UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY THE LAW OF PRIVATE CORPORATIONS BASED UPON THE STATUTES OF THE STATE OF WASHINGTON, AND THE DECISIONS OF THE SUPREME COURT OF THE STATE OF WASHINGTON, WITH THE GENERAL CONSTITUTIONAL AND LEGISLATIVE PROVISIONS OF THE STATE OF, WASHINGTON, AND THE FORMS MOST COMMONLY USED BY WASHINGTON CORPORATIONS. BY J. F. DOUGLAS OF THE SEATTLE BAR TRIBUNE PRINTING CO., PUBLISHERS. SEATTLE, WASHINGTON. 1904. T Copyright 1904 BY J. F. DOUGLAS ^ /> Printed and Bound by The Graham-Hickman Co., Seattle. PREFACE. This book contains all the general constitutional and legislative provisions of the State of Washington, relat- ing to corporations; an outline of the law of corpora- tions, based as far as possible upon the statutes of the -t State of Washington and the decisions of the Supreme Court of the State of Washington; and the forms most commonly used by Washington corporations. The author's design was to put the law of corpora- tions, as set out in our statutes and established by the decisions of our Supreme Court, in convenient form for the use of lawyers, and at the same time in a form that would make a useful book for any person who wished to obtain a working knowledge of our corporation laws. Great care has been taken to make the work accurate. In the belief that this book will be found useful, it is now submitted to the public. J. F. DOUGLAS. April 1, 1904. TABLE OF CONTENTS PART I CONSTITUTIONAL AND LEGISLATIVE PROVISIONS. Constitutional Provisions. 1. Laws may be changed. 2. Existing charters not acted upon of no force. 3. Charters shall. not be extended. 4. Liability of stockholders. 5. " Corporation" defined Action by and against. 6. Limitation on issuance of stock and bonds Changing capital stock. 7. Foreign corporations. 8. Burdens follow franchise on alienation. 9. State shall not loan its credit. 10. Corporate property liable to eminent domain by the state. 11. Corporation shall not issue money. 12. Personal liability of bank officers for deposit if bank insolvent. 13. Common carriers subject to legislative control Car- riers shall connect and exchange passengers and freight. 14. Pooling prohibited. 15. Discrimination prohibited Short haul Commutation tickets. 6 TABLE OF CONTENTS. 16. Competing railroads shall not consolidate. 17. Rolling stock personalty. 18. Railroad rates Commission. 19. Telephone companies may construct lines Exchange of messages Eminent domain. 20. Passes prohibited. 21. Express companies Rights of railroads. 22. Monopolies and trusts prohibited. Legislative provisions. 23. Formation of, generally. 24. Articles to be filed. 25. List of officers to be filed. 26. Corporations hereafter organized. 27. Articles as evidence. 28. Powers of corporations. 29. Exercised by trustees. 30. Lapse of election of trustees. 31. Quorum. 32. First meeting. 33. Stock transferrable. 34. Payment of subscriptions Banks. 35. Fiduciaries may vote stock. 36. Stock may be voted though pledged. 37. Dividends only from profits. 38. Power to issue negotiable paper. 39. Holder of stock as collateral not liable. 40. Record of stockholders Inspection. 41. False entries. 42. Increase or decrease of capital stock. 43. Stockholders' meeting Vote. 44. Statement to be filed. 45. On dissolution, funds held in trust for creditors. TABLE OF CONTENTS. 7 46. Dissolution. 47. Removal of office. 48. Corporations validated. 49. Mining corporations Subscription of stock. 50. Act applies to water companies. 51. Water company may condemn. 52. Consent of town. 53. Powers of foreign corporations. 54. Must file and record papers. 55. Must appoint a resident agent. 56. Penalty. 57. Act does not apply to companies now doing business. 58. County assessor shall report. 59. County auditor's report to state auditor. 60. Fees. 61. Agent's liability. 62. County officers' liability. 63. Water power companies may condemn. 64. Preliminary survey. 65. Usual procedure. 66. Corporations prior to 1872 may hold property. 67. Corporations prior to 1862 may make and secure debts. 68. Laborer's lien on property of corporation. 69. Notice of claim. 70. Service of summons. 71. Foreclosure of lien. 72. Payment by receiver. 73. Penalty for person failing to give list. 74. Fee for corporate articles. 75. Supplemental articles. 76. Certified copies. . 77. Folio charge. 78. Annual tax Penalty. 79. Certain corporations excepted. TABLE OF CONTENTS. 80. Duplication of corporate entitlements, an act to pre- vent. 81. Stockholders in corporations, an act to protect. 82. Acknowledgement, certificate of, an instrument by corporation. 83. Tax, how to be paid, on corporate stock. 84. Agent of corporation to make list. 85. Payment by corporation. 86. Tax a lien Foreclosure. 87. Who may serve summons. 88. Manner of service. 89. Service of summons on receiver. 90. Service on defunct corporation. 91. Service by publication. 92. Information against usurpation of public functions. 93. Who may file information. 94. Judgment of ouster of franchise or office in corpora- tion Costs. 95. Remedy against usurpers of corporate rights. 96. Alien ownership of lands. 97. Fraternal societies Agent in this state. 98. Nonresident insurance companies to file power of at- torney. 99. Private corporation may be sued where served or where it has office. 100. Appointment of receiver. TABLE OF CONTENTS. PART II THE LAW OF PRIVATE CORPORATIONS. CHAPTER I. OBJECTS AND ADVANTAGES OF INCORPORATION. 101. To obtain capital. 102. To obtain unity of action. 103. To avoid casualty. 104. To avoid liability. 105. To expedite business. CHAPTER H. CREATION OF CORPORATIONS. 106. Power to create. 107. Method of creation. 108. Corporate name. 109. Objects of incorporation. 110. Amount of capital stock and number of shares. 111. Time of existence. 112. Principal place of business. ,113. Number and names of trustees. 114. Amendment of articles of incorporation. 115. Effect of failure to comply with statutory provisions. TABLE OF CONTENTS. CHAPTER m. PROOF OF INCORPORATION. 116. Domestic corporations. 117. Foreign corporations. CHAPTER IV. POWERS OF CORPORATIONS. 118. To sue and be sued. 119. To have a seal. 120. Form of seal. 121. Use of seal. 122. By whom is seal affixed. 123. Effect of affixing seal. 124. Failure to affix seal. 125. To acquire, hold or alienate property. 126. To appoint and remove officers and agents. 127. To make by-laws. 128. To manage its business and make regulations. 129. To make contracts. PARTICULAR CONTRACTS. 130. Contracts with strangers. 131. Contracts with stockholders. 132. Contracts with officers and trustees. 133. Contracts in violation of law. 134. Right to borrow money and issue notes for author- ized purpose. 135. Right to borrow money and issue notes for unauthor- ized purpose. 136. Right to become guarantors. TABLE OF CONTENTS. H 137. Right to subscribe for or purchase stock in other corporations. 138. Right to purchase its own stock. 139. Contracts between stockholders prior to incorpora- tion. In general. 140. Form of contract. 141. Place of contract. 142. When powers can be exercised. 143. Where powers can be exercised. 144. Kind of business that can be carried on. CHAPTER V. ULTRA VIRES. 145. Definition of ultra vires. 146. Reason for rule of ultra vires. Rights of persons affected by an ultra vires contract. 147. Rights of the state. 148. Rights of the corporation itself. 149. Rights of stockholders and creditors. 150. Rights of strangers dealing with the corporation. CHAPTER VI. CAPITAL STOCK. Subscriptions to capital stock. 151. Who can subscribe for stock. 152. Who can receive stock subscriptions. 153. Form of stock subscriptions. 154. Consideration for stock subscriptions. 155. Conditional subscriptions for stock. 12 TABLE OF CONTENTS. 156. Payment of stock subscriptions. 157. When can stock subscriptions be enforced. 158. Manner of enforcing stock subscriptions. In general. 159. Amount of capital stock. 160. Number and face value of shares of capital stock. 161. Increase or decrease of capital stock. 162. The capital stock is a trust fund. 163. Overissued stock. CHAPTER VII. STOCKHOLDERS. 164. Who can be stockholders. 165. How to become stockholders. 166. Who are stockholders. Rights of stockholders. 167. Right to participate in management. 168. Right to inspect books and records and remedy for refusal of this right. 169. Right to dividends. 170. Liabilities of stockholders. CHAPTER Vin. TRANSFER OR PLEDGE OF SHARES. 171. Right to transfer shares. 172. Manner of transferring shares. 173. Effect of a transfer of shares. 174. As regards a stockholder's creditors. 175. As regards dividends. 176. As regards the corporation and the corpo- ration's creditors. TABLE OF CONTENTS. 13 177. Transfers in violation of a trust. 178. Remedy for refusal of corporation to transfer shares. 179. Contracts for sale of shares. 180. Pledge of shares. Right to pledge shares. 181. Effect of a pledge of shares. CHAPTER IX. CORPORATE MEETINGS AND ELECTIONS. Stockholders' meetings. 182. Notice of stockholders' meetings. 183. Regular or fixed meetings. 184. Special meetings. 185. Time and place of meeting. 186. Qualifications of voters. 187. Quorum. 188. Elections. Manner of voting. 189. Records of stockholders' meetings. Trustees' meetings. 190. Notice of trustees' meetings. 191. First meeting. 192. Regular meetings. 193. Special meetings. 194. Time and place of meeting. 195. Qualifications of trustees. 196. Manner of voting. 197. Quorum. 198. Election of officers. 199. Record of trustees' meetings. 14 TABLE OF CONTENTS. CHAPTER X. OFFICERS AND AGENTS OF CORPORATIONS. 200. Election, appointment and qualifications of officers. 201. Term of office. Removal from office. 202. Compensation of officers and agents. 203. Powers of officers. 204. Trustees. 205. President. 206. Vice president. 207. Secretary. 208. Treasurer. 209. General manager. 210. Liability of officers for mismanagement. CHAPTER XI. ACTIONS BY AND AGAINST CORPORATIONS. 211. Capacity of corporations to sue and liability of cor- porations to be sued. 212. Venue of actions by and against corporations. 213. Service of process in actions against corporations 214. Pleadings in actions by or against corporations. 215. Special proceedings against corporations. CHAPTER XII. LIABILITIES OF CORPORATIONS FOR TORTS AND CRIMES. 216. Liability of a corporation for its torts. 217. Liability of a corporation for its crimes. TABLE OF CONTENTS. 15 CHAPTER XIII. DISSOLUTION OF CORPORATIONS. 218. Dissolution by the expiration of the time fixed by its articles. 219. Dissolution by complying with the statutory provis- ions for the dissolution of corporations. 220. Dissolution because of a forfeiture of its rights in a proceeding by the state for a violation of law or other cause. CHAPTER XIV. INSOLVENCY OF CORPORATIONS. 221. What facts constitute insolvency. 222. Powers of insolvent corporations. 223. Rights of creditors of insolvent corporations. CHAPTER XV. FOREIGN CORPORATIONS. 224. Rights and powers of foreign corporations. 225. Statutory requirements for foreign corporations. 226. Effect of failure to comply with statutory require- ments. TABLE OP CONTENTS. PART III FORMS FOR WASHINGTON CORPORATIONS. LIST OF FORMS. 1. Acknowledgment, form of. 2. Agent, apointment of by foreign corporation. 3. Agent, appointment of by foreign fraternal insurance company. 4. Articles of incorporation. 5. Bank statement. 6. By-laws. 7. Capital stock, notice to increase or decrease. 8. Capital stock, certificate of increase or decrease. 9. Officers, list of. 10. Power of attorney to vote shares. 11. Principal place of business, notice of removal. 12. Stockholders, notice of annual meeting of. 13. Stockholders, notice of special meeting of. 14. Stockholders, record of. 15. Trustees, notice of first meeting of. 16. Trustees, notice of regular meeting of. 17. Trustees, notice of special meeting of. 18. Trustees, oath of office of. TABLE OF CASES. Adamant Manufacturing Co. v. Wallace, 16 Wash. 614; 48 Pac. 415 156, 223 Allen v. Olympia Light & Power Co. 13 Wash. 307; 43 Pac. 55. . .28, 29, 34, 148, 223 Allen v. Stallcup, 13 Wash. 631; 43 Pac. 884 222 American Bonding & Trust Co. v. Pacific Brewing etc. Co., 33 Wash. 043; 74 Pac. 826 180, 181 Anderson v. Wallace Lumber & Mnfg. Co., 30 Wash. 147; 70 Pac. 247 28, 203, 209 Atlantic Trust Co. v. Behrend, 15 Wash. 466; 46 Pac. 642 28 B Baggot v. Turner, 21 Wash. 339; 58 Pac. 212 29, 197 Baker v. King Co., 17 Wash. 622; 50 Pac. 481 223 Bank of Commerce v. Galland, 14 Wash. 502; 45 Pac. 35 116 Bank of California v. Puget Sound Loan, Trust & Banking Co., 20 Wash. 636; 56 Pac. 395 223 Barto v. Nix, 15 Wash. 563; 46 Pac. 1033 45, 138 Bash v. Culver Gold Mining Co., 7 Wash. 122; 34 Pac. 462. . .24, 107, 139 Biddle Pur. Co. v. Pt. Townsend Steel Wire & Nail Co., 16 Wash. 681; 48 Pac. 407 45, 162, 222, 223 Birge v. Browning, 11 Wash. 249 ; 39 Pac. 643 157, 23 Blair v. Metropolitan Savings Bank, 27 Wash. 192; 67 Pac. 609. 28, 127, 149 Blake v. State Savings Bank, 12 Wash. 619 ; 41 Pac. 909 12 Blumauer v. Clock, 24 Wash. 596; 64 Pac. 844 68 2 D 18 TABLE OF CASES. Bramel v. Manring, 18 Wash. 421; 51 Pac. 1050 45 Brigham v. Kenyon, 76 Fed. Rep. 30 96 Brooks v. James, 16 Wash. 335; 47 Pac. 751 208 Brooks v. Skookum Mnfg. Co., 9 Wash. 80; 37 Pac. 284 45, 221 Brown v. Elwell, 17 Wash. 442; 49 Pac. 1068 23, 27, 142 Brown v. Union Savings & Loan Association, 28 Wash. 657; 69 Pac. 383 36, 181 Budd et al. v. Walla Walla P. & P. Co., 2 Wash. Ter. 347; 7 Pac. 896 28, 29, 32, 132, 184, 195, 205 Burch v. Taylor, 1 Wash. 245; 24 Pac. 438 34, 45, 162 Burns v. Commencement Bay Land etc. Co., 4 Wash. 558; 30 Pac. 668, 709 29, 202 Burrell v. Bennett, 20 Wash. 644; 56 Pac. 375 45, 162, 222, 223 C Cameron v. Groveland Imp. Co., 20 Wash. 169; 54 Pac. 1128; 72 Am. St. 26 210 Carrigan v. Improvement Co., 6 Wash. 590; 34 Pac. 148 28, 124, 209 Carroll v. Pacific National Bank, 19 Wash. 639; 54 Pac. 32 23, 45, 115, 153, 221 Carstens etc. v. Leidigh & Haven's Lumber Co., 18 Wash. 450; 51 Pac. 1051; 63 Am. St. 906; 39 L. R. A. 548 88, 213 Cerf Schloss & Co. v. Wallace, 14 Wash. 249; 44 Pac. 264 222 Chehalis Boom Co. v. Chehalis Co., 24 Wash. 135 ; 63 Pac. 1123 78 Citizen's National Bank v. Wintler, 14 Wash. 558; 45 Pac. 38; 53 Am. St. 890 209 Cole v. Satsop R. R. Co., 9 Wash. 487 ; 37 Pac. 700 ; 43 Am. St. 858, 34, 157, 223 Coler v. Allen, 114 Fed. Rep. 611; 63 Am. St. 872 45, 222 Coler v. Eagle Oil & R. Co., 4 Wash. 183; 29 Pac. 105 137 Commercial Electric Light & Power Co. v. Tacoma, 17 Wash. 661; 50 Pac. 592 28, 125 TABLE OF CASES. 19 Compton v. Schwabacher Bros. & Co. 15 Wash. 306; 46 Pac. 338, 45, 162, 222 Conover v. Hull, 10 Wash. 673; 39 Pac. 166; 45 Am. St. 810 45, 162, 221, 222, 223 Cook v. Moody, 18 Wash. 114; 50 Pac. 1020; 63 Am. St. 872 45, 222 Coolidge v. Schering, 32 Wash. 557; 73 Pac. 682 207 Cox v. Robinson, 82 Fed. Rep. 284 Cunningham v. Spokane Hydraulic Co., 18 Wash. 524; 52 Pac. 235; 20 Wash. 450; 21 Wash 709 Cross v. Johnson, 20 Wash. 124; 54 Pac. 1000 210 D Daniel v. Gold Hill Mining Co., 28 Wash. 411; 68 Pac. 884 53, 224 Davis v. Foster, 29 Wash. 363 ; 69 Pac. 1102 223 Dearborn v. Washington Savings Bank, 18 Wash. 8; 50 Pac. 575, 34, 36, 181 Dearborn Foundry Co. v. Augustine, 5 Wash. 67; 31 Pac. 327 53, 226 Deering v. Holcomb, 26 Wash. 588; 67 Pac. 240, 561 45 Denny Hotel Co. v. Gilmore, 6 Wash. 152; 32 Pac. 1004 34, 157 Denny Hotel Co. v. Schram, 6 Wash. 134; 32 Pac. 1002; 36 Am. St. 130 23, 28, 137, 151, 157 Dexter Horton & Co. v. Long, 2 Wash. 435; 27 Pac. 271; 26 Am. St. 867 28 Dittenhoefer v. Coeur d'Alene Clothing Co., 4 Wash. 519; 30 Pac. 660 224 Donivan v. Manhattan R. Co., 21 N. Y. Sup. 457 210 Duggan v. Pacific Boom Co., 6 Wash. 593; 34 Pac. 157; 36 Am. St. 182 28, 205, 207 Duggan v. Washougal Land etc. Co., 10 Wash. 84 ; 38 Pac. 856 Dunlap v. Rauch, 24 Wash. 620; 64 Pac. 807 34, 156, 213, 223 Dyer v. Middle Kittitas Irrigation District, 25 Wash. 80; 64 Pac. 1009 . 20 TABLE OF CASES. E Earle v. Seattle L. S. & E. Ry., 56 Fed. Rep. 909 28 Edison etc. Co. v. Navigation Co., 8 Wash. 370; 36 Pac. 260; 40 Am. St. 910; 24 L. R. A. 315 54, 226 Elderkin v. Peterson, 8 Wash. 674; 36 Pac. 1089 34, 157, 158 Elwell v. Puget Sound Ry. Co., 7 Wash. 487; 35 Pac. 376 28, 205 F Fernald v. Spokane & B. C. Tel. & Tel. Co., 31 Wash. 672; 72 Pac. 462 28, 206, 221 Fidelity Ins. etc. Co. v. Nelson, 30 Wash. 340; 70 Pac. 961 117 First Nat'l Bank of Pullman v. Gaddis, 31 Wash. 596; 72 Pac. 460. . 210 Fitch v. Applegate, 24 Wash. 25 ; 64 Pac. 147 68 Fox v. Burlington Mnfg. Co., 7 Wash. 391; 35 Pac. 126 140 Frost v. Ainslie Lumber Co., 3 Wash. 241; 28 Pac. 354 27, 116, 214 G Garneau v. Port Blakely Mill Co., 8 Wash. 467; 36 Pac. 463 27, 214 Gilbert v. Seatco, 98 Fed. Rep. 208 28 Gilmore v. H. W. Baker Co., 12 Wash. 468; 41 Pac. 124 Glover v. Rochester German Ins. Co., 11 Wash. 143; 39 Pac. 380.28, 209 Goon Gan. v. Richardson, 16 Wash. 373; 47 Pac. 762 96 Graton & Knight Mnfg. Co. v. Redelscheimer, 28 Wash. 370; 68 Pac. 879 28, 148 Griffith v. Burlingame, 18 Wash. 429; 51 Pac. 1059 45 Grinsfelder v. Spokane St. Ry., 19 Wash. 532; 53 Pac. 719; 67 Am. St. 739; 41 L. R. A. 515 125 Groveland Imp. Co. v. Farmers' Supply Co., 25 Wash. 344; 65 Pac. 529; 87 Am. St. 755 28 G. V. B. Mining Co. v. First Nat'l Bank, 95 Fed. Rep. 30 TABLE OF CASES. 21 H Hall etc. Furniture Co. v. Wilbur, 4 Wash. 644 ; 30 Pac. 665 130 Hardin v. Mullin, 16 Wash. 647; 48 Pac. 349 153 Hardin v. Sweeney, 14 Wash. 129; 44 Pac. 138 131, 154 Hardin v. White Swan Mining & Milling Co., 26 Wash. 583; 67 Pac. 236 166, 181 Hastings v. Anacortes Packing Co., 29 Wash. 224; 69 Pac. 776. . .23, 125, 164, 224 Haworth v. Ellwanger, 86 Fed. 54 11 Hewitt v. Traders Bank, 18 Wash. 326; 51 Pac. 468 223 Hinchman v. Point Defiance Ry. Co., 14 Wash. 349; 44 Pac. 867; 17 Wash. 399; 49 Pac. 1061 17 Holbrook etc. v. Peters & Miller, 8 Wash. 344; 36 Pac. 256 222 Huggins v. Milwaukee Brewing Co., 10 Wash. 579; 39 Pac. 152 178 Huttig Bros. Mnfg. Co. v. Denny Hotel Co., 6 Wash. 122; 32 Pac. 1073 '. 54, 226 J Jones v. Western Mnfg. Co., 27 Wash. 136; 67 Pac. 586 - 166, 221 Jones v. Western Mnfg. Co., 32 Wash. 375; 73 Pac. 359 166 K Keene Guaranty Savings Bank v. Lawrence, 32 Wash. 572; 73 Pac. 680 82, 140, 226 Kiggins v. Munday, 19 Wash. 233; 52 Pac. 855 11, 38, 45, 170 King v. Ilwaco Ry. & Nav. Co., 1 Wash. 127; 33 Pac. 924 24 Klosterman v. Mason County etc. R. R. Co., 8 Wash. 281; 36 Pac. 136 28,222 Knapp etc. v. Strand, 4 Wash. 686; 30 Pac. 1063 27, 54, 117 Kroenert v. Johnston, 19 Wash. 96; 52 Pac. 605 34, 156 22 TABLE OF CASES. Lacaff v. Dutch Miller Mining & Smelting Co., 31 Wash. 566; 72 Pac. 122 176, 178 Ladd v. Gilson, 26 Wash. 79; 66 Pac. 126 LaFrance Fire Engine Co. v. Town of Mount Vernon, 9 Wash. 142; 37 Pac. 287; 38 Pac. 80; 43 Am. St. 827 53, 226 Lancaster Savings Bank v. Elwell, 17 Wash. 446; 49 Pac. 1070 117 Lawler, In re, 110 Fed. Rep. 135 * 68 Leslie v. Wilshire, 6 Wash. 282; 33 Pac. 505 45, 130, 221 Levy v. Fleischner etc. Co., 12 Wash. 15; 40 Pac. 384 210 Lewiston Water & Power Co. v. Asotin County, 24 Wash. 371; 64 Pac. 544 84 M McKay v. Elwood, 12 Wash. 579; 41 Pac. 919 23, 28, 222 McMaster v. Advance Thresher Co., 10 Wash. 147 ; 38 Pac. 760 212 McRae v. Bowers Dredging Co., 86 Fed. Rep. 344 45 Mallon v. Hyde, 76 Fed. Rep. 388 12, 170 Manhattan Trust Company v. Seattle Coal & Iron Co., 19 Wash. 493; 53 Pac. 951 28, 156 Manhattan Trust Company v. Seattle Coal & Iron Co., 16 Wash. 499; 48 Pac. 333, 737 34, 156, 223 Marble etc. Bank v. Williams, 23 Wash. 766; 63 Pac. 511 226 Mayer v. Woolery, 10 Wash. 354; 39 Pac. 135 45, 222 Miles v. Robertson, 5 Wash. 352; 31 Pac. 970 34, 173 Miller v. Washington Southern Ry. Co., 11 Wash. 414; 39 Pac. 673, 28, 130, 148, 205, 209 Moody v. Noyes, 15 Wash. 128; 45 Pac. 732 204 Morrison v. Blue Star Navigation Co., 26 Wash. 541; 67 Pac. 244; 72 Am. St. 26 45, 210 Muldoon v. Seattle Ry. Co., 10 Wash. 311; 38 Pac. 995; 38 Am. St. 901; 22 L, R. A. 794 20 Murray v. Okanogan Live Stock etc. Co., 12 Wash. 259; 40 Pac. 942 . . 