THE LIBRARY
OF
THE UNIVERSITY
OF CALIFORNIA
LOS ANGELES
SCHOOL OF LAW
bift of
benofcr-lYiuss Co.
A TREATISE
ON THE
INCORPORATION AND ORGANIZATION
OF CORPORATIONS
A TREATISE
OX THE
INCORPORATION AND ORGANIZATION
OF
CORPORATIONS
CREATED UNDER THE "BUSINESS CORPORATION ACTS"
OF THE SEVERAL STATES AND TERRITORIES
OF THE UNITED STATES
Including therein- a Synopsis-Digest of the General Incorporation Acts
oe the Several Commonwealths, with Decisions bearing thereon;
also, Forms for Drawing Charters under the Laws of the
several States and Territories ; Amendments to
Charters and Dissolution of Corporations ;
General and Specific Object Clauses
FOR INSERTION IN CHARTERS, By-
Laws, Minutes, etc., etc.
BY
THOMAS GOLD FROST, LL.D., Ph.D.
in
OF THE NEW YORK BAR
Author of "Treatise on Guaranty Insurance," "The French Constitution
of 1793," "Federal Corporation Tax Law," etc.
FOURTH EDITION
ENLARGED, AND REVISED TO JANUARY 1, 1913
BOSTON
LITTLE, BROWN, AND COMPANY
1913
Copyright, 1905, 1906, 1908, 1913,
By Little, Brown, and Company^
AU rights reserved.
If 3
THE UNIVERSITY PRESS, CAMBRIDGE, U.S.A.
*
li TO
JOHN B. BROWN, Esq.
OF THE ILLINOI8 BAB
THIS WORK IS DEDICATED BY HIS FRIEND, COLLEGE CLASSMATE
AND FIRST LAW PARTNER
THE AUTHOR
PREFACE TO THE FOURTH EDITION.
In offering the Fourth Revision of this work, the author wishes
to express his appreciation of the kindly reception which has
been extended to the work by the legal profession of this country.
The task of keeping up to date a complete text book on the Incor-
poration and Organization of Corporations has not been an easy
one. The increase in the size of the present volume over that of
the earlier editions finds its explanation in the following state-
ment. A very considerable addition has been made to the Synopsis
Digest of the Incorporation Acts of the Several States with a view
to not only revising them up to July 1st, 1912, but at the same
time enlarging the Synopsis Digest itself. A number of addi-
tional miscellaneous forms have been added, which it is believed
will add materially to the usefulness of the work.
THE AUTHOR.
220 Broadway,
New York City, January 16th, 1913.
670692
PREFACE
The present work might with no inconsiderable degree of fitness
have been entitled " A Treatise on Comparative Incorporation
Law in the Several Commonwealths of the United States." Such
a work if properly prepared should not fail to interest the active
practitioner as well as the public at large. One of the greatest
difficulties met with in the preparation of the volume here pre-
sented, has been to successfully condense the subject matter thereof
without eliminating any matters of real importance. If, in place
of the customary copious references so freely offered in support
of principles of corporation law universally considered to be
sound, the reader finds only a single citation, he may rest assured
that careful investigation has satisfied the author that it repre-
sents the prevailing doctrine relative to the particular proposition
in support of which it has been cited. This method, it is believed,
will meet with favor at the hands of the profession for the follow-
ing reasons :
The vast majority of the decisions of the courts of this country
rendered prior to 1870, in so far as they relate to questions of
corporation law, are for the most part a veritable legal "junk-
shop" representing either what is now "horn-book law," or else
overruled cases. Many of these contain enunciation of principles
of corporation law the soundness of which no one in these days
would venture to dispute, or else they represent propositions of
Law which are no longer regarded as sound. The corporation
law of to-day, by engrafting into its subject matter accepted prin-
ciples of agency and estoppel, has assumed a form which tin-
corporation lawyer of fifty years ago would find great difficulty in
recognizing.
ix
X PKEFACE.
In the preparation of this work utility and accuracy have been
kept constantly in mind. The writer has made free use of certain
exceptional facilities that have been open to him through his
professional connections, including access to a large number of
forms as well as a great deal of correspondence with state officials
in the various commonwealths. The forms for drawing charters
in the various states, while prepared by the author, have also
been approved in every instance by competent attorneys who
reside in the state under the laws of which the draft of the
charter was made.
All of this has been, it is hoped, to the advantage of the pro-
fession and the public at large.
THOMAS GOLD FROST
76 William Street, New York Citt, N. Y.
December 1, 1904.
TABLE OF CONTEXTS.
Introduction
PART I.
INCORPORATION AND ORGANIZATION OF
CORPORATIONS.
CHAPTER I
DRAFTING THE CHARTER.
Page
§ 1. General Remarks on Corporate Charters 9
§ 2. Incorporators 12
§ 3. Corporate Name ] }
§ 4. Corporate Purposes 15
§ 5. Number of Corporate Purposes permitted . 19
§ G. Collateral Attack upon Corporate Purposes and Powers ... 21
§ 7. Effect of Inserting Illegal Purposes 28
§ 8. Corporate Powers, Classification of 29
§ 9. Common Law Powers, Definition of ; Enumeration of ... . 30
§ 10. Right to a Corporate Name ;;i
§ 1 1. Right of Perpetual Succession 31
§ 12. Right to adopt and use a Corporate Seal 32
§ 13. Power to acquire, hold, and dispose of Real and Personal Property 32
§ 14. Power to appoint Corporate Officers and Agents :;:;
§ 15. Power to establish By-Laws 3;j
§ 16. Power to sue and be sued ;;i
§ 17. Express Powers, Definition of ; Enumeration of :;i
§ 18. Power of Corporations to purchase their own Stock .... 30
§ 19. Power to subscribe for, purchase, and hold Stock in other Cor-
porations , - 57
§ 20. Power to consolidate with other Corporations 38
§ 21. Power to transact all or any Part of the Corporate Business out-
side of the State of its Domicile 38
§ 22. Power toperform Constituent Actsoutsideof the Domiciliary State 40
§ 23. Power to extend Corporate Existence 10
§ 21. Power to change the Corporate Name 11
§ 25. Power to increase or decrease Capital Stock 11
§ 26. Power to issue Preferred Stock 41
xi
Xii TABLE OF CONTENTS.
Page
§ 27. Power to change the Corporate Purposes 46
§ 28. Power to change Number of Directors 46
§ 29. Power to change the Corporate Domicile and Principal Place of
Business 47
§ 30. Power to acquire and enforce a Lien upon Stock to secure the
Payment of Debts Due the Corporation 47
§ 31. Power to levy Assessments against the Stockholders with the
Right to forfeit their Stock for Non-payment thereof ... 48
§ 32. Power to authorize Voting by Proxy at Stockholders' Meetings 49
§ 33. Power to permit Cumulative Voting in the Election of Directors 49
§ 34. Power to issue Stock as full paid in Exchange for Property or
Services 49
§ 35. Power to dispose of Corporate Assets as an Entirety .... 51
§ 36. Power to voluntarily dissolve the Corporation without Recourse
to the Courts 52
§ 37. Power to insert in the Charter Provisions for the Regulation of
the Internal Affairs of the Corporation 53
§ 38. Power to authorize Directors to adopt By-Laws 55
§ 39. Power to authorize Appointment of Executive Committee from
the Board of Directors 56
§ 40. Power to enlarge or diminish Corporate Powers 56
§ 41. Power to change Par Value of Shares 57
§ 42. Power of Bondholders to vote at Election of Directors .... 57
§ 43. Power to classify Directors 57
§ 44. Power to amend Articles before Organization 58
§ 45. Power to surrender Charter before Organization 58
§ 46. Power given to Minority Stockholders to compel Purchase of their
Holdings upon Consolidation 58
§ 47. Incidental Powers, Definition and Enumeration of 59
§ 48. Power to make Contracts 60
§ 49. Power to borrow Money 60
§ 50. Power to give and accept Customary Evidences of Debt ... 60
§ 51. Power to mortgage and pledge Real and Personal Property . . 60
§ 52. Power of Amotion 60
§53. The Modern Doctrine of Ultra Vires 61
§ 54. Corporate Domicile 65
§ 55. Board of Management 67
§ 56. Capital Stock 67
§ 57. Limitations upon Amount of Capital Stock 69
§ 58. Par Value of Capital Stock 70
§ 59. Amount of Stock Subscriptions 70
§ 60. Amount of Stock paid in 72
§ 61. Amount of Stock with which a Corporation may begin Business 73
§ 62. Duration of Corporate Existence 73
§ 63. Date of Annual Meeting 74
§ 64. Limitation upon Corporate Indebtedness 74
§ 65. Exemption of Stockholders from Personal Liability .... 75
§ 66. Adoption of By-Laws by Directors 75
§ 67. Provisions for the Regulation of the Internal Affairs of the Cor-
poration 76
TABLE OF CONTENTS. X1U
Page
§ 68. Miscellaneous Provisions relative to Contents of Articles of In-
corporation 76
5 69. Construction of Charter .... 77
CHAPTER II.
PROCURING THE CHARTER.
Signing the Articles 79
Acknowledgment of Execution of Articles 79
Publication of Articles 80
Affidavit as to Stock Subscriptions 81
Anti-Trust Affidavit 81
Special Requirements in Particular States . . 81
Powers of State Officials relative to accepting or rejecting
Articles , 82
Right to Mandamus State Officials for refusing to file Articles . 84
Organization Tax 84
Form in which Charter is granted 8G
Filing and recording in Local County Offices 86
Distinction between de jure and de facto Corporations .... 87
Right of Parties other than the State to collaterally impeach
Corporate Existence 88
Right of State to attack Corporate Existence in Direct Pro-
ceedings 90
When does Corporate Existence commence ? 92
CHAPTER III.
ORGANIZATION OF CORPORATIONS AFTER INCORPORATION.
The Incorporators' Organization Meeting 95
Organization Meeting, how called 96
Organization Meeting, where held 96
Steps Necessary to complete Organization 98
Adoption of By-Laws 99
Election of Directors lt>0
Power to hold Meetings for the Election of Directors without
the Domiciliary State 104
Voting by Proxy 104
First Directors' Meeting 105
Election of Corporate Officers 107
Appointment of Executive Committee l'»7
Stock Assessments . 108
Certificates required to be made by Officers or Directors after
Organization 109
Time in which Corporation must organize and commence Business 1<»9
Stock Certificates 11,J
§
70.
§
71.
§
72.
§
73.
§
74.
§
75.
§
76.
§
77.
§
78.
§
79.
§
80.
§
81.
§
82.
§
83.
§
84.
5
85.
§
86.
§
87.
§
88.
§
89.
§
90.
§
91.
§
92.
§
93.
§
94.
§
95.
§
96.
§
97.
§
98.
i
99.
XIV TABLE OF CONTENTS.
CHAPTER IV.
ISSUANCE AND PAYMENT OF CAPITAL STOCK.
Page
§ 100. General Remarks as to the Issuance and Payment of Capital
Stock upon the Organization of a Corporation 112
§ 101. Manner of Payment of Capital Stock 113
§ 102. Payment of Capital Stock in Services 120
§ 103. Payment of Capital Stock in Property 120
§ 104. Statement of True Value Rule 122
§ 105 Statement of Good Faith Rule 123
§ 106. Statement of " Speculative Value Rule " 125
§ 107. Eifect of Appraisal of Property by Directors under Statutory
Authority, when taken in Exchange for Stock ..... 137
§ 108. Effect of Appraisal of Value of Property by State Officials when
the same is taken by Corporations in Exchange for their
Capital Stock 139
§ 109. Meaning of Non-Assessable Stock 141
§ 110. Meaning of Full- Paid Stock 142
CHAPTER V.
LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS.
§ 111. Statement of Principal Methods by which Legislative Control
over Domestic Corporations is obtained 145
§ 112. Amendment of Charters 145
§ 113. Reserved Right of the State to repeal Charters 153
§ 114. Legislative Control over Dissolution of Corporations .... 154
§ 115. Forfeiture of Charters 157
§116. The Police Power of the State 160
§ 117. Legislative Investigation into Corporate Affairs 164
§ 118. Legislative Requirement of Annual Reports from Corporations 164
§ 119. Inspection of Corporate Books 165
§ 120. Anti-Trust Legislation 167
§ 121. Regulation of Internal Affairs 16S
§ 122. Liability of Stockholders for Debts of the Corporation . . . 169
§ 123. Statutory Liability of Directors 174
§ 124. Extension of Corporate Existence 176
§ 125. Taxation of Domestic Corporations 177
§ 126. Regulation of the Right of the Consolidation 178
CHAPTER VI.
LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS.
§ 127. Extent of Legislative Power of the various Commonwealths
over Foreign Corporations 180
§ 128. Doctrine of State Comity 1S4
§ 129. What constitutes doing Business on the Part of a Foreign Cor-
poration within the State 190
TABLE OF CONTENTS. XV
Page
§ 130. Penalty for transacting Business in a Foreign State without
obtaining a Permit 195
§ 131. License Tax on Foreign Corporations 198
§ 132. Annual License Tax on Foreign Corporations 199
§ 133. To what Extent is the Taxing Power of the State with reference
to Domestic and Foreign Corporations engaged in Interstate
Commerce limited by the " Commerce Clause " of the Federal
Constitution ? 202
PART II.
SYNOPSIS-DIGEST OF THE INCORPORATION ACTS
OF THE SEVERAL STATES AND TERRITORIES
OF THE UNITED STATES 211-612
PART III.
FORMS AND PRECEDENTS.
Specific Object Clauses 613-652
General Object Clauses 653-654
Clauses regulating Business 654-661
Preferred Stock Clauses 661-662
Forms for Drawing Charters in all the States and Territories . . . 663-744
Foreign Corporations
Forms for procuring Permits to Transact Business as a Foreign
Corporation in the Several States and Territories 745-801
Forms for Drafting Amendments to Charters 802-810
Dissolution of Corporations 811-813
Composite Form of Minutes 813-817
Waiver of Notice of First Meeting of Incorporators 816
Proxy, Meeting of Incorporators and Stockholders 816-817
Transfer of Subscription 817
Inspectors' Oath and Certificate 817
Minutes of Organization Meeting of Directors 818-822
Secretary's Oath 8?2
Waiver of Notice of First Meeting of Directors 822
Composite Form of By-Laws 822-828
By-Laws of United States Steel Corporation 828-835
Miscellaneous Forms and Precedents 835-878
Suggestions relative to Drafting of Charters and Preparation of
Minutes for the Organization Meeting of Corporal ions .... 878-881
Table of Organization Tax for all the States arul Territories 883
Table of Annual Franchise Tax upon Domestic Corporations 884
Table of Taxes imposed upon Foreign Corporations 885 SS(»
General Index 889-911
Index to Synopsis-Digest of the INCORPORATION A.CTS of THE
Several States and Territories
Index to Forms and Precedents •"•' ■ , - tl
A TREATISE
ON THE
INCORPORATION AND ORGANIZATION
OF CORPORATIONS.
INTRODUCTION.
The development of the modern business corporation act has
been most curious and interesting. Previous to the year 1837
charters could be procured only by special act of the legislature.
In that year the legislature of Connecticut passed the first busi-
ness corporation act that went into force and effect in the
United States. It was drawn by Theodore Hinsdale, of Win-
chester, Connecticut, a Yale graduate of the class of 1821. As
this act forms the basic work of most of the business corporation
acts of to-day, it deserves more than passing notice. It was drafted
for the purpose of permitting incorporation thereunder of com-
panies for the purpose of carrying on a manufacturing, mechan-
ical, mining, and quarrying business. The statutory powers of
corporations incorporated thereunder were enumerated as follows :
To sue and be sued, to have a common seal, to elect officers, to
fix their compensation and duties, to establish by-laws, to em-
ploy agents, mechanics, and laborers. Incorporation was limited
to one purpose, to be distinctly and definitely set forth in the art-
icles of agreement which were required to be signed by all the
incorporators. A board of directors was provided for; also a
president, secretary, and treasurer. Power was given to the cor-
poration to forfeit stock of stockholders for non-payment of stock
subscriptions. The corporation also had a lien upon the stock of
its members for debts. After the articles were signed and tin-
corporation organized and the articles of association published,
1 1
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
the officers were required to make and file with the Secretary of
State (and a duplicate thereof with the town clerk of the town
where the corporation was to transact its business) a certificate
setting forth, (1) the purpose of the corporation; (2) the amount
of its capital stock; (3) the names of stockholders and the num-
ber of shares held by each. Annual reports were made obliga-
tory. Stockholders were made liable for all capital refunded
to them, and made personally liable for the declaration of illegal
dividends.
The passage as well as the operation of the first Connecticut
act was watched closely by the legislative bodies of the neighbor-
ing States, with the result that by 1850 there were in the
neighborhood of a score of general business corporation acts in
force and effect in various parts of the country, modelled with
some few exceptions closely after the Connecticut act above re-
ferred to. The operation of these general acts was so satisfac-
tory that a new element appeared in the passage by various States
of constitutional amendments forbidding absolutely the creation
of private corporations for purposes of profit by special act of
the legislature. This has been continued until at the present
time special charters cannot be procured save in seven of the
Commonwealths.
The next development is to be noted along the line of enlarge-
ment of corporate purposes and powers. Gradually the restric-
tion of the earlier incorporation acts limiting the right and
benefits thereof to those desiring to incorporate companies for
manufacturing and mining purposes was removed so as to permit
practically of incorporation for any lawful purpose. At the same
time there came a demand on the part of prospective incorpora-
tors for greater powers than were permitted at common law,
— such, for example, as the right to perform constituent acts
outside of the domiciliary State, to hold stock and bonds in other
corporations, and to amend their charters unrestrictively. In this
way there came to be found in many of the corporation acts a
large number of extraordinary powers which were not recognized
at common law. This served to greatly popularize the corporate
form of organization as compared with individual, partnership, or
joint stock company enterprises. The result which followed was
natural. The several State legislatures proceeded one after the
other to enact statutes compelling incorporators when organizing
2
INTRODUCTION.
corporations to pay a license tax graduated according to the cap-
italization of the corporation. In this way certain States — nota-
bly New Jersey, New York, Delaware, West Virginia, and Maine —
have secured a very large revenue — all to the satisfaction of the
average tax-payer.
It is characteristic of State legislatures that they never fail
to take advantage of an opportunity to relieve a majority of
voters from the burdens of taxation at the expense of a few.
Doubtless it was with this laudatory purpose in mind that they
next proceeded to enact statutes requiring corporations to pay an
annual license tax based upon either their authorized capitaliza-
tion, the amount of capital invested in the State, or the amount of
dividends paid annually to stockholders. The success of a few
States in securing large revenues from both organization and
license taxes resulted in legislative action in other States taken
with a view to securing a proper share of the incorporation busi-
ness, which had hitherto enured to the benefit of two or three
favored Commonwealths. This may be properly described as the
era of the " tramp corporation." That is, it was about this time
that there appeared a well-defined tendency on the part of incor-
porators to go outside of the State of their residence for a charter
under which they planned to do business exclusively in some
foreign State. The result has been that incorporators have grad-
ually accustomed themselves to going for their charters to those
States which are commonly known as leading incorporating
States. In this group will be found at the present time New
Jersey, New York, Delaware, West Virginia, South Dakota,
Maine, Nevada, Arizona, Connecticut, District of Columbia,
Virginia, Oklahoma, North Carolina, and Alabama.
Speaking in general terms, it may be said that a great majority
of the business corporation acts in force in this country to-day are
sadly in need of revision. Thus, for example, the incorporation
acts of Iowa, Nebraska, New Hampshire, Vermont, Rhode Island,
Arizona, Mississippi, and the District of Columbia are more or
less crude in construction, and lack many of the essentials of com-
plete and satisfactory acts. The incorporation laws of Georgia,
Pennsylvania, and Maryland are veritable " legal antiques," and
would bear revision without any injury whatever to the best
interests of those Commonwealths. The incorporation acts of
Indiana, Minnesota, Tennessee, Pennsylvania, and Louisiana are
3
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
so involved as to lead to almost certain confusion when an attempt
is made to take advantage of their provisions.
In regard to the attitude taken by the legislatures of the several
States in the framing of these General Acts, attention is called to
some remarks of the Committee on Corporations addressed to the
legislature of Massachusetts in 1903, which were as follows :
"The history of corporations, as well as the logic of the case,
shows that there are possible two general theories as to the State's
duties in creating corporations. First, the old theory that being
creatures of the State, they should be guaranteed by it to the public
in all particulars of responsibility and management; and the modern,
quite opposite theory that, in the absence of fraud in its creation or
government, an ordinary business corporation should be allowed to do
anything that an individual can do. Under the old theory the capi-
tal stock of a corporation was, in the law, considered to be a guarantee
fund for the payment of creditors as well as affording a method of
corporate enterprise. There resulted from this principle not only the
fundamental proposition that the capital stock, being in the nature
of a guarantee fund, should be paid for at its par value in actual
cash, but all the other provisions to protect creditors or other persons
having dealings with the corporation, such as that the debts of a
corporation should not exceed its capital stock, designed primarily in
the interest of creditors, and secondarily in that of the stockholders,
who are looked after as carefully as if they were wards of the State
when dealing in corporation matters. Under the modern theory, the
State owes no duty to persons who may choose to deal with corpora-
tions to look after the solvency of such artificial bodies ; nor to the
stockholders to protect them from the consequences of going into
such concerns, the idea being that in the case of ordinary business
corporations the State's duty ends in providing clearly that creditors
and stockholders shall be at all times precisely informed of all the
facts attending both the organization and the management of such
corporations, and particularly that there shall be full publicity given
to all details of the original organization thereof."
It may be of some practical value at this point to inquire briefly
what are the advantages of conducting business under corporate
management rather than as an individual or a copartnership en-
terprise. These advantages may be enumerated as follows :
First, Immunity from individual liability for debts arising out
of the conduct of the business.
4
INTRODUCTION.
Second, The securing of the element of perpetuity for the life
of the enterprise in hand, so that the death of any of the parties
interested does not interfere with the conduct of the business.
Third, The good-will and prestige of the business is not then the
property of an individual, but belongs to the corporation.
Fourth, The ease with which capital is obtained for the use of
the business through the sale of stock, thus doing away with the
danger or necessity of admitting general or special partners into
the concern.
Fifth, The facility with which money can be obtained by the
sale of bonds or preferred stock.
Sixth, The ease with which individual interests in a business
may be sold or transferred, without the necessity of obtaining the
consent of a third party to the sale.
Seventh, The removal of the danger of being ruined through
the dishonesty or extravagance of a -partner.
Eighth, The small expense connected with the incorporation of
an enterprise.
Ninth, The wide and far reaching extension of the powers of a
corporation as compared with that of individuals and copartners.
But the advantages of corporate management being stated, the
question then arises : Where should the business man of to-day go
to procure a charter for the enterprise he may have in hand 1
With forty-five States, five Territories, and the District of Columbia
all offering facilities for incorporation, the task of selection there-
from is by no means an easy one. Where the capitalization is
small or the corporate purposes simple, it is sometimes, though
not always, best to procure a charter from the State where the
principal prospective incorporators reside or where they propose
to carry on the company's business. On the other hand, if the
capitalization is to be sought in other localities, the proposed cor-
porate business interstate in character, or the prospective capital-
ization large, and the corporate purposes sought for broad in
character, then it may be of great advantage to procure a charter
in some outside State. Under such circumstances recourse is
usually had to what are recognized as the leading incorporating
States already referred to.
But to go further, it may be stated that a proper investigation
into the question as to where to look for a charter best suited to
the immediate purposes of the proposed corporation must necessa-
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
rily entail an investigation among many others into the following
matters :
1. Nature of the business corporation act of the State wherein
it is proposed to incorporate.
2. Policy of such States towards corporations, domestic and
foreign.
3. Publicity required as to the condition of corporations or-
ganized under the laws of that particular State.
4. Extent of legislative control over private corporations.
5. Nature of corporate powers desired.
6. Initial expense.
7. Amount of annual franchise tax, if any.
8. Amount of capitalization permitted, and the par value of
shares allowed.
9. Time within which the capital stock must be paid up.
10. Question as to whether stockholders' and directors' meet-
ings must be held within the State in which the charter is procured.
11. Question as to whether the principal office of the corpora-
tion may be maintained outside of the State of its organization.
12. Ascertainment of the question as to whether stock can be
legally issued for property or services instead of for cash.
13. Inquiry as to what extent the appraisal of the board of di-
rectors of the property or services paid for by the issuance of
stock is conclusive upon the creditors of the corporation seeking, in
case of insolvency, to enforce an alleged liability for unpaid stock.
14. Power to issue preferred stock.
15. Par value of the corporate shares desired.
16. Power to create debts.
17. Ease or difficulty with which the charter may be amended.
18. Amount of stockholders' liability, if any.
19. Extent of directors' liability, if any.
20. Ease or difficulty with which the corporation may be
dissolved.
21. Nature of the laws of the various States with reference to
the terms and conditions under which foreign corporations may
do business therein.
Each of the foregoing questions has its proper bearing when it
comes to deciding where to go for a charter for some particular
business enterprise which it is proposed to prosecute under the
form of corporate organization.
6
INTRODUCTION.
A discussion of each of these matters will be found in Part I.
of the present treatise.
Turning now to the character of the business corporation acts
passed by the legislatures of the various States and Territories, it
will be apparent to all that many of them are " wonderfully and
fearfully made."
If one were to attempt to characterize and compare the various
incorporation acts of the several States and Territories, it would
be found a task of great difficulty, for the reason that it is almost
impossible to find a logical basis for classification. Any number
of arbitrary classifications might be adopted, but these would be
of no value to either the practitioner or the public at large. What-
ever attempt may be made here along this line must be based
solely upon the most general lines of similarity of the incorporation
acts of various States. As a preliminary to this, it has been
noted that certain States and Territories are known and recog-
nized as "leading incorporating States." The ones to which ref-
erence is made are New Jersey, New York, Delaware, West
Virginia, Maine, South Dakota, Connecticut, Massachusetts, Ari-
zona, Nevada, District of Columbia, and Virginia. The great ma-
jority of charters taken out annually in this country are procured
in the foregoing enumerated States and Territories.
By many the New Jersey act is considered to be a model of
what a business corporation act should be. This fact, coupled
with the large revenue secured by the State of New Jersey
through this medium, has resulted in the passage in other States
of statutes modelled more or less closely after the New Jersey act.
This fact prompts the first classification that will be attempted
here, which will be termed the " New Jersey Class." Within the
limits thereof may be properly included not only New Jersey, but
New York, Delaware, West Virginia, Alabama, Nevada, North
Carolina, New Mexico, and Virginia as well.
Another classification would embrace a large number of West-
ern States and Territories, which to a greater or less extent
have modelled their corporation acts along the same general
lines as that of California. This class may properly be referred
to as the "California Class," and included therein will be
found Colorado, North Dakota, South Dakota, Oklahoma, Idaho,
Montana, Oregon, Washington, Utah, Wyoming, Texas, and
Arizona.
7
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Another group will be known as the " Maine Group," for the
reason that the plan has been therein adopted of having the cor-
poration organized before a certificate of incorporation or organiza-
tion is filed with or issued by the State officials. In this class
belong Maine, Massachusetts, Connecticut, Illinois, Missouri,
Arkansas, and Indian Territory.
Iowa and Nebraska have acts very closely resembling each
other, and may be grouped as the " Iowa Class." In another
group, which we shall call the " Pennsylvania Class," are to be
found Pennsylvania, South Carolina, Florida, Mississippi, and
Kansas. The distinguishing feature of this class is that the incor-
poration scheme adopted embraces a petition for incorporation by
the incorporators addressed to State officials, to be followed by
the filing of a certificate of incorporation if the petition is
favorably acted upon.
Another group may be known as the " Kentucky Group," in
which belong Kentucky, Ohio, New Hampshire, Rhode Island, and
Vermont. The resemblance here, it must be admitted, is more fan-
cied than real, and probably does not depend upon any actual in-
tent to copy the first Kentucky act. In the " Michigan Class " are
to be found Michigan, Wisconsin, and Minnesota, all of which
possess acts resembling each other in certain features. It is
impossible to place Georgia, Indiana, Louisiana, Maryland, and
Tennessee in any specified class. They all possess inadequate
and certainly unique business corporation acts, which are not
likely to be copied by any other State in this day and generation.
PAKT I.
INCORPORATION AND ORGANIZATION OF
CORPORATIONS.
CHAPTER I.
DRAFTING THE CHARTER.
§ 1. General Remarks on Corporate Charters. — Incorporation
is a form of expression of the sovereign political power of the
State in the creation of a juristic person possessing such limited
powers as may be granted to it by the legislative branch of our
State or national government. The growth of the corporate
form of organization affords an example of the rapid evolution
from a somewhat circumscribed beginning to proportions that
can only be described in this age of industrial trusts and com-
binations as colossal in character. Even the courts have not
infrequently called attention to the modern disposition to incorpo-
rate everything. 1
Much of this is due no doubt to the passage by the various State
legislatures of what are commonly known as " business corpora-
tion acts." The phrase " business corporation," in this connec-
tion, is a broad term, and includes all corporations engaged in
business for profit, as distinguished from municipal and eleemosy-
nary corporations. 2 The creation of corporations organized for
profit by special act is now forbidden by constitutional pro-
vision in all but seven of the States. 3 The existence through-
out the country of general incorporation acts has fully reversed •
the old policy of granting exclusive privileges of any kind to
corporations. 4
1 See In re Italian Mut Ben. Ass'n, New Hampshire, Rhode Island, Sonth
4 Pa. Dig. Rep. 357. Carolina, and Vermont.
2 Adams o. Company, Fed. Cases No. 47. * People ». Company, ISO DL268; 2
3 Connecticut, Florida, Massachusetts, N. E. 798.
9
§ 1 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
The purpose of restricting the power to create corporations by
special act has been well set forth as follows : " To inaugurate the
policy of placing corporations of the same kind upon a perfect
equality as to all future grants and powers by making such laws
applicable to all parts of the State and thereby securing the vigi-
lance and attention of its whole representation, and, finally, of
making the judicial construction of their powers or the restric-
tions imposed upon them equally applicable to all corporations of
the same class." *
It is universally recognized in this country that legislative
authority is essential to the creation of a corporation. 2 Incor-
porators cannot come together and agree to become a corporation
without conforming to legislative requirements. 3 It has been well
said " that there is an obvious reason for making such organiza-
tion by written articles of agreement a condition precedent to the
exercise of corporate rights. It is the basis upon which all subse-
quent proceedings are to rest, and is designed to take the place of
a charter or act of incorporation by which corporate rights and
privileges are usually granted. If there were no such provisions,
there would be an absence of any provision by which the right to
exercise corporate powers could be definitely fixed and established,
and there would be no means of ascertaining the rights of stock-
holders and of persons dealing with such association." 4
The charter of a company together with the general laws of the
State of its creation, enumerating and limiting the powers of all
corporations of that class, constitutes the measure of its powers,
and the enumeration thereof implies the exclusion of all other
powers except such as are incidentally or necessarily implied. 5
The instrument by which corporations are created is known by
different names in various parts of the country. The term
" charter " is a word which has descended to us from the common
law existing in England long before the United States became a
nation. It originally referred to the specific grant of certain
privileges running from the sovereign to a subject. Subsequently
it was applied in this country to a specific act of the legislature
1 Atkinson v. Company, 15 O. St. 21 ; 4 Utley v. Union Tool Co., 11 Gray
see also Ex parte Pritz, 9 la. 30. (Mass.), 139.
2 McKim v. Odom, 8 Bland's Chan- 5 G. L. & H. I. Co. v. Kamper, 73 Ala.
eery (Md.), 407. 325; Steiner v. Steiner L. & L. Co.
3 Stowe v. Flagg, 72 111. 397. (Ala.), 26 So. 494; Salt Co. v. East Sagi-
naw, 13 Wall. (U. S.) 378.
10
CHAP. I.] DRAFTING THE CHARTER. £ 1
creating a corporation with distinct and exclusive purposes and
powers. With the advent of the passage of general business cor-
poration acts in this country, the word " charter " has been re-
placed by such terms as " articles of incorporation," " articles of
association," ' k certificate of incorporation," " certificate of organi-
zation," and " petition for incorporation." It goes without saying
that under the Business Corporation Acts referred to there must
be articles of some sort properly executed. 1
It has been said that the essence of a corporation consists, first,
in its capacity to have perpetual succession under a special name
and in an artificial form; second, to take and grant property and
contract obligations, sue and be sued by its corporate name as an
individual ; and third, to receive and enjoy corporate privileges
and immunities. The first two are the privileges of the incorpo-
rators, and the third is the franchise of the corporation. 2
As far back as 1612 Lord Coke enumerated the essentials of a
corporate charter as follows : (1) lawful authority for incorpora-
tion ; (2) persons to be incorporated; (3) corporate name; (4)
domicile ; (5) words sufficient in law enumerating the purposes
and powers of the corporation. All of these essentials and many
more, which by statute are made essentials, are to be found in
the business corporation acts of to-day.
Referring now briefly to those matters which are by statute in this
country made necessary parts of articles of incorporation, the follow-
ing may be said : with the exception of Arkansas, Georgia, In-
dian Territory, Maine, Massachusetts, Mississippi, New Hampshire,
Ohio, Oregon, Rhode Island, South Carolina, Tennessee, and Ver-
mont, all have incorporation acts requiring that the duration of cor-
porate existence shall be set forth in the articles of incorporation.
Again, all but New Hampshire and Tennessee require a state-
ment as to the number and par value of shares. More than
half the States prescribe that the names of the first or tem-
porary board of directors shall be inserted in the articles, while
most of the remaining States require that the number of directors
only shall be inserted. Fully half the States authorize the inser-
tion in the articles of provisions for the issuance of preferred
stock. A few of the Commonwealths require thai the articles
1 Abbott v. Company, 4 Neb. 416; » Snail v. City of Chicago, 138 HI H.i ;
Lusk v. RiggB (Neb.), 97 N. W. 1<W3; 24 N. B. 582.
Childs v. Smith, 55 Barb. (N. V.) 45.
11
§ 2 INCOKPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
shall contain a statement as to the amount of stock subscriptions,
the amount of capital stock paid in, and the amount of capital
with which the corporation will begin business. Alaska, Arizona,
Delaware, Louisiana, Iowa, Minnesota, Nebraska, and Utah require
that the date of the annual meeting shall appear in the articles.
Alabama, Connecticut, Delaware, Maryland, Massachusetts,
Nevada, New Jersey, New York, North Carolina, South Carolina,
Utah, Virginia, West Virginia, and Wisconsin expressly authorize
the insertion in the articles of provisions for the regulation of the
internal affairs of the corporation. If it is desired to protect
stockholders from personal liability for corporate debts, there
must be inserted in the articles of incorporation of companies
organized under the laws of Arizona, Delaware, Iowa, Kentucky,
and Utah provision specifically exempting stockholders from such
liability.
And so the enumeration might be continued almost indefinitely
of special provisions required in particular States in connection
with the incorporation of corporate enterprises.
Finally, attention is called to the various steps necessary to
create a corporation under the modern business corporation acts,
qualified in every respect to carry out the purposes for which
it is formed. These steps may be enumerated as follows : (1) the
drafting of the articles of incorporation ; (2) the signing of
the articles by the requisite number of incorporators, and ac-
knowledgment of the same before an officer duly authorized to
take such acknowledgments ; (3) filing and recording the arti-
cles with the proper State and county officials after payment of
the requisite organization tax and riling and recording fees ; (4)
organization of the corporation ready for the transaction of busi-
ness ; (5) securing the necessary permit from State officials (if
any is required) to transact business within the domiciliary State. 1
§ 2. Incorporators. — An incorporator is one of the constituents
of a corporation, who by petition or by means of the execution
of articles of incorporation invokes the exercise of the supreme
political power of the State in the creation of a corporation for the
benefit of himself and associates and their successors in interest. 2
The words " corporator " and " incorporator " have essentially
1 See Carmody v. Powers, 60 Mich. 26 ; 2 In re Lady Bryan Co., 1 Saw. 349 ;
26 N. W. 80. E. & N. Y. C. R. R. Co. v. Owen, 32
Barb. (N. Y.) 616.
12
CHAP. I.] DRAFTING THE CHARTER. § 2
the same meaning. The qualifications of incorporators vary
with the State from which the charter is sought. The usual
number of incorporators required by the various acts varies from
one to five. In Iowa and Nebraska one person may incorporate. 1
Residential requirements on the part of incorporators exist in
Alaska, California, Idaho, Kansas, Maryland, New York. North
Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Texas.
Utah, and Wisconsin. Failure to state residence of incorporators
in articles is, however, not fatal to corporate existence. 4
The general rule is that citizenship is not necessary unless
specifically required by the statute of incorporators. 5 It has been
said that in the absence of statute providing otherwise incorpora-
tors must be stockholders. 6 The rule, however, appears to be
otherwise in Oregon, Pennsylvania, South Dakota, Texas, Tennes-
see, and Georgia. 7 In a majority of the States, however, statutes
expressly prescribe that incorporators must be subscribers for at
least one share of the capital stock of the proposed corporation.
If married women are under no disabilities, they may act as
incorporators. 8 Aliens may be incorporators if statute does not
provide otherwise. 9
Some of the States expressly limit the right to become incorpo-
rators to natural persons. However, where no such express limi-
tation exists, there is no question but what the word " person,"
when used in the statute limiting such matters, would not permit
corporations to act as incorporators. 10
The rule seems to be that incorporators must be of full age. 11
Incorporators must also be known persons. 12 The modern rule
1 P. B. Corporation v. Lamson, 16 Me. 67 N. W. 947 ; Ramsey v. Tod, 95 Tex.
224; Ulmer v. Company, 98 Me. 579; 614 ; 69 S. YV. 133; Bvrnesiv Beck, 10 6a.
57 Atl. 1001. 121 ; B. B. & T. Co.' v. J. B. T. Co., 101
4 State v. Foulkes, 94 Ind. 493 ; see also Tenn. 545 ; 48 S. W. 228; Wechflelherg
Halhert v. Association (Tex. Civ. App.), 34 p. Bank, 64 Fed. 90.
S. W. 636. 8 [ n re application for charter, 27
6 M. N. F. Co. v. Baumbach, 32 Fed. Weekly Notes of Cases (Pa), 399; In re
205 ; A. S. Co. v. Heidenheimer, 80 Tex. Century Club, 27 \V. N. (' (Pa.) 399.
344; 15 S. W. 1038. " Lamar v. Browne, 92 U. S. 187; 23
6 Gulliver v. Koelle, 100111.141 ; Byron- Law. Ed. 650.
ville Creamery Ass'n v. Ivers (Minn.), 100 10 C. R. Co. v. P. R. Co., 31 N. .1. Eq.
N. W. 387 ; Chase v. Lord, 77 X V. 11 ; 475; Insurance Co. v. N. II. P. Co., 37 La.
Medler v. Company, 6 N. Mex. 331. An. 233.
7 Coyote, etc. Co. v. Ruble, 8 Ore. 284 ; " Matter of Globe, etc. Ass'n, 135
Densmore Oil Co. v. Densmore, 64 Pa. St. N. Y. 280; 32 N 15. 122; II. I'. Road Co
43; Singer Mfg. Co. v. Peck. 9 S. D. 29; v. Townsend, 13 Out. Ap. Rep 534.
'-' ('. It. K. of N. J. v. P. K. K. Co., 81
N. J. Eq. 475.
18
§ 3 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
seems to be that incorporators are merely conduits for the pur-
pose of organization for the benefit of future stockholders. 1
Under this rule there can be no valid legal question raised at this
day as to the legality of the use of what are commonly known as
" dummy incorporators " in the organization of corporations. 2
§ 3. Corporate Name. — Every corporation, like an individual,
must have a name under which its business must be carried on.
It has been said " that the name goes to the very being of the cre-
ation, the knot of the combination, without which corporations
could not do their corporate acts, without which it is unable to
implead and be impleaded, to take any action until it hath gotten
a name." 3 The word " company," which is usually a part of the
corporate name, does not necessarily imply a corporation. 4 In
Alabama, Colorado, Connecticut, Delaware, Kansas, Kentucky,
Missouri, North Carolina, and Virginia statutes exist which pro-
vide that the corporate name must end with some such word as
" association," " company," " corporation," " club," " society,"
"syndicate," or "limited." 5
In a number of the States corporations upon organization are for-
bidden to take the same name as that of an existing domestic cor-
poration, or one so similar as to be calculated to deceive or cause
confusion. 6 Some few of the States go still further and forbid the
use of the name of any foreign corporation by newly created do-
mestic corporations, provided the former has secured a permit to
do business in the State. The States here referred to are Connec-
ticut, Delaware, Kentucky, Massachusetts, New York, Utah, Vir-
ginia, and West Virginia. In the absence of such statute there is
ordinarily no restriction on the right to take the corporate name
of a foreign corporation. 7
The corporate name is the property of the corporation, and
equity will protect the corporation in any jurisdiction from the
1 Densmore Oil Co. v. Densmore, 64 4 Clarke v. Insurance Co., 7 Mo. App.
Pa. St. 43. 77.
2 Salamon v. Salamon Co. (House of 5 On use of word " limited " see Sparks
Lords Cases), 45 Weekly Rep. 193; 75 v. Company, 3 Idaho, 306 ; 29 Pac. 134.
Law Times Rep. 426. But see Louisville 6 See State v. McGrath, 75 Mo. 424.
Banking Co. v. Eisenman, 94 Ky. 83; 21 ' L. V. C. Co. v. Hamblen, 23 Fed.
S. W. 531, 1049; Tillyer v. Hero Jar Co., 225; G. I. R. G. M. Co. v. G. R. Co.,
17 Phil. (Pa.) 153. 128 U. S. 598; 9 S. Ct. 166; People v.
3 Smith v. Plank Road, 30 Ala. 650 ; H. L. Sus. Co., Ill Mich. 405 ; 69 N. W.
Hazelton Boiler Co. v. Company, 137 111. 653.
231 ; 28 N. E. 248.
14
CHAP. I.] DRAFTING THE CHARTER. § 4
fraudulent use of another name so like it as to deceive the public
and rob it of its business. 1 The mere fact that the corporation
against whom a restraining order is asked for has secured a
charter in that particular State while the complaining corporation
has never been incorporated there or even procured a permit to do
business there, will not in most jurisdictions prevent the granting
of such relief. 2
Where statutes exist, such as have been referred to, forbidding
the use of similar corporate names, while the attitude of the Sec-
retary of State in such cases with respect to the issuance of a cer-
tificate of incorporation is ministerial, yet he has reasonable
discretion in the matter and cannot be mandamused when exercis-
ing such discretion. 3 In protecting the use of a corporate name
the courts proceed on the theory that such name should be pro-
tected in equity on principles analogous to those which prevail
in the use of trademarks. 4
§ 4. Corporate Purposes. — By corporate purposes is meant the
specific declaration in the articles of incorporation of the nature
of the business which the corporation is authorized to carry on.
Such statement is a matter which primarily concerns the stock-
holders, and to a less degree the State under whose authority the
corporation is created.
In the granting of corporate privileges it is important to specify
the purposes and objects because the courts should have some
guide in keeping them within the powers granted and conveyed.
Unless they be specified with particularity in the petition or in the
granting thereof, they might do as they pleased and the law be
powerless to restrain them. 5 The purposes enumerated in the
articles of association, read in connection with the general laws
under which the charter is procured, is the measure of the powers
of the corporation. 6
1 Ind. Mut. Dep. Co. v. Central Mut. Higgins Soap Co., 144 N. Y. 462; 39
Dep. Co., 23 Ky. L. R. 2247; 66 S. W. N. E. 490; American Clay Mfg. Co. v.
1032. American Clay Mfg. Co., 198 Pa. St. 189 ;
2 Ind. Mut. Dep. Co. v. Central Mut. 47 Atl. 936; Hazleton Boiler Company v.
Dep. Co., 23 Ky. L. K. 2247 ; 66 S. W. Hazleton T. Boiler Co., 142 111. 494 ; 30
1032 ; P. T. S. D. I. Co. v. P. T. Co., 123 N. E. 339.
Fed. 534. 5 In re John II. Dcveaux ft <//., 54 6a
3 State ex rel. v. McGrath, 92 Mo. 355. 673.
* P. T. S. 1). 1. Co. v. P. T. Co., 123 o G. B. & M. B. Co. v. Union Steam-
Fed. 534; Grand Lodge v. Graham, 96 boat Co., 107 |:. s. 98; 27 I,. E. 413; Suit
Iowa, 592; 65 N. W. 837 ; Higgins Co. v. Co. r. Last Saginaw, 13 Wall. (U. B.) '.7 s
L5
§ 4 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
It must be remembered that articles of association under general
acts are the productions of private citizens gotten up in the interest
of the parties who propose to become incorporated, and who are
stimulated by their zeal for personal advantage rather than for the
general good. They are, so far as permitted in accordance with
the law, substitutes for legislative action in the place of the will
of the people of the State as formerly expressed by acts of the
legislature. While it was true at one time that all grants from
the State to corporations were strictly construed, this principle has
been subject to considerable modification of late years. This is
owing to the passage of general incorporation acts which were un-
doubtedly framed and passed with the intent to liberalize the law
in respect to such grants. 1
" It is fundamental that a corporation can be created and exist
only by statutory authority, and if a corporation organizes under
a general act and inserts in its articles of incorporation regula-
tions and provisions additional to those required by the creative
statute, such additional regulations and privileges are voidable at
the will of the State, nor is the corporation permitted to place any
restrictions on the manner of exercising its corporate duties other
than the statute provides. If the corporation claims the right to
exist for a certain purpose, it must show that it was organized
under a statute authorizing the creation of a corporation for that
particular purpose." 2
The statutes of the various States differ of course with respect
to the character of the purposes for which corporations may be
formed. Some of them permit incorporation for any lawful busi-
ness, without any limitations whatsoever. The phrase " other
lawful business," found in so many of the statutes, is, according to
the weight of authority, held not to be subject to the noscitur a
sociis rule, and is used as a " catch-all " for the purpose of includ-
ing any kind of business for pecuniary profit not otherwise pro-
vided for. 3 In setting out the purposes, this must be done with
reasonable certainty and definiteness. For example, an appli-
cation for a charter was refused in Pennsylvania, where it was
stated that, in addition to certain enumerated objects, the
1 Finnegan v. Noerenberg, 52 Minn. 3 Brown v. Corbin, 40 Minn. 508 ; 42
239; 53 N. W. 1150. N. W. 481 ; Green v. Breard, 35 La. An.
2 Indiana Bond Co. v. Ogle et al., 22 875 ; Dittman v. Company (N. J.), 54 Atl
Ind. Ap. 593 ; 54 N. E. 407. 570.
16
CHAP. I.] DRAFTING THE CHARTER. § 4
corporation was organized for " such other purposes as might be
agreed upon in the future." 1
In many of the States express mention is made of the various
specific purposes for which corporations may be created. As a
general rule the incorporators are required to set out in their
articles of association the specific purpose or purposes for which
the proposed corporation is to be organized. 2
Turning now to the various States, we find the following statu-
tory provisions relative to the purposes for which business cor-
porations may be created. In Alabama for any general business
or lawful enterprise. In Arizona for the transaction of any law-
ful business. In Arkansas for the transaction of any lawful
business. In Colorado for any lawful purpose. In California for
any purpose for which individuals may associate themselves. In
Connecticut for the transaction of any lawful business. In Dela-
ware for the transaction of any lawful business or to promote or
conduct any legitimate object or objects. In the District of Co-
lumbia any enterprise or business which may be lawfully con-
ducted by an individual, except banking, real estate, and railroads.
In Florida for the transaction of any lawful business. In Georgia
for any purpose intended for pecuniary profit. In Idaho for any
purpose for which individuals may lawfully associate themselves.
In Illinois for any lawful purpose. In Indiana for the transac-
tion of any kind of mining, mercantile, chemical, and manufactur-
ing business ; also grain elevator, union stock yards, and transit
companies. In Iowa for the transaction of any lawful business.
In Kansas for the transaction of any kind of manufacturing,
mining, chemical, and mercantile business. In Kentucky for
the transaction of any lawful business, or to promote or conduct
any legitimate object or purpose. In Louisiana for the transaction
of any lawful business, except stock jobbing. In Maine for the
transaction of any lawful business. In Maryland for the trans-
action of any kind of mining, manufacturing, chemical, or mer-
cantile business ; also for shipbuilding and industrial purposes,
and for the transportation of the products of any manufacturing or
mining corporation. In Massachusetts for any lawful purpose
except to buy or sell real estate or to sell or manufacture intoxi-
cating liquors. In Michigan for the transaction of any lawful
1 In re Journalists' Fund, 8 Phil. 212. a See Hughes v. Company, 34 Md. 316.
2 17
§ 4 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
business, but only a manufacturing and a mercantile business can
be carried on by the same corporation. In Minnesota for the
transaction of any lawful business. In Mississippi for any lawful
purpose. In Missouri for any purpose intended for profit or
gain. In Montaua for the transaction of any kind of manufact-
uring, mining, chemical, or mercantile business, or for any lawful
commercial or industrial business, or for carrying on any branch
of business designed to aid in or protect the interests of the
company. In Nebraska for the transaction of any lawful busi-
ness. In Nevada for any branch of trade or business, commerce,
foreign or domestic. In New Hampshire for the transaction of
any lawful business. In New Jersey for any lawful purpose or
purposes whatever. In New Mexico for mining and manufactur-
ing or other industrial purposes. In New York for any lawful
purpose or purposes. In North Carolina for engaging in any
lawful business. In North Dakota for any purpose for which in-
dividuals may lawfully associate themselves. In Ohio for any
purpose for which individuals may lawfully associate themselves,
except for carrying on a professional business. In Oklahoma for
mining, manufacturing or other industrial purposes. In Oregon
for the purpose of engaging in any lawful enterprise, business
pursuit, or occupation. In Pennsylvania for the transaction of
any lawful business, but not for more than one kind of business.
In Rhode Island to carry on any ordinary business. In South
Carolina for any purpose or purposes whatsoever or two or more
combined. In South Dakota for the transaction of any lawful
business. In Tennessee for the trade of the merchants, and for
mining, boring, manufacturing, and other specified purposes. In
Texas for manufacturing or mining and the purchase of goods,
wares, and merchandise ; also for buying and selling agricultural
products and for other specified purposes. In Utah for any pur-
pose for which individuals may lawfully associate themselves.
In Vermont for carrying on any object or business not repugnant
to public policy or the laws of the State. In Virginia for any pur-
pose which may be lawfully conducted by individuals or by a body
politic and corporate. In Washington for any trade or business.
In West Virginia for any purpose or business useful to the public
for which a firm or copartnership may be lawfully formed. In
Wisconsin for any lawful business or purpose whatever. In
Wyoming for the transaction of any kind of manufacturing,
18
CHAP. I.] DRAFTING THE CHARTER. § 5
mining, mercantile, and chemical business or any business designed
to aid in the industrial or productive interests of the country.
The foregoing enumeration of purposes for which corporations
may be created in the various Commonwealths named above,
should be qualified by the statement that in most of them special
acts are provided for certain classes of corporations, such as
banks, trust companies, insurance companies, etc., under which
corporations of that character must be incorporated. Among the
few States in which corporations may be created for any lawful
purpose whatever including the excepted classes above referred
to are Alabama, Virginia, and West Virginia.
Finally, attention is called to the fact that in some few of
the Commonwealths the statutes require that the certificate set
forth the particular trade to be carried on. Such a provision is
in legal effect equivalent to requiring that the purpose or object
of the proposed corporation be set forth.
§ 5. Number of Corporate Purposes Permitted. — Difficulty fre-
quently arises in determining whether under the provisions of
some particular business corporation act parties may incorporate
for the transaction of more than one line of business. In some
of the States, notably, Alabama, Connecticut, Delaware, Maine,
Massachusetts, Nevada, New Jersey, New York, North Carolina,
Virginia, and West Virginia, the acts are so framed as to clearly
authorize incorporation of companies for any number of purposes
not covered by special acts. In all the remaining States, with the
exception of District of Columbia, Indiana, Kansas, Louisiana,
Michigan, Missouri, Ohio, Pennsylvania, Tennessee, Texas, and
Wyoming, the matter is greatly simplified by State officials con-
struing the statutes of their respective States to permit the incor-
poration of companies for the transaction of any number of lines
of business not regulated by special statutes.
In Georgia, Indiana, Maryland, Michigan, Pennsylvania, Tenn-
essee, and Texas the different lines of business are divided into
classes. Generally speaking, parties are not permitted to incor-
porate for lines of business included in more than one of these
classes. 1 In Wyoming the law requires the certificate of incor-
poration to have but one general object. In Ohio only one
purpose may be inserted. In Kansas and Missouri the number of
purposes is only limited by the provision of law that the name of
1 The rule is otherwise in Indiana and Maryland.
19
§ 5 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
the corporation shall indicate the nature of the business to be
carried on by it.
Some suggestions along the line of determining the question as
to the number of purposes which may be inserted in articles of
incorporation in any particular States may be here presented,
Where the statute permits corporations to be formed for several
purposes named in the alternative, separated by the disjunctive
conjunction " or," it is held that a corporation cannot be organized
thereunder for more than one of such purposes, and that articles
of incorporation which include more than one of them are void,
and that incorporation under them will be refused. 1
Again, it would appear that where incorporation for only one
purpose is permitted, incorporators must make a choice of such
purpose themselves in the first instance, for the courts have quite
generally refused to make it for them. 2
On this general subject the Supreme Court of Texas in a recent
case spoke as follows : " A charter must set forth the purpose for
which it is formed. This for the reason that if it had been in-
tended that a corporation might be created for two or more of the
purposes specified in the statute, it would have been proper to
have stated ' purpose or purposes for which it is formed.' The
use of the word ' purpose ' in the singular number tends to show
that it was the intention of the legislature to authorize the
creation of a corporation for only one purpose. It may be true
that the use of the singular number may not be the conclusion of
the question, and that if there were other purposes in the act
which either by express declaration or clear implication indicate
that it was intended to authorize incorporation for two or more of
the designated purposes, whether in the same subdivision or not,
we should so hold. 3
Finally, it may be said that unless the statute expressly or
impliedly permits the insertion of more than one purpose in the
articles, the insertion of two or more purposes therein will clearly
justify State officials in refusing to allow the filing of the same. 4
i State v. Beck, 81 Ind. 500; In re 8 Ramsey v. Tod, 95 Texas, 614; 69
John H. Deveaux et al., 54 Ga. 673. S. W. 133.
M Williams v. Company, 25 Ind. Ap. 4 Ind. Bond Co. v. Ogle, 22 Ind. Ap.
351 ; 57 N. E. 581 ; Bayou Cook Nav. & 593; 54 N. E. 407; Woodberry v. Mc-
Fisheries Co. v. Doullut (La.), 35 So. Clurg, 78 Miss. 831; 29 So. 514; Kins-
729 ; Or. Ry. & Nav. Co. v. Company, 130 ton, etc. Co. v. Stroud, 132 N. C. 413 ;
U. S. 1 ; 9 S. Ct. 409 ; State v. Company, 43 S. E. 9.
88 Wis. 512; 60 N. W. 796.
20
CHAP. I.] DRAFTING THE CHARTER. § 6
§ 6. Collateral Attack upon Corporate Purposes and Powers. —
The term " collateral attack," as used in corporation law, has
reference to the attempt of parties other than the State (in direct
proceedings) to question the validity of a corporation's existence
and purposes or its right to exercise corporate powers. The law
reports are full of conflicting decisions relating to the general
subject of collateral attack upon corporate existence, purposes,
and powers. The seemingly hopeless confusion which exists
among the courts on this subject is largely due to a failure on
their part to recognize that the matter has, by a gradual process
of statutory and judicial legislation, become at the present time
an academic one. It is proposed at this point to discuss at
length not only the question of the right to collaterally attack
the legality of corporate purposes as set forth in articles of incor-
poration, but as well to consider in this same connection the right
to collaterally attack the validity of corporate existence and the
right to exercise corporate powers. This for the reason that all
these questions are so closely related to each other as to properly
permit of discussion at one and the same time.
At the outset, a word should be said as to the policy that would
seem to dictate the establishment of statutory and judicial rules,
forbidding the impeachment by indirect methods of a corpora-
tion's right to exist. In the first place, such attacks are rarely
made except in an attempt to defeat the ends of justice, by
setting up defences to actions brought against debtors by cor-
porations, in which the parties interposing the same have generally
no direct interest whatever. If the State legislatures had not by
legislation, and the courts by an extended application of the doc-
trine of estoppel, forbidden such collateral inquiry into these
matters, it would have been impossible in a great number of cases
for litigants to enforce their just rights in courts of law. If such
a right were admitted in one case, it must be in all. Corpora-
tions might thus be called upon years after their creation to es-
tablish the validity of corporate existence, purposes, and powers,
which public policy should hold to be valid as against all parties
except the State. 1
Having already observed that the question of the right to col-
laterally attack corporate existence, purposes, and powers h;is
become largely an academic one, it will now be proper to sub-
1 Duggan v. Conipauy, 11 Col. 113; 17 I'ac. 105.
21
§ 6 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
stantiate this statement. That the discussion of this question
may proceed along logical lines, attention is first called to the
alleged right to collaterally attack the validity of corporate
existence.
In twenty-six of the States and Territories collateral inquiry
into the legality of corporate existence is expressly forbidden by
statute, the right to impeach such existence being expressly re-
served to the State alone by means of direct proceedings brought
for that purpose. 1 Thus, in California it is provided that where
a corporation claims in good faith to be a corporation and doing
business as such, its right to exercise corporate powers shall not
be inquired into collaterally in any private suit to which such
de facto corporation may be a party.
In Delaware the law provides " that no corporation shall be
permitted to set up or rely upon the want of legal organization as
a defence in any action against it, nor shall any person transact-
ing business with such corporation, or sued for injury to its prop-
erty be permitted to rely upon such want of legal organization as
a defence." In Georgia the law provides that the existence of a
corporation claiming a charter, under the color of law, cannot be
collaterally attacked, and that all who dealt with the corporation
as such are estopped from denying its corporate existence. In
Iowa, Kentucky, and Nebraska statutes exist essentially the same
as that in force in Delaware as cited above. In Nebraska the law
provides that evidence that the corporation is doing business
under a certain name shall be prima facie proof of its due incor-
poration or existence pursuant to law.
In Montana collateral inquiry into corporate existence is ex-
pressly forbidden, until the fact that there was in fact no such cor-
poration has been adjudged in a direct proceeding brought for
that purpose. In South Carolina, it is provided that no irregu-
larity shall be held to vitiate the corporation until a direct pro-
ceeding to set aside or annul the charter be commenced by the
proper authorities of the State, and all acts and contracts entered
into shall have the same force and effect as if no irregularity existed.
In South Dakota, North Dakota, and Oklahoma the law provides
that the due incorporation of any company claiming in good faith
to be a corporation and doing business as such, its right to exer-
i See Boyce v. Church, 46 Md. 359 ; W. & M. W. R. Co. v. Supervisors, 64 Cal.
69 ; 28 Pac 496.
22
CHAP. I.] DRAFTING THE CHARTER. § 6
cise corporate powers shall not be inquired into collaterally. In
Tennessee the law provides that the validity of corporate existence
shall not be collaterally questioned. Persons acting as a corpora-
tion, the law says, will be presumed to be legally incorporated un-
til the contrary is shown, and no such franchise shall be declared
annulled or forfeited except in a regular proceeding brought for
that purpose. In Texas no person who shall have assumed an
obligation to an ostensible corporation as such shall resist the
enforcement of such obligation on the ground that there was no
such corporation until that fact has been adjudged in a direct
proceeding for that purpose.
In Arizona persons acting as a corporation under the provisions
of the incorporation act in force in that Territory are by law pre-
sumed to be legally organized until the contrary is shown, and no
franchise can be declared to be annulled or forfeited except in reg-
ular proceedings brought for that purpose. The law also provides
that no persons acting as a corporation under such act shall be per-
mitted to set up or rely upon the want of legal organization as a
defence to any action brought against them as a corporation, nor
shall any person who shall be sued under a contract made with
such corporation sue for an injury done to its property or for a
wrong done to its interest be permitted to rely upon such want of
legal organization in his defence.
Finally, in Mississippi it is provided that it shall not be a defence
in any action against a corporation that there was a defect or in-
formality in its organization.
Again in twenty-nine of the States authority is given to State
officials to issue certificates of due incorporation. Of this number
fourteen are not included in the list of States forbidding collateral
attacks upon corporate existence. In such States it is safe to say
that the issue of such a certificate is in itself a final adjudication
against all parties except the State that a corporation has a legal
existence to the extent that it cannot be collaterally attacked by
third parties. Particularly where it is organized by the voluntary
action of the requisite number of incorporators with the approval
and consent of an officer of the State possessing authority in the
premises, under an enabling statute permitting corporations of
that particular description to be organized thereunder. 1
1 O'Brien v. Curnmin^s, IS Mo. Ap.
197 ; Boyce v. Church, 4G Aid. 359.
23
8 6 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
The theory upon which the rule here stated is based seems to be
that State officials in issuing a certificate of due incorporation act
under a general statute passed by the legislature, and under the
terms thereof become agents as it were thereof for that purpose.
It therefore follows that the act of such State officials in certify-
ing as to due incorporation, is in effect the act of the legislature
which has the supreme power of creating corporations. So it
may be safely said that, according to the best current of authority,
where the statute gives the State official authority to issue a cer-
tificate of due incorporation, such certificate is evidence thereof
against all the world except the State. 1
Again it should be noted that in manv of the States the statute
itself gives certain probative force to the charter so issued, by provid-
ing that the certificate of incorporation, or a certified copy thereof,
shall be evidence to a certain designated extent and for certain
purposes. Thus in Connecticut, Kansas, Minnesota, North Dakota,
and Ohio statutes exist providing that a certified copy of the cer-
tificate of incorporation shall be prima facie evidence of the legal
existence of the corporation. In Colorado, Oklahoma, Oregon,
Texas, West Virginia, and Wyoming statutes provide that such cer-
tificate shall be evidence of the existence of the company. In Cal-
ifornia, Colorado, Idaho, Illinois, Louisiana, Montana, Nevada,
North Dakota, South Dakota, Oklahoma, Utah, Washington, and
Wyoming such a certificate is prima facie evidence of the facts
therein stated. In New York the certificate of incorporation of any
corporation when duly filed is presumptive evidence of its incor-
poration. In Arkansas a certified copy of the articles is made
prima facie evidence of the due formation and of the existence
and capacity of the corporation. In Colorado it is made evidence
l Petty v. Hayden, 115 Iowa, 212; 88 Jones v. Dana, 24 Barb. 395; Taylor v.
N. W. 339 ; Cochran v. Arnold, 58 Pa. St. Company, 91 Me. 193 ; 39 Atl. 560 ; Finch
399 ; Litchfield Bank v. Church, 29 Conn. v. Ullman, 105 Mo. 255 ; Saunders v.
137; Napier v. Poe, 12 Ga. 170; Caro- Farmer. 62 N. H. 572 ; Union Water Co. v.
lina Iron Co. v. Abernathey, 94 N. C. 545; Kean, 52 N. J. Eq. Ill ; 27 Atl. 1015 ;
Casey v. Galli, 94 U. S. 673; 24 L. E. 168, U. S. Vinegar Co. v. Schlegel, 143 N. Y.
307 ; Lake Sup. Nav. Co. v. Morrison, 22 537 ; 38 N. E. 729 ; W. & P. Ry. Co.
U. C. C. P. 217; Birds Case, 1 Simon v. Company, 114 N. C. 690; 19 S. E.
(n. s.), 47 ; 40 Eng. Ch. 47 ; In re Barneds 646 ; Carroll v. Bank, 19 Wash. 639 ; 54
Bakery Co., L. R. 2 Ch. 674 ; O'Brien v. Pac. 32 ; Vermont, etc. Ry. Co. v. Com-
Cummings, 13 Mo. Ap. 197; N. P. C.I. pany, 34 Vt. 2; Grubb v. Company, 14
Co. v. Company, 16 Utah, 246; 52 Pac. Pa. St. 305; W. P. R. Co. v. Young, 12
168; Holman v. State, 105 Ind. 569; 5 Md. 476.
N. E. 702 ; State v. Carr, 5 N. H. 367 ;
24:
CHAP. I.] DRAFTING THE CHARTER. § 6
of the existence of the corporation. In Connecticut it is evidence
of the legal existence of the corporation, and it is there provided
that it shall serve all the purposes of a charter for the corporation.
In Delaware it is made evidence in any court of law or equity.
In Georgia a certified copy of the petition for incorporation and
order granting the same is made evidence of such incorporation
in any court. In Kentucky the law provides that it may be used
as evidence in any action for or against the corporation. In
Maryland it may be used as evidence in all legal proceedings. In
Michigan it is prima facie evidence of the due formation, exist-
ence, and capacity of such corporation. In Minnesota it is pro-
vided that it shall be evidence in all courts of such incorporation.
In New Jersey it is evidence in all courts and places. In North
Carolina it is prima facie evidence of the organization and incor-
poration of the company purporting thereby to have been estab-
lished. In Pennsylvania it is evidence for all purposes. In Rhode
Island a certificate must be received in evidence before any court,
tribunal, or authority. In Tennessee it is competent evidence in
any proceeding. In "West Virginia it shall be received as evidence
of the existence of the corporation. In Wyoming it is provided
that it shall be evidence of the existence of the company.
Again, in Massachusetts and Indiana the law provides that the
certificate of record shall be conclusive evidence of the existence of
such corporation. In Wisconsin it must be received as conclusive
evidence of the existence of the corporation or of the organization
thereof in all cases where such facts are collaterally involved.
Again, in Alabama the certificate of the probate judge states
specifically that the incorporators are duly organized as a corpora-
tion for the purposes expressed in the declaration, having the
power, capacity, and authority conferred by law. In Florida the
law provides that " letters patent " shall be conclusive evidence of
the existence of the corporation in all actions where the question
of the existence is only collaterally involved, and prima facie evi-
dence in all other actions and proceedings. In Indiana the order
of the court declaring the existence of a corporation entered " ex
parte " is conclusive as to the fact of such existence. In Missis-
sippi the law provides that the powers specified in the charter
shall by the approval of the Governor be vested in such corpora-
tion, and it shall go into operation at the time and on the terms
and conditions specified.
§ 6 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
Again, certain statutes exist providing that after certain pre-
liminary steps have been taken as prescribed by statute such
incorporators and their successors and assigns shall thereupon
become a body politic and corporate for certain specified purposes.
These statutes really provide that upon the observance of certain
specified preliminary conditions relative to the making and execu-
tion of articles of incorporation, the incorporators, their suc-
cessors and assigns, shall be a body politic and corporate under the
name and for the purposes stated in the articles. The foregoing is
the statutory provision as it exists to-day in substance in South Da-
kota, North Dakota, and Oklahoma. In Virginia the law provides
that they shall be a body politic and corporate by the name set
forth in the said certificate and upon the terms and powers set forth
therein, so far as not in conflict with law. In Pennsylvania the
law provides that they shall become a corporation upon the pur-
poses and terms named in the charter. In Maryland they are
declared to thereby become a body politic and corporate according
to the objects, purposes, articles, conditions, and provisions in said
instrument contained. In Maine they are declared to be a corpo-
ration, with all the rights and powers and subject to all the duties,
obligations, and liabilities provided by law.
In Connecticut a copy of the certificate of organization is prima
facie evidence that the corporation has been duly organized and
is duly authorized to exercise all its corporate powers. In Maine
the certificate of the Secretary of State that the corporation has
been duly organized is evidence of the corporate existence of the
corporation. In South Carolina a certificate is issued by the Sec-
retary of State that the corporation is fully authorized to com-
mence business under its charter for the purposes indicated in
the written declaration of the incorporators.
It is not claimed that the statutory provisions here referred to
operate so as to preclude entirely collateral attack upon corpo-
rate existence, purposes, and powers. The most that is claimed
for them where they do not make certain instruments conclusive
evidence of corporate existence, purposes, and powers, is that they
shift the burden of proof and render the likelihood of collateral
attack more remote. 1
1 As to meaning of conclusive evidence, of prima facie evidence, see Holmes v. Gil-
see American Order, etc. v. Merritt, 151 liland, 41 Barb. (N. Y.) 569; Knapp, etc.
Mass. 558; 24 N. E. 918. As to meaning Co. v. Strand, 4 Wash. 686; 30 Pac. 1063;
26
CHAP. I.] DRAFTING THE CHARTER. § G
It has now been fairly demonstrated, it is hoped, that in the
majority of the Commonwealths collateral inquiry into corporate
existence is either prohibited by statute or else is forbidden by
implication, by reason of the issuance of certificates of due in-
corporation, under proper legislative authority, by State officials.
In the few remaining States and Territories the courts have either
by a process of judicial legislation or by an extended application
of the principle of estoppel, practically made it impossible to
successfully attack in collateral proceedings the due existence
of a corporation. This on grounds of enlightened public policy. 1
The judicial legislation above referred to covers the cases where
it is impossible to apply principles of estoppel either on account
of the absence of any conduct on the part of parties litigant show-
ing their recognition of the corporation's existence, or else is
inapplicable by reason of such parties having never in any way
dealt with the corporation or recognized its corporate existence. 2
Having now considered at some length the question as to the
right to collaterally attack the validity of corporate existence,
there naturally follows an inquiry as to the right to attack the
validity of corporate purposes and powers when the same are in-
serted in the articles of incorporation. It would seem to follow,
as a logical sequence, that if the rule be once established forbid-
ding collateral attack upon corporate existence, this same rule
should operate as well to prevent collateral attack upon corporate
purposes and powers. This for the reason that if a corporation
exists at all it must necessarily exist with such purposes and
powers as are inserted in the articles of incorporation which
called the corporation into being.
As has already been observed, a large number of the States have
enacted statutes forbidding collateral attack upon corporate exist-
ence. For the reasons already stated, it would appear that these
statutes would he equally efficacious for the purpose of prohibiting
collateral attack upon corporate purposes and powers.
Eastern Plank Road Co. v. Vaughan, 14 863; Saunders v. Farmer, f>2 N. II. 572;
N. Y. 546; Hates v Wilson, 14 Col. 140; Hackeusack Water Co. v. DeKay, 86 N. J.
24 Pac. 99; Wool v. Company, 56 Conn. Eq. 548; U. S. Vinegar Co. v. Schlegel,
87; 13 Atl. 137; Jewell v. Company, 101 143 N. Y. 537; 38 N. B. 729; W. S P
111.57. Kv. Co. v. Company, 114 N. C. 690; 19
1 See Case v v. Galli, 94 U. S. 673 ; Dug- S. E. 646 ; Reynolds v. Myers, 51 Vt. 144;
gan v. Company, n CoL 118; 17 Pac. Carroll v Bank, 19 Wash. 689 J 54 Pac 82.
105 ; McClinch V. Sturgis, 72 Me. 288; a See Marion Savings Hank v. Dunkin,
Finch v. Ullman, 105 Mo. 255; 16 S. W. 54 Ala. 471.
27
§ 7 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
Again, as has already been stated, a large number of the in-
corporation acts provide that the certificate of incorporation shall
be issued by certain designated State officials. Where such cer-
tificates are issued under express or even implied authority of the
State, the rule unquestionably is that the validity of corporate
purposes and powers not per se illegal, inserted in the articles of
incorporation, cannot be attacked except by the State in a direct
proceeding brought for that purpose. 1
If, however, the charter is issued without the express or im-
plied approval of the State officials, — their duty being merely to
certify to the fact and to mark them when filed as public documents
in their respective offices, — then the insertion of purposes not
authorized by the statute, yet not unlawful per se, would probably
not render the charter valid for all purposes even when filed. 2
To sum up briefly the propositions herein presented, it may be
said that collateral inquiry into the legality of a corporation's ex-
istence, purposes, and powers is forbidden in this country, (1) by
statutes expressly forbidding such collateral attack ; (2) by
reason of authority vested in state officials to issue certificates of
due incorporation which for the reasons already stated are not
open to collateral attack ; (3) by reason of statutory provi-
sions giving to certified copies of articles of incorporation certain
probative effect ; (4) by an extended application of the principle
of estoppel forbidding such collateral attacks ; (5) by a process
of judicial legislation denying on grounds of public policy the right
of parties other than the State to attack the legality of corporate
existence, purposes, and powers.
§ 7. Effect of Inserting Illegal Purposes. — There seems to be a
sound basis in law for permitting collateral attack upon purposes
that are illegal per se. This for the reason that a distinction
clearly exists between purposes which are merely unauthorized
i State ex rel. Walker v. Talbot, 123 Mo. 399 ; Casey v. Galli, 94 U. S. 673 ; Fortier
69; 27 S. W. 366; Doty v. Patterson, 155 v. Bank, 112 U. S. 439; 5 S. Ct. 234
Ind. 60; 56 N. E. 668; T. A. L. Co. v. Niemeyer v. L. R. J. Ry., 43 Ark. Ill
Massey (Tenn.), 56 S. W. 35 ; Allbright 2 Williams v. Company, 25 Ind. Ap
v. Association, 102 Pa. St. 411. See also 351 ; 57 N. E. 581 ; Kinston, etc. Co. v
People v. Beach, 19 Hun, 259 ; N. Orleans, Stroud, 132 N. C. 413 ; 43 S. E. 913 ; Ram
etc. R. R. Co. v. Frank, 39 La. An. 707 ; sey v. Tod, 95 Tex. 614 ; 69 S. W. 133 ; Or
2 So. 310; Holmes v. Gilliland, 41 Barb. Ry. & Nav. Co. v. Or. Ry. Co., 130 U. S
N. Y. 569; Eastern Plank Road Co. v. 1 ; 9 S. Ct. 409; State v. Company, 88 Wis.
Vaughan, 14 N. Y. 546; C. & P. Co. v. 512 ; 60 N. W. 796 ; G. L. H. Ins. Co. u.
Secretary of State, 128 Mich. 621; 87 Kamper, 73 Ala. 325.
N. W. 901 ; Cochran v. Arnold, 58 Pa. St.
28
CHAP. I.] DRAFTING THE CHARTER. § 8
by the terms of the general incorporation act, and those purposes
which are forbidden by express statute, — civil or penal. In the
latter case it seems clear that even the approval by a State official
of such unlawful purposes as evidenced by the issuance by them
of certificates of due incorporation, do not forbid collateral attack
thereon in any suit whereby the corporation seeks to benefit by
the insertion of such unlawful purposes in its articles. 1
The rule might be still further extended so as to apply to pur-
poses which may be lawful in a general way, yet which may be
deemed unlawful on account of the limitations inserted in the
articles upon the means by which such purposes are to be carried
out. 2 The same principle would apply where the purposes are
clearly contrary to the public policy of the State. 3 But if pur-
poses are lawful on their face, they will, as against all but the
State, be presumed to be such. 4 Where some of the purposes are
merely unauthorized, while others are valid and proper, the
insertion of the unauthorized purposes will not vitiate the incorpo-
ration. 5 But where any of the purposes are illegal per se, the State
officials would be clearly justified in refusing to allow the articles
to be filed, though some of them are lawful. 6
§ 8. Corporate Powers, Classification of. — By " corporate
powers " is meant the right or authority of a corporation to act
along certain lines prescribed for it in the instrument whereby it
was created. The tendency of modern decisions is to assimilate
the powers of private corporations to those of individuals and
copartnerships." It is unnecessary to say that a corporation can-
not assume for itself powers of action, irrespective of statute, by
the mere declaration thereof in its articles of incorporation. 8
Neither can they be created by by-law. 9
The Supreme Court of the United States 10 has observed that
1 F. N. Bank v. Company, 59 Ohio St. 4 U. S. Vinigar Co. v. Foehrenk-uh,
316 ; 52 N. E. 834 ; In re DuQuesne 148 N. Y. 58; 42 N. E. 403.
College, 2 Pa. Dint. Ct. Rep. 555; Mat- 5 Skick v. Company, 15 Iud. Ap. 310;
ter of Agudath Hakehiloth, 18 N. Y. Mis. 44 N. E. 48.
Rep. 717; 42 N. Y. Sup. 985; State v. 6 State v. Company, 88 Wis. 512 ; 60
Company, 29 Neb. 700; 46 N. W. 155. N. \V. 796.
2 Or. Ry. & Nav. Co. v. Or. Ry. Co., 7 Fink v. Company, 5 Ore. 301 .
130 U. S. 1 ; 9 S. Ct. 409. 8 People v. Green, 1 16 Mich. 505 ; 74
8 Scheutzen Bund v. Agitations Verein, N. W. 714.
44 Mich. 313 ; 6 N. VV. 675 ; McGrew v. 9 Andrews v. Company, 37 Me. 256.
C. P. Ex., 85 Tenu. 572 ; 4 S. W. 38; In 10 Thomas v. Company, 101 U. S. 71.
re Benefit Society, 10 Phil. 19; People v.
Company, 130 111'. 268; 22 N. E. 798.
29
§ 9 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
" we take the general doctrine to be that the powers of corpora-
tions organized under general statutes are such and such only as
are conferred by statute. Conceding the rule applicable to all
statutes, that what is fairly implied is as much granted as what
is expressed, it remains that the charter of the corporation is
the measure of its powers, and that the enumeration of these
powers implies the exclusion of all others."
The foregoing is true only as to certain classes of powers which
are hereinafter referred to as " express powers." The rule is not
applicable either to what are known as " common law papers " or
to the " incidental powers " of corporations. Corporate powers
may properly be divided into three general classes, to wit :
(1) Common Law Powers ; (2) Express Powers ; (3) Incidental
Powers. Generally speaking, there is no existing rule or prin-
ciple by which corporations created for a certain specific object
or to carry on a particular trade or business are to be held to be
prohibited from all other dealings or transactions not coming
within the exact scope of those designated. Undoubtedly the main
business of a corporation is to be confined to that class of opera-
tions which properly appertains to the general purposes for which
this charter was granted. But it may also enter into contracts
and engage in transactions which are incidental or auxiliary to the
main business, or which may become necessary or profitable in
the care and management of the property which it is authorized
to hold. The same is true as to certain powers which are held
to exist at common law even in the absence of any specific refer-
ence to such powers in the articles of incorporation.
§ 9. Common Law Powers, Definition of ; Enumeration of. —
Common law powers are those which the law bestows upon cor-
porations irrespective of statute or charter provisions, as being
necessary for the carrying out of the purposes for which it was
created. 1 The common law gives to corporations the powers
belonging to corporations of their class, unless there is some-
thing in the nature of the corporation or in the terms of its
charter, or in the act under which it was incorporated inconsis-
tent with the exercise of the powers, or there is some general
statute restricting the same. 2
1 Falconer v. Campbell, 8 Fed. Cases, 593; Knowlesv.Beatty, 1 McLean, 41; Leg-
4620; 2 McLean, 195; C. 0. N. G. & F. gett v. N. J. M., etc. Co., 1 N. J. Eq. 541.
Co. v. C. D. Co., 60 Ohio, 96; 53 N. E. 711 ; 2 Smith v. Company, 27 N. H. 86;
State v. Companv, 144 Mo. 562 ; 46 S. W. Sutton's Hospital Cases, 5 Coke's Rep. 253.
30
CHAP. I.J DRAFTING THE CHARTER. § 11
The common law powers here referred to may be enumerated
as follows : (1) the right to the use of a corporate name ;
(2) the right to perpetual succession ; (3) the right to acquire,
hold, and dispose of corporate property ; (4) the right to appoint
corporate officers and agents; (5) the right to establish by-laws
for the government of the corporation, its officers and members ;
(6) the right to sue and be sued.
An examination of the various corporate acts in force in the
several States and Territories will serve to show that without
exception they contain an enumeration more or less full of the
common law powers above referred to. In Indiana the statute
refers to them as common law powers, and proceeds to enumerate
them. 1
§ 10. Right to a Corporate Name. — The right to the use of a
corporate name is a power well recognized both at common law
and by statute. Corporations have a property right to the use of
such name in the transaction of their business which the courts
will always protect. 2 They are recognized in law only by their
corporate name. 3
The name is said " to be the very being of their constitution ;
the knot of their combination ; without which they could not do
their corporate acts ; for it is unable to implead and be impleaded,
to take any action until it hath gotten a name." 4
The action of State officials in granting the use of a name, it
may be observed, is not conclusive, for courts of equity will never-
theless protect corporations in the use of their name. 5 State
officials have, however, the power to protect the use of corpo-
rate names when applications are made for charters, even when
the proposed name is not exactly similar to that of existing
corporations. 6
The right to have a corporate name is in itself a common law
power ; but it is one which is not alienable."
§ 11. Right of Perpetual Succession. — The " right of perpetual
succession " under a designated corporate name is one of the
common law powers of a corporation. The words " perpetual
1 Ind. Session Laws, 1901, ch. 127, § 28. c State ex rel. v. McGratli, 92 M<>. :;."> .". ;
2 L. D. Co. v. Massachusetts, 10 Wall. 5 S. W. 29.
(U. S.) 566; see also ante, § 3. 1 State v. Company, 40 Kan. 96; 19
8 Curtiss v. Murry, 26 Cal. 633. Pac. 349 ; Detroit Citizens' Street Kv. Co.
4 Smith v. Company, SO Ala. 650. v. Common Council, 125 Mich. i>7.'> : 85
6 Grand Lodge, etc. v. Graham, 96 N. W. 96.
la. 592; 65 N. W. 837.
:;i
§ 13 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART L
succession " do not refer to the duration of the life of the corpora-
tion, where this is specifically limited either by statute or by the
articles of incorporation, but merely operates to grant the continu-
ation of corporate life during the period so prescribed. 1 Perpetual
succession ordinarily merely conveys the right of continued un-
broken succession for the period of time limited for the corporate
existence. 2
§ 12. Right to adopt and use a Corporate Seal. — It is an in-
separable incident to every corporation that it may have a common
seal, and make, alter, and renew the same at pleasure. 3 The doc-
trine of the common law requiring the use of a corporate seal in
the execution of corporate contracts is practically obsolete, and
the seal is now required, in the absence of express statute, only
when it would be required of a natural person under similar
circumstances. 4 Ordinarily the exercise of this power is dele-
gated by the stockholders to the directors by means of an
appropriate by-law. 5
§ 13. Power to acquire, hold, and dispose of Real and Personal
Property. — No doctrine of the common law is more clearly and
undeniably established than that which concedes to corporations
an inherent right to acquire and hold title to real and personal
property, except so far only as they may be restricted by the
objects of their creation or the limitations of their charter. ti The
power to acquire such property, when not restricted by statute, is
only limited by the rule that it must be such as is reasonably
necessary or convenient to enable it to accomplish the purposes
for which it was created. 7
Formerly the amount of real property which a corporation
might purchase and hold was very generally limited by statute in
most of the Commonwealths. The existence of such statutes may
be traced to the policy of the common law and to the existence in
England of statutes known as statutes of mortmain, which pro-
hibited corporations from taking and holding real estate without
licenses from the king or Parliament. 8 However, in most of the
1 State v. Payne, 129 Mo. 468 ; 31 S. W. « Green Co. v. Blodgett, 55 111. Ap. 556.
797. 5 Woodman v. Company, 50 Me. 549.
2 Scanlon v. Crawshaw, 5 Mo. Ap. 6 Lathrop v. Bank, 8 Dana (Ky.), 114;
337 ; see, however, Fairchild v. Association, Thompson v. Waters, 25 Mich. 214.
71 Mo. 526. » Brown t\ Hogg, 14 111. 219 ; Richard-
8 Ransom v. Bank, 13 N. J. Eq. 212 ; son v. Association, 131 Mass. 174.
Thomas v. Dakin, 22 Wend. 9. 8 Leaznre i>. Hillegas, 7 Ser. & R. (Pa.)
32
CHAP. I.] DRAFTING THE CHARTER. § 15
States such restrictions have been done away with, and corpora-
tions may now hold such property, both real and personal, as the
attainment of their corporate purposes may require. In any
event, the general power of a corporation to hold real estate is
primarily a question bet wen the corporation and the State, and
cannot ordinarily be raised by third parties. 1 Where such statutes
exist the corporation has of course no power to exceed the statu-
tory limit as against the State. 2
The general rule is that corporations, unless forbidden by stat-
ute, have implied power to take property by devise. 3 The same
rule applies with respect to the power of taking and holding
property in trust, provided in so doing it acts within its corporate
powers. 1 The power of a corporation to sell and convey is as
broad as the power to purchase and hold, and is granted on the
same terms. 5
§ 14. Power to appoint Corporate Officers and Agents. — At
common law corporations have the inherent power, irrespective
of statute or charter provision, to elect directors and executive
officers and to appoint such agents as the business of the corpora-
tion require. 6
| 15. Power to establish By-laws. — Every corporation has the
implied power to enact such by-laws as may be necessary for the
proper government of the corporation, its officers, and stock-
holders. 7
Sometimes the statutes prescribe the nature of the by-laws to be
adopted and authorize penalties for violation thereof. 8
313; White v. Howard, 38 Conn. 342; 4 Vidal v. Girards Executors. 2 How.
Page v. Heineberg, 40 Vt. 81 ; Rivanna (U. S.) 127; Morris v. May, 16 Ohio, 469;
Nav. Co. v. Dawsons, 3 Grat. (Va.) 19; F. L. T. Co. v. II. F. N. Co., 41 N. V.
Moore v. Moore, 4 Dana (Ky.), 354 ; Mai- 619; White v. Rice, 112 Mich. 403; 70
lett v. Simpson, 94 N. C. 37; Trustees)'. N. W. 1024; Greene /•. Dennis, 6 Conn.
Manning, 72 Md. 116 ; 19 Atl. 599; First 304.
M.B. Churchy. Dixon, 178 111. 260; 52 6 Miners' Ditch Co. v. Zellerbach, 37
N. E. 887. Cal. 543 ; People v. College, 38 Cal. 1 66.
1 C. B. & Q. R. R. Co. v. Lewis, 53 c Kearney v. Andrews, 10 N.J. Eq. 70;
la. 101 ; 4 N. W. 842. A. R. R. Co! v. Kid. I, 29 Ala. 221.
2 Market St. Ry. Co. v. Hellman, 109 ' Wells v. Black, 117 Cal. L57 ; 48 Pac.
Cal. 571; 42 Pac. 225; In re McGraw's 1090; People v. Society, -'4 Bar!.. N. Y .
Estate, 111 N. Y. 66; Andrews v. An- 570; Martin v. Association, 2 Coldw.
drews, 110 111. 223; Graves i». Niles, 1 (Tenn.) 418; Mechanics' Bank t\ Smith, 19
Walker (Mich.), 332. Johns. (N. Y.) 115; Stager v. Davis, 8
8 White v. Howard, 38 Conn. 342; Tex. Civ. App. 23 ; 27 S. W. 1068.
Ravanna Nav. Co. v. Dawsons, 3 Grat. 8 Cahill v. Company, 2 Dong, (Mich.)
(Va.) 19. 128; Mobile v. Yuille, 3 Ala. 187.
3 33
§ 17 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I,
§ 16. Power to sue and be sued. — It has been the rule of the
courts from time immemorial to recognize and enforce the
power of corporations to sue and be sued under and by their cor-
porate name as incident to such corporate existence. 1
§ 17. Express Powers, Definition of; Enumeration of. — Ex-
press powers are those which are either granted to all corpora-
tions alike by statute, whether inserted in the charter or not,
or else are those which are permitted by statute to such corpora-
tions as may see fit to take advantage of them, by reserving such
powers in the charter itself. Statutes of the character first re-
ferred to are construed by the courts to be ipso facto read into
the charter, thereby becoming part and parcel of it. On the other
hand, the last-named powers can only be availed of by the corpo-
ration when, as has been stated, they are specifically reserved or set
forth in the articles of incorporation. Express powers relate not
only to the right to engage in a special line of business as set
forth in the statement in the articles of the object or purposes for
which the corporation is formed, but they relate as well to other
powers which are here termed "express," inasmuch as they
depend upon the existence of specific statutes authorizing their
exercise by such corporations as desire to avail themselves
thereof. These express powers may be divided into twenty-eight
classes, enumerated as follows : (1) power to purchase its own
capital stock ; (2) power to subscribe for, purchase, and hold stock
in other corporations ; (3) power to consolidate with other cor-
porations ; (4) power to transact all or any part of its business
outside of the State of its origin ; (5) power to extend its cor-
porate existence ; (6) power to change its corporate name ; (7)
power to increase or decrease its capital stock ; (8) power to
issue preferred stock ; (9) power to change the corporate pur-
poses ; (10) power to change the number of directors ; (11) power
to change its domiciliary office or place for the transaction of its
business ; (12) power to acquire and enforce a lien upon stock of
the corporation to secure the payment of debts due the corporation
from stockholders ; (13) power to levy assessments against the
stockholders with the right to forfeit the stock for non-payment
thereof ; (14) power to authorize voting at stockholders' meetings
by proxy ; (15) power to allow cumulative voting at the election
of directors ; (16) power to issue stock as full paid and non-
1 S. W. Co. v. Armstrong, 17 Me. 34.
34
CHAP. I.] DRAFTING THE CHARTER. § 17
assessable in exchange for property or services ; (17) power to
sell the corporate assets; (18) power to voluntarily dissolve the
corporation without recourse to the courts ; (19) power to insert
in the charter provisions for the regulation of the internal affairs
of the corporation ; (20) power to authorize directors to adopt by-
laws ; (21) power to authorize appointment of executive com-
mittee from board of directors ; (22) power to enlarge or diminish
corporate powers; (23) power to change par value of shares;
(24) power of bondholders to vote at elections of directors ; (25)
power to classify directors ; (26) power to amend articles before
organization ; (27) power to surrender charter before organiza-
tion ; (28) power given to minority stockholders to compel
purchase of their holdings upon consolidation.
Of the foregoing enumerated powers, the following when ex-
pressly authorized by statute are applicable to all corporations
alike, whether reserved or enumerated in the articles of incorpora-
tion, to wit: The power to consolidate with other corporations; to
perform constituent acts outside of the State of its origin ; to
extend its corporate existence ; to change its corporate name ; to in-
crease or decrease its capital stock; to change the corporate pur-
poses, the number of its directors, its domiciliary office or place
for the transaction of its business ; to acquire and enforce a
lien upon stock of the corporation to secure the payment of debts
due the corporation from stockholders ; to levy assessments against
the stockholders with the right to forfeit stock for non-payment
thereof; to authorize voting at stockholders' meetings by proxy ;
to permit cumulative voting at election of directors (unless such
right is merely made permissible by statute) ; to issue stock as full
paid and non-assessable in exchange for property or services ; to
sell the corporate assets in their entirety ; to voluntarily dissolve
the corporation without recourse to the courts ; to authorize the
directors to adopt by-laws (unless such authority is by statute re-
quired to be reserved in the articles of incorporation) ; to appoint
an executive committee; to enlarge or diminish the corporate
powers ; to change the par value of shares ; to amend articles
before organization; to surrender charter before organization;
power given to minority stockholders to compel purchase of their
holdings upon consolidation.
Of the remaining express powers it is probably in accord with the
general current of authority in this country to say that to bo
35
§ 18 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
available to the corporation they must be reserved or specified in
the articles of incorporation. The powers to which reference is
here made may be enumerated as follows : To subscribe for,
purchase, and hold stock in other corporations ; to transact all
or any part of its business outside of the State of its origin ; to
issue preferred stock ; the power to insert in the charter provisions
for the regulation of the internal affairs of the corporation ;
power of bondholders to vote at election of directors ; power to
classify directors ; and possibly power to purchase its own capital
stock.
§ 18. Power of Corporations to purchase their own Stock. —
There is considerable conflict of opinion in this country relative
to the question whether a corporation may purchase its own stock
without express statutory authority so to do. One line of deci-
sions holds to the view that such power exists only when expressly
conferred by statute no matter what the purpose may be. 1 Other
courts of equally high standing take the view — and this we believe
to be the true one — that every corporation has implied power to
purchase its own stock provided it does so in good faith and with-
out prejudice to the rights of creditors. 2 It has been said that,
" generally speaking, a corporation, when acting within the scope
of the purposes of its organization, has the same power to con-
tract with reference to such powers as an individual. We believe
' the rule to be well settled in the United States by the overwhelm-
ing weight of authority and reason that a private corporation may
purchase its own stock if the transaction is fair and in good faith ;
if it is free from fraud, actual or constructive ; if the corporation
is not insolvent and in process of dissolution, and if the rights of
creditors are in no way affected thereby." 3
Where there is no formal corporate action taken, authorizing
the purchase of the company's own stock, a purchase made thereof,
even though all the stockholders separately consented thereto,
would be invalid as against creditors. 4
1 Crandall v. Lincoln, 52 Conn. 73 ; Vt. 131 ; Chapman v. Company, 62 N. J.
Currier v. Company, 56 N. H. 262; Morgan 497; 41 Atl. 690; Belknap v. Adams, 49
v. Lewis, 46 0. St. 1 ; 17 N. E. 558. La. Ann. 1350; 22 Sou. 382 ; Ins. Co. v.
2 City Bank Columbus v. Bruce, 17 Swigert, 135 111. 162; 25 N. E. 382; Por-
N. Y. 507 ; N. E. T. Co. v. Abbott, 162 ter v. Company (Mont.), 74 Pac. 938.
Mass. 148; 38 N. E. 432; Clapp v. Peter- 3 Porter v. Company (Mont.), 74 Pac.
sen, 104 111. 26 ; Hall & Farley v. Hender- 938.
son, 126 Ala. 449; Bank v Company, 18 4 DeLa Vergne Refrigerator Machine
36
CHAP. I.] DRAFTING THE CHARTER. § 19
Some of the States expressly authorize corporations to purchase
shares of their own capital stock, while others expressly forbid it. 1
The rule of course does not apply to those cases where statutes
exist expressly authorizing the forfeiture of stock for non-pay-
ment of assessments. 2 The purchase by a corporation of its own
stock does not extinguish it. 3 Many of the States have statutes
expressly forbidding corporations to vote their own stock when
held or owned by them. Even in the absence of such statute, it is
probable that the courts would enjoin corporations from voting
their own stock. 4 By statute in a number of States corporations
are forbidden to purchase their own stock. 5
§ 19. Power to subscribe for. purchase, and hold Stock iu other
Corporations. — The prevailing rule in this country is that unless
the power is expressly given by statute or by reservation of such
right in the charter, corporations have no implied power to sub-
scribe for, purchase, or hold stock in other corporations. 6
An attempt has been made in some States to establish the rule
that where the statute does not expressly prohibit such act, the
corporation may purchase stock in other corporations without any
express authority so to do, provided the circumstances are such
as to render the transaction a necessary and proper means for
accomplishing the objects of its creation. 7
If, however, there is no statutory prohibition in the matter and
the State officials permit the insertion in the articles of the power
to purchase and hold stock in other corporations, the exercise of
such power is unquestionably valid. 8 In the same connection it
may be observed that a corporation cannot organize subsidiary com-
panies unless such power is given in express terms in the charter
or by necessary implication from the powers thereby conferred. 9
Co. v. German Savings Institution, 175 40 Ga. 582; First Nat. Bank v. Nat. Ex-
U. S. 38; 44 L. E. 65. change Bank, 92 K. S. L22; Knowles v.
1 Tolnian v. Company (Dak.), 22 N. \V. Sandercock, 107 Cal. 629; 40 Pac. 1047.
505. i inn r. Nisbet, 100 tad. 341 ; Peshtigo
2 Taylor v. Company, 6 Ohio, 83; Co. v. Company, 50 [11. App. 624; S. P.
State v. Association, 35 O. St. 258. T. Co. v. Company, 50 Minn. 93 ; 52 V W.
3 Bank v. Wickersham, 34 Cal. 444; 274; Steamship Co. v. Company, 28 L;l
Clapp v. Peterson, 104 111. 26. An. 173.
4 Sec McNeely v. Woodruff, L3 N. J. 8 N. S. Co. v. Borton (Neb.), 93 N. W.
Law, 352; Brewster v. Hartley, 37 Cal. 15. 225; De La Vergne Refrigerating Ma-
5 See Tolman v. Company (Dak.), 22 chine Co. v. German Savings Institution,
N. W. 505. 175 U. S. 38 ; 20 8. <'t. 20.
6 Franklin Bank v. Commercial Bank, 8 Lagrone v. Timoerman, 46 6.0.878}
36 0. St. 258 ; Central Ry. Co. v. Collins, 24 S. E. 2'JO.
:;:
§ 21 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
In Alaska, District of Columbia, and Georgia corporations are
forbidden by statute to hold stock in other corporations.
§ 20. Power to consolidate with other Corporations. — Corpora-
tions cannot consolidate as against dissenting stockholders,
however desirable or beneficial the consolidation may be, unless
legislative authority is granted to that end. 1 In the exercise of the
police power of the State it may lawfully prohibit the consolidation
of corporations. 2
Consolidation of corporations to a greater or less extent is
permitted by statute at the present time in the States of Alabama?
California, Connecticut, Delaware, Illinois, Kentucky, Maine,
Montana, Nevada, New Jersey, New York, North Carolina, Vir-
ginia, and West Virginia. An attempt has been made to lay down
the rule that in order to effect a lawful consolidation as between
two corporations, the power to so consolidate must be conferred
by each of the States under whose laws they were created. 3 A
better rule, however, and the only practicable one seems to be
this : That either statutory power to dispose of all the assets of
the corporation, or in the absence thereof, the consent of all the
stockholders must be obtained to the sale of the assets of one
corporation to another. Consolidation in this way then takes the
form of a selling out and of accepting money or shares in the new
corporation in return for the assets of the old. 4
§ 21. Power to transact all or any Part of the Corporate Business
outside of the state of its Domicile. — If there are no statutory re-
strictions, a corporation has implied power to carry on its business
at any place within the State in which its charter is procured. 5
The statutory requirement requiring the corporation to fix in the
articles its principal place of business does not prohibit under
ordinary circumstances the transaction of other business within
the State. 6
Long ago in Bank of Augusta v. Earle 7 Chief Justice Taney,
i Pearce v. Ry. Co., 91 How. 341 ; Hill Racine, etc. Ry. Co. v. Company, 49 III.
v. Nisbet, 100 Ind. 341; People v. Com- 331.
pany, 121 N. Y. 582 ; 24 N. E. 834 ; L. &N. 5 Ashley Wire Co. v. Company, 60
Ry. Co. v. Kentucky, 161 U. S. 677. 111. App. 179; City Bank v. Beech, I
2 L. &N. Ry. Co. v. Kentucky, 161 U. S. Blatchford, 425 ; Stickle v. Company (N.
677. J. Eq.), 32 Atl. 708 ; Underwood v. Wal-
3 id_ dron, 12 Mich. 73 ; Berthin v. Company,
4 Matter of Prospect Park, etc. Ry. Co., 28 La. An. 210; Lane v. Bank, 9 Heisk.
67 N. Y. 371 ; Toledo, etc. Ry. Co. v. Com- (Tenn.) 419.
pany, 95 Fed. 497 ; 36 C. C. A. 155 ; 6 Potter v. Bank, 5 Hill (N. Y.), 490.
Lanman v. Company, 30 Pa. St. 42; 7 13 Peters, 519.
38
CHAP. I.] DRAFTING THE CHARTER. § 21
commenting upon the right of a corporation to transact business
beyond the limits of the domiciliary State, spoke as follows :
"It is very true that a corporation can have no legal existence
out of the boundaries of the sovereignty by which it is created.
It exists only in contemplation of law, and by force of the law ;
and where that law ceases to operate, and is no longer obligatory,
the corporation can have no existence. It must dwell in the place
of its creation and cannot migrate to another sovereignty. But
although it must live and have its being in that state only, yet it
does not by any means follow that its existence there will not be
recognized in other places ; and its residence in one state creates no
insuperable objection to its power of contracting in another. It is
indeed a mere artificial being, invisible and intangible ; yet it is a
person for certain purposes in contemplation of law. . . . Natural
persons through the intervention of agents are continually making
contracts in countries in which they do not reside ; and where they
are not personally present when the contract is made ; and nobody
has ever doubted the validity of these agreements. And whal
greater objection can there be to the capacity of an artificial person,
by its agents, to make a contract within the scope of its limited
powers, in a sovereignty in which it does not reside; provided such
contracts are permitted to be made by them by the laws of the
place." x
The strictly legal existence of a corporation is confined to the
State which created it, and it can exercise its powers in another
State only by permission, express or implied, of the legislative
power thereof; but the mere right to purchase and sell property
will be recognized and protected in any State subject only to the
limitations that the exercise of such right shall not be contrary to
the laws or settled policy of the latter State or prejudicial to its
interests or those of its citizens. Unless the Constitution or stat-
utes declare a contrary rule, the courts of another State are bound
to recognize the right of a foreign corporation to collect debts due
to it, by receiving a conveyance of land."
In order, however, to avoid complications that might possibly
arise through hostile action on the part of stockholders or of foreign
States, statutes have been enacted in a number of the Common-
1 See Hall v. Company, 91 Ala. 363 ; 8 2 Thompson v. Waters, 25 Mich. 214.
So. 348.
39
§ 23 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
wealths expressly authorizing the transaction of business in foreign
states and jurisdictions. 1
Under the progressive incorporation acts in force in many of
the States at the present time it is unquestionably permissible to
organize corporations in one State for the exclusive purpose of
transacting their entire business in other States and Territories. 2
§ 22. Power to perform Constituent Acts outside of the Domi-
ciliary State. — By constituent acts is meant such corporate trans-
actions as are separate and apart from its ordinary business
dealings with third parties ; such, for example, as the organization
of the corporation in the first instance, the adoption of by-laws,
the issuance of stock certificates, the election of directors and
officers, and the holding of stockholders' meetings. 3 As a general
rule such constituent acts cannot be performed without the domi-
ciliary State. 4
The legislature may, of course, authorize the performance of
constituent acts beyond the limits of the State. This has been
done in a number of the Commonwealths. It is probably safe to
say that aside from organization meetings the presence of stock-
holders of the corporation at a meeting held without the State will
estop them from attacking the validity of the proceedings had at
such meeting. 6
§ 23. Power to extend Corporate Existence. — In twenty-seven
1 Ashley Wire Co. v. Company, 60 111. 428 ; Galveston, etc. Ry. Co. v. Cowdrey,
App. 179; Kennebec Co. v. Company, 72 11 Wall. 459; 20 Law. Ed. 199.
Mass. 204 ; Aspinwall v. Company, 20 Ind. 4 Commonwealth v. Smith, 45 Pa. St.
492 ; Blodgett v. L. Z. Company, 120 Fed. 59 ; Smith v. Company, 64 Md. 85 ; 20 Atl.
893. 1032; Tuckasegee Mining Co. v. Goodhue,
2 Sec. Nat. Bank v. Hall, 35 O. St. 158 ; 118 N. C. 981; 24 S. E. 797; Camp v.
M. L. & S. Co. o. Reinhard, 114 Mo. 218; Byrne, 41 Mo. 525 ; F. T. L. Co. v. Laigle,
21 S. W. 488; O. M. Co. v. Garst, 18 59 Tex. 339; Craig Co. v. Smith, 163
R. I. 484; 28 Atl. 973 ; People v. Com- Mass. 262 ; 39 N. E. 1116; Bellows v. Todd,
pany, 153 111. 25; 38 N. E. 752; Tilley v. 39 Iowa, 209; Hodgson v. Company, 46
Coykendall, 172 N. Y. 87 ; 65 N. E. 574 ; Minn. 454 ; 49 N. W. 197 ; Harding v. Corn-
Minn., etc. Co. v. Denslow, 46 Minn. 171 ; pany, 182 111. 551 ; 55 N. E. 577; Jones v.
48 N. W. 771; Wright v. Lee, 2 S. D. Company, 20 Col. 417 ; 38 Pac. 700 ; Mack
596; 51 N. W. 706; A., etc. R. R. Co. v. v. Company, 90 Ala. 396; 8 So. 150;
Fletcher, 35 Kan. 236 ; 10 Pac. 596 ; North, Aspinwall v. Company, 20 Ind. 492 ; Court-
etc. Stock Co. v. People, 147 111. 234 ; right v. Deeds, 37 Iowa, 503.
35 N. E. 608; Canada S. Ry. Co. v. Geb- 6 Handley v. Stutz, 139 U. S. 417;
hard, 109 U. S. 527 ; 3 S. Ct. 363 ; Cowell Galveston, etc. Ry. Co. v. Cowdrey, 11
v. Springs Co., 100 U. S. 55 ; Hastings v. Wall. 459 ; see also Humphreys v. Mooney,
Anacortes, etc. Co., 29 Wash. 224 ; 69 5 Col. 282.
Pac. 776 ; Irvine Co. v. Bond, 74 Fed. 849.
3 See McCall v. Company, 6 Conn.
40
CHAP. I.] DRAFTING THE CHARTER. § 26
of the Commonwealths perpetual existence is permitted in the
incorporation of companies therein. The power to extend such
existence is not of any material importance in these Common-
wealths. Twenty-five of the incorporation acts specifically provide
for the extension of corporate existence. Without such statutory
authority corporate existence cannot be extended. 1
In some of the States extension of corporate existence must be
accompanied by the payment of an organization tax, as is the case
of new corporations. Thus, in New Jersey, where such a provi-
sion exists, it has been held that such tax must be paid even
though the extension of the corporate existence was obtained in
the guise of an amendment to the charter. 2
§ 24. Power to change the Corporate Name. — Without statu-
tory authority so to do corporations cannot change their name. 3
If the proposed change of name confiicts with the name of an
existing domestic corporation, State officials are justified in refus-
ing to allow the certificate showing the adoption of the new name
to be filed. 4
Some of the States, as, for example, New York and California,
only permit change of name by application to the courts.
§ 25. Power to increase or decrease Capital Stock. — A corpo-
ration has no implied power to either increase or decrease the
capital stock. 5 Such power must be conferred in express terms
by the incorporation act under which the corporation is organized.
Power to increase or decrease capital stock vests in the stock-
holders and not in the directors. 7 Frequently incorporation acts
provide that the stock shall not be diminished to less than the
amount of the corporate debts. Such is the case in California
and other States. Certificates of stock issued on a fictitious
increase of stock are void. 8
§26. Power to issue Preferred Stock. — Stockholders enjoying
i See post, sec. 120. '' Sutherland v. Olcott, 95 N. V. 93;
2 National Lead Co. v. Dickinson (N. J.), Crandall v. Lincoln, 52 Conn. 73 ; (!. I. . &
57 Atl. 138. II. Insurance Co. V. Kamper, 7:> Ala, 32S .
3 Sykes v. People, 132 111. 32 ; 23 N. E. Palmer v. Bank, 72 Minn 266; 75 N. \V.
391; C. D.&M.Ry. Co. v. Kcisel, 43 la. 380; Detroit Chamber of Commerce v,
39; Glass Co. v. Company, 32 Ind 370. State Secretary, L09 Mich. 691 ; 67 N. W.
* In re U. S. M. Rep. Agency, 115 N. Y. 897.
170; 21 N. E. 1034 ; People v. Company, 7 C. C. Ry. Co. v. Allerton, 18 Wall.
II 1 Mich. 405; ryj N. W. 653. 233.
6 Ins. Co. v. Kamper, 73 Ala. 825; Poll- * Beitman v. Steiucr, 98 Ala. 241;
man v. Upton, 96 U. S. 328. 13 Sou. 87.
11
§ 26 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
preferential or additional rights not enjoyed by the holders of
common shares are called " preferred stockholders." The issu-
ance of preferred stock is a mode by which a corporation obtains
funds for its enterprise, without borrowing money or contracting
a debt. 1 The question as to whether or not preferred stock may
be issued by corporations without express authority by law is a
somewhat difficult one to settle. In twenty-five of the States the
question is settled by the existence of statutes expressly authoriz-
ing the issuance of preferred stock, and even in those States
where no such statutes exist it is, with some few exceptions, the
custom of the State officials to permit the . insertion in the articles
of incorporation of provisions authorizing the issuance of preferred
stock. The action of such officials is certainly conclusive as
against all the world except the State. 3
The true rule governing the matter now before us is, in the
opinion of the writer, best set forth in the case of Campbell v.
American Zylonite Company. 4 In this case the articles of incor-
poration divided the capital stock of the corporation into shares,
equal in amount and value. Some time after incorporation one of
the stockholders executed a blank assignment of certain stock
owned by him to a third party as security for a loan. Subsequently
all the stockholders, except the owner of this pledged certificate,
at a meeting duly called for that purpose, voted to surrender to
the corporation, without consideration, forty per cent of their
stock, and authorized the corporation to reissue this forty per cent
in the form of preferred shares. The legality of this act was
contested by the holder of the pledged certificate, and in passing
upon the legal question involved, the court spoke as follows :
" The right of every shareholder to his proportion of the profits of
the corporation was vested, and in the absence of some power to
change the relative value of the shares conferred by statute or by
the articles of incorporation, no change could be made without the
consent of all the shareholders. . . . The assignee of shares having
possession of the certificates, although holding under unregistered
transfers, are not bound by contracts between the registered share-
holders, the corporation and all the other shareholders which are not
within the express or implied powers of corporations or of their share-
holders. As between the assignor and the assignee, the unregistered
1 Chaffee v. Company, 55 Vt. 110. 3 See Hamlin r. R. R. Co., 78 Fed. 670.
* 122 N. Y. 455 ; 25 N. E. 853.
42
CHAP. I.] DRAFTING THE CHARTER. § 26
assignment was not void. It follows that the change in the relative
value of the shares which this corporation and its registered share-
holders sought to effect was not within the express or implied powers
conferred upon the corporation or shareholders, and that their action
is not binding upon the holder of the assigned certificate who did not
consent to the issuance of the preferred shares."
In Kent v. Quicksilver Company 1 the court addressing itself to
the question now before us, spoke as follows:
" There arises the query whether there was power iu the corporation
to distinguish between the stockholders in it to form them into two
classes, and to give to one class rights in the corporate property and
business and earnings from which the other was shut out. We are
not prepared to say that at the first the corporation might not have
lawfully divided the interest in its capital stock into shares arranged
in classes, preferring one class to another in the right which they
should have in the profits of the business. The charter gave power
to make such by-laws as it might deem proper consistent with Con-
stitution and law. We know of nothing in the Constitution or the
law that inhibits a corporation from beginning its corporate action by
classifying the shares of its capital stock, with peculiar privileges to
one share over another, and thus offering its stock to the public for
subscriptions thereto. No rights are got until a subscription is made.
Each subscriber would know for what class of stock he put down his
name, and what right he 'got when he thus became a stockholder.
There need be no deception or mistake, there would be no tread-
ing upon rights previously acquired; no contract, express or im-
plied, would be broken or impaired. Shares of stock are in the
nature of choses in action, and give the holder a fixed right in
the division of profits or earnings of the company so long as it exists,
and of its effects when it is dissolved. That right is as inviolable as
is any right in property, and can no more be taken away or lessened
against the will of the owner than can any other right, unless power
is reserved in the first instance, when it enters into the constitution
of the right; or is properly derived afterward from a superior law-
giver. It is manifest that any action of a corporation which takes
hold of the shares of its capital stock already sold and in the hands
of lawful owners, and divides them into two classes, — one of which
is thereby given prior right to a receipt of a fixed sum from the earn-
ings before the other may have any receipt therefrom, and is given
an equal share afterward with the other in what earnings may
remain, — destroys the equality of the shares, takes away a right
l 78 X. V. L67.
I:;
§ 26 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I..
which originally existed in it, and materially varies the effect of the
certificate of stock. It is said that when a corporation can lawfully
buy property or get money on loan, any known assurance may be
exacted and given which does not fall within the prohibition, express
or implied, of some statute. But the prohibition to such action as
this is found not, indeed, in a statute commonly so called, but in the
constitutional provision which forbids the impairment of vested
rights, save for public purposes and on due compensation. The
right which a stockholder gets on the purchase of his share, and
the issue to him of the certificate therefor, is such a vested right.
It is contended that the power so to do is an incidental and implied
power necessary to the use of the other powers of the corporation,
and is a legitimate means of raising money before securing the
agreed consideration therefor. We have already conceded that it is
legitimate to borrow money and to secure the repayment of it with
a compensation for the use of it. But that is when it is done in such
way as to put the burden upon every share of stock alike, and to
enable every share of stock to be relieved therefrom alike ; in such
way as to preserve the equality of right and privilege and value of the
shares, and maintain intact the contract thereto with the stockholders.
" We are, therefore, of the opinion that there was no power in the
corporate body, nor in a majority of the stockholders, to provide by
by-law for the creation of a preferred stock, so as to bind a minority
of the stockholders not assenting thereto."
In what has been stated a most important principle has been
referred to, which, it is believed, is controlling upon the question at
hand. This principle to which reference is here made is that the
charter proceeds from the State, and that nothing can be legally
done by the corporation acting through its stockholders not au-
thorized either by statute or by the charter itself. , Thus it is
clear that in these States where the statutory right to issue pre-
ferred stock is not granted and the charter itself only provides
for common stock, no preferred stock can be legally issued by the
stockholders as against the State, except by amending the charter
itself. This, too, even where the stockholders consent. 1
This question is likely to be presented in a troublesome form
where common stock has been pledged to creditors before the pre-
ferred stock was issued. 2
From a careful examination of the authorities it may be said
1 Knoxville, etc. Co. v. City of Knox- 2 See generally Lockhart v. Van Als-
ville, 98 Tenn. 1 ; 37 S. W. 883. tyne, 31 Mich. 76; McGregor v. Insurance
44
CHAP. I.] DRAFTING THE CHARTER. § 26
that in order to constitute an issue of preferred stock valid as
against all the world, there must be a statute authorizing it, or
provision therefor inserted in the charter. To make the issue
valid as against all but the State, the consent of all of the holders
of common stock to the issuance of preferred stock is, doubtless,
all that is necessary. 1 It is hardly necessary to add, in addition to
the foregoing, that the total amount of common stock added to
the preferred stock so issued must not in any case exceed the
total authorized capital stock of the corporation.
The rights of holders of preferred stock depend upon the terms
of the statute or of the charter or by-law authorizing it. 2 Ordi-
narily the power to authorize the issuance of preferred stock vests
in the stockholders and not in the directors. 3
Where a portion of the stock of the corporation is issued as
preferred, no creditor of the corporation can object, provided the
money paid for the stock reaches the treasury of the corporation,
and the dividends on the stock are not to be paid except out of
net profits. 4 Unless the statute provides otherwise, preferred
stockholders may be deprived of the right which they would
otherwise have, to vote their stock in the same manner as com-
mon stockholders. 5 This is commonly done either by charter pro-
vision or by a by-law adopted before any preferred stock is issued.
Preferred stock cannot be lawfully issued with the provision that
it shall bear interest absolutely. 6 In order to make preferred stock
a lien upon the corporate assets statutory authority is necessary. 7
Co., 33 N.J. Eq. 181; Higgins ?;. Lansingh, By. Co., 4 K. & J. 1; 27 L. J. Ch. 1;
154 111. 301; 40 N. E. 362; Covington, Corry v. Londonderry, etc. Co., 29 Bea^
etc. Co. v. Sargent, 1 Cinn. Sup. Ct. 272; 3 L. J. Ch. 290; Coates v. Notting-
354; Elevator Co. v. Memphis, etc. Co., ham Water Works Co., 30 Heav. 86.
85 Tenn. 703; 5 S. W. 52; March v. x Higgins t\ Lansiiigh, 154 111. 301;
Eastern R. R. Co., '43 N. II. 515; Bates 40 N. E. 362.
v. Androscoggin, etc. It. R. Co., 49 Me. 2 Scott v. B. & O. R. R. Co., 93 Md.
491; Prouty v. Mich., etc. R. R. Co., 75 ; 49 Atl. 327.
1 Hun, 655; Kent v. Quicksilver Min. 8 See Coit v. Freed, 15 Utah, 426; 49
Co., 12 Hun, 53 ; Jones v. Terre Haute, etc. Pac. 533.
• Co., 57 N. Y. 196; Hoyt v. Quicksilver 4 First Nat. Bank of Peoria v. Peoria
Mining Co., 78 N. Y. 159; 8. c. 9 Week. Watch Co., 191 111. 12s ; 60 N. E. 859.
Digest, 187, aff'g 17 Hun, 169; Curry v. 5 Lockhart v. Van Alstyne, 81 Mich.
Scott, 54 Pa. St. 270; Sturge-s v. E. Un. 76; Mackintosh v. Company, 82 Fed. 850 J
Ry.Co.,7 Do Gex, M. & G. 158; Matthews Miller v. Rattcrman, 47 0. St. 141.
v. Gt. Northern R. It. Co., 28 L. J. Ch. 375 ; 8 Winscott v. Investment Co., 63 Mo.
Green's Brice Ultra Vires, 145; Hutton Ap. 367.
v. Scarhorough Hotel Co., 2 Drew & Sim. 7 Continental Trust Co. o. Toledo, etc.
514; Hook v. (it. Western By. ('<>.,:! Ry. Co., 72 Fed. 92.
L. R. Ch. 262; Henry v. (it. Northern
45
§ 28 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
S 27. Power to change the Corporate Purposes. — In the early
days the right of amendment, when the same related to altering
the original purposes of corporations, was jealously guarded and
limited both by statute and by judicial construction. In later
years there has been evinced greater liberality in this regard, as
evidenced by granting to corporations unlimited power of amend-
ment. The only real difficulty in this connection arises when
an attempt is made to so completely change the original purposes
for which a corporation was formed as in effect to create a new
corporation. Under the Pennsylvania Incorporation Act gov-
erning amendments, it was held that this could not be done. 1
The present attitude of the courts on this subject is well shown
by a recent New Jersey decision, — that of Meredith v. New Jersey
Zinc & Iron Company. 3 In this case the right of amendment,
even when producing fundamental changes in the corporate pur-
poses, was sustained. 4
It appears clear that under the liberal power of amendment
existing to-day in the majority of the States, any changes may be
made, no matter how fundamental, by the consent of all the
stockholders. And where the matter is simply one between the
corporation and the State, the right to make such an amendment
cannot, in the States referred to, be questioned wheu adopted by
the requisite number of stockholders.
§ 28. Power to change Number of Directors. — Only in those
States where the number of directors is required to be fixed in
the articles, is it necessary to have statutory authority to change
the same. In other States the matter of amendment may be
regulated by the by-laws. However, in the larger number of the
Commonwealths, the power to amend the articles with reference
to changing the number of directors is required to be based upon
express statutory authority so to do. 5
i In re Pennsylvania Bottling Co., 19 694; 38 N. TV. 113; Stickle v. Liberty
Pennsylvania County Court Keports, 593. Cycle Mfg. Co. (N. J. Eq.), 32 Atl. 708 ;
See also State v. Taylor, 53 Iowa, 759; 6 Banet v. Company, 13 111. 504; Ross v.
N. TV. 39. Company, 77 111. 134 ; Pac. Ry. Co. v. Ren-
3 Meredith v. Company, 59 N. J. Eq. shaw, 18 Mo. 210 ; Ashton v. Burbank, 2
257; 44 Atl. 55. See also sec. 112, post. Dill. (U. S.) 435; Del. Ry. Co. v. Thorp, 1
4 See also Grand River College v. Rob- Hurst (Del.), 149 ; M. B. Ry. Co. v. Sullivan,
ertson, 67 Mo. App. 329 ; Mercantile State- 37 Ga. 240 ; Com. v. Cullen, 13 Pa. St. 133.
ment Co. v. Kneal, 51 Minn. 263 ; 53 N. W. 5 Matter of Griffing Iron Co., 63 N. J.
632; Bowie v. Grand Lodge, 99 Cal. 392 ; Law, 168; 41 Atl. 9311; 63 N. J. Law,
34 Pac. 103 ; Day v. Company, 75 la. 357 ; 46 Atl. 1097.
46
CHAP. I.] DRAFTING THE CHARTER. § 30
§ 29. The Power to change the Corporate Domicile and Principal
Place of Business. — As will hereafter be seen, it is essential to
corporate existence that the corporation should have a home. 1 It
is the naming of the domiciliary office in the articles which fixes
the residence of the corporation for jurisdictional purposes, and
fixes the usual place for holding stockholders' and directors' meet-
ings. If it is desired to change the domicile, or if the location of
the . corporation's principal place of business is to be transferred
from one place to another, an amendment to the articles must
be had under legislative sanction. 2 It should, however, be noted
in this connection, that the corporation's domicile and its princi-
pal place of business are not necessarily one and the same thing. 3
Again, if, as is the case in some States, the name of the agent
upon whom process upon the corporation may be served, is re-
quired to be set forth in the articles, in order to lawfully substi-
tute a new agent, an amendment to the articles is necessary,
made pursuant to statutory authority given in the premises. 4
§ 30. Power to acquire and enforce a Lien upon Stock to se-
cure the Payment of Debts Due the Corporation. — In a large
number of the States statutes exist expressly granting to cor-
porations the right to enforce a lien upon the stock of its members
for the purpose of securing the payment of debts due from such
members to the corporation.
The courts are not by any means in entire agreement as to
whether statutory authority to enforce such a lien is essential to
its validity. Some courts, of excellent repute, maintain the affirm-
ative, and others take the opposite view. 6 It seems fairly certain
that at common law such a right did not exist. 7
The true view appears to be that while at common law a cor-
poration had no lien on the shares of its capital stock for the
debts due it from the stockholders, nevertheless such a lien may
be acquired either when given by statute or when such right is
1 S( -e post, sec. 54. 6 Costello v. Company, 69 N. II. 40j, 48
2 See Stickle v. Liberty Cycle Mfg. Atl. 640; Foung v. Vough, 23 X.J. Eq.
Co. (N. J. Eq.), 32 Atl. 708; Kennett 325; Moore v. Bank, 52 Mo. 377 ; In re
v. Company, 68 N. H. 432; 39 Atl. 585; Klaus. 67 Wis. 401 ; 29 N.W 582 ; Farm-
Harris v. McGregor, 29 Cal. 124. era', etc. Bank v. Wasson, 48 [a. 336;
3 Van Etten v. Eaton, 19 .Mich. 187; Cont. T. R. Co. v. Toledo, etc, Ry. Co., 72
McConnell v. Company (.Mont.), 74 Pac. Fed. 92.
194 - 7 Brinkerhoff, etc. Co. v. Company, 118
4 See Johnson v. Mason Lodge, 21 Ky. Mo. 447; 24 8. W. 129.
Law Hep. 493; 51 8. W. 620.
17
§ 31 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
preserved by inserting provisions therefor in the Articles of Incor-
poration, or by the passage of a valid by-law, or by inserting a
provision therefor in the stock certificates. 1
§ 31. Power to levy Assessments against the Stockholders with
the Right to forfeit their Stock for Non-payment thereof. — With
some few exceptions the right to forfeit stock for non-payment of
valid assessments levied against it is preserved by statute in most
of the States and Territories. Even in the absence of such statute
the right to forfeit stock for non-payment of valid assessments when
given to the corporation by its by-laws will probably be enforced by
the courts. In any event the common law remedy would exist,
giving the corporation the right to recover judgment against the
delinquent stockholders for the amount of such assessments. 3
In all cases the right to forfeit stock is considered to be merely
a cumulative remedy. 4 The right to levy assessments upon
stockholders does not exist after payment by such stockholders
for their stock in full, unless the power to do so is conferred
either by statute, by the articles of incorporation, or by the unani-
mous consent of all the stockholders. 5 But even in the absence
•of express power to declare a forfeiture of stock for non-payment,
a corporation may sue for amount of subscription to the capital
stock, and on failure to collect the amount subscribed may secure
payment by sale of stock subscribed. 6
On the general subject of assessments the following may be said :
provisions for the forfeiture of capital stock for the non-payment
of assessments must be just and reasonable in order to be valid. 7
The terms of the statute in any event must be strictly complied
with. 8 The power to levy assessments rests in the directors by
virtue of their office and not in the stockholders. 9 Even where
i Union Bank v. Laird, 2 Wheaton Neb. 642 ; 79 N. W. 560; Duluth Club v.
(U. S.), 390; St. Louis Per. Ins. Co. v. McDonald, 74 Minn. 254; 76 N. W. 1128;
Goodfellow, 9 Mo. 149; Van Sands?;. Bank, State r. Association, 23 N. J. Law, 195;
26 Conn. 144 ; Sargent v. Insurance Co., Sullivan Co. Club v. Butler, 26 N. Y.
-25 Mass. 90. See also Atchison Bank v. Miscellaneous Reports, 306 ; Mayberry v.
Durfee, 118 Mo. 431 ; 24 S. W. 133 ; V. G. Meade, 80 Me. 27 ; 12 Atl. 635 ; Price's
B. Co. v. Bloede,84Md. 129; 34Atl. 1127; Appeal, 106 Pa. St. 421; Weeks v. Corn-
Bishop v. Globe Co., 135 Mass. 132. pany, 55 N. Y. Sup. Ct. 1.
3 San Joaquin v. Beecher, 101 Cal. 70; 6 Chase v. Company, 5 Lea (Tenn.),415.
35 Pac. 349. 7 Crissey v. Cooke, 67 Kan. 20 ; 72 Pac.
4 M. F. & N. Co. v. Hall, 121 Mass. 272 ; 54 1 .
Raymond v. Caton, 24 111. 123; Lesseps v. 8 P. G. T. R. Co. v. Graham, 11 Met-
Architects' Co., 4 La. Ann. 316. calf, 1.
5 Enterprise Ditch Co. v. Moffitt, 58 9 Chouteau Ins. Co. v. Floyd, 74 Mo. 28a
48
CHAP. I.] DRAFTING THE CHARTER. § 34
the statute expressly gives power to the stockholders to levy
assessments they may doubtless delegate this power to directors. 1
Directors, however, cannot lawfully delegate such power to
ministerial officers. 2
§ 32. Power to authorize Voting by Proxy at Stockholders'
Meetings. — At common law the right of stockholders to vote
by proxy was not recognized. The right in order to be available
must be granted either by statute, charter, or appropriate by-law. 3
Voting by proxy is not however per se unlawful.* Therefore the
right may be secured to stockholders by appropriate by-law duly
passed even without a statute authorizing it. 5
§ 33. Power to permit Cumulative Voting at Election of Direc-
tors. — The right of cumulative voting exists where a stockholder
has a number of votes equal to the number of shares held by him
multiplied by the number of directors to be chosen, and is allowed
to cast or distribute them as he sees fit. The purpose thereof is
to secure minority representation on the board of directors. To
authorize cumulative voting the right must be preserved either by
constitutional, statutory, or charter provision or by the passage of
a by-law looking to that end. 6
If the right is conferred absolutely by constitutional or statu-
tory provision, it cannot be taken away by means of a by-law
or resolution denying such right to stockholders. 7
In twenty-one of the Commonwealths the right to cumulate
votes is secured to stockholders either by constitutional enact-
ment or by statutory provision.
§ 34. Power to issue Stock as full paid in Exchange for Property
or Services. — In the quaint wording of an English case, " stock
must be paid for, in the absence of constitutional or statutory
provision providing otherwise, " in meal or in malt;" that is. in
money or in money's worth. 9 Forty of the States have enacted
laws authorizing the payment of stock not only in cash bui in
1 Rives v. Company, 30 Ala. 92. " Pierce v. Commonwealth, 104 Pa. St.
2 In re County Palatine L. & D. Co., 150; Sclimi.lt v. Mitchell, 101 Ky. 570;
L. R. 9 Ch. 691." 41 S. W. 929; State V. Stockier, 4;') <). St.
8 Harvey v. Company, 118 N. C. 693; 304; 13 N. E. 279 ; State v. Greer, 78 Mo.
24 S. E. 489 ; People v. Crossley, 69 111. 188; Baker's Appeal, 109 Pa. St. n » i
1 95 ; McKee v. Company (la.), 98 N.W. 609. 7 Tomlin v. Hank, 52 Mo, App. 430j
4 M. & O. Railroad Co. v. Nicholas, 98 Commonwealth v. Fetter, L90 Pa £
Ala. 92 ; 12 Sou. 723. 43 Atl. 220.
'•> State v. Tudor, 5 Day (Conn.), 329; '■> Drummond'a Case, L. II. 1 Ch. 772.
Commonwealth v. Detwiler, 131 Pa. St.
614; 18 Atl. 990.
4 49
§ 34 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
services or property. Some of the States — for example, Ala-
bama and Virginia — have somewhat elaborate provisions on the
subject.
Thus, in Alabama, stock may be issued in exchange for all
such real and personal property as may be necessary or conven-
ient for the efficient construction, operation, and maintenance of
its works or plants, lines, shops, factories, or other buildings, or
for the conduct and management of its business or as its purposes
may require. 1
In Virginia the new Incorporation Act authorizes subscriptions
to the capital stock to be paid for in money, land, or other prop-
erty, real or personal, leases, options, mines, minerals, mineral
rights, patent rights, rights of water or easements, contracts,
labor, or services. 3
Even in those few Commonwealths where no statutes exist
authorizing the payment of stock in property or services, the
courts will presume that corporations have inherent power to pur-
chase property and labor and pay for the same in stock instead
of money, provided the transaction whereby the stock is to be
issued in exchange for such property or services is made in good
faith and no fraud is perpetrated upon stockholders or creditors. 4
The statute to prohibit absolutely the payment of subscriptions
to the capital stock in property or services must be clearly re-
strictive in character. 5 The only effect apparently of the absence
in particular Commonwealths of any provision, constitutional or
statutory, authorizing the payment of stock in property or ser-
vices, is to induce the courts to adopt what is known as the " true
value rule " 6 rather than the " good faith rule." ' But in the
Commonwealths referred to, the character of the property, labor,
or services accepted in exchange for stock must be strictly
such as the corporation under its charter has the power to ac-
quire, and when property is so taken it must be fairly represented
to the corporation and for a just, lawful, and needed equivalent
for the money subscribed. 8
1 See Alabama Session Laws, 1903, p. Smith, 30 N. Y. 116; Shannon v Steven-
395, sec. 7, subdiv. c. son, 173 Pa. St. 419 ; 34 Atl. 218.
B See Session Laws of Virginia, 1903, 5 See Knox v. Company, 86 Ala. 180; 5
chap. 270. So. 57S.
4 Liebke v. Knapp, 79 Mo. 22 ; Beach v. 6 See post, sec. 104.
See post, sec. 105.
« Liebke v. Knapp, 79 Mo. 22 ; Powell
50
CHAP. I.] DRAFTING THE CHARTER. § 35
§ 3o. Power to dispose of Corporate Assets as an Entirety. —
In ten of the Commonwealths express power is conferred upon
corporations to dispose of their entire corporate assets by obtain-
ing the consent of a certain percentage of the stockholders to such
disposition. Much controversy has arisen as to whether or not
express statutory power is necessary in order to authorize transfer
by a corporation of the entire corporate assets. At common law
neither the directors nor a majority of the stockholders had power
to sell or otherwise transfer all of the property of an acting and
prosperous corporation able to achieve the objects of its creation
as against the dissent of a single stockholder. 1
The view is taken by the New Jersey court in Coler v. Com-
pany 3 that the sale of the corporate assets as an entirety is equiv-
alent to a dissolution, and therefore can only be done through
the courts under statutory authority. Many courts, however, take
the view that it can be done where it is not in fraud of the rights
of creditors or in violation of charter or statutory restrictions,
and this, too, by a majority of the stockholders against the dis-
sent of a minority where the exigencies of the business seem to>
require it. 4 Thus, it has been asserted that " it is a well settled
rule that a strictly private corporation has the same right to dis-
pose of its property that an individual has, and that when insol-
vent or in a failing condition it may sell all thereof without
the consent of all of the stockholders. It is the general rule,
however, that neither the directors nor a majority of the
stockholders of a corporation have power at common law to
sell or otherwise transfer all its property while the corporation
is a going, prosperous concern against the dissent of any share-
holder." 5
It may be added in this connection that the right to exist as a
v. Murray, 3 N. Y. App. Div. 273 ; 38 Co. v. M. O. P. Co., 89 Fed. 529 ; Metcalf
N. Y. Sup. 233; Id. 157 N. Y 717; 53 v. A. S. F. Co., 122 Fed. 11.'-; Traer v.
N. E. 1 130 ; Kimball v. Company, 69 N. II. Company (la.), 99 N. W. 290.
485; 45 Atl. 253; Montgomery t'. Com- 8 64 N. J. Eq. 117 ; 53 Atl. 680.
pany, 48 N. Y. App. Div. 12; 62 N. Y. 4 Treadwelli>. Company, 7 Gray (Mass.),
Sup. 606; Id. 168 N. Y. 657; 61 N. E. 393; Martin v. Zellerbach, 38 Cal. 300;
1131. Miners' Ditcli Co. v. Zellerbach, 37 Cal.
1 Forrester v. Company, 21 Mont. 544 ; 543; Featherstonhangh v. Company, L. R.
55 Pac. 229; Idem, 74 Pac. 1088; People l Eq. 318; Bartholomew v. Company, 69
v. Ballard, 134 X. Y. 269; 32 N. E. 54 ; Conn. 521 ; 38 Atl. 45.
California Bank v. Kennedy, 167 U. S. 6 Traer v. Compauy (la.), 99 N. W.
862; 4'j L. E. 198; B. & M. C. C.&S. M. 290.
51
§ 36 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
corporation is not alienable. 1 The sale of all the corporate prop-
erty does not operate to dissolve the corporation. 2
S 36. Power to voluntarily dissolve the Corporation without
Recourse to the Courts. — The dissolution of a corporation is a
peculiar function that rests primarily in the legislature, and is
conferred upon courts or upon the corporation itself, only by
explicit legislative authority. 3 Stockholders, in the absence of
statutory provision, cannot extinguish the corporate charter or
dissolve the corporation, nor can a court of equity accomplish a
similar result at their instance. 4 In all the States some provision
is made for dissolution of corporations. For example, in Alabama,
Connecticut, New Jersey, North Carolina, Virginia, and West
Virginia the incorporators have the right to surrender the charter
before organization. In twenty-seven of the Commonwealths
corporations may be dissolved under statutory authority without
recourse to the courts.
The doctrine that dissolution can only be effected by the joint
act of the State and corporation is set forth in a Massachusetts
case as follows : 6 "Charters are in many respects compacts be-
tween government and corporators. And as the former cannot
deprive the latter of their franchises in violation of the compact,
so the latter cannot put an end to the compact without the con-
sent of the former. It is equally obligatory on both parties.
The surrender of the charter can only be made by the formal act
of the corporation ; and will be of no avail until accepted by the
government. There must be the same agreement of the parties
to dissolve, that there was to form the compact. It is the accept-
ance which gives efficacy to the surrender. Dissolution of a
corporation, it is said, extinguishes all its debts. The power to
dissolve itself by its own act would be a dangerous power, and one
which cannot be supposed to exist." 7
In this connection it may be observed that the stockholders
1 Detroit Citizens' Street Ry. Co. v, 8 Olds v. Company (Mass.), 70 N. E.
Common Council, 125 Mich. 673 ; 85 N. W. 1022.
96 ; Pearce v. R. R., 21 How. 441 ; 16 4 Benedict v. Company, 49 N. J. Eq.
L. E. 184; State v. Company, 40 Kan. 235; 23 Atl. 485.
96; 19 Pac. 349. 6 Boston Glass Manufactory Co. v.
2 Miners' Ditch Co. v. Zellerbach, 37 Langdon, 24 Pick. 49.
Cal. 543 ; Sullivan v. Company, 39 Cal. 7 See also Davis v. Company, 87 Ala.
459. 633; 6 Sou. 140.
52
CHAP. I.] DRAFTING THE CHARTER. § 37
alone have power to surrender the charter. 1 It will be re-
membered, of course, that the expiration of the time limited by
the charter as a corporation's term of existence is held in most
jurisdictions to result in the dissolution of such a corporation. 2
But neither insolvency nor sale of all of the corporate property,
nor cessation of business operates to dissolve the corporation. 3
But in the absence of any provision in the charter limiting cor-
porate existence, the corporation is entitled to perpetual life. 4 If
the articles provide for a longer period of corporate existence than
the law allows, the excess is void. 5 In many of the States statutes
exist providing that the corporation shall continue in existence
for periods ranging from three to five years after the expiration
of the time limited for its existence for the purpose of winding up
its affairs. 6
A majority of the States delegate to the courts the power to
dissolve the corporation on application of stockholders or credi-
tors." The fact that certain States make the directors trustees
for creditors on dissolution does not necessarily take away the
jurisdiction of courts of equity to appoint a receiver. 8 Many
States have statutes providing that upon the expiration of the time
limited by their charter as the duration of their corporate exist-
ence, they shall nevertheless be continued for a certain period of
time in order to permit of the winding up of the corporate affairs.
Without such statutory provisions suits cannot be maintained
against the corporation after such period has expired. 9
§ 37. Power to insert in the Charter Provisions for the Regula-
tion of the Internal Affairs of the Corporation. — The incorpora-
tion acts of eighteen of the States contain provisions relative
to the contents of certificates of incorporation, authorizing the
insertion therein of provisions for the regulation of the business
of the corporation, or for the purpose of defining or limiting the
powers of the corporation, its officers, directors, and stockholders.
1 Jones v. Bank, 10 Col. 464; 17 Pac. • Foster i\ Bank, 16 Mass. 24."); Naah-
272; Barton v. Association, 114 Ind. 226 ; ville Hank v. Petway, 3 Hum. (Teun.) 522.
l»l x. I-:. 486. 7 See Miner v. Company, 93 Mich. 97 ;
2 Mason v. Company, 25 Fed. 882. 53 N. W. 218 ; Wheeler v. Company, 143
:i Davis v. Company, 87 Ala. 633 ; 6 So. 111. 197 ; 32 N. E. 420.
140. 8 City Pottery Co. v. Yates, 37 N. J.
4 F. L. S. Co. v. Clowes, 3 N. Y. 470. Eq. 543.
• People v. Cheeseman, 7 Col. 376 ; 3 ° Nelson ?>. Hubbard, % Ala. 238; 11
Par. 716. Sou. 428.
53
§ 37 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
Unless the law expressly permits the insertion of such provisions
in the certificate of incorporation, State officials are justified in
refusing to accept and file certificates containing such provisions.
This generally on the ground that in the absence of statutory
provision so authorizing, they are properly the subject of by-laws
and not proper for insertion in the certificate of incorporation. 1
Leaving out of consideration the fact of acceptance by State
officials, and approval by them of certificates of incorporation
containing such provisions as are here referred to, when there is no
statute authorizing the same, the following may be said : The
general test as to whether provisions not called for by the statutes
are valid when inserted in certificates of incorporation must be
determined from their character. If they are not powers, but are
merely in the nature of by-laws, they are invalid as not being
called for by the statute. If they are powers, but not authorized
by statute, to permit such insertion in the certificate of incorpora-
tion would be equivalent to saying that the legislature had clothed
the incorporators with a number of their legislative functions. 2
On this general subject the opinion of the Supreme Court of Ala-
bama in a leading case in that State is instructive : " It is appar-
ent," observes the court, " that the creation of corporations under
general law rather than by special act was not intended to work
any essential change in their nature and character. Whether
deriving existence from a special law, or from incorporation under
the general law, the corporation is an artificial being of legisla-
tive creation, having no other powers or properties than such
as the law confers, or which may be incidental to their very ex-
istence. The mode of incorporation the statutes have carefully
prescribed. The persons proposing to be incorporated must file
and cause to be recorded in a designated public office a declaration
in writing, stating the name of the corporation, the objects for
which it is formed, the amount of the capital stock, the number
of shares into which it is divided, the names of the stockholders,
and the number of shares each may hold. The office and the
effect of the declaration the statutes do not leave in doubt —
1 In re Application for charter, 10 Phil. N. Y. 546; G. L. D. Co. v. Perkins
Rep. 130; Van Pelt v. Gardner, 54 Neb. (Texas), 26 S. W. 256; Albright v. Asso-
701; 75 N. W. 874; Bent v. Underdown, 60 ciation, 102 Pa. St. 411 ; Shoun v. Arm-
N. E. 307 ; 156 Ind. 516 ; Heck v. McEwen, strong (Term.), 59 S. W. 790.
12 Lea, 97; T. A. L. Co. v. Massey, 56 2 People ex rel. v. C. G. T. Co., 130 111.
.S. W. 35; E. P. R. Co. v. Vaughan, 14 268; 22 N. E. 798.
54
CHAP. I.] DRAFTING THE CHARTER. § 38
when recorded, the persons signing it and their successors become
a body corporate by the name stated therein and with the powers
conferred by law. It is an acceptance by the corporation, under
the name designated, for the objects expressed, of the corporate
powers and capacity the law confers, and a statement of the prin-
cipal constituents of the corporation, — the amount of the capital
stock, the names of the stockholders, and the quantity of interest
each has in the capital stock. There is no authority of law for
introducing more into it, and if more be introduced, it is mere
surplusage, not adding to or detracting from the force of the
declaration. A controlling purpose, as we suppose, in authorizing
or in compelling the creation of corporations under general laws,
is to secure uniformity and equality of corporate powers, func-
tions, and privileges ; that all corporations of the same class,
formed for like purposes, should possess the same capacities
and properties, and exercise and enjoy the same franchises and
privileges. Unless it was intended to work a radical change in
the nature and character of these artificial beings, the mere crea-
tures of the law, and to subvert the whole theory which has pre-
vailed in reference to them, it cannot have been contemplated
that they should for themselves create powers and privileges by
declaration or reservation, whether the declaration or reservation
is expressed in the articles of incorporation or in the by-laws
ordered by the corporators for their government. Such declara-
tions or reservations would soon become more liberal and diverse
than was the liberality and diversity of the grants of corporate
powers by special legislative enactment, the evil it was intended
to remove. Of every corporation formed under the general law,
the law itself becomes the charter, defines and enumerates the
powers which are to be exercised, the nature and extent of cor-
porate franchises and privileges. The declaration of incorpora-
tion, the by-laws adopted for corporate government, do not form
the charter, or define or enumerate the corporate powers. These
are the acts of the corporators. The charter is the grant from
the sovereign power of the State, and by that source only can be
varied or enlarged." *
§ 38. Power to authorize Directors to adopt By-Laws. — In a
number of the States statutes exist authorizing the directors to
adopt by-laws under certain conditions. The conditions here re-
1 G. L. & II. Ins. Co. v. Kampcr, 73 Ala. 325.
55
§ 40 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
ferred to are usually either that the right referred to should be
expressly inserted in the certificate of incorporation, or, in lieu
thereof, that the stockholders expressly delegate this power to
the directors. Unless the statute or charter provides otherwise,
the by-laws must be adopted by the stockholders. 1 However,
where the right to adopt by-laws is expressly limited to the direc-
tors, it is exclusive.
§ 39. Power to authorize Appointment of Executive Committee
from the Board of Directors. — In Connecticut, Delaware, Massa-
chusetts, Nevada, New Jersey, Virginia, and West Virginia stat-
utes exist expressly authorizing directors to appoint an executive
committee from their own number to whom may be delegated, to
such extent as shall be provided in the by-laws, any of the powers
of the board of directors. There has as yet been no fair test in
the courts as to the validity of such statutes where an attempt has
been made by the directors to practically delegate all their powers to
an executive committee. A reasonable view of the matter would
seem to be that where the statute clearly conveys such power it is
valid when exercised by an executive committee duly appointed
from the full board of directors pursuant to the statute in such
case made and provided. 3
The power of the board of directors is not a delegated authority,
and when the transaction of the business of the company will be
facilitated by the appointment of ah executive committee such
appointment may unquestionably be made. 4
§ 40. Power to enlarge or diminish Corporate Powers. — The right
here referred to becomes one of importance only in those States
wherein it is permitted to insert specific corporate powers in the
articles of incorporation. The powers here referred to are such,
for example, as the right of the corporation to acquire its own
stock ; to hold stock and bonds in other corporations ; to delegate
to directors power to adopt by-laws, etc. It will be found that
wherever such a right exists the power to amend will be found
sufficiently broad to permit of the enlargement or diminishing of
l See Norton, etc. Co. v. Wysong, 51 28 N. E. 467 ; Black, etc. Co. v. Hol-
Ind. 4; Salem Bank v. Bank, 17 Mass. way, 85 Wis. 344 ; 55 N. W. 418 ; Andres
1 ; Watson v. Company, 56 Mo. App. 145; v. Fry, 113 Cal. 124 ; 45 Pac. 534 ; Bank
State v. Curtis, 9 Nev. 325. v. Walton Iron Co., 30 Bull. (Ohio) 382.
3 S. E. L. Co. v. Bank, 127 N. Y. 517 ; 4 Leavitt v. Company, 3 Utah, 265; 1
Pac. 356.
56
CHAP. I.] DRAFTING THE CHARTER. § 43
corporate powers by complying with the terms of the statute
relative to such amendments. 1
§ 41. Power to change Par Value of Shares. — Where the charter
fixes the number and par value thereof, a corporation cannot in-
crease or diminish the par value of its shares without legislative
sanction. 2 If however the certificate of incorporation says nothing
as to the number and par value of shares, they may doubtless be
changed by the stockholders of the corporation without legislative
sanction. 3
The legal effect of a change in the number of shares without
any corresponding increase or decrease in the par value thereof,
is to increase or decrease the capital stock, and this can only be
done by permission of the legislature. 4
In thirty-six of the States the par value of the capital stock may
be any amount, while in the remainder such par value is limited
from amounts ranging from one dollar to one hundred dollars per
share. In some few of the States it will be noted that the pro-
visions of the statutes limiting amendments fail to authorize
changes in the par value of the shares of capital stock.
§ 42. Power of Bondholders to vote at Election of Directors. —
Very few of the States have enacted statutes giving to bondholders
the right to participate in the election of directors. Virginia
and Delaware are the exceptions to the general rule. Most of the
States provide that the board of directors shall be elected by
the stockholders, and thus by implication forbid the giving of the
right to bondholders to vote at such election. 7 However, if neither
by constitutional or statutory provision bondholders are barred
from participating in the election of directors, such right may be
bestowed upon them either by provision therefor in the charter or
by proper by-law duly adopted. 8
§ 43. Power to classify Directors. — Ordinarily the tenure of di-
rectors is fixed by statute, and where so fixed these provisions are of
course controlling. If the statute requires directors to be elected
i Peoria, etc. Co. v. Preston, 35 la. 3 S.&K. Ry.Co. v. dishing, 45 Me. 534.
115 ; P., etc. P. R. C>>. v. (irillin, 21 Barb. 4 Droitwich Patent Salt Co. v. Curzon,
454 ; Pac. R. Co. v. Hughes, 22 Mo. 291. L. R. 3 Ex. 35.
2 Droitwich Patent Sail Co. v. Curzon, 7 Durkee v. People, 155 111- 354; 40
L. It. 3 Ex. 35 ; Tscbumi v. Hills, 6 Kan. N. E. 626.
App. 549 ; 51 Pac. 619 ; S. M. D. Cor. v. s g tate „. M c Daniel, 22 0. St. 354.
Ropes, 6 Pick. (Mass.) 23.
57
§ 46 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
annually, this by implication prohibits the classification of direc-
tors for terms in excess of the statutory limit. 1 In a large num-
ber of the States statutes exist expressly authorizing classification
of directors.
If the statute does not require annual election of directors, there
would appear to be nothing illegal in a corporation's classifying its
directors in any manner it sees fit so to do, provided (in the ab-
sence of statutory regulations) directors hold their office at the
pleasure of the corporation.
§ 44. Power to amend Articles before Organization. — As
has already been seen, the power to amend, if it exists at all,
must be derived from the legislature. Very few of the Common-
wealths have granted to incorporators the right to amend articles
of incorporation before organization. Statutes, however, to that
effect exist in Alabama, Connecticut, New York, New Jersey,
North Carolina, and Virginia.
§ 45. Power to surrender Charter before Organization. — It is
often an advantage to a corporation which does not care to avail
itself of the right to actively engage in business, to surrender its
charter to the State before organization, without going through
the expensive and usually complicated proceedings incident to
dissolution. Such right is expressly given in Connecticut, New
Jersey, North Carolina, Virginia, and West Virginia. 3
§ 46. Power given to Minority Stockholders to compel Purchase
of their Holdings upon Consolidation. — In the States of Alabama,
Connecticut, Massachusetts, Delaware, and New York statutory
protection is afforded to minority stockholders in case the cor-
poration has consolidated with another. The Connecticut statute
may be briefly summarized as an example of such statutes. 4
The act provides that any stockholder in any corporation con-
solidating, who at the time of such consolidation objects thereto
in writing, may, within ten days after the agreement of consolida-
tion has been filed for record in the office of the Secretary of
State, demand in writing from the consolidated corporation pay-
ment of his stock ; and such corporation shall within three
months thereafter pay him the value of his stock at the date of
i State v. McCullough, 3 Nev. 202. 428 ; Law v. Rich, 47 W. Va. 634 ; 35 S. E.
3 Mumma v. Company, 8 Pet. LI. S. 858.
281 ; Taylor v. Holmes, 14 Fed. Rep. 498; 4 Sec. 79, chap. 194, of the Session
Houston v. Jefferson College, 63 Pa. St. Laws of 1903.
58
CHAP. I.] DRAFTING THE CHARTER. § 47
such consolidation. In case of disagreement as to the value
thereof, such value shall be ascertained by three disinterested
persons, to be chosen, one by the stockholder, one by the directors
of the consolidated corporation, and the third by the two thus
selected ; and in case their award is not paid within thirty days
from this date it shall become a debt of said consolidated corpora-
tion and may be collected as such. Upon receiving payment of
the amount awarded, such stockholder shall transfer his stock to
the consolidated corporation, which shall dispose of it on the best
terms attainable. 1
§ 47. Incidental Powers, Definition and Enumeration of. — An
incidental power is one that is directly necessary or proper to the
execution of an express power, and not one that has a slight or
remote relation to it. 2 The term expresses those powers which
flow necessarily out of the exercise of the express powers con-
ferred by statute or by charter. 3
The exercise of a power that might be beneficial to the prin-
cipal business of the corporation is not necessarily incident to it. 4
The principal incidental powers may be enumerated as follows :
(1) power to make contracts ; (2) power to borrow money ; (3)
power to give and accept customary evidences of debt ; (4) power
to mortgage or pledge real and personal property ; (5) power
of amotion.
The implied powers which a corporation has in order to carry
into effect those expressly granted, and to accomplish the pur-
poses of its creation, are not limited to such as are indispensable
for these purposes, but comprise all that are necessary in the
sense of appropriate, convenient, and suitable, including the right
of reasonable choice of means to be employed. Acts of a cor-
poration which if standing alone or engaged in as a business
would be beyond its implied powers, are not necessarily ultra vires
when they are incidental to or form part of an entire transaction
which in its general scope, is within the corporate purpose. The
validity of such a transaction is to be determined from its general
1 See Lanman v. Company, 30 Pa. St. 798; People v. Company, 175 111. 125 ; 51
42; Mowrey v. Company, 17 Fed. Cas. N. E. 664.
No. 9891; 4 Bissell, 78; Pittsburg, etc. 3 See U. M. Co. v. Bank, 2 Col. 248;
By. Co. i'. Garrett, 50 O. St. 405 ; 34 N. E. Wright v. Hughes, 1 19 Ind. 324 ; 21 N. F.
493. 907.
2 Hood v. Company, 42 Conn. 112; ■ Nicollet Nat. Bank v. Company, 71
People v. Company, 130 111. 268 ; 22 N. E. Minn. 413 ; 74 N. W. 160.
59
§ 52 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
character considered as a whole rather than by segregation into
individual parts and each regarded as distinct from the other. 1
§ 48. Power to make Contracts. — A corporation is a creature
of law, and may do any act or thing under contract the same as
natural persons might do, subject to the rights conferred on it by
the law of its creation or by its charter. 2 Where chartered in
one State for any purpose, it may lawfully make a contract in
furtherance of that purpose in any other State where not pro-*
hibited by the laws thereof. 3
§ 49. Power to borrow Money. — The power to borrow money
in carrying out the purposes of the corporation's organization is
one of the incidental corporate powers. 4 In this connection it
may be said that the power to borrow money has been held to
imply the power to issue bonds. 5 However that may be, in addi-
tion to an enumeration in the statute of the power to borrow
money, a majority of the business corporation acts expressly
confer the right upon corporations to issue bonds.
§ 50. Power to give and accept Customary Evidences of Debt. — -
This incidental power includes the right of corporations to make
notes or bills of exchange, to accept drafts and notes, and to draw
checks. 7
§ 51. Power to mortgage and pledge Real and Personal Property
— Every corporation has the incidental power to mortgage and
pledge its real and personal property in order to procure and
secure necessary loans to be made to the corporation. 8 It is
sometimes said that a corporation has power to pledge both its
issued and unissued shares. 9
§ 52. Power of Amotion. — The power of amotion has refer-
ence to the removal of officers and directors. The term " dis-
1 C. 0. N. G. F. Co. v. Company, 60 7 Moss v. Averell, 10 N. Y. 449 ; Lucas
Ohio, 96; 53 N. E. 711; Porter v. Company v. Pitney, 27 N. J. Law, 221 ; Smead v.
(Mont.), 74 Pac. 938. Company, 11 Lud. 104; Strauss v. Com-
2 Hand v. Company, 143 Pa. St. 408; pany, 52 O. St. 59; Morris v. Cheney, 51
22 Atl. 709 ; People v. Company, 70 N. Y. 111. 451.
569 ; MacGinniss v. Company (Mont.), 75 8 State v. Company, 61 Kan. 547 ; 60
Pac. 89. Pac. 337 ; Farmers' Bank v. Company,
8 Hall v. Company, 91 Ala. 363; 8 108 Ky. 447 ; 56 S. W. 719 ; Savings Trust
Sou. 348. Co. v. Company, 112 Fed. 693.
4 See Ward v. Johnson, 95 111. 215; 9 See U. Savings Ass'n v. Seligman,
Wright v. Hughes, 119 Ind. 324; 21 N. E. 92 Mo. 635 ; 15 S. W. 630; Burgess v.
907. Seligman, 107 U. S. 20; 2 S. Ct. 10.
5 Commonwealth v. Smith, 10 Allen
(Mass.), 448; Smith v. Law, 21 N. Y. 296.
60
CHAP. I.] DRAFTING THE CHARTER. § 53
franchisement " has reference solely to the deprivation of the
right to vote as against stockholders. 1 The right is delegated by
statute to the stockholders in fifteen of the Commonwealths. In
the absence of such statute there is no power in the stockholders
to remove directors before the expiration of their allotted terms,
except for cause, provided such terms are fixed by statute. 3
It seems to have been the rule of the common law that every
corporation had an implied power to remove directors for cause
when their terms of office were not prescribed by statute. 4 In
Xew York it has been held that the power to remove directors
may be covered by by-law. 5
The main grounds which justify amotion where no statute
exists limiting the same, are the conviction of crime on the part of
directors, misconduct in office, and violation of statutory provi-
sions. 6 If the charter or statute provides steps which must be
taken to remove directors, such statute must be strictly followed."
In the exercise of this power the stockholders meet, charges must
be preferred, and the director removed by a majority vote. 8
Equity will not interfere in such matters in the absence of usurpa-
tion or gross negligence. 9
§ 53. The Modern Doctrine of Ultra Vires. — To define in a
general way the ancient doctrine of ultra vires is to say that a
contract of a corporation which is unauthorized by or in violation
of its charter, or entirely outside of the scope of the express
purposes of its creation or beyond the powers granted to it by the
charter or by statute, is void in the sense of being no contract at
all, because of a total want of power to enter into it; that such
contract will not be enforced by any species of action in a court of
justice ; that being void ab initio, it cannot be made good by
ratification or by any succession of renewals, and that no perform-
ance on either side can give validity to the unlawful contract, or
form a foundation of any right of action upon it. 10
1 White v. Brownell, 4 Abb. Pr. n. s. 8 Rex v. Taylor, 3 Salk. 231 ; R. E. G.
162. v. Smith, 10 Wood, 74; DeLacey v. Com-
; Nathan v. Tompkins, 82 Ala. 437; pany, 1 Hawks (N. C), 274; Pordy v.
2 So. 747. Ass'n (Mo. Ap.), 74 S. W. 486.
4 Fawcette v. Charles, 13 Wend. 473. 8 B a k er D- Backus, 32 111. 79; Park v.
6 Douglass v. Company, 118 N. Y. 484; Grant Locomotive Works, 40 N. J. Eq.
23 N. K.806. 114; 19 Atl. 62; Id. 45 N. .1. Eq. 241,
6 Rex v. Richardson, 1 Burr. 517. 362; 3 Atl. 162.
7 State v. Trustees, etc., 5 Ind. 77. i" See Thompson on Corporations, vol.
v. § r>96s ; for history of doctrine of ultra
Gl
§ 53 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
The necessities of modern business and the arrival by the courts
at a better conception of the true relations governing the matter,
have brought about radical changes in the doctrine as here
stated. What we propose to do in this connection is to set forth
what may be termed " the modern doctrine of ultra vires. " Pre-
liminary to this a statement should be made showing how the
doctrine of ultra vires originated, and how it came to be applied
from time to time.
In the early days corporations were created mainly for public
purposes, and it was in connection with quasi-public corporations
that the doctrine of ultra vires first originated. In view of this
fact, as has been well stated, there was no reason why the doc-
trine should ever have been applied to private corporations not
formed for public purposes. 1
The grounds of the old doctrine are stated by Judge Gray as
follows : 2 " That the charter of a corporation which contains its
grant of powers is a public statute, which all persons are bound
to take notice of and be governed by ; that the restraints thereby
established on the alienation of the franchises of the property of
the corporation are founded on considerations of public policy,
which neither the corporation nor any other persons can be
allowed to evade or disregard." In a later case, when sitting
on the United States Supreme Court bench, the same judge ob-
served : 3 " The reason a corporation is not liable on a contract
ultra vires are the interests of the public that the corporation
shall not transcend the powers granted; the interests of the
stockholders that the capital stock shall not be subjected to the
risk of enterprises not contemplated by the charter, and therefore
not authorized by .the stockholders in subscribing for the stock ;
the obligation of every one entering into a contract with a corpora-
tion to take notice of the legal limits of its powers."
Turning now to this statement, attention should be called to
those reasons which have aided a great majority of the courts in
evolving a new doctrine of ultra vires better suited to the condi-
tions of the present time. In the first place, except in the case
of what is known as " quasi-public-private corporations," the
vires see B. G. L. Co. v. Claffy, 151 N. Y. 2 Richardson v. Sibley, 11 Allen, 65.
24; 45 N. E. 390. 3 Pittsburgh, etc. Co. v. Keokuk, etc
1 See Heunesey v. Muhleman, 40 N. Y. Bridge Co., 131 U. S. 37 ; 9 S. Ct 770
Ap. Div. 175 ; 57 N. Y. S. 854.
G2
CHAP, I.J DRAFTING THE CHARTER. § 53
public has no direct interest whatever in the nature of the powers
vested in them. Corporations are no longer created by special
act, except in a few cases, and it would be a poor rule which
would require a stranger to take notice of the contents of char-
ters not public and difficult to obtain. In modern times the
placing in articles of incorporation of a large number of purposes,
in some cases giving the corporation almost unlimited scope along
business lines, has practically removed the objections spoken of
above, to the effect that capital shall not be subjected to the risk
of enterprises not contemplated by the charter.
Turning now to the changes already referred to, as having taken
place in the doctrine of ultra vires, they may be stated in the
form of the following propositions : (1) " The claim that a con-
tract is void, because under the charter beyond the power of a
corporation is seldom recognized as a defence to an agreement
otherwise objectionable, and never where it would defeat the ends
of justice or become a shield against wrong ; " 1 (2) the doctrine of
ultra vires is not usually applied where the party setting it up has
received a benefit from the unlawful act relied upon as a defence ; 2
(3) where the most that can be said of a corporate act is that it
is an abuse of power, the State alone can act ; 3 (-f ) the doctrine
that persons dealing with corporations are bound to take notice of
their power is now practically done away with by the application
of the doctrine of estoppel in the case of completed contracts.
Again, it should be carefully noted that by the fullest applica-
tion of the doctrine of estoppel where attempts have been made to
set aside contracts on the ground that they were ultra vires of the
corporate powers, the courts have practically revolutionized the
doctrine as it once existed in this country. The doctrine of es-
toppel here referred to is of the character referred to by Lord
Denman in Pickard v. Sears, 4 where he says that where one by
his words or conduct wilfully causes another to believe in the ex-
istence of a certain state of things, and induces him to act on that
belief so as to alter his own previous position, the former is pre-
cluded from averring against the latter a different state of things
as existing at the same time. By an extended application of the
1 Int. Trust Co. v. Company, 70 N. H. ;! Rector v. Hartford Deposit Co., 190
lis; 40 Atl. 1054; B. R. V." 0. Co. v. 111.380; 60 N. E. 528.
Banley, 15 Utah, 506; 50 Pa. St. 611. 4 6 Ad. & El. 469.
- Norton v. Bank, 61 N.H.589; Smith
v. Bank, 72 N. II. 4.
G3
§ 53 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
doctrine laid down by Lord Denrnan, the courts hold that where
there has been no express violation of the law the corporation is
estopped by its own contract or conduct from setting up, as a de-
fence to an action to enforce such contract, that it was not in the
power of the corporation to make it. So too the courts hold that
where a private corporation enters into a contract in excess of its
granted powers and has received the benefits of the contract which
the other parties acted upon, the corporation is estopped to repudiate
the contract on the ground that it was ultra vires. Repeatedly the
courts have held that where a contract with a corporation —
the making of which is beyond its chartered powers — has been
fully executed by both parties to the contract, neither of them
can assert its invalidity as a cause of action as against the other.
Again, it may be stated that where a corporation has acted in
excess of its granted powers or in the face of express or implied
statutory prohibition it is clear that there can be no objection
raised on that ground between it and a private party, for this can
only be raised by the State in a direct proceeding- to forfeit the
franchises of the corporation. 1 Again, it may be stated that the
doctrine of estoppel, as well as the doctrines of ratification and
confirmation by acquiescence, apply under modern rules to ultra
vires contracts. 2
An Ohio court has divided unauthorized acts of a corporation
into two classes : (1) where it has no power to do what it promises
or to receive what is promised ; (2) where it has no power to do
what it promises but may receive what is promised. In each class,
it was said, if action is brought, one of three states of fact will
appear : (a) where it has performed its promise, but the other
party has not ; (6) where the other party has performed, but it
has not ; (c) where neither party has done all that was promised.
In case 1 a the corporation cannot recover ; the contract has no
existence. In case 2 a the corporation may recover for perform-
ance if it has eliminated the ultra vires element and there is no
want of mutuality. In cases 1 b and 2 b what remains to be done
is ultra vires, and neither party can recover. In cases 1 c and
1 Union Nat. Bank v. Matthews, 98 Works Co., 44 Fed. 146 ; Linkauf v. Lom-
U. S. 621 ; Pullman v. Upton, 96 U. S.328. bard, 137 N. Y. 417 ; 33 N. E. 472 ; Nims
2 See Water Works Co. v. Low, 46 N. Y. v. School, 160 Mass. 177; 35 N.E. 776;
Sup. 633 ; Woodruff v. Erie R. R. Co., 93 J. B. Farrell Company v. Wolf, 96 Wis.
N. Y. 609 ; Miller v. Am. Mut. Acci. Ins. 10 ; 70 N. W. 289 ; Smith v. Bank of New
Co., 92 Tenn. 167; Wood v. Corry Water England, 72 N. H. 4.
G4
CHAP. I.] DRAFTING THE CHARTER. § 54
2 c neither party can recover because the contract is ultra vires.
"Recovery cannot be helped by promises of the officers. Pure
assertion of law cannot give rise to estoppel. Nor is recovery
aided by the fact that a consideration was conveyed to an indi-
vidual as trustee for the corporation. 1
§ 54. Corporate Domicile. — Corporations, like individuals, must
have a place of abode. 2 As far back as Lord Coke's time a place
of abode was held to be of the essence of a corporation. 3 Unless
provided otherwise by statute, the rule at the present time is that
corporations to have any legal existence must have a home within
the boundaries of the State which creates it.
In the words of Justice McAdam in Kruse v. Dusenbury, 4 "A
corporation cannot become a tramp. It must have a domicile —
not in theory, but in fact — within the sovereignty which created
it. ... A corporation in the nature of things must have some
office or place of business in the State where it was incorporated,
so that creditors may know where to find it, that they may present
and if necessary prosecute their just demands. The statute con-
templates that such place of business shall exist not only in name,
but in fact ; for, if the corporation has no place of business in the
state where it was incorporated, it does not affect the charter,
but it cannot have branch offices elsewhere. Like a live tree, it
cannot consist of branches only, but must take root in its native
soil before it can extend its branches into other States."
Most of the States have statutes expressly requiring the main-
tenance of a domiciliary office within the State of the corporation's
origin, and failure to comply with this requirement renders the
charter of such corporation liable to forfeiture upon proper action
taken by the State. 5
Thus in Minnesota a charter was forfeited for the failure on the
part of the corporation to maintain a domiciliary office therein.
In this case, 6 the court observed, " that independently of statute,
it is incumbent upon a private corporation to keep its principal
place of business, its books and records, and its principal offices in
1 Vos v. Association, 9 Bull. (Ohio) 194. Tex. 80; State v. Company, 45 Wis. 579 ;
- In re Spring Valley Water Co., 17 Simmons v. Company, 113 N. C. 147 ; is
Cal. 132. S. E. 117; State v. Company, 58 Minn.
8 See Sutton's Hospital Cases, 5 Coke's 330; 59 N. W. 1048; State D. Company,
Rep. 253. 59 Kan. 151 ; 52 Pac. 422.
* 19 Wk. Di. (N. V.) 201. 6 State v. P. & N. L. Co., 58 Minn. 330 ;
5 See N. & S. R. Co. v. People, 147 111. 59 N. W. 1048.
234 ; 85 N. E. 608 ; State v. Company, 24
5 65
§ 54 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART 1.
the State where it is incorporated, to an extent necessary to the
fullest jurisdiction and visitorial power of the State and its courts
and the efficient exercise thereof in all proper cases, and that a
forfeiture may be adjudged for a violation of this common law
obligation." x
The authorities have on more than one occasion brought
actions to forfeit charters of corporations for failure to main-
tain domiciliary offices therein. 2
In the words of one court, a corporation "must have some
fixed office or place of business in the State where it is incor-
porated, so that creditors may know where to find it." 3 Again,
the object of naming the domicile is to fix the place for the
holding of stockholders' and directors' meetings, and to fix a
location for the books of the corporation where the stockholders
and creditors may demand an inspection thereof, if this right
is given to them by statute. 4 Another purpose is to fix the
venue of actions brought against a corporation where the law
requires that suits shall be brought in the county where the
defendant resides. In those States which have statutes expressly
authorizing a corporation to transact all of its business out-
side of the domiciliary State, this provision for a domiciliary
office is of the utmost importance.
A corporation cannot have two domiciles at the same time. 5
The domicile, residence, and citizenship of a corporation are in
the State from which the charter was procured. 6 The place of
residence is in the county where the principal office is located. 7
The principal office of a corporation and the place for the
transaction of its business are not one and the same thing. A
corporation may have its office in one locality and transact its
business in another. 8
1 See also State ex rel. v. Company, 45 3 Kruse v. Dusenbury, 19 Wk. Dig.
Wis. 579; Stickle v. Liberty Cycle" Co. (N.Y.)201.
(N. J.), 32 Atl. 708. * State v. Ry. Co., 45 Wis. 580.
2 See N. & S. R. Co. v. People, 147 111. 5 Bridge Co. v. Woolley, 78 Ky. 525.
234 ; 35 N. E. 608 ; State v. Company, 24 6 American, etc. Co. v. Johnston, 60
Texas, 80; State v. Company, 45 Wis. Fed. 503 ; Chafee v. Bank, 71 Me. 514.
579; Simmons v. Company, 113 N. C. 7 McSherry v. Company, 97 Cal. 637;
147; 18 S. E. 117; 22 L. R.A. 677; State 32 Pac. 711.
v. Company, 58 Minn. 330; 59 N. W. 8 Van Etten v. Eaton, 19 Mich. 187;
1048; State v. Company, 59 Kan. 151; Kennett v. Company, 68 N. H. 432; 39
52 Pac. 422 ; Montgomery v. Forbes, 148 Atl. 585 ; Meredith v. Company, 59 N. J.
Mass. 249 ; 19 N. E. 342. Eq. 257 ; 44 Atl. 55 ; Harris v. McGregor,
29 Cal. 124.
66
CHAP. I.] DRAFTING THE CHARTER. § 56
§ 55. Board of Management. — A corporation without a re-
sponsible management is like a boat without oars, a ship with-
out sails. It must have certain recognized and duly appointed
agents to represent the stockholders in the management of the
company. These agents are generally known as a board of
directors, or less commonly as a board of trustees. Twenty of
the States require the names of the first board of directors to
be inserted in the certificate of incorporation, while of the re-
mainder nine require merely the number of directors to be
stated therein. Twenty-two of the States prescribe residen-
tial requirements for directors, while others require that all
directors shall be stockholders. The number of directors
required by the various business corporation acts vary from
an unlimited maximum to a minimum of one.
Where the statute requires the number of directors to be set
forth in the articles, the incorporators cannot name a number
less than the minimum required by law. 1 The power to have
and elect directors is inherent in every corporation, irrespec-
tive of statute. In fact, it is an essential feature of corporate
existence. 3
In the absence of express provision in the charter or by-laws
the management of the business of the corporation is vested in
the Board of Directors and not in the stockholders. 4 Failure
to name directors in the articles when the same is required
by statute will justify State officials in refusing to file arti-
cles. 5 Merely providing for executive officers in the articles
is insufficient. 6 The original directors named in the certifi-
cate of incorporation under direction of the incorporation act
are directors de jure, clothed with all the powers of the
corporation, and may exercise the same powers as though
elected by the stockholders. 7
§ 56. Capital Stock. — Capital stock is the fund of money or
other property fixed as the basis for conducting the business of
the corporation, and contributed by the corporators to the capi-
1 In re Germania Sangerbund, 12 Perm. 5 Eakwright v. Company, 13 Ind. 404;
Co. Ct. Rep. 89. - In re Association, 19 Penn. Co. Ct. Rep.
3 TerwilliKer v. Company, 59 111. 249 ; 25 ; People v. Sclfredge, 52 Cal. 831.
Reed v. Company, 50 Ind. 342; Hurlbnt v. 6 Bates v. Wilson, 14 Col. 140; 24
Marshall, 62 Wis. 590 ; 22 N. W. 852. Pac. 99.
* Dana v. Bank, 5 W. & S. (Pa.) 247. 7 Hamilton Trust Co. v. Clemens, 163
N. Y. 423 ; 57 N. E. 614.
67
§ 56 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
tal, and is usually represented by shares issued to subscribers
to the stock on the initiation of the enterprise. 1 Capital stock
from another aspect is the security for creditors of the corpora-
tions, and entitles the owners thereof to participate in the man-
agement of corporate business and share in its profits and in its
surplus after payment of corporate debts. 2 Shares of stock, on
the other hand, are simply the muniments and evidence of the
holder's title to a given share in the property and franchises of
the corporation in which he is a member. 3 Frequently the words
"capital" and "capital stock" are used interchangeably to
express the property and assets of the corporation.
It is not altogether clear whether express authority to issue
shares of capital stock is necessary, yet it has been repeatedly
held that in order to increase or reduce the capital stock of
a corporation, legislative authority is necessary. The prevail-
ing view seems to be in favor of the necessity of legislative
authority. 4
In the absence of statutory or charter requirements neither
subscription for capital stock nor payment thereof is necessary
to corporate existence. 5 If the charter of a corporation does not
fix the amount of its capital stock , it must be fixed by the stock-
holders, or, with their consent, by the directors. 6 Stock can be
issued only by direction of the corporation. 7
In many of the Commonwealths the minimum amount of
capital stock which a corporation may have is fixed by statute.
Very few of the States limit the maximum amount of capitaliza-
tion. 8 To determine the amount of capital stock that a corpora-
tion has, preferred stock must always be included therein. 9 It
is not always an easy question to determine who are and who
i Christensen v. Eno, 106 N. Y. 97 ; 12 Company, 74 Texas, 421 ; 2 S. W. 101 ;
N. E. 648. Stowe v. Flagg, 72 HI. 397.
2 Janney v. Bank, 98 Ala. 515 ; 13 So. 6 So. K. Ry. Co. v. Cushing, 45 Me.
761. 524; State v. Bank, 95 Tenn. 221; 31
3 Mechanics' Bank v. Company, 13 S. W. 993.
N. Y. 599. 7 H. D. P. Ass'n v. Stevens, 34 Neb.
4 Cooke v. Marshall, 191 Pa. St. 315
43 Atl. 314; 196 Pa. St. 200; 46 Atl
447 ; Detroit Chamber of Commerce 41 Ind. 151 ; Williams v. Hewitt, 47 La.
v. Gardner, 109 Mich. 691; 67 N. W
897.
6 McGintyu. Company, 155 Mass. 183
.29 N. E. 510; Jefferson Nat. Bank v
68
528 ; 52 N. W. 568 ; Hendrix v. Academy
of Music, 73 Ga. 437 ; State v. Company,
Ann. 1076 ; 17 So. 496.
8 See Hughes v. Company, 34 Md. 316.
9 State v. Company, 16 S. C. 524.
CHAP. I.] DRAFTING THE CHARTER. § 57
are not stockholders. The question must usually be determined
by the particular facts of each case. 1
Sometimes the incorporation act requires the articles to state
the time when and the manner in which stock shall be paid for.
It is sufficient in this connection to say, for example, that the
stock shall be paid for in cash, and that no certificate of stock
shall issue until such payment is made. 2 The statement may
be broadened if desired by setting forth in the articles that the
stock shall be paid for in property, at such times and of such
a character and with such notice to the subscribers as the
directors shall deem for the best interests of the corporation. 3
Where the statute requires the amount of the capital stock to
be stated, it has been held sufficient to simply state the number
of shares and the par value of the same. 4
§ 57. Limitations upon Amount of Capital Stock. — As has
already been observed, the great majority of the incorpora-
tion acts provide that the amount of capital stock which the
corporation is to have shall be fixed in the articles of incor-
poration. This is the usual and often the only limitation on
the amount of capital stock which any particular corporation
is authorized to have. However, in fourteen of the Common-
wealths the minimum capital stock of all corporations is fixed
by statute, while in three of them the maximum capitalization
is also prescribed.
In this connection the words of the court in Barry v. Mer-
chants Exchange Co. 6 are peculiarly instructive. In that case
Chancellor Sanford observed : " That the capital stock of a
corporation is the aggregate amount of the funds of the cor-
porators which are combined together under a charter, for the
attainment of some common object of public convenience or
private utility. This amount is fixed in the act of incorpora-
tion. It is thus limited, in reference to the convenience of the
intended corporators, and for the information and security of
the public at large. To the corporators it prescribes the amount
and the subdivisions of their respective contributions to the com-
1 See O'Brien v. Fulkerson, 75 Mich, * Buffalo, etc. Ry. Co. v. Hatch, 20
554; 42 N. W. 979. N. Y. 157.
2 N. O. Ry. Co. v. Frank, 39 La. Ann. « i San. Chan. (N. Y.) 280.
707 ; 2 So. 310.
3 See Baltimore, etc. Telephone Co. v.
Company, 37 La. Ann. 883.
69
§ 59 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
mon fund ; the voice which each shall have in the control and
management; and the apportionment of the profits of the enter-
prise. To the community it announces the extent of the means
contributed and forming the basis of the dealings of the corpo-
rate body, and enables every man to judge of its ability to meet
its engagements and perform what it undertakes. And when the
statute requires the stock to be paid in before the corporation
can transact business, security to those contracting with it is
thereby superadded to the information of its resources. These
objects for the public benefit are such as the legislature had in
view in limiting the amount of capital stock, and requiring a
specified sum or proportion to be paid in. One other considera-
tion dictates the amount thus fixed. This is the probable and
reasonable extent of the means requisite to the accomplishment
of the end proposed, qualified in many cases by the unwilling-
ness of the legislature to create these artificial beings with an
undue amount of capital."
§ 58. Par Value of Capital Stock. — In thirty-six of the
States the par value of the shares of the capital stock may
be any amount. In the remainder the par value is limited
by statute. Where the corporation act does not require that
the number and par value of shares be set forth, the presumption
is that the legislature intended that this should be fixed by the
stockholders of the corporation at the organization meeting. 1
The matter may be entrusted by the stockholders to the directors
if desired. 3
The question sometimes arises as to whether changing the par
value of shares without increasing or decreasing the capital
stock constitutes such a "variation" therein as to come within
the statutory prohibition forbidding such variation without leg-
islative authority. The prevailing rule seems to be that such
variation may be made only by conforming to the statute (if any
exists) authorizing amendments to the charter in this regard. 4
§ 59. Amount of Stock Subscriptions. — Unless made SO by
statute, no subscription, in whole or in part, of the capital stock
of a corporation is necessary, either to the validity of a corpora-
1 S. & K. R. Co. v. Cushing, 45 Me. 3 Commonwealth v. Company, 52 Pa.
524; State v. Bank, 95 Tenn. 221; 31 St. 506.
g w. 993. * C. C. Ry. Co. v. Allerton, 18 Wall.
233 ; Seignouret v. Company, 24 Fed. 332.
70
CHAP. I.] DRAFTING THE CHARTER. § 59
tiorfs existence or to its right to transact business. 1 The rule,
however, that exists in this country to-day is doubtless opposed
to the common law rule on the subject. 2 The States of Wash-
ington, Illinois, and Missouri require subscriptions to the full
amount of the authorized capital stock. 3
Fourteen of the Commonwealths require the amount of stock
subscribed for by each incorporator to be set forth in the arti-
cles, while others require the amount of stock with which the
corporation will commence business to be stated. A few pre-
scribe that the amount of stock actually subscribed shall be set
forth. 4 Sometimes provisions are found requiring the residences
of subscribers to the capital stock to appear in the articles. 5
Any person capable of contracting may subscribe for stock or
become a stockholder. This includes aliens, married women,
and corporations. 6 Subscriptions for stock must be made
through commissioners where the law so provides. 7 But even
where such subscriptions are made through parties other than
commissioners contrary to the statute, such subscriptions may
be afterwards ratified by the proper party. 8
Occasionally attempts are made to limit by charter provisions
the amount of stock which may be owned by any one stockholder.
Such provisions are generally held void, as not called for by the
governing statute. 9 An important question that arises in con-
nection with the general subject of stock subscriptions, amount
of stock paid in, and amount of capital with which the corpora-
tion may begin business, has reference to the effects which follow
a failure on the part of the corporation to comply with such
statutory requirements. In general, it may be said that the
penalties which follow a failure to comply with such provisions
are generally along the following lines :
First, they afford a basis for an action to be brought by the State
1 Livesey v. Company, 5 Neb. 50; Cal. 201 ; L. O. A. Ry. Co. v. Mason, 16
Johnson v. Kessler, 76 la. 411 ; 41 N. W. N. T. 451.
57; S. F. N. Hank v. Almy, 117 Mass. 6 See Steinmetz v. Company, 57 Ind.
476; Minor v. Bank, l Peters (U.S.), 46; 457.
7 L. E. 47 ; Schenectady, etc. Plank Road 6 Dublin, etc. Ry. Co. v. Black, L. R. 8
Co. v. Thatcher, 111 N. Y. 102. Exch. 181 ; Cork, etc. Ry. Co. v. Caze-
2 Schloss v. Company, 87 Ala. 411 ; 6 nove, L. R. 10 Ad. & El. 935.
So. 360. 7 Shurtz v. Company, 9 Mich. 269.
a Denny Hotel Co. v. Schram, 6 Wash. 8 Walker v. Company, ">1 Misc. (N. Y.)
134; 32 Pac. 1002. 245.
4 See Buffalo, etc. Ry. Co. v. Hatch, 9 O'Brien v. Cummings, 13 Mo. Ap.
20 N. Y. 157; People v. Chambers, 42 197.
71
§ 60 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
looking to the forfeiture of the Gharter. Secondly, they some-
times result in rendering the incorporators liable as co-partners,
the courts holding that by failing to comply with the statute
they have forfeited their right to immunity from individual
liability for what would otherwise be distinctively corporate
debts. Thirdly, in some jurisdictions a penalty is prescribed
by statute making directors and officers liable for all debts con-
tracted before the statutory requirements above referred to have
been complied with.
It goes without saying that corporations cannot legally issue
stock in excess of their authorized capitalization. 1 However,
this does not mean that bona fide purchasers of such shares are
without remedy, for ordinarily in such cases both the corpora-
tion and its officers are liable. 2
§ 60. Amount of stock paid in. — It has already been ob-
served that neither the subscription to nor the payment of the
whole amount of capital stock authorized by the charter is a
condition precedent to the legal existence of the corporation
unless it is made so by a governing statute. Ordinarily, it
merely goes to the right to transact business, without subjecting
the directors or the corporate officers and agents to personal
liability. 3 However, in some few of the States the corporation
acts provide that before the corporation may commence busi-
ness a certain percentage of the capital stock shall be paid in.
Where the articles fail to so set forth the amount of stock paid
in as required by statutes, this does not affect ipso facto the
legality of the corporation's existence, but it is a matter which
can only be taken advantage of by the State in quo warranto
proceedings. 5
Statutory payments must be made in the manner and time
provided by statute, and they must be paid in in good faith. 6
1 Mechanics' Bank v. Company, 13 Music, 73 Ga.437 ; K.C. H. Co. v. Hunt, 57
N. Y. 599 ; Scovill v. Thayer, 105 U. S. Mo. 126 ; Tradesmen Publishing Co. v.
143 . Company, 95 Tenn. 634; 32 S. W. 1097;
2 N. Y. N. H. R. Co. v. Schuyler, 34 Ag. Bank v. Burr, 24 Me. 256 ; Y. R.
N. Y. 30 ; Moores v. Bank, 111 U. S. 156 ; L. N. Co. v. Company, 72 Fed. 62.
4 S. Ct. 345. 6 McLaren v. Pennington, 1 Paige
3 D. S., etc. Co. v. Attorney-General, (N. Y.),102; People v. Chambers, 42 Cal.
21 Can. Sup. Ct. 72 ; S. P. R. Co. v. 201 ; State v. Company, 3 Hump. (Tenn.)
Thatcher, 11 N. Y. 102. 305 ; People v. City Bank, 7 Col. 226 ; 3
« E. P. R. Co. v. Vaughan, 14 N. Y. Pac. 214 ; People v. Bank, 129 111. 618 ; 22
546. See also Hendrix v. Academy of N. E. 288 ; Hammond v. Strauss, 53 Md. 1.
72
CHAP. I.] DRAFTING THE CHARTER. § 02
Failure to state, in the affidavit relative to the amount of stock
paid in, that such payments had been made in good faith to the
directors is not fatal, as the bona fides of the transaction will be
implied. 1
§ 61. Amount of Stock ■with which a Corporation may begin
Business. — Some few of the States require that the amount of
capital with which a corporation will begin business shall be
set forth in the articles. In some cases, as in New Jersey and
New York, the minimum amount is prescribed by statute. The
failure, however, to actually pay in the prescribed amount of
capital stated in the articles will not operate to destroy the
corporate existence. 2
§ 62. Duration of Corporate Existence. — At one time there
was a tendency on the part of the States to limit the duration of
corporate existence of corporations to a definite period in the
supposed interest of the public. 3 At the present time in
twenty-six of the Commonwealths perpetual charters may be
procured under the business corporation acts in force therein.
In the remaining States the periods vary from one hundred
years to twenty. Even in these States provision is made for
extension of corporate existence by complying with the statute
in such case made and provided. 5
The phrase " perpetual succession " has been held not to be
equivalent to perpetual existence. 6 The naming of a period of
corporate existence in the charter in excess of that permitted by
law will not render the charter void, but the corporate existence
will not be continued beyond the statutory period."
It is scarcely necessary to say that the continuance of active
corporate existence during the entire period limited by the
charter is not binding upon the corporation. 8 A difficult ques-
tion often arises when the corporation attempts to continue its
active business as a corporation and to perform its corporate
1 Buffalo, etc. Ky. Co. v. Hatch, 20 5 See post, sec. 120.
N. Y. 157. G Fairchild v. Association, 71 Mo. 526 ;
2 Staunton Copper Mining Co. v. State ex rel. Walker v. Payne, 129 Mo.
Thurmond, 7 Mo. Ap. 587; Hammond v. 468; 31 S. W. 797.
Strauss, 53 Md. 1 ; State v. Webb, 97 Ala. 7 People v. Clieeseman, 7 Col. 376 ; 3
ill ; 12 So. 377. Pac. 716; Hughes v. Company, 34 Md.
3 Smith v. Company, 58 N. J. Eq. 331 ; 316. See also Buffalo, etc. Ky. Co. V.
43 Atl. 567 ; State ex rel. Walker v. Payne, Hatch, 20 N. V. 157.
129 Mo. 468; 31 S. W. 797. s Cronln v. Company ei «/., 29 Wk. L
Bui (Ohio) 52.
73
§ 64 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
functions after the expiration of its charter. Ordinarily this
is a matter which concerns the State alone. 1 Under such cir-
cumstances, in order to protect third parties, the courts recognize
such corporations as corporations de facto on the ground that
there is clearly authority for their attempting to act as cor-
porations. 2 Many courts of high authority have held that a
corporation is dissolved and ceases to exist when its charter
expires. 3 In many States there are statutes permitting corpo-
rations to exist as such for certain purposes after the expiration
of their charter. The purpose of such statutes is to grant to
the corporation time to close up its corporate affairs. It has
been held that the object of such statutes is not to limit
but to enlarge corporate privileges so that the corporation
may continue active business throughout the whole charter
period. 5
§ 63. Date of Annual Meeting. — In Alaska, Arizona, Dela-
ware, Iowa, Minnesota, Nebraska, and Utah the corporation acts
require that the date of the annual meeting of the corporation
be inserted in the articles. Such provisions are to be regarded
as directory rather than mandatory, and their legal effect is es-
sentially the same as if such provision was merely made in a
valid by-law of the corporation. In Arkansas, Louisiana, and
Tennessee the date of the organization meeting must appear in
the certificate of incorporation. 6 Even when the statute requires
that the directors shall be chosen at the annual meeting, this
has no reference to the election of the first board at the organi-
zation meeting. 7
§ 64. Limitation upon Corporate Indebtedness. — In the absence
of constitutional or statutory provision, there are no limita-
tions imposed upon corporations with respect to the amount of
indebtedness which they may incur. 8 The whole extent of cor-
porate credit is measured and controlled by its capital. The
laws of trade have placed more efficient barriers than the State
1 Bushnell v. Company, 138 111. 67 ; 27 5 Berwick v. Company, 39 Mich. 701.
N. E. 596. 6 Hughes v. Parker, 20 N. H. 58 ;
2 Miller v. Company, 31 W. Va. 836; Beardsley v. Johnson, 121 N. Y. 224; 24
8 S. E. 600. N. E. 380.
3 Bradley v. Reppell, 133 Mo. 545 ; '' B. A. M. Co. v. Moring, 15 Gray
32 S. W. 645; Sturges v. Vanderbilt, 73 (Mass.), 211.
N. Y. 384. 8 Barry v. Company, 1 San. Chan.
(N. Y.) 280,310.
74
CHAP. I.] DRAFTING THE CHARTER. § 66
legislatures to the power of corporate borrowing. In Alaska,
Arizona, Florida, Iowa, Minnesota, and Nebraska, the incor-
poration acts require that the maximum amount of indebtedness
which the corporation may incur shall be set forth in the articles
of incorporation.
In twenty-two of the Commonwealths statutes, either expressly
or by implication, prescribe the amount of indebtedness which
corporations may incur. 1
When the phrase "implied limitation upon corporate indebted-
ness " is used, reference is had to that not uncommon form of
limitation where directors or stockholders are made liable for
corporate debts in case the corporate indebtedness exceeds a
certain definite amount. 2
§ 65. Exemption of Stockholders from Personal Liability. —
While there is no common-law liability imposed upon stock-
holders for corporate debts, nevertheless parties may lawfully
contract to any extent they see fit as to their own personal lia-
bility for such indebtedness. 3
In order that stockholders may avoid personal liability for
corporate debts it is necessary in Arizona, Delaware, Iowa,
Kentucky, Louisiana, Mississippi, Nebraska, and Utah, to
insert provisions in the certificates of incorporation expressly
exempting stockholders from such liability.
§ 60. Adoption of By-Laws by Directors. — In a large number
of the States and Territories the incorporation acts expressly
provide for delegation of power to directors to make, alter, or
repeal by-laws. 4 In many of the States in order that the cor-
poration may have this power it is necessary to insert provision
therefor in the charter. 5 Unless the power to make, alter, or
repeal by-laws is thus delegated to the board of directors, it can
only be exercised by the stockholders. 6
1 See Commonwealth v. Company, 129 3 London, etc. Bank v. Parrott, 125
Pa. St. 405; 18 Atl.414;0. H. Mfg. Co. v. Cal. 472 ; 58 Pac. 164; Lillard v. Com-
Canney, 54 N. H. 295; Thornton v. Bal- pany, 14 Tex. Civ. Ap. 67; 36 S. W. 792 ;
com, 85 la. 198; 52 X. W. 190; Heuer v. Tidioute Sav. Bank v. Libbey, 101 Wis.
Carmichael, 82 la. 288 ; 47 N. W. 1034. 193 ; 77 N. W. 182.
2 See Tallmadge v. Company, 4 Barb. 4 See Part III., Table 12, page 582.
(X. r.)382; Allison v. Company, 87 Tenn. 6 Caliill v. Company, 2 Dong. (Mich.)
60; 9 S. W. 226; Sweney v. Talcott, 85 128; Heintzelman v. Association, 38 Minn,
la. 103; 52 N. YV. 106 : Cunther v. Com- 138; 36 N. W. 100; Hank of Holly Springs
pany, 107 Ky. 44; 52 S. W. 931. v. Pinson, 58 Miss 421.
Morton Gravel Road v. Wysong, 51
75
§ 68 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
§ 67. Provisions for the Regulation of the Internal Affairs of the
Corporation. — In a number of the States statutory authority is
to be found for inserting in the articles of incorporation any
provisions that may be desired relative to the regulation of the
business, and for the conduct of the affairs of the corporation,
creating, defining, and limiting the powers of the corporation,
the officers, and the stockholders. Under such authority the
clauses which are usually inserted are the following: giving the
directors power to sell all the business of the corporation as-
an entirety; the power to sell entire corporate property at the
request of a majority of the stockholders; giving the right to
directors to make and alter by-laws; giving the power to direc-
tors to borrow money upon bond and mortgage without authority
therefor being first given by the stockholders ; power to appoint
additional vice-presidents and assistant secretaries and treas-
urers ; to declare dividends ; to reserve and fix working capital ;
to appoint an executive committee from the board of directors;
giving stockholders power to remove directors ; giving power
to create a lien upon stock for indebtedness due company from
stockholders; provision for the examination of books by the
stockholders, and in connection therewith power to insert
private publicity clause ; to provide for cumulative voting and
limiting the power to vote ; reservation of power to change
provisions in the articles of incorporation; power to create
preferred stock.
§ 68. Miscellaneous Provisions Relative to Contents of Articles
of incorporation. — It would be impossible to enumerate all the
peculiar provisions under the several business corporation
acts which exist * in the various States. Among those not
already referred to are the following : Statement of the amount
of stock subscribed for by the incorporators ; a list of all
parties who have subscribed for stock as preliminary to
incorporation. 1
In setting forth the subscribers to the capital stock it is
sufficient to use above the first name the words "names,"
Ind. 4; N. M. T. S. Co. v. Bishop, 103 1 Chester Glass Co. v. Dewey, 16 Mass.
Wis. 492 ; 79 N. W. 785 ; In re A. A. 94 ; C. V. & P. CǤ. v. Secretary of State,
Griffiug Iron Co., 63 N. J. Law, 168, 357 ; 128 Mich. 62 ; 87 N. W. 901 ; J. N. Bank
41 Atl. 931 ; 46 Atl. 1097. v. Company, 74 Tex. 421 ; 12 S. W.
110.
76
CHAP. I.] DRAFTING THE CHARTER. § 69
"residences," "shares, 1 ' and then immediately follow the
same with the names of the subscribers to the capital stock. 1
Among other provisions arc those requiring the naming of an
agent upon whom service of process upon the corporation may
be served ; 2 another, a statement of the manner of conducting
the business of the corporation. 3 A number of the States
require the names and residences of the incorporators to be
set forth in the articles. 4 Sometimes it is necessary to secure
the approval of the Attorney-General to the form and contents of
the articles. 5
§69. Construction of Charter. — Under the liberal provisions
of the modern incorporation acts, the articles drawn thereunder
necessarily assume, by the sole action of the incorporators,
numerous powers, many of which have been heretofore of a
public character, affecting the interests of the public very
largely and very seriously. The Supreme Court of the United
States has taken the view that, for the reasons just given, these
articles do not commend themselves to the judicial mind as a
class of instruments requiring or justifying any very liberal con-
struction. That court has said in this connection, that where
the question is whether they conform to the authority given by
statute in regard to corporate organization, it is always to be
determined upon a just construction of the power granted to
them with a due regard for all other laws of the State upon that
subject. 6
In construing charters the following rules seem to govern the
courts: First, the intention of the legislature must be given due
weight." Second, due consideration must be given to the policy
of the State with reference to such matters as evidenced by the
character of legislation. Third, all ambiguities in the terms of
the articles of incorporation must be construed against the
corporation in favor of the public. 8 Fourth, words should be
given their ordinary meaning. 9 Fifth, the construction given
1 Vawter v. Franklin College, 53 Ind. 6 Or. Ry. Co. v. Or. Ry. Co., 130 TJ. S.
88. 1 ; 9 8. Ct. 409.
2 Johnson v. Masons' Lodge, 21 Ky. 7 Union Nat. Bank v. Matthews, 98
L. R. 493; 51 S. W. 620. U. S. 621.
3 State v. Association, 29 O. St. 399. 8 A. L. & T. Co. v. Company, 157 111.
* Steinmetz v. Company, 57 Ind. 457 ; 641 ; 42 N. E. 153.
State v. Foulkes, 94 Ind. 493. '•» Riker v. Leo, 133 N. Y. 519 ; 30 N. E.
6 See Field v. Cooks, 16 La. Ann. 598.
153.
77
§ 69 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
the charter must always be reasonable. 1 Sixth, where the
language of the certificate as to corporate purposes and powers
permits of two constructions, that the more favorable to the
State is to be adopted. 2
i Black v. Company, 22 N. J. Eq. 130 ; 2 Bridge Co. v. Ferry Co., 29 Conn,
Wheeler, etc. Co. v. Company, 14 Wash. 221.
630; 45 Pac. 316; Nat. Bank v. Com-
pany, 41 0. St. 1.
78
CHAP. II.] PROCURING THE CHARTER. $ 71
CHAPTER II.
PROCURING THE CHARTER.
§ 70. Signing the Articles. — With but few exceptions the
business corporation acts of the various Commonwealths provide
that the articles shall be signed by the incorporators. 1 It is not
requisite to the validity of such articles that they be signed
within the State from which the charter is procured. 2 The arti-
cles may be drawn on separate sheets, the last one of which only
need be signed by the incorporators. 3 If the incorporator is
unable to write he may sign the articles by his mark. 4 The full
name need not be signed. 5
If seals are required by statute they must be used. 6 The use
of a power of attorney to sign articles would probably not be
sanctioned where the statute calls for additional matters which
are necessarily personal in their nature. 7
§ 71. Acknowledgment of Execution of Articles. — With some
few exceptions, the incorporation acts of all the States require
that the articles of incorporation shall be acknowledged by the
incorporators, before some officer authorized by law to take
acknowledgments of deeds. There must in all cases be a proper
number of acknowledgments. 8 Where the statutes designate
some particular officer to take the acknowledgment, the charter
is voidable if taken before any other official. 9 A failure, on the
part of the officer taking the acknowledgment, to certify that the
i State v. Critchett, 37 Minn. 13; 32 No. 5816; Warner v. Callender, 20 O. St.
X. W. 787 ; People v. Company, 97 Cal. 190.
276; 32 Pac. 236; Hughes v. Company, 7 In re Charter Acknowledgment, 28
34 Md. 316; W. B. & L. Ass'u v. Colo- Pa. Co. Ct. Rep. 187.
man, 89 Pa. St. 428. 8 People v. Company, 97 Cal. 276 ; 32
? Humphreys v. Moonev, 5 Col. 282. Pac. 236; Hughes v. Company, 34 Md.
8 See L. O. A. & N. Ry. Co. v. Mason, 316; Doyle v. Mizner, 42 Mich. 332; 3
16 N. Y. 451. N. W. 968 ; Kaiser v. Bank, 56 la. 104 ; 8
* Trustee, etc. v. Campbell, 46 La. Ann. N. W. 772; State v. Critchett, 37 Minn.
1543; 21 So. 184. 13 ; 32 N. W. 787.
6 State v. Beck, 81 Ind. 500. 9 Shields v. Company, 94 Tenn. 123,
8 Griffen v. Company, Fed. Cases, 28 S. W. 668 ; State v. Lee, 21 O. St. 662 ;
Simmings v. Association, 26 O. St. 483.
79
§ 72 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
incorporators were personally known to him will not invalidate
the incorporation proceedings. 1
Even where the statutes require the organization meetings to
be held within the domiciliary State, it is not necessary that the
articles be signed and acknowledged therein. 2
The omission of immaterial parts of the acknowledgment does
not operate to render the incorporators liable as partners. 3 In
order to entitle articles to be filed with the proper State official,
they must be signed and acknowledged in all respects as required
by law. 4
§ 72. Publication of Articles. — In ten of the Commonwealths
the law requires that either the petition for a charter or the
charter itself or the substance thereof shall be published for a
prescribed length of time. The original theory upon which such
requirements are based appears to have been that the creation
of a corporation should be attended with all possible publicity,
in order that all the world might acquaint itself with the fact
that it is dealing with a corporation and not with a natural per-
son. 6 At the present time the legislatures seem to proceed on
the basis of furnishing the newspapers with additional paid
matter on the theory that they need it in their business.
However that may be, it still remains true that the statutes
governing publication of articles must be substantially com-
plied with, otherwise the charter may be declared void at the
instance of the State. 7
Sometimes due publication of articles carries with it immu-
nity from personal liability. 8
It has been held that the publication of more than the law
requires will not invalidate the legality of the publication. 9
1 People v. Cheeseman, 7 Col. 376; Bigelow t\ Gregory, 7.*? 111. 197; Field v.
3 Pac. 716. See also Boston Acid Mfg. Cooks, 16 La. Ann. 153; Hunt v. Salis-
Co. v. Moring, 15 Gray (Mass.), 211. bury, 55 Mo. 310; Indianapolis Min. Co.
2 Humphreys v. Mooney, 5 Col. 282. v. Herkimer, 46 Ind. 142; Holmes v.
3 Stout v. Zulick, 48 X. J. L. 599; Gilliland, 41 Barb. 568; Davenport Nat.
7 Atl. 362. Bank v. Davis, 43 la. 424 ; 15 N. W. 865.
4 Doyle v. Mizner, 42 Mich. 332 ; 3 8 Davenport Nat. Bank v. Davis, 43 la.
N. W. 968; Montgomery v. Forbes, 148 424; 15 N. W. 865. See, however, Clark
Mass. 249 ; 19 N. E. 342. v. Richardson, 17 Ky. Law Rep. 514 ; 31
• See In re Church, etc., 14 Phil. 121 ; S. W. 878; Wing v. Slater, 19 R. I. 597;
Seaton v. Grimm, 110 la. 145; 81 N. W. 35 Atl. 302; Heinig v. Company, 81 Ky.
225. 300; 5 Ky. Law Rep. 281.
7 Clegg v. Company, 61 la. 121; 15 9 In re Sowego Water Co., 38 W. N. C.
N. W. 865 ; Thornton v. Balcom, 85 la. 198 ; (Pa.) 148.
80
CHAP. II.] PROCURING THE CHARTER. § 75
§ 73. Affidavit as to Stock Subscriptions. — The laws of
Florida, Georgia, Illinois, Kansas, Michigan, Missouri, Ohio,
Oregon, Pennsylvania, South Carolina, Texas, Utah, Vermont,
and West Virginia require in addition to the ordinary ac-
knowledgment of the execution of the articles, that the same
be accompanied by an affidavit showing that the amount of stock
required by law as a preliminary to doing business as a corpo-
ration has been duly subscribed. 1 The same matter appears
in the certificate of organization required in Arkansas, Con-
necticut, Indian Territory, Maine, and Virginia.
On the other hand, the incorporation acts of Alabama, Cali-
fornia, Delaware, Idaho, Kentucky, Nevada, New Jersey, New
York, North Carolina, Ohio, Virginia, and Washington merely
require that the amount of stock subscriptions be set forth in the
articles.
As to the content of the affidavits as to stock subscriptions, it
is sufficient if they serve to show clearly that the statute rela-
tive to the same has been substantially complied with. 2
Unless the statute designates some officer before whom such
affidavit be sworn to, it may be made before any officer authorized
to administer oaths and to certify to the same. 3
§ 74. Anti-Trust Affidavit. — Some few of the States — such, for
example, as South Dakota, Missouri, and Illinois — require either
of the incorporators before organization or of certain designated
officers of the corporation after organization that they certify
and make oath to the effect that the corporation is organized for
the transaction of a lawful business and not for the purpose of
enabling the corporation to violate the provision of the anti-trust
act in force in that particular Commonwealth. Just what prac-
tical purpose the requirements here referred to serve, it would
be difficult to say. In its practical opex*ation it is usually a mere
formality, and has, so far as observation goes, seldom served any
useful purpose. 4
§ 75. Special Requirements in Particular States. — Owing to
the varied requirements existing in the several States and Terri-
tories relative to the steps necessary to procure charters under
1 People v. Company, 45 Cal. 306. 0. St. 668 ; 32 N. E. 933 ; People v. Com-
8 People v. Company, 45 Cal. 306; B. pany, 121 N. Y. 582; 24 N. E. 834; State
&P. Ry. Co. v. Hatch, 20 N. Y. 157. v. Standard Oil Co., 49 0. St. 137; 30
8 Wood v. Bank, 9 Cowen, 194. N. E. 279.
* See Ohio St. Ily. Co. v. State, 49
6 81
§ 76 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
the laws thereof, it will be impossible to do more than merely
refer to a few of these requirements not already discussed.
Under the statutes of some of the States it is necessary before a
charter can issue that the capital stock either be subscribed for
in whole or in part. 1 In others it is necessary that all or part
of the authorized capital stock be actually paid in. 2 However,
in many of the States it is not necessary that the capital stock be
subscribed for as a condition precedent to corporate existence. 3
Some of the States require that the certificate shall show the
amount of the capital stock, the amount actually paid in, and
that it shall give the names and residences of the shareholders,
and the amount of stock which each has subscribed. Where
such provisions exist substantial compliance therewith is essen-,
tial to the creation of a de jure corporation. 4
Sometimes incorporation acts require that the certificate shall
state the maximum amount of indebtedness which the corpora-
tion is authorized to incur. 5 In Indiana the articles must contain
an impression or description of the seal. 6 In Georgia charters
are issued by the courts upon petition therefor. Here as well as
in other cases the statute governing the matter must be substan-
tially complied with. 7
In some States the law requires that the certificate shall set
forth the name and location of the principal place of business of
the corporation. Such provision must be substantially complied
with. 8
In Pennsylvania, where the incorporation act required the
application for a charter to show the place of business of the
proposed corporation, and the application merely stated location
of its office, it was held insufficient. This for the reason that a
corporation may have its office in one place and its place of
business in another. 9
§ 76. Powers of State Officials Relative to Accepting or Reject-
ing Articles. — Where the statute either expressly or by implica-
i J. C. G. Company v. Dwight, 29 « See Vawter v. Franklin College, 53
N. J. Eq. 246 ; Boyd v. Company, 90 Pa. Ind. 88.
g t 169. 7 Van Pelt v. Association, 79 Ga. 439 ;
2 People v. Chambers, 42 Cal. 201. 4 S. E. 501 ; In re Deveaux, 54 Ga. 637.
3 See ante, sec. 2. 8 Montgomery v. Forbes, 148 Mass.
* Hendrix v. Academy, 73 Ga. 437; 249; 19 N. E. 342; Ex parte Spring
Boiling f.Le Grand, 87 Ala. 482; 6 Sou. 332. Valley Works, 17 Cal. 132.
5 Sweney v. Talcott, 85 la. 103 ; 52 9 In re Enterprise Mutual Benefit
N. W. 106. Ass'n, 10 Pa. 380.
82
CHAP. II.] PROCURING THE CHARTER. § 16
tion bestows upon State officials the duty of examining articles
of incorporation and passing upon their legal sufficiency and
authorizes State officials to certify that the incorporators have
become a corporation, then the issue of such certificate becomes
an adjudication that the corporation has been duly formed until
the State has vacated the charter by proper proceedings taken in
the courts. 1 Usually this duty is bestowed upon the State depart-
ment which is a branch of the executive, and cannot therefore
pass upon questions which are purely judicial. 2 It is confined to
an examination as to whether the purposes of the proposed cor-
poration are legal on their face and whether conditions precedent
have been complied with so that a charter should properly issue.*
The main points to which State officials should address them-
selves in passing upon corporation papers presented to them are
as follows: (1) Have the requisite number of incorporators
signed the articles of incorporation ? (2) Have the articles
been properly acknowledged by the incorporators ? (3) Is the
corporate name mentioned in the articles one that can be law-
fully used by the proposed corporation ? (4) Have the statu-
tory requirements relative to the contents of the articles of
incorporation been substantially complied with? 4
Generally speaking, permission to file charters may be refused
upon the following grounds: If the name of the proposed
corporation is identical or closely resembles that of an existing
corporation, the State officials may exercise their discretion and
refuse to pass the charter. 5
It has been held, however, by a court of excellent authority
that a statute prohibiting the corporation from assuming a name
in use by any other organization or so closely analogous to it as to
mislead the public is designed to protect domestic corporations. 6
1 Boyce v. M. E. Church, 46 Md. 359 ; Charter St. L. Ass'n, 19 Pa. County
D. II. R. R. Co. v. Marsh, Fed. Cas. 4014. Ct. Rep. 25 ; In re DuQuesne College
2 Granby Co. v. Richards, 95 Mo. Charter, 12 Pa. County Ct. Rep. 491;
106; 8 S. W. 246; Van Pelt v. Gardner, Woodberry v. McClurg, 78 Miss. 831 ; -2'J
54 Neb. 701 ; 75 N. W. 874. Sou. 514.
8 P. R. T. Rd. Co. Charter Appli- 6 State v. McGrath, 92 Mo. 355 ; 5 S. W.
cation, 20 Pa. County Ct. Rep. 151 ; X. 29; American ('lav Mfg. Co. w. American
M. G. T. Co. v. N. G. f . Co., 21 Pa. County Clay Mfg. Co., 198 Pa. St. 189 ; 47 Atl.
Ct. Rep. 393 ; People v. Company, 130 111. 936; People v. Payne, 161 N. Y. 229 ; 55
268; 22 N.E. 798. N E. 849.
4 State v. National Inv. Co., 88 Wis. 6 People v. II. L. A. Co., Ill Mich.
512; In re Application for Charter, 5 405; 69 N. W. 653.
Pa. Dia. Rep. 243 ; In re Application for
83
§ 78 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
Generally speaking, the action of the Secretary of State in
issuing a license or certificate of incorporation is ministerial. 1
Neither State officials nor the courts can with respect to incor-
poration add new conditions to those prescribed by statute. 2
Generally, the test of the extent of powers of ministerial offices
is the right to compel performance by mandamus. 3
It is an almost universal rule that after the certificate is once
issued, the officer who issues it has no power to revoke the cer-
tificate. For this purpose application must ordinarily be made
to the courts. 4
§ 77. Right to Mandamus State Officials for refusing to file
Articles. — Ordinarily mandamus is the proper remedy where
State officials refuse to file a certificate of incorporation, pro-
vided the duty of receiving and filing the same is lodged with
them. 5
§ 78. Organization Tax. — By the term "organization tax," as
here used, is to be understood the amount of money exacted by the
State from individuals in return for a grant from the former to
the latter of the right or privilege of being a corporation ; that is,
of doing business in a corporate capacity and under the privilege
or franchise which when incorporated the company may exercise.
The right or privilege to be a corporation or to do business as such
body is one generally deemed of value to the corporation, which is
the right or privilege by which several individuals may unite them-
selves under a common name and act as a single person with a
succession of members without dissolution or suspension of busi-
ness and with a limited individual liability. The grant of such a
right or privilege rests entirely in the discretion of the State, and
may unquestionably be accompanied with such conditions as the
legislature thereof may judge most befitting to its interests and
policy.
Thus the latter may require of the incorporators, as a condition
to the original grant of the franchise as well as of its continued
exercise, that the corporation pay a specific sum to the State. 6
i People v. C. G. T. Co., 130 111. 269 ; 5 People ex rel. N. Y. P. Co. v. Kice,
22 N. E. 798. 128 N. Y. 59, 28 N. E. 251 ; H. W. I. Co.
2 Hastings v. A. P. Co., 29 Wash. 224 ; v. N. Y. H. I. Co., 140 N. Y. 94 ; 35 N. E.
69 Pac. 776. 417 ; State v. Taylor, 55 O. St. 61, 44
3 F. B. Co. v. Wood, 14 Ga. 80. N. E. 513 ; State v. McGrath, 92 Mo. 355 ;
4 See, however, I. W. C. Co. v. Pear- 5 S. W. 29 ; Illinois Watch Case Co. u.
son, 140 111. 423 ; 31 N. E. 400 ; In re N. I. Pearson, 140 111. 423 ; 31 N. E. 400.
E. Co., 142 Pa. St. 450; 21 Atl. 879. 6 Home Insurance Co. v. People of thb
84
CHAP. II.] PROCURING THE CHARTER. § 78
There are two broad grounds for sustaining the power of the
State to impose organization taxes. The first of these is their in-
herent power to regulate corporations. Corporate capacity itself
is a franchise. No persons can make themselves a body corporate
and politic without legislative authority. 1 The other ground re-
ferred to is the inherent power of the State to enact such legislation
as may be necessary in order to raise revenue for State purposes. 2
The term "organization tax" should be carefully distinguished
from the phrase " franchise tax ; " the latter referring to the tax
imposed by the State upon corporations for the privilege of doing
business in a corporate capacity after incorporation. All of the
States and Territories with the exception of Arizona, Arkansas,
District of Columbia, Georgia, Indian Territory, Louisiana, and
Oklahoma, impose graduated organization taxes upon corporations
organized under their laws. There can be no question as to the
validity of such graduated taxation. 3 The same is true even
when in such matters the legislature distinguishes, as is the case
in West Virginia and New Hampshire, between resident and non-
resident domestic corporations. 4
At the present time it is a rule of almost universal application
that the payment of an organization tax is a condition precedent
to corporate existence. 5 Organization taxes cannot be evaded on
the ground that the corporation calls itself an " eleemosynary "
corporation when in fact it is otherwise. 6
The State is not bound to permit corporations to consolidate or
to extend their corporate existence, and for this reason it may
lawfully impose the payment of an organization tax as a condition
precedent to consolidation or to the extension of its corporate
existence. 7
State of New York, 134 U. S. 594; 10 4 B. J. C. C. Co. v. Scherr, 50 W. Va.
S. ft. 593; 33 L. E. 1025; Gordon v. 533; 40 S. E. 514.
Appeal Tax Court, 44 U.S. (3 How.) 133; 5 Union Horseshoe Works v. Lewis,
11 Law Ed. 529; B. & 0. Ry. Co. v. Mary- 1 Abb. (U. S.) 518; Fed. Cases, No.
land, 88 U. S. (21 Wall ) 456 ; 22 L. E. 14383; Combined Saw & Planet Co. v.
678; People v. Rose. 210 111. 582; 71 N. E. Flournoy, 88 Va 102'.); 14 S. K. 976;
580. Edwards v. Denver & R. G. R. Co., 13 Col.
i California v. Company, 127 U. S. 1 ; 59; 21 Pac. 1611; State r. Rotwitt, 17
8 S. Ct. 1073 ; 32 L. E. 157. Mont, 41 ; 41 Pac. 1004 ; Ashley v. Ryan
2 Baker v. Cincinnati, 11 O. St. 534; 49 0. St. 504; 31 N. E. 721 ; H. M. Co.
W. U. T. Co. v. Attorney-General. 125 v. Bremer, 12 R. L 491.
U. S. 530; 8 S. Ct. 961; 31 L. E. 790. ' State v. Lesueur, 99 Mo. 552; 13
3 See Ashley v. Ryan, 49 0. St. 504; S. W. 237.
31 N. E. 721 ; 153 U. S. 436; 14 S. Ct. 7 Ashley v. Ryan, 49 O. St. 504; 31
865; 38 L. E. 773. N. E. 721; 153 U. S. 436; 14 S. Ct.
86
§ 80 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
§ 79. Form in which Charter is granted. — In only twenty-nine
of the States do the corporation acts expressly provide for the
issuance of a certificate of incorporation or charter by State
officials. In some few of the remainder the power to issue such
instruments is assumed by the officers having the matter in charge
without any express authorization therefor in the statute. In the
remaining States proof of incorporation is usually had by pro-
curing certified copies of the articles of incorporation. The mat-
ter becomes one of practical importance in connection with the
right of third parties to collaterally attack not only the corporate
existence but the corporate purposes and powers as well. This
matter has already been discussed at length in a previous section. 1
Ordinarily the commencement of corporate existence dates
from the time when the certificate of incorporation is issued.
Where the statute expressly provides for the issuance of a charter
by State officials the latter have no discretion in the matter, and
must issue the same upon demand of the parties who have legally
entitled themselves to the same. 2 The certificate must be issued
immediately, and must be in the form, if any, prescribed by the
statute. 3 The Secretary of State should always affix his seal to
the certificate of incorporation. 4
8 80. Filing and Recording in Local County Offices. — Generally
speaking, it is part of the plan adopted by the various legislatures
in the enactment of general incorporation acts, to provide in
addition to requiring that articles of incorporation be filed with
some designated State official, that they always be filed in one
or more local county offices. Usually the latter requirement is
confined to the provision that they be filed in the county where
the corporation's domiciliary office is located. However, in some
few of the States such articles must be filed in every county
wherein the corporation transacts its business or holds real
property. In some of the States, such as California and Maryland,
more importance appears to be attached to the filing of the articles
in the local county office than with State officials. 6
865 ; 38 L. E. 773 ; People v. Pfister, 57 Ass'n v. Clarke, 61 Me. 351 ; Sparks v
C a) '532 Company, 87 Ala. 294 ; 6 So. 195 ; People
" 1 See ante, § 6. v. Payn, 161 N. Y. 229; 55 N. E. 849.
2 State t>. Taylor, 55 0. St. 61 ; 44 N. E. 4 JBenner v. State, 7 Lea (Tenn.), 682.
513 ; Sparks v. Company, 87 Ala. 294 ; 6 6 See N. H. C. & M. Co. v. Woodberry,
So. 195. 14 Cal. 434.
3 Stowe v. Flagg, 72 111. 397 ; R. F
86
CHAP. II.] PROCURING THE CHARTER. § 81
The purpose of filing articles in county offices has been said to
be in order that persons dealing with the corporation may have an
easy and public inspection of the basis of its corporate organi-
zation. 1 With some few exceptions corporate existence is not
made to depend upon the filing of the articles in the local county
offices. In any event, where such filing is not had, the corporation
is treated as a corporation de facto, if not de jure. 2 The fore-
going is certainly true in the absence of any proceedings by the
State in the nature of quo warranto. 3
In some States the filing of articles in designated offices is
specifically made a condition precedent to the legal existence of
the corporation, while in others it is merely made a condition
precedent to the right of the corporation to engage in business as
such. 4 It has been held, however, in Missouri that in order to
the creation of corporate existence articles must be filed in both
State and county offices.
At the present time it is safe to say that as to third parties the
validity of corporate existence will be presumed even when
articles have not been filed in local county offices as required.
But in some jurisdictions attempts have been made to hold the
incorporators liable as partners under such conditions. 6
S 81. Distinction between de jure and de facto Corporations. — A
corporation de jure is one whose right to exercise corporate
functions would prove invulnerable if assailed by the State in quo
warranto proceedings. 7 A de facto corporation, on the other hand,
is one the legality of whose existence may be inquired into by the
State in quo warranto proceedings. The general rule is that to
prove the existence of a corporation de facto it is necessary to
i Loverin v. McLaughlin, 161 111. 417; N. W. 1056; In re Shakopec Mfg. Co., 37
44 N. E. 99. .Minn. 91 ; 33 N. W. 219; G. M. & S. Co.
2 Curtis v. Tracey, 62 111. Ap. 49 ; B. v. Richards, 95 Mo. 106; 8 S. W. 246.
& T. Co. v. Gade, 55 111. 181; Johus v. 5 Hurt v. Salisbury, 55 Mo. 310.
People, 25 Mich. 499 ; Whitney v. Wyman, 6 See P. &-G. T. Co. v. Bobb, 88 Ky.
101 U. S. 392. 226; 10 S. W. 794; Rassbeck v. Dester-
3 Bankiv Davies, 43 Iowa, 424 ; Martin richer, 55 How. Pr. 516 ; 4 Abb. New
v. Deetz, 102 Cal. 55 ; 36 Pac. 368 ; I. T., Cases, 444 ; F. G. B. & T. Co. v. Gade, 55
etc. Co. v. Herkimer, 46 Ind. 142; Hum- 111. 181; N. Y. N. Exchange Hank v.
phreys v. Mooney, 5 Col. 282; Sims v. Crowell, 177 Pa. 313; 35 At!. 618; Clegg
Commonwealth, 24 Kv. L. Rep. 159; 71 v. Company, 61 la. 121; 15 N. W. 865;
8. W. 929; Childs p. Hard, 32 W. Va. Gent v. Company, 107 111. 652; Childsv.
66; 9 S. E. 362; Abbott v. Co., 4 Neb. Hard, 32 W. Va. 66; 9 S. E. 862.
416. 7 Clapp v. Company, 40 Neb. 470; 28
* Bergeron v. Hobbs, 96 Wis. 641 ; 71 N. W. 956.
87
§ 82 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
show (1) an act authorizing the creation of a corporation of
that character; (2) an application duly made thereunder by
the requisite number of incorporators praying for incorporation.
(3) It is sometimes necessary, although not always, to show-
user thereunder. 1
§ 82. Right of Parties other than the State to collaterally im-
peach Corporate Existence. — The right here referred to has already
been considered somewhat at length in connection with a discus-
sion of the right of third parties to collaterally attack corporate
purposes and powers. 2 There are some additional matters,
however, not already discussed to which attention will now be
called.
As has already been suggested, the courts have taken varied
and conflicting views relative to the right of parties other than
the State to collaterally attack the existence of a corporation with
whom they chance to be involved in litigation. The diverging
views here referred to may be classified as follows : (1) the view
that the State alone can test the question' whether or not a corpo-
ration which has procured a charter from the proper State officials
is in law as well as in fact a corporation ; 3 (2) the view that this
question may be inquired into by third parties, but that it is suffi-
cient in such cases for the corporation to show substantial com-
pliance with the conditions prescribed by the general incorporation
act in order to prove that it is a corporation de jure as well as de
facto ; 4 (3) the view that the matter may be inquired into by third
parties, and that under such circumstances it is necessary that the
corporation shall show strict compliance with each and every con-
dition precedent prescribed by the general incorporation act in
order to establish the fact that it is a corporation de jure as well
as de facto . 5
For purpose of convenience these three diverging views may be
i Stout v. Zulick, 48 N. J. Law, 599 ; 7 Co., 157 111. 641 ; 42 N. E. 153 ; In re Gibbs
Atl. 362 ; Haas v. Bank, 41 Neb. 754 ; 60 Estate, 157 Pa. St. 59 ; 27 Atl. 383.
N. W. 85; Duggan v. Company, 11 Col. 2 See ante, § 6.
113 ; 17 Pac. 105 ; Central Ag.,etc. Ass'nr. 3 See ante, § 6.
Company, 70 Ala. 120; Baker v. Backus, 4 Jones v. Company, 21 Col. 263; 40
32 111. 79; Hughes v. Bank, 5 Litt. (Ky.) Pac. 457 ; Stout v. Zulick, 48 N. J. L.
45 ; Buffalo, etc. Ry. Co. v. Cary, 26 599 ; 7 Atl. 362 ; Finnegan v. Noerenberg,
N. Y. 75; Finnegan v. Noerenberg, 52 52 Minn. 239 ; 53 N. W. 1150.
Minn. 239; 53 N. W. 1150; Continental 5 Mokelumne, etc. Co. v. Woodbury,
Trust Co. v. T., etc. Ry. Co., 82 Fed. 642 ; 14 Cal. 424 ; Lucas v. Bank, 2 Stew. (Ala.)
City of Guthrie v. Territory, 1 Okla. 188 ; 147.
31 Pac. 190; A. L., etc. Co. v. M., etc. R.
88
CHAP. II.] PROCURING THE CHARTER. § 82
distinguished as follows : referring to the first as to the true, the
second as the substantial compliance, and the third as the strict
compliance rule. Space will permit of discussion here of only
the first of the rules just referred to.
The legislatures alone, as has been shown, can create a corpora-
tion. Under the modern practice these bodies have passed general
incorporation acts entrusting the execution of the law to the
executive department of the government. Under the rule now
generally established, either by statute or judicial construction,
in most of the States a corporation becomes a corporation de facto
from the moment the charter or certificate of incorporation is
issued by the proper State authorities. 1 The basis of holding
such certificates as conclusive of corporate existence as against
all the world except the State is that where by reason of such
certificate a corporation is held out to the world as ready to under-
take business, most disastrous consequences would follow to com-
mercial undertakings if any private person was allowed to go back
and enter into an examination of the circumstances attending the
original incorporation. 2
The power which creates the corporation it is needless to say
should alone have the power to take it away. It should not be
permitted to parties other than the State for this reason to col-
laterally impeach corporate existence, for to permit such impeach-
ment would be in legal effect to permit third parties, for the
purpose at least of that particular action, to destroy the effect
of the previous action of the State in the premises. On grounds
of public policy as to all parties but the State, it should under
such circumstances be conclusively presumed that the statutory
requirements relative to incorporation have been duly complied
with. 3 A corporation must of necessity be presumed to be
rightfully in possession of the franchise and rightfully exercis-
ing the power which the legislative grant confers. Individual
right is not invaded if the presumption is true in fact and there
is no usurpation. It is the State — the sovereign — whose
rights are invaded and whose authority is usurped. The in-
dividual could not create the corporation, could not grant, define,
or limit its {towers ; any grant of these by the sovereign cannot
1 See ante, § 6. 3 Tar River Nav. Co. v. Ncal, S Hawki
2 Lake Superior Co. v. Morrison, 22 (N. C), 520; Welch v. Bank, L22 N. V.
Canada C. P. 224. 177 ; 25 N. 10. 269.
89
§ 83 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
lessen his right. There can consequently be no cause of com-
plaint by the citizen, and no right to inquire whether the corpo-
rate existence is rightful, de jure, or merely colorable. 1
Corporations may exist either de jure or de facto. If of the
latter class, they are under the same protection of the law and
governed by the same legal principles as those of the former so
long as the State acquiesces in their existence and exercise of cor-
porate functions. A private citizen whose rights are not invaded
and who has no cause of complaint has no right to inquire col-
laterally into the legality of its existence. This can only be done
in a direct proceeding on the part of the State from whom is de-
rived the right to exist as a corporation and whose authority is
usurped. 2
A corporation de facto may legally do and perform every act
and thing which the same entity could do and perform were it a
de jure corporation. As to all the world except the paramount
authority under which it acts and from which it receives its
charter, it occupies the same position as though in all respects
valid, and even as against the State, except in direct proceedings
to arrest its usurpation of powers, its acts are to be treated as
efficacious. 3
Finally, it may be observed that the principle here contended
for has been held by at least one court to be applicable to a case
where a corporation had incorporated under an unconstitutional
law, yet nevertheless the validity of the corporation's existence
could not be collaterally attacked, as it had been chartered by the
implied consent of the State. 4
§ 83. Right of State to attack Corporate Existence in Direct
Proceedings. — This section has reference only to actions brought
by the State for the purpose of testing the legality of corporate
existence where it is alleged that there has been a failure on the
part of the incorporators to perform all the conditions prescribed
by statute as a precedent to corporate existence. The action here
referred to is that of quo warranto, which, even in the absence of
statutory provision, may be maintained at common law in behalf
of the State against incorporators who assume to exercise corpo-
i Lehman v. Warner, 61 Ala. 455. 3 People v. LaEue, 67 Cal. 526 ; 8 Pac.
2 Snider's Sons' Co. v. Troy, 91 Ala. 84.
•224 ; 8 So. 658 ; Tar River Nav. Co. v. 4 Richards v. Bank, 75 Minn. 196 ; 77
INeal, 5 Hawks (N. C), 520. N. W. 822.
90
CHAP. II.] PROCURING THE CHARTER. § 83
rate powers without being legally incorporated, for the purpose of
ousting them from the exercise of such powers. 1
In all such proceedings as against the State not merely a de
facto corporate existence must be shown, but a de jure existence
as well. The general prevailing view at the present time seems
to be that, as against the State in such proceedings, it is necessary
to show a specific statute authorizing the creation of corporations
of the character of the one against which the quo warranto pro-
ceedings are brought, and also substantial compliance in the
preliminary organization of the corporation with all conditions
precedent prescribed by statute. 2
In quo ivarranto proceedings the burden of proof is upon the
corporation to show that it has been legally incorporated. 3 In
the proceedings of the character referred to it has been well said
that " public policy demands that the power to oust de facto cor-
porations from the exercise of corporate powers because of failure
to comply substantially with conditions precedent be sparingly
exercised." *
Were the rule otherwise, disastrous consequences would follow
in the commercial world, and in all such cases the courts should
take extraordinary care to see that the rights of third parties are
fully protected. In proceedings brought by the State, the most
important matter to be looked at is whether there has been a
failure on the part of the incorporators to comply with the pro-
visions of the statute, which are merely directory as opposed to
those that are mandatory. A " directory " provision is one which
the legislature did not intend as essential to corporate existence,
and the failure to comply with which is a mere irregularity and is
not fatal to corporate existence. A. "mandatory" provision, on
the other hand, is one which must be substantially complied with
in order to create a corporation de jure. 5 Whether the particular
provision of the statute is directory or mandatory is to be deter-
mined by "the intention and true meaning of the legislature
deduced from the act and sometimes aided by other acts in pari
1 Greene v. People, 150 111. 513 ; 37 8 People v. Lowden (Cal.), 8 Pac. 66.
N. E. 842. 4 Duggan v. Company, 11 Colo. 113;
2 State v. Webb, 97 Ala. Ill ; 12 So. 17 Pac. 105.
377; People v. Self ridge, 52 Cal. 331; 6 Newcomb v. Reed, 12 Allen, 362;
State v. Critchett, 37 Minn. 13 ; 32 N. W. B. W. S. Co. v. Inhabitants of Braintree,
787; Holman v. State, 105 Ind. 569; 5 140 Maes. 482 ; 16 N. E. 420.
N. E. 702.
91
§ 84 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
materia and extraneous circumstances." 1 Even as against the
State it is only necessary that a mandatory provision shall be
substantially complied with. 2
§ 84. "When does Corporate Existence commence ? — Where the
statute provides, as it does in some of the Commonwealths, that
the articles of incorporation shall be filed with State officials or
in some local county office or both, the general rule is that the
corporate existence dates from the time of filing of the articles
with such officials and not from the time it begins to do business. 3
The foregoing seems to be the rule in force in the majority of
States. Some of the States, however, provide by statute as
to when corporate existence shall commence, as, for example,
Alabama, California, Colorado, Connecticut, Delaware, Idaho,
Iowa, Kansas, Kentucky, Maine, Massachusetts, Michigan, Mis-
sissippi, Missouri, Montana, Nebraska, Nevada, New Hampshire,
New Jersey, New York, North Dakota, Ohio, Pennsylvania, Rhode
Island, South Carolina, South Dakota, Tennessee, Texas, Utah,
Virginia, Washington, West Virginia, Wisconsin, and Wyoming. 4
In a number of the States corporate existence depends not merely
upon filing articles with the Secretary of State, but also upon filing
the same in the local recording office of the county where the
principal place of business of the corporation is to be located,
as, for example, in Arizona, California, Colorado, Delaware,
Idaho, Maryland, Montana, New Jersey, Utah, and Wisconsin.
In some few of the States the statute by reason of its peculiar
provision seems to contemplate the corporate existence shall com-
mence before the filing of articles of incorporation with any
official, either State or county ; this for the reason that the
certificate required to be filed with such officials must be signed
by corporate officers. States to which reference is here made are
Arkansas, Illinois, Indian Territory, Maine, Massachusetts, Michi-
gan, and Missouri.
i Cross v. Company, 17 111. 54; Eak- 3 Hanna v. Company, 23 O. St. 622;
right v. Company, 13 Ind. 404; Newcomb G. M. & S. Co. v. Richards, 95 Mo. 106; 8
v. Reed, 12 Allen, 362. S. W. 246 ; Humphreys v. Mooney, 5 Colo.
2 People v. Company, 97 Cal. 276 ; 32 293 ; V. C. Railway Co. v. Clayes, 21 Vt.
Pac. 236 ; State v. White, 13 Mo. Appeals 30 ; Borough of Braddock v. Company, 189
139; People v. Cheeseman, 7 Colo. 376; Pa. 379; 42 Atl. 15; Badger Paper Co.
3 Pac. 716: Newcomb v. Reed, 12 Allen, v. Rose, 95 Wis. 45; 70 N. W. 302; Hunt
362; Eakright v. Company, 14 Ind. 404; v. Company. 11 Kan. 412.
Walworth v. Bracket, 19 Mass. 98 ; B. W. 4 See Part II., Synopsis-Digest of the
S. Co. v. Inhabitants of Braintree, 146 Corporation Laws of the several State*
Mass. 482 ; 16 N. E. 420. and Territories.
92
CHAP. II.] PROCURING THE CHARTER. § 84
There seems to exist in some jurisdictions the theory that in
the matter of determining when the corporate existence com-
mences reference must be had, first, to the primary franchise of
beino- a corporation vesting in the incorporators and next to the
secondary franchise to do certain specific acts which vests in the
corporation. 1 Again, in some States, while filing articles of incor-
poration constitutes a condition precedent to the creation of cor-
porate existence, it is also a condition precedent to the right of
doing business. 2
Ordinarily corporate existence does not commence until all con-
ditions precedent are performed. 3 There is a very obvious distinc-
tion between such acts as are declared to be necessary steps in the
process of incorporation and such as are required of the individ-
uals seeking to become incorporated, but which are not made
prerequisites to the assumption of corporate powers. With respect
to the former any material omission will be fatal to its existence
as a corporation de jure, as against the State. In respect to the
latter, failure to comply therewith is not ordinarily accompanied
by forfeiture of its charter powers, but rather goes to the question
of the personal liability of the individuals who attempt to do
business as a corporation without having complied with all the
conditions subsequent. 4
Corporate existence in this immediate connection ordinarily
means full authority to transact business as such in contradis-
tinction to the qualified existence of such corporations which dates
from the time of filing the articles of association with the Secre-
tary of State. 5 So too, in those States where organization precedes
the filing of a certificate of incorporation, it has been held that a
corporation has a qualified existence from the date of the incor-
porators' first meeting. 6
In Illinois corporate existence does not commence until the
reception of a license from the Secretary of State to take stock
1 State v. Water Co., 61 Kan. 547; 60 Pa. St. 379; 42 Atl. 15; Badger Paper
Pac. 337 _ Co. v. Rose, 95 Wis. 145 ; 70 N. W. 802.
2 Gade v. Company, 165 111. 367; 46 4 Herrod v. Hamer, 32 Wis. 162; E.
N. E. 286; Martin v. Deetz, 102 Cal. 55 ; G. L. Co. v. Green, 46 N. .1. Eq. 118; 18
36Pac. 368; In re, 8. M. Co., 37 Minn. 91; Atl. 844; M. H. M. Co. v. Woodbury, 14
33 N. W. 219 ; Johns v. People, 25 Mich. Cal. 424.
499; G. M. & S. Co. v. Richards, 95 Mo. "' Hurt v. Salisbury, 55 Mo. 310.
106; 8 S. W. 246. 6 S. G. & P. Co. v. Scholfield, 70Conn.
; Afferton v. Company, 67 End. 334; 500; 40 Atl. 182.
Borough of Braddock v. Company, 189
93
§ 84 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
subscriptions. 1 It would of course follow, from the necessities of
the case, that before a corporation can contract as such, it must
have a full and complete organization. 2 While ordinarily such
organization is not necessary to the commencement of corporate
existence, it is sometimes made so by statute. 3
1 Stowe v. Flagg et al., 72 111. 397 ; Cur- O. St. 328 ; U. R. Co. v. ITolden, 63 N. C.
ran v. Bradner, 27 111. Ap. 582. 410; Teitig v. Boesman, 12 Mont. 404;
2 Gent v. Company, 107 111. 652. 31 Pac. 371.
3 A. & N. T. Ry. Co. v. Smith, 15
94
CHAP. III.] ORGANIZATION AFTER INCORPORATION. § 85
CHAPTER III.
ORGANIZATION OF CORPORATIONS AFTER INCORPORATION.
§ 85. The Incorporators' Organization Meeting. — That a cor-
poration shall have a full and complete organization and existence
as an entity before it can enter into any kind of contract or
transact any business, would seem to be self-evident. A corpora-
tion until organization has no franchises or faculties. Its exist-
ence before is but a qualified existence. Its powers are limited
for the time being to the right to organize itself into an active
corporate organization, and, as we have seen, those engaged in
bringing it into being have no power to bind it by contract unless
so authorized by the charter. Until organization as authorized
by the charter, it does not possess the right to exercise its cor-
porate functions, nor has it a valid existence for all purposes. 1
In this connection it was observed in a leading case, that " it is
often stated in the books that a corporation is created by its
charter. This is not precisely correct. The charter only confers
the life and provides the instruments by which it may become an
acting entity. Such a corporation has been well defined to be an
artificial being, existing only in contemplation of law. The
instruments provided to bring the artificial being into active
operation are the persons named in the charter, and those who
by virtue of its provisions may become associated with them.
These persons — the incorporators — as natural persons have no
such power. The charter confers upon them a new faculty for
this purpose, a faculty which they can have only by virtue of the
law which confers it." 2
The better, if not the prevailing, rule appears to be, that not only
are the incorporators named in the articles of incorporation
entitled to participate in the organization meeting thereof, but also
all subscribers to the preliminary stock subscription to the capital
stock of the proposed corporation may do so.' !
1 Gent v. Company, 107 111. 652. 8 Baltimore City Pass. Ry. Co. v. Ham-
2 Miller v. Ewer, 27 Me. 509. bleton. 77 Md. 341 ; Spear v. Crawford.
95
§ 87 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
§ 86. Organization Meeting, how called. — The more recent
incorporation acts, such as are in force in Connecticut, Maine,
Massachusetts, New Jersey, North Carolina, and West Virginia,
point out specifically how the organization meeting of a corpora-
tion is to be called. Where no such statutes exist the better and
safer practice is for all the incorporators, as well as the subscribers
to the preliminary subscription agreement to the capital stock of
the proposed corporation, to sign a waiver and agreement fixing
the time and place for the organization meeting of the corporation. 1
It has been held that all are not required to be present, at the
organization meeting who sign the articles of incorporation unless
the statute requires it. A majority, it is said, is sufficient. 2 The
safer practice, however, is to comply with the rule stated above. 3
Virginia is one of the few States possessing a statute giving the
incorporators the right to assign their interests as such in a pro-
spective corporation. Failure to call a meeting as provided by
statute is to be regarded as a breach of a condition subsequent
and is not fatal to the creation of a valid corporation. 4
§ 87. Organization Meeting, where held. — It was laid down at
an early date by the Supreme Court of Maine in Miller v. Ewer, 5
that all acts and proceedings of persons pretending to act in the
capacity of incorporators when assumed without the bounds of the
sovereignty granting the charter are absolutely void. The prin-
ciple established in Miller v. Ewer has been quite generally
adopted in other parts of the country. 6
The reasoning of these cases is to the following effect: the
charter bestows upon the incorporators certain privileges which
14 Wend. 24 ; Nickum v. Burkhardt, 30 5 27 Me. 509.
Ore. 464 ; 47 Pac. 788 ; Waukon, etc. Ry. 6 Freeman v. Company, 38 Me. 343 ;
Co. v. Dwyer, 49 la. 121 ; Instone v. Com- Smith v. Company, 64 Md. 85; 20 Atl.
pany, 2 Bibb. (Ky.) 578; Chester Glass 1032; Camp v. Byrne, 41 Mo. 525 ; Hum-
Co. v. Dewey, 16 Mass. 94; Haskell v. phreys v. Mooney, 5 Col. 282; Duke v.
Read (Neb.), 93 N. W. 997. Taylor, 37 Fla. 64; 19 So. 172; Miller
i B. B. R. Co. v. Buck, 68 Me. 81. v. Parrish, 14 N. J. Eq. 380 ; Ormsby v.
2 Packard v. Co., 168 Mass. 92 ; 46 Company, 56 N. Y. 623 ; Mitchell v. Com-
N. E. 433. pany, 40 N. Y. Sup. Ct. 406 ; F. T. L. Co.
3 See Babbitt v. E. J. I. Co., 1 Stew. v. Laigle, 59 Texas, 339 ; Hodgson v.
Dig. 208, § 13, not otherwise officially re- Company, 46 Minn. 454; 49 N. W. 197;
ported (1876) ; Walworth v. Bracket, 98 Ohio, etc. Ry. Co. v. McPherson, 35 Mo.
Mass. 98. 13 ; Arms v. Conant, 36 Vt. 744; Galves-
4 McClinch v. Sturges, 72 Me. 288; ton, etc. Ry. Co. v. Cowdrey, 1 1 Wall. 459 ;
Braintree Water Supply Co. v. Braintree, Runyan v. Coster, 14 Peters, 122 ; Augusta
146 Mass. 482 ; 16 N. E. 420; In re Brit- Bank v. Earle, 13 Peters, 519 ; Wright v.
ish Sugar Refining Co., 3 Kay & J. 408 ; Lee, 2 S. D. 596 ; 57 N. W. 706.
Porter v. Robinson, 40 Hun (N. Y), 209.
96
CHAP. III.] ORGANIZATION AFTER INCORPORATION. § 87
thev can possess only by virtue of the law which confers it ; that
law is inoperative beyond the bounds of the legislative power by
which it was enacted ; that, as the foregoing faculty cannot accom-
pany the incorporators beyond the bounds of the sovereignty which
creates it, they cannot possess or exercise it there, and can have
no more power there to make the artificial being act than other
persons not named or associated as incorporators. Therefore any
attempt to exercise such a faculty there is merely a usurpation of
authority by persons destitute of it and acting without any legal
capacity to act in that manner. If the foregoing reasoning be
sound, it follows that all fundamental corporate acts and pro-
ceedings when assumed without the bounds of the sovereignty
granting the charter are absolutely void. The principle here
stated has been materially qualified in a large number of jurisdic-
tions by an extended application of the doctrine of estoppel. As
an example of this, attention is called to the case of Handley v.
Stutz. 1
This was a case where a Kentucky corporation at a meeting of
the stockholders of the corporation, held outside of the State, in-
creased the capital stock of the company from one hundred twenty
thousand dollars to two hundred thousand dollars. It was con-
tended that this increase was illegal, for the reason that the meet-
ing of the stockholders authorizing it was held outside of the
State of Kentucky. The court, in its opinion upon this point,
spoke as follows :
"Nor were the proceedings of such meeting any less binding upon
those participating in it by reason of the fact that it was held outside
of the boundaries of the State under the laws of which the company
was incorporated. By act of the Kentucky Legislature, it is pro-
vided, that all elections for directors and other officers by private
corporations shall be held within the territorial limits of the State
of Kentucky, and that any such election held outside of Kentucky
shall be void. Beyond the election of officers, however, there is no
statutory restriction of corporate action to the limits of the State,
and in the absence of such inhibition the proceedings of such meet-
ing would, with regard to directors' meetings, be binding upon all
those participating in it, as well as upon those acting upon the faith
of its validity or receiving the stock authorized to be issued at said
meeting. It is true that there are cases holding that stockholders'
» 139 U. S. 417; 11 S. Ct. 530.
7 97
§ 88 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
meetings cannot be legally held outside of the home State of the cor-
poration, but the question has generally arisen where a majority
present had attempted by their action to bind a dissenting minority,
or had taken action prejudicial to the rights of third persons. In-
deed, so far as we know, the authorities are uniform to the effect
that the action taken at such meeting was binding upon those who
participated in or partook of the benefits of them. In this case the
meeting was attended by all the stockholders but two, who were
present by proxy. The vote increasing the stock was unanimous,
and it does not lie in the mouth of those who participated in this act,
or received the stock voted at this meeting, to question its validity." 1
Unquestionably the legislature has the legal right, in the absence
of constitutional provision, to provide that all meetings of cor-
porations, whether organization or otherwise, may be held outside
the State. 2
8 88. Steps Necessary to complete Organization. — The princi-
pal matters which demand attention at the organization meeting
of a corporation may be enumerated as follows : (1) the adoption
of by-laws ; (2) election of directors ; (3) providing for the issue
and payment of the capital stock of the corporation. The subject
of the adoption of by-laws and the payment of the capital stock of
the corporation will be left for subsequent consideration.
With respect to the matter of the election of a board of direc-
tors the following may be said. Many of the incorporation acts
require that the names of the first board of directors shall be set
forth in the articles of incorporation, and this ordinarily obviates
the necessity of electing a new board at the organization meeting
of the corporation. 3 Unless the statute so requires it, it is not
necessary, in order to give the incorporators the right to partici-
pate in the organization meeting, that they be stockholders. 4 But
ordinarily it is contemplated by the incorporation acts that the
incorporators shall be stockholders or subscribers for capital stock.
i See to the same effect Heath v. S. L. 4 Hammond v. Straus, 53 Md. 1 ; Per-
Min. Co., 39 Wis. 146 ; O. & M. Ry. Co. v. kins v. Berders, 56 Miss. 733 ; Proprie-
McPherson, 35 Mo. 13; Ormsby v. Ver- tors, etc. v. Dickinson, 6 Gray (Mass.), 586;
mont Min. Co., 56 N. Y. 632 ; Humphrey Coyote v. Ruble, 8 Oregon, 284 ; Dens-
v. Mooney, 5 Col. 282 ; Wright v. Lee, 2 more Oil Co. v. Densmore, 64 Pa. St. 43 ;
S. D. 596 ; 57 N. W. 706 ; T. M. Co. v. Singer Mfg. Co., v. Peck, 9 S. D. 29 ; 67
Goodhue, 18 N. C. 981. N. W. 947 ; Ramsey v. Tod, 95 Texas,
2 Graham r. Co., 118 U. S. 161; 6 Sup. 614; 69 S. W. 133; Byrnes v. Beck, 10
Ct. 1009. Ga. 121 ; B. B. & T. Co. v. J. B. T. Co.
s Hamilton Trust Co. v. Clemens, 163 101 Tenn. 545; 48 S. W. 228; Wechsel-
N. Y. 423 ; 57 N. E. 614. berg v. Bank, 64 Fed. 90.
98
CHAP. III.] ORGANIZATION AFTER INCORPORATION. § 89
The right to vote stock is an incident to stock ownership, and was
recognized at common law as a property right. 1
In some few of the States, statutes exist limiting the right of
stockholders to own more than a certain percentage of the total
stock of the corporation. 2
Sometimes the incorporators are appointed commissioners to
take stock subscriptions. It has been held that the failure of
such commissioners to take the oath of office as required by
statute, will not render the subscriptions void. 3 Where authority
to open books of subscription is given by statute to the incorpora-
tors, this authority may be exclusive, so that subscriptions cannot
lawfully be received by others. Such subscriptions, however, may
of course be ratified by proper parties. 4
Ordinarily the election of officers is by statute devolved upon
the board of directors. However, in some few of the State* cer-
tain officers are required to be elected by the stockholders.
§ 89. Adoption of By-Laws. — A by-law is in effect a contin-
uing rule of action for the government of the corporation, its mem-
bers and officers. 5 The purpose of a by-law is to regulate and
define the duties of the stockholders between themselves and the
conduct of the officers and the management of the corporate
affairs. 6
All corporations have the implied power to make by-laws for
the government of the corporation and the management of its
affairs. 7 Unless otherwise provided by statute, the by-laws must be
adopted by the incorporators at their organization meeting or else
by the stockholders at a meeting duly called for that purpose. 8
Some few of the States, among them being South Dakota, North
Dakota, and Oklahoma, permit incorporators to adopt by-laws,
whether they are subscribers for the capital stock of the proposed
corporation or not. Statutory provisions exist in several of the
1 Commonwealth v. Dalzell, 152 Pa. 3 Hollman v. Company, 9 Gill & J.
St. 217 ; 25 Atl. 535. (Md.) 462.
2 Mack v. Company, 90 Ala. 396; 8 * N. C. M. Ry. Co. v. Eslow, 40 Mich.
So. 150; Commonwealth v. Detwiller, 222.
131 Pa. St. 614; 18 Atl. 990. On right 5 N. M. T. S. Co. v. Bishop, 103 Wis.
of corporation to vote its own shares see 492 ; 79 N. W. 785.
McNeely v. Woodruff, 13 N. J. L. 352; c Flint v. Pierce, 99 Mass. 70.
Ex jmrte Holmes, 5 Cowen (N. Y.), 426; 7 Engelhardt v. Association, 148 N. Y.
on right of corporations to vote shares in 281 ; 42 N. E. 710.
another corporation see Davis v. Com- 8 M. G. Ii. Co. v. Wysong, 51 Ind. 12.
punv, 77 Md. 35 ; 25 Atl. 982.
99
§ 90 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
states, expressly permitting provision to be made, if desired, for
the adoption of by-laws by the directors. In the absence of any
such statutory authority, by-laws adopted by the directors are not
binding unless subsequently ratified by the stockholders. 1 On the
other hand, if the directors are vested by statute with exclusive
power to pass by-laws, those passed by the stockholders are not
valid. 2
The adoption of by-laws is a constituent act, and for this reason
they must be adopted within the State by whose laws the corpora-
tion was created, if action of stockholders is necessary to their
adoption. 3 In the absence of statutory power or charter provision,
by-laws can be altered or repealed by the stockholders alone. 4
In the absence of statutory prohibition, the power to amend or
alter by-laws may be delegated by the stockholders to the direc-
tors. In general by-laws must be adopted in conformity to the
charter and be reasonable and proper. 5
The by-laws of a private corporation will be interpreted by the
courts as interpreted by the corporation. 6
The reasonableness of a by-law is a question of law and not of
fact. 7
In drawing by-laws the following rules should govern : they
should be made certain ; 8 they must be directed to all within the
sphere of their operation ; 9 they must operate equally upon all to
whom applied ; 10 they must be lawful as against members pos-
sessing rights, and must be reasonable. 11
Sometimes the statute requires by-laws to be adopted within
thirty days after incorporation and copied into a book of by-laws. 12
Such statutes are clearly directory and not mandatory.
§ 90. Election of Directors. — The power to choose a board of
1 Carroll v. Bank, 8 Mo. Ap. 253. 6 State ex rel. Attorney-General v. Conk-
2 In re Klaus, 67 Wis. 40; 29 N. W. lin, 33 Wis. 21.
582 ; People v. Company, 82 111. 457 ; S. S. 7 State v. Overton, 4 Zabriskie (N. J.),
Ass'n v. Company, 25 Mo. Ap. 642. 435.
3 In re Klaus, 67 Wis. 40 ; 29 N. W. 8 Goddard v. Merchants' Exchange, 9
582 ; Mitchell v. Company, 40 N. Y. Sup. Mo. Ap. 290.
Court, 413. 9 Ex parte Frank, 52 Cal. 606.
4 M. G. R. Company v. Wysong, 51 10 People v. Society, 25 Barb. (N. Y.) 7.
Ind. 12. n Com. v. Worcester, 3 Pick. 461 ; King
5 See Kent v. Company, 78 N. Y. 182 ; v. Union, 170 111. 135 ; 48 N. E. 677. On
Bergman v. Association, 29 Minn. 275 ; failure to post by-laws, see Langon v.
13 N. W. 120; Commons v. Company, 12 Company, 49 la. 317.
Pa. St. 318; People v. Chicago Board of n See Hall v. Crandall, 29 Cal. 567;
Trade, 45 111. 118. Clapman v. Doray, 89 Cal. 52 ; 26 Pac. 605.
100
CHAP. III.] ORGANIZATION AFTER INCORPORATION. § 90
directors is inherent in all private corporations irrespective of
statute. 1
The election of directors in connection with the organization of
a corporation ordinarily follows the adoption of by-laws. After
the organization the election of directors is usually had at the
annual meeting of the corporation. In giving the notice of such
annual meeting it is customary to specify in the notice that a
board of directors is to be chosen. 2
In choosing the directors it is incumbent upon the incorpora-
tors or stockholders, as the case may be, to observe the pro-
visions of the statutes relative to the number of directors to be
chosen and their qualifications as to stock-holdings, residence, and
citizenship if any such are prescribed by statute. In the absence
of such statutes as exist in many of the States authorizing the
dividing of directors into classes, so that only a certain portion of
the board are elected annually, the full board must be elected each
year. In the absence of statute making the ownership of stock a
qualification for holding the office of director such ownership is
not necessary. 3 Even where the statute requires that directors
shall be stockholders, it is not necessary that they shall become
such before their election if they become stockholders before enter-
ing upon the duties of their office. 4 In the election of directors
by the incorporators it is sufficient in order to qualify him that
a director be a subscriber for stock, though no certificate has in
fact been issued. 5 Where ownership of stock is necessary to
qualify one as a director, the prevailing rule seems to be that
the moment a director ceases to be a stockholder, he ceases to be a
director dejure (but not de facto) without proceedings having first
been taken to remove him. 6
Where a director is required to take an oath of office before
entering upon the discharge of his duties, his failure to take such an
oath will not prevent him from becoming a director de facto. 7
Any person who can be a business agent for another can, if pos-
sessed of statutory qualifications, become a director. 8 OrdinariU
1 Ilurlbut v. Marshall, 62 Wis. 590; 6 Dispatch Light Packet v. Company.
22 X. W. 852. 12 N. II. 205; Wright v. Company, 52
2 Merritt v. Ferris, 22 111. 303. N. J. Eq. S52 ; Iluwe v. Scarborough
'■'■ Wright v. Company, 117 Mass. 226. (Ala.), 35 So. 113.
4 Greenoagh v. Company, 64 Fed. 22. " Simpson i», Garland, 76 Me, 203.
5 McComb v. Association, l<) N. V. Sup. 8 People v. Webster, 10 Wend. (N. Y.)
552; Beckett v. Houston, 32 Ind. 393. 554.
101
§ 90 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
it is not necessary that resignations of directors be accepted in
order to become effective. 1
Persons owning a majority of stock have a right to elect direc-
tors. 2 It is a fundamental principle in corporation law that a
majority of stockholders shall control the policy and regulate the
business affairs of the corporation, and to this each stockholder
impliedly agrees when he acquires stock in the corporation. 3
However, in order to insure minority representation on the board,
cumulative voting for directors is permitted in a large number of the
States. Where such right to cumulate votes is mandatory such
right cannot be taken away by by-law. 5
The fact that a corporation begins business with an insuffi-
cient number of directors does not invalidate debts contracted by
them, nor deprive it of its corporate rights and privileges unless
some action is taken by the State to that end. 6 Failure to elect a
board of directors annually does not work dissolution. The old
board will hold over by implication of law. 7 This is a rule not
only established by statute in a large number of the States, but is
a well established rule of corporation law in the absence of such
statutes. 8 In the election of directors a majority vote of all present
is sufficient, provided a majority of the stock is represented at the
meeting. 9 Vacancies in the board of directors cannot be filled
by the remaining directors, but must be filled by the stockholders,
unless such power is expressly granted by statute. 10 Even where
the right to fill vacancies is given to the remaining directors it is
probably true that there must be present at the meeting a majority
of the whole number of directors prescribed by the charter, and
that such vacancy be filled by a majority vote thereof. 11
Unless regulated by statute or by-laws, the board of directors
may fix any place within the domiciliary State at which annual
1 Pres., etc. of Manhattan Co. v. Kal- ' Hunter v. Company, 26 La. Ann. 13.
denberg, 165 N. Y. 1 ; 58 N. E. 790 ; 8 Chamberlain v. D. S. Works, 103
Briggs v. Spaulding, 141 U. S. 155. Mich. 124 ; 61 N. W. 532 ; Moses v. Tomp-
2 Faulds v. Yates, 57 111. 416. kins, 84 Ala. 613 ; 4 So. 763.
3 Wheeler v. Company, 143 111. 197; 9 Eggleston v. Doolittle, 33 Conn. 402.
32 N. E. 420. 10 Moses v. Tompkins, 84 Ala. 613 ; 4
5 Tomlin v. Bank, 52 Mo. Ap. 430; So. 763; Kearney v. Andrews, 10 N.J.
Wright v. Company, 67 Cal. 532 ; 8 Pac. Eq. 70.
70. u Moses v. Tompkins, 84 Ala. 613 ; 4
6 Fargason v. Company, 78 Miss. 65 ; So. 763 ; Nathan v. Tompkins, 82 Ala.
27 So. 877. 437 ; 2 So. 747.
102
CHAP. III.] ORGANIZATION AFTER INCORPORATION. § 90
meetings for the election of directors may be held. 1 Where there
are mandatory provisions in the charter, statute, or by-laws as to
place of holding annual meetings these must be followed. 2 Where
the certificate of incorporation is required to fix the number of
directors, such number cannot be changed except by amendment
thereof. 3
In connection with the general subject of election of directors the
question not infrequently arises as to the validity of the so-called
" voting trusts " now becoming so common in this country. The
prevailing and it is believed the true rule on this subject is set
forth in Clowes v. Miller, 4 where it was held that in the absence
of any improper motive such trusts are valid. 5 It is, in the absence
of such improper motives, merely a convenient method of voting
by proxy.
In the absence of statute, charter provision, or valid by-law to
the contrary, holders of preferred stock have the same rights in the
election of directors as belong to the holders of common stock. 6 It
has been held that stockholders may in voting for directors change
their vote while the election is in progress. 7 Mandamus is the
proper remedy to compel canvassing of votes at election of direc-
tors to determine whether or not such election was valid. 8
In some of the States there are certain statutory officers known
as " Inspectors of Election," who must be chosen preliminary to
the election of the board of directors. These inspectors should be
chosen in the mode provided in the by-laws. 9 Inspectors have no
power, express or implied, to pass upon the eligibility of directors. 10
The failure to have the inspectors sworn before acting as such will
not invalidate an election. 11 In the absence of statutory provision
i Corbett v. Woodward, 5 Saw. 403; 6 Mackintosh v. 11. II. Co., 32 Fed. 350;
Commonwealth v. Smith, 45 Pa. St. 59 ; 54 Fed. 582 ; Lockhart v. Van Alstyne,
Pratt v. Company, 35 Conn. '365; Duke 31 Mich. 76; Miller v. Katterman, 47
v. Taylor, 37 Fla. 64 ; 19 Sou. 172 ; Hilles O. St. 141 ; 24 N. E. 496.
v. Parish, 14 N. J. Eq. 380 ; Arms v. Co- 7 State v. McGaius, 64 Mo. Ap. 225.
nant. 30 Vt. 744 ; Hodgson v. Company, 8 State v. McGaius, 64 Mo. Ap. 225.
46 Minn. 454 ; 49 N. W. 197. 9 In re Excelsior Fire Ins. Co., 16 Abb.
2 McDaniel v. Company, 22 Vt. 274. Pr. 8 ; People v. Company, 55 Barb. 344 ;
3 See Matter of Griffin Iron Co., 63 In re LighthaH Mfg. Co., 47 Hun, 258;
N. J. L. 168; 41 Atl. 931. State v. Merchant, 37 O. St. 251 ; Com
* 60 N.J. Eq. 179; 47 Atl. 345. monwealth v. Woelper, 3 S. & R. (Pa.) 29.
5 See also Faulds i\ Yates, 57 111. 416
Moses V. Scott, 84 Ala. 608 ; 4 So. 742
O. & M. Ry. Co. v. State, 49 O. St. 668
32 N. E. 933 ; Mobile, etc. Ry. Co. v. (N. Y.) 135
Nicholas, 98 Ala. 92; 12 So. 723.
In re St. Lawrence Steamboat Co.,
44 N. J. L. 529.
ii In re M. & II. By. Co., 19 Wend.
103
§ 92 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
or regulation by by-laws providing otherwise, the power to appoint
inspectors of election lies with the stockholders alone. 1
S 91. Power to hold Meetings for the Election of Directors -with-
out the Domiciliary state. — The general rule unquestionably is
that in the absence of statute or unanimous consent of all the
stockholders no election of directors by the stockholders can be
legal, so as to make them directors de jure, when had at a meeting
called without the limits of the State under whose laws the cor-
poration is created. 2
Twelve of the Commonwealths have statutes expressly author-
izing the holding of stockholders' meetings without the domiciliary
State. In any event, it seems to be now well settled that where
all the stockholders meet without the State and transact busi-
ness thereat, even though such business be the annual election of
directors, the stockholders present at such meeting are estopped
to question the validity of the proceedings had thereat. 4 An ex-
cellent method of validating any action taken by stockholders at
meetings held without the domiciliary State is to have subsequent
action taken by the stockholders at a meeting called within the
State ratifying what has been previously done by them without
the State. This, it has been held, cures all previous defects. 5
§92. Voting by Proxy. — At common law, voting of stock-
holders at annual meetings or special meetings was required to be
done in person. 6 In the absence of statute, charter provision, or
valid by-law giving stockholders this right, the same rule would
apply at the present day. 7
i State v. Merchant, 37 0. St. 251. 11 Wall. 459; 20 Law Ed. 199. The
2 Harding v. American Glucose Co., principle of estoppel may be applied here
182 111. 551 ; 55 N. E. 577. See Hodgson Handley v. Stutz, 139 U. S. 417; 11 Sup
v. Company, 46 Minn. 454 ; 49 N. W. 197 ; Ct. 530.
Freeman v. Company, 38 Me. 343 ; Smith 4 T. M. Co. v. Goodhue, 18 N. Car. 981
v. Silver Valley Min. Co., 64 Md. 85 ; 20 Handley v. Stutz, 139 U. S. 417 ; 11 Sup
Atl. 1032; Aspinwall et at. v. Ohio & Ct. 530.
M. R. R. Co., 20 Ind. 492 ; W. H. & H. 5 G. I. & E. Co. v. Toler, 80 Md. 278 ;
Mining Co. v. King, 45 Ga. 34 ; Hiles v. 30 Atl. 657.
Parrish, 24 N. J. Eq. 380 ; Arms v. Con- 6 Perry v. Company, 93 Ala. 364 ; 9
nant, 36 Vt. 750; Bellows v. Todd, 39 So. Rep. 217.
Iowa, 209; Franco-Texas Land Co. v. 7 Phillips v. Wickham, 1 Paige (N. Y.),
Laigle, 59 Tex. 339; Mack v. De Bardel- 590; Taylor v. Griswold, 14 N. J. L. 222 ;
ben, etc. Co., 90 Ala. 396; 8 So. 150; P. H. S. Bank v. Superior Court, 104 Cal.
Duke v. Taylor, 37 Fla. 64 ; 19 So. 172; 649 ; 38 Pac. 452 ; State v. Tudor, 5 Day,
Camp v. Byrne, 41 Mo. 525; Mitchell v. 329; People v. Crossley, 69 111. 195 ; Perry
Vt. Copper Min. Co., 40 N. Y. Sup. Ct. v. Company, 93 Ala. 364; 9 So. 217.
406 ; Galveston, etc. Ry. Co. v. Cowdrey,
104
CHAP. III.] ORGANIZATION AFTER INCORPORATION. § 93
Owing to the unquestioned right of a corporation to adopt a
valid by-law permitting voting by proxy, even in the absence of
a statute authorizing it, the question has ceased to be one of any
great practical importance in the country to-day. Besides this,
statutes exist in all of the States and Territories, except Ari-
zona and Georgia, expressly authorizing the voting of stock by
proxy. It should be observed, however, that where the right to
vote by proxy is given by statute without restriction it cannot be
qualified by by-law. 1
Proxies may be issued in blank and lawfully filled in by the
holder. 2 It has been held that stockholders cannot give an
irrevocable proxy to secure the payment of a debt. 3 It is against
the settled rules governing the control of corporations that an
irrevocable power of attorney which directs the vote on stock,
should be vested in a person who has no interest in the stock or
is not a representative of a person interested therein. 4
The foregoing suggests the question as to whether or not
voting trusts, so common at the present time, are valid. A
" voting trust " may be defined to be an agreement of stock-
holders to give any designated trustee the right to vote at his
discretion through stockholders for a given period of time. It
may be said that such voting trust is valid where neither the
purposes nor the means used contravene any constitutional or
statutory provision or well-recognized principles of public policy,
and are within the scope of the powers of the contracting
parties. 5
§ 93. First Directors' Meeting. — The principal business to be
transacted at the first meeting of the board of directors of a cor-
poration is (1) the election of- the officers provided for in the
by-laws; (2) the carrying into effect the resolutions passed at
the organization meeting of the stockholders, if any, looking to
the payment of the stock in property, or, in lieu thereof, the
1 Bankt-. Superior Court, 104 Cal. 649; Kreisel ''. Distilling Co., 61 N. J. Eq. 5 ;
38 Pac. 452. 47 Atl. 471 ; Brightman v. Bates, 175 Mass.
2 Matter of White, 45 Hun, 580; 105; 55 N. E. 809; Moses v. Scott, 84
Matter of Townsend, 46 N. Y. St. Rep. Ala. 608 ; 4 So. 742 ; ( Howes v. Miller, 60
135. N. J. Eq. 179; 47 Atl. 345; Sullivan v.
3 Matter of Germicide Co., 65 Hun, Parkes (N. Y.), 69 Ap Div. 221 : 74 N. Y.
606; 20 N. Y. Sup. 195. Sup. 786; Freon v. Company, 42 0. Si.
4 Clowes v. Miller, 60 N. J. Eq. 179; :!o. See however Shepaug Voting Trust
47 Atl. 345. Case, Co Conn. 553; 24 Atl. 32: Harvey
■' M. & O. R. v. Nichols, 98 Ala. 92; 12 v. Company, 118 N. C. 693; 24 S. E.
So. 723 ; Smith v. Company, 115 Cal. 584 ; 489.
L05
§ 93 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
passage of a resolution by the board of directors ordering an
assessment, either in whole or in part, upon the par value of the
capital stock. The general rule appears to be that unless the
governing statute or a by-law of the corporation expressly provides
that directors' meetings should be held within the domiciliary
State, that such meetings may be held without the limits of such
State if desired. 1
Some courts, however, apparently distinguish in this regard
between meetings of the board of directors for the election of
officers and those meetings merely called for the transaction of
routine business. Such courts hold that meetings of the first
class must be held within the domiciliary State, while the others
may be held without such State if desired. 2 In nearly half of the
States statutes exist authorizing the holding of directors' meet-
ings without the State. It is unquestionably true that where in-
corporators can perform constituent acts outside of the domiciliary
State directors can elect officers in like manner. 4
When calling the directors together for their first meeting, the
mode of notice provided for in the by-laws must be given. In
the absence thereof personal notice must be given, or a waiver of
notice must be had from each of the directors. 5 It is hardly
necessary to state in this connection that no director can lawfully
delegate power to act for him to another person. 6
At common law a majority of the directors present and voting
at a meeting was necessary to constitute a quorum of the full
board. 7 In some few of the States, notably Oregon, statutory
provisions exist permitting less than a majority of the board of
directors to constitute a quorum. Provisions in statutes and by-
laws requiring the election of directors to be held on a specified
date are ordinarily construed to be merely directory. 8 The
general rule is that a majority of the directors constitute a quorum
1 Thompson v. Company, 58 Miss. 423 ; 5 Bank v. McCarthy, 55 Ark. 473 ; 18
Lead Co. v. Reinhard, 114 Mo. 218; 21 S. W. 759 ; B. B. R. Co. v. Buck, 68 Me.
S. W. 488; Bassett v. Mining Co., 15 Nev. 81; Library v. Association, 173 Pa. St.
293 ; Parsons v. Lent, 34 N. J. Eq. 67 ; 30 ; 33 Atl. 744.
Hanna v. Company, 23 O. St. 622. 6 Perry v. Company, 93 Ala. 364 ; 9
2 Smith v. Mining Co., 64 Md. 85 ; 20 So. 217 ; Craig Medicine Co. v. Mer-
Atl. 1032 ; G. I. & E. Co. v. Toler, 80 Md. chants' Bank, 59 Hnn, 661 ; 14 N. Y.
278; 30 Atl. 651. Sup. 16.
4 Ohio, etc. R. R. Co. v. McPherson, 35 ' Blackwell v. State, 36 Ark. 178.
Mo. 13. 8 Beardsley v. Johnson, 121 N. Y. 224;
24 N. E. 380.
106
CHAP. III.] ORGANIZATION AFTER INCORPORATION. § 95
for the transaction of business, and a majority of the quorum have
power to bind the corporation by their votes. 1
§ 94. Election of Corporate Officers. — In nearly all of the States
statutes exist designating certain officers that business corporations
must have, and providing that such officers shall be elected by
the board of directors duly convened for that purpose. Where,
however, as is sometimes the case, this power is devolved upon the
stockholders by statute, then directors have no power to elect such
officers. 2 In the absence of such statutes as are here referred to,
giving the directors power to elect officers, it must be admitted
that the current of authority is to the effect that the power then
lies in the stockholders alone. 3
The law implies that directors shall hold their office until their
successors have been elected and qualified. 4 Where vacancies
occur in the board of directors they must be filled, in the absence
of statute, charter provision, or by-law giving the power to the
directors, by the stockholders only, and even where the power to
fill vacancies is lawfully bestowed upon the remaining directors,
vacancies can then be filled only by action of a majority of the
authorized number of directors. 5
Questions of policy, or management, or expediency of contract or
action, or consideration of gross misappropriation or unlawful appro-
priation of corporate funds to the detriment of corporate interests,
are left generally to the decision of the directors if their powers
are without limitation and free from restraint. To hold otherwise
would be to substitute the judgment and discretion of others in
place of those determined on by the scheme of incorporation. 6
§ 95. Appointment of Executive Committee. — The incorpora-
tion acts of Connecticut, Delaware, Massachusetts, Nevada, New
Jersey, North Carolina, Virginia, and West Virginia all authorize
the appointment by the board of directors from their own number
of an executive committee to whom may be entrusted most of the
ordinary duties that devolve upon the full board of directors.
i Ten F.vck v. Company, 74 Mich. 226; 4 People v. Rankle, 9 .Johnson (N. Y.),
41 N W 905; Bee also Hoyt v. Thompson, 147; Buguenot Nat. Bank v. Stadwell, 6
19 N. Y. 207. Daly (N. Y.), 713.
a See In re St.. Helen Mill Co., 13 Saw. 6 Moses v. Tompkins, 84 Ala. 013; 4
92; Walsenberg Water Co. v. Moore, 5 Sou. 763.
CoLApp. 144; 38 Pac. 60. " Ellerman v. Ry. Co., 49 N. J. Bq.
a Beardsleyi>.John8on,12lN.Y.224;24 217; 23 Atl. 287; Ulmer v. Company, 98
N. E. 380 ; In re A. A. G. Iron Co., 63 N. J. Me. 579 ; 57 Atl. 1001.
Law, 168, 357; 41 Atl. 931 ; 40 Atl. H)'J7.
107
§ 96 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART H.
It was at one time held that the performance of any duties by the
board of directors involving the exercise of discretion and judg-
ment could not be so delegated. 1 The modern rule, even in the
absence of statute, is that directors have the power to delegate to
a part of their own number authority to perform any part of the
ordinary business of the corporation, even though it involves the
exercise of the broadest judgment and discretion. 2
In any event, whenever a question is raised as to the validity of
acts done by an executive committee, the ratification of their action
by the full board will undoubtedly correct all defects in the act
complained of which would have been valid in the first instance if
performed by the board itself. 3
§ 96. Stock Assessments. — Where the capital stock of a cor-
poration is not all issued in the first instance in exchange for
property, it is customary for the board of directors to pass a reso-
lution at their first meeting, making an assessment upon the stock
of stockholders either for its entire par value or some fractional
part thereof. Generally speaking, in order to sustain a right of
action on stock subscriptions, it is necessary to show that a valid
call or assessment has been made. 4 An assessment is a rating
or fixing of the proportion by the board of directors or by the
stockholders, which every subscriber is to pay of his subscrip-
tion, of which notice is given, which notice is referred to as a
« call." 5
While it is doubtless true that a " call " may be made either by
the directors or the stockholders, nevertheless it is usually made
by the directors. This of course necessitates the organization of
the corporation as a preliminary to the making of a valid assess-
ment. 6 The purpose of the " call " is to fix the time for pay-
ment where that is not provided for either by statute, charter
provisions, or by-law. 7 The better rule seems to be that the
1 Gillis v. Bailey, 21 N. H. 149. * Chandler v. Siddle, 5 Fed. Cases No.
2 Hoyt v. Thompson, etc., 19 N. Y. 207 ; 2594 ; 3 Dillon, 477.
Burden v. Burden, 159 N. Y. 187; 54 5 Spangler v. Company, 21 111. 276.
N. E. 17; Jones v. Williams, 139 Mo. 1 ; 6 Williams v. Taylor, 120 N. Y. 244;.
40 S. W. 383; Davis v. Company, 2 Utah, 24 N. E. 288 ; Williams v. Company, 153
74 ; Tempel v. Dodge, 89 Texas, 69 ; 32 Ind. 496 ; 55 N. E. 425.
S. W. 514; 33 S. W. 222; Metropolitan 7 West v. Crawford, 80 Cal. 19; 21
Telephone Co. v. Company, 44 N. J. Eq. Pac. 1123; W. S. Bank v. Bank, 107 Mo.
568; 14Atl. 907; Sheridan Electric Light 133; 17 S. W. 644 ; Champion Fire Kin-
Co. v. Bank, 127 N. Y. 517 ; 28 N. E. 467. dler Co. v. Rischert, 74 Mo. Ap. 537.
3 U. P. Ry. Co. v. Company, 163 U. S.
564; 16 S. Ct. 1173.
108
■CHAP. III.] ORGANIZATION AFTER INCORPORATION. § 97
directors have implied power by virtue of their office to make
assessments. 1
In any event, shareholders may delegate such power to the
directors when the same is given to them by statute or by-law. 2
It is questionable, however, whether the directors have power in
their turn to delegate the power of making assessments to some
ministerial officer. 3 In the making of assessments the utmost care
should be observed to see that all the statutory requirements rela-
tive to the same are complied with.
§ 97. Certificates required to be made by Officers or Directors
after Organization. — In Maine, Massachusetts, Arkansas, and
Indiana the statutes require that the board of directors together
with certain of the corporate officers shall file a certificate of
organization with certain officers. Ordinarily the failure to file
such certificate would not affect the legal character of the cor-
poration unless there was a statutory provision to that effect. 4
In Illinois, Missouri, Tennessee, and Utah a certificate of due
organization is issued to the corporation by State officials. 5
In New York, New Jersey, District of Columbia, Nevada,
Indiana, Massachusetts, North Carolina, and Colorado the law
requires that after the payment, either in whole or in part, of the
capital stock a certificate shall be made and filed in the proper
State office setting forth the facts relative to such payment. 6
In some of the States, notably New Jersey, failure to file such
certificate renders the officers neglecting or refusing to make
such certificate for thirty days after written request so to do,
jointly and severally liable for all debts contracted before the filing
of such certificate. 7
Unless there is a penalty provided, such provisions are merely
directory. 8
1 Budd v. Company, 15 Ore. 413; 15 6 Also in Delaware upon request of a
Pac. 659 ; Smith r. Company, 1 How. creditor or stockholder.
(Miss.) 479. 7 Nassau Bank v. Brown, 30 N. J. Eq.
a Rives v. Company, 30 Ala. 92. 478; Waters v. Quinby, 27 N. J. L. 296.
8 Pike v. Company, 68 Me. 445 ; S. H. See S. F. N. Bank v. Almy, 117 Mass. 476 ;
Road v. Green, 12 11. I. 164. Chase's Pat. El. Co. v. Company, L52 Mass.
4 In re Shakopee, etc. Co., 37 Minn. 428; 28 N. E. 300; Chase v. Lord, 77
91; 33 N. W. 219; Franklin Bridge Co. N V. 1 ; Block v. Womer, 100 111. 328;
v. Wood, 14 Ga. 80; In re Philadelphia Hardman v. Sage, 124 N. Y. 25; 26 N. E.
Artisans Institute, 8 Pliila. 229 ; A. S. A. 354; Flash v. Conn, 16 Fla. 428 ; Austin
& G. Co. v. Whittier, 117 Mass. 451. v. Berlin, 13 Col. 200 ; 22 Pac. 433.
6 See Boston Acid Mfg. Co. v. Mo- 8 Veeder v. Undgett, 95 N. Y. 295
ring, 15 Gray (Mass.), 251.
109
§ 99 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
§ 98. Time in which Corporation must organize and commence
Business. — Over half of the States have provisions upon their
statute books requiring corporations to organize and commence
business within from one to five years after the issuance of their
charter. 1 Usually the penalty for failure to so organize and com-
mence business is the right given to the State to bring proceed-
ings for the forfeiture of the corporation's charter on the ground
of non-user thereof during the statutory period. It is undoubtedly
true, however, that as against all but the State failure to organize
and commence business within the time limited by statute will not
prevent it from becoming a corporation de facto. 2
§ 99. Stock Certificates. — Stock certificates are the muniments
and evidence of the holder's title to a given share in the property
and franchises of the corporation in which he is a member. 3
Subscribers to the capital stock upon complying with the terms of
their subscription are entitled to certificates of stock showing the
number of shares owned by them. These certificates must be
signed by the officers designated for that purpose by statute or, in
the absence of statutory provision, by such officers as are desig-
nated in the by-laws for that purpose. 4 A seal is not necessary
to the validity of a corporation of stock in a corporation (although
it is customary to affix one), and this, too, even in the presence of
statutory requirements. 5 Neither is it necessary to the validity of
a stock certificate that it should be issued in the State of the cor-
poration's domicile. 6 Generally speaking, however, the stock cer-
tificate book, seal, and stock transfer books must be kept within
the State unless the statute provides otherwise. 7
Statutory provisions exist in nearly all the States providing the
minimum and maximum par value of shares of capital stock. 8 In
some few States the statute expressly provides that all the stock
certificates issued by a corporation shall be of a uniform par value.
Even in the absence of such a mandatory provision, it is at least
1 See People v. Ry. Co., 45 Cal. 306 ; * N. O. & T. P. Co. v. Bank (Ohio), 24
Commonwealth v. Water Co., 110 Pa. St. Wk. Law Bui. 198; Titus v. G. W. T.
391 ; 2 Atl. 63. Road, 61 N. Y. 237.
2 Lehman v. "Warner, 61 Ala. 455; S. 5 Fitzhugh v. Bank,3 Monroe (Ky.), 128 ;
L. A. & T. H. Ry. Co. v. Company, 158 Halsted v. Dodge, 1 How. Pr. (N. Y.) 170.
111. 390; 41 N. E. 916; County of Macon 6 Courtright v. Deeds, 37 la. 503.
v. Shores, 97 TJ. S. 272. 7 Perkins v. Lyons, 111 la. 192; 82
3 Mechanics Bank v. Company, 13 N. Y. n. w. 486.
599. 8 See Part III. Table 6, page 576.
110
CHAP. IH.J ORGANIZATION AFTER INCORPORATION. § 99
questionable whether the courts would sustain the issuance of
stock certificates of more than one designated par value. 1 In the
absence of statute prohibiting the same, corporations ma) r insert
in stock certificates such stipulations as they choose relative to the
rights of the holders of such certificates, and these constitute
valid contracts between the stockholders and the corporation. 2
i See In re Cressona Building Ass'n, 1 pany, 129 (Pa.) St. 405 ; 18 Atl. 414 ; Dela-
Legal Register (Pa.), 177. As to meaning field v. Illinois, 2 Hill (N. Y.), 172.
of par value, see Commonwealth v. Com- 2 Pioneer Co. v. Brockett, 58 111. Ap. 204.
Ill
§100 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
CHAPTER IV.
ISSUANCE AND PAYMENT OF CAPITAL STOCK.
§ 100. General Remarks as to the Issuance and Payment of Cap-
ital Stock upon the Organization of a Corporation. — In connec-
tion with the issuance and payment of capital stock following
the organization of a corporation, several important matters should
be considered, such, for example, as the time within which the cap-
ital must be paid in ; the question as to how the capital must be
paid in with reference to whether in cash, in property, or in ser-
vices ; and, finally, consideration of the safest and most convenient
method to be adopted by the corporation so that it can sell a por-
tion of its capital stock at less than par, if necessary, for the
procuring of working capital for the corporation ; and this, too,
without subjecting the purchasers of such stock to any liability to
creditors for alleged unpaid stock subscriptions thereon.
It appears that in certain of the States, notably South Dakota
and Tennessee, it is not necessary that any of the capital stock
be either subscribed or paid in, in order that the corporation
may transact business. 1 In the several States provisions of the
several incorporation acts in force therein differ greatly in regard
to the matter of the time within which capital stock must be paid
in. New York requires that half of the authorized capital be
paid in within one year ; Missouri, fifty per cent thereof immedi-
ately ; Maryland, one-fourth of the capital must be paid in each
year ; in Indiana, manufacturing corporations must pay in all their
capital within eighteen months. Twenty of the States require a
certain percentage of the capital to be paid in, in order to com-
mence business ; while in twenty -five a certain percentage of the
authorized capital must be subscribed. As a general rule the
effect of the provisions of law here referred to when they are not
' complied with has been held not to affect the existence of a cor-
poration as a corporation de jure, but merely afford ground for a
1 See ante, § 2.
112
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 101
judgment of ouster in a proper action brought by the State for
that purpose. 1
Sometimes the statutes go further and require certificates as to
the payment of the capital stock to be filed in designated offices. 2
§ 101. Manner of Payment of Capital Stock. — Probably no sub-
ject of corporation law is more involved in apparently hopeless
confusion than that growing out of the question of the payment of
capital stock of corporations where the rights not only of stock-
holders, but creditors as well, are involved. Frequent attempts
have been made from time to time by both State legislatures and
the courts looking to the enactment or declaration of rules which
will remove the question from its present vague and unsatisfactory
form into the realm of certainty and security. It may not be
without its practical value to trace here the sporadic development
of the various doctrines that have been advanced from time to
time relative to both how the capital stock of a corporation may
be paid in, and when so paid in whether the valuation placed upon
the property accepted by the corporation in exchange for stock,
shall be conclusive alike upon stockholders and creditors. The
common law rule with reference to the manner of payment of the
capital stock of a corporation appears to have been from time im-
memorial that it must have been paid for either in money or
money's worth. 3 In this country such a rule seems to have ob-
tained at an early date. Even when required, by constitutional
provision or statute, that stock should be paid for in cash, never-
theless the courts early adopted the view that the same might be
paid for in money or money's worth. Otherwise it would simply
put the corporation to the necessity of issuing stock in the first
instance for money, and then ordering it to be immediately paid
out for necessary labor, property, or services. 4
The next step in order of development was the enactment of
either constitutional or statutory provisions expressly authorizing
1 Baker v. Backus, 32 111 79 ; Far- 2 See Quinby v. Waters, 28 N. J. L.
gason v. Company, 78 Miss. 65 ; 27 So. 533. See ante, sec. 97.
877 ; Hammond v. Strauss, 53 Md. 1 ; 8 Drummond's Case, L. R. 4 Chan.
People v. Chambers, 42 Cal. 201 ; People Ap. 772.
v. Bank, 7 Col. 226; 3 Pac. 214; Palmer 4 Liebo v. Knapp, 7'.) Mo. 22 ; Camden
v. Lawrence, 3 Sandf. N. Y. 161 ; Lake v. Stuart, 144 U. S. 104 ; 12 S. Ct. 585;
Ontario, etc. K. Co. v. Mason, 16 N. Y. Kronert v. Johnston, 19 Wash. 96; 52
451 ; Spartenburg, etc. It. Co. v. Ezell, Pac. 605.
14 S. C. 281 ; State ex rel. v. Webb, 97
Ala. Ill ; 12 So. 377.
a 113
§ 101 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
the payment of stock of corporations in money, property, or
services. Later came a wave of constitutional enactments mainly
confined to the Western States, to the effect " that no corporation
should issue stock except for money, labor done, or property act-
ually received, and declaring that all fictitious increase of stock
should be void." In early times, when the number of corporations
formed were few in number, and their charters limited to a few
purposes, the courts were seldom called upon to determine whether
or not capital stock had been actually paid in in accordance with
l aw - 5 — this for the reason that in most cases the mode of payment
of such stock had been in cash. However, early in the nineteenth
century the question became a vital one through the not infrequent
attempts on the part of certain corporations to pay for their stock
in property taken at a valuation which in the opinion of many
was largely fictitious if not fraudulent. When such corporations
became insolvent, creditors, and sometimes before that time stock-
holders, brought the question in its practical form before the
courts as to whether such valuation were binding not only upon
the corporation, but upon its creditors as well. It was such a
case which led Justice Joseph Story in 1824 to give utterance to
the famous " trust fund doctrine " to the effect that the capital
stock of a corporation is to be regarded at all times as a fund held
in trust by the corporation for the benefit of its creditors. 1
In its practical application the trust fund doctrine was found to
be an instrument of injustice rather than of justice. Besides this
it had never received the sanction of the common law, as it existed
in England before the Revolution, and had not in its last analysis
any right to demand recognition on the broad basis laid down for
it by its founder. By degrees the majority of the courts refused to
recognize the trust fund doctrine, at least in its original form, and
declared upon the only safe ground, which was that stockholders
should only be held liable to creditors on stock issued in exchange
for property, upon the ground of fraud. 2 At the same time the
courts divided upon the question whether in the appraisal of
property taken in exchange for capital stock corporations should
be required to appraise such property at its true value without
regard to the intention of the parties upon whom the duty of
1 See Wood v. Dummer, 3 Mason, 308 ; 2 See opinion of Justice Wm. Mitchell
Fed. Cases No. 17944. in Hospes v. Company, 48 Minn. 174;
50 N. W. 1117.
114
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 101
making such appraisal was imposed, or whether they should treat
all such appraisals as conclusive upon both the corporation and
creditors when made in good faith and where no actual fraud
appeared in the transaction. At this time, too, the courts almost
universally decided to distinguish in this regard between the
rights of the corporation and its stockholders on the one hand and
the rights of creditors on the other. Such a distinction as is
here referred to was evidenced by the adoption of the rule now
recognized everywhere that a valuation placed upon stock by the
corporation may be valid and binding upon the corporation and its
stockholders and yet not conclusive as against creditors. 1
The doctrine here referred to is well stated by Judge Showalter
in a Federal case as follows : 3
"Whatsoever may have been in fact the value of the property
turned over to the company for its stock, the latter agreed to take it
for the stock. The persons interested were the stockholders, and
there was no dissent on the part of any person concerned in what was
thus done. Neither any person thus holding stock nor any person
who afterwards became a stockholder by assignment from one who
then held stock can now make complaint on behalf of the corporation
against the lawfulness of that transaction. This I take to be the
settled law on that subject."
The next evolutionary step is to be found in the recognition by
both the legislatures and courts of a number of the Commonwealths
of the unsatisfactory results attending the application of not only
the narrow and falsely conceived " true value rule " above referred
to, but that of the " good faith rule " as well. It was clearly seen
that something further was needed in order to remove the subject
for all time from its situation of uncertainty and doubt. Both the
legislatures and the courts of these Commonwealths undertook to
remedy the matter, with what success it will hereafter appear.
Certain of the States, such as New Jersey, New York, Delaware,
West Virginia, Connecticut, and others, enacted statutes providing
in substance that in those cases where corporations attempted to
issue their capital stock as fully paid in exchange for property,
i Handley v. Stutz, 139 U. S. 417 ; 35 N. Y. 2f>3 ; 26 N. E. 145; Parmalec v.
L. E. 227 ; Scovill v. Thayer, 105 I'. S. Price, 208 111. 544 ; 70 N. E. 725.
143; 26 L. E. 968; Barr v. Company, 125 2 Northern Trust Co. v. Company, 75
Fed. 986.
115
§101 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
the valuations placed upon such property by the board of direc-
tors thereof should, in the absence of actual fraud or gross over-
valuation, be conclusive in the premises. Again, other States
sought to remedy the evil in a surer, if less generally satisfac-
tory form. Thus, for example, Michigan, Virginia, Florida, and
other States have acts upon their statute books requiring a de-
scription of the property which they desire to accept in exchange
for their capital stock to be submitted to State officials in order
that the valuation placed upon such property by the corporation
may be approved by such State officials before the stock can be
issued; the act further generally providing that after such
appraisal has been approved by the State officials, it should be
conclusive in the premises.
Turning now to the efforts of the court on their part to remedy
the evil above referred to, the following may be said. Without in
terms adopting what is hereinafter referred to as the " speculative
value rule" the courts in recent years have often recognized, in
connection with attempts on the part of corporations to issue stock
as full paid in exchange for property, the distinction that clearly
obtains between property which has either a well-known or
easily ascertained market value and that other species of property
of the character commonly known as "speculative," which with-
out any present large intrinsic value, possesses nevertheless in
almost every instance a large value for future speculative pur-
poses, not determinable, however, by the ordinary market value
standards. Such a rule, when generally recognized, will have the
effect in law of practically dividing corporations into two great
classes with respect to the question of issuing stock thereof in
exchange for property, to wit, non-speculative and speculative
corporations.
On the subject now before us certain portions of the able report
of the Massachusetts legislative committee on corporations ren-
dered in 1903, is so peculiarly instructive and appropriate that we
venture to quote the following extract therefrom :
"The history of corporations, as well as the logic of the case,
shows that there are possible two general theories as to the State's
duty in creating corporations : first, the old theory that, being
creatures of the State, they should be guaranteed by it to the public
in all particulars of responsibility and management; and the modern
quite opposite theory that, in the absence of fraud in its organization
116
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 101
or government, an ordinary business corporation should be allowed to
do anything that an individual may do. Under the old theory, the
capital stock of a corporation was, in the law, considered to be a
guarantee fund for the payment of creditors, as well as affording a
method of conveniently measuring the interests of the individual
owners of a corporate enterprise. There resulted from this principle
not only the fundamental proposition that the capital stock, being in
the nature of a guarantee fund, should be paid up at its full par in
actual cash, but all the other provisions to protect creditors or other
persons having dealings with the corporation : such as, that the debts
of a corporation should not exceed its capital stock, designed prima-
rily in the interest of creditors and secondarily in that of the stock-
holders, who were looked after as carefully as if they were the wards
of the State when dealing in corporation matters. Under the modern
theory the State owes no duty to persons who may choose to deal
with corporations, to look after the solvency of such artificial bodies ;
nor to stockholders, to protect them from the consequences of going
into such concerns, the idea being that in the case of ordinary busi-
ness corporations the State's duty ends in providing clearly that credi-
tors and stockholders shall at all times be precisely informed of all
the facts attending both the organization and the management of
such corporations, and particularly that there should be full publicity
given to all details of the original organization thereof.
"The committee has had little hesitation in determining which of
these theories it should adopt. The limit of capitalization both in
amount and in valuation to the net tangible assets of the corporation
has unquestionably had much to do with the arrest of corporate
growth in this Commonwealth. Good-will, trade-marks, patents may
unquestionably be valuable assets, which, under our present method,
may not be capitalized. Admirable as this theory may have been, of
payment of capital stock in full in cash, the condition is so easily
avoided in practice that the result is that our existing law promises a
protection which, in reality, it does not afford, and is merely an em-
barrassment to those who feel obliged to comply not only with the
letter but with the spirit of the law. It is no longer true that persons
dealing with corporations rely upon the State laws to guarantee their
solvency or their proper management. The attempts of the Common-
wealth to do so by laws still remaining on its statute books result, as
we apprehend, only in a false sense of security; and we believe that
the act proposed, while giving up the attempt to do the impossible
thing, will really, by its greater attention to the details of organiza-
tion required to be made public by all corporations, result in an ad-
vantage to stockholders and creditors more substantial than the
117
§ 101 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
present partial attempt to enforce a principle impossible of complete
realization and which is, under existing laws, easily evaded.
" It is impossible to reconcile or combine the two systems. Either
the old theory must be maintained, under which the State attempts
though vainly to guarantee both to stockholders and creditors that
there is one hundred dollars of actual value behind each one hundred
dollars of par value of capital stock, or some other system must be
adopted which, while not being chargeable with the vagueness and
laxity of the newer legislation of other States, will permit a share of
capital stock, although nominally one hundred dollars in value, to rep-
resent, as the word implies, only a certain share or proportion, which
may be more or less than par, of whatever net assets the corporation
may prove to have. Under a system of this sort the State machinery
will only provide that the stockholders and, perhaps, the creditors,
may at all times have access to the corporation records or returns in
such manner as clearly to show, both at organization and thereafter,
all of the property or assets of which such share of capital stock
actually represents its proportion of ownership.
"The question of monopoly the committee does not conceive to
have been left to its consideration. The limitations now existing on
the capitalization of business corporations are, no doubt, attributable
to the sentiment which has always existed against monopoly, but it is
clearly the policy of the Commonwealth, as shown in its recent legis-
lation, to do away with the attempt to prevent large corporations,
simply because they are large. Moreover, it is apprehended that the
question of monopoly, or rather of the abuse of the power of large
corporations, does not result necessarily from the size of corporations
engaged in business throughout the United States. In the opinion of
the committee, some confusion has been created, in the discussion of
the form of so-called trust legislation, by a failure to appreciate that
its real object is not to protect the investor, who can or should learn
to take care of himself, or the creditor who has already learned to do
so. The real purpose of such legislation is the protection of the con-
sumer. In other words, there is no reason for an arbitrary limitation
of capitalization unless it can be used as a means of creating a mo-
nopoly which will influence the price of commodities. In the opinion
of the committee, the question of capitalization is not a contributing
factor in the fight for a monopoly. The United States Steel Company
would have no greater and no less a monopoly of the steel business if
it were organized with one-half of its present capitalization. The
Standard Oil Company has a very conservative capitalization, and yet
it is the most complete monopoly of any industrial corporation in this
country.
118
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 101
" At all events, it is no better for the State to leave its citizens at
the mercy of the large corporations created by other less careful sover-
eignties, than to permit the organization of corporations adequate to
the demands of modern business under its own laws, subject to its
own more careful regulation and control. Under our State and Fed-
eral system it is practically impossible for any one State, by its own
law 7 s, to control foreign corporations, but so far as possible at present
the committee has sought to subject them to the same safeguards of
reasonable publicity and accurate returns, both as to organization and
annual condition, as the State requires of its own corporations. The
simple requirement of an annual excise tax, based on the capital-
ization of such foreign corporations, will serve to bring them under
the control of this State, and the way will be open for their further
regulation if desirable. This annual tax has been levied upon the
same principle as the corresponding tax paid by home corporations.
The State should impose no greater burden on foreign corporations
than on its own, but should, so far as possible, subject them to its
own laws.
"The committee would repeat its opinion that, so far as purely
business corporations are concerned, and excluding insurance, finan-
cial, and public service corporations, the State cannot assume to act,
directly or indirectly, as guarantor or sponsor for any organization
under corporate form. It can and should require, for itself and for
the use of all persons interested in the corporation, the fullest and
most detailed information, consistent with practical business methods,
as to the details of its organization, the powers and restrictions im-
posed upon its stockholders, and as to the property against which
stock is to be or has been issued.
" Capital stock may be paid for in cash or by property. If it is
paid for in cash, it may be paid for in full or by instalments, and a
machinery has been created for protecting the corporation against the
failure of the subscribers to stock to pay the balance of their sub-
scriptions. If stock is paid for by property, the incorporators and not
the State are to pass upon its value. Before any stock, however, can
be issued for property, a description of the property sufficient for
purposes of identification, to the satisfaction of the Commissioner of
Corporations, must be filed in the office of the Secretary of the Com-
monwealth. This document becomes a public record, and may be
consulted by any one interested in the corporation. If the officers of
a corporation make a return which is false and which is known to be
false, they are liable to any one injured for actual damages. If a lull
and honest description is made of property against which stock is
issued, a stockholder cannot complain because of his failure to inform
119
§ 103 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
himself by personal examination or investigation of the value of the
property in which he is, or contemplates becoming, an investor.
" The second principle upon which the committee has acted in its
specific recommendations is this : that the State should permit the
utmost freedom of self-regulation if it provides quick and effective
machinery for the punishment of fraud, and gives to each stockholder
the right to obtain the fullest information in regard to his own
rights and privileges before and after he becomes the owner of
stock."
§ 102. Payment of Capital Stock in Services. — The statutes of
Alabama, Arkansas, California, Colorado, Delaware, Florida,
Idaho, Kentucky, Maine, Missouri, Montana, North Dakota, South
Carolina, South Dakota, Texas, Utah, Virginia, Washington, West
Virginia, and Wisconsin expressly authorize the payment of stock
in services. It sometimes becomes a question of importance to
know just what is meant by " services " as used in this connec-
tion. 1 Frequently attempts are made to issue stock to persons
gratuitously for the use of their name in the promotion of the
corporation under the theory that permission to use their name is
a proper service rendered to the company, against which stock
may be issued. The current of authority seems to be against this
proposition. 2
Still again, the constitutional provision which exists in many of
the States declaring all fictitious increase of stock void militates
against such lines of procedure. 3
Oftentimes an attempt is made to issue stock to promoters of
corporations under what is known as " promotion stock." The
promoters are usually the incorporators, and as such are not
entitled to gifts of stock. 4 However, if in the promotion of the
company services and time have been employed, the same may
be recompensed to the extent of the just value of such services.
§ 103. Payment of Capital Stock in Property. — In most of the
Commonwealths statutes exist expressly authorizing the payment
of capital stock of a corporation in property. Even in the absence
i See Arapahoe, etc. Co. v. Stevens, 13 Fogg v. Blair, 139 U. S. 118 ; 35 Law Ed.
Col. 534 ; 22 Pac. 823 ; Clevenger v. Moore 104.
(N. J.), 58 Atl. 88. 3 See Hellerman v. Maier, 116 Cal.
2 P. S. Bank v. Company, 105 Mich. 416 ; 48 Pac. 377.
535; 63 N. W. 514; Christensen v. Eno, 4 Brown v. F. S. H. Co., 119 Fed.
106 N. Y. 97; 12 N. E. 648; Handley v. 472.
Stutz, 139 U. S. 417; 35 Law Ed. 227;
120
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 103
of such statute stock may doubtless be issued in the same manner,
provided the purchase of such property is within the express or
implied powers conferred by the charter and the property is of
such a character as to be suitable for the specific purpose for
which the corporation was formed. 1 Some few of the States
describe in considerable detail just what kinds or classes of
property may be accepted by the corporation in exchange for
its capital stock. The incorporation acts of Alabama, North
Carolina, Virginia, West Virginia, and New Jersey are partic-
ularly full in this regard. In the absence of such provisions
corporations under the restrictions stated above may accept in
payment of their capital stock all kinds of real and personal
property having some monetary value, such as mining lands, gas
lands, patent rights, secret formulae, trade-marks, and the good
will of an established business. 2
The payment of capital stock may be made in notes, bonds, or
mortgages in the absence of any statutory or charter prohibition. 3
But as to creditors, if the notes, bonds, or mortgages should turn
out to be worthless, the parties accepting such stock might be
compelled to pay the par value of such stock in money. 4 So it
has been held that stock of a corporation may be paid for in
advertising, 5 in a license to take minerals from lands, 6 and in
stock in other corporations. 7
In other words, capital stock of a corporation may be issued
against any property which the corporation is authorized to pur-
chase, or which is necessary for its legitimate business. 8
One of the most frequent questions with which an attorney has
to deal in connection with the organization of a corporation has
reference to devising some safe method whereby stock may be
legally issued in the first instance as full paid and non-assessable,
to be thereafter sold below par if necessary for the purpose of
procuring a working capital for the company. The main thing
1 Liebke v. Knapp, 79 Mo. 22. 8 Goodrich v. Reynolds, 31 111. 490;
2 Loud v. Company, 153 U. S. 564; Stoddard v. Company, 44 Conn . :>4.">.
141 S. Ct. 928; Carr v. La Fevre, 27 Pa. 4 Bouton v. Denent, 123 111. 142; 14
417 ; American Tube & Iron Co. v. Com- N. E. 62.
pany, 165 Pa. St. 489; 30 Atl. 940; Young 5 Liebke r. Knapp, 79 Mo. 2'_>.
v. Company, 65 Mich. Ill ; 31 N. XV. 814; 8 Shepard V. Drake, 61 Mo. Ap. 134.
Washburn v. Company, 81 Fed. 17; " East N. Y. J. R. Co. v. Lighthall, 86
Whitehill v. Jacobs, 75 Wis. 474; 44 How. Pr. 481.
N. W. 630; Bank v. Company, 32 W. Va. 8 Bruner v. Brown, 139 Ind. 600; 38
37 ; 59 S. E. 243 ; Kelly v. Clark, 21 Mont. N. E. 318.
319; 53 Pac. 959.
121
§104 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PARTI.
to be kept in mind in connection with the foregoing is to see that
the stock is so issued that future purchasers thereof shall not be
liable thereon either to the corporation or to creditors. This can
be accomplished most satisfactorily in the following manner.
Have the corporation accept the proposition to issue its capital
stock, either in whole or in part, against real or personal property
to be thereafter duly conveyed or transferred to the corporation.
Next the property so conveyed or transferred should be appraised
at a valuation which will stand the test according to the character
of the property so conveyed or transferred of either the good faith
or the speculative value rules already referred to. The next step
is for the party to whom such stock is issued to transfer such
stock, either in whole or in part, back to the corporation under
a trust agreement providing that the same shall be sold at such
times and at such prices as to the board of directors of the cor-
poration will seem advisable for the purpose of procuring the
necessary working capital. Under such circumstances the stock
so transferred, while originally issued at par, may be sold at the
best price obtainable, and the purchasers will not incur liabil-
ity beyond the agreed price even to subsequent creditors. 1 The
same is true of stock that has been forfeited for non-payment of
assessments. 2
§ 104. Statement of True Value Rule. — In connection with the
appraisal of property taken by a corporation in exchange for its
capital stock, the courts have established various rules with a view
to laying down some satisfactory principle upon which such
appraisal may be based in those cases where creditors seek to
enforce as against the holders of such stock an alleged liability
for unpaid stock subscriptions. The various rules here referred
to may be enumerated as follows : " the true value rule," " the good
faith rule," and " the speculative value rule." It is to the first
of these that our attention will now be directed.
What is known as " the true value rule " is a natural outgrowth
of the adoption by many of the courts of the trust fund doctrine
enunciated by Judge Story in Wood v. Dummer. 3 This may be
i Iron Co. et al. v. Hayes et al., 165 Pa. 7 S. Ct. 482; Coleman v. Howe, 154 111.
St. 489 ; 30 Atl. 936 ; Lake Sup. Iron Co. 458 ; 39 N. E. 725 ; Kimball v. Company,
v. Drexel, 90 N. Y. 87 ; Davis Bros. v. 69 N. H. 485 ; 45 Atl. 253.
Company, 101 Ala. 127 ; 8 So. 496 ; Ailing 2 Pullman v. Company, 73 111. Ap. 313 ;
v. Wenzel, 133 111. 264; 24 N. E. 551; Otter v. Company, 50 Barb. 247.
M. & L. R, Ry. Co. v. Dow, 120 U. S. 287 ; 3 3 Mason, 308 ; Fed. Cases, No. 17944.
122
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. ^105
stated as follows : That the courts will not treat anything .in the
shape of property accepted by the corporation in exchange for its
capital stock as payment thereof except to the extent of the true
value of the property received, wholly without regard to the pres-
ence of fraud or the absence of good faith in the transaction. 1
Not only has the true value rule been adopted by many courts,
irrespective of statute, but it has found legislative recognition as
well. Thus the incorporation act of Alaska requires that such
property shall be assessed at its true money value ; that of Con-
necticut and Delaware, at its actual value ; in Kentucky, at its
market price ; in North Dakota and South Carolina, at its true
money value ; in Tennessee and Utah, at its fair cash value, and
Florida, at a just valuation. In Connecticut, Massachusetts, and
North Dakota the necessity of making such appraisal according
to the strict letter of the statute is very forcibly suggested by
making the directors liable to all parties injured thereby in case
they fail to make such appraisal as directed by the act. Statutory
provisions which exist in so many of the States declaring all
fictitious increase of stock void have been held by the courts
not to make the validity of an over-issue of stock dependent upon
the inquiry whether the money or property received therefor was
of equal value in the market with the stock so issued, or to restrict
private corporations acting without the approval of their stock-
holders in the sale of their stock for money, property, or labor
done upon such terms as they might deem proper, provided always
that the transaction is a real one, based upon present consideration,
having reference to legitimate corporate purposes, and is not merely
a device to evade the law and accomplish that which is forbidden. 2
§ 105. Statement of Good Faith Rule. — As has already been
observed in a previous section, 3 the trust fund theory of Justice
Story no longer obtains in a majority of the States. With the
absence of any general recognition by the courts of this doctrine,
there necessarily followed the abrogation of the true value rule,
which was based largely upon the trust fund doctrine. In its
place has appeared in many jurisdictions what is known as the
" good faith rule." The true value rule in its practical applica-
tion was harsh and unconscionable, was wholly in the interest of
* Shickle v. Watts, 94 Mo. 410; 7 Pac. 582; M. & L. R. Ry. Co. v. Dow,
S. W. 274. 120 U. S. 287 ; 7 S. Ct. 482.
2 Smith v. Company, 115 Cal. 584; 47 8 Ante, § 101.
123
§105 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
creditors, and made little account of the interests of equally inno-
cent stockholders. The good faith rule, on the other hand, while
often difficult of practical application, is much more liberal and
fair to all concerned than the rule which it is now so rapidly sup-
planting. It may be stated as follows :
That where the governing statute authorizes the shares to be
paid for in property instead of cash, or where the law of the State
concedes this power, then the fact that they are so paid for at a
fair valuation of the property, affords no ground of complaint to
the creditors, provided such payment is made and accepted in
good faith. In fact, in order to render the transaction void
either gross over -valuation or actual fraud must be shown. 1
In order to obtain a clear understanding of the distinction that
exists between the true value rule and the good faith rule, it is
necessary to understand the reasons which actuated so many of
the courts in repudiating in the first instance the trust fund doc-
trine in order to clear the way for the adoption by such courts of
the good faith rule. Nowhere will be found a better statement of
this matter than that presented by Justice William Mitchell of the
Minnesota Supreme Court in the case of Hospes v. Northwestern
Manufacturing Company. 2
" It is difficult," said Justice Mitchell, " if not impossible, to
explain or reconcile decisions and cases bearing upon the trust
fund doctrine, or, in the light of them, to predicate the liability of
the stockholder upon that doctrine. But by putting it upon the
ground of fraud, and applying the old and familiar rules of law
on that subject to the peculiar nature of a corporation and the
relation which its stockholders bear to it and to the public, we
have at once rational and logical ground on which to stand. The
capital of a corporation is the basis of its credit. It is a substi-
tute for the individual liability of those who own its stock. People
deal with it and give it credit on the faith of it. They have a
right to assume that it has paid in capital to the amount which
it represents itself as having ; and if they give it credit on the
faith of that representation, and if the representation is false, it
is a fraud upon them ; and in case the corporation becomes insol-
i Bank v. Alden, 129 U. S. 372; 32 Whitehill v. Jacobs, 75 Wis. 474; 44
L. E. 725 ; Rood v. Wharton, 74 Fed. 118 ; N. W. 630 ; Young v. Company, 65 Mich.
Coit v. Company, 119 U. S. 343; 7 S. Ct. Ill ; 31 N. W. 814.
231; Boynton v. Hatch, 47 N. Y. 225; a 48 Minn. 174; 50 N. W. 1117.
Van Cott v. Van Brunt, 82 N. Y. 535;
124
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 106
vent the law, upon the plainest principles of common justice, says
to the delinquent stockholder, ' Make that representation good by
paying for your stock.' It certainly cannot require the invention
of any new doctrine in order to enforce so familiar a rule of equity.
It is the misrepresentation of fact in stating the amount of capital
to be greater than it really is that is the true basis of the liability
of the stockholders in such cases ; and it follows that it is only
those creditors who have relied, or who can fairly be presumed to
have relied, upon the professed amount of capital, in whose favor
the law will recognize and enforce an equity against the holders
of ' bonus stock.' This furnishes a rational and uniform rule, to
which familiar principles are easily applied, and which frees the
subject from many of the difficulties and apparent inconsistencies
into which the 'trust-fund' doctrine has involved it; and we
think that even when the ' trust fund ' doctrine has been invoked
the decision in almost every well-considered case is readily
referable to such a rule."
Another statement of the good faith rule is to be found in Kelley
v. Company, 1 to the following effect: If the nature of the property
and the extent of the valuation are such that the latter might have
been due to errors of judgment, then to render the transaction
invalid as against creditors actual fraud must be shown, and the
question is one of fact. On the other hand, if the over-valuation
is so gross that it could not have been due to mere errors of judg-
ment, the transaction will be held fraudulent as a matter of law. 2
§ 106. Statement of " Speculative Value Rule." — It must be
admitted that neither the " true value rule " nor the " good
i 21 Mont. 319; 51 Pac. 959. Ry. Co. (Cal.), 51 Pac. 710; Jenkins v.
2 Coleman ». Howe, 154 111. 458; 39 Bradley, 104 Wis. 540; 80 N. W. 1025;
N. E. 725 ; N. II. H. N. Co. v. Company, Gamble v. Q. C. W. Co., 123 N. Y. 91 ;
142 Mass. 349; 7 N. E. 773; Hastings 25 N. E. 201 ; Young v. Erie Iron Co.,
Malting Co v. Company, 65 Minn. 28; 67 65 Mich. Ill; 31 N. W. 814; Bank '■•
N. W. 652; Northern Trust Co. v. Com- Alden, 129 U. S. 372; 32 L. E. 725 ;
pany, 75 Fed. 936 ; affirmed in Dickinson Coffin o. Ransdell, 110 Ind. 417 ; 11 X. E.
'•.Northern Trust Co., 80 Fed. 452; Wash- 20; Bickley v. Schlag, 46 N. J. Eq 538;
burn v. Company, 81 Fed. 17; Goodrich 20 Atl. 250; S. R. C. S. Co. r. Rankin,
v. Reynold*, 31 111.490; Edwards v. Com- 45 111. Ap. 226; Bruner v. Brown, 139
pany, 27 La. Ann. 474; Whitehill v. Jacobs, Ind. 600; 38 N. E. 318; Gilkie, etc. Co.
75 Wis. 474 ; 44 N. W. 630; Humaaton v. v. I). T., etc. Co., 46 Neb. 333 ; 64 N. W.
Company, 2t) Wall. 20; State v. Webb, 978; A. T., etc. Co. r. Hays. 165 Pa Si.
110 Ala. 214; 20 So. 402; Skinner v. 489 ; 30 Atl. 936 ; Jones v. Whitworth, 94
Smith, 134 N. Y 240; 31 N. E. 911 ; Par- Tenn. 602 ; 30 S. W. 736; M. T Co. <•.
make v. Price, 208 111.544; 70 N. E. 725; S. C, etc. Co., 16 Wash. 499; 1- Pac
Phelan <•. Hazard, l'.» Fed. Cases No. 333 ; Taylor t\ Cummings, 127 Fed. 108.
11068; 5 Dill. 45; Smith v. Ferrier, etc.
L25
§ 106 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART U
faith rule" affords a satisfactory basis for determining all ques-
tions that may arise relative to the issuance of the capital stock
of a corporation as full-paid and non-assessable in exchange-
for property transferred to it. In practice, neither the inequi-
table " true value rule " nor the fairer " good faith rule " will be
found to rest on any satisfactory or substantial basis. Of late
years, without in terms calling it by that particular name,
courts of high repute have in substance adopted what will be
termed here the " speculative value rule." This may be defined
as that rule whereby a corporation is permitted, in issuing its
capital stock as full paid and non-assessable in exchange for
either real or personal property, to appraise the latter at its
potential speculative value, looking towards its future development
rather than at its present intrinsic value. The statement of the
rule would be incomplete without adding that in all cases where
such appraisal is questioned, the burden of proof of attacking the
same is upon the creditor.
The rule in its practical application throws upon the creditor
the burden of showing that, viewed from a purely speculative stand-
point, the appraisal made by the corporation of such property
constituted not merely an over-valuation, but a fraudulent over-
valuation as well. Before attempting to discuss at length the
" speculative value rule," as stated above, it might not be without
its advantage to trace briefly those evolutionary steps along legal
lines which appear to have paved the way for a fuller recognition
on the part of the courts of the rule here contended for. In the
first place, we have the enunciation by Justice Story, in 1824, of
the now all but moribund " trust fund doctrine " already referred
to. 1 Then ensued a period of years when the courts, one after
another, proceeded to adopt the doctrine just mentioned, although
it was unknown to the common law. Gradually, however, it came
to be recognized that the trust fund theory was wrong in principle
as well as inequitable, leading in its practical operations to harsh
and unconscionable results. This gradually led to the adoption
by many courts of a better and more enlightened doctrine which
predicated the liability of stockholders to creditors, not upon the
trust fund doctrine, but upon the sounder ground of fraud. 2
1 See Wood v. Dummer, 3 Mason, U. S. Justice Mitchell in Hospes v. Company*
308. 48 Minn. 174; 50 N. W. 1117.
2 See statement of this doctrine by
126
CHAP. IV.j ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 106
This was followed by the enunciation on the pa**t of certain
courts of several important rules governing the question of the
ourden of proof in cases where attempts were made by creditors
to enforce an alleged stockholder's liability, on the ground that
the property against which such stock had been issued had been
grossly over- valued. A fair presentation of the rules here referred
to may be found in the opinion of the Supreme Court of Minnesota.
in Hastings Malting Co. v. Iron Range Brewing Co., 1 reading as
follows :
" In principle it can make no difference whether the stock issued as
paid up is bonus stock, pure and simple, or whether it was sold for
cash for less than its par value, or for property at a gross over-
valuation. In the first two cases the question of fraud would be one
of law, for on the issuing by the corporation of its stock as paid and
its acceptance by the stockholders when in fact nothing was ever paid
for it, or where a sum of money less than its par value was paid and
accepted for it, there is no opportunity for a mistake of judgment;
the law in such cases presumes an intention to defraud. Ordinarily,
however, the question is one of fact.
" Upon principle and authority a corporation may in good faith issue
paid up shares of its stock for the purchase of property at a fair
valuation, and in such case the corporation and its creditors are bound
by it.
" In the practical application of the rule it must be kept in mind that
fraud, actual or constructive, is the basis of the stockholders' liability
to the creditor. On the one hand, the value of the property is to be
determined, not from subsequent events, but as of the time of the
transaction, and from the nature, situation, and condition of the prop-
erty as they honestly appeared to the parties at the time. Although
there was in fact an over-valuation of the property, it will not render
the stockholders liable for the deficiency if it was the result of an
honest mistake or error of judgment. On the other hand, where the
nature and condition of the property are such that its value is well
known and understood, or is capable of being readily estimated and
ascertained, and the property is transferred to the corporation at a
gross over-valuation for paid-up shares, the transfer is prima facie
fraudulent as to subsequent creditors, and as against them the burden
is upon the shareholders to rebut the presumption."
It is a principle of law universally recognized that, except in
casesof trust relationships, the burden of proof in all cases relative
1 65 Minn. 28 ; 07 N. W. 652.
127
§ 106 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
to proof of fraud is cast upon the party who alleges that such
fraud exists. 1
By no stretch of the imagination can the relationship that exists
between creditors of a corporation and the corporation itself be
termed a " trust relationship." The relation is neither confidential
nor fiduciary, as the same is construed by the courts. 2 There is
no more reason for treating this relationship as one of trust than
there is in the case of ordinary creditors and debtors. It was
doubtless, however, as a sort of concession to the fanciful trust
fund doctrine of Justice Story, that there early appeared a ten-
dency, upon the part of certain courts, to engraft thereon the
absurd principle that, where the board of directors of a corporation
have duly appraised in the first instance property taken by the
latter in exchange for its capital stock, the rule should obtain
that where such property has a well known or easily ascertained
value, and is taken at a valuation which to the court seems
greatly in excess of its real value, then in such cases it will be
presumed that such valuation is not made in good faith, but is
made for a fraudulent purpose. To overcome this presumption
the burden is upon the stockholders to introduce satisfactory
evidence explanatory of this presumptively fraudulent over-
valuation. Some courts even went further, and asserted that
where the over-valuation was so great that the fraudulent inten-
tion appeared on its face and it is not explained, it should be held
fraudulent as a matter of law, without submitting the question to
a jury.
These drastic rules had full sway for a number of years, until
certain of the courts saw fit to modify their rigor to no inconsider-
able extent. Then the rule was enunciated that where stock has
been paid for either in property or services, although it appears
that there was an over-valuation in appraising the same, yet if it
appears to the court not to be so gross and unconscionable as to
compel it to say, as a matter of law, that it must have been inten-
tional, it will be presumed that the valuation was honestly
made, and the burden of attacking the same will be upon the
creditors who seek to hold the stockholders upon an alleged
stockholders' liability for unpaid stock subscriptions. 3
1 See Phelan v. Hazard, 5 Dil. 45; N. E. 725 ; Davis Bros. v. Company, 101
Bickley v. Schlag, 46 N. J. Eq. 533. Ala. 127 ; 8 S. W. 496 ; Manhattan Trust I
2 See Robinson v. Pope, 57 Cal. 496. Co. v. Company, 16 Wash. 499; 48 Pa«.
3 Coleman v. Howe, 154 111. 458; 39 333.
128
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 106
So much, then, for the historical development of the various
doctrines relative to the subject matter now before us. Turning
again to consider the " speculative value rule," the same must
be looked at from two separate and distinct standpoints, to wit :
(1) as dividing all properties which a corporation proposes to
take over in exchange for its capital stock into two broad and
well-defined classes, known respectively as " speculative " and
" non-speculative " properties ; (2) as establishing a rule for
appraising the value of speculative properties based not upon the
intrinsic value of the same, but rather upon their availability for
purposes of speculation, looking towards an enhancement of their
present value by the future expenditure of funds in the develop-
ment thereof.
Let us now turn our attention to the classification of properties
above referred to designated as " speculative " and " non-specula-
tive." " Speculative " properties may be defined as those whose
nature is such that they have not only a present intrinsic value,
but a considerable potential value as well, speculative in its
nature, and dependent upon future development in order to arrive
at a definite estimation as to the amount thereof. Non-specula-
tive properties, on the other hand, are those whose intrinsic
worth alone gives them a market value or a value which can be
easily ascertained by reference to well-recognized standards of
value. In the first class of properties might be enumerated
mining rights, patent rights, oil and gas lands, secret processes
and trade secrets, patent medicines, etc. In the second class
might be named real estate to be employed for business, dwelling,
farming, and grazing purposes, stock in trade and personal prop-
erty which is the common subject of bargain and sale between man
and man at current prices, determined by the law of supply and
demand. In the opinion of the Supreme Court of Minnesota, in
Hastings Malting Company v. Iron Range Brewing Company,
cited above, it will be noted that the rule that is to be applied in
those cases where the nature and condition of the property are such
that its value is well known or understood, or is capable of being
readily estimated and ascertained, is clearly stated. The opinion,
however, fails to state with equal clearness the rule that is to be
applied where the value of the property is not of the character
just described, but is of that type herein referred to as k * specu-
lative," having no present or well-known readily ascertained
9 129
§ 106 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART E.
value, but depending entirely upon future development in order to
determine what such value may be. By implication only is the
true rule in such cases suggested by the Minnesota court. How-
ever, in Kelly v. Clark, 1 the Montana Supreme Court in effect
declares the rule in such cases to be that where the property is
speculative in character, and as such the alleged over-valuation
thereof may have been possibly due to errors in judgment, then the
burden of proof is upon the creditors seeking to attack the valu-
ation by showing actual fraud in the transaction.
Let us turn now to the question as to how the valuation of spec-
ulative properties is to be ascertained. Generally speaking, the
rule to be adopted is this : " What, under all the circumstances,
considering the proposed use to which it is to be put, and the gen-
eral purpose for which the corporation was created, is the fair
value of the property against which its capital stock is to be
issued ?" 2 In this age of speculative enterprises it is a matter of
common knowledge that the value of properties taken over by
corporations about to embark in speculative enterprises is depend-
ent almost wholly upon their availability for the purpose in hand
and upon the promise which external appearances give them as
to their having a large and considerable potential value. Thus,
for example, sixty square feet of land may have a very small
intrinsic value when considered as farming, grazing, or residence
property, and yet possess an immense potential value when treated
as mining property. It is the expectation of success which in-
duces investors to put their money into such enterprises, and
which justifies a valuation far in excess of the property's intrinsic
value. Such valuations, it must be admitted, are necessarily
arbitrary in character. This fact the legislatures in many States
have recognized, and the courts should not hesitate to do the
same. 3
The value of property which is transferred to the corporation
is also not to be estimated by what it cost the promoter. It is the
speculative and experimental results which afford a basis for the
large valuation. By value in such cases is meant the speculative
value for the uses and purposes of the company in its proposed
speculative enterprise, and not the actual market value or the
i 21 Mont. 291 ; 53 Pac. 959. 3 See Civil Code of Montana, 1895„
2 See Gamble v. Company, 123 N. Y. § 410.
91; 25 N. E. 201.
130
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 106
actual intrinsic value thereof at the time the properties are taken
over by the company.
The view of the matter here presented was first suggested, it is
believed, by the United States Circuit Court many years ago in the
case of the South Mountain Consolidated Mining Co. 1 At the trial
below in this case the court spoke as follows :
" The mode in which mining companies are formed is familiar to
all. The owners of the property, or persons expecting to become
such, by complying with a few simple formalities form themselves
into a corporation, to which the property is conveyed. The amount
of capital stock which is required to be stated in the certificate of
incorporation is usually fixed at a purely arbitrary sum, and divided
into as many shares as convenience or caprice may dictate. It neither
bears nor is intended nor supposed by the public to bear the slight-
est relation to the real value of the property — a value nearly always
conjectural and very often imaginary."
In this same case on appeal the court observed as follows : 2
" The mode of forming mining corporations is well known to any
body. A prospector finds, as he supposes, a valuable mine. It
requires capital to work it which he does not possess. He goes
to the money and business centres, where he finds capitalists accus-
tomed to organize corporations for the development of new mines,
and makes such arrangements as he can. He presents such evidence
of the value of his mine as he has obtained. Little is known of the
real value. It may be worth nothing and it may be worth millions.
Parties are found willing to take hold of the enterprise. They agree
to incorporate and fix the capital stock at some purely nominal amount,
and divide it into a certain number of shares, corresponding to the
amount of capital adopted. The owner of the mine, for an agreed
number of shares and in consideration of the promises of the other
parties to assist in the development of the mine, conveys the mine
and receives for it the amount of stock agreed upon. The other
parties, for their services in organizing and managing the company and
its business, receive a large portion of the stock, this being usually a
considerable amount of stock reserved by the company, which is put
upon the market and sold for such price as can be obtained, to raise
a fund to secure machinery and develop the mine. The price of this
stock is of course determined by the prospect of the mine, its location,
and its probable richness, and the confidence of the public reposed in
1 7 Sawyer, 30 ; 8 Sawyer, 366. 2 8 Sawyer, U. S. 366.
131
§ 106 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
the experience, ability, and character of those having the management.
Mining corporations are sui generis. They are organized and carried on
upon principles wholly different from banking, railroad, insurance, and
ordinary commercial corporations having a subscribed capital stock." 1
But nowhere is the speculative element in the valuation of
property better considered than by the Supreme Court of Penn-
sylvania, in the case of Iron Co. et al, v. Hays et al? The facts
in this case briefly stated are as follows :
A corporation was organized by two co-partners to take over
certain lands owned or leased by them and believed to contain
gas and oil. They capitalized the company for $500,000, and
issued the whole of its capital stock to themselves against the
properties above referred to. These latter had an intrinsic value
representing but a very small percentage of the capitalization of
the company. The incorporators retained $175,000 of the capital
stock of the corporation for their own benefit, and transferred
the balance to the corporation in trust to be sold by the board of
directors thereof for the purpose of procuring working capital for
the corporation. Later on, the lands proved to be practically
worthless, and the company became insolvent, and creditors
thereof sued the stockholders, alleging that the stock held by
them had not been fully paid for. In passing upon the various
legal questions involved, the court spoke as follows :
" Attention should be called first to the method of organization, to
the facts showing the situation of the parties, the necessity for ob-
taining corporate powers, and the provision made for a working capi-
tal with which to enter upon the proposed corporate enterprise.
" The corporators had been partners. As such they had been en-
gaged in procuring leases and drilling wells in search for oil. In
their search they had not been successful, but two of the wells drilled
by them proved to be valuable gas wells. This, taken in connection
with other developments in the same general region, was well calcu-
lated to induce the belief that they were the possessors of a large and
valuable gas territory that should be promptly developed and utilized
or its value would steadily decline by reason of drainage from the
operation of others. They could not utilize their gas without trans-
porting it to a market. They could not transport it to advantage
except as a natural gas company possessing the powers conferred by
1 In re South Mountain Con. Min. Co., 2 165 Pa. St. 489 ; 30 Atl. 936.
8 Saw. 366.
132
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 106
law. This determined them to organize a corporation for the pro-
duction and transportation of natural gas and to transfer their gas-
wells and leases to the corporation. When this had been decided on,
the first question to present itself was, how shall the partnership con-
vey its property to the corporation so as to secure to its members the
same relative interest in the stock of the corporation they now have
in the partnership property? The next question was, how shall we
secure the necessary working capital to enable the corporation to go
forward with the work of producing, transporting, and selling natural
gas? In a general way these questions were answered by the adop-
tion of the scheme already referred to. The value of the properties
held by the firm was set down at $175,000, the working capital needed
at $325,000. To meet both purposes the capital stock of the corpora-
tion was fixed at $500,000. It teas all to be issued as paid up stock in
exchange for the property conveyed to the corporation, subject to the
agreement that all except $175,000 thereof was to be contributed to
the treasury to be sold as a means of raising the money needed for a
working capital. . . .
" In what respect, then, have the defendant stockholders failed in the
performance of their undertaking to the corporation ? The scheme
was to turn over all the gas wells, leases, etc. to the corporation for
6175,000, and provide it with the means of prosecuting the gas busi-
ness by putting into its treasury paid up stock, or what should be sold as
paid up stock, to the amount of $325,000 more. . . .
" The court below found 'that the facts in evidence, connected with
the fact that within a few months it was demonstrated that the prop-
erty was of very small value, threw on the stockholders the burden of
showing clearly that the sale from themselves to themselves was in
good faith on a reasonable belief in the value of the property.' But
what has the fact that, after some months spent in development of their
territory, the corporation found itself disappointed in its productiveness
and a heavy loser in consequence, to do with the good faith of their pur-
chase or the reasonableness of the price ?
" These are to be judged of by the facts before them when the arrange-
ment was made. The character of the gas wells already opened, the
extent of the territory covered by the leases, its relation toother develop-
ments, its nearness to an a den a ate market, and the i>rububle. duration of
the supply within reach, were the consider at inns that would affect the
judgment of buyers and sellers and of the business public as to its value.
The subsequent disappointment must therefore be left nut of the ens,', and
the transaction examined in the light in which it was seen when the
arrangement was entered into. When this is done and the absence of
any suggestion or finding of fraud is remembered, it is not easy to see
L33 '
§ 106 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
what there is in the case to shift the burden of proof or to require the
stockholders to establish the good faith of the transaction which the
plaintiffs have not attacked. The action proceeds on the theory that
the subscriptions to the capital stock are wholly unpaid. The proofs
show that they were paid exactly in accordance with the agreement, and
that this payment had been recognized by the corporation from the
first. The decree, as finally made, seems to rest on the conclusion that
although paid they were paid in property which was taken at too high a
price. It is true that no such thing was alleged in the bill or shown in
the proofs, but if the value of the property is to be determined in the
light of subsequent events, a light which the parties did not have when
this sale was arranged, the conclusion of the court below would be
reasonable. The trouble with it, however, is, that it rests on the in-
trinsic value of the property as ascertained by actual developments
made after the sale, while the real question relates to the apparent value
as indicated by the circumstances existing at the time of the sale. . . .
" We should agree with the court below that the property was sold
at more than its actual value, if that value was to be determined by
subsequent results rather than by prospects as they appeared at the
time of sale. But if the parties were mistaken in relation to its value,
we do not see how, in the absence of any averment of fraud in the
transaction, the sale can be disregarded and the subscriptions to the
capital stock treated as unpaid. The proofs show that they were
paid exactly in accordance with the agreement under which they
were made, and until that agreement is attacked as fraudulent, the
creditors stand in no better position than the corporation itself. The
decree is reversed so far as it requires payment of the stock subscrip-
tions or any part thereof." *
So much, then, for the question as to the proper basis for ap-
praising property of a speculative character when the same is
transferred to the corporation in exchange for its capital stock.
Let us add a few more words to what was said in the foregoing
opinion relative to the question as to where the burden of proof
lies in such cases, when the valuation placed upon the property is
impeached by creditors who seek to enforce an alleged stock-
holder's liability for unpaid stock subscriptions. Let us note in
this connection, first, the statement of the law made by the Court
of Appeals of Maryland in Brandt v. Ehlen, 2 where the court
observed " we take the law to be well settled, that a company
i See also Kelly v. Clark, 21 Mont. 2 59 Md. 1.
291 ; 53 Pac. 959 ; Montana Ry. Co.
v. Warren, 6 Mont. 275 ; 12 Pac. 641.
134
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 106
may receive, in payment of the shares of its capital stock, any
property which it may lawfully purchase. So long as the trans-
action stands unimpeached for fraud, the courts will treat as
a payment that which the parties shall agree to be a payment, and
this too in cases where the rights of creditors are involved." The
Supreme Court of Massachusetts in a recent case 1 observed that
it appears to be well settled that in the absence of fraud an agree-
ment can ordinarily be made by which stockholders can be
allowed to pay for their shares in patents, mines, or other property
to which it is not easy to assign a determinate value. At least,
one court of high authority has adopted the rule that where one
becomes a creditor of a corporation knowing the manner in which
its stock has been paid, he is deemed to waive his right to assert
that there has been an over-valuation of the property against which
the corporation issued its stock. 2 It is to go but a step for-
ward to say that in the case of corporations engaged in speculative
enterprises it is a matter of common knowledge that shares are to
be paid for in property appraised at its potential rather than its
present intrinsic value, and that therefore the rule stated above
should obtain, even in the absence of actual knowledge on the part
of creditors as to the manner in which the capital stock of the
corporation had been issued. Again, where stock has been paid for
by the conveyance of property to a corporation of the character
known as " speculative " and upon which a valuation has been
placed, — not its present intrinsic value, but rather its prospective
value after development thereof, — then in such cases the courts
should presume that the valuation was honestly made and place the
burden upon the creditor of attacking the transfer. 3
The ordinary practice, as has been observed, is for corporations
engaged in non-speculative enterprises to issue stock for property
which has a well-recognized market value or one which can be
easily ascertained. In regard to such corporations, where the nature
and condition of its property is such that its value is well known or
understood or is capable of being readily estimated and ascertained,
and the same is transferred to the corporation at a gross over-
valuation for paid up shares, it would unquestionably be proper
i N. II. II. N. Co. v. Company, 142 8 So. 496; Coleman v. Howe, 154 111.
Mass. 349, 7 N. E. 773. 458 ; 39 N. E. 725 ; Carr v. Le F<\ re, l'7
2 Callanan v. Windsor, 78 la. 193; Pa. St. 489; Shield w. Company, 94 Tenn.
42 N. W. 652. 123 ; 28 S. W. 668.
3 Davis v. Company, 101 Ala. 127;
L35
§ 106 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
for courts to treat such transactions as presumptively fraudulent,
and to place the burden of proof upon the stockholders in such
cases to rebut such presumption by clear and satisfactory proof.
On the other hand, where the corporation is engaged in specula-
tive enterprises of the character above referred to, and stock is
issued against property accepted by the corporation at a valuation
not based upon the present intrinsic value of the same, but avow-
edly (as is the universal custom) at its potential speculative value
(to be determined after development thereof by the corporation
which has acquired the property), then the practical attitude for
the courts to take in such cases would be to adopt what is termed
here the " speculative value rule," and to attach to the valuation
placed by the corporation upon such property the presumption
that it was honestly made, and place the burden of proof in such
cases upon the creditor attacking the transaction. In practical
operation it will be found that the shifting of the burden of proof
would be equivalent in nearly all cases to making the valuation
placed upon the property in any case, whether speculative or non-
speculative in character, conclusive respectively upon the stock-
holders and the creditors. The reason of this is that in the case of
non-speculative properties it is easy to demonstrate that the same
has been grossly overvalued; as, for example, by showing the market
value of the same. Again, in the case of speculative enterprises
the same is true for the reason that the valuation placed upon the
properties from a speculative standpoint, if honest and fair, would
be such as to render it practically impossible as a matter of proof
to show that such valuation was fraudulent or grossly overvalued,
— this for the reason that in every such case it will be found that
there exists an immense margin for honest difference of opinion,
and although it may appear that there were serious errors of judg-
ment, nevertheless it will be found in practice that such valu-
ations should not and will not be set aside except for actual fraud.
It is the recognition of the necessity of shifting the burden of
proof according to whether the property against which stock is
issued is speculative in character or not, which, in connection
with the basis of appraisal already referred to, affords a practical
basis for the operation of the speculative value rule. Finally, the
following may be said :
Upon principle and in the interest of justice both to the stock-
holders and creditors alike, in determining the question whether
136
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 107
stock has been in fact fully paid, the line should be drawn with
the utmost clearness and distinctness between ordinary corpora-
tions such as trading, mercantile, banking, insurance, etc., whose
capital stock is formally subscribed for and ordinarily paid in in
cash or in real and personal property having a well-recognized or
easily established market value on the one hand, and those cor-
porations on the other hand incorporated for the express and
avowed purpose of engaging in speculative enterprises — such, for
example, as corporations organized to take over mining properties,
oil and gas lands, patent and patent rights, secret processes, con-
cessions, franchises, etc. In this era of speculative enterprises
the courts can no longer remain blind to the fact that the stock of
such corporations is not intended by the incorporators or under-
stood by the creditors or the public generally to represent any-
thing but certain property having a speculative value, which may
or may not ultimately prove to be worth the par value of the stock
ao-ainst which the latter has been issued. The credit obtained by
such corporations concerning which the courts have in the past
displayed such intense solicitude in the interest of creditors to the
exclusion of the interests of equally meritorious stockholders, is
seldom, if ever, extended to the corporation without full knowl-
edge on the part of creditors as to the nature of the assets of the
corporation, or as to the manner in which the stock has been
issued in exchange for property of a speculative value.
§ 107. Effect of Appraisal of Property by Directors under Stat-
utory Authority, when taken in Exchange for Stock. — The incor-
poration acts of Connecticut, Delaware, Maine, Montana, New
Jersey, New York, North Carolina, South Carolina, Virginia, and
West Virginia all contain provisions relating to the effect of ap-
praisal of property by directors when taken by the corporation in
exchange for its capital stock. The provisions of the New Jersey
act may be given as an example of such legislation. The statute
referred to reads as follows : '
" Any corporation formed under this act may purchase mines,
manufactories, or other property necessary for its business or the
stock of another company or companies owning a mine, manufactory,
or producing mijls or other property necessary for its business, and
issue stock to the amount of the value thereof, in payment therefor,
i Public Laws of New Jersey, 1896, chap. 85, § 49.
L37
§ 107 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
and the stock so issued shall be full-paid stock and not liable to any-
further call, nor shall the holder thereof be liable for any further pay-
ments under any of the provisions of this act, and in the absence of
actual fraud in the transaction the judgment of the directors as to
the value of the property purchased shall be conclusive."
In commenting upon the foregoing section in the case of Donald
v. American Smelting & Refining Co., 1 the court spoke as follows :
" The distinction between the contemplated issue of corporate stock
for property and its issue for money lies not in the rule for valuation,
but in the fact that different estimates may be formed of the value of
property. When such differences are brought before judicial tribunals,
the judgment of those who are by law entrusted with the power of
issuing stock to the amount of the value of the property, and upon
whom therefore is placed the first duty of valuing the property, may
be accorded considerable weight. But it cannot be deemed conclusive
when duly subjected to judicial scrutiny, nor is it necessary that con-
scious over-valuation or any form of fraudulent conduct on the part
of its primary valuers should be shown to justify judicial interposi-
tion. Their honest judgment, if reached without due examination
of the elements of value, or if based in part upon an estimate of mat-
ters which really are not property, or if plainly weighed by self-
interest, may lead to a violation of the statutory rule as surely as would
corrupt motives. The original issue of corporate stock is a special
function in the exercise of which the legislature has fixed the stand-
ard to be observed, and it is the duty of the courts, so far as their
jurisdiction extends, to see that this standard is not violated either
intentionally or unintentionally. When corporate stock has once
been issued for property purchased, then the legislature has directed
the application of a different rule. In the words of the statute, ' the
stock so issued shall be full-paid stock, and not liable to any further
call, neither shall the holder thereof be liable for any further payment
under the provisions of this act ; and in the absence of actual fraud
in the transaction the judgment of the directors as to the value of the
property purchased shall be conclusive. Under these provisions, after
the property has been purchased and the stock issued therefor, noth-
ing short of actual fraud in the transaction can impair the right of the
holder to hold his stock as full-paid stock, free from further call.' " 2
i 61 N. J. Eq. 458 ; 48 Atl. 786. 45 W. Va. 134 ; 30 S. E. 92 ; Clark v.
2 See also Wetherbee v. Baker, 35 N. J. Bever, 139 U. S. 96 ; 11 S. Ct. 468 ; Fogg
Eq. 501; Bank v. Lumber Co., 32 W. Va. v. Blair, 139 U. S. 118; 11 S. Ct. 496;
-357 ; 9 S. E. 243 ; Riehardson v. Graham, Liebke v. Knapp, 79 Mo. 22.
138
CHAP. IV.] ISSUANCE AND PAYMENT OP CAPITAL STOCK. § 108
§ 108. Effect of Appraisal of Value of Property by State Officials
when the same is taken by Corporations in Exchange for their
Capital Stock. — Owing to the coniiicting decisions of the courts
of the various States relative to what does and what does not con-
stitute as against creditors full payment of the capital stock of a
corporation, attempts have been made by the legislatures of
a number of the States to remedy this situation by means of stat-
utory enactments. Such legislative enactments may be said to be
indicative of the public policy of the State in that regard. The
■" public policy of the State," as the term is used in this connec-
tion, frequently varies from time to time. In the absence of
-express statutes of the character here referred to, it has been said
that it is not to be measured by the private combinations or notions
of the persons who happen to be exercising judicial functions, but
by reference to the enactments of the law-making power, and in
the absence of them to the decisions of the courts. When, how-
ever, the legislature has spoken on a particular subject and within
the limits of its special powers, its utterance then becomes the
public policy of the State. 1 In view of the fact that the near
future is likely to see many attempts by other legislatures to
solve the question here referred to by the enactment of statutes
governing the same, the matter now under consideration should
receive careful attention.
It is a fair supposition to say that the passage of such acts in
this country originated doubtless in a desire to transfer to this
country certain sections of what is known as the " English Com-
pany's Act of 1867." Under the act just referred to, corporations
which desired to accept property in exchange for their capital
stock were required to register in a designated government office
a description of the property against which any particular cor-
poration proposed to issue its full-paid shares. The construction
by the English courts put upon this section of the English Com-
pany's Act does not seem to give to the legislative provision
referred to the full effect which is claimed for such statutes in this
country. In substance the holding of the English courts in
this regard is as follows :
That where the property is so registered under the act it is not
unlawful for the vendor to sell such property to the corporation in
1 See MacGinniss v. Company (Mont), 75 Pac. 89; United Statas v. Association,
166 U. S. 290; 17 S. Ct. 540.
139
§108 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
exchange for stock having a par value in excess of what the vendor
paid for the property. That ordinarily the court will not in the
interests of stockholders or creditors go behind the contract and
inquire whether the consideration represents the full value against
which the shares are issued unless the contract itself is impeached
or the consideration on the face thereof appears to be insufficient
or elusory. 1
Turning now to the statutory enactments in this country of the
same character, they may be explained as follows : In Florida
the incorporation act there in force provides that incorporators
may provide in the charter that the capital stock, either in whole
or in part, shall be payable in property, labor, or services, at a
valuation fixed in the charter. The latter must also contain
a general description of the property to be taken in exchange for
stock. In Utah the statute is very similar to the one in force in
Florida. In Massachusetts the articles of organization must set
forth the amount of capital stock to be issued, the amount thereof
to be paid for in cash, and the amount thereof to be paid for in
property. If such property consists of real estate, its location and
the amount of stock to be issued therefor must be stated. If any
part of such property is personal, it must be described in de-
tail. The whole matter is then submitted to and passed upon
by the commissioners of corporations. But the statute makes no
provision relative to what the legal effect thereof shall be as to
creditors where the issuance of stock in exchange for property i&
approved by the commissioners of corporations.
Unquestionably the most effective statute in existence is to be
found in the Michigan act, 2 which in prescribing the requisites of
articles of incorporation reads in part as follows : " The amount
of capital paid in at the time of executing the articles, which
shall not be less than ten per cent of the authorized capital, etc.
Such capital stock may be paid in either cash or in other property r
real or personal ; but where payment is made otherwise than in
cash there shall be included in the articles an itemized descrip-
tion of the property in which such payment is made, with the
valuation for which such item is taken, which valuation shall be
conclusive in the absence of actual fraud."
i In re Wragg, L. R. 1 Chan. 796; 2 Session Laws of 1903, § 232.
Ooregum Gold Min. Co. v. Ropes, 61 L. J.
Chau. 337.
1-10
CHAP. TV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 109
The intent of the legislature would clearly appear to be to
■establish conclusively that the property received and accepted by
the corporation under the authority of the State in exchange for
its stock constituted a fair equivalent of the amount of stock so
■given. It would seem to forbid all claim of fraud thereafter to be
made, and to establish the valuation as conclusive upon both stock-
holders and creditors. 1
§ 100. Meaning of Non-Assessable Stock. — In entering upon
the subject of non-assessable stock as contrasted with full-paid
stock the discussion of the former will be confined to ques-
tions arising between the corporation and its stockholders, while
the latter will be discussed from the standpoint of the stock-
holder in his relation to creditors. It is unquestionably within
the power of a corporation to agree with stockholders that stock
shall be issued to them at less than par, and that when so issued
shall not be subject to any further assessments on the part of the
•corporation. 2
In West Virginia, Nevada, Wyoming, and other States this
principle has found recognition in the incorporation acts in force
in those Commonwealths. The West Virginia act will serve as
a fair example. The law there provides in substance as follows :
that upon the vote of three-fourths of the stockholders corporate
stock may be sold or disposed of at less than par. The act then
goes on to provide that nothing therein contained shall be con-
strued as to prevent any mining or manufacturing company from
issuing stock and negotiating the sale of the same in payment of
real and personal estate for the use of the corporation at such price
and upon such terms and conditions as may be agreed upon by the
owners and directors or stockholders of the corporation, and any
subscriber to the capital stock of any such corporation may pay
for the same by the transfer and conveyance to such corporation
of real or personal property upon such terms as may be mutually
agreed upon. All stock so issued shall be full paid and not liable
to any further call or assessment.
Such a statute as is here referred to unquestionably has the effect
of making the stock non-assessable as between the corporation
and the subscribers to its capital stock, but it clearly has not the
effect of preventing subsequent creditors in case of insolvency
1 See State v. Webb et «/., 110 Ala. a Esgen V. Smith, 113 la. 25 ; 84 N. W.
214; 20 So. 462. 954.
141
§ 110 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
compelling the payment of any unpaid balance on such stock. 1
On this subject Judge Showalter, in Northern Trust Co. v. Colum-
bia Straw Paper Co., 2 spoke as follows :
11 Whatever may have been in fact the value of the property
turned over to the company for its stock, the latter agreed to take
it for the stock. The persons interested were the stockholders, and
there was no dissent on the part of any person in what was done.
Neither any person then holding stock, nor any person who afterwards
became a stockholder by assignment from one who then held the stock,
can now make complaint on behalf of the corporation against the law-
fulness of that transaction. This I take to be the settled law on that
subject."
In the absence of statutory authority conferred upon the corpo-
ration or in the absence of unanimous consent of all the stock-
holders, it is clear that the directors of a corporation have no
power to assess shares which have been fully paid up. 3
§ 110. Meaning of Full-Paid Stock. — The term " full-paid stock "
as here used may be defined to be stock whose par value has been
paid either in cash or in property, the ownership of which does
not subject the holder thereof to any further liability either to
the corporation or to the creditors. The mere declaration that
stock is full paid, either by resolution or by stamping upon
the stock this statement, does not make it so, at least as to
creditors. 4
It has already been said that stock may be issued for less than
its par value to subscribers as full paid and non-assessable and be
binding as between the corporation and the stockholders. 5 Where
statutes exist declaring that stock issued in a particular manner
shall be full paid and non-assessable, they are merely to be con-
strued to the effect that stock may be issued in this manner, and
that the holders thereof shall not be held liable to further calls or
assessments on the part of the corporation, but such immunity
i The Wyoming statute would appear Pacific Fruit Co. v. Coon, 107 Cal. 447;
to be materially different from the West 40 Pac. 542.
Virginia and Nevada acts. i Upton v. Triblecock, 91 U. S. 345 ; 23.
a 75 Fed. 936. L. E. 203; F. N. Bank v. Company, 42.
3 Wells v. Company, 90 Wis. 442 ; 64 Minn. 327 ; 44 N. W. 198 ; National Tube
N". W. 69 ; Ventura, etc. Ry. Co. v. Hart- Works v. Gilfillan, 124 N. Y. 302 ; 2&
man, 116 Cal. 260; 48 Pac. 65; Handley N. E. 538 ; Kroenert v. Johnston, 19 Wash.
v. Stutz, 39 U. S. 417 ; 11 S. Ct. 530 ; Gary 96 ; 25 Pac. 605.
v. Company, 9 Utah, 464 ; 35 Pac. 494 ; 5 See Scoville v. Thayer, 105 U. S. 143.
142
CHAP. IV.] ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 11(/
will not be extended in such suit so as to prevent subsequent
creditors enforcing their claims for the payment of the unpaid
residue. 1 Many of the States have statutory provisions to the
effect that no corporation shall issue stock except for money paid,
labor done, or property actually received, declaring all fictitious
increase of stock to be void. Under such provisions an original
issue of stock as fully paid at less than par will be held to be
void. 2
Many cases will be found bearing upon the question as to the
validity of so-called " bonus " or " promotion stock." In regard to
the validity of such stock the courts differ. One line of decisions
is represented by the courts of New York and Massachusetts. In
Christensen v. Eno 3 the New York Court of Appeals spoke as
follows :
" It may be admitted that the liability of subscribers on unpaid
stock subscriptions constitutes an asset of the corporation which can-
not be given up by the corporation without consideration on the part
of creditors. The unissued shares of a corporation are not assets.
When issued, they represent the proportionate interest of the share-
holders in the corporate property, — an interest, however, subordinate
to the claims of creditors. There are unquestionably public evils
growing out of the creation and multiplication of shares of stock in
corporations not based upon corporate property. The remedy is with
the legislature. But the liability of a shareholder to pay for the
stock does not arise out of his relation, but depends upon his con-
tract, express or implied, or upon some statute, and in the absence of
either of these grounds of liability, we do not perceive how a person
to whom shares have been issued as a gratuity has by accepting them
committed any wrong upon the creditors or made himself liable to
pay the nominal face of the shares as upon his subscription or
contract." 4
On the other hand, courts of almost equal authority have refused
to treat such stock in the interest of creditors as full paid and non-
assessable, and have enforced in their favor an alleged stockholders'
1 Vt. Marble Co. o. Company, 1.35 Cal. Cal. 624; 37 Pac. 0.3 8 ; Kellerman v.
579 ; 67 Pac. 1057. Maier, 116 Cal. 46; 48 Pac. .377 ; Garrett
2 Williams v. Evans, 87 Ala. 725; 6 v. Company, 11.3 Mo. 330; 20 S. W.
So. 702; Perry v. Mill Co., 98 Ala. 364; 965.
9 So. 217 ; Heitman v. Steiner, 98 Ala. 3 106 N. Y. 97 ; 12 N. E. 648.
241 ; 13 So. 87; Stein v. Howard, 65 Cal. « Same rule in N. EL I'. X. Co. v.
616; 4 Pac. 662; Jefferson v. Hewitt, 103 Company, 142 Mass. 349; V i\ r . B. 77.3.
143
§110 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PARTI.
liability thereon. 1 It has been held, however, that even though a
stockholder has paid nothing for his stock, he is entitled to vote
the same. 2
1 See Peninsula Savings Bank v. Com- N. W. 894 ; Scoville v. Thayer, 105 U. S.
pany, 105 Mich. 535; 63 N. W. 514; 143; Garrett v. Company, 113 Mo. 330;
Handley v. Stutz, 139 U. S. 417; 11 S. 20 S. W. 965.
Ct. 530; De La Vergne Refrigerating 2 Cartwright v. Dickinson, 88 Tenn.
Machine Co. v. German Savings Institu- 476; 12 S. W. 1030; W. E. L. Co. v.
tion, 175 U. S. 40; 20 S. Ct. 20; 44 L. E. Landy, 66 Vt. 248; 29 Atl. 248; see also
65; Rogers v. Gross, 67 Minn. 224; 69 Busey v. Hooper, 35 Md. 15.
144
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 112
CHAPTER V.
LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS.
§ 111. Statement of Principal Methods by which Legislative
Control over Domestic Corporations is obtained. — Under our
modern system legislative control over domestic corporations
ordinarily takes the following forms, to wit : (1) control over
amendment of corporate charters ; (2) reservation on the part
of the State of the right to repeal all charters ; (3) control
over dissolution of corporations ; (4) by the exercise through
State officials of the right to forfeit charters by means of quo
warranto proceedings ; (5) by means of the exercise of the
police power; (6) through legislative investigation into corpo-
rate affairs ; (7) by requiring annual reports of corporations ;
(8) by compelling corporations to permit inspection of their
books and records for the benefit of stockholders and creditors ;
(9) by means of anti-trust legislation ; (10) by the enactment of
statutes regulating the internal affairs of the corporation ; (11) by
the imposition of liability upon stockholders for corporate debts
over and beyond their liability for unpaid stock subscriptions ;
(12) enactment of statutes imposing liability upon directors for
misfeasance or non-feasance in office ; (13) by means of legisla-
tive control over the extension of corporate existence; (14) by
the exercise of the right of taxation upon corporations ; (15) by
regulating the right of consolidation of corporations.
§112. Amendment of Charters. — A glance at the general
business acts in force in the several States and Territories will
serve to show that in all of them more or less attention has hem
paid by the legislatures to the question of the right to amend —
with more or less freedom — articles of incorporation. In a ma-
jority of these the power of amendment will be found to he prac-
tically unlimited. In nine the limitations imposed are not wide in
scope, while in eleven the power referred to may be characterized
10 145
§ 112 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
as being very narrow in its practical operation. 1 The practical
questions to be considered in this immediate connection have
reference, first, to ascertaining in what body the legislatures have
seen fit to place the power of amendment, and, secondly, an inquiry
whether the power when granted, apparently in the broadest
terms, is in legal effect without any limitations whatsoever.
As a general rule, the directors have no power to amend charters
unless such right is expressly conferred upon them by statute.
Power to amend resides exclusively in the stockholders. 2 Turn-
ing now to the second inquiry referred to above, the following may
be said. With respect to the right on the part of majority stock-
holders to exercise the power of amendment, there are two prac-
tical views of the question which deserve consideration. The first
has reference to the effect, if any, the exercise of such right may
have upon the right of the corporation to enforce stock subscrip-
tions which were made in reliance upon the corporate purposes
set forth in the original charter. The other relates to the
binding effect of such amendments, when had, upon dissenting
minority stockholders who have previously paid up their stock
subscriptions.
In the first case it appears to be the generally accepted view
that when a party makes a subscription to the capital stock of a
corporation he does it in reliance upon the implied understanding
that no changes shall be made in the charter without his consent
which produce material and fundamental changes therein. 3 The
rule however can clearly not apply where the changes made were
trifling or immaterial or were in furtherance of the original objects
of the corporation. 4 There is a well-defined tendency at the
present time on the part of many courts to take the view that in
order that a subscriber to the capital stock may escape liability
on his subscription on the ground that there has been a material
amendment to the charter since his subscription was made, that
1 See Part II., Synopsis-Digest of the 133 ; Abbott v. Company, 33 Barb. (N. Y.>
Corporation Acts of the Several States, 583.
under the head " Amendments." 3 Mowrey v. Company, 4 Bissell (U. S.),
2 Gill v. Bayless, 72 Mo. 424; Ky. Co. 78; Printing House v. Trustees, 104 U. S.
v. Allerton, 18 Wall. U. S. 233 ; Olleshei- 711.
mer v. Mfg. Co., 44 Mo. Ap. 172 ; Clough 4 Fry's Executors v. Company, 2 Met-
v. Company, 25 Col. 520; 55 Pac. 809; calf (Ky.), 322; Peoria v. Preston, 35 la.
State v. Oftedal, 72 Minn. 488; 75 N. W. 115 Milford, etc. Turnpike Co. v. Brush,
692 ; Commonwealth v. Cullen, 13 Pa. St. 10 0. St. Ill; Durfee v. Company, 5-
Allen (Mass.), 230.
146
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 112
such amendment must necessarily have brought about changes
of the most radical and fundamental character. 1
Turning now to the second question here referred to, the fol-
lowing may be said. Important questions frequently arise as to
the right of majority stockholders to amend the charter of the
corporation against the dissent of minority stockholders so as
practically to create an entirely new corporation with purposes
and powers wholly different from those conferred in the original
charter.
Before the passage of the modern liberal amendment acts,
specifically authorizing majority stockholders to change ad libitum
corporate purposes and powers, the rule undoubtedly was that
majority stockholders had no power to depart, under the guise of
an amendment to the charter, from the objects for the accom-
plishment of which the corporation was created. At that time
majority stockholders would be enjoined on the application of
minority stockholders from making fundamental and radical
changes in the original corporate purposes, which had the effect
of practically creating a new corporation, with power to engage
in lines of business wholly foreign to that set forth in the original
charter. 2 But whatever the rule may have been in times past,
changed conditions have brought about material modifications
therein.
Owing to the recent statutory enactments in the great majority
of the Commonwealths relative to amendment of charters, it may
be said that this question has ceased to be one of great practical
importance at the present time, however it may have been in the
past. In view of these statutory provisions it may be said that as
a general rule the extent of the power of amendment when exercised
by a majority of the stockholders according to the statute in such
case made and provided, depends entirely upon the terms of such
statute and the construction given by the courts thereto. 3 If broad
1 Banet v. Company, 13 111. 504 ; Pa- Natusch v. Irving, 1 Smith's Cases, 226 ;
cific Ry. Co. v. Renshaw, 18 Mo. 210; Union LockB and Canals v. Towne, 1 N. H.
Spragu'e v. Company, 19 111. 174; Irvine 44; Ashton v. Burbank, 2 Dill. 435; Fed.
v. Turnpike Co., 2 Pen. & W. (Pa.) 466; Cases No. 582; H. & N. II. Ky. Co. v.
Cross v. Company, 90 Pa. St. 392; Troy, Croswell, 5 Hill (N. Y.), 383.
etc. Ry. Co. t;. 'Kerr, 17 Barb. (N. Y.) 8 Day v. Company, 75 la. 694; 38
607; Worcester v. Company, 109 Mass. N. W. 113; GoMer t>. Bressler, 105 111.
103; Del. Ry. Co. v. Tharp, 1 Houst. 419; Spriggw. Company, 46 Md. 67; Hope
(Del.) 149. Mutual Fire Ins. Co. v. Beckman, 47
2 Zabriskie v. Company, 18 N. J. Eq. Mo. 93; Detroit Chamber of Commerce v.
178; Stevens v. Company, 29 Vt. 545; Secretary of State, 109 Mich. 691; 67
147
§ 112 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
in scope, they unquestionably permit majority stockholders to
bring about radical and even fundamental changes in corporate
purposes and powers if they so desire.
The question here presented is one of so much practical im-
portance that it deserves more attention than has been yet given
it. The New York Court of Appeals in Buffalo & New York City
Railroad Co. v. Dudley 1 laid the foundation for the establishment
in that State of the present just rule that there obtains with
reference to the right of majority stockholders to materially
change the corporate purposes against the dissent of minority
stockholders. In that case the court permitted a change of name
and an extension of the line of the railway by means of an amend-
ment to the original charter. In passing upon this point the
court spoke as follows :
" The stock subscription having been valid so as to give a right
of action in case of non-payment to the corporation, did the altera-
tion of the charter and the extension of the road subsequently absolve
the defendant from his liability upon such subscription ? The right
to alter was reserved in the charter, and the subscription must be
taken to have been made subject to having such additional powers
conferred as the legislature might deem essential and expedient.
The change is not fundamental. The new powers conferred are
identical in kind with those originally given. They are enlarged
merely, the general objects and purposes of the corporation remain-
ing still the same. It may be admitted that under this reserved
power to alter and repeal the legislature would have no right to
change the fundamental character of the corporation and convert it
into a different legal being, for instance, a banking corporation,
without absolving those who did not choose to be bound. But this
they have not attempted to do. The additional powers are of the
•same character and have been regularly acquired from a legitimate
source of power, and if they had been fairly exercised the defendant,
although the change may have operated to his pecuniary disadvan-
tage, is still bound by his undertaking. The whole matter is mani-
festly a question of power; and if the power was legitimately
acquired and has been exercised without fraud, the rights of the
parties are in no respect changed as between themselves whether
the alteration is beneficial or injurious to the defendant's interest.
N. W. 897; Mercantile Statement Co. People v. Green, 116 Mich. 505; 74 N. W.
v. Kneal, 51 Minn. 263; 53 N. W. 632; 714.
l 14 N. Y. 342.
148
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 112
Whether he has made or lost by the change in no respect affects the
question of authority iu the plaintiff."
Many years later this same court, in discussing the respective
rights of majority and minority stockholders or corporations, spoke
as follows :
"The court would not be justified in interfering even in doubtful
cases, where the action of the majority might be susceptible of dif-
ferent constructions. To warrant the interposition of the court in
favor of the minority shareholders in a corporation or joint-stock
association, as against the contemplated action of the majority, where
such action is within the corporate powers, a case must be made out
which plainly shows that such action is so far opposed to the true
interests of the corporation itself as to lead to the clear inference
that no one thus acting could have been influenced by any honest
desire to secure such interests, but that he must have acted with an
intent to subserve some outside purpose, regardless of the conse-
quences to the Company and in a manner inconsistent with its
interests. Otherwise the court might be called upon to balance prob-
abilities of profitable results to arise from the carrying out of the
one or the other of different plans proposed by or on behalf of the
different shareholders in a corporation, and to decree the adoption of
that line of policy which seemed to it to promise the best results, or
at least to enjoin the carrying out of the opposite policy. This is no
business for any court to follow." 1
It is difficult to find a better presentation of the more modern
and better view taken of the question now under discussion than
that to be found in the opinion of the Massachusetts Supreme
Court in Durfee v. Old Colony & Fall River Railway Company. 2
While the case had special reference to the right of a State legis-
lature to exercise its reserved right to amend corporate charters
so as to produce radical changes in the purposes named in the
original charter, nevertheless the reasoning is equally applicable
to those cases where majority stockholders attempt equally radical
amendments under general acts permitting such stockholders to
amend charters on their own initiative.
" We suppose," said Chief Justice Bigelow in the case referred
to, " it may be stated as an indisputable proposition, that every
1 Gamble v. Company, 123 N. Y. 91 ; 25 Allen, 230.
25 N. E. 201.
149
§ 112 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
person who becomes a member of a corporation aggregate by pur-
chasing and holding shares agrees by necessary implication that
he will be bound by all acts and proceedings, within the scope of
the powers and authority conferred by the charter, w r hich shall
be adopted or sanctioned by a vote of the majority of the corpora-
tion, duly taken and ascertained according to law. This is an
unavoidable result of the fundamental principle that the majority
of the stockholders can regulate and control the lawful exer-
cise of the powers conferred on a corporation by its charter. A
holder of shares in an incorporated body, so far as his indi-
vidual rights and interests may be involved in the doings of the
corporation, acting within the legitimate sphere of its corporate
power, has no other legal control over them than that which he
can exercise by his single vote in the meetings of the company.
To this extent he has parted with his personal right or privilege
to regulate the disposition of that portion of his property which
he has invested in the capital stock of the corporation, and sur-
rendered it to the will of a majority of his fellow corporators.
The jus disponendi is vested in them so long as they keep within
the line of the general purpose and object for which the corpora-
tion was established, although their action may be against the will
of a minority however large. It cannot, therefore, be justly said
that the contract, express or implied, between the corporation
and the stockholders is infringed or impaired by any act or pro-
ceeding of the former which is authorized by a majority, and
which comes within the terms of the original statute creating and
establishing their franchise, and conferring on them capacity to
exercise control over the rights and property of their members.
On the contrary, the fair and reasonable implication resulting
from the legal relation of the stockholders and the corporation is,
that the majority may do any act either coming within the scope
of the corporate authority, or which is consistent with the terms
and conditions of the original charter, without and even against
the consent of an individual member." Again, in this same opinion
the court observed that, " in creating a corporation, no contract
is made by the legislature with the individual members or stock-
holders, any further than they are represented by the artificial
body which the act of incorporation calls into being. They have
no other rights except those which exist or grow out of the con-
stitution of the body corporate of which they are members. To
150
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 112
this can we only look, in order to ascertain whether there has
been any breach of contract or violation of chartered rights. It
constitutes, of itself, the contract by which the rights of all parties
are to be governed. When, therefore, it is expressly provided
between the legislature on the one hand and the corporation on
the other, as part of the original contract of incorporation, that
the former may change or modify or abrogate it or any portion
of it, it cannot be said that any contract is broken or infringed
when the power thus reserved is exercised with the consent of the
artificial body of whose original creation and existence such reser-
vation formed an essential part. The stockholder cannot say
that he became a member of the corporation on the faith of an
agreement made by the legislature with the corporation, that the
original act of incorporation should undergo no change except
with his assent. Such a position may be asserted with more
plausibility, if there was an absence of a clause in the original
act of incorporation providing for an alteration in its terms. In
such a case it might perhaps be maintained that there was a
strong implication that the charter should remain inviolate, and
that the holders of shares invested their property in the corpora-
tion relying upon a contract entered into between it and the
legislature that the provisions of the act creating it should remain
unchanged. But it is difficult to see how such a construction can
be put on a contract which contains an express stipulation that it
shall be subject to amendment and alteration. If it be asked by
whom such amendment or alteration is to be made, the answer
is obvious : by the parties to the contract, the legislature on the
one hand and the corporation on the other ; the former expressing
its intention by means of a legislative act, and the latter assenting
thereto by a vote of the majority of the stockholders, according
to the provisions of its charter. It is nothing more than the
ordinary case of a stipulation that one of the parties to a contract
may vary its terms with the assent of the other contracting party.
In such case, all persons claiming derivative rights or interests
under the original contract, with notice of its terms, would be
bound by the amendment or alteration to which the parties should
agree. It is a mistake, therefore, to say that the contract of a
stockholder with a corporation established under our statutes
binds the latter to undertake no new enterprise and engage in do
business or operation other than that contemplated by fche original
151
§ 112 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
charter. This interpretation puts aside the express provision
authorizing an amendment or alteration of the act of incorporation,
and gives it no effect as against a stockholder without his assent,
although he bought his stock or subscribed for his shares subject
to the legal effect of such a stipulation. The real contract into
which the stockholder enters with the corporation is, that he
agrees to become a member of an artificial body which is created
and has its existence by virtue of a contract with the legislature,
which may be amended or changed with the consent of the com-
pany, ascertained and declared in the mode pointed out by law.
Having, by virtue of the relation which subsists between himself
and the corporation as a holder of shares, assented to the terms
of the original act of incorporation, he cannot be heard to say
that he will not be bound by a vote of the majority of the stock-
holders accepting an amendment or alteration of the charter
made in pursuance of an express authority reserved to the legis-
lature, and which by such acceptance has become binding on the
corporation."
In some few of the States, as for example Ohio, 1 the law provides
that no amendment shall change substantially the original pur-
poses of the organization. In many of the States great similarity
is to be observed in the formalities necessary to be taken in order
to legally amend the charter. Usually the matter is brought to
the attention of the stockholders by a resolution passed by the
board of directors directing the calling of a meeting of the stock-
holders for the purpose of passing upon certain proposed amend-
ments. A meeting of the stockholders is then called in the manner
prescribed by statute, if any, or according to the method set forth
in the by-laws. If the requisite number of stockholders vote in
favor of such amendment, a certificate to that effect is usually
made by the officers of the corporation and filed in the same offices
as is required in the case of the original articles of incorporation.
Thereupon the amendment ordinarily becomes effective. If the
statute does not prescribe the method of amending the charter,
the only safe plan to pursue is to adopt substantially the same
procedure therefor as is prescribed by statute in the case of original
articles. 2
i See Revised Statutes of Ohio, sec. 2 Day v. Company, 75 la. 694; 38
3258a ; also State v. Taylor, 55 O. St. 61 ; N. W. 113.
Picard v. Hughey, 58 O. St. 577.
152
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 113
§ 113. Reserved Right of the State to repeal Charters. — Without
exception, under the system of incorporation now in vogue, each
of the several States and Territories reserves the right in the grant-
ing of corporate charters under general acts to alter, amend, or
repeal the same at any future time. The presence of such enact-
ments is due to the decision of the United States Supreme Court
in Dartmouth College v. Woodward, 1 wherein that tribunal an-
nounced the principle that the charter of a private corporation
was entitled to protection from alteration, amendment, or repeal
on the part of State legislatures under the clause of the Federal
Constitution forbidding impairment of the obligation of contracts.
When this case was decided, it became obvious at once that " many
acts of incorporation which had been passed as laws of a public
character, partaking in no general sense of a bargain between the
States and the corporations which they created, but which yet con-
ferred private rights, were no longer subject to alteration, amend-
ment, or repeal except by the consent of the corporate body, and
that the general control which the legislatures creating such
bodies had previously supposed they had the right to exercise, no
longer existed." It was no doubt with a view to suggesting a
method by which the State legislatures could retain in a large
measure this important power without violating the provisions of
the Federal Constitution, that Justice Story, in his concurring
opinion in the Dartmouth College Case, suggested that, " when the
legislature was enacting a charter for a corporation, a provision
in the statute reserving to the legislature the right to amend or
repeal it must be held to be a part of the contract itself, and the
subsequent exercise of the right would be in accordance with the
contract and could not therefore impair its obligation." 2
With respect to the right to repeal, the power of the legislature
in this regard, when exercised, is all but absolute, and the courts
ordinarily will not inquire into the legislative motive for exercis-
ing it. Under such circumstances it will be presumed that the
power is properly exercised. 3 The only exception appears to be
that the courts will interfere where the legislature has exercised
its power of repeal so wantonly and causelessly as palpably to
violate the principles of natural justice. 4
1 4 Wheaton, 5 1 8, decided in 1819. Wagner Free Institution V. Philadelphia!
2 Greenwood v. Company, 105 U. 8. 132 Pa. St. 612.
18. 4 Lothrop ei «/. v. Stedman el «/., Fed.
8 Greenwood v. Company, 105 U. S. IS; Cases, N<» 8519.
L53
§ 114 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
Another question, however, is presented when the legislature
attempts to alter or amend the charter. In order to justify the
exercise of this power by the legislature the same must be so
exercised as not to defeat or substantially impair the object of
the grant or any rights vested under it which the legislature may
deem necessary to secure either that object or some public right. 1
From the foregoing it is to be seen that the reserved power to
repeal and alter is not unlimited. On this subject the U. S.
Supreme Court, in Union Pacific Railroad Co. v. United States, 2
spoke as follows :
" That the power to alter or amend a charter even when reserved has
a limit no one can doubt. All agree that it cannot be used to take
away the property already acquired under the operation of the
charter or to deprive the corporation of the fruits actually reduced
to possession of contracts lawfully made. It may safely be affirmed
that the reserve power may be exercised to almost any extent to carry
into effect the original purposes of the grant or to secure the due
administration of its affairs so as to protect the rights of stockholders
and creditors, and for the proper distribution of its assets. Also
to protect the rights of the public and of the incorporators or to
promote the due administration of the affairs of the corporation.
The alterations must, however, be reasonable. They must be made in
good faith, and be consistent with the object and scope of the act of
incorporation. Sheer oppression and wrong cannot be inflicted under
the guise of alteration or amendment."
§ 114. Legislative Control over Dissolution of Corporations. —
Legislative control over dissolution of domestic corporations
(omitting any reference to forfeiture of charters by State action, )
is exercised in the following four ways : (1) by prescribing the
maximum duration of corporate charters; (2) by permitting
corporations to surrender their charters before organization ;
(3) by authorizing voluntary dissolution, with or without recourse
to the courts; (4) by enacting statutes authorizing involuntary
dissolution on application of stockholders or creditors. Each of
these matters will now be taken up briefly for discussion.
(1) Legislative limitations upon corporate duration. In the
absence of any provision in the governing statute or in the charter
limiting corporate duration, the corporation is entitled to perpetual
i N. Y. & N. E. Railway Co. v. Town 2 99 U. S. 700.
of Bristol, 151 U. S. 556.
154
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 114
existence. 1 The legislature may however, if it sees fit, limit
the duration of corporate existence to any specific number of
years. This right has been exercised in a majority of the
States. Upon expiration of the period of time limited in the
charter as the duration of corporate life, dissolution results by
operation of law. 3 If the articles provide for a longer period
of duration than the law allows, then the excess is of no force
or effect. 4
In many of the States statutes exist continuing the existence of
corporations after the expiration of the period limited in their
charters for certain periods of years in order to permit them to
close up their corporate affairs. Such statutes may be lawfully
enacted subsequent to the creation of the corporation, for the
reason that they provide for the enforcement of rights which
equity recognizes even in the absence of statute. 5
(2) Surrender of charter before organization. Statutes exist
in the States of Connecticut, Delaware, Maine, Massachusetts,
Nevada, New Jersey, New York, North Carolina, Virginia, West
Virginia, and Wisconsin expressly permitting corporations to
surrender their charters either prior to organization or to the
commencement of corporate business. It is unquestionably true
that in order to render such a surrender valid it must have been
made under authority of the statutory provision enacted, which
is of course equivalent to acceptance by the State. 6
(3) Voluntary dissolution with or without recourse to the
courts. " Charters," it has been said, " are in many respects com-
pacts between the government and the corporators. And as the
former cannot deprive the latter of their franchises in violation of
the compact, so the latter cannot put an end to the compact with-
out the consent of the former. It is equally obligatory on both
parties. The surrender of a charter can only be made by some
formal act of the corporation, and will be of no avail until ac-
cepted by the government. There must be the same agreement
of the parties to dissolve that there was to form the compact. It
1 F. L. & S. Co. v. Clowes, 3 N. Y. 470. v. Hutchinson, 183 111. 605; 56 N. E.
3 Mason v. Company, 25 Fed. 882; 388.
Bradley v. Reppell, 133 Mo. 545 ; 32 S. W. e Taylor v. Holmes, 14 Fed. 98 : Revere
6 -t5. ». Company, 15 Pick. (Mass.) 351; Combes,
4 People v. Cheeseman, 7 Col. 376; 3 ,. Keyes, 89 Wis. _".i: ; 62 N. W. 89;
Pac. 716. Law v. Rich, 47 VV. Va. 634 ; 35 S. E. 858 ;
6 Foster 0. Bank, 16 Mass. 245 ; Singer Mariners v. Sewall, 50 Me. 220 ; Barton '■
Association, 114 Ind. 226; 16 N. B. 186.
155
§ 114 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
is the acceptance which gives efficiency to the surrender. Dis-
solution of a corporation extinguishes all its debts. The power
of dissolving itself by its own act would be a dangerous power,
and one which cannot be supposed to exist." 1
The foregoing statement of the law is unquestionably based
upon both reason and authority. Accordingly, a corporation may
dispose of all its assets, cease entirely to do business, and neglect
to elect officers or hold meetings of any kind, yet it cannot be
legally dissolved by any action of its stockholders or a surrender
of its charter unless such surrender is authorized by some
statute. 2
Where statutes exist authorizing dissolution of corporations
prior to the termination of the period limited in their charters,
such statutes are of course equivalent to an acceptance by the
legislature of the surrender of the charter. All that is necessary
is that the statute shall be substantially complied with in order
that the dissolution may be effective. 3
It may be remarked, in passing, that no cessation or abandon-
ment of its corporate business, failure to hold corporate meetings
or to elect officers, alienation or loss of all its property, has the
effect in law of dissolving the corporation. 4
(4) Involuntary dissolution on application of stockholders and
creditors. Most of the States have enacted statutes giving courts
possessing equitable powers the right to wind up corporations for
cause shown upon application of some stockholder or on petition
of creditors. But such proceedings, even when the corporation is
insolvent, do not necessarily dissolve the corporation, unless the
statute that is invoked expressly so provides. 5
It has been expressly held that corporations are not dissolved by
i Boston Glass Manufactory v. Lang- 222 ; Boston Glass Manufactory v. Lang-
don, 24 Pick. 49; see also Olds v. Company don, 24 Pick. (Mass.) 49 ; Kincaid v. Dwi-
(Mass.), 70 N. E. 1022. nelle, 59 N. Y. 548; Jones v. Edson, 10
Kan. Ap. 110; 62 Pac. 249 ; State v. Trus-
tees, 5 Ind. 44 ; Wilmington & Reading
Ry. Co. v. Downward (Del.), 14 Atl. 720;
Muscatine Turnverein v. Funck, 18 la.
2 Everetts v. Company, 20 Conn. 448
Rorke v. Thomas, 56 N. Y. 559 ; People v
Ballard, 134 N. Y. 269 ; 32 N. E. 54
Commonwealth v. Silfer, 53 Pa. St. 71
Wilson v. Proprietors, etc., 9 R. I. 590 ; 469 ; U. S. v. Company, 1 Fed. 700 ; Brad.
State v. Association, 35 O. St. 258. ley v. McKee, 5 Cranch C. C. 298 ; Fed.
3 Commonwealth v. Slifer, 53 Pa. St. Cases, No. 1784.
71 ; In re Lincoln Co., 190 Pa. St. 124 ; 42 5 Sprague Brimmer Mfg. Co. v. Com-
Atl. 538; Wilson v. Proprietors, etc, 9 pany, 26 Fed. 572 ; Stolzeu. Company, 100
r. i. 590. Wis. 208 ; 75 N. W. 987 ; Olds v. Com-
* People v. B. & R. T. Road, 23 Wend, pany (Mass.), 70 N. E. 1022.
156
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 115
statutory proceedings in bankruptcy or insolvency, or by appoint-
ment of receivers in equity or by assignment for the benefit of
creditors. 1
§ 115. Forfeiture of Charters. — At common law forfeiture of
charters was accomplished by means of scire facias, or by an
information by the proper State officials in the nature of a writ
of quo warranto. 2 " An information for the purpose of dissolving
a corporation or of seizing its franchises," it has been said, " can-
not be brought except by the authority of the Commonwealth,
exercised by the legislature or by the attorney or solicitor-general
acting under its direction or ex officio in its behalf. For the
Commonwealth may waive any provision of any condition, express
or implied, on which the corporation was created ; and courts can-
not give judgment for the seizure by the Commonwealth of the
franchises of any corporation unless the Commonwealth be a party
in interest to the suit and assents to the judgment." 3
A corporation cannot within the meaning of the law forfeit its
rights and seal up the corporation. A corporation without rights,
without legal capacity to do anything, not even to acquire rights,
is an impossibility. It has never been seriously contended that
mere non-performance of conditions subsequent on the part of
a corporation has the effect ex proprio vigore to put an end
to corporate life. By such non-performance the corporation is
not ipso facto dissolved or deprived of its corporate existence
or corporate rights, but it is simply exposed to proceedings in
behalf of the State to establish and enforce a forfeiture. The
State which gave the corporate life may take it away. The State
which imposed the conditions may waive their performance, and
the corporate life may run on until the State by proper proceedings
(ordinarily quo tvarranto, or in the nature of quo ivarranto) inter-
poses and enforces a forfeiture. 4
Courts of equity have no inherent jurisdiction, in the absence
of statute conferring the same, to decree a dissolution of a cor-
poration or declare a forfeiture of its charter on any grounds. 5
1 Chamberlain v. Company, 118 Mass. N. V. 366; W. & B. T. Co. v. Maryland,
532; Taylor?'. Company, 14 Allen (Mass.), 19 Ml. 239.
■353; Montgomery v. Men-ill, is Midi. 8 Commonwealth v. Company, 5 Mass.
•338; Boston Glass Manufactory v. Lang- 230.
don, 24 Pick. (Mass.) 49; Central Nat. ' Matter of Brooklyn Elevated Ry.
Bank v. Company, 104 U. S. 54. Co., 125 N. Y. 434 ; 26 N. E. 474.
2 Bex v. Passmore, 3 Term Reports, 6 Wheeler v. Company, L4S 111. 197;
199; Slee v. Bloom, 5 Johnson's Chan. 32 N. E. 420; Denike v. Company, 80
i:.7
§ 115 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART T.
The principal grounds under the statute upon which charters will
be forfeited may be enumerated as follows : (1) non-user of cor-
porate franchises ; (2) mis-user or abuse of corporate powers ; (3)
for non-performance of conditions precedent to valid existence as
a corporation ; (4) for non-performance of conditions subsequent
to valid continuance of existence as a corporation ; (5) for viola-
tion of express statutes ; (6) for non-payment of taxes ; (7) for
insolvency. These will now be taken up briefly for separate
consideration.
(1) Forfeiture for non-user of corporate franchises. It is a well-
established doctrine of the law that courts should proceed with
extreme caution in proceedings which have for their object the
forfeiture of corporate franchises ; nor should such a penalty be
visited except for plain abuse of power by which the corporation
fails to fulfil the designs and purposes of its organization. 1 Again
it has been well said : " It is not every failure to perform a duty
imposed that will work a forfeiture. It must be something more
than accidental negligence, something more than an excess of
power, something more than a mere mistake in the mode of
executing the acknowledged powers ; and though a single act
of simple non-feasance may be a ground of forfeiture, a specific
act of non-feasance not committed wilfully and not producing
or tending to produce mischievous consequences to any one,
and not being contrary to formal regulations of the charter,,
will not be." 2
All these judicial utterances are little more than a declaration
of the fact that the policy of the State, of its officers and courts
should be to encourage in all legitimate ways the organization
and operation of all corporations organized to promote any legit-
imate enterprise. " The rights, privileges, and franchises of such
corporations," it has been well said, " should not be declared
forfeited, and they should not be ousted and excluded therefrom,
except for solid, weighty, and cogent reasons, for the violation of
a positive or prohibitory statute and not of a statute whose pro-
visions are permissive and apparently directory, and never upon
mere technical grounds." 3
The term " forfeiture of charter for non-user of corporate
franchises," as here used, has a very broad signification. It
N.Y.599. See however Miner v. Company, x State v. Chemical Bank, 10 0. St. 535.
93 Mich. 97 ; Arents v. Company, 101 Fed. ' 2 State v. Company, 8 R. I. 182.
138. 3 Moore v. State, 71 Ind. 478.
158
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 115
may have reference to action taken by the State with a view-
to forfeiture of corporate charters on any one of the following
grounds: failure to organize the corporation within the time
prescribed by statute ; : failure to carry on the business enu-
merated in its articles; 2 failure to elect officers; 3 failure to
maintain domiciliary office within the State; 4 failure to com-
mence business within the time designated by statute. 5
(2) Forfeiture for misuse or abuse of corporate powers. " To
work a forfeiture on the ground of misuser or abuse of corporate
powers, there should not only be a wrong, but one arising from
wilful abuse or improper neglect. The corporate default must
be something more than accidental negligence or mere mistaken
excess of power, or mistake in the mode of exercising an acknowl-
edged power. There must be an abuse of trust, of such a nature as
would render a trustee liable to forfeit his station on the complaint
of his cestui que trust if the question stood on the relation between
them. Corporations are political trustees. Have they fulfilled the
purposes of their trust or acted in good faith with a view to fulfil-
ment ? is the question to be asked when they are called upon to
forfeit their charter, either for acts of commission or omission." 6
" It appears to be settled," observed the New York Court of
Appeals, " that the State as prosecutor must show on the part
of the corporation accused some act against the law of its being
which has produced or tends to produce injury to the public. The
transgression must not be merely formal or accidental, but mate-
rial and serious, and such as to harm or menace the public welfare.
For the State does not concern itself with the quarrels of private
litigants. It furnishes for them sufficient courts and remedies,
but interferes only where some public interest requires its action.
Corporations may and often do exceed their authority where only
private rights are affected. But when the transgression has a
wider scope and threatens the welfare of the people, they may
summon the offender to answer for the abuse of its franchises or
the violation of its corporate duty." 7
1 State v. Simonton, 78 N. C. 57. 6 W.F.C.F. Co. i\ Kittridge, 5 Saw. 44 ;
2 W. C. M. Co. v. Burns, 1 14 N. C. 353 ; People v. Bank, 129 111. 618; 22 N. E. 288.
19 S. E. 238. c People v. B. & R. T. Road, 28 Wend.
3 State v. Barron, 58 N. II. 370. 222.
4 State v. Company, 58 Minn. 330; 59 7 IVople v. Company, 121 \. F.582; 24
N. W. 1048; State v. Company, 59 Kan. N. E. 834 ; see also M. O. & R. R. Co. v.
151 ; 52 Pac. 422; State v. Company, 45 Cross, 20 Ark. 443.
Wi.s. 579.
l.V.i
§ 116 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
(3) Forfeiture for non-performance of conditions precedent.
Even a corporation defectively organized may have what is
termed a " de facto existence," so that it cannot ordinarily be
impeached by parties other than the State. Nevertheless the
right to bring proceedings to forfeit the charter of such cor-
poration vests with the State which may bring proceedings to
forfeit the same and oust it from the exercise of corporate
powers. 1
(4) Forfeiture for non-performance of conditions subsequent. It
has been well settled that charters of corporations may be forfeited
by proper action brought by the State for failure to comply with
conditions subsequent which are clearly mandatory and not merely
directory in their nature. 2
(5) Forfeiture for violation of express statute. This is one of
the clearest grounds for the exercise by the State of its right
to forfeit charters. The most common ground for the exercise
thereof is in connection with anti-trust legislation. 3
(6) Forfeiture for non-payment of taxes. Several of the States
authorize forfeiture of charters for non-payment of organization
and annual franchise taxes. This right has been exercised with
great frequency, and constitutes unquestionably a valid exercise
of the power of such legislature over corporations. 4
(7) Forfeiture for insolvency. In the absence of statutory pro-
vision to that effect, insolvency alone will not authorize the State
to forfeit corporate charters. 5 However, it is unquestionably valid
for a State to prescribe that if a corporation be insolvent for a
certain length of time it shall constitute a forfeiture of its charter. 6
§ 116. The Police Power of the State. — The police power of the
State comprehends all those general laws of internal regulation
which are necessary to secure the peace, good order, health, and
i Holraan v. State, 105 Ind. 569 ; People bers, 42 Cal. 201 ; People v. Bank, 129 111.
v. City Bank, 7 Col. 226 ; 3 Pac. 214. 618 ; 22 N. E. 288 ; 24 N. E. 834.
2 State v. Company, 1 Term. Cases, 4 Hugbesdale Mfg. Co. v. Vanner, 12
511 ; People v. Company, 131 N. Y. 140; R. I. 491 ; Bank v. Company, 17 Ap. Div.
Hammond v. Strauss, 53 Md. 1. (N. Y.) 524.
8 Simmons v. Company, 113 N. C. 147 ; 5 People v. Bank, 6 Cowen (N. Y.),
State v. Company, 24 Texas, 80; Huyler 211 ; A. & L. T. Co. v. Holthonse, 7 Ind.
v. Company, 40 N. J. Eq. 392; People v. 59; State v. Bank, 13 Smeads&M. (Miss.)
Company, 60 How. Pr. 82 ; People v. Com- 569 ; Chicago Life Ins. Co. v. Needles,
pany, 130 111. 268; State*;. Standard Oil 113 U. S. 574.
Co." 49 O. St. 137; People v. Company, 6 People v. Bank, 12 Mich. 526; C. M.
121 N. Y. 582 ; see also People v. Cham- L. & I. Ass'n v. Hunt, 127 111. 257 ; Denike
v. Company, 80 N. Y. 599.
160
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 116
comfort of society, but the proper limit in its bearing upon charter
rights and privileges of private corporations for public uses
would seem to be this : That the legislature may at all times regu-
late the exercise of the corporate franchises by general laws passed
in good faith for the legitimate ends contemplated by State police
power; that is, for peace, good order, health, comfort, and welfare
of society ; but it cannot under the color of such laws destroy or
impair the franchises itself, or any of the rights or powers which
are essential to the exercise of it. 1
After the decision of the United States Supreme Court in Dart-
mouth College v. Woodward, 2 that court proceeded to enunciate
the doctrine that in the exercise of what is termed " police power,"
the several States might pass laws as a valid exercise of such
powers when otherwise they would be forbidden to do so under
Section 10, Article 1, of the Constitution of the United States,
which forbids the impairing of the obligations of contracts by
means of laws enacted by them.
The police power arises primarily from the nature of the social
contract, just as when each person upon becoming a member of a
society must of necessity relinquish some of the rights and priv-
ileges which, as an individual and considered alone, he might
retain. The Supreme Court of Massachusetts in Commonwealth
v. Alger 3 says : " All property is subject to such reasonable re-
strictions and regulations established by law as the legislature
under the governing and controlling power vested in them by the
Constitution may think necessary and expedient."
In Gibbons v. Ogden 4 the United States Supreme Court held
that the police power is lodged with the several States. In Prov-
idence Bank v. Billings 5 the court took another step forward, and
held that the abandonment on the part of the State of its power of
regulation in this regard ought never to be presumed in any case
where the purpose of the State to abandon it does not clearly appear.
In the License Cases 6 the court held that, in the exercise of its
police power, a State may pass quarantine and sanitary laws damag-
ing and even destroying property in some cases. In Bartemeyer
v. Iowa 7 the court held that a State law prohibiting the manufac-
1 V. W. B. It. It. Co. v. Bowers, 4 IIous- * 9 Wheat. 1.
ton, Del. 506. 6 4 Patera, 514.
2 4 Wheat. 518. 6 5 Boward, 404.
3 7 Cuah. 84. i 18 Wal. 138.
11 l.ll
§ 116 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
ture and sale of intoxicating liquors was a valid exercise of the
police power. In Beer Company v. Massachusetts 2 the court held
that as a measure of police regulation, looking to the preservation
of public morals, a State law prohibiting the manufacture and sale
of intoxicating liquors is not repugnant to any clause of the Con-
stitution of the United States.
In Mugler v. Kansas 2 it was held that a State may absolutely
prohibit the manufacture and sale of intoxicating liquors as a
beverage, and may declare places where such liquors are manufac-
tured or sold to be nuisances, and may authorize the destruction of
such liquors found therein, and of all property used in keeping and
manufacturing such nuisances. Such a statute is valid as to such
liquors lawfully manufactured before the enactment of the statute,
and although it greatly deteriorates the value of the property law-
fully used in such manufacture before the enactment of the statute.
In Munn v. Illinois 3 it was held that when the owner of property
devotes it to a use in which the public has an interest, he in effect
grants to the public an interest in such use, and must to the
extent of that interest submit to be controlled by the public for
the common good as long as he maintains the use.
In Fertilizing Company v. Hyde Park 4 the right of State
authorities to compel the removal of a bone fertilizing business
from a location near the village to a point farther removed, was
held to be valid as an exercise of the police power.
In the Slaughter House Cases 5 the court held that the power
of State legislatures to make a contract of such a character that
under the provisions of the Constitution it cannot be modified or
abrogated does not extend to subjects affecting public health and
public morals, so as to limit the further exercise of legislative
power over those subjects, to the prejudice of the general welfare.
To summarize briefly the general doctrine of the federal
Supreme Court on this subject, the same may be done by present-
ing the following abstract propositions :
(1) Laws for the welfare and safety of a community being
essential to the existence of every State, it cannot be supposed to
have been within the intention of the original thirteen States to
limit this power by assenting to the Federal Constitution. 6
i 97 U.S. 25. 5 HI U. S. 746.
2 123 U. S. 623. 6 Louisville & N. K. Co. v. Kentucky,
» 94 U.S. 113. 161 U. S. 677; 40 L. E. 849.
* 97 U. S. 659.
162
CHAP. V.] LEGISLATIVE CONTROL OYER DOMESTIC CORPORATIONS. § 116
(2) Generally speaking, the extent to which a State can
regulate the business or affairs of a corporation depends upon
the nature of the business — whether it affects the public closely
or remotely. If it is of such a character or magnitude that the
public are directly interested in its proper management, then it
falls within the proper sphere of legislative control. 1
(3) Being an inherent right as well as a duty, the legislature
may pass enactments looking towards the safety of life and prop-
erty, and general laws of this nature are a legitimate exercise of
the " police power." Thus it may compel railroads to fence tracks,
maintain cattle guards, put up signboards at crossings, construct
viaducts, require all trains to stop at intersections of railroads, etc. 2
(4) Laws intended to prevent or remove nuisances are clearly
within the " police power " of the State. 3
(5) A State may pass laws for the protection of its inhabitants
against the evils of intemperance, even though existing contracts
be affected thereby. 4
(6) Laws regulating the employment of persons of a certain
age in manufactories are a valid exercise of the general power of
the State to enact laws to secure the health and education of
the community. 5
(7) A State may by statute protect the interest of employees
when the common law affords no protection ; as for example,
a law providing that all railroad companies shall be liable for
wages due to day laborers employed by contractors engaged
to construct the company's railroad and works was held to be
valid. 6
(8) A State may by general laws regulate the use and dis-
position of property within its jurisdiction, although existing
incorporated companies be thereby affected. 7
(9) A State may pass laws for the protection of the morals
1 Munn v. Illinois, 94 U. S. 113 ; 24 28 L. E. 629 ; Mugler v. Kansas, 123 U. S.
L. E. 77; Pearsall v. Company, 161 U. S. 623.
646; 40 L. E. 838. 5 Knoxville Iron Co. v. Harbison, 183
»' Reid v. Colorado, 187 U. S. 137; 47 U. S. 13; 46 L. E. 55.
L. E. 108; Smith v. Company, 181 U. S. 6 Knoxville Iron Co. v. Harbison, 183
248- 45 L. E. 847. U. S. 13 ; 46 L. E. 55; Butchers' Union,
3 ' Slaughter House Cases, 16 Wall. 36; etc. v. Company, 111 U. S. 746; 28 L. E.
21 L. E. 394. 585 ; Dent v. West Virginia, 129 V. S. 114 j
4 Reymann Brewing Co. v. Brister, 32 L. E. 623; Iloldcn r. Hardy, 169 U. S.
179 U. S. 445; 45 L. E. 269; Rhodes v. 366; 42 L. E. 780.
State of Iowa, 170 U. S. 412; 42 L. E. 7 Budd v. New York, 143 U. S. 517;
1088; Foster v. Kansas, 112 U. S. 201; 36 L. E. 247.
1G3
§ 118 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
of its citizens, even though vested corporate rights be thereby
affected. 1
§ 117. Legislative Investigation into Corporate Affairs. — The
statutes of California, Michigan, Minnesota, North Dakota, Okla-
homa, South Dakota, and Wisconsin contain express provisions
for the appointment of legislative committees to examine into
the affairs of corporations organized under their laws. The pro-
visions of the South Dakota act may be quoted as exemplifying
the nature of such statutory provision. It reads as follows :
"The legislative assembly, or either branch thereof, may examine
into the affairs and condition of any corporation in this State at all
times ; and for that purpose any committee appointed by the said
assembly, or either branch thereof, may administer all necessary
oaths to the directors, officers, and stockholders of such corporation,
and may examine them on oath in relation to the affairs and con-
ditions thereof ; and may examine the safes, books, papers, and docu-
ments belonging to such corporation, or pertaining to its affairs and
condition, and compel the production of all keys, books, papers, and
documents by summary process, to be issued on application to any
circuit court or any judge thereof, under such rules and regulations as
the court may prescribe." 2
Such an inquiry as is authorized by the statutes just referred to
has been held not to constitute a judicial act, and is therefore con-
sidered a valid exercise of legislative powers. 3 On this particular
subject the Supreme Court of Massachusetts spoke as follows :
" The inquiry into the affairs or defaults of a corporation with a
view to continue or discontinue it, is not a judicial act. No issue is
framed. No decree or judgment is passed. No forfeiture is adjudged.
No fine or imprisonment is imposed. But an inquiry is had in such
form as is deemed most wise and expedient, with a view to ascertain-
ing facts upon which to exert legislative power or to learn whether
a contingency has happened upon which legislative action is required." 4
§ 118. Legislative Requirement of Annual Reports from Corpora-
tions. — Statutes exist in thirty-three of the Commonwealths
1 Austin v. Tennessee, 179 U. S. 343; 2 Sec. 478, Rev. Civ. Code ; sec. 2970,
45 L. E. 224 ; Petit v. Minnesota, 177 U. S. Comp. L.
164; 4 L. E. 716; Hanningtonr. Georgia, 3 Lothrop v. Stedman, 42 Conn. 583;
161 U. S. 299; 41 L. E. 166; L'Hote v. Fed. Cas. No. 8519.
Hew Orleans, 77 U. S. 587 ; 44 L. E. 899. 4 Crease v. Babcock, 23 Pick. 344.
164
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 119
requiring annual reports from domestic corporations. The valid-
ity of such statutes was considered by the Supreme Court in the
case of Eagle Insurance Company v. State of Ohio. 1 The court
in its opinion therein spoke as follows :
" The right of the plaintiff in error to exist as a corporation and its
authority in that capacity to conduct the particular business for which
it was created were granted subject to the condition that the privileges
and franchises conferred upon it should not be abused or so employed
as to defeat the ends for which it was established, and that when so
abused or misemployed they might be withdrawn or reclaimed by the
State in such way and by such modes of procedure as were con-
sistent with law. Although no such condition is expressed in the
plaintiff's charter, it is implied in every grant of corporate existence.
Equally implied in our judgment is the condition that the corporation
shall be subject to such reasonable regulations in respect to the general
conduct of its powers as the legislature may from time to time pre-
scribe which do not materially interfere with or obstruct the sub-
stantial enjoyment of the privileges the State has granted only to
secure the ends for which the corporation was created. If this con-
dition be not implied, then the creation of corporations with rights
and privileges which do not belong to individual citizens may become
dangerous to the public welfare through the ignorance or misconduct or
fraud of those to whose management their affairs are entrusted. It
would be extraordinary for the legislative department of a govern-
ment, charged with the duty of enacting such laws as may promote
the health or morals or prosperity of the people might not when
unrestrained by constitutional limitations upon its authority, provide
by reasonable regulations against the misuse of special corporate
privileges which it has granted, and which could not except by its
sanction, express or implied, have been exercised at all."
The conclusion of the court in the case just referred to was that
the charter of the corporation did not exempt it from obligations
to comply with the subsequently established police regulations of
the State, requiring certain corporations to make annual state-
ments of their condition.
§ 119. Inspection of Corporate Books. — In all the Common-
wealths but five statutes have been enacted requiring the keeping
of certain corporate books and giving to stockholders, and some-
times to creditors as well, the right to inspect the same. At
l 153 U. S. 446.
1G5
§ 119 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
common law stockholders had the right to inspect books and
papers of the corporation at reasonable times and for a proper
purpose. 1 Creditors had no such common law rights.
On this subject the New York Court of Appeals in the Matter
of Steinway 2 spoke as follows :
" The elementary works unite in holding that the incorporator has
the right in question and that mandamus is the proper remedy. We
think that according to the decided weight of authority a stockholder
has the right at common law to inspect the books of his corporation
at a proper time and place and for a proper purpose, and that if this
right is refused by the officers in charge, writ of mandamus may issue
in the sound discretion of the court with suitable safeguards to
protect the interests of all concerned. It should not be issued to aid
a blackmailer, nor withheld simply because the interest of the stock-
holder is small, but the court should proceed cautiously and dis-
creetly, according to the facts of the particular case. To the extent,
however, that an absolute right is conferred by statute, nothing is
left to the discretion of the court but the writ to issue as a matter
of course, although even then doubtless due precautions may be taken
as to time and place so as to prevent interruption of business, or
other serious inconvenience. We do not think, however, that the
statute now in force in this State is exclusive, or that it has abridged
the common law right of stockholders with reference to the examina-
tion of the corporate books. By enabling the stockholder to get some
information in a new way, it did not impliedly repeal the common
law rule, which enabled him to get other information in another way,
for the courts do not hold the common law to be repealed by impli-
cation unless the intention is obvious. By simply providing an addi-
tional remedy the existing remedy was not taken away. The statute
merely strengthens the common law rule with reference to one part
thereof, and left the remainder intact."
The right of inspection of corporate books is not the inspection
of the idle, the impertinent, or the curious, but an inspection with
a laudable object to accomplish, or a real and actual interest upon
which is predicated the request for information disclosed by the
books. 3
1 People v. Eadie, 63 Hun, 320 ; 133 2 159 N. Y. 250.
N. Y. 573 ; Burham v. Company, 76 Cal. 3 State ex rel. Bourdette v. Company,
24; 17 Pac. 940; Phceuix Iron Co. v. Com- 49 La. Ann. 1556 ; 22 So. 815.
monwealth, 113 Pa. St. 563; Hemingway
v. Hemingway, 58 Conn. 443.
. 166
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 120
The purpose of requiring a copy of stock books and books of
account at the corporation's domiciliary office is to protect the
rights of stockholders and to aid the State in exercising its visito-
rial powers, or to enable creditors or stockholders to ascertain the
number of shares standing in the names of each so as to levy
execution and attachment thereon. The mere fact that a domestic
corporation has kept its books in another State when required by
law to keep its books at its domiciliary office, is not a ground for
dissolving the corporation when parties entitled to inspection of
such books have never been refused the right to inspect the same
at the domiciliary office. 1
§120. Anti-Trust Legislation. — The term "trust" includes
any form of combination or combinations between corporations or
between corporations and individuals for the purpose of regulating
production and repressing competition by means of the power
thus centralized. 2
Under the common law agreements, pools, trusts, or combina-
tions between persons or corporations looking towards any absolute
restraint of trade or to regulate prices or to promote monopolies,
were against public policy, and as such were unlawful and void.
But when the question of public policy is at issue, certain matters
should be noted.
It has been well said " that the public policy of the State varies
from time to time. It is not to be measured by the private com-
bination or combinations of the persons who happen to be exer-
cising judicial functions, but by reference to the enactment of the
law-making power, and in the absence of them to the decisions of
the courts. When, however, the legislature has spoken upon a
particular subject and within the limits of its constitutional
powers, its utterance is the public policy of the State." 3
Congress dealt with illegal trade combinations in relation to
interstate commerce as early as 1887, when it passed the Inter-
State Commerce Act, and later on, July 2, 1890, it passed what is
known as the " Sherman Anti-Trust Act." Since that time thirty-
three of the States have passed more or less stringent anti-trust
acts. All this legislation has been framed with the same purpose.
1 Ribling Stock Co. v. People, 147 111. 3 MacGinniss v. Company (Mont.), 75
234 ; 35 X. E. 008. Pac. 89 ; United States v. Association, 166
2 MacGinniss v. Company (Mont.), 75 U. S. 290; 41 L. E. 1007.
Pac. 89.
L67
§ 121 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I,
In some of these acts an arbitrary distinction is made between
dealers and producers. Such provisions have under certain cir-
cumstances been declared to be " class legislation," and as such
are invalid under the Fourteenth Amendment to the Federal
Constitution.
Under this principle the anti-trust acts of Illinois and Texas
have recently been declared to be unconstitutional. 1
In the note below will be found the dates of the passage of the
earlier anti-trust acts in the several States. 2
§ 121. Regulation of Internal Affairs. — In many of the States
the regulation of the internal affairs of corporations has been
largely delegated by statute to the corporations themselves. Such
is the case in Alabama, Connecticut, Delaware, Iowa, Maryland,
Massachusetts, New Jersey, Nebraska, New York, North Carolina,
South Carolina, Tennessee, Utah, Virginia, West Virginia, and
Wisconsin.
In other of the Commonwealths, without express provision of
law permitting the same, State officials allow clauses for the
regulation of the internal affairs of the corporation to be in-
corporated in articles of incorporation filed with them. As an
1 Connolly v. Union S. P. Co., 184
U. S. 540 ; 46 L. E. 679 ; State v. Shippers
& Compress Warehouse Co., 95 Texas, 603;
69 S. W. 58; Ford v. Association, 155 111.
166; 39 N. E. 651 ; Harding v. Company,
182 111. 551 ; 55 N. E. 577. See also
Northern Securities Co. v. United States,
193 U. S. 197.
2 The Federal Anti-Trust Act commonly
known as "the Sherman Act" was ap-
proved July 2, 1890. The following is a
list of the States wherein anti-trust legis-
lation of a more or less comprehensive
character was passed, together with the
date the same went into effect :
Alabama, Insurance Act, Feb. 18, 1897;
Arkansas, Anti-Trust Act, Mar. 16, 1897 ;
California, Cattle Trust Act, Feb. 27,1893 ;
Delaware, Life Insurance Act, Feb. 15,
1891 ; Florida, Trade in Cattle, June 11,
1 897 ; Georgia, Anti-Monopoly Act, Dec. 23,
1896 ; Illinois, Prohibitory Pools, Trusts,
and Combinations, Original Act, July 11,
1891, amended June 10, 1897; Indiana,
Mar. 5, 1897, General Anti-Trust; Iowa,
General Anti-Trust, May 6, 1890 ; Kansas,
Mar. 8, 1897, defines a trust in five sec-
1G8
tions ; Kentucky, General, May 20, 1890;
Louisiana, General went into effect July 7,
1892 ; Maine, General, Mar. 7, 1889 ; Mich-
igan, became a law July 1, 1889; Minne-
sota, April 20, 1891 ; Mississippi, Part of
the Code of the General St. Laws of Mis-
sissippi adopted in 1892, and amended
March 11, 1896; Missouri, Original Act,
April 2, 1891, revised under Act of
April 11, 1895, and revised again March 24,
1897 ; Montana, Annotated Code of 1895,
sees. 321-325 ; Nebraska, Act of April 8,
1897; New Mexico, Feb. 4, 1891 ; New
York, May 7, 1897 ; North Carolina,
March 11, 1889; North Dakota, March 9,
1897; Oklahoma, Dec. 25, 1890; South
Carolina, Feb. 25, 1897; South Dakota,
March, 1, 1897 ; Tennessee, April 6, 1889
amended March 30, 1891 ; Texas, Origi-
nal Act, March 30, 1889, amended April 30,
1895 ; Utah, March 9, 1896 ; Washington,
Con., Art. XII sec. 22, and also Act of
March 21, 1895, Session Laws, 1895,
chap, cxlviii. ; Wisconsin, April 27, 1897.
(See " Biography of Commercial Trusts,"
by Wm. H. Winters, Librarian of the
N. Y. Law Institute in 1890.)
CHAP. V.J LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 122
example of the statutes above referred to, attention is called to the
provisions of the New Jersey Act, which reads as follows :
" The certificate of incorporation may also contain any provision
which the incorporators may choose to insert for the regulation of the
business and for the conduct of the affairs of the corporation, and any
provision creating, defining, limiting, and regulating the powers of the
corporation, the directors, and the stockholders or any class or classes
of stockholders." 1 '
Without such statutory authority State officials are unquestion-
ably justified in refusing to allow articles of incorporation to be
filed containing such clauses as are here referred to. 2
The Court of Appeals of New York in an early case, commenting
upon the legal effect of the insertion of provisions in the articles
not authorized by the incorporation act, spoke as follows :
" The want of authority for this provision would not affect the
validity of the corporation. The articles must contain the statements
affirmatively required by the act, because those statements constitute
the conditions precedent to the right of the company to become
incorporated. If unauthorized provisions are added, all the acts done
pursuant to such provisions will be void, but until the company is
proceeded against for abuse of its franchises its rights as a corporation
will not be affected by such unauthorized provisions." 3
The more modern view in regard to such matters is that where
State officials are either expressly or impliedly empowered to pass
upon the validity of articles of incorporation submitted to them
with a view to filing in their office, the approval of such State
official once obtained renders such clauses as are here referred to
valid as against all but the State, even when their insertion in the
articles is not expressly authorized. 4
§ 122. Liability of Stockholders for Debts of the Corporation. —
The general subject of stockholders' liability may be best dis-
cussed under three heads: (a) Liability for unpaid stock subscrip-
tions; (5) Double liability as established by statute in certain
1 New Jersey Session Laws of 1896, 8 Eastern Plank Road Co. v. Vaughan,
chap. 185, sec. 8, subdivision 7. 14 N. Y. . r >. r >l.
2 In re Stevedores' Beneficial Ass'n, 4 See ante, sec. 6.
14 Pliila. Pa. 130; see ante, sec. 5.
1G9
§122 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
States ; (c) Special liability as established by statute in certain
States.
(a) Liability for unpaid stock subscription. The statutes which
exist in nearly every Commonwealth in the Union making stock-
holders liable for unpaid stock subscriptions are merely declaratory
of the common law. 1 The liability of stockholders of corporations
for unpaid stock subscriptions with reference to creditors is often-
times confused with their liability to the corporation itself. The
latter liability is directory and the right to enforce it may be
waived by the corporation. In the absence of such waiver the
subscribing stockholders are bound by the contract of subscription
to pay the full value of their shares in such instalments and in
such manner as may be prescribed by the laws of the State or by-
laws of the corporation. In such cases the liability may be enforced
by the ordinary remedies. The corporation usually has a lien
upon the stock, and may sell the same in satisfaction of the debt,
and may collect the deficiency, if any, by action against the delin-
quent stockholders.
On the other hand, as the corporation is a legal entity distinct
from the stockholders who constitute it, no debts or obligations
incurred by it can, in the absence of a direct statutory provision,
impose any lawful liability upon the stockholders. But in equity,
under what is termed the " trust fund doctrine," the debts of the
stockholders to the corporation are regarded as equitable assets of
the corporation and may be reached by the creditors if the legal
assets prove insufficient. This trust fund doctrine derives its main
support at the present time from the Supreme Court of the United
States, but it has secured recognition in many jurisdictions.
As stated in Sanger v. Upton, 2 " The capital stock of an incor-
porated company is a fund set apart for payment of its debts. It
is publicly pledged to those who deal with the corporation for their
security. Unpaid stock is as much a part of this pledge, and as
much a part of the assets of the company as the cash which has
been paid in.
" The stockholders thus become individually liable for the debts
of the corporation, to the extent of the unpaid balance on their
stock. They are also in some States subject to other statutory
liabilities hereinafter set forth. The statutory remedy is usually
by equitable action, but in some States by an action at law.
1 Taylor v. Cummings, 127 Fed. 108. 2 91 U. S. 60.
170
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 122
Under nearly all such statutory provisions, the liability of stock-
holders is intended merely as a secondary security for creditors
in case the assets of the corporation are insufficient to meet its
debts, but in special cases stockholders may be made parties
defendant in an original action, and if they are obliged to pay any
debt of the corporation they may bring an action against the cor'
poration for the amount so paid, and are usually entitled also
to exact contribution from the other stockholders."'
The only other questions which are of practical importance in
connection with the present subject may be restricted to two classes :
one relates to the liability for unpaid stock subscriptions to cred-
itors as between the transferor and the transferee, and the other re-
lates to the liability to creditors of pledgees and trustees of stock.
With reference to the first question it may be said that the
question depends upon the law of the State in which the stock-
holder may reside and in which action may be brought. 1 In most
States transferors of stock are not subject to stockholders' liability,
and are thereafter released from liability for assessments made by
the corporation. 2
In the absence of statutory provision to the contrary, a bona fide
transfer of stock perfected on the books of the corporation, dis-
charges the transferor from any further liability either to the
corporation or to creditors for calls made after the transfer and for
calls made prior thereto, and the transferee takes his place and
becomes liable for calls made after the transfer but not for calls
made before. 3 The distinction which clearly obtains between one
who holds his stock by transfer and one who is an original sub-
scriber to the stock of the corporation, must be carefully noted.
The former may in good faith discharge himself from liability for
unpaid instalments by due transfer of his shares, while the latter
cannot obtain immunity in this way. The subscriptions for stock
and the acceptance of a certificate for the shares constitute a con-
tract between the subscriber and the corporation by which he
engages to pay the remaining instalments on demand from the
corporation. From this agreement the subscriber cannot recede
without the consent of the corporation. 4 In some of the States
1 Glenn v. Hunt, 120 Mo. 330; 25 also Sigua Iron Co. v. Brown, 271 N. Y.
8. W. 181. 488; 64 N. E. 194.
2 M L. T. Co. v. Ward, 13 Ohio, 120. 4 Hood v. McNaughton, 54 N. J. Law,
3 Pullman v. Upton, 96 U. S. 328 ; see 425; 24 Atl. 497.
171
§ 122 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
this matter is regulated by statute. In Maine, Massachusetts,
North Carolina, West Virginia, the original subscriber alone is
liable. In Illinois, Iowa, Nebraska, New Hampshire, Rhode
Island, and Virginia the original subscriber remains liable as well
as the transferee. 1 In Georgia, Ohio, Tennessee, and Oregon the
original subscriber is liable upon default in payment by the trans-
feree. In Mississippi and Wisconsin the original subscriber
remains liable for the debts contracted before his ownership or
those contracted thereafter. In California, Indiana, Kentucky,
Maryland, Michigan, Minnesota, New York, and Tennessee the
original subscriber remains liable for the debts of the corporation
contracted during his ownership and not for debts contracted after
such transfer. In Alabama, Arizona, Arkansas, Colorado, Con-
necticut, Delaware, District of Columbia, Florida, Idaho, Kansas,
Louisiana, Massachusetts, Minnesota, Missouri, Montana, New
Jersey, North Dakota, Oklahoma, Pennsylvania, South Carolina,
South Dakota, Texas, Utah, Vermont, Washington, and Wyoming
upon the transfer of stock the transferee becomes liable for all
debts contracted both before and after transfer, and the transferor
is discharged in all these States as to debts contracted after such
transfer, and in some of these States from liability for debts con-
tracted before such transfer as well. 2
Turning now to the question of liability of pledgees and trustees
of stock, it may be said that unless protected by statute, as is the
case in New York, Missouri, California, and Michigan, the pre-
vailing rule seems to be that pledgees and trustees of stock are
liable thereon to the extent of the unpaid portion of the stock held
by them. 3
On the other hand the Supreme Court of the United States has
enunciated a different doctrine to the effect that a pledgee of stock
taken as collateral security or as a loan is not subject to personal
liability for the debts of the corporation imposed on other share-
holders unless he has either become the owner of the shares in fact
or has held himself out to be the owner, and thereby estopped him-
self from denying his personal liability as such. 4
i White v. Greene (Iowa), 70 N. W. 65 S. W. 630 ; Germania National Bank
182; Sprague v. Bank, 172 111. 149; 50 v. Case, 99 U. S. 628; McMahon v. Macy,
N. E. 190. 51 N. Y. 155.
2 Van Cott v. Van Brunt, 82 N. Y. 535. * Rankin v. F. I. T. & D. Co., 189
3 Hole v. Walker, 31 la. 344; Union U. S. 242.
Savings Ass'n v. Seligman, 92 Mo. 635 ;
172
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. ^1-2
(b) Double liability as established by statute in certain States.
What is known as the " double liability " of stockholders for debts
of the corporation which existed formerly in a large number of
States, has now been so far removed by statute that it exists at
the present time in the case of ordinary business corporations in
only two States, to wit, California and Minnesota. 1 In the last-
mentioned State it does not exist in the case of corporations
organized exclusively for the purpose of carrying on a manufac-
turing, mining, or mechanical business. 2
(c) Special liability as established by statute in certain States.
Stockholders at common law were not liable for debts of the
corporation beyond their liability for unpaid stock subscriptions. 8
Personal responsibility of stockholders is inconsistent with the
conception of corporate liability at common law, and for this
reason, if it exists at all, must rest upon some positive statute. 4
The particular liability under consideration here arises by
reason of the existence of statutory provisions that may be stated
as follows : Liability of incorporators as partners through failure
to legally organize the corporation. In Florida, Iowa, Minnesota,
Nebraska, and Wisconsin stockholders are individually liable by
statute for failure to comply with certain prescribed regulations in
regard to organization and publicity. 5 In a few of the States the
courts construe the liability of incorporators where they have failed
to legally organize the corporation, not as partners at all. This
on the ground that no such relationship or liability is contemplated
by the incorporators, and that the creditors' only remedy is against
the officers and agents who actually made the contract. 6
In Indiana, Massachusetts, Michigan, New York, North Dakota,
1 The liability may possibly still exist N. J. Law, 52 ; Ciar v. Iglehart, 3 O. St.
in Indiana and Kansas ; see pages 306, 321. 457.
2 Sacramento Bank v. Pacific Bank, 5 Kaiser v. Bank, 56 Iowa, 104; 8 N. \V.
124 Cal. 147; 56 Pac. 787; Danielson v. 772; Fuller v. Rowe, 57 N. Y. 23 ; Connor
Yoakum, 116 Cal. 382 ; 48 Pac. 322 ; N. H. v. Abbot, 35 Ark. 366 ; Johnson v. Corser,
H. N. Co. v. Company, 142 Mass. 349 ; 7 34 Minn. 355 ; 25 N. W. 799 ; Hurt v.
N E 773 • Bates v. Day, 198 Pa. St. 513 ; Salisbury, 55 Mo. 310 ; Bergeron v. Hobbs,
48 Atl. 407 ; Whitman v. Bank, 176 U. S. 96 Wis. 641 ; 71 N. W. 1056; Clegg v.
559; Willis v. Mabon, 48 Minn. 140; Company, 61 Iowa, 121; 15 N. W. 365;
50 N. W. 1110 ; Marshall v. Sherman, 148 Slocum v. Head, 105 Wis. 431 : 81 N. W.
N Y. 9 ; 42 N. E. 419 ; Tuttle v. National 673.
Bank 161 111. 497; 44 N. E. 984. ,; Ward v. Brigham, 127 Mass. 24;
a Toner v. Faulkerson, 125 Ind. 224; Rutherford v. Hill, 22 Ore. 218; 25 Pac
25 N E 218- Hood v. McNaughton, 54 546; Canfield v. Gregory, 66 Conn. 9; 33
N. J. L. 425 ; 24 Atl. 497. Atl. 536 ; Bank v. Hall, 35 O. St. 158.
* S L. C N. Bank v. Hendrickson, 40
173
§ 123 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
Oklahoma, Pennsylvania, South Dakota, Tennessee, and Wiscon-
sin they are liable for the wages of employees of the corporation.
In New York, in what is known as full liability corporations,
stockholders are liable for debts of the corporation in full. In
Arkansas, Delaware, Iowa, Maine, Michigan, Minnesota, New
Hampshire, New Jersey, North Carolina, Vermont, and West
Virginia stockholders are individually liable to the extent of
any part of the corporate assets refunded to them respectively.
In Idaho, Minnesota, North Carolina, and South Carolina stock-
holders are individually liable for any fraud or misconduct on
their part. In Arizona, Delaware, Iowa, and Nebraska stock-
holders are personally liable for the debts of the corporation,
unless they limit this liability by provision therefor in the
charter. 1
§ 123. Statutory Liability of Directors. — With the exception
of a very limited number of States, all of the Commonwealths
have statutes, either civil or penal, imposing liability upon
directors for certain designated acts of misfeasance or non-
feasance. These statutes are diverse both in scope and charac-
ter. It will only be possible in this connection to enumerate
without discussion the several liabilities thus imposed upon
directors.
(1) For illegal declaration of dividends. 2
(2) For illegal withdrawal of capital stock. 3
(3) For making false reports, or keeping false books of
account, or making false representations. 4
1 Van Pelt v. Gardner, 54 Neb. 701 ; Pittsburg, etc. R. R. Co. v. Allegheny Co.,
75 N. W. 974. 63 Pa. St. 126.
2 Such liability exists in Alaska, Ar- 3 Such liability exists in Alaska, Cali-
kansas, California, Colorado, Connecticut, fornia, Connecticut, Georgia, Idaho, Iowa,
Delaware, District of Columbia, Florida, Mississippi, Montana, Nevada, New Jersey,
Georgia, Idaho, Illinois, Indiana, Iowa, New Mexico, North Carolina, Oklahoma,
Kansas, Kentucky, Maine, Maryland, Mas- Oregon, South Dakota, Washington, and
sachusetts, Michigan, Minnesota, Missis- West Virginia.
sippi, Missouri, Montana, Nebraska, 4 Such liability exists in Delaware,
Nevada, New Hampshire, New Mexico, District of Columbia, Indiana, Kentucky,
New Jersey, New York, North Carolina, Montana, Nevada, New Hampshire, New
North Dakota, Ohio, Oklahoma, Ore- York, Rhode Island, South Carolina, Ten-
gon, Pennsylvania, Rhode Island, South nessee, and Virginia. See Huntington v.
Dakota, Tennessee, Texas, Vermont, Vir- Attrill, 118 N. Y. 365; 23 N. E. 544;
ginia, Washington, West Virginia, Wis- Gidding v. Holter, 19 Mont. 263; 48 Pac.
consin, and Wyoming. See Dykman v. 8; Felker v. Company, 148 Mass 226; 19
Keeney, 160 N. Y. 677; 54 N. E. 1090; N. E 225; Githers v, Clarke, 158 Pa. St.
Chamberlain v. Company, 118 Mass. 552; 616; 28 Atl. 232; Thompson Houston
174
CHAP. V.J LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 123
(4) For failure to file annual reports. 1
(5) For violation of express statutes. 2
(6) For authorizing the contraction of debts in excess of the
amount limited by law. 3
(7) For contracting debts before statutory requirements, such
as subscriptions for stock, either in whole or in part, publication
of articles, etc., have been complied with. 4
(8) For failure to file certificates as to reduction of capital
stock. 5
(9) For false oaths to articles of incorporation. 6
(10) For making loans to directors. 7
(11) For making loans to stockholders. 8
(12) For loss of funds through negligence. 9
(13) For failure to display name or itemized accounts at
domiciliary office. 10
(14) For failure to allow inspection of books. 11
Electric Co. v. Murray, 60 N. J. L. 20;
37 Atl. 443.
1 Such liability exists in Colorado,
Michigan, Montana, New Hampshire, New-
York, and Oklahoma. See Garrison v.
Howe, IT N. Y. 458; Van Etten v. Eatou,
19 Mich. 187; Shanklin v. Gray, 111 Cal.
88 ; 43 l'ac. 399 , Cincinnati Cooperage Co.
v. O'Keeffe, 120 N. Y. 603; 24 N. E. 993 ;
Wallace w. Walsh, 125 N. Y. 26 ; 25 N. E.
1076 ; Glenn Falls Paper Co. v. White, 18
Hun (N. Y.), 214; Bolen v. Crosby, 49
N. Y. 183 ; Tabor v. Bank, 62 Fed. 383 ; 10
C. ('. A. 429
2 Such liability exists in Arkansas,
Idaho, Indiana, Kentucky, Michigan,
North Dakota, and South Dakota. See
Patterson v. Stewart, 41 Minn. 84 ; 42
N. W. 926 ; Loverin v. McLaughlin, 161
111. 417 ; 44 N. E. 99 ; Clow v. Brown, 150
Ind. 185; 48 N. E. 1034; 49 N. E. 1057;
Gunther v. Company, 21 Ky. L. Hep. 655 ;
52 S. W. 931.
'■'■ Such liability exists in California,
Illinois, Idaho, Mississippi, Montana, New
Hampshire, New Mexico, North Dakota,
Oklahoma, Rhode Island, Tennessee, Ver-
mont, and Wyoming. See Tradesmen
Pub. Co. v. Company, 95 Tenn. 634; 32
S. W. 1097 ; Lewis v. Montgomery, 145
111. 30 ; 33 N. E. 880 ; Horuor v. Henning,
93 U. S. 228.
4 Such liability exists in Illinois, Ohio,
Vermont, and Wisconsin. See Kent v.
Clark, 181 111. 237 ; 54 N. E. 967; Clow v.
Brown, 150 Ind. 185 ; 48 N. E. 1034; 49
N. E. 1057 ; Hequembourg v. Edwards,
155 Mo. 514; 55 S. W. 490; Loverin v.
McLaughlin, 161 111. 417 ; 44 N. E. 99.
5 Such liability exists in Indiana, New
Jersey, and North Carolina.
6 Such liability exists in Massachusetts.
7 Such liability exists in Massachusetts
and New York. See Thacher v. King,
156 Mass. 490; 31 N. E. 648; Connecticut
River Bank v. Fiske, 62 N. II. 178; Wit-
ters v. Sowles, 31 Fed. 1.
8 Such liability exists in District of
Columbia, Mississippi, Missouri, New
Hampshire, New York, Oklahoma, Rhode
Island, and Tennessee. See Working-
men's Banking Co. v. Rautenberg, 103
111. 460; Bank Commissioners v. Bank of
Buffalo, 6 Paige (N. Y.), 497.
9 Such liability exists in Minnesota.
See Horn Silver Mining Co. v. Ryan, 42
Minn. 196 ; 44 N. W. 56; M. F. N. Hank
v. Harper, 61 Minn. 375; 63 N. W. 1079.
"| Such liability exists in California
and New Jersey. See Eyre v. Harmon,
92 Cal. 580; 28 Pac. 779 ; Hall v. Toman,
119 Cal. 35; 51 l'ac. 546.
ii Such liability exists in New Jersey.
175
5
§124 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
(15) For embezzlement of officers. 1
(16) For failure to make certificate of payment of capital
stock. 2
(17) For making false appraisal as to value of property taken
an exchange for corporate stock. 3
(18) For not producing list of stockholders at the annual
•election of directors. 4
(19) For permitting an illegal issue of stock or bonds.
(20) For making prohibited transfers of property. 6
(21) For issuing stock as full paid when less than its par
value is paid thereon. 7
§ 124. Extension of Corporate Existence. — In order to extend
corporate existence special legislative action is necessary. 8 In
nearly all of the States statutes exist providing that for a period
of three years after the term of existence limited by its charter
has expired, the corporation shall continue to exist for the pur-
pose of winding up its affairs. Express power to extend cor-
porate existence is granted in twenty-five of the Commonwealths.
Where corporations are permitted under their charter to make
their term of existence perpetual, this right to extend corporate
•existence is of very little practical importance. As, however,
perpetual existence is permitted in only twenty-seven of the
States, it is a question of much practical importance in the re-
mainder. It has been held by at least one court of excellent
repute that where the power of amendment of the charter is
unlimited, even though it does not refer specifically to the right
to extend corporate existence, it may nevertheless be used for
that purpose. 10
When so extended, it must pay an organization tax if the law
1 Such liability exists in Colorado, New 5 Such liability exists in North Dakota
Mexico, and Pennsylvania. See Scott v. and New York. See Clow v. Brown, 150
Depeyster, 1 Edw. Ch. (N. Y.) 513 ; Ind. 185 ; 48 N. E. 1034.
Wallace v. Bank, 89 Tenn. 630 ; 13 S. W. 6 Such liability exists in New York.
48 ; Ouderkirk v. Bank, 119 N. Y. 263 ; 23 7 Such liability exists in North Dakota.
N. E. 875. See Schley v. Dixon, 24 Ga. 273.
2 Such liability exists in Colorado, 8 People v. Pfister, 57 Cal. 532 ; Attor-
Delaware, Maryland, New Hampshire, ney-General v. Perkin, 73 Mich. 303;
North Carolina, and Rhode Island. Smith v. Company, 58 N. J. Eq. 331;
3 Such liability exists in Connecticut. 43 Atl. 567; People v. Greene, 116 Mich.
See Hequembourg v. Edwards, 155 Mo. 505 ; 74 N. W. 714 ; Frostberg Mining Co.
514; 56 S. W. 490; F. C. T. Co. v. Floyd, v. Company, 81 Md. 28; 31 Atl. 698.
47 O. St. 525; 26 N. E. 110. 10 People v. Greene, 116 Mich. 505;
4 Such liability exists in Delaware and 74 N. W. 714.
_New Jersey.
176
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. §125
so provides, even though existence is extended under guise of an
amendment. 1
§ 125. Taxation of Domestic Corporations. — Legislative control
over domestic corporations is exercised by means of the un-
questioned right of such legislatures to impose a tax upon
their organization and annually thereafter in the form of a fran-
chise tax. The latter may be defined to be a tax levied by the
State upon the capital of a corporation in return for the privilege
of exercising its corporate powers within the limits of the State
levying such tax. On the general subject of franchise tax the
New York Court of Appeals in a recent case 2 spoke as follows :
"The system of taxation in this State is so complicated as to
invite mistakes on the part of those who are called upon to enforce
the law. In some instances the tax is laid upon property and in
others upon rights and privileges connected with the property.
There is direct taxation of real estate and of some personal property,
indirect taxation of other personal property, taxation of the capital
stock of corporations and of their franchises, taxation upon the right
of succession to the property left by decedents, and the like. . . .
" There is, first, an organization tax, payable to the State, which is
imposed but once, and is exacted for the privilege of becoming a cor-
poration. Next, there is a tax upon the real estate owned by the
corporation in this State, which is assessed the same as if it were
owned by an individual. The personal property of the corporation
is not directly taxed, but its capital stock and surplus after deduct-
ing the assessed value of its real estate and making some other
deductions, is assessed at its actual value. Finally, there is a fran-
chise tax on corporations which is payable annually to the State,
« computed upon the basis of the amount of its capital stock employed
within this State.' This is not a tax upon property, although it is
measured by the value of property, but upon the right of a corpora-
tion to exist and exercise the powers granted by its charter. These
forms of taxation do not all rest upon the same principle. The
organization tax is in the nature of a license fee for the right to
become a corporation. The tax upon real estate is a direct tax upon
real property, while the franchise tax is not laid upon property at
all, but is imposed upon the corporation for the privilege; of currying
on business in this State and exercising the corporate franchises
granted by the State. The distinction between a tax upon the prop-
i Nl. Lead Co. v. Dickinson (N. J.), a People exrel. etc. v. Knight, 174 N.Y.
57 All. 138. 475; 67 N. E. 65.
12
177
§ 126 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART 1^
erty of a corporation and a franchise tax, although well established
and of great importance, is easily overlooked, as we find from our
own experience."
"With reference to organization taxes there can be no question
raised as to the constitutionality of such taxation. 1
The constitutionality of franchise taxes being imposed upon
the franchise as a species of property is clearly within the con-
stitutional powers of State legislatures. 2 In all of the States and
Territories, with the exception of Alaska, Arkansas, District of
Columbia, Georgia, Indian Territory, and Oklahoma, graduated
organization taxes are imposed upon domestic corporations.
With respect to annual franchise taxes these are imposed only
in the States of Alabama, Colorado, Delaware, Maine, Massachu-
setts, New Jersey, New York, North Carolina, Ohio, Oregon,
Pennsylvania, South Carolina, Texas, Vermont, Washington, and
West Virginia. In Alabama, Colorado, Maine, North Carolina,
Oregon, South Carolina, Texas, Vermont, Virginia, Washington,
and West Virginia the tax is levied upon the total amount of
authorized capital stock, irrespective of the amount that may
have been issued and outstanding.
In Delaware, Massachusetts, New Jersey, and Ohio the tax
is graded according to the amount of capital stock issued and
outstanding. In New York the tax is determined largely by the
dividends on the par value of the amount of capital stock
authorized. It is also graded on the amount of capital stock
employed within the State.
§ 126. Regulation of the Right of Consolidation. — To accomplish
a valid consolidation of two corporations tbat are organized under
the laws of the same or of different States, legislative authority is
necessary. It is not over-stating the matter to say that legisla-
tive authority is as necessary for the accomplishment of a valid
consolidation of existing corporations as it is to the creation of a
corporation in the first instance. 3 Any attempt, therefore, on the
1 United Horseshoe Works v. Lewis, 2 Society for Savings v. Coit, 6 Wall.
1 Abb. (U. S.) 518; Fed. Cas. No. 14365; (U. S.) 594; Tidewater Pipe Line Co v.
Combined Saw & Planer Co. v. Flournoy, Berry, 53 N. J. L. 212 ; 21 Atl. 490;
88 Va. 1029 ; 14 S. E. 976; State v. Hot- Attorney-General v. Bay State Mining
witt, 17 Mont. 41 ; 41 Pac. 1004; Hughes- Co., 99 Mass. 148.
dale Mfg. Co. v. Vanner, 12 R. I. 491 ; 3 Pearce v. Company, 22 How. (U. S.)
Jones v. Company, 21 Col. 263; 40 Pac. 441 ; A. L. & T. Co. v. Company, 157 111.
457. 641 ; 42 N. E. 153 ; Cole v. Company, 133
178
N. Y. 164 ; 30 N. E. 847.
CHAP. V.] LEGISLATIVE CONTROL OVER DOMESTIC CORPORATIONS. § 126
part of corporations to consolidate in the absence of any statute
permitting consolidation will not be recognized by the courts. 1
Where power is granted to corporations to consolidate it is usually
done by means of a general statute. Such statutes exist in a
comparatively small number of the Commonwealths, the legis-
latures of the remaining States evidently looking upon consolida-
tion as a form of a trust and therefore to be restricted. Some of
the statutes limit the right of consolidation to corporations of the
same character or engaged in the same line of business. 3 Where
the right to consolidate existed at the time the corporation was
created it can ordinarily be affected by vote of a majority of the
stockholders against the dissent of the minority. 4 However, in
the absence of such authority conferred prior to the incorporation
of a company, it has been held that consolidation cannot be
affected against the dissent of the minority stockholders. 5
When it comes to the matter of consolidation, creditors have no
right to intervene for the purpose of preventing such a consolida-
tion providing the same is undertaken under legislative authority.
The remedy of creditors in such cases is to proceed in equity with
a view to subjecting the property of the consolidated corpora-
tion to the payment of their claims. 6 Sometimes, though not
always, when a new corporation is formed by the consolidation
of a domestic corporation with a foreign corporation, it is required
to pay an organization tax, at least upon so much of the capital
stock as is represented by the capitalization of that of the consoli-
dated domestic corporation. 7
i Greenville Warehouse Press Co. v. Wis. 13 ; Mowrey v. Company, 4 Bissell,
Company, 70 Miss. 669; 13 So. 879. 78; Fed. Cas. No. 9891.
a See In re Prospect Park & Coney 6 People i>. Company, 92 N. Y. 105.
Island Railway Co., 67 N. Y. 371. See R. I. Ry. Co. v. Moffatt, 75 111. 524 ;
* Spero v. Company, 7 Ind. 369; N. D. Ry. Co. v. Company, 120 Mass. 397.
Spragne v. Company, 90 111. 174. 7 State v. Sherman, 22 O. St. 411 ; P.
5 Clearwater v. Meredith, 1 Wall. Co. v. Company, 113 U. S. 296 ; A. & U.
flj. S.) 25 ; K. & R. I. Ry. Co. v. Marsh, 17 A. L. Co. v. State, 63 Ga. 2183 ; contra.
People v. Company, 129 N. Y. 474; 29
N. E. 951.
170
§ 127 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
CHAPTER VI.
LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS.
§ 127. Extent of Legislative Power of the various Common-wealths
over Foreign Corporations. — A foreign corporation may be defined
as one created under the laws of a State, Territory, government,
or country other than that wherein it seeks to do business. 1
With some few exceptions nearly all of the Commonwealths have
enacted statutes prescribing the terms and conditions upon which
foreign corporations may carry on business within their borders.
Most of these statutes closely resemble each other in character,
and generally look to the attainment of the same end. Thus, for
example, in order to give courts of the foreign State jurisdiction
over the foreign corporation and to secure proper protection
for such of its citizens as may transact business with the latter,
the statutes prescribe that foreign corporations shall designate
an agent residing within the State upon whom service of process
upon the corporation may be served, and also designate a place
of business where it may be found. Such provisions are unques-
tionably valid. 3
Again, most of the acts require that a certified or sworn copy
of the charter of the foreign corporation shall be filed in certain
designated offices, usually with the Secretary of State and in the
local recording office of the county where its principal place of
business is to be located. The object of such enactment is to fur-
nish easily accessible evidence of the existence of the corporation,
and to protect parties dealing with it from fraud and imposition. 4
Still other States require the filing of reports enumerating the
officers, giving information relativ.e to the business to be trans-
acted within the foreign State and as to the financial condition
1 Daly v. Company, 64 Ind. 1. * Evans v. Lee, 11 Nev. 194; D. F. Co.
3 St. Clair v. Cox, 106 U. S. 356; v. Augustine, 5 Wash. 67 ; 31 Pac. 327 ;
Lafayette Ins. Co. v. French, 18 How. Huffman v. Company, 13 Tex. Civ. Ap.
(U. S.) 404. 169 ; 36 S. W. 306.
180
CHAP. 71.] LEGISLATIVE CONTROL OYER FOREIGN CORPORATIONS. § 127
of the corporation. 1 The right to transact business in a foreign
State is a matter of State comity, pure and simple. The recog-
nition of a foreign corporation and enforcement of its contracts
in States other than that of its creation rests only on comity, and
any conditions governing the right to transact business outside of
the domiciliary State of the corporation may be imposed upon them
or they may be entirely excluded. 2 But the conditions imposed
must not be repugnant to the Constitution of the United States
or to the public policy of the foreign State as evidenced by its
statutory enactments and judicial decisions, nor can they be re-
pugnant to rules of public law. 3
In this connection it may be observed that foreign corporations
cannot claim the protection of the prohibition of the United States
Constitution against denying to citizens of any State the privileges
and immunities of citizens of the several States. 4 Nor can they
claim the benefit of the clause against denying to any person equal
protection of the law. 5
A State may preclude all foreign corporations not engaged in
interstate commerce or in" the employ of the general government
from transacting business within its limits, and the courts cannot
inquire into its reasons for so doing. 6 A State may discriminate
between foreign and domestic corporations. 7 In short, the power
of States over foreign corporations with respect to imposing con-
ditions for doing business are as broad as those exercised over
domestic corporations. 8 Wherever a corporation transacts its
business it carries its charter with it, and that becomes the law
of its existence in the foreign State, for the charter is the same
abroad as it is at home. Whatever disabilities are placed upon
the corporation at home are ordinarily equally binding upon it
abroad, and whatever proper legislative control it is subject to
must in general be recognized and submitted to by those who
deal with it elsewhere. 9 The foregoing rule should be qualified
1 Washington County Mut. Ins. Co. v. 6 Boyle v. Company, 94 U. S. 541 ;
Dawes, 6 Gray, Mass. 376. Horn Silver Mining Co. v. New York, 143
2 Pan! v. Virginia, 8 Wall. (U. S.) 161. U. S. 314.
3 Lafayette Ins. Co. v. French, 18 How. 7 Ducat v. Chicago, 10 Wall. (U. S.) 415.
407; S. P. Ry. Co. v. Denton, 146 U. S. 8 Orient Ins. Co. v. Daggs, 173 V. S.
201 ; Am., etc. Christian Union v. Yount, 566.
101 U. S. 356. 9 Canada, etc. Ry. v. Gebherd, 109 l'. S
4 Paul v. Virginia, 8 Wall. (U. S.) 168. 597 ; Isle Royale Land Corporation v. Sec.
6 P. C. S. M. & C. Co. v. Pennsylvania, of State, 76 Mich. 162; 43 N. W. 14.
125 U. S. 181.
181
§ 127 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
by the statement that a foreign corporation can do no act in a
foreign State which cannot be done through the intervention of
a mere agent and which is not in contemplation of law the
direct act of the corporation itself. 1
Comity between States authorizes a corporation to exercise its
charter powers within any State, but it does not permit the exer-
cise of a power where the policy of that State distinctly marked
by legislative enactments or constitutional provisions forbids it. 2
It has been well said that " no rule of comity will allow one
State to charter corporations to operate in another State unless
there is willingness on the part of the foreign State that it should
be so. To hold otherwise would be to say that the right of one
State by comity is superior to the sovereign will of the other.
This involves the surrender of sovereignty to a rule of comity
and to a matter of international etiquette, which no sovereign
State should for a moment think of." 3
A great deal of litigation has arisen through the question
whether or not foreign corporations may exercise the same
powers in a foreign State that their charter authorizes them to
exercise in the domestic State. It has been held that foreign cor-
porations cannot exercise outside of the domicile State powers
which their own charters do not permit them to exercise within
the State of their origin, nor can they exercise powers in a foreign
State not permitted to corporations organized under the laws
thereof. 4 They cannot, however, do any acts which are contrary
to the public policy of the foreign State. 5 Nor can they transact
business for which domestic corporations cannot be formed on
account of statutory prohibition thereof. 6
In some jurisdictions what are termed " retaliatory statutes "
have been enacted. The purpose of these statutes is to put cor-
porations coming from other States upon the same plane as
domestic corporations of that State are placed when they seek
in turn to transact business in the States referred to. 7 Some-
times the laws of the foreign State expressly provide that foreign
1 Duke v. Taylor, 37 Fla. 641 ; Dema- Mich. 145; Clarke v. R. R. Co., 50 Fed.
rest v. Flack, 128 N. Y. 205; 28 N. E. 645; 338; State v. Water Co., 61 Kan. 563;
Colwell v. Company, 100 U. S. 55. People v. Howard, 50 Mich. 239.
2 McDonough v. Murdoch, 15 How. 5 L. G. R. T. Co. v. Commissioners, 6
(U. S.) 413. Kan. 245.
3 Empire Mills v. Company (Tex. Ap.), 6 Empire Mills v. Company (Tex. Ap.),
15 S. W. 506. 15 S. W. 200.
4 Diamond Match Co. v. Powers, 51 7 Talbot v. Company, 74 Mo. 544.
182
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 127
corporations shall have no rights or privileges other than those
possessed by domestic corporations of the same character. A fair
interpretation of such statutes would seem to be that such foreign
corporations shall have equal powers with domestic corporations of
a character similar to their own. 1
In a recent case an interesting question arose as to the legal
effect of inserting powers in a charter to be exercised only outside
of the State, such powers being forbidden by the laws of the State
in which the corporation was organized. 2 In this case the Fed-
eral Court of the State of Washington spoke as follows :
" It has become a habit of business men in this country to organize
corporations in one State to operate in another, and presumably
there is some advantage to be gained thereby, otherwise the practice
would not be continued. But no sound reason has been advanced,
and none occurs to my mind, for giving additional encouragement to
the practice by judicially expanding the powers of such corporations
so as to include additional rights and powers to be exercised abroad
but not at home. Corporations organized under legislative statutes
are not endowed with the rights of natural persons to do as they
please except when restrained by prohibitive laws. On the contrary,
the rule is that they have only such powers and rights as the statutes
confer, and the enumeration of their powers implies the exclusion of
all others except such subordinate and incidental rights and powers
as are essential to their existence and the exercise of the rights and
powers conferred in express terms, and the corporation can make no
contracts and do no acts other than permitted by the State which
created it except such as are authorized by its charter."
The general rule is that foreign courts will not interfere in
the internal management of foreign corporations ; that is, except
in the presence of extraordinary circumstances. 3 In this con-
nection a distinction obtains where the act complained of affects
the party solely in his capacity as stockholder, for there he must
seek redress of his grievance in the courts of the domiciliary
State of the corporation. But where the act affects his individual
1 See sec. 15, Art. XII. California Con- 2 Seattle Gas & Electric Co. v. Citizens'
stitution ; sec. 11, Art. XV. Montana Con- Light & Power Co., 123 Fed. 588 ; 125 Fed.
stitutions; I. & M. B. Co. v. Stone, 174 1001.
Mo. 1 ; 73 8. W. 453; MacGinniBfl v. Com- 8 Sidway v. Company, 101 Fed. 481;
pany (Mont.), 75 Pac. 89 ; Lowe v. Com- Kimball v. Company, 157 Mass. 7; 31
pany, 52 Cal. 60. N. E. 697.
183
5 128 INCORPOKATION AND ORGANIZATION OF CORPORATIONS. [PART I.
rio-hts he may seek redress in any tribunal where jurisdiction
may properly be acquired. 1 Foreign courts have not the power
to forfeit charters of foreign corporations. 2
Quo warranto is the proper proceeding to try the right of a
foreign corporation to carry on corporate business in a foreign
State. 3
The certificate of the Secretary of State authorizing a foreign
corporation to transact business within the State is a franchise
emanating from the State, and cannot be gone behind or revoked
by any authority but the State. 4
§ 128. Doctrine of State Comity. — What is known as the
" doctrine of State comity " is nothing more nor less than a
recognition of the principle that the right of foreign corporations
to engage in business in a State other than that of their creation
depends solely on the will of such other State. 5
While there are exceptions to this rule they only exist where
the corporation created by one State rests its right to enter
another and engage in business therein upon the nature of its
business. As, for instance, where it is necessarily an instrumen-
tality of interstate commerce, and its business constitutes such
commerce, it is therefore wholly within the paramount authority
of Congress. In this case the exceptional business is protected
against interference by such authority.
If the power to regulate applies to all the instances to which
such commerce gives rise, and to all contracts which might be
made in the course of its transactions, that power would embrace
the entire sphere of mercantile activity in any way connected
with the trade between the States, and would exclude State con-
trol over many contracts purely domestic in their nature. The
power to exclude where it exists, embraces the power as well to
regulate and to enforce all legislation in regard to things done
within the State which may be directly or incidentally requisite in
order to render the enforcement of the State powers efficacious
to the fullest extent, subject always of course to the paramount
authority of the United States. 6 Let us now turn our attention
i N. S. C, etc. Co. v. Field, 64 Fed. 151 ; 4 State ex rel. v. Ackerman, 51 O. St.
M. B. T. Co. v. R. G. N. Co., 81 N. Y. 163; 37 N. E. 828.
Sup. 302. 8 Hooper v. State of California, 155
2 Fritts v. Palmer, 132 U. S. 289. U. S. 148.
3 State v. Ins. Co., 39 Minn. 538 ; 41 6 W. U. Tel. Co. v. Mayer, 28 O. St
N. W. 108. 521.
184
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 128
to the attitude maintained by the State courts towards foreign
corporations.
One of the familiar features of the present day is the organi-
zation of corporations under the laws of one State whose statutes
are particularly favorable with the intention of carrying on no
business in the State of its organization and with the avowed
purpose of carrying on business in other States. Long ago
these corporations were nominated as " tramp corporations," and
there was at the outset some effort made on the part of the
courts to limit the powers and question the legal status of such
corporations. There was an attempt made to induce the courts
to refuse to judicially recognize such corporations, and to hold their
stockholders liable upon their contracts as partners and upon
their torts as joint tortfeasors. 1
But the liberal policy of the American States in extending
hospitality to foreign corporations and the powerful influence of
interstate comity has completely overcome the tendency here
referred to, so that at the present day the doctrine is established
in practically every State in the Union, that each of these States
will recognize as valid a corporation formed under the laws of
another State for the express purpose of doing business outside
of the State of its origin. 2
The broader view taken by the courts on this question is well
set forth by the decision of the New York Court of Appeals in
Merrick v. Van Sanvoort. 3 In this case attempt was made to
establish the doctrine that where a Connecticut corporation
conducts all its business in the State of New York, it must
thereby be deemed to have migrated to New York and to have
forfeited its charter, thus permitting creditors of the corporation
to hold the members, officers, and agents of the corporation per-
sonally liable for the debts and torts of the corporation. In
refusing to recognize this doctrine the court spoke as follows:
" Hitherto corporate enterprise has not been trammelled by un-
friendly legislation. No jealousy or competition or rivalry of adverse
interest has been permitted to convert State lines into barriers
i See Hill v. Beach, 12 N. J. Eq. .31 ; 2 See Merrick v. Van Sanvoort, 34
Landgrant, etc. Co. v. Coffey Co., fi Kan. N. Y. 208; Deinarest v. Flack, 128 N. Y.
245; Montgomery v. Forl.es, 148 Mass. 205 ; State ex rel. v. Cook (Mo.), 80 S. W.
249; 19 N. K. 342 ; Atterljerry v. Knox, 929.
4 B. Monroe (Ky.), 90. 8 34 N. Y. 208.
185
8 128 INCOKPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
of obstruction to the free course of general commerce. Its avenues
have been open to all.
« In this country our individual interests are so interwoven that
the union of the States is due, in its continuance, if not iu its origin,
as much to commercial as to political necessity. The citizens of each
claim a birthright in the advantages and resources of all. They
demand from their local authorities such facilities as the law-making
power can afford in the employment of labor and capital. They
claim such corporate franchises and immunities as may enable them
to compete on equal terms with the citizens of other States. For
these, with the structure of our institutions, they naturally look to
their own government. They acknowledge a double allegiance in
their local and federal relations, which, by general consent, carries
with it a correlative community of rights. They may live in an
inland State, but they are none the less citizens of a maritime nation,
and they may lawfully organize companies at home for traffic on
ocean highways.
"A corporate charter is in the nature of a commission from the
State to its citizens, and their successors in interest, whether at home
or abroad. Each government, in the exercise of its own discretion,
determines the conditions of its grant. It is free to impose or omit
territorial restrictions, but it can confer general powers to be exer-
cised within its bounds or without them, wherever the comity of
nations is respected. For the purpose of commerce such a com-
mission is regarded like a government flag, as a symbol of allegiance
. and authority ; and it is entitled to recognition abroad until it forfeits
a recognition at home. . . .
". . . We think the policy of this State is in harmony with that
■ of the country, and that it would be neither provident nor just to
inaugurate a rule which would uDsettle the security of corporate
property and rights and exclude others from the enjoyment here of
privileges which have always been accorded abroad. Our national
commerce is but the aggregate of that of the States, and every
needless restriction by the operation of local laws is unjust and
■ calamitous to all. We suppose the rules of comity on which we have
hitherto acted to be generally accepted and approved. We see no
reason why a Southern State may not grant to a corporation of its
planters the right to erect mills for the manufacture of their cotton
in New England ; nor why the legislature of Massachusetts may not
.authorize a company of Lowell millers to raise cotton in South
America or the Sea Islands. The State of Illinois touches neither
the Atlantic nor the Pacific; but if it should organize a company
• of its citizens on the ocean with its office in the City of New York
186
CHAP. TI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 128
and its business conducted by managers elected annually in Chicago,
the rights of the corporation would be recognized wherever the
obligations of national law are respected."
Through the operation of interstate comity corporations or-
ganized under the laws of one State may exercise their corporate
powers outside of the geographical limits of the State from which
they have obtained their charter. The doctrine of the courts on
this subject is well set forth by the United States Supreme Court
in Cowell v. Colorado Springs Co. 1 as follows :
" By the general comity which, in the absence of positive direction
to the contrary, obtains through the States and Territories of the
United States, corporations created in one State or Territory are per-
mitted to carry on any lawful business in another State and Territory,
and to acquire, hold, and transfer property there equally as indi-
viduals. If the policy of the State or Territory does not permit the
business of the foreign corporations in its limits or allow the cor-
poration to acquire or hold real property, it must be expressed in
some affirmative way ; it cannot be inferred from the fact that its
legislature has made no provision for the formation of similar corpo-
rations or allows corporations to be formed only by general law."
A most instructive case in this immediate connection is that of
Demarest v. Flack, 2 wherein the New York Court of Appeals
observed that :
" The courts of every State and country recognize foreign corpora-
tions through what is termed national or State comity. But whether
such recognition shall be given must be decided by the courts of the
country where the corporation seeks to do business. In our State, as
in others, it is a question of domestic policy, and what that policy is
must be determined by an examination of our own legislation. If we
find any direct enactment uppn the subject, it is our duty to obey it,
and in its absence we must determine the question with reference to
our general legislation and to the circumstances which surround us
as a great and growing commercial community, having need of and
employing large amounts of combined capital, and for whose prosperity
and growth it is of the utmost importance that such capital should
have the greatest facilities extended it for useful employment, with
reasonable and proper personal exemptions from liability. We can
find no reason for a domestic policy that should exclude from recog-
1 100 U. S. 55. 2 128 N. Y. 205; 28 N. E. 645.
L87
§ 128 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
nition by our courts foreign corporations generally. It may safely
be said there can be no such domestic policy at the present day in
a civilized State. . . .
" An examination of our laws shows that it is, and for many years
has been, the policy of this State to enlarge the facilities for the
formation of corporations. General laws are on our statute book for
the formation of corporations of almost every conceivable kind, and
under some one of them a corporation of the kind mentioned in
the case could readily be formed. The freedom from personal liability
would be as great and could be as easily attained under our own as
under the laws of West Virginia. The security of the creditor would
not be substantially greater in the case of the domestic than in that
of the foreign corporation. In the latter the creditor has the remedy
by attachment, and he can obtain about as easy access to its property
as if it were domestic instead of foreign.
" There is really nothing to evade by incorporating under a foreign
law. No harmful results flow to a creditor or to the community
here by such incorporation. Where the corporation formed under
another jurisdiction comes here to do business of a kind which we
permit to be done by corporations, and where our laws provide for
incorporating individuals for the purpose of doing that business, it
is difficult to see how the terms ' evasion ' and ' fraud ' can be prop-
erly applied to acts of our citizens whereby they obtain incorpora-
tion in another State. When they come in our State to do business
they must conform to our laws relating to foreign corporations and
comply with the terms laid down by us as conditions of allowing
them to transact business here. In the case of many kinds of cor-
porations such conditions have already been imposed by our laws,
and if there be any kind where none is imposed it is conclusive
evidence that up to this time the legislature has not thought it
conducive to the true interests of the State and its citizens to impose
them. I do not intimate that it is necessary for a State to expressly
by statute exclude foreign corporations from acting within its juris-
diction. The policy of the State may exclude them, and that policy
may be clearly established by a reference to the general legislation
of a State. I find none such in the laws of this State.
" It has been urged that the easy way which our laws provide for
forming corporations is itself a reason why we should not recognize
as a corporation those of our own citizens who have gone to another
State for the purpose of incorporating themselves under the laws
thereof, to do business in our own State as such corporation.
" We think there is very little force in the argument. The public
policy which we see in our own State, as evidenced by her laws upon
188
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 128
the subject of the formation of corporations, is one which looks to
their ready and easy formation as a means of transacting business
with an accumulation of capital and an exemption from personal
liability to the largest extent consistent with reasonable supervision
by the State. The facilities for incorporation offered by this State
are not the result of any desire to promote the formation of corpora-
tions here as against their formation in other States. They are
offered because of a policy on our part which urges upon the State
the propriety of furnishing them as one means of controlling the
business done by them and keeping it within our borders. If in any
particular case it is thought by those interested in the matter that
the business can be done in our own State and by our own citizens
with greater facility under the form of a foreign corporation than
under that of a domestic one, there is no public policy which forbids
its transaction under such form. The supervision of a foreign cor-
poration by this State may easily be exercised by imposing terms as
a condition of permitting it to do business here. The absence of
any such terms in our legislation forms no reason for refusing to
recognize the corporation. The power rests with the legislature to
say whether any, and if so what, terms shall be imposed upon such
corporations as a condition of granting them permission to do business
here. Those terms can only be imposed by the legislature, and in
their absence our courts ought not, merely on that account, to refuse
to recognize a foreign corporation. In the absence of legislation, our
courts must either refuse absolutely, or else they must recognize the
right of such corporations to come to this State and do business here.
The courts cannot themselves impose terms or conditions. . . .
" The truth is, foreign corporations are not properly to be regarded
with suspicion, nor should unnecessary restraints be imposed upon
their doing business in our midst. They carry no black flag, and the
policy of all civilized nations is to grant them recognition in their
courts. It seems to me that every reason which urges upon us the
recognition of foreign corporations organized with power to do
business in our State and composed of citizens of the foreign State,
is equally potent when the foreign corporation is composed of our
own citizens. It has always been supposed that a State should at
least deal as liberally with its own citizens as with those of foreign
States. If, therefore, we permit foreign citizens to come within our
limits in the form of a foreign corporation organized with power to
do business here and recognized by us, why should we not permit
our own citizens to avail themselves of the like privilege? If we
impose terms and conditions upon foreign corporations, as such,
doing business here, those same terms and conditions still and
1 89
§ 129 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
equally apply to a foreign corporation when composed of our own
citizens. Why should they not be placed at least upon an equality
with the foreign citizen?" 1
§ 129. What constitutes doing Business on the Part of a Foreign
Corporation within the state. — There is perhaps no subject of
corporation law wherein will be found greater diversity in the
opinions of the courts of the several Commonwealths than that
relating to the rights of foreign corporations. The growth of
corporate organization as well as the vast extension of the busi-
ness of corporations outside of the State of their origin has made
the question of determining what in legal effect constitutes doing
business on the part of a foreign corporation in States other than
that of its domicile one of great practical importance. As has
already been observed, parties may incorporate in one State at
the present time for the purpose of transacting their business in
another Commonwealth. 2
In some of the States, notably South Carolina, the legislatures-
have attempted to give a statutory definition as to what constitutes
doing business on the part of a foreign corporation within the
Commonwealth. In most of the States, however, the question is.
left for judicial determination. A fair example of such statutes
is to be found in the New York statute 3 which provides that " no
foreign corporation, other than a moneyed corporation, shall do
business in the State without having first procured " a proper
certificate from the Secretary of State that it has complied with
the statutes in such case made and provided. From the foregoing
it will appear that the whole question centres upon the meaning
of the word " business " as used in the statutes, of which the fore-
going is a fair example. It will be impossible within the limits
of this work to discuss at any length the conflicting decisions of
the courts on the point here referred to. All that it is proposed
to do is to present certain rules which a careful reading of the
authorities have shown to represent the prevailing and better
considered opinions of the various courts on the questions pre-
sented. These rules may be enumerated as follows :
i See also Lancaster v. Amsterdam 484; 28 Atl. 973; Hanna v. Company.
Improvement Co., 140 N. Y. 576 ; 35 N. E. 23 0. St. 622.
964. 3 New York Session Laws of 1890,
2 State ex rel. v. Cook (Mo.), 80 S. W. chap. 56.3, sec. 150; amended by Laws of
929; Oakhill Mfg. Co. o. Garst, 18 R. I. 1901, chaps. 96, 538.
190
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 129
(1) In order to constitute the transaction of business by a
foreign corporation within the foreign State, it is not indispensa-
ble that it should do the greater part of its business therein. If
it does any part of its ordinary business therein and the same
cannot properly be styled purely interstate commerce, the same
constitutes the transaction of business therein within the meaning
of the statute. 1
(2) Generally speaking, the making of a single contract within
the foreign State does not constitute the transaction of business
therein. 2 There must be more or less continuity in the matter.
(3) The institution and prosecution of actions not arising out
of previous transactions had within the foreign State does not
constitute the transaction of business within the meaning of the
statute. 3
(4) Sales of merchandise by foreign trading corporations made
by means of non-resident travelling salesmen, or by correspondence
had between the foreign corporation at the domiciliary office and
customers in the foreign State, or upon unsolicited orders from
customers in the foreign State, do not constitute transaction of
business within the meaning of the statute regulating the trans-
action of business by foreign corporations. 4
Aside from the question of the nature of the act, there are
constitutional grounds upon which it would be held that corpora-
tions were not, under the circumstances here referred to, subject
to the statutes in such foreign State compelling foreign corpora-
tions to obtain a permit to do business therein. The constitu-
1 Lamb v. Lamb, 6 Biss. 420; Fed. Co., 72 Miss. 809; 17 So. 769; Kilgore v.
Cas. No. 8018. Smith, 122 Pa. St. 48 ; 15 Atl. 698 ; United
2 Cooper Mfg. Co. v. Ferguson, 113 States i\ Company, 29 Fed. 17.
U. S. 727 ; Gilchrist v. Helena H. S. & S. R. 3 Mandel v. Company, 154 111. 177;
Co., 47 Fed. 593 ; Colorado Iron Works 40 N. E. 462; Smith v. Little, 67 Ind. 549.
Co. v. Company, 15 Col. 499; 25 Pac. * T. L. Co. v. Holbert, 5 N. Y. Ap.
325 ; Commonwealth v. Standard Oil Co., Div. 559 ; Novelty Mfg. Co. v. Connell. 88
101 Pa. St. 119 ; Florsheim Co. r.Lester,.60 Hun, 254 ; M. I. W. C. & S. Co. v. Mosher,
Ark. 120; 29 S. W. 34; Miller v. Williams 114 Mich. 64; 72 N. W. 117; F. & J.
(Col.), 59 Pac. 740 ; Tabor v. Company, M. Co. v. Foster, 4 Dak. 329 ; J. S. L. Co.
11 Col. 419 ; 18 Pac. 537 ; Creteau v. Foote v. Chappell, 184 111. 539 ; 56 N. E. 539 ;
Co., 40 Ap. Div. (N. Y.) 215 ; Sec. Co. v. Gale Mfg. Co. v. Finkolstein, 22 Tex.
Panhandle Nat. Bank, 93 Texas, 575 ; Civ. Ap. 241 ; 54 S. W. 619 ; Toledo Com-
57 S. W. 22 ; Missouri Coal Mining Co. mercial Co. v. Company, 55 0. St. 217 ;
v. Ladd, 160 Mo. 435 ; 61 S. W. 191; Wolff Dryer Co. v. Bigler, 192 Pa.St.466 ;
Payson v. Withers, 5 Biss. 269 ; Fed. Cas. 43 Atl. 1092; Droege v. Company, 163.
No. 10864 ; Hope Mut. Life Ins. Co. v. N. Y. 466 ; 57 N. E. 747.
Perkins, 38 N. Y. 404 ; Hart v. Livermoro
191
§ 129 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
tional grounds here referred to have reference to those trading
or quasi-public corporations engaged wholly in interstate trade
and commerce and therefore not subject to regulation by State
enactments. 1 The same rule applies where the corporation is in
the employ of the general government. 2
(5) Foreign corporations may take mortgages by way of in-
vestment or as security, or may take real estate as security or
otherwise without coming within the prohibition of the statute,
provided such acts are not within the express purposes for which
such corporations were created, as for example where they are en-
gaged in the mortgage loan or real estate business. 3
(6) Foreign corporations may take property by devise in for-
eign jurisdictions, if their charter authorizes it, either expressly or
by implication, without coming within the purview of the statute. 4
(7) The mere fact that a corporation pays rent for offices for
its agent employed to solicit orders in the foreign State does not
in itself prove that the corporation is transacting business within
the foreign State. 5 The question in all such cases is whether it is
actually transacting business within the foreign State, and not
whether some incident preliminary to the transaction of such
business is to be performed there. 6 The maintenance of an office
within the State may be considered as a circumstance done in
connection with others to show that a foreign corporation is
transacting business in the State, but it is by no means conclu-
sive of the question. 7
(8) Where a foreign corporation consigns goods to persons in
a foreign State to sell, and sales are made there by the factor in
his own name and the proceeds collected by him, this does not
1 Robbins v. Shelby County Tax Dis- L. E. 1137 ; F. B. D. G. Co. v. Lester, 60
trict, 120 U. S. 489; Brennan v. Titus- Ark. 120; 29 S. W. 34.
ville, 153 U. S. 289. 4 Am., etc. Christian Union v. Yount,
2 Horn Silver Mining Co. v. New York, 101 U. S. 352 ; Santa Clara Female Acad-
143 U. S. 305. emy v. Sullivan, 116 111. 375 ; 6 N. E. 183 ;
3 C. U. A. Co. v. Scammon, 102 111. 46; Lewisburg Baptist University v. Tucker,
Bard v. Poole, 12 N. Y. 495; A. M. L. I. Co. 31 W. Va. 621 ; 8 S. E. 410 ; Chamberlain
v. Owen, 15 Gray (Mass.), 491 ; Black v. v. Chamberlain, 43 N. Y. 444.
Colwell, 83 Fed. 880 ; C. O. L. I. Co. v. 5 People ex rel. Brewing Co. v. Roberts,
Sawyer, 44 Wis. 387 ; Fritts v. Palmer, 22 N. Y. Ap. Div. 284.
132 IT. S. 288; Bank v. Sherman, 28 Ore. 6 Tallapoosa Lumber Co. v. Holbert,
577 ; 43 Pac. 658 ; Simplex Dairy Co. v. 5 N. Y. Ap. Div. 516.
Cole, 86 Fed. 739 ; Gilchrist v. Company, 7 People v. Company, 175 N. Y. 76;
47 Fed. 593; C. P. E. Co. v. Company, American Broom & Brush Co. v. Addicks,
152 Mass. 432; 28 N. E. 300; Cooper 19 N. Y. Misc. Rep. 36.
Mfg. Co. v. Ferguson, 113 U. S. 727; 28
192
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 129
constitute doing business within the foreign State within the
meaning of the statute. 1
(9) The renting of an office in a foreign jurisdiction in
charge of a selling agent who distributes therefrom samples to
customers and to travelling agents whose salaries are paid there-
from, together with the keeping of a bank account in such juris-
diction, does not necessarily constitute doing business within the
foreign State within the meaning of the statute. 2
Finally, in addition to the foregoing rules, it may not be without
value in this connection to call particular attention to a few cases
which seem to throw considerable light upon the general subject of
what constitutes the transaction of business within a foreign State
within the meaning of the Statutes already referred to. Attention
is first called to the case of People ex rel. Kellogg Paper Co. v.
Roberts. 3 Here an Illinois corporation furnished printed matter
to local publishers in the State of New York. It kept solicitors
in the State of New York to secure advertising patronage for a
newspaper published by it in Chicago. For this purpose it had an
office in the State of New York with a manager and five clerks.
It also kept a New York bank deposit from which rent and sal-
aries were paid amounting to an annual expense of $13,000. It
had office furniture in the State of New York valued at $700. It
was held that the corporation had no capital employed in the
State of New York which rendered its capital stock liable to
assessment for taxation. The court in its opinion stated :
" Office conveniences are permitted here to a foreign corporation
doing business in another State to solicit orders to be executed in the
other States without liability to our franchise tax. In People ex rel.
Smith Co. v. Eoberts, 4 the court held that office leases, bank accounts,
and the keeping of samples within the State by foreign corporations
were nominally incidental to the business of soliciting orders and
making sales which the relator could carry on in the foreign State with-
out being liable to taxation. It also observed that the machinery
with which an interstate business is carried on is to some extent
erected within the State and does not make such business taxable
there."
1 Bertha Zinc & Mining Co. v. Clure, Ap. Div. 13; People ex rel. v. Roberts,
7 N. V MiflC Rep. 128. 29 N. V. Ap. Div. 585.
2 Washington Mills Co. v. Roberts, 8 8 30 N. Y. Ap. Div.,150.
N. Y. A p. Div 201 ; affirmed in 151 N. Y. < 27 N. Y. Ap. Div. 455.
619 ; People ex rel. v. Roberts, 25 N. Y.
13 193
§ 129 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
In Vaughan Machine Co. v. Lighthouse, 1 the testimony showed
that a foreign corporation had sold merchandise in New York
both by agents and by correspondence, and in this case it had no
office within the State. Upon the question whether this constituted
the transaction of business within the State, the court spoke as
follows :
" The statute does not intend to relate to business conducted in the
manner just referred to. It contemplates a location, a domicile,
having an office and the investment of some part of its capital within
the State. Orders can then be transmitted and dealings had with it
at this office and the conduct of its business is thus transferred, in a
measure at least, to the headquarters established within the territorial
limits of this State. It thus settles within the State, and enjoys the
benefits incident to a domestic corporation, and the legislature im-
poses requirements and obligations upon it by reason of the privi-
lege conferred of doing business like a body corporate organized in
this State. It was never intended to hamper trade and restrict
interstate commerce by bringing within its ban every corporation
which happens to cross the State boundary with its wares to supply
customers who have ordered them from the home office.
"... It must be kept in mind that it was not designed to fetter or
exclude business from the State. Its aim was to require a foreign
corporation, which was on a level in its privileges with one organ-
ized here, to bear the burdens and be equally accessible to process
with State corporations. To give it the construction contended for
by the defendant would interfere with that comity between the States
in their trade relations which has been potential in the development
of our commercial and industrial business."
In Cummer Lumber Company v. Insurance Company, 2 the court
spoke as follows :
" This statute — relative to foreign corporations obtaining a permit
to do business in this State — was simply declaratory of the policy of
the State that foreign stock corporations should not carry on any busi-
ness in this State which similar corporations organized under its laws
could not lawfully conduct. Its purpose was not to avoid contracts,
but to provide an effective supervision and control of the business
proposed to be carried on here by foreign corporations, and it is
absurd to contend that it had no reference to the facts established by
the evidence in the case at bar."
i 64 N. Y. Ap. Div. 138. 2 67 N. Y. Ap. Div. 151.
194
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 130
Again, the court said :
" The scope of the law here under consideration is that of merely-
undertaking to regulate the business of foreign corporations so that
they shall not do business under more advantageous terms than those
allowed to corporations of this State. It has no relation whatever to
the incidental contracts of a foreign corporation made with a domestic
corporation, such as the insurance of the property of a lumber com-
pany organized under the laws of Florida and doing business in that
State."
Finall3 r , attention is called to People ex rel. Dives Pelican Com-
pany v. Feitner. 1 In this case a corporation organized under the
laws of the State of Colorado had its principal place of business
in the State of New York and had an office in the City of New
York. The New York office was maintained for the sole purpose
of enabling the directors of the corporation to meet in it and
declare dividends on its stock. No goods of the corporation were
sent to or sold in New York. It had no bills receivable in New
York, and the only assets which it had in that State were office
furniture and money on hand and in bank which had been sent
from its principal office to its New York office for the purpose
of paying dividends. It was held that the corporation was not
doing business in the State of New York within the meaning of
the statute.
§ 130. Penalty for transacting Business in a Foreign State
without obtaining a Permit. — The statutes of the various States
differ materially with respect to the penalty that attaches to the
transaction of business by a foreign corporation without having
first complied with the statute relative to obtaining a permit to
transact the same. The form of penalty prescribed usually takes
one of five forms, to wit :
(1) Suspending the right to maintain suits in the courts of the
foreign State until the statute has been complied with. (2) Stat-
utes absolutely prohibiting the right to bring suit on contracts
entered into in the foreign State before the ootaining of a permit
to do business therein. (3) Statutes providing that all contracts
made by a foreign corporation before obtaining a permit to do
business in a foreign State shall be absolutely void. (4) Statutes
providing penalties in certain designated amount for failure to
1 77 N. Y. Ap. Div. 189.
195
§ 130 INCORPORATION AND ORGANIZATION OP CORPORATIONS. [PART I.
obtain a permit in a foreign State before transacting business
therein. (5) Statutes merely giving the right to the State to
bring proceedings to oust or exclude foreign corporations from
doing business within the foreign State without having first
obtained a permit so to do. Each of the foregoing will now be
taken up briefly for separate consideration.
(1) Suspending the right to maintain suits in the courts of the
foreign State until the statute has been complied with. Such stat-
utes do not affect the validity of contracts previously made in the
foreign State by a foreign corporation, but merely prevent it
from enforcing the same therein until it has obtained a permit to
do business in such State. 1
(2) Statutes absolutely prohibiting the right to bring suit on
contracts entered into in the foreign State before the obtaining of
a permit to do business therein. - Such statutes exist in New York
and read as follows :
" No foreign corporation now doing business in this State shall do
business herein after December 31st, 1892, without having procured
such certificate from the Secretary of State ; but any contract
previously made by the corporation may be permitted and enforced
within the State subsequent to such date. No foreign stock corpora-
tion doing business in this State shall maintain any action in this
State upon any contract made by it in this State unless prior to the
making of such contract it shall have procured a certificate."
In interpreting this provision of the statutes the Supreme
Court, in Dunbarton Flax Spinning Co. v. Greenwich and John-
sonville Railway Company, 2 spoke as follows :
" Unless prohibited by law, a foreign corporation, duly organized,
can come into this State and exercise the legitimate powers conferred
upon it and carry on any business not prohibited by our laws or
against public policy. The State has the power, however, to compel
compliance with its laws or to punish the corporation if it does not
do so. And the legislature can deny to such corporation failing to
comply with its laws by procuring a certificate and paying the license
fee, all recourse to its courts to enforce its rights or to redress its
wrongs. These statutes are, however, mere revenue regulations,
1 Goddard v. Crefields Mills, 75 Fed. v. Fowler Bros., 163 N. Y. 580; 57 N. E.
*18 ; 21 C. C. A. 530 ; Davis Provision Co. 1 108.
2 87 Ap. Div.(N. Y.) 21.
196
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 130
compliance with which is made necessary in order to acquire the
right to do business here and to enforce causes of action in our
courts.
"In Lancaster v. A. I. Co. 1 it is said to be the policy of the State
to encourage foreign corporations to enter its boundaries for the
transaction of lawful business, and it is manifestly for the interest
of the State that foreign capital should be actively employed within
its borders."
(3) Statutes providing that all contracts made by a foreign cor-
poration before obtaining a permit to do business in a foreign State
shall be absolutely void. To have the effect stated above the
statute must in express terms declare that contracts made by cor-
porations which have not complied with the statute relative to
obtaining a permit to do business within a foreign State, shall be
absolutely void. Where such is the case, it is entirely clear that
no action can be maintained by the corporation thereon in such
foreign State. 2 Such statutes, however, have no extra-territorial
effect.
In an Illinois case 3 the court spoke as follows :
"To permit the company, when they admit that they have dis-
regarded all these requirements, to recover, would be for the courts
to disregard the clearly expressed will of the general assembly, and
to say what it has said shall be unlawful is and shall be lawful and
binding. To enforce the payment of this note would be, virtually,
to repeal a plain enactment of the legislature. When the legislature
prohibits an act, or declares that it shall be unlawful to perform it,
every rule of interpretation must say that the legislature intended
to interpose its power to prevent the act, and, as one of the means
of its prevention, that the court shall hold it void. This is as mani-
fest as if the statute had declared that it should be void. To hold
otherwise would be to give the person, or corporation, or individual
the same rights in enforcing prohibited contracts as the good citizen
who respects and conforms to the law. To permit such contracts to
be enforced, if not offering a premium to violate law, certainly
withdraws a large portion of the fear that deters men from defying
the law. To do so places the person who violates the law on an equal
footing with those who strictly observe its requirements. That this
contract is absolutely void, as to appellee, we entertain no doubt." *
1 140 N. Y. 576, 591 ; 35 N. B. 964. • C. M. H. A. Co. v. Rosenthal, 55 111. 85.
2 Bank of Louisville v. Young, 37 Mo. 4 See also McCanna & Eraser Co. v.
398. Company, 74 Fed. 597.
197
§ 131 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
(4) Statutes providing 'penalties in certain designated amounts
for failure to obtain a permit in a foreign State before transacting
business therein. In this connection two opposing lines of author-
ity are to be met with, one holding that where a penalty is
imposed, this is exclusive, but does not render the contract made
by the foreign corporation, out of which the imposition of the
penalty arose, invalid. 1 The other, and what appears to us the
better, view is that although a specific penalty is provided, this in
itself operates to render the contract, out of which the imposition
of the penalty arose, illegal and unenforceable in the courts of
such foreign State. 2
(5) Statutes merely giving the right to the State to bring pro-
ceedings to oust or exclude foreign corporations from doing business
within the foreign State without having first obtained a permit so
to do. Unless some other remedy is prescribed by statute, the
proper remedy, in case foreign corporations engage unlawfully in
business in a foreign State, is for the State to bring quo warranto
proceedings to oust or exclude such foreign corporation from
doing business within the foreign jurisdiction. 3 In such proceed-
ings the courts have the right to review, if they see fit, the action
of the Secretary of State in issuing a permit to such foreign
corporation to do business within the State. 4
§ 131. License Tax on Foreign Corporations. — There is a clear
distinction to be observed of course between the creation of a cor-
poration under State authority and the licensing of a corporation
already existing, to do business within the jurisdiction of such
State. 5 Sometimes the statute provides that after foreign cor-
porations have complied with certain formalities relative to obtain-
ing a permit to do business within a foreign State, they shall
thereby ipso facto become domestic corporations. Under such a
statute it has been held that they thereby become for all pur-
poses, except for such matters as pertain to federal affairs,
domestic corporations and not mere licensed corporations. 6 It
1 Clarke v. Middleton, 19 Mo. 54 ; Gar- 517 ; 60 N. W. 121 ; State v. Company, 39
rett Ford Co. v. Company, 20 R. I. 189; Minn. 538; 41 N. W. 108.
J. C. M. T. Co. v. Willhoit, 84 Fed. 514. 4 State v. Company, 49 O. St. 440 ; 31
2 Dudley v. Collier, 87 Ala. 431 ; 16 So. N. E. 658 ; State v. Company, 91 Iowa,
304; C. M. H. A. Co. v. Rosenthal, 55 111. 517 ; 60 N. W. 121.
85 ; State v. Briggs, 116 Ind. 55 ; 18 N. E. 5 C. B. & Q. Ry. Co. v. Harris, 12 Wall.
395 ; Buxton v. Hamblen, 32 Me. 448 ; U. S. 65.
Stewart v. Company, 38 N. J. Law, 436. 6 Debnam v. Company, 126 N. C. 831 ;
3 State v. Company, 47 O. St. 167 ; 24 36 S. E. 269.
N. E. 392; State v. Company, 91 Iowa,
19S
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 132
has been repeatedly held by the United States Supreme Court
that State legislatures may impose license taxes to any amount
upon foreign corporations as a condition to the granting of the
right of such foreign corporations to transact business in a
foreign State. 1
In addition to the payment of a tax, there are a number of
other requirements in force in the various States differing one
from the other, such, for example, as requiring the filing of a copy
of the articles of incorporation, appointing an agent within the
State to accept and receive service of process, etc. Such require-
ments if reasonable are valid. 2
The State may, if it choose, tax without restriction as to amount
or entirely prohibit a foreign corporation from doing business
within the State, provided, however, it is not engaged in interstate
commerce or is in the employ of the general government. 3 Some
States, such for example as Ohio, New Jersey, and Nevada, adopt
what are known as retaliatory statutes. The purpose of such
statutes is to place foreign corporations which do business in for-
eign States under the same regulations as are imposed by the
domiciliary State upon foreign corporations seeking to do business
within such State. 4
The power of a State to exclude foreign corporations from
transacting business within its borders cannot be questioned,
neither can its motives in so doing. 5
Thirty-three of the States have imposed the payment of license
taxes upon foreign corporations desiring to do business within the
foreign State.
§ 132. Annual License Tax on Foreign Corporations. — The right
of a State to impose an annual license tax on foreign corporations
transacting business within its borders is unequivocally estab-
lished by the decision of the Supreme Court of the United States
* Paul v. Virginia, 8 Wall. 168; P. C. 8 Horn Silver Mining Co. v. N. Y., 143
S. M. & N. Co. v. Pennsylvania, 125 U. S. U. S. 305 ; Pierce v. People, 106 111. 11 ;
181 ; Liverpool Ins. Co. v. Massachusetts, State v. Phipps, 50 Kan. 609 ; 31 Pac. 1097.
10 Wall. 576; Pembina Min. Co. v. Penn- 4 State v. Reinmund, 45 (). St. 214;
sylvania, 125 U. S. 184. 13 N. E. 30 ; Miles v. Woodward, 115 Cal.
2 Huffman v. Company, 13 Tex. Civ. 308; 46 Pac. 1076; State v. Company, 39
Ap. 169 ; 36 S. W. 306 ; E. & S. A. M. &, I. Minn. 538 ; 41 N. W. 108.
Co. v. Hardy, 93 Texas, 289; 55 S. W. 6 Doyle v. Company, 94 U. S. 535;
169; Utley v. Company, 4 Col. 369 ; Green Hartford Fire Ins. Co. v. Raymond, 70
v. Association, 105 Iowa, 628; 15 N. W. Mich. 485 ; 38 N. W. 474.
935 ; Hammer v. Company, 130 U. S.
291.
199
§ 132 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
in Horn Silver Mining Co. v. State of New York. 1 Upon the sub-
ject just referred to, that court spoke as follows :
" The right and privilege, or the franchise, as it may be termed,
of being a corporation, is of great value to its members, and is con-
sidered as property, separate and distinct from the property which
the corporation itself may acquire. According to the law of most
States this franchise or privilege of being a corporation is deemed
personal property and is subject to separate taxation. The right of
the States to thus tax it has been recognized by this court and the
State courts in instances without number. It was said, in Delaware
Railroad Tax, 2 that ' the State may impose taxes upon the corporation
as an entity existing under its laws, as well as upon the capital stock
of the corporation or its separate corporate property. And the
manner in which its value shall be assessed, and the rate of taxation,
however arbitrary or capricious, are mere matters of legislative dis-
cretion,' except, we may add, as that discretion is controlled by the
Organic Law of the State. And, as we there said also, 'it is
not for us to suggest in any case that a more equitable mode of
assessment or rate of taxation might be adopted than the one pre-
scribed by the Legislature of the State ; our only concern is with
the validity of the tax; all else lies beyond the domain of our
jurisdiction.'
" The granting of the rights and privileges which constitute the
franchises of a corporation being a matter resting entirely within the
control of the legislature, to be exercised in its good pleasure, it may
be accompanied with any such conditions as the legislature may
deem most suitable to the public interests and policy. It may impose
as a condition of the grant, as well as, also, of its continued exercise,
the payment of a specific sum to the State each year, or a portion of
the profits or gross receipts of the corporation, and may prescribe
such mode in which the sum shall be ascertained as may be deemed
convenient and just. There is no constitutional inhibition against
the legislature adopting any mode to arrive at the sum which it will
exact as a condition of the creation of the corporation or of its con-
tinued existence. There can be, therefore, no possible objection to
the validity of the tax prescribed by the statute of New York, as far
as it relates to its own corporations. Nor can there be any greater
objection to a similar tax upon a foreign corporation doing business
by its permission within the State. As to a foreign corporation —
and all corporations in States other than the State of its creation are
i 143 U. S. 305. 2 85 TJ. S. (18 Wall.) 206.
200
CHAP. VI. J LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 132
deemed to be foreign corporations — it can claim a right to do business
in another State to any extent, only subject to the conditions imposed
by the laws.
"This doctrine has been so frequently declared by this court that it
must be deemed no longer a matter of discussion, if any question can
ever be considered at rest.
"Only two exceptions or qualifications have been attached to it in
all the numerous adjudications in which the subject has been con-
sidered, since the judgment of this court was announced more than
half a century ago in Bank of Agusta v. Earle. 1 One of these
qualifications is that the State cannot exclude from its limits a
corporation engaged in interstate or foreign commerce, established
by the decision in Pensacola Teleg. Co. v. Western U. Teleg. Co. 2
The other limitation upon the power of the State is, where the
corporation is in the employ of the general government, an obvious
exception, first stated we think by the late Mr. Justice Bradley in
Stockton v. Baltimore & N. Y. E. Co. 3 As that learned justice said,
' If Congress should employ a corporation of ship-builders to con-
struct a man of war, they should have the right to purchase the
necessary timber and iron in any State in the Union.' And this
court, in citing this passage, added, 'without the permission and
against the prohibition of the State.' 4
" Having the absolute power of excluding the foreign corporation^
the State may, of course, impose such conditions upon permitting the
corporation to do business within its limits as it may judge expedi-
ent; and it may make the grant or privilege dependent upon the
payment of a specific license tax, or a sum proportioned to the amount
of its capital. No individual member of the corporation or the cor-
poration itself can call in question the validity of any exaction which
the State may require for the grant of its privileges. It does not
lie in any foreign corporation to complain that it is subjected to the
same law with the domestic corporation. The counsel for the ap-
pellant objects that the statute of New York is to be treated as a
tax law, and not as a license to the corporation for permission to do
business in the State. Conceding such to be the case, we do not
perceive how it in any respect affects the validity of the tax. How-
ever it may be regarded, it is the condition upon which a foreign cor-
poration can do business in the State, and in doing such business
it puts itself under the law of the State, however that may be
characterized."
1 13 Peters (U. S.), 519. 4 Pembina Con. S. Min. & Mill. Co. v.
2 96 U. S. 1. Pennsylvania, 125 U. S. 181.
3 .32 Fed. Rep. 9.
201
§ 133 INCOKPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
From the foregoing opinion it is clear that it is unquestionably
within the power of the various State legislatures to impose an
annual license tax upon foreign corporations transacting business
within their limit. However, but few of the States have chosen thus
far to exercise this power. Alabama, Colorado, Massachusetts.
New York, Ohio, Oregon, Texas, Vermont, Virginia, Washington,
and West Virginia are the only States which impose an annual
license tax upon foreign corporations. In each of these States the
tax is a graduated one, the amount thereof depending either upon
the authorized capitalization of the corporation, or the amount of
the eapital stock represented by capital invested in the foreign
State where such annual license tax is imposed.
§ 133. To what Extent is the Taxing Power of the State with
Reference to Domestic and Foreign Corporations Engaged in Inter-
state Commerce Limited by the "Commerce Clause" of the Federal
Constitution ? — The question as to the extent of the legislative
power of the various State legislatures with reference to taxing
domestic and foreign corporations must always be arrived at 'by
giving due consideration to the limitations imposed upon this
power by the provisions of what is known as the "Interstate
Commerce Clause of the Federal Constitution." 1
Again, this question, in order to permit of intelligent consider-
ation, must be viewed from four standpoints, to wit : (1) What
effect, if any, has the Interstate Commerce Clause of the Fed-
eral Constitution upon the right of the several States to impose
organization taxes upon corporations engaged in interstate com-
merce ? (2) What effect, if any, has the Interstate Commerce
Clause of the Federal Constitution upon the right of the several
States to impose franchise taxes upon corporations engaged in
interstate commerce ? (3) What effect, if any, has the Interstate
Commerce Clause of the Federal Constitution upon the right of
the several States to impose license taxes upon corporations
engaged in interstate commerce ? (4) What effect, if any, has the
Interstate Commerce Clause of the Federal Constitution upon the
right of the several States to impose property taxes upon corpora-
tions engaged in interstate commerce ? Each of these will now
be taken up for separate consideration.
(1) What effect, if any, has the Interstate Commerce Clause
of the Federal Constitution upon the right of the several States
1 See Constitution of the United States, Art. I. sec. 8, clause 3.
202
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 133
to impose organization taxes upon corporations engaged in inter-
state commerce ? The State is said to possess inherent power to
tax its corporations. So the State has undoubted power to exact
a bonus for the granting of a franchise, payable in advance or in
futuro, 1 A round sum or an annual charge, with or without ref-
erence to capital stock, may be asked by the legislature for such
a franchise. 2 In discussing the question of the right of a State to
impose a fee, a license or a tax upon corporations, the Supreme
Court of the United States in Ashley v. Ryan, 3 spoke as follows :
"At the time the articles were presented for filing, the statute
law of the State charged the parties with notice that the benefits
which it was sought to procure could not be obtained without pay-
ment of the tax for consolidation which the Secretary of State
exacted. As it was within the discretion of the State to withhold or
grant the privilege of exercising corporate existence, it was as a neces-
sary resultant also within its power to impose whatever conditions
it might deem fit as prerequisite to corporate life. The act of filing,
constituting, as it did, a claim of a right to the franchise granted by
the State law, carried with it a voluntary assumption of any bur«
den with which the privilege was accompanied, and without which
the right of corporate existence could not have been procured.
Having thus accepted the act of grace of the State and taken the
advantages which sprang from it, the corporation cannot be per-
mitted to hold on to the privilege or right granted and at the same
time repudiate the condition by the performance of which it could
alone obtain the privilege which it sought. That the right to be a
State corporation depends solely upon the grace of the State and is
not a right inherent in the parties, is settled.
" ... It follows from these principles that a State in granting a
corporate privilege to its own citizens, or, what is equivalent thereto,
in permitting a foreign corporation to become one of the constituent
elements of a consolidated corporation organized under its laws, may
impose such conditions as it deems proper, and that the acceptance
of the franchise in either case implies a submission to the conditions
without which the franchise could not have been obtained."
The right of the State to impose such taxes upon the organiza-
tion of a corporation is in no wise affected by the Interstate Com-
merce Clause of the Federal Constitution ; this, too, even when
1 B. & 0. E. R. Co. v. Maryland, 88 - Gordon v. Appeal Tax Court, 3 How.
U. S. 456. (U. S.) 134.
8 153 U. S. 436
203
§ 133 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I..
the corporation is formed for the express purpose of engaging in
interstate commerce. In the words of the United States Supreme
Court, " the right and privilege of being a corporation is of great
value to its members, as it is considered as property separate and
distinct from the property which the corporation may acquire.
According to the law of most States this franchise, or privilege of
being a corporation, is deemed personal property and is subject to
separate taxation. The right of the State to thus tax it has been
recognized by this court and the State courts in instances without
number." 1
(2) What effect, if any, has the Interstate Commerce Clause
of the Federal Constitution upon the right of the several States
to impose franchise taxes upon corporations engaged in interstate
commerce ? Again, attention is here called to the decisions of
the United States Supreme Court relative to the exercise of the
power in question. " The granting of the rights and privileges,"
observes that tribunal, " which constitute the franchises of a cor-
poration, being a matter resting entirely within the control of the
legislature, to be exercised in its good pleasure, it may be accom-
panied with any such conditions as the legislature may deem most
suitable to the public interests and policy. It may impose as a
condition of the grant as well as also of its continued exercise,
the payment of a specific sum to the State each year, or a portion
of the profits or gross receipts of the corporation, and may pre-
scribe such mode in which the sum shall be ascertained as may
be deemed convenient and just. There is no constitutional inhi-
bition against the legislature adopting any mode to arrive at the
sum which it will exact as a condition of the creation of the
corporation or of its continued existence. There can be, there-
fore, no possible objection to the validity of the tax prescribed
by the statutes of any State so far as it relates to its own corpora-
tions, nor can there be any greater objection to a similar tax
upon a foreign corporation doing business by its permission
within the State. As to a foreign corporation, it can claim a
right to do business in another State to any extent only subject to
the conditions imposed by its statutes. Only two exceptions or
qualifications have been attached to the foregoing, to wit : One is
that the State cannot exclude from its limits a corporation en-
i Horn Silver Mining Co. v. New York, York, 134 U. S. 594; Delaware R. II.
143 U. S. 305 ; Home Ins. Co. v. New Tax, 85 U. S. 206.
204
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 133
gaged in interstate or foreign commerce. The other limitation is
that where the corporation is in the employ of the government.
Raving the absolute power to exclude the foreign corporation, the
State may of course impose such conditions upon permitting the
corporation to do business within its limits as it may judge expe-
dient ; and it may make the grant or privilege dependent upon
the payment of a specific license tax or a sum proportioned to the
amount of its capital. No individual member of the corporation
or the corporation itself can call in question the validity of any
exaction which the State may require for the grant of its priv-
ileges. It does not lie in any foreign corporation to complain that
it is subjected to the same law with the domestic corporation." *
In a certain sense the imposition of an organization tax is as
much the levying of a franchise tax as the imposition by a State
of annual taxes upon corporations in return for the right to exer-
cise their corporate powers within the jurisdiction of the State.
The one has been defined to be a "franchise to be," and the other
as a " franchise to do." 2
(3) What effect, if any, has the Interstate Commerce Clause
of the Federal Constitution upon the right of the several States
to impose license taxes upon corporations engaged in interstate
commerce? Strictly speaking, the imposition of a franchise tax
has reference only to domestic corporations, while license taxes,
when applied to corporations, have reference not only to domestic
corporations, but to foreign corporations as well. Foreign cor-
porations, as such, can be taxed by foreign States only upon
corporate property situated within such foreign State, or upon the
business done there. They cannot be taxed in a foreign State on
account of their corporate franchises, as that was not given by
the laws of the foreign State but was dependent upon the laws of
the State of its creation and had an existence separate therefrom.
A corporation may, through its agents, extend its operations into
other States, and thus, metaphorically speaking, go there ; but it
never really travels, and its franchises exist only at the place of
its domicile and residence. 3
1 Horn Silver Mining Co. v. New York, Tax Cases, 92 U. S. 603; California v.
143 U. S. 305. Company, 127 U. S. 1 ; Society for Savings
2 Ailains Express Co. v. Ohio, 166 v. Coite, 6 Wall. 606; Maine v. l.'y. Co.,
U. S. 22+; Home Insurance Co. v. New 142 II. S 227.
York, 134 U. S. 600; Reading R. R. v. '■ People v. Equitable Trust Co., 96 N.Y.
Pennsylvania, 15 Wall. 296; State R. R. 387; Plimpton v. Bigelow, 98 N. V. 592,
205
§ 133 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART r.
On the other hand, there is clear distinction between a license
tax and a property tax. The former involves a charge for
permission or authority to transact certain business, while the
latter, when applied to corporations, is a contribution imposed
upon and measured by the property of the corporation. 1
The right to impose a license tax upon corporations is subject
to the following limitation : If the tax is essentially a regulation
of interstate commerce and its imposition does not constitute
a proper exercise of the police power of the State, then it comes
within the inhibition of the Interstate Commerce Clause of the
Federal Constitution. 2
Again, in Pembina Consolidated Silver Mining & Milling Co.
v. Pennsylvania, 3 the United States Supreme Court spoke as
follows :
" The exaction of a license fee to enable the corporation to have an
office for the transaction of its business within a foreign State is
clearly within the competency of the legislature of that State. The
recognition of the foreign corporation's existence in a foreign State,
even to the extent of allowing it to have an office within its limits
for the use of its officers, agents, and employees, was a matter de-
pendent upon the will of the State. It could make the grant of the
privilege conditional upon payment of a license tax and fix the same
according to the amount of the authorized capital of the corporation.
The absolute power of exclusion includes the right of a conditional
and restricted exercise of its corporate powers within the State.
The equal protection of the laws which these bodies may claim is only
such as is accorded to similar associations within the jurisdiction of
the State. The plaintiff in error is not a corporation within the
jurisdiction of Pennsylvania. The office it hires is within such juris-
diction, and on condition that it pays the required license tax it can
claim the same protection in the use of the office that any other cor-
poration having a similar office may claim. It would then have the
equal protection of the law so far as it had anything within the
jurisdiction of the State, and the constitutional amendment requires
nothing more. The State is not prohibited from discriminating in
the privileges it may grant to foreign corporations as a condition of
their doing business or hiring offices within its limits, provided
always such discrimination does not interfere with any transaction
i Cooley on Taxation, 2nd ed. pp. 383, 2 People ex rel. Pennsylvania R. R. v.
576; Welton v. Missouri, 91 U. S. 275; Wemple, 138 N. Y. 1.
Emert v. Missouri, 156 U. S. 296. 3 125 U. S. 181.
206
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 133
by such corporations of interstate or foreign commerce. It is not
every corporation lawful in the State of its creation that other States
may be willing to admit within their jurisdiction or consent that it
have offices in them; such, for example, as a corporation for lotteries.
And even where the business of a foreign corporation is not unlawful
in other States the latter may wish to limit the number of such cor-
porations or to subject their business to such control as would be in
accordance with the policy governing domestic corporations of a
similar character. The States may therefore require for the admis-
sion within their limits of the corporations of other States, or of any
number of them, such conditions as they may choose, without acting
in conflict with the concluding provision of the first section of the
Fourteenth Amendment.
" The only limitation upon this power of the State to exclude a
foreign corporation from doing business within its limits, or hiring
offices for that purpose, or to exact conditions for allowing the cor-
poration to do business or hire offices there, arises where the cor-
poration is in the employ of the Federal Government, or where its
business is strictly commerce, interstate or foreign. The control of
such commerce, being in the Federal Government, is not to be
restricted by State authority."
In "Waters Pierce Oil Co. v. Texas 1 it was said that :
" Having no absolute right of recognition in other States, but de-
pending for such recognition and enforcement of its contracts upon
their assent, it follows, as a matter of course, that such assent may
be granted upon such terms and conditions as those States may
think proper to impose. They may exclude the foreign corporation
entirely; they may restrict its business to particular localities, or
they may exact such security for the performance of its contracts
with their citizens as in their judgment will best promote the public
interest. The whole matter rests in their discretion."
In Hooper v. California, 2 conditions imposed upon a foreign
corporation were considered, and a statute was sustained, making
it a misdemeanor for a person in California to procure insurance
for a resident in that State from an insurance company not incor-
porated under its laws, and which had not filed a bond required
by the law of the State. All preceding cases were cited, and it
was assumed as settled " that the right of a foreign corporation to
engage in business within a State other than that of its creation,
» 177 U S 28. a l- r )5 U. S. 648; 39 L. Ed. 297.
207
§ 133 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
depends solely upon the will of such other State." And the ex-
ception to the rule was stated to be " only cases where a corpora-
tion created by one State rests its right to enter another and
to engage in business therein upon the federal nature of its
business."
A State may tax the franchise of a domestic corporation or
impose a license tax upon a foreign corporation, but can only
subject a corporation engaged in interstate commerce or in the
employ of the general government to such property taxation as
only incidentally affects its occupation, as all business, whether of
individuals or corporations, is affected by common governmental
burdens. 1
The power to license is a police power, although it may be exer-
cised for the purpose of raising revenue. 2 But the State in the
exercise of the police power cannot impede interstate commerce
by discriminating taxes. 3
The question next arises as to what constitutes a proper exer-
cise of the police power on the part of a State. A State may law-
fully in the exercise of this power provide for security of lives,
limbs, health, and comfort of persons and protection of property,
or in regulation of highways, canals, railways, and other commer-
cial facilities, passage of laws to regulate sale of articles deemed
injurious to health or morals of community ; imposition of taxes
on persons residing within the State and upon occupations pursued
therein, not directly connected with foreign or interstate com-
merce or with some other business exercised under authority of
the United States and imposition of taxes upon all property
within the State mingled with and forming part of the great mass
of property therein. 4
(4) What effect, if any, has the interstate commerce clause of
the Federal Constitution upon the right of the several States to
impose property taxes upon corporations engaged in interstate
commerce ?
1 Postal Telegraph Co. v. Adams, 155 576 ; Philadelphia, etc. Ass'n v. New York,
U. S. 696. 119 U. S. 119; Horn Silver Mining Co. v.
2 Wiggins Co. v. East St. Louis, 107 New York, 143 U. S. 305 ; Postal, etc.
U. S. 374. Cable Co. v. Charleston, 153 U. S. 693 ;
3 Austin v. Tennessee, 179 U. S. 344; Martin v. R. R., 151 U. S. 677; Hooper v.
License Cases, 5 How. (U. S.) 592. California, 155 U. S. 652; Bonman v.
4 Robbins v. Shelby Co. Tax Dis- Railway, 125 U. S. 491; Smith v. Alabama,
trict, 120 U. S. 493. See also Liverpool 124 U. S. 474.
Ins. Co. v. Massachusetts, 10 Wall. (U. S.)
208
CHAP. VI.] LEGISLATIVE CONTROL OVER FOREIGN CORPORATIONS. § 133
A State may tax corporations for their privileges within the
State in lieu of all other taxes, provided the amount is made
dependent on the value of its property within the State and pay-
ment is not a condition precedent to the right to carry on its
business. The tax then becomes a mere property tax and not an
interference with interstate commerce. 1
The existence of federal supervision over interstate commerce
is not inconsistent with the power of the State to control its
internal commerce and to tax franchises, property, or business of
domestic corporations engaged in such commerce, nor with power
to tax foreign corporations on property within the State. 2 In this
connection it has been well said that
"commerce between the States consists of intercourse and traffic
between their citizens and includes the transportation of persons and
property, and the navigation of public waters for that purpose as
well as the purchase, sale, and exchange of commodities. It makes
no difference whether such commerce is carried on by individuals or
by corporations. It is true that the property of corporations engaged
iu foreign or interstate commerce, as well as the property of cor-
porations engaged in other business, is subject to State taxation,
provided always it is within the jurisdiction of the State. Where
there is jurisdiction on the part of the State neither as to persons
nor property, the imposition of a tax is unconstitutional and void.
If the legislature of a State enacted that the citizens of another
State or country should be taxed in the same manner as the persons
within its own limits, and subject to its authority or in any other
manner whatsoever, such a law would be as much a nullity as if in
conflict with the most explicit constitutional inhibition. Jurisdiction
is as necessary to valid legislative as to valid judicial action. It has
been repeatedly decided, and is settled law, that a tax upon the capital
stock of a corporation is a tax upon its property and assets ; that it
is undoubtedly competent for the legislature to lay a franchise or
license tax upon foreign corporations for the privilege of doing busi-
ness within the State, but that such a tax is in no sense a license tax.
It is a fundamental principle that in order to tax the corporation it
must have a domicile within the State; that when it is sought to tax
capital stock of a corporation, the law imposing such a tax must be
construed to mean so much of the capital stock as is measured by the
property actually brought within the State by the corporation in the
transaction of its business. To the States must be conceded power
i Postal Tel. Co. v. Adams, 155 U.S. - Erie R. R. v. Pennsylvania, 158
696. U. S. 4.i7.
u 209
§ 133 INCORPORATION AND ORGANIZATION OF CORPORATIONS. [PART I.
to exclude foreign corporations altogether from its borders or to
impose a license tax so heavy as to amount to the same thing. They
must be denied the power to tax either persons or property not
within their jurisdiction." 1
1 Gloucester Ferry Co. v. Pennsylvania, 136 U. S. 120; Ashley v. Ryan, 153
114 U. S. 196. See also Philadelphia, etc. U. S. 446; Erie R. R. v. Pennsylvania
Steamship Co. v. Pennsylvania, 122 U. S. 158 U. S.437 ; New York State v. Roberts,
345 ; Norfolk, etc.,R. R. v. Pennsylvania, 171 U. S. 665.
210
PAET II.
SYNOPSIS-DIGEST OF THE INCORPORATION
ACTS OF THE SEVERAL STATES AND TER-
RITORIES OF THE UNITED STATES.
(Revised to July 1st, 1912.)
ALABAMA.
(The references are to the Code of Alabama, 1907, where not otherwise stated.)
1. Statutes under which Business Corporations may incorporate. — Busi-
ness corporations are organized under the Act of October 2, 1903, found in the
Acts of Alabama, 1903, page 310. This act will be found contained in Chapter
69 of the Code of Alabama, 1907, which went into effect May 1, 1908. Under
this act corporations may be organized "for any lawful business or businesses
of any kind or nature whatsoever."
2. Incorporators. — Three or more. There are no residential require-
ments (sec. 3445). Each of the incorporators must be a subscriber for at
least one share of stock (sec. 3446).
3. Contents of the Certificate of Incorporation. — The certificate must
contain (sec. 3446) :
a. Name. — Similarity of names is forbidden. If the name of a person or
partnership be assumed, it must be followed by the addition of some word
designating the nature of at least one of the businesses to be carried on, followed
by the word "Company" or "Corporation, and Inc."
6. Purposes. — The objects for which the corporation is to be formed.
Corporations may be formed under the General Act for any purpose whatever,
and for as many purposes as desired. The only limitation is that banking and
trust company powers cannot be exercised by corporations formed for any
other purpose.
G. L. & H. Ins. Co. v. Hamper, 73 Ala. 325; Beggs v. Company, 96 Ala. 295.
c. Domiciliary Office. — Location of principal office in the State.
d. Capital Stock. — The amount of total authorized capital stock not to be
less than $2,000. There is no maximum limit. The number of shares into which
it is divided, also amount of capital stock with which it will commence busim
not to be less than twenty-five per cent of the authorized capital, in no case le
than $1,000. If there be more than one class of stock, the certificate must
contain a description of the different classes of stock, with the terms on which
each class is created.
Nelson v. Hubbard, 96 Ala. 238.
211
DIGEST OF INCORPORATION ACTS. — ALABAMA.
e. Subscription Agent. — The name and post-office address of the officer or
agent designated by the incorporators to receive subscriptions to the capital
stock.
/. Incorporators, Directors, and Officers. — Names and addresses of the in-
corporators, together with the number of shares subscribed for by each, this
representing the amount of capital stock with which the corporation will begin
business. In addition, the incorporators' names, and names and addresses of
the directors and officers for the first year must be given. (See ante, sec. 2, and
post, sec. 12.)
g. Corporate Existence. — Duration of corporate existence, which may be
perpetual if desired.
h. Corporate Rules and Regulations. — Provisions desired for the regulation
of the business and for the conduct of the affairs of the corporation, creating
and defining the powers of the corporation, the directors and stockholders or
any class or classes of stockholders.
Note. — Additional statements are required for railway transportation, canal, telegraph,
telephone, and public utility corporations (see sec. 3446, sub. 1, 8, 9).
4. Statutory Powers. — The statute gives to corporations organizing
under the General Act the following powers, which being such as existed at
common law without any statutory enumeration thereof may be termed "com-
mon law powers." They are as follows: (1) The power of succession; (2) to
sue and be sued ; (3) to make, use, and alter the corporate seal ; (4) to adopt
by-laws ; (5) to purchase and hold real property for the purposes of the organi-
zation ; (6) to receive and grant by the corporate name ; (7) to appoint officers
and agents; (8) to borrow money ; (9) to issue negotiable paper ; (10) to mort-
gage the corporate property (Id. sec. 72).
Falconer v. Campbell, 2 McLean, 195.
In addition to the foregoing statutory enumeration of the common law
powers of corporations, the following additional powers are conferred : To hold
stockholders' and directors' meetings without the State, provided certain pre-
liminary formalities are observed (sec. 3481, sub. 7); to carry on corporate
business in other States and foreign countries (sec. 3481, sub. 9) ; to subscribe
for, purchase, and hold stock and bonds of other corporations (sec. 3481, sub.
10) ; under certain conditions to operate railroads (sec. 3485) ; to issue bonds
and mortgages or create indebtedness without limit with the consent of a major-
ity of the stockholders first obtained (sec. 3481, sub. 3); to accept real and per-
sonal property in payment of capital stock (sec. 3481, sub. 3) ; to create liens
upon the stock of members for debts due the corporation (sec. 3481, sub. 5;
as to power of corporations to consolidate see sec. 3481, sub. 11, sees. 3502-
3508 inclusive).
Railway, mining, manufacturing, and quarrying corporations may construct,
acquire, and operate steamboats, barges, ships for transportation of freight and
passengers (sec. 3494). They may also subscribe for or aid any other corpora-
tion in the construction of a railroad, etc. (sec. 3496).
Mining, manufacturing, and quarrying corporations may construct and
operate to and from their plants, railways, tramways, canals, tunnels, and
roads, and, as common carriers, transport freight and passengers thereon (sec.
3500).
Only corporations formed for the transaction of a banking or trust com-
pany business can engage in banking within the State (sec. 3524).
212
DIGEST OF INCORPORATION ACTS. — ALABAMA.
Corporations also have power to issue preferred stock ; to authorize voting by
proxy at stockholders' meeting ; to forfeit stock for non-payment of assessments
(sec. 3446, sub. 4; sees. 3479, 3478, 3476).
Chemacla Lime Works t>. Dismukes, 87 Ala. 344; Westinghouse Machine Co. v. Wilkinson,
79 Ala. 312; Simmons v. Troy Iron Works, 92 Ala. 427; Nelson v. Hubbard, 96 Ala. 238;
A. I. & I. Co. v. McKeever, 112 Ala. 134; London v. Sample Lumber Co., 91 Ala. 606; Perry
v. Company, 93 Ala. 364.
5. Procuring the Charter. — The certificate must be signed by all the
subscribers to the capital stock named therein. The statute does not expressly
require that the certificate be acknowledged by the subscribers. The certifi-
cate must then be filed and recorded in the office of the probate judge of the
county where the corporation will have its principal place of business. After
it has been recorded the probate judge, endorses thereon a certificate of regis-
tration. Within ten days after the filing of the certificate in the office of the
probate judge, the corporation must cause to be filed in the office of the Secre-
tary of State a statement signed by said probate judge, giving the name of
the corporation, the names of its incorporators, the date of the incorporation,
the amount of the capital stock, and the name of the county in which located.
For filing such statement a fee of fifty cents must be paid to Secretary of State.
The certificate must have attached to it a statement under oath by the person
authorized by the incorporators to receive subscriptions to the capital stock,
which shall show the amount of capital stock which has been paid in and the
amount of stock secured by contracts for stipulated labor or services or transfer
of property, which amount shall be at least twenty per cent of the stock sub-
scribed for, and in no case less than $1,000. At the time the certificate is filed
with the judge of probate the incorporators must pay the organization tax to
the judge of probate. A copy of the subscription list must be also attached
to the certificate (sees. 3446-3450 inclusive).
Corporate existence commences as soon as the articles are filed and recorded
in the office of the probate judge of the county where the domiciliary office is
located and the organization tax and filing fees paid (sec. 3454).
O. W. Co. v. Bliss, 132 Ala. 253 ; 31 Sou. 81 ; M. & O. Ry. Co. v. P. T. C. Co., 120 Ala. 21 ;
24 Sou. 408; N. C. Bank v. McDonnell, 92 Ala. 387; 9 Sou. 149; Harris v. G. L. Co., 128 Ala.
652; 29 Sou. 611; Boiling & Son v. Le Grand, 87 Ala. 482; 6 Sou. 332; Bebb v. Hall &
Farley, 101 Ala. 79; 14 Sou. 98; C. & C. Co. v. Lumber Co., 121 Ala. 340; 25 Sou. 566; Sav-
age v. Company, 84 Ala. 103; 4 Sou. 235; Sparks v. Company, 87 Ala. 294; 6 Sou. 195; Cen.
Ry. of Ga. v. Company, 144 Ala. 639.
6. Corporate Indebtedness. — There is no statutory limit upon the
amount of indebtedness that may be contracted by a business corporation.
To create a bonded indebtedness or increase the same, or to mortgage the rea 1
property of the corporation, the vote of the larger amount of stock present
and voting at a meeting duly called for that purpose must be had (sec. 3481 ,
sub. 3).
Under the Constitution (Art. XIV. sec. 6) corporations cannot issue bonds
except for money, labor done, or money or property actually received, and all
fictitious increase of indebtedness shall be void.
Nelson v. Hubbard, 96 Ala. 238; 11 Sou. 428; Dexter v. McClellan, 116 Ala. 37; 22 Sou.
461.
7. Organization Tax. — At the time the certificate is filed in the office <>f
the judge of probate the incorporators must pay to him for the use of the Stale
a charter fee of one dollar for every $1,000 of authorized capital stock, bul in
no case less than $5 (sec. 3450).
213
DIGEST OF INCORPORATION ACTS. — ALABAMA.
8. Filing and Recording Fees. — To the probate judge for recording cer-
tificate of incorporation fifteen cents for each one hundred words; for examining
the certificate $2.50 (sec. 3449) ; for filing the statement required by section 3455
to be filed with the Secretary of State, there shall be paid to the probate judge
of the county in which the company was organized a fee of $2.50 for the use of
the State (sec. 3455).
9. Commencing Business. — Twenty-five per cent of the authorized
■capital stock of a corporation must be subscribed in good faith, payable in
money before the commencement of corporate existence, but subscribers
may have the privilege of discharging the same in services, labor, or property
at the reasonable value for such services, labor or property. Twenty per
cent of all subscriptions for stock must be actually paid in, and said amount
must never be less in the aggregate than $1,000 (sec. 3446, sub. 4: sec. 3447).
Business must be commenced within five years from the date that the charter
issues (sec. 3515).
10. Organization Meetings. — A preliminary organization is effected by
the incorporators meeting within the State (by proxy, if desired) and author-
izing some person to receive subscriptions to the capital stock of the proposed
corporation. After the charter is secured from the State by the compliance
with the necessary formalities prescribed by statute (as stated above), the
incorporators, who, under the statute, must likewise be subscribers to the
capital stock, should sign a written consent to the holding of an organization
meeting, fixing the time and place for holding the same. The incorporators
should then organize by adopting by-laws and by the transaction of other
routine organization business. There is no statutory time prescribed within
which this organization meeting must be held, the law simply providing
that non-user of corporate franchise for a period of five consecutive years
is a forfeiture of such franchise.
11. Meetings, Stockholders' and Directors'. — In the absence of the
written consent of all resident stockholders, stockholders' meetings must be
held within the State, but such meetings may be held without the State upon
the written consent of such resident stockholders acknowledged before an officer
authorized to take acknowledgments and recorded in the office of the Secretary
of State. All corporations holding their stockholders' meetings without the
State must give the name and residence within the State of the agent in charge
of their principal office within the State, to be signed by the president or sec-
retary of the corporation under the corporate seal. The certificate should then
be filed in the office of the Secretary of State and in the office of the probate
judge of the county in which it has its principal office. A copy of all proceed-
ings had at stockholders' and directors' meetings held without the State must
be deposited with such agent. Written consent of the stockholders residing
within the State, for stockholders' meetings to be held without the State when
filed in the office of the Secretary of State, shall remain in force until revoked.
Directors' meetings may be held within or without the State as the by-laws
may provide (sec. 3481, sub. 7. As to notice of meetings, see sec. 3478).
Brockway v. G. M. L. Co., 102 Ala. 620; 15 Sou. 431.
12. Directors' Qualifications and Liabilities. — a. Qualifications. There
must be at least three directors, who shall be stockholders and hold office for
one year or until their successors are elected. There are no residential require-
ments (sec. 3463).
214
DIGEST OF INCORPORATION ACTS. — ALABAMA.
b. Liabilities. — Any president, director, or managing officer of any cor-
poration, by whatsoever name or title he may be known or called should so do
or omit to do any act or should so make any declaration or statement in writing
or otherwise, with the intent to depreciate the market value of the stock or bonds
of such corporation, and with the further intent to enable BUCh president, director,
or other managing officer or any other person to buy any such stock or bonds
at less than the real value thereof, must on conviction be fined not more than
S500 and shall be sentenced to hard labor for the county for not less than five
nor more than twelve months (sec. 6623). Any officer, agent, or servant of any
private or municipal corporation, who keeps false books or accounts or makes
false entries therein, with the intent to deceive, injure, or defraud such corpora-
tion or the officers or agents thereof, or if a private corporation, the stockholders
therein, must on conviction be fined not less than S100 nor more than SI, 000,
and may also be sentenced to hard labor for the county for not more than two
years, one or both, at the discretion of the jury (sec. 6927).
See Wilson v. Stevenson, 129 Ala. 630; Smith v. P. R. Co., 30 Ala. 650; Fitzpatrick v.
D. P. Co., 83 Ala. 604 ; 2 Sou. 727.
13. Stockholders' Liabilities. — Stockholders are liable for the debts of
the corporation only on the unpaid stock owned by them (sec. 3468). The cor-
poration may, by the adoption of a proper by-law, place a hen upon the shares
of its stockholders for any debt or liability they may incur to the company (sec.
3476, Cons., Art. XLV. sec. 8).
Lear. Company, 119 Ala. 271; 24Sou.28; Nicrosi v. Company, 115 Ala. 429; 22 Sou. 117.
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate signed by the president and secretary or treasurer. The par value
may be any amount (sec. 3469; sec. 3446, sub. 4).
15. Preferred Stock. — Preferred stock is expressly authorized under the
new act (sec. 3479). If provided for in the original certificate of incorpora-
tion, the terms on which it is issued must be therein stated (sec. 3446, sub. 4).
In such cases it must be accompanied by the assent of the original subscribers
to the capital stock expressed in their subscription (sec. 3479). If subse-
quent to incorporation it is desired to issue preferred stock, this may be done
by the vote of the holders of two-thirds in value of the capital stock outstand-
ing at a meeting called for that purpose. The proceedings of this meeting
must be certified to the Secretary of State and filed and recorded in his office.
After this has been done, preferred stock, not to exceed two-thirds of the
capital stock paid in in cash or property, may be issued. Each stockholder
shall be first entitled to the privilege of taking such preferred stock in pro-
portion to the amount of common stock held by him, or a less amount
should he desire, before the preferred stock is offered for sale to the public
(Id. sec. 43 ; Cons., Art. XLV. sec. 9).
16. Payment of Capital Stock. — Under the Constitution corpora-
tions can only issue stock for money, labor done, or money or property
actually received. All fictitious increase of stock is void (Cons., Art. XIV.
sec. 6).
All subscriptions to capital stock must be paid in cash, except that, if so
provided in the contract of subscription, such subscriptions may be discharged
by the rendition of stipulated necessary services, or the performance of stipu-
lated necessary labor, or the transfer of property at the reasonable value
215
DIGEST OF INCORPORATION ACTS. — ALABAMA.
thereof. In such cases the subscription list shall state the names of such
subscribers, with the nature of the services or labor to be performed and a
brief description of the property and when it is to be transferred to the com-
pany (sec. 3467).
Bibb v. Hall, 101 Ala. 79; 14 Sou. 98; Haas v. Hall, 111 Ala. 442; 20 Sou. 78; Paschall
v. Whitsett, 11 Ala. 472; Spence v. Shapard, 57 Ala. 598; Knox v. C. L. Co., 86 Ala. 180;
5 Sou. 578; Fitzpatrick v. P. Co., 83 Ala. 604; 2 Sou. 727; Williams v. Evans, 87 Ala. 725;
6 Sou. 702; Parsons v. Joseph, 92 Ala. 403; 8 Sou. 788; Beitman v. Steiner, 98 Ala. 241;
13 Sou. 87; Perry v. Mill Co., 93 Ala. 364; 9 Sou. 217; L. L. Co. v. Rees, 103 Ala. 622; 16
Sou. 637; Powers v. Dimmick, 115 Ala. 233; 22 Sou. 109; Elyton Co. v. Company, 92 Ala.
407; 9 Sou. 129; Nicrosi v. Drove, 102 Ala. 648; 15 Sou. 429.
17. Books. — It is contemplated by the statute that the books, records,
and papers of the corporation shall be kept at the principal office within the
State unless the by-laws otherwise provide. The statute gives to all stock-
holders the right of access to, and inspection and examination of such books,
records, and papers at reasonable and proper times (sec. 3477). It is specially
provided that a stock register shall be kept with an agent in the State, showing
list of stockholders, transfers, and hypothecations (sec. 3473).
18. Office and Agent. — Every corporation must have an office within the
State, and an agent in charge thereof upon whom process may be served (sec.
3481, sub. 7).
19. Reports. — No annual reports are required (sec. 2361, sub. 26).
20. Anti-Trust Statute. — ■ There is an anti-trust statute in force within
the State (Cons. 1902, Art. IV. sees. 74, 103, Code of 1907, sees. 7579 to 7582
inclusive, see also Id. sees. 2487, 2488).
21. Statutory Grounds for Forfeiture of Charter. — Non-user for a period
of five consecutive years is ground for forfeiture of the charter upon proper
action taken by the State (sec. 3515). Also non-payment of license tax.
State v. Bank, 2 Stew. 30; Curry v. Woodward, 53 Ala. 371; M. & O. R. R. Co. v. State,
29 Ala. 573; I. & E. Co. v. Locke, 50 Ala. 332; State v. R. R. Co., 108 Ala. 29; 18 Sou. 801.
22. Amendments. — If through misunderstanding or inadvertence occurring
at the time of incorporation, the corporation has failed to comply with any of
the requirements of the act, the president or other executive head of the corpora-
tion may supply such omission or defect by filing in the office of the judge of
the probate court in the county in which the corporation was organized, a state-
ment in writing, under oath, setting forth the omission or error and supplying
or correcting the same (sec. 3461).
In regard to material amendments desired after incorporation the following
may be said : Under section 3462 of the Code of Alabama of 1907. Every cor-
poration chartered under this chapter or under any general or special law of
this State may change the nature of its business, the par value of the shares of
its stock, change the location of its principal office in this State, renew or extend
its corporate existence, change its corporate name, and make such other amend-
ment, alteration, or change of its charter as may be desired in the following
manner: the board of directors shall pass a resolution declaring that such change
or alteration or extension is desirable and calling a meeting of the stockholders
to take action thereon; if the holders of the larger amount in value of each class
of stockholders having voting powers shall vote in favor of such alteration,
change, amendment, renewal or extension, a certificate thereof shall be signed
by the president and secretary under the corporate seal, acknowledged or proved
as in the case of deeds of real estate, and such certificate, together with the written
assent, signed in person or by proxy, of the stockholders holding a majority in
216
DIGEST OF IN'CORPORATION ACTS. — ALABAMA.
value of each such class, shall be filed in the office of the judge of probate of the
county where the corporation has its principal place of business, and upon the
filing of the same the certificate of incorporation shall be deemed to be so re-
newed or extended; provided that such certificate of change, alteration, amend-
ment, renewal, or extension shall contain only such provisions as would be
lawful and proper to insert in an original certificate of incorporation, made at
the time of making such amendment.
To increase or decrease the number of directors the consent of the persons
holding the larger amount in value of the capital stock expressed by a vote
cast at a regular meeting or at a special meeting called for that purpose, is neces-
sary (sec. 3466). The capital stock or bonded indebtedness may be increased
by the consent of the persons holding the larger amount in value of the capital
stock obtained in favor thereof, at a regular meeting of the stockholders or a
special meeting thereof called for that purpose on thirty days' notice, the ootice
of the meeting in either case to state what increase is proposed to be made. If
at such meeting the consent of the holders of the larger amount in value of the
capital stock shall be given to a specified increase of the capital stock or bonded
indebtedness, a report thereof, certified by the president or secretary of the cor,
poration under the corporate seal, must be filed and recorded in the office of thq
judge of probate of the county in which the corporation was organized. A \ika
proceeding is necessary in order to decrease the capital stock, special provision
being made as to the manner in which such decrease shall be effected. (See
sec. 3480.)
23. Renewal of Corporate Existence. — The term of existence may be ex-
tended at pleasure by compliance with the statute in such case made and pro-
vided. (See sec. 3462; sec. 3481, sub. 14.)
24. Annual Privilege Tax. — When paid up capital is under $10,000, $10;
when it exceeds $10,000 and does not exceed $25,000, $15; when it exceeds
$25,000 and does not exceed $50,000, $25; when it exceeds $50,000 and does not
exceed $100,000, $50; when it exceeds $100,000 and does not exceed $200,000,
$75; when it exceeds $200,000 and does not exceed $300,000, $125; when it
exceeds $300,000 and does not exceed $400,000, $170; when it exceeds $400,000
and does not exceed $500,000, $200; when it exceeds $500,000 and does not
exceed $1,000,000, $300; when it exceeds $1,000,000, $500. The tax becomes
due January 1st (sec. 2361, sub. 26).
At the time application is made for the issuance of the annual license to cor-
porations required by law, it must be accompanied by the affidavit of the presi-
dent or other chief officer of the corporation, showing the amount of capital
stock of such corporation. But the payment of this tax in one county in Ala-
bama, as evidenced by the certificate issued by the judge of probate of that
county, shall be sufficient (sec. 2361, sub. 26).
25. Dissolution. — Dissolution may be effected by an agreement of all
stockholders signed and acknowledged, filed and recorded with tin- probate
judge of the county of organization, and published in a newspaper of county
of principal place of business four weeks ; or (if such agreement cannot be bad)
holders of two-thirds in value of stock may petition Court of Chancery or other
court of competent jurisdiction for dissolution (sees. 3510-3514).
State v Webb, 97 Ala. Ill; 12 Sou. 377; MoKleroy ". Q. I- I <'<>.. 126 Ala. 1st; 28 Sou.
660.
26. Foreign Corporations. — Under Art. XII. sec. 232 of the Constitu-
tion of Alabama, 1901, and under the provisions of sec. 3642 of the Code of
217
DIGEST OF INCORPORATION ACTS. ALABAMA.
Alabama, 1907, no foreign corporation can do business within the State until
it has filed with the Secretary of State a written statement, designating at
least one known place of business within the State, and naming an agent within
the State, located at its own place of business, upon whom as such agent service
of process may be made and all legal notices served for all the purposes con-
templated by the laws of the State of Alabama. There must also be filed with
the foregoing a certified copy of its articles of incorporation. The statement
to be filed must be in writing under the seal of the corporation and signed
officially by the president and secretary thereof. The transaction of business
by foreign corporations without having first filed the written statement here-
inbefore referred to, renders it liable to forfeit and pay to the State the sum
of $1,000 (sees. 3642-3646).
The legislature is directed by the Constitution to provide for the payment
of a license tax by foreign corporations to be based on the actual amount of
capital employed by them within the State.
Foreign corporations are required before engaging in the transaction of busi-
ness within the State to pay to the treasurer for the use of the State the follow-
ing fees. Each foreign corporation whose actual amount of capital employed
within this State is $100 or less, shall pay a charter fee of twenty-five per cent
of the actual amount of capital employed or to be employed in the State by it.
Each foreign corporation whose actual amount of capital employed in this State
exceeds $100 and does not exceed $1,000, shall pay a charter fee of twenty-five
per cent upon the first $100 of the actual amount of capital employed in this
State, by it, and five per cent on all such remaining actual amount of capital
employed in this State by it over $100 and up to and not exceeding $1,000.
Each foreign corporation whose actual amount of capital employed in this
State exceeds $1,000 shall pay a charter fee of twenty-five per cent upon
the first $100 of actual amount of capital employed in this State by it, and
five per cent upon all such capital employed in this State by it over $100 and
up to $1,000, and one-tenth of one per cent on such actual amount of capital
in excess of $1,000. All corporations or mutual companies which have no capi-
tal stock shall pay a fee of $25 (sec. 3647 as amended by Laws of Special
Session of 1907, p. 200). This tax is payable annually each year while the
corporation is transacting business within the State.
Under sec. 3648 of the Code of 1907, such foreign corporation shall at the
time of paying said fee into the treasury file in the office of the State Auditor an
instrument in writing under the seal of the corporation and signed officially by
the president or other chief officer and the secretary of such corporation, show-
ing the name of the corporation, and the State or country under whose laws it
was incorporated, the amount of the total authorized capital of such corpora-
tion, its principal place of business, the name of the authorized agent of said
corporation in this State, and the post-office address of such authorized agent
of such corporation in this State, and the location of the principal place of
business of such corporation in this State ; and also a statement showing the
actual amount of capital employed in this State by such corporation, if such
corporation is at the date of the filing of such statement engaged in business
in this State, and if such corporation is not at the date of the filing of such
statement engaged in business in this State, such statement shall state the
actual amount of capital to be employed by such corporation in this State,
which statement shall be sworn to by the president or other executive officer
and the secretary of said corporation before some officer authorized under the
218
DIGEST OF INCORPORATION ACTS. — ALABAMA.
laws of this State to administer oaths or take acknowledgment of conveyances.
If the auditor shall have any reason to believe that any statement made in
such instrument so filed in his office is untrue, or that any fact or facts stated
in such instrument is incorrectly stated, he shall have power to demand of such
corporation, its officers or agents, an inspection of the books, records, and pa |
of the said corporation for the purpose of ascertaining the truth or falsity of any
such statement, and any corporation which shall refuse to permit the auditor.
or such person as may be designated by him, to inspect the books, records, and
papers of such corporation when such examination is demanded by the auditor,
shall not be permitted to transact any business or do any act in its corporate
capacity in this State until such inspection is made. If the auditor, upon making
such inspection of the books, records, and papers of such corporation shall find
that the amount of capital to be employed or which is employed by the said
corporation in this State is in excess of the amount stated in such statement
filed by such corporation, he shall make demand upon such corporation, its
officers or agents, for the payment of the difference in amount between the
charter fee for which such corporation would be liable upon the amount of
capital set forth in said statement and the amount of the charter fee for which
such corporation would be liable upon the amount of capital set forth in said
statement, and the amount of the charter fee which such corporation would be
liable upon the amount of said capital as ascertained by the auditor from his
inspection of the books, records, and papers of such corporation, and any such
corporation which shall fail or refuse for the space of sixty days after the date
that such demand is made by the auditor to pay said amount found by the audi-
tor to be due it in excess of the amount shown to be due by it in such state-
ment, shall not be permitted to engage in business or do any act in its corporate
capacity in this State at any time within five years from the date of such
demand (sec. 36-48).
No foreign corporation required to pay a tax under this act shall do
any business in the State of Alabama not constituting interstate commerce, or
maintain or defend any action in any of the courts of this State upon a con-
tract made in this State other than contract based upon interstate com-
merce unless such corporation shall have paid such tax within sixty days
after the same became due. Provided that this act shall not apply to
foreign corporations engaged in the business of lending money in Alabama
(sec. 2396).
All foreign corporations are required to procure annually from the Secretary
of State a license to transact business within the State. This license must be
procured prior to January 1st of each year, and for issuing the same the Sec-
retary of State is entitled to charge and receive $10 (sec. 3652). In addition
to the foregoing enumerated license taxes each foreign corporation must pay
annually to the judge of probate of the county where it has a resident agent
a franchise tax, for the use of the State, equal in amount and assessed in the
same mariner as the charter fee referred to above. They must also file with
the judge of probate the same detailed information required to be filed by
foreign corporations with the State Auditor as enumerated above. The act
further provides that in addition to the amount of franchise taxes required
to be paid by each foreign corporation to the State, as here stated, all foreigrj
corporations shall in addition thereto pay to the county, for the use of the
county, an aniounl equal to one-half of the amount paid by it to the State
(sec. 2399). aal license tax must be paid prior to January 1st of
219
DIGEST OF INCORPORATION ACTS. — ALABAMA.
each year (sees. 2391-2392. See also as to reissuing of permit after cancella-
tion of license, sec. 3657).
Hall v. Engine Co., 91 Ala. 363; 8 Sou. 348; Morris v. Hall, 41 Ala. 510; Lucas v. Bank,
2 Stew. 147; Craddock v. Mortgage Co., 88 Ala. 281; 7 Sou. 196; Cook v. Brick Co., 98 Ala.
409; 12 Sou. 918; State v. Bank, 108 Ala 3; 18 Sou. 533; George v. N. E. M. Sec. Co., 109
Ala. 548; 20 Sou. 331; Electric L. Co. v. Rust, 117 Ala. 680; 23 Sou. 751; Farrier v. N. E.
M. S. Co., 88 Ala. 275; 7 Sou. 200; Collier v. Davis, 94 Ala. 456; 10 Sou. 86; Christian v.
A. F. L. & M. Co., 89 Ala. 198; 7 Sou. 427; City of Greenville v. G. W. Co., 125 Ala. 625;
27 Sou. 764; Sullivan v. Vernon, 121 Ala. 393; 25 Sou. 600; Beard v. U. & A. P. Co., 71 Ala.
60; Falls v. U. S. S. L. & B. Co., 97 Ala. 417; 13 Sou. 25; McLeod v. Am. F. L. M. Co., 100
Ala. 496; 14 Sou. 409; Chattanooga, etc. Ass'n v. Denson et al., 189 U. S. 408; D. M. & T.
I. Co. v. Nixon, 95 Ala. 318; 10 Sou. 311.
220
DIGEST OF INCORPORATION ACTS. — ALASKA.
ALASKA.
(The references are to the Act of Congress [Public Act, 135] approved March 2. 1903,
■unless otherwise stated, Vol. 32, U. S. Revised Statutes, chap. 978, sec. 5, pp. 947-952.)
1. Statute under which Business Corporations may incorporate. —
The Business Corporation Act of Alaska is found in Acts of Congress No. 135,
approved March 2, 1903. Under this act corporations may organize for the
purpose of transacting the following lines of business in Alaska only, to wit :
railway, street railway, wagon road, canal, flume, telegraph, telephone, mining,
fishery, smelting, electric power, lighting, dock, wharfage, elevator, warehouse,
hotel, trade, transportation, agricultural, lumbering, and manufacturing
companies.
2. Incorporators. — Three or more adult persons, all of whom must be
bona fide residents of the District of Alaska (sec. 1).
3. Contents of the Articles of Incorporation. — Articles must contain:
a. Corporate Name. — Similarity of names not forbidden (sec. 2).
b. Purposes. — Nature and character of the business. May be incorporated
for one or more of the purposes above enumerated (Id.).
c. Domiciliary Office. — Principal place for transacting business.
d. Duration. — Time of commencement and period of continuance not to
exceed fifty years (Id.).
e. Capital Stock. — Amount of capital stock and manner in which the same
is to be paid in, and the number and par value of the shares (Id. sec. 10).
/. Indebtedness. — Highest amount of indebtedness or liability that may
be incurred (Id.).
g. Names of Incorporators. — Names and residences of the incorporators (Id.).
h. Directors. — Number and names of first board of directors, and also
statement as to what officers shall have charge of the management of the cor-
porate affairs and when they shall be elected and their terms of office (Id.). If
desired, provision may be inserted for manner of calling first meeting of directors
(sec. 9).
4. Statutory Powers. — The statute merely enumerates the common law
powers of corporations. The power to remove officers and directors is ex-
pressly granted, as well as the right of stockholders to vote by proxy. Stock
may be forfeited for non-payment of assessments (sees. 4-6, 10).
5. Procuring the Charter. — Incorporators must subscribe and acknowl-
edge written articles of incorporation in triplicate. One of these must be filed
and recorded in the office of the Secretary of the District of Alaska and an-
other in the office of the clerk of the District Court of the recording division where
the principal place of business of the corporation is to be located ; the third to
be retained in the possession of the corporation. Corporate existence com-
mences as soon as the foregoing steps have been taken (sees. 2-4).
6. Corporate Indebtedness. — The corporate indebtedness cannot ex-
ceed the capital stock (sec. 17).
7. Organization Tax. — There is no organization tax in the District of
Alaska.
8. Filing and Recording Fees. — The filing and recording fees in the
office of the Secretary of the District of Alaska have not yet been fixed by the
221
DIGEST OF INCORPORATION ACTS. — ALASKA.
Attorney-General of the United States. On this subject the Attorney-General
of the United States writes as follows :
" The Attorney-General has not prescribed any schedule of fees covering the
filing of papers in the office of the Secretary of the District of Alaska, for the
reason that it has been and is considered very doubtful whether he is author-
ized by Section 30, Chapter 1, Title I. of the Act of June 6, 1900, to do so.
"Under Section 10 of the above-named chapter and title, the Surveyor
General, ex officio Secretary of the District, gets a salary of four thousand
dollars per annum as full compensation. It seems clear therefore that he (the
Secretary) would not be authorized to retain for his own use any fees prescribed
by the Attorney-General for services rendered in filing papers in the office of
the Secretary. In view of the fact that Congress provided a salaried officer
to perform the services rendered by such Secretary, and neither prescribed
fees therefor nor provided how the Secretary should account for fees if pre-
scribed by the Attorney-General, it seems that the Attorney-General is not
authorized to prescribe fees for such services."
With respect to the fees of the clerks of the courts in the District of Alaska
it should be noted that sec. 828 of the Revised Statutes of the United States
has been made applicable to the services rendered by clerks of the Federal
courts. (See also paragraph 535 of Instructions to United States judges,
marshals, attorneys, clerks, and commissioners for the District of Alaska, effec-
tive from and after August 1, 1902.) For recording articles in the office of the
clerk of the District Court of the recording division where the principal place
of business of the corporation is to be located, a fee of 15 cents per folio
must be paid for such service. (See Public Act No. 150, Title I. sec. 30, ap-
proved January 6, 1900.)
9. Commencing Business. — Business may be commenced as soon as the
articles are filed in the proper offices and the organization effected (sec. 4).
Within thirty days after any change of officers a certificate thereof is required
to be filed in the office of the clerk of the District Court (sec. 20). Directors
must also take oath of office (sec. 6).
10. Organization Meeting. — The organization meeting must be held
in the District of Alaska. Corporations must organize within one month after
fifing articles of incorporation by the adoption of by-laws (sees. 9-16). Unless
otherwise provided in articles of incorporation, the first meeting of directors
must be called by one or more of the persons named as directors in the cer-
tificate, by notice served personally on the resident directors and published at
least twenty days in a newspaper at or nearest the principal place of business
of the corporation in Alaska (sec. 9).
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held within the District of Alaska. The requirement that a majority
of the directors must be residents of the district would ordinarily necessitate
holding all meetings of the board of directors there (sec. 6).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be not less than three directors, who shall be stockholders, and a
majority shall be residents of the District of Alaska. They are each required
to subscribe to an oath of office (sec. 6).
b. Liabilities. — Directors are liable for illegal payment of dividends and for
the unlawful withdrawal of any part of the capital stock of the corporation,
unless absent from meeting or their dissent is entered at length upon the minutes
(sec. 13).
222
DIGEST OF INCORPORATION ACTS. — ALASKA.
13. Stockholders' Liabilities. — Stockholders are liable only for the
amount that remains unpaid upon the par value of their stock (sec. 14).
14. Stock Certificates. — Each stockholder is entitled to a stock certifi-
cate signed by such officers as the by-laws may prescribe. The par value of
stock may be any amount.
15. Preferred Stock. — There is no provision for preferred stock.
16. Payment of Capital Stock. — Stock may be issued in considera-
tion of money, labor, or property, estimated at its true money value (sec.
14).
17. Books. — Books of account, stock books, and record books must be
kept at its principal office in Alaska. These are open to the inspection of stock-
holders (sec. 16).
18. Office and Agent. — The office and the principal managing officer or
superintendent must respectively be maintained and reside in the District of
Alaska (sees. 2, 16).
19. Reports. — The president, secretary, and treasurer must annually
make out and publish weekly for three weeks a statement showing, first, number
of shares of stock outstanding ; second, amount paid in on each share ; third,
actual paid up capital of the corporation; fourth, actual cash value of the
property and its location ; fifth, statement of debts and liability and a descrip-
tion of the same; sixth, salaries paid officers, manager, and superintendent;
seventh, increase or decrease, if any, in the stock, the capital and the liability
of the corporation during the preceding year. On or before September 1st of
each year, or within thirty days after any change in the officers of a corpora-
tion, there must be filed in the office of the clerk of the district court of the
recording division where the principal office of the corporation is located, a fist
containing the names of the principal officers, including the president, cashier,
secretary, and managing agents (sees. 20, 23).
20. Anti-Trust Statute. — There is no anti-trust statute specially appli-
cable to the District of Alaska. (See Anti-Trust Act, U. S. Statutes of 1890,
chap. 647.)
21. Statutory Grounds for Forfeiture of Charter. — An action may
be maintained in the name of the United States, whenever the governor shall so
direct, against a corporation, either public or private, for the purpose of avoid-
ing the act of incorporation, or the act renewing or modifying its corporate
existence, on the ground that such act or either of them was procured upon
some fraudulent suggestion or concealment of a material fact by the persons
incorporated, or some of them, or with their knowledge and consent ; or for an-
nulling the existence of such corporation, when the same has been formed
under any general law operating in this district therefor, on the ground that
such incorporation, or any renewal or modification thereof, was procured in like
manner (sec. 338).
An action may be maintained in the name of the United States against a
corporation, other than a public one on leave granted by the court or judge
thereof where the action is triable, for the purpose of avoiding the charter or
annulling the existence of such corporation whenever it shall —
First. Offend against any of the provisions of the acts, or cither of them
creating, renewing, or modifying such corporation or the provisions of any
general law under which it became incorporated ; or,
Second. Violate the provisions of any law by which such corporation for-
feits its charter by abuse of its powers; or,
223
DIGEST OF INCORPORATION ACTS. — ALASKA.
Third. Whenever it has forfeited its privileges or franchises by failure to
exercise for a period of one year its powers; or,
Fourth. Whenever it has done or omitted any act which amounts to a
surrender of its corporate rights, privileges, and franchises ; or,
Fifth. Whenever it exercises a franchise or privilege not conferred upon
it by law.
Sixth. Whenever any such corporation or association of persons shall
combine for the purpose of forming a trust or agreement to prevent competition
or to control the price production or sale of any goods, products, or merchandise
(sec. 339).
22. Amendments. — To increase or decrease the capital stock a meeting
of stockholders must be called by notice signed by at least a majority of the
directors, and published weekly for at least eight consecutive weeks in some
established newspaper published at or near the principal place of business of
the corporation in the District of Alaska, which notice shall specify the object
of the meeting, the time and place where it is to be held, and the amount to
which it is proposed to raise or diminish the capital stock. The proposed in-
crease or decrease in stock must be approved by a vote of two-thirds of all the
shares of stock. Thereupon a certificate of proceedings, showing compliance
with the foregoing provisions, the amount of the capital stock actually paid
in, the whole amount of debts and liabilities of the company, and the amount
to which the capital stock is to be decreased and diminished shall be made out,
signed, and verified by the affidavit of the presiding officer and secretary of
the meeting, and certified to by a majority of the directors, and filed and re-
corded in the same manner as original articles of incorporation (sees. 17-19 ;
sec. 2, sub. 7 ; sec. 7). In the same manner and upon such additional notice as
may be provided in the articles of incorporation or by-laws, any of the general
provisions of the articles of incorporation may be amended, and upon a like
vote, unless a different vote be required in the articles of incorporation. There-
upon such amended articles must be filed and recorded in the same manner as
provided for original articles (sees. 17-19 ; sec. 2, sub. 7 ; sec. 7).
23. Extension of Corporate Existence. — There is no provision for the
extension of corporate existence.
24. Dissolution. — The corporation may be dissolved by the voluntary
action of the stockholders taken as provided for in the act (sees. 21-22).
25. Annual License Fee. — There is no annual license fee in the District
of Alaska.
26. Foreign Corporations. — Under Act of June 6, 1900, chap. 23 of Title
III.' U. S. Statutes at Large, 1900, pp. 321-528, a foreign corporation, whether
created under the laws of the United States or those of any State or Territory
of the United States, is required, before doing business within the District
of Alaska, to file with the secretary of the district and the clerk of the District
Court for the division within which the business is to be carried on, an authen-
ticated copy of its charter or articles of incorporation, and a statement verified
by oath of the president and secretary of the corporation, and attested by a
majority of the directors, showing : name and location of principal place of
business without, and also (if it have one) within the district ; amount of capital
stock; amount thereof -paid in in money, and amount paid in any other way,
and manner thereof; amount of assets and of what they consist, and actual
cash value thereof ; liabilities, and if any of its indebtedness is secured, how and
upon what property. It must also file with the foregoing papers a certificate
224
DIGEST OF INCORPORATION ACTS. — ALASKA.
under seal of the president, vice-president, or other acting head of the corpora-
tion, and the secretary, if there be one, certifying that such corporation 1ms
consented to be sued in the courts of the district upon all causes of action arising
against it in the district, and that process may be served upon a designated
agent residing in the district ; and must file therewith written consent of such
agent. Such corporation must also annually, within thirty days from July 1,
report in substantially the same form required in the foregoing statement and
containing similar information (Civil Code, sees. 225, 226, 228, 229, 231).
Ames v. Kruzner, 1 Alaska, 598; Miocene Ditch Co. v. Lyng, 2 Alaska, 265; First Nat.
Bank of Seattle, v. Fish, 2 Alaska, 344.
15 225
DIGEST OF INCORPORATION ACTS. — ARIZONA.
ARIZONA.
(The references cited below are to the Revised Statutes of Arizona, 1901, unless otherwise
stated.)
1. Statute under which Business Corporations may incorporate. —
The General Corporation Act in force in Arizona went into effect September 1,
1901. It is found in the Revised Statutes of 1901, sees. 761-783 and sees. 909-
925 and amendments thereto. It is entitled "Title XIII." ; chap. 2 thereof
refers to corporations. In 1903 an act was passed amending sees. 766-770 of
the act above referred to. Under it parties may incorporate for any lawful
purpose.
2. Incorporators (R. S., sec. 764). — Any number of persons may be
incorporators; there are no residential requirements.
3. Contents of Articles of Incorporation. — The articles of incorpora-
tion must state the names of the corporators, name of corporation, and the
principal place of business of the corporation within the Territory. Similarity
of names is not expressly forbidden. The business of the company must be
indicated by its corporate name (Laws of 1912, chap. ).
b. General Nature of the Business proposed to be transacted. — The Terri-
torial Auditor allows as many purposes as may be desired to be inserted in the
articles. Special provisions are made for railway, insurance, savings and loan,
and eleemosynary corporations.
B. B. Co. v. A. & C, Ariz., 35 Pac. 983.
c. Capital Stock. — The amount of the capital stock authorized, and the
time when, and conditions upon which, it is to be paid in. Capital stock under
this section is without limit as to amount. The par value of the shares may be
any amount.
d. Corporate Existence. — The time of commencement and termination of
the corporate existence of the corporation. This period is limited by the stat-
ute to twenty-five years (sec. 771). Corporate existence may be renewed for
another period of twenty-five years upon a vote of three-fourths of the stock-
holders given at a meeting duly held for that purpose (sec. 771).
e. Officers and Directors. — The names of the officers or the persons by
whom the affairs of the corporation are to be conducted, and the times at which
they are to be elected. Reference should be made in the articles to a board of
directors of a designated number, to be elected annually by the stockholders.
So far as the statute is concerned, one would scarcely know that the corpora-
tions organized under the General Act were supposed to have a board of direc-
tors (Laws of 1903, chap. 88).
/. Corporate Liability. — The highest amount of indebtedness or liability to
which a corporation can at any time subject itself. This liability must not in
any case exceed two-thirds of the capital stock (sec. 767).
g. Annual Meeting. — This is inserted by inference from sec. 5 of the
Amendment of 1903, which requires a statement of time at which the officers in
charge of the affairs of the corporation are elected.
h. Stockholders' Liability. — Unless the private property of the stockholders
is expressly exempt in the articles of incorporation from liability for corporate
debts, stockholders are liable for the debts of the corporation in the proportion
which their stock bears to the entire capital stock.
226
DIGEST OF INCORPORATION ACTS. — ARIZONA.
i. Corporate Rides and Regulations. — While the statute does not authorize
the insertion in the articles of any corporate rules and regulations, the Terri-
torial Auditor permits such rules and regulations to be inserted in the articles
filed in his office. (See Laws of 1903, Act 88.)
4. Statutory Powers. — The statute (sec. 705) enumerates the common
law powers of corporations. A sinking fund may be established for the payment
of debts (sec. 777). No mining or manufacturing corporation can have the
power to operate or construct any railway, tramway, turnpike, or public high-
way, except such as lead from their principal work to adjacent streams, rail-
ways, or highways (sec. 781). Specific power is given to forfeit stock for
non-payment of subscriptions (Laws of 1907, chap. 38). As to powers of rail-
road corporations see Laws of 1909, chap. 83.
Keyser v. Shuts, 29 Pac. 386.
5. Procuring the Charter (sees. 767-769). — The articles must be signed
and acknowledged before some officer authorized to take acknowledgments.
Under the new corporation act which went into effect in the State of Arizona
in 1912, the original articles must be filed with the Corporation Commission,
a body having a membership of three. A certified copy of the original articles
must then be filed in the office of the county recorder of the county where the
principal place of business of said corporation within the State is located. When
this has been done, the Corporation Commission issues a certificate of incor-
poration. The articles must then be published at least six times in some
newspaper published in the county in which the corporation's principal place
of business is located or works established, and an affidavit of publication
thereof must be filed in the office of the County Recorder, for which no fee is
charged. The act provides that there shall be no collateral inquiry into the
legality of the corporate existence (sees. 770, 780; Laws of 1903, Act 88).
6. Corporate Indebtedness. — Must not exceed two-thirds of capital
stock (sec. 767; Laws of 1903, chap. 88).
7. Organization Tax. — There is no organization tax imposed.
8. Filing and Recording Fees. — For filing articles of incorporation with
the Corporation Commission, a fee of $10 is charged. For fifing appointment
of agent, So; for issuing certificate of incorporation, $10; fee for issuing certi-
fied copy of articles is twenty cents per folio, and $1 for certificate and seal.
For filing annual report, $5; for filing and recording articles in local county
recorder's office, twenty cents per folio of one hundred words.
9. Commencing Business (sec. 769). — Before commencing business the
corporation must appoint a bona fide resident of the Territory, who is a resident
of three years' standing, as its agent upon whom process may be served against
the corporation. The certificate of such appointment duly certified to by the
proper officers of the corporation must be filed in the office of the Territorial
Auditor (sec. 783, Laws of 1903, chap. 82). The corporation may commence
business as soon as the articles of incorporation are filed for record in the office
of the county recorder, and a certified copy thereof with the Territorial Auditor.
The publication of the articles must be made and an affidavit thereof filed in
the office of the Territorial Auditor within three months from date of filing same
with county recorder (sec. 769). No specified amount of capital stock need be
subscribed for or paid in before commencing business. Business must commence
within five years from the time the charter is issued (sec. 77-1).
10. Organization Meeting. — There is no statute in force in Arizona ex-
227
DIGEST OF INCORPORATION ACTS. — ARIZONA.
pressly permitting the holding of either the organization or stockholders' meet-
ings outside of the Territory of Arizona. The Territorial officials, however,
permit articles of incorporation to be filed and recorded in their offices wherein
it is expressly provided that both organization and stockholders' meetings may
be held without the Territory. In the case of Chase v. Fleming, decided by the
Arizona District Court in 1904, it was held as follows : In this particular case
the articles of incorporation provided that the principal place of business of the
corporation should be at Philadelphia ; that the affairs of the corporation should
be conducted by a board of thirteen directors; that the incorporators should
serve as directors for one year, and should meet and organize as a board of
directors immediately after the filing of the articles and should adopt by-laws ;
that the board of directors should be elected at such time and manner as should
be prescribed in the by-laws. The incorporators held a meeting in Philadelphia
shortly after the articles were filed in Arizona, at which meeting by-laws were
adopted. These by-laws provided that the annual stockholders' meeting should
be held on the first Wednesday in December of each year at the principal office
of the corporation within Arizona, or at the branch office in Philadelphia, as the
board of directors should determine. The meeting, the validity of which was
in question in the case, was held in Philadelphia. The court held that the board
of directors elected at the meeting in Philadelphia was a de facto but not a
de jure board. They held that the respondent Fleming having attended such
meeting as a stockholder was estopped to question its validity. The court held
that such meeting and the acts of the stockholders taken thereat were not ipso
facto void r but voidable only at the instance of the person affected, provided
such person has a legal right to question the act complained of, and provided,
further, that he has not estopped himself from so questioning them. In the case
in question the articles of incorporation expressly provided that the time and
manner of the election of the board of directors should be prescribed in the
by-laws, and the by-laws afterwards adopted, provided that the stockholders'
meeting "should be held at the principal office or branch office as the board
of directors should determine."
11. Meetings, Stockholders' and Directors'. — There is no statute
authorizing stockholders' meetings to be held without the Territory. In the
case of Chase v. Fleming, decided by the local District Court at Phoenix,
Arizona, in 1904, the court made the following holding : "A corporation duly
organized may not, except by express authority of law, legally act as such
corporation through its stockholders outside the state of its creation. A meet-
ing of the stockholders so held is unlawful, and the acts of the stockholders
thereat are invalid. Such meeting and the acts of the stockholders thereat
are not, however, ipso facto void, but voidable only at the instance of a per-
son affected who has the right to question them. A stockholder present and
acquiescing may not, however, question the legality of the meeting or the
acts performed thereat." Directors' meetings may be held within or without
the Territory, as the by-laws may provide. In the absence of any statute
giving that right, authority to vote by proxy at stockholders' meetings should
be provided for in the articles of incorporation.
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There may be any number of directors. They need not be stockholders, and
there-are no residential requirements.
6. Liabilities. — Every officer, agent, or clerk of any corporation or of any
person proposing to organize a corporation, or to increase the capital stock of
228
DIGEST OF INCORPORATION ACTS. — ARIZONA.
any corporation, who knowingly exhibits any false, forged, or altered book,
paper, voucher, security, or other instrument of evidence, to any public officer
or board authorized by law to examine the organization of such corporation, or
to investigate its affairs, or to be allowed an increase of its capital, with intent
to deceive such officer or board in respect thereto, is punishable by imprison-
ment in the territorial prison not less than three nor more than ten years (Penal
Code, sec. 502).
Every person who, without being authorized so to do, subscribes the name
of another to or inserts the name of another in any prospectus, circular, or other
advertisement or announcement of any corporation or joint stock association,
existing or intended to be formed, with intent to permit the same to be published,
and thereby to lead persons to believe that the person whose name is so sub-
scribed is an officer, agent, member, or promoter of such corporation or asso-
ciation, is guilty of a misdemeanor (Penal Code, sec. 503).
Every director of any stock corporation who concurs in any vote or act of
the directors of such corporation, or any of them, by which it is intended either
(1) to make any dividend, except from the surplus profits arising from the
business of the corporation, and in the cases and manner allowed by law; or
(2) to divide, withdraw, or in any manner, except as provided by law, pay to
the stockholders, or any of them, any part of the capital stock of the corporation ;
or (3) to discount or receive any note or other evidence of debt in payment of
any instalment actually called in and required to be paid, or with the intent to
provide the means of making such payment; or (4) to receive or discount any
note or other evidence of debt, with the intent to enable any stockholder to with-
draw any part of the money paid in by him, or his stock; or (5) to receive from
any other stock corporation in exchange for the shares, notes, bonds, or other
evidences of debt of their own corporation, shares of the capital stock of such
other corporation, or notes, bonds, or other evidences of the debt issued by such
other corporation, is guilty of a misdemeanor (Penal Code, sec. 504).
Every director, officer, or agent of any corporation or joint stock associa-
tion, who knowingly receives or possesses himself of any property of such cor-
poration or association, otherwise than in payment of a just demand, and who,
with intent to defraud, omits to make or to cause or direct to be made, a full and
true entry thereof in the books or accounts of such corporation or association,
and every director, officer, agent, or member of any corporation or joint stock
association who with intent to defraud, destroys, alters, mutilates, or falsifies
any of the books, papers, writings, or securities belonging to such corporation
or association, or makes or concurs in making any false entries, or omits or
concurs in omitting to make any material entry, in any association, is punish-
able by imprisonment in the territorial prison not less than three nor more than
ten years, or by imprisonment in a county jail not exceeding six months, and a
fine not exceeding five hundred dollars, or by both such fine and imprisonment
(Penal Code, sec. 707).
Every director, officer, or agent of any corporation or joint-stock associa-
tion who knowingly concurs in making, publishing, or posting any written re-
port, exhibit, or statement of its affairs or pecuniary condition, or book or notice
containing any material statement which is false, or refuses to make any book
or post any notice required by law, in the manner required by law, other than
Buch as are mentioned in this chapter, is guilty of a felony (Penal Code, see. 508).
Every officer or agent of any corporation having or keeping an office within
this territory who has in his custody or control any book, paper, or document of
229
DIGEST OF INCORPORATION ACTS. — ARIZONA.
such corporation, and who refuses to give to a stockholder or member of such
corporation lawfully demanding during office hours, to inspect or take a copy of
the same, or any part thereof, a reasonable opportunity so to do, is guilty of a
misdemeanor (Penal Code, sec. 509).
Every director of a corporation or joint stock association is deemed to possess
such a knowledge of the affairs of his corporation as to enable him to determine
whether any act, proceeding, or omission of its directors is a violation of this
chapter (Penal Code, sec. 512).
Every director of a corporation or joint stock association who is present at
a meeting of the directors at which any act, proceeding, or omission of such
directors in violation of this chapter, occurs, is deemed to have concurred therein,
unless he at the time causes, or in writing requires, his dissent therefrom to be
entered in the minutes of the directors (Penal Code, sec. 513).
Every director of a corporation or joint stock association, although not
present at a meeting of the directors at which any act, proceeding, or omission of
such directors in violation of this chapter occurs, is deemed to have concurred
therein, if the facts constituting such violation appear on the records of the
minutes of proceedings of the board of directors, and he remains a director of
the same company for six months thereafter, and does not within that time
cause, or in writing require, his dissent from such illegality to be entered in the
minutes of the directors (Penal Code, sec. 514).
It is no defence to a prosecution for a violation of the provisions of this
chapter, that the corporation was one created by the laws of another territory,
State, government, or country, if it was one carrying on business or keeping an
office therefor within this territory (Penal Code, sec. 515).
The term "director" as used in this chapter embraces any of the persons
having by law the direction or management of the affairs of a corporation by
whatever name such persons are described in its charter or known by law (Penal
Code, sec. 516).
13. Stockholders' Liabilities. — Unless the articles of incorporation
specifically exempt them from liability, stockholders are liable for the debt
of the corporation in the proportion which their shares of stock bear to the
whole capital stock. Stockholders are individually liable to the amount of the
unpaid instalments on the stock owned by them or transferred to them for
the purpose of defrauding creditors, and an execution against the corporation to
that "extent may be levied upon the private property of such stockholder (Id.
sec. "776 ; Laws of 1903, chap. 88).
14. Stock Certificates. — The statute does not require specifically the
issuance of stock certificates, nor does it prescribe who shall sign the same. This
must be regulated by the by-laws. The par value of the stock certificates may
be any amount.
15. Preferred Stock. — The statute does not expressly authorize the issu-
ance of preferred stock. The Territorial Auditor permits the filing of articles
in bis office providing for preferred stock.
16. Payment of Capital Stock. — The statute is silent as to how the
capital stock shall be paid. In the absence of express provisions in the articles
authorizing the payment of stock in property or services, stock must be paid
for in money or money's worth. (See Penal Code, sec. 504, sub. 5.)
17. Books. — The statute does not specifically require that any books shall
be kept within the Territory. It does, however, require that a transfer book
shall be kept showing the names of the persons by whom and to whom stock
230
DIGEST OF INCORPORATION ACTS. — ARIZONA.
transfers are made, the number of shares, and the date of the transfer. It must
also show the original stockholders, their respective addresses, the amount which
has been paid in, and all transfers thereof. Such books and records or correct
copies thereof, so far as they relate to the items mentioned above, shall be at
all times subject to the inspection of any stockholder (Id. sec. 778). The loca-
tion of the transfer book would appear to be presumptively, if not actually,
at the principal place for transacting business (Penal Code, sec. 509).
18. Office and Agent (Id. sec. 783). — All corporations are required to
name in their articles the location of their principal place of business within
the Territory. They are also required to appoint a bona fide resident of the
Territory, who has a residence of three years' standing, as the agent upon whom
process may be served within the Territory (Laws of 1903, Act 82). This ap-
pointment must be filed with the Territorial Auditor (Laws of 1903, chap. 82).
19. Reports. — An annual statement must be filed in the office of the
State Corporation Commission by all corporations in June of each year. For
fifing this statement a charge of $5 is made.
20. Anti-Trust Statute. — There is no anti-trust statute in force in
the Territory except such as have been passed by Congress and are in force
everywhere. (See Penal Code, sec. 504, forbidding the acquisition of the stock
and bonds of other corporations.)
21. Statutory Grounds for Forfeiture of Charter. — The statute pro-
vides that persons acting as a corporation under the General Act shall be pre-
sumed to be legally organized until the contrary is shown, and no such franchise
shall be declared to be actually null and forfeited except in a regular proceeding
brought for that purpose (Id. sec. 779). The statute further provides that any
corporation organized or attempted to be organized under the General Act shall
cease to exist by non-user of its franchise for five years at any one time (Id.
sec. 774). Charter may be forfeited for failure to appoint and maintain resident
agent (Laws of 1903, Act 88. For additional grounds for forfeiture of charter,
see Laws of 1903, chap. 82).
22. Amendments (Id. sec. 770). — Capital stock may be increased or
decreased and articles may be amended in any particular by the affirmative
vote of a majority of the stockholders. Such amendments shall be signed and
acknowledged by the president and attested by the secretary of the corporation,
and must be recorded and published in the same manner as the original articles
(Laws of 1903, Act 88).
23. Annual Franchise Tax. — Every corporation must pay inithe month
of June of each year a registration fee of $15. There must also be filed at the
same time an annual statement, for the filing of which a charge of $5 is made.
24. Extension of Corporate Existence. — May extend corporate exist-
ence for an additional period of twenty-five years (Id. sec. 771).
25. Dissolution. — Corporations may be dissolved by a majority vote of
its members unless a different rule is adopted in the articles of incorporation
(Id. sees. 772, 775. For grounds for involuntary dissolution of a corporation,
see Laws of 1903, chap. 82).
26. Foreign Corporations. — Before transacting business in the Territory
foreign corporations must file a certified and duly authenticated copy of their
articles of incorporation or charter, and the appointrrient of an apvnl upon
whom process may be served with the Auditor of the Territory and with the
county recorder of each county in which it docs business or has an office. 1 he
appointment of the agent must be in writing, signed by the presidenl and attested
23 I
DIGEST OF INCORPORATION ACTS. — ARIZONA.
by the secretary of the corporation, and be based upon a resolution duly adopted
by the board of directors. The agent must have been a bona fide resident of
the county wherein appointed, for three consecutive years prior to his appoint-
ment. The corporation must publish six times in some newspaper published in
each of said counties a copy of its articles of incorporation, and upon the ex-
piration of such publication file an affidavit thereof in the office of the Territorial
Auditor. The appointment of the agent must be by the board of directors.
Fees for filing and recording are the same as for domestic corporations (Id.
sees. 909-925). Except in the case of corporations organized for mining or
manufacturing purposes, foreign corporations are limited to real estate holdings
of 320 acres (sec. 913).
Babbitt v. Field, 52 Pac. 775.
232
DIGEST OF INCORPORATION ACTS. — ARKANSAS.
ARKANSAS.
(The references cited below are to Kirby's Digest of the Statutes of Arkansas, 1904, chap.
31, unless otherwise stated.)
1. Statute under which Business Corporations may incorporate. —
The general Business Corporation Act of Arkansas is to be found in Kirby's
Digest of the Statutes of Arkansas, 1904, chap. 31, sees. 824 to 871 inclusive;
953 to 958 inclusive, and acts amendatory thereof. Special acts exist for the
incorporation of navigation, traction, lighting, trust and surety, turnpike and
plank roads, bureaus of immigration, railway, raft and boom companies, and
eleemosynary corporations. Under the act corporations may be chartered for
any lawful purpose not covered by the special acts referred to.
2. Incorporators. — Three or more. There are no residential require-
ments (sec. 837).
3. Contents of the Articles of Association (sec. 845). — The articles
of association must contain :
a. Name. — Any name permitted.
b. Incorporators. — Names and residences of the incorporators.
c. Domiciliartj Office. — The location of the principal place of business and
the office of the company for the transaction of business within the State.
d. Purposes. — Persons desiring to incorporate under the General Act may
do so by setting forth the purposes for which the corporation is formed. These
purposes include any kind of manufacturing, mechanical, mining, and other
lawful business not provided for by special acts. The Secretary of State per-
mits the insertion of as many purposes as are desired, provided they are not
covered by special acts (sees. 837, 845).
e. Capital Stock. — The amount of capital stock must be stated. There
is no limit as to what this amount may be. The amount of capital stock sub-
scribed for by the several incorporators must be set forth, and this should be
followed by a provision that the residue of the capital stock may be issued and
disposed of as the board of directors may from time to time order and direct.
/. Number and Par Value of Shares. — The par value of the shares must
be $25 (sec. 838).
g. Directors. — The number of the directors must be set forth, together
with the provision that they shall all be stockholders of the corporation, and
to this should be added a provision that the board of directors shall elect one
of its members president and another as vice-president, and shall also elect a
secretary and treasurer. The number of directors may be any number not less
than three. There are no residential requirements, but they must be stock-
holders, and must be chosen annually by the stockholders at such time and
place as shall be provided by the by-laws of the corporation (sec. 841). The
president is a statutory officer and must be a director. The secretary and
treasurer are also statutory officers, but need not necessarily be directors. The
last two named must reside and have their place of business within the State.
h. First Election for Directors. — This clause should provide thai the fir t
election for directors shall be held immediately after the organization of the
corporation, and that the directors shall serve for one year and until their
successors are elected.
233
DIGEST OF INCORPORATION ACTS. — ARKANSAS.
i. Powers of the Board of Directors. — This clause may provide that the
board of directors are empowered to establish all by-laws and regulations
necessary to the management of the business and affairs of the corporation
and to alter and repeal the same at pleasure.
/. Organization Meeting. — This clause should fix a time and place for the
holding of the organization meeting, and should contain a waiver by the incor-
porators of the notice of such meeting.
k. Corporate Existence. — Corporate existence under the statute is per-
petual. The period of existence is not required to be stated.
4. Statutory Powers. — The statutory powers found in the General
Incorporation Act are the usual common law powers of corporations (sees.
847, 850, 851). There is a statutory lien given the corporation upon the
stock of members for debts due it (sees. 847, 865-868). Voting by proxy is
permitted. The right to issue preferred stock is granted (Laws of 1905, chap.
330).
5. W. Co. v. Bank, 68 Ark. 234; 57 S. W. 257; Conway et al., ex parte, 4 Ark. 302.
5. Procuring the Charter. — The articles of association must be sub-
scribed by each of the incorporators. The statute provides that any two of
the incorporators may call the first meeting of the corporation at such time
and place as they may appoint, by giving notice thereof in any one or more
newspapers published in the county in which such corporation is to be estab-
lished, or in any adjoining county, at least fifteen days before the time ap-
pointed for such meeting. But such notice may be waived in writing, signed
by all the subscribers to the capital stock of such company, specifying the
time and place for said first meeting, which writing shall be entered at full
length upon the records of the corporation ; and the first meeting of such cor-
poration which has been held pursuant to such written waiver of notice shall
be valid. At this organization meeting the incorporators proceed to the elec-
tion of a board of directors and the adoption of by-laws for the corporation.
The directors must then meet and elect a president, secretary, treasurer, and
such other officers as the by-laws of the corporation shall prescribe (sees. 840,
841, 843). The statute further provides that before any corporation shall
commence business, the president and directors thereof shall file their articles
of association and also subscribe under oath or affirmation to a certificate set-
ting forth the purposes for which said corporation is formed, the amount of
its capital stock, the amount actually paid in, and the names of its stock-
holders and the number of shares by each respectively owned, with the clerk
of the county in which the corporation is to have its principal place of
business; and shall file said articles and certificate bearing the endorsement
of the county clerk in the office of the Secretary of State. Said certificate
shall be recorded by said county clerk and Secretary of State in books kept
by them for that purpose. Upon the fifing of such endorsed articles and
certificate with the Secretary of State, and the payment of the organization
tax, the Secretary of State is authorized to issue a certificate of incorpora-
tion in the form prescribed by statute, which certificate or certified copy
thereof is prima facie evidence of due incorporation (sec. 845).
Town of Searcy v. Yarnell, 47 Ark. 269; Fleener v. State, 58 Ark. 98.
6. Corporate Indebtedness. — There is no limit prescribed by statute
to the creation of corporate indebtedness. To create a bonded indebtedness
the consent of the larger amount in value of stock must be obtained at a meet-
234
DIGEST OF INCORPORATION ACTS. — ARKANSAS.
ing duly called for that purpose. Bonds cannot be issued except for money
or property actually received or labor done, and all fictitious increase of in-
debtedness is void (Cons., Art. XII. sec. 8).
7. Organization Tax. — All domestic corporations upon incorporation
must pay into the treasury of the State for the filing of their articles a fee
of $25, where the capital stock is $10,000 or under; and one-tenth of one
per cent for all in excess of $10,000. The organization tax thus imposed
includes the fee of the Secretary of State for fifing articles and issuing the
charter (Act of 1911, No. 89).
8. Filing and Recording Fees. —The organization tax includes the fees
of the Secretary of State for filing and recording the articles of association.
For the issuance of a certificate of incorporation, So. The charge for issuing
a certified copy of articles of incorporation is 15 cents per hundred words, and
$1 for certificate. This usually amounts to $2.50. The charge for filing and
recording amendments to articles of incorporation is $10 for filing and 15 cents
per hundred words for recording. The fee for recording the articles in the
office of the county clerk of the county in which the corporation is to have its
principal place of business is 10 cents per hundred words and 50 cents for cer-
tificate of filing. This fee usually varies from $2.50 to $5 (sec. S57).
9. Commencing Business (Id. sec. 845). — Corporations may com-
mence business as soon as the president and board of directors have filed a true
copy of the articles of association and the certificate referred to in sec. 5 above.
Garnett ct al. v. Richardson et al., 35 Ark. 144; Connor v. Abbott, 35 Ark. 365; Blackwell
v. State, 36 Ark. 178.
10. Organization Meeting (Id. sec. 840). —The organization meeting
must be held within the State. Each incorporator is presumed to be a stock-
holder to at least the extent of one share. It is usual to fix the time and place
for the holding of the organization meeting in the articles of association. In
the absence of any such provision, two of the incorporators may call the first
meeting at such time and place as they may appoint by giving notice thereof
in any one or more newspapers published in the county in which such corpora-
tion is to be established or any adjoining county at least fifteen days before
the time appointed for such meeting (Id. sec. 840). The duty of the incor-
porators is to adopt by-laws and elect a board of directors. Immediately after
the incorporators' and stockholders' meeting adjourns, a meeting of the board
of directors should be held for the purpose of electing a president, secretary,
and treasurer, and such other officers as may be required by the by-laws.
11. Meeting of Stockholders and Directors (sees. 840-843, 846). — In
the absence of any statute providing otherwise, all stockholders' meetings must
be held within the State. Directors' meetings, after the first meeting, may be
held within or without the State, as the by-laws may provide.
Bank v. McCarthy, 55 Ark. 473; 18 S. W. 759; Blackwell t>. State, 36 Ark. 178.
12. Directors' Qualifications and Liabilities, a. Qualifications. — There
must be at least three directors who shall be stockholders. There are no resi-
dential requirements (Id. sec. 841).
Jones et al. v. Jarman, 34 Ark. 323; Worthen v. Griffith, 59 Ark. 502; 28 S. W. 286.
b. Liabilities. — If the president or secretary of any business corporation
shall neglect to make the certificate showing the condition of (he affairs of the
corporation, as provided by sec. 848, or refuse to perform the duties required
2J35
DIGEST OF INCORPORATION ACTS. — ARKANSAS.
of them respectively, the persons so neglecting or refusing shall duly and sev-
erally be liable to an action founded on the statute for the debts of such corpora-
tion contracted during the period of such neglect or refusal (sec. 859 as amended
by L. 1909, Act 222). Directors are jointly and severally liable for the declara-
tion and payment of a dividend when the corporation is insolvent or the payment
of which renders it insolvent, knowing such corporation to be insolvent or that
the payment of such dividend would render it so ; also for debts of the corpora-
tion contracted during the period when they shall neglect or refuse to comply
with any of the provisions of the incorporation act affecting them. If, by reason
of the violation of any of the provisions of the act by the directors, a corpora-
tion shall become insolvent, then all directors ordering or assenting to such
violation shall be jointly and severally liable for all corporate debts contracted
after such violation (sees. 862-864).
Simon v. Association, 54 Ark. 58; 14 S. W. 1101; Bank v. McCarthy, 55 Ark. 473; 18
S. W. 759.
13. Stockholders' Liabilities. — Stockholders are liable for the debts of
the corporation only to the extent of the unpaid stock subscribed for or held
by them. The corporation may, by the adoption of a proper by-law, place a
lien upon the shares of its stockholders for any debt or liability they may incur
to the company. The statute (Id. sees. 865, 868) provides a method for the
enforcement of this hen. If the capital stock should be withdrawn or refunded
to the stockholders before the payment of all the debts of the corporation for
which such stock would have been liable, the stockholders are liable to any
creditor of the corporation for the amount of the sum refunded to them respec-
tively (Id. 861).
Jones et al. v. Jarman, 34 Ark. 323; Worthen v. Griffith, 59 Ark. 562; 28 S. W. 286.
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him. Stock certificates may be signed by such offi-
cers as the by-laws may provide. The par value of the shares must be $25,
except in the case of railroad corporations, when they may be $100 (sees. 838,,
6721).
15. Preferred Stock. — All business corporations have power to issue
preferred stock with such preferences, voting powers, and restrictions or quali-
fications thereunder as shall be stated and expressed in the certificate of incor-
poration or in any certificate of amendment thereof. Such preferred stock may,
if so desired, be made subject to redemption at any time after three years from
the issue thereof at a price not less than par, and the holders thereof shall be
entitled to receive, and the corporation shall be bound to pay thereon, dividends.
at such rates and under such conditions as shall be stated in the original or
amended certificates of incorporation, not exceeding eight per centum per
annum, payable quarterly, half-yearly, or yearly ; and such dividends may be
made payable before any dividends shall be set apart or paid on the common
stock, and may be made cumulative, provided the corporation shall set apart
and pay the same dividend to the holders of non-cumulative preferred stock
before any dividend shall be paid on the common stock, and in no event shall
the holders of preferred stock be personally liable for the debts of the corpora-
tion; but in case of insolvency its debts or other liabilities shall be paid in
preference to the preferred stock (Acts of Ark., 1905, Act 330).
16. Payment of Capital Stock. — Under the constitution capital stock
236
DIGEST OF INCORPORATION ACTS. — ARKANSAS.
can be issued only for money and property actually received or labor done
(Cons., 1S74, Art. XII. sec. 8).
Carter v. Company, 54 Ark. 576; 16 S. W. 579; Fletcher v. Bank (Ark.); 69 S. W. 580.
17. Books. — The books must be kept within the State at the principal
office of the corporation therein or at the office of the treasurer within the
State (Id. sec. 852). The statute gives to all stockholders the right to inspect
and examine the same (Id. sec. 852).
18. Office. — The corporation must maintain an office within the State, and
its secretary and treasurer must reside within the State (Id. sees, 843, 852. See
also Laws 1909, Act 98).
19. Reports. — At least once a year, by order of the directors, a true state-
ment of the accounts of the corporation shall be made to the stockholders
(sec. 852). An annual report must be filed with the Arkansas Tax Commis-
sion on or before July first of each year upon forms prescribed by the Com-
mission. This report must be signed and sworn to by the president, vice presi-
dent, secretary or general manager of the corporation (Laws of 1911, Act 112).
Under Act I. of the Acts of Arkansas, 1905, the Secretary of State, on or
before the 1st day of July of each year, addresses to the president, secretary,
or treasurer of each incorporated company doing business in the State a letter
of inquiry as to whether the said corporation has all or any part of its interest
or business in or with any trust, combination, or association of persons of the
kind described in what is known as the "Anti-Trust Act of 1905." Such officers
are required to answer under oath such inquiry, the form of affidavit for that
purpose being enclosed. (See also Laws of 1907, chap. 451.)
Neb. Nat. Bank v. Walsh, 68 Ark. 433; 59 S. W. 952.
20. Anti-Trust Statute. — Under the Act of January 23, 1905, Acts of
Arkansas, 1905, chap. 1, a very drastic act is enacted, providing a punishment
for pools, trusts, and conspiracies to control prices.
21. Statutory Grounds for Forfeiture of Charter. — Corporations may
forfeit their charters by misuser or non-user in matters that go to the essential
elements of their creation (Darnell v. State, 48 Ark. 321). The charter may
also be forfeited for violations of the Anti-Trust Statute (Acts of Ark., 1905,
«hap. 1).
Darnell v. State, 48 Ark. 321; 3 S. W. 365; State v. Bank, 5 Ark. 595; Blackwell v.
State, 36 Ark. 178; Brown v. Ry. Co., 68 Ark. 134; 56 S. W. 862.
22. Amendments. — The power of amendment in Arkansas is broad, but
is also somewhat complicated. To reduce the capital stock either by releas-
ing unpaid subscriptions for stock or by returning to the shareholders a portion
of the amount paid in by them, such reduction must be made by a resolution
duly adopted by a majority of the stockholders, and a copy of such resolution
must be filed as amendment to the charter in the offices of the Secretary of State
and the county clerk of the county in which the corporation transacts business,
and such amendment must be published once in some newspaper published
within the county. To authorize the corporation to engage in additional lines
of business, the stockholders must authorize such change by a majority vote
at a meeting duly called for that purpose. Then the president and directors
shall cause such of the amended articles as specify the purposes for which the
corporation is formed, subscribed by the stockholders, to be published in a
newspaper printed in the county in which such corporation is located, or any
237
DIGEST OF INCORPORATION ACTS. — ARKANSAS.
adjoining county, and shall also make a certificate of the purpose for which
Buch corporation is formed as changed by the amended articles, which certifi-
cate shall be signed and deposited and recorded in the same manner as the
original certificate. To increase the capital stock such increase must be voted
for by a majority of the stockholders at a meeting especially called for that
purpose. After the increase is approved the president and directors shall within
thirty days thereafter make a certificate thereof, which must be signed, de-
posited, and recorded the same as an original certificate. By the Act of April
11, 1901, a corporation may change its name and number of directors by a resolu-
tion of the stockholders duly adopted by a majority thereof at a meeting called
for that purpose. A copy of such resolution duly certified by the president and
secretary must be filed with the clerk of the county court of the county in which
the principal place of business is located, and also with the Secretary of State.
To change its principal place of business within the State to a county within
the State the president and secretary must procure from the county clerk of the
county from which it removes a certified copy of the records of its articles of
association, etc., to which certified copy shall be attached the certificate of
such president and secretary that such corporation has thus removed, which
certified copy of the certificate must be filed and recorded in the office of
the county clerk of the county to which such corporation shall remove. A
similar certified copy of the certificate must be filed in the office of the secretary
in such State. A duplicate copy of such certificate must be published in a news-
paper in the county in which such corporation shall be located. If the removal
is from one county to another, there must be two publications, one in a news-
paper in each county (Id. 854-857, 860).
Brown v. W. & S. E. Ry. Co., 68 Ark. 134; 56 S. W. 862.
23. Annual Franchise Tax. — Domestic corporations doing business in
the State must annually on or before July 1 of each year file with the
Arkansas Tax Commission a report signed and sworn to by the president,
vice president, secretary or general manager of the corporation, which report
shall contain (a) the name of the corporation ; (b) the location of its principal
office; (c) the names of the president, secretary, treasurer and members of
the board of directors with the post office address of each ; (d) the amount
of authorized capital stock; (e) the amount of capital stock subscribed, the
amount of capital stock issued and outstanding, the amount of capital stock
paid up and the par and market value of such stock ; (f) the nature and kind
of business in which the corporation is engaged and its place of business ;
(g) the amount of its capital stock employed and the value of its property
within this State, and the amount of its capital stock employed and the
value of its property without the State, except as hereinafter provided ;
(h) the change or changes, if any, in the above particulars, made since the
last annual report (L. of 1911, Act 112, sec. 2).
Upon the filing of the report provided for in sections 1 and 2 of Act 112,
Laws of 1911, the Commission or tax assessor as the case may be, after find-
ing such report to be correct, shall report to the Auditor of State, who shall
charge and certify to the Treasurer of State for collection, on or before July
20, as herein provided, from such corporation, a tax of one-twentieth of one
per cent upon that part of its subscribed or issued and outstanding capital em-
ployed in Arkansas except as hereinafter provided (Laws of 1911, Act 112,
sect. 3).
238
DIGEST OF INCORPORATION ACTS. — ARKANSAS.
24. Extension of Corporate Existence. — There is no provision for
extension of corporate existence.
25. Dissolution. — Corporations may be dissolved by application to the
courts having equitable jurisdiction. Any corporation may surrender its
charter by resolution of a majority in value of the stockholders, at a meeting
duly called for that purpose, and filing a certified copy of such resolution in
the office of the Secretary of State, and in the office of the county clerk of the
county where the principal place of business of such corporation is located (Id.
sees. 953-95S).
Town of Searcy v. Yamell, 47 Ark. 289; 1 S. W. 319; Dozier v. A. C. Mills, 67 Ark. 11;
53 S. W. 403; Curran v. State, 15 How. 304; Jefferson v. Edrington, 53 Ark. 545; Forbes v.
Whittemore, 62 Ark.,229.
26. Foreign Corporations. — Every company or corporation incorporated
under the laws of any other State, Territory, or country, including foreign rail-
road and foreign fire and life insurance companies now or hereafter doing busi-
ness in this State, shall file in the office of the Secretary of State of this State a
copy of its charter or articles of incorporation or association or a copy of its cer-
tificate of incorporation duly authenticated and certified by the proper authority,
together with a statement of its assets and liabilities and the amount of its cap-
ital employed in this State, and shall also designate its general office or place of
business in this State, and shall name an agent upon whom service of process
may be made. Provided, before authority is granted any foreign corporation
to do business in this State, it must file with the Secretary of State a resolution
adopted by its board of directors consenting that service of process upon any
agent of such company in this State or upon the Secretary of State of this State
in any action brought or pending in this State shall be valid service upon such
company ; and if process is served upon the Secretary of State, it shall be his
duty to at once send it by mail addressed to the company at its principal office;
and if any company shall, without the consent of the other party to any suit or
proceeding brought by or against it in any court of this State, remove such
suit or proceeding to any Federal court, or shall institute any suit or proceed-
ing against any citizen of this State in any Federal court, it shall be the duty
of the Secretary of State to forthwith revoke the authority of said company and
its agents to do business in this State, and to publish such revocation in some
newspaper of general circulation published in this State ; and if such corporation
shall thereafter continue to do business in this State, it shall be subject to the
penalty of this act for so continuing to do business in this State after such
revocation. Any foreign corporation which shall fail to comply with the pro-
visions of this act and shall do any business in this State shall be subject to
a fine of not less than $1,000, to be recovered in any court of competent juris-
diction, and all fines so recovered shall be paid into the general revenue fund
of the county in which the cause of action shall accrue; and it is hereby made
a duty of the prosecuting attorneys to institute such suit, in the name of the
State for the use and benefit of the county in which the suit is brought, and
said prosecuting attorney shall receive as liis compensation one-fourth of tin-
amount recovered, and as an additional penalty any foreign corporation which
shall fail or refuse to file its articles of incorporation or certificate aforesaid
cannot make any contract in this State which can be enforced by it either in
law or in equity, and the complying with the provisions of this act after suit
is brought shall in no way validate said contract.
All corporations hereinafter incorporated in this State, and all foreign 0OF>
239
DIGEST OF INCORPORATION ACTS. — ARKANSAS.
porations seeking to do business in this State, shall pay into the treasury of
this State for the filing of such articles a fee of $25 where the capital stock is
$10,000 or under; one-tenth of one per cent on all amounts in excess of
810,000. This tax in the case of foreign corporations is based on the pro-
portion of capital stock represented by property and business in the State of
Arkansas (Acts of 1911, no. 197).
Before any foreign corporation shall be authorized to do intrastate business
in Arkansas, or permitted to continue to do intrastate business, it shall file with
the Secretary of State, under the oath of its president, secretary, treasurer, su-
perintendent or managing agent in this State, a statement showing the follow-
ing facts : (1) The number of shares of authorized capital stock of the company
and the par value of each share; (2) the value of the property owned and used
by the company in Arkansas, and the value of the property owned and used
outside of the State of Arkansas; (3) the proportion of the capital stock of the
Company which is represented or to be represented, and employed or to be
employed in its business transacted or to be transacted in Arkansas; (4) the
proportion of its capital stock employed in its business outside of Arkansas,
stating the proportionate part used in each city and county. From the facts
thus reported and any other facts coming to his knowledge, bearing upon the
question, the Secretary of State shall determine the proportion of the capital
stock of the company represented by its property and business in Arkansas and
upon which the fees prescribed herein are payable (Laws of 1911, Act 87, sec.
3).
Each foreign corporation for profit and doing business in this State and
owning or using a part or all of its capital or plant in this State and subject to
compliance with all other provisions of law, and in addition to all other state-
ments required by the law shall make a report in writing to the Arkansas Tax
Commission on or before July 1, and if such Tax Commission shall have been
abolished by law, then the Assessor of the County in which the principal place
of business of such corporation in this State shall be (Laws of 1911, Act 112,
sees. 4, 5, 6).
Said report shall contain (1) name of the corporation and under the laws of
what State or country organized; (2) the location of its principal- office; (3) the
names of the president, secretary, treasurer and members of the Board of Di-
rectors with the post-office addresses of each; (4) the date of the annual elec-
tion of officers; (5) the amount of authorized capital stock and the par value
of each share; (6) the amount of capital stock subscribed; the amount of
capital stock issued and outstanding; the amount of capital stock paid
up and the market value of the same; (7) nature and kind of business in which
the company is engaged, and its place or places of business both within and
without the State; (8) the name and location of its office or offices in this
State, and the names and addresses of the officers or agents of the corporation
in charge of its business in this State; (9) the value of the property owned and
used by the Company in this State; where situated and the value of the
property owned and used outside of this State; (10) the change or changes,
if any, in the above particulars made since the last annual report (Laws of
1911, Act 112, sec. 5).
Upon the filing of the report provided for in sections 4 and 5 of this Act, the
Commission or Assessor, as the case may be, from the facts thus reported, and
any other facts coming to its or his knowledge, bearing upon the question, shall
determine the proportion of the authorized capital stock of the Company repre-
240
DIGEST OF INCORPORATION ACTS. ARKANSAS.
sented by its property and business in this State, on or before July 20, and shall
report the same to the auditor of the State, who shall charge and certify to the
treasurer of the State on or before August 1 for collection as herein provided
annually from such Company, in addition to the initial fee authorized by law,
for the privilege of exercising its franchises in this State one twentieth of one
per cent each year thereafter upon the proportion of the authorized capital
stock of the corporation represented by the property owned and used in business
transacted in this State (Laws of 1911, Act 112, sec. 6).
Any foreign mutual corporation having no capital stock shall be required
to pay to the Secretary of State for filing its articles of incorporation the
sum of $500; provided, however, nothing in this section shall apply to fra-
ternal orders that write insurance (Acts of Ark., 1907, Act 313, approved May
13, 1907). A fee of $1 is required to be paid for filing appointment of agent
by foreign corporations. Foreign corporations are required to pay the same
annual franchise tax as domestic. (See ante, sec. 23.)
Gunn v. Company, 57 Ark. 24 ; 20 S. W. 591; Scruggs v. Company, 54 Ark. 566; 16 S W.
563; St. L., etc. Ry. Co. v. Fire Ass'n, 60 Ark. 325; 30 S. W. 350; Buffalo Zinc & Copper Co.
v. Crump, 70 Ark. 525; 69 S. W. 572; W. R. Lumber Co. v. Implement Ass'n, 55 Ark. 625;
18 S. W. 1055; Boyington v. Van Etten, 62 Ark. 63; 35 S. W. 622; Railway v. Fire Ass'n.
55 Ark. 163; 18 S. W. 43; Woodson v. State, 69 Ark. 521 ; 65 S. W. 465.
16 241
DIGEST OF INCORPORATION ACTS. — CALIFORNIA.
CALIFORNIA.
(The references cited below are to the Civil Code, unless otherwise stated.)
1. Statute under which Business Corporations may incorporate. —
The Civil Code of California, Part IV. sees. 283-403, as amended in certain
respects by subsequent Session Laws, constitutes the General Incorporation Act
of the State of California for business corporations. There are special acts
applicable only to insurance, railway, street railway, wagon road, bridge, ferry,
wharf, chute, pier, telegraph, telephone, water, canal, homestead, savings and
loan, mining, gas, and eleemosynary corporations, but any kind of business
corporation may be incorporated under the General Act.
2. Incorporators. — There may be any number of incorporators not less
than three, a majority of whom must reside in the State (C. C, sees. 285, 292 ;
Laws of 1905, chap. 392).
People v. Company, 97 Cal. 276; 32 Pac. 236.
3. Contents of the Articles of Incorporation (C. C, sec. 290, as amended
by Laws of 1907, chap. 278). — The articles must contain :
a. Name. — The use of a name identical with that or similar to that of
an existing domestic corporation is forbidden (C. C, sec. 296 ; Laws of 1905,
chap. 103 ; Laws of 1906, chap. 19, sec. 6 ; Laws of 1907, chap. 403). The
use of the word "trust" is forbidden to all corporations except those organ-
ized to transact a trust company business (Laws of 1905, chaps. 259, 279).
Curtiss v. Murray el al., 26 Cal. 633.
b. Purpose. — Companies may be incorporated for any purpose not covered
by special act (Cons., Art. XIII. sec. 9 ; Laws of 1905, chap. 392).
c. Domiciliary Office. — The place where the principal business is to be
transacted.
d. Corporate Existence. — The term for which it is to exist not to exceed
fifty years (sees. 290, 362).
e. Directors. — Number of directors not less than three, together with the
names and residences of those appointed for the first year. The directors must
be stockholders, and a majority residents of the State (C. C, sees. 290, 305 ; Laws
of 1905, chap. 392).
/. Capital Stock. — The amount of capital stock, which may be any amount.
The number of shares must also be stated, the par value of which may be any
amount. The articles of incorporation may provide for classification of capital
stock into preferred and common. To this must be added a statement of the
number of shares of stock to which preference is granted and the number of
shares to which no preference is granted. The articles must also set forth the
nature and extent of the preference granted and except as to the matters and
things so stated no distinction shall exist between such classes of stock; pro-
vided, however, that no preference shall be granted, nor shall any distinction
be made between the classes of stock either as to voting powers or as to statutory
constitutional liability of the holders thereof to the creditors of the corporation
(Laws of 1907, chap. 278).
g. Original Stock Subscriptions. — The amount actually subscribed and by
242
DIGEST OF INCORPORATION ACTS. — CALIFORNIA.
whom. There need be no particular amount subscribed beyond the one share
required for each of the incorporators (Laws of 1905, chap. 392).
Harris et al. v. McGregor, 29 Cal. 125; Ex parte S. V. \Y. \\\, l7Cal. 132; People v. Company,
45Cal. 306; People v. Perrin, 56 Cal. 345; People v. Company, 97 Cal. 276; 32 Pac. 236.
4. Statutory Powers (C. C, sees. 283, 354. 355). — In addition to the
statutory enumeration of the common law powers of corporations (C. C, sec.
354) there are some express limitations upon the ordinary corporate powers.
One is the provision that no corporation shall acquire or hold any more real
property than may be reasonably necessary for the transaction of its business
or the construction of its works. The bonded indebtedness of a corporation
may be created or increased by a vote of the stockholders representing at least
two-thirds of the subscribed capital stock at a meeting called by the board
of directors, and after publisliing notice of such meeting once a week for at least
sixty days, which notice shall state the amount of bonded indebtedness which
it is proposed to create, or the amount to which it is proposed to increase the
said indebtedness. The necessity of publication may be obviated by written
consents from the holders of two-thirds of the outstanding capital stock (C. C,
sec. 359). Domestic mining corporations possessing mining claims adjoining
each other may consolidate in such manner and upon such terms as may be
agreed upon, provided the written consent of all the stockholders representing
two-thirds of the capital stock of each corporation is first obtained, and provided
the statutory requirements relative to calling meetings, publishing notice thereof,
etc., are complied with (C. C, sec. 361). Only so much real property as is neces-
sary for the transaction of corporate business can be held (C. C, sec. 360 ; also
Session Laws, 1905, chap. 576).
The following additional powers are conferred : To authorize voting by
proxy, to permit cumulative voting in the election of directors, and to forfeit
stock for non-payment of assessments (Cons., Art. XII. sec. 12 ; C. C, sees.
307, 312, 331-349; Laws of 1903, chap. 215). Also to sell and dispose of all
the corporate assets with the consent of two-tliirds of the stockholders (C. C,
sees. 364, 584 ; Laws of 1903, chap. 271 ; Laws of 1905, chap. 416, sec. 4). Also
to remove directors (sec. 310; Laws of 1905, chap. 416). To accept devises
(Laws of 1903, chap. 223). By the unanimous vote of all the directors at any
regular meeting corporations may acquire and hold the land and buildings in
which their business is carried on, and may improve the same to any extent
required for the convenient transaction of its business (Laws of 1905, chap. 576).
The power of repealing and amending by-laws and of adopting new by-laws
may, by a two-thirds vote of the stockholders cast at a meeting thereof called
for that purpose, or by the written assent of the holders of two-thirds of the
stock, be delegated to the board of directors (Laws of 1905, chap. 416).
See Smith v. Morse, 2 Cal. 524; Smith v. Company, 6 Cal. 1 : Knowles v. Sandcrcock, 107
Cal. 629; 40 Pac. 1017; Tel. Co. v. Tel. Co., 22 Cal. 398; I ttion Water <'•>. v. Murphy I ... ■(
al., 22 Cal. 621; 1>. S. II. Hank v. Sadler (Cal. AppJ, 81 Pac. 1029.
5. Procuring the Charter. — The articles must lie signed and acknowl-
edged by each of the three or more incorporators, a majority of whom musl be
residents of the State (C. C, sec. 292; Laws of 1905, chap. 392). The signature
of each person named in such articles of incorporation as directors of such
corporation shall be affixed to said articles of incorporation and acknowledged b.\
each (Laws of 1911, chap. 589). Next, (lie articles must be filed in the office of
the county clerk of the county in which the principal business of the company
i to be transacted, and a copy thereof, certified by the county clerk, must be
243
DIGEST OF INCORPORATION ACTS. — CALIFORNIA.
filed with the Secretary of State (C. C, sec. 296). Before the articles can be filed
with the latter the organization tax (see below) and the proper proportional part
of the annual license tax must be paid. (See post, sec. 23; Laws of 1909, chap.
299). When such tax is paid and the articles duly filed with the Secretary of
State, the latter issues to the corporation, over the Great Seal of the State, a cer-
tificate that a copy of the articles containing the required statement of facts has
been filed in his office, and the statute then provides that the persons signing
the articles and their associates and successors shall thereupon be a body politic
and corporate by the name stated in the certificate (C. C, sec. 296; Laws of
1901, chap. 201). The due incorporation of any company claiming in good faith
to be a corporation, doing business as such, and its right to exercise corporate
powers shall not be inquired into collaterally in any private suit to which such
de facto corporation may be a party, but such inquiry may be had at the suit of
the State, except in those cases where the corporation has been doing business
for ten consecutive years as a corporation (C. C, sec. 358; Laws of 1901, chap.
206). No corporation may purchase, locate, or hold property in any county in
the State other than the county in which its original articles are filed, without
filing a copy of the copy of the articles of incorporation filed in the office of
the Secretary of State duly certified by him in the office of the clerk of the
county in which said property is situated and within sixty days after such
purchase or location is made (Laws of 1905, chap. 416).
Martin v. Deetz, 102 Cal. 55; 36 Pac. 368; Rondell v. Fay, 32 Cal. 354; Waterworks v.
San Francisco, 22 Cal. 441.
6. Organization Tax. — If the capital stock amounts to $25,000 or less,
$15; over $25,000 and not over $75,000, $25; over $75,000 and not over
$200,000, $50 ; over $200,000 and not over $500,000, $75 ; over $500,000 and
not over $1,000,000, $100; over $1,000,000, $50 additional for every $500,000
or fractional part thereof of capital stock over and above $1,000,000. The
foregoing fees are payable to the Secretary of State upon fifing articles in his
office (Laws of 1905, chap. 467).
7. Filing and Recording Fees. — The Secretary of State is entitled to
no additional fee for filing articles of incorporation other than the payment
to him of the organization tax, but for recording such articles he is entitled
to charge 20 cents per folio. For issuing certificate of incorporation, $3. For
copy of articles of incorporation on file in his office, 20 cents per folio, and for
affixing certificate seal of State thereto, $2. For comparing copy of articles with
the original on file in his office, 5 cents per folio. The county clerk is entitled
to a fee of $1 for filing articles of incorporation, and for copy of same 10 cents
per folio, and for certificate for same, 50 cents (Pol. Code, 416; Gen. Laws,
Title 84, Stat. 1895, p. 268; Laws of 1905, chap. 467; Laws of 1907, chap. 281.
As to provision for issuance of duplicate of articles of incorporation, where the
original has been lost, see Laws of 1906, chaps. 53 and 61).
8. Corporate Indebtedness. — Cannot exceed amount of subscribed cap-
ital stock (C. C, sec. 359, as amended by Laws of 1903, chap. 235; Laws of
1905, chap. 416, sec. 4). (As to increase or decrease in indebtedness, see Laws
of 1907, chap. 280; see also Laws of 1907, chap. 93.)
9. Commencing Business. — Corporations may commence business as
soon as the certificate of incorporation is issued by the Secretary of State and a
license to do business has been issued by that official to the corporation. In
order to procure such a license the law provides that at the time of filing a cer-
tified copy of articles of incorporation of any corporation the proportionate
244
DIGEST OF INCORPORATION ACTS. — CALIFORNIA.
part of the current annual license tax must be paid (Laws of 1909, chap.
299). The law provides that no corporation, either domestic or foreign, shall
do or attempt to do business by virtue of its certificate of incorporation in
the State without a State license therefor. They must commence business
within one year upon penalty of having their charter forfeited by proper action
commenced by the State (C. C, sec. 358; see also Laws of 1901, chap. 147).
If the corporation has property in other counties than that where its original
articles are filed, it must within sixty days after such property is purchased,
located, or held, file with the clerk of such counties copies of its articles of
incorporation certified by the Secretary of State (C. C, sec. 299; Laws of 1905,
chap. 416).
People v. Company, 45 Cal. 306.
10. Organization Meeting. — A preliminary organization is effected by
the stockholders holding a meeting within the State within one month after
incorporation (by proxy if desired) and proceeding to adopt by-laws. These
must be adopted by a two-thirds vote of all the stock issued and outstanding.
By-laws may, however, be adopted by the written assent of two-thirds of the
stockholdings without a meeting (C. C, sec. 301 ; Laws of 1905, chap. 416).
The right to repeal and amend by-laws is governed by the same provisions.
The power to repeal and amend by-laws and adopt new by-laws may by a similar
vote at any such meeting, or similar written assent, be delegated to the board
of directors. All by-laws must be certified by a majority of the board of directors
and the secretary of the corporation, and copied in a book kept in the office of
the secretary of the corporation, to be known as the book of by-laws, subject
to the inspection of the public during business hours each day (C. C, sec. 301 ;
C. C, sec. 364; Laws of 1901, chap. 157, sees. 67, 68; Laws of 1905, chap. 416).
Hall v. Crandall, 29 Cal. 568.
11. Meetings of Stockholders and Directors. — Meetings of both stock-
holders and board of directors must be held at the corporation's office or princi-
pal place of business (C. C, sec. 319 ; Laws of 1905, chaps. 282, 584 ; as to use
of proxy at stockholders' meetings, see Laws of 1905, chaps. 28, 416, sees. 7-9).
At all elections or votes had for any purpose there must be a majority of the
subscribed capital stock represented either in person or by proxy. Every person
acting at said meeting must be a stockholder having stock in his own name on
the stock books of the corporation at least ten days prior to the election (Laws
of 1907, chap. 319).
The directors of all business corporations must be elected annually by stock-
holders, and if no provision is made in the by-laws for the time of election, the
election must be held on the first Tuesday in June. Notice of sucli election
must be given i*s prescribed in section 301 of the Code, unless all the stock-
holders waive such notice in writing (Laws of 1909, chap. 57).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three directors who shall be stockholders and a majority
of whom shall be residents of the State. Unless a quorum is present no business
performed or acted on is valid as against the corporation. Whenever a vacancy
occurs in the office of director, unless the by-laws of the corporation otherwise
provide, such vacancy must be filled by an appointee of the board (C. C,
sees. 290, 301, 305; Laws of 1901, chap. 145; Laws of 1905, chaps. 392, 4 Hi).
Cumulative voting for directors is permitted (sec. 307).
b. Liabilities. — Directors are jointly and severally liable to the crediton
245
DIGEST OF INCORPORATION ACTS. — CALIFORNIA.
and stockholders for all moneys embezzled or misappropriated by the officers
during their term of office (Cons., Art. XII. sec. 3). Non-dissenting directors
are liable to the corporation and to the creditors to the full amount of the capital
stock withdrawn as dividends when there are no surplus profits (C. C, sec. 309 ;
Laws of 1905, chap. 416). They are also jointly and severally liable where they
create debts beyond the subscribed' capital stock (C. C, sec. 309). They are
also liable for the withdrawal of capital stock or the increase or decrease thereof,
except when made in accordance with the statute in such case made and pro-
vided (C. C, sec. 309). Finally, directors are made liable for making false
reports relative to corporate matters (Laws of 1905, chap. 522). Directors in
mining corporations are liable for failure to have the reports and accounts cur-
rent made and posted as required by law (C. C, sec. 590 ; see also Penal Code,
sees. 560, 563, 564, 568-572).
Fox v Company, 108 Cal. 478; 41 Pac. 328; A. S. Mining Co. v. Company, 78 Cal. 629;
21 Pac. 373; Martin v. Zellerbach, 38 Cal. 300; E. W. & Mining Co. v. Pierce, 90 Cal. 131;
27 Pac. 44; Shattuck v. Company, 58 Cal. 550; Irvine v. McKeon, 23 Cal. 472.
13. Stockholders' Liabilities, a. Individual Liability. — Every stock-
holder is individually liable for such proportion of the corporation's debts and
liabilities contracted or incurred during the time he was a stockholder, as the
amount of stock owned by him bears to the whole of the subscribed capital
stock of the corporation. The liability of each stockholder is determined by
the amount of stock owned by him at the time the debt or liability was incurred,
and such liability is not released by subsequent transfer of stock (Cons., Art. XII.
sec. 3 ; C. C, sec. 322 ; Laws of 1905, chap. 339). Stockholders are also liable
for the amount of their unpaid-stock subscriptions.
Harmon v. Page, 62 Cal. 448; Baines v. Babcock, 95 Cal. 581; 27 Pac. 674; Vermont
Marble Co. v. Company, 135 Cal. 579; 67 Pac. 1057; Bank v. Company, 103 Cal. 594; 37
Pac. 499.
b. Stock Assessments. — Assessments are levied in the first instance by the
board of directors after one-fourth of the capital stock has been subscribed.
The amount of the assessment is limited except in the case hereafter referred
to, so that no one assessment shall exceed ten per cent of the amount of the
authorized capital stock. The exception is where the whole capital stock has
not been paid up and the corporation is unable to meet its liabilities or to satisfy
the claims of creditors. The assessment must be levied according to statute,
and must be made payable not less than thirty nor more than sixty days from
the time of making the order leaving the assessment. The day to be fixed for
the sale of delinquent stock shall be not less than fifteen nor more than sixty
days from the day the stock is declared delinquent. In addition to the penalty
provided for forfeiture of stock for failure to pay assessments, a corporation may
recover the amount of such instalment directly against the stockholder by proper
action brought for that purpose (C. C, sees. 331-349). The Supreme Court of
California has held that the directors of any domestic corporation may levy and
collect assessments for corporate purposes on shares of stock upon which all
subscriptions have been fully paid.
R R. Co. v. Spreckles, 65 Cal. 193; 3 Pac. 661, 802; Younglove v. Steinman, 80 Cal. 375;
22 Pac. 189; Company v. Herberger, 82 Cal. 603; 23 Pac. 134; Water Co. v. Superior Court,
92 Cal. 50; 28 Pac. 54; Green v. Medical Co., 96 Cal. 322; 31 Pac. 100; see also Cons., Art. XII.
sec 3; Visalia, etc. Co. v. Hyde, 110 Cal. 632; 43 Pac. 10; U. S. Bank v. Leiter, 145 Cal. 696;
79 Pac. 441.
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him signed by the president and secretary (C. C, sec. 323).
The corporation may provide in its by-laws for issuing certificates prior to full
246
DIGEST OF INCORPORATION ACTS. — CALIFORNIA.
payment, but any certificate issued prior to full payment must show on its face
what amount has been paid thereon. The par value of stock certificates may
be any amount (C. C, sees. 290, 587 ; Laws of 1901, chap. 147 ; Laws of 1905,
chaps. 339 and 391 ; Laws of 1907, chap. 279). Certificates of stock issued by
corporations issuing stocks of different classes shall express upon their face the
character of stock represented by such certificates. The latter must also state
the number of shares of stock of each class issued and shall also contain a state-
ment of the nature and extent of the preferences granted to the preferred stock
(Laws of 1907, chap. 279 ; see also Laws of 1907, chap. 470).
Williams v. Company, (Cal.) 78 Pac. 28.
15. Preferred Stock. — Preferred stock is expressly authorized by Laws
of 1907, chap. 278. (See ante, sec. 3, sub. f.)
16. Payment of Capital Stock. — Under the constitution no corporation
can issue stock except for money paid, or labor done, or property actually
received (Cons., Art. XII. sec. 11 ; C. C, sec. 359, as amended by Laws of 1903,
chap. 253 ; Laws of 1907, chap. 280).
Ewing v. Company, 56 Cal. 649; Stein v. Howard, 65 Cal. 616; 4 Pac. 662; Martin v.
Zellerbach, 38 Cal. 309; Jefferson v. Hewitt, 103 Cal. 624; 37 Pac. 638; Kellerman v. Mater,
116 Cal 416; 48 Pac. 377; Garretson v. Company (Cal.), 79 Pac. 838; Green v. The Com-
pany, 96 Cal. 322.
17. Books. — The book of by-laws and stock books must be kept at the
principal office of the company within the State, and are subject to inspection
thereof by any stockholder. The stock and transfer books are open to inspec-
tion of creditors as well as stockholders (C. C, sees. 304, 377-378, 588; and
Cons., Art. XII. sec. 14).
18. Office. — The corporation must maintain an office within the State
(Cons., Art. XII. sec. 14).
19. Reports. — No reports are required to be published. Directors in
mining corporations are required to make monthly reports to the stockholders,
verified by the president and secretary (C. C, sec. 588).
20. Anti-Trust Statute. — Corporations cannot combine or agree to any
act to prevent any person from buying five-stock in the State, or having it for
sale or selling it on commission (Session Laws of 1893, chap. 30). Discrimina-
tion in rates and combination among transportation companies are prohibited
by the Constitution (Art. XII, sees. 20, 21).
21. Statutory Grounds for Forfeiture of Charter. — If a corporation
does not organize and commence the transaction of its business or the construc-
tion of its works within one year from the date of its incorporation, or if after
organization and commencement of business it loses or disposes of all of its
property and for a period of two years fails to elect officers and transact in a
regular way its business, its corporate powers shall cease, and the corporation
may be dissolved by proper action brought by the State for that purpose (C. C,
sec. 358; C. C, Pro., sees. 802-810; Laws of 1901, chap. 20G). Charters may
be forfeited for failure to pay the annual license tax as provided by Laws of 1906,
chap. 19; Laws of 1907, chaps. 347 and t03; Laws of L911, chap. .".7:;.
People v. Stanford, 77 Cal. 360; 18 Pac. 85; People v. Dashaway Aaa'n. si Cal. lit; 24
Pac 277- San Pedro v. K. R. Co., 101 Cal. 333; 35 Pac. 993; People v. Water Co., 9t ( al.
276; 32 Pac. 236; L. H. liank v. Spires, 120 Cal. 511 ; 5s Pac. 1049.
22. Amendments. — The power of amendmenl in California is broad and
is also somewhat complicated. The name of the corporation can be changed
only by application to the Superior Court. The corporation must file a certi
247
DIGEST OF INCORPORATION ACTS. — CALIFORNIA.
fied copy of the decree of the court changing the corporate name in the office
of the Secretary of State, and in the office of the county clerk of each county
in which the original articles or certified copies thereof are required to be filed
within thirty days from the date of such decree (Code of Civ. Proc, sees. 1276,
1277, 1279; Laws of 1905, chaps. 45 and 103; Laws of 1907, chap. 275; Laws
of 1909, chap. 639). Articles may be amended for any purpose except as stated
below, by the majority vote of the directors and by the vote or written assent
of stockholders representing two-thirds of the subscribed capital stock of the
corporation, or the written assent of the majority of the members if there is no
capital stock ; a copy of the articles as amended, duly certified to be correct by
the president and secretary of the board of directors, shall be filed in the office
where the original articles are filed and a certified copy thereof duly certified
by such county clerk, in the office of the Secretary of State. Amended articles,
duly certified as aforesaid, must be filed in the office of the county clerk of every
county in which said corporation has or holds property except only in the county
in which the original amended articles of incorporation have been filed. Failure
to so file subjects the corporation to the penalties and liabilities provided in sec.
299 of the Civil Code. If the assent of two-thirds of the stockholders to such
amendment has not been obtained, a notice of the intention to make such
amendment must be advertised for thirty days in some newspaper published
in the locality in which the principal place of business of the corporation is
located before the filing of the proposed amendment (Laws of 1907, chap. 278).
The capital stock of a corporation may be increased or diminished at a
meeting of the stockholders by a two-thirds vote of the subscribed or issued
capital stock. When such action is taken at a meeting of the stockholders, the
same must be called by the board of directors and notice must be given by pub-
lication in a newspaper published in the county where the principal place of
business of the corporation is located ; provided, however, where the articles
of incorporation provide for two or more kinds of capital stock, no increase or
reduction shall be made without the consent of two-thirds of all the subscribed
stock, and in making such increase or reduction the assent shall identify the
particular class or classes of stock to be increased or reduced and the amounts
apportioned to each. The notice must specify the object of the meeting and
the amount to which it is proposed to increase or diminish the capital stock
and the time and place of holding the meeting, which latter must be at the
principal place of business of the corporation, and at the building where the
board of directors usually meet. The notice of the meeting must be published
once a week for at least sixty days. In addition to the notice by publication,
the secretary of the corporation must address a notice to each of the stock-
holders whose names appear on the company's books, at his place of residence,
if known, and if not, then at the place at which the principal place of business
of the corporation is situated, which notice shall be so mailed to said stock-
holders at least thirty days before the date appointed for such meeting. In
lieu of such call for a meeting of stockholders and of such notice and publica-
tion of the same, and of a stockholders' meeting held in pursuance thereof, and
of said vote thereat, representing two-thirds of the subscribed capital stock,
any corporation may diminish its capital stock and also originally create its
bonded indebtedness by a resolution adopted by the unanimous vote of its
board of directors or trustees at a regular or at a special meeting called for that
purpose, and approved by the written assent or assents of the stockholders
holding two-thirds of the subscribed or issued capital stock, which assent or
248
DIGEST OF INCORPORATION ACTS. — CALIFORNIA.
assents must be filed with the secretary of the corporation; or the secretary
of the corporation must address by mail, postage fully prepaid, a copy of
such resolution to each of the stockholders whose names appear upon the
company's books as sufficiently addressed or identified, at his place of resi-
dence if known, and if not known, then at the place in which the principal
place of business of the corporation is situated, which notice shall be so mailed
to such stockholders at least thirty days before the certificate hereinafter
provided for is made and signed or filed, as hereinafter provided, and within
that time any stockholder may file with such secretary his dissent in writing ;
and it is further provided that if at any time within said thirty days such writ-
ten assent or assents of the stockholders holding all of the subscribed or
issued capital stock be so filed with the secretary, then and at once and without
further delay a certificate hereinafter provided for may be so made, signed and
filed as hereinafter provided and with the same effect, but such capital stock
cannot be diminished to an amount less than the indebtedness of the corpo-
ration, and no increase of capital stock or bonded indebtedness of the corpora-
tion can be made except at a meeting of the stockholders as in this section
provided.
Upon such increase or diminution of the capital stock or creation or increase
of the bonded indebtedness being made in accordance with the provisions of
this section, there shall be made a certificate under the corporate seal and signed
by the president and secretary of the corporation, or of each corporation acting
in the premises, and a majority of the directors or trustees of such corpora-
tion, or each corporation so acting, showing compliance by such corporation, or
each corporation so acting with the requirements of said laws named in said
subdivisions, and the amount to which the capital stock has been increased
or diminished, or the amount of the bonded indebtedness created, or to which
the bonded indebtedness may have been increased, and the amount of stock
represented at the meeting, and the total vote in the affirmative by which the
same was accomplished, and the total vote in the negative ; or, if such pro-
ceedings be had and taken under subdivision five of this section as to dim-
inution of capital stock or the original creation of bonded indebtedness a
like certificate shall be made and sealed and signed as aforesaid, showing the
compliance by such corporation or by each corporation acting in the premises
with the requirements of said subdivision fifth and the amount to which the
capital stock has been diminished, or the amount of bonded indebtedness so
originally created and the total amount of the stock represented by the said
written assent or assents so filed with the secretary and the total amount of
stock represented by the said written dissent or dissents so filed.
In case of a consolidated bonded indebtedness, each corporation which is
a party thereto, shall cause to be made, signed, sealed and verified and filed as
in this section provided, a separate certificate.
In all cases the certificates shall state the total number of subscribed or
issued shares of the capital stock of the corporation or of each corporation re-
spectively acting in the premises, and shall be verified by the oath of the said
president, secretary or of the said respective presidents and secretaries. Said
consolidated bonded indebtedness may be created or increased to an amount
equal to the par or face value of the aggregate amount of the subscribed or
issued capital stock of said two or more corporations and shall not. exceed such
aggregate amount. In each and every case the certificate must be filed in the
office of the clerk of the county or the city or county where the original articles
249
DIGEST OF INCORPORATION ACTS. — CALIFORNIA.
•of incorporation of the corporation or corporations acting hereunder are filed
and a certified copy thereof certified by such clerk shall be filed in the office of
the Secretary of State; and thereupon the capital stock shall be so increased
or diminished, or the bonded indebtedness or consolidated bonded indebtedness
shall be decreased or increased accordingly, and said certificate or certificates
so filed shall be, when such certified copy or copies are so filed, conclusive proof
of such increase or diminution of capital stock or such creation or increase of
original or consolidated bonded indebtedness and the validity of each thereof.
When the by-laws of a corporation prescribe the paper in which the notices of
meetings of directors or trustees or stockholders are to be published, notice of
publication herein provided for shall be published in such paper unless publica-
tion thereof shall have ceased (Laws of 1907, chap. 280).
The place of business may be changed, if desired, by amendment (C. C,
sec. 321 a). If articles are filed in the wrong county in the first instance, the
Code provides a means of remedying this. (See sec. 363.) The number of
directors may be changed by a majority vote of the stockholders, whereupon
a certificate must be filed relative to such change, in the same manner as in
the case of original articles (Laws of 1905, chap. 392).
Application of La SocieHe", etc., 123 Cal. 525; 56 Pac. 458.
23. Annual License Tax. — No corporation heretofore or hereafter incor-
porated under the laws of this State, or of any other State shall do or attempt
to do business by virtue of its charter or certificate of incorporation in this
State without a State license therefor (Laws of 1906, chap. 19).
It shall be the duty of every corporation incorporated under the laws of
this State, and of every foreign corporation now doing business, or which shall
hereafter engage in business in this State, to procure annually from the Sec-
retary of State, a license authorizing the transaction of such business in this
State, and shall pay therefor a license tax as follows:
When the authorized capital stock of the corporation does not exceed $10,000,
the tax shall be $10; when the authorized capital stock exceeds $10,000, but
does not exceed $20,000, the tax shall be $15 ; when the authorized capital
stock exceeds $20,000, but does not exceed $50,000, the tax shall be $20 ; when
the authorized capital stock exceeds $50,000, but does not exceed $100,000, the
tax shall be $25 ; when the authorized capital stock exceeds $100,000, but does
not exceed $250,000, the tax shall be $50 ; when the authorized capital stock
exceeds $250,000, but does not exceed $500,000, the tax shall be $75 ; when
the authorized capital stock exceeds $500,000, but does not exceed $2,000,000,
the tax shall be $100; when the authorized capital stock exceeds $2,000,000,
but does not exceed $5,000,000, the tax shall be $200; when the authorized
capital stock exceeds $5,000,000, the tax shall be $250. Said license tax or fee
shall be due and payable on the 1st day of July of each and every year to the
Secretary of State, who shall pay the same into the State Treasury. If not
paid on or before the hour of four o'clock p. m., of the 1st day of September
next thereafter, the same shall become delinquent and there shall be added
thereto, as a penalty for such delinquency the sum of $10. The license tax or
fee hereby provided authorizes the corporation to transact its business during
the year or for any fractional part of such year in which such license tax or fee
is paid. "Year" within the meaning of this act means from and including the
1st day of July to and including the 30th day of June next thereafter (Laws
of 1907, chap. 347, as amended by Laws of 1909, chap. 299).
250
DIGEST OF INCORPORATION ACTS. — CALIFORNIA.
The Secretary of State shall, on or before the loth day of September of
each year, report to the governor of the State a li^t of all corporations which
have become delinquent as provided in sec. 2 of this act, and the governor shall
forthwith issue his proclamation declaring under this act, that the charters of
such delinquent corporations will be forfeited unless payment of said lio
tax together with the penalty for such delinquency, as hereinbefore provided,
be made to the Secretary of State on or before the hour of four o'clock i». M.,
of the 30th day of November next following (Laws of 1906. chap. 19j. Said
proclamation shall be filed immediately in the office of the Secretary of State.
and said Secretary of State shall immediately cause a copy of said proclama-
tion to be published in one issue of two daily newspapers to be selected by the
governor (Laws of 1906, chap. 19).
At the hour of four o'clock p. m., of the 30th day of November each year,
the charters of all delinquent domestic corporations which have failed to
said license tax together with said penalty for such delinquency shall be for-
feited to the State of California and the right of all delinquent foreign corpo-
rations to do business in this State, which have failed to pay said license tax,
together with the penalty for such delinquency shall be likewise forfeited (Laws
of 1906, chap. 19; see also Laws of 1907, chap. 403; Laws of 1911, chap. .573).
At the time of filing a certified copy of articles of incorporation of any cor-
poration when filed on or between the 1st day of July and the 30th day of
September in any year, there shall be paid to the Secretary of State the full
amount of the license tax provided to be paid as stated above; when filed
on or between the 1st day of October and the 31st day of December in any
year, a sum equal to three-fourths of the license tax provided to be paid
stated above; when filed on or between the 1st day of January and the 31s1
day of March in any year, a sum equal to one-half of such license tax as
stated above shall be paid; when filed on or between the 1st day of April and
the 30th day of June in any year, a sum equal to one-fourth of the license as
stated above shall be paid. Upon receipt of such full or fractional lie
tax the Secretary of State shall issue a license receipt for the full or for tin-
fractional part of the then current fiscal year (Laws of 1909, chap. 299).
24. Extension of Corporate Existence. — Every corporation may at
any time prior to the expiration of the term of its corporate existence, extend
such term to a period not exceeding fifty years from the date of such extension.
An extension must be voted for at a meeting of the stockholders, called by the
directors expressly for that purpose, and two-thirds of the stockholders must
vote in favor thereof. Or, in lieu of a meeting, it may be made upon the written
assent of stockholders representing two-thirds of the capital stock. The cer-
tificate of such vote or assent shall be signed and sworn to by the secretary or
treasurer and by a majority of the directors of the corporation and filed in the
office of the county clerk where the original articles of incorporation were filed,
and a copy, certified by said clerk shall be filed in the office of the Secretary of
State (C. C, sec. 4010, as amended by Laws of 1907, chap. 274).
25. Dissolution. — The dissolution of a corporation is effected by a decree
of the Superior Court of the county where the principal place of business of the
corporation is situated, upon action previously had at a meeting of the stock-
holders called for that purpose, whereat the dissolution of the corporation was
resolved by a vote of two-thirds of the holders of the subscribed capital Btock.
The application must also show that all claims and demands against the cor-
poration have been satisfied and discharged. Upon filing of the application
251
DIGEST OF INCORPORATION ACTS. — CALIFORNIA.
the clerk must give notice of the same for such time as the court may order,
and not less than thirty, nor more than fifty days, by publication in some news-
paper published in the county where the corporation has its principal place of
business. The application for dissolution must be signed by a majority of the
board of directors or other officers having the management of the affairs of the
corporation (Code of Civ. Proc, sees. 1227-1234; Laws of 1905, chaps. 348, 416;
Laws of 1907, chap. 254).
After the time of publication has expired the court may, upon five days'
notice to the persons who have filed objections, or without further notice if no
objections have been filed, proceed to hear and determine the application, and
if all the statements therein made are shown to be true, must declare the cor-
poration dissolved. A certified copy of the decree and order of the court dis-
solving the corporation must be filed in the office of the Secretary of State
(Laws of 1907, chap. 401). (As to involuntary dissolution, see Code of Civ.
Proc, sec. 812, etc.)
26. Foreign Corporations. — Foreign corporations must at the time they
file application for a permit to do business within the State file in the office
of the Secretary of State a designation of some person residing within the State
upon whom service of process may be made. Unless such designation is made
the right to maintain or defend actions in the courts is denied to the corporation.
The corporation must also file in the office of the Secretary of State a certified
copy of its articles of incorporation or of the statute or governmental act creat-
ing it, and a certified copy thereof duly certified by the Secretary of State of
California must likewise be filed in the office of the county clerk of the county
where its principal place of business is located and also where such corpora-
tion owns property. For filing such certified copy in the office of the Secretary
of State the same fees must be paid as are paid by domestic corporations of
like capitalization upon organization. Failure to comply with the law subjects
the corporation to heavy penalties (Laws of 1905, chap. 471 ; Laws of 1907,
chap. 283). Foreign corporations are also subject to the payment of the same
annual license tax as domestic corporations (Laws of 1906, chap. 19 ; Laws of
1907, chap. 347; Laws of 1909, chap. 299). Stockholders in foreign corpora-
tions doing business in the State are liable to the same extent as stockholders in
domestic corporations (Laws of 1905, chap. 3S6). The fee for filing notice of
appointment of agent is $5 (Laws of 1905, chap. 467). The filing and record-
ing fees are otherwise the same as are imposed upon domestic corporations.
The right to cumulate votes in the election of directors is made applicable to
foreign corporations (Laws of 1903, chap. 215). See as to penalty for failure
on the part of foreign corporations to file certified copies of articles (Laws of
1911, chap. 541).
Thomas v. Company, 65 Cal. 600; 4 Pac. 641; Pinney v. Nelson, 183 U. S. 144; 22 Sup.
Ct. 52.
252
DIGEST OF INCORPORATION ACTS. — COLORADO.
COLORADO.
(The references cited below are to Mills' Annotated Statutes, 1905 Edition, unless otherwise
stated.)
1. Character of the Law under which Business Corporations may
incorporate. — The Business Corporation Act of Colorado is found in Mills'
Annotated Statutes of Colorado, sees. 472 et seq. Special acts arc provided for
the incorporation of railways, banks, trust companies, deposit, surety, title,
guaranty, insurance, toll road, ditch, bridge and ferry, telegraph, telephone,
gas, and electric companies.
2. Incorporators. — Three or more. There are no residential require-
ments (Mills, sec. 473).
3. Contents of the Certificate of Incorporation. — The certificate must
set forth :
a. Name. — The name must commence with the word "the" and end with
the word "corporation," "company," "association," or "society," and must
indicate the business to be carried on. Similarity of names is forbidden (Mills,
sees. 472, 475, 625). Upon the filing in the office of the Secretary of State of a
certificate by three or more persons or corporation, stating that it is the desire
and intention of such persons or corporation to adopt and use a certain name
as and for the name of a domestic corporation to be thereafter incorporated or
organized, it shall be the duty of the Secretary of State to reserve such name
for the use and benefit of the persons or corporation filing such certificate for the
period of sixty days from the date of filing the same; and the Secretary of State
shall not file or permit to be filed in his office within said period any articles
of incorporation or any other papers, by any other person, persons, or corpora-
tions by which such name is sought to be used or adopted as (lie name of a
domestic corporation; provided, however, that such name is not already used,
adopted or prepared by some other person, persons, or domestic corporation
(Laws of 1911, chap. 104, sec. 1).
b. Purposes. — The statute clearly contemplates that corporations may be
organized for any number of purposes not covered by the special acts. It should
be remembered in this connection that this clause cannot be changed by amend-
ment after incorporation (sec. 477).
c. Capital Stock. — The amount of the capital stock. This may be any
amount. In the case of a mining company the article should state whether
the stock is non-assessable or assessable (Mills, sec. 581).
d. Duration. — Must not exceed twenty years.
e. Number and Par Value of Shares. — The par value of shares must not be
less than $1 nor more than $100.
/. Directors. — The number of directors must not be less than three nor
more than thirteen. In the case of mining companies and banks the number
must not exceed nine (sees. 512, 585).
g. Names of First Board of Directors. — This board, under the statute, lias
control of the affairs of the company for the first year of its existence
h. Domiciliary Office. — The name of the town and county in which the
principal office of the company shall be kept.
i. Place for the Transaction of Business. \aine of the county or counties
in which the principal business shall hi' carried on. \\ hen the corporation is
253
DIGEST OF INCORPORATION ACTS. — COLORADO.
to carry on part of its business without the State, the certificate must state
that fact, and also state the name of the town and county in Colorado in which
the principal office shall be kept, and also state the names of the counties in
which the principal business of the corporation is to be carried on within the
State.
j. By-Laws. — To directors may be delegated the right to make by-laws if
so desired, otherwise the stockholders must adopt the by-laws.
k. Directors' Meetings. — If it is desired to hold directors' meetings without
the State, this right should be reserved in the certificate (Mills, sec. 473).
Schroers v. Fisk, 10 Col. 599; 16 Pac. 285; Duggan v. Company, 11 Col. 113; 17 Pac.
105; Humphreys v. Mooney, 5 Col. 293; People v. Cheeseman, 7 Col. 376; 3 Pac. 716; D. &
S. Ry. Co. v. D. C. Rv. Co., 2 Col. 673; G. R. B. Co. v. Rollins, 13 Col. 4; 21 Pac. 897; Jones
v. Company, 21 Col. 263; 40 Pac. 457; Tabor v. Bank, 62 Fed. 383.
4. Statutory Powers. — The main statutory powers are what are known
as the common law powers belonging to all business corporations (Mills, sec
476). Corporations have, however, the following extraordinary powers in
Colorado : To consolidate with another corporation when, by a vote of at least
three-fourths of the stock of each company severally had, the proposition shall
be approved. The method of consolidation is pointed out in detail in the
statute (Mills, sees. 625, 628). The statute contains one express limitation
upon the powers of corporations, which may be enumerated as follows : They
are forbidden to use any of the corporate funds for the purchase of their own
stock except such as may be forfeited for the non-payment of assessments
thereon (Mills, sec. 485). Manufacturing and mining companies cannot encum-
ber their plant or mines or machinery without the vote of a majority of the
stockholders (3 Mills, sec. 481). Cumulative voting for directors is permitted
(Laws of 1905, p. 150) ; also voting by proxy (Laws of 1S95, pp. 150-152, sec. 1;
Laws of 1891, p. 93, sec. 4; see also Laws of 1903, p. 158).
Jones v. Hardware Co., 21 Col. 263; 40 Pac. 457; Spangler v. Butterfield, 6 Col. 356;
Carpenter v. People, 8 Col. 116; 5 Pac. 828; Mining Co. v. Bank, 2 Col. 248; City of Pueblo
v. Company, 28 Col. 524; 67 Pac. 162.
5. Procuring the Charter. — The certificate must be signed and acknowl-
edged by each of the incorporators. In practice it is well to execute a sufficient
number of original certificates so as to permit the filing of one original in every
county where the business of the corporation is to be carried on, as well as
in the office of the Secretary of State. As soon as the certificate has been filed
in the office of the recorder of deeds in each of the counties in which the principal
place of business shall be carried on, as well as in the office of the Secretary of
State, the corporate existence commences (sees. 473-475). The Secretary of
State issues a certificate of authority to transact business as a corporation within
the State. The president and a majority of the directors, after the last instal-
ment of stock is paid in, must make a certificate stating the amount of the
capital so fixed and paid in, which certificate shall be signed and sworn to by
the president and a majority of the directors and must be recorded in the same
offices where the certificate of incorporation is recorded (Mills, sees. 487, 491).
There is no penalty by law for failure to file the certificate of full paid stock.
Austin v. Berlin, 13 Col. 198; 22 Pac. 433; Cook v. Merritt, 15 Col. 212; 25 Pac. 176;
Matthews v. Patterson, 16 Col. 215; 26 Pac. 812; F. M. & Co. v. MacLeod, 8 Col. App. 190;
45 Pac. 282.
6. Corporate Indebtedness. — There is no statutory limitation upon the
amount of indebtedness which a corporation may incur.
7. Organization Fee. — There must be paid to the Secretary of State $20
for filing the certificate of incorporation of companies with a capitalization of
254
DIGEST OF INCORPORATION ACTS. — COLORADO.
not more than $50,000, and for every thousand dollars in excess of $50,000
an organization tax of 20 cents per thousand is exacted (Laws of 1901, chap.
52, sec. 1).
Jones v. Company, 21 Col. 263; 40 Pac. 457.
8. Filing and Recording Fees. — There are no fees due the Secretary
of State for filing articles of incorporation other than payment of the organiza-
tion tax. For certified copy of articles of incorporation, 15 cents per folio of
one hundred words, and SI for seal. For issuing certificate of authority showing
that all fees prescribed by law have been paid, $5; for filing and recording
impression of the corporate seal, $2.50; for filing certificate of payment of
stock, $2.50 and upwards, according to capitalization; if capitalization exceeds
$50,000, the fee is 5 cents per $1,000 of stock in excess thereof. Fee for filing
annual report, $1 where capitalization is $10,000 or less ; where it exceeds
that amount it is $5. With regard to fees of county recorder, wherein articles
of incorporation are required to be filed, the counties are graded for fee pur-
poses. The fifing fee there ranges from 10 cents to 25 cents. If the articles are
recorded, the fee ranges from 50 cents to $2 (Laws of 1901, pp. 116-121, sees.
1-10 ; Session Laws of 1907, chap. 182).
9. Commencing Business. — Corporations may begin business as soon
as their certificates have been filed, State fees paid, and certificate of payment
thereof issued (Laws of 1901, chap. 52, sec. 1).
10. Organization Meeting. — The incorporators should sign a written
agreement fixing the time and place within the State for the organization of
the corporation. The incorporators may be represented by proxy if desired.
If the certificate of incorporation does not bestow upon directors the right to
make by-laws, the stockholders should adopt by-laws themselves. Immedi-
ately after the adjournment of the stockholders' organization meeting (if any is
held), the board of directors named in the certificate of incorporation should
meet and elect the officers of the corporation, receive and act upon an offer
to transfer property for stock, etc., and adopt by-laws. The statutory officers
are a president, who must be chosen from among the directors, and such sub-
ordinate officers as the company may by its by-laws designate.
Humphreys v. Mooney, 5 Col. 283.
11. Meetings of Stockholders and Directors. — Meetings of the stock-
holders must be held at the office of the company within the State. Directors"
meetings may be held without the State only by making provision therefor
in the certificate of incorporation (Mills, sees. 481, 493).
Humphreys v. Mooney . 5 Col. 283; Jones v. Pearl M. Co., 20-Col. 417; 38 Pac. 700; Cook
v. Hager, 3 Col. 386; Utlay v. Company, 4 Col. 371.
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must not be less than three nor more than thirteen directors, all of whom
must be stockholders. In case of mining companies and banks not more than
nine are permitted. There are no residential requirements (Mills, sec. 481 ; set-
also Mills, sec. 585; Laws of 1895, pp. 150-152, Bee. \>. Cumulative voting for
directors is provided for by statute I Laws of 1905, p. 150, sec. 1).
b. Liabilities. — Assenting directors are jointly and severally liable for the
declaration and payment of dividends which render il insolvent or which
decrease the amount of its capital stock. The extent of the liability is for
all debts of the corporation then existing and for all thai Bhall thereafter be
contracted while the capital remains so diminished (Mills, sec. 192). Thej are
DIGEST OF INCORPORATION ACTS. — COLORADO.
also liable for failure to file annual reports (Laws of 1901 ; 3 Mills, sec. 491 j).
However, as the failure to file the annual report fixes directors and officers with
the liability for debts as stated, and as this annual report must be filed whether
the stock has been fully paid and certificate to that effect made or not, it would
appear that the failure to make a certificate as to full payment of stock is in
itself immaterial. It is made a misdemeanor for directors to fail to properly
keep, and, on demand of parties entitled to the same to permit inspection of,
corporate books (sec. 488 to 508).
Nix v. Miller, 26 Col. 203; 57 Pac. 1034; Austin v. Berlin, 13 Col. 198; 22 Pac. 433;
Matthews v. Patterson, 16 Col. 215; 26 Pac. 812; Larsen v. James, 1 Col. App. 313; 29 Pac.
183; Gregory v. Bank, 3 Col. 322; Col. Fuel Co. v. Lenhart, 6 Col. App. 511; 41 Pac. 634;
Cook v. Merritt, 15 Col. 212; 25 Pac. 176.
13. Stockholders' Liabilities. — Stockholders are liable for corporate
debts to the extent of their unpaid subscriptions to the corporate stock (Mills,
sec. 486).
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him signed by such officers as the by-laws shall prescribe.
The par value of stock certificates must not be less than $1 nor more than
$100 (Mills, sec. 480).
15. Preferred Stock. — The issuance of preferred stock is not expressly
authorized by statute.
16. Payment of Capital Stock. — The corporation may purchase mines,
manufactories, and other property necessary for the corporate business, and
issue stock to the amount of the value thereof in payment therefor. Stock
so issued shall be declared full paid stock and not liable to any further assess-
ments. Neither shall the stockholders be liable to any further payments there-
for. The constitutional provision (Cons., Art. XV. sec. 9) is that no corporation
shall issue stock or bonds except for labor done, service performed, or money
or property actually received (Mills, sec. 618).
17. Books. — The directors are required to keep at the principal office or
place of business within the State correct books of account. These books
shall be open to the inspection of stockholders at any time. In addition to
the foregoing a stock register must be kept containing the names and residences
of the stockholders, the number of shares held by them, the time when they
became or ceased to be stockholders, and the amount of stock actually paid in
and what proportion has been paid in cash. This book is open to the inspection
of stockholders and creditors during business hours (Mills, sec. 488; 3 Mills,
sec. 508 ; Laws of 1903, chap. 77).
18. Office. — The corporation must maintain an office within the State
(Mills, sec. 473).
19. Reports. — Annually within sixty days from January 1st, reports must
be filed with the Secretary of State, covering the names and residences of officers
and directors, the amount of capital stock fixed, and the proportion paid in;
a statement of the manner of the payment of capital stock, a statement that the
company is or is not engaged actively in business within the State, and other
information necessary to show the financial condition of the company. Also
the amount of indebtedness of the company at the date of the filing of the
report. (Mining, ditch, and power companies must include other statements.)
In case of failure to file such report the officers and directors become liable for
256
DIGEST OF INCORPORATION ACTS. — COLORADO.
corporate indebtedness contracted during the preceding year, or while such
default continues (Laws of 1911, chap. 102). A report of particulars of financial
condition must also be made to the State Board of Assessors, and tiled before
June 1st, under penalty of $100 per day for default (Laws of 1902, pp. 71-73,
sec. 63).
20. Anti-Trust Statute. — There is no anti-trust statute.
21. Statutory Grounds for Forfeiture of Charter. — Quo warranto lies
for failure to pay fees on issuance of stock (sec. 491 b, Cons., Art icle XV, sec. 3).
If any corporation fails for a period of three years to pay tin- annual State, cor-
poration or license tax and other fees required by law, or to make any report
the statutes require, the charter of such corporation is subject to forfeiture by
the Secretary of State upon compliance by him with statutory requirements
looking to that end. (See Laws of 1911, chap. 101.)
22. Amendments. — Corporations may amend their articles of incorpora-
tion in any manner provided that thereby they do not so change such articles
as to work a change in the object or purposes for which such corporation was
originally organized. All proposed amendments must be voted upon by the
stockholders either at their regular annual meeting or at a special meeting ;
provided the published notice of such annual meeting required by law and by
the by-laws of the corporation shall have contained a notice of such proposed
amendment giving the purport of the same, and that it would be presented
and acted upon at such meeting, and provided further that if such amendment
is to be voted upon at a special meeting the same shall be called by order of
the board of directors, and that notice thereof shall have been given as required
by the by-laws of the corporation and by delivering personally or depositing
in the post-office, at least thirty days before the time fixed for such meeting,
a notice properly addressed to each stockholder, signed by the president or
other head officer or the secretary, stating the time and object of such meeting,
and that the same will be held at the place appointed by said board and desig-
nated in such notice, and as provided in sec. 347 of the General Statutes of
Colorado. The act also provides that a meeting of the stockholders to vote
upon the proposed amendment shall be called by the president or other head
officer upon the written request of the holders of one-third in amount of the
subscribed capital stock. Upon such request the president must call together
the board of directors and present such request to them, and thereupon it
shall be the duty of the board of directors to call a special meeting of the stock-
holders for the purpose of considering such proposed amendment for a time
not less than thirty nor more than sixty days thereafter, which meeting shall be
called by delivering personally or depositing in the post-office, at least thirty
days before the time fixed for such meeting, a notice properly addressed to
each stockholder, signed by the president or other head officer or secretary,
stating the time and object of such meeting, which shall be held at the place
appointed by the said board and designated in such notice. If at such stock-
holders' meeting the amendment shall receive; the vote of two-thirds of all the
subscribed capital stock, it shall be deemed adopted, and a certificate setting
forth the fact or facts, signed by the president or other bead officer of such
corporation, and verified by his affidavit and attested by the secretary thereof
with the seal of the corporation thereunto affixed, shall be filed for record with
the Secretary of State, and a like certificate shall be hied in the office of the
recorder of each county wherein the original articles of incorporation were tiled.
Thereafter such amendment or amendments shall be in full force and effect to
17 257
DIGEST OF INCORPORATION ACTS. — COLORADO.
the same extent as if the same had been included in the original articles of
incorporation (3 Mills, sees. 477 to 479 inclusive, as amended by Session Laws
of Colorado, 1907, chap. 138).
23. Annual Franchise Tax. — All domestic corporations must on or before
the 1st day of May of each year pay an annual State corporation license tax
to the Secretary of State in the amount of 2 cents upon each $1,000 of its
capital stock (Session Laws of 1907, chap. 211).
24. Extension of Corporate Existence. — Stockholders owning at least
ten per cent of the entire capital stock of the corporation have the right to call
a special meeting of the stockholders to vote upon the question as to whether
the corporate existence shall be extended beyond the limit prescribed in the
original articles. Notice of such meeting must be given by publication for four
successive weeks by mailing notice thereof to each stockholder at least thirty
days prior to the time fixed for the meeting. A majority of the entire capital
stock issued and outstanding must be represented thereat. If such majority
votes in favor of renewal, the president and secretary shall under the seal of
the company certify to that fact, and shall file one certificate in the office of the
recorder of deeds in each county wherein the company may do business, and
one in the office of the Secretary of State. Thereupon the corporate life of such
corporation shall be renewed for another term of twenty years. The Secretary
of State is entitled to charge the same fees as are provided by law for fifing in
his office new certificates of incorporation (Laws of 1905, chap. 87).
Pratt v. Company, 1 Col. Dec. Supp. 171.
25. Dissolution. — If all debts are paid, a company may be dissolved by
the vote of two-thirds of the outstanding stock at a meeting of the stockholders
called for that purpose. A certificate of such dissolution must be filed and like-
wise published (3 Mills, sec. 619 a ; see special act relative to conspiracies to
bring about receiverships, Session Laws of 1907, chap. 152).
26. Foreign Corporations. — A foreign corporation desiring to do any
business, institute or defend actions, or hold property within the State is re-
quired to file with the Secretary of State a copy of its charter, or of its certifi-
cate of incorporation, duly certified and authenticated by the proper authority
from the State from which the charter issues. It must also file a certificate,
signed and acknowledged by the president and secretary, with the Secretary
of State and in the office of the recorder of deeds of the county or counties in
which it proposes to carry on its business within the State, designating the princi-
pal place wherein the business of said corporation is to be carried on in the State,
and appointing an agent at this principal place of business upon whom process
may be served. The preliminary fee for foreign corporations seeking to obtain
a permit to do business within the State is one-half more than for filing original
certificates of domestic corporations. All foreign corporations must pay on or
before the 1st day of May of each year an annual State corporation license of
two cents upon each one thousand dollars par value upon that proportion of its
capital stock represented by its corporate capital property and assets located and
employed in Colorado; and every such foreign corporation by its president and
secretary shall within sixty days next after the first day of June in each year
make and forward to the Secretary of State a statement sworn to and showing
that portion of the capital stock of such corporation which is represented by its
corporate capital, property and assets located and employed in Colorado. A
penalty of ten per cent of such tax for every six months during which said tax is
258
DIGEST OF INCORPORATION ACTS. — COLOR-ADO.
delinquent is exacted (Laws of 1911, chap. 103). Foreign corporations must
also file annual reports, setting forth the same matters as are required of domestic
corporations, and in addition thereto the following matters: A statement as t<>
the portion of its capital stock represented by its corporate capital, property
and assets located and employed in the State of Colorado. And if it appear by
any animal report so filed that the corporate capital, property and assets located
and employed in the State of Colorado will exceed the amount mentioned in its
sworn statement at the time of the original filing in the office of the Secretary
<oi State, then the said corporation shall pay to the Secretary of State thirty
oents on each and every one thousand dollars of such excess (Laws of 1911, chap.
102).
Every corporation, joint stock company or association, incorporated by or
under any general or special law of any foreign State or kingdom, or any State
or Territory of the United States beyond the limits of this State, having a capital
stock divided into shares, shall pay to the Secretary of State for the use of the
S-tate a fee of thirty dollars in case the capital stock which such corporation,
joint stock company or association is authorized to have does not exceed fifty
thousand dollars; but in case the capital stock thereof is in excess of fifty thou-
sand dollars the Secretary of State shall collect the further sum of thirty cents
on each and every one thousand dollars of that portion of such excess of capital
stock as is represented by its corporate capital property and assets employed and
located in Colorado and a like fee of thirty cents on each one thousand dollars
of that proportion of the amount of subsequent increase of stock as represented
by the corporate capital, property and assets employed and located in Colorado,
and every such corporation by its president and secretary shall file with the
certified articles of incorporation and the affidavits required a sworn statement
under its corporate seal, setting forth the entire amount of its capital, and that
proportion thereof which is represented by the corporate property, capital and
assets employed and located in the State of Colorado. The said fee shall be due
and payable upon the fifing of the certificate of incorporation, articles of associa-
tion or charter of such corporation, joint stock company or association in the
office of the Secretary of State, and no such corporation, joint stock company
or association shall have or exercise any corporate powers or hold or acquire any
real or personal property, franchises, rights or privileges or be permitted to do
any business or prosecute or defend any suit in this State until the said fee shall
have been paid (Laws of 1911, chap. 102, sec. 4). For filing copies of laws of
foreign States the fee is $5; for filing certificate designating agent, $5.
Miller v. Williams, 27 Col. 34; 59 Pac. 740; Keghart v. People, 28 Col. 73; 62 Pac. 946;
Iron Silver Mining; Co. v. Cowie, 31 Col. 450; 72 Pac. 1067.
259
DIGEST OF INCORPORATION ACTS. — CONNECTICUT.
CONNECTICUT.
(The references cited below are to the Session Laws of 1903, chap. 194, unless otherwise
stated.)
1. Character of the Law under which Business Corporations may
incorporate. — The corporation laws of Connecticut, including the Corpora-
tion Act of 1901 (General Statutes, 1901, chap. 157), have been entirely revised.
The provisions of the Act of 1901 have been repealed, and the revised law —
Laws of 1903, chap. 194 — has been substituted therefor. Special acts are pro-
vided for the incorporation of banking, trust, building and loan, insurance,
surety, railway, street railway, telephone, telegraph, gas, electric light, and
water companies. Corporations may, however, be incorporated for the purpose
of transacting any of the said lines of business just enumerated in any other
State or foreign country if not prohibited by the laws of such State or foreign
country (sec. 62).
2. Incorporators. — Three or more. There are no residential require-
ments (sec. 62).
3. Contents of the Certificate of Incorporation. — The certificate must
set forth :
a. Name. — The name of every corporation shall be such as to distinguish it
from any other corporation organized under the laws of this State, and from any
other corporation engaged in the same business or promoting or carrying on the
same purposes in this State, and such name shall be in the English language,
and shall begin with "the" and end with "company" or "corporation," or have
the word "incorporated" immediately after or in the same. Every corporation
shall be located in some town in the State (Public Acts of 1907, chap. 155).
b. Domiciliary Office. — The name of the town in the State in which the
corporation is to be located (sec. 63 ; Public Acts of 1907, chap. 155).
c. Nature of the Business to be transacted or the Purposes to be promoted or
carried out. — The statute clearly contemplates that corporations may be or-
ganized for any number of purposes not covered by the special acts (sec. 63).
d. Capital Stock. — The amount of the total authorized capital stock, which
shall not be less than $2,000 ; also the number of shares into which the same
is divided, which shall not be less than $25. If there be more than one class
of stock, a description of the general classes with the terms upon which they
are respectively created (sec. 63).
e. Commencing Business. — Amount of capital stock with which the corpo-
ration shall begin business, which shall not be less than $1,000 (sec. 63).
/. Duration. — The period, if any, limited for the duration of the corpora-
tion. The charter may be perpetual if desired (sec. 63).
g. Regulation of Internal Affairs. — There may also be inserted any lawful
provisions which the incorporators may choose to insert for the regulation of
the business of the corporation, or for defining or limiting the powers of the
corporation, its officers, directors, or any class of stockholders (sec. 64).
4. Statutory Powers. — In addition to the statutory enumeration of the
powers of corporations (Laws of 1903, chap. 194, sec. 3) corporations have the
following extraordinary powers : To carry on their business in any State or
Territory of the United States or in any foreign country. To share profits with
260
DIGEST OF INCORPORATION ACTS. CONNECTICUT.
employees. To acquire its own stock. To voluntarily dissolve itself. To
mortgage real and personal estate, including its franchises, and issue promissory
notes, bonds, or other evidences of indebtedness. To issue one or more classes
of stock. To consolidate with another corporation engaged in the same or simi-
lar line of business. To enforce a lien upon corporate stock for all debts, includ-
ing assessments. To appoint an executive committee from the board of directors.
To vote by proxy and to purchase and to hold the stock of other corporations.
To cumulate votes in the election of directors by making provision therefor in
the certificates of incorporation (Laws of 1903, chap. 194, sees. 3, 4, 9, 11, 21,
25, 27, 59, 75; Laws of 1905, chaps. 166, 171. As to mortgage of after-acquired
property, see Laws of 1911, chap. 260.)
5. Procuring the Charter. — The certificate must be signed and sworn
to by each of the incorporators and must be filed in the office of the Secret a ry
of State, who shall examine the same, and if he finds that it conforms to the
law, and that the organization tax has been paid, shall endorse thereon the word
"approved," with his name and official title, and shall thereupon record such
certificate in a book kept by him for that purpose (sec. 60). The law provides
that the corporate existence shall begin upon the approval of such certificate
by the Secretary of State (sec. 65). After such approval and until the directors
shall be elected, the incorporators shall be given charge of the affairs of the
corporation and may take such steps as are necessary or proper to obtain sub-
scriptions to its stock (sees. 66 and 67).
5. G. & P. Co. v. Scholfield, 70 Conn. 500; 40 Atl. 182.
6. Corporate Indebtedness. — There is no limitation upon amount of
corporate indebtedness.
7. Organization Tax. — Fifty cents on every thousand dollars of its cap-
ital stock up to $5,000,000. Beyond that amount 10 cents upon every thousand
dollars of excess. The minimum fee, however, is $25 (sec. 61).
8. Filing and Recording Fees. — To the Secretary of State, $1 for filing
certificate of incorporation, and for recording the same $1 for two pages or less,
and for each additional page at the rate of 50 cents per page. For filing eeitifi-
cate of organization, $1, and for recording the same $1 for two pages or less, and
for each additional page at the rate of 50 cents per page. For preparing certi-
fied copy of certificate of incorporation, 50 cents for each page, but in no case
less than $1.50. For filing annual reports, $1. For preparing forms lor certifi-
cates and reports of corporations, for recording the same and for copies of
certificate, 50 cents for each page, but in no case less than $1. For filing copy
of charter or certificate of organization of foreign corporation, $10; for filing
statement required from such corporation, $5; for secretary's certificate with the
State's seal impressed thereon, 50 cents. For filing appointment of Secretary
of State as attorney for such corporation, $1 ; for filing annual report and certi-
fied copy thereof, $2.50 ; for recording certificate of incorporation in local county
office, $1.
9. Commencing Business. — A corporation cannot commence business
until the amount of capital specified in the certificate of incorporation as the
amount with which it will begin business lias been paid in, nor until its directors
and officers have been duly elected and its by-laws adopted, nor until a majority
of its directors have caused to be filed with the Secretary of Stale a certificate
of organization setting forth (1) The amount of each class of stock subscribed
for. (2) The amount paid thereon in cash. (3) The amount paid thereon in
L'Cl
DIGEST OF INCORPORATION ACTS. CONNECTICUT.
property other than cash. (4) The amount paid on each share of stock which
has not been paid in full. (5) The names and residences of each of the origi-
nal subscribers with the number and class of shares subscribed for by each.
(6) That the officers and directors of the corporation have been duly elected and
its by-laws adopted. (7) The names, residences, and post-office addresses of
each of the officers and directors. (8) The location of its principal office in this
State with the street number, if any, thereof, and the name of the agent or
person in charge thereof upon whom process against the corporation may be
served (Laws of 1905, chap. 267; Laws of 1909, chap. 160). Unless a certifi-
cate of organization is filed within two years after the filing of the certificate of
incorporation, such certificate of incorporation shall be void. The Secretary of
State must approve the certificate of organization before fifing (sec. 69, Laws
of 1905, chap. 267; Laws of 1909, chap. 160). No corporation can commence
business until a copy of the certificate of incorporation, duly certified by the
Secretary of State, shall have been duly filed and recorded in the office of the
town clerk of the town where the corporation is to be located (sec. 60). (As to
preliminaries necessary to be observed to secure permit to sell stock of oil and
mining companies, see Laws of 1903, chap. 196.)
10. Organization Meeting. — A majority of the incorporators may call
the organization meeting at such time and place as may be designated by a
notice published twice at least seven days before the time designated in a news-
paper in the State having circulation in the town in which the corporation is
located, and such notice may be waived by a writing signed by all the sub-
scribers to the stock, and a majority of the incorporators, specifying the time
and place for such meeting. When the meeting is held, the subscribers for the
stock, who may be present in person or be represented by proxy, must choose
a temporary clerk, and proceed to the election by ballot of three or more directors
who are subscribers to the capital stock, and shall adopt by-laws for the regu-
lation of the affairs of the corporation. Immediately upon the adjournment
of the organization meeting of the incorporators the directors should meet and
organize by choosing from among their number a president, and shall appoint
a treasurer and secretary, and such other officers as the by-laws shall prescribe.
The same person may fill the offices of president and treasurer or of secretary
and treasurer (sees. 67-71 inclusive).
11. Meetings of Stockholders and Directors. — Meetings of stock-
holders must be held at the office of the company within the State. Directors'
meetings may be held without the State by making provision therefor in the
by-laws or by the consent of all the directors. Cumulative voting is permitted
if provision is made therefor in the certificate of incorporation (sees. 3, 22 ; Laws
of 1905, chap. 171). For three days prior to the holding of any stockholders'
meeting a complete list of the stockholders entitled to vote, arranged in alpha-
betical order, shall be open to inspection by any stockholder at the time and place
of the meeting (Laws of 1911, chap. 215).
McCall v. Company, 6 Conn. 428.
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three directors, who must be stockholders. There
are no residential requirements. They may be divided into classes if desired
(sees. 10, 68). The board of directors may appoint an executive committee
if they see fit (sec. 10). May adopt by-laws subject to those adopted by the
stockholders.
262
DIGEST OF INCORPORATION ACTS. CONNECTICUT.
b. Liabilities. — Every director voting for a dividend or other distribution
of assets, except from the net profits or actual surplus of the corporation, is
liable to a fine of not more than §500. If such payment or distribution leaves
the company insolvent, the directors so voting shall be jointly and severally
liable to the amount so paid or distributed to any creditors existing at the date
of such voting which shall have obtained judgment against such corporation
and on which execution shall have been returned unsatisfied. Where the di-
rectors concur in a fraudulent overvaluation of property taken in exchange for
stock of the corporation, they are jointly and severally liable to the corporation
for the amount of the difference between the actual value of any property so
accepted in payment at the time of such indebtedness and the amount for which
it is received in payment (sees. 5, 12. See also Laws of 1907, chap. 144).
Davenport v. Lines, 72 Conn. 118; 44 Atl. 17.
13. Stockholders' Liabilities. — Stockholders, whether original sub-
scribers or not, are liable for any balance due on the stock held by them. After
the par value of their stock has been paid they are not liable for any further
assessments. They are liable for causing insolvency by illegally reducing stock
(sees. 6, 16).
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him under the seal of the corporation signed by the presi-
dent or vice-president and by the secretary or assistant secretary or treasurer
or assistant treasurer. The par value of stock certificates must not be less than
$25 (sees. 1, 17, 63).
15. Preferred Stock. — Special authority to issue preferred stock is given
by statute if provision is made therefor in the certificate of incorporation. The
terms upon which such preferred stock is issued must be stated in the certificate
of incorporation (sec. 63 ; see also sec. 25).
16. Payment of Capital Stock. — Stock may be paid for either in case
or in property. If not paid for in cash, a majority of the directors shall make
and sign upon the corporate records a statement showing the property received
in payment for stock and that it has an actual value equal to the amount for
which it was so received. The judgment of the directors as to the value of the
property upon this subject is made final. But the directors concurring in the
judgment of such valuation, in the case of fraud in the overvaluation of such
property, are jointly and severally liable to the corporation for the difference
between the actual value of such property so accepted in payment and the
amount for which it is received in payment (sec. 12).
17. Books. — The stock book or duplicate thereof, containing the names
and addresses of the stockholders and the number of shares held by them, shall
at all times during the usual hours of business be open to the examination of
every stockholder at its principal office and place of business in the State. If
a creditor makes an affidavit that he is a creditor of the corporation, the
person in charge of the stock books is obliged to furnish him informaticm
as to the number of shares held by such stockholder in any corporation
(sec. 18, as amended by Laws of 1911, chap. 215; see also sec. 39).
Heminway v. Heminway, 58 Conn. 443; 19 Atl. 766.
18. Office. — The corporation must maintain an office within the State
(sec. 63).
19. Reports. — The president, or, in case of his absence or disability, the
secretary and treasurer, must annually, on or before the 15th day of February
263
DIGEST OF INCORPORATION ACTS. — CONNECTICUT.
or August, make, sign, swear to, and file in the office of the Secretary of State
a certificate setting forth as of the 1st day of January or July immediately pre-
ceding: the name, residence, and post-office address of all the officers and
directors; amount of outstanding capital stock which has not been paid for
in full, with the amount due thereon ; location of the principal office within the
State, with the street number if there be any, and the name of the person in
charge thereof upon whom process against the corporation may be served (sec.
37, as amended by Public Acts of 1907, chap. 27). Whenever a corporation
shall be in the hands of a receiver or trustee in bankruptcy or a trustee in in-
solvency, or whenever any foreign corporation shall have appointed the Secretary
of State its attorney, has ceased to do business in this State, and such fact is
certified to and recorded by the Secretary of State, or whenever any domestic
corporation has filed its certificate of dissolution, no annual report shall be re-
quired of such corporation during the period aforesaid (Public Acts of 1909,
chap. 160). A certified copy of said certificate must be recorded in the office
of the town clerk of the town in which such corporation is located (sec. 37).
Every corporation may at any meeting duly held for that purpose, empower its
directors to issue shares of its unissued authorized capital stock. At the time of
the filing of its next annual report, after the issue of any such shares, a majority
of the directors shall make and file a certificate setting forth the facts relating,
to such issue similar to the facts relative to the original issue of stock required
as set forth under the certificate of organization (sec. 71. As to penalty for
failure to file annual report see sec. 21 below. See Laws of 1911, chap. 147, as to
power of Attorney General to remit forfeitures or fines).
20. Anti-Trust Statute. — There is no anti-trust affidavit in force in
Connecticut.
21. Statutory Grounds for Forfeiture of Charter. — The grounds for
proceedings in the nature of quo warranto against corporations are to be found
in the Statutes of Connecticut 1887, sees. 1296-1302 inclusive. Unless the cer-
tificate of organization is filed within two years after the filing of the certificate
of incorporation, it is void (Laws of 1905, chap. 267).
Any corporation failing to file its annual report for two consecutive years
and shall not pay to the State the forfeiture imposed for such neglect shall prima
facie be deemed to have forfeited its rights and powers, and its corporate ex-
istence may be terminated by law (Public Acts of 1909, chap 200).
Pearce v. Olney, 20 Conn. 544; Hart v. Company, 40 Conn. 524.
22. Amendments. — Articles may be amended before commencing busi-
ness in any respect desired, provided that the subject matter of such changes
could have been inserted in the original certificate of incorporation. No
change, alteration, or amendment shall be valid unless approved in writing by
all of the subscribers to the capital stock of such corporation, nor unless a cer-
tificate setting forth such amendments, changes, or alterations and stating the
same has been duly approved by the subscribers, shall be made, acknowledged,
and filed by all of the incorporators both in the office of the Secretary of State
and in the office of the town clerk of the town where the corporation is to be
located (sec. 73).
Every corporation may change its name, nature of its business, and its loca-
tion ; may increase or reduce the amount of its authorized capital stock ; may
create one or more classes of stock ; may make such other amendments in its
certificate of incorporation as may be desired, provided that the subject matter
264
DIGEST OF INCORPORATION ACTS. — CONNECTICUT.
thereof could have been lawfully inserted in the original certificate of incor-
poration. No such amendments shall be valid unless approved by the vote of
two-thirds of the outstanding capital stock of each class at a meeting of the
stockholders duly called to consider such amendment, nor unless a certificate
setting forth such amendments and stating the same have been duly adopted
by the stockholders, shall be made and filed with the Secretary of State by a
majority of the directors (sec. 74).
N. H. & D. Ry. Co. v. Chapman, 38 Conn. 56.
23. Annual Franchise Tax. — There is no annual franchise tax
(sec. 61).
24. Extension of Corporate Existence. — There is no provision for
extension of corporate existence.
25. Dissolution. — The franchises may be surrendered at any time be-
fore any part of subscriptions are paid and business begun. Whence er directors
of a corporation shall vote to terminate its corporate existence, they shall forth-
with call a- special meeting of the stockholders, to be held not less than thirty
nor more than forty days after the date of such calling. Such call shall contain
a copy of such vote, and shall be published once a week for four weeks next pre-
ceding such meeting in a newspaper of the State having a circulation in the
town where such corporation is located, and a copy thereof shall be sent by
mail to the last known address of each stockholder. If at said meeting of the
stockholders three-fourths in interest of each class of stock issued shall vote
to confirm such vote of the directors, the directors shall proceed forthwith to
wind up the affairs of the corporation. If every stockholder shall sign and ac-
knowledge an agreement among stockholders that the corporate existence of
such corporation shall be terminated, the vote of the directors and the con-
firming vote of the stockholders may be dispensed with (sec. 29). Whenever
the stockholders shall by vote or written assent agree to the dissolution of a
corporation, a majority of the directors shall make, sign, and swear to and file
in the office of the Secretary of State a certificate that such stockholders' vote
has been duly passed or such assent duly given, and stating the address to
which all claims against such corporation may be sent, and such secretary shall
thereupon record such certificate in a book kept by him for that purpose. When
the directors have completed their duties as trustees, for the purpose of winding
up the affairs of the corporation, a majority of them shall make, sign, and swear
to and file in the office of the Secretary of State a further certificate stating that
the directors have completed their duties in winding up the affairs of such cor-
poration and have sold or collected all its assets and distributed the same,
stating the mariner of such distribution. The Secretary of State shall examine
the same, and if he finds it conforms to law, shall endorse his approval thereon,
and shall thereupon record such certificate. When such certificate has been
approved by the Secretary of State, the existence of such corporation shall
terminate (sec. 34). The minority stockholders owning one-tenth of the
capital stock may petition the court for dissolution (Laws of 1905, chap.
121).
26. Foreign Corporations. — Before a foreign corporation can transact
business in the State it must file in the oflice of the Secretary of Stale a certified
copy of its charter or certificate of incorporation, together with a statement
signed and sworn to by its president and a majority of directors, showing the
amount of its authorized capital stock and the amount thereof which has been
265
DIGEST OF INCORPORATION ACTS. — CONNECTICUT.
paid in, and if any part of such payment has been made otherwise than in cash
such statement shall state forthwith the particulars thereof (Public Acts of 1907,
chap. 60). They must also appoint, in writing, the Secretary of State to be their
attorney, upon whom process may be sewed (sees. 83 to 85 inclusive). Foreign
corporations are required to file annual reports similar to those required of
domestic corporations. The fee for fifing certified copy of the charter is $10,
and a further fee of $5 is charged for filing the statement required by law (sees.
SO to 88 inclusive). For filing appointment of Secretary of State as attorney, $1.
Charge for filing annual report and making certified copy thereof for purpose
of filing the same with the town clerk, $2.50.
Farmers' Loan & Trust Co. v. Smith, 74 Conn. 625; 51 Atl. 609.
266
DIGEST OF INCORPORATION ACTS. — DELAWARE.
DELAWARE.
(The references cited below are to the 21 Delaware Laws (1899), chap. 273, unless other-
■wise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Delaware is to be found in an act passed March
10, 1899, entitled "An Act providing a General Corporation Law" (21 Del.
Laws, chap. 273). This act has been successively amended by the Delaware
legislature in 1901, 1903, 1905, and 1907. Under it parties may incorporate for
any lawful business excepting banking. Special provisions are to be found
therein for incorporating railway companies for the purpose of operating rail-
ways within the State.
2. Incorporators. — There must be at least three incorporators. There
are no residential requirements (sec. 1).
3. Contents of the Certificate of Incorporation (sec. 5). — The certifi-
cate of incorporation must set forth :
a. Name. — The name of the corporation must contain one of the words
"association," "company," "corporation," "club," "incorporated," "society,"
"union," or "syndicate." No name can be employed which does not serve to
distinguish it from that of any other corporation engaged in the same business
or promoting or carrying on the same objects or purposes within the State.
b. Domiciliary Office. — The name of the city or town, county or place
within the county in which the principal office or place of business is to be
located in Delaware, and the name of the resident agent (Laws of 1907,
chap. 173).
c. Purposes. — The nature of the business, objects, or purposes proposed to
be transacted, promoted, or carried on. The statute clearly contemplates that
corporations may be organized for more than one purpose not covered by the
special acts. Banking is the only purpose forbidden to corporations organized
under the General Act.
d. Capital Stock. — The amount of capital, which shall not be less than
$2,000, the number of shares into which the same is divided, and the par value
of each share, which may be any amount, the amount of capital stock with
which it will commence business, which cannot be less than $1,000. If the cor-
poration is to have more than one class of stock, a description of each class
must be given, with the terms on which the respective classes of stock are
created.
e. Incorporators. — The name and place of residence of each of the original
subscribers to the capital stock, who are in practice the incorporators of the
company.
/. Duration. — The corporation may have perpetual existence. If not, the
time when the existence is to commence and the time when it is to cease must
be stated.
g. Exemption of Stockholders from Liability for Corporate Debts. — The cer-
tificate must state whether the private property of the corporation shall !>'■ Bub-
ject to the payment of corporate debts, and if so to what extent.
h. Regulation of tin- Internal Affair* of the Corporation. — The Certificate
may contain any provision desired for the regulation of the business and the
267
DIGEST OF INCORPORATION ACTS. — DELAWARE.
conduct of the affairs of the corporation, the directors and stockholders, or any
classes of stockholders permitted by law (sees. 5, 12, 29, 34). If the business is
to be conducted outside of the State, such power must be specifically set forth
in the certificate of incorporation (sec. 3).
4. Statutory Powers. — In addition to the common law powers which
are enumerated in the statute, Delaware corporations have the following addi-
tional powers : To guaranty, purchase, hold, assign, transfer, mortgage, pledge,
or otherwise dispose of stock and bonds of other corporations, and to exercise
in the case of stock the right to vote thereon. Corporations also have power
to acquire and hold their own shares, but not to vote thereon. To conduct
business in any State, Territory, or colony of the United States or in any for-
eign country. To issue stock for property or services, and to forfeit stock for
non-payment of assessments. To have one or more offices out of the State, and
to hold, purchase, mortgage, convey real and personal property out of the
State, provided such powers are included within the objects set forth in the
certificate of incorporation. To classify directors. The corporation also has
express power to create preferred stock, if desired, provided this power is set
forth in the articles of incorporation. The consolidation of corporations carry-
ing on any kind of business is expressly permitted. Also to authorize voting
by proxy, to forfeit stock for non-payment of assessments, and to cumulate
votes in the election of directors (sees. 2, 9, 13, 14, 17, 19, 22, 28, 29, 36, 59-66,
135; see also Laws of 1905, chap. 155; Laws of 1909, chap. 154). Bondholders
may be given, if desired, the same voting powers as stockholders (sec. 29).
State ex rel. White v. Hancock, 2 Pen. 252; 45 Atl. 851.
5. Procuring the Charter. — The certificate of incorporation must be
signed, sealed, and acknowledged by each of the original subscribers to the capi-
tal stock. The original certificate of incorporation is then filed in the office of
the Secretary of State, and a certified copy thereof recorded in the office of the
recorder of deeds in the county in which the principal office as stated in the
certificate of incorporation is located. When these acts have been completed
and the organization tax paid to the Secretary of State, the corporate existence
begins (sees. 5, 6, 7, 11). Collateral inquiry into legality of corporate existence
is forbidden (sec. 68).
6. Corporate Indebtedness. — There is no limit upon the amount of
indebtedness which a corporation may incur. Bondholders may be given the
right to vote (sec. 29).
7. Organization Tax. — The organization tax is 10 cents for each one
thousand dollars of the total amount of capital stock authorized, but in no
case shall it be less than $10. In cases where the amount of the capital stock
of any corporation as authorized in its original certificate of incorporation, or
in any amendment thereof, shall exceed $2,000,000, the organization tax shall
be at the rate of 5 cents on each one thousand dollars of authorized capital in
excess of $2,000,000, but in no case less than $10 (Laws of 1907, chap. 174).
Whenever any certificate of increase of capital stock shall be filed, an additional
tax of 10 cents on each one thousand dollars of such increased capitalization
shall be paid, but in no case shall such fee be less than $5. When two or more
corporations shall consolidate or merge, the Secretary of State shall demand
and receive for the use of the State 10 cents on each one thousand dollars of
capital stock authorized or merged, but in no case less than $20.
8. Filing and Recording Fees. — To the Secretary of State for receiving,
268
DIGEST OF INCORPORATION ACTS. — DELAWARE.
filing, and indexing the certificate of incorporation, S2 ; for recording certificate
of incorporation, 10 cents per line; for certified copy of the certificate of in-
corporation, 2 cents per line for copy, and SI for attaching thereto the official
seal. The fee for this service usually averages about S4.50. For filing cer-
tificate of dissolution, change of name, amended certificate of organization, de-
crease of capital stock, increase or decrease of number of shares, $10; fur
filing other certificates, So. Fee to the Recorder of Deeds for recording cert i-
fied copy of the certificate of incorporation in the local county office where it
does not exceed four pages, $3.50. For each additional page, 50 cents 1 1 awa
of 1909, chap. 240).
9. Commencing Business. — At least $1,000 of the capital stock must he
subscribed for before the corporation can begin business. If the corporate
business is not begun in good faith within two years from the date of the
incorporation, the franchise is subject to forfeiture (sees. 5, 67).
P. W. & B. R. R. Co. v. Kent Co. R. R. Co., 5 Houst. 127.
10. Organization Meeting. — This may be held either within or without
the State (sec. 30). The incorporators ordinarily sign a written agreement,
fixing the time and place within the State for the organization of the corpora-
tion. In the absence of such consent, the meeting must be called by notice
• signed by a majority of the incorporators, and published three times in a local
newspaper at least two weeks before the time of meeting, or by two days'
notice served personally (sec. 11). The incorporators may be represented by
proxy if desired. Until the directors are elected the signers of the certificate
of incorporation have by statute control of the affairs and of the organization
of the corporation, and may take such steps as are proper to obtain the neces-
sary subscriptions to stock. As soon as the meeting is organized by the elect inn
of a chairman and secretary, by-laws should be adopted. If the certificate of
incorporation so provides, the directors to be elected at the organization meet-
ing of the corporation may adopt by-laws. The incorporators should then pro-
ceed to the election of not less than three directors. The directors must own at
least three shares of stock, and one must be a resident of the State. The by-
laws may provide for the election of officers either by the stockholders or the
directors. If by the stockholders, the election of the statutory officers should
be had before the adjournment of the organization meeting. Immediately
after the adjournment of the incorporators' meeting the directors named in the
articles of incorporation should meet and elect the officers of the corporation.
The statutory officers are a president, secretary, and treasurer. The president
must be chosen from among the directors. The secretary and treasurer may
or may not be the same person, and if the corporation have a vice-president, he
may, if deemed advisable by the directors, hold the office of vice-president and
secretary, or vice-president and treasurer, but not the office of vice-president,
secretary, and treasurer. The directors may, if authorized by the by-laws, or
by a resolution passed by a majority of the whole board, designate two or mure
of their number to constitute an executive commit tee. who shall have and
exercise all the powers of the bund of directors in the management of t lie busi-
ness affairs of the company. The secretary must be sworn (sees. 7 11).
11. Meetings of Stockholders and Directors. -■- The stockholders and
directors may hold their meetings outside of the State if tin- by la us so pro-
vide. It may be found more convenient to hold the organizatio eting within
the State (sees. 30, 32). As to right of cumulative voting, see Laws of L903,
269
DIGEST OF INCORPORATION ACTS. — DELAWARE.
chap. 394, sec. 17 ; see also Cons., Art. IX. sec. 6 ; see post, sec. 12. Voting may-
be by proxy (sec. 17). No shares can be voted which have been transferred on
the books of the company within twenty days next preceding the election
(sees. 17, 29).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be a board of directors of not less than three in number, one of whom
must be a resident of the State. The directors must hold at least three shares
of stock. They may be divided into classes if desired. Power may be given
the directors to adopt by-laws for the corporation, by inserting such a provi-
sion in the certificate of incorporation (sees. 9, 12, 30). It is a mooted ques-
tion whether cumulative voting is permissible under the Laws of Delaware.
Under the Constitution, Art. IX. sec. 6, each stockholder is declared to be
entitled to one vote for each share of stock he may hold, but under the Laws
of 1903, chap. 394, sec. 17, it is provided that at every meeting of stockholders,
each stockholder, whether resident or non-resident, shall, unless otherwise pro-
vided in the charter or by-laws, be entitled to one vote in person or by proxy for
each share of capital stock held by him (Laws of 1903, chap. 394, sec. 17). Di-
rectors have power to designate two or more of their number to act as an execu-
tive committee (sec. 9).
b. Liabilities. — Directors are disqualified from re-election to office in case
they fail to make and file the annual report required by law (Laws of 1906,
chap. 1). Directors who knowingly cause to be published or give out any
written statement or report of the corporate business or condition that is false
in any material respect, are jointly and severally liable for any loss or damage
resulting therefrom. Non-dissenting directors are also liable for declaring divi-
dends not earned or for the illegal distribution of capital stock (sees. 35, 37).
They are also liable for refusing to make certificate of full paid capital stock upon
written request of any creditor or stockholder (sec. 23). Directors are liable
for failure to publish certificate of reduction of capital stock to the extent
that they are personally liable for the corporate debts contracted during such
default (sec. 28). Directors are liable for loans made to officers of the corpora-
tion or to stockholders upon the security of its stock (sec. 36). Directors neglect-
ing or failing to have alphabetical list of stockholders produced at election are
ineligible to re-election to any office thereat (sec. 29).
13. Stockholders' Liabilities. — Stockholders are only liable for their
unpaid stock subscriptions (sees. 20, 28).
14. Stock Certificate. — Every stockholder is entitled to have a stock
certificate issued to him signed by the president and treasurer. The par value
of stock certificates may be any amount (sees. 15, 29).
15. Preferred Stock. — Corporations have the power to create two or
more kinds of stock with such preferences and voting powers and with such
restrictions or qualifications thereof as shall be stated or expressed in the cer-
tificate of incorporation. The preferred stock, however, must not exceed two-
thirds of the actual capital paid in in cash or property. The preferred stock
may, if desired, be made subject to redemption at not less than par at a fixed
time and place to be fixed in the certificate of incorporation. Preferred stock-
holders shall be entitled to receive a fixed yearly dividend to be expressed in
the certificate, not exceeding eight per cent payable quarterly, half yearly, or
yearly. Such dividends may be made cumulative. Preferred stock cannot
be created unless provided for in the original certificate or amended certificate
of incorporation. Corporations are authorized to issue bonds and to confer
270
DIGEST OF INCORPORATION ACTS. — DELAWARE.
upon the holders thereof the power to vote in reaped to t he corporate affairs
and management of the company, to the same extent and in the same manner
as stockholders, if sojprovided in the certificate of incorporation (sees. 5, 13, 29).
16. Payment of Capital Stock. — The Delaware Constitution provides
(Cons., Art. IX. sec. 3) that no corporation shall issue stock except for money
paid, labor done, or personal property or real property or leases thereof, actu-
ally acquired by such corporation, and no labor or property shall be received
in payment of stock at a greater price than the actual value at the time the
said labor was done or property delivered or title acquired. By statute, how-
ever, it is provided that subscriptions to and purchase of the capital stock of
any corporation organized under any law of this State may be paid for wholly
or partly by cash, by labor done, by personal property, or by real property or
leases thereof ; and the stock so issued shall be declared and taken to be fully
paid stock and not liable to any further call, nor shall the holder thereof be
liable for any further payments thereon under the provisions of this act. In
the absence of actual fraud in the transaction the judgment of the directors
as to the value of such labor, property, real estate, and leases thereof shall he
conclusive (Laws of 1905, chap. 155).
Every corporation may at any meeting increase its capital stock and the
number of shares thereof until it shall reach the amount named in the original
certificate (sec. 27). The president, with the secretary or treasurer, shall, upon
the written request of any creditor or stockholder, make a certificate stating
the amount of the instalments or calls paid in cash or by the purchase of prop-
erty, and stating also the total amount of capital stock issued, which certificate
shall be signed and sworn to by the president and secretary or treasurer, and
shall within thirty days after the making thereof be filed in the office of the
Secretary of State.
17. Books. — The original or duplicate stock ledger containing the names
and addresses of the stockholders and the number of shares held by them
respectively must be kept at the principal office within the State. These are
open to the inspection of stockholders. The general books of account need
not be kept within the State (sec. 29).
18. Office. — The corporation must maintain a principal office or place
of business in the State, and have an agent, a resident of the State, in charge
thereof. A sign containing the name of the corporation must be displayed at
a conspicuous place in said office (sees. 32, 33, 137).
19. Annual Reports. — On or before the first Tuesday in January of
each year it shall be the duty of the president, treasurer or other officer of any
two directors of any domestic corporation to file with the Secretary of State
an annual report stating the location within the state of the principal office and
the name of the agent upon whom service of process against such corporation
may be served, the location or locations (town or towns, city or cities, stating
the street and number, if numbers there be) of the place or places of business
of such company without the State of Delaware ; the names and addresses of all
the directors and officers of the company and when the term of each expires,
the date appointed for the next annual meeting of stockholders lor the election
of directors, the amount of its authorized capital, the amount actually paid in,
the amount invested in real estate, taxes annually thereon, t he amount invested
in manufacturing or mining in Delaware or both ; if such report is not so made
and so filed the corporation shall forfeit to the State the sum of $200, t<> be
recovered with costs in an action of debt to be prosecuted by the Attorney
_'7I
DIGEST OF INCORPORATION ACTS. DELAWARE.
General, and provided further that if such report shall not be made and filed,
all the directors of any such corporation who shall wilfully refuse to comply
with the provisions thereof and who shall be in office during the default shall
at the time appointed for the next election and for a period of one year there-
after be thereby rendered ineligible for election or appointment to any office
in the company as directors or officers (Laws of 1906, chap. 1). On written
request of any director or stockholder, the officers of the corporation must file
with the Secretary of State certificate showing amount of stock issued and
paid for in cash or property and the total amount of capital stock issued
(sec. 23).
20. Anti-Trust Statute. — There is none in force within the State.
21. Statutory Grounds for Forfeiture of Charter. — The statutory
grounds for forfeiture of charter are failure, for two years after the corpora-
tion is created, to commence in good faith the business to be promoted ot
the objects or purposes for which it was organized. Also failure for two suc-
cessive years to pay the State tax assessed against it, which it is required to
pay under the law, renders the charter void (sec. 67 ; Tax Law, sees. 10, 11).
22. Amendments. — The incorporators, before the payment of any part of
the authorized capital stock of the corporation, may file with the Secretary of
State an amended certificate duly signed by all of the incorporators amending
the original certificate of incorporation in whole or in part. A copy of such
certificate, duly certified by the Secretary of State, must then be recorded in
the office of the recorder of the county in which the original certificate of in-
corporation was recorded. Such amended certificate shall thereupon take the
place of the original certificate of incorporation (sec. 25). Certificates of in-
corporation may be amended when and as desired either by addition to its
corporate powers and purposes or diminution thereof, or by the substitution
of other powers and purposes in whole or in part for those prescribed by its
charter, or by increasing or decreasing its authorized capital stock, or by chang-
ing the number and par value of the shares of its capital stock, or by changing
the corporate name, or by making any other change that may be desired, in
manner following, to wit :
The board of directors shall first adopt a resolution setting forth the amend-
ment proposed-, declaring its advisability, and calling a meeting of the stock-
holders for consideration thereof. The meeting shall be called and held upon
notice as provided for by the corporation's charter or by-laws. At «uch meet-
ing a vote of the stockholders in person or by proxy shall be taken for and
against the proposed amendment, which vote shall be conducted by two judges
appointed for that purpose either by the directors or by the said meeting. The
judges are given plenary powers, and they are required to make out certificates
in duplicate stating the number of shares of stock, voting for and against the
amendment, and subscribing and delivering the same to the secretary of the
corporation. If it shall appear by such certificates of the judges that the persons
holding a majority of the stock of the corporation or of each class of stock, if
there be more than one, have voted in favor of the amendment, thereupon the
said corporation shall make under its corporate seal and the hands of its presi-
dent and secretary a certificate accordingly, and the president shall duly execute
and acknowledge the same with one of the judge's duplicate certificates attached,
which shall be filed in the office of the Secretary of State, and a copy thereof
certified by said Secretary of State shall be recorded in the office of the recorder
of the county in which the original certificate of incorporation is recorded.
272
DIGEST OF INCORPORATION ACTS. — DELAWARE.
No corporation, however, can decrease its capital stock without paying or
adequately securing such of its del its as are not then fully secured (G. C. L.,
sec. 26, as amended by Laws of 1909, chap. 155). (See also sees. 27 aiul 28, as
to increase and reduction of capital paid in.)
The board of directors of any corporation may change the location of the
principal office of any corporation within the State to any other place within
the State by resolution adopted at a regular or special meeting of said board.
Upon the adoption of such resolution a copy thereof shall be filed in the office
of the Secretary of State by the president or secretary of such corporation and
sealed with its corporate seal ; a certified copy of such resolution shall also be
recorded in the office of the recorder of the county to which such principal
office is removed. For filing such certificate the Secretary of State shall charge
a fee of So (sec. 137).
If it is desired to decrease the issued capital stock without changing the
amount of authorized capital stock, this may be effected by the vote or written
consent of two-thirds in interest of the stockholders (see sec. 28). Such re-
duction may be carried into effect by retiring or reducing any class of the stock
or by drawing the necessary number of shares by law for retirement, or by
decreasing the number of shares of each shareholder, or by the purchase at not
less than par of certain shares for retirement or by retiring the shares owned by
the corporation or by reducing the par value of shares. No such reduction
shall be made until the corporate debts are fully secured or have been paid and
discharged (sec. 28).
23. Annual Franchise Tax. — The annual franchise tax on the amount
of the authorized capital stock up to and including §25,000, is $5 ; on all author-
ize! capital stock exceeding $25,000, and not more than $100,000, $10; on
authorized capital stock exceeding $100,000, and not more than $300,000, $20;
on authorized capital stock exceeding $300,000, and not more than $500,000,
$25 ; on authorized capital stock exceeding $500,000, and not more than
$1,000,000, $50; and a further sum of $25 a year on each $1,000,000 or part
thereof in excess of $1,000,000; provided that such corporation shall only be
required to pay one-half of the amount of taxes here enumerated in cases where
they show in their annual report that they are not engaged in any business, but
in no case shall the amount of taxes be less than $5 a year. This tax is pay-
able on May 1st of each year (Laws of 1907, chap. 47). Manufacturing or
mining companies as well as mercantile companies whose capital actually paid
in is invested in a mercantile business carried on within the State and which is
now subject to a license tax for the carrying on of such business under chapter
117, Vol. 13, Laws of Delaware, and all corporations at least fifty per cent of
whose capital stock issued and outstanding is invested in business carried on
within the State, are exempt from the payment of such license tax (Laws of
1903, chap. 17). If any other corporation shall have less than fifty per cent of
its capital stock issued and outstanding invested in business carried on within
the State it shall pay the annual license tax or franchise tax provided for com-
panies not carrying on business in this State, but shall be entitled in the compu-
tation of such tax to a deduction from the amount of its capital stock issued
and outstanding of the assessed value of its real or personal estate within this
State (22 Del. Laws. chap. 259; Laws of L903, chap. 17).
24. Extension of Corporate Existence. — Corporate existence may be
extended by complying with the terms of the statute in such case made and
provided (sees. 131-134). (See also Laws of 190.), chap. 166.)
18 273
DIGEST OF INCORPORATION ACTS. — DELAWARE.
25. Dissolution. — Before payment of any part of the capital stock or
beginning business the incorporators may surrender their franchises by filing
in the office of the Secretary of State a certificate verified by a majority of the
incorporators to the effect that no part of the capital has been paid and that
such business has not been begun. After the paying in of the capital stock
a majority vote of the directors cast in favor of the dissolution of the corpora-
tion, coupled with the written consent of two-thirds in interest of the stock-
holders, affords the necessary basis for a dissolution of the corporation by
consent. In addition to this, notice of the stockholders' meeting, called for
the purpose of voting upon the question of dissolution, must be published for
four successive weeks. The consent of the directors and officers must be certified
by the president, secretary, and treasurer and filed with the Secretary of State,
who issues his certificate that such consent has been filed, which certificate must
be published for four consecutive weeks. If all the stockholders consent in
writing, no meeting or notice is required (sees. 38-58).
Com. Bank v. Lockwood's Adm'r, 2 Harr. 8.
26 v Foreign Corporations. — Before doing business within the State,
foreign corporations are required to file with the Secretary of State a certified
copy of their certificate of incorporation, the name of the authorized agent
within the State, a sworn statement of assets and liabilities, and must pay to the
Secretary of State a license fee of $50. Thereupon the Secretary of State
issues a certificate of authority to transact business within the State. The law
imposes a duty upon the Secretary of State after issuing the certificate afore-
said to issue a certificate to the prothonotary of the Superior Court in each
county of the State of Delaware, containing the name of the agent of such foreign
corporation and the State wherein incorporated. This certificate is then filed by
such prothonotary in his office. For this service the law provides that he shall
receive a fee of $1, to be collected from each corporation by the Secretary of
State and paid over by that official to the prothonotary (Laws of 1903, chap.
395 ; Cons., Art. IX. sec. 5 ; as to penalties for non-compliance with the law,
see Laws of 1903, chap. 395, sec. 6). Section 9 of the tax law provides that
foreign corporations doing business in Delaware shall be subject to what is
known as the retaliatory tax law. This act provides that when by the laws of
any other State any other or greater taxes, licenses, etc., are imposed upon
corporations of this State doing business in such other State, than the laws of
this State impose upon foreign corporations doing business in this State, so long
as such laws continue in force in such foreign State the same taxes, licenses, etc.,
shall be imposed upon all corporations of such other States doing business
within this State. Foreign corporations must pay a filing and recording fee
of $10 in all cases (Tax Law, sec. 9). No annual reports are required of
foreign corporations and they are not subject to the payment of any annual
franchise tax.
Deringer's Adm'r v. Deringer's Adm'r, 5 Houst. 416; Standard Sewing Machine Co. v.
Frame, 2 Pen. 430; 48 Atl. 188; Love v. P. & J. Co., 3 Pen. 577; 52 Atl. 542.
274
DIGEST OF INCORPORATION ACTS. — DISTRICT OF COLUMBIA.
DISTRICT OF COLUMBIA.
(The references are to the District of Columbia Code (1902), unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act in force in the District of Columbia is to be found
in the United States Statutes at Large, Vol. 31, pp. 1284 et seq., as amended
by the Acts of January 31, 1902 (U. S. Stat, at L., Vol. 32, p. 2), and Act of June
30, 1902 (U. S. Stat, at L., Vol. 32, pp. 533 et seq.). Under this act companies
may be formed for the purpose of carrying on any business or enterprise which
may be lawfully conducted by an individual, excepting banks, corporations
formed to buy, sell, or deal in real property, railways, and such other enterprises
or business as are provided for by special acts.
2. Incorporators. — There must be at least three incorporators. There
are no residential requirements (sec. 605).
3. Contents of the Certificate of Incorporation (sec. 606). The cer-
tificate must set forth :
a. Name. — The act forbids the employment of a name already in use
(sec. 604).
b. Purposes. — Object for which it is formed. The recorder of deeds only
permits the insertion of one line of business in the certificate of incorporation.
(See sees. 605, 612.)
c. Duration. — May be perpetual if desired.
d. Capital Stock. — Amount thereof and the number of shares. Both may
be any amount desired.
e. Trustees. — The number of trustees who shall manage the concerns of
the company for the first year and their names. The recorder of deeds requires
that the citizenship of each of the trustees shall be set forth in the certificate.
/. Domiciliary Office. —The name of the place in the District in which the
operations of the company are to be carried on. The recorder of deeds requires
that the post-office address of the place of business of the corporation shall also
be given.
4. Statutory Powers. — In addition to a statutory enumeration of com-
mon law powers the act authorized voting by proxy ; also forfeiture of stock
for non-payment of assessments. The statute expressly forbids the purchase
to stock in other corporations. Power to adopt by-laws is conferred upon the
trustees (sees. 397, 607, 609, 612, 613).
Scanlon v. Snow, 2 D. C. App. Cases, 137.
5. Procuring the Charter. — No proper understanding of the Business
Corporation Act in force in the District of Columbia can be obtained without
a careful reading of the case of Dancy v. Clark et al., 24 D. C. App. Cas. 487,
wherein the Court of Appeals of the District of Columbia made the following
holding: (1) That while the recorder of deeds in the District is a ministerial
officer, without jurisdiction to pass upon the validity of certificates of incor-
poration presented to him for record, that nevertheless he is not wholly \\ ithoul
jurisdiction in determining whether a given certificate shall be admitted fco
record or not. The court held that he had the right to exercise discretion in the
premises, but not judicial discretion. (2) The court held that only one kind
275
DIGEST OF INCORPORATION ACTS. DISTRICT OF COLUMBIA.
of business may be included in the designation of purposes for which any specific
corporation is formed. (3) The court held that inasmuch as the statute re-
quires that all the trustees must be stockholders, that therefore each of the
trustees named in the certificate of incorporation must join in the execution
of the certificate, thus in effect requiring that all the trustees must be incorpora-
tors. The reasoning by which the court arrived at this conclusion was as follows :
That the incorporators must be regarded as the only stockholders of the
corporation, and that therefore the trustees, being necessarily by reason of their
positions stockholders, must on incorporation be selected from the original
incorporators. The court further held that the only extension of business
permissible by amendment of the certificate of incorporation is to extend the
business of the corporation to some business cognate to the business for which
the company was originally incorporated.
Finally, the court held that the powers inserted in the certificate not author-
ized by law must be regarded as surplusage.
The certificate of incorporation must be subscribed and acknowledged by
each of the incorporators. It must then be filed in the office of the recorder of
deeds for the District (sec. 605). Under the Act of February 4, 1905, the cer-
tificate of incorporation must be accompanied by proof satisfactory to the
recorder of deeds, that all the stock of the said company has been subscribed
for in good faith, and that not less than ten per cent of the par value of the stock
has been actually paid in cash, and the money derived therefrom is then in the
possession of the person named as the first board of trustees. The proof required
by the recorder of deeds is that the requirements above set forth have been
complied with. That is, first, a statement of the trustees named in the cer-
tificate that all of the capital stock of the proposed company has been subscribed
for in good faith and that not less than ten per cent of the par value thereof
has been actually paid for in cash, and that the money derived therefrom is in
the possession of the persons named as the first board of trustees of the cor-
poration ; and, secondly, a certificate made by one of the executive officers of
some reputable bank or trust company, that said sum in cash is on deposit in
said bank or trust company to the credit of the said trustees. The recorder
furnishes blank forms for this purpose.
6. Corporate Indebtedness. — By implication the debts should not at
any time exceed the amount of capital stock (sec. 634).
7. Organization Tax. — All corporations must pay to the recorder of
deeds at the time of the filing of the certificate of incorporation 40 cents on
each $1,000 of the capital stock of the corporation as set forth in the certificate
of incorporation ; provided, however, that no fee shall be paid less than $25
(sec. 552 ; see Act of Congress approved February 4, 1905).
8. Filing and Recording Fees. — To the recorder of deeds, 50 cents for
the first two hundred words in articles of incorporation; 15 cents for each
hundred words in addition thereto ; extra charge of 25 cents for each separate
acknowledgment over one. For each certificate and seal, 25 cents.- For certified
copies of certificate of incorporation, 50 cents for the first two hundred words
and 15 cents for each additional one hundred words ; for affixing certificate and
seal thereto, 25 cents (U. S. Stat., Vol. 31, p. 1276).
9. Commencing Business. — Business may be commenced as soon as the
articles are executed and filed as required by law. Before business can be
transacted ten per cent of the capital stock must be paid in, either in money
or property at its actual value (sec. 613). Within thirty days after the pay-
276
DIGEST OF INCORPORATION ACTS. DISTRICT OF COLUMBIA.
ment of the last instalment of the capital stock the president and a majoritv
of the trustees must make, verify, and record in the office of the recorder of
deeds a certificate stating the amount of capital fixed by the certificate and
paid in (sec. 616).
10. Organization Meeting. — The organization meeting must be held
within the District (this in the absence of any statute expressly authorizing such
meeting to be held without the District).
11. Meetings of Stockholders and Trustees. — Stockholders' meetings
must be held within the District. Owing to the provision that a majority of
the trustees must be residents of the District, it is in practice almost a neces-
sity to hold trustees' meetings in the District, where a majority of the body is
required to be present. In practice, however, through the expedient of the ap-
pointment of an executive committee, composed of a majority of the board of
trustees to whom is delegated all the powers of the full board in the transaction
of the business outside of the District of Columbia, meetings of the trustees
who are members of an executive committee can be held outside of the District.
Notice of the holding of annual meetings for the election of trustees must be
published in the District not less than thirty days previous thereto (sees. 608,
609).
12. Trustees' Qualifications and Liabilities. — a. Qualifications. There
must be not less than three, nor more than fifteen trustees, who shall be stock-
holders, and a majority citizens of the District (sees. 608, 609, 612).
b. Liabilities. — Trustees are jointly and severally liable for making false
certificates or reports, knowing the same to be false, which liability extends
to all debts of the company contracted while acting as such trustees (sees. 618,
619, 631). Non-dissenting trustees are liable for loans of money upon the secu-
rity of the company's own stock. They are also liable for illegal declaration of
dividends (sees. 621-623).
13. Stockholders' Liabilities. — All stockholders are severally liable to
the creditors of the corporation for the unpaid amount due on the shares of
stock held by them respectively, for all debts and contracts made by the cor-
poration until the whole amount of the capital stock of said company shall have
been paid in, and a certificate thereof shall have been made and recorded. This
certificate, signed and sworn to by a majority of the trustees and the president,
must within thirty days after the payment of the last instalment of the capital
stock be recorded in the office of the register of deeds of the District (sees. 615,
616).
14. Stock Certificates. — Each stockholder is entitled to a certificate
showing the number of shares owned by him, signed by such officers as the
by-laws may prescribe.
15. Preferred Stock. — There is no express provision authorizing the issu-
ance of preferred stock.
16. Payment of Capital Stock. — Stock may be paid for in money or
property at its actual cash value (sec. 613).
17. Books. — The stock register must be kept within the District of Co-
lumbia. This is open to the inspection of stockholders and creditors (sees. (L'7,
628; see also sees. 631, 632).
18. Office. — Every corporation must maintain an office at all times within
the District (sec. 606).
19. Reports. — Every corporation shall annually within twenty days
from the 1st of January make a report, which must he published in a news-
277
DIGEST OF INCORPORATION ACTS. — DISTRICT OF COLUMBIA.
paper published in the District, stating the amount of capital and the propor-
tion actually paid and the amount of existing debts, which report shall be
signed by the president and a majority of the trustees and verified by the oath
of the president or secretary of the company and filed in the office of the re-
corder of deeds of the District. The only penalty for failure to make this report
is that any creditor of the corporation may, by petition for mandamus against
the corporation, compel such publication to be made, and in such case the court
shall require the corporation to pay all expenses of the proceeding including
counsel fees. If any false report is made, all officers who have signed the same
knowing it to be false are individually liable for all debts of the company con-
tracted while they are stockholders or officers thereof (sees. 617, 618).
20. Anti-Trust Statute. — There is no anti-trust statute specially appli-
cable to the District of Columbia.
21. Statutory Grounds for Forfeiture of Charter. — The act specifi-
cally provides for forfeiture of charters when the corporation has been guilty of
misuse, abuse, or non-user of its corporate powers and franchises of such viola-
tion of law as would authorize and make proper the forfeiture thereof (sec.
786).
See Gilbert v. Endowment Ass'n, 10 D. C. App. 316.
22. Amendments. — Articles may be amended only for the purpose of in-
creasing or decreasing the capital stock, or for the purpose of extending or
changing its business. This may be accomplished in the following manner:
Before the corporation shall be entitled to diminish the amount of its capital
stock it must first diminish the amount of its debts and liabilities so that they
shall not exceed such diminished amount of capital. To increase or diminish
the capital stock or to extend or change the business, a majority of the trustees
shall publish notice in a newspaper in the District at least three successive
weeks and depositing a notice of such meeting in the post-office addressed to
each stockholder at his usual place of residence at least three weeks to the
date fixed upon for holding such meeting, specifying the object of the meeting
and the time and place where such meeting shall be held. At this meeting
stockholders must appear either in person or by proxy, representing not less
than two-thirds of all of the shares of stock of the corporation. If after organi-
zation at said meeting and canvassing the votes it appears that the votes of
two-thirds of the capital stock have been cast in favor of increasing or diminish-
ing the amount of capital or extending or changing the business of the company,
a certificate of the proceedings, showing compliance with the laws relative to
amendments, the amount of capital paid in, the business to which it is extended
or changed, the whole amount of its debts and liabilities, and the amount to
which the capital shall be increased or reduced, shall be made out and signed
and verified by the affidavit of the chairman of the meeting, and be counter-
signed by the secretary thereof. Such certificate when acknowledged by the
chairman and filed in the office of the recorder of deeds of the District shall be
sufficient to secure the amendment desired (sees. 633-639 inclusive). Under
the decision of the District Court of Appeals in Dancy v. Clark (24 D. of C.
App. Cas. 487), the business of the corporation can be extended only to some
additional line of business cognate to that for which the company was originally
incorporated. In connection with the provisions of the Code relative to pub-
lication of notice of stockholders' meetings for the purpose of increasing or
decreasing capital stock or for extending or changing the business, the Attorney-
278
DIGEST OF INCORPORATION ACTS. — DISTRICT OF COLUMBIA.
General of the United States has rendered an opinion to the effect that such
publication may be waived by unanimous consent of all the stockholders.
23. Extension of Corporate Existence. — There is no provision for the
extension of corporate existence except by reincorporating under the general
statute (see sees. 766, 767).
24. Dissolution. — Corporations may be dissolved on application to the
court having jurisdiction, for cause shown (sees. 769-789).
Morrow v. Edwards, 9 Mackey, 475.
25. Annual Franchise Tax. — There is no annual franchise tax. Under
sec. 8 of the Tax Law approved July 1, 1902, capital stock of all newspaper, real
estate, and mercantile corporations are taxed the same as individuals conduct-
ing business along similar lines.
26. Foreign Corporations. — Foreign corporations are not required to
obtain a permit to do business in the District of Columbia. (Sec, however,
32 Statutes at Large, 622.) Under the act of February 1, 1907, when a foreign
corporation transacts business in the District without having any place of
business or resident agent therein, the service upon any agent or officer or
employe in the District shall be effectual as to suits growing out of contracts
entered into or to be performed in whole or in part in the District of Columbia,
or growing out of any tort heretofore or hereafter committed in said District
(U. S. Comp. Stat. 1901, Sup. of 1905, Title XLVIII. sec. 4066).
Eastern Trust & Banking Co. v. Willis, 6 D. C. App. 375.
279
DIGEST OF INCORPORATION ACTS. — FLORIDA.
FLORIDA.
(The references cited below are to the General Statutes of 1906 unless otherwise stated.)
1. Statute under which Business Corporations may incorporate. —
The Business Corporation Act of Florida is to be found in the General Statutes
of 1906, sees. 2643 to 2692 inclusive. Special provision is made by statute for
banking, building and loan, insurance, surety, railroad, canal, telegraph com-
panies and eleemosynary institutions.
2. Incorporators. — Three or more persons. There are no residential
requirements (sec. 2647).
Brown v. Company, 19 Fla. 472.
3. Contents of the Charter. — The charter must set forth (sec. 2648) :
a. Name. — Similarity of names is forbidden (sec. 2676).
b. Domiciliary Office. — The place or places of business must be set forth.
c. Purposes. — The general nature of the business or businesses to be
transacted. The statute clearly contemplates that corporations may be created
for more than one purpose, provided none of the purposes set forth are covered
by special acts.
d. Capital Stock. — The amount of the capital stock authorized, the number
and par value of the shares into which it is divided, and the terms and condi-
tions upon which it is to be paid in must be set forth. The par value of the
shares must not be less than $10 (sec. 2653). The capitalization may be any
amount. If it is desired to pay in the capital stock in anything but money, this
fact must be stated in the charter. This statement should include a provision
either that the whole capital stock or some portion thereof shall be payable in
property, labor or services, at a just valuation, to be fixed by the incorporators,
or by the directors at a meeting called for that purpose (sec, 2653).
e. Corporate Existence. — The charter may be perpetual if desired.
/. Corporate Officers. — The charter must designate the officers by whom
the business is to be conducted, the times at which they shall be elected, and
the names of the officers who are to conduct the business until those elected
at the first election shall have qualified. The directors must all be stockholders.
The statutory officers are a president and treasurer or cashier and such other
officers as the by-laws may designate.
g. Corporate Indebtedness. — The highest amount of indebtedness to which
the corporation can at any time subject itself must be set forth.
h. Incorporators. — The names and residences of the incorporators must
be stated. The subscribing incorporators must also state the amount of stock
subscribed for by each. Such amount shall be not less than ten per cent of the
authorized capital stock (sec. 2648).
4. Statutory Powers. — Florida statutes enumerate fully the common
law powers of corporations as follows: Every corporation by virtue of its
existence as such shall have power (1) To have succession by its corporate
name for the period limited in its charter, and, when no period is limited,
perpetually ; (2) To sue and be sued in any court of law or equity ; (3) To
make contracts and to adopt and use a common seal, and alter the same at
pleasure ; (4) Where special provision is not made by law or otherwise, to
280
DIGEST OF INCORPORATION ACTS. — FLORIDA.
hold, buy, convey, or mortgage such personal or real estate as the purposes
of the corporation shall require, also to take, hold, and convey such other real
and personal property as shall be necessary for the corporation to acquire in
order to obtain or secure the payment of any indebtedness or liability to it ;
(5) To appoint such subordinate officers and agents as the affairs of the cor-
poration shall require, and to allow them suitable compensation ; (6) To make
by-laws ; (7) To increase or diminish by a vote of its members, cast as the
by-laws direct, the number of directors, managers, or trustees, so, however,
that the number shall not be less than three nor more than thirteen. The
only additional powers conferred by statute are the right to vote by proxy
and to forfeit stock for non-payment of assessments. Also to mortgage prop-
erties. The power to adopt by-laws may be delegated in the charter to the
directors if desired (sees. 2645, 2662, 2671).
5. Procuring the Charter. — The charter must be subscribed and ac-
knowledged by each of the incorporators (sec. 2648). Then the proposed charter,
together with notice of the intention to apply to the governor for letters patent
thereon, must be published for four weeks once each week, in some newspaper
published in the county where the principal place of business is to be located
(sec. 2640). This notice must be signed with the name of at least three of the
incorporators, and the proposed charter must be filed in the Secretary of State's
office during the four weeks of publication (sec. 2650). Then the proposed
charter, accompanied by proof of publication of notice, must be submitted to
the governor, who, if he finds it to be in proper form, and for objects authorized
by law, and that the formalities just referred to have been observed, will issue
letters patent to the corporation. The Secretary of State will then annex to
the letters patent a certified copy of the charter, retaining the original on file
and recording it. The organization tax must be paid to the Secretary of State,
who issues a certified copy of the charter. Corporate existence commences
from the time the certified copy of the charter is issued by the Secretary of State.
The statute specifically provides that letters patent, or a certified copy thereof,
shall be conclusive evidence as to the existence of the corporation in all actions
and proceedings where the question of its existence is only collaterally involved,
and prima facie evidence in all other actions and proceedings (sees. -!o,30, 2651).
6. Corporate Indebtedness. — There is no statutory limitation upon the
amount of corporate indebtedness (sec. 2646).
7. Organization Tax. — Two dollars upon each thousand dollars of the
capital stock, provided no fee shall be less than $5 or more than $250 (sec. 2650).
8. Filing and Recording Fees. — To the Secretary of State, in addition
to the payment of the organization tax, there must be paid a filing fee of $1.
The charge for making a certified copy of the charter is 10 cents per hundred
words for copying. The combined fee for filing and making certified copy and
recording is about $3.50. For publication, the charge is usually about $10.
For recording certificate of incorporation in the office of the clerk of the circuit
court in the county where the corporation is to do business, together with the
affidavit of the treasurer as to the amount of capital stock paid in, the fee is
10 cents per hundred words.
9. Commencing Business. — Before commencing business letters patent
together with a certified copy of the charter must be recorded in the office of
the clerk of the circuit court of the county where the principal place of busi-
ness is located. There must also be filed with the Secretary of State and with
said clerk of the circuit court duplicate affidavits by the treasurer of the cor-
28]
DIGEST OF INCORPORATION ACTS. — FLORIDA.
poration that ten per cent of the capital stock has been subscribed and paid.
The organization tax must likewise be paid (sec. 2652).
10. Organization Meeting. — Must be held within the State (sec. 2666).
11. Meetings of Stockholders and Directors. — Stockholders must hold
their meetings within the State. The directors may hold their meetings without
the State if the by-laws so provide (sees. 2662, 2666).
Duke v. Taylor, 37 Fla. 64; 19 Sou. 172.
12. Directors' Qualifications and Liabilities, a. Qualifications. — The
number of directors is not limited by law. They must all be stockholders.
There are no residential requirements (sees. 2645, 2663).
o. Liabilities. — Directors participating in the declaration of illegal divi-
dends are jointly and severally liable for the debts of the corporation then
existing to the extent of the dividend declared, unless they at the time object
to the declaration of the dividend in writing (sec. 2691).
13. Stockholders' Liabilities. — Stockholders are liable to the extent
of their unpaid stock subscriptions (sec. 2677). If any corporation shall
transact any business before complying with the statutory requirements, its
stockholders shall be personally liable for all the corporation debts as if they
were members of a general partnership and not stockholders of a corporation
(sec. 2652).
Gibbs v Davis, 27 Fla. 531; 8 Sou. 633; Brown v. Company, 19 Fla. 472; Martin v. Com-
pany, 8 Fla. 370.
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him signed by such officers as the by-laws may designate
for that purpose. The par value of stock certificates may be any amount not
less than $10 (sec. 2653).
15. Preferred Stock. — There is no statutory provision expressly author-
izing the issuance of preferred stock.
16. Payment of Capital Stock. — Unless otherwise provided in the
charter, stock subscriptions must be paid in cash. Incorporators may, how-
ever, provide in the charter that the capital stock, either in whole or in part,
shall be payable in property, labor, or services at a valuation to be fixed in the
charter. The charter must also set forth the general description of the prop-
erty to be taken in exchange for stock (sec. 2653).
17. Books. — The secretary or other officer who by the by-laws is made
the custodian of its books, is required to keep the same in his possession at all
times during business hours, and have the same ready to be inspected by any
officer, director, or committee appointed by the stockholders representing one-
tenth of all the subscribed stock. The treasurer or cashier is required to keep
a stock book containing a list of the stockholders with the number of shares
owned by each, which is subject to inspection by the stockholders upon written
application (sees. 2658, 2672).
18. Office. — Every corporation must have a place of business within the
State, and the custodian of its books and papers must reside within the State
(sees. 2658, 2672).
19. Reports. — The corporation shall annually make a report to the State
comptroller containing the name and residence of each stockholder, with the
number of shares and the par and cash market value of such shares, the whole
amount of capital stock, the amount actually paid in, the real estate subject
to assessment of taxes, and the personal estate. A statement of the amount
282
DIGEST OF INCORPORATION ACTS. — FLORIDA.
of capital stock subscribed and the amount actually paid in and of the indebted-
ness of the corporation shall be filed once every six months in the of lice of the
State comptroller (sees. 2659, 2661).
20. Anti-Trust Statute. — Trusts to control meats, cattle, or edible ani-
mals are prohibited (sees. 1714, 2452, 3160, 3164).
21. Statutory Grounds for Forfeiture of Charter. — Diversion by a
corporation of its funds or property to objects other than those named in t lie
charter or to payment of dividends, leaving insufficient funds to meet outstand-
ing liabilities, work a forfeiture of the charter (sec. '-'690).
22. Amendments. — To change the name of a corporation a resolution
to that effect must be passed by a majority vote of the stockholders at a meeting
called for that purpose, and a certificate setting forth such resolution under
the corporate seal (attested by the secretary) must be filed in the office of
the Secretary of State. Thereupon letters patent shall issue, reciting the change
in name, which must be recorded in the Secretary of State's office and in the
office of the clerk of the Circuit Court where the original charter is recorded
(sees. 2675, 2676).
With respect to increasing or reducing the capital stock, the statute reads
that any corporation desiring to alter or amend its charter shall do so in a
certain prescribed manner as set forth in the statute. To increase the capital
stock, notice of the meeting of stockholders called for that purpose must be
published once a week for four consecutive weeks prior thereto in one newspaper
published in the county. In addition to this the usual notice for stockholders'
meetings provided for in the by-laws must be served upon or mailed to the
stockholders. If at such meeting two-thirds of all the stockholders vote to
increase the capital stock, the president within thirty days thereafter must
make a return to the Secretary of State under oath of the amount of such
increase and the terms on which said capital stock is issued, and from the time
the said return is filed the increase of stock shall be authorized, anil when
issued shall become a part of the capital. At the same time the capitalization
tax must be paid upon the amount of increased capital stock. To reduce the
capital stock or alter or change the par value of the shares thereof requires
the two-thirds vote of all the stockholders cast at a meeting called in the same
manner as is above referred to in the case of the increase of the capital stock.
In order to legalize the reduction of the capital stock, the president must make
within thirty days thereafter under oath his return to the Secretary of State of
the amount of such decrease, and upon his affidavit must be endorsed a certifi-
cate of the State comptroller that in his judgment the ability of the corporation
to meet its outstanding liabilities and debts will not be impaired thereby (sees.
2673, 2674; Laws of 1909, No. 22, p. 38).
To amend the charter in other respects a meeting must be called in the
manner set forth above with reference to increasing or reducing the capitaliza-
tion. At this meeting the proposed amendment must receive a vote of three-
fourths of the outstanding capital stock. II' t he proposed amendment is adopted,
the corporation must then give four weeks' notice, once each week, of intent inn
to apply to the governor therefor, in some newspaper published in the county
wherein the principal place of business is located, setting forth the desired
alteration or amendment. The corporation must then prepare :t certificate
which shall be filed in the Secretary of Sta1 ' office during the time <>( publi-
cation, am I afterwards, togel her v. ii h the proof of publication of not ice. These
are all submitted to the governor, who, it' the same are found in proper form
283
DIGEST OF INCORPORATION ACTS. — FLORIDA.
and legally adopted, if the proposed amendment will be beneficial and lawful
and of interest to the community and in accord with the purposes of the charter,
will approve the same, and thereupon letters patent shall issue reciting the
amendment, and the same shall then be recorded in the office of the Secretary
of State and in the office of the clerk of the Circuit Court where the original
charter was recorded (sec. 2150).
23. Annual License Tax. — There is no annual license tax.
24. Extension of Corporate Existence. — The statute makes no spe-
cific provision for extension of corporate existence. (See, however, sec.
2675.)
25. Dissolution. — A majority in interest of the stockholders may peti-
tion the Circuit Court for the dissolution of the corporation, and the court
after publication for a reasonable period may hear the matter and may decree
a dissolution (sec. 2682).
Gibbs v. Davis, 27 Fla. 531; 8 Sou. 633.
26. Foreign Corporations. — Up to 1907 there were no statutory pro-
visions in force in Florida prescribing the conditions upon which foreign corpora-
tions might do business in that State. The matter is now regulated by recent
statute as follows (Laws of 1907, No. 122; chap. 5717, approved June 1, 1907).
No foreign corporation shall transact business or acquire, hold, or dispose of
property in this State until it shall have filed in the office of the Secretary of
state a duly authenticated copy of its charter or articles of incorporation, and
shall have received from him a permit to do business in this State. Upon the
filing of such copy, the Secretary of State shall, if the objects of the corporation
are such as are not prohibited by the laws of this State, issue a permit allowing
such corporation to transact business in this State, but he shall not deliver such
permit to the corporation until he shall have received from it for the use of the
State a sum equal to that which the said corporation would have been required
to pay as a charter fee if it had been incorporated under the laws of this State.
The fee of the Secretary of State for issuing the permit shall be $5.
If the charter or articles of incorporation of any foreign corporation shall
be amended after a permit has been issued to it under the provisions of this
act, such corporation shall within thirty days thereafter file a duly authenti-
cated copy of the amendment in the office of the Secretary of State, who shall
issue to the corporation a certificate of the filing ; but if the amendment is one
increasing the capital stock, he shall not deliver the certificate until he shall
have received from the corporation for the use of the State a sum equal to
that winch such corporation would have been required to pay if it had been a
corporation increasing its capital stock under the laws of this State. If any
such corporation shall fail to file any amendment and to make the payment
aforesaid within the said thirty days, its permit shall be deemed to be revoked
until the provisions of this section shall be complied with. The fee of the
Secretary of State for granting the certificate shall be $2.
Every contract made by or on behalf of any foreign corporation affecting its
liability or relating to property within the State before it shall have complied
with the provisions of this act shall be void on its behalf and on behalf of its
assigns, but shall be enforceable against it or them.
This act shall be deemed to apply to foreign building and loan associations,
foreign insurance companies, foreign surety companies, and all other foreign
corporations which now are or hereafter may be required to obtain other certifi-
284
DIGEST OF INCORPORATION ACTS. — FLORIDA.
cates of authority to transact business in this State ami to impose an additional
requirement upon them, as well as to all other foreign corporations except
those which are excepted by the terms from the operation of this act. This
act shall not apply to any foreign corporation whatever transacting business in
this State at the time this act shall take effect; provided that any such foreign
corporation hereafter increasing its capital stock shall comply with the pro-
visions of sec. 3 in relation thereto.
A foreign corporation is denned to be a corporation incorporated by or under
the laws of any other State or Territory or of any other country.
Any foreign corporation which shall violate the provisions of sec. 1 or 3 shall
upon conviction be fined not more than $1,000 for the first offence, and not
more than $5,000 for each subsequent offence, and any officer or agent of any
foreign corporation who shall violate the provisions of sec. 1 or 3 shall upon
conviction be punished by a fine of not more than $2,000 or by imprisonment
not exceeding six months, or by both such fine and imprisonment.
Duke v. Taylor, 37 Fla. 64; 19 Sou. 172.
285
DIGEST OF INCORPORATION ACTS. — GEORGIA.
GEORGIA.
(The references cited below are to the Civil Code of Georgia, 1895, and to the Supplement
of 1901, unless otherwise stated.)
1. Statute under which Business Corporations may incorporate. —
The Business Corporation Act of Georgia is to be found in the Civil Code of
Georgia (Revision of 1895), title 11, sees. 1831 to 1902. Some general provisions
applicable alike to all corporations are also found in Civil Code, sees. 2349,
2350, 2698, 3064, and 3954, and in the Political Code, sees. 805 to 881. Under
the general law corporations may be formed for any lawful purpose not covered
by the special acts relating to banks, railroads, telegraph, insurance, naviga-
tion, express, and canal companies, charters for which are granted and issued
the Secretary of State. (See sees. 1903-2348.)
Atherton v. Company, 71 Ga. 106; Ellington v. Company, 93 Ga. 53; 19 S. E. 21; P. &
M. Bank v. Pedgett, 69 Ga. 159.
2. Incorporators. — There must be at least two incorporators. There
are no residential requirements (sec. 2350 ; see also sec. 1854).
Mather v. Morgan, 72 Ga. 517; Waycross, etc. Ry. Co. v. Offerman, 109 Ga. 827; 35
S. E. 275.
3. Contents of Petition for Charter. — The petition addressed to the
Superior Court must state :
a. Purposes. — The objects of the corporation and the particular business
proposed to be carried on. It is doubtful whether under this section a corpo-
ration may be incorporated to carry on more than one line of business.
b. Name. — Similarity of names is not permitted.
c. Capital Stock. — The amount of capital stock to be employed and actu-
ally paid in. Capital stock may be any amount.
d. Domiciliary Office. — The principal place of business must be set forth.
e. Duration. — Corporate existence is limited to twenty years (sec. 2350).
In re Devaux, 54 Ga. 673; Hendrix v. Academy, 73 Ga. 437; Davis v. Company, 17 Ga.
323; Daniel v. Wilson, 91 Ga. 238; 18 S. E. 134.
4. Statutory Powers. — In addition to a statutory enumeration of
common law powers, the folio wing additional powers are conferred : To receive
donations by gift or will ; to create a lien upon the stock for debts due from
stockholders (sees. 1852, 2825). Corporations are forbidden by constitutional
provision to own or hold stock in other corporations (Cons., Art. IV. sec. 11,
par. 4). They are also forbidden to consolidate or merge with other corpora-
tions when the effect would be to defeat or risk competition or to encourage
monopoly (Cons., Art. IV. sec. 11, par. 4; sees. 6467-6472). The rights of
majority and minority stockholders are enumerated in the statute, sees. 1859,
1860). Corporators have an interest in the franchises of the corporation, of
which they cannot be deprived except by due process of the law. Mandamus
will lie against the corporation to enforce such right if there is no legal remedy
(Cons., Art. IV. sec. 2, par. 4. See also as to special powers of mining corpora-
tions, Laws of 1904, p. 51).
Trust Co. v. State, 109 Ga. 736; 35 S. E. 323; Waycross, etc. Ry. Co. v. Offerman, 109
Ga. 827; 35 S. E. 275; Bradford v. Companv, 58 Ga. 280; U. B. Ry. Co. v. Company, 14
Ga. 327.
286
DIGEST OF INCORPORATION ACTS. — GEORGIA.
5. Procuring the Charter. — The declaration of incorporation prepared
by the incorporators as prescribed by sec. 2350 of the Code (see ante, sec. 3)
must be presented in the form of a petition to the Superior Court of the county
in which the corporation desires to transact business. The manner of execu-
tion of the declaration of incorporation is not prescribed by statute. The
petition must be published once a week for four consecutive weeks in the nearest
newspaper to the point where the corporate business is to be carried on. When
the court grants the petition by order to that effect, the petition and the order
must be recorded by the clerk of the Superior Court in the record of "Superior
Court charters." The proceedings must also be recorded in the minutes of the
court as part of the proceedings thereof. The order itself is to the effect that
the petitioners and their successors are incorporated for a term of not exceeding
twenty years, with the privilege of renewal at the expiration of that time in
the manner provided by statute. Before business can be commenced ten per
cent of the authorized capital stock must be paid in. Corporate business must
be commenced within two years after the issuance of the charter (sec. 2350).
Existence of a corporation cannot be collaterally attacked. All who have
dealt with the corporation as such are estopped from denying its corporate
existence (sec. 1862).
Harriman v. Baptist Church, 63 Ga. 186; In re Deveaux, 54 Ga. 673; Etowah Mil. Co.
v. Crenshaw, 116 Ga. 406; 42 S. E. 709; McCandless v. Company, 115 Ga. 968; 42 S. E. 449.
6. Corporate Indebtedness. — There is no statutory hrnitation upon the
amount of corporate indebtedness. If the corporation desires to issue bonds,
it must furnish to the Secretary of State a certified statement in relation thereto
(Laws of 1900, chap. 139; sees. 1866-1868, 6157).
7. Organization Tax. — There is no organization tax imposed as such in
Georgia. Under the statute the clerk of the court has power to collect the
usual fees allowed for similar services in other cases. These fees vary from
S10 to S20.
8. Filing and Recording Fees. — The average cost for filing petition for
charter in the office of the county clerk and for docketing and spreading the
order granting petition on the minutes, $12.50. The cost of certified copy of
the charter is S2.50 ; cost of publishing articles of incorporation depends upon
whether the publication is made in a country or city newspaper, and ranges
from $5 to $20.
9. Commencing Business. — Corporations before commencing business
must pay in ten per cent of the authorized capital stock (sec. 2350). Business
must be commenced within two years (sec. 2350). In order to avoid liability,
the incorporators must see that the minimum capital stock has been subscribed
for and ten per cent thereof paid in before commencing business (sec. 1856).
• McCandless v. Company, 115 Ga. 968; 42 S. E. 449; Atherton v. Company, 71 Ga. 106.
10. Organization Meeting. — In the absence of any statute expressly
authorizing the holding of meetings elsewhere, organization meetings must
be held within the State.
Mining Co. v. King, 45 Ga. 34.
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held witliin the State. Directors' meetings may be held without the
State if the by-laws so provide.
12. Directors' Qualifications and Liabilities, a. Qualifications. — The
statute makes no special provision with relation to directors other than to
287
DIGEST OF INCORPORATION ACTS. — GEORGIA.
provide that they shall represent the corporation and its stockholders. Their
number, qualifications, term of office, and powers are left largely for determina-
tion to the by-laws adopted by the incorporators (sees. 1858, 1861).
b. Liabilities. — Directors are liable for the declaration of any dividend or
the distribution of money among the stockholders as profits when such dividend
or money is not the legitimate proceeds of such investments. (See Penal Code,
sec. 691 ; Laws of 1902, chap. 13, p. 58.) The law provides that for failure
to allow an inspection of list of stockholders, or for the declaration of illegal
dividends, or for refusing to give certificate of stockholders and their holdings
on application in a suit against the corporation, the officers responsible therefor
shall be held liable. (See sees. 594, 691 of the Penal Code; also Civ. Code,
sees. 1861, 1891, 1895.) Directors are liable for authorizing use of corporate
funds for political purposes (Laws of 1908, chap. 435).
13. Stockholders' Liabilities. — Stockholders are liable for the debts of
the company only to the extent of their unpaid stock subscriptions. Stock-
holders who are incorporators and who organize the company and transact
business under that name before the minimum amount of capital stock has
been subscribed for, are liable to creditors to make good the minimum stock
with interest (sees. 1889, 1890, 2350). Whenever a stockholder purchases
stock upon which there is a liability for unpaid subscriptions, he shall be exempt
from further liability unless the corporation fails within six months from the
date of the transfer (sec. 1888).
Fouche v. Bank of Rome, 110 Ga. 827; 36 S. E. 256; Wilkinson v. Bertock, 111 Ga. 187;
36 S. E. 623; Harrell v. Blount, 112 Ga. 711; 38 S. E. 56; Tichenor v. Williams, etc. Co.,
116 Ga. 306; 42 S. E. 505; Allen v. Grant, 122 Ga. 552; Bank v. Warthan, 119 Ga. 990.
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him signed by such officers as the by-laws may designate
for that purpose. The par value of stock certificates may be any amount.
15. Preferred Stock. — There is no statutory provision expressly author-
izing the issuance of preferred stock.
See, however, Totten v. Tison, 54 Ga. 139.
16. Payment of Capital Stock. — The statute does not authorize in
express terms the issuance of capital stock for anything except cash.
See Havden v. Atlanta Cotton Factory, 61 Ga. 233; Fouche v. Bank of Rome, 110 Ga.
827; 36 S. E. 256; McCandless v. Company, 115 Ga. 978; 42 S. E. 449; Macon, etc. Ry.
Co. v. Vernon, 57 Ga. 314.
17. Books. — The corporation is required to keep a stock register which
is open to the inspection of creditors (Penal Code, sec. 594 ; Civ. Code, sees. 1890,
1891, 1895).
18. Office. — Every corporation must maintain an office within the State
(sec. 2350).
R. R. Co. v. Wilson, 116 Ga. 189; E. M. Co. v. Crenshaw, 116 Ga. 406.
19. Reports. — Annual reports must be filed with the Secretary of State
as the ex-officio corporation commissioner of the State on or before Novem-
ber 1st of each year. This report must show name of company, facts relat-
ing to incorporation, amount of capital stock, business, and location of the
principal office (Laws of 1906, p. 103).
20. Anti-Trust Statute. — By statute all combinations made with a view
to lessen free competition in the importation or sale of articles, or in the manu-
288
DIGEST OF INCORPORATION ACTS. — GEORGIA.
facture or sale of articles of domestic growth, are illegal and void (Laws of
1896, p. 68).
In the case of Brown & Allen et al. v. Jacobs, ete. Co. (115 Ga. 428), this
statute was declared unconstitutional as exempting from its provisions agri-
cultural products and live-stock. The court, however, in this case held that
under the common law of the State it was contrary to public policy for unjust
combinations to lessen free competition, and that therefore the statute was
unnecessary. The State legislature is forbidden by constitutional enactment
to authorize any corporation to buy stock or make any contract with any other
corporation which may have the effect of defeating or risking competition or
encouraging monopoly (Cons., Art. IV. sec. 2, par. 4. See also sees. 6468, 6470,
6471).
Willis o. Company, 120 Ga. 597.
21. Statutory Grounds for Forfeiture of Charter. — A corporation
may forfeit its charter by wilful violation of any of the essential conditions on
which it was granted. Also by misuse or non-user of its franchises. Dissolu-
tion for either cause can be effected only by a court of competent jurisdiction
declaring forfeiture (Civil Code, sees. 1882-1886).
22. Amendments. — The incorporation acts relative to the incorporation
of companies through the medium of the Superior Court is very vague when
it comes to the matter of amending charters. Sec. 2350 of the Code, sub. 6,
provides that the power conferred upon the Superior Court to grant charters
shall extend to the amendment or renewal of the same. The power thus con-
ferred is held by the courts to be sufficient to permit of the amendment of
charters to practically an unlimited extent. (See also Code, sees. 1840-1845
inclusive, as to the amendment of charters of banking, insurance, railroad, canal,
navigation, express, or telegraph companies. See also Laws of 1902, p. 49.)
Macon, etc. Ry. Co. v. Gibson, 85 Ga. 1; US. E. 442.
23. Annual License Tax. — An annual license tax must be paid to the
tax collector of the county in which the corporate business is carried on in the
following amounts : Where the capital of the corporation does not exceed
$10,000, $5; over $10,000 and not over $25,000, $10; over $25,000 and not over
$100,000, $15; over $100,000 and not over $300,000, $25; over $300,000 and
not over $500,000, $50; over $500,000 and not over $1,000,000, $75; on any
amount over $1,000,000, $100 (Laws of 1909, p. 48, sec. 2, sub. 31).
24. Extension of Corporate Existence. — Corporate existence may be
extended by complying with the statutes in that regard (sec. 2350, sub. ;
Laws of 1897, p. 28).
25. Dissolution. — Corporations are dissolved, (1) by expiration of the
charter; (2) by forfeiture of the charter; (3) by surrender of franchises;
(4) by the death of all its members without provision for its succession (Code,
sec. 1882).
Atlanta u. Gate Citv Gas Light Co., 71 Ga. 106; Georgia Central Ry. Co. v. Tifton, Thomas-
ville, & Gulf Ry. Co., "lO'J Ga. 766.
26. Foreign Corporations. — Foreign corporations are permitted to do
business in Georgia as a matter of comity to the same extern 1 as Georgia cor
porations are recognized in the domiciliary State of such foreign corporation
(sec. 1846). They arc forbidden to own land in Georgia to the amount of five
thousand acres or over without incorporating under Georgia laws (sec. L849).
19
DIGEST OF INCORPORATION ACTS. — GEORGIA.
The General Tax Act of Georgia for the years 1908 and 1909, sec. 42, Laws of
1907, p. 34, provides that a tax shall be imposed upon agents of foreign cor-
porations having a place of business in the State annually as follows : Upon cor-
porations with a capital not exceeding $10,000, $5; over $10,000 and not over
$25,000, $10; with a capital over $25,000 and not over $100,000, $15; over
$100,000 and not over $300,000, $25; over $300,000 and not over $500,000, $50;
over $500,000 and not over $1,000,000, $75; over $1,000,000, $100. The act
further provides that if such foreign corporation shall on or before the 1st day
of April of each year pay to the Comptroller- General the amount of license tax
prescribed for domestic corporations (see ante, sec. 23), then such agent shall
be relieved from the payment of such annual license tax, and to that end such
foreign corporations shall register their names, capital stock, and names of
agent with the Comptroller- General before the 1st day of April of each year
(Laws of 1909, p. 48, sec. 2, sub. 32). In case of the failure of a foreign cor-
poration to make the returns required by law, or to pay taxes, their right to do
business in the State is suspended (Pol. Code, sec. 875). All corporations, ex-
cept banks, doing business in this State are required to make a return annually
to the Secretary of State, through the president or general manager, on or by
the 1st of November, embracing the following information: (1) The name of
the company; (2) when incorporated; (3) by what authority; (4) where in-
corporated; (5) the amount of the capital stock of said corporation; (6) the
business of the corporation; (7) its principal office. At the time of making
said return the officer making same shall remit a fee of $1 for the first year,
and annually thereafter 50 cents. The penalty for the failure to make this
promptly is $50 (Act of August 17, 1906). The fee for fifing with the Secretary
of State the first annual report is $1, thereafter filing fee is 50 cents annually.
V. B. R. R. Co. v. E. T. & G. R. R. Co., 114 Ga. 327; A. C. Society v. Gartell, 23 Ga.
448; S. C. Ry. Co. v. People's Sav. Ins., 64 Ga. 18.
290
DIGEST OF INCORPORATION ACTS. — HAWAII.
HAWAII.
(The references cited below are to chap. 157 of the Revised Laws of Hawaii, 1905,funlesa
otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Hawaii is to be found in the Revised Laws of
Hawaii, 1905, chap. 157, sees. 2535-2569 inclusive. Provisions relative to
foreign corporations are to be found in the Revised Laws of 1905, chap. 160,
sees. 2623-2629 inclusive. Under this act corporations may be formed for
any purpose excepting banking and professional business.
2. Incorporators. — Any number not less than five, a majority of whom
must be residents of Hawaii.
3. Contents of Articles of Association. — The articles must set forth
(sec. 2536) :
a. Name. — The name must be followed by the word " Limited."
b. Domicile. — Location of its principal office.
c. Purpose. — The purpose of the company.
d. Capital Stock. — The amount of the capital stock, and if the privilege of
subsequent extension thereof is asked for, the limit of such extension.
e. Officers. — Number and designation of officers proposed. The duration
of the corporation should also be stated, and this cannot exceed fifty years
(sec. 2539). In the provisions of law with reference to the creation of corpora-
tions by charter (having special reference to quasi-public and eleemosynary
corporations) is to be found the following: "In the case of joint-stock com-
panies, there shall, in addition to a w r ritten petition accompanied by proofs
that three-fourths of the shares have been subscribed for, be also filed at the
same time in the office of the Territorial Treasurer a certificate setting forth
the location of the proposed company, the object of the corporation, the
amount of stock proposed, and, if the privilege of subsequent extension thereof
is asked for, the limit of the extension, the proposed duration of the company,
the time within which it is to organize, whether the liability of stockholders
is to be limited to the amount of their stock or otherwise ; and also whether
the whole or any part of the capital stock is to be paid in before commencing
operations, and if in part, what part (sec. 2545). The foregoing, however, does
not apply to joint stock companies incorporated under sections 2535 and 2540,
except as to increase of capital stock (sec. 2541).
4. Statutory Powers. — In addition to a statutory enumeration of the
common law powers, corporations have the following additional powers : To
issue preferred stock. To forfeit stock for non-payment of assessments. To
vote at stockholders' meetings by proxy (sees. 2551, 2552, 2554, 2558, 2559,
2560). To issue preferred stock (Act 30, 1909).
5. Procuring the Charter. — The incorporators must sign and acknowl-
edge the articles of association before some officer authorized to take acknowl-
edgments. The articles of association must then be recorded in the office <>f
the Treasurer of the Territory. They must be accompanied by an affidavit,
sworn to by the president, secretary, and treasurer of the corporal ion. setting
forth the number of shares, amount of capital stock, names of subscribers to
t'ie capital stock, and the amount paid thereon. When the object of the cor-
291
DIGEST OF INCORPORATION ACTS. — HAWAII.
poration is to take over and conduct any existing agricultural, manufacturing,
shipping, or trading business or enterprise, affidavit must then contain a full
description of the property intended to represent the capital stock of the pro-
posed corporation, a detailed valuation of each item of the property, and copy
of the conveyance's to be made by the owners of such business to the proposed
corporation (sees. 2536-2538 inclusive).
Hackfeld v. King, 11 H. 5.
6. Corporate Indebtedness. — The amount of indebtedness must at no
time exceed the amount of the capital stock (sec. 2564).
7. Organization Tax. — On filing the articles of association in the office
of the Treasurer of the Territory, in addition to a stamp duty of $25 thereon,
and the payment of the ordinary recording fees, the following organization tax
must be paid to the Treasurer of the Territory for the use of the Territory, to
wit: For certificate of incorporation, 20 cents for each $1,000 of total amount of
capital stock authorized, but in no case less than $25; for increase of capital
stock, 20 cents for each $1,000 of total increase authorized, but in no case less
than $20; for extension or renewal of corporate existence of any corporation
the fee is the same as required for filing the original certificate of organization.
Dissolution of corporation, change of name, change of nature of business,
amended certificates of organization (except in the increase of capital stock),
decrease of capital stock, increase or decrease of par value or of number of
shares, $25; for filing annual exhibit of foreign and domestic corporations, $10
(sec. 2566 A, as added by Laws of 1907, p. 95, sees. 1298, 1320).
8. Filing and Recording Fees. — For recording in the office of the
Territorial Treasurer, approximately $5; for every copy of any document,
50 cents per hundred words (sec. 1181).
9. Commencing Business. — Corporations may commence business as
soon as three-fourths of the authorized capital stock has been subscribed for
and ten per cent thereof shall have been paid in, or the corporation shall have
acquired property of a value equal to ten per cent of its capital (sec. 2540).
10. Organization Meeting. — Organization meeting must be held within
the Territory (see, however, sec. 2555).
O. S. Co. v. Austin, 5 H. 555.
11. Meetings of Stockholders and Directors. — In the absence of
unanimous consent of stockholders, the meetings must be held within the Ter-
ritory. The law, however, provides that when all the stockholders are present,
either in person or by proxy, and shall sign a written consent thereto on the
record of such meeting, the doings of such meeting shall be valid (sees. 2555-
2557). It would appear, in the absence of any statute providing otherwise,
that directors' meetings may be held without the Territory if the by-laws so
provide.
Brown v. Carter, 15 H. 333.
12. Directors' Qualifications and Liabilities, a. Qualifications. — There
is no limit to the number of directors, nor are any residential qualifications
prescribed. The matter is left to be regulated by the by-laws.
b. Liabilities. — Directors are individually liable for making dividends ex-
cept from the profits of the business, for the withdrawal of capital stock, and
are also criminally liable for making false statements in affidavits, reports, etc.
292
DIGEST OF INCORPORATION ACTS. — HAWAII.
(sees. 2561, 2565). They are also liable for holding themselves out as a cor-
poration without having duly complied with the law (sec. ^Wo).
13. Stockholders' Liabilities. — Stockholders are liable only to the ex-
tent of their unpaid stock subscriptions (sees. 2562-2564 inclusive).
14. Stock Certificates. — Every stockholder is entitled to a certificate
signed by such officers as the by-laws may prescribe. Par value may be any
amount (see sec. 2550). Every certificate must show plainly how much of its
par value has been paid in (sec. 2550).
15. Preferred Stock. — Provision may be made in the articles of associa-
tion for the issuance of two or more classes of stock, with such preferences, vot-
ing powers, restrictions and qualifications thereof as shall be therein set forth.
After incorporation preferred stock may be issued by amending the articles of
association to that effect by the vote of three-fourths of all its stock issued and
outstanding (sec. 2552, as amended by Act 30, 1909).
16. Payment of Capital Stock. — Stock may be issued in exchange for
money or money's worth (sees. 253S, 2540).
17. Books. — The stock books must be kept at tht, principal office of the
corporation, and be open to the inspection of stockholders and creditors during
business hours (sees. 2548, 2566).
Marks v. Parmelee, 13 H. 438.
18. Office and Agent. — The corporation must have a principal office at
the place designated in the articles of association (sees. 2536-2548).
19. Reports. — Every business corporation shall annually present a full
and correct exhibit of the state of its affairs to the Territorial Treasurer as of
December 31st of each year. Such exhibit shall be filed within sixty days after
said date, or within such further time, not exceeding thirty days, which may be
allowed by the Territorial Treasurer, and shall contain such information and
be in such form as the Territorial Treasurer shall, with the approval of the
governor, require (sec. 2566, as amended by Act 146, 1909).
20. Anti-Trust Statute. — The statute in enumerating unlawful con-
spiracies declares that the establishment, management, or conducting of a trust
or monopoly in the purchase or sale of any commodity is a conspiracy of the
second degree, punishable by imprisonment at hard labor not more than two
years, or fine not exceeding $10,000, in the discretion of the court (sees. 3091,
3100 ; see also sec. 2541).
21. Statutory Grounds for Forfeiture of Charter. — Quo warranto
will he against corporations not legally incorporated (sec. 2044 to 2052).
22. Amendments. — The Territorial Treasurer, with the approval of the
governor, has power to permit and allow amendment of articles of association,
provided they confer no other corporate powers or privileges than could have
been lawfully conferred or obtained in the original articles of association (sees.
2545, 2546).
No increase or extension of the capital stock shall be legal and effective
unless a certificate shall first have been filed with the Treasurer of the Territory,
signed by the president and secretary of such corporation, showing, first , tin-
present authorized capital stock of such corporation; second, the amount to
which the capital stock thereof may be increased or extended under its articles
of association; third, the a mount of increase or extension of such capital stock
duly authorized by its stockholders. The certificate of amendment musl be ac-
companied by payment of the fee required to be paid to the Territorial Treasurer
DIGEST OF INCORPORATION ACTS. — HAWAII.
upon the amount of increased capital stock so authorized (sec. 2566 B, as added
by Laws of 1907, p. 51).
23. Extension of Corporate Existence. — The Territorial Treasurer has
power on the expiration of any charter to renew the same on application to
him for that purpose by two-thirds of the stockholders of said company and
the said explanation to him of the state of its affairs (sec. 2543).
24. Dissolution. — Corporate dissolution may be obtained by petition to
the Territorial Treasurer, together with certificate setting forth the date of the
meeting of the stockholders called for that purpose, at which it was decided by
a vote of three-fourths of the stockholders to dissolve the corporation, which
certificate shall be signed by the presiding officer or secretary of said meeting.
The Treasurer shall thereupon enter such petition and certificate of record in
his office, and after sixty days' publication of notice in such manner as he shall
prescribe, he shall proceed to consider the same, and when satisfied that the
vote certified has been truly taken, and that all claims against the corporation
are discharged, he shall declare such corporation dissolved (sees. 256S, 2569,
Act 135, Laws of 1909).
25. Annual License Fees. — A tax of two per cent is levied annually on
the net income above actual operating and business expenses of all companies
doing business in the Territory, no matter where created or organized (sec.
1279). Regular tax returns are required to be made in June of each year (sec.
1277). The returns of the annual income tax of two per cent on net profits
referred to above must be made between July 1st and 31st of each year (sees.
1279, 1282).
Robertson v. Pratt, 13 H. 590; Peacock v. Pratt, 121 Fed. Rep. 772.
26. Foreign Corporations. — Every foreign corporation carrying on busi-
ness in the Territory or acquiring real estate therein, must file in the office of
the Territorial Treasurer (1) a certified copy of its charter, (2) the names of
its officers, (3) the name of some person within the Territory of Hawaii upon
whom process may be served, (4) a certified copy of the by-laws of the corpora-
tion (sec. 2623). Upon compliance with the foregoing, and upon payment to
the Treasurer of a fee of $50, the corporation will be permitted to transact
business within the Territory. It is also necessary to procure an annual license
from the Territorial Treasurer. Any foreign corporation, except foreign in-
surance companies, which does not invest and use all its capital in Hawaii
cannot have an office therein unless it shall first obtain from the Territorial
Treasurer an annual license to do so. The amoimt of this license is $100
(sec. 2625, as amended by Act 61, Laws of 1909). Annual reports are re-
quired the same as of domestic corporations (sees. 2627-2629). As to service
of process upon foreign and domestic corporations see Act 43, Laws of 1909.
294
DIGEST OF INCORPORATION ACTS. — IDAHO.
IDAHO.
(The references cited below are to the Revised Code of Idaho, 1901, unless otherwise stated.)
1. Statutes under which Business Corporations may be incorporated.
— The Business Corporation Act of Idaho is found in the Civil (Ode of that
State (1901), sees. 2085-2162, as amended by recent Session Laws. Special
acts are provided for bridge, ferry, flume, boom, gas, fidelity, domestic insur-
ance, railroad, telegraph, telephone, water, canal, and wagon road companies.
(See Laws of 1905, pp. 150, 162.)
2. Incorporators. — May be any number of persons not less than three,
one of whom must be a bona fide resident of the State (Session Laws of 1905,
Act No. 140, p. 163 ; Laws of 1907, p. 540).
3. Contents of the Articles of Incorporation. — The articles must set
forth:
a. Name. — Similarity of names is not specifically forbidden.
b. Purpose. — The Secretary of State allows articles to be filed providing
for any number of purposes not covered by special acts.
c. Domiciliary Office. — The place where the principal business is to be
transacted must be set forth.
d. Corporate Existence. — May be any number of years not exceeding fifty.
e. Board of Directors. — The number must not be less than three nor more
than fifteen. The directors must all be stockholders, in an amount to be fixed
by the by-laws, and at least one must be a citizen and bona fide resident of the
State (sec. 2102, Laws of 1905, pp. 161, 165; Laws of 1909, p. 158).
/. Capital Stock. — The amount of the capital stock and the number of
shares into which it is divided. The capital stock as well as the par value of
the shares may be any amount.
g. Stock Subscriptions. — If there is capital stock, the amount actually sub-
scribed and by whom should be set forth (sec. 2089).
Any corporation may at its option provide in its articles or by amend-
ment thereof for the election of one-third of its directors for the term of one
year, one-tliird for two years, and one-third for three years (sec. 2089, as amended
by Session Laws of 1905, p. 166; Laws of 1909, p. 158).
If it is desired to hold meetings of the board of directors without the
State, provision ■ may be made therefor in the articles of incorporation.
4. Statutory Powers. — In addition to a statutory enumeration of com-
mon law powers the following additional powers are granted: To classify and
remove directors; to authorize voting by proxy; to purchase their own capital
stock (Laws of 1909, pp. 160, 163, 164); to forfeit stock for non-payment of
assessments (Laws of 1909, pp. 162, 163); to extend corporate existence
(sees. 2107, 2109, 2125-2137, 2144, 2149; Laws of l'.io;,, p. 1i;d ; also to cumu-
late VOteS in the election of directors (Laws of 1907, pp. ">l<>, .''II'.
5. Procuring the Charter. — The articles must lie subscribed and acknowl-
edged by at least three of the incorporators. The articles must then be filed in
the office of the county recorder of the county in which the principal place of
1>ii iness of the company is to be t ransacted, and a copy thereof, duly cerl ified
by such recorder, must be filed and recorded in the office of the Secretary of
State (sec. 2094 as amended by Laws of 1907, p. 555). Thereupon the Secretary
295
DIGEST OF INCORPORATION ACTS. — IDAHO.
of State issues to the corporation a certificate that a copy of the articles con-
taining the required statement of facts has been filed in his office. Thereupon
the corporate existence commences. If it is proposed to purchase or locate
property in any other county of the State, there must be filed with the county
recorder of that county, within sixty days after such purchase or location is
made, a certified copy of the articles of incorporation. The due incorporation
of any company or its rights to exercise corporate powers cannot be inquired
into collaterally in any private suit to winch such de facto corporation may be
a party (sees. 2091, 2094, 2097, 2147; Session Laws of 1905, p. 161).
6. Corporate Indebtedness. — Must not exceed amount of authorized
capital stock (sec. 2148).
7. Organization Tax. — When the authorized capital stock does not ex-
ceed $25,000 the organization tax is $10 ; when it exceeds $25,000 and does not
exceed $50,000, $20 ; when it exceeds $50,000 and does not exceed $100,000,
$40; when it exceeds $100,000 and does not exceed $500,000, $60; when it
exceeds $500,000 and does not exceed $1,000,000, $100; when it exceeds
$1,000,000, $150 (Laws of 1907, pp. 215-217).
8. Filing and Recording Fees. — To the Secretary of State for recording
articles of incorporation, 20 cents per folio ; for issuing certified copy of articles
of incorporation, 20 cents per folio for copy and $1 for certificate; for issuing
certificates of incorporation, $3 ; for filing certificates of increase of capital stock
there shall be charged the fee for the total capitalization of the corporation less
the amount already paid for fifing the original articles of incorporation ; for
filing certificates of all other changes in articles of incorporation, $5 ; for issuing
certificate of increase or decrease in capital stock, $3 ; for filing, recording, and
indexing designation of agent for foreign corporations, $2 (Laws of 1907, pp. 215-
217) ; for filing articles in recorder's office in local county office, 50 cents, and
for recording articles therein, 20 cents per folio ; for certified copy of articles
of incorporation by recorder of county in which the corporation's principal
place of business is located, 20 cents per folio.
9. Commencing Business. — Corporations may commence business as soon
as the articles of incorporation are filed. Within one month after filing the arti-
cles of incorporation a code of by-laws must be adopted (sec. 2101, as amended
by Laws of 1907, pp. 571, 572). If the corporation does not organize and
commence business or' the construction of its works within one year from the
date of its incorporation, its corporate powers cease (sees. 2077, 2094, 2098,
2147).
10. Organization Meeting. — The incorporators within one month from
the date the charter is issued should sign a written agreement fixing the time
and place within the State for the organization of the corporation. In the
absence of such written agreement the meeting is called by advertisement of
it in advance of the date of the meeting in some newspaper published in the
county in which the principal place of business of the corporation is located.
The written assent of the holders of two-thirds of the stock subscribed or two-
thirds of the members shall be sufficient to adopt a code of by-laws without a
meeting for that purpose. The statute sets forth certain matters which may be
covered by the by-laws, including penalties for violation of by-laws, not exceed-
ing in any case $100 for any one offence. The by-laws must be certified by a
majority of the directors and the secretary of the corporation, and copied in the
book of by-laws to be kept at the principal office of the corporation within the
State (Laws of 1907, p. 572). Immediately after the adjournment of the incor-
296
DIGEST OF INCORPORATION ACTS. — IDAHO.
porators' meeting the directors named in the articles of incorporation should
meet, and after the election of a chairman and secretary should proceed to the
election of the officers named in the by-laws. These officers under the statute
must consist of a president, who is himself a director, and a secretary and treas-
urer. The law provides that at the first meeting at which the by-laws are
adopted, or at such subsequent meeting as may be then designated, directors
must be elected to hold their office for one year and until their successors are
elected and qualify. Organization meeting must be held within the State in
the absence of any statute authorizing such meetings to be held without the
State (see. 2103 ; Session Laws of 1905, pp. 165, 166).
11. Meetings of Stockholders and Directors. — All meetings of stock-
holders must be held at the principal place of business of the corporation within
the State (Laws of 1905, p. 165). Meetings of the board of directors or executive
committee must be held at the principal place of business of the corporation
within the State, unless otherwise provided in the articles of incorporation or
amended articles or by-laws, or by resolution of the board (Laws of 1905, pp.
164-166).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be a board of not less than three nor more than fifteen directors,
to be elected from among the stockholders. At least one of the directors must
in all cases be a citizen and actual bona fide resident of the State. The directors
must all be stockholders in an amount to be fixed by the by-laws. A majority
of the board must be present in order to constitute a quorum thereof. The
directors may be divided into three classes, if desired (Laws of 1909, p. 158).
All corporations are authorized to appoint an executive committee equal in
number to at least one-third of the board, such committee to have all the rights
and powers and privileges of the full board (Laws of 1905, pp. 161-165; Laws
of 1909, p. 159). The cumulative system of voting for directors is in force in
the State (Laws of 1907, pp. 540, 541). Director's may be removed by a two-
thirds vote of the stock at a regular meeting called on notice specifying the pur-
pose according to the by-laws. The meeting may be called by the president or
a majority of the directors or by one-half of the voting stock (sec. 2107, Laws of
1909, p. 160). The power to adopt by-laws may be delegated to the board of
directors, if the stockholders so elect (Laws of 1907, p. 571).
b. Liabilities. — Directors are jointly and severally liable for authorizing
the payment of dividends other than from the surplus profits arising from the
business (Laws of 1909, pp. 159, 160). Tiny arc also liable for dividing or
withdrawing or paying to the stockholders any part of the capital stock unless
they enter their dissent on the minutes of the directors at the time, or, when
not present, as soon as they are informed of the action referred to (Laws of 1909,
pp. 159, 160). They are also subject to further liability for certain acts specified
in the Penal Code (sees. 2106, 2113; P. C, 5010-5026; see also Laws of 1907,
pp. 25, 26, relative to making false; reports, prospecti, etc.).
13. Stockholders' Liabilities. — Stockholders are liable for the amount
unpaid upon the par or face value of the shares owned by them. To avail
themselves of this provision of the statute they must cause to be written or
printed under the corporate name on its stock certificates, letters, bill heads,
and all official documents the word "limited" (sees. 2119, 2120, Laws of 1909,
pp. 160, 101; see also Cons., Art. XI. sec. 17).
14. Preferred Stock. — Every corporation may create two or more kinds
of stock, of such classes, with such voting powers or restrictions or qualifications
297
DIGEST OF INCORPORATION ACTS. — IDAHO.
thereof as shall be stated or expressed in the articles of incorporation or in any
certificate of amendment thereto, or as shall be fixed in the by-laws ; and the
power to increase or decrease the stock as is in this code elsewhere provided
shall apply to all or any of the classes of stock ; but no preferred stock shall be
issued except for cash or its equivalent, nor for less than par value of its
shares, and at no time shall the total amount of the preferred stock issued and
outstanding exceed two-thirds of the capital stock paid in cash or property;
and such preferred stock may, if desired, be made subject to redemption at any
time after three years from the issue thereof at a price not less than par, and the
holders thereof shall be entitled to receive and the corporation shall be bound to
pay thereon a fixed yearly dividend of eight per cent, payable quarterly, semi-
annually or annually, before any dividend may be set apart or paid on the
common stock, and such dividend may be made cumulative. In no event
shall the holder' of preferred stock be personally liable for the debts of the cor-
poration, but in case of insolvency, its debts or other liabilities shall be paid in
preference to the preferred stock. On the dissolution of a corporation, volun-
tarily or otherwise, the holders of the preferred stock shall be entitled to have
their shares redeemed at par before any distribution of any part of the assets
of the corporation shall be made to the holders of the common stock (Laws
of 1909, pp. 163, 164).
15. Payment of Capital Stock. — Under the Idaho Constitution no cor-
poration can issue stock except for labor done, services performed, or money or
property actually received. When any corporation issues stock or bonds for
labor done, services performed, or property actually received, the judgment of
the directors of such corporation as to the value of such labor, services, or prop-
erty shall, in the absence of fraud in the transaction, be conclusive. This statute,
however, provides that money actually paid upon the indebtedness of the
corporation as provided by such statute may be credited upon stock subscrip-
tions to the full amount so paid (Cons., Art. XI. sec. 9; Laws of 1899, p. 115,
amending sec. 2119; Laws of 1909, p. 164).
16. Books. — The stock and transfer books must be kept within the State
at the principal office of the corporation. Also a book of by-laws must be kept
at the company's office within the State (sec. 2101, as amended by Laws of 1907,
pp. 571, 572; Laws of 1909, pp. 158, 159). All books are open to inspection
of stockholders and creditors (sees. 2101', 2150, 2151; Laws of 1909, pp. 158,
159).
17. Stock Certificates. — Each stockholder is entitled to a certificate show-
ing the number of shares owned by him, signed by the president and secretary,
or such other officers as may be authorized by the by-laws. All corporations
may provide in their by-laws for issuing certificates prior to the full payment
thereof (sec. 2121 ; Laws of 1909, p. 162).
18. Office. — Every corporation must maintain an office within the State
(sees. 2101, 2151).
19. Reports. — All corporations, both domestic and foreign, except insur-
ance and surety companies and mining corporations owning mines which are
not productive, worked, or operated, shall during the month of June of each
year and on or before the 1st day of July of each year furnish to the Secretary
of State, upon blanks to be furnished by him, a correct statement, sworn to by
one of the officers of the corporation or managing agent or authorized attorney in
fact in this State of any foreign corporation, before some officer duly authorized
to administer oaths, setting forth the name of the corporation, the location of
298
DIGEST OF INCORPORATION ACTS. — IDAHO.
its principal office, the names of the president, secretary, and treasurer, with
the post-office address of each, date of annual election of directors and officers
of such corporation, the amount of authorized capital stock, the number of
shares, the par value of each share, the amount of capital stock subscribed,
the amount of capital stock issued, and the amount of capital stock paid up.
Every foreign corporation shall include in such statement the names and
post-office addresses of its managing agent and attorneys in fact in the State
(Laws of 1907, pp. 235, 236; Laws of 1909, pp. S, 9).
20. Anti-Trust Statute. — Combinations for fixing prices on any article
of commerce, of produce, of sale, or of consumption by the people are illegal.
(See Cons., Art. XL sec. 18.)
21. Statutory Ground for Forfeiture of Charter. — Failure to organize
and transact the corporate business or the construction of corporate works within
one year from the date of incorporation is a ground for forfeiture (sec. 21 17).
22. Extension of Corporate Existence. — Every corporation formed for
a period less than fifty years may, at any time prior to the expiration of the
term of its corporate existence, extend such term to a period not exceeding
fifty years from its formation. Such extension may be made by a two-thirds
vote of the stockholders cast at a meeting called by the directors for that pur-
pose. The certificate of the proceedings must be signed by the chairman and
secretary of the meeting and be filed in the office of the county recorder where
the original articles of incorporation are filed, and a certified copy thereof must
be filed in the office of the Secretary of State (sees. 2160, 2161).
23. Annual License Tax. — Every corporation, domestic as well as
foreign, shall pay an annual license fee in proportion to the amount of its au-
thorized capital stock, as follows, to wit : Where such capital stock shall not
exceed $5,000, an annual license fee of $10 must be paid. Where the capital
stock exceeds $5,000 and does not exceed $10,000, $12.50; where the capital
stock exceeds $10,000 and does not exceed $25,000, $15 ; where the capital stock
shall exceed $25,000 and shall not exceed $50,000, $22.50 ; where the capital
stock exceeds $50,000 and does not exceed $100,000, $37.50; where the capi-
tal stock exceeds $100,000 and shall not exceed $250,000, $52.50; where the
capital stock shall exceed $250,000 and shall not exceed $500,000, $75. If
the capital stock shall exceed $500,000 and shall not exceed $1,000,000, $90.
Where the capital stock shall exceed $1,000,000 and shall not exceed $2,000,000,
$130. If such capital stock shall exceed $2,000,000 then the annual license fee
shall be $150. The fees above provided for become due and payable within
thirty days from the 15th day of July of each year. The annual license fee
required by this act shall be paid in advance for the fiscal year beginning July 1 st
of each year, and in case new corporations arc formed or enter the State during
the fiscal year, the first year's fee shall be proportionate to such fraction of a
year (Laws of 1907, pp. 235-237).
24. Amendments. — Articles may be amended for the purpose of increas-
ing the number of directors by vote of a majority of the stockholders. The
amendment when adopted must be filed in the manner provided for the filing
of original articles (Laws of 1905, p. 161). Corporations may increase or de-
crease their capital stock in the following manner: (1) By a majority vote
of the directors there may be called a meeting of the stockholders, to he con-
vened for the purpose of increasing or- diminishing the capital stock. (2) Per-
sonal notice of the time and place of such meeting and of the object thereof
must be served on each stockholder at least thirty days prior to the date of
299
DIGEST OF INCORPORATION ACTS. — IDAHO.
such proposed meeting ; or in lieu thereof a notice must be published at least
once a week in a newspaper published in the county where the principal place
of business is located for at least thirty days. (3) The notice must also contain
the amount to which it is proposed to increase or diminish the capital stock.
(4) The capital stock must in no case be diminished to an amount less than the
indebtedness of the corporation or the estimated- cost of the works which it
may be the object or purpose of the corporation to construct. (5) At least
two-thirds of the entire capital stock must vote in favor of such increase or
diminution before the same is effected. (6) A certificate signed and verified by
the chairman and secretary of the meeting must be made, showing a strict com-
pliance with the requirements of this section, the amount to which the capital
stock has been increased or diminished, the amount of stock represented at the
meeting, the vote by which the object was accomplished. (7) The certificate
must be subscribed by a majority of the directors and duplicates made, one to
be filed in the office of the county recorder and one to be filed and recorded in
the office of the Secretary of State as provided for original articles of incorpora-
tion (Laws of 1907, pp. 540, 541). (8) The written assent of the holders of three-
fourths of the subscribed capital stock is as effectual to authorize the increase or
diminution of the capital stock as if the meeting were called and held ; and upon
written assent, the directors may proceed to make the certificate herein pro-
vided for (sec. 2148).
Corporations may also change their principal place of business from one
place to another within the State. Before such change is made the consent
in writing of the holders of two-thirds of the capital stock must be obtained
and filed. Notice of such intention to change must be published at least once
a week for three successive weeks, giving the name of the county where it is
situated and that to which it is intended to remove (sec. 2118).
Any corporation may amend its articles of incorporation so as to provide
for the issuance of preferred stock or an increase thereof in the same manner
as is now provided by law for amendments increasing the capital stock of cor-
porations and the par value of shares therein (Laws of 1909, pp. 164, 165).
Any corporation may amend its articles of incorporation in the following
respects, to wit : change the name of the corporation ; the purposes for which
the corporation is formed ; the place where its principal place of business is to
be located ; the number of its directors ; increase or diminish the capital stock,
or in any other respect not in violation of law desired by the stockholders; pro-
vided that the capital stock must in no case be diminished to an amount less
than the indebtedness of the corporation or the estimated cost of the work
which are made the objects or purposes of the corporation to construct. Any
amendment shall be made and certified in the manner prescribed in section 2773
for increasing or diminishing the capital stock and filed in the office of the
county recorder and Secretary of State (Laws of 1909, pp. 164, 165).
25. Dissolution. — Corporations may be dissolved upon application to the
courts (sec. 2159; C. C. P., sees. 3834-3840).
S. S. & T. Co. v. Piper, 4 Idaho, 463; 40 Pac. 144.
26. Foreign Corporations. — Every foreign corporation before doing
business within the State must file and record with the county recorder of the
county in which its principal business is to be transacted a copy of its articles
of incorporation certified by the Secretary of State of the State in which said
corporation was organized, and file in the office of the Secretary of State a copy
300
DIGEST OF INCORPORATION ACTS. — IDAHO.
of its articles certified by the recorder, and pay to the Secretary of State the same
fees as provided for incorporating domestic corporations. They must witliin
three months from the time of commencing business within the State also file
in the office of the clerk of the District Court of the county where such principal
place of business is to be located, and also in the office of the Secretary of State,
a designation of some person residing in said county on whom process may be
served (Cons., Art. X. ; R. S., sees. 2119, 2162, as amended by Laws of 1903, pp.
49, 50; Laws of 1907, p. 319). Foreign corporations must also pay the same
annual license tax as is required of domestic corporations and make the same
reports (see ante, sec. 23; Laws of 1907, p. 235).
Katz v. Herrick (Idaho), 86 Pac. 873; Vermont Loan & Trust Co. v. Hoffman, 5 Idaho,
376; 49 Pac. 314; Boyer v. N. P. R. R. Co. (Idaho), 66 Pac. 826; Thum v. Pyke (Idaho),
66 Pac. 167; B. C. M. Co. v. Frizzell (Idaho), 81 Pac. 58.
301
DIGEST OF INCORPORATION ACTS. ILLINOIS.
ILLINOIS.
(The references cited below are to the Revised Statutes, 1899, chap. 32, unless otherwise
stated.)
1. Statute under which Business Corporations may be incorporated.
— The Business Corporation Act of Illinois is found in the Revised Statutes
of that State, sees. 985-1063 inclusive. Special acts are provided for banking,
trust, insurance, real estate, brokerage, and railway corporations. (See also
Laws of 1904, chap. 66.)
People ex rel. Bonney v. Rose, 188 111. 268.
2. Incorporators. — Any number of persons not less than three nor
more than seven may form a corporation. There are no residential require-
ments (sec. 2).
3. Statement of Incorporators (sec. 2). — The incorporators must make
a statement setting forth :
a. The Name of the Proposed Corporation. — No license can be issued to
two companies having the same or a similar name as any domestic corpora-
tion, nor can any domestic corporation assume the same or a similar name to
that of any foreign corporation previously admitted to do business in the State
(sees. 2, 28$).
b. Purpose. — The statute uses the singular noun "object." The Secre-
tary of State permits the insertion of any number of purposes not covered by
special acts.
c. Capital Stock. — Capital stock may be any amount.
d. Number of Shares. — The par value of the shares must be not less than
$10 nor more than $100 (sec. 7).
e. Domiciliary Office. — The location of the principal office within the
State.
4. Statutory Powers. — The statute enumerates the common law powers
of corporations. There is a limitation even on these to the extent that all real
estate acquired by the corporation in satisfaction of any liability shall be offered
at public auction at least once in every year, unless the same is necessary and
suitable for the business of the corporation. The power to adopt by-laws is
granted to the board of directors (sec. 6). The statute expressly authorizes
mining and manufacturing corporations to hold stock of one or more railroads
connecting different plants of the corporation with each other and with other
railroads or wharves. Whenever consolidation takes place the consolidated
company is liable for all debts of the two consolidated corporations. Power
is also given to authorize voting of stockholders by proxy, to classify directors,
and to forfeit stock for non-payment of assessments. Cumulative voting in
election of directors is mandatory (sees. 3, 6, 7 ; Cons., Art. XL sec. 3 ; see also
Laws of 1904, chap. 66).
Com. N. B. v. Burch, 141 111. 519; 31 N. E. 420; People ex rel. v. P. P. Car Co., 175 111.
125; First Nat. Bank v. Company, 191 111. 128.
5. Procuring the Charter. — The statement must be signed and acknowl-
edged by each of the incorporators and must then be filed in the office of the
Secretary of State. If the object for which such corporation is proposed to be
302
DIGEST OF INCORPORATION ACTS. — ILLINOIS.
organized is clearly and distinctly stated and is a lawful object, the Secretary
of State shall thereupon issue to said persons a license as commissioners to
open books for subscription to the capital stock of the proposed corporation at
sucli time and place as they may determine. Power is given to the Secretary
of State to propound to the incorporators such interrogatories as lie shall deem
necessary to ascertain the object for winch the corporation is formed. The
commissioners are required to make a full report of their proceedings, includ-
ing a copy of the notice of the opening of books of subscription and of the sub-
scription list, a statement of the amount of capital, not less than one-half actually
paid in, the amount of such capital not paid in, what disposition lias been made
of stock subscribed and not paid ; and if any proportion of the capital -tuck has
been paid in property, the same shall be appraised by such commissioners and
they shall report the fair cash value thereof. The report must contain the names
of the directors elected with their residence and terms of office, and must be
sworn to by at least a majority of the commissioners, and the same, together
with a statement setting forth the post-office address, including street and
number of the office of the corporation, must be filed with the Secretary of State.
The latter thereupon issues a certificate of the complete organization of the cor-
poration, making a part thereof a copy of all the papers filed in his office in and
about the organization of the corporation duly authenticated under his hand
and seal of State. This certificate must then be recorded in the office of the
recorder of deeds where the principal office of said company is located, where-
upon the corporation shall be deemed fully organized and may proceed to
do business (Laws of 1905, pp. 130-133). The corporation must be organized
and proceed to do business within two years after the issuance of the hcense
by the Secretary of State relative to the opening of books for subscription
to the capital stock.
People v. Rose, 188 111. 268; 59 N. E. 432; Elgin 111. Watch Co. v. Loveland, 132 Fed.
41; Gade v. Company, 165 111. 367; Edwards v. Company, 190 111. 467; Ricker v. Larkin, 27
111. App. 625.
6. Corporate Indebtedness. — Corporate indebtedness should not ex-
ceed the authorized capital stock (sec. 16).
7. Organization Tax. — The organization tax on any capitalization up
to $2,500 is $30; up to $5,000 is $50; over $5,000, $50, and an additional $1
for each thousand dollars of capitalization over $5,000 (Laws of 1899, p. 117).
8. Filing and Recording Fees. — There is no filing fee payable to the
Secretary of State other than the organization tax. There is a charge for re-
cording the statement of incorporators and the return of the commissioner of
15 cents per hundred words. For certified copy of the foregoing the charge is 1 5
cents per hundred words and $1 for affixing the secretary's certificate thereto.
The charge for filing amendments to articles of incorporation is $1. The re-
cording fees in local county office are as follows : In counties of first class (popu-
lation not over 25,000), 10 cents per hundred words; in counties of second
class (over 25,000 and not exceeding 100,000), 8 cents per hundred words and
certificate 25 cents additional; in counties of third class (population exceed-
ing 100,000), 6 cents per hundred words and 25 cents additional lor certificate.
9. Commencing Business. — Corporations may commence business as
soon as the Secretary of State issues a certificate of complete organization
and the same is recorded in the office of the recorder of deeds of the county
where the principal place of business of said corporation is located. The cor-
poration must organize and proceed to business within two yen after the
303
DIGEST OF INCORPORATION ACTS. — ILLINOIS.
Secretary of State issues his certificate of complete organization (sec. 4). All
the capital stock must be subscribed in good faith, and one-half thereof must
be actually paid in (sec. 8; Laws of 1905, p. 131). If the incorporators assume
to act as a corporation before the requirements of the law are fully complied
with, they are jointly and severally liable for all debts contracted (sec. 18).
People v. N. S. Bank, 129 111. 618; 22 N. E. 288; Gent. v. M. & M. I. Co., 107 111. 652;
Allman v. Company, 88 111. 521; Merrick v. Company, 111 111. App. 153.
10. Organization Meeting. — In the absence of any statute providing
otherwise, this meeting must be held within the State. The commissioners
appointed by the Secretary of State to receive stock subscriptions have power
under the statute to convene a meeting of the subscribers to the capital stock
of the corporation for the purpose of electing directors, etc. Notice of this
meeting may be waived in writing (the statute requires ten days' notice), the
time and place fixed for said meeting to be designated therein. At this meet-
ing the subscribers to the capital stock may vote in person or by proxy. Cumu-
lative voting is permitted, if desired. Stockholders may divide the board of
directors into three classes, to hold office for one, two, and three years respec-
tively. After the Secretary of State has issued a certificate of complete or-
ganization, the board of directors should meet, and after effecting a temporary
organization should first adopt a code of by-laws. They then should proceed
to the election of a president, secretary, and treasurer, and such other officers
as shall be designated by the by-laws so adopted (sec. 3).
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held within the State. Directors' meetings to be valid must be held
within the State, unless any action taken by the board without the limits of
the State is either authorized or the action thereat taken ratified by a vote of
two-thirds of the directors cast at a regular meeting of said board held within
the State (sees. 20, 22).
Harding v. Company, 182 111. 551; 55 N. E. 577.
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must not be less than three nor more than eleven directors. There are
no residential requirements. Directors may be divided into classes, if de-
sired. The right to cumulate votes for directors is mandatory (sees. 3, 6).
The act provides that the directors may adopt by-laws for the government of
the officers and affairs of the company (sec. 6).
Fey v. Company, 32 111. App. 618.
b. Liabilities. — If the indebtedness of any corporation shall exceed the
amount of its capital stock, the directors assenting thereto are individually
liable for such excess to the creditors of the corporation. They are also jointly
and severally liable for all debts of the corporation then existing or thereafter
contracted when they declare and pay any dividends when the corporation is in-
solvent, or any dividend the payment of which would render the corporation
insolvent or which diminishes the amount of its capital stock ; also for assum-
ing to exercise corporate powers before all the capital stock is subscribed in
good faith (sees. 16, 18, 19, 21). If any certified report or statement made or
published notice given by the officers of any corporation shall be false
in any material representation, the officers who have signed the same know-
ing it to be false shall be jointly and severally liable for all damages arising
therefrom.
Greene v. Masten et al., 66 111. App. 345; Kent v. Clark, 181 111. 237; 54 N. E. 967.
304
DIGEST OF INCORPORATION" ACTS. — ILLINOIS.
13. Stockholders' Liabilities. — Stockholders are personally liable foi
the amount unpaid upon their stock (sec. 8). The law also provides that all
persons 'assuming to exercise corporate powers or to use a corporate name with-
out complying with the law in regard to procuring charters, before all stock
named in the articles of incorporation is subscribed in good faith, shall be
liable for all debts and liabilities contracted by them in the name of such
corporation (sec. 18).
Sprague v. Nat. Bank, 172 111. 149: 50 N. E. 19; First Nat. Bank v. Company, 191 111.
12S; 60 N. E. 859; Sherwood v. Bank, 195 111. 112; 62 N. E. 835; Foote v. Bank, 191 111.
600; 62 N. E. S34; McCoy v. Exposition, 1S6 111. 356; 57 N. E. 1043; Florsheiin v. Bank,
192 111. 382; 61 N. E. 491; Coleman v. Howe, 154 111. 458; 37 N. E. 725.
14. Preferred Stock. — There is no statutory provision expressly author-
izing the issuance of preferred stock.
First Nat. Bank v. Company, 191 111. 128; 60 N. E. 859.
15. Payment of Capital Stock. — The statute is silent as to how the
capital stock shall be paid. Under the common law rule, in the absence of any
statutory prohibition, stock may be paid for in cash or in property taken in
good faith at a fair valuation (sec. 4; as amended by Laws of 1905, p. 131).
G. C. & S. R. Co. v. Kelly, 77 111. 426; Higgins v. Lansingh, 154 111. 301; Farwell v. Com-
pany, 161 111. 522; S. R. C. S. Co. v. Rankin, 152 111. 622; Sprague v. Nat. Bank, 172 111.
149; Dean v. Baldwin, 99 111. App. 582; Parmelee v. Price, 208 111. 544; 70 N. E. 725; M.
B. I. Co. v. Company, 210 111. 26; 71 N. E. 22.
16. Books. — The directors must keep at the principal office within the
State books of account of the corporate business (sec. 13). They are open to
inspection of stockholders.
17. Stock Certificates. — Each shareholder is entitled to a certificate
showing the number of shares owned by him, signed by such officers as the
by-laws shall prescribe. Par value of shares must not be less than $10 nor
more than S100.
18. Office. — Every corporation must maintain an office within the State
(sees. 2, 13).
19. Reports. — Before receiving a certificate of complete organization,
each corporation shall file with the Secretary of State the post-office address
of its business office, giving street and number, and it shall annually between
February 1st and March 1st file with the Secretary of State a statement show-
ing the location of the principal office within the State, with town, street, and
number, names of its officers and their residences, — town, street, and number,
— date of expiration of their terms of office ; whether or not the corporation
is pursuing an active business under its charter, and the kind of business ;
report must be under the corporate seal, signed and sworn to by some officer
of the corporation, and a fee of $1 must be paid to the Secretary of State
(Laws of 1903, pp. 121, 122). Within twenty days from December 1st of each
year the president, secretary, or treasurer must file in the office of the Secretary
of State, and record in the recorder's office of the county wherein the principal
place of business of the corporation is located, a duly verified statement and
description of any real estate acquired during the year in securing any debt
or liability due the corporation, with date of acquiring title (sec. 17).
All corporations except coal mining, manufacturing, printing, newspaper,
or stock-breeding corporations must file with the assessor of the district in which
the office or place of business is located, in addition to the schedule of other prop-
erty to be listed, a sworn statement of their capital stock, stating: (1) name and
20 305
DIGEST OF INCORPORATION ACTS. — ILLINOIS.
location of the company; (2) amount of capital stock authorized and number
of shares into which it is divided ; (3) amount paid up ; (4) market value, or,
if none, actual value of shares ; (5) total amount of indebtedness, except for
current expenses; (6) assessed valuation of all tangible property (chap. 120,
sec. 32 ; Laws of 1905, p. 354). Report must be made between May 1st and
July 1st. •
It shall be the duty of the Secretary of State on or before the 1st day of
September of each year to address to the president, secretary, or treasurer of
any incorporated company doing business in the State a letter of inquiry as to
whether such corporation has all or any part of its business in or with any
trust, combination, or association of persons or stockholders of the character
described in what is known as the Anti-Trust Act, and to require answer under
oath of such officers, the form of affidavit being enclosed in such letter of inquiry,
in the form prescribed by statute (Laws of 1907, pp. 216-218).
20. Anti-Trust Statute. — Illinois has an elaborate statute forbidding
pools, trusts, and combinations of every class and description (Crim. Code,
sees. 269 a, 269 b, 615; Act of June 11, 1891, as amended by Act of June 20,
1893, as amended by Laws of 1907, pp. 216-218).
D. & C. F. Co. v. People, 156 111. 448; 41 N. E. 188; Harding v. Company, 182 111. 551;
55 N. E. 577.
21. Statutory Ground for Forfeiture of Charter. — The charter may be
forfeited for failure to organize and commence business witliin two years from
the date of incorporation. It is also subject to forfeiture for entering into illegal
trusts, pools, and combinations (sees. 4, 269 m). The charter is also subject to
forfeiture for refusal to answer inquiries relative to whether or not it is doing
business within the State in violation of the Anti-Trust Act (Laws of 1907,
pp. 216-218) ; also for failure to file annual report, this being made by statute
prima facie evidence of the corporation being out of business (sees. 193, 194, etc.).
N. & S. R. S. Co. v. People, 147 111. 234; 35 N. E. 608; Independent Medical College v.
People, 182 111. 274; 55 N. E. 345; People v. Rose, 207 111. 352; 69 N. E. 762.
22. Extension of Corporate Existence. — Any corporation originally
incorporated for a period less than ninety-nine years may extend the term of its
existence beyond the time specified in its original certificate of incorporation
for a period not to exceed ninety-nine years from the date of original incorpora-
tion upon compliance with the statutes in such case made and provided (see
Laws of 1911, pp. 239, 240).
People ex rel. Stickney v. Marshall, 1 Gilm. 672.
23. Annual License Tax. — There is no annual license tax.
24. Amendments. — To change the corporate name, place of business,
.enlarge or change the object for which the corporation was formed, to increase
or decrease the capital stock, to change the number of shares of capital stock,
to increase or decrease the par value of shares of capital stock, to increase or
decrease the number of directors, or to consolidate with other corporations,
requires the calling of a special meeting of the stockholders by the board of
directors. This meeting must be called by delivering personally or depositing
in the post-office, at least thirty days before the date of such meeting, a notice
signed by a majority of said directors, stating the time, place, and object thereof.
A similar general notice must also be published for three successive weeks in
some newspaper printed in or nearest the county in which the principal office
of the corporation is located. A two-thirds vote of all the stock of the corpora-
306
DIGEST OF INCORPORATION ACTS. — ILLINOIS.
tion is necessary for the adoption of the proposed amendment. Thereafter a
certificate must be prepared, signed, and verified by the affidavit of the president
under the corporate seal. This must be filed in the office of the Secretary of
State and a like certificate filed for record in the office of the recorder of deeds
of the county where the principal business office of the corporation is located.
There must also be published, in some newspaper published in the county above
referred to, a notice of such change, for three successive weeks (sees. 50-54 as
amended by Laws of 1903, pp. 116, 117).
Sykes v. People, 132 111. 32.
25. Dissolution. — Any court of competent jurisdiction may decree dis-
solution of a corporation upon petition therefor. Voluntary dissolution may
be effected by vote of two-tliirds of capital stock (sees. 49 a, 49 b, 149).
26. Foreign Corporations. — All foreign corporations doing business
within the State must make application to the Secretary of State, signed and
sworn to by the president and secretary, stating what business such corporation
proposes to pursue under its charter, the amount of capital stock of such cor| io-
ration, whether it is transacting or intends to transact business in any State or
country, the proportion of its business intended to be carried on in the S1
of Illinois, the amount paid in upon its capital stock, what property and a-
and estimate of the value thereof will be employed in the business of such cor-
poration in the State of Illinois ; if any of its capital subscribed has not been
paid in, what disposition is to be made thereof ; the names of the president,
secretary, and directors of said corporation and their residences, where its princi-
pal office in Illinois will be located, and the name and address of some attorney
in fact upon whom process may be served, and, if required by the Secretary of
State, the names and residences of all of the stockholders in said corporation.
Such corporation shall file with the Secretary of State a copy of its articles of
incorporation, duly certified and authenticated by the officer who issued the
original, or by the recorder or registrar of the office in which said original articles
may have been recorded. The Secretary of State is also given power to pro-
pound additional interrogatories if he sees fit. Upon the admission of such
corporation to do business the Secretary of State shall issue a certified copy
of all papers, including a certified copy of the charter of such corporation, and
shall state in the certificate of authority to do business issued by him the powers
and objects of such corporation which may be exercised in this State, and no
corporation shall, by the certificate of the Secretary of State, be authorized to
transact any business in this State for the transaction of which the corporation
cannot be organized under the laws of this State. No foreign corporation shall
exercise powers in this State not authorized by the provisions of its charter.
Every foreign corporation admitted to do business in Illinois shall keep on file
in the office of the Secretary of State an affidavit of the president and secretary
showing the location of its principal business office in the State of Illinois, the
name of some person who may be found at such office for the purpose of accept-
ing service upon said corporation in all suits that may be commenced againsl
it, and as often as such corporation shall change the location of its office or it-
attorney for receiving and accepting service a new aiii<la\ it shall l>e filed. For-
eign corporations shall be required to make such reports from time to timi
are required to be made by similar domestic corporations. Only such real
estate may be held as may be necessary for the proper carrying on of its legit i-
307
DIGEST OF INCORPORATION ACTS. — ILLINOIS.
mate business (Session Laws of 1905, pp. 124-129, as amended by Laws of
1911, pp. 240-241).
Before being authorized to do business it must pay into the office of the
Secretary of State, upon the proportion of its stock represented by its property
and business in Illinois, fees equal to fees required of similar corporations formed
within and under the laws of this State. Foreign corporations failing to comply
with the provisions of law are subject to a penalty of not less than $1,000 and
not exceeding $10,000 (Session Laws of 1905, pages 124-129 inclusive). Foreign
corporations must file within thirty days after September 1st of each year the
same anti-trust affidavit that is required of domestic corporations (Laws of 1907,
pp. 218-218). They must also keep constantly on file with the Secretary of
State an affidavit of the president and secretary showing the location of their
principal office in the State, and the name of a person in said office upon whom
process may be served (Laws of 1905, pp. 124, 126). They are also made gen-
erally subject to the same provisions as domestic corporations as to reports.
Under Laws of 1905, p. 124, they must keep proper books at their principal
office or place of business within the State.
Spry Lumber Co. v. Chappell, 184 111. 539; 56 N. E. 794; Richardson v. U. S. M. & T.
Co., 194 111. 259; 62 N. E. 606; Bradbury v. Company, 113 111. App. 600.
!08
DIGEST OF INCORPORATION ACTS. — INDIANA.
INDIANA.
(References are to Bums' Annotated Indiana Statutes, Revision of 190S, unless otherwise
stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Acts of Indiana are two in number. The first of these
is known as the Manufacturing and Mining Act (see sees. 5062-5170). The
other is known as the Voluntary Association Act. (See sees. 4286-4359, as
amended by Acts of 1909, chap. 113, p. 290). The purposes for which corpora-
tions may be organized under the Manufacturing and Mining Act arc set forth
in section 3, post. The purposes for which corporations may be organized under
the Voluntary Association Act are the following:
To organize companies for the purpose of sinking and operating oil and
gas wells, and of selling the products of such wells; to establish and maintain
companies or associations for the purpose of importing live stock into the
United States and to establish and maintain companies or associations for the
purpose of registering and maintaining a register of imported registered live
stock imported into the United States and for the improvement of such imported
five stock. To organize associations for the purpose of buying and selling mer-
chandise and conducting mercantile operations, and also to manufacture such
articles of merchandise sold and handled in connection therewith or for the
purpose of printing and publishing newspapers, books and other matter and
commercial and job printing and book binding. To organize forwarding and
commission companies and to own and operate wharf boats in connection
therewith upon any of the rivers within or bordering upon the State of Indiana.
To organize companies for the purpose of carrying on the business of insuring
title to real estate and to make abstracts, loans, and collections in connection
therewith, in the manner to be fully stated in such articles, or for the purpose
of making abstracts, loans, and collections. To organize companies for pur-
pose of buying and selling State, county, municipal, and all other bonds; of
borrowing and loaning money; of buying and selling promissory notes, bills of
exchange, accounts, choses in action, fees, and all other evidences of indebted-
ness, and of buying, holding, owning, mortgaging, leasing, and selling real
estate and personal property, all in the manner and on a plan to be fully stated
in such articles. Such association shall not be authorized to do a general bank-
ing or trust business; to organize storage and cold storage companies; to or-
ganize and maintain companies to carry on an omnibus and transfer business,
and the business of carting and draying, and the Letting of vehicles and hoi
for hire. To acquire by purchase, lease or otherwise hold, own, maintain, or-
nament, and improve places, parks, and ways for shows and exhibits and speed
and other tests of motor cars, balloons, or airships; to hold, and conduct or to
license or permit others to hold and conduct therein or t hereon such shi
exhibits, tests; to secure the co-operation and participation in such showB or
exhibits and speed or other tests of motor car-, balloons, and airships of manu-
facturers and owners of and dealers in all or any thereof, and of per, mis skilled
in the arts and sciences applicable thereto; to promote the development, use,
and sale of all or any thereof, and to transacl all business incidental to all or
any of said purposes (sees. 4304-4316, Acts of 1909, chap. 1 13, p. '-"»ii).
309
DIGEST OF INCORPORATION ACTS. — INDIANA.
To acquire by purchase, lease, or otherwise, hold, own, maintain, and operate
opera houses, theaters, grounds, and other places for the presentation of theat-
rical plays, operas, concerts, or other forms of amusements or entertainments,
and to produce and present, and to license or permit others to produce and
present therein or thereon theatrical plays, operas, concerts, and other forms
of amusement or entertainment (Laws of 1909, chap. 113, p. 291).
To design, to register and perfect trade marks, and to do all things needful
or connected therewith (Laws of 1909, chap. 113, p. 291).
To govern, manage, control, and improve parks, boulevards, and pleasure
drives, and to lay out the same and to take and hold by gift for such purpose
of personal property; and to take and hold by purchase, gift, grant, dedication,
or devise, real property for said purposes, located within four miles of any city
of the first, second, or third class, where such company may have its home
office, but shall take and hold said property and exercise said powers in trust
for the city in connection with which said parks, boulevards, or pleasure drives
shall be laid out and maintained ; provided that when any company is organized
to exercise the powers and for the purposes named in this subdivision, it shall
be without capital stock and not for pecuniary gain, provided nothing herein
shall authorize the production or presentation of any amusement or other en-
tertainment now or hereafter prohibited by law.
The objects or purposes of any such association may include any or all of
the purposes stated in any one of the above subdivisions of this section (Laws
of 1909, chap. 113, p. 291; see also Laws of 1911, chap. 259).
2. Incorporators. — Any number of persons not less than three may be
incorporators. There are no residential requirements (sees. 4286, 5062).
3. Contents of the Articles of Association. — The articles of associa-
tion of all corporations organized under the Voluntary Association Act (sec.
4286) must set forth :
a. Name. — The corporate name of the proposed corporation. Similarity
of names is forbidden as to domestic corporations.
b. Capital Stock. — The articles must set forth the amount of capital stock
and the number of shares into which the same shall be divided, with the par
value of the same. The capital stock may be any amount (except gas and oil
companies where the capital stock is limited to $2,000,000), and the par value
of the shares may be any amount not exceeding $100. (See Laws of 1903, chap.
128.) If preferred stock is to be issued, provision therefor may be made in the
articles, provided that the par value of the same is fixed at $100, and that the
aggregate amount thereof shall at no time exceed double the amount of the com-
mon stock of the corporation actually subscribed or issued. The certificate must
state the amount of preferred stock proposed to be issued, and the number of
shares into which it is to be divided (sees. 5093-5099).
c. Purposes. — The object of the corporation, with the proposed plan of
doing business, must be fully set forth. The purposes may include all or any
of the purposes included in any one of the twenty-three classes, which may be
described in general terms as follows : Horticultural, literary, drainage, educa-
tional, eleemosynary, cemetery, fraternal, military, fire, shade trees, safe deposit
and loan companies, hotels, real estate and rental companies, mining, health re-
sorts, oil and gas wells, live-stock, trading corporations, commission merchants,
title insurance, abstract and loan, women's exchange, bond and money, brokerage,
.medical and scientific research, storage, transfer, and scientific purposes (sees.
4304, 4316; Laws of 1909, chap. 113, p. 290; see also Laws of 1911, chap. 259).
310
DIGEST OF INCORPORATION ACTS. — INDIANA.
d. Incorporators. — Names and places of residence of the incorporators
must be set forth.
e. Domiciliary Office. — The principal place of business must be set forth,
which by implication would seem to refer to the principal place of business
within the State.
/. Duration. — The term of existence must not exceed fifty years.
g. Corporate Seal. — A demonstration of the corporate seal must be attached.
h. Board of Directors. — The manner of election or appointment of directors
and officers who are to manage the business must be set forth.
i. Number and Names of Directors. — The number of directors, together
with the names of those who shall manage the affairs for the first year, must
appear. If desired, the date of the annual meeting may be set forth in the
articles (sec. 4286; Laws of 1903, chaps. 37, 73, 128).
Under section 5062, whenever three or more persons desire to form a com-
pany under what is known as the Manufacturing and Mining Act, they may
do so for the purpose of carrying on any one of the following named purposes,
to wit: (a) Any kind of manufacturing business, or to buy and sell merchan-
dise of a kind or kinds similar or incident to merchandise to be manufactured
by the incorporating company and for the selling of such merchandise when
manufactured, (b) Any kind of mining business, (c) Any kind of mechanical
business or chemical business, (d) To furnish motive power, (e) To supply
any cities, towns, villages, communities, places of amusement or exhibition,
or any two or more or either of the same, with water, light, heat, or power.
(/) To own, construct, operate, and maintain stockyards, transfer companies
and conduct and transact business incident thereto, (g) To own, construct,
maintain, and operate grain elevators or flour mills, or both, and transact busi-
ness incident thereto, including the manufacture of flour, meal, and all grains
and cereal products, and the buying and selling of grain and cereals of all kinds
and the manufactured products thereof, (h) To construct railroads, highways,
streets, buildings, or other structures, and to carry on a general construction
business, (i) To buy, sell, and lease lands and buildings and other structures
thereon, and to erect dwellings and other buildings and structures on lands
leased or purchased. (See sec. 1, ante.)
Parties incorporating under the above act must make and acknowledge be-
fore some officer capable of taking acknowledgments, a certificate in writing
which shall set forth: (1) The corporate name adopted by the company, which
name shall not be the same or strikingly similar to that of an existing corpora-
tion. (2) The object or objects of its promotion, which shall include any or
all of the purposes stated in any one of the subdivisions of purposes enumerated
in the act. (3) The amount of capital stock, the number of shares into which
it is divided, and the par value of each share. If preferred stock is to be issued,
provision therefor may be made in the articles, provided that the par value of
the same is fixed at $100 and that the aggregate amount thereof shall at no
time exceed double the amount of the common stock of the corporation actually
subscribed or issued. The certificate must state the amount of preferred stock
proposed to be issued and the number of shares into which it is to be divided
(sees. 5093-5090). (4) The term of existence not to exceed fifty years. (5) The
number of directors and the names of those who shall manage the affairs of
the corporation for the first year. (6) The name of the city or town in which
its principal place of lm i n<- .-. is to be located. If desired, the incorporators may
fix in the certificate the date for holding the annual meeting of the stockholder
311
DIGEST OF INCORPORATION ACTS. — INDIANA.
for the election of directors of the company. Such date may be fixed at any
time within one year from the date of fifing the certificate, and when so fixed
and stated, the directors therein named and the successors of such directors as
have resigned, shall serve only for the period of time intervening between the
date of their appointment and the time of such annual meeting so fixed in
the certificate of incorporation. If the time of holding the annual meeting is
not fixed in the certificate of incorporation, the annual meeting shall be held
one year from the date of fifing the same (sec. 5062).
Bank v. Mead, 159 Ind. 252; 64 N. E. 880.
4. Statutory Powers. — The statute fully enumerates the implied com-
mon law powers of corporations (sees. 4046, 4069-4170, 4319, 5069, 5138-5143).
Manufacturing and mining companies are permitted to consolidate (sees. 5109-
5112). Among the special powers conferred by statute are the following: To
issue preferred stock, to permit voting by proxy at stockholders' meetings, to
forfeit stock for non-payment of assessments, to borrow on mortgage (sees.
5093-5099, 5071, 4046, 5089-5090, 4069-4070).
Most business corporations are expressly forbidden to become stockholders
in other corporations, except that railroads may own stock in telegraph, tele-
phone, union railway, and bridge companies under certain circumstances;
manufacturing companies may also hold stock in other corporations upon the
written consent of all parties interested (sec. 5122).
5. Procuring the Charter. — In the case of companies incorporated
under the Voluntary Association Act (sec. 4286) the articles of association
must be signed and acknowledged by each incorporator. They must first be
presented to the Secretary of State for filing, and at the time of presenting
such articles they must also present therewith a full written or printed state-
ment of the proposed plan of doing business; but if, upon examination, the
Secretary of State shall find the articles to be according to law, and the pro-
posed plan of doing business not inconsistent with law, he shall, upon the
payment of the fees prescribed by law, issue a certificate of incorporation.
Thereafter the corporation must file and record a duplicate of these articles
in the recorder's office of the county in which the principal place of business
of such corporation is located. The law provides that such record or a certi-
fied copy thereof shall be conclusive evidence of the matters and tilings therein
stated (sec. 4318). In the case of companies incorporated under the Manufac-
turing and Mining Company Act (sees. 5062, 5064; see also sec. 4044) the
articles must be signed and acknowledged in duplicate, the first of which shall
be filed in the office of the Secretary of State, and the other, having been ap-
proved by the latter official, must be filed with the county recorder of the county
in which the company's principal place of business is to be located.
6. Corporate Indebtedness. — There is no statutory limitation upon the
amount of corporate indebtedness. (As to borrowing on mortgage, see sees.
4069-4070.)
7. Organization Tax. — Where the capital stock is $10,000 or under,
$10; where the authorized capital stock is over $10,000, the tax is one-tehth
of one per cent thereon (Laws of 1911, chap. 271).
8. Filing and Recording Fees. — For filing and recording articles of as-
sociation not exceeding two hundred words, $1, and 10 cents per hundred
words for all in excess thereof (sec. 7206). For issuing certificate of incorpora-
tion, 50 cents; for certified copy of articles of association, 50 cents for certifi-
312
DIGEST OF INCORPORATION ACTS. — INDIANA.
cate and 10 cents for one hundred words per copy; for filing certificate of reduc-
tion of capital stock, $5; for filing copy of decree of court changing corporate
name, 85; for filing certificate of extension of purposes or change of domicile,
$5; for fifing other amendments, 20 cents per hundred words, to be in no case
less than $5. The foregoing fees are payable to the Secretary of State. Any
corporation fifing with the Secretary of State any certified copy of minutes shall
pay to him $25, $15 of which shall be for the use of the State. The Secretary of
State shall forthwith make a certified copy of such minutes and all endorse-
ments thereon and a statement of the time of filing and taking effect thereof,
and send the same to the county recorder of the county wherein the corpora-
tion has its principal place of business. With this must be sent $10 of the orig-
inal $25 paid by the corporation, which sum shall be the fee of the county re-
corder for filing and recording such copies (sec. 9215). The county recorder is
authorized to collect 10 cents per hundred words for recording articles of asso-
ciation (sees. 7206, 9215).
9. Commencing Business. — Corporations may commence business as
soon as the Secretary of State issues a certificate of incorporation and a dupli-
cate of the articles of association are recorded in the recorder's office of the
county wherein the principal place of business of the corporation is located
(sees. 4319, 5064). Companies incorporated under the Manufacturing Act
must pay up their capital stock within eighteen months after incorporation
(sec. 5089). Within thirty days after the last payment is made, the president
and a majority of the directors must make a sworn statement setting forth
this fact; thereupon the certificate must be recorded in the office of the clerk
of the Circuit Court of the county wherein the corporation's principal place of
business is located (sec. 5091).
10. Organization Meetings. — In the absence of any statute providing
otherwise, organization meetings must be held within the State. The incor-
porators should sign a written agreement fixing the time and place for holding
the organization meeting. In case no agreement can be had the organization
meeting may be called by a notice signed by three or more members setting
forth the time, place, and purpose of the meeting, and must ten days before
the meeting be delivered to each member, or published in some newspaper of
the county where the corporation may be established (sec. 40 IS). After a
temporary secretary and chairman have been chosen, the corporation should
proceed to the adoption of by-laws. Stockholders may vote by proxy. Im-
mediately after the adjournment of the incorporators' meeting the hoard of
directors named in the articles of incorporation should meet and organize by
the election of the officers prescribed in the by-laws. The statutory officers
are a president, secretary, and treasurer. The secretary and treasurer are re-
quired to give bonds with such securities as shall be required by the by-laws,
and must be sworn to the faithful discharge of the duties which may be assigned
to either of them. The same person may be elected to the office of secretary
and treasurer. The law provides that when the steps necessary to organization
have been completed, a statement thereof must be filed in the office of the clerk
of the Circuit Court of the proper county; that said court al its next term
thereafter shall, on proof of such organization, cause to 1 utered an order
declaring the existence of such corporation. The law provides that such order
shall be conclusive as to the fact of such existence from the date which said
court may fix in the order (-<■<■*. 101 I. ">071 ),
11. Meetings of Stockholders and Directors. — Stockholders' meet-
318
DIGEST OF INCORPORATION ACTS. — INDIANA.
ings must be held within the State. It seems to be contemplated by the statute
that directors' meetings should be held at the principal office within the State
(sees. 4074, 4075, 5070, 5071).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be not less than three nor more than thirteen directors (sec.
3448) ; cannot exceed eleven in case of manufacturing, mining, mechanical,
and chemical companies (sec. 5054). In the last-named class of companies,
directors must be stockholders and residents of the United States. In other
corporations there are no such requirements (sees. 4073-4075, 5071).
Renn v. Company (Ind.), 73 N. E. 269.
b. Liabilities. — If any corporation reducing its capital stock shall fail to
file a certified copy of the vote of the stockholders thereon within thirty days
thereafter in the office of the clerk of the Circuit Court in which the corpora-
tion's original certificate was filed, and also a duplicate of the same in the office
of the Secretary of State, the directors shall be jointly and severally liable for
debts contracted after the said thirty days or before the record of such vote.
Directors are also jointly and severally liable for all damages resulting in case
any certificate, report, or public notice given as required by law shall be false
in any material respect, or if they shall fail to give such notice or make such
report, and any person shall be misled or deceived thereby. The directors are
also jointly and severally liable for all debts contracted after the declaration
and payment of a dividend knowing the company to be insolvent, or knowing
that such dividend would render it so, or if they violate any of the provisions
of the act which shall thereby render the corporation insolvent (sees. 5092,
5101, 5103, 5104).
Brown v. Clow, 158 Ind. 403; 62 N. E. 1006; A. C. I. Co., 156 Ind. 212; 59 N. E. 679;
Renn v. U. S. Cem. Co. (Ind.), 73 N. E. 269.
13. Stockholders' Liabilities. — The Constitution of Indiana (sec. 213)
provides that every corporation other than banking shall be secured by such
individual liability of the stockholders or other means as may be prescribed
by law. In the case of corporations organized under the Voluntary Association
Act, there is no stockholders' liability other than that arising from the non-
payment of subscriptions to the capital stock (sees. 4051, 4078). However,
if any part of the capital stock shall be withdrawn or refunded to the stock-
holders before payment of the debts of the corporation, stockholders are then
individually and severally liable for the payment of such debts (sec. 4051). In
the case of corporations organized under the Manufacturing Act, stockholders
therein are individually liable for all debts due to laborers, servants, appren-
tices, and employees for services rendered such corporations (sec. 5105).
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him, under the seal of the corporation, signed by the treas-
urer. Stock in manufacturing companies cannot be transferred until it is
paid up.
15. Preferred Stock. — Corporations organized under the Manufacturing
Act are expressly authorized to issue preferred stock by providing therefor in
the articles of association (sees. 5094, 5095). Preferred stock may be issued
after incorporation to an aggregate amount, which must not at any time ex-
ceed double the amount of the common stock of the company in shares of not
more than $100 each. If such company desires to create and issue shares of
preferred stock after incorporation, it may do so at any regular annual or special
314
DIGEST OF INCORPORATION ACTS. — INDIANA.
meeting of its stockholders, by the vote of the holders of three-fourtlxs of its
common stock, and such company may at any such meeting or any subse-
quent meeting of its stockholders, by a vote of the holders of :i majority of its
common stock, authorize and empower its board of directors to dispose <>t and
issue such preferred stock upon such terms and conditions as said board of
directors may deem best, or as such company may prescribe; and when 50
authorized the validity of the issuance and the disposition made of such pre-
ferred stock by said directors shall in all tilings be binding and conclusive upon
such company. Within thirty days after the time such company lias am borized
the issuance of preferred stock as provided in this section, it shall cause to be
filed with the Secretary of State its certificate in writing, signed by its presi-
dent and attested by its secretary, duly acknowledged, certifying that the
issuance of preferred stock has been authorized by such company, the amount
of such preferred stock, the number of shares into which it shall be divided,
and the amount of each share (sec. 5095).
Such preferred stock may be in any amount, and it shall be subject to
redemption at par at such times and upon such terms and conditions as shall
be expressed in the certificates thereof, and the holders of such preferred stock
shall be entitled to receive, and the said company shall be bound to pay thereon,
such quarterly, semi-annual, or annual dividend as may be expressed in the
certificates, not exceeding in all eight per cent, before any dividend shall be
set aside or paid on the common stock of such company ; and in no event shall
the holders of such preferred stock be individually or personally liable for the
debts or other liabilities of such company, but in case of insolvency or upon the
dissolution of such company such debts or other liabilities shall be paid in
preference to such preferred stock. Such preferred stock, however, shall at all
times have a priority in payment out of the assets of such corporation over
the common stock thereof for the full face value, together with all arrearages
of interest or dividends due thereon (sec. 5096).
Such preferred stock shall not be voted at any meeting of such company,
nor shall the owners or holders thereof, as such, have any voice in the manage-
ment of the affairs of such company, unless the right to vote such preferred
stock be conferred upon the owners thereof, either in the articles of incorpora-
tion, or by the unanimous action of all of the owners of the common stock of such
company. When the right to vote has been conferred in either of these ways,
each and every owner of such preferred stock shall have the right to vote such
stock at any meeting of such company in like manner and with the same effect
as the common stock of such company is voted, but such company shall not have
authority to convey its real estate or mortgage any of its property without the
written consent of the holders of a majority of the shares of such preferred stock,
nor shall such company without such consent declare any dividend upon its
common stock that will impair its capital (as amended by Laws of 191 1, chap.
205, p. 493).
When any such company has redeemed the preferred stock issued by it
under the provisions of this act, its directors shall within thirty days there-
after cause to be filed with the Secretary of State their certificate in writing
as directors of such corporation, duly acknowledged, certifying that such pic
ferred stock has been redeemed; and in default thereof the directors of such
company shall be jointly and severally liable for all debts contracted after
said thirty days and before said certificate i filed (sec. 5098; see al <>
5093, 5099).
315
DIGEST OF INCORPORATION ACTS. — INDIANA.
t
16. Payment of Capital Stock. — The statute does not provide as to
how the capital stock shall be paid in. In the absence of statutory prohibition,
it may be paid in in money or money's worth (sees. 4321, 5060, 5062, 5089, 5091).
17. Books. — Corporations are required to keep at their office or place of
business within the State a stock book open to inspection during business hours
to all stockholders and creditors, who may take extracts therefrom if they
desire (sees. 4054, 4055).
18. Office. — Every corporation must have an office within the State (sees.
4054, 4073).
19. Reports. — Every domestic business corporation must also file in the
office of the Secretary of State within sixty days from the first day of June of
each year, a report, signed and sworn to by the president or secretary or by two
of the directors of the corporation, which report shall state: (1) The name of
the corporation, and if at any time the name shall have been changed in any
respect, and the report of such change has not already been filed in the office of
the Secretary of State, the old name or names, and the manner and date of such
change or changes. (2) The location, town, city, the street number, if number
there be, of its principal office in this State, and if the location shall have been
at any time changed from one city or town to another city or town and the
report of such change has not already been filed in the office of the Secretary
of State, the point or points from which such change or changes have been made
and the date thereof. (3) The amount of authorized capital stock of the cor-
poration and the amount thereof actually issued and outstanding. (4) The
amount of its increases of capital stock, both common and preferred, with the
dates of such increases, as well as a statement showing redemptions of preferred
stock if any. (5) The amount of reductions of capital stock, if any, and when
and how made. (6) The original term of existence, and if extended at any time,
for what period. (7) Whether the original articles have been amended in any
manner, the date of such amendment or amendments, and in what respect they
have been amended. (8) The names and post-office addresses of all present
officers and directors and the date of expirations of their respective terms.
(9) The date of the next annual meeting of the stockholders (sec. 4080).
Within thirty days of the date of filing such report an original or certified
copy of any resolution at any time theretofore adopted by such corporation for
increasing capital stock, for issuance of preferred stock, for reduction of capital
stock, for redemption of preferred stock, for change of election, for extension of
term of existence, for amending the articles of incorporation, or decree or resolu-
tion for change of name not already filed in the office of the Secretary of State,
must be filed with the said official. Refusal to comply with the above renders
the corporation subject to fine, and the directors who wilfully neglect to comply
with the provisions of the act ineligible for re-election to their office at the next
election and for a period of one year thereafter. The fee for filing such report
is fixed by statute at 50 cents (sees. 4080-4084) . (As to fee for filing certified
copy of resolution, see ante, sec. 8).
20. Anti-Trust Statute. — There is a statutory prohibition directed
against trusts and combinations tending to lessen free competition in the im-
portation, sale, or manufacture of various articles (sees. 3862 -3S92).
21. Statutory Grounds for Forfeiture of Charters. — Charters may be
forfeited either for violation of the anti-trust act, or for allowing a judgment
to stand against the corporation for a period of one year without satisfying
the same (sees. 3879, 3990, 4050, 4066, 4067, 3429, 3439, 3440).
316
DIGEST OF INCORPORATION" ACTS. — INDIANA.
22. Extension of Corporate Existence. — Corporations may extend
their corporate existence by complying with the provisions set forth in Bee. J 1
herein relative to amendments to certificates of incorporation (sec. 5084 I. The
act permitting such extension of corporate existence expressly provides thai
no second extension of corporate existence may be granted (Acts of 1907,
chap. 192).
23. Annual License Tax. — There is no annual license tax.
24. Amendments. — To change the corporate name requires the filing of
a petition in the Circuit Court of the county in which the corporation has its
principal place of business. The petition being filed, the corporation shall give
notice thereof by three weekly publications in some newspaper of general cir-
culation printed in the county wherein its principal place of business is locate. 1
thirty days prior to the first day of the term on which such petition shall be
heard. Proof of such publication must be made and filed and a copy of such
publication notice verified by the affidavit of a disinterested person, and a copy
of the decree of the court, changing the name of the corporation, certified under
the seal of the said court by the clerk thereof, shall within ten days thereafter
be filed with the Secretary of State (sees. 1035-1039, 4079).
Any domestic business corporation may reduce or increase its common
capital stock or define or limit or enlarge its corporate objects to the extent and
subject to the conditions and limitations hereinafter expressed by complying
with the following provisions. Any such corporation may increase the amount
of its authorized common capital stock in the following manner : At any regidar
annual meeting of its stockholders, or at any meeting of them called for that
purpose, the call for which, mailed to each known stockholder not less than
thirty days before the date of the meeting, states that the increase of the author-
ized capital will be considered and acted upon if four-fifths of all of the shares
then outstanding and entitled to vote at said stockholders' meeting shall ap-
prove the resolution for such increase, and thereafter at a regular or duly called
meeting of the directors of the corporation, a majority of the members of the
full board of directors shall by resolution ratify the action of the stockholders in
that behalf, and a copy of the minutes of the said two meetings, verified by the
president and secretary or by such other officers as the corporation may in said
resolution designate to make the certificates, and authenticated by the cor-
porate seal of the corporation (if the corporation have a seal), shall be filed in the
office of the Secretary of State of the State of Indiana, and the same fees be paid
to the Secretary of State, for the use of the State, as would be paid were the
corporation then being originally organized with a capital stock equal to the
amount of such increase from the time of such filing, and on payment of
such fees the authorized common capital stock of such corporation shall be
increased to the amount so authorized by its stockholders and directors,
and the same maybe subscribed for and certificates issued therefor under
and subject to all the limitations applicable to the issue of the company's
original stock (sec. 4056).
Any such company may at any regular annual meeting of its stockholders,
or at a meeting called in manner aforesaid, by a like vote of its stockholders
ratified by a like vote of its directors, reduce the authorized common capital
stock of the corporation so far as then unsubscribed for or then not outstanding
in the hands of stockholders, and when a copy of the minutes of said two meet-
ings, certified as aforesaid, shall be filed in the office of the Secretary of State
of the State of Indiana, and the same fees shall be paid to him for the use of the
::i7
DIGEST OF INCORPORATION ACTS. — INDIANA.
State as would be paid were the company then organizing as a coiporation not
for pecuniary profit, from the time of such filing and payment the authorized
capital stock shall be reduced to the amount in said resolutions of the stock-
holders and directors stated ; and it shall thereupon be unlawful for any such
company, so long as such reduction of capital stock shall stand, to issue any
part of the original authorized capital as was not so subscribed for and out-
standing before such resolutions were adopted (sec. 4056).
Any such corporation may define, shorten, or extend the period of its corpo-
rate existence in the following manner : Its stockholders at any regular annual
meeting, or a called meeting, for which notice as aforesaid has been given, may
by a like vote of its stockholders, ratified by a like vote of its directors, reduce,
define, or extend the period of its corporate existence by naming in the resolu-
tion a date when the existence shall end, which date shall not be later than fifty
years from the date of said stockholders' meeting, and when a copy of the
minutes of said two meetings, certified as aforesaid, shall be filed in the office
of the Secretary of State of the State of Indiana and the same fees shall be
paid to him for the use of the State as would be payable were the corporation
just organizing, then and thereby the term of existence of such corporation shall
become and be the period named in such resolutions ; but if such time shall not
clearly be an extension or enlargement of the term of corporate existence, the
Secretary of State shall not permit the papers to be filed unless and until the
officers who certified them, or other proper officers of the company, shall make
and file therewith an affidavit, stating that the corporation has no debt or
liability the date of whose maturity will be later than the date named in said
resolutions for the expiration of corporate existence (sec. 4056).
Any such corporation at any regular meeting of its stockholders, or at a
meeting of them called in manner aforesaid, may, by a like vote ratified by a
like vote of its directors, define, limit, or enlarge the express objects of its crea-
tion, but if they be enlarged, the objects as changed shall include no object
that could not be lawfully included if the corporation were then organizing
originally ; and when a copy of the minutes of said two meetings, certified as
aforesaid, shall be filed in the office of the Secretary of State of the State of
Indiana and the same fees shall be paid to him for the use of the State as
would be paid were the company then organizing as a corporation, from the
time of such fifing and payment the authorized objects or scope of the corpora-
tion shall be defined, limited, or enlarged by such resolutions: Provided, however,
that whenever four-fifths or more of all of the outstanding capital stock entitled
to vote at stockholders' meetings of any such corporation shall in pursuance
of the provisions of the act have determined that any change authorized to
be made by this act shall be made then, and in that event any stockholder whose
stock at said meeting voted against such change, may within ten days after
such meeting by notice in writing deliver to the corporation named his valuation
of his stock and name an appraisor to appraise the same in case the company
and he cannot agree as to such value. In case the company and he cannot
agree as to such valuation, then and thereupon such corporation shall name an
appraisor, and the two appraisors so selected shall select a third appraisor, all
of whom shall be disinterested persons, and the determination of any two of the
three appraisors fixing a fair cash value of the stock of such stockholder shall
be conclusive and binding upon the parties except as hereinafter provided, and
such appraisors shall, as soon as they have made such appraisement, reduce the
same to writing in duplicate, and those appraisors agreeing to the valuation
318
DIGEST OF INCORPORATION ACTS. — INDIANA.
shall sign such duplicates, one of which duplicates shall be delivered by them
to the company and the other to the said stockholder or his proxy so voting
his stock at said meeting. The said corporation, or a majority of stockholders
favoring such charge, shall within thirty days after such valuation shall have
been arrived at by the foregoing appraisement, pay to said stockholder or his
proxy, or if both be absent or refuse to accept the money, deposit to the credit
of such stockholder in a solvent national bank or trust company in Indiana
the value of said stock as was agreed upon or fixed by appraisement. Such
company shall pay all of the reasonable charges and expenses of the three
appraisers in making and certifying such appraisement. Such stock from the
time of such payment or deposit shall belong to the person or persons whose
money was so paid therefor, and if the same was the money of such corporation
such stock shall become treasury stock of such corporation to be reissued or
retired as the board of directors of the corporation may determine (sec. 510f>).
Whenever any such corporation shall in pursuance of the provisions of this
act present to the Secretary of State for filing any certified copy of any meetings
of its stockholders if it does not appear that the same were adopted by a favor-
ing vote of their outstanding stock entitled to vote at stockholders' meetings,
the Secretary of State shall refuse to file the same, and the same shall not be
filed or take effect unless such certificate shall be accompanied by the affidavit
of one or more of the officers or directors of said company showing therein that
any stockholder who voted at said meeting against the action of a majority of
the stock did, in pursuance of this section, name a value or call for an appraise-
ment of his stock, or showing what stockholders so voting against a majority
did so value their stock and demand an appraisement, and that an appraisement
was made or value agreed upon as in this section required, and showing that
the value of said stock so determined by agreement or appraisement was paid,
or deposited as by this section required to be done. In case any stockholder
shall not be satisfied with the valuation so fixed by appraisement he may bring
his action against said corporation at any time within one year in any Circuit
or Superior Court having jurisdiction of the defendant to have the fair value of
his stock as of the date of such appraisement determined, and the final judgment
in said action shall be binding on said defendant, and it shall be liable in per-
sonam therefor without relief from valuation or appraisement laws for the
excess valuation over the sum so deposited (sec. 4056).
Any domestic corporation may, at any annual or other meeting called for
that purpose, of the stockholders, increase or decrease the number of shares
into which its capital stock shall be divided, provided that such capital stock
shall be divided into shares of not more than $100 each, and that written or
printed notice of such proposed increase or decrease shall be given by the secre-
tary of such corporation to its stockholders by depositing such notice in the
mail at least thirty days before such annual or other meeting called for the
purpose, addressed to their last known place of residence, and that at such
meeting not less than two-thirds of the whole capital stock of such corporation
shall vote in favor of such increase or decrease. A copy of the record and pro-
ceedings of the meeting shall be filed in the office of i\^<- Secretary of State,
certified to by the president and secretary of such corporation within thirty
days after such meeting (Laws of 1909, ch. 45, sec. 1).
25. Dissolution. — May voluntarily dissolve without recourse" to the
courts by compliance with the statul 1050, 5065, 5068).
State v. Trustees, 6 Ind. 77.
319
DIGEST OF INCORPORATION ACTS. — INDIANA.
26. Foreign Corporations. — Foreign corporations desiring to transact
business in Indiana must make an application to the Secretary of State, signed
and sworn to by the president and secretary, stating what business such cor-
poration proposes to pursue in Indiana, the amount of its capital stock, whether
it is transacting or is intending to transact business in any other State or country,
the proportion of its business, based upon its total business for the year imme-
diately preceding, to be carried on in the State of Indiana, or if a newly organ-
ized corporation, then the proportion as nearly as can be determined by estimate,
to be transacted in Indiana, the amount paid in upon its capital stock, what
property, assets, and estimate of the value thereof, to be employed in the busi-
ness of such corporation in Indiana. If any of its capital stock has not been
paid in, what disposition is to be made thereof. The name of the president,
directors, and secretary of such corporation and their residence ; where its prin-
cipal office in Indiana will be located, and the name and address of some agent
or attorney in fact upon whom service of process can be had. Such corpora-
tion shall also file with the Secretaiy of State a copy of its charter or articles
of incorporation, or in case such corporation is incorporated merely by a cer-
tificate, then a copy of its certificate of incorporation duly certified and authen-
ticated by the officer who issued the original or by the register or recorder in
which such original charter, articles, or certificate may have been recorded.
The Secretary of State shall have the power to prescribe the form of such appli-
cation, and may propound additional interrogatories to the applicant respect-
ing the character of the business, etc., which the incorporators shall answer
under oath, and shall be filed with such application and with a certified copy
of its articles or certificate. Such application shall contain an agreement by
such corporation that it will not transfer from any court of this State any
pending case to any court of the United States save by regular course of appeal
in the said courts. The Secretary of State is authorized to issue a certificate
of such foreign corporation to do business within the State, and is required to
state in such certificate of authority the powers and objects of the corporation
which may be exercised in Indiana. All foreign corporations permitted to do
business in the State must keep on file in the office of the Secretary of State an
affidavit of the president or secretary showing the location of the principal
business office in the State of Indiana, and the name of some person upon
whom process may be served. No foreign corporation admitted to do busi-
ness in the State under the provisions of the act, shall hold any real estate ex-
cept such as may be for the proper carrying on of its legitimate business (Laws
of 1909, chap. 59).
Within thirty days after the 1st day of January of each year foreign corpora-
tions must make a report to the Secretary of State under oath, stating the then
name of the corporation, its total capital stock, the proportion of its business in
the State, the value of its property and assets in the State, and the proportion
thereof as compared with its total property assessed. The character of the busi-
ness being transacted in the State, the location of its office, the name of its agent
or attorney, in fact and the names of its president, secretary, and directors, and
their residences. Whenever such annual report shall show an increase of §5,000
or more in the proportion of property in the State, the corporation shall pay an
additional fee on such increase. Before any foreign corporation shall be au-
thorized to do business in the State, it must pay to the Secretary of State upon
the proportion of its stock represented by its property and business in Indiana,
a fee of $25 on the first $10,000 or under, thereof; and one-tenth of one per cent
320
DIGEST OF INCORPORATION ACTS. — INDIANA.
on all amounts in excess of $10,000; for increase in proportion in this State a
fee of $10 for an amount of $10,000 or less, and one-tenth of one per cent addi-
tional on all amounts in excess of $10,000; for filing annual report a fee ot M
must be paid. In addition there shaJl be collected such certificate and other
fees as is elsewhere provided by statute. Any foreign corporation having the
same or strikingly similar name as any existing Indiana corporation, or having
the same or strikingly similar name as any foreign corporation previously ad-
mitted to do business in the State, shall not be licensed to do business in Indiana
under such name (sees. 4085-4105).
Hockett v. State, 105 Ind. 250; 5 N. E. 178; Machine Co. v. Caldwell, 54 In.l. 270; Am.
Insurance Co v. Wellman, 69 Ind. 413; Singer Manufacturing Co. v. Brown, 64 lnd. ots;
Brechbill v. Randall, 102 Ind. 328; 1 N. E. 862; P. B L & S ■ Ass'n v. Markley. 27 lnd.
Ap 128- 60 N E 1013; N. M. N. G. Co. v. Smith, 27 Ind. Ap. 4,2; 61 V L. 10; b. b. &
L Ass'n v. Elbert, 153 Ind. 198; 54 N. E. 753.
21 321
DIGEST OF INCORPORATION ACTS. — IOWA.
IOWA.
(The references are to the Code of 1897, unless otherwise stated.)
1. Statutes under which Business Corporations may be incorporated.
— The Business Corporation Act of Iowa is found in the statutes of that State,
Title IX. sees. 1607-1641 inclusive, as amended by the Session Laws of 1899,
1901, and 1903. There are special requirements, not hereinafter set out, as to
banks, building associations, fidelity companies, insurance, railroad, telegraph,
telephone, and water-power companies.
2. Incorporators. — Any number of persons may be incorporators. The
law expressly provides that a single person may incorporate under the General
Corporation Act. There are no residential requirements (sees. 1607, 1608).
3. Articles of Incorporation. — The act requires that before commenc-
ing business the incorporators must adopt articles of incorporation, but it does
not point out specifically all of the contents of the same. The act does, however,
prescribe the contents of the notice of incorporation, which is required to be
published. The notice here referred to must contain:
(a) The name of the corporation and its principal place of business. Simi-
larity of names is not forbidden.
(b) The general nature of the business to be transacted. There is no express
authority for the issuance of a charter authorizing the transaction of more than
one general line of business.
(c) The amount of the capital stock authorized, and the times and con-
ditions on which it is to be paid in. The capital stock may be any amount.
The par value of each share may be any amount.
(d) The time of the commencement and the termination of the corpora-
tion. This is limited to not more than twenty years in ordinary business
corporations (sec. 1618).
(e) By what officers or persons its affairs shall be conducted and the times
when and the manner in which they will be elected. A board of directors of
any number of persons may be named.
(/) The highest amount of indebtedness to which it is at any time to subject
itself. This must not exceed two-thirds of its capital stock. This limitation
does not apply to risks of insurance companies, certain liabilities of banks, cer-
tain bonds or other railway or street railway securities, or to debentures or bonds
secured by the actual transfer of certain real estate securities.
Hener v. Carmichael, 82 Iowa, 288; 47 N. W. R. 1034
(g) Whether private property is to be exempt from corporate debts (sees.
1610-1613). While the law does not prescribe all that the articles shall con-
tain, it is the universal custom to cover at least all of the matters required in
the foregoing notice. (See sec. 1613 ; Laws of 1902, chap. 67.)
Every domestic corporation must designate in its articles of incorporation
its principal place of business, which must be in this State, and if outside the
limits of a city or town, then its post-office address must be given. The place of
business so designated shall not be changed except through amendment of its
articles of incorporation. This place of business shall be in charge of an agent
of the corporation and shall be the place where it shall hold its meetings, and
322
DIGEST OF INCORPORATION ACTS. — IOWA.
keep a record of its proceedings, and its stock and transfer books (Laws of 1909,
chap. 104, sec. 2).
4. Statutory Powers. — The Iowa statutes merely enumerate the implied
common law powers of corporations (sec. 1609). For the purpose of repairs,
rebuilding, enlarging or to meet contingencies, or for the purpose of creating
a sinking fund, the corporation may set apart a sum which it may loan and
take proper security therefor (sec. 1630). Stock certificates cannot be issued
without having endorsed on the face thereof the amount or portion paid thereon
and whether such payment has been in money or property (sec. 1627 ; Laws of
1904, chap. 55).
Calumet Paper Co. v. Company, 96 Iowa, 147; 64 N. W. 782; Traer v. Company (Iowa),
99 N. W. 290; McKee v. Company (Iowa), 98 N. W. 609; S. C. T. R. & W. Co. v. Trust Co.,
82 Fed. 124.
5. Procuring the Charter. — The incorporators must sign and acknowl-
edge the articles of incorporation. The recorder must within five days there-
after endorse thereon the time when the same were filed and the book and page
where the record will be found (Laws of 1909, chap. 104). They must be re-
corded in the office of the register of deeds of the county where the principal
place of business is located. The articles bearing the endorsement of the re-
corder as to the time when the same were recorded and the book and page of
such record must be forwarded to the Secretary of State, and by him recorded.
When articles of incorporation are presented to the Secretary of State for the
purpose of filing, if he is satisfied that they are in proper form to meet the re-
quirements of law, that their object is a lawful one and not against public policy,
that their plan for doing business is honest and lawful, he shall file them, but
if he is of the opinion that they are not in proper form to meet the requirements
of law, or that their object is an unlawful one or against public policy, or that
their plan for doing business is dishonest or unlawful, he shall refuse to file
them. Should a question of fact arise as to the legality of the articles, he shall
submit them to the Attorney-General, whose duty it shall be to forthwith ex-
amine and return them with an opinion in writing touching the point or points
concerning which inquiry has been made to him. If such opinion is in favor of
the legality of the articles and no further objections are propounded, they shall
then, and upon payment of the proper fee, be filed and otherwise dealt with as
by law provided. If, however, such opinion be against their legality, they
shall not be filed. Upon the rejection of any articles of incorporation by the
Secretary of State except for the reason that they have been held by the
Attorney-General to be illegal, they shall, if the person or persons presenting
them so request, be submitted to the Executive Council, who shall as soon as-
practicable consider the said articles, and if the Council determines that the
articles are in proper form, of honest purpose, not against public policy, nor
otherwise objectionable, he shall so advise the Secretary of State in writing,
whereupon he shall, upon payment of the proper fees, file the same and proceed
otherwise as the law directs; but if the Council sustains the previous ait inn
of the Secretary of State in rejecting said articles, said decision by the Council
shall be reported to the Secretary of State in writing, who shall then return said
articles to the person or persons presenting them, with such explanation as
.-hall be proper in the case (Laws of 1907, chap. 70, as amended by Law of
1909, chap. 104).
The organization tax must be paid at the time of the recording. Within
three months from the date of the certificate of incorporation a notice must be
323
DIGEST OF INCORPORATION ACTS. — IOWA.
published once each week for four consecutive weeks in some newspaper as
convenient as practicable to the principal place of business, which must con-
tain the matters set out in reference to this notice in par. 3, supra. Proof
of such publication by affidavit of the publishers of the newspaper in which
it is made must be filed with the Secretary of State. Both the corporation and
persons sued by the corporation are forbidden to set up want of legal organiza-
tion on the part of the corporation as a defence (sees. 1610, 1613, 1636).
First Nat. Bank v. Davies, 43 Iowa, 424; Heald v. Owen, 79 Iowa, 23; 44 N. W. 210;
Berkson v. Anderson (Iowa), 87 N. W. 402.
6. Corporate Indebtedness. — Corporate indebtedness cannot exceed
two-thirds of the capital stock (sec. 1611), except in the cases indicated in
sec. 3, subdivision "f," supra.
7. Organization Tax. — Up to $10,000, $25, and an additional fee of
$1 per thousand for all stock authorized beyond that amount (sec. 1610; Laws
of 1902, chap. 66).
8. Filing and Recording Fees. — The payment of the organization tax
entitles the corporation to a certificate of incorporation free of charge. The
payment of the organization tax also includes the charge for filing articles
of incorporation. The Secretary of State is entitled to charge 10 cents per
hundred words for recording such articles. The charge for filing and record-
ing amendments to articles of incorporation is a certificate fee of $1 and the
recording fee of 10 cents per hundred words. For issuing certified copy of
articles of incorporation the charge is $1 for certificate and 10 cents per hundred
words for making copy. For certified copy of certificate of incorporation, $1. The
legal rate for publishing articles of incorporation, averaging one thousand words
in length, is about $30. It varies, being based upon so many fines of brevier type
of a specified length. The newspapers will usually publish for twenty or even fifty
per cent of the legal rate. The recording fees in local county office are 50 cents for
the first four hundred words, and 10 cents per hundred words for the balance.
9. Commencing Business. — Corporations may commence business as
soon as the articles of incorporation are filed and recorded in the office of the
County Recorder where the principal place of business is located and in the office
of the Secretary of State, provided, further, that the publication of the notice
required by law is thereafter made and proof thereof duly filed in the office
of the Secretary of State. Any domestic corporation that does not maintain
an office in the county of its organization and transact business in the State
must file with the Secretary of State a written instrument duly signed and sealed,
authorizing the Secretary of State to accept service of process for and in behalf
of such corporation (Laws of 1906, chap. 64). Business must be commenced
within two years from the time the articles are filed, in order to avoid for-
feiture of its franchises (sees. 1614, 1628).
Thornton v. Balcom, 85 Iowa, 198; 52 N. W. 190; Johnson v. Kessler, 76 Iowa, 411; 41
N. W. 57.
10. Organization Meetings. — Ordinarily organization meetings are held
within the State (sec. 1612). The statute reads as follows : " If the corpora-
tion transacts business in this State, the articles shall fix its principal place of
business, which must be in this State, and in charge of an agent of the corpo-
ration, at which place it shall keep its stock and transfer books and hold its
meetings" (Id.).
11. Meetings of Stockholders and Directors. — Stockholders' meet-
ings must ordinarily be held within the State. Directors' meetings may be
324
DIGEST OF INCORPORATION ACTS. — IOWA.
held without the State if the by-laws so provide. (See sec. 1612, cited at length
above; also Laws of 1904, chap. 55.)
12. Directors' Qualifications and Liabilities, a. Qualifications. —
Any number of persons may act as directors. There arc no residential or other
requirements.
b. Liabilities. — Directors are penally liable for unlawful diversion of cor-
porate funds, for declaring illegal dividends, and for keeping false books of
account. The payment by the directors of any dividend when the corporation
is known by them to be insolvent, or any dividend the payment of which would
render it insolvent or which diminishes the amount of its capital stock, ren-
ders the directors knowingly consenting thereto jointly and severally liable
for all debts of the corporation then existing. If the indebtedness of any corpo-
ration shall exceed the amount of indebtedness permitted by law, the directors
knowingly consenting thereto shall be personally liable to the creditors thereof
for such excess (sees. 1621-1623). They are also liable for knowingly making
false statements relative to the corporation's affairs having a tendency to produce
or give the shares of such corporation a greater or less value than they really
possess. The penalty is either imprisonment or fine (Laws of 1907, chap. 72).
Frost Mfg. Co. v. Foster, 76 Iowa, 535; 41 N. W. 212; Miller v. Bradish, 69 Iowa, 278;
28 N. W. 594.
13. Stockholders' Liabilities. — Failure to comply substantially with
the requirements relative to organization and publicity renders the individual
property of stockholders liable for corporate debts (sec. 1616). They are
also liable to creditors of the corporation for all unpaid instalments on stock
owned by them or transferred by them for the purpose of defrauding creditors
(sec. 1631). The receipt of illegal dividends by stockholders makes them liable
to the amount of such dividend so received for all liabilities of the corporation
then existing (sec. 1621). Intentional fraud and failure to comply substantially
with the articles of incorporation, or in deceiving the public or individuals in
relation to their means or their liabilities, shall be a misdemeanor, and shall sub-
ject those guilty thereof to fine or imprisonment or both at the discretion of the
court. Any person who has sustained injury from such fraud may also recover
damages therefor against those guilty of participating in such fraud (sec. 1620).
Warfield v. Company, 72 Iowa, 666; 34 N. W. 467; Chisholm v. Forny, 65 Iowa, 333;
21 N. W. 664.
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him signed by such officers as may be designated in the
by-laws. No certificate can be issued without having endorsed on the face
thereof what amount of the par value has been paid to the corporation issu-
ing the same and whether such payment has been in money or property (sec.
1627 ; Laws of 1900, chap. 57).
15. Preferred Stock. — The statute does not expressly authorize the
issuance of preferred stock by domestic corporations. They undoubtedly have
the power to issue such stock.
16. Payment of Capital Stock. — No business corporation shall issue
any capital stock or any certificate or certificates thereof until the corporation
has received the par value thereof. If it is proposed to pay for the said capital
stock in propertyor in any other thing than money, the corporation proposing the
same must, before issuing capital stock in any way, apply to (lie Executive
Council of the State for leave so to do. Such application shall stale i lie amount
DIGEST OF INCORPORATION ACTS. — IOWA.
of capital stock proposed to be issued for a consideration other than money,
and set forth specifically the property or other thing to be received in payment
for such stock. Thereupon it shall be the duty of the Executive Council to
make investigation to ascertain the real value of the property or other thing
which the corporation is to receive for the stock ; and shall in its finding fix the
value at which the corporation may receive the same in payment of capital
stock for the said property but not at a greater amount than the value so fixed
and determined by the Executive Council.
The capital stock of any corporation issued in violation of the terms and
provisions of this act shall be void, and in a suit brought by the Attorney-
General on behalf of the State of Iowa in any court having jurisdiction, a de-
cree of cancellation shall be entered, and if the corporation has received any
money or thing of value for the said stock, such money or thing of value shall
be returned to the individual, firm, company, or corporation from whom it
was received, and if represented by labor or other service of an intangible
nature, the value thereo. shall constitute a claim against the corporation issu-
ing stock in exchange therefor (Laws of 1909, chap. 104, sec. 4). Every cor-
porat on must file a certificate under oath with the Secretary of State within
10 days after the issuance of any capital stock, stating the date of issue, the
amount issued, the sum received therefor, if payment be made in money or the
property, or thing taken, if such be the method of payment (Laws of 1907,
chap. 71).
Singer v. Given, 61 Iowa, 93; 15 N. W. 858.
17. Books. — Transfer books showing the name of the person by whom
and to whom stock is transferred, the number of shares, and the date of the
transfer must be kept within the State at the principal office of the corporation
(sees. 1612, 1626). They are open to public inspection.
18. Office and Agent. — Every corporation must maintain a principal
office within the State with an agent in charge thereof, in which must be posted
a copy of the by-laws, a statement of the amount of capital stock subscribed,
the amount of capital stock actually paid in, and the amount of indebtedness,
all for public inspection (sees. 1612, 1624, 1626). Any domestic corporation
that does not maintain an office in the county of its organization and transact
business in the State must file with the Secretary of State a written instrument
duly signed and sealed, authorizing the Secretary of State to accept service of
process for and in behalf of such corporation (Laws of 1906, chap. 64).
19. Reports. — All corporations, domestic and foreign, doing business
within the State must, between the 1st day of Ju'y and the 1st day of August
of each year, make and file an annual report in the office of the Secretary of
State. (As to detai s of such report, see Laws of 1909, chap. 105.)
20. Anti-Trust Statute. — Iowa has an elaborate anti-trust statute pro-
hibiting certain pools, trusts, and conspiracies (Code, sees. 5060-5067).
21. Statutory Grounds for Forfeiture of Charter. — Intentional fraud
in failing to comply substantially with the articles of incorporation, or deceiv-
ing the public in relation to the corporation's means and liabilities, or a diversion
of funds which results in the insolvency of the corporation, works a forfeiture of
the corporate privileges to be enforced as directed by law. Failure to use
the charter for two successive years is a ground for forfeiture of the charter.
Charter may also be forfeited for violation of the anti-trust act (sees. 1622, 1628 ;
see also sees. 4313-4335, 5065). Any corporation violating the provisions of
326
DIGEST OF INCORPORATION ACTS. — IOWA.
law relative to the issuance of capital stock may be dissolved upon application
of the Attorney-General in behalf of the State (Laws of 1907, chap. 71).
22. Extension of Corporate Existence. — Corporate existence may be
extended for an additional period of twenty years if desired (sec. 1618; Laws
of 1900, chap. 56; Laws of 1902, chap. 66; Laws of 1904, chap. 2; Law-
1909, chap. 104, sec. 3; see also 34 G. A., chap. 74).
23. Annual License Tax. — An annual fee of one dollar is required to
be paid by every domestic or foreign corporation doing business within the
State. This fee must be paid between the 1st day of July and the 1st day of
August of each year at the same time that the corporation files its animal re-
port. If this fee is not paid by the 1st day of September of each year the cor-
poration incurs the following penalties:
For the month of September the sum of $2; for the month of October
the sum of $4; for the month of November the sum of $6; for the month of
December the sum of $8; and for each month thereafter the sum of $10. If
on the 1st day of May following such corporation shall not have filed the
annual report and paid the annual fee together with all monthly penalties due
at the time of filing such report and paid the State fee, the Secretary of State
shall furnish to the Attorney-General a list of such delinquent corporations,
and he may direct the county attorney of the county in which the corporation
has its principal place of business to bring suit for the collection of the fee and
penalties then due, or may bring such action himself. Any domestic corpora-
tion may, prior to the 1st day of May, 1910, and the 1st day of May of any
subsequent year, escape the payment of fee and penalties by dissolving the
corporation, and filing with the Secretary of State the proof of publication and
notice of dissolution. Any foreign corporation which shall fail to make the
annual report and pay the annual fee and penalties that may be due, shall
thereby forfeit its right to do business within this State (Laws of 1909,
chap. 105).
24. Amendments. — Changes in any of the provisions of the articles may
be made at any annual meeting of stockholders or a special meeting called for
that purpose. Amendments are valid only when recorded, approved, and pub-
lished as original articles are required to be. The amendments however Deed
only be signed and acknowledged by such officers of the corporation as may
be designated to perform such act by the stockholders.
If any increase is made in the amount of capital stock, a certificate fee of
$1 and a recording fee of 10 cents per one hundred words must be paid.
No recording fee less than 50 cents. Where the capital stock is increased a
certificate fee shall be omitted, but a filing fee of $1 per thousand of such
increase, together with a recording fee of 10 cents per one hundred words,
shall be paid.
The period of corporate existence may be renewed from time to time if a
majority of the votes cast at any regular election or special meeting called
for that purpose in favor of such renewal, and if those wishing such renewal
will purchase the stock of those opposed thereto, at its true value. Such re-
newals shall date from the expiration of the corporate period which it succeeds
and shall be limited in duration to a period no! exceeding the time allowed by
law to the same class of corporations. Within five days after the said action
of the stockholders for the renewal of any corporation, a certificate showing
the proceedings resulting in such renewal, .-worn toby the president and secre-
tary of the corporation, or by such other officers as may be dei ignated bj the
327
DIGEST OF INCORPORATION ACTS. — IOWA.
stockholders together with the articles of incorporation, which may be the
original articles of incorporation or amended and substituted articles, shall be
filed for record in the office of the recorder of the county in which the principal
place of business of such corporation is situated and the same shall be recorded.
Upon filing with the Secretary of State of such certificate and articles of in-
corporation, within ten days thereafter, and upon the payment to the Secre-
tary of State of a fee of $25, together with a recording fee of 10 cents per one
hundred words and an additional fee of $1 for each thousand dollars of
authorized stock in excess of $10,000, the Secretary of State shall record the
said certificate and the articles of incorporation in a book to be kept by him
for that purpose, and shall issue a proper certificate for the renewal of the cor-
poration. Within three months after the fifing of the certificate and articles
of incorporation with the Secretary of State the corporation so renewed shall
publish notice of renewal. Such notice shall be published once each week for
four weeks in succession in a newspaper as convenient as practicable to the
principal place of business of the corporation and proof of publication filed in
the office of the Secretary of State, and shall contain the matters and things
required to be published by section 1613 of the act relating to original
incorporations.
25. Dissolution. — May be dissolved prior to the period fixed in the arti-
cles of incorporation by unanimous consent of the stockholders, or in accord-
ance with the provisions of its articles, and notice thereof must be given in the
same manner and for the same time as is required for its organization. Courts
of equity have power to dissolve or close up the business (sees. 1617,
1640).
26. Foreign Corporations. — Any corporation for pecuniary profit, other
than for carrying on mercantile or manufacturing business as clearly defined
and restricted by its articles of incorporation, organized under the laws of an-
other State, or of any territory of the United States, or of any foreign country,
which has transacted business in the State of Iowa since the 1st day of Sep-
tember, 1886, or desires hereafter to transact business in this State, and which
has not a permit to do such business, shall file with the Secretary of State a
certified copy of its articles of incorporation, duly attested by the Secretary of
State, or other State officer, in whose office the original articles were filed, ac-
companied by a resolution of its board of directors or stockholders authoriz-
ing the filing thereof and also authorizing service of process to be made upon
any of its officers or agents in this State engaged in transacting its business,
and requesting the issuance to such corporation of a permit to transact busi-
ness in this State; said application to contain a stipulation that such permit
shall be subject to the provisions of this chapter. Before such permit is issued,
the said corporation shall pay to the Secretary of State the same fee required
for the organization of corporations in this State, and if the capital of such
corporation is increased, it shall pay the same fee as is in such event required
of corporations organized under the laws of this State. Any corporation trans-
acting business in this State prior to the 1st day of September, 1886, shall be
exempt from the payment of the fees required under the provisions of this
section. The Secretary of State shall thereupon issue to such corporation a
permit in such form as he may prescribe, for the transaction of the business of
such corporation, and upon the receipt of such permit said corporation shall
be permitted and authorized to conduct and carry on its business in this State.
Nothing in this section shall be construed to prevent any foreign corporation
328
DIGEST OF INCORPORATION ACTS. — IOWA.
from buying, selling, and otherwise dealing in notes, bonds, mortgages, and
other securities (sec. 1637). Foreign corporations doing business within the
State must file the same annual reports and pay the same annual license tax
as is required of domestic corporations (Laws of 1909, chap. 105).
Ware Cattle Co. v. Anderson, 107 Iowa, 231; 77 N. W. 1026: Scottish Union, etc. Co. r.
Herriott, 109 Iowa, 606; 80 N. W. 665; State v. Company, 91 Iowa, 517; 60 N. \Y. 121.
320
DIGEST OF INCORPORATION ACTS. — KANSAS.
KANSAS.
(The references stated below are to the General Statutes of Kansas, 1901, unless other-
wise stated.)
1. Statute under which Business Corporations may incorporate. —
The Business Corporation Act of Kansas is found in the General Statutes of
that State for 1901, chap. 23, Arts. 1-21, sees. 1317-1550, as amended by Laws
of 1903, chaps. 151-153; Laws of 1905, chaps. 155-159 ; Laws of 1907, chap.
140. Special provisions are in force for railway, banking, roads, telegraph,
trust, building and loan, warehouse, bridge, investment, sewer, express, co-
operative corporations and eleemosynary corporations. Foreign corporations
are provided for by Laws of 1907, chap. 140, sees. 12-16. Under the Gen-
eral Act as amended corporations may be formed for forty-nine enumerated
purposes, which cover substantially all lines of business. (See Laws of 1907,
chap. 140, sec. 2.)
2. Incorporators. — There must be at least five incorporators, three of
whom must be citizens of the State (Laws of 1907, chap. 140).
3. Contents of Application for Charter. — The incorporators, five or
more in number, must make a written application to the Secretary of State
upon blank forms supplied by him for permission to organize a corporation.
This application must be subscribed by all of the proposed incorporators and
must set forth :
a. Name. — There can be only one corporation of the same name. This
must indicate the nature of the business intended to be carried on. It must
begin with the word "the" and end with the word "corporation," "company,"
"association," or "society," and must indicate by its corporate name the busi-
ness to be carried on by said corporation.
b. Domiciliary Office. — The place where its principal office or place of busi-
ness is to be located within the State.
c. Duration. — Not to exceed fifty years.
d. Purposes. — The full nature and character of the business in which it
proposes to engage. The statute enumerates fifty-four classes of corporations
which may be organized under the General Act (Laws of 1907, chap. 140; Laws
of 1911, chaps. 125, 126).
"The statute of this State," observes the Secretary of State, "provides that
the name of the corporation shall indicate the character of the business in which
it proposes to engage, and it is the practice of the charter board to limit the
operation of the corporation to a, single line of business, except as its engage-
ment in other business may be incidental or necessary to the successful operation
of such business."
Parkinson Sugar Co. v. Bank, 60 Kan. 474; 57 Pac. 126.
e. Incorporators. — Names and addresses of the incorporators.
/. Capital Stock. — This may be any amount. The par value of shares may
be any amount. (See also Laws of 1904, chap. 157; Laws of 1907, chap. 140.)
4. Statutory Powers. — In addition to a statutory enumeration of com-
mon law powers the act confers the following additional powers : To authorize
voting by proxy, to permit cumulative voting, to forfeit stock for non-payment
of assessments, to issue preferred stock, to issue bonds (sees. 1248, 1266, 1269 ;
Laws of 1907, chap. 140, sees. 1, 24, 25).
330
DIGEST OF INCORPORATION ACTS. — KANSAS.
5. Procuring the Charter. — The petition for a charter must be presented
to the charter board, composed of the Attorney-General, the Secretary of Slate,
and the State Bank Commissioner. The application must be accompanied by
the payment of S25, known as the " application fee." The Charter Board -hall
make a careful investigation of each application, and shall inquire especially
with reference to the character of the business in which the proposed incorpora-
tion is to engage, and if the Board shall determine that the business or undertak-
ing is one for winch the corporation may lawfully be formed, and that the appli-
cants are acting in good faith, the application shall be granted and a certificate
setting forth that the application has been approved shall be endorsed upon the
application and signed by the members of the charter board approving the same
(Laws of 1911, chap. 125). Thereupon the charter must be prepared, containing:
(1) Name of the corporation. (2) Purposes thereof. (3) Location of principal
place of business within the State. (4) Duration of corporate existence. 1 5 > Num-
ber of directors, names and residences of those appointed for the first year.
(6) Amount of capital stock, and the number of shares into which it is divided.
(7) Names and residence of the stockholders and the number of shares held by
each. Provision may be made also to the effect that no stockholder shall ever
own, or vote as the owner or by proxy or both, to exceed a certain minoritj' part
of the capital stock of such corporation, and such provision shall be binding
upon and enforced against all stockholders of such corporation (Laws of 1905,
chap. 15). A road company must also state the kind of road intended to be
constructed, the places from and to which the road is intended to run, the
counties through which it is intended to run, and the estimated length of the road.
The charter of a bridge or ferry company must also state the stream intended to
be crossed and the place where it is intended to be crossed by the bridge or ferry
(Laws of 1907, chap. 140, sees. 6, 7). The charter must be subscribed and ac-
knowledged by at least five incorporators, three of whom must be residents of
the State (Laws of 1907, chap. 140. sec. 5). The charter of every corporation
after the paymentof fees provided bylaw to be paid have been endorsed t hereon
by the Secretary of State, must be filed in the office of the latter, who shall re-
cord the same at length in a book to be kept for that purpose, who shall retain
the original on file in his office, giving a certified copy of it to the incorporators.
A copy of the charter and of the record thereof, duly certified by the Secretary
of State, shall be evidence of the creation of the corporation (Laws of 1907,
chap. 140, sec. 11).
Ryland v. Hollinger, 117 Fed. 216; 54 C. C. A. 248.
6. Corporate Indebtedness. — Must not exceed amount of authorized
capital stock (sec. 1274).
7. Organization Tax. — The application must be accompanied by what
is known as the application fee of S25, and before the charter is filed the appli-
cants must pay to the Secretary of State a capitalization fee as follows : For a
corporation having an authorized capital of S 100,000 or less, the fee shall be
one-tenth of one per centum of the amount, but never less than $10. For a
corporation having an authorized capital greater than $100,000 the fee shall
be $100, and in addition thereto one-twentieth of one per centum of the amount
of such capital in excess of $100,000 (Laws of L907, chap. IK), sees. _>l _•:;; Laws
of 1011, chap. 127).
8. Filing and Recording Fees. — The application fee to the charter
board is $25, and to the Secretary of State for filing and recording charter, $2.60
(Laws of 1907, chap. 120, sees. 21, 22).
:;:;i
DIGEST OF INCORPORATION ACTS. — KANSAS.
9. Commencing Business. — Corporations may commence business as
soon as their application has been favorably acted upon by the charter board,
the application fee paid, the charter properly filed and recorded with the Sec-
retary of State, and the organization tax and filing fees paid. Corporations
must commence business within one year after fifing and recording their charter
(Laws of 1907, chap. 140, sees. 10, 12, 32).
10. Organization Meeting. — Must be held within the State in the absence
of any statute providing otherwise. (See sec. 1277.)
11. Meetings of Stockholders and Directors. — All meetings of stock-
holders must be held within the State. Directors' meetings may be held with-
out the State if the by-laws so provide (sees. 1276, 1288, 1293).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three and not more than twenty-four directors.
Three of these must be residents of the State. All directors must be stock-
holders. Cumulative voting for directors is permitted. The power to adopt
by-laws is delegated to the directors, but subject to amendment by stock-
holders if they choose. An oath of office is required (sees. 1269, 1271, 1276-1279,
1282, 1288, 1293).
b. Liabilities. — Directors are jointly and severally liable for knowingly
declaring or paying any dividends when the corporation is insolvent, or any
dividend the payment of which would render it insolvent. They may avoid
this liability by filing their objections in writing with the secretary of the cor-
poration (sec. 1292).
13. Stockholders' Liability. — Stockholders are liable for their unpaid
stock subscriptions. The double liability of stockholders that formerly existed
in Kansas was removed by Constitutional Amendment adopted in 1906, amend-
ing Art. XII. sec. 2 of the Constitution so as to read as follows: "Dues from
every corporation shall be secured by the individual liability of the stockholders
to the amount of stock owned by each stockholder, and such other means as
shall be provided by law." (See also Laws of 1903, chap. 152.) If stock is
reduced without the prescribed publication, stockholders are liable for the
amount thereof received by each (Laws of 1903, chap. 151).
Musgrave v. Association, 5 Kan. App. 393; 49 Pac. 338; Munson v. Warren, 63 Kan.
182; 65 Pac. 222.
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him signed by such officers as may be designated in the
by-laws.
15. Preferred Stock. — Preferred stock may be issued by insertion of a
provision therefor in the charter, or by the unanimous consent of all the com-
mon stockholders of the corporation after incorporation (sec. 1287).
16. Payment of Capital Stock. — The capital stock is payable in such
amounts and in such manner as may be required by the by-laws under direc-
tion of the board of directors (sees. 1285, 1289).
Walburn v. Chenault, 43 Kan. 352.
17. Books. — A record must be kept of all stock subscribed and trans-
ferred and all business transactions. Such records must be open at all times
to the inspection of stockholders (sec. 1293). All books of account, records, etc.,
must be kept at the general office in the State (sec. 1293).
18. Office. — Every corporation must maintain an office within the State
332
DIGEST OF INCORPORATION ACTS. — KANSAS.
(sec. 1293). The treasurer's office and all corporate funds must be kept within
the State (sec. 1306).
19. Reports. — Every corporation, except banking, insurance, and rail-
road corporations, shall file annually with the Secretary of State, on or before the
first day of February, a statement of condition of such corporation on the 31st
day of December preceding. The Secretary of State shall prepare and furnish
blank forms for such annual statements. The statement to be made by a
domestic corporation shall set forth the following: (1) The authorized capital
stock; (2) the paid in capital; (3) the par value of the shares of the capital
stock ; (4) a complete and detailed statement of the assets and liabilities of the
corporation; (5) a complete list of the stockholders, with the post-olfice
addresses of each and the number of shares held by each ; (0) the names and
addresses of the officers, trustees, or directors and manager elected for the
ensuing year. The Secretary of State may at any time require a further or
supplemental report under this section, which shall contain the same informa-
tion and data as specified in the annual report herein required. The failure
of any corporation to file the annual statement herein provided for within
ninety days from the time provided for filing the same shall work a forfeiture
of the charter of any corporation organized under the laws of this State, and
the charter board may at any time thereafter declare the charter of such cor-
poration forfeited, and upon the declaration of any such forfeiture it shall be
the duty of the Attorney-General to apply to the District Court of the proper
county for the appointment of a receiver to close out the business of such
corporation ; and the failure of any foreign corporation to file such annual
statement as heretofore provided for shall work a forfeiture of its authority to
do business in this State, and the charter board may at any time declare such
forfeiture, and shall publish such declaration in the official State paper. No
action shall be maintained or recovery had in any of the courts of this State by
any corporation doing business in this State without first obtaining the certifi-
cate of the Secretary of State that the annual statements herein provided for
have been filed as required by this act. Fee for filing report is $1 (Laws of
1907, chap. 140, sec. 29; see also Laws of 1908, chap. 80; see also Laws of L911,
chap. 128). Both domestic and foreign corporations are required to make
annual reports on or before the 20th day of April of each year for local assess-
ment and taxation purposes (Laws of 1911, chap. 318).
20. Anti-Trust Statute. — Kansas has an elaborate anti-trust statute pro-
viding for the prohibition of certain kinds of pools, trusts, or conspiracies
(sees. 2427, 2431, 7864-7874; Laws of 1905, chaps. 2, 157; Laws of 1907, chap.
259; Laws of 1909, chap. 261).
State v. Jack, 69 Kan. 387; Keene v. The Company, 69 Ivan. 284.
21. Statutory Grounds for Forfeiture of Charter. — The charter board
is authorized by law to declare a charter void for failure to furnish such infor-
mation, in the way of annual reports or otherwise, as may be required by the
Secretary of State. The charter may be forfeited for illegal use or abuse of
corporate powers, or for entering illegal trusts and combinations, or for failure
to commence business within one year from filing of charter, or for failure to
maintain its domiciliary office and resident directors (sees. 1283, L293, 1294,
1310, 1311,7866; Laws of L907, chap. 140,86(58.31,32; Laws of 1905, chaps. 2,
315; Laws of 1909, chap. 96). All domeatio corporations which fail for three
consecutive years to file their annual statements with the Secretary of Stale are
333
DIGEST OF INCORPORATION ACTS. — KANSAS.
subject to forfeiture of their charters by the State Charter Board (Laws of 1911,
chap. 129).
22. Extension of Corporate Existence. — Corporate existence may be
extended for successive periods of fifty years by filing with the Secretary of State
at any time certificate of its intention to so extend its time of existence, signed
and duly acknowledged by the president and secretary after the same has
been authorized by its board of directors and approved by a two-thirds vote of
its stockholders present at any meeting duly called for that purpose (Laws of
1907, chap. 140, sees. 17, 18, 23; see Laws of 1911, chaps. 127, 130).
23. Annual License Tax. — There is no annual license tax.
24. Amendments. — Any domestic business corporation may amend its
charter in any of its parts by the affirmative vote of two-thirds of the shares
of stock of any such corporation, at a meeting of the stockholders called for the
purpose in conformity with the by-laws thereof. After such amendment has
been duly adopted by the stockholders a copy thereof, duly certified by the
president and secretary of the corporation, shall be submitted to the charter
board, and when approved by such board shall be filed in the office of the
Secretary of State along with the original charter of the corporation (Laws of
1907, chap. 140, sees. 17, 18).
When the name of a corporation shall have been changed, or where the
capital of a corporation shall have been decreased, or when the location of
the principal office or place of business shall have been changed, notice of the
same shall immediately thereafter be published once each week for four con-
secutive weeks in a newspaper printed and published in the county where the
principal office of the corporation is located (Laws of 1907, chap. 140, sec. 19).
Any corporation may increase its capital stock to any amount not exceeding
three times the amount of its authorized capital by vote of two-thirds of the
stockholders cast at any meeting duly convened for that purpose, or such corpora-
tion may increase its capital to any amount by vote as aforesaid, provided there
be an actual bona fide additional paid up subscription thereto, equal to the
amount of such increase, and such increase shall become a part of the capital
of the corporation from and after the date of filing the certificate of such amend-
ment in the office of the Secretary of State (Laws of 1907, chap. 140, sec. 20).
In order to decrease the capital stock the president of the corporation, upon
request of the holders of one-fourth of stock, or the board of directors without
such request, may call a meeting of the stockholders for the purpose of pass-
ing upon the question. Notice of such meeting shall be given in the manner
and time provided by the by-laws, and in the absence of such a provision ten
days' notice thereof shall be given to the stockholders personally or by mail.
If at such meeting not less than two-thirds of the capital stock be voted in
favor of such decrease, a certificate of such decrease under the corporate seal,
signed by the president and secretary and acknowledged by the president, shall
be filed in the office of the Secretary of State, and thereupon the charter of such
corporation shall be amended accordingly (Laws of 1903, chap. 151).
An alternative method of decreasing the capital stock is provided for by
permitting the retiring or reducing of any class of stock, or by the surrender
by every stockholder of his shares and the issuance to him in lieu thereof of a
decreased number of shares, or by reducing the number of shares. If this
method is adopted, a certificate of decrease must be published once each week
for three successive weeks in some newspaper published in the county where
the principal office of the corporation is located, the first publication to be
334
DIGEST OF INCORPORATION ACTS. — KANSAS.
made within fifteen days after the filing of such certificate with the Secretary
of State. In default of such publication the directors of the corporation are
jointly and severally liable for all debts of the corporation contracted after the
fifing of such certificate with the Secretary of State before the publication of
the same (Laws of 1903, chap. 151).
25. Dissolution. — The corporation may be dissolved either on applica-
tion to the court (sees. 1310, 1312-1315 ; Laws of 1907, chap. 140, sec. 31) ; or
it may be voluntarily dissolved by vote of the stockholders as provided in
sec. 30 of chap. 140 of the Laws of 1907. In order that there may be a
voluntary liquidation the corporation must have liquidated its obligations, and
the resolution of the dissolution shall state that the corporation has no outstand-
ing indebtedness. Upon the filing of a copy of such resolution, certified by the
president and secretary, in the office of the Secretary of State, the corporation
shall cease to exist (Laws of 1907, chap. 40, sec. 30; Laws of 1909, chap. 96).
Brigham v. Nathan, 62 Ivan. 243; 62 Pac. 319; Jones v. Edson, 10 Ivan. App. 110; 62
Pac. 249.
26. Foreign Corporations. — Every foreign corporation that has a place
or places of business within the State of Kansas or distributing point therein
where it delivers its wares or products to resident agents for sale, delivery, or
distribution, shall be held to be doing business in the State within the mean-
ing of the act governing foreign corporations (Laws of 1907, chap. 140, sec. 28).
Foreign corporations must apply to the charter board for permission to engage
in business in the State. At the time of such application they shall pay an
application fee of $25, and shall make application upon blank forms supplied
by the Secretary of State, and shall therein set forth the following matters:
(1) A certified copy of its charter or articles of incorporation; (2) the place
where the principal office of the corporation is located ; (3) the place where the
principal place or places of business in Kansas are to be located ; (4) the full
nature and character of the business the corporation proposes to conduct in
the State ; (5) the name and address of each of the officers, trustees, or directors
of the corporation; (6) a detailed statement of the assets and liabilities of the
corporation, which must be subscribed and sworn to by the president and secre-
tary of the corporation ; (7) the written consent of the corporation irrevocable,
that actions may be commenced in the proper court of any county in the State
in which a cause of action may arise or in which the plaintiff may reside, by
service of process upon the Secretary of State. This consent must be executed
by the president and secretary of the company, authenticated by the seal thereof,
and be accompanied by a duly certified copy of the resolution of the board of
directors authorizing the said secretary and president to execute the same
(Laws of 1907, chap. 140, sec. 13). All foreign corporations must pay the same
fees as are required of domestic corporations of like capitalization upon their
incorporation (Laws of 1907, chap. 140, sec. 23).
Every foreign corporation for profit doing business in this State, except
banking, insurance, and railroad corporations, shall file in the office of the Secre-
tary of State during the month of February of each year a statement of the
condition of the corporation at the close of business on the :; 1 si day of I December
next preceding the day of filing. The annual statement to be filed by a foreign
corporation shall set forth the full corporate oai >l such corporation ; the I"
cation of its principal office or place of business without this State; the location
of its principal office or place of business within this State, if any it hi ; the
names and addresses of its officers ami directors ; the amount of its authorized
DIGEST OF INCORPORATION ACTS — KANSAS.
capital stock and the amount of each share ; the amount of its capital stock sub-
scribed and the amount and general nature of its resources and liabilities in a
form to be subscribed by the charter board. Such statement shall be sub-
scribed and sworn to by the president or general manager and by the secretary
of such corporation, and shall be made upon a blank furnished by the Secretary
of State. The fee for filing such a report and making the certificate that the
same has been made and is on file as aforesaid shall be $1.
State v. Topeka Water Co., 61 Ivan. 547; 60 Pac. 337; Alliance Trust Co. v. Wilson,
9 Ivan. App. 891; 59 Pac. 177; S. C. L. S. C. Co. v. Haston (Kan.), 75 Pac. 1028; States.
American Book Co. (Kan.), 76 Pac. 11; J. D. P. Co. v. Wyland (Ivan.), 76 Pac. 863.
336
DIGEST OF INCORPORATION ACTS. KENTUCKY.
KENTUCKY.
(The references cited below are to the Revised Statutes of 1894, unless otherwise stated.)
1. Statute under which Business Corporations may incorporate. —
The Business Corporation Act of Kentucky is found in the Revised Statutes,
1S94, sees. 538-576, and acts amendatory thereof. Under it parties may in-
corporate for transaction of any lawful business. There are special provisions
applicable to collection agencies, banks, bankers, bridge companies, building
and loan associations, insurance, railroad, and real estate corporations (sec. 538.
As to incorporation of warehouse companies, see Laws of 1906, chap. 145).
Sayre v. Ass'n, 62 Ky. 143.
2. Incorporators. — Any number of persons not less than three may be
incorporators. There are no residential requirements (sec. 538).
Louisville Bank Co. v. Eisenman, 94 Ky. 83; 31 S. W. 531.
3. Contents of the Certificate of Incorporation. — The articles must
specify (sec. 539) :
a. Name. — Similarity of names as to existing domestic corporations is
forbidden. The word " incorporated " must always follow the name adopted
(sec. 576).
b. Domiciliary Office. — Location within the State of the principal office or
place of business of the corporation.
c. Purposes. — The nature of the business, the objects or purposes proposed
to be carried on, promoted, or transacted. This permits of incorporation for
more than one purpose.
d. Capital Stock. — The amount of capital stock and the number of shares
into which the same is divided. The capital stock may be any amount. The
par value of shares may be any amount. If preferred stock is to lie issued, pro-
vision therefor must be made in this section (sec. 564 ; Laws of 1904, chap. 105).
e. Subscribers to Capital Stock. — The names and places of residence of the
stockholders and the number of shares subscribed by each.
/. Duration. — The time when the corporate existence commences and the
duration of the same. This may be unlimited.
g. Directors and Officers. — A designation of the officers or persons who are
to conduct the affairs of the corporation and the time and place at which they
are to be elected. There must be at least three directors.
h. Corporate Indebtedness. — The highest amount of indebtedness or liability
which the corporation may at any time incur. This may be unlimited.
i. Stockholders' Liability. — Statement as to whether the private property
of the stockholders shall be subject lo the payment of corporate debts, and if
so, to what extent (sec. 539). l{ desired, the mode of voluntary dissolution may
be provided for in the articles (see. 561 ).
Louis Bletz & Co. v. Bank, 21 Ky. Law Rep 1554; 55 S. VV. 697; Thwcalf v. Bank, 81
Ky. 1; 4 Ky. Law Rep. 557.
4. Statutory Powers. — In addition to the enumeration of the common
law powers of corporations, the statute gives the corporation power t<> remove
officers, to define their duties, and to require from any of them a bond for the
faithful performance of their duties, ami gives boards of directors power to
22 337
DIGEST OF INCORPORATION ACTS. — KENTUCKY.
adopt by-laws. The statute forbids the purchase by the corporation of its own
capital stock except to prevent loss upon debts previously contracted, and the
stock so purchased shall in no case be held for more than one year. It also
permits corporations to consolidate and to issue preferred stock. Also a lien
on stock for debts due the corporation from stockholders may be enforced by
the corporation. Corporations cannot hold any real estate, except as may be
necessary for carrying on their legitimate business, for a longer period than five
years. Power to vote by proxy, to forfeit stock for non-payment of assessment,
to permit cumulative voting, and to classify directors is given (sees. 542, 543,
551, 555, 564, .567; Laws of 1902, chap. 58; Laws of 1905, chap. 105). Power
to adopt by-laws is delegated to the directors (sec. 542).
German Nat. Bank v. K. T. Co., 19 Ky. Law Rep. 361; 40 S. W. 458; C. G. L. Co. v. City
of Covington, 22 Ky. Law Rep. 796; 58 S. W. 805; Phillips v. Winslow, 57 Ky. 431 ; L. G. Co.
v. Kaufman, 105 Ky. 131 ; 48 S. W. 434; Jefferson v. Burford, 13 Ky. Law Rep. 650; 17 S. W.
855; Price v. Company, 17 Ky. Law Rep. 865; 32 S. W. 267; Shaw v. Company, 12 Ky. Law
Rep. 799; 15 S. W. 245.
5. Corporate Indebtedness. — There is no limit to the amount of indebt-
edness which a corporation may incur. No bonds can be issued except for
equivalent in money paid, labor done, or property actually received and applied
to the purposes for which the corporation was created (sec. 568 ; Laws of 1905,
chap. 105).
6. Procuring the Charter. — The articles of incorporation must be signed
and acknowledged by each of the incorporators. They must then be recorded
in the county clerk's office of the county in which the principal place of business
is to be located, and a copy thereof filed and recorded in the office of the Secre-
tary of State (sees. 540, 542, 570). Collateral inquiry into the legality of cor-
porate existence is forbidden (sec. 566).
Walton v. Riley, 85 Ky. 413; 3 S. W. 605; P. & G. T. Co. v. Bobb, 88 Ky. 226; 10 S. W.
794; Sims v. Commonwealth, 71 S. W. 929; 24 Ky. Law Rep. 1591; Wight v. Company,
55 Ky. 4; Gill v. Company, 70 Ky. 635.
7. Organization Tax. — An organization tax amounting to one-tenth of
one per cent on the amount of authorized capital stock and a like tax upon any
subsequent increase thereof is exacted (Acts of 1906, p. 22; Art. XIII. par. 1).
8. Filing and Recording Fees. — The recording fee in the office of the
Secretary of State is 25 cents per folio of one hundred words (Laws of 1906,
chap. 2). No charge is made for issuing the certificate of incorporation. The
fee for certified copy of certificate of incorporation is 25 cents per page for copy-
ing and $2 for certificate under seal. For recording appointment of agent upon
whom process may be served in the case of foreign corporations a fee of 50 cents
is charged. Recording fees in local county office for articles averaging one
thousand words in length is $3, which includes cost of certified copy for filing
in the office of the Secretary of State. The county clerk is entitled to charge
25 cents per folio of one hundred words for recording certificate of incorporation.
9. Commencing Business. — Corporations in order to transact any busi-
ness with persons other than the stockholders must procure subscriptions in
good faith for at least fifty per cent of the authorized capital stock. When
this has been done, the corporation may commence the transaction of its busi-
ness. Such business must be commenced within two years after organization
(sees. 543, 565). Before commencing business the corporation must file in the
office of the Secretary of State a statement, signed by its president or secretary,
giving the location of its office or offices within the State, and the name or names
of its agent upon whom process may be served (sec. 571).
338
DIGEST OF INCORPORATION ACTS. — KENTUCKY.
10. Organization Meeting. — Organization meeting must be held within
the State, in the absence of any statute providing otherwise.
11. Meetings of Stockholders and Directors. — All meetings of stock-
holders must be held within the State. Directors' meetings may be held with-
out the State if the by-laws so provide (sec. 551).
P. C. Co. v. Finley, 98 Ky. 405; 33 S. W. 188; Schmidt v. Mitchell. 101 Kv 370- 41
S. W. 929; Vaught v. Company, 49 S. \Y. 426; 20 Ky. Law Rep. 1471. ' ' '
12. Directors' Qualifications and Liabilities. a. Qualifications. —
There must be at least three directors, each of whom must own in his own
right not less than three shares of stock. There are no residential requirements.
Directors may be classified, if desired. They must also adopt by-laws (sees. 5 12,
551). Cumulative voting for directors is authorized (sec. 552; Cons., sec. 1207).
Schmidt v. Mitchell, 101 Ky. 570.
b. Liabilities. — Directors are jointly and severally liable for the declara-
tion and payment of dividends when the corporation is insolvent or the dec-
laration or payment of which renders it insolvent or which diminishes the
amount of its capital stock. They are also jointly and severally liable for know-
ingly causing to be published or given out any false statement or report of
the condition of the corporate business, or for failing or refusing to comply
with, or for violation of, any provision of the Business Corporation Act appli-
cable to them (sees. 548-550 inclusive).
Prewitt v. Trimble, 92 Ky. 176; 17 S. W. 356; Kruse v. Humpert, 21 Kv. Law Rep.
985; 53 S. W. 657; Dudley v. Price, 49 Ky. 84; O'Neal v. Company (Kv.), SO S. W. 451;
25 Ky. Law Rep. 2279; Schmidt v. Mitchell, 98 Ky. 218; 32 S. W. 599; 33 S. W. 408; C. C.
Co. v. Bate, 96 Ky. 356; 26 S. W. 538; Dietrich v. Rottenberger, 25 Ky. Law Rep. 338; 7ft
S. W. 271; Cornwall v. Eastham, 65 Ky. 561; Brannin v. Loring, 82 Ky. 370; 6 Ky. Law
Rep. 328; Guentter v. Company, 107 Ky. 44; 52 S. W. 931.
13. Stockholders' Liabilities. — * Stockholders in ordinary business cor-
porations are liable only for their unpaid stock subscriptions (sec. 547 ; Laws of
1902, chap. 10).
Cincinnati Cooperage Co. v. Bate, 16 Ky. Law Rep. 626; 26 S. W. 538; Senn v. Levy.
23 Ky. Law Rep. 662, 1331; 63 S. W. 776.
14. Stock Certificates. — Every shareholder is entitled to have a stock
certificate issued to him, signed by such officers as may be designated in the
by-laws (Laws of 1904, chap. 105).
15. Preferred Stock. — Any corporation organized under this law may
divide its shares into classes, such as preferred and common shares, or as may
be otherwise designated, and it may give to each of the several (lasses such
priority of right in the payment of dividends and in the redemption of shares
as may be prescribed under the rules and regulations adopted by the share-
holders, and may provide that the holders of its bonds shall be entitled upon
terms prescribed by it, to convert- the same into the slock of the corporation,
whether common or preferred, and that the holders of its preferred stock shall
be entitled, upon terms prescribed by it, to convert the same into the bonds or
other obligations of the corporation. No preferred stock shall be issued except
for cash or its equivalent, nor for less than the par value of the shares which
shall be stated in the certificates representing the preferred and common Btock
respectively (Laws of 1910, chap. 79). Alter incorporation, the corporation
may, by a vote of two-thirds in amount of the outstanding capital Btock cast al
a special meeting of the stockholders called for that purpose and of which notice
shall have been given as provided in the by-laws of the company at [east twenty
:;:;'.i
DIGEST OF INCORPORATION ACTS. — KENTUCKY.
days before the date of such meeting, or at the annual meeting of the stock-
holders, or by the written consent of the holders of not less than two-thirds in
amount of the capital stock, distribute or convert its outstanding capital stock
into preferred and common stock in such proportion as may be desired, pro-
vided that all holders of stock at the time of distribution shall be entitled to
the same pro rata proportion of such preferred and common stock. Preferred
stock may be made convertible into the bonds of the company, if desired (sees.
564, 771; Laws of 1904, chap. 105; Laws of 1910, chap. 79).
16. Payment of Capital Stock. — Stock can be issued only for money
paid, labor done, or property actually received and applied to the purposes for
which the corporation was created. No labor nor property shall be received
in payment of stock at a greater value than the market price at the time the
labor was done or the property delivered. All fictitious increases of stock shall
be void (sec. 568; Cons., sec. 193).
Mercer v. Company, 18 Ky. Law Rep. 985; 38 S. W. 841; J. R. P. L. Co. v. Cooke, 103
Ky. 96; 44 S. W. 391; Bush v. Robinson, 95 Ky. 492; 26 S. W. 178.
17. Books. — A book containing the name and post-office address, the
numbers of shares held by each stockholder, and the time when such person
became a stockholder, must be kept. Also a stock transfer book must be kept
at the principal office of the -corporation within the State (sec. 546). This is
open to the inspection of stockholders and creditors.
18. Office and Agent. — Every corporation must maintain an office within
the State and have an authorized agent therein upon whom process may be
served. The designation of such agent must be filed in the office of the Secretary
of State, by certificate signed by the president or secretary giving location of the
office of the company in the State, and the name of the agent upon whom process
may be served (sec. 571 ; Cons., sec. 194).
Standard Oil Co. v. Commonwealth, 23 Ky. Law Rep. 302; 62 S. W. 897.
19. Reports. — See section 21, post.
20. Anti-Trust Statute. — There is an anti-trust statute in force directed
against illegal combinations, pools, and trusts (Cons., sec. 198; R. S., sees. 3915-
3921 inclusive).
21. Annual License Tax. — An annual franchise tax based upon the
amount of the authorized capital stock of the corporation is imposed as follows :
Domestic and foreign corporations shall pay an annual franchise tax of 30 cents
on each $1,000 of that part of their authorized capital stock represented by
property owned and business transacted in this State which shall be ascer-
tained by finding the proportion that the property owned and business trans-
acted bears to the aggregate amount of property owned and business transacted
in and out of the State: Provided, that such corporations may pay at such rate
upon their entire authorized capital stock, and in that event they shall not be
required to report as to their property and business as provided in the other
sections of the act. Domestic corporations are not required to pay the annual
license tax for the year in which they may organize.
On or before the 15th day of December of each year the Auditor of Public
Accounts is required to furnish to all corporations a blank upon which to make
the report which is to serve as the basis for the imposition of the annual license
tax. This report, verified by the affidavit of the president or secretary of the
corporation, must be filed with the Auditor of Public Accounts on or before the
1st day of February of each year. Upon this report the Board of Assessment
340
DIGEST OF INCORPORATION AC IS. — KENTUCKY.
and Valuation ascertains and fixes that part of the authorized capital stock of
the corporation upon which the license tax shall be based. As soon as the
amount is arrived at, the Auditor of Public Accounts is required to notify each
corporation of the amount so assessed against it by the Hoard. The corporation
is required to pay the tax to the Auditor of Public Accounts not later than thirty
days after notification to the corporation of its tax. The report required by
this act must show the following tacts :
Name of such corporation ; the name of the State or government under the
laws of which it is incorporated ; the date of incorporation: the place of its prin-
cipal office in and out of tliis Commonwealth ; the name and post-office address
of its president and secretary; the name and post-office address of its author-
ized agent or attorney upon whom process may be executed, as provided by
law. and the name and address of its officer or agent in charge of its bush
in this State; total amount of its authorized capital stock; t ho value of the
property owned and used by the company in Kentucky, where situated, and
the value of the property owned and used by the company outside of Ken-
tucky; aggregate amount of business transacted by said company during the
preceding year ending the 31st day of December, and the proportion of such
business transacted in this State ; and state such other facts bearing on this
matter as the Board of Valuation and Assessment may require. The minimum
annual license tax is fixed at $10 (Laws of 1906,. chap. 22).
22. Extension of Corporate Existence. — There is no statutory pro-
vision therefor.
23. Statutory Grounds for Forfeiture of Charter. — Every charter
is liable to be forfeited by suit brought for that purpose by the State for
failing to comply with any requirement or provision of its charter, or for
any abuse or misuse of its corporate powers, and shall have thereby become
detrimental to the internal welfare of the State. The charter is liable to for-
feiture for failure to commence business within two years after its organiza-
tion, for entering into illegal trusts, combinations, and pools, or for giving
money to fix the result of any election (sees. 565, 569, 1574 a, 1987, 3919;
Cons., sec. 205).
S. E. Co. v. Commonwealth, 21 Ky. Law Rep. 1556; 55 S. W. 684.
24. Amendments. — By consent in writing of owners of two-thirds of
capital stock, the articles of incorporation may be amended for any purpose,
said alteration or amendment to be signed and acknowledged by the directors.
or a majority of them, and filed and recorded as articles of incorporation are
required to be filed in the first instance (sees. 559, 574). Under Acts of 1904,
chap. 105, special provision is made for increasing the capital stock. The pro-
cedure therein outlined is as follows : Any business corporation may, by a resolu-
tion adopted by a vote of holders of not less than two-thirds in amount of its
outstanding capital stock, passed in person or by proxy, at a special meeting
of stockholders called for that purpose, and of which notice shall have been
given as provided in the by-laws of the company, at least twenty days before
the date of the meeting or at the annual meeting of the stockholders of the
company, or by written consent of the holders of not less than two-thirds in
amount of its capital stock, increase its capital stock in such manner as maj I"'
deemed desirable (Laws of 1910, chap. 79).
Senn v. Levy, 111 Ky. 318; 63 8. W. 770; Cin. Coop. Co. v. Bate, 96 Ky. 366; 26 8. W.
538; 14 Ky. Law Rep. 469.
::il
DIGEST OF INCORPORATION ACTS. KENTUCKY.
25. Dissolution. — Any corporation may, by consent in writing of the
owners of a majority of its stock, close its business and wind up its affairs (sec.
561).
Williams v. Nail, 108 Ky. 21; 55 S. W. 706; L. G. Co. v. Kaufman, 105 Ky. 131; 48
S W 434; G. T. S. Co. v. Taylor & Sons, 113 Ky. 709; 68 S. W. 862; Bank v. Trimble, 45
Ky. 599; E. B. & L. Ass'n v. Company, 113 Ky. 246; 68 S. W. 21.
26. Foreign Corporations. — The only requirements necessary to be com-
plied with in order to transact business within the State on the part of foreign
corporations is the designation of an agent upon whom process may be served,
:and a declaration of the name of such agent and the domicile of the corporation,
by filing same with the Secretary of State (Act 1890, p. 188; see also Cons., sec.
u 202 ; Laws of 1904, chap. 69). Foreign corporations must pay the same annual
license tax as is imposed upon domestic corporations (see ante, sec. 21 ; Acts of
1906, chap. 22; Art. XL pars. 3-9).
Commonwealth v. Read Phosphate Co., 23 Ky. Law Rep. 2284; 67 S. W. 45; Aultman
Taylor Co. v. Mead, 22 Kv. Law Rep. 1189; 60 S. W. 294; Phoenix Ins. Co. v Common-
wealth, 68 Ky. 68; Commonwealth v. P. & O. Co., 26 Ky. Law Rep. 58; 80 S. W. 791; C.
T. & T. Co. v. L. H. L. Co., 24 Ky. Law Rep. 1676; 72 S. W. 4.
342
DIGEST OF INCORPORATION ACTS. — LOUISIANA.
LOUISIANA.
{The references cited below are to Wolff's Revised Statutes of 1904, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Louisiana is found in the Revised Statutes
of that State, 1904, sees. 683-741; see also Civ. Code of Louisiana, 1870, Bees.
427-147. (See Laws of 1902, Acts 53, 154 ; Laws of 1904, Act 78.) Special ads
are provided for banking, building and loan, canal, insurance, railway, safe
deposit and trust, street railway, surety, telegraph, and telephone companies.
Incorporation for stock-jobbing business is expressly forbidden (sec. 683; Laws
■of 1S88, Act 36). At the present time practically all business corporations
formed within the State are incorporated under Act No. 78 of the Louisiana
Sessions Laws of 1904. This act permits incorporation for any purpose except
that of insurance and banking, or the carrying on of any business entitling the
corporation to exercise the right of eminent domain.
2. Incorporators. — Under Act 78, Laws of 1904, but three incorporators
are required. There are no residential requirements. (See, however, sec. 6S3 ;
Laws of 1882, Act 111 ; Laws of 1902, Act 154.)
Ross v. Crockett, 14 La. Ann. 811; Board of Trustees, etc. v. Campbell, 48 La. Ann.
1543; 21 Sou. 184.
3. Contents of the Charter (sec. 685). — The charter must contain :
a. Name. — A corporation organized under "Limited Liability Act" must
have the word "limited" in its name. Similarity of names is not forbidden.
6. Domiciliary Office. — The location of the principal office or place of busi-
ness within the State.
c. Purposes. — Corporations may be organized for more than one purpose
if none of these are within those classes for which special acts are provided, and
if the corporation has a subscribed capital of $3,000 or over (Laws of 1904,
Act 78).
d. Service of Process. — An officer must be designated upon whom process
may be served.
e. Capital Stock. — Amount of capital stock, number of shares, par value
of same, time when and manner in which payment thereof shall be made. The
subscribed capital stock of all companies incorporated under Act 78, Laws of
1904, must be not less than $3,000. The par value of the shares may be any
amount.
/. Election of Directors. — The mode in which the election of directors shall
be conducted.
g. Dissolution. — The mode of liquidation at the termination of the charter
(sec. 685).
The duration of charters is ninety-nine years (sec. 684).
L. N. & F. Co. v. Doullet (La.), 38 Sou. 613.
4. Statutory Powers. — The statute enumerates the implied common law
powers of corporations, and also confers the following additional powers: Busi-
ness and manufacturing corporations whose objects are of the same general
nature may consolidate. The right to receive legacies and donations is a I o
343
DIGEST OF INCORPORATION ACTS. — LOUISIANA.
given (sees. 684; Laws of 1874, Act approved Dec. 12; see also Cons., 1898,
sec. 265).
5. Corporate Indebtedness. — Railway, plank road, turnpike, canal,
warehouse, drainage, sewage, land reclaimer, levee building, waterworks, electric
lighting and power, bridge, mills and refineries, saw-mills, rice-mills, cotton-
oil mills, erecting companies, ship-building and dock corporations, may borrow
money and issue bonds and mortgage their properties and franchises under such
terms as the directors may direct or deem expedient (Laws of 1902, Act 30 ; see
also Laws of 1902, Act 121). If desired, corporate bonds may be converted into
stock within ten years from their date (R. L. of 1904, p. 236).
6. Procuring the Charter. — The articles must be signed and acknowl-
edged before a notary. Charters for commercial and manufacturing corpora-
tions must be recorded in the office of the recorder of mortgages of the parish
of their domicile, together with a list of subscriptions to their stock. Such
charters must also be published in some daily newspaper within the parish of
the domicile five times within thirty days. It is not necessary to publish the
list of subscribers. A duly certified copy of the charter, taken either from the
record of the notary before whom the act was passed, or from the record thereof
in the office of the recorder in whose office said charter shall have been recorded,
must be filed in the office of the Secretary of State. To this copy must be
affixed the certificate of the recorder, attesting recordation of the act in his
office, etc. ; also a copy of one issue of the newspaper wherein the said charter
shall have been published, together with the affidavit of publication (sees. 677,
686; Laws of 1898, Act 59).
7. Organization Tax. — There is no organization tax, properly speaking.
The principal expense involved is the fee to the notary for drawing the charter.
His fees range from $25 up, the same being regulated by the length of the charter
and the amount of the capital stock.
8. Filing and Recording Fees. — To the Secretary of State for recording
charter, 25 cents per hundred words; for certificate of recordation, $1 ; for
certified copy of charter, $1 ; for filing and recording amendments to charter,
25 cents per hundred words; for recording charter in local parish, recording
fees, 15 cents per hundred words.
9. Commencing Business. — Corporations may begin business immedi-
ately after the first publication of the charter. Under Act 78, Laws of 1904, at
least $3,000 of the capital stock must be subscribed for in order to entitle the
corporation to begin business.
Globe Realty Co. v. Whitney, 106 La. Ann. 257; 30 Sou. 745.
10. Organization Meeting. — In the absence of any statute providing
otherwise, the organization meeting must be held within the State (sec. 741).
11. Meetings of Stockholders and Directors. — All meetings, whether
of stockholders, directors, or officers, must be held at the domicile of the cor-
poration within the State. The law provides that any such meeting held else-
where and any business transacted thereat shall be unlawful and of no effect
(sec. 741, as amended by Laws of 1910, Act 63).
12. Directors' Qualifications and Liabilities, a. Qualifications. — The
statute does not provide any specific number of directors, neither are there any
residential requirements (sec. 684).
b. Liabilities. — Directors are liable for any resulting damage or indebted-
ness arising from the omission of the word "limited" from the corporate name
344
DIGEST OF INCORPORATION ACTS. — LOUISIANA.
(R. L. of 1904, p. 243). They are also liable to fine and imprisonment for viola-
tion of anti-trust laws (R. S., 1904, pp. 1S04-1S06). Officers are also liable
for refusal to allow examination of books. (See Bourdette v. Sieward, 107
La. 258.)
13. Stockholders' Liabilities. — Stockholders are liable for unpaid bal-
ance due the company on shares owned by them. The statute specifically pro-
vides that no mere informality in organization shall have the effect of exposing
a stockholder to any liability for unpaid balance due on his stock. The statute
also provides that the word "limited" shall be the last word of the name of
every corporation. The act further provides that the omission of the word
"limited" in the use of the name of the corporation shall render it. and every
person participating in such omission or knowingly acquiescing therein, liable
for any indebtedness, damage, or liability arising therefrom (sec. 690 ; Laws of
1888, Act 36).
14. Stock Certificates. — Every 1 stockholder is entitled to have a certifi-
cate issued to him signed by such officers as may be designated in the by-laws.
15. Preferred Stock. — There is no statutory authorization for the issu-
ance of preferred stock.
16. Payment of Capital Stock. — Stock may be issued under the- con-
stitution for labor done or money or property actually received. All fictitious
issues of stock are declared void (Cons., Art. 266).
17. Books. — The corporation is required to keep a stock transfer book at
its domicile within the State. This book must be kept open for public inspec-
tion (Cons., Art. 273).
Legendre v. Association, 45 La. Ann. 669: 12 Sou. 837; Bourdette v. Sieward, 107 La.
Ann. 258; 31 Sou. 630.
18. Office. — Every corporation is required to keep a public office or place
of business within the State for the transaction of business (Cons., Arts. 264, 273 ;
R. S. sec. 740). The corporate name must be displayed on its office or place
of business and stationery (Cons., Art. 273; R. S. 1904, p. 243).
19. Reports. — The president, cashier, secretary, or agent of every stock
corporation must, on or before the 1st day of March in each year, make and
deliver to the State collectors or assessors of the parish in which such company
is liable to be taxed a written statement under oath specifying: First, the real
estate, if any, owned by such company when the same is located in this State ;
second, the capital stock actually paid in and not invested in real estate ; third,
the place of its principal business or where its principal operations are carried
on in which it is liable to be taxed (sec. 736; see also Laws of 1898, Act 170).
For the purpose of taxation, the parish assessors within the county where the
corporation has either real or personal property must be furnished by every
domestic corporation with a sworn statement of its condition. This statement
of condition must be made next preceding the day of listing, and must be made
within the first twenty days of January of each year. The statement must
include the cost of the corporation's property, real and personal, and the value
at which the same is carried in the books. It must include also a statement of
the earning capacity of the corporation, which earning capacity shall form the
basis of estimate and value of its charter or franchises (Arts of 1906, Act 66).
20. Anti-Trust Statute. — There is a constitutional prohibition forbid-
ding corporations to combine or conspire together for the purpose of forcing up
or down the price of any agricultural product or article of necessity for specula-
tive purposes (Cons., Art. 190). Under the Act of July 7, 1892, this consti-
345
DIGEST OF INCORPORATION ACTS. — LOUISIANA.
tutional provision is put in force in the form of an express anti-trust statute
(Laws of 1892, Act 90; Laws of 1908, Act 12S).
State v. Company, 109 La. 64.
21. Annual License Tax. — There is no annual license tax, properly
speaking, in existence in Louisiana. A license tax is imposed, however, on
gross receipts of certain designated lines of business, whether carried on by
individuals or corporations (pp. 1674-1723 inclusive).
22. Extension of Corporate Existence. — There is no statutory pro-
vision therefor.
23. Statutory Grounds for Forfeiture of Charter. — The charter may
be forfeited for fictitious issues of stock, for violation of the Anti-Trust Act and
for insolvency (Laws of 1902, Act 224 ; see also Cons., Art. 266, and R. S., sec
731). Also for illegal payment of dividends (Laws of 190S, Act 241).
La. Savings Bank, 35 La. Ann. 196; State v. Company, 111 La. 1049.
24. Amendments. — The law provides that stockholders of any corpora-
tion, at a general meeting convened for that purpose, may make any alterations,
additions, or changes in their charter with the assent of three-fourths of the
stockholders represented at said meeting. Such amendments as are adopted
to be recorded as in the case of original charters. Special provision is made
in the case of increase or decrease in the capital stock. To effect such a change,
directors of the corporation must publish a notice, for thirty days preceding
the time fixed for such meeting, that a meeting of the stockholders will be held
at the office of the corporation for the purpose of deciding upon such increase
or decrease, and shall also deposit a written or printed copy of such notice in
the post-office, prepaid, addressed to each stockholder at his usual place of resi-
dence at least forty days before the date fixed for such meeting. At the meet-
ing, when held, stockholders being present either in person or by proxy holding
an amount not less than two-thirds in value of the stock, a vote may be taken
thereat upon the proposed increase or decrease of the capital stock. If stock-
holders holding not less than two-thirds of the stock of the corporation have
voted in favor of the proposed increase or decrease of stock, a certificate of the
proceedings shall be made, showing compliance with the provisions of law, the
amount of the capital stock at the time such vote was taken, and the number
of holders thereof, the amount and number of shares to which it was proposed
and carried to increase or decrease, the amount and number of shares whose
holders have voted against such change, and the whole amount of the debts
and liabilities of such corporation. The said certificate shall be signed by the
chairman and secretary of the stockholders' meeting and shall be verified by
their affidavits, and then filed in the office of the Secretary of State (sec. 687 ;
Laws of 1882, Act 26 ; Laws of 1898, Act of July 14 of that year).
In making amendments to charters, it is necessary that the same be published
and recorded in the same manner as the original charter.
25. Dissolution. — Corporations may be dissolved by vote of three-fourths
of the stockholders represented at any meeting called for that purpose (Civ.
Code, Art. 447 ; R. S., sec. 688 ; Laws of 1902, Act 224).
Curie v. Santini, 16 La. Ann. 27.
26. Foreign Corporations. — All foreign corporations doing business
within the State must file in the office of the Secretary of State a written decla-
ration setting forth the place or locality of its domicile or place in the State
346
DIGEST OF INCORPORATION ACTS. — LOUISIANA.
where it is doing business, the place of its principal business establishment,
and the name of an agent within the State upon whom process may be served
(Laws of 1904, Act 54; Laws of 190S, Act 284). Tor filing, recording, and
furnishing certified copy of power of attorney appointing an agent for a foreign
corporation, the Secretary of State charges S3. 50. They are also required to
file the same annual reports as are exacted of domestic corporations (sec. 736 ;
Laws of 1898, Act 170). Under the Laws of 1898, Act 127, an annual license
tax is authorized to be levied upon certain classes of corporations doing busi-
ness within the State whose domiciles are in other States or foreign countries.
This act is not general, but only applies to such corporations as are especially
named in the act. The constitutionality of tins statutory enactment is ques-
tioned on the ground of lack of uniformity. (See Cons., Art. 242 ; see generally
Laws of 1908, Acts 128, 241.)
State ex rel Watkins ». Company, 106 La. Ann. 621; 31 Sou. 172; State v. Southern
Pacific Co., 52 La. Ann. 1822; 28 So. 372; Milwaukee Trust Co. v. Insurance Co.. 106 La.
Ann. 669; 31 Sou. 298; New Orleans v. Insurance Co., 106 La. Ann. 31; 30 Sou. 254.
347
DIGEST OF INCORPORATION ACTS. — MAINE.
MAINE.
(The references cited below are to the Revised Statutes of 1904, chap. 47, unless otherwise
stated.)
1. Statutes under which Business Corporations may incorporate. —
Business corporations are organized under the provisions of chap. 47 of the
Revised Statutes of 1904. Special acts are provided for banks, gas and electric
companies, navigation, railway, insurance, and trust companies, telegraph
and telephone, water and aqueduct corporations. