offices, other apart- 
 ments in the same building to rent as a source of income. 
 
 2. Such as shall be purchased by or conveyed to it in satis- 
 faction, or on account of, debts previously contracted in the 
 course of its business. 
 
 3. Such as it shall purchase at sale under judgments, de- 
 crees, liens, or mortgage foreclosures, against securities held by 
 it: Providing, that no such real estate, except that used in 
 the transaction of its business, shall be carried as an asset on 
 the books of the bank for a longer period than five years from
 
 §§ 626-628 ExrsTiNQ corporation laws, 1913. 446 
 
 the date of its purchase. [Laws 1907, § 21, p. 526 ; Laws 1913, 
 c. 22.] 
 
 § 626. Receiving Deposits When Insolvent — Penalty. 
 
 [§ 3331, Rem.-Bal.] The owners or officers of any bank 
 who shall fraudulently receive any deposit, knowing that such 
 bank is insolvent, shall be deemed guilty of a felony, and pun- 
 ished upon conviction thereof, by a fine not exceeding one 
 thousand dollars, or imprisoned in the state penitentiary not 
 exceeding ten years, or both such fine and imprisonment, at 
 the discretion of the court. [Laws 1907, § 22, p. 526.] 
 
 Held, not to apply to private bankers. (State v. Youngbluth, 60 Wash. 
 383, 111 Pac. 240.) 
 
 § 627. Reorganization as National Bank — ^Liabilities. 
 
 [§ 3332, Rem.-Bal.] Any state bank reorganized under the 
 laws of the United States as a national bank, as soon as it shall 
 have obtained a certificate from the Controller of the Cur- 
 rency authorizing it to commence business, under the United 
 States banking laws, shall retain and hold all the assets, real 
 and personal, which it acquired during its existence under this 
 act, and shall hold the same subject to all existing liabilities 
 against said bank at the time of its reorganization. [Laws 
 1907, § 23, p. 526.] 
 
 § 628. Reorganization from National to State Bank — Lia- 
 bilities. 
 [§ 3333, Rem.-Bal.] Whenever any bank existing under 
 the laws of the United States is authorized to dissolve, and 
 shall have taken the necessary steps to effect dissolution, it 
 shall be lawful for a majority of the directors of such bank, 
 upon the authority, in writing, of the owners of three-fo«rths 
 of its capital stock, with the approval of the State Examiner, 
 to execute articles of incorporation, as provided in this act, 
 which articles, in addition to the requirements above, shall set 
 forth the authority derived from the stockholders of such 
 dissolved national bank, and upon filing the same as herein- 
 before provided for the organization of banks, the same shall 
 become a bank under the laws of this state, and thereupon all
 
 447 BANKS — FORMATION AND REGULATION. §§ 629-631 
 
 assets of such dissolved national bank shall by act of law be 
 vested and become the property of such state bank subject to 
 all liabilities of such national bank not liquidated under the 
 laws of the United States before such reorganization. [Laws 
 1907, § 24, p. 527.] 
 
 § 629. Fraudulent Conveyances Void. 
 
 [§ 3334, Rem.-Bal.] Every transfer of its property or as- 
 sets made by any bank in this state, after it shall have become 
 insolvent, within the spirit of this act, with a view to the pref- 
 erence of one creditor over another, or to prevent the equal 
 distribution of its property and assets among its creditors, 
 Bhall be void. [Laws 1907, § 25, p. 527.] 
 
 § 630. Checks not to be Certified Unless Funds are on De- 
 posit. 
 [§ 3335, Rem.-Bal.] No owner, officer, agent, clerk or em- 
 ployee of any bank shall certify a check unless the amount 
 thereof actually stands to the credit of the drawer on the 
 books of the bank, and any person who shall willfully violate 
 this provision, shall, on conviction thereof, be deemed guilty 
 of a misdemeanor, and be punished by a fine not exceeding 
 one thousand dollars. Any such check so certified by a duly 
 authorized person shall be a good and valid obligation of the 
 bank in the hands of an innocent holder. [Laws 1907, § 26, 
 p. 527.] 
 
 § 631. Savings Banks. 
 
 [§3336, Rem.-Bal.] Any bank which shall designate its 
 business as that of a savings bank shall have power to carry 
 on the business of banking as prescribed and limited in this 
 act, and may receive money on savings deposits, and such 
 deposits shall be repaid to the depositor or his lawful repre- 
 sentative, when required, at such time or times, and with such 
 interest, as the regulations of the bank from time to time pre- 
 scribe. A pass-book shall be issued to each savings depositor, 
 containing the rules and regulations prescribed by the bank 
 governing such deposits, in which shall be entered each de- 
 posit made by and each payment to such depositor. And no
 
 §§ 632-634 EXISTING corporation laws, 1913. 448 
 
 payment made to such depositor, and no payment or check 
 against any such savings account, shall be made, unless accom- 
 panied by and entered in the pass-book issued therefor, except 
 for good cause and assurance, satisfactory to the bank officers ; 
 but nothing in this section shall prevent savings banks from 
 issuing time certificates of deposit or certificates of deposit 
 specifically issued subject to the rules and regulations govern- 
 ing savings deposits. [Laws 1907, § 27, p. 527.] 
 
 § 632, Separate Books to be Kept. , 
 
 [§ 3337, Rem.-Bal.] Any bank combining the business of 
 a commercial bank and a savings bank shall keep with the re- 
 spective depositors separate books of account for each kind of 
 business. [Laws 1907, § 28, p. 528.] 
 
 § 633. Deposits by Persons Under Disabilities — Payment. 
 
 [§ 3338, Rem.-Bal.] "Where any deposit is made in any 
 bank in his or her own name by any minor, married woman, or 
 other person under disability such bank may pay such money 
 on a check or order of such person, the same as in other cases, 
 and such payments shall be in all respects valid in law. 
 [Laws 1907, § 29, p. 528.] 
 
 § 634. Use of Names Prohibited. 
 
 [§ 3339, Rem.-Bal.] No person or persons, association or 
 body corporate, except banks, or trust companies, incorpo- 
 rated under the law^s of the United States, or the laws of the 
 state of Washington, and existing foreign banks now doing 
 business in the state of Washington, shall advertise or put 
 forth a sign having thereon any of the following words : 
 "Bank," "Banking Company," "Trust," or any artificial 
 or corporate name, or words indicating that such person, per- 
 sons, association or body corporate is a bank, trust company, 
 or savings bank, or shall in any way solicit or receive de- 
 posits as an incorporated bank. Every person, association, 
 or body corporate, violating the provisions of this act, shall 
 be fined not more than one thousand dollars ($1,000.00) per 
 day for each day of such violation. From and after the first 
 day of January, 1915, no person, persons, copartnership, as-
 
 440 BANKS — FORMATION AND REGULATION. § § 634a-G;]5 
 
 sociation, or body corporate except banks or trust companies 
 incorporated under the laws of the United States or the laws 
 of the state of Washington and existing foreign banks now 
 doing business in the state of Washington, or mutual or 
 co-operative savings companies or associations doing a bank- 
 ing business as defined in section 3315 of this act, shall trans- 
 act a banking business in this state. [Laws 1913, c. 147, § 3 ; 
 Laws 1907, § 30, p. 528.] 
 
 § 634a. Unauthorized Use of Corporate Name. 
 
 [§ 3340, Rem.-Bal] Any person or persons who shall put 
 up, or cause to be put up, or exhibit, any sign or advertise- 
 ment, purporting thereby to be an incorporated bank, or shall 
 do business under a corporate name when they are not such, 
 shall, on conviction thereof, be adjudged guilty of a misde- 
 meanor, and punished by a fine not exceeding two hundred 
 dollars. [Laws 1913, c. 147, § 5 ; Laws 1891, p. 130, § 38 ; 2 
 H. C, §245; Bal., §7174.] 
 
 § 634b. Private Banks to Incorporate. 
 
 [§33391/2, Rem.-Bal.] All firms or individuals who on 
 January 1st, 1913, were conducting private banks and receiv- 
 ing deposits as such and who desire to do a banking business 
 on and after January 1st, 1915, shall prior to that time in- 
 corporate under the laws of this state applicable thereto, and 
 the capital stock of such corporation shall be in such sum as 
 is required by existing law, all of which shall be subscribed 
 and at least ten thousand dollars thereof paid in in cash, and 
 the balance of said capital stock must be paid in at such time 
 and in such amounts as shall be required by the state bank 
 examiner. [Laws 1913, e. 147, § 4.] 
 
 § 635. Act Does not Affect Transactions Already Had. 
 
 [§ 3341, Rem.-Bal.] Nothing in this act shall be construed 
 to affect the legality of investments heretofore made, or of 
 transactions heretofore had, pursuant to any provisions in 
 force when such investments were made or transactions had. 
 [Laws 1907, § 31, p. 529.] 
 29
 
 §§ 636-639 EXISTING corporation laws, 1913, 450 
 
 § 63G. Leans to Officers — Liability of Directors. 
 
 [§ 3342, Rem.-Bal.] No officer or employee of any corpora- 
 tion transacting a banking business in this state shall be per- 
 mitted to loan to himself any of the funds of the bank upon his 
 own note or obligation, without first having obtained the ap- 
 proval of a majority of the board of directors of the bank, and 
 the approval, if obtained, shall be made a part of its records. 
 And if the directors of any bank shall knowingly permit any 
 of its officers, directors, or employees of such bank to borrow 
 its funds in an excessive and dishonest manner, every director 
 who participated in and assented to the same, shall be held 
 liable in his personal and individual capacity for all damages 
 which the corporation, its shareholders, or any other person 
 shall have sustained in consequence of such violation. [Laws 
 1907, § 32, p, 530.] 
 
 § 637, Amount of Funds to be Kept on Hand. 
 
 [§ 3343, Rem.-Bal.] Every bank doing business under this 
 act shall have on hand at all times, in available funds, not less 
 than twenty per cent of its demand liabilities ; such sums may 
 consist of balances due it from good, solvent banks located at 
 commercial centers, and at such other points as the State Ex- 
 aminer may approve, and actual cash, or checks on solvent 
 banks located in the same city, [Laws 1907, § 33, p. 529.] 
 
 § 638. Compensation and Expenses of Examiner. 
 
 [§3295, Rem.-Bal.] The State Examiner shall receive a 
 salary of thirty-six hundred dollars a year, and each deputy 
 state examiner shall receive a salary of two thousand four hun- 
 dred dollars a year ; and the State Examiner shall be allowed 
 an additional sum as may be necessary, for clerical assistance 
 in his office, office rent, traveling and other expenses, detailed 
 vouchers for all of which shall be filed with his report. [Laws 
 1909, §8 [9], p. 696.] 
 
 § 639. Seal of Examiner — Instrument shall Bear Same. 
 
 [§ 3296, Rem.-Bal.] The State Examiner, with the ap- 
 proval of the Governor, shall devise a seal with a suitable in- 
 scription, for his office, a description of which, with a certifi-
 
 451 BANKS — FORMATION AND REGULATION, §§ 640, 641 
 
 cate of approval by the Governor, shall be filed in the office 
 of the Secretary of State, with an impression thereof, which 
 shall thereupon be and become the seal of office of the State 
 Examiner. Every certificate, assignment and conveyance, 
 executed by the said State Examiner in pursuance of the au- 
 thority conferred upon him by law, and sealed with the seal 
 of his ofifice, shall be received as evidence and recorded in the 
 proper recording offices, in the same manner and with like 
 effect as a deed regularly acknowledged as required by law, 
 and all copies of papers in the office of said Examiner, certi- 
 fied by him and authenticated by his seal, shall be received in 
 evidence equally and in like manner as the originals. [Laws 
 1907, § 35, p. 530.] 
 
 § 640. Banks to Make Reports — Publication. 
 
 [§ 3297, Rem.-Bal.] Every bank shall make at least three 
 reports each year to the State Examiner, on days designated 
 by the controller of the currency on which national banks 
 shall make reports, according to forms to be prescribed by 
 him, verified by the president, manager or cashier, and by 
 two directors, which shall exhibit in detail, and under appro- 
 priate heads, the resources and liabilities of the bank, and 
 shall be transmitted to the State Examiner within ten days 
 of the receipt of a request therefor from him. And such re- 
 port in condensed form, according to forms to be prescribed 
 by the State Examiner, shall be published once in a newspaper 
 of general circulation published in the place where the bank 
 is located, or if there be no newspaper published in such place, 
 then in some newspaper published in the same county. Proof 
 of publication shall be transmitted to the State Examiner, 
 within twenty days from the day fixed for such report. The 
 State Examiner Shall also have power to call for special re- 
 ports from any bank whenever in his judgment the same is 
 necessary, in order to obtain a full knowledge of its condition, 
 [Laws 1909, § 10, p. 697.] 
 
 § 641. Penalty for Failure to Report. 
 
 [§ 3298, Rem.-Bal.] Every bank which fails to make, 
 transmit and publish any report required under the preceding
 
 §§ 642, 643 EXISTING corporation laws, 1913. 452 
 
 section shall be subject to a penalty of ten dollars ($10.00) per 
 day for each day 's delay after the period specified in said sec- 
 tion. [Laws 1907, § 37, p. 530.] 
 
 § 642. Examiner to Make Annual Report to Governor. 
 
 [§ 3299, Rera.-Bal.] The State Examiner shall receive and 
 place on file in his office the reports required to be made by 
 banks under this act, prepare and furnish to all such banks the 
 blank forms for such statements or reports as may be by this 
 act required of them ; make on or before the first day of Feb- 
 ruary of each year, a report for the preceding year to the 
 Governor of this state, showing: 
 
 1. A summary of the conditions of the banks subject to his 
 control at the date of their last report. 
 
 2. A list of banks which have been organized or closed dur- 
 ing the year. 
 
 3. The amount of money collected and expended by him. 
 It shall be his duty to publish annually at the expense of the 
 
 state, in pamphlet form at least five hundred copies of such 
 report, and he shall furnish a copy of same free to each bank 
 doing business under the provisions of this act, and shall fur- 
 nish copies to any applicant upon payment of actual cost of 
 printing thereof. [Laws 1907, § 38, p. 531.] 
 
 § 643. Examination of Banks. 
 
 [§ 3300, Rem.-Bal.j It shall be the duty of the State Ex- 
 aminer, or his deputy, without previous notice to visit each 
 and every bank doing business in this state, except national 
 banks, at least once in each year and oftener if necessary, for 
 the purpose of making a full and careful investigation and 
 inquiry into the condition of affairs of such bank, and for 
 that purpose the Examiner or deputy is hereby authorized and 
 empowered to administer oaths and to examine under oath the 
 owners and directors and all officers and employees and agents 
 of such bank; and any willful false swearing in any such 
 examination shall be deemed perjury and punished as such. 
 [Laws 1907, § 39, p. 531.]
 
 453 BANKS — FORMATION AND REGULATION. §§ 644-6-lG 
 
 § 644. Fee for Examination. 
 
 [§ 3301, Rem.-Bal.] The State Examiner shall collect from 
 each bank for each complete examination of its condition, 
 twenty-five dollars ($25.00) for each examination, and in ad- 
 dition thereto, one two-hundredths per cent (1-200%) on all 
 deposits, including those of banks, and certificates of deposit 
 at the time of the examination of the bank, but in no case shall 
 the charge be more than two hundred dollars. All money col- 
 lected under the provision of this section shall be paid into the 
 general fund of the state : Provided, however, that no bank 
 shall be required to pay for more than one examination in 
 any one year. [Laws 1909, § 11, p. 697.] 
 
 § 645. Impairment of Capital. 
 
 [§3302, Rem.-Bal.] Whenever it shall appear from any 
 report of any bank, or whenever the Examiner shall have rea- 
 son to believe that the capital of such bank is reduced by im- 
 pairment or otherwise below the amount required by this act, 
 or by its certificate or articles of incorporation, it shall be 
 the duty of the Examiner to require such bank to make good 
 the deficiency so appearing, or to reduce its capital in accord- 
 ance with the provisions of section 17 of this act [3326, Rem.- 
 Bal.] ; and to give effect to such requisition he shall have the 
 power to examine or cause to be examined any such bank, to as- 
 certain the amount of any such impairment of capital, and 
 whether his requirements have been complied with. And if 
 such bank shall neglect for three months to comply with such 
 requirements, the same shall be cause for the proceedings pro- 
 vided for in section 42 of this act [3303, Rem.-Bal.]. [Laws 
 1907, § 41, p. 532.] 
 
 § 646. Violation of Act — Appointment of Receiver. 
 
 [§ 3303, Rem.-Bal.] If the State Examiner, upon examina- 
 tion of the affairs of any bank governed by this act, shall find 
 that such bank has been guilty of violating its charter or the 
 provisions of this act, or is conducting its business in an unsafe 
 manner, he shall, by an order addressed to the bank so offend- 
 ing, direct discontinuance of such illegal or unsafe practices, 
 and if such bank shall refuse or neglect to comply with such
 
 §§ 647, 648 EXISTING corporation laws, 1913. 454 
 
 order within a period of thirty days, he may immediately 
 apply to the superior court of the county in which such bank 
 has its principal place of business, for the appointment of a 
 receiver of such bank, who, if he be appointed, shall proceed 
 to administer the assets of the bank in accordance with law. 
 [Laws 1907, § 42, p. 532.] 
 
 § 647. Bank Under Control of Examiner. 
 
 [§ 3304, Rem.-Bal.] Any bank doing business under this 
 act may place its affairs and assets under the control of the 
 State Examiner by posting a notice on its front door as follows : 
 
 "This bank is in the hands of the State Examiner." 
 
 The posting of such notice, or the taking possession of any 
 bank by the State Examiner, shall be sufficient to place all its 
 assets and property of whatever nature in the possession of the 
 State Examiner, and shall operate as a bar to any attachment 
 proceedings. [Laws 1907, § 43, p. 532.] 
 
 § 648. Examiner to Take Charge of Bank — Receivers. 
 
 [§ 3305, Rem.-Bal.] If upon examination made by the Ex- 
 aminer or his deputy, or from any report made to the Exam- 
 iner, it shall appear that any bank is insolvent, it shall be 
 the duty of the Examiner to immediately take charge of such 
 bank and all the property and effects thereof. Upon taking 
 charge of any bank, the Examiner shall as soon as possible, 
 ascertain by a thorough examination into its affairs, its actual 
 condition, and whenever he shall become satisfied that such 
 bank cannot resume business, or liquidate its indebtedness to 
 the satisfaction of all its creditors, he shall report the fact 
 of its insolvency to the attorney general, who shall immedi- 
 ately upon receipt of such notice, institute proper proceedings 
 in the proper court for the purpose of having a receiver ap- 
 pointed to take charge of such bank, and to wind up the 
 affairs and business thereof for the benefit of its depositors, 
 creditors and stockholders. The State Examiner may appoint 
 a special deputy State Examiner to take charge of the affairs 
 of an insolvent bank temporarily, until a receiver is appointed ; 
 such deputy shall qualify, give bond and receive compensa-
 
 455 BANKS — FORMATION AND REGULATION. §§ 649-651 
 
 tion the same as a regular deputy; such compensation to be 
 paid by such bank or allowed by the court in costs in the case 
 of appointment of a receiver : Provided, that in no case shall 
 any bank continue in charge of such special deputy for a 
 longer period than ninety days : Provided further, that after 
 a bank has been taken charge of by the State Examiner or a 
 deputy, if it be ascertained upon examination, to the satis- 
 faction of the Examiner, that the said bank is solvent, he may 
 permit the same to be reopened, and it shall in that event re- 
 possess the officers of such bank with all of its funds and 
 assets, after deducting therefrom the necessary expense in- 
 cident to the charge and control thereof while in the hands 
 of the Examiner. [Laws 1907, § 44, p. 533.] 
 
 § 649. Compensation of Receivers. 
 
 [§ 3306, Kem.-Bal] Receivers provided for in this act 
 shall receive such compensation as shall be allowed by the 
 court, but in no event to exceed the fees allowed executors and 
 administrators in the administration of estates. [Laws 1907, 
 § 45, p. 533.] 
 
 § 650. Examiner to Keep Record of Fees Collected. 
 
 [§ 3307, Rem.-Bal.] It shall be the duty of the State Ex- 
 aminer to keep a record of all fees collected by him or his 
 deputy, together with a record of the expense incurred in 
 making the examinations of all banks, and pay to the State 
 Treasurer at the times and in the manner prescribed by law, 
 all fees collected, together with all funds received by him offi- 
 cially from whatsoever source, and he shall file with the State 
 Treasurer, quarterly, an itemized statement showing from 
 whom collected. [Laws 1907, § 46, p. 534.] 
 
 § 651. Examiner not to Disclose or Make Public Informa- 
 tion. 
 
 [§ 3308, Rem.-Bal.] The State Examiner shall keep proper 
 books of record of all acts, matters and things done by him 
 under the provisions of this act, as records of his office. 
 Neither he nor his clerks shall disclose any fact or information 
 obtained in the course of the business of the department, ex- 
 cept so far as this act makes it their duty to make public
 
 §§ 652-654 EXISTING corporation laws, 1913. 456 
 
 records and publish the same, and any violation of this pro- 
 hibition shall subject the offender to prosecution for mis- 
 demeanor in any court of competent jurisdiction, and to 
 punishment by fine not exceeding one thousand dollars, with 
 imprisonment in the county jail until the same is paid; and 
 such conviction shall subject the offender to a forfeiture of his 
 office or employment. [Laws 1907, § 47, p. 534.] 
 
 § 652. Distribution of Assets of Insolvent Banks. 
 
 [§ 3309, Rem -Bal.] In distributing the assets of any bank 
 for which a receiver has been appointed under the provisions 
 of this act, the claims of depositors shall be given preference 
 over all other claims except claims for labor: Provided, that 
 this section shall not be so construed as to impair the rights of 
 secured creditors. [Laws 1907, § 48, p. 534.] 
 
 § 653. Attorney General to Act. 
 
 [§ 3310, Rem.-Bal.] The attorney general of the state shall 
 conduct all actions, suits or proceedings begun by the State 
 Examiner under the authority of this act. [Laws 1907, § 49, 
 p. 534.] 
 
 § 654. Duties Heretofore Performed by State Auditor and 
 Secretary of State Hereafter Performed by Ex- 
 aminer. 
 [§ 3311, Rem.-Bal.] That all duties now required to be 
 performed by and all responsibilities now imposed upon the 
 auditor of this state, under the laws regulating the business 
 of banking shall hereafter be performed by the State Exam- 
 iner, and all reports and documents now on file in the state 
 auditor's office pertaining to banks now in existence are 
 hereby transferred to the custody of the Bank Examiner. 
 That all duties now required to be performed by and all re- 
 sponsibilities now imposed upon the Secretary of State under 
 chapter 176 of the Laws of 1903, relating to the inspection and 
 supervision of trust companies, shall hereafter be performed 
 by the State Examiner, and all reports and documents now in 
 existence are hereby transferred to the custody of the Bank 
 Examiner. [Laws 1907, § 50, p. 534.]
 
 457 BANKS — FORMATION AND REGULATION. §§ 655-658 
 
 § 655. Repeal of Former Banking Law. 
 
 [§ 3313, Rem.-Bal.] All acts and parts of acts reflating 
 the organization and management of banks inconsistent with 
 this act are hereby repealed, but nothing herein shall be held 
 to repeal any law regulating trust companies, foreign banks 
 and foreign bankers doing business in this state. [Laws 1907, 
 § 52, p. 535.] 
 
 § 656. Penalty for False Statement or Entry. 
 
 [§ 3314, Rem.-Bal.] Any person or persons who shall will- 
 fully and knowingly subscribe to or make or cause to be made 
 any false statement or false entry in the books of any bank or 
 corporation transacting a banking business or shall knowingly 
 subscribe to or exhibit false or fictitious papers or securities 
 with the intent to deceive any person or persons authorized to 
 examine into the affairs of said bank or corporation, or shall 
 make, state or publish any false statement of the amount of 
 the assets or liabilities of any such bank or corporation, shall 
 be deemed guilty of a felony and upoii conviction thereof shall 
 be imprisoned in the state penitentiary not less than one year 
 nor more than ten years. [Laws 1907, § 53, p. 535.] 
 
 § 657. Forfeiture for Violating Act. 
 
 [§ 3367, Rem.-Bal.] Every foreign bank or foreign banker, 
 and every officer, agent or employee thereof, violating any of 
 the provisions of this act, shall for each violation forfeit and 
 pay to the state of Washington the sum of one thousand dol- 
 lars. Said forfeiture may be recovered in an action by the 
 attorney general in the name of the state of Washington in 
 the superior court of the county where such bank or branch 
 bank shall be located. [Laws 1905, § 3, p. 55.] 
 
 § 658. Defining "Foreign Bank" and "Foreign Banker." 
 
 [§ 3368, Rem.-Bal.] In construing this act the terms 
 "foreign bcnk" and "foreign banker" shall be deemed to in- 
 clude : 
 
 1. Every corporation not organized under the laws of the 
 territory or state of Washington doing a banking business, ex- 
 cept a national bank.
 
 §§ 669, 660 EXISTING CORPORATION LAWS, 1913. 458 
 
 2. Every unincorporated company, partnership or associa- 
 tion of two or more individuals organized under or pursuant 
 to the laws of another state or country doing a banking busi- 
 ness authorized by this act. 
 
 3. Every other unincorporated company, partnership or 
 association of two or more individuals doing a banking busi- 
 ness authorized by this act, if the members thereof, owning a 
 majority interest therein, or entitled to more than one-half the 
 profits thereof, or who would, if it were dissolved, be entitled 
 to more than one-half the net assets thereof, are not residents 
 of this state. 
 
 4. Every nonresident of this state doing a banking business 
 authorized by this act in his own name and right only, [Laws 
 1905, § 4, p. 56.] 
 
 § 659. Foreign Banks and Bankers — Not to Receive De- 
 posits — Exceptions. 
 [§ 3365, Rem.-Bal.] Any foreign bank or foreign banker 
 may keep an office for the purpose of loaning money and buy- 
 ing and selling exchange, coin or bullion, at any place or 
 places within this state, but shall not in any manner, directly 
 or indirectly, receive deposits: Provided, however, that noth- 
 ing in this section contained shall prevent any existing branch 
 of any foreign bank which was engaged in doing a banking 
 business at any place or places within this state on the first 
 day of January, 1905, or its successors or assigns becoming 
 such prior to the date upon which this act takes effect, from re- 
 ceiving deposits and transacting a general banking business. 
 [Laws 1905, § 1, p. 55.] 
 
 § 660. Capital Stock Required. 
 
 [§ 3366, Rem.-Bal.] Every foreign bank or foreign banker 
 heretofore having established, or hereafter establishing an 
 office in this state shall have, and at all times maintain, at 
 every such office, a capital not less in amount than that re- 
 quired by the national bank act for the organization of a na- 
 tional bank at the time when, and place where, such office was 
 or shall be opened, and the payment of taxes on such amount 
 shall be prima facie evidence of the payment and existence of
 
 459 BANKS — FORMATION AND REGULATION. § 660 
 
 such capital ; and no such foreign bank or foreign banker shall 
 set forth on the stationery of such bank or banker or in any 
 manner advertise a greater capital, surplus and undivided 
 profits than are actually maintained at any such bank within 
 this state. [Laws 1905, § 2, p. 55.]
 
 §§ 661, 662 EXISTING CORPORATION LAWS, 1913. 460 
 
 DEPOSITORIES OF MONEY TO REPORT. 
 
 § 661. To Make Return of Deposits Standing Inactive Ten 
 Years — Notice to be Published. 
 [§ 3344, Rem.-Bal.] The cashier or secretary of every sav- 
 ings bank and loan society, and every institution in which 
 deposits of money are made, shall, within fifteen days after 
 the first day of December, in the year one thousand nine hun- 
 dred and five, and within fifteen days of the first day of 
 December of each and every second succeeding year thereafter 
 return to the Secretary of State of the state of Washington a 
 sworn statement showing the amount standing to his credit, 
 the last known place of residence or postoffice address, and 
 the fact of death if known, to said cashier or secretary of 
 every depositor who shall not have made a deposit therein, or 
 withdrawn therefrom any part of his deposit, or any part of 
 the interest thereon for the period of more than ten years next 
 preceding; and the cashiers and secretaries of such savings 
 banks, savings and loan societies and institutions for deposit 
 of savings shall give notice of these deposits in one or more 
 newspapers published in or nearest to the city, county or town 
 where such banks are situated at least once a week for four 
 successive weeks, the cost of such publication to be paid pro 
 rata out of said unclaimed deposits : Provided, however, that 
 this act shall not apply to or affect the deposit made by or in 
 the name of any person known to the said cashier or secretary 
 to be living. The Secretary of State shall annually turn over 
 all reports made by him to the attorney general for proceed- 
 ings for forfeiture, if he shall be so advised. [Laws 1905, § 1, 
 p. 244, c. 129.] 
 
 § 662. Refusal to Make Report — Penalty. 
 
 [§ 3345, Rem.-Bal.] Any cashier or secretary of any of 
 the banking institutions mentioned in section 1 of this act 
 [3344, Rem.-Bal.] neglecting or refusing to make the sworn 
 statement required by section 1 [3344, Rem.-Bal.] shall be
 
 461 DEPOSITORIES OF MONEY TO REPORT. § 662 
 
 guilty of a misdemeanor and on conviction thereof shall be 
 fined in any sum not less than fifty dollars nor more than one 
 thousand dollars or confined in the county jail not less than 
 ten days nor more than ninety days, or both such fine and im- 
 prisonment. [Laws 1905, § 2, p. 245, c. 129.]
 
 §§ 663-666 EXISTING corporation laws, 1^13. 462 
 
 CORPORATIONS OTHER THAN THOSE 
 
 FORMED FOR THE PURPOSE OF 
 
 PROFIT. 
 
 § 663. Formation — Purposes. 
 
 [§3752, Rem.-Bal.] Corporations may be formed under 
 the provisions of this act for any lawful purpose except the 
 carrying on of a business, trade, avocation or profession for 
 profit. [Laws 1907, § 1, p. 255.] 
 
 § 664. Membership — No Capital Stock— Shares not to be 
 Issued. 
 [§ 3753, Rem.-Bal.] The incorporators and members of a 
 corporation formed under the provisions of this act may be 
 individuals, copartnerships or corporations. It shall have no 
 capital stock, and shares therein shall not be issued. The 
 interest of each incorporator or member shall be equal to that 
 of any other, and no incorporator or member can acquire any 
 interest which will entitle him to any greater voice, vote, au- 
 thority or interest in the corporation than any other member. 
 [Laws 1907, § 2, p. 256.] 
 
 § 665. Membership Certificates — Assignable. 
 
 [§ 3754, Rem.-Bal.] The corporation may issue member- 
 ship certificates, which certificates shall be assignable under 
 such provisions, rules and regulations as may be prescribed by 
 the by-laws of the company. [Laws 1907, § 3, p. 256.] 
 
 § 666. Termination of Membership. 
 
 [§ 3755, Rem.-Bal.] A membership in a corporation 
 formed hereunder may be terminated by voluntary with- 
 drawal, by expulsion and by death. Losses of membership 
 through any such causes and the incidents thereof shall be 
 governed by the by-laws of the company. [Laws 1907, § 4, 
 p. 256.]
 
 463 MEMBERSHIP CORPORATIONS. §§ 667, 668 
 
 § 667. Organization — Articles to be Filed. 
 
 [§ 3756, Rem.-Bal.] Not less than five individuals, copart- 
 nerships, or corporations shall be required to form a corpora- 
 tion hereunder. Articles of incorporation shall be prepared, 
 executed and acknowledged in triplicate ; one copy shall be 
 filed in the office of the Secretary of State, another in the office 
 of the county auditor of the county in which the principal 
 place of business of the corporation is located, and the third 
 retained in the possession of the corporation. Such articles 
 shall state the name of the corporation, the purposes for which 
 it is formed, the place where its principal place of business 
 will be, the term for which it is to exist, not exceeding fifty 
 years, the number of the trustees thereof, and the names of 
 the trustees who shall manage the affairs of the corporation 
 for such length of time, not less than two months, nor more 
 than six months, as may be designated in such articles, until 
 the trustees shall be elected by the members. The formation 
 of the corporation shall be complete upon the filing of the 
 articles as herein provided. [Laws 1907, § 5, p. 256.] 
 
 § 668. Must Adopt By-laws Before Transacting Any Busi- 
 ness. 
 
 [§ 3757, Rem.-Bal.] Before transacting any business or ac- 
 quiring any property the members of the corporation must 
 meet and adopt by-laws. The vote of a majority of all the 
 members of the corporation shall be necessary to the adoption 
 of such by-laws and when adopted the same must be written 
 in a book to be kept by the corporation. The corporation may 
 by its by-laws provide for the time, place and manner of call- 
 ing and conducting its meetings, the number of trustees, the 
 time of their election, their term of office, the mode and 
 manner of their removal, the mode and manner of filling 
 vacancies on the board caused by death, resignation, removal 
 or otherwise, the power and authority of the trustees, the com- 
 pensation of the trustees or of any officer, the mode and 
 manner of conducting business, the mode and manner of con- 
 ducting elections, the qualifications for membership, on what 
 conditions there may be a succession of membership, the
 
 § 669 EXISTING CORPORATION LAWS, 1913. 464 
 
 manner in which membership shall cease, the mode and 
 manner of expulsion of a member, the termination of a mem- 
 ber's interest in the corporate property upon the cessation of 
 his membership, and whether he shall be remunerated therefor, 
 and if so in what manner, the amount of membership fee, and 
 the dues, installments or labor which each member may be re- 
 quired to pay or perform, if any, the charges which may be 
 made for services rendered or supplies furnished the members 
 of the corporation by it, the manner of collection or enforce- 
 ment of membership fees, dues or charges, and the method of 
 forfeiting the membership interest for nonpayment or non- 
 performance, the method, time and manner of permitting the 
 withdrawal of a member, if at all, and how his interest may be 
 ascertained and payments made therefor, if the company de- 
 cide that he should be reimbursed therefor, the formation of 
 a surplus fund and the manner and proportions in which such 
 surplus fund shall be distributed, either upon the order of 
 the corporation or upon its dissolution, and generally, all such 
 other matters as may be proper to carry out the purpose for 
 which the corporation was formed. [Laws 1907, § 6, p. 257.] 
 
 § 669. Powers of Corporations. 
 
 [§ 3758, Rem.-Bal.] Corporations formed under this act 
 shall have power of succession by their corporate name for 
 fifty years, in such name may sue and be sued in any court, 
 may make and use a common seal and alter the same at 
 pleasure, may receive gifts and devises, may purchase, hold 
 and convey real and personal property, as the purposes of the 
 corporation may require, may appoint such subordinate agents 
 or officers as the business may require, may demand assess- 
 ments of members and sell or forfeit their interests in the 
 corporation for default with respect to any lawful provision 
 of the by-laws, may enter into any lawful contracts and incur 
 obligations essential to the transaction of its affairs for the 
 purpose for which it was formed, may borrow money and 
 issue notes, bills or evidence of indebtedness, and may mort- 
 gage its property to secure the same as its by-laws may pro- 
 vide, and, generally, may do all things necessary or proper to
 
 465 MEMBERSHIP CORPORATIONS. §§ 670-672 
 
 carry out the purpose of its creation. [Laws 1907, § 7, p. 
 258.] 
 
 § 670. Change of Purpose. 
 
 [§ 3759, Rem.-Bal.] The purpose or purposes for which a 
 corporation is created hereunder may be altered, modified, en- 
 larged, or diminished by the vote of two-thirds of all the mem- 
 bers at a special meeting called for such purpose, notice of 
 which meeting shall be given in the manner provided by the 
 by-laws for the giving of notice for the election of trustees. 
 [Laws 1907, § 8, p. 258.] 
 
 § 671. Amendment of By-laws. 
 
 [§ 3760, Rem.-Bal.] The by-laws of the corporation shall 
 prescribe the manner in which they may be amended. [Laws 
 1907, § 9, p. 258.] 
 
 § 672. Dissolution — Cannot Have Receiver, When. 
 
 [§ 3761, Rem.-Bal.] Any corporation formed under this 
 act may be dissolved and its affairs wound up voluntarily by 
 the written request of two-thirds of the members. Such re- 
 quest must be addressed to the trustees and specify reasons 
 why the winding up of the affairs of the corporation is deemed 
 advisable, and name three persons, members of the corpora- 
 tion, to act in liquidation. Upon the filing of such request 
 with the trustees, and a copy thereof in the office of the Secre- 
 tary of State, and of the county auditor of the county where 
 the principal place of business of the corporation is located, 
 the power of the trustees shall cease and the persons appointed 
 shall proceed to wind up the corporation, realize upon its as- 
 sets, pay its debts and divide the residue of the money among 
 the members in the proportion to which each member is en- 
 titled under the by-laws. This shall be done within the time 
 designated in such request or such further time as may be 
 granted by writing signed by two-thirds of the members and 
 filed in the office of the Secretary of State and of the county 
 auditor of the county where the principal place of business 
 of the corporation is located. No receiver of such a corpora- 
 30
 
 §§ 673, 674 EXISTING corporation laws, 1913. 466 
 
 tion or of its property, or of any right therein, can he ap- 
 pointed by any court upon the application of any member 
 save after judgment of dissolution in an action brought by 
 the state to forfeit its franchise. [Laws 1907, § 10, p. 258.] 
 
 § 673. Shall not Engage in Business for Gain, etc. 
 
 [§ 3762, Rem.-Bal.] Any corporation formed under the 
 provisions of this act that shall engage in any business, trade, 
 avocation or profession for gain or which shall enter into any 
 agreement or combination in restraint of trade, or to fix or 
 establish the price of any commodity, or to limit or regulate 
 the production or distribution of any commodity, or which 
 shall attempt to restrain trade, or fix or establish the price of 
 any commodity, or limit or regulate the production or dis- 
 tribution of any commodity shall forfeit its right to exist as 
 a corporation and judgment of dissolution may be entered in 
 an action brought by the state to have such forfeiture declared. 
 Nothing herein contained shall be construed to forbid such a 
 corporation accumulating a surplus fund through membership 
 fees and dues, or from charges made its members for services 
 rendered or supplies furnished them by it, and the distribu- 
 tion of such fund among the members in the manner provided 
 by the by-laws. [Laws 1907, § 11, p. 259.] 
 
 § 674. Existing Corporations may Reorganize Under Act. 
 
 [§3763, Rem.-Bal.] Any corporation heretofore formed 
 under any law of this state, the purpose or purposes for the 
 creation of which is such that it might have been formed and 
 carry on business hereunder, may avail itself of the privileges 
 and incur the liabilities prescribed by this act upon a majority 
 vote of all the members to the effect that it desires to re- 
 organize hereunder, the result of such vote to be evidenced by 
 a certificate executed by the president and secretary under the 
 seal of the corporation and filed in the office of the Secretary 
 of State and of the county auditor of the county where the 
 principal place of business of the corporation is located. 
 Upon the filing of such certificate it shall be endowed with all 
 the privileges and affected by all the liabilities prescribed here-
 
 467 MEMBERSHIP CORPORATIONS. § 675 
 
 under, but the time of its existence fixed by its articles shall 
 not be enlarged by such action. [Laws 1907, § 12, p. 259.] 
 
 § 675. Filing ajid License Fee. 
 
 [§ 3764, Rem.-Bal.] All corporations formed under the 
 provisions of this act shall pay to the Secretary of State, for 
 the use of the state, the same fee for filing its articles of in- 
 corporation and the same annual license fee, as is prescribed 
 by law for other corporations having a capital stock. [Laws 
 1907, § 13, p. 260.]
 
 §§677,678 EXISTING corporation laws, 1913. 468 
 
 RELIGIOUS, EDUCATIONAL, SOCIAL AND 
 CHARITABLE CORPORATIONS. 
 
 § 677. Formation of— Articles. 
 
 [§ 3731, Rem.-Bal.] Any two or more persons desirous of 
 forming a corporation for a college, seminary, church, library, 
 or benevolent, temperance, charitable or scientific society, shall 
 make and subscribe written articles of incorporation in tripli- 
 cate and acknowledge the same before any ofi6.cer authorized 
 to take the acknowledgment of deeds, and file one of such 
 articles in the office of the Secretary of State, and another in 
 the office of the county auditor of the county in which the 
 principal place [of] business of the corporation is intended 
 to be located, and retain the third in the possession of the cor- 
 poration. Such articles shall specify : 
 
 1. The corporate name and location and chief place of busi- 
 ness of such corporation. 
 
 2. If a joint stock company, the amount of capital stock, 
 and the amount constituting a share ; if not a joint stock com- 
 pany, then the terms of admission to membership. 
 
 3. The object for which the corporation is formed. 
 
 4. By what officers the affairs of said corporation shall be 
 managed, and when such officers are to be elected, or, if ap- 
 pointed, when and by whom such appointments are to be 
 made. [Laws 1895, § 1, p. 347; Cd. 1881, § 2450; 1 H. C, § 
 1638; Bal., §4438.] 
 
 "Person" construed to be individual as distinct from corporation. 
 (Denny Hotel Co. v. Schram, 6 Wash. 134.) 
 
 § 678. Powers of Such Corporations Enumerated. 
 