131 TABLE OF CASES. 23 N Neufelder v. North British Ins. Co., 10 Wash. 395; 39 Pac. 110; 45 Am. St. 793 224 Neufelder v. German American Ins. Co., 6 Wash. 336; 33 Pac. 870; 36 Am. St. 166; 22 L. R. A. 287 224 New York National Exchange Bank v. Metropolitan Savings Bank, 28 Wash. 553; 68 Pac., 905 45, 222 Northwestern Lumber Co. v. Chehalis Co., 24 Wash. 626; 64 Pac. 787 Northwestern Warehouse Co. v. Oregon Ry. & Nav. Co., 32 Wash. 218; 73 Pac. 388 15 Nyman v. Berry, 3 Wash. 734 ; 29 Pac. 557 222 O Oleson v. Bank of Tacoma, 15 Wash. 148 ; 45 Pac. 734 222 O'Neile v. Ternes, 32 Wash .528; 73 Pac. 692 132 Oregon Mortgage Co. v. Carstens, 16 Wash. 165; 47 Pac. 421; 35 L. R. A. 841 53, 96 Osborne v. Columbia etc. Corporation, 9 Wash. 666 ; 38 Pac. 160 . . .88, 213 Pacific Nat'l Bank v. Pierce County, 20 Wash. 675 ; 56 Pac. 936 84 Parsons v. Tacoma Smelting & Refining Co., 25 Wash. 492; 65 Pac. 765 28, 31, 125, 132, 137, 144, 149, 195, 204 Paxton v. Daniel, 1 Wash. 19 ; 23 Pac. 441 88 Port Townsend National Bank v. Port Townsend Gas & Fuel Co., 6 Wash. 597; 34 Pac. 155 33, 36, 172, 174, 176, 180, 181, 222 Potvin v. Denny Hotel Co., 26 Wash. 309; 66 Pac. 376. .45, 210, 222, 223 Pronger v. Old National Bank, 20 Wash. 618 ; 56 Pac. 391 148 Puget Sound etc. R. R. Co. v. Ouellette, 7 Wash. 265 ; 34 Pac. 929 158 24 TABLE OF CASES. Ramsay v. Tacoma Land Co., 31 Wash. 351; 71 Pac. 1024 23 Rathbone v. Frost, 9 Wash. 162; 37 Pac. 298 226 Rattlemiller v. Stone, 28 Wash. 104; 68 Pac. 168 209 Realty Co. v. Appolonio, 5 Wash. 437; 32 Pac. 219 53, 224 Ridpath v. Sans Poil, etc., Transportation Co., 26 Wash. 427; 67 Pac. 229 220 Ridpath v. Spokane County, 23 Wash. 436; 63 Pac. 261 84 Roberts v. Washington National Bank, 9 Wash. 12 ; 37 Pac. 26 221 Roberts v. Washington National Bank, 11 Wash. 550; 40 Pac. 225. . 222 Roberts v. Washington Water Power Co., 19 Wash. 392; 53 Pac. 664 28, 199 Roy & Co. v. Scott Hartley & Co., 11 Wash. 399; 39 Pac. 679 130, 205 S Saunders v. United States Marble Co., 25 Wash. 475 ; 65 Pac. 782 . . 28, 209 Sayward v. Carlson, 1 Wash. 29 ; 23 Pac. 830 88 Sayward v. Gardner, 5 Wash. 247; 31 Pac. 671; 33 Pac. 389 226 Seal v. Cameron, 24 Wash. 62 ; 63 Pac. 1103 214 Seal v. Puget Sound Loan etc. Co., 5 Wash. 422; 32 Pac. 214 28, 205 Seattle & Mon., etc., Co. v. State, 7 Wash. 150; 34 Pac. 551 13 Seattle Crockery Co. v. Haley, 6 Wash. 302; 33 Pac. 650; 36 Am. St. 156 130, 210 Seattle Trust Co. v. Pitner, 18 Wash. 401; 51 Pac. 1048 23 Security Savings Society v. Cohalan, 31 Wash. 266 ; 71 Pac. 1020 ... 130 Sengfelder v. Mutual Life Ins. Co., 5 Wash. 121; 31 Pac. 428 214 Shuey v. Adair, 24 Wash. 378; 64 Pac. 536 11, 37, 170, 223 Shuey v. Holmes, 21 Wash. 223; 57 Pac. 818 11, 170, 223 Shuey v. Holmes, 22 Wash. 193; 60 Pac. 402 38, 45 Sievers v. Dalles P. & A. Navigation Co., 24 Wash. 302; 64 Pac. 539 . ..88, 213 TABLE OF CASES. 25 Sligh v. Shelton Southwestern R. R. Co., 20 Wash. 16; 54 Pac. 763. . 34, 223 Sloan v. Langert, 6 Wash. 26 ; 32 Pac. 1015 210 Sly v. Palo Alto Gold Mining Co., 28 Wash. 485; 68 Pac. 871 214 Smith v. Hopkins, 10 Wash. 77; 38 Pac. 854 155 Spokane v. Amsterdamsch Trustees Kantoor, 22 Wash. 172; 60 Pac. 141 23, 28, 29, 36, 142, 148, 153, 166, 181, 204 Spokane & Idaho Lumber Co. v. Loy, 21 Wash. 501; 58 Pac. 672; 60 Pac. 1119 27, 116 Spokane Truck & Dray Co. v. Hoefer, 2 Wash. 45; 25 Pac. 1072; 26 Am. St. 842; 11 L. R. A. 689 210 Standard Gold Mining Co. v. Byers, 31 Wash. 100; 71 Pac. 766. . .29, 92, 215 Stanford Land Co. v. Steidle, 28 Wash. 72; 68 Pac. 178 27, 116 State ex rel. Amsterdamsch Trustees Kantoor v. Superior Court, 15 Wash. 668; 15, Wash. 701; 47 Pac. 31; 55 Am. St. 907; 37 L. R. A. Ill 95, 115 State ex rel. Attorney General v. Seattle Gas & Electric Co., 28 Wash. 488; 68 Pac. 946 92, 215, 220 State ex rel. Boardman v. Ball, 5 Wash. 387; 31 Pac. 975; 34 Am. St. 866 213 State ex rel. Grinsfelder v. Spokane St. Ry. Co., 19 Wash. 518; 53 Pac. 719 125 State ex rel. Jenkins v. Equitable Indemnity Ass'n, 18 Wash. 514; 52 Pac. 234 221 State ex rel. Mitchell v. Koran, 22 Wash. 197; 60 Pac. 135 29, 92, 126, 215 State v. Pittam, 32 Wash. 137; 72 Pac. 1042 27, 116 State ex rel. Smith v. Superior Court, 30 Wash. 219; 70 Pac. 484. . State ex rel. Sterling Timber Co. v. Jenkins, 22 Wash. 494; 61 Pac. 141 78 State ex rel. Strohl v. Superior Court, 20 Wash. 545; 56 Pac. 35; 45 L. R. A. 177 162, 222, 223 State ex rel. Tel. Co. v. Spokane, 24 Wash. 53; 63 Pac. 1116 19 26 TABLE OF CASES. State ex rel. Weinberg v. Pacific Brewing & Malting Co., 21 Wash. 451; 58 Pac. 584; 47 L. R. A. 208... 168, 214 State ex rel. Winston v. Hudson Land Co., 19 Wash. 85; 52 Pac. 574; 40 L. R. A. 430 96, 164 State ex rel. Winston v. Morrison, 18 Wash. 664 ; 52 Pac. 228 96 Sengf elder v. Mutual Life Ins. Co., 5 Wash. 121; 31 Pac. 428 116 Stewart v. Gould, 8 Wash. 367; 36 Pac. 277 28, 135, 162 Stewart v. Walla Walla P. & P. Co., 1 Wash. 521; 20 Pac. 605 34, 166, 173, 176 Strohl v. Seattle National Bank, 25 Wash. 28; 64 Pac. 916 45, 221 T Tait v. Piggott, 32 Wash. 345; 73 Pac. 364 37 Theis v. Spokane Falls Gas Light Co., 33 Wash. 045; 74 Pac. 1004. . . 219 Thompson v. Huron Lumber Co., 4 Wash. 600; 30 Pac. 741; 31 Pac. 25 45, 220, 222, 223 Tibbals v. Mt. Olympus Water Co., 10 Wash. 329; 38 Pac. 1120; 16 Wash. 480; 48 Pac. 236 199 Tootle v. First National Bank, 6 Wash. 181; 33 Pac. 345 28, 148 Trowbridge v. Hamilton, 18 Wash. 686; 52 Pac. 328 167 Troy v. Morse, 22 Wash. 280; 60 Pac. 648 34 Turner v. Bailey, 12 Wash. 634; 42 Pac. 115 34, 156 V Van Brocklin v. Queen City Printing Co., 19 Wash. 552; 53 Pac. 822 45, 222, 223 Vincent v. Snoqualmie Mill Co., 7 Wash. 566; 35 Pac. 396 28, 45, 222 Vogel v. Dalles, etc., Nav. Co., 25 Wash. 672; 64 Pac. 539 213 W Wallace v. Oceanic Packing Co., 25 Wash. 143; 64 Pac. 938 205 Washington Liquor Co. v. Alladio Cafe Co., 28 Wash. 176; 68 Pac. 444 . 45, 223 TABLE OF CASES. 27 Washington Mill Co. v. Marks, 27 Wash. 170; 67 Pac. 565 87 Washington Mill Co. v. Sprague Lumber Co., 19 Wash. 165; 52 Pac. 1067 28, 134, 135, 136 Watterson v. Masterson, 15 Wash. 511; 46 Pac. 1041 45, 223 West Seattle Land & Improvement Co. v. Novelty Mill Co., 31 Wash. 435; 72 Pac. 71 28, 203, 205, 209 Wheeler, Osgood & Co. v. Everett Land Co., 14 Wash. 630 ; 45 Pac. 316 136, 144, 148, 196 Whitman Agricultural Co. v. Strand, 8 Wash. 647; 36 Pac. 682.. 54, 226 Wilson v. Book, 13 Wash. 676; 43 Pac. 939 11, 45, 170, 223 Wilson v. Northern Pac. R. Co., 5 Wash. 621; 32 Pac. 468; 34 Pac. 146 . . 210 Y Yakima National Bank v. Knipe, 6 Wash. 348; 33 Pac. 834 27, 116 Yeaton v. Eagle Oil, etc., Co., 4 Wash. 183; 29 Pac. 1051 137, 166 Z Zindorf v. Western American Co., 26 Wash. 695; 67 Pac. 355 88 PART I CONSTITUTIONAL AND LEGISLA- TIVE PROVISIONS CONSTITUTIONAL PROVISIONS. 1. Laws may be changed. 2. Existing charters not acted upon of no force. 3. Charters shall not be extended. 4. Liability of stockholders 5. "Corporation" defined. Action by and against. 6. Limitation on issuance of stock and bonds. Changing capital stock. 7. Foreign corporations. 8. Burdens follow franchise on alienation. 9. State shall not loan its credit. 10. Corporate property liable to eminent domain by the state. 11. Corporation shall not issue money. Liability of stock- holders in bank. 12. Personal liability of bank officers for deposit if bank is insolvent. 13. Common carriers subject to legislative control. Car- riers shall connect and exchange passengers and freight. 14. Pooling prohibited. 15. Discrimination prohibited. Short haul. Commuta- tion tickets. 16. Competing railroads shall not consolidate. 17. Rolling tock personalty. 18. Railroad rates. Commission. 19. Telephone companies may construct lines. Exchange of messages. Eminent domain. 32 CONSTITUTIONAL PROVISIONS. 20. Passes prohibited. 21. Express companies. Rights of railroads. 22. Monopolies and trusts prohibited. CONSTITUTIONAL PROVISIONS. Private corporations Laws may be changed. 1. Corporations may be formed under general laws, but shall not be created by special acts. All laws relating to corporations 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 regu- lated, limited or restrained by law. Article XII, Sec. 1, Const. Existing charters not acted upon of no force. 2. All existing charters, franchises, special or exclu- sive privileges, under which an actual and bona fide organization shall not have taken place, and business commenced in good faith, at the time of the adoption of this constitution, shall thereafter have no validity. Article XII, Sec. 2, Const. Charters shall not be extended. 3. The legislature shall not extend any franchise or charter, nor remit the forfeiture of any franchise or char- ter of any corporation now existing, or which shall here- after exist under the laws of this state. Article XII, Sec. 3, Const. CONSTITUTIONAL PROVISIONS. 33 Liability of stockholders. 4. Each stockholder in all incorporated companies, except corporations 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 this liability. Article XII, Sec. 4, Const. "Corporation" defined Action by and against. 5. The term ''corporation," as used in this article, shall be construed to include all associations and joint stock companies having any powers or privileges of cor- porations 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 nat- ural persons. Article XII, Sec. 5, Const. Limitation on issuance of stock and bonds Changing capital stock. 6. Corporations shall not issue stock, except to bona fide subscribers 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 pursuance 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 notice of the proposed increase having been previously given in 3 D 34 CONSTITUTIONAL PROVISIONS. such manner as may be prescribed by law. All fictitious increase of stock or indebtedness shall be void. Article XII, Sec. 6, Const. Foreign corporations. 7. 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 corporations organized under the laws of this state. Article XII, Sec. 7, Const. Burdens follow franchise on alienation. 8. No corporation shall lease or alienate any fran- chise, so as to relieve the franchise or property held thereunder from the liabilities of the lessor, or grantor, lessee, or grantee, contracted or incurred in the opera- tion, use, or enjoyment of such franchise or any of its privileges. Article XII, Sec. 8, Const. State shall not loan its credit. 9. 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. Article XII, Sec. 9, Const. Corporate property liable to eminent domain by the state. 10. The exercise of the right of eminent domain shall never be so abridged or construed as to prevent CONSTITUTIONAL PROVISIONS. 35 the legislature from taking the property and franchise of incorporated companies, and subjecting them to pub- lic use the same as the property of individuals. Article XII, Sec. 10, Const. Corporations shall not issue money Liability of stockholders in bank. 11. 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 or 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 stock- holders to the extent of the amount of their stock therein at the par value thereof in addition to the amount in- vested in such shares. Article XII, Sec. 11, Const. Shuey v. Adair, 24 Wash. 378; 64 Pac. 536. Kiggins v. Munday, 19 Wash. 233; 52 Pac. 955. Wilson v. Book, 13 Wash. 676; 43 Pac. 939. Shuey v. Holmes, 21 Wash. 223; 57 Pac. 818. Haworth v. Ellwanger, 86 Fed. 54. Personal liability of bank officer for deposit if bank insolvent. 12. 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 36 CONSTITUTIONAL PROVISIONS. insolvent or in failing circumstances shall be individually responsible for such deposits so received. Article XII, Sec. 12, Const. Blake v. State Savings Bank, 12 Wash. 619; 41 Pac. 909. Mallon v. Hyde, 76 Fed. Rep. 388. Common carriers subject to legislative control Carriers shall connect and exchange passengers and freight. 13. All railroad, canal, and other transportation companies are declared to be common carriers and sub- ject to legislative control. Any association or corpora- tion organized for the purpose, under the laws of this state, shall have the right to connect 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 and 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 rail- road shall begin or terminate at or near any other rail- road, 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 discrimination. Article XII, Sec. 13, Const. Seattle, etc., Ry. v. State, 7 Wash, 150; 34 Pac. 551. Pooling prohibited. 14. No railroad company or other common carrier shall combine or make any contract with the owners of CONSTITUTIONAL PROVISIONS. 37 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 carrying. Article XII, Sec. 14, Const. Discrimination prohibited Short haul Commutation tickets. 15. No discrimination in charges or facilities for transportation shall be made by any railroad or other transportation company between places or persons, or in the facilities for the transportation of the same classes of freight or passengers within this state, or coming from or going to any other state. Persons and property transported over any railroad or by any other trans- portation company, or individual, shall be delivered at any station, landing, or port at charges not exceeding the charges for the transportation of persons and prop- erty of the same class, in the same direction to any more distant station, port, or landing. Excursion and com- mutation tickets may be issued at special rates. Article XII, Sec. 15, Const. Northwestern Warehouse Co. v. Oregon Ry. & Nav. Co., 32 Wash. 218; 73 Pac. 388. Competing railroads shall not consolidate. 16. No railroad corporation shall consolidate its stock, property or franchise with any other railroad cor- poration owning a competing line. Article XII, Sec. 16, Const. 38 CONSTITUTIONAL PROVISIONS. Rolling stock personalty. 17. The rolling stock and other movable property belonging to any railroad company or corporation in this state shall be considered personal property, and shall be liable to taxation and to execution and sale in the same manner as the personal property of individuals and such property shall not be exempted from execution and sale. Article XII, Sec. 17, Const. Cited, Hinchman v. Point Defiance Ry. Co., 14 Wash. 349 ; 44 Pac. 1867. Cited in second appeal, Id., 17 Wash. 399 (401) ; 49 Pac. 1061. Railroad rates Commission. 18. The legislature shall pass laws establishing rea- sonable maximum rates of charges for the transporta- tion 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 rail- roads and other common carriers in the state, and shall enforce such laws by adequate penalties. A railroad and transportation commission may be established and its powers and duties fully defined by law. Article XII, Sec. 18, Const. Telephone companies may construct lines Exchange of mes- sages Eminent domain. 19. 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 receive and transmit each other's CONSTITUTIONAL PROVISIONS. 39 messages without delay or discrimination, and all of such companies are hereby declared to be common car- riers and subject to legislative control. Eailroad cor- porations organized or doing business in this state shall allow telegraph and telephone corporations and com- panies to construct and maintain telegraph lines on and along the rights of way of such railroads and railroad companies, and no railroad 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 companies. The right of eminent domain is hereby extended to all tele- graph and telephone companies. The legislature shall, by general law of uniform operation, provide reasonable regulations to give effect to this section. Article XII, Sec. 19, Const. State ex rel. Tel. Co. v. Spokane, 24 Wash. 53; 63 Pac. 1116. Passes prohibited. 20. No railroad or other transportation company shall grant free passes, or sell tickets or passes at a discount, other than is sold to the public generally, to any member of the legislature, or to any person holding any public office within this state. The legislature shall pass laws to carry this provision into effect. Article XII, Sec. 20, Const. Muldoon v. Seattle Ry. Co., 10 Wash. 311; 38 Pac. 995; 38 Am. St. 901; 22 L. R. A. 794. Express companies Rights on railroads. 21. Eailroad companies now or hereafter organized 40 CONSTITUTIONAL PROVISIONS. or doing business in this state, shall allow all express companies organized or doing business in this state trans- portation over all lines of railroad owned or operated !>y 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, privileges or rates for transportation of men or materials or property car- ried by them or for doing the business of such express companies not allowed to all express companies. Article XXI, Sec. 21, Const. Monopolies and trusts prohibited. 22. 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 trustees or assignees of such stock- holders, or with any copartnership or association of per- sons, or in any manner whatever for the purposes 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 companies, if necessary for that purpose, may declare a forfeiture of their franchise. Article XXI, Sec. 22, Const. LEGISLATIVE PROVISIONS. 23. Formation of, generally. 24. Articles to be filed. 25. List of officers to be filed. 26. Corporations hereafter organized. 27. Articles as evidence. 28. Powers of corporations. 29. Exercised by trustees. 30. Lapse of election of trustees. 31. Quorum. 32. First meeting. 33. Stock transferable. 34. Payment of subscriptions Banks. 35. Fiduciaries may vote stock. 36. Stock may be voted though pledged. 37. Dividends only from profits. 38. Power to issue negotiable paper. 39. Holder of stock as collateral not liable. 40. Record of stockholders Inspection. 41. False entries. 42. Increase or decrease of capital stock. 43. Stockholders ' meeting Vote. 44. Statement to be filed. 45. On dissolution, funds held in trust for creditors. 46. Dissolution. 47. Removal of office. 48. Corporations validated. 42 LEGISLATIVE PROVISIONS. 49. Mining corporations Subscription of stock. 50. Act applies to water companies. 51. Water company may condemn. 52. Consent of town. 53. Powers of foreign corporations. 54. Must file and record papers. 55. Must appoint a resident agent. 56. Penalty. 57. Act does not apply to companies now doing business. 58. County assessor shall report. 59. County auditors report to state auditors. 60. Fees. 61. Agent's liability. 62. County officers' liability. 63. Water power companies may condemn. 64. Preliminary survey. 65. Usual procedure. 66. Corporations prior to 1872 may hold property. 67. Corporations prior to 1862 may make and secure debts. 68. Laborer's lien on property of corporation. 69. Notice of claim. 70. Service of summons. 71. Foreclosure of lien. 72. Payment by receiver. 73. Penalty for person failing to give list. 74. Fee for corporate articles. 75. Supplemental articles. 76. Certified copies. 77. Folio charge. 78. Annual tax Penalty. 79. Certain corporations excepted. 80. Duplication of corporate entitlements An act to pre- vent. LEGISLATIVE PROVISIONS. 43 | 81. Stockholders in corporations An act to protect. 82. Acknowledgement Certificate of An instrument by corporation. 83. Tax How to be paid on corporate stock. 84. Agent of corporation to make list. 85. Payment by corporation. 86. Tax a lien Foreclosure. 87. Who may serve summons. 88. Manner of service. 89. Service of summons on receiver. 90. Service on defunct corporation. 91. Service by publication. 92. Information against usurpation of public functions. 93. Who may file information. 94. Judgment of ouster of franchise or office in corpora- tion Costs. 95. Remedy against usurpers of corporate rights. 96. Alien ownership of lands. 97. Fraternal societies Agent in this state. 98. Non-resident insurance companies to file power of at- torney. 99. Private corporation may be sued where served or where it has an office. 100. Appointment of receiver. Formation of, Generally. 23. Corporations for manufacturing, mining, mill- ing, wharfing and docking, mechanical, banking, mercan- tile, improvement and building purposes, or for the build- ing, equipping and managing water-flumes for the trans- portation of wood and lumber, or for the purpose of building, equipping and running railroads, or construct- ing canals, or irrigating canals, or engaging in any other 44 LEGISLATIVE PROVISIONS. 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 commence business or in- stitute proceedings to condemn land for corporate pur- poses until the whole amount of its capital stock has been subscribed: And Provided further, that the provisions 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 confine their loaning and business operations wholly to the counties of their principal place of busi- ness, respectively, and to the counties adjacent and ad- joining thereto. P. C. 7053. B. C. 4250. Carroll v. Pacific Nat. Bank, 19 Wash. 639; 54 Pac. 32. Seattle Trust Co. v. Pitner, 18 Wash. 401; 51 Pac. 1048. Ramsey v. Tacoma Land Co., 31 Wash. 351; 71 Pac. 1024. Hastings v. Anacortes Packing Co., 29 Wash. 224; 69 Pac. 776. Denny Hotel Co. v. Schram, 6 Wash. 134; 32 Pac. 1002; 36 Am. St. 130. Birge v. Browning, 11 Wash. 249; 39 Pac. 643. Spokane v. Amsterdamsch, etc., 22 Wash. 172; 60 Pac. 141. McKay v. Elwood, 12 Wash. 579; 41 Pac. 919. Brown v. Elwell, 17 Wash. 442; 49 Pac. 1068. Articles to be filed. 24. 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 acknowl- LEGISLATIVE PROVISIONS. 45 edgement 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 prin- cipal place of business of the company is intended to be located, and retain the third in the possession of the cor- poration. Said articles shall state the corporate name of the company, the object for which the same shall be formed, the amount of its capital stock, the time of its existence, not to exceed fifty years, 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 supplemental articles, executed and filed the same as the original articles. P. C. 7054. B. C. 4251. 1 H. C. 1498. Bash v. Culver Gold Mining Co., 7 Wash. 122; 34 Pac. 462. King v. Ilwaco Ry. & Nav. Co., 1 Wash. 127; 23 Pac. 924. List of officers to be filed. 25. Every corporation heretofore organized 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 corporation may elect so to do, file with the coun- ty auditor of the county in which such corporation has its principal place of business, a statement, sworn to by its 46 LEGISLATIVE PROVISIONS. 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 '95, p. 355. P. C. 7055. B. C. 4259. Corporations hereafter organized. 26. Every corporation which shall be hereafter or- ganized under the laws of this state shall, within thirty days after it shall have filed its certificate of incorpora- tion 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 at- tested 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 addresses, and the term of office for which they have been chosen. P. C. 7056. B. C. 4260. Articles as evidence. 27. A copy of any certificate of incorporation filed in pursuance of this act 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 the courts and places as prima facie evidence of the facts therein stated. P. C. 7057. B. C. 4252. 1 H. C. 1499. State v. Pittam, 32 Wash. 137; 72 Pac. 1042. LEGISLATIVE PROVISIONS 47 Spokane & Idaho Lumber Co. v. Loy, 21 Wash. 501; 58 Pac. 672; 60 Pac. 1119. Knapp, Burrell & Co. v. Strand, 4 Wash. 686; 49 Pac. 1063. Brown v. Elwell, 17 Wash. 442; 49 Pac. 1068. Frost v. Ainslie Lumber Co., 3 Wash. 241; 28 Pac. 354. Yakima Nat. Bank v. Knipe, 6 Wash. 348; 33 Pac. 834. Garneau v. Port Blakeley Mill Co., 8 Wash. 467; 36 Pac. 463. Stanford Land Co. v. Steidle, 28 Wash. 72; 68 Pac. 178. Powers of the corporation. 28. When the certificate shall have been filed the persons who shall have signed and acknowledged 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 jurisdiction. 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 compen- sation. 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 hereinafter provided. 48 LEGISLATIVE PROVISIONS 6. To make by-laws not inconsistent with the laws of the congress of the United States, and of this state. 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 incorpora- tion. P. C. 7058; B. C. 4230; 1 H. C. 1500. Denny Hotel Co. v. Schram, 6 Wash. 134 ; 32 Pac. 1002 ; 36 Am. St. 130. Parsons v. Tacoma Smelting, etc., Co., 25 Wash. 492; 65 Pac. 765. Stewart v. Gould, 8 Wash. 367; 36 Pac. 277. Saunders v. United States Marble Co., 25 Wash. 475; 65 Pac. 782. Graton & Knight Mnfg. Co. v. Redelsheimer, 28 Wash. 370; 68 Pac. 879. Blair v. Metropolitan Savings Bank, 27 Wash. 192; 67 Pac. 609. Groveland Imp. Co. v. Farmers' Supply Co., 25 Wash. 344; 65 Pac. 529; 87 Am. St. 755. Anderson v. Wallace Lumber & Mfg. Co., 30 Wash. 147; 70 Pac. 247. Dexter Horton & Co. v. Long, 2 Wash. 435; 27 Pac. 271; 26 Am. St. 867. Seal v. Puget Sound Loan, etc., Co., 5 Wash. 422; 32 Pac. 214. Tootle v. First Nat. Bank, 6 Wash. 181; 33 Pac. 345. Duggan v. Pacific Boom Co., 6 Wash. 593; 34 Pac. 157; 36 Am. St. 182. Carrigan v. Port Crescent Imp. Co., 6 Wash. 590; 34 Pac. 148. Elwell v. Puget Sound, etc., Ry., 7 Wash. 487; 35 Pac. 376. Vincent v. Snoqualmie Mill Co., 7 Wash. 566; 35 Pac. 396. Roberts v. Washington Water Power Co., 19 Wash. 392; 53 Pac. 664. Atlantic Trust Co. v. Behrend, 15 Wash. 466; 46 Pac. 642. Allen v. Olympia L. & P. Co., 13 Wash. 307; 43 Pac. 55. Glover v. Rochester German Ins. Co., 11 Wash. 143; 39 Pac. 380. Miller v. Washington So. Ry. Co., 11 Wash. 414; 39 Pac. 673. Fernald v. Spokane, etc., Co., 31 Wash. 672; 72 Pac. 462. West Seattle L. & I. Co. v. Novelty Mill Co., 31 Wash. 435; 72 Pac. 71. Manhattan Trust Co. v. Seattle Coal & Iron Co., 19 Wash. 493; 53 Pac. 951. McKay v. Elwood, 12 Wash. 579; 41 Pac. 919. Spokane v. Amsterdamsch, etc., 22 Wash. 172; 60 Pac. 141. LEGISLATIVE PROVISIONS 49 Klosterman v. Mason County, etc., R. R. Co., 8 Wash. 281 ; 36 Pac. 13. Washington Mill Co. v. Sprague Lumber Co., 19 Wash. 165; 52 Pac. 1067. Com'l Electric L. & P. Co. v. Tacoma, 17 Wash. 661; 50 Pac. 592. Budd et al. v. Walla Walla Printing & Pub. Co., 2 W. T. 347; 7 Pac. 896. Gilbert v. Seates Mfg. Co., 98 Fed. Rep. 208. Earle v. Seattle L. S. & E. Ry., 56 Fed. Rep. 909. Exercised by trustees. 29. The corporate powers of a corporation shall be exercised by a board of not less than two trustees, 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, re- spectively 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 stockholders, at such time and place, with- in 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 corpora- tion, by their by-laws, limiting such bona fide shareholder 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 stock- holders of any corporation organized under this chapter 4 D 50 LEGISLATIVE PROVISIONS to expel any trustee from office, and to elect another to succeed him. In all cases where a meeting of the stock- holders 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 otherwise, 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: Pro- vided, That service of such process may be made at any time upon any resident trustee of such corporation. P. C. 7059. B. C. 4255. Burns v. Commencement Bay Land, etc., Co., 4 Wash. 558; 30 Pac. 668, 709. Baggot v. Turner, 21 Wash. 339; 58 Pac. 212. Standard Gold Mining Co. v. Byers, 31 Wash. 100; 71 Pac. 766. Spokane v. Amsterdamsch, etc., 22 Wash. 172; 60 Pac. 141. State ex rel. Mitchell v. Horan, 22 Wash. 197; 60 Pac. 135. Budd et al. v. Walla Walla Printing Co., 2 Wash. T. 347; 7 Pac. 896. Lapse of election of trustees. 30. 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 LEGISLATIVE PROVISIONS 51 upon the company until their successors are elected and qualified. p. c. TOGO. B. C. 4256. 1 H. C. 1503. Quorum. 31. A majority of the whole number of trustees shall form a board for the transaction of business, and every decision of a majority of the persons duly assem- bled as a board shall be valid as a corporate act. P. C. 7061. B. C. 4257. 1 H. C. 1504. Parsons v. Tacoma Smelting, etc., Co., 25 Wash. 492; 65 Pac. 765. First meeting. 32. 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 the meeting, which notice shall be delivered person- ally to each trustee, or published at least twenty days in some newspaper 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 near- est thereto in the state. P. C. 7062. B. C. 4258. 1 H. C. 1505. Budd et al. v. Walla Walla Printing Co., 2 Wash. T. 347; 7 Pac. 896. Stock, transferable. 33. The stock of the company shall be deemed per- sonal estate, and shall be transferable in such manner as 52 LEGISLATIVE PROVISIONS shall be prescribed by the by-laws of the company; but no transfer shall be valid except between the parties thereto, until the same shall have been entered upon the books of the company, so as to show the names of the parties, by and to whom transferred, the numbers and designation of the shares and the date of the transfer. P. C. 7063. B. C. 4261. 1 H. C. 1506. Port Townsend National Bank v. Port Townsend Gas & Fuel Co., 6 Wash. 597; 34 Pac. 155. Payment of subscriptions Banks. 34. The stockholders of any corporation formed under this act may in the by-laws of the company pre- scribe the times, manner and amounts in which payments of the sums 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 assess- ment 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 busi- ness in the state. If after such notice has been given any stockholder 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 necessary 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 LEGISLATIVE PROVISIONS 53 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 ex- penses 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 call of the trustees, and it shall be the duty of the trustees of any such 'bank to file with their articles of incorporation their affidavit that three-fifths of the capi- tal stock of such bank has been actually paid in. P. C. 7064. B. C. 4262. 1 H. C. 1507. Cole v. Satsop R. R. Co., 9 Wash. 487; 37 Pac. 700; 43 Am. St. 858. Elderkin v. Peterson, 8 Wash. 674; 36 Pac. 1089. Burch v. Taylor, 1 Wash. 245; 24 Pac. 438. Stewart v. Walla Walla, etc., Pub. Co., 1 Wash. 521; 20 Pac. 605. Z. C. Miles Co. v. Robertson, 5 Wash. 352; 31 Pac. 970. Denny Hotel Co. v. Gilmore, 6 Wash. 152 ; 32 Pac. 1004. Dunlap v. Rauch, 24 Wash. 620; 64 Pac. 807. Troy v. Morse, 22 Wash. 280; 60 Pac. 648. Sligh v. Shelton S. W. Ry. Co., 20 Wash. 16; 54 Pac. 763. Manhattan Trust Co. v. Seattle Coal & Iron Co., 16 Wash. 499; 48 Pae. 333, 737; but see S. C. 19 Wash. 493; 53 Pac. 951. Adamant Mfg. Co. v. Wallace, 16 Wash. 614; 48 Pac. 415. Turner v. Bailey, 12 Wash. 634; 42 Pac. 115. Kroenert v. Johnston, 19 Wash. 96 ; 52 Pac. 605. Dearborn v. Washington Savings Bank, 18 Wash. 8; 50 Pac. 575. 54 LEGISLATIVE PROVISIONS Fiduciaries may vote stock. 35. Whenever any stock is held by a person as ex- ecutor, administrator, guardian or trustee, he shall repre- sent such stock at all meetings of the company and may vote accordingly as a stockholder. P. C. 7065. B. C. 4263. 1 H. C. 1508. Stock may be voted though pledged. 36. Any stockholder may pledge his stock by a de- livery of the certificate or other evidence of his interest, but may, nevertheless, represent the same at all meetings and vote as a stockholder. P. C. 7066. B. C. 4264. 1 H. . 1509. Brown v. Union Savings, etc., Ass'n, 28 Wash. 657 ; 69 Pac. 383. Port Townsend National Bank v. Port Townsend Gas & Fuel Co., 6 Wash. 597; 34 Pac. 155. Dearborn v. Washington Savings Bank, 18 Wash. 8; 50 Pac. 575. Spokane v. Amsterdamsch, etc., 22 Wash. 172; 60 Pac. 141. Dividends only from profits Reduction of stock. 37. It shall not be lawful for the trustees 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 act, 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 LEGISLATIVE PROVISIONS. 55 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 trustees 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 creditors thereof in the event of its dissolution, to the full amount so divided, or reduced, or paid out; provided, that this section shall not be construed to prevent a division and distribution 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. P. C. 7067. B. C. 4265. 1 H. C. 1510. Tait v. Pigott, 32 Wash., 345; 73 Pac. 364. Shuey v. Adair, 24 Wash. 378; 64 Pac. 388. Power to issue negotiable paper. 38. No corporation organized under this act shall, by any implication or construction, be deemed to pos- sess 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 : Provided, that the stockholders of every bank incorporated under this act shall be held individ- ually responsible, equally and ratably, and not one for another, for all contracts, debts and engagements of such association accruing while they remain such stockholders, 56 LEGISLATIVE PROVISIONS. 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 loans and amount upon each class of securities, the names and residences of the shareholders and number of their shares, the trustees or officers for the time being, and any other matters af- fecting 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 author- ized 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 evidences of debt; by receiv- ing deposits, buying and selling exchange, coin and bul- lion, by loaning money on real estate or personal security, to accept and execute all trusts, fiduciary or other- wise 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. Any person or persons who shall be engaged in the business of banking 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 misdemeanor and punished by a fine not ex- ceeding two hundred dollars: Provided further, that the provisions of this section shall not apply to the de- bentures or bonds of any company duly incorporated under the provisions of this act, the payment of which LEGISLATIVE PROVISIONS. 57 debentures or bonds shall be secured by an actual trans- fer of real estate securities for the benefit and protec- tion of purchasers of said debentures or bonds, such se- curities to be at least equal in amount to the par value of such bonds or debentures, and to be first liens upon unincumbered real estate, worth at least twice the amount loaned thereon; provided further, however, that such issue of debentures or bonds shall in no cases exceed ten times the capital stock of the issuing corporation. P. C. 7068. B. C. 4266. 1 H. C. 1511. Kiggins v. Munday, 19 Wash. 233; 52 Pac. 855. Shuey v. Holmes, 22 Wash. 193; 60 Pac. 402. Holder of stock as collateral not liable. 39. No person holding stock as executor, adminis- trator, guardian or trustee, or holding it as collateral security, or in pledge, shall be personally subject to any liability as a stockholder of the company ; but the person pledging 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. P. C. 7069. B. C. 4268. 1 H. C. 1512. 58 LEGISLATIVE PROVISIONS. Record of stockholders Inspection. 40. It shall be the duty of the trustees of every company incorporated under this act, to keep a book containing the names of all persons, alphabetically ar- ranged, who. are or shall be stockholders of the corpora- tion and showing the number of shares of stock held by them respectively, and the time when they became the owners of such shares, which book, during the usual bus- iness hours of the day, on every day excepting Sundays 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 company 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 com- pany, and such book and certified copy shall be presump- tive evidence of the fact therein stated in any action or proceeding against the company or any one or more of the stockholders. P. C. 7070. B. C. 4269. 1 H. C. 1513. False entries. 41. If at any time the clerk or other officer having charge of such book shall make any false entry or neg- lect to make any proper entry therein, or having the charge of any papers of the company shall refuse or neglect to exhibit the same or allow the same to be in- spected, or extracts to be taken therefrom, or to give a LEGISLATIVE PROVISIONS. 59 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 hundred nor more than one thousand dollars and all damages resulting therefrom, to be recov- ered 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 hundred 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. P. C. 7071. B. C. 4270. 1 H. C. 1514. Increase or decrease of capital stock. 42. Any company incorporated under this act, may, by complying with the provisions herein contained, in- crease 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 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 cor- poration shall not be included in ascertaining the debts and liabilities of such trust company or banking corpora- tion' for the purposes of this section : Provided further, that this act shall not relieve such trust company or banking corporation or the stockholders of any such gO LEGISLATIVE PROVISIONS. trust company or banking corporation from liability, al- though contingent, or remote, incurred or entered into by such trust company or banking corporation prior to the reduction of its capital, including liability for depos- its: Provided further, that before any banking cor- poration, or trust company, can reduce its capitalization, a notice, in writing, must be mailed to the last known postoffice address of its depositors, setting forth the fact that the said banking corporation, or trust company, in- tends to decrease its capitalization, showing the amount of its capitalization and the amount to which it intends to decrease the 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 per- sons to whom mailed. Laws '99, p. 174. P. C. 7072. Stockholders' meeting Vote. 43. Whenever it is desired to increase or diminish the amount of capital stock, a meeting of the stockhold- ers shall be called by a notice signed by at least a major- ity 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 news- paper nearest thereto in the state, which notice shall spe- cify 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 shares of the stock shall be necessary to increase or diminish the amount of capital stock. LEGISLATIVE PROVISIONS. P. C. 7073. B. C. 4272. 1 H. C. 1516. Statement to be filed. 44. If at a meeting so called a sufficient number of votes have been given in favor of increasing or dimin- ishing the amount of capital, a certificate of the proceed- ings 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 majority of 'the trustees, and filed as required by section 2422 (Sec. 24), and when so filed the capital stock of the corporation shall be increased or diminished to the amount specified in the certificate. P. C. 7074. B. C. 4273. 1 H. C. 1517. On dissolution Funds held in trust for creditors. 45. Upon the dissolution of any corporation formed under the provisions of this act the trustees 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 the outstand- ing debts, settle all its affairs and divide among the 62 LEGISLATIVE PROVISIONS. stockholders the money and other property that shall re- main after the payment of the debts and necessary ex- penses. P. C. 7075. B. C. 4274. 1 H. C. 1518. Strohl v. Seattle Nat'l Bank, 25 Wash. 28; 64 Pac. 916. Potvin v. Denny Hotel Co., 26 Wash. 309; 66 Pac. 376. Morrison v. Blue Star Nav. Co., 26 Wash. 541; 67 Pac. 244. Deering v. Holcomb, 26 Wash. 588; 67 Pac. 240, 561. Washington Liquor Co. v. Alladio Cafe Co., 28 Wash. 176; 68 Pac. 444. Thompson v. Huron Lumber Co., 4 Wash. 600; 30 Pac. 741; 31 Pac. 25. Leslie v. Wilshire, 6 Wash. 282; 33 Pac. 505. Vincent v. Snoqualmie Mill Co., 7 Wash. 566; 35 Pac. 396. Mayer v. Woolery, 10 Wash. 354 ; 39 Pac. 135. Conover v. Hull, 10 Wash. 673; 39 Pac. 166; 45 Am. St. 810. Brooks v. Skookum Mfg. Co., 9 Wash. 80; 37 Pac. 284. Burrell v. Bennett, 20 Wash. 644 ; 56 Pac. 375. Van Brocklin v. Queen City Printing Co., 19 Wash. 552; 53 Pac. 822. Carroll v. Pacific Nat'l Bank, 19 Wash. 639; 54 Pac. 32. Cook v. Moody, 18 Wash. 114; 50 Pac. 1020; 63 Am. St. 872. Griffith v. Burlingame, 18 Wash. 429; 51 Pac. 1059. Biddle Pur. Co. v. Port Townsend Steel, etc., Co., 16 Wash. 681; 48 Pac. 407. Compton v. Schwabacher Bros. & Co., 15 Wash. 306; 46 Pac. 338. Watterson v. Masterson, 15 Wash. 511; 46 Pac. 1041. Barto v. Nix, 15 Wash. 563; 46 Pac. 1033. Wilson v. Book, 13 Wash. 676; 43 Pac. 939. New York N. E. Bank v. Metropolitan Bank, 28 Wash. 553; 68 Pac. 905. Burch v. Taylor, 1 Wash. 245; 24 Pac. 438. Bramel v. Manring, 18 Wash. 421; 51 Pac. 1050. McRae v. Bowers Dredging Co., 86 Fed. Rep. 344. Dissolution. 46. Any corporation formed under this act 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 LEGISLATIVE PROVISIONS. 63 by a certificate of its proper officers and setting forth that at a meeting of the stockholders called for that pur- pose, it was decided by a vote of two-thirds of all the stockholders to disincorporate and dissolve the corpora- tion. 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 news- paper 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 which it may be postponed by the judge, he shall proceed to consider the application, and if satisfied that the corpora- tion 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. P. C. 7076. B. C. 4275. 1 H. C. 1519. Removal of office. 47. 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, pub- lication 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 54 LEGISLATIVE PROVISIONS. removed. The formation or corporate acts of any cor- poration hereafter formed under this act 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 act such corporation shall cause publication to be made once a week for at least four weeks in the newspaper published nearest the city, town, or locality, and where the principal 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 com- pliance with the provisions of this section in the several cases herein mentioned, the principal place of business of any corporation shall be deemed established, or re- moved at or to any designated city, town or locality, in the state. P. C. 7077. B. C. 4276. 1 H. C. 1520. Corporations validated. 48. All persons who have organized themselves as a corporation under the provisions of this act for pur- poses other than those enumerated in section 2421 (Sec. 23), are hereby declared incorporate bodies, with all the powers the same as they would enjoy had they been incor- porated for the purposes set forth in said section 2421 (Sec. 23). P. C. 7078. Mining corporation Subscription of stock. 49. In incorporations already formed, or which may hereafter be formed under this act, where the amount LEGISLATIVE PROVISIONS. 65 of the capital stock of such corporation consists of the aggregate valuation of the whole number of feet, shares, or interest 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 interest 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 delivery to such corporation of such deed, deed of trust, or other instru- ment; nor shall the validity of any assessment levied by the board of trustees of such corporation be affected by 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 pro- vided in this section : Provided, that the greater portion of said amount of capital stock shall have been so sub- scribed: And, provided further, that this section shall not be so construed as to prohibit the stockholders of any corporation formed, or which may be formed, for mining purposes as provided in this section, from regu- lating the mode of making subscriptions to its capital stock and calling in the same by by-laws or express con- tract. P. C'. 7079. B. C. 4280. 1 H. C. 1558. 5 D 66 LEGISLATIVE PROVISIONS. Act applies to water companies. 50. The provisions of this act shall extend to and apply to all associations already formed under any law of this state, or hereafter to be formed under the provi- sions of this act, for the purpose of supplying any cities or towns in this state, or the inhabitants thereof with pure and fresh water. p. c. 7080. B. C. 4277. 1 H. C. 1521. Water company may condemn. 51. Such water companies incorporated for the pur- poses 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 there- for. The mode of proceeding to obtain possession of such lands for the use of the company, right of way for laying pipes and aqueducts for the use of the company, when the parties cannot agree shall so far as the same be applicable be as prescribed in act at section 5102: (See explanatory note, p. 94.) Provided, that nothing herein contained shall be so construed as to authorize the appropriation of water belonging to any person, unless the owner thereof shall refuse to supply said town or city with water after being requested so to do by the town board or city council. P. C. 7081. B. C. 4278. 1 H. C. 1522. LEGISLATIVE PROVISIONS. 67 Consent of town. 52. Water companies hereafter incorporated under the provisions of this act must first obtain from the cor- porate authorities of a city or town intended to be sup- plied with water, the right or privilege so to do; but nothing herein contained shall affect parties now acting under legislative grants or franchises. P. C. 7082. B. C. 4279. 1 H. C. 1523. Powers of foreign corporations. 53. 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 for 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, pur- chase, hold, mortgage, sell, convey, or otherwise dispose of, in the corporate name all real estate or personal prop- erty necessary or convenient to carry into effect the ob- jects and purposes of its incorporation, and also any in- terest in real estate by mortgage or otherwise do [due] to or loans made by such foreign corporations 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 corpora- tions 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 68 LEGISLATIVE PROVISIONS. second and third sections of this act (sees, 54, 55) : Pro- vided, 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 similiar corporations 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 intentions to become citizens of the United States, shall acquire the ownership of any lands in this state, other than lands containing valuable deposits of minerals, metals, iron, coal or fire clay, and the necessary land for mills and machinery to be used in the develop- ment thereof, and the manufacture of products therefrom, except where acquired under mortgage or in good faith in the ordinary course of justice in the collection of debts; provided further, that no foreign corporation which is hereafter organized, which has among its other powers the business of dealing in real estate, and buying and sell- ing 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 corpora- tion may be organized. P. C. 7214; Laws '90, p. 288. B. C. 4291. 1H. C. 1522. Realty Co. v. Appolonio, 5 Wash. 437; 32 Pac. 219. Oregon Mortgage Co. v. Carstens, 16 Wash. 165; 47 Pac. 421; 35 L. R. A. 841. LEGISLATIVE PROVISIONS. 59 Daniel v. Gold Hill Mining Co., 28 Wash. 411; 68 Pac. 884. La France, etc., Co. v. Mount Vernon, 9 Wash. 142; 37 Pac. 287; 38 Pac. 80; 43 Am St. 827. Dearborn Foundry Co. v. Augustine, 5 Wash. 67; 31 Pac. 327. Must file and record papers. 54. Such corporations shall cause to be filed and recorded in the office of the secretary of state, a certified copy of its charter, articles of incorporation, memoran- dum of association, or certificate of incorporation certi- fied 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, ac- cording to the 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 attesta- tion shall be prima facie proof of the facts therein stated, and of 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 cer- tificate 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 certificate, and to the fact that at the time of making such certificate the person making the same held the office described in the certificate. p. C. 7215. B. C. 4292. (56) 70 LEGISLATIVE PROVISIONS. 1 H. C. 1525. Knapp, Burrell & Co. v. Strand, 4 Wash. 686; 30 Pac. 1063. Huttig Bros. Mfg. Co. v. Denny Hotel Co., 6 Wash. 122; 32 Pac. 1073. Edison, etc., Co. v. Canadian Pac. Nav. Co., 8 Wash. 370; 36 Pac. 260; 40 Am. St. 910; 24 L. R. A. 315. Whitman Agl. Co. v. Strand, 8 Wash. 647; 36 Pac. 682. Must appoint a resident agent. 55. Such corporations shall also constitute and ap- point 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 pres- ident or chief officer of such corporation, and shall be at- tested by its corporate seal, and shall contain the name of the agent, his place of residence and the place where the principal business of such is to be carried on, and shall authorize such agent to accept service of process in any action or suit pertaining to the property, business or transactions of such corporation within this state in which such corporation may be a party. The signature of such president or chief officer, attested by the corpo- rate seal to such written appointment, shall be sufficient proof of the appointment of such agent. Such appoint- ment, 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 corporation shall con- duct or carry on any business within this state, and serv- ice of any process, pleading, notice or other paper shall be taken and held as due service on such corporations. Such corporation may change its agents or its principal LEGISLATIVE PROVISIONS. 71 place of business, from time to time, by filing and record- ing with the secretary of state a new appointment, stat- ing the change of such agent or the change in the prin- cipal place of business. P. C. 7216. B. C. 4293. 1 H. C. 1526. Penalty. 56. Any foreign corporation doing business in this state which shall fail to comply with the provisions of sections 1525 (Sec. 54) and 1526 (Sec. 55) of 1 Hill's An- notated Statutes and Codes of Washington, shall be sub- ject to a penalty of two hundred and fifty dollars, to be recovered in a civil action to be instituted by the attorney general in the name of the State of Washington, upon his being furnished with a sworn statement of facts sufficient to justify such action. Acts '99, p. 100. P. C. 7217. All penalties so recovered shall be paid into the gen- eral fund of the state treasury. Acts '99, p. 100. P. C. 7217a. Act does not apply to companies now doing business. 57. No corporation which has heretofore complied with the laws of the State or Territory of Washington 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 72 LEGISLATIVE PROVISIONS. record or cause to be recorded the certified copies re- quired by this act, or to execute or file for record or cause to be recorded a new appointment of agent as herein re- quired. P. C. 7218. B. C. 4294. 1 H. C. 1527. County assessor shall report. 58. 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 otherwise 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 ad- dress, and shall within ten days from and after the com- pilation of such assessment, make out and deliver to the county auditor of his county, a full and complete list of the names of such corporations doing business in his counties, together with the nature of the business so car- ried on by each of such corporations, and the name of the resident agent of each of such corporations, if any there be, and the place of residence of each of such agents. p. c. 7219. B. C. 4295. 1 H. C. 1528. County auditors report to state auditors. 59. It shall be the duty of each and every county auditor in this state to make out and transmit to the secre- tary of state, within thirty days next preceding the re- ceipt by him from such county assessor, the lists provided LEGISLATIVE PROVISIONS. 73 in section 2482 (Sec. 58), a full, true and concise statement of the names of such corporations, their place of business, the nature of business conducted by such corporations, to- gether with the names of each and every agent of each of such corporations, if any there be, and the places of residence of such agents. p. c. 7220. B. C. 4296. 1 H. C. 1529. Fees. 60. The fees for recording, under the provisions of this act, shall be the same as are allowed by law to the secretary of state, for certified copies of papers on file in his office. p. c. 7221. B. C. 4297. 1 H. C. 1530. Agent's liability. 61. Any agent of any foreign corporation, conduct- ing 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 act, shall be deemed guilty of a misdemeanor, and, upon conviction thereof, shall be punished by a fine not exceeding two hundred dollars, or by imprisonment in the county jail for a term not ex- ceeding three months, or by both such fine and imprison- ment. p. c. 7222. B. C. 4298. 1 H. C. 1531. 74 LEGISLATIVE PROVISIONS. County officers liability. 62. 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 (Sec. 61), and any county auditor failing to make out and trans- mit to the secretary of state a statement, within the time and in the manner provided in section 2482 (Sec. 58), shall be deemed guilty of a misdemeanor, and, upon con- viction thereof, shall be punished by a fine not exceeding three hundred dollars. P. C. 7223. B. C. 4299. 1 H. C. 1532. Water power companies may condemn. 63. 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 in- corporated 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 struc- tures. Laws '01, p. 299. P. C. 5155. Preliminary survey. 64. Every corporation that is now or that may here- after be incorporated under the laws of this state or of LEGISLATIVE PROVISIONS. 75 any other state or territory of the United States and do- ing 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 pur- pose of examining, locating and surveying such ditches, flumes, pipe lines, tunnels or any other means for the utilization of water power, doing no unnecessary damage thereby. P. C. 5156. The usual procedure. 65. Every such corporation shall have the right, subject to the proviso contained in section 1 (Sec. 63) hereof, to appropriate real estate or other property 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. P. C. 5157. Corporations prior to 1872 may hold property. 66. That all private corporations incorporated by the legislative assembly of the Territory of Washington prior to the 10th day of June, 1872, other than for relig- ious purposes, be and they are hereby authorized to hold, acquire, own and possess real and personal property to the extent and to such an amount as to said corporations 76 LEGISLATIVE PROVISIONS. may seem meet; anything in the acts incorporating said private corporations to the contrary notwithstanding. P. C. 7108. B. C. 4254. 1 H. C. 1501. Corporations prior to 1862 may make and secure debts. 67. That all private corporations incorporated by the legislative assembly of the Territory of Washington 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, mortgages or other evidences of indebtedness and to secure payment of the same by mortgage, trust deed or otherwise incumbering any real estate or personal property owned by said corporation. Said corporations shall have the power to buy, sell or otherwise deal in notes, bonds and stock of other corporations, and shall have power through their duly authorized officers to exe- cute any and all instruments necessary to carry out the powers conferred upon said corporations by the provi- sions of this act. P. C. 7109. B. C. 4267. Laborer's lien on property of corporation Priorities. 68. Every person performing labor for any person, company or corporation, in the operation of any railway, canal or transportation company, or any water, mining or manufacturing company, sawmill, lumber or timber company, shall have a prior lien on the franchise, earn- ings, and on all the real and personal property of said LEGISLATIVE PROVISIONS. 77 person, company or corporation, which is used in the operation of its business to the extent of the moneys due him from such person, company or corporation, operat- ing said franchise or business, for labor performed with- in six months next preceding the filing of this claim there- for, as hereinafter provided; and no mortgage, deed of trust or conveyance shall defeat or take precedence over said lien. P. C. 6133. B. C. 5919. Fitch v. Applegate, 24 Wash. 25; 64 Pac. 147. Blumauer v. Clock, 24 Wash. 596; 64 Pac. 844. In re Lawler, 110 Fed. 135. Notice of claim. 69. No person shall be entitled to the lien given by the preceding section, unless he shall, within ninety days after he has ceased to perform labor for such person, company or corporation, filed for record with the county auditor of the county in which said labor was performed, or in which is located the principal office of such person, company or corporation in this state, a notice of claim, containing a statement of his demand, after deducting all just credits and offsets, the name of the person, com- pany or corporation, and the name of the person or per- sons employing claimant, if known, with the statement of the terms and conditions of his contract, if any, and the time he commenced the employment, and the date of his last service, and shall serve a copy thereof on said per- son, company or corporation within thirty days after the same is so filed for record. B. c. 5920. P. C. 6134. 78 LEGISLATIVE PROVISIONS. Service as in summons. 70. Service of notice, as herein required, may be made in the same manner as summons in civil actions. P. C. 6135. B. C. 5921. Foreclosure of lien. 71. Any such lien may be enforced within the same time and in the same manner as mechanics ' liens are fore- closed. P. C. 6136. B. C. 5922. Payment by receiver. 72. Whenever a receiver or assignee is appointed for any person, company or corporation, the court shall require such receiver or assignee to pay all claims for which a lien could be filed under this act, before the pay- ment of any other debts or claims other than operating expenses. P. C. 6137. B. C. 5923. / Any person failing to give list Penalty. 73. If any person or corporation shall give a false or fraudulent list, schedule or statement required by this act, or shall fail or refuse to deliver to the assessor, when called on for that purpose, a list of the taxable personal property which he is required to list under this act, he or it shall be liable to a penalty of not less than ten dollars nor more than two thousand dollars, to be recovered in any proper form of action in the name of the State of LEGISLATIVE PROVISIONS. 79 Washington on the complaint of any person, such fine, when collected, to be paid into the county treasury to the credit of the general fund. P. C. 8633. B. C. 1697. Fee for corporate articles. 74. Every corporation incorporated under the laws of this state, or of any state or territory of the United States, or of any foreign state, having a capital stock divided into shares, shall pay to the secretary of the state, for the use of the state, the following fees : Every corporation having a capital stock, $10 ; the said fee to be due and payable upon the filing of the articles of incor- poration in the officfe of the secretary of state, and no such corporation shall have or exercise any corporate powers, or be permitted to do any business in this state, until the said fees shall have been paid, and the secretary of state shall not file any articles of incorporation or their equivalent or give any certificate thereof, until the said fees shall have been paid. P. C. 8467. B. C. 4285. Supplemental articles. 75. Every corporation desiring to file articles amend- atory or supplemental, or certificate of increase or de- crease of capital stock, shall pay to the secretary of state, for the use of the state, the fee of ten dollars. P. C. 8468. B. C. 4286. 80 LEGISLATIVE PROVISIONS. Certified copies. 76. The secretary of state shall charge for making a copy of any law, resolution, record or other document or paper on file in his office fifteen cents per folio ; pro- vided, no copy shall be furnished by the secretary of state unless under seal of the state, and shall charge for any certificate under seal of state, two dollars. Laws 1903, p. 297. Note. This fee bill repeals sec. 8469 P. C. or sec. 4287 B. C. Folio charge. 77. The secretary of state shall charge for recording articles of incorporation fifteen cents per folio. Laws 1903, p. 297. This section repeals law heretofore in effect found in sec. 8470 P. C. or sec. 4288 B. C. Annual tax Penalty. 78. 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 sec- retary 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, ten 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 thereafter, and before the first day of January next following, shall pay to the sec- retary of state, for the use of the state, in addition to the LEGISLATIVE PROVISIONS. 81 said license fee, the following further fee, as a penalty for such failure : Every corporation, two dollars and fif- ty cents. Every corporation failing to pay the said li- cense fees and penalties on or before the thirty-first day of December of any year shall forfeit the sum of five dollars for every day which it shall continue to do busi- ness as a corporation after said date, to be recovered in an action in any court of competent jurisdiction. P. C. 8471. B. C. 4289. State ex rel. Sterling Timber Co. v. Jenkins, 22 Wash. 494 ; 61 Pac. 141. Annual license fee of ten dollars merely an excise upon right of cor- poration to exist and does not supersede the right to tax the franchise of the corporation. Chehalis Boom Co. v. Chehalis County, 24 Wash. 135; 63 Pac. 1123. Certain corporations excepted. 79. This act shall not apply to corporations not for pecuniary profit, or to corporations organized for reli- gious, social, fraternal, charitable, benevolent or educa- tional purposes, nor to such insurance companies as are required to pay an annual license under the insurance laws of this state. P. C. 8472. B. C. 4290. An act to prevent the duplication of corporate entitlements. 80. Private corporations may be formed in the man- ner prescribed by the laws of this state governing cor- porations for any purpose for which individuals may lawfully associate. No corporation shall take the name of a corporation theretofore [heretofore] organized un- der the laws of this state, nor of any foreign corporation 6 D 82 LEGISLATIVE PROVISIONS. having complied 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 incorporation of any associattion or corporation violating the provisions of this act. Laws 1903, p. 124. An act to protect stockholders in corporations. 81. Any superintendent, director, secretary, manag- er, agent, or other officer of any corporation formed or existing under the laws of this state, or transacting busi- ness in this state, or any person pretending or holding himself out as such superintendent, director, secretary, manager, agent or other officer, who shall wilfully sub- scribe, sign, indorse, verify or otherwise assent to the publication, either generally or privately, to the stock- holders or to other persons dealing with such corporation, or its stock, any wilfully untrue and fraudulently exag- gerated report, prospectus, account, statement of oper- ations, values, business profits, expenditures, or pros- pects, 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 corporation a greater value than they really possess, or with the intention 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 convic- tion thereof, shall be punished by imprisonment in the penitentiary, not less than one or more than five years, or in the county jail not more than one year, or by a fine not exceeding two thousand dollars, or both. Laws 1903, p. 141. LEGISLATIVE PROVISIONS. 33 Acknowledgment, certificate of. 82. Certificates of acknowledgment of" an instru- ment acknowledged by a corporation substantially in the following form, shall be sufficient : State of "j L ss. County of J On this day of , A. D. 190 , before me personally appeared , to me known to be the (president, 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 acknowledged the said instru- ment 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 writ- ten. (Signature and Title of Officer.) Laws 1903, p. 245. The fact that a notary public is an officer in a corpora- tion to which a mortgage is given would not bar him from, taking the acknowledgment. Keene Guaranty Savings Bank v. Lawrence, 32 Wash. 572; 73 Pac. 680. How tax to be paid on corporate stock. 83. If a foreign executor, administrator or trustee shall assign any corporate stock or obligations in this Acknowledgment, certificate of. g4 LEGISLATIVE PROVISIONS. state standing in the name of a decedent, or in trust for a decedent, liable to such tax, the tax shall be paid to the state treasurer on or before the transfer thereof; otherwise, the corporation permitting its stock to be so transferred on its books shall be liable to pay such tax, and it is the duty of the state treasurer to enforce the payment thereof. P. C. 8755. Laws 1901, p. 73. Agent of corporation to make list. 84. The president, secretary or principal accounting officer or agent of any company or association, whether incorporated or unincorporated, except as otherwise pro- vided for in this act, shall make out and deliver to the assessor a sworn statement of its property, setting forth particularly: First, the name and location of the com- pany or association; second, the real property of the company or association, and where situated; third, the nature and value of its personal property. The real and personal property of such company or association shall be assessed the same as other real and personal property. In all cases of failure or refusal of any person, officer, company or association to make such return or statement, it shall be the duty of the assessor to make such return or statement from the best information he can obtain. P. C. 8612. B. C. 1676. Ridpath v. Spokane County, 23 Wash. 436; 63 Pac. 261. Lewistown Water Co. v. Asotin County, 24 Wash. 371; 64 Pac. 544. Pacific Nat. Bank v. Pierce County, 20 Wash. 675; 56 Pac. 936. LEGISLATIVE PROVISIONS. 35 Payment by corporation. 85. Every such bank or other corporation shall pay to the collector, or other person authorized to collect the taxes of the state, county, city or town in which the same is located, at the time in each year when other taxes as- sessed in the said state, county, city or town become due, the amount of the tax so assessed in each year upon the shares in such bank or other corporation. If such tax is not so paid, the said bank or other corporation shall be liable for the same. P. C. 8614. B. C. 1678. Tax a lien Foreclosure. 86. The shares of such banks or other corporations shall be subject to the tax paid thereon by the corporation or by the officers thereof, and the corporation and officers thereof shall have a lien on all the shares in such bank or other corporation and on all the rights and property of the shareholders in the corporate property for the pay- ment of said taxes, which lien may be foreclosed by a sim- ilar proceeding as under chattel mortgages, and the said tax, with interest thereon at the rate of fifteen per cent per annum from the day when the tax became due, to- gether with a reasonable attorney's fee, may be recov- ered as in a civil action brought by the treasurer of such county. P. C. 8615. B. C. 1679. Who may serve summons. 87. In all cases, except when service is made by pub- lication, as hereinafter provided, the summons shall be 86 LEGISLATIVE PROVISIONS. served by the sheriff of the county wherein the service is made or by his deputy, or by any person over twenty-one years of age, who is competent to be a witness in the ac- tion, other than the plaintiff. p. c. 331. B. C. 4874. Washington Mill Co. v. Marks, 27 Wash. 170; 67 Pac. 55. Manner of service. 88. The summons shall be served by delivering a copy thereof as follows : If against a railroad corporation, to any station, freight, ticket or other agent thereof within the state. If against a corporation owning or operating sleeping cars, or hotel cars, to any person having charge of any of its cars or any agent found within the state. If against an insurance company, to any agent au- thorized by such company to solicit insurance within this state. If against a company or corporation doing any express business, to any agent authorized by said company or cor- poration to receive and deliver express matters and collect pay therefor within this state. If the suit be against a company or corporation other than those designated in the preceding subdivisions of this section, to the president or other head of the com- pany or corporation, secretary, cashier or managing agent thereof. If the suit be against a foreign corporation or non- resident joint stock company or association doing busi- ness within this state, to any agent, cashier or secretary thereof. LEGISLATIVE PROVISIONS. 87 P. C. 332. B. C. 4875. Osborne v. Columbia County Farmers Alliance Corporation, 9 Wash. 666; 38 Pac. 160. Sievers v. Dalles, etc., Co., 24 Wash. 302; 64 Pac. 539. Zindorf v. Western American Co., 26 Wash. 695; 67 Pac. 355. Carstens & Earles v. Leidigh, etc., Lumber Co., 18 Wash. 450 ; 51 Pac. 1051; 63 Am. St. 906; 39 L. R. A. 548. Paxton v. Daniel, 1 Wash. 19; 23 Pac. 441. Sayward v. Carlson, 1 Wash. 29; 23 Pac. 830. Service of summons on receiver. 89. That whenever any domestic or foreign corpo- ration, which has been doing business in this state, has been placed in the hands of a receiver and the receiver is in possession of any of the property or assets of such corporation service of all process upon such corporation may be made upon the receiver thereof. p. c. 333. B. C. 4875. Service on defunct domestic corporation. 90. Whenever any corporation, created by the laws of this state, or late Territory of Washington, does not have an officer in this state upon whom legal service of process can be made, an action or proceeding against such corporation may be commenced in any county where the cause of action may arise, or said corporation may have property, and service may be made upon such cor- poration by depositing a copy of the summons, writ, or other process, in the office of the secretary of state, which shall be taken, deemed and treated as personal service on such corporation: Provided, a copy of said summons, writ, or other process, shall be deposited in the postoffice, postage paid, directed to the secretary or other proper 88 LEGISLATIVE PROVISIONS. officer of such corporation, at the place where the main business of such corporation is transacted, when such place of business is known to the plaintiff, and be pub- lished at least once a week for six weeks in some news- paper printed and published at the seat of government of this state, before such service shall be deemed perfect. p. c. 334. B. C. 4876. Service by publication. 91. When the deefndant cannot be found within the state, of which the return of the sheriff of the county in which the action is brought, that the defendant cannot be found in the county, is prima facie evidence, and upon the filing of an affidavit of the plaintiff, his agent or at- torney, with the clerk of the court, stating that he believes that the defendant is not a resident of the state, or cannot be found therein, and that he has deposited a copy of the summons and complaint in the postoffice, directed to the defendant at his place of residence, unless it is stated in the affidavit that such residence is not known to the affi- ant, and stating the existence of one of the cases herein- after specified, the service may be made by publication of the summons, by the plaintiff or his attorney in either of the following cases : ********** When the defendant is a foreign corporation and has property within the state. When the action is against any corporation, whether private or municipal, organized under the laws of this state and the proper officers on whom to make service do not exist or cannot be found. P. C. 335. B. C. 4877. LEGISLATIVE PROVISIONS. 39 Information against usurpation of public functions. 92. An information may be filed against any person or corporation in the following cases : 1. When any person shall usurp, intrude upon, or un- lawfully hold or exercise any public office or franchise within the state, or any office in any corporation created by the authority of the state. #*##*####* 3. When several persons claim to be entitled to the same office or franchise, one information may be filed against any or all such persons in order to try their re- spective rights to the office or franchise. 4. When any association or number of persons shall act within this sta^e as a corporation, without being legally incorporated. 5. Or where any corporation does, or omits acts which amount to a surrender or a forfeiture of their rights and privileges as a corporation, or where they exercise powers not conferred by law. P. C. 1434. B. C. 5780. 2 H. C. 679. State ex rel. Atty. Genl. v. Seattle Gas Co., 28 Wash. 488; 68 Pac. 946. State ex rel .Mitchell v. Horan, 22 Wash. 197; 60 Pac. 135. Cited in Standard Gold Mining Co. v. Byers, 31 Wash. 100; 71 Pac. 767. Who may file information. 93. The information may be filed by the prosecuting attorney in the superior court of the proper county, upon his own relation, whenever he shall deem it his duty to do so, or shall be directed by the court or other competent 90 LEGISLATIVE PROVISIONS. authority, or by any other person on his own relation, whenever he claims an interest in the office, franchise or corporation which is the subject of the information. P. C. 1435. B. C. 5781. 2 H. C. 680. Judgment of ouster of franchise or office in corporations Costs. 94. Whenever any defendant shall be found guilty of any usurpation of or intrusion into, or unlawfully ex- ercising any office or franchise within this state, or any office in any corporation created by the authority of this state, or when any public officer thus charged shall be found guilty of having done or suffered any act which by the provisions of the law shall work a forfeiture of his office, or when any association or number of persons shall be found guilty of having acted as a corporation without having been legally incorporated, the court shall give judgment of ouster against the defendant or defend- ants, and exclude him or them from the office, franchise or corporate rights, and in case of corporations that the same shall be dissolved, and the court shall adjudge costs in favor of the plaintiff. P. C. 1443. B. C. 5789. 2 H. C. 688. Remedy against usurpers of corporate rights. 95. If judgment be rendered against any corpora- tion or against any persons claiming to be a corpo- ration, the court may cause the costs to be collected by LEGISLATIVE PROVISIONS. 91 executions against the persons claiming to be a corpora- tion or by attachment against the directors or other of- ficers of the corporation, and shall restrain the corpo- ration, appoint a receiver of its property and effects, take an account and make a distribution thereof among the creditors. The prosecuting attorney shall immediately institute proceedings for that purpose. P. C. 1444. B. C. 5790. 2 H. C. 689. State ex rel. v. Superior Court, 15 Wash. 668, 701; 47 Pac. 31, 1103; 55 Am. St. 907; 37 L. R. A. 111. Alien ownership of lands. 96. The ownership of lands by aliens other than those who in good faith have declared their intention to become citizens of the United States is prohibited in this state, except where acquired by inheritance under mort- gage or in good faith in the ordinary course of justice in the collection of debts; and all conveyances of lands hereafter made to any alien directly or in trust for such alien shall be void: Provided, that the provisions of this section shall not apply to lands containing valuable deposits of minerals, metals, iron, coal, or fire clay, and the necessary land for mills and machinery to be used in the development thereof and the manufacture of the pro- ducts therefrom. Every corporation, the majority of the capital stock of which is owned by aliens, shall be con- sidered an alien for the purposes of this prohibition. Art. II, Sec. 33, Const. (Omitted by mistake from constitutional provisions.) State ex rel. Winston v. Morrison, 18 Wash. 664; 52 Pac. 228. 92 LEGISLATIVE PROVISIONS. State ex rel. Winston v. Hudson Land Co., 19 Wash. 85; 52 Pac. 574; 40 L. R. A. 430. Oregon Mortgage Co. v. Carstens, 16 Wash. 165; 47 Pac. 421; 35 L. R. A. 841. Goon Gan v. Richardson, 16 Wash. 373; 47 Pac. 762. Brigham v. Kenyon, 76 Fed. Rep. 30. Fraternal societies Agent in this state. 97. Each such association now doing business or hereafter admitted to do business within this state and not having its principal office within this state, and not being organized under the laws of this state, shall ap- point, in writing, the commissioner of insurance and his successors in office to be its true and lawful attorney, upon whom all lawful process in any action or proceed- ing against it must be served, and in such writing shall agree that any lawful process against it which is served on said attorney shall be of the same legal force and validity as if served upon the association, and that the authority shall continue in force so long as any liability remains outstanding in this state. Copies of such cer- tificate, certified by said commissioner of insurance, shall be deemed sufficient evidence thereof, and shall be ad- mitted in evidence with the same force and effct as the original thereof might be admitted. Service upon such attorney shall be deemed sufficient service upon such asso- ciation. When legal process against any such association is served upon said commissioner of insurance, he shall im- mediately notify the association of such service by let- ter, prepaid and directed to its secretary or correspond- ing officer, and shall within two days after such service forward in the same manner a copy of the process served on him to such officer. The plaintiff in such process so LEGISLATIVE PROVISIONS. 93 served shall pay to the commissioner of insurance, at the time of such service, a fee of $3 which shall be recovered by him as part of the taxable costs, if he prevails in the suit. The commissioner of insurance shall keep a record of all processes served upon him, which record shall show the day and hour when such service was made. P. C. 7194. Non-resident insurance companies to file power of attorney. 98. No insurance company, corporation or associa- tion organized outside of this state shall be permitted to do business in this state until such organization shall have filed with the commissioner a power of attorney which shall authorize a citizen and resident of this state to make and accept service in any proceedings in any court in this state, or the United States herein. If any attorney of any insurance organization, appointed under the provisions of this act, shall remove from the state, or become disqualified in any manner from accepting serv- ice, and if any citizen or resident of this state shall have any claim by virtue of any insurance policy issued by any company or organization not represented by attor- ney in this state, valid service may be made on such company or organization, and the principal agent for the Pacific Coast, enclosing a copy of the service by mail, postpaid : And provided further, that in such case no proceeding shall be had within forty days after such service on the commissioner. P. C. 5631. B. C. 2818. 94 LEGISLATIVE PROVISIONS. Private corporations may be sued where served or where it has office. 99. An action against a corporation may be brought in any county where the corporation has an office for the transaction of business, or any person resides upon whom process may be served against such corporation, unless otherwise provided in this code. p. c. 3io. B. C. 4854. 2 H. C. 160. Appointment of receiver. 100. A receiver may be appointed by the court in the following cases : ********** Where a corporation has been dissolved, or is insol- vent, or is in imminent danger of insolvency, or has for- feited its corporate rights. p. c. 575. B. C. 5456. 2 H. C. 326. EXPLANATORY NOTE. Some important statutes, by reason of the fact that they are not of general interest, have been omitted. Among the most important of these are the statutes on eminent domain, Sees. 5102-5109 P. C. Also, Sees. 7088-7107 P. C. See, also, Sees. 8613, 8615, 8616, 8617 P. C. Sec. 8613 P. C. amended by Laws 1903, P. 123. INDEX TO PART I. CONSTITUTIONAL AND LEGISLATIVE PROVISIONS. (References are to sections.) Agent. Corporate property, must furnish list of, 84. Foreign corporation must appoint a resident, 55. Liability of, 61. Alienation of franchise, 8. Amendments to articles of incorporation, 24. Articles of incorporation. Amendment to, 24. Fee for filing supplemental, 75. Fee for furnishing certified copies of, 76. Evidence of, 27. Filing of, 24. Recording fees foreign corporation, 60. Recording fees supplemental articles, 75. 96 INDEX TO PART I. Assessor. County, shall report for taxation property of foreign cor- poration, 58. Failure to make list of taxable property of foreign corpora- tion, 62. Auditor of county. Certificate of, prima facie evidence of incorporation, 27. Report to state officer, 59. B Bank. Capital stock, amount of, 34. Officers, when personally liable, 12. Penalty for person purporting to conduct business of, 38. Report to state auditor, 38. Shares in, 34. Benevolent purposes. Corporations organized for, excepted from taxes, 79. Books. Corporation, transfer of stock to be registered on, 33. Inspection, shall be open to, 40. Trustees to keep, 40. Bonds. Limitations on issuance of stock and, 6. By-laws. Corporations may make, 28. INDEX TO PART I. 97 Capital stock. Change of, 6. Division and distribution of, 37. Increase or decrease of, 42,43,44. Reduction of, 37. Carriers. Combination of common, prohibited, 14. Passengers and freight, shall connect and exchange, 13. Certificate. Acknowledgment of corporate instruments, 82. Copy of, as evidence of incorporation, 27. Certified copies of articles. Fee for furnishing, 76. Charitable corporations. Exempt from annual license fee, 79. Charters. Antedating constitution and not acted upon, without force, 2. Forfeiture of, shall not be remitted, 3. Claim. Notice of against corporation, 69. Collateral. Holder of stock as, not personally liable, 39. Combinations. Incorporated companies, partnerships or associations, pro- hibited, 22. Railroad companies and common carriers prohibited from entering into, 14. 7 D 98 INDEX TO PART I. Common carriers. Combinations, prohibited from entering, 14. Legislative control, subject to, 13. Passengers and freight, shall connect and exchange, 13. Commission, railroad, 18. Commutation tickets, 15 Companies now doing business. Act of 1890, p. 290, does not apply to, 57. Condemnation proceedings. Water power company's right of, to, 63. Water power company, by, 51. Consolidation. (Of) railroad company with competing line prohibited, 16. Corporate powers. By whom exercised, 29. Corporate property. Eminent domain, liable to, 10. Corporate stock. Tax on, how paid, 83. Corporations. Certain corporations validated, 48. County auditors must report for taxation, 59. May be sued where it has office for the transaction of busi- ness, 99. Definition of, 5. Formation of generally, 23. Prior to 1862. 67. Prior to 1872, 66. Taxation, exempted from, what, 79. INDEX TO PART I. 99 County assessor. Corporations, shall report, for taxation, 58. County officers, liability. Foreign corporations, failure to make list of, 62. Creation of corporations. Method of, 1. Special act, cannot be by, 1. Creditors of corporation. Funds of corporation, on dissolution, held in trust for, 45. D Deposits. Bank officer receiving after knowledge of insolvency, cre- ates personal liability, 12. Discrimination. In charges or facilities prohibited, 15. Dissolution of corporations, 46. Funds held in trust for creditors on, 45. Receiver, court may appoint, 100. Dividends. From profits only, 37. Duplication of corporate entitlements, 80. Educational purposes. Corporations organized for, excepted from taxation, 79. 100 INDEX TO PART I. Election of trustees. Lapse of, 30. Eminent domain, Corporate property liable to by the state, 10. Usual procedure by corporations in cases of, 65. Entitlements. Duplication of corporate, prohibited, 80. Exchange of messages by telegraph and telephone companies, 19. Excursion tickets, 15. Executor. Collateral stock, may vote, 39. Fiduciary, may vote stock held as, 35. Express companies. Rights on railroads, 21. False entry. Misdemeanor for clerk or officer of corporation to make, 41. Penalty for clerk or officer of corporation to make, 41. Fees. Certified copies, for furnishing, 76. Corporate articles, 74. License, 78. Recording articles of foreign corporation, 60. Recording supplemental articles, 75. Recording articles, 77 Fiduciaries. May vote stock, 35. INDEX TO PART I. Filing articles, 24. Folio charge, 77. Foreclosure of lien, 71. Foreign corporation. Cannot do business on more favorable conditions than do- mestic corporations, 7, 53. Conditions precedent to right to do business, 53. Penalty clause act 1899, p. 100, 56. Recording fees for, 60. Forfeiture of any franchise or charter. Shall not be remitted, 3. Forfeiture of corporate rights, court may appoint receiver on, 100. Formation of corporations. Generally, 23. Franchise. Alienation of, burdens follow on, 8. Forfeiture of, shall not be remitted, 3. Legislature shall not extend any, 3. Fraternal societies. Corporation organized for, exempted from taxation, 79. Freight. Carriers shall connect and exchange passengers and, 13. Funds. On dissolution, held in trust for creditors, 45. General laws. Corporations must be formed under, 1. 102 INDEX TO PART I. Guardian. Not liable for stock held as collateral, 39. Person holding stock as, may vote, 35. I Indebtedness. Fictitious, shall be void, 6. Inspection of record of stockholders, 40. Insolvency, court may appoint receiver in cases of, 100. Instruments. Acknowledgment of corporate, 82. J Joint-stock companies, 5. Laborer's lien. On property of corporation, 68. Lapse of election. Of trustee, 30. Laws relating to corporations. May be altered, amended or repealed, 1. Lease of franchise, 8. Legislative control. Common carriers subject to, 13. INDEX TO PART I. 103 Legislature. Passes to members of, prohibited, 20. License fee, 78. Lien. Foreclosure of, 71. Laborer's, on property of corporation, 68. Notice of claim, 69. Tax on shares, a, 86. Limitation of existence of corporation, 24. Limitations of issuance of stock and bonds, 6. List of corporate property. Agent to make, 84. M Mining corporations. Subscriptions to stock of, 49. Messages. Telephone and telegraph companies shall exchange, 19. Money. Corporations shall not issue, 11. Monopolies and trusts. Prohibition of, 22. Municipality. Consent of, must be obtained by water company, 52. N Negotiable paper. Power to issue, 38. 104 INDEX TO PART I. Notice. Banking or trust company must give, for increase or de- crease of stock, 42. Claim of lien, must give for, 69. Corporation removing office, must give, 47. Dissolution of corporation, must give on, 46. First meeting of trustees, 32. Increase or decrease of capital stock, 6, 43. Trustees expulsion of, 29. o Office. Removal of, 47. Officers. List of, to be filed, 25. Passengers and freight. Carriers of, 13. Passes. Prohibition of, 20. Payment. Lien claims by receiver, 72. . . Subscriptions, 34. Tax by corporation, 85. Penalty. Annual tax, failure to pay, 78. Failure of foreign corporations to comply with law, 56. Tax list, person failing to give, 73. INDEX TO PART I. 105 Pledged stock. May be voted, 36. Pooling. Prohibition of, 14. Powers of corporations. How exercised, 29. Privileges, special or exclusive. Not valid unless acted upon at the time of the adoption of constitution, 2. Profits. Dividends only from, 37. Property of corporation. Agent of corporation to make list of for purposes of taxa- tion, 84. Public use. Corporate property liable to eminent domain by state for, 10. Q Quorum. Board of trustees, 31. R Railroad. Combination of companies prohibited, 14. Commission, 18. Competing, shall not consolidate, 16. Express companies, rights on, 21. Rates, 18. 106 INDEX TO PART I. Receiver. Court may appoint, 100. Payment by, 72. Service of summons on, 89. Record of stockholders. Inspection of, stockholders have right of, 40. Trustees must keep, 40. Record papers. Foreign corporations must file and, 54. Reduction of stock, 37. Religious purposes. Corporations organized for, excepted from fees, 79. Removal of office, 47. Resident agent. Foreign corporation must appoint, 55. Rolling stock. Is personalty, 17. Seal. Corporation may make and use, 28. Secretary of state. Certificate of, as to articles of incorporation, prima facie evidence, 27. Fees of, 76, 77. Service of process. Corporation may be sued where person resides upon whom service may be made, 99. Corporation may be sued where it has an office for busi- ness, 99. Defunct domestic corporation, on, 90. INDEX TO PART I. Foreign corporation, how may be made on, 55, 91. Receiver of corporation, when may be made on, 89. Service of lien notice same as in summons, 70. Short haul. Not greater charge than longer haul, 15. Social purposes. Corporations organized for, exempt from taxation, 79. Special acts. Corporations shall not be created by, 1. State auditors. County auditors to make report of corporations to, 59. Banks must report to, 38. State. Corporate property liable to eminent domain by, 10. Credit, shall not loan, 9. Statutory provisions. Failure of foreign corporation to comply with, 56. Stock. Capital, change of, 6. Fiduciary may vote, 35. Holder of, as collateral, not liable, 39. Increase or decrease of capital, 42. Increase of, how may be effected, 6. Limitations on issuance of, 6. Mining corporations, subscriptions for, 49. Pledged, may be voted, 36. Subscribed before commencing business, 23. Tax, how to be paid on corporate, 83. Tax on, payment of by corporation, 85. 108 INDEX TO PAHT I. Stockholders. Liability of, 38. Meeting of, to increase or decrease stock, 43. Protection of, from fraudulent representations, 81. Record of, 40. Voting by, 29. Subscriptions. Bank, payment, 34. Mining corporation, 49. Supplemental articles. Fee for filing, 75. Survey, preliminary. In eminent domain, 64. Tax. Annual, penalty for neglect to pay, 78. Corporate stock, how tax to be paid on, 78. Foreclosure on, for, 86. Payment by bank, lien on share of, 86. Payment by corporation, 85. Telegraph companies. Construction of lines, 19. Eminent domain, 19. Exchange of messages, 19. Tickets. Commutation, 15. Titles. Prevention of duplication of, 80. INDEX TO PART I. Town. Consent must be secured by water companies, 52. Transfer of stock, 33. Transportation commission. May be established by state, 18. Trustees of corporation. Corporate powers exercised by, 29. Election, lapse of, 30. Expulsion of, 32. Expulsion, notice necessary before, 29. First meeting of, 32. Names of, 24. Notice necessary to expel, 29. Number of, 13, 29. Oath, must take, 29. Quorum of, 31. Service of process on, 29. Stock, when liable for reduction of, 37. Stockholder, must be, 29. Time for which first serve, 24. Vacancy, how filled, 29. Trusts prohibited, monopolies and, 22. Vote. Increase or decrease of capital stock, by, 43. Stockholders' meeting, 29. INDEX TO PART I. Water companies. Consent of town prerequisite, 52. Preliminary survey for, 64. PART II. THE LAW OF PRIVATE CORPORATIONS. CHAPTER I. OBJECTS AND ADVANTAGES OF INCORPORATION. Objects and advantages of incorporation. 101. To obtain capital. 102. To obtain unity of action. 103. To avoid casualty. 104. To avoid liability. 105. To expedite business. To obtain capital. 101. The large capital required for modern busi- ness enterprises demands co-operation on the part of the owners of capital. Corporations, as we have them, are a result of what has proved to be the most satisfactory method of obtaining this co-operation. To obtain unity of action. 102. Without incorporation, unity of action is im- possible where many individuals are concerned. In a corporation, a fixed number, usually a majority, rules. To avoid casualty. 103. If a number of persons are associated in an enterprise, the death, withdrawal, or insolvency of one of 'them, or other contingencies, may defeat the object of the association. Under incorporation, this interfer- ence is avoided. 8 D OBJECTS AND ADVANTAGES OP INCORPORATION. To avoid liability. 104. An individual is liable for the full amount of his debts. A partner is liable for the full amount of the partnership debts. A stockholder in a corporation is not liable for the debts of the corporation, except in certain cases, and then only for a stipulated amount. To expedite business. 105. If property is owned by an association of per- sons, all contracts relating thereto must be made as in- dividuals. A corporation has the title to the corporate property and can make contracts affecting it the same as a natural person. CHAPTER II. CREATION OF CORPORATIONS. 106. Power to create. 107. Method of creation. 108. Corporate name. 109. Objects of incorporation. 110. Amount of capital stock and number of shares. 111. Time of existence. 112. Principal place of business. 113. Number and names of trustees. 114. Amendment of articles of incorporation. 115. Effect of failure to comply with statutory provisions. Power to create. 106. The power to create corporations is in the legislature. Method of creation. 107. The state constitution provides that corpora- tions can only be formed under general laws and that they shall not be created by special act. 1 Any two or more persons may make and subscribe written articles of incorporation, in triplicate, and ac- knowledge the same before any officer authorized to take the acknowledgement of deeds, and file one of such arti- 106. Sec. 1. 107. i Sec. 1. CREATION OF CORPORATIONS cles in the office of the secretary of state, one in the office of the county auditor in the county in which the principal place of business of the company is located, and retain the third in the possession of the corporation. 2 When the articles have been filed, the persons who shall have signed and acknowledged the same and their successors, shall be a body corporate and politic in fact and in name. 3 The mere use of a corporate name without filing articles of incorporation does not constitute a corporation. 4 Corporate name. 108. The articles of incorporation shall state the name of the corporation, 1 which shall not be the same name as that of any other corporation of this state or of any foreign corporation that has complied with the laws of this state, nor so nearly resembling the name of such other corporation as to be misleading. 2 Objects of incorporation. 109. The articles of incorporation shall state the objects for which the corporation is formed. 107. 2 Sec. 24. 3 Sec. 28. < Bash v. Culver Gold Mining Co., 7 Wash. 122; 34 Pac. 462. 108. 1 Sec. 24. 2 Sec. 80. 109. Sec. 24. CREATION OF CORPORATIONS Amount of capital stock and number of shares. 110. The articles of incorporation shall state the amount of the capital stock of the corporation and the number of shares into which it is divided. Time of existence. 111. The articles of incorporation shall state the number of years for which the corporation shall exist, which shall not exceed fifty years. Principal place of business. 112. The articles of incorporation shall state the name of the city, tpwn or locality, and county, in which the principal place of business of the corporation shall be located. Number and names of trustees and time for which first trus- tees shall serve. 113. The articles of incorporation shall state the number of the trustees and the names of the first trustees and the time for which these trustees shall serve which shall not be less than two months and shall not exceed six months. Amendments to articles of incorporation. 114. Amendments may be made to the articles of incorporation, by supplemental articles, executed and filed the same as the original articles. 110-111-112-113-114. Sec. 24. CREATION OF CORPORATIONS Effect of failure to comply with statutory provisions. 115. Unless the statute is complied with in forming a corporation, it is open to attack by the state, and the persons attempting to exercise corporate powers can be ousted from the exercise of these powers by the state. 1 Objection to the legality of the corporation, however, can- not be raised" by the corporation itself or by one dealing with it to the loss or injury of other parties. 2 Whether a corporation is one de jure or merely de facto, it is en- titled to the possession of its property until deprived thereof by a court of competent jurisdiction. 3 When an action has been brought by the state to oust a corporation of its powers, the court may appoint a receiver to take charge of the property of the corporation after judgment against it, 4 but not upon the institution of the suit. 5 115. 1 Sees. 92 and 94. 2 Carroll v. Pacific National Bank, 19 Wash. 639; 54 Pac. 32. 3 State ex rel. Amsterdamsch Trustees Kantoor v. Superior Court, 15 Wash. 68; 47 Pac. 31, 55 Am. St. Rep. 907, 37 L. R. A. 111. 4 Sec. 95. s Same citation as Note 3. CHAPTER HI. PROOF OF INCORPORATION. 116. Domestic corporations. 117. Foreign corporations. Domestic corporations. 116. A copy of the articles of incorporation, certi- fied by the auditor of the county in which the articles are filed, or his deputy, or by the secretary of state, shall be received in all the courts as prima facie evidence of the facts therein stated. 1 In the absence of objection, incor- portation may be shown by parol evidence. 2 A corpora- tion de facto may be proved by parol evidence. 3 Parol evidence, however, is not the best evidence of corporate existence. 4 Incorporation of defendant company is ad- mitted by filing an answer as such. 5 A de facto corpora- tion may be proved by showing a bona fide attempt to comply with the general laws under which a corporation can be formed, an apparent compliance with the require- ments of such laws, and the exercise of corporate powers, and having established proof of a corporation de facto, its existence cannot be inquired into collaterally, but only in a direct proceeding by the state. H6. 1 Sec. 27, Spokane & Idaho Lumber Co. v. Loy, 21 Wash. 501 ; 58 Pac. 672; 60 Pac. 1119. 2 Stanford Land Co. v. Steidle, 28 Wash. 72; 68 Pac. 178; Yakima Nat'l Bank v. Knipe, 6 Wash. 348, 33 Pac. 834; fol. in Nat'l Bank of Commerce .v Galland, 14 Wash. 502; 45 Pac. 35; State v. Pittam, 32 Wash. 137; 72 Pac. 1042. 3 Stanford Land Co. v. Steidle, supra. 4 Stanford Land Co. v. Steidle, supra. 5 Frost v. Ainslie Lumber Co., 3 Wash. 241; 28 Pac. 354; Sengf elder v. Mutual Life Ins. Co., 5 Wash. 121; 31 Pac. 428. 120 PROOF OF INCORPORATION Foreign corporations. 117. A copy of the articles of incorporation and the appointment of an agent, certified by the secretary of state as being of record in his office, constitute prima facie evidence of the organization of such corporation and of its right to transact business in this state. 1 A certified copy of the act of the legislature of a foreign state incorporating a company, and the taking of an assignment of a note and mortgage or other user, is sufficient proof of a foreign corporation. 2 117. 1 Knapp, Burrell & Co. v. Strand, 4 Wash. CSS; 30 Pac. 1063. 2 Lancaster Savings Bank v. Elwell, 17 Wash. 446; 49 Pac. 1070. 3 See case of Fidelity Ins. etc. Co. v. Nelson, 30 Wash. 340; 70 Pac. 961; as to presumption regarding laws of a sister state. CHAPTER IV. POWERS OF CORPORATIONS. 118. To sue and be sued. 119. To have a seal. 120. Form of seal. 121. Use of seal. 122. By whom is seal affixed. 123. Effect of affixing seal. 124. Failure to affix seal. 125. To acquire, hold or alienate property. 126. To appoint and remove officers and agents. 127. To make 'by-laws. 128. To manage its business and make regulations. 129. To make contracts. Particular contracts. 130. Contracts with strangers. 131. Contracts with stockholders. 132. Contracts with officers and trustees. 133. Contracts in violation of law. 134. Right to borrow money and issue notes for author- ized purpose. 135. Right to borrow money and issue notes for unau- thorized purpose. 136. Right to become guarantors. 137. Right to subscribe for or purchase stock in other corporations. 138. Right to purchase its own stock. 139. Contracts between stockholders prior to incorpora- tion. 122 POWERS OF CORPORATIONS In general 140. Form of contract. 141. Place of contract. 142. When powers can be exercised. 143. Where powers can be exercised. 144. Kind of business that can be carried on. To sue and be sued. 118. A corporation may sue or may be sued in its corporate name the same as a natural person. To have a seal. 119. A corporation may make and use a common seal and alter the same at its pleasure. Form of seal. 120. Our statute does not provide a form of seal, and hence the form of seal is determined by the corpora- tion. It is the common practice to place on the seal the name of the corporation, the name of its principal place of business in this state, and the date of its incorporation. Use of seal. 121. The seal of the corporation is used to authen- ticate the contracts and agreements of the corporation, and should be affixed to its certificates of stock. By whom is seal affixed. 122. The seal must be used or affixed by or under the direction of the officer designated by the by-laws of the corporation, or in some other manner, as the person to use or affix it. 118. Sec. 28. 119. Sec. 28. POWERS OP CORPORATIONS 123 Effect of affixing seal. 123. As a general rule, the effect of affixing the seal is to afford strong evidence of the validity of the docu- ment to which it is affixed. Failure to affix seal. 124. Our court in one case refused to draw any dis- tinction between a contract executed by an officer and au- thenticated by the seal and one not so authenticated. To acquire, hold or alienate property. 125. A corporation has power to acquire such real or personal property as it needs to carry on the corporate business and may hold, mortgage, sell or convey the same. 1 A corporation, the majority of whose stock is held by aliens, cannot acquire lands except under mort- gage or in good faith in the ordinary course of justice in the collection of debts. 2 A corporation cannot sell or lease its entire property when not specifically authorized to do so by its articles of incorporation, 3 except by a unanimous vote of its stockholders. A corporation can- not lease, mortgage or sell its franchises or property held thereunder, free from the liabilities of the lessor, or grantee, contracted or incurred in the operation, use or enjoyment of such franchises or any of its privileges. 4 A 124. Carrigan v. Port Crescent Improvement Co., 6 Wash. 590; 34 Pac. 148. 125. 1 Sec. 28. 2 Sec. 96, Hastings v. Anacortes Packing Co., 29 Wash. 224; 69 Pac. 776. s Parsons v. Tacoma Smelting Co., 25 Wash. 492; 65 Pac. 765. 4 Sec. 8. 124 POWERS OF CORPORATIONS corporation can sell or assign franchises granted to it by a city. 5 To appoint and remove officers and agents. 126. A corporation can appoint such officers, agents or servants as the business of the corporation shall re- quire, define their duties, prescribe their powers, fix their compensation and remove them, but no trustee shall be removed except upon a two-thirds vote of the stockhold- ers. 1 The two-thirds vote required to remove a trustee means a two-thirds vote of the stock. 2 The by-laws of the corporation should fix the names of the officers of the cor- poration, define their duties, fix their powers, and provide for their removal. The compensation of the officers and agents of the corporation is usually fixed by the board of trustees. To make by-laws. 127. A corporation has power to make by-laws, but these by-laws must not be unreasonable, nor inconsistent with the articles of incorporation, the constitution or laws of the United States, the constitution or laws of this state. Unless the articles of incorporation confer the power of making by-laws upon the trustees, the stockholders adopt the by-laws at their stockholders' meetings. If the arti- cles of incorporation confer the power of making by-laws upon the board of trustees, the by-laws must be adopted 125. e Commercial Electric Light & Power Co. v. Tacoma, 17 Wash. 661; 50 Pac. 592. Cited in State ex rel. Grinsfelder v. Spokane St. R. Co., 19 Wash. 532; 53 Pac. 719; 67 Am. St. 739; 41 L. R. A. 515. 126. 1 Sec. 29. 2 State ex rel. Mitchell v. Horan, 22 Wash. 197; 60 Pac. 135. POWERS OF CORPORATIONS 125 by the board of trustees. A by-law may be abrogated by non-usage. 1 To manage its business and make regulations. 128. A corporation must necessarily have the right to manage its business. 1 As the by-laws of a corporation do not provide all the necessary rules for the conduct of the members and officers of the corporation, the corpora- tion is empowered to make regulations. 2 Regulations are usually made to control the conduct of the officers or employes of the corporation and are usually made in some informal manner, either by the board of trustees or some officer of the corporation. To make contracts. 129. Several of the powers of a corporation set out in the statute give a corporation the right to make con- tracts. 1 Owing to the importance that attaches to the right of the corporation to make contracts and the many questions that arise in the exercise of this right, we will consider some of these contracts both with respect to the persons entering into the contract, and the kind or nature of these contracts. 127. i Blair v. Metropolitan Savings Bank, 27 Wash. 192; 67 Pac. 609. 128. 1 Sec. 28. 2 Sec. 28. 129. Sec. 28. 126 POWERS OF CORPORATIONS Particular contracts. Contracts with strangers. 130. Contracts with strangers to the corporation stand on the same footing as contracts between natural persons who are strangers to each other. A person who has entered into a contract with a corporation cannot question the right of the corporation to make the con- tract. 1 The principal and sureties on a bond for the at- tachment of the property of a corporation are estopped to deny its corporate existence. 2 Although a contract of a corporation may not have been properly authorized by its board of trustees, yet when the corporation continues to receive the benefits accruing from the contract, it is estopped to deny the validity of the contract. 3 When all of the stockholders of a corporation acquiesce in the execution of a mortgage on the corporate property they are estopped from setting up the invalidity of the mort- gage on the ground that it was executed without corpor- ate authority. 4 Acts of a president and secretary of a corporation long acquisced in by the corporation bind the corporation. 5 A corporation is not entitled to a dis- count on a note, when the discount was obtained through one of its stockholders and trustees, who was also the attorney of the maker of the note. 6 130. 1 Hall & Paulson Furniture Co. v. Wilbur, 4 Wash. 644 ; 30 Pac. 665. 2 Seattle Crockery Co. v. Haley et al, 6 Wash. 302; 33 Pac. 650; 36 Am. St. 156. s Leslie v. Wilshire, 6 Wash. 282; 33 Pac. 505. * Roy & Co. v. Scott, Hartley & Co., 11 Wash. 399; 39 Pac. 679. 5 Miller v. Washington Southern Ry. Co., 11 Wash. 414; 39 Pac. 673. 6 See case of Security Savings Soc. v. Cohalan, 31 Wash. 266; 71 Pac. 1020. POWERS OF CORPORATIONS 127 Contracts with stockholders. 131. A corporation and its stockholders are sepa- rate persons in the eyes of the law, hence a corporation can enter into a contract with its stockholders. A stock- holder who deals with an agent of the company is pre- sumed to know the scope of the agent's authority. 1 An agreement by a corporation that it will not engage in a certain business within a stipulated period of time does not bind the individual members of the corporation. 2 Contracts with officers and trustees. 132. A corporation can enter into a valid contract with its officers or trustees, 1 but as an officer or trustee of a corporation bears a trust relation to the corporation, he will not be allowed to take advantage of the corpora- tion; 2 and if the vote of a trustee interested adversely to the corporation is necessary to make the contract, it can be set aside upon the complaint of a stockholder. 3 The trust relation of officers and directors extends only to the corporate business and property of the company, and not to private dealings with the stockholders. 4 Contracts in violation of law. 133. A corporation cannot make a contract in viola- tion of law. 131. lHardin v. Sweeney, 14 Wash. 129; 44 Pac. 138. 2 Murray v. Okanogan Live Stock etc. Co., 12 Wash. 259; 40 Pac. 942. 132. i Budd v. Walla Walla P. & P. Co., 2 Wash. T. 347; 7 Pac. 896. 2- Parsons v. Tacoma Smelting Co., 25 Wash. 492; 65 Pac. 765. s Parsons v. Tacoma Smelting Co., supra; Budd v. Walla Walla P. & P. Co., supra. 4 O'Neile v. Ternes, 32 Wash. 528; 73 Pac. 692. 128 POWERS OF CORPORATIONS Particular contracts. Right to borrow money and issue notes for authorized purpose. 134. A corporation can borrow money for its author- ized purposes and give its note as evidence therefor and may secure the same by mortgage upon the corporate property. 1 Right to borrow money and issue notes for unauthorized purpose. 135. A corporation cannot borrow money for pur- poses not authorized by its articles of incorporation, and notes given as evidence of an indebtedness created for such unauthorized purpose, and mortgages to secure the same, are not valid as against a non-consenting stock- holder or a creditor of the corporation. 1 A note of a corporation given without consideration is valid in the hands of a bona fide purchaser. 2 Right to become guarantors. 136. A corporation may become a guarantor or surety in aid of its authorized purposes, and when it is to receive a direct and substantial benefit by so doing, 1 but otherwise it cannot enter into a contract of guaranty or suretyship to the injury of its creditors. 2 134. i Washington Mill Co. v. Sprague Lumber Co., 19 Wash. 165; 52 Pac. 1067. 135. 1 Washington Mill Co. v. Sprague Lumber Co., 19 Wash. 165; 52 Pac. 1067. 2 Stewart v. Gould, 8 Wash. 367; 36 Pac. 277. 136. 1 Wheeler, Osgood & Co. v. Everett Land Co., 14 Wash. 630; 45 Pac. 316. 2 Washington Mill Co. v. Sprague Lumber Co., 19 Wash. 165; 19 Pac. 1067. POWERS OF CORPORATIONS 129 Eight to subscribe for or purchase stock in other corporations. 137. A corporation cannot subscribe for 1 or pur- chase 2 stock in another corporation, and expressing such power in its articles of incorporation will not give it the right to do so, 3 but it may take stock of another corpora- tion as collateral to or in payment of a debt to the cor- poration. It has been held that a New Jersey, corpora- tion can own stock in a Washington corporation. 4 For the purpose of upholding a contract, a foreign corpora- tion will be presumed to have power to purchase its own stock. 5 Eight to purchase its own stock. 138. A corporation cannot purchase its own stock, 1 but it can take its own stock as collateral to or in pay- ment of a debt from its stockholders, when the transac- tion is bona fide and for the purpose of protecting the corporation from loss. 2 Contracts between stockholders prior to incorporation. 139. A corporation is not liable upon contracts prior to incorporation when there is no corporate act recognizing such liability. 1 137.- 1 Denny Hotel Co. v. Schram, 6 Wash. 134; 32 Pac. 1002; 36 Am. St. 130. 2 Parsons v. Tacoma Smelting Co., 25 Wash. 492; 65 Pac. 765. 3 Parsons v. Tacoma Smelting Co., supra. < Coler v. Tacoma R. & P. Co., 53 Atl. 686. 5 Yeaton v. Eagle Oil & R. Co., 4 Wash, 183; 29 Pac. 1051. 138. 1 Barton v. Nix, 15 Wash. 563; 46 Pac. 1033; Tait v. Pigott, 32 Wash. 345. 2 Barto v. Nix, supra. 139. Bash v. Culver Gold Mining Co., 7 Wash. 122; 34 Pac. 462. 9 o |30 POWERS OF CORPORATIONS In general. Form of contract. 140. Our statute does not prescribe any form for the contracts of a corporation, hence its contracts should be executed with the same formalities as the contracts of a natural person. The law, however, provides a form of acknowledgement for the use of corporations in cases where an acknowledgement is necessary. 1 The acknowl- edgement of an instrument made to a corporation can be made before a notary who is an officer of the corpora- tion. 2 Place of contract. 141. A corporation can contract either within or without the state so long as it conforms to the laws of the state where such contract is made. When powers can be exercised. 142. A corporation can commence business when the whole amount of its capital stock has been subscribed, provided, however, that corporations engaged exclusively in loaning money on real estate or in raising money from, and loaning or repaying it to their own members, and which confine their loaning or business operations wholly to the counties of their principal place of business, re- spectively, and to the counties adjacent and adjoining thereto, need not have any definite amount of their capi- 140. 1 Sec. 82. 2 Keene Guaranty Savings Bank v. Lawrence, 32 Wash. 572 ; 73 Pac. 680; Spokane & Idaho Lumber Co. v. Loy, 21 Wash. 501; 58 Pac. 672; Nixon v. Post, 13 Wash. 181; 43 Pac. 23. s See case of Fox v. Burlington Mnfg. Co., 7 Wash. 391; 35 Pac. 126; for effect of a contract of lease signed by all stockholders of a corpora- tion. POWERS OF CORPORATIONS tal subscribed, 1 and the mere fact that a corporation has power to do other acts than the ones mentioned in this proviso will not deprive it of the right to do business be- fore the whole of its capital is subscribed, if it does in fact confine its business within the terms of this pro- viso. 2 A banking corporation, however, cannot begin business until three-fifths of its capital stock has been paid in, 3 and the entire stock of a trust company must be paid in before it can be authorized to transact busi- ness. 4 Although a corporation may not have complied with the statutory requirement that all of its stock must have been subscribed before it can do business as a cor- poration, yet where it has done business without fully and fairly complying with such prescription, the ques- tion cannot be raised, either by the corporation, or one dealing with it, to the injury or loss of other parties. 5 Where powers can be exercised Place of business Removal. 143. A corporation can exercise its powers at any place within the state, and at any place without the state, by conforming to the laws of the place where it attempts to do business. The articles of incorporation fix the principal place of business of the corporation. 1 If a corporation moves its 142. 1 Sec. 23. 2 Brown v. Blwell, 17 Wash. 442; 49 Pac. 1068. 3 Sec. 34. 4 Laws 1903, p. 367. 5 Spokane v. Amsterdamsch Trustees Kantoor, 22 Wash. 172; 60 Pac. 141. 143. i Sec. 28. 132 POWERS OF CORPORATIONS principal place of business into some other county in the state, it must file a certified copy of its certificate of in- corporation in the office of the county auditor of the county to which its place of business is removed. 2 If a corporation removes its principal place of business to some other city, town or locality within the same county, it must publish a notice of such removal for at least four weeks in the newspaper published nearest to the city, town or locality from which it removes its principal place of business. 3 Kind of business that can be carried on. 144. A corporation must confine its business within the objects set out in its articles of incorporation. 1 A corporation, however, can do such acts as are incidental to and in aid of its principal business as set out in its articles of incorporation. 2 143. 2 Sec. 47. 3 Sec. 47. 144. 1 Parsons v. Tacoma Smelting Co., 25 Wash. 492 ; 65 Pac. 765. 2 Wheeler, Osgood & Co. v. Everett Land Co., 14 Wash. 630; 45 Pac. 316. CHAPTER V. ULTRA VIRES. 145. Definition of ultra vires. 146. Reason for rule of ultra vires. Rights of persons affected by an ultra vires act. 147. Rights of the state. 148. Rights of the corporation itself. 149. Rights of stockholders and creditors. 150. Rights of strangers dealing with the corporation. Definition of ultra vires. 145. When a corporation does an act, not within the scope of its powers as set forth in the articles of in- corporation, or contrary to law, it is called an ultra vires act. Many acts called ultra vires, such for example, as acts in excess of their authority by officers of a cor- poration, are not ultra vires, and should properly be treated under some other subject. Just as in the case of individuals, a corporation may do wrong or may do an ultra vires act, and rights and liabilities may grow out of this act. Reason for the doctrine of ultra vires. 146. The reason for the doctrine of ultra vires is found in the interest the state has in seeing that the corporation, like any other person, does not exceed its powers or do wrong, and the interest of the stockholders 134 ULTRA VIRES and creditors of the corporation, or persons dealing with the corporation, in seeing that the capital of the corpora- tion is not subjected to the risk of enterprises other than those contemplated by its articles or allowed by law. Rights of persons affected by an ultra vires act. Rights of the state. 147. A corporation forfeits its rights by an ultra vires act, and the state can proceed against it by quo warranto to forfeit its charter or oust it from the exer- cise of the ultra vires act. 1 Rights of the corporation itself. 148. The courts will not interfere with an ultra vires contract that is fully executed. If the ultra vires contract is fully executory, it is void. If the corporation has received and retained the benefits of an ultra vires act, it cannot set up the plea that the contract is ultra vires. 1 When a bank, through its officers, has induced a person to enter into an agreement for the purpose of de- frauding him, it cannot avoid liability oh the ground that the contract was ultra vires. 2 147. i Sec. 94. 148. 1 Tootle v. First National Bank, 6 Wash. 181; 33 Pac. 345; cited in Miller v. Washington So. R. Co., 11 Wash. 414; 39 Pac. 673; Allen v. Olympia L. & P. Co., 13 Wash. 307; 43 Pac. 55; Wheeler, Osgood & Co. v. Everett Land Co., 14 Wash. 630; 45 Pac. 316; Spokane v. Amster- damsch Trustees etc., 22 Wash. 172; 60 Pac. 141; Graton & Knight Co. v. Redelsheimer, 28 Wash. 370, 68 Pac. 879. 2 Pranger v. Old Nat'l Bank, 20 Wash. 618; 56 Pac. 391. ULTRA VIRES 135 Rights of stockholders and creditors. 149. A stockholder or creditor has a right to insist that the capital of the corporation shall not be diverted to purposes outside the powers of the corporation, as denned by law and set out in the articles of incorporation. 1 An ultra vires, executory contract is voidable at the suit of a non-consenting stockholder. A stockholder may re- strain other stockholders or the corporation from doing utra vires acts. In order for a stockholder to obtain re- lief against an ultra vires act, he must act promptly, or he will be presumed to have acquiesced in the transaction. Rights of strangers dealing with the corporation. 150. A person who deals with a corporation must take notice of its powers, but, if the fact that an act is ultra vires was not known by the person dealing with the corporation, and the facts making it ultra vires were peculiarly within the knowledge of the corporation, the corporation will be estopped to deny its authority to make the contract. If the corporation repudiates an ultra vires contract, it must restore any money or property received under it. 149. i Parsons v. Tacoma Smelting Co., 25 Wash. 492; 65 Pac. 765; see case of Blair v. Metropolitan Savings Bank, 27 Wash. 192; 67 Pac. 609. CHAPTER VI. CAPITAL STOCK. Subscriptions to capital stock. 151. Who can subscribe for stock. 152. Who can receive stock subscriptions. 153. Form of stock subscriptions. 154. Consideration for stock subscriptions. 155. Conditional subscriptions for stock. 156. Payment of stock subscriptions. 157. When stock subscriptions can be enforced. 158. Manner of enforcing stock subscriptions. In general. 159. Amount of capital stock. 160. Number and face value of shares of capital stock. 161. Increase or decrease of capital stock. 162. The capital stock is a trust fund. 163. Overissued stock. Who can subscribe for stock. 151. Any person capable of making a contract can subscribe for stock in a corporation. A corporation, how- ever, cannot subscribe for its own stock, and a Washing- ton corporation cannot subscribe for stock in another corporation. 1 i Denny Hotel Co. v. Schram, 6 Wash. 134; 32 Pac. 1002, 36 Am. St. 130; followed in Denny Hotel Co. v. Gilmore, 6 Wash. 152; 32 Pac. 1004. Cited in Parsons v. Tacoma Smelting Co., 25 Wash. 492; 65 Pac. 765; Knowles v. Sandercock, 107 Cal. 643; 40 Pac. 1049; Nebraska Shirt Co. v. Horton (Neb.), 93 N. W. 225. CAPITAL STOCK Who can receive subscriptions. 152. The corporation can authorize any person to receive subscriptions. Subscriptions received by persons not authorized to receive them will not be binding on the corporation unless subsequently accepted or ratified by the corporation. Form of stock subscriptions. 153. Subscriptions for stock may be in any form, if they show the intention of the parties to subscribe. They need not be in writing. Even if there has been no formal subscription of any kind for the stock of a cor- poration it may be legally formed, and a person dealing with it cannot avoid his contract on that ground. 1 A joint subscription by trustees of a corporation for the purpose of completing the subscriptions to the capital stock is an enforceable contract. 2 Consideration for stock subscriptions. 154. The consideration for a subscription to stock in a corporation is the benefit to be derived from being a stockholder in the corporation. Notes, given in pay- ment of subscriptions to the capital stock of a corpora- tion, are based upon a valid consideration, when the sub- scriptions are legally enforceable. 1 153. i Carroll v. Pacific Nat'l Bank, 19 Wash. 639; 54 Pac. 32; followed in Spokane v. Amsterdamsch Trustees Kantoor, 22 Wash. 172; 60 Pac. 141. '2 Hardin v. Mullin, 16 Wash. 647; 48 Pac. 349. 154. i Hardin v. Sweeney, 14 Wash. 129; 44 Pac. 138. 138 CAPITAL STOCK Conditional subscriptions for stock. 155. Conditional subscriptions to the stock of cor- porations may be made, and payment therefor depend upon the performance of the conditions, but this can be done only at the time of the organization of the com- pany and before such organization has been completed. 1 Payment of stock subscriptions. 156. Stock may be paid for in money or in prop- erty. 1 Stock is frequently paid for in property taken at an overvaluation, and upon the failure of the corpora- tion, the creditors attempt to recover from the stock- holder the difference between the actual value of the property and the face value of the stock. The decisions of our supreme court in these cases do not seem to be very harmonious. In one case it was held that where by arrangement between the stockholders and the corpora- tion, the stock was issued as fully paid up, when in fact it had not been paid to the amount of its full value, but had been paid for in property at a fictitious or inflated value, the court would compel a payment by the stock- holder, for the benefit of the creditor who has dealt with the corporation, relying upon the asserted value of its assets, to the full amount or value of his stock. 2 This view is also taken in a later case. 3 In another case where property was taken at a great overvaluation, it was held 155. i Smith v. Hopkins, 10 Wash. 77; 38 Pac. 854. 156. 1 Manhattan Trust Co. v. Seattle Coal etc. Co., 19 Wash. 493; 53 Pac. 951; Adamant Mnfg. Co. v. Wallace, 16 Wash. 614; 48 Pac. 415; Turner v. Bailey, 12 Wash. 634; 42 Pac. 115. 2 Adamant Mnfg. Co. v. Wallace, supra. 3 Dunlap v. Rauch, 24 Wash. 620; 64 Pac. 807. CAPITAL STOCK ^39 that such an apparent overvaluation was fraudulent. 4 Later the court in construing the same facts held this valuation not fraudulent. 5 In another case it was held that where property was taken in payment for stock at a double valuation, and was so taken without any inten- tion to defraud, that a judgment creditor of the corpora- tion could not recover from such stockholder the differ- ence between the actual value of the property and the face value of the stock. 6 The fair rule would seem to be, that as against inno- cent creditors of the corporation, property accepted in payment for stock, should be appraised and taken at its true value. If creditors deal with a corporation with knowledge that stock subscriptions have been paid for in property at a fictitious valuation, they are estopped to enforce any further liability against the subscriber. 7 The fact that property, accepted in payment of stock at its reasonable value, subsequently depreciated, will not render the stockholder liable for the difference between the property at its depreciated price and the face value of the stock. 8 The capital stock of a mining corporation may be rep- resented by an interest or share in a mining claim and no actual subscription to the capital stock is necessary. 9 When can stock subscriptions be enforced. 157. Under our statutes, with certain exceptions, 156. * Manhattan Trust Co. v. Seattle Coal etc. Co., 16 Wash. 499; 48 Pac. 333, 737. 5 Manhattan Trust Co. v. Seattle Coal etc. Co., supra. . 6 Kroenert v. Johnson, 19 Wash. 96; 52 Pac. 605. 7 Adamant Mnf g. Co. v. Wallace, supra. 8 Turner v. Bailey, supra, a Sec. 49. CAPITAL, STOCK all the capital stock must be subscribed, and a corpora- tion cannot enforce subscriptions to its stock until all of its stock has been subscribed, 1 unless there has been a waiver of this condition by the stockholders, 2 and the fact that a subscriber has made a payment on his stock without knowledge of the fact that all of the stock had not been subscribed, does not waive his right to object to the authority of the corporation to enforce his sub- scription. 3 Subscribers to the stock of a corporation cannot escape liability on the ground that part of the stock has been illegally subscribed when they have sub- scribed with knowledge of that fact. 4 Manner of enforcing subscriptions. 158. Subscriptions to the capital stock of a corpor- ation may be enforced by the corporation by suit as on a contract for the payment of money. 1 The receiver of an insolvent corporation may bring a separate suit against a stockholder to recover the sum due upon his shares of stock. 2 The presumption is, that a corporation in bringing suit on stock subscriptions has acted regu- larly according to its by-laws, and if there is any by-law 157. 1 Denny Hotel Co. v. Schram, 6 Wash. 134 ; 32 Pac. 1002 ; 36 Am. St. 130; cited in Denny Hotel Co. v. Gilmore, 6 Wash. 152; 32 Pac. 1004; Elderkin v. Peterson, 8 Wash. 674; 36 Pac. 1089. 2 Elderkin v. Peterson, supra; Birge v. Browning, 11 Wash. 249; 39 Pac. 643. 3 Denny Hotel Co. v. Gilmore, supra; Birge v. Browning, supra. < Cole v. Satsop R. R. Co., 9 Wash. 487; 37 Pac. 700; 43 Am. St. 858. 158. 1 Puget Sound etc. Ry. Co. v. Oullette, 7 Wash. 265; 34 Pac. 929. 2 Elderkin v. Peterson, 8 Wash. 674; 36 Pac. 1089. CAPITAL STOCK which renders their action irregular, it is a matter of defense which should be pleaded. 3 In general. Amount of capital stock. 159. The articles of incorporation must state the amount of the capital stock. 1 The amount is arrived at by agreement of the parties. A banking corporation, however, must have at least twenty-five thousand dollars capital stock, 2 a trust company twenty-five thousand dol- lars or more, according to the population of the city or town where located. 3 A building and loan association must have an authorized capital of two million dollars. 4 Certain corporations organized for educational, social or charitable objects do not need any capital stock. 5 Number and face value of shares of capital stock. 160. The articles of incorporation must state the number of shares into which the capital stock is divided. 1 The face value of the shares, is with few exceptions, left to agreement between the parties. 2 The face value of the shares of a bank or trust company, 3 however, must be one hundred dollars. 158. 3 Puget Sound Etc. Co. v. Oullette, supra. 159. 1 Sec. 24. 2 Sec. 34. 3 Laws of 1903, p. 367. * Sec. 7142, Pierce's Code. 5 Sec. 7083. 160. 1 Sec. 24. 2 Sec. 34. 3 Laws of 1903, p. 367. |42 CAPITAL STOCK Increase or decrease of the capital stock. 161. The capital stock may be increased or de- creased by complying with certain statutory provisions. 1 The capital cannot be decreased by a misuse of the cor- porate assets. 2 The capital stock is a trust fund. 162. The capital stock is a trust fund for the benefit of the creditors of the corporation. 1 The creditors have a right to insist that the capital stock shall be kept intact. Unpaid subscriptions to the capital stock are assets of the corporation and a trust fund for the benefit of all the creditors of the corporation. 2 A stockholder who has acquired all the stock of the corporation cannot transfer or dispose of the corporate property to secure an indi- vidual indebtedness to the prejudice of the corporate creditors. 3 The corporation cannot use the corporate funds to purchase stock from its stockholders. 4 161. 1 Sees. 42, 43 and 44, where procedure is fully set out; see also Sec. 37. 2 Tait v. Pigott, 32 Wash. 344; 73 Pac. 364. 162. iConover v. Hull, 10 Wash. 673; 39 Pac. 166; 45 Am. St. 810; cited in Compton v. Schwabacher, 15 Wash. 306; 46 Pac. 338; Biddle Pur. Co. v. Port Townsend Steel Co., 16 Wash. 681; 48 Pac. 407; Burrell v. Ben- nett, 20 Wash. 644; 56 Pac. 375; State ex rel. Strohl v. Superior Ct., 20 Wash. 545; 56 Pac. 35; 45 L. R. A. 177; Tait v. Pigott, 32 Wash. 344; 23 Pac. 364. 2 Burch v. Taylor, 1 Wash. 245; 24 Pae. 438. 3 Stewart v. Gould, 8 Wash. 367; 36 Pac. 277. * Tait v. Pigott, supra. 5 See Sec. 222, Rights of Creditors of Insolvent Corporations. CAPITAL STOCK 143 Overissued stock. 163. Stock issued in excess of the amount fixed by the articles of incorporation is void even in the hands of an innocent purchaser. The bona fide holder of over- issued stock, issued by the proper officers of the corpora- tion, may sue the corporation and recover the damages suffered. CHAPTER VH. STOCKHOLDERS. 164. Who can be stockholders. 165. How to become stockholders. 166. Who are stockholders. Rights of stockholders. 167. Right to participate in management. 168. Right to inspect books and records and remedy for refusal of this right. 169. Right to dividends. 170. Liabilities of stockholders. Who can be stockholders. 164. Any person capable of contracting, can become a stockholder in a corporation, provided, however, that a corporation cannot purchase or hold its own stock or purchase or hold stock in another corporation, except under certain circumstances. 1 At least one trustee, and consequently one stockholder, must be a resident of the State of Washington. 2 If the majority of the stockholders of a corporation are aliens, a conveyance of real estate to the corporation may be avoided by the state. 3 164. 1 See Sees. 137 and 138. 2 Sec. 29. 3 State ex rel. Winston v. Hudson Land Co., 19 Wash. 85; 52 Pac. 574; 40 L. R. A. 430; see Hastings v. Anacortes Packing Co., 29 Wash. 224; 69 Pac. 776. STOCKHOLDERS How to become stockholders. 165. If a corporation has a capital stock, member- ship is attained by the purchase of shares of stock. If the corporation has no capital stock, membership is at- tained by conforming to the rules laid down in its articles of incorporation and by-laws. Who are stockholders. 166. Any person owning a share of stock is a stock- holder. In many cases, however, the courts have found great difficulty in determining who are liable as stock- holders. A subscriber to the capital stock of a corpora- tion whose subscription is unpaid, but who has assigned his stock with the consent of the corporation, is not a stockholder. 1 A person who holds stock in a corporation, under an agreement that if discharged from his employ- ment by the corporation, he can return the stock and get the money paid for it, is a stockholder. 2 A stockholder who has pledged his stock is still a stockholder and en- titled to vote his stock. 3 A person who has transferred his stock, although such stock is not registered on the books of the company, is not a stockholder so that his stock can be sold on execution, 4 while he would be a stock- holder for the purpose of voting the stock. 5 A person is 166. 1 Stewart v. Walla Print. & Pub. Co., 1 Wash. 521; 20 Pac. 605. 2 Yeaton v. Eagle Oil etc. Co., 4 Wash. 183; 29 Pac. 1051. 3 Spokane v. Amsterdamsch etc., 22 Wash. 172; 60 Pac. 141.