 [§3732, Rem.-Bal.] When such articles shall have been 
 . filed, as aforesaid, the persons who shall have signed and veri- 
 fied the same, and their successors, shall be a body politic and 
 corporate, with perpetual succession; they shall be capable in 
 law of suing and being sued, pleading and being impleaded, 
 answering and being answered in all the courts of the state;
 
 469 RELIGIOUS, ETC., CORPORATIONS. §§ 679, 680 
 
 they may have a common seal, alter and change the same at 
 pleasure; acquire, mortgage and sell property, personal and 
 real, for the purpose of carrying out the objects of the cor- 
 poration, and make by-laws, rules and regulations, as they 
 may deem proper and best for the welfare and the good order 
 of the corporation ; and may amend the articles of incorpora- 
 tion by supplemental articles, executed and filed the same as 
 the original articles: Provided, that such by-laws, rules and 
 regulations be not contrary to the constitution and laws of the 
 United States, and the existing laws of the state. [Laws 1886, 
 § 1, p. 86; Cd. 1881, § 2451; 1 H. C, § 1639; Bal., § 4439.] 
 
 § 679. Secret Societies — Articles — Where to be Filed and 
 What to Contain. 
 [§ 3733, Rem.-Bal.] Any lodge, encampment of [or] other 
 subordinate lodge of Free and Accepted Masons, Independent 
 Order of Odd Fellows, Knights of Pythias, or other fraternal 
 society, desiring to incorporate, shall make articles of incor- 
 poration in triplicate, and file one of such articles in the office 
 of the Secretary of State and another in the office of the 
 county auditor of the county in which the meetings of such 
 lodge, chapter or encampment are held ; such articles shall be 
 signed by the presiding officer and the secretary of such lodge, 
 chapter or encampment, and attested by the seal thereof, and 
 shall specify : 
 
 1. The name of such lodge or other society, and the place 
 of holding its meetings. 
 
 2. The name of the grand body from which it derives its 
 rights and powers as such lodge or society. 
 
 3. The names of the presiding officer and the secretary hav- 
 ing the custody of the seal of such lodge or society. 
 
 4. What officers shall join in the execution of any contract 
 by such lodge or society to give it force and effect in accord- 
 ance with the usages of such lodges or society. [Laws 1903, 
 § 1, p. 118; Cd. 1881, § 2452; 1 H. C, § 1640; Bal., § 4440.] 
 
 § 680. Filing Fee— With Secretary of State. 
 
 [§ 3734, Rem.-Bal.] The Secretary of State shall file such 
 articles of incorporation in his office and issue a certificate of
 
 §§ 681-684 EXISTING CORPORATION LAWS, 1913. 470 
 
 incorporation to any such lodge or other society upon the pay- 
 ment of the sum of five dollars. [Laws 1903, § 2, p. 118.] 
 
 § 681. Powers — Not Subject to License Fee. 
 
 [§ 3735, Rem.-Bal.] Such lodge or other society shall be 
 a body politic and corporate with all the powers and incidents 
 of a corporation upon its compliance with sections one and 
 two of this act [3733, 3734, Rem.-Bal.] : Provided, however, 
 that such fraternal corporation shall not be subject to any 
 license fee or other corporate tax of commercial corporations. 
 [Laws 1903, § 3, p. 118.] 
 
 § 682. Waiver of Original Rights to Corporate Name. 
 
 [§ 3736, Rem.-Bal.] Any lodge or society, or the members 
 thereof, having heretofore attempted to incorporate as a body 
 under the provisions of an act entitled "An act to provide for 
 the incorporation of associations for social, charitable and edu- 
 cational purposes," approved March 21st, 1895, such lodge or 
 society may incorporate under its original corporate name by 
 complying with the provisions of sections one and two of this 
 act [3733, 3734, Rem.-Bal.] : Provided, that such lodge or 
 society shall attach to and file with the articles of incorpora- 
 tion provided for in this act a certificate duly signed, executed 
 and attested by the officers of the said corporation consenting 
 to such reincorporation and waiving all rights of the original 
 corporation to such corporate name. [Laws 1903, § 4, p. 119.] 
 
 § 683. Colleges may Confer Degrees. 
 
 [§ 3737, Rem.-Bal.] Any college or seminary hereafter in- 
 corporated by the provisions of this chapter shall have power, 
 and is hereby invested with authority, to confer the degrees 
 usually conferred by such institution. [Laws 1873, § 4, p. 
 411 ; Cd. 1881, § 2453 ; 1 H. C, § 1641 ; Bal., § 4441.] 
 
 § 684. Dissolution of Corporation. 
 
 [§ 3738, Rem.-Bal.] Any corporation desiring its dissolu- 
 tion may, by a three-fourths vote of all its members at some 
 regular meeting, execute a surrender of all its corporate 
 powers, and upon the filing of duplicate surrenders with the
 
 471 RELIGIOUS, ETC., CORPORATIONS. § 685 
 
 said auditor and Secretary of State, the said corporation shall 
 be dissolved to all intents and purposes. [Laws 1879, § 5, p. 
 411; Cd. 1881, § 2454; 1 H. C. § 1642; Bal., § 4442.] 
 
 § 685. Validating Defective Articles. 
 
 [§ 3739, Rem.-Bal.] That all instruments purporting to 
 be articles of incorporation for a college, seminary, church, 
 library, or benevolent, charitable, or scientific society, made 
 and executed in accordance with the provisions of chapter 9, 
 title 18, of volume 1 of Hill's Annotated Statutes and Codes 
 of Washington, or under and by virtue of the provisions of 
 section 2450 to 2454, both inclusive, of the Code of Washing- 
 ton of 1881, except that the same have been acknowledged 
 before an officer authorized by law to take the acknowledg- 
 ment of deeds, and have not been sworn to by the trustees 
 as by said laws required, or have been filed with the auditor 
 of the county where the chief place of business of the cor- 
 poration so purporting to be formed is located, instead of 
 being recorded as by said laws required, or which are de- 
 fective in both of said respects, are hereby declared to be, and 
 are hereby made to be, good and valid articles of incorpora- 
 tion ; and the corporations formed, or attempted to be formed 
 by virtue of said articles of incorporation, are hereby declared 
 to be, and are hereby made, good and valid, and existing cor- 
 porations, with the same and as full powers, rights and liabili- 
 ties as they would have had if the articles of incorporation 
 had been executed and recorded as by law required, and that 
 all acts, deeds, and proceedings had or done by said corpora- 
 tions, or under said articles of incorporation, and all rights 
 acquired as to both real and personal property, and all obliga- 
 tions of every kind incurred by such corporations, are hereby 
 made of the same force, effect and validity as if said articles 
 of incorporation had been executed as required by law. 
 [Laws 1895, § 1, p. 24; Bal., § 4443.] 
 
 The above-named provisions of Hill's Code and the Code of 1881 are 
 preceding sections.
 
 §§ 686-688 EXISTING corporation laws, 1913. 472 
 
 SOCIAL AND CHARITAB1.E ORGANIZA- 
 TIONS. 
 
 § 686. Agreement of Association. 
 
 [§ 3740, Rem.-Bal.] Two or more persons within this state 
 who associate themselves together by an agreement in writing, 
 as hereinafter described, with the intention of forming a cor- 
 poration for any of the purposes hereinafter specified, upon 
 complying with the provisions of sections 4, 5, and 6 of this 
 act [3743-3745, Rem.-Bal.], shall be and remain a corporation. 
 [Laws 1895, § 1, p. 400; Bal., § 4445.] 
 
 "Person" construed to be individual as distinct from corporation, 
 (Denny Hotel Co. v. Schram, 6 Wash. 134, 32 Pac. 1002.) 
 
 § 687. Associations, Objects of. 
 
 [§ 3741, Rem.-Bal.] Such association may be formed for 
 any educational, charitable, benevolent or religious purposes; 
 for the prosecution of any antiquarian, historical, literary, 
 scientific, medical, artistic, monumental or musical purpose ; 
 for supporting any missionary enterprise having for its object 
 the dissemination of religious or educational instruction ; for 
 promoting temperance or morality in this state ; or other chari- 
 table or social bodies of a like character and purpose ; for the 
 establishment and maintenance of social clubs, and of places 
 for reading-rooms, libraries or social meetings. [Laws 1895, 
 §2, p. 400; Bal, §4446.] 
 
 § 688. Agreement to State, What. 
 
 [§3742, Rem.-Bal.] The agreement shall state that the 
 subscribers thereto associate themselves with the intention of 
 forming a corporation, the name of the corporation, the pur- 
 poses for which it is formed, the town or city — which shall be 
 in this state — in which it is located, and if it has a capital 
 stock, the amount thereof, and the number and par value of 
 its shares. The name shall be one not previously in use by 
 any existing corporation, and shall be changed only as here- 
 inafter provided. [Laws 1895, § 3, p. 400; Bal., § 4447. J
 
 473 SOCIAL AND CHARITABLE ORGANIZATIONS. §§ 689-691 
 
 § 689. Subscribers, First Meeting of. 
 
 [§3743, Rem.-Bal.] The first meeting of the subscribers 
 to such agreement shall be called by a notice signed by one or 
 more thereof, stating the time, place and purpose of the meet- 
 ing ; a copy of which notice shall, seven days at least before the 
 day appointed for the meeting, be given to each subscriber, or 
 left at his usual place of business or place of residence, or de- 
 posited in the postofifice, postpaid, and addressed to him at his 
 usual place of business or of residence. And whoever gives 
 such notices shall make affidavit of his doings, which shall be 
 recorded in the records of the corporation. [Laws 1895, § 4, 
 p. 400;Bal., §4448.] 
 
 § 690. Temporary Secretary — Election of Officers. 
 
 [§3744, Rem.-Bal.] At such first meeting, including any 
 necessary or reasonable adjournment, an organization shall be 
 effected by the choice by ballot of a temporary secretary, and 
 by the adoption of by-laws, and the election of a president, sec- 
 retary, treasurer and a board of trustees, not less than three 
 nor more than twenty-five in number, and such other officers as 
 may be provided for by the by-laws. At such first meeting no 
 person shall be eligible as an officer or trustee who has not 
 subscribed to the agreement of the association, but any cor- 
 poration now or hereafter organized under this act, may, by 
 a by-law, increase or diminish the number of trustees, within 
 the limits hereinbefore provided. The temporary secretary 
 shall make and attest a record of the proceedings until the 
 secretary has been chosen. [Laws 1905, § 5, p. 240; Bal., 
 §4449.] 
 
 § 691. Certificate — Contents and Filing of. 
 
 [§ 3745, Rem.-Bal.] The president, secretary and a ma- 
 jority of the trustees shall forthwith make, sign and swear to 
 a certificate setting forth a true copy of the agreement of as- 
 sociation, with the names of the subscribers thereto, the date 
 of the first meeting and the successive adjournments thereof, 
 if any, and shall file such certificate in the office of the county 
 auditor of the county wherein the organization is effected and
 
 § 691 EXISTING CORPORATION LAWS, 1913. 474 
 
 in the office of the Secretary of State, who, upon payment of 
 a fee of five dollars, shall cause the same to be recorded in a 
 book to be kept for that purpose, and shall thereupon issue a 
 certificate in the following form: 
 
 State of Washington. 
 
 Be it Imown that, whereas (here the names of the subscribers 
 to the agreement of association shall be inserted) have asso- 
 ciated themselves with the intention of forming a corporation 
 under the name of (here the name of the corporation shall be 
 inserted), for the purpose (here the purpose declared in the 
 agreement of association shall be inserted), with a capital of 
 (here the amount of the capital stock shall be inserted, or if 
 there is no capital stock this clause shall be omitted) , and have 
 complied with the provisions of the laws of this state in such 
 case made and provided, as appears from the certificate of the 
 president, secretary and a majority of the trustees of said cor- 
 poration, recorded in this office; now, therefore, I (here the 
 name of the secretary shall be inserted) Secretary of the State 
 of Washington, do hereby certify that said (here the names of 
 the subscribers to agreement of association shall be inserted), 
 their associates and successors, are legally organized and estab- 
 lished as and are hereby made an existing corporation, under 
 the name of (here the name of the corporation shall be in- 
 serted), with the powers, rights and privileges and subject to 
 the limitations, duties and restrictions which by law appertain 
 thereto. 
 
 Witness my official signature subscribed and the seal of the 
 
 state of Washington hereunto affixed, this day of 
 
 in the year .... (In these blanks the day, month 
 
 and year of execution of the certificate shall be inserted.) 
 
 The secretary shall sign the same and cause the seal of the 
 state to be thereto affixed, and such certificate shall be conclu- 
 sive evidence of the existence of such corporation. He shall 
 also cause a record of such certificate to be made, and such cor- 
 poration shall forthwith cause a certified copy of such record 
 to be filed in the office of the auditor of the county wherein 
 such corporation is located. [Laws 1895, §6, p. 401; Bal., 
 § 4450.]
 
 475 SOCIAL AND CHARITABLE ORGANIZATIONS. §§ 692, 693 
 
 § 692. By-laws to Contain What. 
 
 [§ 3746, Rem.-Bal.] The corporation may prescribe by its 
 laws the manner in which, and the officers and agents by whom 
 the purposes of its incorporation may be carried out. The 
 corporation may hold real and personal estate, and may hire, 
 purchase or erect suitable buildings for its accommodation, to 
 be devoted to the purposes set forth in its agreement of as- 
 sociation, and may receive and hold in trust, or otherwise, 
 funds received by gift or bequest, to be devoted by it to such 
 purposes. And for the purposes of the corporation shall have 
 power to issue its promissory notes, bonds or other obligations, 
 to be secured by mortgages on its real estate and other prop- 
 erty in such manner as may be provided by its by-laws. The 
 board of trustees shall have power to sell or dispose of the 
 whole or any part of the property, either real or personal, 
 which the corporation may from time to time own, and to 
 acquire other property, but shall not sell or dispose of or pur- 
 chase real estate unless authorized so to do by the vote of two- 
 thirds of all the stock represented or two-thirds of the mem- 
 bers present at a meeting called for that purpose, written 
 notice of which shall have been given to all stockholders or 
 members at least thirty days previous thereto by mail, in such 
 manner as shall be provided by the by-laws, which two-thirds 
 vote must comprise at least a majority of all the stock or of 
 the members of the corporation. Such notice shall set forth 
 in full the matter or proposition to be considered at such 
 meeting. Voting by proxy shall be allowed at such meeting. 
 [Laws 1907, § 1, p. 127; Bal., § M51.] 
 
 § 693. Beneficiaries. 
 
 [§ 3747, Rem.-Bal.] The corporation organized for any 
 purpose mentioned in section two [3741, Rem.-Bal.] may, for 
 the purpose of assisting widows, orphans or other persons de- 
 pendent upon deceased members, provide in its by-laws for the 
 payment by each member of a fixed sum, to be held by such 
 association until the death of a member occurs, and then to be 
 forthwith paid to the person or persons entitled thereto; and 
 such fund so held shall not be liable to attachment by garnish-
 
 §§ 694r-696 EXISTING CORPORATION LAWS, 1913. 476 
 
 ment or other process. And the associations may be formed 
 under this act for the purpose of rendering assistance to such 
 persons, and in the manner herein specified. [Laws 1895, § 8, 
 p. 402;Bal., §4452.] 
 
 § 694. Death Fund. 
 
 [§ 3748, Rem.-Bal.] Any such beneficiary corporation or 
 society may hold at any one time as a death fund, belonging 
 to the beneficiaries of anticipated deceased members, an 
 amount not exceeding one assessment from a general or un- 
 limited membership, or an amount not exceeding in the aggre- 
 gate one assessment from each limited class or division of its 
 members : Provided, that nothing in this section shall be held 
 to restrict such fund to less than ten thousand dollars. Such 
 funds, while held in trust, shall be deposited in safe banking 
 institutions, subject to sight drafts for distribution to the 
 beneficiaries aforesaid. [Laws 1895, § 9, p. 403 ; Bal., § 4453.] 
 
 § 695. Exempt from Operations of Insurance Laws. 
 
 [§ 3749, Rem.-Bal.] The provisions of the general laws re- 
 lating to life insurance companies shall not apply to such bene- 
 ficiary corporations, associations and societies. [Laws 1895, 
 §10, p. 403; Bal., §4454.] 
 
 § 696. Not Retroactive — Pre-existing Societies may Adopt. 
 
 [§ 3750, Rem.-Bal.] Nothing contained in this act shall 
 affect the existence of any association or corporation hereto- 
 fore formed under the provisions of any law in this state for 
 any of the purposes mentioned in section two of this act [3741, 
 Rem.-Bal.], [and] any such corporation may, at a meeting 
 called for the purpose, vote to adopt the provisions of this act, 
 and upon so voting and complying with the provisions of this 
 section shall have the powers and privileges and be subject to 
 the duties and obligations of corporations formed under this 
 act. After so voting the corporation may file with the Secre- 
 tary of the State a certificate signed and sworn to by its presi- 
 dent, secretary, and a majority of its board of trustees, setting 
 forth a copy of its articles of incorporation and of said vote, and 
 the date of the meeting at which the vote was adopted, and the
 
 477 SOCIAL AND CHARITABLE ORGANIZATIONS. § 697 
 
 Secretary of State, upon payment of a fee of five dollars, shall 
 cause the same to be recorded, and shall issue a certificate in 
 the following form : 
 
 State of Washington. 
 
 Be it known that, whereas, (here the names of the original 
 incorporators shall be inserted) have formally associated them- 
 selves with the intention of forming a corporation under the 
 name of (here the name of the incorporation shall be inserted) 
 for the purpose (here the purpose declared in the original 
 articles of incorporation shall be inserted), under the provi- 
 sions of (here the designation of the statute under the provi- 
 sions of which organization was effected, shall be inserted), 
 with a capital of (here the amount of capital stock as it stands 
 fixed at the date of the certificate, shall be inserted ; or if there 
 is no capital stock this clause shall be omitted) , and the provi- 
 sions of the laws in this state in such case made and provided 
 have been complied with, as appears from a certificate of the 
 proper officers of said corporation, recorded [in] this office; 
 now, therefore, I (here the name of the secretary is to be in- 
 serted). Secretary of the State of Washington, do hereby cer- 
 tify that said (here the name of the corporation shall be 
 inserted) is legally organized and established as an existing 
 corporation, with the powers, right and privileges, and sub- 
 ject to the limitations, duties and restrictions which by law 
 appertain thereto. 
 
 Witness my official signature hereunto subscribed and the 
 
 seal of [the] state of Washington hereunto affixed, this 
 
 day of , in the year (In these blanks the day, 
 
 month and year of execution of the certificate, shall be in- 
 serted.) 
 
 This certificate shall be signed, sealed and recorded, and 
 filed in the same manner, and shall have the same effect as the 
 certificate provided in section six [3745, Rem.-Bal.]. [Laws 
 1895, § 11, p. 403 ; Bal., § 4455.] 
 
 § 697. Agreement, Amendment to. 
 
 [ § 3751, Rem.-Bal.] Whenever it is desired to amend in any 
 particular within the scope of this act, the provisions of the
 
 § 697 EXISTING CORPORATION LAWS, 1913. 478 
 
 articles of agreement of any corporation organized or qualified 
 under this act, such amendment or amendments shall be ef- 
 fected by the filing with the Secretary of State of a certificate 
 signed and sworn to by the president, secretary and a majority 
 of the board of trustees, which certificate shall be authorized 
 by a vote of at least two-thirds of the stock represented or 
 members of the corporation present at a meeting called and 
 held for that purpose, in the manner prescribed by the by- 
 laws and the Secretary of State shall, upon payment of a fee 
 of five dollars, cause such certificate to be recorded, and shall 
 issue a certificate in the following form : 
 
 State of Washington. 
 
 Be it known that, whereas, (here the name of the corpora- 
 tion shall be inserted) a corporation heretofore duly organized, 
 has, in accordance with the provisions of the laws of this state 
 in such case made and provided, amended its articles of agree- 
 ment as follows: (Here shall be inserted the nature of the 
 amendment or amendments), as appears from a certificate of 
 the proper officers of said corporation recorded in this office. 
 Now therefore, I (here the name of the secretary is to be in- 
 serted). Secretary of the State of Washington, do hereby 
 certify that such amendment (or amendments) ha. . been 
 duly adopted as, and now are, a part of the articles of agree- 
 ment of said corporation. 
 
 Witness my official signature hereunto subscribed and the 
 seal of the state of Washington hereunto affixed, this .... 
 
 day of in the year .... (In these blanks the day, 
 
 month and year of execution of this certificate shall be in- 
 serted.) 
 
 This certificate shall be signed, sealed and recorded, and 
 filed in the same manner and shall have the same effect as the 
 certificate provided for in section six [3745, Rem.-Bal.]. 
 [Laws 1907, § 1, p. 128 ; Bal., § 4456.]
 
 47D BENEVOLENT SOCIETIES. § 698 
 
 BENEVOLENT SOCIETIES FOR PROTEC- 
 TION OF HOMELESS OR ABUSED 
 CHILDREN. 
 
 § 698. Who may Take Children— Surrender by Parents. 
 
 [§ 1700, Rem.-Bal.] Any benevolent or charitable society 
 incorporated under the laws of this state for the purpose of re- 
 ceiving, earing for or placing out for adoption, or improving 
 the condition of orphan, homeless, neglected or abused minor 
 children of this state shall have authority to receive, control, 
 and dispose of children under eighteen (18) years of age 
 under the following provisions : 
 
 (a) When the father and mother or the person or persons 
 legally entitled to act as guardian of the person of any minor 
 child shall, in writing, surrender such child to the charge and 
 custody of said society, such child shall thereafter be in the 
 legal custody of such society for the purposes herein pro- 
 vided. 
 
 (b) In case of death or legal incapacity of a father or his 
 abandonment or neglect to provide for his family, the mother 
 shall have authority to make such surrender, and in case of 
 the death or legal incapacity of a mother, or her abandonment 
 of such child, then the father shall have authority to make 
 such surrender. 
 
 (c) In all cases where the person or persons legally author- 
 ized to mal?:e such surrender are not known, any judge of 
 superior court may cause a notice of hearing to be published 
 in any newspaper of general circulation printed and published 
 in the county, and if he deems it best for such orphan, home- 
 less, neglected or abused child, he may surrender it to any 
 benevolent or charitable society incorporated under the laws 
 of Washington and having for its object the care of such 
 children. 
 
 (d) When any child shall have been surrendered in ac- 
 cordance with any of the preceding clauses and such child 
 shall have been accepted by such society, then, (but not other-
 
 § 699 EXISTING CORPORATION LAWS, 1913. 480 
 
 •wise), the rights of its natural parents or of the guardian of 
 its person (if any) shall cease and such corporation shall be- 
 come entitled to the custody of such child, and shall have au- 
 thority to care for and educate such child or place it either 
 temporarily or permanently in a suitable private home in such 
 manner as shall best secure its welfare. Such corporation 
 shall have authority when any such child has been surrendered 
 to it in accordance with any of the preceding provisions, and 
 it is still in its control, to consent to its adoption under the 
 laws of Washington. The custody or control of any such 
 child by any such corporation or by any other corporation, in- 
 stitution, society or person may be inquired into, and, in the 
 discretion of the court, terminated at any time by the superior 
 court of the county where the child may be, upon the com- 
 plaint of any person, and a showing that such custody is not 
 in the interest of the child. [Laws 1903, § 1, p. 58.] 
 
 § 699. When Children Taken by Process. 
 
 [§ 1701, Rem.-Bal.] Upon complaint of any person in 
 writing other than an officer or agent of such society or cor- 
 poration to any judge of the superior court, giving the names 
 and residences of the parents, guardian, (if any) or next of 
 kin of such child, so far as known, and alleging that the father 
 of such minor child is dead, or has abandoned his family or is 
 an habitual drunkard or is a man of notoriously bad char- 
 acter, or is imprisoned for crime, or has grossly abused or 
 neglected such child, and that the mother of such child is an 
 habitual drunkard, or imprisoned for crime, or an inmate of 
 a house of ill-fame, or a woman of notoriously bad character 
 or is dead, or has abandoned her family, or has grossly abused 
 or neglected such child, and alleging that the welfare of such 
 child requires that legal steps be taken to provide for its care 
 and custody, a warrant shall issue directing the proper officer 
 to take such child into custody and care for or dispose of it 
 as such judge shall direct, until a hearing can be had, 
 such proceedings shall have precedence of other causes, of 
 which hearing not less than five days' notice shall be given 
 to such parents, guardian or next of kin and such judge shall 
 hear the allegations of the complaint and all testimony offered
 
 481 BENEVOLENT SOCIETIES. §§700,701 
 
 for or against the same and determine whether in his judg- 
 ment there is cause for a change in the care and custody of 
 such child. If the judge shall decide to change the care and 
 custody of such child, he may commit the child to the care 
 and custody of any such benevolent society contemplated in 
 this act which is willing to receive it, and such commitment 
 shall carry with it the same powers and authority as above 
 provided in case of voluntary surrender, or he may enter such 
 findings and transmit the papers and a transcript of his pro- 
 ceedings to the county commissioners of the county in which the 
 case arises and surrender such child to the care and custody of 
 such commissioners and it may be disposed of without further 
 notice to the parents, guardian or next of kin. [Laws 1903, 
 § 2, p. 60.] 
 
 § 700. Child a County Charge, Disposal of— Notice. 
 
 [§ 1702, Rem.-Bal.] When any minor is a county charge, 
 the board of county commissioners, if they think the welfare 
 of the child demands it, may surrender such child to the care 
 and custody of any benevolent society or corporation without 
 the consent of its parents unless within twenty days after the 
 notice of the intention of such commissioners so to do, given 
 in writing to parents, guardian or next of kin of such child 
 so far as known, to said commissioners, such parents, guardian 
 or next of kin shall provide for such child and relieve the 
 county thereof and when any child has been so surrendered 
 by the county commissioners, it may be disposed of as herein 
 provided for the disposition of other children. (Laws 1903, 
 sec. 3, p. 60.) 
 
 § 701. Duties of Police Officer. 
 
 [§ 1703, Rem.-Bal.] When any officer or agent of any such 
 society shall request a police officer, or other peace officer, to 
 investigate or assist in the investigation of any alleged case 
 of any such neglected or abused child, such officer shall imme- 
 diately make or assist in such investigation and if he deem it 
 proper shall forthwith take such child into custody without 
 warrant, taking such child and reporting such case at once 
 to the judge of the superior court for such proceedings as may 
 31
 
 §§ 702-704 EXISTING CORPORATION LAWS, 1913. 482 
 
 be proper under the provisions of this act. [Laws 1903, § 4, 
 p. 61.] 
 
 § 702. In Case of Minor Convicted of Charge, Punishable 
 by Confinement in Reform School. 
 
 [§ 1704, Rem.-Bal.] When any minor under eighteen years 
 of age shall be convicted on any charge, the punishment for 
 which may be imprisonment or confinement in the reform 
 school, the judge of the superior court, if he finds that the good 
 of such minor demands it, and such minor is an orphan, or a 
 homeless, neglected or abused minor within the terms of this 
 act, or is a county charge, or the parents or guardian of such 
 minor consent thereto, may suspend sentence and surrender 
 the custody of such minor to any society, as is contemplated 
 in this act, when such society is willing to receive such minor, 
 until such minor shall attain the age of majority, or for a 
 term of years to be fixed in the order of surrender, and such 
 society may find a home for such minor and surrender his cus- 
 tody to the person providing such home for the term fixed in 
 said order of surrender, which surrender by the society shall 
 be approved by an order of said court : Provided, that nothing 
 in this section shall be held to affect the natural rights of 
 said minor or of his parents or guardian, except in the matter 
 of his custody : And provided further, that if said minor shall 
 fail to conform to the order of court fixing his custody, he 
 may be apprehended and brought before the court, and the 
 court may sentence said minor as provided by law, or resur- 
 render him as the court may deem best for the interests of 
 said minor. [Laws 1903, § 5, p. 61.] 
 
 § 703. Guardianship of Persons Only. 
 
 [§ 1705, Rem.-Bal.] Nothing in this act shall entitle any 
 such society to act as guardian or to have control of the estate 
 of any minor child. [Laws 1903, § 6, p. 62.] 
 
 § 704. Habeas Corpus — Effect of Proceedings. 
 
 [§ 1706, Rem.-Bal.] Upon the hearing of any writ of 
 habeas corpus for the custody of any such child, if it appears 
 that such child has been surrendered to any such corporation
 
 483 BENEVOLENT SOCIETIES. § 705 
 
 under the provisions of this act such surrender shall be taken 
 as prima facie evidence that such child was legally and prop- 
 erly surrendered to such corporation and that such corpora- 
 tion is entitled to the custody and control of such child under 
 the provisions of this act. [Laws 1903, § 7, p. 62.] 
 
 § 705. Expenses During Examination — Costs. 
 
 [§ 1707, Rem.-Bal] The l^oard of county commissioners 
 shall pay the expenses of bringing the child before the court 
 and caring for it pending a hearing under this act; when a 
 child is surrendered to a benevolent society under the provi- 
 sions of this act by the superior court, the county shall pay 
 such society a reasonable compensation for the temporary care 
 of such child until it is placed in a family but not to exceed 
 fifty ($50) [dollars] in each case. No clerk, sheriff, police 
 officer, member of the board of county commissioners or agent 
 of any such society shall charge or be allowed any costs what- 
 ever in these proceedings, except where a complaint shall be 
 adjudged to be without sufficient cause and malicious, in which 
 event all costs shall be taxed against the complainant: Pro- 
 vided, that the provisions of this section shall not apply to 
 cases under section five of this act [1703, Rem.-Bal.]. [Laws 
 1903, § 8, p. 62.]
 
 §§ 706-708 EXISTING CORPORATION LAWS, 1913. 484 
 
 CEMETERY ASSOCIATIONS. 
 
 § 706. Associations may be Incorporated. 
 
 [§ 3643, Rem.-Bal.] Ten or more persons residing within 
 any county of this state may associate themselves together be 
 [by] an agreement in writing in the manner and form pre- 
 scribed in an act entitled "An act to provide for the incor- 
 poration of associations for social, charitable and educational 
 purposes," approved March 21, 1895, being contained in sec- 
 tions 4445 to 4456, inclusive, of Ballinger's Annotated Codes 
 and Statutes of Washington, for the purpose of organizing 
 themselves into a cemetery association, and upon complying 
 with the provisions of said act, so far as applicable, they shall 
 be and remain a corporation. [Laws 1899, § 1, p. 44.] 
 
 "Person" construed to be individual as distinct from corporation. 
 (Denny Hotel Co. v. Schram, 6 Wash. 134.) 
 
 § 707. Corporate Powers. 
 
 [§ 3644, Rem.-Bal.] All such associations shall have power 
 to prescribe the terms on which members may be admitted, the 
 number of its trustees and officers and the time and manner 
 of their election or appointment and the time and place of 
 meeting for the trustees and for the association, and to pass 
 all such other by-laws as may be necessary for the good gov- 
 ernment of such association. [Laws 1899, § 2, p. 45.] 
 
 § 708. May Hold Lands — Fund to be Created and Its Use — 
 Debts. 
 
 [§ 3645, Rem.-Bal.] Such association shall be authorized 
 to purchase or take by gift or devise, and hold land exempt 
 from execution and from any appropriation to public pur- 
 poses, for the sole purpose of a cemetery not exceeding eighty 
 acres, which shall be exempt from taxation if intended to be 
 used exclusively for burial purposes, and in no wise with a 
 view to profit of the members of such association : Provided, 
 that when the land already held by the association is all prac- 
 tically used then the amount thereof may be increased by
 
 485 CEMETERY ASSOCIATIONS. § 709 
 
 adding thereto not exceeding twenty acres at a time. Such 
 association may by its by-laws provide that a stated percentage 
 of the monej^s realized from the sale of lots, donations or other 
 sources of revenue, shall constitute an irreducible fund, which 
 fund may be invested in such manner or loaned upon such 
 securities as the association or the trustees thereof may deem 
 proper. The interest or income arising from the irreducible 
 fund, provided for in any by-laws, or so much thereof as may 
 be necessary, shall be devoted exclusively to the preservation 
 and embellishment of the lots sold to the members of such as- 
 sociation, and where any by-laws have been enacted for the 
 creation of an irreducible fund as herein provided for it can- 
 not thereafter be amended, in any manner whatever except 
 for the purpose of increasing such fund. After paying for 
 the land, all the future receipts and income of such associa- 
 tion subject to the provisions herein for the creation of an 
 irreducible fund, whether from the sale of lots, from dona- 
 tions, rents or otherwise, shall be applied exclusively to laying 
 out, preserving, protecting and embellishing the cemetery and 
 the avenues leading thereto, and in the erection of such build- 
 ings as may be necessary or convenient for the cemetery pur- 
 poses, and to paying the necessary expenses of the association. 
 No debts shall be contracted in anticipation of any future 
 receipts except for originally purchasing, laying out and 
 embellishing the ground and avenues, for which debts so con- 
 tracted such association may issue bonds or notes, and secure 
 the same by way of mortgage upon any of its lands, except- 
 ing such lots as shall have been conveyed to the members 
 thereof; and such association shall have power to adopt such 
 rules and regulations as they shall deem expedient for dis- 
 posing of and for conveying burial lots. [Laws 1899, § 3, p. 
 45.] 
 
 § 709. May Sell Land. 
 
 [§ 3646, Rem.-Bal.] It shall be lawful for said trustees, 
 wherever in their opinion any portion or portions of their 
 lands are unsuitable for burial purposes, to sell such portion 
 or portions, and apply the avails thereof to the general pur- 
 poses of such association. [Laws 1899, § 4, p. 46.]
 
 §§ 710-712 EXISTING CORPORATION LAWS, 1913. 486 
 
 § 710. Exemptions. 
 
 [§3647, Rem.-Bal.] Burial lots, sold by such association 
 shall be for the sole purpose of interment, and shall be exempt 
 from taxation, execution, attachment or other claims, lien or 
 process whatsoever, if used as intended, exclusively for burial 
 purposes and in no wise with a view to profit. [Laws 1899, 
 § 5, p. 46.] 
 
 § 711. Plat to be Recorded — Reflation of Grounds. 
 
 [§3649, Rem.-Bal.] All such associations shall cause a 
 plan of their grounds and of the blocks and lots by them laid 
 out, to be made and recorded, such blocks and lots to be num- 
 bered by regular consecutive numbers, and shall have power to 
 inclose, improve and adorn the grounds and avenues, to erect 
 buildings for the use of the association and to prescribe rules 
 for the designation and adorning of lots and for erecting 
 monuments in the cemetery, and to prohibit any use, division, 
 improvement or adornment of a lot which they may deem 
 improper. An annual exhibit shall be made of the affairs of 
 the association. The plan, or plat, hereinbefore required, 
 shall be recorded by the proper county auditor for a fee not 
 to exceed ten cents a lot, and if the actual cost of recording 
 the same shall be less than ten cents a lot, then said auditor 
 shall record the same at the actual cost thereof. [Laws 1905, 
 § 6, p. 123, c. 64.] 
 
 § 712. Injury to Sepulture or Property— Penalty. 
 
 [§3651, Rem.-Bal.] Any person who shall willfully de- 
 stroy, mutilate, deface, injure or remove any tomb, monument 
 or gravestone, or other structure in any cemetery, or any fence, 
 railing or other work for the protection or ornament of a 
 cemetery tomb, monument or gravestone or other structure 
 aforesaid or of any cemetery lot within a cemetery, or shall 
 willfully destroy, cut, break or injure any tree, shrub or plant 
 within the limits of a cemetery shall be deemed guilty of a mis- 
 demeanor and shall upon conviction thereof before any court 
 of competent jurisdiction be punished by a fine not less than 
 five dollars, nor more than five hundred dollars and imprison- 
 ment in the county jail for a term not less than one nor more
 
 487 CEMETERY ASSOCIATIONS. § 713 
 
 than thirty days, according to the nature and aggravation of 
 the offense and such offender shall also be liable in an action 
 of trespass in the name of said association, to pay all such 
 damages as have been occasioned by his unlawful act or acts, 
 which wrong, when recovered, shall be applied to the repara- 
 tion and restoration of the property destroyed or injured as 
 above. [Laws 1899, § 7, p. 47.] 
 
 § 713. May Hold Property in Trust for Improvement of 
 Cemetery. 
 [§ 3650, Rem.-Bal.] That all associations and companies 
 owning cemeteries may take and hold any property, real and 
 personal, bequeathed or given upon trust, to apply the income 
 thereof under the direction of the trustees or managers of such 
 associations or companies, for the improvement or embellish- 
 ment of such cemeteries, or the erection or preservation of any 
 buildings, structures, fences or walks erected or to be erected 
 upon the lands of such cemetery associations or companies, or 
 upon the lots or plots of any of the proprietors, or for the re- 
 pair, preservation, erection or renewal of any tomb, monu- 
 ment, gravestone, fence, railing, or other erection in or around 
 any cemetery lot or plot, or for planting and cultivating trees, 
 shrubs, flowers or plants in or around any such lot or plot, or 
 for improving or embellishing such cemeteries or any of the 
 lots or plots in any other manner or form consistent with the 
 design and purposes of such associations and companies, ac- 
 cording to the terms of such grant, devise or bequest. [Laws 
 1905, § 1, c. 118.]
 
 §§ 714r-718 EXISTING CORPORATION LAWS, 1913. 488 
 
 FEES AND LICENSE TAX. 
 
 § 714. Filing Articles of Incorporation. 
 
 [§ 3709, Rem -Bal.] Every corporation incorporated under 
 the laws of this state, or of any state or territory in the United 
 States or of any foreign state or country, required by law to 
 file articles of incorporation in the office of the Secretary of 
 State, shall pay to the Secretary of State a filing fee of twenty- 
 five dollars. [Laws 1907, § 1, p. 270 ; Bal., § 4285.] 
 
 § 715. Filing Amendment or Supplemental Articles. 
 
 [§ 3710, Rem.-Bal.] Every corporation, foreign or do- 
 mestic, desiring to file in the office of the Secretary of State 
 articles amendatory or supplemental, or certificates of increase 
 or decrease of capital stock shall pay to the Secretary of State 
 a fee of ten dollars. [Laws 1907, § 2, p. 270 ; Bal., § 4286.] 
 
 § 716. Filing Appointment of Agent of Foreign Company. 
 
 [§ 3711, Rem.-Bal.] Every foreign corporation filing in 
 the office of the Secretary of State a certificate of the appoint- 
 ment of an agent residing in this state, or a certificate of the 
 revocation of such appointment of the resident agent, shall 
 pay to the Secretary of State a fee of five dollars. [Laws 
 1907, § 3, p. 270.] 
 
 § 717. Certified Copies. 
 
 [§3712, Rem.-Bal.] The fee for furnishing a certified 
 copy of articles of incorporation, or articles amendatory or 
 supplemental, or certificates of increase or decrease of capital 
 stock, or certificate of appointment of resident agent, or cer- 
 tificate or revocation of appointment of resident agent, shall 
 be five dollars. [Laws 1907, § 4, p. 271 j Bal., § 4287.] 
 
 § 718. Recording Fees, When. 
 
 [§ 3713, Rem.-Bal.] There shall be no charge for record- 
 ing any of the documents mentioned in this act or for making 
 or certifying to copies of same other than the fees in this act
 
 489 FEES AND LICENSE TAX. §§ 719,720 
 
 prescribed, unless the document to be recorded or the copy 
 to be certified shall exceed twenty folios, in which case there 
 shall be a further charge of fifteen cents per folio for all such 
 excess. [Laws 1907, § 5, p. 271 ; Bal., § 4288.] 
 
 § 719. License Fee — Penalty for Nonpayment — Building 
 and Loan Companies Excepted. 
 [§ 3714, Rem.-Bal.] Every corporation incorporated under 
 the laws of this state, and every foreign corporation having 
 its articles of incorporation on file in the office of the Secretary 
 of State shall, on or before the first day of July of each and 
 every year, pay to the Secretary of State, for the use of the 
 state, the following license fees : Every corporation having a 
 capital stock, fifteen dollars. Every corporation failing to 
 pay the said annual license fee, on or before the first day of 
 July of each and every year, and desiring to pay the same there- 
 after, and before the first day of January next following, shall 
 pay to the Secretary of State, for the use of the state, in addi- 
 tion to the said license fee, the following further fee, as a 
 penalty for such failure: The sum of two dollars and fifty 
 cents: Provided, however. That building and loan companies 
 paying special fees provided for in this act under which same 
 are incorporated shall not be required to pay the regular fee 
 provided herein. [Laws 1907, § 6, p. 271 ; Bal., § 4289.] 
 
 The year contemplated by the statute (Laws 1897, p. 135, sec. 5)^ 
 for payment of license fee is the year beginning July 1st, not the 
 calendar year. (State ex rel. Sterling Timber Co. v. Jenkins, 22 Wash. 
 494, 61 Pac. 141.) 
 
 Payment of license fee by foreign corporation is a matter exclusively 
 between state and company, and cannot be raised by third person. (State 
 ex rel. Ami Co. V. Superior Court, 42 Wash. 675, 85 Pac. 669.) 
 
 A corporation does not wholly lose its right to use of its corporate 
 name until period for reinstatement has elapsed. (State ex rel. 
 Harper v. Howell, 56 Wash. 694, 106 Pac. 470. See 122 Pac. 604; 123 
 Pac. 606.) 
 
 § 720. Shall not Maintain Suit Unless License is Paid- 
 Names to be Stricken from Records by Secretary 
 of State. 
 
 [§ 3715, Rem.-Bal.] No corporation shall be permitted to 
 commence or maintain any suit, action or proceeding in any
 
 § 720 EXISTING CORPORATION LAWS, 1913. 490 
 
 court of this state, without alleging and proving that it has 
 paid its annual license fee last due. A certificate of the pay- 
 ment of such annual license fee, or anj' duplicate of such cer- 
 tificate under the seal of the Secretary of State, shall be prima 
 facie evidence of such payment ; and the Secretary of State 
 is hereby required to issue such duplicate certificates, upon 
 request, at a charge of twenty-five cents for each thereof. The 
 State Board of Tax Commissioners may institute suits to en- 
 force the payment of any license fee, due from any corpora- 
 tion, under this or any other law. Failure upon the part of 
 any corporation to pay its annual license fee for a period of 
 one year, from and after the date when such payment first 
 became due, shall be prima facie evidence of the insolvency 
 of such corporation, and the fact of such insolvency may be 
 shown by the state or by any private person or corporation : 
 Provided, that as to corporations now delinquent in the pay- 
 ment of their annual license fees for a period of one or more 
 years, such presumption of insolvency shall not exist until 
 after one year from the date of the passage of this act and 
 the continuation of such delinquency. It shall be the duty 
 of the Secretary of State to strike from the records of his office 
 the names of all incorporations which have neglected for a 
 period of two years to pay their annual license fees; and any 
 corporation thereafter organized may take and shall have the 
 exclusive right to use the corporate name of any corporation 
 so stricken from the records : Provided, that no corporate 
 name shall be so stricken from the records for a period of 
 one year from the date of the passage of this act. [Laws 
 1907, § 7, p. 271.] 
 
 Forfeiture for failure to pay license fees violates no contract rights 
 of creditors. (Hawley v. Bonanza Queen Min. Co., 61 Wash. 90, 111 
 Pac. 1073.) 
 
 This provision only goes to the capacity to sue, and is waived unless 
 raised by demurrer or answer. (Pierson v. Northern Pac. E. Co., 61 
 Wash. 450, 452, 112 Pac. 509, 511; Thompson-Spencer Co. v. Thompson, 
 61 Wash. 547, 112 Pac. 655.) 
 
 Compliance with the section is not necessary in case of a foreign 
 corporation not "doing business within the state." (Lilly-Brackett Co. 
 V. Sonnemann, 50 Wash. 487, 97 Pac. 506.)
 
 491 FEES AND LICENSE TAX. §§ 721-723 
 
 Whenever in the course of the case it appears that the defendant set- 
 ting up a counterclaim is in default in payment of a license fee, the 
 defendant cannot maintain further chum to affirmative relief. (North 
 Star etc. Co. v. Alaska Yukon etc. Co., 63 Wash. 376, 115 Pac. 855.) 
 
 The section held to apply to foreign corporation maintaining marine 
 superintendent at port in state. (Boston Towboat Co. v. Sesnon Co., 
 64 Wash. 375, 116 Pac. 1083.) 
 
 A coal mining company is not within this section. (Davies v. Ball, 
 64 Wash. 292, 116 Pac. 833.) 
 
 § 721. Reinstatement of Delinquent Corporation. 
 
 [§ 3715a, Rem.-Bal.] Every corporation whose name has 
 been or shall hereafter be, stricken from the records of the 
 office of the Secretary of State in pursuance of law for failure 
 to pay its annual license fee for two years is hereby author- 
 ized and permitted to apply to the Secretary of State for 
 reinstatement at any time within six months from the ap- 
 proval of this act, or within six months after its name has 
 been stricken from the records of the office of the Secretary 
 of State. [Laws 1909, Sp. Sess., § 1, p. 57.] 
 
 § 722. Condition — Prepayment of Fees and Penalty. 
 
 [§ 3715b, Rem.-Bal.] Any corporation so applying for re- 
 instatement shall at the time of its application pay to the 
 Secretary of State, for the use of the state, all license fees and 
 penalties then due from it and the sum of twenty-five dollars 
 as additional penalty, and upon the making of such applica- 
 tion and such payment, it shall be the duty of the Secretary 
 of State to enter upon his records a notation that such cor- 
 poration is reinstated. [Laws 1909, Sp. Sess., § 2, p. 57.] 
 
 This section repealed by Laws 1911, §2, p. 135; ruling of Attorney 
 General. 
 
 § 723. Rights Restored. ^ 
 
 [§ 3715c, Rem.-Bal.] Thereafter such corporation shall 
 have and enjoy the same rights and powers as if its name had 
 never been stricken from the records, and all things done by 
 it in the exercise of its corporate powers before such reinstate- 
 ment are hereby validated and confirmed. [Laws 1909, Sp. 
 Sess., § 3, p. 57.]
 
 §§ 724r-727 EXISTING corporation laws, 1913. 492 
 
 § 724. Dissolution for Nonpayment. 
 
 [§ 3715d, Rem.-Bal.] If, however, within the period named 
 within which a corporation may make application to be rein- 
 stated such corporation shall not have made such application, 
 the Secretary of State shall enter upon his records a notation 
 that such corporation is dissolved, and it shall thereupon be 
 dissolved and the trustees of such corporation shall hold the 
 title to the property of the corporation for the benefit of its 
 stockholders and creditors to be disposed of under appropriate 
 court proceedings. [Laws 1909, Sp. Sess., § 4, p. 57.] 
 
 See Laws 1911, § 2, p. 135. 
 
 § 725. Adoption of Name of Delinquent Corporation. 
 
 [§3715e, Rem.-Bal.] The name of no corporation which 
 has been stricken from the records of the office of Secretary of 
 State for nonpayment of its annual license tax shall be adopted 
 by another corporation until the expiration of the time within 
 which such delinquent corporation is allowed in which to apply 
 for reinstatement, or while such application for reinstatement 
 is pending. [Laws 1909, Sp. Sess., § 5, p. 58.] 
 
 § 726. Fee for Certifying Corporation Laws. 
 
 [§ 3716, Rem.-Bal.] The fee for furnishing and certifying 
 to a printed compilation of the corporation laws of this state 
 shall be five doUars. [Laws 1907, § 8, p. 272.] 
 
 § 727. Not to Apply to Certain Corporations. 
 
 [§ 3717, Rem.-Bal.] This act shall not apply to domestic 
 corporations organized for religious, social, charitable or edu- 
 cational purposes, or to foreign corporations organized for 
 like purposes, when not engaged in this state in the loaning 
 of money or the conducting of any other business pursuits for 
 profit. [Laws 1907, § 9, p. 272; Bal., § 4290.]
 
 493 REINSTATEMENT PROVISIONS. §§ 728, 729 
 
 REINSTATEMENT PROVISIONS. 
 
 § 728. Application for Reinstatement — Dissolution. 
 
 That section 3715a of Remington and Ballinger's Annotated 
 Codes and Statutes of Washington be, and the same is hereby, 
 amended to read as follows: Section 3715a. Every corpora- 
 tion whose name has been, or shall hereafter be, stricken from 
 the records of the office of the Secretary of State in pur.su- 
 ance of law for failure to pay its annual license fee for two 
 years is hereby authorized and permitted to apply to the 
 Secretary of State for reinstatement at any time after its 
 name has been stricken from the records of the office of the 
 Secretary of State. Any corporation stricken from the rec- 
 ords and dissolved, as provided in this chapter may at any 
 time thereafter hold a meeting of stockholders, in the same 
 manner as provided during its corporate existence, and pass 
 such resolutions as may be necessary to close out its affairs 
 and wind up the business of such corporation and where such 
 stricken and dissolved corporation has heretofore held such 
 meetings of stockholders for the purpose of passing resolutions 
 to wind up their affairs, such method of procedure is hereby 
 validated and approved. [Laws 1911, p. 135, § 1.] 
 
 § 729. Penalties to be Paid for Reinstatement. 
 
 That section 3715b of Remington and Ballinger's Anno- 
 tated Codes and Statutes of Washington be, and the same is 
 hereby, amended to read as follows : Section 3715b. Any cor- 
 poration so applying for reinstatement shall at the time of its 
 application pay to the Secretary of State, for the use of the 
 state, all license fees and penalties then due from it and the 
 sum of one hundred dollars as additional penalty: Provided, 
 that this shall apply to the reinstatement of corporations, the 
 names of which shall have been stricken at the present time, 
 and hereafter whenever any corporation shall have its name 
 stricken from the records by the Secretary of State it shall, 
 in applying for reinstatement, pay all license fees and penal- 
 ties then due from it and the additional sum of twenty dollars
 
 §§730,731 EXISTING CORPORATION LAWS, 1913. 494 
 
 for each and every year that its name has been stricken from 
 the records, and upon the making of such application and 
 such payment, it shall be the duty of the Secretary of State 
 to enter upon his records a notation that such corporation is 
 reinstated. [Laws 1911, § 2, p. 135.] 
 
 § 730. All Fees shall be Paid in Advance. 
 
 [§3718, Eem.-Bal.] All fees provided for in this act are 
 due in advance and shall be paid to the Secretary of State 
 before the services desired are performed. [Laws 1907, § 10, 
 p. 274.] 
 
 § 731. Corporation Charged with Crime. 
 
 Section 1. Whenever an indictment or information shall 
 be filed in any superior court against a corporation charging 
 it with the commission of a crime, a summons shall be issued 
 by the clerk of such court, signed by one of the judges thereof, 
 commanding the sheriff forthwith to notify the accused 
 thereof, and commanding it to appear before such court at 
 such time as shall be specified in said summons. Such sum- 
 mons and a copy of the indictment or information shall be at 
 once delivered by such clerk to said sheriff and by him forth- 
 with served and returned in the manner provided for service 
 of summons upon such corporation in a civil action. When- 
 ever a complaint against a corporation, charging it with the 
 commission of a crime, shall be made before any justice of the 
 peace or municipal judge, a like summons, signed by such 
 justice of the peace or municipal judge, shall be issued, which, 
 together with a copy of said complaint, shall be delivered to 
 the sheriff at once and by him forthwith served as herein pro- 
 vided. [Laws 1911, § 1, p. 106.] 
 
 Sec. 2. Upon such service being made such corporation 
 shall appear at the time designated, by one of its officers or by 
 counsel ; and upon such appearance, and thereafter, the same 
 course shall be pursued, as nearly as may be, as upon the ap- 
 pearance of an individual to indictment, information or com- 
 plaint and warrant charging him with the same offense. Upon 
 failure of the corporation to make such appearance said court
 
 495 REINSTATEMENT PROVISIONS. § 731 
 
 shall cause to be entered a plea of "not guilty," and upon ap- 
 pearance made or plea entered the corporation shall be deemed 
 forthwith continuously present in court until the case shall be 
 finally disposed of. [Laws 1911, § 2, p. 107.] 
 
 Sec. 3. If the corporation shall be found guilty and a fine 
 imposed, it shall be entered and docketed by the clerk, or jus- 
 tice of the peace or municipal judge as a judgment against 
 the corporation, and it shall be of the same force and effect 
 and be enforced against such corporation in the same manner 
 as a judgment in a civil action. [Laws 1911, § 3, p. 107. j
 
 §§ 732-735 EXISTING corporation laws, 1913. 496 
 
 CONSTITUTIONAL PROVISIONS. 
 
 § 732. Not to be Created by Special Laws. 
 
 Corporations may be formed under general laws, but shall 
 not be created by special acts. All laws relating to corpora- 
 tions may be altered, amended, or repealed by the legislature 
 at any time, and all corporations doing business in this state 
 may, as to such business, be regulated, limited, or restrained 
 by law. [§ 1, Art. XII, State Const.] 
 
 A special charter is not repealed by a subsequent general incorpora- 
 tion act. (Cascades R. Co. v. Sohms, 1 Wash. Ter. 557.) 
 
 § 733. Legislature shall not Extend Franchise or Remit 
 Forfeiture. 
 The legislature shall not extend any franchise or charter, 
 nor remit the forfeiture of any franchise or charter of any 
 corporation now existing or which shall hereafter exist under 
 the laws of this state. [§ 3, Art. XII, State Const.] 
 
 § 734. Liability of Stockholders. 
 
 Each stockholder in all incorporated companies, except cor- 
 porations organized for banking or insurance purposes, shall 
 be liable for the debts of the corporation to the amount of his 
 unpaid stock, and no more, and one or more stockholders may 
 be joined as parties defendant in suits to recover upon his 
 liability. [§ 4, Art. XII, State Const.] 
 
 Agreement by corporation not to engage in a particular business is 
 inoperative against the stockholders of the company individually. 
 (Murray v. O'Kanagan Livestock etc. Co., 12 Wash. 259, 40 Pac. 942.) 
 
 § 735. Corporation Construed to Include What. 
 
 The term "corporations," as used in this article, shall be 
 construed to include all associations and joint stock companies 
 having any powers or privileges of corporations not possessed 
 by individuals or partnerships, and all corporations shall have 
 the right to sue and shall be subject to be sued, in all courts, 
 in like cases as natural persons. [§ 5, Art. XII, State Const.]
 
 497 CONSTITUTIONAL PROVISIONS. §§ 736, 737 
 
 § 736. Corporation Stock, Fictitious Issue Void. 
 
 Corporations shall not issue stock, except to bona fide sub- 
 scribers therefor ; or their assignees ; nor shall any corporation 
 issue any bond, or other obligation, for the payment of money, 
 except for money or property received or labor done. The 
 stock of corporations shall not be increased, except in pursu- 
 ance of a general law, nor shall any law authorize the increase 
 of stock, without the consent of the person or persons holding 
 the larger amount in value of the stock, nor without due no- 
 tice of the proposed increase having been previously given 
 in such manner as may be prescribed by law. All fictitious 
 increase of stock or indebtedness shall be void. [§ 6, Art. 
 XII, State Const.] 
 
 Property may be taken in payment for a stock subscription. (Man- 
 hattan Trust Co. V. Seattle Coal & Iron Co., 16 Wash. 499, 48 Pac. 333, 
 737.) 
 
 Property taken in payment of stock must be fairly valued and stock- 
 holder's valuation is not conclusive. (Dunlap v. Eauch, 24 Wash. 620, 
 64 Pac. 807; Manhattan Trust Co. v. Seattle Coal & Iron Co., 19 Wash. 
 493, 53 Pac. 951.) 
 
 Where fully paid stock is issued for property, there must be actual 
 fraud to enable creditors to call stockholders to account or for unpaid 
 subscriptions. (Turner v. Bailey, 12 Wash. 634, 42 Pac. 115.) 
 
 Stock subscriptions must be fully paid in property or cash, irre- 
 spective of understandings among the stockholders. (Adamant Mfg. 
 Co. V. Wallace, 16 Wash. 614, 48 Pac. 415.) 
 
 Where stock is fully paid by property at its fair valuation, the 
 stockholders do not become subsequently liable by the subsequent de- 
 preciation of the property. (Turner v. Bailey, 12 Wash. 634, 42 Pac. 
 115.) 
 
 The fact that a stock certificate purports on its face to be fully paid 
 is not conclusive. (Elderkin v. Peterson, 8 Wash. 674, 36 Pac. 1089.) 
 
 Stock issued to promoters for property not canceled in absence of 
 actual fraud. (Inland Nursery & Floral Co. v. Eice, 57 Wash. 67, 106 
 Pae. 499.) 
 
 § 737. Foreign Corporations shall Conform to State Laws. 
 
 No corporation organized outside the limits of this state 
 shall be allowed to transact business within the state on more 
 favorable conditions than are prescribed by law to similar cor- 
 porations organized under the laws of this state. [§ 7, Art. 
 XII, State Const.] 
 32
 
 §§ 738-741 EXISTING CORPORATION LAWS, 1913. 498 
 
 § 738. Leasing or Alienation of Franchises. 
 
 No corporation shall lease or alienate any franchise, so as to 
 release the franchise, or property held thereunder, from the 
 liabilities of the lessor, or grantor, lessee, or grantee, con- 
 tracted or incurred in the operation, use, or enjoyment of such 
 franchise or any of its privileges. [§ 8, Art. XII. State 
 Const.] 
 
 Transfer of property for payment of debts not prevented by article 
 12, section 8, constitution, in alienation of corporate franchise. 
 (Klosterman v. Mason County etc. E. Co., 8 Wash. 281, 36 Pac. 136.) 
 
 Rule that corporation may not assign its corporate privileges and 
 franchises does not apply to franchises granted by city which come 
 under section 1500, General Statutes. (Commercial Elec. L. & P. Co. 
 V. Tacoma, 17 Wash. 661, 50 Pac. 592.) 
 
 § 739. State shall not Loan Its Credit to Corporations. 
 
 The state shall not in any manner loan its credit, nor shall it 
 subscribe to, or be interested in, the stock of any company, 
 association or corporation. [§ 9, Art. XII, State Const.] 
 
 § 740. Eminent Domain, State may Exercise Right Against 
 Corporations. 
 
 The exercise of the right of eminent domain shall never be 
 so abridged or construed as to prevent the legislature from 
 taking the property and franchises of incorporated companies, 
 and subjecting them to public use the same as the property of 
 individuals. [§ 10, Art. XII, State Const.] 
 
 § 741. Liability of Stockholders. 
 
 No corporation, association, or individual shall issue or put 
 in circulation as money anything but the lawful money of the 
 United States. Each stockholder of any banking or insurance 
 corporation or joint stock association shall be individually and 
 personally liable, equally and ratably, and not one for another, 
 for all contracts, debts and' engagements of such corporation 
 or association accruing while they remain such stockholders, to 
 the extent of the amount of their stock therein at the par 
 value thereof, in addition to the amount invested in such 
 shares. [§ 11, Art. XII, State Const.]
 
 499 CONSTITUTIONAL. PROVISIONS. §§742,743 
 
 The liability imposed by statute is secondary, as that of surety 
 (Wilson V. Book, 13 Wash. 676, 43 Pac. 939; Watterson v. Masterson, 
 15 Wash. 511, 46 Pac. 1041), but this does not affect the time and 
 manner of enforcement by suit (Bennett v. Thorne, 36 Wash. 253, 78 
 Pac. 936); the additional liability is personal. (Shuey v. Holmes, 21 
 Wash. 223, 57 Pac. 818; Shuey v. Adair, 24 Wash. 378, 64 Pac. 536.) 
 
 § 742. Insolvent Banks shall not Receive Deposits. 
 
 Any president, director, manager, cashier, or other officer 
 of any banking institution who shall receive or assent to the 
 reception of deposits after he shall have knowledge of the fact 
 that such banking institution is insolvent or in failing circum- 
 stances shall be individually responsible for such deposits so 
 received. [§ 12, Art. XII, State Const.] 
 
 This section does not preclude criminal liability. (State v. Oleson, 
 35 Wash. 149, 76 Pac. 686.) 
 
 § 743. Common Carriers — Rights — Duties. 
 
 All railroad, canal, and other transportation companies are 
 declared to be common carriers and subject to legislative con- 
 trol. Any association or corporation organized for the pur- 
 pose, under the laws of the state, shall have the right to con- 
 nect at the state line with railroads of other states. Every 
 railroad company shall have the right with its road, whether 
 the same is now constructed or may hereafter be constructed, 
 to intersect, cross, or connect with any other railroad, and 
 when such railroads are of the same or similar gauge they 
 shall, at all crossings and at all points where a railroad shall 
 begin or terminate at or near any other railroad, form proper 
 connections, so that the cars of any such railroad companies 
 may be speedily transferred from one railroad to another. 
 All railroad companies shall receive and transport each the 
 other's passengers, tonnage, and cars, without delay or dis- 
 crimination. [§ 13, Art. XII, State Const.] 
 
 Kailways are common carriers. (Cogswell v. West St. & E. Co., 5 
 Wash. 46, 31 Pac. 411; Boyle v. Gt. North. E. Co., 13 Wash. 383, 43 Pac. 
 344; State ex rel. Grinsfelder v. Spokane St. R. Co., 19 Wash. 518, 53 
 Pac. 719.) 
 
 An irrigation company is a common carrier. (Prescott Irr. Co. v. 
 Flathers, 20 Wash. 454, 55 Pac. 635.)
 
 §§ 743a-745 existing corporation laws, 1913. 500 
 
 An owner of an office building operating an elevator is a common 
 carrier. (Edwards v. Burke, 36 Wash. 107, 78 Pac. 610.) 
 
 Right of railroad to cross another does not justify longitudinal tak- 
 ing. (Seattle & M. R. Co. v. State, 7 Wash. 150, 34 Pac. 551.) 
 
 Great necessity must be shown to justify condemnation of terminal 
 grounds. (State ex rel. Spokane Falls & N. E. Co. v. Superior Court, 
 40 Wash. 389, 82 Pac. 417.) 
 
 § 743a. Certain Combinations Forbidden. 
 
 No railroad company or other common carrier shall combine 
 or make any contract with the owners of any vessel that leaves 
 port or makes port in this state, or with any common carrier, 
 by which combination or contract the earnings of one doing 
 the carrying are to be shared by the other not doing the carry- 
 ing. [§ 14, Art. XII, State Const.] 
 
 Construction by competing lines of new line opening new territory 
 does not violate this section. (State ex rel. Cascade R. Co. v. Superior 
 Court, 51 Wash. 346, 98 Pac. 739.) 
 
 § 744. Discrimination in Rates Forbidden. 
 
 No discrimination in charges or facilities for transportation 
 shall be made by any railroad or other transportation com- 
 pany between places or persons, or in the facilities for the 
 transportation of the same classes of freight or passengers 
 within the state, or coming or going to any other state. Per- 
 sons and property transported over any railroad, or by any 
 other transportation company, or individual, shall be delivered 
 at any station, landing or port, at charges not exceeding the 
 charges for the transportation of persons and property of the 
 same class, in the same direction to any more distant station, 
 port or landing. Excursion and commutation tickets may be 
 issued at special rates. [§ 15, Art. XII, State Const.] 
 
 This section is limited to construction of legislature in statute; not 
 self-executing. (Northwestern Warehouse Co. v. Oregon R. & Nav. 
 Co., 32 Wash. 218, 73 Pac. 388.) 
 
 § 745. Shall not Consolidate. 
 
 No railroad corporation shall consolidate its stock, property 
 or franchise with any other railroad corporation owning a 
 competing line. [§ 16, Art. XII, State Const.]
 
 501 CONSTITUTIONAL PROVISIONS. §§ 746-748 
 
 § 746. Rolling Stock, etc., Considered to be Personal Prop- 
 erty. 
 
 The rolling stock and other movable property belonging to 
 any railroad company or corporation in this state shall be con- 
 sidered personal property, and shall be liable to taxation and 
 to execution and sale in the same manner as the personal prop- 
 erty of individuals, and such property shall not be exempted 
 from execution and sale. [§ 17, Art. XII, State Const.] 
 
 § 747. Regulation of Fares and Freights by Legislature. 
 
 The legislature shall pass laws establishing reasonable maxi- 
 mum rates of charges for the transportation of passengers and 
 freight, and to correct abuses, and to prevent discrimination 
 and extortion in the rates of freight and passenger tariffs on 
 the different railroads and other common carriers in the state, 
 and shall enforce such laws by adequate penalties. A rail- 
 road and transportation commission may be established and its 
 powers and duties fully defined by law. [§ 18, Art. XII, State 
 Const.] 
 
 This section does not prevent the delegation of rate-making to a 
 commission. (Great Northern R. Co. v. E. R. Commission, 52 Wash. 
 33, lOO Pac. 184.) 
 
 § 748. Telegraph and Telephone Companies. 
 
 Any association or corporation, or the lessees or managers 
 thereof, organized for the purpose, or any individual, shall 
 have the right to construct and maintain lines of telegraph 
 and telephone within this state, and said companies shall re- 
 ceive and transmit each other's messages without delay or dis- 
 crimination, and all such companies are hereby declared to be 
 common carriers and subject to legislative control. Railroad 
 corporations organized or doing business in this state shall 
 allow telegraph and telephone corporations and companies to 
 construct and maintain telegraph lines on and along the rights 
 of way of such railroads and railroad companies, and no rail- 
 road corporation organized or doing business in this state shall 
 allow any telegraph corporation or company any facilities, 
 privileges, or rates for transportation of men or material, or 
 for repairing their lines, not allowed to all telegraph com-
 
 §§ 749-751 EXISTING CORPORATION LAWS, 1913, 502 
 
 panies. The right of eminent domain is hereby extended to 
 all telegraph and telephone companies. The legislature shall, 
 by general law, of uniform operation, provide reasonable regu- 
 lations to give effect to this section. [§ 19, Art. XII, State 
 Const.] 
 
 Not self-executing. City may decline to grant franchise. (State 
 ex rel. Spokane etc. Tel. Co. v. Spokane, 24 Wash. 53, 63 Pac. 1116.) 
 
 § 749. Free Passes — Discrimination Forbidden. 
 
 No railroad or other transportation company shall grant 
 free passes, or sell tickets or passes at a discount, other than 
 as sold to the public generally, to any member of the legis- 
 lature, or to any person holding any public office within this 
 state. The legislature shall pass laws to carry this provision 
 into effect. [§ 20, Art. XII, State Const.] 
 
 A public officer traveling on pass estopped from setting up its in- 
 validity. (Muldoon V. Seattle City Ry. Co., 10 Wash. 311, 38 Pac. 995.) 
 
 § 750. Railroads shall not Discriminate Against Any Ex- 
 press Company. 
 
 Railroad companies now or hereafter organized or doing 
 business in this state, shall allow all express companies organ- 
 ized or doing business in this state, transportation over all lines 
 of railroad owned or operated by such railroad companies upon 
 equal terms with any other express company, and no railroad 
 corporation organized or doing business in this state shall 
 allow any express corporation or company any facilities, privi- 
 leges, or rates for transportation of men or materials or prop- 
 erty carried by them, or for doing the business of such express 
 companies, not allowed to all express companies. [§ 21, Art. 
 XII, State Const.] 
 
 § 751. Trusts and Monopolies Forbidden. 
 
 Monopolies and trusts shall never be allowed in this state, 
 and no incorporated company, copartnership, or association 
 of persons in this state shall directly or indirectly combine or 
 make any contract with any other incorporated company, 
 foreign or domestic, through their stockholders, or the trus-
 
 503 CONSTITUTIONAL PROVISIONS. § 751 
 
 tees or assignees of such stockholders, or with any copartner- 
 ship or association of persons, or in any manner whatever, for 
 the purpose of fixing the price or limiting the production or 
 regulating the transportation of any product or commodity. 
 The legislature shall pass laws for the enforcement of this 
 section by adequate penalties, and in case of incorporated com- 
 panies, if necessary for that purpose, may declare a forfeiture 
 of their franchise. [§22, Art. XII, State Const.] 
 
 Street railway franchise permitting consolidation of competing lines 
 does not violate this section. (Wood v. Seattle, 23 Wash. 1, 62 Pac. 
 135.) 
 
 Held, monopoly in warehouse business not shown. (Northwest 
 Warehouse Co. v. Oregon E. & N. Co., 32 Wash. 218, 73 Pac. 388.) 
 
 Section 8100, Eemington and Ballinger's Code, providing for excava- 
 tion of waterways, does not violate this section. (Seattle & Lake 
 Wash. Waterway Co. v. Seattle Dock Co., 35 Wash. 503, 77 Pac. 845.) 
 
 Boom company. (Nicomen Boom Co. v. North Shore etc. Co., 40 
 Wash. 315, 82 Pac. 412.)
 
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 41 
 
 441 
 
 2641 
 
 42 
 
 442 
 
 2642 
 
 43 
 
 443 
 
 2643 
 
 44 
 
 444 
 
 2644 
 
 45 
 
 445
 
 EXISTING CORPORATION LAWS, 1913. 506 
 
 Kem.-Bal. 
 
 Secretary of State. 
 
 Mclntire. 
 
 2645 
 
 46 
 
 446 
 
 2646 
 
 47 
 
 447 
 
 2647 
 
 48 
 
 448 
 
 2648 
 
 49 
 
 449 
 
 2649 
 
 50 
 
 450 
 
 3290 
 
 205 
 
 605 
 
 3291 
 
 206 
 
 606 
 
 3292 
 
 207 
 
 607 
 
 3293 
 
 208 
 
 608 
 
 3294 
 
 209 
 
 609 
 
 3295 
 
 238 
 
 633 
 
 3296 
 
 239 
 
 639 
 
 3297 
 
 240 
 
 640 
 
 3298 
 
 241 
 
 641 
 
 3299 
 
 242 
 
 642 
 
 3300 
 
 243 
 
 643 
 
 3301 
 
 244 
 
 644 
 
 3302 
 
 245 
 
 645 
 
 3303 
 
 246 
 
 646 
 
 3304 
 
 247 
 
 647 
 
 3305 
 
 248 
 
 648 
 
 3306 
 
 249 
 
 649 
 
 3307 
 
 250 
 
 650 
 
 3308 
 
 251 
 
 651 
 
 3309 
 
 252 
 
 652 
 
 3310 
 
 253 
 
 653 
 
 3311 
 
 254 
 
 654 
 
 3313 
 
 255 
 
 655 
 
 3314 
 
 256 
 
 656 
 
 3315 
 
 210 
 
 610 
 
 3316 
 
 211 
 
 611 
 
 3317 
 
 212 
 
 612 
 
 3318 
 
 213 
 
 613 
 
 3319 
 
 214 
 
 614 
 
 3320 
 
 215 
 
 615 
 
 3321 
 
 216 
 
 616 
 
 3322 
 
 217 
 
 617 
 
 3323 
 
 218 
 
 618 
 
 3324 
 
 219 
 
 619
 
 507 CROSS-REFERENCES. 
 
 em.-Ral. 
 
 Secretary of State. 
 
 Melntire. 
 
 3325 
 
 220 
 
 620 
 
 3326 
 
 221 
 
 621 
 
 3327 
 
 222 
 
 622 
 
 3328 
 
 223 
 
 623 
 
 3329 
 
 224 
 
 624 
 
 3330 
 
 225 
 
 625 
 
 3331 
 
 226 
 
 626 
 
 3332 
 
 227 
 
 627 
 
 3333 
 
 228 
 
 628 
 
 3334 
 
 229 
 
 629 
 
 3335 
 
 230 
 
 630 
 
 3336 
 
 231 
 
 631 
 
 3337 
 
 232 
 
 632 
 
 3338 
 
 233 
 
 633 
 
 3339 
 
 234 
 
 634 
 
 3340 
 
 
 634a 
 
 3341 
 
 235 
 
 635 
 
 3342 
 
 236 
 
 636 
 
 3343 
 
 237 
 
 637 
 
 3344 
 
 261 
 
 661 
 
 3345 
 
 262 
 
 662 
 
 3346 
 
 188 
 
 588 
 
 3347 
 
 189 
 
 589 
 
 3348 
 
 190 
 
 590 
 
 3349 
 
 191 
 
 591 
 
 3350 
 
 192 
 
 592 
 
 3351 
 
 193 
 
 593 
 
 3352 
 
 194 
 
 594 
 
 3353 
 
 195 
 
 595 
 
 3354 
 
 196 
 
 596 
 
 3355 
 
 197 
 
 597 
 
 3356 
 
 198 
 
 598 
 
 3357 
 
 199 
 
 599 
 
 3358 
 
 200 
 
 600 
 
 3359 
 
 201 
 
 601 
 
 3360 
 
 202 
 
 602 
 
 3361 
 
 203 
 
 603 
 
 3362 
 
 204 
 
 604 
 
 3363 
 
 
 602a
 
 EXISTING CORPORATION LAWS, 191S. 508 
 
 Eem.-Bal. 
 
 Secretary of State. 
 
 Mclntire. 
 
 3364 
 
 
 603a 
 
 3365 
 
 259 
 
 659 
 
 3366 
 
 260 
 
 660 
 
 3367 
 
 257 
 
 657 
 
 3368 
 
 258 
 
 658 
 
 3602 
 
 151 
 
 574 
 
 3603 
 
 152 
 
 551 
 
 3604 
 
 153 
 
 557 
 
 3605 
 
 154 
 
 560 
 
 3606 
 
 155 
 
 558 
 
 3607 
 
 156 
 
 559 
 
 3608 
 
 157 
 
 558, 572 
 
 3614 
 
 163 
 
 570 
 
 3618 
 
 167 
 
 567 
 
 3620 
 
 169 
 
 569 
 
 3623 
 
 172 
 
 571 
 
 3626 
 
 175 
 
 555 
 
 3627 
 
 176 
 
 556, 565 
 
 3631 
 
 180 
 
 564 
 
 3633 
 
 182 
 
 575 
 
 3634 
 
 183 
 
 566 
 
 3643 
 
 306 
 
 706 
 
 3644 
 
 307 
 
 707 
 
 3645 
 
 308 
 
 708 
 
 3646 
 
 309 
 
 709 
 
 3647 
 
 310 
 
 710 
 
 3649 
 
 311 
 
 711 
 
 3650 
 
 313 
 
 713 
 
 3651 
 
 312 
 
 712 
 
 3677 
 
 1 
 
 401 
 
 3678 
 
 31 
 
 431 
 
 3679 
 
 2 
 
 402 
 
 3680 
 
 37 
 
 437 
 
 3681 
 
 30 
 
 430 
 
 3682 
 
 5 
 
 405 
 
 3683 
 
 6 
 
 406 
 
 3684 
 
 8 
 
 408 
 
 3685 
 
 35 
 
 435
 
 509 CROSS-REFERENCES. 
 
 Eem.-Bal. 
 
 Secretary of State. 
 
 McTntire. 
 
 3686 
 
 7 
 
 407 
 
 3687 
 
 9 
 
 409 
 
 3688 
 
 10 
 
 410 
 
 3689 
 
 12 
 
 412 
 
 3690 
 
 11 
 
 411 
 
 3691 
 
 3 
 
 403 
 
 3692 
 
 4 
 
 404 
 
 3693 
 
 13 
 
 413 
 
 3694 
 
 14 
 
 414 
 
 3695 
 
 15 
 
 415 
 
 3696 
 
 16 
 
 416 
 
 3697 
 
 17 
 
 417 
 
 3698 
 
 18 
 
 418 
 
 3699 
 
 36 
 
 436 
 
 3700 
 
 19 
 
 419 
 
 3701 
 
 20 
 
 420 
 
 3702 
 
 21 
 
 421 
 
 3703 
 
 38 
 
 438 
 
 3704 
 
 24 
 
 424 
 
 3705 
 
 25 
 
 425 
 
 3706 
 
 26 
 
 426 
 
 3707 
 
 27 
 
 427 
 
 3708 
 
 28 
 
 428 
 
 37081/2 
 
 29 
 
 429 
 
 3709 
 
 314 
 
 714 
 
 3710 
 
 315 
 
 715 
 
 3711 
 
 316 
 
 716 
 
 3712 
 
 317 
 
 717 
 
 3713 
 
 318 
 
 718 
 
 3714 
 
 319 
 
 719 
 
 3715 
 
 320 
 
 720 
 
 3715a 
 
 321 
 
 721 
 
 3715b 
 
 322 
 
 722 
 
 3715c 
 
 323 
 
 723 
 
 3715d 
 
 324 
 
 724 
 
 3715e 
 
 325 
 
 725 
 
 3716 
 
 326 
 
 726 
 
 3717 
 
 327 
 
 727 
 
 3718 
 
 330 
 
 730
 
 EXISTING CORPORATION LAWS, 1913. 510 
 
 Eem.-Bal. 
 
 Secretary of State. 
 
 Mclntire. 
 
 3720 
 
 52 
 
 452 
 
 3721 
 
 53 
 
 453 
 
 3722 
 
 54 
 
 454 
 
 3723 
 
 55 
 
 455 
 
 3724 
 
 56 
 
 456 . 
 
 3725 
 
 57 
 
 457 
 
 3726 
 
 58 
 
 458 
 
 3727 
 
 59 
 
 459 
 
 3728 
 
 
 459a 
 
 3729 
 
 60 
 
 460 
 
 3730 
 
 61 
 
 461 
 
 3731 
 
 277 
 
 677 
 
 3732 
 
 278 
 
 678 
 
 3733 
 
 279 
 
 679 
 
 3734 
 
 280 
 
 680 
 
 3735 
 
 281 
 
 681 
 
 3736 
 
 282 
 
 682 
 
 3737 
 
 283 
 
 683 
 
 3738 
 
 284 
 
 684 
 
 3739 
 
 285 
 
 685 
 
 3740 
 
 286 
 
 686 
 
 3741 
 
 287 
 
 687 
 
 3742 
 
 288 
 
 688 
 
 3743 
 
 289 
 
 : 689 
 
 3744 
 
 290 
 
 690 
 
 3745 
 
 291 
 
 691 
 
 3748 
 
 292 
 
 692 
 
 3747 
 
 293 
 
 693 
 
 3748 
 
 294 
 
 694 
 
 3749 
 
 295 
 
 695 
 
 3750 
 
 296 
 
 696 
 
 3751 
 
 297 
 
 697 
 
 3752 
 
 263 
 
 663 
 
 3753 
 
 264 
 
 664 
 
 3754 
 
 265 
 
 665 
 
 3755 
 
 266 
 
 666 
 
 3756 
 
 267 
 
 667 
 
 3757 
 
 268 
 
 668 
 
 3758 
 
 269 
 
 669
 
 511 CROSS-REFERENCES. 
 
 Bem.-Bal. 
 
 Secretary of State. 
 
 Mclntire. 
 
 3759 
 
 270 
 
 670 
 
 3760 
 
 271 
 
 671 
 
 3761 
 
 272 
 
 672 
 
 3762 
 
 273 
 
 673 
 
 3763 
 
 274 
 
 674 
 
 3764 
 
 275 
 
 675 
 
 3765 
 
 147 
 
 547 
 
 3766 
 
 148 
 
 548 
 
 3766a 
 
 149 
 
 549 
 
 4972 
 
 107 
 
 507 
 
 4973 
 
 108 
 
 508 
 
 4974 
 
 95 
 
 495 
 
 4975 
 
 96 
 
 496 
 
 4976 
 
 97 
 
 497 
 
 7106 
 
 142 
 
 542 
 
 7107 
 
 143 
 
 543 
 
 7108 
 
 144 
 
 544 
 
 7109 
 
 145 
 
 545 
 
 7110 
 
 125 
 
 525 
 
 7111 
 
 126 
 
 526 
 
 7112 
 
 127 
 
 527 
 
 7113 
 
 128 
 
 528 
 
 7114 
 
 129 
 
 529 
 
 7115 
 
 130 
 
 530 
 
 7116 
 
 131 
 
 531 
 
 7117 
 
 132 
 
 532 
 
 7118 
 
 133 
 
 533 
 
 7119 
 
 134 
 
 534 
 
 7120 
 
 135 
 
 535 
 
 7121 
 
 136 
 
 536 
 
 7122 
 
 137 
 
 537 
 
 7123 
 
 138 
 
 538 
 
 7124 
 
 139 
 
 539 
 
 7125 
 
 140 
 
 540 
 
 7126 
 
 141 
 
 541 
 
 7344 
 
 81 
 
 481 
 
 7345 
 
 82 
 
 482 
 
 7346 
 
 83 
 
 483 
 
 7347 
 
 34 
 
 434
 
 EiaSTIJNG CORPORATION LAWS, 1913. 512 
 
 Eem.-Bal. 
 
 Secretary of State. 
 
 Mclntire. 
 
 7348 
 
 22 
 
 422 
 
 7349 
 
 23 
 
 423 
 
 7350 
 
 
 423a 
 
 8662 
 
 98 
 
 498 
 
 8663 
 
 105 
 
 505 
 
 8664 
 
 106 
 
 506 
 
 8665 
 
 99 
 
 499 
 
 8666 
 
 100 
 
 500 
 
 8667 
 
 102 
 
 502 
 
 8668 
 
 101 
 
 501 
 
 8669 
 
 103 
 
 503 
 
 8670 
 
 104 
 
 504 
 
 8671 
 
 
 504a 
 
 8736 
 
 76 
 
 476 
 
 8737 
 
 77 
 
 477 
 
 8738 
 
 
 477a 
 
 8739 
 
 74 
 
 474 
 
 8740 
 
 75 
 
 475 
 
 87611/^' 
 
 51 
 
 451 
 
 9080 
 
 111 
 
 511 
 
 9081 
 
 112 
 
 512 
 
 9082 
 
 113 
 
 513 
 
 9083 
 
 85 
 
 485 
 
 9300 
 
 78 
 
 478 
 
 9300 
 
 114 
 
 514 
 
 9301 
 
 79 
 
 479 
 
 9301 
 
 115 
 
 515 
 
 9302 
 
 116 
 
 516 
 
 9303 
 
 117 
 
 517 
 
 9304 
 
 80 
 
 480 
 
 9305 
 
 118 
 
 518 
 
 9314 
 
 119 
 
 519 
 
 9315 
 
 120 
 
 520 
 
 9316 
 
 121 
 
 521 
 
 9317 
 
 122 
 
 522 
 
 9318 
 
 123 
 
 523 
 
 9319 
 
 124 
 
 524 
 
 9504 
 
 32 
 
 432 
 
 9505 
 
 33 
 
 433
 
 513 CROSS-REFERENCES. 
 
 Kem.-Bal. 
 
 Secretary of State. 
 
 Mclntire. 
 
 9506 
 
 90 
 
 490 
 
 9507 
 
 91 
 
 491 
 
 9508 
 
 92 
 
 492 
 
 9509 
 
 62 
 
 462 
 
 9510 
 
 93 
 
 493 
 
 33 
 

 
 § 752 EXISTING CORPORATION LAWS, 1913. 514 
 
 FEDERAL CORPORATION TAX LAW. 
 
 § 752. Special Excise Tax on Corporations. 
 
 Act Aug. 5, 1909, c. 6, § 38. (H. R. 1438.) 
 
 Sec. 38. That every corporation, joint stock company or 
 association, organized for profit and having a capital stock 
 represented by shares, and every insurance company, now or 
 hereafter organized under the laws of the United States or 
 of any State or Territory of the United States or under the 
 Acts of Congress applicable to Alaska or the District of 
 Columbia, or now or hereafter organized under the laws of 
 any foreign country and engaged in business in any State 
 or Territory of the United States or in Alaska or in the Dis- 
 trict of Columbia, shall be subject to pay annually a special 
 excise tax with respect to the carrying on or doing business 
 by such corporation, joint stock company or association, or 
 insurance company, equivalent to one per centum upon the 
 entire net income over and above five thousand dollars re- 
 ceived by it from all sources during such year, exclusive of 
 amounts received by it as dividends upon stock of other cor- 
 porations, joint stock companies or associations, or insur- 
 ance companies, subject to the tax hereby imposed; or if 
 organized under the laws of any foreign country, upon the 
 amount of net income over and above five thousand dollars 
 received by it from business transacted and capital invested 
 within the United States and its Territories, Alaska, and the 
 District of Columbia during such year, exclusive of amounts 
 so received by it as dividends upon stock of other corpora- 
 tions, joint stock companies or associations, or insurance 
 companies, subject to the tax hereby imposed: Provided, 
 however, That nothing in this section contained shall apply 
 to labor, agricultural or horticultural organizations, or to 
 fraternal beneficiary societies, orders or associations operat- 
 ing under the lodge system, and providing for the payment 
 of life, sick, accident, and other benefits to the members of 
 such societies, orders, or associations, and dependents of
 
 515 FEDERAL CORPORATION TAX LAW. § 753 
 
 such members, nor to domestic building and loan associa- 
 tions, organized and operated exclusively for the mutual 
 benefit of their members, nor to any corporation or associa- 
 tion organized and operated exclusively for religious, chari- 
 table, or educational purposes, no part of the net income of 
 which inures to the benefit of any private stockholder or in- 
 dividual. 
 
 § 753. Income and Tax, How Returned. 
 
 Second. Such net income shall be ascertained by deduct- 
 ing from the gross amount of the income of such corporation, 
 joint stock company or association, or insurance company, 
 received within the year from all sources, (first) all the ordi- 
 nary and necessary expenses actually paid within the year 
 out of income in the maintenance and operation of its busi- 
 ness and properties, including all charges such as rentals or 
 franchise payments, required to be made as a condition to 
 the continued use or possession of property; (second) all 
 losses actually sustained within the year and not compen- 
 sated by insurance or otherwise, including a reasonable al- 
 lowance for depreciation of property, if any, and in the case 
 of insurance companies the sums other than dividends, paid 
 within the year on policy and annuity contracts and the net 
 addition, if any, required by law to be made within the year 
 to reserve funds; (third) interest actually paid within the 
 year on its bonded or other indebtedness to an amount of 
 such bonded and other indebtedness not exceeding the paid- 
 up capital stock of such corpor-^ition, joint stock company 
 or association, or insurance company, outstanding at the 
 close of the year, and in the case of a bank, banking asso- 
 ciation or trust company, all interest actually paid by it 
 within the year on deposits; (fourth) all si^ms paid by it 
 within the year for taxes imposed under the authority of the 
 United States or of any State or Territory thereof, or im- 
 posed by the government of any foreign country as a condi- 
 tion to carrying on business therein; (fifth) all amounts 
 received by it within the year as dividends upon stock of 
 other corporations, joint stock companies or associations, or
 
 § 753 EXISTING CORPORATION LAWS, 1913. 516 
 
 insurance companies, subject to the tax hereby imposed: 
 Provided, That in the case of a corporation, joint stock com- 
 pany or association, or insurance company organized under 
 the laws of a foreign country, such net income shall be ascer- 
 tained by deducting from the gross amount of its income 
 received within the year from business transacted and capi- 
 tal invested within the United States and any of its Terri- 
 tories, Alaska, and the District of Columbia, (first) all the 
 ordinary and necessary expenses actually paid within the 
 year out of earnings in the maintenance and operation of 
 its business and property within the United States and its 
 Territories, Alaska, and the District of Columbia, including 
 all charges such as rentals or franchise payments required to 
 be made as a condition to the continued use or possession of 
 property; (second) all losses actually sustained within the 
 year in business conducted by it within the United States or 
 its Territories, Alaska, or the District of Columbia not com- 
 pensated by insurance or otherwise, including a reasonable 
 allowance for depreciation of property, if any, and in the 
 case of insurance companies the sums other than dividends, 
 paid within the year on policy and annuity contracts and 
 the net addition, if any, required by law to be made within 
 the year to reserve funds: (third) interest actually paid 
 vv^ithin the year on its bonded or other indebtedness to an 
 amount of such bonded and other indebtedness, not exceed- 
 ing the proportion of its paid-up capital stock outstanding 
 at the close of the year which the gross amount of its income 
 for the year from business transacted and capital invested 
 within the United States and any of its Territories, Alaska, 
 and the District of Columbia bears to the gross amount of its 
 income derived from all sources within and without the 
 United States; (fourth) the sums paid by it within the year 
 for taxes imposed under the authority of the United States 
 or of any State or Territory thereof; (fifth) all amounts re- 
 ceived by it within the year as dividends upon stock of other 
 corporations, joint stock companies or associations, and in- 
 surance companies, subject to the tax hereby imposed. In 
 the case of assessment insurance companies the actual de-
 
 517 FEDERAL CORPORATION TAX LAW. § 754 
 
 posit of sums with State or Territorial officers, pursuant to 
 law, as additions to guaranty or reserved funds shall be 
 treated as being payments required by law to reserve funds. 
 
 § 754. Deduction from Income. 
 
 Third. There shall be deducted from the amount of the 
 net income of each of such corporations, joint stock com- 
 panies or associations, or insurance companies, ascertained 
 as provided in the foregoing paragraphs of this section, the 
 sum of five thousand dollars, and said tax shall be computed 
 upon the remainder of said net income of such corporation, 
 joint stock company or association, or insurance company, 
 for the year ending December thirty-first, nineteen hundred 
 and nine, and for each calendar year thereafter; and on or 
 before the first day of March nineteen hundred and ten, and 
 the first day of March in each year thereafter, a true and 
 accurate return under oath or affirmation of its president, 
 vice-president, or other principal officer, and its treasurer 
 or assistant treasurer, shall be made by each of the corpora- 
 tions, joint stock companies or associations, and insurance 
 companies, subject to the tax imposed by this section, to the 
 collector of internal revenue for the district in which such 
 corporation, joint stock company or association, or insurance 
 company, has its principal place of business, or, in the case 
 of a corporation, joint stock company or association or in- 
 surance company organized under the laws of a foreign 
 country, in the place where its principal business is carried 
 on within the United States, in such form as the Commis- 
 sioner of Internal Revenue, with the approval of the Secre- 
 tary of the Treasury, shall prescribe, setting forth, (first) 
 the total amount of the paid-up capital stock of such corpo- 
 ration, joint stock company or association, or insurance com- 
 pany, outstanding at the close of the year; (second) the 
 total amount of the bonded and other indebtedness of such 
 corporation, joint stock company or association, or insurance 
 company at the close of the year; (third) the gross amount 
 of the income of such corporation, joint stock company or 
 association, or insurance company, received during such year
 
 § 754 EXISTING CORPORATION LAWS, 1913. 518 
 
 from all sources, and if organized under the laws of a foreign 
 country the gross amount of its income received within the 
 year from business transacted and capital invested within 
 the United States and any of its Territories, Alaska and the 
 District of Columbia ; also the amount received by such cor- 
 poration, joint stock company or association, or insurance 
 company, within the year by way of dividends upon stock 
 of other corporations, joint stock companies or associations, 
 or insurance companies, subject to the tax imposed by this 
 section; (fourth) the total amount of all the ordinary and 
 necessary expenses actually paid out of earnings in the main- 
 tenance and operation of the business and properties of such 
 corporation, joint stock company or association, or insur- 
 ance company, within the year, stating separately all charges 
 such as rentals or franchise payments required to be made 
 as a condition to the continued use or possession of prop- 
 erty, and if organized under the laws of a foreign country 
 the amount so paid in the maintenance and operation of its 
 business within the United States and its Territories, Alaska, 
 and the District of Columbia; (fifth) the total amount of all 
 losses actually sustained during the year and not compen- 
 sated by insurance or otherwise, stating separately any 
 amounts allowed for depreciation of property, and in the 
 case of insurance companies the sums other than dividends, 
 paid within the year on policy and annuity contracts and 
 the net addition, if any, required by law to be made within 
 the year to reserve funds ; and in the case of a corporation, 
 joint stock company or association or insurance company, 
 organized under the laws of a foreign country, all losses 
 actually sustained by it during the year in business con- 
 ducted by it within the United States or its Territories, 
 Alaska, and the District of Columbia, not compensated by 
 insurance or otherwise, stating separately any amounts al- 
 lowed for depreciation of property, and in the case of insur- 
 ance companies the sums other than dividends, paid within 
 the year on policy and annuity contracts and the net addi- 
 tion, if any, required by law to be made within the year to 
 reserve fund; (sixth) the amount of interest actually paid
 
 519 FEDERAL CORPORATION TAX LAW. § 755 
 
 within the year on its bonded or other indebtedness to an 
 amount of such bonded and other indebtedness not exceed- 
 ing the paid-up capital stock of such corporation, joint stock 
 company or association, or insurance company, outstanding 
 at the close of the year, and in the case of a bank, banking 
 association or trust company, stating separately all interest 
 paid by it within the year on deposits; or in case of a corpo- 
 ration, joint stock company or association, or insurance com- 
 pany, organized under the laws of a foreign country, interest 
 so paid on its bonded or other indebtedness to an amount 
 of such bonded and other indebtedness not exceeding the 
 proportion of its paid-up capital stock outstanding at the 
 close of the year, which the gross amount of its income for 
 the year from business transacted and capital invested 
 within the United States and any of its Territories, Alaska, 
 and the District of Columbia, bears to the gross amount of 
 its income derived from all sources within and without the 
 United States; (seventh) the amount paid by it v/ithin the 
 year for taxes imposed under the authority of the United 
 States or any State or Territory thereof, and separately the 
 amount so paid by it for taxes imposed by the government 
 of any foreign country as a condition to carrying on busi- 
 ness therein; (eighth) the net income of such corporation, 
 joint stock company or association, or insurance company, 
 after making the deductions in this section authorized. All 
 such returns shall as received be transmitted forthwith by 
 the collector to the Commissioner of Internal Revenue. 
 
 § 755. False Returns and Examinations. 
 
 Fourth. Whenever evidence shall be produced before the 
 Commissioner of Internal Revenue which in the opinion of 
 the commissioner justifies the belief that the return made by 
 any corporation, joint stock company or association, or in- 
 surance company, is incorrect, or whenever any collector 
 shall report to the Commissioner of Internal Revenue that 
 any corporation, joint stock company or association, or in- 
 surance company, has failed to make a return as required by 
 law, the Commissioner of Internal Revenue may require from
 
 § 756 EXISTING CORPORATION LAWS, 1913. 520 
 
 the corporation, joint stock company or association, or in- 
 surance company making such return, such further informa- 
 tion with reference to its capital, income, losses, and ex- 
 penditures as he may deem expedient ; and the Commissioner 
 of Internal Revenue, for the purpose of ascertaining the cor- 
 rectness of such return or for the purpose of making a return 
 where none has been made, is hereby authorized, by any 
 regularly appointed revenue agent specially designated by 
 him for that purpose, to examine any books and papers bear- 
 ing upon the matters required to be included in the return 
 of such corporation, joint stock company or association, or 
 insurance company, and to require the attendance of any 
 officer or employee of such corporation, joint stock company 
 or association, or insurance company, and to take his testi- 
 mony with reference to the matter required by law to be 
 included in such return, with power to administer oaths to 
 such person or persons ; and the Commissioner of Internal 
 Revenue may also invoke the aid of any court of the United 
 States having jurisdiction to require the attendance of such 
 officers or employees and the production of such books and 
 papers. Upon the information so acquired the Commissioner 
 of Internal Revenue may amend any returns or make a re- 
 turn where none has been made. All proceedings taken by 
 the Commissioner of Internal Revenue under the provisions 
 of this section shall be subject to the approval of the Secre- 
 tary of the Treasury. 
 
 § 756. Assessments. 
 
 Fifth. All returns shall be retained by the Commissioner 
 of Internal Revenue, who shall make assessments thereon; 
 and in the case of any return made with false or fraudulent 
 intent, he shall add one hundred per centum of such tax, and 
 in case of a refusal or neglect to make a return or to verify 
 the same as aforesaid he shall add fifty per centum of such 
 tax. In case of neglect occasioned by the sickness or ab- 
 sence of an officer of such corporation, joint stock company 
 or association, or insurance company, required to make said 
 return, or for other sufficient reason, the collector may allow
 
 521 FEDERAL CORPORATION TAX LAW. § 757 
 
 such further time for making and delivering such return as 
 he may deem necessary, not exceeding thirty days. The 
 amount so added to the tax shall be collected at the same 
 time and in the same manner as the tax originally assessed 
 unless the refusal, neglect, or falsity is discovered after the 
 date for payment of said taxes, in w^hich case the amount 
 so added shall be paid by the delinquent corporation, joint 
 stock company or association, or insurance company, imme- 
 diately upon notice given by the collector. All assessments 
 shall be made and the several corporations, joint stock com- 
 panies or associations or insurance companies, shall be noti- 
 fied of the amount for which they are respectively liable on 
 or before the first day of June of each successive year, and 
 said assessment shall be paid on or before the thirtieth day 
 of June, except in cases of refusal or neglect to make such 
 returns, and in cases of false or fraudulent returns, in which 
 cases the Commissioner of Internal Revenue shall, upon the 
 discovery thereof, at any time within three years after said 
 return is due, make a return upon information obtained as 
 above provided for and the assessment made by the Commis- 
 sioner of Internal Revenue thereon shall be paid by such 
 corporation, joint stock company or association, or insurance 
 company immediately upon notification of the amount of 
 such assessment; and to any sum or sums due and unpaid 
 after the thirtieth day of June in any year, and for ten days 
 after notice and demand thereof by the collector, there shall 
 be added the sum of five per centum on the amount of tax 
 unpaid and interest at the rate of one per centum per month 
 upon said tax from the time the same becomes due. 
 
 § 757. Filing of Assessment Returns. 
 
 Sixth. When the assessment shall be made, as provided 
 in this section, the returns, together with any corrections 
 thereof which may have been made by the commissioner, 
 shall be filed in the office of the Commissioner of Internal 
 Revenue and shall constitute public records and be open to 
 inspection as such.
 
 §§758,759 EXISTING corporation laws, 1913. 522 
 
 § 758. Information not to be Disclosed. 
 
 Seventh. It shall be unlawful for any collector, deputy 
 collector, agent, clerk, or other officer or employee of the 
 United States to divulge or make known in any manner 
 whatever not provided by law to any person any informa- 
 tion obtained by him in the discharge of his official duty, or 
 to divulge or make known in any manner not provided by 
 law any document received, evidence taken, or report made 
 under this section except upon the special direction of the 
 President; and any offense against the foregoing provision 
 shall be a misdemeanor and be punished by a fine not ex- 
 ceeding one thousand dollars, or by imprisonment not ex- 
 ceeding one year, or both, at the discretion of the court. 
 
 § 759. Penalty for False Return or Refusal to Make. 
 
 Eighth. If any of the corporations, joint stock companies 
 or associations, or insurance companies, aforesaid, shall re- 
 fuse or neglect to make a return at the time or times here- 
 inbefore specified in each year, or shall render a false or 
 fraudulent return, such corporation, joint stock company or 
 association, or insurance company, shall be liable to a pen- 
 alty of not less than one thousand dollars and not exceeding 
 ten thousand dollars. 
 
 Any person authorized by law to make, render, sign, or 
 verify any return, who makes any false or fraudulent return, 
 or statement, with intent to defeat or evade the assessment 
 required by this section to be made, shall be guilty of a mis- 
 demeanor, and shall be fined not exceeding one thousand 
 dollars or be imprisoned not exceeding one year, or both, at 
 the discretion of the court, with the cost of prosecution. 
 
 All laws relating to the collection, remission, and refund 
 of internal revenue taxes, so far as applicable to and not 
 inconsistent with the provisions of this section, are hereby 
 extended and made applicable to the tax imposed by this 
 section. 
 
 Jurisdiction is hereby conferred upon the circuit and dis- 
 trict courts of the United States for the district within which 
 any person summoned under this section to appear to testify
 
 523 FEDERAL CORPORATION TAX LAW. § 759 
 
 or to produce books, as aforesaid, shall reside, to compel such 
 attendance, production of books, and testimony by appro- 
 priate process. 
 
 Note: The Federal Corporation Tax Law was enacted as section 38 
 of the Payne Tariff Act of 1909. This act applies to all corporations 
 not specifically exempted and has been construed by the United States 
 supreme court in Flint v. Stone Tracy Co., 220 U. S. 107, to be con- 
 stitutional and not to be a franchise or income tax, but an excise tax 
 on doing "corporate business." 
 
 The tax is imposed on all corporations and joint stock companies 
 and associations doing business in a corporate or quasi-corporate capa- 
 city under statutory authority. (Eliot v. Freeman et al., 220 U. S. 
 17S.) 
 
 The measure of the tax is the income (subject to specified deduc- 
 tions) "from all sources," which means not only income from the 
 property used in business but income from every source. (Flint v. 
 Stone Tracy Co., 220 U. S. 107.) 
 
 Beceivers of insolvent corporations should make the required return 
 whether there be liability to pay the tax or not. (Pennsylvania etc. 
 Co. V. New York City R. Co., 176 Fed. 471.) 
 
 The Interstate Commerce Act of 1887 as amended. United States 
 Compiled Statutes 1901, vol. 3, p. 3154, and as amended by the Act 
 of 1906-10, U. S. Compiled Statutes, Supplement of 1911, p. 1284, and 
 The Sherman Anti-Trust Act, so called, entitled "Monopolies and 
 Combinations in Restraint of Trade," as passed in 1890 and amended 
 in 1894, U. S. Compiled Statutes 1901, vol. 3, p. 3200, and as amended 
 in 1903, U. S. Compiled Statutes, Supplement 1911, p. 1318, and in 
 1910, U. S. Compiled Statutes, Supplement 1911, p. 1382, should be 
 consulted by corporations doing interstate business.
 
 OUTLINE 
 
 OF 
 
 COEPORATE PEOCEDUEE. 
 
 § 760. Character of Corporate Existence. 
 
 A corporation is a union of individuals acting under a cor- 
 porate name as a unit, authorized and recognized as such by- 
 statute law. It is devised and created by the law not for its 
 own sake or benefit, but purely to facilitate action on the 
 part of individuals composing its membership. The statute 
 brings it into being, regulates its conduct and terminates its 
 existence. The formation and conduct of corporations is 
 therefore almost invariably a matter of compliance with statu- 
 tory requirements governing the case in hand, and statutory 
 provisions, though many times inconsistent and incomplete, 
 often uncertain and ambiguous, and sometimes unreasonable, 
 can only be modified or improved by the legislature or other 
 law-making power. In the concrete case the statute must be 
 taken as it is and complied with in its express terms, so far 
 as possible. One should not do more and must not do less 
 than the statute requires. In the case of the corporation, 
 strict compliance with the statute is of imperative importance, 
 and failure therein often leads to endless confusion, loss, and 
 perhaps financial ruin of individuals concerned. In the 
 preparation, therefore, of papers and documents for use in 
 the formation and conduct of corporations, the aim must be 
 persistent toward the utmost simplicity, clearness and precise 
 compliance with the statutory requirements possible to attain. 
 
 § 761. The Several Kinds of Corporations. 
 
 Of private corporations, or those composed of persons ex- 
 pressly assenting to membership therein, the statutory Cor- 
 poration Laws of Washington provide by sections 401 and 402 
 thereof for the formation of all kinds of trading and business 
 
 (525)
 
 § 762 CORPORATE PROCEDURE. 526 
 
 stock corporations for profit, including railroads, but not in- 
 cluding those otherwise expressly provided for, to wit : Build- 
 ing and loan associations, by section 550; trust companies, by 
 section 588 ; banks, by section 612 ; patrons of husbandry 
 (Granges), by section 547; co-operative associations, by sec- 
 tion 546. 
 
 Private corporations not for profit are authorized to be 
 formed as follows : Membership, or nonstock, corporations of 
 all kinds not otherwise expressly provided for, by sections 
 663—667. Those otherwise provided for are religious, educa- 
 tional and charitable, for a college, seminary, church, library, 
 benevolent, temperance, charitable or scientific society, by sec- 
 tion 677 ; secret societies, lodges, orders, by section 679 ; social 
 clubs and any educational, charitable or religious purpose, by 
 sections 686, 687 ; cemetery associations, by section 706. 
 
 § 762. Preliminary Considerations. 
 
 Preliminary to taking the first steps for the formation of 
 a company and the preparation of the articles of incorpora- 
 tion, the following rules and requirements are to be considered 
 and borne in mind : 
 
 Corporations may subscribe for, hold, own and vote stock 
 in other corporations. (Section 408.) 
 
 Corporate names are not to be duplicated (section 437) ; 
 therefore, it should be ascertained from the Secretary of State, 
 as early as conveniently may be, whether a desired name may 
 be used. 
 
 The whole capital stock of the company must be subscribed 
 before it begins business, unless its business is to be confined 
 to loaning money on real estate. (Section 401.) 
 
 Subscriptions to stock may be paid in cash or property, as 
 provided by the stockholders or trustees in absence of fraud. 
 (Section 414.) 
 
 Preferred stock is not specifically provided for by statute, 
 but may be authorized at the outset by the by-laws or other- 
 wise by the trustees ; i. e., before any subscriptions to the 
 common stock are taken without notice to such subscriber. 
 (Sections 407, 417.)
 
 527 OUTLINE OF CORPORATE PROCEDURE. § 763 
 
 The liability of stockholders is by the Constitution limited 
 to unpaid subscriptions. (Const., sec. 734.) 
 
 The capital stock of the company may be increased or de- 
 creased at any time by complying with sections 424, 425, 426. 
 
 The trustees must be stockholders (section 407) and the trus- 
 tees for the first six months or less are named in the articles. 
 (Section 402.) They must take an oath before entering on 
 their duties. (Section 407.) 
 
 Meetings of stockholders must be held at the principal place 
 of business in the state. (Section 411.) 
 
 Meetings of trustees are to be held at such places within or 
 without the state as may be designated by the articles or by- 
 laws. (Section 411.) 
 
 Stockholders may expel trustees and elect others in their 
 place; otherwise vacancies are filled by the board. (Section 
 407.) 
 
 By-laws are adopted and amended by the trustees. (Sec- 
 tions, 406, 407.) 
 
 Annual reports are not required of business corporations. 
 
 Every stock corporation, domestic or foreign, must pay an 
 annual license fee of $15 (section 719), and cannot maintain 
 suit unless the license fee is paid. (Section 720.) 
 
 Fees are as follows: For filing articles, $25 (section 714) ; 
 for amendatory or supplemental articles, certificates of in- 
 crease or decrease of capital stock, $10 (section 715) ; for ap- 
 pointment or revocation of appointment of agent by foreign 
 corporation, $5 (section 716) ; certified copies, $5 (section 
 717) ; recording fees (section 718). 
 
 § 763. Articles of Incorporation. 
 
 All stock corporations for profit, trade or business other 
 than those having for some or all of their objects banking, 
 insurance, trust company business, or the rights and powers 
 of building and loan associations are formed under sections 
 401 and 402, corporation laws. 
 
 Articles must be made and executed in compliance with the 
 requirements of those sections in triplicate, one to be filed in 
 the office of the Secretary of State, one in the office of the 
 county auditor, and one in the company's files. (Section 402.)
 
 § 764 CORPORATE PROCEDURE. 528 
 
 In view of the fact that stock corporations for profit formed 
 under sections 401 and 402 are by section 406, subdivision 7, 
 confined in their exercise of corporate powers within the ob- 
 jects and purposes of the company expressed in their articles 
 of incorporation, it is important in stating the objects and pur- 
 poses in the articles to describe the business to be conducted 
 by apt and specific wording covering all emergencies that may 
 arise during the corporate existence. A form for a building 
 company complete with names and data and executed as if 
 ready for filing will be found post (section 797), and sub- 
 joined thereto are purpose clauses for various kinds of business 
 corporations. 
 
 As soon as may be after the corporate name, the amount 
 of the capital stock, the par value of the shares and the prefer- 
 ences, if any, i. e., whether the stock is to be all common or 
 part preferred, have been determined upon by the parties in 
 interest as later to be adopted by the by-laws, the corporate 
 seal, stock certificate book, and stock transfer or record book, 
 should be ordered from the stationers, in order that they 
 may be ready when required for the first meeting of trustees. 
 
 § 764. First Meeting of Trustees. 
 
 As soon as conveniently may be after the articles have been 
 made, executed and filed, and before the trustees named in the 
 certificate do any corporate act, they should take and sub- 
 scribe to an oath as required by section 407. A form of oath 
 will be found in section 800. 
 
 Thereafter one of the trustees should deliver, personally, 
 to each of the other trustees a notice in writing of such first 
 meeting setting forth the time and place in compliance with 
 section 412. If for any reason it is impossible to deliver the 
 notice to any of the trustees, it may be published as provided 
 in that section. A form of written notice for the purpose 
 will be found in section 799. At the time and place set in the 
 notice the first meeting of the trustees named in the certificate 
 should be held and the organization of the company completed, 
 officers elected, stock certificates, by-laws and corporate seal 
 formally adopted, and before any corporate business is com- 
 menced subscriptions to the entire capital stock should be
 
 529 OUTLINE OF CORPORATE PROCEDURE. §§ 765, 766 
 
 received. A form of minutes for the first meeting of the trus- 
 tees will be found in section 798. While it is unnecessary to 
 follow any particular form of procedure or minutes, it is 
 important to spread in some shape on minutes or records of 
 the company proof of compliance with statutory requirements. 
 
 § 765. Subscriptions. 
 
 Subscriptions are contracts binding on each subscriber until 
 the par value of stock subscribed by him is fully paid in cash 
 or property. In case, however, that stock is issued before it 
 is fully paid and afterward transferred on the books of the 
 company, the transferee becomes liable instead of the orig- 
 inal subscriber for the amounts still due and unpaid on the 
 stock. No particular form of subscription agreement must 
 necessarily be followed, it being enough if the subscriber ex- 
 pressly agrees to take certain shares of stock. A form of stock 
 subscription should be used, however, clearly defining the 
 rights and liabilities of the subscriber to avoid question and 
 possible litigation. Such a form will be found in section 803. 
 
 § 766. Preferred Stock. 
 
 Preferred stock is stock entitled to preference over common 
 stock in the payment of any dividends declared and in the 
 distribution of assets on dissolution. Preferred stock, for the 
 reason that it is preferred over common stock, must be issued, 
 if at all, with the assent, express or implied, of every sub- 
 scriber to the common stock. Preferred stock, if issued, 
 should therefore be authorized at the outset and brought to the 
 actual notice of every subscriber to the common stock. There 
 are various kinds of preferred stock, the particular prefer- 
 ence adopted in the concrete case being a matter of business 
 advisability under the circumstances. The kind or form of 
 preference having been selected, it should be adopted by the 
 trustees and set out in the by-laws, and the preferential right 
 should be set forth in a manner sufficient to give notice of 
 its existence in the stock certificates and subscription agree- 
 ments. A form for cumulative preferred stock preference 
 34
 
 §§767,768 CORPORATE PROCEDURE. 530 
 
 in the by-laws will be found in section 801, article VIII, and 
 a corresponding form of stock certificate in section 802. 
 
 § 767. By-laws. 
 
 By-laws are authorized to be made by the statutory grant 
 of powers to the corporation (section 406, subdivision 6), and 
 since the powers of the corporation are to be exercised by the 
 trustees (section 407), the power to make by-laws is conse- 
 quently in the trustees. 
 
 By-laws as rules adopted to govern the procedure of as- 
 semblies of individuals are of very ancient origin. In cor- 
 porations, they govern the manner of the exercise of the 
 corporate powers and the respective rights, duties and liabili- 
 ties of the stockholders, trustees and officers of the corpora- 
 tion. Once adopted they have the force of law, binding on all 
 persons having actual or constructive notice of them, and can- 
 not be modified or repealed except in accordance with statu- 
 tory provision or the rule prescribed in themselves for their 
 amendment, alteration or repeal. It is therefore important, 
 in order to make the by-laws adopted in any particular ease 
 elastic and easily modified or, on the other hand, to make 
 them rigid and inelastic, if so desired, to include or exclude 
 a provision for their amendment or repeal. "Where it is con- 
 sidered desirable, as is usually the case, to make the by-laws 
 readily adaptable to changing circumstances, the provision for 
 amendment, alteration or repeal is included, thus taking the 
 by-laws out of the category of rigid contractual rules and 
 enabling the trustees at any meeting to alter, amend or re- 
 peal them. A workable form of by-laws devised by experi- 
 ence to prevent deadlocks and to facilitate corporate action 
 will be found as adopted in the form of minutes for the first 
 meeting of trustees in section 801. This form of by-laws 
 should, of course, be modified or abridged where necessary or 
 desirable, to meet the requirements of a particular case. 
 
 § 768. Issue of Stock for Property. 
 
 Since by section 414 the times, manner and amounts of pay- 
 ments of subscriptions to stock are to be determined by the 
 stockholders or trustees, property may be accepted in payment
 
 531 OUTLINE OF CORPORATE PROCEDURE. § 769 
 
 of subscriptions and stock issued therefor fully paid in the 
 absence of fraud. 
 
 While the issue of stock fully paid for property is notori- 
 ously often utilized for the purpose of evading the statutory 
 liability of stockholders for unpaid subscriptions and in cover- 
 ing watered stock issues, it is none the less frequently made 
 use of for the legitimate purpose contemplated by the statute, 
 namely, to enable persons incorporating their business or other 
 concerns to turn over their property to the corporation and 
 to take stock therefor fully paid to the amount of the fair 
 valuation of the property. If, whatever the pretense, the 
 property turned over to the corporation for stock is in fact 
 intentionally and excessively overvalued, no device, however 
 clever, can alter the actual fact or do more than cover the 
 attempted evasion of the statute. The value of property, how- 
 ever, is in any event a matter of opinion purely, and what- 
 ever the difference of opinion and however great may be the 
 fluctuation from time to time in the valuation placed by dif- 
 ferent persons upon the property, if, nevertheless, at the time 
 stock is issued for property the valuation placed upon the 
 property can be shown for reasons stated to be a fair one and 
 fairly made, and especially if made by persons not directly 
 interested in putting an overvaluation on the property, stock 
 issued for property thus valued will stand as fully paid, and 
 its issue as fully paid stock will not be successfully ques- 
 tioned. 
 
 Where stock is issued for property, therefore not only 
 should the property be fairly valued, but the minutes and 
 records of the company should show that to be the case, and 
 care especially should be taken that none of the trustees, whose 
 function it may be to pass on the valuation of the property, 
 is an owner of or otherwise directly interested in the property 
 valued. Procedure in such cases is indicated in the form for 
 minutes of first meeting of trustees in sections 798 and 805. 
 
 § 769. List of Officers. 
 
 After the first meeting of trustees and the election of offi- 
 cers, and within thirty days after the filing of the articles,
 
 §§ 770-772 CORPORATE PROCEDURE. 532 
 
 the company must make and file with the county auditor, in 
 compliance with section 404, a list of officers, with their titles, 
 names, addresses and terms of office. A form will be found 
 in section 806. 
 
 § 770. Meetings of Trustees. 
 
 The trustees may and should meet from time to time as 
 designated in the by-laws and otherwise, and exercise the cor- 
 porate powsrs of the company as authorized by sections 406 and 
 407 and by the articles and in the manner provided by the by- 
 laws. 
 
 In case a trustee is unable to attend any meeting, proof 
 that notice of the meeting was duly given him or that he 
 waived the same should be filed with the records of the com- 
 pany and spread on the minutes of such meeting. For form 
 of notice and waiver, see sections 799 and 819. 
 
 § 771. Records and Papers. 
 
 It is th« duty of trustees, in compliance with section 420, 
 to keep a record book of stockholders, alphabetically arranged, 
 showing the names of stockholders, the number of shares 
 owned, and the times of transfer, to keep the record open for 
 inspection by stockholders and creditors, to allow extracts 
 to be made, and to furnish certified copies of corporate papers 
 on file. 
 
 § 772. Assessments on Stock Subscriptions and Sale of 
 Shares. 
 So long as any part of the stock subscriptions remains un- 
 paid, the trustees may, under section 414 and in compliance 
 with the by-laws, make assessments calling for all or part of 
 the balance due by giving notice of such assessment to the 
 stockholders personally, or by publication of the notice for 
 four weeks in a newspaper published in the county of the 
 principal place of business of the company, and in default of 
 payment by the stockholder his shares may be sold at public 
 auction, in compliance with the section. A form of notice of 
 assessment for personal service or publication will be found 
 in section 821.
 
 533 OUTLINE OF CORPORATE PROCEDURE. §§ 773-775 
 
 § 773. Change of Name. 
 
 If at any time it be found advisable to change the corporate 
 name of the company, the trustees may by resolution author- 
 ize supplemental articles of incorporation to be filed for that 
 purpose, in compliance with section 430, and upon executing 
 such articles and filing the same in the office of the Secretary 
 of State and in the office of the county auditor with the notice 
 of such change as required by section 430, the corporate name 
 will be changed accordingly. For form of supplemental 
 articles and notice, see sections 807, 808. 
 
 § 774. Change or Removal of Place of Business. 
 
 If it is desired to move the principal place of business of 
 the company from one place to another in the same county, 
 the removal should be authorized by a resolution of the trus- 
 tees, and a removal notice published four weeks in a news- 
 paper published nearest the old place of business, in com- 
 pliance with section 429. If the principal place of business 
 is to be moved into another county in the state, in addition 
 to the resolution of the trustees and the publication of notice, 
 a certified copy of the certificate of incorporation must be filed 
 in the office of the county auditor of the county in which the 
 principal place of business is to be in the future. For form of 
 notice, see section 820. 
 
 § 775. Stockholders' Meetings. 
 
 Annual and special meetings of the stockholders are held 
 at the principal place of business of the company (section 411) , 
 upon such notice as shall be directed by the by-laws of the 
 company (section 407) ; the annual meeting is held at the time 
 designated in the by-laws for the election of trustees, and at 
 both annual and special meetings each stockholder is entitled 
 to cast as many votes in person or by proxy as there are 
 shares of stock standing in his name on the books of the com- 
 pany, unless otherwise provided by the by-laws. Notice of the 
 annual meeting is given as required by the by-laws of the com- 
 pany. See form in section 817. 
 
 Notice of special meeting-s is given as required by the 
 by-laws, and any statutory requirement applicable to the
 
 §§ 776, 777 CORPORATE PROCEDURE. 534 
 
 particular case. For form of notice for special meeting of 
 stockholders, see section 809. 
 
 § 776. Increase or Decrease of Capital Stock. 
 
 Whenever a corporation desires to increase or decrease its 
 capital stock. to an amount not less than its debts and liabili- 
 ties, it may do so by a vote of two-thirds of its shares of stock 
 taken at a special meeting called by a notice published for 
 eight weeks in a newspaper of the county, and by filing in the 
 office of the Secretary of State and in the office of the county 
 auditor a certificate executed and verified by the chairman and 
 secretary of the meeting and certified to by a majority of the 
 trustees showing a compliance with the statutory provisions 
 (sections 424, 425, 426). 
 
 A form of such certificate, including the notice of meeting, 
 will be found in section 809. 
 
 § 777. Dissolution. 
 
 Corporations are terminated in one of three ways : by the 
 expiration of the term of existence stated in the charter, by 
 forfeiture of the charter, and by voluntary dissolution. 
 
 In the case, however, of corporations failing to pay their 
 license fee, provision is made by statute (sections 720, 724) 
 for the involuntary dissolution of such corporations by the 
 Secretary of State. In case a corporation desires volun- 
 tarily to dissolve itself, it may, with the consent of two-thirds 
 of the stockholders given by vote at a special meeting called 
 for the purpose, present a petition to that effect to the su- 
 perior judge of the county in which it has its office, and on 
 compliance in that and other respects with section 428 it may 
 be dissolved, in which case the trustees at the time continue 
 as trustees for the stockholders and creditors (section 427) to 
 collect and pay outstanding debts, settle all its affairs, and 
 divide among the stockholders the remaining money and prop- 
 erty. A form of petition and certificate for voluntary dis- 
 solution in compliance with section 428 will be found in section 
 822.
 
 535 OUTLINE OF CORPORATE PROCEDURE. § 778 
 
 § 778. Foreign Corporations. 
 
 A foreign corporation in Washington is one organized 
 under the laws of some jurisdiction other than the state of 
 Washington. Foreign corporations on complying with the 
 statute may do business, sue and be sued to the same extent 
 as domestic corporations (section 452). A corporation, the 
 majority of whose capital stock is owned by aliens, may not 
 acquire ownership of lands other than mineral lands (section 
 452). A foreign corporation cannot conduct a real estate 
 brokerage business in the state (section 452). 
 
 To comply with the statute, a foreign corporation must file 
 in the office of the Secretary of State a certified copy of its 
 certificate of incorporation (section 453), also written appoint- 
 ment of agent (section 454), and must pay an annual license 
 fee (section 719). A form for written appointment of agent 
 will be found in section 811.
 
 §§ 779, 780 CORPORATE PROCEDURE. 536 
 
 VARIOUS PURPOSE CLAUSES. 
 
 § 779. Advertising. 
 
 To prepare and arrange advertisements ; to make, build, 
 manufacture and construct advertising devices and novelties ; 
 to erect, construct, purchase, lease, hold, sell or otherwise 
 acquire and dispose of fences, billboards, signboards, build- 
 ings, papers, publications and other structures and spaces 
 suitable or desired for advertising purposes; to conduct a 
 general advertising business as principals and agents ; to carry- 
 on the business of printers, publishers, painters and deco- 
 rators; to acquire, hold and dispose of inventions, patents and 
 trademarks in the United States or foreign countries; to ac- 
 quire, hold and dispose of real and personal property ; to carry- 
 on said business as principal or agent "within and without the 
 state of Washington, and to carry on any business, make con- 
 tracts and do any and all acts necessary, proper, incidental or 
 convenient to said purposes and objects not inconsistent with 
 the laws of "Washington. 
 
 § 780. Automobiles and Vehicles. 
 
 To make, manufacture and sell any and all kinds of motors, 
 engines, machines, machinery and contrivances for the gener- 
 ation of steam, electricity, gasoline or other forms of power 
 now known or which may be hereafter discovered; to make, 
 manufacture and sell cars, carriages, wagons, boats, aero- 
 planes, balloons and vehicles of every kind and description 
 for the transportation of passengers and goods by land, water 
 or through the air; to manufacture, acquire, hold, sell and 
 otherwise dispose of machinery, machine supplies and en- 
 gineering appliances of all kinds ; to acquire, hold and dispose 
 of inventions, patents and trademarks in the United States 
 and foreign countries; to acquire, hold and dispose of any 
 and all kinds of real and personal property; to conduct said 
 business as principal or agent wdthin and without the state 
 of Washington, and to carry on any business, make contracts 
 and do any and all acts necessary, proper, incidental or con-
 
 537 VARIOUS PURPOSE CLAUSES, §§ 781-783 
 
 venient to said purposes and objects not inconsistent with the 
 laws of Washington. 
 
 § 781. Brewery. 
 
 To grow, cure, mamifacture, prepare or otherwise acquire, 
 hold, sell, or otherwise dispose of malt and hops ; to manufac- 
 ture, brew and bottle all kinds of ale, beer, porter and other 
 beverages, and in general to manufacture, purchase, sell and 
 deal in malt and hops and the products thereof; to acquire, 
 hold and dispose of inventions, patents and trademarks in the 
 United States or foreign countries; to acquire, hold and dis- 
 pose of any and all kinds of real and personal property; to 
 conduct said business as principal or agent within and with- 
 out the state of Washington, and to carry on any business, 
 make contracts, and do any and all acts necessary, proper, in- 
 cidental or convenient to said purposes and objects not in- 
 consistent with the laws of Washington. 
 
 § 782. Bricks. 
 
 To make, manufacture, purchase, or otherwise acquire, hold 
 and sell bricks, tiles, pipes, pottery, earthenware, china, terra- 
 cotta and ceramic ware, and to buy, sell, deal and trade in 
 every kind of bricks, stone and building materials, goods and 
 merchandise by land and water ; to acquire, hold and dispose 
 of quarries, clay, sand and gravel banks and deposits, cars, 
 boats and vehicles of all kinds; to acquire, hold and dispose 
 of inventions, patents and trademarks in the United States 
 and foreign countries ; to acquire, hold and dispose of real 
 and personal property of all kinds; to conduct said business as 
 principal or agent within and without the state of Washing- 
 ton, and to carry on any business, make contracts and do any 
 and all acts necessary, proper, incidental or convenient to said 
 purposes and objects not inconsistent with the laws of Wash- 
 ington. 
 
 § 783. Cattle. 
 
 To rear, grow, breed, buy or otherwise acquire, hold, sell or 
 otherwise dispose of any and all kinds of cattle and livestock, 
 meats, goods, wares and merchandise pertaining and belong-
 
 §§784,785 CORPORATE PROCEDURE. 538 
 
 ing to the cattle, livestock, meat and butcher business; to 
 build or otherwise acquire, hold, maintain, sell or otherwise 
 dispose of abattoirs for the slaughter and killing of all kinds 
 of animals and cattle ; to cure, can, preserve, manufacture and 
 otherwise prepare all kinds of provisions, articles and mer- 
 chandise for food or other use made of meats and fat and any 
 and all kinds of goods kindred to the meat and butcher busi- 
 ness, and to prepare in any and every manner the carcasses 
 of animals and cattle into merchandise for the butcher and 
 meat business ; to acquire, hold and dispose of inventions, 
 patents and trademarks in the United States or foreign 
 countries; to acquire, hold and dispose of any and all kinds 
 of real and personal property ; to conduct said business as 
 principal or agent within and without the state of Washing- 
 ton, and to carry on any business, make contracts and do any 
 and all acts necessary, proper, incidental or convenient to said 
 purposes and objects not inconsistent with the laws of Wash- 
 ington. 
 
 § 784. Commission Merchants. 
 
 To manufacture, produce, purchase or otherwise acquire, 
 own, hold, sell or otherwise dispose, as principal or as agent, 
 upon commission or otherwise, within and without the state of 
 Washington, any and all kinds of personal property, and in 
 general to do a commission merchant's and selling agent's 
 business; to acquire, hold and dispose of inventions, patents 
 and trademarks in the United States or foreign countries; 
 to acquire, hold and dispose of all kinds of real and personal 
 property, and to carry on any business, make contracts and 
 do any and all acts necessary, proper, incidental or conven- 
 ient to said business not inconsistent with the laws of Wash- 
 ington. 
 
 § 785. Distillers. 
 
 To manufacture, produce, distill, redistill and rectify wines, 
 gins, whiskies, brandies, rum, beer, ale, and porter, and the 
 by-products thereof, and to purchase, acquire, hold, sell and 
 otherwise deal in and dispose of said products throughout the 
 
 \
 
 539 VARIOUS PURPOSE CLAUSES. § 786 
 
 United States and elsewhere ; to acquire, hold and dispose of 
 inventions, patents and trademarks in the United States and 
 elsewhere; to acquire, hold and dispose of any and all kinds 
 of real and personal property ; to carry on said business, as 
 principal or agent, within and without the state of Washing- 
 ton; to make contracts and to do any and all acts necessary, 
 proper, incidental or convenient to said purposes and objects 
 not inconsistent with the laws of Washington. 
 
 § 786. Dock and Warehouse. 
 
 To receive, load, unload, transfer, store in warehouse or 
 otherwise, to hoist, elevate and forward by wagon, car, barge, 
 boat or other vehicle, on land or water, any and all kinds of 
 goods, wares, merchandise, commercial commodity or thing 
 of value ; to erect, construct, purchase or otherwise acquire, 
 maintain, hold, sell and otherwise dispose of docks, wharves, 
 warehouses, terminal and transfer structures and other facili- 
 ties, including piers, basins, floating docks, bulkheads, ele- 
 vators, coal bins, pockets and chutes, and in general to carry 
 on the business of docking, warehousing, storage and wharfage, 
 freighting, elevating, forwarding, lighterage, storing and 
 berthing of ships, steam vessels, boats and every other kind 
 of water craft ; to issue storage, dock and warehouse receipts, 
 negotiable and non-negotiable, for and upon all kinds of 
 goods, wares, merchandise and any other commercial com- 
 modity or thing of value; to purchase or otherwise acquire, 
 hold, sell or otherwise dispose of ships, steamers, vessels and 
 every kind of water craft, and all goods, wares, merchandise, 
 commodity or thing of value ; to make, manufacture or other- 
 wise acquire, hold, sell or otherwise dispose of engines, boilers, 
 launches, boats, water crafts of all kinds, and any article or 
 thing of value; to collect and receive dockage, wharfage and 
 storage dues and other compensation; to loan money on the 
 pledge of goods, wares, merchandise and other property or of 
 storage, dock or warehouse receipts therefor; and to advance 
 •moneys for freights, duties, fire and marine insurance, and 
 liens of every description upon the pledge of goods, wares 
 and merchandise or other property received on storage or
 
 §§787,788 CORPORATE PROCEDURE. 540 
 
 for the purpose of being warehoused or forwarded or on the 
 pledge of storage, dock or warehouse receipts therefor; to ac- 
 quire, hold and dispose of inventions, patents and trademarks 
 in the United States or foreign countries ; to acquire, hold and 
 dispose of all, any and all kinds of real and personal prop- 
 erty; to conduct said business as principal or agent, within 
 and without the state of Washington, and to carry on any 
 business, to make contracts and do any and all acts necessary, 
 proper, incidental or convenient to said purposes and objects 
 not inconsistent with the laws of Washington. 
 
 § 787. Electrical Contractors. 
 
 To conduct a general contracting business and to do and 
 supply electrical work of every kind and description in elec- 
 trical plants, machinery, appliances and supplies ; to construct, 
 install, equip, repair and deal in plants, works, electrical ma- 
 chinery and appliances of every kind for generating, storing, 
 transmitting, supplying and distributing electricity for light, 
 heat, power and every purpose, public and private ; to acquire, 
 hold and dispose of inventions, patents and trademarks in the 
 United States and foreign countries; to acquire, hold and 
 dispose of any and all kinds of real and personal property ; 
 to conduct said business and every part thereof, as principal 
 or agent, within and without the state of Washington ; to 
 carry on any business, make contracts and do any and every 
 act necessary, proper, incidental or convenient to said pur- 
 poses or objects not inconsistent with the laws of Washington. 
 
 § 788. Express Business. 
 
 To carry and transfer goods, wares, merchandise and per- 
 sonal property of every kind from any place or places to any 
 other place or places by means of wagons drawn by horses or 
 other animals, or by electric, steam, gasoline or other motor 
 cars, boats or vehicles, or by any other method of transpor- 
 tation; to contract with other companies or individuals to 
 carry or transfer such property, and generally to carry on and' 
 conduct an express and transportation business; to acquire, 
 hold and dispose of any and all kinds of real and personal prop-
 
 541 VARIOUS PURPOSE CLAUSES. §§ 789, 790 
 
 crty; to conduct said business, as principal or agent, within 
 and without the state of Washington; to carry on any busi- 
 ness, make contracts and do any and every act necessary, 
 proper, incidental or convenient to said purposes or objects 
 not inconsistent with the laws of Washington. 
 
 § 789. Fisheries and Canning. 
 
 To carry on the business of buying, catching, salting, pack- 
 ing, canning, storing, selling and otherwise dealing in fish 
 and sea food of every kind, whether from fresh or salt water, 
 and products thereof ; to acquire, hold and dispose of any and 
 all kinds of fishing boats, nets, tackle and appliances of every 
 description for taking and catching fish ; to acquire, establish, 
 maintain and dispose of factories, agencies and depots for 
 salting, packing, canning, storing and otherwise preserving 
 and dealing in all kinds of food, fishes and products thereof; 
 to acquire, hold and dispose of inventions, patents and trade- 
 marks in the United States and foreign countries ; to acquire, 
 hold and dispose of any and all kinds of real and personal 
 property; to conduct said business, as principal or agent, 
 within and without the state of Washington, and to carry on 
 any business and do any and every act necessary, proper, in- 
 cidental or convenient to said purposes and objects not incon- 
 sistent with the laws of Washington. 
 
 § 790. MiUing. 
 
 To grow, buy, handle, grind, mill, deal in and deal with, 
 sell and otherwise dispose of wheat, rye, barley, oats, buck- 
 wheat, corn and other grains and cereals ; to manufacture said 
 grains and cereals into flour, meal, foodstuffs and every com- 
 modity produced therefrom ; to buy, handle, store, warehouse, 
 deal in and deal with, sell and otherwise dispose of said grains, 
 cereals, flour, meal, foodstuffs and commodities; to buy, ac- 
 quire, own, hold, sell or otherwise dispose of lands, buildings, 
 wharves, docks, boats, barges, ships, transportation lines and 
 systems by land and water, warehouses, elevators, mills, struc- 
 tures, machinery and appliances suitable or desired for purchas- 
 ing, treating, handling, milling, storing, dealing in, selling or 
 otherwise disposing of or utilizing any or all of said grains.
 
 §§791,792 CORPORATE PROCEDURE. 542 
 
 cereals, foodstuffs and commodities ; to acquire, hold and dis- 
 pose of inventions, patents, trademarks in the United States or 
 forei^ countries ; to acquire, hold and dispose of any and all 
 kinds of real and personal property ; to conduct said business 
 and any part thereof, as principal or agent, within and without 
 the state of Washington, and to carry on any business and do 
 any and every act necessary, proper, incidental or convenient 
 to said purposes and objects not inconsistent with the laws of 
 Washington. 
 
 § 791. Lumber. 
 
 To buy, lease, acquire, hold, own, sell and otherwise dispose 
 of timber, timber lands, lumber, mills, sawmills, plants, mill- 
 sites, booms, boom-sites, roads, ways, logging roads, railroads, 
 machinery, steam, electric, gasoline and other engines, water- 
 power sites and machinery therefor, ships, boats, barges, steam, 
 electric and gasoline cars, wagons, horses, and any other means 
 of transportation by any form of power or energy now known 
 or hereafter discovered, and to purchase, acquire, o^vn, hold, 
 manufacture, sell, and otherwise dispose of any and all kinds 
 of timber, lumber and wood, and product or products thereof ; 
 and in general to carry on the business of timber and lumber 
 manufacturers and merchants, as principal or agent, within 
 and without the state of Washington; to acquire, hold and 
 dispose of inventions, patents and trademarks in the United 
 States or foreign countries; to acquire, hold and dispose of 
 any and every kind of real or personal property, and to carry 
 on any business, make contracts and do any and every act 
 necessary, proper, incidental or convenient to said purposes 
 and objects not inconsistent with the laws of Washington. 
 
 § 792. Leather. 
 
 To manufacture, produce, tan, purchase and otherwise ac- 
 quire, hold and sell or otherwise dispose of leather, lumber and 
 belting; to acquire, hold and dispose of lands, timber, mills, 
 plants, machinery, hides, bark supplies and other articles used 
 in connection with the tanning and manufacture of leather; 
 to acquire, hold and dispose of inventions, patents and trade- 
 marks in the United States and foreign countries; to ac-
 
 543 VARIOUS PURPOSE CLAUSES. §§ 793, 794 
 
 quire, hold and dispose of any and all kinds of real and 
 personal property; to conduct said business, as principal or 
 agent, within and without the state of Washington; and to 
 carry on any business, make contracts and do any and every 
 act necessary, proper, incidental or convenient to said pur- 
 poses and objects not inconsistent with the laws of Washing- 
 ton. 
 
 § 793. Mining. 
 
 To explore, locate, acquire by purchase, lease or otherwise 
 hold, own, work, exercise and develop, sell, lease, mortgage 
 or otherwise dispose of any mines, mining rights and metallif- 
 erous land, and any interest therein; to acquire, smelt, re- 
 duce, refine, mill and otherwise treat, own, hold, sell and other- 
 wise dispose of ores, minerals and metals ; to crush, win, get, 
 quarry, calcine, refine, dress, amalgamate, manipulate and 
 prepare for market mineral substances of all kinds; to buy, 
 build, construct, and otherwise acquire, own, hold, sell, lease, 
 mortgage or otherwise dispose of ways, tramways, railways, 
 bridges, waters, watercourses, reservoirs, aqueducts, wharves, 
 docks, factories, warehouses, furnaces, crushing works, hy- 
 draulic works, electrical works, sawmills, cars, wagons, boats, 
 ships, horses, engines, motors and vehicles of transportation of 
 every kind, electric, steam and water-power plants and ma- 
 chinery and appliances therefor, and for the transmission 
 thereof; to acquire, hold and dispose of inventions, patents 
 and trademarks in the United States and foreign countries; 
 to acquire, hold and dispose of any and all kinds of real and 
 personal property ; to conduct said mining and other business, 
 as principal or agent, within and without the state of Wash- 
 ington, and to carry on any business, make contracts and do 
 any and every act necessary, proper, incidental or conven- 
 ient to said purposes and objects not inconsistent with the 
 laws of Washington. 
 
 § 794. Paper. 
 
 To manufacture, produce, purchase or otherwise acquire, 
 hold, own, sell or otherwise deal in and dispose of paper, wood, 
 pulp, fiber, iron pyrites, clay, sulphur, coal, agolite, fibrous
 
 § 795 CORPORATE PROCEDURE. 544 
 
 minerals and materials, and any and all ingredients, products, 
 by-products and compounds thereof and used in connection 
 with their manufacture ; to acquire, hold and dispose of mines, 
 wood lands, steam, electric and water-power and water rights, 
 ways, roads, railways, watercourses and means of transmis- 
 sion and vehicles of transportation ; to acquire, hold and dis- 
 pose of inventions, patents and trademarks in the United 
 States or foreign countries ; to acquire, hold and dispose of any 
 and all kinds of real and personal property ; to carry on said 
 business and any part thereof, as principal or agent, within 
 and without the state of Washington, and to carry on any 
 business, make contracts and do any and every act necessary, 
 proper, incidental or convenient to any of said purposes and 
 objects not inconsistent with the laws of Washington. 
 
 § 795. Railroads. 
 To build, construct, maintain and operate a steam, electric 
 
 or other railway or railroad from to , which 
 
 places shall be the termini of the railway or railroad ; to operate 
 the same by steam, electric or other power now known or here- 
 after discovered ; to acquire, hold and dispose of ways, rights 
 of way, yards, depots, stations and terminals ; to build, con- 
 struct, erect and otherwise acquire, hold and dispose of works, 
 plants and systems for the manufacture, production and gen- 
 eration of steam and electrical energy, light, heat, and power 
 and the transmission thereof; to build, acquire, hold and dis- 
 pose of telephone and telegraph plants, facilities and systems 
 and other means of communication ; to build, acquire, hold and 
 dispose of waters, docks, wharves, boats, sailing and steam 
 boats, and ships and lines and systems thereof; to build, ac- 
 quire, own, hold and dispose of, directly and indirectly, 
 wagons, cars, boats, ships, vehicles, engines and motors of 
 every kind; to carry, convey, transport and transmit for toll 
 and hire persons, property, messages and communications ; to 
 acquire, hold and dispose of inventions, patents and trade- 
 marks in the United States and foreign countries ; to acquire, 
 hold and dispose of any and all kinds of real and personal 
 property ; to conduct and exercise said powers, purposes and 
 business and any part thereof, as principal or agent, within
 
 545 VARIOUS PURPOSE CLAUSES. § 796 
 
 and without the state of "Washington, and to carry on any busi- 
 ness, make any contracts and do any and every act necessary, 
 proper, incidental or convenient to said purposes and objects 
 not inconsistent with the laws of Washington. 
 
 § 796. Real Estate and Brokerage. 
 
 To act as agent, broker or attorney in fact for individuals 
 and corporations in buying, selling, managing, leasing, rent- 
 ing, mortgaging and otherwise dealing in and disposing of real 
 and personal property, leases and mortgages thereon, and 
 any and every interest therein and collateral or appurtenant 
 thereto, including choses in action and judgments; to make 
 and obtain loans; to effect insurance against fire and other 
 risks; to register, file and record mortgages, deeds and other 
 instruments; to investigate and report upon the credit and 
 financial solvency and reliability of borrowers, sureties and 
 persons dealing in such property; to acquire, hold and dis- 
 pose of inventions, patents and trademarks in the United 
 States and foreign countries; to acquire, hold and dispose of 
 any and all kinds of real and personal property, and in gen- 
 eral to conduct a real estate and brokerage business, as prin- 
 cipal or agent within and without the state of Washington, and 
 to conduct any business, make contracts and do any and every 
 act necessary, proper, incidental or convenient to said pur- 
 poses and objects not inconsistent with the laws of Wash- 
 ington.
 
 FORMS. 
 
 § 797. 
 
 ARTICLES OF INCORPORATION OF KING COUNTY 
 CONSTRUCTION COMPANY. 
 
 These presents witness that we, James Smith, Albert Jones, 
 and William King, being desirous of forming a corporation 
 for the purposes hereinafter specified, and in conformity with 
 the laws of the State of Washington, do make and subscribe 
 the following written Articles of Incorporation in triplicate. 
 
 ARTICLE I. 
 The corporate name of the company shall be: King Comity 
 Construction Company. 
 
 ARTICLE IL 
 The objects for which the company shall be formed are : To 
 build, construct, improve, equip, tear down, remove and do 
 any work upon buildings and their foundations, excavations, 
 structures and machines of every kind on lands and waters, 
 and any and all kinds of streets, roads, ways, tramways, rail- 
 roads, street railways, branches, extensions and sidings 
 thereof, dams, bridges, reservoirs, watercourses, flumes and 
 wharves, canals, sewers, tunnels and subways, plants for 
 furnishing light, heat and power, by electricity or otherwise, 
 systems, machinery, appliances and devices for the generation 
 of steam, electrical or other power and force and energy of 
 every kind; to acquire, hold and dispose of inventions, patents 
 and trademarks relating thereto in the United States or for- 
 eign countries; to acquire, hold and dispose of any and all 
 kinds of real and personal property ; to carry on said business, 
 as principal or agent, within or without the state of Wash- 
 ington ; and to carry on any business, make contracts and do 
 any and all acts necessary, proper, incidental or convenient 
 to said purposes and objects not inconsistent with the laws of 
 
 Washington. 
 
 (547)
 
 § 79?! CORPORATE PROCEDURE. 548 
 
 ARTICLE III. 
 The amount of the capital stock of the company shall be 
 ($100,000) one hundred thousand dollars. 
 
 ARTICLE IV. 
 The time of existence of the company shall be fifty years. 
 
 ARTICLE V. 
 
 The number of shares of which the capital stock of the com- 
 pany shall consist shall be (1,000) one thousand. 
 ARTICLE VI. 
 
 The number of trustees of the company shall be three, and 
 the names and residences of the trustees who shall manage 
 the concerns of the company until the third Tuesday in De- 
 cember, 1912, are 
 
 Names. Residences. 
 
 James Smith No. 1 Avenue A, Seattle 
 
 Albert Jones No. 1 Avenue B, Seattle 
 
 William King No. 1 Avenue C, Seattle 
 
 ARTICLE VII. 
 
 The principal place of business of the company is to be 
 located in the city of Seattle, county of King, state of Wash- 
 ington. 
 
 In witness whereof we have this first day of September, 
 A. D. 1912, hereunto set our hands and seals in triplicate. 
 
 JAMES SMITH. [Seal] 
 ALBERT JONES. [Seal] 
 WILLIAM KING. [Seal] 
 
 Signed, sealed and delivered in the presence of 
 
 BENJAMIN ALLEN. 
 JOHN WOOD. 
 
 State of Washington, 
 
 County of King, — ss. 
 
 I, Joseph White, a notary public in and for the state of 
 Washington, duly commissioned, sworn and qualified, do
 
 549 FORMS. §§ 798, 799 
 
 hereby certify that on this second day of September, A. D. 
 1912, personally appeared James Smith, Albert Jones and 
 William King, to me known to be the individuals described in 
 and who executed the within instrument and acknowledged 
 that they signed and sealed the same as their free and volun- 
 tary act and deed and for the uses and purposes therein men- 
 tioned. 
 
 Given under my hand and official seal this second day of 
 September, A. D. 1912. 
 
 [Notarial Seal] JOSEPH WHITE, 
 
 Notary Public. 
 
 § 798. MINUTES 
 
 of 
 
 First Meeting of the Trustees of King County Construction 
 Company, Held at No. 100 Second Avenue, Seattle, Wash- 
 ington, on September 10, 1912, at 10:30 o'clock in the 
 forenoon. 
 
 Present : Messrs. James Smith, 
 Albert Jones, 
 William King, 
 being all of the trustees named in the Articles of Incorpora- 
 tion of the company. 
 
 The meeting was called to order by Mr. King. 
 
 Mr. King was elected temporary chairman and Mr. Smith 
 was elected secretary pro tempore. 
 
 The chairman presented the notice of the First Trustees* 
 Meeting, which with proof of service required by law was 
 read and ordered spread upon the minutes of the meeting and 
 is as follows: 
 
 § 799. 
 
 NOTICE OF FIRST MEETING OF TRUSTEES OF KING 
 COUNTY CONSTRUCTION COMPANY. 
 
 The undersigned, one of the trustees named in the Articles 
 of Incorporation of the above-named company, hereby calls 
 the first meeting of the trustees of said company, to be held
 
 § 800 CORPORATE PROCEDURE. 550 
 
 at No. 100 Second Avenue, Seattle, Washington, on the tenth 
 day of September, 1912, at 10:30 o'clock in the forenoon. 
 Dated Seattle, Washington, September 5. 1912. 
 
 (Signed) WILLIAM KING, 
 
 Tru.stee. 
 
 State of Washington, 
 King County, — ss. 
 
 William King, first being duly sworn, deposes and says that 
 on the fifth day of September, 1912, he personally delivered 
 the annexed notice of meeting to each of the persons named 
 in the Articles of Incorporation of King County Construction 
 Company. 
 
 (Signed) WILLIAM KING. 
 
 Subscribed and sworn to before me this fifth day of Sep- 
 tember, 1912. 
 
 JOSEPH. WHITE, 
 Notary Public in and for the State of Washington, Residing 
 at 1616 E. Howell St., Seattle, Washington. 
 
 The original notice and proof of service was thereupon or- 
 dered filed among the records of the company. 
 
 § 800. 
 
 The chairman then produced and read the oath taken and 
 subscribed by the trustees as follows : 
 
 State of Washington, 
 County of King, — ss. 
 
 James Smith, Albert Jones and William King, being first 
 duly sworn, on their oath say that they are the trustees named 
 in the Articles of Incorporation of the King County Construc- 
 tion Company, and that they will each faithfully and honestly 
 discharge the duties of their office as trustees. 
 
 JAMES SMITH. 
 
 ALBERT JONES. 
 
 [WILLIAM KING.
 
 551 FORMS. § 801 
 
 Subscribed and sworn to before me this fourth day of Sep- 
 tember, 1912. 
 
 JOSEPH WHITE, 
 
 Notary Public in and for the State of Washington, Residing 
 at 1616 East Howell St., Seattle, Washington. 
 
 The original oath was then ordered filed among the records 
 of the company. 
 
 The chairman then produced the triplicate copy of the 
 Articles of Incorporation of the company on file and of record 
 in the office of the Secretary of State and the office of the 
 county auditor of King County, in which the principal place 
 of business of the company was located, and the same was 
 read and ordered spread upon the minutes of the meeting 
 and is as follows: [Take in Copy of Articles.] 
 
 The said triplicate original Articles of Incorporation were 
 thereupon ordered filed among the records of the company. 
 
 At the request of the Chairman, counsel for the company 
 then produced and read proposed by-laws of the company as 
 follows : 
 
 § 801. 
 BY-LAWS OF KING COUNTY CONSTRUCTION 
 COMPANY. 
 
 ARTICLE I. 
 
 Meetings of Stockholders. 
 
 Section 1. The annual meeting of stockholders for the elec- 
 tion of trustees and general corporate action shall be held at 
 the principal office of the company at Seattle, King County, 
 Washington, on the third Tuesday in December, in the year 
 1912, and each year thereafter at 12 o'clock M. 
 
 Sec. 2. Special meetings of the stockholders may be called 
 and held at the said office of the company at any time by 
 order of the board of trustees, and shall be called whenever 
 stockholders of record owning one-tenth of the capital stock 
 of the company issued and outstanding at the time shall make 
 application in writing therefor to the board of trustees stating
 
 § 801 CORPORATE PROCEDURE. 552 
 
 the object of such meeting. The business transacted at special 
 meetings shall be confined to the objects stated in the call. 
 
 Sec. 3. Notice of the time, place and object of each annual 
 or special meeting of stockholders shall be given as prescribed 
 by statute in any case, and shall be mailed to each stockholder 
 at least ten days before the date set for each meeting, ad- 
 dressed to him at his place of residence or business, as the 
 same appears in the list of addresses which shall be kept by 
 the secretary of the company. 
 
 Sec. 4. At every election and meeting of the stockholders 
 each stockholder shall be entitled to one vote in person or by 
 proxy for each share of the capital stock owned by him and 
 standing in his name on the books of the company. Each 
 owner of stock entitled to vote may vote in person or by 
 proxy duly appointed in writing. 
 
 Sec. 5. At all stockholders' meetings a majority of the 
 shares of stock issued and outstanding at the time and having 
 voting power, represented in person or by proxy, shall con- 
 stitute a quorum. Meetings at which less than a majority 
 of the shares of outstanding stock having voting power are 
 represented may be adjourned to a future date by those who 
 attend, provided that notice of such adjournment be mailed 
 to each owner of stock at least three days before the date at 
 which such meeting is adjourned, addressed to his place of 
 business or residence as stated in the list of addresses kept by 
 the secretary of the company. 
 
 ARTICLE II. 
 
 Trustees. 
 
 Section 1. The affairs of the company shall be managed 
 by a board of three trustees. 
 
 Sec. 2. The trustees, except those first appointed by the 
 articles, shall be elected by the stockholders at their annual 
 meeting by ballot except as otherwise provided herein, and 
 shall hold office for one year and until their successors are 
 elected respectively. 
 
 Sec. 3. Vacancies in the board of trustees, whether original 
 vacancies or caused by resignation or otherwise, may be filled
 
 553 FORMS. § 801 
 
 by the board at any meeting thereof at which a quorum is 
 present. 
 
 Sec. 4. The board of trustees shall have the general man- 
 agement and control of all the property, business and con- 
 cerns of the company ; they shall define and limit the powers 
 and duties of all committees, officers, agents and employees of 
 the company not otherwise provided for by these by-laws; 
 shall fix all salaries, and may require such bonds as they deem 
 proper. 
 
 Sec. 5. They shall declare all dividends upon the capital 
 stock of the company and generally do any and every lawful 
 act requisite or advisable in order to effect the purposes of the 
 corporation. They shall also keep a record of their proceed- 
 ings. 
 
 Sec. 6. The board of trustees shall annually elect from 
 their own number a president and one or more vice-presidents 
 of the company. They shall also annually elect or appoint 
 a secretary, treasurer and general manager, who may or may 
 not be trustees as the board may in each case determine. 
 
 Sec. 7. Meetings of the board of trustees shall be held at 
 such times and places within this state as the board itself may 
 elect or may be called at any time by the president or by one- 
 fourth of the members of the board on such notice as may be 
 deemed advisable by those calling the meeting. 
 
 Sec. 8. A majority of the trustees shall constitute a quorum 
 for the transaction of business, but a less number may adjourn 
 from time to time ; the secretary shall give such notice as he 
 may deem proper of such adjournment to the absent trustees. 
 
 Sec. 9. The first meeting of the board of trustees, after 
 each annual meeting of stockholders, shall be held without un- 
 necessary delay for the election of officers and transaction of 
 other business. 
 
 ARTICLE III. 
 
 Officers. 
 
 Section 1. The officers of the company shall be a president, 
 one or more vice-presidents, a secretary and a treasurer. The 
 offices of secretary and treasurer may be filled by the same per-
 
 § 801 CORPORATE PROCEDURE. 554 
 
 son, as also may those of vice-president and general manager 
 if such there be. 
 
 Sec. 2. All of said officers other than the president may be 
 removed at any time by a vote of a majority of the board 
 of trustees, but otherwise they shall hold their respective offices 
 for one year or until their successors are elected. Any and all 
 vacancies that may occur in anj^ of said offices may be filled 
 by the trustees at any meeting of the board. 
 
 Sec. 3. The board of trustees may elect or appoint such 
 other officers, agents and employees of the company as they 
 may from time to time deem best, and upon such terms as 
 they may in each case prescribe. 
 
 ARTICLE IV. 
 
 President and Vice-president. 
 
 Section 1. The president shall be the chief executive offi- 
 cer of the company, and shall preside at all meetings of the 
 stockholders and of the board of trustees. He shall sign all 
 certificates of stock, countersign all checks, and sign or 
 countersign all bonds, notes and other evidences of indebted- 
 ness issued by the company, and shall, on behalf of the 
 company, sign all contracts, unless some other officer be 
 specifically authorized so to do by the board of trustees. 
 
 Sec. 2. He shall have the general oversight, care and man- 
 agement of all the property, business management and busi- 
 ness of the company, subject always to the direction and con- 
 trol of the board of trustees. He shall make a report in writ- 
 ing to the stockholders at each annual meeting of the earnings 
 and general business of the company, which report shall be 
 first submitted to the board of trustees for their approval. 
 
 Sec. 3. In case of the absence or disability of the president, 
 his powers and duties shall devolve upon and be performed 
 by the vice-president; otherwise the vice-president shall have 
 such powers and perform such duties as may be prescribed 
 from time to time by the board of trustees.
 
 555 FORMS. § 801 
 
 ARTICLE V. 
 
 General Manager, 
 
 The general manager, if such there be, shall, subject to the 
 board of trustees, control and have general charge of the con- 
 struction work and operations of the company's business. 
 
 ARTICLE VI. 
 
 Secretary, 
 
 Section 1. The secretary shall be ex-officio secretary of all 
 stockholders' meetings and of the board of trustees, and shall 
 attend their meetings, keep the records of the proceedings at 
 such meetings and be the custodian of the same. 
 
 Sec. 2. He shall, subject to the direction of the board of 
 trustees, give all notices required for the election of trustees 
 and for meetings of trustees and stockholders, and shall per- 
 form such other duties as may from time to time be assigned 
 to him by the board of trustees. 
 
 Sec. 3. In case of the absence or disability of the secre- 
 tary, the board of trustees may appoint a secretary pro tem. 
 to perform his duties. 
 
 Sec. 4. The secretary shall also have charge of the cor- 
 porate seal of the company and shall, in the course of its busi- 
 ness, affix the same to all bonds and stock certificates issued; 
 and when authorized by the board of trustees, he shall also 
 affix said seal to contracts and other instruments. 
 
 ARTICLE VII. 
 
 Treasurer. 
 
 Section 1. The treasurer shall have the custody of all 
 moneys belonging to the company, and shall keep the same 
 deposited to the credit of and in the name of the company in 
 such place or places as the board of trustees may from time 
 to time designate ; and shall also disburse the funds of the 
 company under the direction of the board of trustees. 
 
 Sec. 2. He shall keep accurate books of account showing 
 all receipts and disbursements of the company, which shall at
 
 § 801 CORPORATE PROCEDURE. 556 
 
 all times be open to the inspection of the trustees and the 
 president. 
 
 Sec. 3. He shall si^, or countersign, all cheeks, drafts, 
 orders for money, notes and receipts and certificates of stock 
 of the company. 
 
 Sec. 4. He shall, whenever called upon, render to the 
 board of trustees reports in writing of the business and con- 
 dition of the company, and shall perform such other duties 
 and have such other powers as may from time to time be pre- 
 scribed by the board of trustees. 
 
 ARTICLE VIII. 
 Capital Stock, Its Transfer and Registration. 
 
 Section 1. The capital stock of the company shall be of two 
 classes; one-half thereof to be preferred stock and one-half 
 common stock. 
 
 Sec. 2. The holders of the preferred stock shall be entitled 
 to receive, when and as any dividends are declared by the trus- 
 tees, dividends at the rate of and not exceeding seven per 
 centum per annum. Such dividends shall be cumulative, and 
 if the profits of any one year declarable as dividends shall not 
 be sufficient to pay or warrant the declaration of dividends, 
 then the same shall be made up from profits of a later period 
 until the full amount of dividends herein specified without 
 interest shall have been paid upon or set apart for the pre- 
 ferred stock before any dividend is declared or paid on the 
 common stock. The balance of the net profits of the company 
 declarable as dividends may be distributed among the holders 
 of the common stock at such times as may be fixed by the 
 trustees; the par value of the preferred stock and accumu- 
 lated and unpaid dividends thereon shall also, in the event of 
 the dissolution of the company and disposition of its assets, 
 be paid in full before any sum whatever is paid on account of 
 the common stock, and thereafter the common stock shall be 
 entitled to the entire assets remaining. 
 
 Sec. 3. All transfers of stock shall be signed by the stock- 
 holders in person or by attorney in a book to be provided for 
 that purpose. At the time of each transfer the old certificate
 
 557 FORMS. § 802 
 
 for the shares transferred shall be surrendered and canceled, 
 and a new certificate issued in lieu thereof. 
 
 Sec. 4. All certificates of stock issued by the company shall 
 bear the seal of the company and be signed by the president 
 or one of the vice-presidents and by the treasurer, and shall 
 be countersigned by the transfer agent and registrar of trans- 
 fers of the company if such there be. 
 
 Sec. 5. The board of trustees may appoint a transfer 
 agent to facilitate transfers by stockholders under such regu- 
 lations as the board may from time to time prescribe. They 
 may also appoint a registrar of transfers of stock. After the 
 appointment of such registrar of transfers, no certificate there- 
 after issued for stock shall be binding upon the corporation, 
 or shall have any validity, unless countersigned by such regis- 
 trar of transfers. 
 
 ARTICLE IX. 
 
 Seal. 
 Section 1. The corporate seal of the company shall con- 
 tain the words ''King County Construction Co." on the mar- 
 gin and the words "Incorporated Washington" around the 
 figures "1912" in the center. The seal shall be kept in the 
 charge and custody of the secretary of the company and must 
 be affixed to all instruments requiring a seal. 
 
 ARTICLE X. 
 
 Amendments. 
 
 The by-laws may be altered or amended at any meeting of 
 the board of trustees by a vote of the majority of the board. 
 
 After full consideration and discussion of each article and 
 section thereof, said by-laws were, on motion duly made and 
 seconded, unanimously adopted as the by-laws of the company. 
 
 § 802. 
 
 On motion duly made and carried, the following was 
 adopted as the stock certificate of the company;
 
 § 802 CORPORATE PROCEDURE. 558 
 
 KING COUNTY CONSTRUCTION COMPANY. 
 
 No. Incorporated Under the Laws Shares 
 
 of Washington, 
 
 Authorized Capital Stock, $100,000. 
 
 $50,000 Preferred Stock— $50,000 Common Stock. 
 
 r Preferred Stock "^ 
 
 J or L 
 
 I Common Stock J 
 
 This certifies that entitled to shares of the 
 
 commJn'^ ^^^^^ ^^ ^i°= County Construction Company, trans- 
 ferable only on the books of the company by the holder hereof 
 in person or by attorney upon surrender of this certificate duly 
 indorsed. 
 
 The preferred stock, as more fully provided in the by-laws 
 of the company, is entitled, in preference to the common stock, 
 to cumulative dividends at the rate of seven per centum yearly 
 and to payment of its par value and the amount of such cumu- 
 lative dividends then unpaid in any distribution of assets. 
 
 In witness whereof the said company has caused its cor- 
 porate seal to be affixed hereto and this certificate to be signed 
 by its president or vice-president and secretary or treasurer. 
 
 [Corporate Seal] , 
 
 President. 
 
 Secretary. 
 
 (Indorsement for Transfer:) 
 
 For value received .... hereby sell, assign and transfer 
 
 unto shares of the capital represented by the within 
 
 certificate, and hereby irrevocably constitute and appoint 
 
 , attorney, to transfer the said stock on the books of 
 
 the within named company, with full power of substitution in 
 the premises. 
 
 Dated ,19 
 
 In presence of
 
 559 
 
 FORMS. 
 
 §§ 803 ,80-1 
 
 A recess was then taken and reassembling the Chairman 
 announced that the entire capital stock had been subscribed. 
 The subscription agreement was read and ordered spread upon 
 the minutes of the meeting, and is as follows : 
 
 § 803. SUBSCRIPTION TO STOCK. 
 
 King County Construction Company, 
 
 We, the undersigned, severally agree with King County 
 Construction Company, and with each other, to take the num- 
 ber of shares of stock in said company set opposite our names 
 at the par value of $100 each, and to pay for such shares of 
 stock at such times and in such installments as the board of 
 trustees of said company may by resolution require : 
 
 Names. 
 
 P. O. Addresses. 
 
 No. of Shares 
 Common. 
 
 No. of SliaroB 
 Preferred. 
 
 James Smith 
 Albert James 
 William King 
 John Edwards 
 
 30 Howell St., Seattle, Wash. 
 50 Cherry St., Seattle, Wash. 
 40 Pike St., Seattle, Wash. 
 10 Cherry St., Seattle, Wash. 
 
 1 
 
 2 
 
 2 
 
 4&5 
 
 500 
 
 Dated Seattle, Washington, September 10, 1912. 
 
 The original subscription agreement was then ordered filed 
 with the records of the company. 
 
 § 804. 
 
 The meeting then proceeded to the election of officers by 
 ballot, to serve until the third Tuesday in December, 1912. 
 Mr. White was appointed teller and nominations for president, 
 vice-president, secretary and treasurer having been made, the 
 teller collected the ballots and reported the vote of the meeting 
 as follows: 
 
 For president: William King — 3 votes. 
 
 For vice-president: James Smith — 3 votes. 
 
 For secretary : Albert Jones — 3 votes. 
 
 For treasurer — Albert Jones — 3 votes. 
 
 The Chairman declared the above named elected to the said 
 offices respectively.
 
 § 805 COEPORATE I'EOCEDURE. 560 
 
 § 805. 
 
 The Chairman then reported that he had received from Mr. 
 John Edwards an offer in writing to assign, transfer and con- 
 vey his entire construction business, including plant, fixtures, 
 machinery, cash and stock on hand, and the entire assets 
 thereof, including goodwill, to the company for the capital 
 stock subscribed by him, amounting to 495 shares of the com- 
 mon stock and 500 shares of preferred stock of the company. 
 
 The said offer was read and ordered spread upon the 
 minutes of the meeting, and is as follows: [Take in written 
 offer.] 
 
 Mr. Edwards was thereupon invited into the meeting and 
 made a full statement, in answer to questions and otherwise, 
 as to the value of his said business and plant. 
 
 After Mr. Edwards retired the trustees had a prolonged dis- 
 cussion regarding his offer and the value of his plant and 
 construction business, and thereafter, on motion duly made 
 and carried, it was unanimously 
 
 "Resolved, that in the opinion of the trustees, after full 
 investigation, consideration and discussion, the plant and con- 
 struction business of Mr. John Edward is fairly and conser- 
 vatively valued in his offer to the company; that the best 
 interests of the company will be furthered by accepting the 
 offer, and therefore be it further resolved that the offer of Mr. 
 John Edwards to transfer his entire construction business, 
 plant and goodwill to the company be and the same is hereby 
 accepted; and be it further resolved that on receiving from 
 Mr. Edwards an assignment, transfer and conveyance of his 
 construction business, plant, assets and goodwill, examined by 
 and approved by counsel for the company, the proper officers 
 be and they are hereby authorized and directed to issue to Mr. 
 Edwards and his appointees 500 shares of the preferred and 
 495 shares of the common stock of the company." 
 
 On. motion duly made and carried, the meeting adjourned. 
 
 • > 
 
 Secretary.
 
 561 
 
 FORMS. 
 
 §806 
 
 § 806. 
 
 STATEMENT OF OFFICERS OF KING COUNTY 
 CONSTRUCTION COMPANY. 
 
 King County Construction Company, a corporation organ- 
 ized and existing under the laws of Washington, in compli- 
 ance therewith makes and files this statement containing the 
 following list of all of its officers and their respective titles 
 of office, names and addresses, and the term of office for which 
 they have been chosen : 
 
 Name. 
 
 President: William King 
 
 Vice-President: James Smith 
 
 Secretary: Albert Jones 
 
 Treasurer: Albert Jones 
 
 Address. 
 
 No. 1 Avenue C, 
 
 Seattle, Wash. 
 
 No. 1 Avenue A, 
 Seattle, Wash. 
 
 No. 1 Avenue B, 
 Seattle, Wash. 
 
 No. 1 Avenue B, 
 Seattle, Wash. 
 
 Term of Office. 
 
 Until Third Tues- 
 day in December, 
 1912. 
 
 Until Third Tues- 
 day in December, 
 1912. 
 
 Until Third Tues- 
 day in December, 
 1912. 
 
 Until Third Tues- 
 day in December, 
 1912. 
 
 In witness whereof the company has executed this statement 
 in its corporate name, sealed with its corporate seal, attested 
 by its secretary, and sworn to by its president, this 15th day 
 of September, 1912. 
 
 KING COUNTY CONSTRUCTION COMPANY. 
 
 By WILLIAM KING, 
 
 President. 
 [Corporate Seal] Attest: ALBERT JONES, 
 
 Secretary. 
 
 State of Washington, 
 County of King, — ss. 
 
 William King, first being duly sworn, deposes and says that 
 
 he is the president of King County Construction Company, 
 
 and that the foregoing annexed statement contains a true and 
 
 complete list of all the officers of said company and their re- 
 
 36
 
 §§ 807, 808 CORPORATE PROCEDURE. 562 
 
 spective titles of office, names and addresses and the term of 
 office for which they have been chosen. 
 
 [Signed] WILLIAM KING. 
 
 Subscribed and sworn to before me, a notary public in 
 and for King County, State of Washington, residing at 
 1616 E. Howell St., Seattle. 
 
 [Notarial Seal] JOSEPH WHITE. 
 
 § 807. 
 
 NOTICE OF CHANGE OF NAME OF ELECTRICAL 
 CONSTEUCTION COMPANY 
 
 Formerly 
 
 KING COUNTY CONSTRUCTION COMPANTT. 
 
 The undersigned, William King, president of Electrical 
 Construction Company, signs this written notice to be filed 
 by the company in compliance with the laws of the state of 
 Washington, setting forth as follows: 
 
 I. The former corporate name of the company was King 
 County Construction Company. 
 
 II. The corporate name of the company as changed is Elec- 
 trical Construction Company. 
 
 III. Supplemental articles making such change of name 
 have been filed in the office of the Secretary of State and in 
 the office of the county auditor of King County, Washington. 
 
 In witness whereof I have hereunto set my hand and seal 
 this 28th day of September, 1912. 
 
 WILLIAM KING, 
 
 President. 
 
 § 808. 
 
 SUPPLEMENTAL ARTICLES OF INCORPORATION OF 
 KING COUNTY CONSTRUCTION COMPANY. 
 
 The King County Construction Company being desirous of 
 changing its said name to be hereafter Electrical Construction 
 Company, in conformity with the laws of the state of Wash-
 
 563 FORMS. § 808 
 
 ington, makes and executes these Supplemental Articles of 
 Incorporation, and certifies as follows : 
 
 ARTICLE I. 
 
 The name of the corporation is hereby changed from its 
 former name, King County Construction Company, and shall 
 hereafter be 
 
 Electrical Construction Company. 
 
 ARTICLE II. 
 The corporate seal of the company shall be changed to con- 
 form to the newly adopted name. 
 
 In witness whereof the company has caused these presents 
 to be executed and filed in its former corporate name by its 
 president and its former corporate seal to be hereto affixed and 
 attested by its secretary, this 20th day of September, 1912. 
 [Corporate Seal] 
 
 KING COUNTY CONSTRUCTION COMPANY, 
 
 Per WILLIAM KING, 
 
 President. 
 Attest: ALBERT JONES, 
 
 Secretary. 
 
 State of Washington, 
 County of King. 
 
 On this 20th day of September, 1912, before me personally 
 appeared William King, to me known to be the president of 
 the corporation that executed the within and foregoing instru- 
 ment, and acknowledged the said instrument to be the free 
 and voluntary act and deed of said corporation for the uses 
 and purposes therein mentioned, and on oath stated that he 
 was authorized to execute said instrument, and that the seal 
 affixed is the corporate seal of said corporation. 
 
 In witness whereof I have hereunto set my hand and affixed 
 my official seal the day and year first above written. 
 
 JOSEPH WHITE, 
 Notary Public in and for the State of Washington, Residing 
 at 1616 E. Howell St., Seattle, Wash.
 
 § 809 CORPORATE PROCEDURE. 564 
 
 § 809. 
 
 CERTIFICATE OF INCREASE [OR REDUCTION] OF 
 THE CAPITAL STOCK OF KING COUNTY CON- 
 STRUCTION COMPANY. 
 
 "We, the undersigned, William King, Chairman, and James 
 Smith, Secretary, respectively, of a special meeting of the 
 stockholders of King County Construction Company, a cor- 
 poration organized and existing under the laws of the state 
 of Washington, held for the purpose of increasing the capital 
 stock of the company, do make, sign and verify this certificate 
 of the proceedings, showing a compliance with the laws of 
 Washington, as follows : 
 
 That prior to such meeting a notice specifying the object of 
 the meeting, the place where it was to be held, and the amount 
 to which it was proposed to increase the capital, signed by at 
 least a majority of the trustees of the company, was published 
 once a week for at least eight weeks in the "Seattle Daily 
 Bulletin," a newspaper published in King County, where the 
 principal place of business of the company is located. 
 
 That the following is a true copy of said notice : 
 
 NOTICE TO STOCKHOLDERS. 
 
 Seattle, Washington, Sept. 25, 1912. 
 ■A special meeting of the stockholders of King County Con- 
 struction Company will be held on the twelfth day of Decem- 
 ber, 1912, at 11 o'clock A. M., at the office of said company, 
 at No. 100 Second Avenue, Seattle, Washington, for the pur- 
 pose of voting upon a proposition to increase the capital stock 
 of the company from $100,000, consisting of 1,000 shares of 
 the par value of $100 each, to $150,000, consisting of 1,500 
 shares of the par value of $100 each. 
 
 WILLIAM KING, 
 JAMES SMITH, 
 ALBERT JONES, 
 Trustees of King County Construction Company. 
 
 That a copy of such notice was also duly mailed to each 
 gtockholder at least ten days before the date specified for said
 
 565 FORMS. § 809 
 
 meeting, addressed to him at his place of business or residence 
 as the same appears in the list of addresses kept by the secre- 
 tary of the company. 
 
 That at the time and place specified in said notice, stock- 
 holders of the company appeared in person or by proxy, repre- 
 senting at least tM'o-thirds of all the shares of the stock of the 
 company, and organized said meeting by choosing from their 
 number the undersigned, William King, as chairman and the 
 undersigned, James Smith, as secretary thereof. 
 
 That the notice of the meeting and proof of the proper pub- 
 lishing and mailing thereof was presented and read and 
 ordered spread upon the minutes of the meeting. 
 
 That upon motion duly made and seconded a vote of the 
 stockholders present in person or by proxy was then taken 
 upon the following resolution : 
 
 Resolved, that the capital stock of King County Construc- 
 tion Company be increased from the present amount thereof, 
 to wit: One hundred thousand dollars ($100,000), consisting 
 of one thousand (1,000) shares of the par value of one hun- 
 dred dollars ($100) each, to one hundred and fifty thousand 
 dollars ($150,000), to consist of fifteen hundred (1,500) shares 
 of the par value of one hundred dollars ($100) each; and be 
 it further 
 
 Resolved, that the chairman and secretary of this meet- 
 ing be and they are hereby authorized and directed to make, 
 sign and verify the certificates of the proceeding, showing 
 compliance with the provisions of the laws of Washington, 
 certified to by a majority of the trustees of the company, and 
 cause one of such certificates to be filed in the office of the 
 Secretary of State and another in the office of the county au- 
 ditor of King County, Washington, the county in which the 
 principal place of business of the company is located, and to 
 do all acts and things that may be necessary or proper to 
 comply with the provisions of law applicable to and regulating 
 such increase of capital stock. 
 
 That stockholders of the company representing seven hun- 
 dred and sixty-five (765) shares of stock, being in excess of 
 two-thirds of all the shares of the stock of the company, voted
 
 § 809 CORPORATE PROCEDURE. 566 
 
 in favor of said resolutions ; and stockholders representing 
 seventy-five shares of the stock of the company voted against 
 said resolutions. 
 
 That a sufficient number of the shares of stock of the com- 
 pany having been voted in favor of such increase, said resolu- 
 tions were declared duly adopted. 
 
 That the amount of capital of the company actually paid 
 in is one hundred thousand dollars ($100,000). 
 
 That the whole amount of the debts and liabilities of the 
 company is forty thousand dollars ($40,000). 
 
 That the amount to which the capital stock is to be increased 
 is one hundred and fifty thousand dollars ($150,000), consist- 
 ing of fifteen hundred (1,500) shares of the par value of one 
 hundred dollars ($100) each. 
 
 In witness whereof we have made, signed and verified this 
 certificate, certified to by a majority of the trustees all in 
 triplicate, this 15th day of December, 1912. 
 
 WILLIAM KING, 
 
 Chairman. 
 JAMES SMITH, 
 
 Secretary. 
 
 State of Washington, 
 County of King, — ss. 
 
 William King and James Smith, being first severally duly 
 sworn, on their oaths do depose and say, and each for himself 
 deposes and says, that he, the said William King, acted as 
 chairman and he, the said James Smith, acted as secretary of 
 said meeting of stockholders of King County Construction 
 Company, held at 100 Second Avenue, Seattle, Washington, 
 on the twelfth day of December, 1912; that he signed said 
 foregoing certificate ; that he has read said certificate and 
 knows its contents, and that the same are true. 
 
 WILLIAM KING, 
 
 Chairman. 
 JAMES SMITH, 
 
 Secretary.
 
 567 FORMS. § 810 
 
 Sworn to before me this fifteenth day of December. 1912. 
 [Notarial Seal] JOSEPH WHITE, 
 
 Notary Public in and for the State of Washino^ton, King 
 County, Residing at 1616 E. Howell St., Seattle, Wash- 
 ington. 
 
 § 810. CERTIFICATE OF TRUSTEES. 
 
 We, the undersigned, hereby certify that we are a ma.iority 
 of the trustees of King County Construction Company ; that 
 from the beginning we have been cognizant of the proceedings 
 of the said company to increase its capital stock ; that we have 
 read the foregoing annexed certificate of proceedings and 
 know the contents thereof, and that the same are true, and 
 that said certificate is made, signed and verified by the per- 
 sons who acted as chairman and secretary, respectively, of 
 said meeting of stockholders of said company. 
 
 Witness our hands and seals this fifteenth day of September, 
 1912. 
 
 WILLIAM KING, [Seal] 
 ALBERT JONES, [Seal] 
 JAMES SMITH, [Seal] 
 Trustees. 
 
 State of Washington, 
 County of King, — ss. 
 
 I, Joseph White, a notary public in and for the state of 
 Washington, duly commissioned and qualified, do hereby cer- 
 tify that on this fifteenth day of December, 1912, before me 
 personally appeared William King, Albert Jones and James 
 Smith, to me known to be the individuals described in and 
 who executed the within instrument, and acknowledged that 
 they signed and sealed the same as their free and voluntary 
 act and deed and for the uses and purposes therein mentioned. 
 
 Given under my hand and official seal this fifteenth day of 
 
 December, 1912. 
 
 JOSEPH WHITE, 
 
 Notary Public.
 
 §§ 811, 812 CORPORATE PROCEDURE. 568 
 
 § 811. 
 
 APPOINTMENT OF AGENT BY FOREIGN CORPORA- 
 TION. 
 
 Pursuant to the provisions and requirements of the laws of 
 the state of Washington, Ohio Construction Company, a cor- 
 poration incorporated under the laws of the state of Ohio, for 
 construction and other purposes for which domestic corpora- 
 tions are authorized to be formed by the laws of the state of 
 Washington, hereby appoints an agent residing at the place 
 in the state where the principal business of the corporation is 
 to be carried on , designated as follows : 
 
 I. The name of the agent is George Adams. 
 
 II. The place of residence of said agent is 140 Avenue B, 
 Tacoma, Washington. 
 
 III. The place where the principal business of such cor- 
 poration is to be carried on is No. 105 Cherry Street, Tacoma, 
 Washington, at which place said agent has his office. 
 
 IV. Said agent is hereby authorized to accept service of 
 process in any action or suit pertaining to the property, busi- 
 ness or transactions of such corporation within this state in 
 which such corporation may be a party. 
 
 In witness whereof, Ohio Construction Company has caused 
 these presents to be signed by its president and attested by its 
 corporate seal this twentieth day of September, 1912. 
 
 [Corporate Seal] GEORGE H. McKINLEY, 
 
 President of Ohio Construction Company. 
 
 § 812. PROXY [POWER OF ATTORNEY]. 
 
 Know all men by these presents, that I, William King, do 
 hereby constitute and appoint Joseph White to be my lawful 
 attorney, substitute and proxy in my name, place and stead, 
 to vote upon all stock held by me in King County Construc- 
 tion Company at the annual meeting of stockholders of said 
 corporation to be held on the third Tuesday in December, 
 1912 (or special meeting designated), and at any adjourned 
 meeting thereof, as fully and with the same effect upon all 
 matters and to all intents and purposes as I might or could
 
 569 
 
 FORMS. 
 
 §813 
 
 do were I personally present at such meeting; and I hereby 
 revoke any proxy or proxies heretofore given by me to any 
 person or persons whatsoever. 
 
 In witness whereof I have hereunto set my hand and seal 
 this tenth day of December, 1912. 
 
 In presence of 
 
 § 813. 
 
 ARTICLES OF INCORPORATION OF SPOKANE SAY- 
 INGS AND LOAN SOCIETY [ASSOCIATION]. 
 "We, the undersigned citizens of the state of Washington, 
 desiring to form a savings and loan society [association] for 
 the purpose of accumulating the savings and funds of its 
 members and lending its shareholders or others the funds so 
 accumulated, do make, acknowledge and file Articles of In- 
 corporation specifying : 
 
 (a) The name of the proposed association shall be Spokane 
 Savings and Loan Society. 
 
 (b) The city and county wherein the principal place of 
 business of the association is to be located are the city of 
 Spokane, County of Spokane, within the state of Washington. 
 
 (c) The number of its directors shall be nine. The first 
 board of directors shall hold office for a term of three months 
 from the time said association is authorized to do business. 
 
 (d) The names, occupation and postoffice addresses of its 
 first directors are: 
 
 Names. 
 
 Occupation. 
 
 John Smith. 
 
 Real Estate Ag«nt. 
 
 George Jones, 
 
 Doctor. 
 
 William Smith, 
 
 Farmer. 
 
 Henry Jones, 
 
 Salesman, 
 
 Robert Allen. 
 
 Physician. 
 
 Joseph Allen.. 
 
 Druggist. 
 
 John Bailey. 
 
 Grocer. 
 
 William Manley. 
 
 L/awyer. 
 
 Joseph Manley. 
 
 Banker. 
 
 Postoffice Addresses. 
 
 No. 10 
 No. 11 
 No. 12 
 No. 13 
 No. 14 
 No. 15 
 No. 16 
 No. 17 
 No. 18 
 
 Pacific Ave., 
 Pacific Av«., 
 Pacific Ave., 
 Pacific Ave., 
 Atlantic Ave 
 Atlantic Ave 
 Atlantic Ave 
 Atlantic Ave 
 At Isn't ic .Ave 
 
 Spokane, Wash. 
 Spokane, Wash. 
 Spokane, Wash. 
 Spokane, Wash. 
 ., Spokane, Wash. 
 ., Spokane, Wash. 
 , Spokane, Wash. 
 , Spokane, Wash. 
 ., Spokane, Wash. 
 
 (e) The names, occupation and postoffice addrasses of the 
 subscribers to the Articles of Incorporation and the number
 
 §813 
 
 CORPORATE PROCEDURE. 
 
 570 
 
 of shares which each has agreed to take, the matured value 
 of which shares so subscribed shall be $25,000, are 
 
 Namea. 
 
 Occupation. 
 
 PostofiSce Addresses. 
 
 Shares. 
 
 John Smith. 
 
 Real Estate Agent. 
 
 No. 10 Pacific Ave., Spokane, Wash. 
 
 25 
 
 George Jones, 
 
 Doctor. 
 
 No. 11 Pacific Ave., Spokane, Wash. 
 
 35 
 
 William Smith. 
 
 Farmer. 
 
 No. 12 Pacific Ave., Spokane, Wash. 
 
 15 
 
 Henry Jones, 
 
 Salesman. 
 
 No. 13 Pacific Ave., Spokane, Wash. 
 
 25 
 
 Robert Allen. 
 
 Physician, 
 
 No. 14 Atlantic Ave., Spokane, Wash. 
 
 45 
 
 Joseph Allen. 
 
 Druggist. 
 
 No. 15 Atlantic Ave., Spokane, Wash. 
 
 20 
 
 John Bailey. 
 
 Grocer. 
 
 No. 16 Atlantic Ave., Spokane, Wash. 
 
 15 
 
 William Manley. 
 
 Dawyer. 
 
 No. 17 Atlantic Ave., Spokane, Wash. 
 
 20 
 
 Josreph Manley. 
 
 Banker. 
 
 No. 18 Atlantic Ave., Spokane, Wash. 
 
 25 
 
 Geor^ Allen. 
 
 Grocer. 
 
 No. 19 Pacific Ave., Spokane, Wasih. 
 
 25 
 
 (f) The limit of capital to be accumulated shall be 
 $2,500,000. 
 
 (g) The time of duration of said association shall be fifty 
 years. 
 
 In witness whereof we have hereunto set our hands and 
 seals this fifteenth day of April, 1913. 
 
 JOHN SMITH. [Seal 
 
 GEORGE JONES. [Seal 
 
 WILLIAM SMITH. [Seal 
 
 HENRY JONES. [Seal 
 
 ROBERT ALLEN. [Seal 
 
 JOSEPH ALLEN. [Seal 
 
 •JOHN BAILEY. [Seal 
 
 WILLIAM MANLEY. [Seal 
 JOSEPH MANLEY. [Seal 
 GEORGE ALLEN. [Seal 
 
 State of Washington, 
 County of Spokane, — ss. 
 
 I, Joseph White, a notary public in and for the state of 
 Washington, duly commissioned, sworn and qualified, do 
 hereby certify that on this fifteenth day of April, 1913, be- 
 fore me personally appeared John Smith, George Jones, Will- 
 iam Smith, Henry Jones, Robert Allen, Joseph Allen, John 
 Bailey, William Manley, Joseph Manley and George Allen, 
 to me known to be the individuals described in and who exe- 
 cuted the within instrument and acknowledged that they
 
 571 
 
 FORMS. 
 
 §814 
 
 signed and sealed the same as their free and voluntary act 
 and deed and for the uses and purposes therein mentioned. 
 Given under my hand and official seal this fifteenth day of 
 April, 1913. 
 
 [Notarial Seal] JOSEPH WHITE, 
 
 Notary Public, No. 1616 East Howell St., Seattle, "Wash. 
 
 § 814. 
 
 CERTIFICATE OF ORGANIZATION OF TACOMA 
 TRUST COMPANY. 
 
 "We, the undersigned, being seven persons of full age, de- 
 sirous of becoming a trust company on the terms and con- 
 ditions and subject to the liabilities prescribed by the laws 
 of the state of Washington, do execute and acknowledge this 
 organization certificate in triplicate and do specifically state 
 as follows : 
 
 (1) The name by which the corporation shall be known is 
 Tacoma Trust Company. 
 
 (2) The place where the business of the corporation is to 
 be transacted is Tacoma, Washington. 
 
 (3) The amount of the capital stock of the corporation is 
 two million five hundred thousand dollars ($2,500,000), and 
 the number of shares into which the same is to be divided is 
 twenty-five thousand (25,000). 
 
 (4) The name, residence and postoffice address of each mem- 
 ber of the corporation are 
 
 Names. 
 
 
 Eesidences. 
 
 
 Postoffice Addresses. 
 
 John Smith. 
 
 No. 
 
 100 5th Ave., 
 Tacoma, 
 
 Wash. 
 
 No. 100 5th Ave., 
 
 Tacoma, Wash. 
 
 Henry Smith. 
 
 No. 
 
 45 South St., 
 Tacoma, 
 
 Wash. 
 
 P. 0. Box 610, 
 
 Tacoma, Wash. 
 
 James Alder. 
 
 No. 
 
 62 North St. 
 Tacoma, 
 
 Wash. 
 
 No. 62 North St., 
 
 Tacoma, Wash. 
 
 Joseph Alder. 
 
 No. 
 
 230 West St., 
 Tacoma, 
 
 Wash. 
 
 P. 0. Box 1312, 
 
 Tacoma, Wash. 
 
 Frank Allen. 
 
 No. 
 
 34 Western Ave., 
 Tacoma, Wash. 
 
 P. 0. Box 13&0, 
 
 Tacoma, Wash. 
 
 James Allen. 
 
 No. 
 
 39 South. St 
 Tacoma, 
 
 Wash. 
 
 No. 39 South St., 
 
 Tacoma, Wash. 
 
 John Bailey. 
 
 No. 
 
 305 6th Ave., 
 Tacoma, 
 
 Wash. 
 
 P. 0. Box 1410, 
 
 Tacoma, Wash.
 
 § 815 CORPORATE PROCEDURE. 572 
 
 (5) The term of the existence of the corporation shall be 
 
 fifty years. 
 
 In witness whereof we have hereunto set our hands and 
 
 seals this eleventh day September, A. D. 1912. 
 
 JOHN SMITH. [Seal] 
 
 HENRY SMITH. [Seal] 
 JAMES ALDER. [Seal] 
 JOSEPH ALDER. [Seal] 
 FRANK ALLEN. [Seal] 
 JAMES ALLEN. [Seal] 
 JOHN BAILEY. [Seal] 
 
 State of Washington, 
 County of , — ss. 
 
 I, Joseph White, a notary public in and for the state of 
 Washington, duly commissioned, sworn and qualified, do 
 hereby certify that on this eleventh day of September, A. D. 
 1912, before me personally appeared John Smith, Henry 
 Smith, James Alder, Joseph Alder, Frank Allen, James Allen, 
 John Bailey, to me known to be the individuals described in 
 and who executed the within instrument and acknowledged 
 that they signed and sealed the same as their free and volun- 
 tary act and deed and for the uses and purposes therein men- 
 tioned. 
 
 Given under my hand and official seal this eleventh day of 
 September, 1912. 
 
 [Notarial Seal] JOSEPH WHITE, 
 
 Notary Public. 
 
 § 815. 
 
 ARTICLES OF INCORPORATION OF TRADERS' BANK 
 OF COMMERCE. 
 
 The undersigned being desirous of becoming incorporated 
 for the purpose of conducting and carrying on a general bank- 
 ing business, do execute and acknowledge these articles speci- 
 fying as follows : 
 
 1. The name assumed by such bank shall be Traders' Bank 
 of Commerce.
 
 573 FORMS. § 815 
 
 2. The county and city where such bank is to be located is 
 the county of King and the city of Seattle. 
 
 3. The nature of its business shall be that of a commercial 
 bank. 
 
 4. The amount of its capital stock which shall be divided 
 into shares of one hundred dollars each shall be two hundred 
 and fifty thousand dollars ($250,000). 
 
 5. The period for which such bank is organized shall be fifty 
 years. 
 
 In witness whereof we have hereunto set our hands and seals 
 this fifteenth day of September, 1912. 
 
 ARTHUR JONES. [Seal] 
 THOMAS BENSON. [Seal] 
 WILLIAM KING. [Seal] 
 
 State of Washington, 
 County of King, — ss. 
 
 I, Joseph White, a notary public in and for the state of 
 Washington, duly commissioned, sworn and qualified, do 
 hereby certify that on this fifteenth day of September, A. D. 
 1912, before me personally appeared Arthur Jones, Thomas 
 Benson and William King, to me known to be the individuals 
 described in and who executed the within instrument, and 
 acknowledged that they signed and sealed the same as their 
 free and voluntary act and deed and for the uses and purposes 
 therein mentioned. 
 
 Given under my hand and official seal this fifteenth day of 
 September, A. D. 1912. 
 
 [Notarial Seal] . JOSEPH WHITE, 
 
 Notary Public.
 
 § 816 CORPORATE PROCEDURE. 574 
 
 § 816. 
 
 FORM OF CORPORATE BOND SECURED BY 
 MORTGAGE. 
 
 UNITED STATES OF AMERICA. 
 
 State of 
 
 No $1,000 
 
 CONSTRUCTION COMPANY. 
 
 First Consolidated Mortgage Four and One-half Per Cent 
 Twenty-Year Gold Bond. 
 
 Construction Company, a corporation duly organ- 
 ized under the laws of the state of for value received, 
 
 promises to pay to the bearer or, if this bond be registered, 
 
 then to the registered holder hereof, at the office of 
 
 trust company, in the city, county and state of one 
 
 thousand dollars ($1,000) in good coin of the United States 
 of America of the present standard of weight and fineness, on 
 the twenty-second day of January, A. D. 1923, and also to pay 
 interest on said principal sum from the twenty-second day of 
 January, 1903, semi-annually in like coin, at the rate of four 
 and one-half per centum (4i/2%) per annum on the twenty- 
 second days of July and January in each year on presentation 
 and surrender at the office of said trust company of the inter- 
 est coupons hereto annexed as the same become due respect- 
 ively. 
 
 This bond is one of a series of seven thousand five hundred 
 (7,500) bonds numbered consecutively from 1 to 7,500, both 
 numbers inclusive, all of like date, tenor and amount and all 
 equally secured by a First Consolidated Mortgage bearing 
 even date herewith, duly executed and delivered by said 
 Construction Company to said Trust Com- 
 pany, as trustee, and conveying to said trustee by way of 
 mortgage certain lands and premises, with the appurtenances, 
 as by reference to said mortgage will more fully and at large 
 appear; subject to the terms, conditions and provisions of 
 which said mortgage this bond is issued, accepted and held.
 
 575 FORMS, § 81G 
 
 This bond may be registered in the name of the owner, in 
 
 the manner and with the effect provided in the said mortgage. 
 
 This bond shall not be obligatory or valid for any purpose 
 
 until the certificate indorsed hereon is signed by the trustee 
 
 under said mortgage. 
 
 In witness whereof said Construction Company 
 
 has caused its corporate seal to be hereunto affixed and at- 
 tested by its secretary and this bond to be signed in its 
 corporate name by its president, and has also caused the fac- 
 simile signature of its treasurer to be engraved upon the an- 
 nexed coupons, all this twenty-second day of January, one 
 thousand nine hundred and three. 
 
 CONSTRUCTION COMPANY, 
 
 • By ..., 
 
 President. 
 
 Attest : , 
 
 Secretary. 
 
 (Coupon.) 
 No $22.50 
 
 Construction Company will pay to the bearer on 
 
 the twenty-second day of , at the office of 
 
 Trust Company, in the city of , twenty-two dollars 
 
 and fifty cents in gold coin of the United States of America, 
 for six months' interest then due on its First Consolidated 
 Mortgage gold bond No 
 
 Coupon No 
 
 Treasurer. 
 (Trustee's Certificate.) 
 
 Trust Company hereby certifies that the within 
 
 bond is one of the series and issue of bonds described in the 
 mortgage therein mentioned. 
 
 Trust Company, 
 
 Trustee. 
 By
 
 §§ 817, 818 CORPORATE PROCEDURE. 576 
 
 § 817. 
 
 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS 
 OF KING COUNTY CONSTRUCTION COMPANY. 
 
 Notice is hereby given that the annual meeting of stock- 
 holders of King County Construction Company will be held 
 at the office of the company at No. 100 Second Avenue, 
 Seattle, Washington, on the seventeenth day of December, 
 1912, at 10:30 o'clock in the forenoon, for the annual election 
 of trustees and for (insert any special purpose), and for the 
 transaction of such other business as may properly come before 
 said meeting. 
 
 Dated Seattle, December 1, 1912. 
 
 JAMES SMITH, 
 Secretary. 
 
 § 818. 
 
 NOTICE OF [ANNUAL, REGULAR, SPECIAL, AS THE 
 CASE MAY BE] MEETING OF THE BOARD OF 
 TRUSTEES OF KING COUNTY CONSTRUCTION 
 COMPANY. 
 
 To the Trustees of King County Construction Company : 
 
 You and each of you are hereby notified that a (special, 
 regular, annual) meeting of the board of trustees of King 
 County Construction Company will be held at the office of 
 the company, at No. 100 Second Avenue, in the city of Seattle, 
 King County, "Washington, on the twentieth day of Septem- 
 ber, 1912, for the purpose of , and of transacting 
 
 such other business as may come before the meeting. 
 
 Dated at Seattle, Washington, this eleventh day of Sep- 
 tember, 1912. 
 
 KING COUNTY CONSTRUCTION COMPANY, 
 
 [Corporate Seal] By , 
 
 Secretary.
 
 577 FORMS. §§819,820 
 
 § 819. 
 
 WAIVER OF NOTICE OF [ANNUAL, REGULAR, SPE- 
 CIAL] MEETING OF BOARD OF DIRECTORS OF 
 KING COUNTY CONSTRUCTION COMPANY. 
 
 I, , trustee of King County Construction Company, 
 
 hereby admit due and timely service of the notice of which 
 a copy is hereto annexed, and do hereby waive notice of the 
 meeting therein mentioned and the lapse of any prescribed 
 period of time, and I do hereby authorize and approve the acts 
 of the trustees at such meeting. 
 
 Trustee. 
 In the presence of 
 
 § 820. 
 
 NOTICE OF REMOVAL OF PRINCIPAL PLACE OF 
 BUSINESS OF KING COUNTY CONSTRUCTION 
 COMPANY. 
 To Whom It May Concern : 
 
 Notice is hereby given that on the thirtieth day of Septem- 
 ber, 1912, the principal place of business of King County Con- 
 struction Company will be removed from 100 Second Ave., 
 Seattle, King County, Washington, to the city of West Seattle, 
 King County (or if out of county specify city, town and 
 county), Washington. 
 
 Dated Seattle, Washington, September 12, 1912. 
 
 KING COUNTY CONSTRUCTION COMPANY, 
 [Corporate Seal] By JAMES SMITH, 
 
 Secretary. 
 37
 
 § 821 CORPORATE PROCEDURE. 578 
 
 § 821. 
 
 NOTICE OF ASSESSMENT AND SALE OF SHARES 
 OF STOCK IN KING COUNTY CONSTRUCTION 
 COMPANY. 
 
 To John Smith, Henry Jones, William Barnes, George King, 
 and Each of You, Stockholders in King County Construc- 
 tion Company. 
 
 Notice is hereby given that of the balance of $25 per share 
 still unpaid on your several subscriptions to the stock of the 
 said company, the trustees of the company do hereby make 
 an assessment of $15 per share, and do hereby call and de- 
 mand payment from each of you of $15 per share of stock 
 in the company so held by you severally, being $150 on the 
 ten shares of stock so held by John Smith, $225 on the 15 
 shares of stock so held by Henry Jones, $300 on the 20 shares 
 of stock so held by William Barnes, and $450 on the 30 shares 
 of stock so held by George King, said payment and payments 
 to be made to the company at its office on or before October 
 20, ]912, and upon default or failure to make such payments 
 by any of you, so many of said shares so held by him as will 
 be necessary for the payment of the said assessments on the 
 shares held by him will be sold at public auction by Robert 
 Jenkins, public auctioneer, on the front steps of the county 
 courthouse, at Seattle, Washington, on the twenty-second day 
 of October, 1912, at 12 M., and at such sale the person who 
 shall pay the assessment so due together with the expenses of 
 advertising and sale for the smallest number of shares or 
 portion of a share, as the case may be, shall be deemed the 
 highest bidder. 
 
 Dated Seattle, Washington, September 11, 1912. 
 
 WILLIAM KING, 
 JAMES SMITH, 
 ALBERT JONES, 
 Trustees.
 
 579 FORMS. § 822 
 
 § 822. 
 
 PETITION FOR VOLUNTARY DISSOLUTION. 
 
 Superior Court, King County, Washington. 
 
 In the Matter of the Voluntary Dissolution ^ 
 of KING COUNTY CONSTRUC- > 
 TION COMPANY. J 
 
 To Hon , Judge of the Superior Court of King 
 
 County : 
 
 The petition of King County Construction Company re- 
 spectfully alleges and shows : 
 
 That your petitioner, its trustees and officers, have discov- 
 ered that the stock, effects and other property of it, said peti- 
 tioner corporation, are not sufficient to pay all just demands 
 for which it is liable, or to afford reasonable security to those 
 who may deal with it, and that (state any special reason), 
 and that your petitioner, its trustees and stockholders, deem 
 it beneficial to the interests of the stockholders that the said 
 corporation be dissolved ; 
 
 That the principal place of business of said corporation 
 is located at No. 100 Second Avenue, King County, Seattle; 
 
 Wherefore your petitioner prays that a final order be made 
 and entered declaring said corporation dissolved and that a 
 receiver of the property and effects of said corporation be 
 appointed, and for such other and further relief as may be 
 proper. 
 
 KING COUNTY CONSTRUCTION COMPANY. 
 
 [Corporate Seal] By WILLIAM KING, 
 
 President. 
 
 Attest: JAMES SMITH, 
 
 Secretary. 
 
 State of Washington, 
 County of King, — ss, 
 
 William King, being first duly sworn, on his oath says that 
 he is the president of King County Construction Company; 
 that as such he executed the foregoing petition in the name 
 of the corporation by order of the trustees thereof; that he
 
 §§ 823, 824 CORPORATE PROCEDURE. 580 
 
 has read said foregoing petition and knows the contents 
 thereof, and that the same are true. 
 
 WILLIAM KING. 
 
 Subscribed and sworn to before me this tenth day of Sep- 
 tember, 1912. 
 
 [Notarial Seal] JOSEPH WHITE, 
 
 Notary Public for the State of Washington. 
 
 § 823. CERTIFICATE OF OFFICERS. 
 
 Superior Court, King County, Washington. 
 
 In the Matter of the Voluntary Dissolution ^ 
 of KING COUNTY CONSTRUC- I 
 TION COMPANY. J 
 
 We, the undersigned president and secretary of King 
 County Construction Company, hereby certify and set forth 
 that at a meeting of the stockholders of the said corporation, 
 called for the purpose, it was decided by a vote of two-thirds 
 of all the stockholders to disincorporate and dissolve the cor- 
 poration. 
 
 Witness our hands and seals this tenth day of September, 
 1912. 
 
 WILLIAM KING, 
 
 President. 
 tlAMES SMITH, 
 
 Secretary. 
 (Acknowledgment.) 
 
 § 824. 
 
 ARTICLES OF ASSOCIATION OF PACIFIC CO- 
 OPERATIVE LUMBER COMPANY. 
 We, the undersigned, being desirous of associating our- 
 selves together as a co-operative association for the transac- 
 tion of the business hereinafter specified on the co-operative 
 plan, and in conformity with the laws of the state of Wash- 
 ington, do hereby prepare and subscribe articles of association 
 setting forth as follows:
 
 681 FORMS. § 824 
 
 1. The name of the association shall be Pacific Co-operative 
 Lumber Company. 
 
 2. The purpose for which it is formed is [copy form 791]. 
 
 3. Its principal place of business shall be No. 200 Cherry 
 street, Seattle, King county, state of Washington. 
 
 4. The term for which it is to exist shall be fifty years. 
 
 5. The amount of its capital stock shall be one million dol- 
 lars ($1,000,000), consisting of ten thousand (10,000) shares 
 of the par value of one hundred dollars ($100) each. 
 
 In witness whereof we have this fourteenth day of April, 
 A. D. 1913, hereunto set our hands and seals. 
 
 JOHN SMITH. [Seal] 
 
 ANDREW JONES. [Seal] 
 GEORGE KING. [Seal] 
 
 ALBERT WOOD. [Seal] 
 ARTHUR SMITH. [Seal] 
 Signed, sealed and delivered in the presence of 
 
 BENJAMIN ALLEN. 
 JOHN WOOD. 
 
 State of Washington, 
 County of King, — ss. 
 
 I, Joseph White, a notary public in and for the state of 
 Washington, duly commissioned, sworn and qualified, do here- 
 by certify that on this fourteenth day of April, 1913, per- 
 sonally appeared John Smith, Andrew Jones, George King, 
 Albert Wood and Arthur Smith, to me known to be the in- 
 dividuals described in and who executed the within instru- 
 ment, and acknowledged that they signed and sealed the same 
 as their free and voluntary act and deed and for the uses and 
 purposes therein mentioned. 
 
 Given under my hand and official seal this fourteenth day 
 of April, 1913. 
 
 [Notarial Seal] JOSEPH WHITE, 
 
 Notary Public.
 
 FEES CHARGED BY SECRETARY OF 
 STATE. 
 
 The following fees will be charged in the office of the Secretary of 
 State on and after June 12, 1907, and must be paid in advance. 
 COEPORATIONS, INCLUDING ALL CORPORATIONS REQUIRED 
 TO FILE ARTICLES WITH THE SECRETARY OF STATE, 
 EXCEPTING THOSE ORGANIZED FOR RELIGIOUS, SOCIAL, 
 CHARITABLE OR EDUCATIONAL PURPOSES. (See Laws 
 1907, Chapters 134 and 140.) 
 
 •Filing and recording Articles of Incorporation $25 00 
 
 •Filing and recording Amendatory or Supplemental Articles. 10 00 
 •Filing and recording Certificate or Increase of Decrease or 
 
 Capital Stock 10 00 
 
 Filing and recording Appointment or Revocation of Appoint- 
 ment OF Resident Agent of foreign corporation 5 00 
 
 •CJertified Copy of articles of incorporation 5 00 
 
 Certified Copy amendatory or supplemental articles 5 00 
 
 Certified Copy of certificate of increase or decrease of capital 
 
 stock 5 00 
 
 Certified Copy of certificate of appointment or revocation of 
 
 appointment of resident agent 5 00 
 
 Duplicate license 25 
 
 Penalty for nonpayment of license fee prior to July 1st, in ad- 
 vance 2 50 
 
 Reinstatement penalty, corporations four years delinquent 100 00 
 
 Reinstatement penalty, less than four years, per annum 2'0 00 
 
 Filing and recording notice of dissolution 5 00 
 
 Annual Corporation License fee (payable in advance on or be- 
 fore July 1st of each year) 15 00 
 
 Furnishing and certifying to a printed compilation of the Cor- 
 poration Laws 5 00 
 
 Resolution to extend branch lines of railways, etc., $5.00 and 
 
 15^ per folio for filing and recording. 
 For certified copy of such resolutions, $2 and 15^ per folio. 
 
 RELIGIOUS, SOCIAL, CHARITABLE AND EDUCATIONAL OR- 
 GANIZATIONS. 
 Filing and recording articles of religious, educational, social and 
 
 charitable corporations $5 00 
 
 Filing and recording articles of agreement of Social, Charitable 
 and Educational Associations (eleemosynary incorpora- 
 
 *Wh€never the articles exceed twenty folios there shaJl be an ad- 
 ditional charge of lo<^ per folio for all extra folios in excess of the first 
 twenty. 
 
 (583)
 
 584 FEES CHARGED BY SECRETARY OF STATE. 
 
 EELIGIOUS, SOCIAL, CHAEITABLE AND EDUCATIONAL OK- 
 
 GANIZATIONS— Continued : 
 
 tions), including certififd copy of certificate for filing with 
 
 county auditor (Law of 1895) $7 45 
 
 Filing and recording amendment or amendments 5 OO 
 
 Filing and recording notice of dissolution 5 00 
 
 MISCELLANEOUS. 
 Filing Boom Plat 5 00 
 
 Filing and recording Trademark 5 00 
 
 Filing Order of Board of County Commissioners incorporating 
 
 cities and towns 5 00 
 
 For Any Certificate Under Seal of State 2 00 
 
 For filing and recording articles of Cemetery Associations .... 5 00 
 For recording miscellaneous records, papers or other documents, 
 
 10^ per folio and $5 for filing in each case. 
 For copy of any law, record or other document or paper, 15^ per 
 
 folio and certificate of $2 in addition. 
 
 Note. — Postage stamps will not be accepted in payment of any of the 
 above fees. 
 
 Note. — All fees miist he paid in advance. Original articles offered 
 for filing must be accompanied by filing and recording fee of $25.00, as 
 also annual license fee of $15.00. The fiscal year ends on June 30th, 
 on which date all corporation licences expire, no m,atter on what date 
 issued. Fractional years are not recognized in the payment of license 
 fees. Thus, a company filing articles on June let, must pay the fuU 
 license fee of $15.00 at the time of filing, and the license fee for the 
 succeeding year must be paid before July 1st, otherwise a penalty of 
 $2.50 is added.
 
 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "S'tatutei"; 
 Pr. equals "Procedure."] 
 
 Abuse of Powers and Ultra Vires Acts. 
 
 Distinction, S'y 82. 
 
 Acceptance. 
 
 Of charter, S'y 34. 
 
 Of charter creation of corporation, S'y 34. 
 
 No corporation until, S'y 34. 
 
 Accountability. 
 
 Of directors and trustees, S'y 163. 
 Acknowledgment: 
 
 Corporate — Form, Stat. 451. 
 Of certificate, S'y 18. 
 
 Acquiring Property. 
 
 By corporations, S'y 47. 
 Acquisition of Land. 
 
 For unauthorized purposes, S'y 51. 
 Acting as corporation, S'y 19. 
 
 Action. 
 
 Of tort against foreign corporation, S'y 232. 
 On unexecuted contracts unauthorized, S'y 70. 
 On ultra vires contracts, S'y 62. 
 
 Actions. 
 
 Of foreign corporations, S 'y 222. 
 Acts of Incorporation, S'y 33. 
 
 Adoption. 
 
 Of by-laws in organization, S'y 5. 
 
 Ad Valorem Assessment. 
 
 In condemnation, S'y 265. 
 
 (585)
 
 586 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, equali "Statutesf'; 
 Pr. equals "Procedure."] 
 
 Affidavit Attached to Certificate, S'y 18. 
 Of good faith, S'y 18. 
 
 Required on certificate of incorporation, S'y 18. 
 To construct road, S'y 19. 
 
 Agent. 
 
 Authority of implied, S'y 44. 
 
 Agents. 
 
 Of corporation, acts by, S 'y 42. 
 Of foreign corporations, S'y 229. 
 
 Foreign corporation: 
 
 Failure of, to comply with law, Stat. 423. 
 Power of, implied, S'y 44. 
 Trustees are, S'y 155. 
 
 Alteration of Charter, S'y 35. 
 
 Amendment of Charter, S'y 33, 35. 
 
 Amount Devised to Corporation Limited, S'y 54. 
 
 Appointment of Receivers, S 'y 188. 
 
 Apportionment of Assessment, S'y 264. 
 
 Appraisement in Condemnation, S'y 301. 
 
 ARTICLES OF INCORPORATION. 
 
 Articles of incorporation, Pr. 763. 
 
 Articles of incorporation — General form, Pr. 797. 
 
 Articles can assume no powers beyond statute, S'y 46. 
 
 Articles must be filed, S'y 7. 
 
 Amendment of, by banks, Stat. 621. 
 
 Bank form, Pr. 815. 
 
 Building and loan association — Form, Pr. 813. 
 
 Copy of, as evidence, Stat. 405. 
 
 Corporations formed for purposes other than profit, Stat. 
 
 663. 
 Fee for filing, Stat. 714. 
 For general corporations, Stat. 752.
 
 ALPHABETICAL INDEX. 587 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statute*"; 
 Pr. equals "Procedure."] 
 
 ARTICLES OF INCORPORATION (Continued). 
 Pee for furnishing certified copies, Stat. 717. 
 Filing of, by banks, Stat. 614. 
 Of banks, what to contain, Stat. 613. 
 Powers enumerated are limit of corporate power, S'y 46, 
 Religious, etc., associations, Stat. 677. 
 Secret societies — Where to be filed, Stat. 679. 
 Supplemental — Statement to be filed, Stat. 430. 
 Supplemental or amendatory — Fee for filing, Stat. 715. 
 Trust company — Form, Pr. 814. 
 
 Validating defective, of religious, etc., associations, Stat. 
 685. 
 
 Artificial Being. 
 
 Corporation is, S'y 1. 
 
 Ascertainment of Value iji Condemnation. 
 
 Character of proceedings, S'y 310. 
 
 ASSESSMENTS. 
 
 As for public use, S'y 261, 
 Notice of, how given, Stat. 414. 
 Proportioned to benefits, S'y 265, 
 Taking of private property, S'y 287. 
 
 Associates After Organization, S'y 7. 
 Not to include subscribers, S'y 7. 
 
 Association, 
 
 Meaning of, S'y 7. 
 
 Assumption. 
 
 Of corporate powers, S'y 20. 
 
 Of powers in articles of incorporation, S'y 46. 
 
 Attack on De Facto Corporation Only by State, S'y 20. 
 
 ATTORNEY GENERAL. 
 
 Proceedings against building, loan and saving associa- 
 tions, Stat. 569.
 
 588 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, eqaali "Statxit«y; 
 Pr. equals "Procedure."] 
 
 Authority of Officers. 
 
 How shown, S'y 160, 161. 
 
 Award. 
 
 In condemnation not a contract, S'y 311. 
 Of commissioners in condemnation, S'y 305. 
 
 "Banking" and "Branch Bank," Stat. 610. 
 Provisions affect all companies, Stat. 611. 
 
 Banking Names. 
 
 Use prohibited, Stat. 634. 
 Unauthorized use, Stat. 634a. 
 
 BANKS. 
 
 Amendment of articles, Stat. 621. 
 
 Amount of funds to be kept on hand, Stat. 637. 
 
 Articles of incorporation, what to contain, Stat. 613. 
 
 Articles of incorporation — Form, Pr. 815. 
 
 Attorney general to act, when, Stat. 653. 
 
 "Banking," and "branch bank" defined, Stat. 610. 
 
 Capital required, amount of, Stat. 612. 
 
 Capital stock, payment of, Stat. 616. 
 
 Capital stock required — Foreign bank, Stat. 660. 
 
 Certified checks, when issued, Stat. 630. 
 
 Charter rights, S'y 37. 
 
 Combining savings and commercial business, Stat. 632. 
 
 Defining "foreign bank" and "foreign banker," Stat. 
 
 658. 
 Deposits of persons under disabilities, Stat. 633. 
 Deputy examiners — How appointed, Stat. 607. 
 Directors — Election — Term of office, Stat. 623. 
 Dividends, Stat. 624. 
 Examination of, Stat. 643. 
 
 Examiner : 
 
 Appointment of, Stat. 605. 
 
 And deputy to give bond, Stat. 608.
 
 ALPHABETICAL INDEX. 589 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 BANKS (Continued). 
 
 Compensation and expenses of, Stat. 638. 
 
 Duties of other officers transferred to, Stat. 654. 
 
 Location of office, Stat. 609. 
 
 Not to disclose information, Stat. 651. 
 
 Seal of, etc., Stat. 639. 
 
 To keep record of fees, Stat. 650. 
 
 To make annual report to governor, Stat. 642. 
 
 To take charge, when, Stat. 648. 
 
 Vacancy in office — How filed, Stat. 606. 
 Failure to report — Penalty, Stat. 641. 
 False statement or entry, Stat. 656. 
 Forfeiture for violating act, Stat. 657. 
 Fee for examination, Stat. 644. 
 Filing of article, Stat. 614. 
 Formation of corporation, Stat. 612. 
 Foreign banks not to receive deposits, Stat. 659. 
 Fraudulent conveyances void, Stat. 629. 
 Impairment of capital, Stat. 645. 
 Inactive deposits, report of, to be made, Stat. 661. 
 Insolvent, distribution of assets, Stat. 652. 
 Joint deposits, Stat. 603a. 
 Law not retroactive, Stat. 635. 
 Liability of directors, Stat. 636. 
 Liability of stockholders, Stat. 622. 
 Liability on forged checks, Stat. 602a. 
 Loans to officers, Stat. 636. 
 May commence business — When, Stat, 618. 
 May hold real estate, when, Stat. 625. 
 National bank reorganizing as state bank, Stat. 628. 
 Officers of, refusing report of inactive deposits, Stat. 
 
 662. 
 Powers of, Stat. 615. 
 
 Provisions of law affect all corporations receiving de- 
 posits, Stat. 611. 
 Receivers, compensation of, Stat. 649.
 
 590 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure." J 
 
 BANKS (Continued). 
 
 Receiving deposits, when insolvent, Stat. 441. 
 
 Repeal of former act, Stat. 655. 
 
 Reports to state examiner — Publication, Stat. 640. 
 
 Savings banks, power to do business, Stat. 631. 
 
 State bank reorganizing as national bank, Stat. 627. 
 
 Stock-books, Stat. 620. 
 
 Stockholders failing to pay, Stat. 617. 
 
 Transfer of shares, Stat. 619. 
 
 Under control of examiner, Stat. 647. 
 
 Unauthorized use of name, Stat. 634a. 
 
 Use of term "bank," etc., prohibited, when, Stat. 634. 
 
 Violation of act — Appointment of receiver, Stat. 646. 
 
 Benefit of Ultra Vires, S'y 60. 
 
 Benefits Received. 
 
 In case of ultra vires contracts, S'y 79. 
 Yet ultra vires defense, S'y 83. 
 
 BENEVOLENT ASSOCIATIONS. 
 
 Child a county charge — Disposal of — Notice, Stat. 700. 
 Duties of police officer, Stat. 701. 
 Expenses during examination, Stat. 705. 
 Guardianship of person only, Stat. 703. 
 Habeas corpus — Effect of proceedings, Stat. 704. 
 Minor, confinement of in reform school, Stat. 702. 
 "When children taken by process, Stat. 699. 
 "Who may take children — Surrender by parents, Stat. 
 698. 
 
 Bequests. 
 
 To corporation unauthorized, S'y 70. 
 
 Bondholders, S'y 134. 
 
 Bond Issue by County not TaJdng Private Property, S'y 284. 
 
 BOOM COMPANIES. 
 
 Authority and powers of, Stat. 535.
 
 ALPHABETICAL INDEX. 591 
 
 [Beferenees »re to Sections. S'y equals "Summary"; Stat, equals "S'tatutea"; 
 Pr. equals "Procedure."] 
 
 BOOM COMPANIES (Continued). 
 Damages for neglect, Stat. 539. 
 Deemed public corporations, Stat. 533. 
 Driving logs — Tools — Liens, Stat. 538. 
 Duties of— Tolls, Stat. 528. 
 Eminent domain extended to, Stat. 525. 
 General powers and duties, Stat. 537. 
 How organized, Stat. 534. 
 Liability for damage, Stat. 531. 
 Liability for neglect, Stat. 532. 
 May file amended articles, Stat. 541. 
 Must assort and separate logs, Stat. 529. 
 Plats, when filed, Stat. 536. 
 Plat and survey must be filed, Stat. 526. 
 Power to construct works, Stat. 527. 
 Rafts, record of must be kept, Stat. 530. 
 Rights to cease, when, Stat. 540. 
 
 BUILDING, LOAN AND SAVINGS ASSOCIATIONS. 
 
 Act applies to present companies, Stat. 575. 
 
 Acts repealed, Stat. 577. 
 
 Advertisements, Stat. 573. 
 
 Annual report — Penalty, Stat. 567. 
 
 Approval of by-laws, Stat. 552. 
 
 Attorney general — Suit by, Stat. 569. 
 
 By-laws — Approval, Stat. 551. 
 
 Capital stock — Classified shares, Stat. 555. 
 
 Checking accounts prohibited, Stat. 561. 
 
 Compliance with present law, Stat. 572. 
 
 Contingent fund, Stat. 562. 
 
 Deposit of securities, Stat. 558. 
 
 Doing business without authority, Stat. 571. 
 
 Dividends, Stat. 556. 
 
 Exemption of shares from taxation, Stat. 566. 
 
 Foreign corporation — Forfeiture, Stat. 570.
 
 592 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary" ; Stat, equals "S'tatntes" ; 
 Pr. equals "Procedure."] 
 
 BUILDING, LOAN AND SAVINGS ASSOCIATIONS (Con^ 
 tinued). 
 Formation, Stat. 550. 
 Form of articles, Pr. 813. 
 Limit of expense fund, Stat. 564. 
 Losses exceeding reserve fund, Stat. 563. 
 Membership, Stat. 554. 
 Names, Stat. 574. 
 
 Oath and bond of directors and officers, Stat. 553. 
 Penalty for violations, Stat. 576. 
 Power to hold realty, Stat. 560. 
 Security for loans — Bonds, Stat. 557. 
 Supervision by state auditor, Stat. 568. 
 Surrender of securities by auditor, Stat. 559. 
 "Withdrawals by shareholders — Notice, Stat. 565, 
 
 By-laws, Pr. 767. 
 Form, Pr. 801. 
 Power to make, S *y 138. 
 Power to make implied, S'y 43. 
 
 CANAL COMPANIES. 
 
 Eminent domain extended to, Stat. 493. 
 Right of, to build over rivers, etc., Stat. 477. 
 
 Capacity of Corporation to Take Land, S 'y 68. 
 
 CAPITAL STOCK. 
 
 Banks, amount of, Stat. 414. 
 
 Building, loan and savings associations — Amount re- 
 quired, Stat. 558. 
 Certificate of increase or decrease to be made, Stat. 426. 
 How reduced, Stat. 417. 
 Increase or decrease of, Stat. 424; Pr. 776. 
 
 Increase of: 
 
 By building, loan and savings associations, Stat. 
 565.
 
 ALPHABETICAL INDEX. 593 
 
 [References are to Sections. S'y equals "Summary"; Stat. eqaaU "Statutes"; 
 Pr. equals "Procedure."] 
 
 CAPITAL STOCK (Continued). 
 
 By trust companies, Stat. 603. 
 Notice of meeting to increase or decrease, Stat. 425. 
 Payment of, by banks, Stat. 616. 
 Personal estate — Transfer of, Stat. 413. 
 Stock not all subscribed, S'y 6. 
 
 Carrying on Business, S'y 235. 
 
 CEMETERY ASSOCIATIONS. 
 
 Corporate powers, Stat. 707. 
 Exemptions, Stat. 710. 
 
 Injury to sepulture or property— Penalty, Stat. 712. 
 May be incorporated, Stat. 706. 
 
 May hold lands— Fund to be created— Debts, Stat. 708. 
 May hold property in trust, Stat. 713. 
 May sell land, Stat. 709. 
 
 Plat to be recorded — Regulation of grounds, Stat. 711. 
 Certificate. 
 
 Of increase (or reduction) of capital stock — Form, Pr. 
 
 809. 
 Of officers— Form, Pr. 823. 
 Of trustees — Form, Pr. 810. 
 
 Change or Removal of Place of Business, Pr. 774. 
 
 Characteristics of Corporations, S'y 1. 
 
 Character of Corporation, Pr. 760. 
 
 Charitable Gifts, S'y 53. 
 
 Charitable Uses, S 'y 52. 
 
 Charter. 
 
 Express statutory authority, S'y 33. 
 Filed merely, S'y 6. 
 Limit of trustees' powers, S'y 159. 
 Measure of corporate powers, S'y 44. 
 38
 
 594 ALPHABETICAL INDEX. 
 
 [B«ferenee8 are to Sections. S'y equals "Summary"; Stat, equals "S'tatates^* ; 
 Pr. equals "Procedure."] 
 
 CHARTER POWERS. 
 
 Alteration of charters, S'y 39, 41. 
 
 Charter a contract, S'y 37. 
 
 Express powers, S'y 35. 
 
 Franchise, S 'y 32. 
 
 General corporation acts, S'y 34. 
 
 Implied powers, S'y 42-46. 
 
 Power must affirmatively appear, S'y 38. 
 
 Power to hold property, S'y 47-56. 
 
 Real property holding, S 'y 47-56. 
 
 Special charter, S'y 33. 
 
 Special and general, S'y 33. 
 
 Subject to eminent domain, S'y 253. 
 
 Charters. 
 
 In different states, S'y 3. 
 
 Of one corporation in several states, S'y 218. 
 
 Circuit Court U. 8. 
 
 Jurisdiction in eminent domain, S'y 257. 
 
 Citizen. 
 
 Corporation is, of state creating it, S'y 2. 
 Corporation is, S'y 217. 
 
 CITY COUNCILS. 
 
 May authorize construction : 
 
 Of electric railways, Stat. 511. 
 
 Of lines for power transmission, Stat. 507. 
 
 Classification. 
 
 Of property rights, S'y 270. 
 
 Collateral Attack. 
 
 On condemnation proceedings, S'y 308. 
 On de facto corporation, S 'y 20. 
 
 Collateral Question. 
 
 As to holding land where partially authorized, S'j 71.
 
 ALPHABETICAL INDEX. 595 
 
 [R«fereneM an to 9«otion«. S'r equals "Summary"; Stat. eqa«U "Statutes"; 
 
 Pr. equals "Procedure."] 
 
 Colorable Articles of Association, S'y 19. 
 Colorable Attempt to Form Corporation, S'y 21. 
 Combinations and Conspiracies, S'y 102. 
 Combinations in Restraint of Trade, S'y 101. 
 
 Comity. 
 
 Acts, suits and contracts, S'y 216. 
 Of states, S'y 213-215. 
 
 Commissioners in Condemnation, S'y 301. 
 
 Qualifications, S'y 308. 
 
 Commissioners' Findings. 
 Review, S'y 302. 
 
 Compensation. 
 
 Ascertainment delegated, S'y 309. 
 
 Certainty of, S'y 293. 
 
 Estimation of franchise, S'y 291. 
 
 For private property, S'y 290. 
 
 For property condemned, S'y 259. 
 
 When to be paid in condemnation, S'y 292. 
 
 Condemnation. 
 
 By federal government, S'y 256. 
 Of state lands, Stat. 464a. 
 Filing decree, Stat. 464a. 
 
 CONDEMNATION (EMINENT DOMAIN). 
 
 Adjournment of proceedings, Stat. 465. 
 
 Appeal, Stat. 471. 
 
 Appeal shall not delay work, Stat. 472. 
 
 Damages may be paid into court, Stat. 469. 
 
 Disposition of money — Conflicting claims, Stat. 470. 
 
 Extent of right of appropriation, Stat. 475. 
 
 Electric railways may secure right of way, Stat. 512. 
 
 Judgment and decree, Stat. 468.
 
 596 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary" ; Stat, equals "Statutes" ; 
 Pr. equals "Procedure."] 
 
 CONDEMNATION (EMINENT DOMAIN) (Continued). 
 
 Jury shall be summoned, Stat. 466. 
 
 Notice, contents of and service, Stat. 464. 
 
 Of water by mining and manufacturing companies, Stat. 
 462. 
 
 Procedure — Petition, requisites of, Stat. 463. 
 
 Right of railroad companies, etc., to enter lands for sur- 
 vey, Stat. 474. 
 
 Rights of railroads through defiles, Stat. 473. 
 
 Right of railroad to cross or connect with other roads, 
 Stat. 476. 
 
 Telegraph and telephone companies may build along 
 railroad lines, Stat. 480. 
 
 Trial — Assessment of Damages — Judgment, Stat. 467. 
 
 Conditions. 
 
 Of lav/ (incorporation), S'y 18. 
 Precedent (incorporation), S'y 18. 
 To doing business, S'y 230. 
 
 Conflicting Jurisdiction. 
 
 Receivers, S'y 186. 
 
 Consent of State. 
 
 To doing business, S'y 230. 
 
 Consequential Dajnages. 
 
 Not taking property (condemnation), S'y 280. 
 To property (condemnation), S'y 274. 
 
 Consolidation, S'y 175. 
 
 And merger rights, S'y 175-179. 
 
 Constitutional Limitations. 
 
 On eminent domain, S'y 250. 
 
 CONSTITUTIONAL PROVISIONS. 
 
 Combinations forbidden — When, Stat. 743. 
 Common carriers — Rights of, Stat. 743.
 
 ALPHABETICAL INDEX. 597 
 
 [Beferences »?• to Sections. S'y equals "Summary"; Stat, eqtiata "SXatutei"; 
 Pr. equals "Procedure."] 
 
 CONSTITUTIONAL PROVISIONS (Continued). 
 
 Competing railroads not to consolidate, Stat. 745. 
 
 Corporation : 
 
 Construed to include what, Stat. 735. 
 
 Not to be created by special laws, Stat. 732. 
 
 Stock, fictitious issue of, void, Stat. 736. 
 
 Discrimination in rates forbidden, Stat. 744. 
 
 Eminent domain — State may exercise right of, Stat. 740. 
 
 Foreign corporations shall conform to state laws, Stat. 
 737. 
 
 Free passes forbidden, Stat. 749. 
 
 Insolvent banks not to receive deposits, Stat. 742. 
 
 Leasing or alienation of franchise, Stat. 738. 
 
 Legislation not to extend or remit forfeiture of fran- 
 chise, Stat. 733. 
 
 Liability of stockholders, Stat. 734. 
 
 Liability of stockholders in banking and insurance cor- 
 porations, Stat. 741. 
 
 Railroads not to discriminate against express com- 
 panies, Stat. 750. 
 
 Regulation of fares, etc., by legislature, Stat. 747. 
 
 Rolling stock personal property, Stat. 746. 
 
 State shall not loan aredit to corporations, Stat. 739. 
 
 Telegraph and telephone companies, Stat. 748. 
 
 Trusts and monopolies forbidden, Stat. 751. 
 
 Constitutional Requirements for Condemnation, S'y 293, 294. 
 
 Construction. 
 
 Of Sherman Act, S'y 104. 
 
 ContemplS/tion of Law. 
 
 Corporation exists in, S'y 1. 
 
 Contract. 
 
 Charter is, S'y 35. 
 Corporate power, S'y 211. 
 
 In other states, S'y 1, 212.
 
 598 ALPHABETICAL INDEX. 
 
 [Beferenen are to Seotion«. S'7 equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Proce'dure." ] 
 
 Contract (Continued). 
 
 Liability of directors and officers, S'y 165-169. 
 Not expressly authorized, S'y 81. 
 Transactions not authorized, S'y 60. 
 Partially performed — Estoppel, S'y 75. 
 "With corporation not individuals, S'y 21. 
 "With de facto corporation ratified, S'y 21. 
 
 Conversion. 
 
 Of stock, S'y 117. 
 
 Conveyajices. 
 
 Authorized by charter, S'y 55. 
 For ultra vires purposes, S'y 56. 
 Void and voidable, S'y 55. 
 
 CO-OPERATIVE ASSOCIATIONS. 
 
 Amendments, Stat. 546e. 
 Annual reports, Stat. 546n. 
 Articles, Stat. 546a. 
 Articles— Form of, Pr. 824. 
 By-laws, Stat. 546r. 
 Constitutionality, Stat. 546t. 
 Co-operative — Use of term, Stat. 546p. 
 Dividends — Distribution, Stat. 546m. 
 Doing business — Liability, Stat. 546q. 
 Earnings, Stat. 5461. 
 Existing companies, Stat. 546o. 
 Filing articles, Stat. 546b. 
 Filing fees, Stat. 546c. 
 Lawful business, Stat. 546f. 
 Officers, Stat. 546d. 
 Organization, Stat. 546, 
 Purchase of business, Stat. 546i. 
 Stock — Certificates, Stat. 546j. 
 Stock issue, Stat. 546g. 
 Stockholders — Voting, Stat. 546k.
 
 ALPHABETICAL INDEX. 599 
 
 [ReferencM are to Sections. S'y equals "Summary"; St»t. eqm»li "Statutes"; 
 Pr. equals "Procedure."] 
 
 CO-OPERATIVE ASSOCIATIONS (Continued). 
 Subscriptions, Stat. 546h. 
 Trust— Stock held in, Stat. 546j. 
 Trustees, Stat. 546d. 
 
 Corporate Acts. 
 
 To constitute organization, S'y 4. 
 
 Corporate Bond. 
 Form, Pr. 816. 
 
 Corporate Capacity, S 'y 211. 
 A franchise, S'y 32. 
 
 Corporate Entity. 
 
 Created, S'y 7. 
 Not created, S'y 6. 
 
 CORPORATE EXISTENCE. 
 
 Characteristics of corporation, S'y 1. 
 
 Individuality, S'y 2. 
 
 Citizenship, S'y 2. 
 
 Residence and citizenship, S'y 2, 3. 
 
 Organization, S'y 4r-7. 
 
 CORPORATE NAME. 
 
 Unauthorized use, Stat. 634a. 
 
 Corporate Powers. 
 
 In trustees, Stat. 407. 
 
 Must be within constitution and statutes, S'y 46. 
 
 Not exceeded — Presumption, S'y 86. 
 
 CORPORATE PROCEDURE. 
 
 Character of corporation, Pr. 760. 
 Kinds of corporation, Pr. 761. 
 Preliminary considerations, Pr. 762. 
 Articles of incorporation, Pr. 763. 
 First meeting of trustees, Pr. 764. 
 Subscription, Pr. 765.
 
 600 ALPHABETICAL INDEX. 
 
 [Befeirene«s are to Sections. S'y equals "Summary"; Stat, equal! "Statntea"; 
 Pr. equals "Procedure."] 
 
 CORPORATE PROCEDURE (Continued). 
 Preferred stock, Pr. 766. 
 By-laws, Pr. 767. 
 Issue of stock, Pr. 768. 
 List of officers, Pr. 769. 
 Meetings of trustees, Pr. 770. 
 Records and papers, Pr. 771. 
 
 Assessments and subscriptions, Pr. 772. 
 
 Change of name, Pr. 773. 
 
 Change of place of business, Pr. 774. 
 
 Stockholders' meeting, Pr. 775. 
 
 Increase or decrease of stock, Pr. 776. 
 
 Dissolution, Pr. 777. 
 
 Foreign corporation, Pr. 778. 
 
 Corporate Rights. 
 
 Measured by statutes not common law, S'y 45. 
 To hold land questioned by individual, S'y 50. 
 
 CORPORATIONS (General Provisions) . 
 
 Adoption of name of delinquent, Stat. 725. 
 
 Agent of foreign company — Fee for filing certificate, 
 
 Stat. 716. 
 Amendment or supplemental articles — Fee for filing, 
 
 Stat. 715. 
 Articles to be filed — Contents, Stat. 402. 
 Certified copies of articles — Fee for furnishing, Stat. 717. 
 Certificate of increase or decrease of stock, Stat. 426. 
 Charged with crime — Procedure, Stat. 731. 
 Copy of articles as evidence, Stat. 405. 
 Delinquent — Rights restored, when, Stat. 560. 
 Dissolution of, for nonpayment of fees, Stat. 724. 
 Dissolution proceedings, Stat. 428. 
 Dividends — Capital stock, how reduced, Stat. 417. 
 Doing business without license, Stat. 442. 
 Executors may vote stock, Stat. 415. 
 False entries in records, Stat. 421. 
 False report of, Stat. 443.
 
 ALPHABETICAL INDEX. 601 
 
 [References are to Sections. S'y equals "Sumraarj''' ; Stat, equals "Statutes"; 
 Pr. equals "Prooodure."] 
 
 CORPORATIONS (General Provisions) (Continued). 
 Fees: 
 
 For filing articles, Stat. 714. 
 
 Not to apply to certain, Stat. 727. 
 Form of acknowledgment of instmment, Stat. 451. 
 Fraud in stock subscriptions, Stat. 439. 
 Fraudulent issue of stock, Stat. 440. 
 Hereafter organized, Stat. 404. 
 
 How organized — Conditions and liabilities, Stat. 401. 
 Increase or decrease of capital stock, Stat. 424. 
 Lapse of election of trustees, Stat. 409. 
 Liability : 
 
 Of executor, holding stock, Stat. 419. 
 
 Of trustees, Stat. 417. 
 License fee — Penalty for nonpayment, Stat. 719. 
 List of officers to be filed, Stat. 403. 
 May hold, own and vote stock of other corporations, Stat. 
 
 408. 
 
 Meeting: 
 
 Notice of, to increase or decrease stock, Stat. 425. 
 Of stockholders, Stat. 411. 
 Of trustees, Stat. 411, 
 
 Names: 
 
 Not to be duplicated, Stat. 437. 
 
 To be stricken, when, Stat. 720. 
 Negotiable paper, power to issue, Stat. 418. 
 
 **Not formed for profit": 
 
 Amendment of by-laws, Stat. 671. 
 
 Change of purpose, Stat. 670. 
 
 Dissolution — Cannot have receiver, when, Stat. 672. 
 
 Existing corporations may reorganize under act, 
 
 Stat. 674. 
 Filing and license fee, Stat. 675. 
 Formation — Purposes, Stat. 663. 
 Membership — No capital stock — Shares not to be 
 
 issued, Stat. 664.
 
 602 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, eqnals "Statutes"; 
 Pr. equals "Procedure."] 
 
 CORPORATIONS (General Provisions) (Continued). 
 
 Membership certificates — Assignable, Stat. 665. 
 
 Must adopt by-laws, Stat. 668. 
 
 Organization — Articles to be filed, Stat. 667. 
 
 Powers of, Stat. 669. 
 
 Shall not engage in business for gain, Stat. 673. 
 
 Termination of membership, Stat. 66i6. 
 Penalty for reinstatement, Stat. 729. 
 Pledge of stock, effect of, Stat. 416. 
 
 Powers : 
 
 Enumerated, Stat. 406. 
 
 How exercised, Stat. 407. 
 
 Of trustees upon dissolution, Stat. 427. 
 Principal place of business, removal of, Stat. 429. 
 Prior to 1872, may hold property, Stat. 435. 
 Prior to 1862, may make and secure debts, Stat. 436. 
 Protection of stockholders from fraudulent reports, Stat. 
 
 438. 
 Provisions of law extend to water companies, Stat. 431. 
 Quorum of trustees, Stat. 410. 
 Record of stockholders, Stat. 420. 
 Recording fees, when to be paid, Stat. 718. 
 Reinstatement of delinquent: 
 
 Application for, Stat. 721. 
 
 Conditions, Stat. 722. 
 Right of stockholders in mining companies to inspect, 
 
 Stat. 422. 
 Shall not maintain suit unless license is paid, Stat. 720. 
 Stock in, personal estate, Stat. 413. 
 Stockholders closing business of defunct corporation, 
 
 Stat. 728. 
 Subscriptions, assessments, sale of shares, etc., Stat. 414. 
 Supplemental articles — Statement to be filed, Stat. 430. 
 
 CORPORATIONS DE JURE AND DE FACTO. 
 
 Substantial compliance with statute, S'y 18'. 
 Partial compliance with statute, S'y 19.
 
 ALPHABETICAL INDEX. 603 
 
 [Referemoes are to Sections. S'y equals "Summary"; Stat, eqitals "Statutea"; 
 
 Pr. equals "Procedure."] 
 
 CORPORATIONS DE JURE AND DE FACTO (Continued). 
 
 Estoppel, S'y 20. 
 
 Stockholders' liability, S'y 21, 22. 
 
 CORPORATION LAWS. 
 
 Fee for certifying to, Stat. 726. 
 
 Corporation, Right to be, Franchise, S'y 18. 
 
 COUNTY ASSESSOR. 
 
 Failure to report list of foreign corporations, Stat. 461. 
 To report to county auditor, Stat. 458. 
 
 COUNTY AUDITOR. 
 
 Failure of, to report list of foreign corporations, Stat. 
 
 461. 
 To report to Secretary of State, Stat. 459. 
 
 COUNTY COMMISSIONERS. 
 
 May authorize construction of electric railways, Stat. 
 511. 
 
 May authorize construction of lines for power transmis- 
 sion, Stat. 508. 
 
 Creation. 
 
 Must be clearly implied, S'y 3. 
 
 Creature of Law. 
 
 Corporation is, S'y 45. 
 
 Creditor. 
 
 Entitled to receiver, S'y 189-191. 
 
 Crimes. 
 
 Corporate, S'y 90. 
 Forfeiture for, S'y 90. 
 
 CRIMINAL OFFENSES AND TORTS. 
 
 Agents must comply with law, Stat. 423. 
 Banks receiving deposits when insolvent, Stat. 441. 
 Banking corporations, failure of, to report, Stat. 641. 
 Banking officers making false statements, etc., Stat. 656. 
 Counterfeiting trademarks — Penalty, Stat. 402.
 
 604 ALPHABETICAL INDEX. 
 
 (Referemoes are t« Section*. S'y equals "Summary"; Sfcat. equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 CRIMINAL OFFENSES AND TORTS (Continued). 
 Crimes and torts, S 'y 90. 
 Doing business without license, Stat. 442. 
 Failure of carrier to redeem unused passage ticket, Stat. 
 
 450. 
 Failure of county assessor or auditor to report list of 
 
 foreign corporations, Stat. 461. 
 Foreign corporation having no resident agent, Stat. 455. 
 Failure to cancel bill of lading, Stat. 448. 
 False entries, Stat. 421. 
 
 False entries in records of trust companies, Stat. 595. 
 False report of corporation, Stat. 443. 
 Filing fraudulent trademarks, Stat. 404. 
 Fraud in stock subscriptions, Stat. 439. 
 Fraudulent issue of stock, Stat. 440. 
 Injury to cemetery, Stat. 712. 
 
 Liability of agent of foreign corporation, Stat. 460. 
 Penalty for unauthorized use of trademark, Stat. 406. 
 Persons selling passage tickets without authority, Stat. 
 
 449. 
 Telegraph or telephone company failing to transmit 
 
 message, Stat. 522. 
 
 Warehousemen : 
 
 Fraudulently mixing goods, Stat. 446. 
 Issuing duplicate receipt, Stat. 447. 
 Issuing fictitious bill of lading, Stat. 445. 
 Refusing to issue receipt, Stat. 444. 
 
 Dam. 
 
 For manufacturing purpose, S'y 258. 
 
 Damming Rivers, S 'y 277. 
 
 Dams. 
 
 For water-power, regulation of property, S'y 285. 
 
 Dealing With Corporation, S'y 19. 
 
 Deed. 
 
 Acts by corporation without, S'y 42.
 
 ALPHABETICAL INDEX, 605 
 
 [References are to Sections. S'y equals "Summary"; Stat, eqnali "Statutei"; 
 Pr. equals "Procedure."] 
 
 De Facto Corporation, S 'y 18. 
 Contract, S'y 21. 
 
 De Facto Officers. 
 
 Contract binding, S'y 161. 
 De Jure Corporation, S 'y 18. 
 Delegated Power, S'y 136. 
 
 DELINQUENT CORPORATIONS. 
 
 Adoption of name of, Stat. 720. 
 Reinstatement : 
 
 Of— Conditions, Stat. 729. 
 
 Application for, Stat. 321, 
 Rights restored — When, Stat. 723. 
 
 Devises of Land. 
 
 Executory character of, S'y 53, 
 
 In excess of statutory limitations, S'y 52. 
 
 Devise to Corporation. 
 
 Where prohibited, S'y 50. 
 
 Directors, S'y 155. 
 
 Transactions with corporation voidable, S'y 164. 
 
 DIRECTORS AND OFFICERS. 
 
 Accountability, S'y 159, 163, 
 
 Agents of corporation, S'y 155, 
 
 Contracts with themselves voidable, S'y 164. 
 
 De facto officers, S'y 161. 
 
 Election of, in banking corporation, Stat. 623. 
 
 Fiduciary relation, S'y 158. 
 
 Fraudulent acts, S'y 163. 
 
 In banks, liability of, Stat. 636. 
 
 Liability as individuals, S'y 165-167, 
 
 Liability as individuals on contracts, S'y 168, 169, 
 
 Ostensible authority of officer, S'y 160. 
 
 Powers of directors, S'y 156. 
 
 Powers of officers. S'y 157. 
 
 Ratification, S'y 162.
 
 606 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 Dissolution, Pr. 777; S'y 195, 196. 
 
 Appointment of receiver, S'y 197. 
 Diversity of Citizenship, S'y 217. 
 
 Dividends. 
 
 On preferred stock, S'y 129. 
 
 Doing Business. 
 
 In state, S'y 220. 
 
 What constitutes, S'y 235. 
 
 Domicile. 
 
 Of corporation, S'y 114. 
 
 In each state, S'y 3. 
 Doubts Construed Against Corporation, S'y 38. 
 Due Process of Law, S 'y 260. 
 
 Earnings, S'y 130. 
 
 Easement. 
 
 Compensation for taking, S'y 272. 
 
 EDUCATIONAL ASSOCIATIONS. See Religious etc. Asso- 
 ciations. 
 
 Election. 
 
 Of directors and president, S'y 5; Stat. 407. 
 
 ELECTRIC POWER COMPANIES. 
 
 Authority to construct transmission lines, Stat. 508. 
 Deemed public service corporations, Stat. 495. 
 Electricity not to be used for private purposes, Stat. 
 
 496. 
 Eminent domain extended to, Stat. 487. 
 Damages paid in court, Stat. 469. 
 May forfeit franchise, Stat. 497. 
 May lease or purchase property of other corporations, 
 
 Stat. 508. 
 Procedure in condemnation cases, Stat. 489. 
 Right of, to enter lands for surveys, etc., Stat. 488. 
 Right of easement, Stat. 494.
 
 ALPHABETICAL INDEX. 607 
 
 [R«feT«Ticea are to Sections. S'y equals "Summary"; Stat, equals "Statatea"; 
 Pr. equals "Procedure.") 
 
 ELECTRIC RAILWAY COMPANIES. 
 
 Authority to construct roads, Stat. 511. 
 
 Eminent domain extended to, Stat. 484. 
 
 Damages paid in court, Stat. 469. 
 
 May lease or purchase property of other corporations, 
 
 Stat. 513. 
 Procedure in condemnation cases, Stat. 486. 
 Right of, to enter lands for surveys, etc., Stat. 485. 
 
 EMINENT DOMAIN. 
 
 And taxation, S'y 263." 
 
 As to charter or franchise, S'y 253. 
 
 Public use, S'y 250-266. 
 
 Taking of private property, S'y 270-288. 
 
 Compensation, S'y 290-295. 
 
 Condemnation procedure, S'y 300-311. 
 
 Extended to : 
 
 Boom companies, Stat. 525. 
 
 Canal companies, Stat. 493. 
 
 Electric railway companies, Stat. 512. 
 
 Electric power companies, Stat. 487. 
 
 Mining companies, Stat. 481. 
 
 Telegraph companies, Stat. 514. 
 
 Telegraph and telephone eompanies, Stat. 478. 
 
 Toll-logging roads, Stat. 545. 
 
 Water-power companies, Stat. 490. 
 Right of telegraph and telephone companies to enter 
 
 upon land, Stat. 479. 
 Right to appropriate water and build dams, etc., Stat. 
 
 462. 
 
 Enforceable, Ultra Vires Contracts not, S'y 84. 
 
 Estoppel. 
 
 In corporations de facto, S'y 19, 21. 
 
 In connection with ultra vires acts, S'y 60. 
 
 To deny corporate powers, S'y 61. 
 
 To plead ultra vires, S'y 76, 78, 84. 
 
 Where ultra vires not ascertainable, S'y 86.
 
 608 ALPHABETICAL INDEX. 
 
 [R«fe(renoes are to Sections. S'y equals "Summary"; Siat. equals "Statutes"; 
 
 Pr. equals "Procedure."] 
 
 Excessive Taxation. 
 
 Taking of private property, S'y 287. 
 Excise, Federal, Stat. 752-759. 
 Exclusive Covenants, S'y 97. 
 Exclusive Right. 
 
 To franchise not presumed, S 'y 36-38. 
 
 Exclusive Words. 
 
 Necessary, S'y 38, 
 Executed and Executory Contracts Ultra Vires, S'y 60. 
 Executed Ultra Vires Contracts, S 'y 78, 79. 
 
 EXECUTORS. 
 
 Liability of, holding stock, Stat. 419. 
 May vote stock, Stat. 415. 
 
 Executory Transaction Regarding Real Property, S'y 56. 
 
 Executory Ultra Vires Contracts, S'y 78. 
 
 Existence, Corporate, S'y 1. 
 
 Expectant or Contingent Rights, S'y 40. 
 
 Expiration of Charter, S 'y 205. 
 
 Express Powers, S 'y 35. 
 
 False Reports, Stat. 651a. 
 
 Feame's Definition of Vested Rights, S'y 40. 
 
 Federal Corporation Tax Law, Stat. 752-759. 
 
 Fee in Lands by Corporations of Limited Period, S 'y 48. 
 
 Fees, Pr. 762. 
 
 Must be paid in advance, Stat. 730. 
 Paid to Secretary of State. See Schedule preceding 
 index. 
 
 Feudal Rights. 
 
 Lost in lands held by corporations, S'y 52. 
 
 Fiduciary Relation. 
 
 Of officers and trustees, S'y 158. 
 Foreign Attachment, S 'y 231.
 
 ALPHABETICAL INDEX. 609 
 
 [Bcferenoes are to Sections. S'y equals "Summary" ; Stat, equals "Statutes" ; 
 Pr. equals "Procedure."] 
 
 Foreign Bank, S 'y 21 1 . 
 
 Law not to apply to, when, Stat. 457. 
 
 Recording fees, Stat. 459a. 
 
 Powers of, in this state, Stat. 452. 
 
 Suits by and against such corporations. S'y 222-234:. 
 
 FOREIGN CORPORATIONS, S'y 210; Pr. 778. 
 Agent's liability, Stat. 460. 
 
 Agent: 
 
 Appointment of, to be filed, Stat. 454. 
 
 To accept service, Stat. 454. 
 
 Appointment of — Form, Pr. 811. 
 
 Authority, S'y 220. 
 Certified copy of charter to be filed, Stat. 453. 
 Charter law controlling, S'y 219. 
 Contracts in other states, S'y 210^218. 
 County assessors to secure list of, Stat. 458. 
 County auditors to report list of, to Secretary of State, 
 
 Stat. 459. 
 Doing business, S'y 220, 234-237. 
 Failure to comply with law — Penalty, Stat. 455. 
 Federal suits, S'y 221. 
 
 Foreign Country. 
 
 Contracts in, S'y 213. 
 
 Forfeiture. 
 
 Does not extinguish debts, S'y 200. 
 Of charter, S'y 195. 
 State only to enforce, S'y 198. 
 Under Mortmain, S 'y 52. 
 
 Forged Check. 
 
 Liability on, Stat. 602a. 
 
 Forged Transfer of Stock. 
 
 Invalid, S'y 120. 
 
 FORMS. 
 
 Acknowledgment, corporate, Stat. 451. 
 
 39^
 
 610 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 FORMS (Continued). 
 
 Articles of incorporation (general), Pr. 797. 
 
 Minutes of first meeting, Pr. 798. 
 
 Notice of first meeting, Pr. 799. 
 
 Oath of trustees, Pr. 800. 
 
 By-laws, Pr. 801. 
 
 Stock certificate, Pr. 802. 
 
 Subscription, Pr. 803. 
 
 Statement of officers, Pr. 806. 
 
 Notice of change of nam€, Pr. 807. 
 
 Supplemental articles, Pr. 808. 
 
 Certificate of increase or decrease of stock, Pr. 809. 
 
 Notice of special meetings, Pr. 809. 
 
 Appointment of agent by foreign corporation, Pr. 811. 
 
 Proxy, Pr. 812. 
 
 Articles building and loan association, Pr. 813. 
 
 Articles trust company, Pr. 814. 
 
 Articles of bank, Pr. 815. 
 
 Corporate bond, Pr. 816. 
 
 Notice of annual meeting, Pr. 817. 
 
 Notice of trustees' meetings, Pr. 818. 
 
 Waiver of meeting, Pr. 819. 
 
 Notice of removal of place of business, Pr. 820. 
 
 Notice of assessment on stock, Pr. 821. 
 
 Petition for voluntary dissolution, Pr. 822. 
 
 Certificate of officers (petition for dissolution), Pr. 823. 
 Franchise. 
 
 Charter a, S'y 254. 
 
 Condemnation of, S'y 275. 
 
 Definition, S'y 32. 
 
 Examples, S'y 32. 
 
 Exists only by legislative authority, S'y 32. 
 
 Grant, creation of corporation is, S'y 32. 
 
 In corporation, S 'y 7. 
 
 Right forfeited, S'y 21. 
 
 Of corporate existence, S'y 32. 
 
 Of the corporation, S'y 32. 
 
 Subject to eminent domain, S'y 253.
 
 ALPHABETICAL INDEX. 611 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "St«t«t««"; 
 Pr. equals "Procedure."] 
 
 Fraud. 
 
 Liability of directors and officers, S'y 165, 
 On the part of directors and trustees, S'y 163. 
 Tainting formation, S'y 21. 
 
 Fraudulent Transfer of Stock. 
 
 Effect, S'y 127. 
 
 Full Performance of Ultra Vires Contracts, S 'y 77. 
 
 Gains and Profits. 
 
 Corporate, S'y 130. 
 
 General Incorporation Laws, S 'y 34. 
 
 GRANGES. 
 
 General rights and liabilities, Stat. 549. 
 Manner of incorporating, Stat. 547. 
 May engage in certain pursuits, Stat. 548. 
 
 HIGHWAY AND GRADE CROSSINGS. 
 
 Act when not operative, Stat. 510u. 
 Appropriation, Stat. 510x. 
 Changes in crossings, Stat. 510c. 
 Constitutionality, Stat. 510v. 
 Construction work — Cost, Stat. 510f. 
 Cost of crossings, Stat. 510e. 
 Duty to maintain crossings, Stat. 510d. 
 Eminent domain, Stat. 510n. 
 Engineers — Employees, Stat. 510m. 
 Grade crossings — Prohibited, Stat. 510a. 
 Illegal crossings, Stat. 510o. 
 Mandamus, Stat. 510p. 
 New crossings — Petitions, Stat. 510b. 
 Notices — Service, Stat. 510k. 
 Penalty for violation, Stat. 510q. 
 Plans and specifications, Stat. 510g. 
 Posts, piers and abutments, Stat. 510s. 
 Practice and procedure, Stat. 510j. 
 Repeal, Stat. 510w.
 
 612 ALPHABETICAL INDEX. 
 
 [References »re to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 HIGHWAY AND GRADE CROSSINGS (Continued). 
 
 Review and appeal, Stat. 5101. 
 
 Right of action, Stat. 510t. 
 
 Temporary crossings, Stat. 510a. 
 
 Time for construction, Stat. 510i. 
 Holding Land. 
 
 Where authorized for certain purposes, S'y 71, 
 
 Where transaction executory, S'y 56. 
 Holding Property. 
 
 By corporations, S'y 47. 
 
 Main purpose of corporation, S'y 47. 
 
 HUSBANDRY, PATRONS OF. See Granges. 
 
 Illegality of Ultra Vires Contracts, S 'y 64, 76. 
 
 Illegal Transactions and Estoppel, S'y 75. 
 
 Imaginary Corporation, S'y 20. 
 
 Impairing Obligation of Contracts, S'y 253. 
 
 Impairment of Charter Contract, S'y 35. 
 
 Implication of Powers, S'y 35. 
 
 Implication of Rights and Powers of Corporations, S'y 42. 
 
 Implied and Express Corporate Powers, S'y 44. 
 
 Implied Limitations on Holding Property, S'y 53. 
 
 Implied Power; 
 
 To hold property, S'y 47. 
 To contract, S'y 43. 
 
 Implied Promises. 
 
 Of corporation, S'y 42. 
 Of stockholders, S'y 121. 
 
 Implied Statutory Limitations, S'y 49. 
 Incapacity to Make Ultra Vires Contract, S 'y 62. 
 Incidental Corporate Objects, S'y 44. 
 Incidental Powers of Banks, S'y 37. 
 Incidents of Corporation. 
 Implied, S'y 44.
 
 ALPHABETICAL INDEX. 613 
 
 [Refegnemeea are to Sections. S'j equals "Summary"; Stat, eqaala "Statutes"; 
 Pr. equals "Procedure."] 
 
 Incorporation of Private Banks, Stat. 634b. 
 
 Incorporators. 
 
 Corporate franchises belonging to, S'y 7. 
 
 Increase or Decrease of Capital Stock, Pr. 776. 
 
 Individual. 
 
 Corporation is, S'y 2. 
 
 Questioning corporate right to hold land, S'y 50. 
 
 Stockholder, right to sue, S'y 131. 
 
 Inhabitant of State Creating It. 
 
 Corporation is, S 'y 2. 
 
 Inherent Right. 
 
 To hold property, S'y 53. 
 
 Injunction. 
 
 Against insolvent corporation, S'y 202. 
 Right to, S'y 131. 
 
 Injustice of Ultra Vires Defense. 
 
 Questioned and denied, S'y 88. 
 
 Inquisition in Condemnation, S'y 310. 
 
 Insolvent Company, S'y 202. 
 
 Installments. 
 
 Of subscriptions unpaid, S'y 122. 
 
 INSURANCE COMPANIES. Write State Insurance Com- 
 missioner. 
 
 Intention. 
 
 In question of doing business, S'y 235. 
 
 Interest. 
 
 On amounts assessed on condemnation, S'y 303. 
 
 Interstate Commerce, S'y 220. 
 Trade or commerce, S'y 104. 
 Transactions, S'y 237. 
 
 Inviolability of Corporate Charters, S'y 36. 
 
 Irrevocable Proxy, S 'y 142.
 
 614 ALPHABETICAL INDEX. 
 
 [R«fermc«a we to Sections. S'y equals "Summary" ; Stat, equali "Statutes" ; 
 Pr. equals "Procedure."] 
 
 IRRIGATION. 
 
 As public use, S 'y 262. 
 Railroads may build ditches, Stat. 506. 
 Irrigation Assessment, S'y 264. 
 
 IRRIGATION COMPANIES. 
 
 Eminent domain extended to, Stat. 493. 
 Right of easement (eminent domain), Stat. 494. 
 Issue of Stock. 
 
 Below par invalid, S'y 125. 
 For property, S'y 123; Pr. 768. 
 
 Joint Deposits, Stat. 603a. 
 
 Judgment of Condemnation. 
 
 Conclusive, S'y 305. 
 Judicial Determinations (Eminent Domain), S'y 251, 
 Jurisdiction. 
 
 Of state court, S'y 260. 
 
 To appoint receiver, S'y 186, 187. 
 Just Compensation, S'y 294. 
 Justice and Injustice in Ultra Vires Contracts, S'y 81. 
 
 Kinds of Corporations, Pr. 761. 
 Knov/ledge of Ultra Vires Contracts, S 'y 76. 
 
 Law. 
 
 Authorizing corporation — None, S'y 21. 
 
 Of charter governs, S'y 219. 
 Lease Ultra Vires. 
 
 Validity, S'y 77. 
 Legal Possibility to Make Ultra Vires Contracts, S 'y 76. 
 Legal Validity. 
 
 None in ultra vires acts, S'y 60. 
 Legal Wrongdoing. 
 
 Tainting formation, S'y 21. 
 Legislative Determination of Improvenijent Benefit, S'y 288.
 
 ALPHABETICAL INDEX. 615 
 
 [B«f«re>nc«s are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 Liability. 
 
 Of directors of de facto corporation, S'y 21. 
 
 Of officers of de facto corporation, S'y 21. 
 
 Of pledgee of stock, S'y 127. 
 
 Of Stockholders, S'y 111. 
 
 Of stockholders above par value — Statutory, S'y 126. 
 
 Of stockholders of de facto corporation, S'y 21. 
 
 Of stockholders to creditors, S'y 123, 124. 
 
 Of stockholders to pay fully, S'y 125. 
 
 Licenses. 
 
 Holding property without, S'y 53. 
 
 Limit. 
 
 Taking property in excess of, S'y 50. 
 
 Limitations, S'y 38. 
 
 Express statutory, S'y 49. 
 In statutes on holding property, S'y 53. 
 Of devises to corporations, S'y 54. 
 On taking property, S'y 47. 
 
 Limits of Corporate Powers. 
 
 Notice of, S'y 65. 
 Literal Compliance (Incorporation), S'y 18. 
 
 Main Object of Grant. 
 
 Things not necessary to, S'y 40. 
 Majority may not Oust Minority, S 'y 203. 
 
 Mala in Se and Mala Prohibita. 
 
 In ultra vires contracts, S'y 77. 
 Management of Corporate Affairs. 
 In stockholders, S'y 113. 
 
 Manufacture. 
 
 As distinguished from sales (restraint and trusts), S'y 
 
 104. 
 "Within state by foreign corporation, S'y 235. 
 
 MANUFACTURING COMPANIES. 
 
 Right to appropriate waters, Stat. 462.
 
 616 ALPHABETICAL INDEX. 
 
 (References are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 Measure of Compensation (Eminent Domain), S'y 291. 
 Meetings. 
 
 Of stockholders, Stat. 407-411. 
 Merger, S 'y 175. 
 
 Migrate, Corporation cannot, S'y 1. 
 Migration. 
 
 Of corporation, S'y 219. 
 Mill Dams. 
 
 Authorization is regulation of property, S'y 285. 
 
 MINING COMPANIES. 
 
 Eminent domain extended to, Stat. 481. 
 Penalty for failure to furnish statement, Stat. 423a. 
 Procedure in condemnation eases, Stat. 483. 
 Right of stockholders in, to inspect property, Stat. 422. 
 Right to appropriate waters, Stat. 462. 
 Right of, to enter lands for snrveys, etc., Stat. 482. 
 Subscriptions of stock, Stat. 434. 
 Minutes of Meeting. 
 Form, Pr. 798. 
 
 MONOPOLIES, TRUSTS AND RESTRAINTS OP TRADE. 
 
 Monopoly, S'y 91. 
 Trust, S'y 91, 99-102. 
 Partial restraint of trade, S'y 92-97. 
 Restraints under Sherman Act, S 'y 103-106. 
 Monopolies forbidden, Stat. 751. 
 Mortgage. 
 
 Ultra vires enforced, S'y 79. 
 Ultra vires void, S'y 83. 
 
 Mortmain Acts. 
 
 Forfeitures, S'y 52. 
 
 None in Massachusetts, S'y 53. 
 
 Of limitations in England, S'y 49. 
 
 Of none except in Pennsylvania and New York, S'y 49. 
 
 Mortmain Policy. 
 
 In New York, S'y 54. 
 
 I
 
 ALPHABETICAL INDEX. 617 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statutea"; 
 Pr. equals "Procedure."] 
 
 Mortmain Statutes of Limitations, S 'y 48. 
 Mortmain Statutes not Re-enacted Here, S'y 48. 
 
 NAMES OF CORPORATIONS. 
 
 Change of, Pr. 773. 
 
 Corporate unauthorized use, Stat. 634a. 
 
 Not to be duplicated, Stat. 437. 
 
 To be stricken from records — When, Stat. 720. 
 
 NAVIGABLE WATERS. 
 
 Deemed public highways, Stat. 533. 
 Under federal control, S'y 279. 
 
 Necessary Powers of Banks, S'y 37. 
 
 Negligence. 
 
 Corporation liable for, S'y 90. 
 Of directors and officers, S'y 167. 
 Nonfeasance and Misfeasance. 
 Of officers, S'y 167. 
 
 Nonresident Owners. 
 
 Bound by condemnation proceedings, S'y 307. 
 
 Nonuser and Misuser of Franchises, S 'y 201. 
 
 Notaries Public, Stat. 451a. 
 
 Notice. 
 
 In condemnation, S'y 306. 
 
 Of annual meeting of stockholders — ^Form, Pr. 817. 
 
 Of assessment and sale of stock — Form, Pr. 821. 
 
 Of change of name — Form, Pr. 807. 
 
 Of first meeting of trustees — Form, Pr. 799. 
 
 Of legal limits of corporate capacity, S'y 82. 
 
 Of meeting of trustees — Form, Pr. 818. 
 
 Of removal of place of business — ^Form, Pr. 820. 
 
 Nudum Pactum not Protected, S'y 39. 
 
 Nullity. 
 
 Corporation as. S'y 19. 
 Of ultra vires acts, S 'y 66.
 
 618 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equate "Procedure."] 
 
 Oath. 
 
 Of trustees — Form, Pr. 800. 
 Officer. 
 
 Of corporation — Authority, S'y 160. 
 
 Officers, S'y 155. 
 
 Individual liability, S'y 165. 
 
 List of, Pr. 769. 
 
 Special employment, S'y 157. 
 
 Omission of Requirements (Incorporation), S'y 18. 
 
 Opening of Subscription-books, S 'y 5. 
 
 Organization, S 'y 4. 
 
 No sufficient, S'y 6. 
 
 Orphan Associations. See Benevolent Societies, etc. 
 
 Ostensible Authority. 
 
 Of officers, S'y 160. 
 
 Of trustees, S'y 156. 
 
 Ownership. 
 
 Of corporate property, S'y 113. 
 
 Papers. 
 
 Filed colorable (incorporation), S'y 19. 
 Parol Contracts. 
 
 Of corporation, S'y 42. 
 
 Partial Restraint of Trade, S 'y 92. 
 Participation. 
 
 Of directors and officers in torts, S 'y 166. 
 Partners. 
 
 Stockholders liable as, S 'y 21. 
 Partnership. 
 
 Difference from corporation, S'y 1. 
 Party Defendant. 
 
 Corporation must be, S'y 132. 
 Party Receiver. 
 
 Necessary, S'y 192.
 
 ALPHABETICAL INDEX. 619 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure." ] 
 
 PATRONS OF HUSBANDRY. See Granges. 
 
 Payment. 
 
 Of subscriptions in property, S 'y 123 ; Pr. 7G8. 
 
 Period of Corporate Existence, S 'y 204. 
 
 Person. 
 
 Corporation is, S'y 2. 
 
 Petition. 
 
 For voluntary dissolution — Form, Pr. 822. 
 
 Phantom. 
 
 De facto corporation not, S'y 20. 
 
 Piers. 
 
 On navigable Avater, S'y 278. 
 
 On river private property, S'y 273. 
 
 Place of Business, S'y 18. 
 
 Change or removal, Pr. 774. 
 
 Place of Creation. 
 
 Law, S'y 212. 
 
 Place of Exercise of Power, S 'y 213. 
 
 Pleading. 
 
 Of ultra vires, S'y 66. 
 
 Pledgee. 
 
 Of stock— Liability, S'y 127. 
 
 Police Power. 
 
 Cannot be bargained away, S'y 39. 
 Over corporations, S'y 39. 
 Positive Statutory Requirements, S 'y 18. 
 
 Postoffice. 
 
 Condemnation for, S'y 256. 
 
 Powers. 
 
 Assumed beyond statutory authority, S'y 46. 
 Of corporation in trustees, Stat. 407. 
 Of state over condemnation proceedings, S'y 311. 
 Presumed not to be surrendered, S'y 40.
 
 620 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statute*"; 
 Pr. equals "Procedure."] 
 
 Pre-emption Claim. 
 
 Compensation for taking, S'y 272. 
 
 Preferred Stock, Pr. 766. 
 Preferred Stockholders. 
 
 Not creditors, S'y 129. 
 Rights of, S'y 128. 
 
 Preferred Stock Rights. 
 
 To dividends and profits, S'y 129. 
 
 Preliminary Considerations, Pr. 762. 
 Prescribed Statutory Conditions, S'y 18. 
 
 Presumption. 
 
 That act is within corporate powers, S'y 86. 
 
 Private Property. 
 
 For private use, S'y 252. 
 
 Privity. 
 
 Arising from stock transfer, S'y 121. 
 
 Procedure. 
 
 For condemnation, S'y 300. 
 
 In condemnation in discretion of legislature, S'y 304. 
 
 Prohibited Contracts. 
 
 Enforcement of, S'y 80. 
 
 Prohibitions. 
 
 Express on holding land, S'y 49. 
 On corporations taking land, S'y 68, 69. 
 To foreign corporations, S'y 220. 
 To take property, S'y 47. 
 Promoters, S'y 134. 
 
 Property. 
 
 Gommon-law right to take, S'y 48. 
 
 Corporate to hold questioned by whom, S'y 50. 
 
 Foreign to corporate objects, S'y 48. 
 
 Inherent right to hold, S'y 53. 
 
 Implied power to take, S'y 47. 
 
 In excess of limitation state only may question, S'y 53. 
 
 Interest, S'y 136.
 
 ALPHABETICAL INDEX. 621 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 Property (Continued). 
 
 On termination of company, S'y 196-199. 
 Restrictions on holding how questioned, S'y 54. 
 Rights under charter, S'y 35. 
 Statutory restriction to hold, S'y 49. 
 Tenure derived from, S'y 254. 
 Within territorial jurisdiction, S'y 3. 
 
 Protection of Public, S 'y 39. 
 
 Proxies, S'y 135. 
 
 Proxy. 
 
 Form, Pr. 812. 
 
 Voting extension of law, S'y 140. 
 
 Public Policy. 
 
 As to restraints of trade, S 'y 92. 
 
 As to voting trusts, S'y 146, 147. 
 
 Contracts contrary to, S'y 60. 
 
 In cases of partially authorized land holding, S'y 71. 
 
 In cases of ultra vires contracts, S'y 75. 
 
 Question of ultra vires contracts, S'y 64. 
 
 Public Rights. 
 
 In city streets, S 'y 283. 
 
 Public Use, S'y 250. 
 Definition, S'y 262. 
 Involving use by public, S'y 266. 
 Promotive of public benefit, S'y 266. 
 Taking property for, S'y 263. 
 What is, S'y 260, 261. 
 
 PURPOSE CLAUSES IN ARTICLES OF INCORPORA- 
 TION. 
 
 Advertising, Pr. 779. 
 
 Automobiles and vehicles, Pr. 780. 
 
 Brewery, Pr. 781. 
 
 Bricks, Pr. 782, 
 
 Cattle, Pr. 783. 
 
 Commission merchants, Pr. 784.
 
 622 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 PURPOSE CLAUSES IN ARTICLES OF INCORPORA- 
 TION (Continued). 
 Distillers, Pr. 785. 
 Dock and warehouse, Pr. 786. 
 Electrical contractors, Pr. 787. 
 Express business, Pr, 788. 
 Fisheries and canning, Pr. 789. 
 Leather, Pr. 792. 
 Lumber, Pr. 791. 
 Milling, Pr. 790. 
 Mining, Pr. 793. 
 Paper, Pr. 794. 
 Railroads, Pr. 795. 
 Real estate and brokerage, Pr. 796. 
 
 Quantum Meruit. 
 
 In ultra vires transactions, S'y 60. 
 Recovery on ultra vires contract, S'y 63. 
 Quo Warranto Proceedings, S 'y 21. 
 
 RAILROAD COMPANIES. 
 
 Foreign lines must file route on entering state, Stat. 501. 
 
 May aid in construction of other roads, Stat. 499. 
 
 May bridge navigable streams, Stat. 504. 
 
 May build branch lines, Stat. 498. 
 
 May build irrigation ditches, Stat. 506. 
 
 May buy, lease or consolidate with other roads, Stat. 
 499. • 
 
 May construct spur tracks, Stat. 502. 
 
 May guarantee irrigation securities, Stat. 505. 
 
 Must allow equal privileges to all telephone and tele- 
 graph companies, Stat. 517. 
 
 Prior sales, leases, etc., legalized, Stat. 500. 
 
 Refusing privileges to telegraph or telephone company 
 — Damages, Stat. 523. 
 
 Rights of: 
 
 To build over rivers, etc., Stat. 477.
 
 ALPHABETICAL INDEX. 623 
 
 [References are to Sections. S'y equals "Summary"; Stat. eqTiaU "Statutes"; 
 Pr. equals "Procedure."] 
 
 RAILROAD COMPANIES (Continued). 
 
 To cross or connect with other roads, Stat. 476. 
 To enter land for surveys, Stat. 474. 
 Through defiles, Stat. 473. 
 Subject to laws of state, Stat. 503. 
 
 Railways. 
 
 Change of grade or location, Stat. 477a. 
 Right to construct bridges, Stat. 504a. 
 Tracks in streets, S'y 282. 
 
 Ratification. 
 
 Of irregular contracts, S'y 162. 
 
 Reality. 
 
 De facto corporation is, S'y 20. 
 
 Real Property. 
 
 Ultra vires contracts as to, S'y 68. 
 
 Reasonable Restraints, S'y 94. 
 Of trade, S'y 92. 
 
 RECEIVERS, S'y 185-192. 
 
 Conflicting jurisdiction, S'y 192. 
 Officer of court, S'y 185. 
 Power and duties, S'y 186. 
 
 Receiving Benefit. 
 
 Effect in ultra vires contracts. S'y 78. 
 Recognized in Other States (Corporations), S'y lli 
 
 RECORDING FEES. 
 
 When to be paid, Stat. 730. 
 Records and Papers, Pr. 771. 
 
 Registry. 
 
 Of stock, S'y 121. 
 
 Of stock transfer, S'y 118. 
 
 Regulation of Franchises. 
 
 Not impairment of contract, S'y 39. 
 
 Regulation of Status. 
 Charter is, S'y 135.
 
 624 ALPHABETICAL INDEX. 
 
 [ReferenoAfl are to Sections. S'y equaJs "Summary"; Stat, equals "Ststmtes"; 
 Pr. equals "Procedure."] 
 
 Relaxation. 
 
 In construing corporate powers, S'y 42. 
 
 RELIGIOUS, EDUCATIONAL, SOCIAL AND CHARL 
 TABLE ASSOCIATIONS. 
 
 Colleges may confer degrees, Stat. 683. 
 
 Dissolution of corporation, Stat. 684. 
 
 Formation of — Articles, Stat. 677. 
 
 Powers of, enumerated, Stat. 678. 
 
 Validating defective articles, Stat. 685. 
 Removal of Suits. 
 
 By foreign corporation, S'y 221. 
 Repeal of Charter, S'y 35. 
 Reports. 
 
 Of corporations, Pr. 762. 
 Repudiation of Just Obligation. 
 
 In ultra vires contracts, S'y 76. 
 Requirements of Law, S 'y 18. 
 Requisites. 
 
 Of stockholders' suit, S'y 133. 
 Reservation of Power, S 'y 36. 
 Reservation of Right. 
 
 To amend, alter or repeal charter, S'y 41. 
 Residence. 
 
 Of corporation, S'y 229. 
 Resident in Each State, S'y 3. 
 Respondeat Superior, S'y 167. 
 Restraints of Trade, S'y 91. 
 
 Examples, S'y 93. 
 
 In light of reason, S'y 107. 
 
 Under Sherman Act — Examples, S'y 105, 106. 
 Restriction. 
 
 Of ultra vires defense, S'y 77. 
 
 On holding property by corporation, S'y 70. 
 
 On holding property not to be raised collaterally, S'y 
 554.
 
 ALPHABETICAL INDEX. 625 
 
 [Refereiices are to Sections. S'y equals "Summary"; Stat, equals "Statutes" ; 
 Pr. equals "Procedure."] 
 
 Restrictive Covenants, S'y 94. 
 Examples, S'y 95, 96. 
 
 Revocability of Proxy, S 'y 141. 
 
 Revocable Licenses. 
 
 Repealable, S'y 39. 
 
 Right to Take Property. 
 
 Question of, S'y 47. 
 
 Rights and Powers of Corporation. 
 
 Implied, S'y 42. 
 
 Rights, Duties and Liabilities of Stockholders, S 'y 110. 
 Rights of Fishery, S'y 277. 
 
 Rights Under Executed Contracts. 
 
 Vested, S'y 40. 
 
 Riparian Owners. 
 
 Obligation, S'y 280. 
 
 Rights, S'y 278. 
 Rule as to Eminent Domain, S 'y 251. 
 
 Sale. 
 
 Of all assets and property, S'y 203. 
 Of stock at best price, S'y 125. 
 Scope of Exercise of Eminent Domain, S 'y 251. 
 
 Seal. 
 
 Corporate acts under, S'y 42. 
 Corporate contracts under, S'y 42. 
 
 SECRETARY OF STATE. 
 
 Fees to be paid to. 
 
 SECRET SOCIETIES. 
 
 Articles— Where to be filed, Stat. 679. 
 Filing fee— Where paid, Stat. 680. 
 Powers — Not subject to license fee, Stat. 681. 
 Waiver of original right to name, Stat. 642. 
 
 Security of Property Owners, S'y 39. 
 
 40
 
 626 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statutes" 
 Pr. equals "Procedure."] 
 
 Service. 
 
 On agent of foreign corporation, S'y 231. 
 Setoff. 
 
 By stockholder of debt due by company, S'y 124. 
 
 Several States. 
 
 Charters in, S'y 218. 
 
 Sherman Act, S'y 103. 
 
 Simple Contract Creditor. 
 
 Not entitled to receivers, S'y 191. 
 Single Contract Within State, S'y 236. 
 Situs of Corporate Stock, S'y 114. 
 
 SOCIAL AND CHARITABLE ORGANIZATIONS. 
 
 Act not retroactive, Stat. 696. 
 Agreement : 
 
 Of associations, Stat. 686. 
 
 Amendment to, Stat. 6'97. 
 
 To state, what, Stat. 688. 
 Beneficiaries, Stat. 693. 
 By-laws to contain what, Stat. 692. 
 Certificate — Contents and filing of, Stat. 691. 
 Death fund, Stat. 694. 
 
 Exempt from operation of insurance laws, Stat. 695. 
 Form for articles, Stat. 753. 
 Objects of, Stat. 687. 
 Subscribers, first meeting of, Stat. 689. 
 Temporary secretary — Election of officers, Stat. 690. 
 
 Solvent Corporation. 
 
 Management, S'y 191, 
 
 Source of Corporate Existence, S'y 1. 
 Sovereign Power to Take Property, S 'y 250. 
 
 Special Assessment. 
 
 On property, S 'y 287. 
 
 Special Charter. 
 
 For bank, S'y 7.
 
 ALPHABETICAL INDEX, 627 
 
 [RefOTenoes are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 STATE AUDITOR. 
 
 Must approve by-laws of building, loan and savings as- 
 sociations, Stat. 552. 
 
 To hold securities of building, loan and savings associa- 
 tions, Stat. 555. 
 
 To surrender securities of building, loan and savings as- 
 sociations, when, Stat. 556. 
 
 State Lands. 
 
 Condemnation of, Stat. 464a. 
 
 Statement of Officers. 
 
 Form, Pr. 806. 
 
 STATE TREASURER. 
 
 Penalties to be paid to, Stat. 456. 
 
 Status of Stockholders, S'y 111. 
 Statutes. 
 
 Substantially complied with, S'y 6. 
 
 Statutes and Legislation. 
 
 Re foreign corporations, S'y 216. 
 
 Statutory Authority to Take Property, S'y 47. 
 Statutory Liability of Stockholders, S 'y 126. 
 
 Statutory Notice. 
 
 Omitted, S'y 5. 
 
 Statutory Receivers, S'y 189. 
 
 Statutory Remedies. 
 
 For consequential damages, S'y 281. 
 
 Statutory Requirements. 
 
 Compliance with, S'y 19. 
 
 Statutory Restrictions. 
 
 On holding land, S'y 49. 
 
 Statutory Right. 
 
 Acquiring, S'y 18. 
 Steps Necessary to Organization, S'y 6. 
 Stipulation not to Remove Suits, S y 221.
 
 628 ALPHABETICAL INDEX. 
 
 [Referenoet are to Sections. S'y equals "Summary"; Stat, equals "Statute!** ; 
 Pr. equals "Procedure."] 
 
 Stock. 
 
 Issued for property, Pr. 768. Jhi^C ^ir- 
 
 Of other companies, holding, S'y 180-182. V i 
 
 Subscription, S'y 5. ?f^'t/^<'/ . 6'//\ ^/ 
 
 Subscription assessments, Pr. 772. 
 Subscription paid in property, S'y 123. 
 
 Stock Certificate. 
 
 Evidence of ownership, S'y 118. 
 
 Form, Pr. 802. 
 
 Limits rights of preferred stock, S'y 128. 
 
 Stock Dividends, S 'y 130. 
 
 STOCKHOLDERS. 
 
 Contractual status, S'y 111. 
 Control of corporate acts, S'y 114. 
 Conversion of stock, S'y 117. 
 Director's accountability, S'y 131. 
 Dividends, S'y 129. 
 Forged transfer, S 'y 120. 
 
 In banks : 
 
 Failing to pay, Stat. 617. 
 
 Interest in property of company, S'y 113. 
 
 Liability for unpaid installment, S'y 122. 
 Liability of, in banks, Stat. 622. 
 Liability to creditor, S'y 123. 
 May pledge stock — Effect of, Stat. 416. 
 Meetings of, Stat. 411. 
 Meeting of, for dissolution, Stat. 428. 
 Mutual relations, S'y 110. 
 Pledgee voting rights, S'y 115. 
 Preferred stockholders' rights, S'y 128. 
 Promoters, S'y 134. 
 
 Protection of, from fraudulent reports, Stat. 438. 
 Record of, Stat. 420. 
 Right of, in mining companies, to inspect property, 
 
 Stat. 422. 
 Sale of stock below par, S'y 125.
 
 ALPHABETICAL INDEX. 629 
 
 [Referencsi are to Sections. S'y equals "Summary"; Stat, eqaali "Statute*"; 
 Pr. equals "Procedure."] 
 
 STOCKHOLDEES (Continued). 
 Statutory assessments, S'y 124. 
 Statutory liability, S'y 126. 
 Setoff, S'y 124. 
 Stock dividends, S'y 130. 
 Stock issued for property, S'y 123; Pr. 768. 
 Stock to be sold— When, Stat. 617. 
 Subscribers to stock, S'y 112. 
 Subscription a contract, S'y 116. 
 Suits by stockholders, S'y 131-133. 
 Transferee in blank, S'y 119. 
 Transferee, liability, S'y 127. 
 Transfer of stock registered, S'y 118. 
 Transfer on books of company, S'y 121. 
 Trustee voting rights, S'y 115. 
 Become such how, S'y 121. 
 Meetings, Stat. 407-411 ; Pr. 775. 
 Not owners of corporate property, S'y 113. 
 On termination cotenants, S'y 196. 
 Suing must join corporation, S'y 132. 
 Suit, other remedies exhausted, S'y 133. 
 
 Strict Construction of Charter, S'y 35. 
 
 Strict Rule in Case of Ultra Vires Contracts, S'y 82. 
 
 Submission. 
 
 To state jurisdiction, S'y 223. 
 
 Subscribers not Sigiiing Articles, S 'y 7. 
 
 Subscription. 
 
 To stock— Form, Pr. 803. 
 To stock, validity of, S'y 116. 
 
 Subscriptions, Pr. 765. 
 
 Of stockholders, S'y 11^. 
 
 To stock, alterations, S'y 116. 
 
 To stock ultra vires and void, S'y 84. 
 
 Unpaid installments, S'y 122. 
 Substantial Compliance (Incorporation), S'y 18.
 
 630 ALPHABETICAL INDEX. 
 
 [Referencea are to Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 Sue. 
 
 Eight to in other states, S'y 215. 
 Suits. 
 
 Against foreign corporation, S'y 229, 233, 234. 
 
 Of foreign corporations, S'y 222. 
 Supplemental Articles. 
 
 Form, Pr. 808. 
 
 Taking and Holding Land. 
 
 Not expressly prohibited, S'y 56. 
 Taking of Private Property, S 'y 270. 
 Taking Property. 
 
 By devise, S 'y 50. 
 What is, S'y 271. 
 
 Taxation. 
 
 Distinguished from eminent domain, S'y 270-284. 
 Not taking of property in condemnation, S'y 286. 
 Of franchises, S'y 32. 
 
 Tax, Federal Corporation, Stat. 752-759. 
 
 TELEGRAPH COMPANIES. 
 
 May recover damages from railroad, when, Stat. 523. 
 Authority to use highways for poles, etc., Stat. 519. 
 Eminent domain extended to, Stat. 478. 
 Entitled to equal privileges from railroads, Stat. 517. 
 Failure to transmit message — Penalty, Stat. 522. 
 Malicious injury to any property of — May recover, Stat. 
 
 521. 
 Injury to line — May recover for, Stat. 520. 
 May build along railroad lines, Stat. 480. 
 May use right of way of post road, Stat. 516, 
 Must receive and transmit messages, Stat. 518. 
 Right of, to enter upon land, Stat. 479. 
 Right to enter lands for survey, etc., Stat. 515. 
 Subaqueous cables to be marked, Stat. 524.
 
 ALPHABETICAL INDEX. G31 
 
 [References are %o Sections. S'y equals "Summary"; Stat, equals "Statutes"; 
 Pr. equals "Procedure."] 
 
 TELEPHONE COMPANIES. 
 
 Authority to use highways for poles, etc., Stat. 519. 
 
 Eminent domain extended to, Stat. 478. 
 
 Entitled to equal privileges from railroads, Stat. 517. 
 
 Failur® to transmit message — Penalty, Stat. 522. 
 
 Injury to line — May recover for, Stat. 520. 
 
 Malicious injury to any property of — May recover, Stat. 
 
 521. 
 May build along railroad lines, Stat. 480. 
 May recover damages from railroad, when, Stat. 523. 
 May use right of way of post road, Stat. 516. 
 Must receive and transmit messages, Stat. 518. 
 Right to enter lands for survey, etc., Stat. 515. 
 Subaqueous cables to be marked, Stat. 524. 
 Tenures of Property. 
 
 Government source, S'y 255. 
 
 Termination. 
 
 By expiration of charter, S'y 205. 
 Conversion of assets, S'y 203. 
 Judgment after, S'y 201. 
 Of corporation, S'y 195. 
 
 TERMINATION OF CORPORATE EXISTENCE, S'y 195- 
 
 203. 
 
 Threatened Wrong. 
 
 Basis of stockholders' suit, S'y 133. 
 
 Title. 
 
 Of receivers, S'y 189. 
 
 Passes when compensation paid, S'y 295. 
 
 To lands condemned, S'y 304. 
 
 TOLL-LOGGING ROADS AND WAYS. 
 
 Articles of incorporation, Stat. 542. 
 Deemed common carrier, Stat. 545. 
 Eminent domain extended to, Stat. 545. 
 Must transport logs, etc., Stat. 544. 
 Power of corporation, Stat. 543.
 
 632 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Statutea" ; 
 Pr. equals "Procedure."] 
 
 Tolls. 
 
 Power to take by corporation, S'y 45. 
 
 Power to take must be expressed, S'y 45. 
 Tort. 
 
 Committed in foreign country, S'y 232. 
 
 Corporate, S'y 90. 
 
 Liability of directors and officers, S'y 165. 
 
 Of corporation, liability of officers, S'y 168. 
 Transaction of Business for Years, S 'y 20. 
 
 Transfer. 
 
 Of stock in blank, S'y 117. 
 
 Transferee of Stock, S'y 127. 
 
 Liability on subscription, S'y 121. 
 Subject to liens, S'y 119. 
 
 Transfers of Stock, S'y 112. 
 
 TRUST COMPANIES. See, also. Banks. 
 
 Certificate of organization — What to show, Stat. 589. 
 
 Deposits for minors, Stat. 597. 
 
 Directors, election of, etc., Stat. 592. 
 
 Duties of, as trustees, executors, etc., Stat. 601. 
 
 False entries, etc., a misdemeanor, Stat. 595. 
 
 Fees to be paid, Stat. 604. 
 
 Filing of certificate, etc., Stat. 590. 
 
 Formation of company, Stat. 588. 
 
 Increase of capital stock, Stat. 603. 
 
 Insolvency of, Stat. 599. 
 
 Liability of stockholders, Stat. 602. 
 
 Not to loan on own stock, Stat. 596. 
 
 Powers outlined, Stat. 591. 
 
 Prohibited from making loans to officers, Stat. 593. 
 
 Refusal to submit to examination, Stat. 600. 
 
 Report to state bank examiner, Stat. 594. 
 
 State bank examiner has supervision over, Stat. 598. 
 
 "When authorized to do business, Stat. 591.
 
 ALPHABETICAL INDEX. 633 
 
 [References »re to Sections. S'y equals "Summary"; St&t. equals "Stat«.tM"; 
 Pr. equals "Procedure."] 
 
 Trustees. 
 
 Powers of, Stat. 407. 
 Transfer of stock to, S'y 144. 
 
 Trustees and Directors. 
 
 And officers agents, S'y 155. 
 
 TRUSTEES OF CORPORATIONS. 
 
 Dealing with themselves presumed fraudulent, S'y 158. 
 First meeting, Pr. 764. 
 
 How called, Stat. 412. 
 First trustees to serve how long, Stat. 402. 
 Liabilities of, Stat. 417. 
 Lapse of election of, Stat. 409. 
 Meetings of, Stat. 411; Pr. 770. 
 Majority must sign — Increasing capital, Stat. 426. 
 Powers of, upon dissolution, Stat. 427. 
 Quorum of, Stat. 410. 
 
 Trustees or Directors. 
 
 Powers limited, S'y 156. 
 
 Trustees' Powers. 
 
 Limit of, S'y 159. 
 
 Trust Fund. 
 
 For creditors, S'y 124. 
 
 Trusts, S'y 91. 
 
 And monopolies, S'y 100. 
 
 Ultra Vires. 
 
 As a defense, S'y 75, 80. 
 
 Ultra Vires Acts. 
 
 And abuse of powers, S'y 82. 
 Of directors, S'y 156. 
 
 Ultra Vires Contracts. 
 
 And transactions where executed, S'y 71. 
 Attitude of courts, S'y 67. 
 Authorized for some purposes, S'y 85. 
 Benefits received, S'y 85.
 
 634 ALPHABETICAL INDEX. 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "StatnteB" ; 
 Pr. equals "Procedure."] 
 
 Ultra Vires Contracts (Continued). 
 Enforceable, S'y 80. 
 Enforced, S'y 76. 
 Not enforceable, S'y 84. 
 
 Partly executed and benefits received, S'y 85. 
 Where departure from powers existing, S'y 85. 
 "Where no power to make, S'y 85. 
 Void, S'y 60. 
 Void as to public, S'y 77. 
 
 Ultra Vires the Charter, S'y 162. 
 
 ULTRA VIRES TRANSACTIONS. 
 
 Acts authorized by charter, S'y 60. 
 
 Nullity of ultra vires acts, S'y 66. 
 
 Public policy, S 'y 64. 
 
 Quantum meruit, S'y 68. 
 
 Ultra vires as defense, S'y 75-86. 
 
 Ultra vires void, S'y 61. 
 
 Unauthorized contracts unenforceable, S'y 62. 
 
 Unauthorized acts cannot be ratified, S'y 60. 
 
 Unauthorized taking of realty, S'y 67-71. 
 Not to be ratified, S'y 162. 
 
 Unauthorized Contracts or Transactions, S'y 60. 
 
 Unauthorized Transfer of Stock, S'y 120. 
 
 Unenforceable Restraint of Trade, S 'y 93. 
 
 Unexecuted Contracts for Unauthorized Conveyances, S'y. 
 70. 
 
 United States Government Right of Eminent Domain, S'y 
 256. 
 
 User by Corporation, S 'y 21. 
 
 Usurpation of Pow^ers. 
 
 By corporations, S'y 60. 
 
 Vacation of Award. 
 
 In condemnation, S'y 311.
 
 ALPHABETICAL INDEX. 6S5 
 
 [References are to Sections. S'y equals "Summary"; Stat, equals "Stiktutos"; 
 Pr. equals "Procedure."] 
 
 Vested Rights, S'y 40. 
 
 As to charters, S'y 35. 
 
 Vitality of Ultra Vires Contracts. 
 
 None, S'y 62. 
 Voidable, not Void, Contracts of Trustees With Corporation, 
 
 S'y 164. 
 Voidability of Ultra Vires Contract, S 'y 60. 
 Void and Voidable Conveyances to Corporations, S'y 55. 
 Void Per Se Contracts, S'y 60. 
 
 Voting. 
 
 A duty, S'y 136. 
 
 A franchise, S'y 136. 
 
 In public corporation, S'y 136. 
 
 Stock by executor or pledgee, S'y 115. 
 
 Stock by trustee, S'y 115. 
 
 Trusts, S'y 135, 143. 
 
 Trusts active trusts, S'y 148. 
 
 Trust agreements, S'y 144, 145. 
 
 Trusts coupled with interest and active, S'y 150. 
 
 Trusts not contrary to public policy, S'y 149. 
 
 VOTING BY PROXY AND VOTING TRUSTS. 
 
 Charter regulation of status, S'y 135. 
 Property right, S'y 136. 
 Proxies, S'y 137-140. 
 Revocability of proxy, S'y 141, 142. 
 Voting trusts, S'y 143-150. 
 
 Waiver of Notice of Meeting. 
 Form, Pr. 819. 
 
 WAREHOUSEMAN. 
 
 Bill of lading must be canceled, when, Stat, 448. 
 Fraudulently mixing goods, Stat. 446. 
 
 issuing : 
 
 Duplicate receipt, Stat. 447.
 
 636 ALPHABETICAL INDEX. 
 
 [Rpeferenees are to Sections. S'y equals "Summary" ; Stat, equals "Statutei" 
 Pr. equals "Procedure."] 
 
 WAREHOUSEMAN (Continued). 
 
 Fictitious bill of lading, Stat. 445. 
 Refusing to issue receipt, Stat. 444. 
 
 WATER COMPANIES. 
 
 May acquire lands and water, Stat. 432. 
 
 Must obtain right or privilege from city, Stat. 433. 
 
 Provisions of law extended to, Stat. 431. 
 
 Watering of Stock, S 'y 125. 
 
 WATER POWER COMPANIES. 
 
 Eminent domain extended to, Stat. 490. 
 Procedure in condemnation cases, Stat. 492. 
 Right of, to enter lands for surveys, etc., Stat. 491. 
 
 Water System. 
 
 Condemnation of, S'y 276. 
 
 Ways of Necessity, Stat. 473a. 
 Condemnation, Stat. 546a. 
 Duty as common carriers, Stat. 546b. 
 
 Where Dealing Takes Place. 
 
 Corporation is recognized, S'y 1. 
 
 Wrongs. 
 
 Corporation liable for, S'y 90.
 
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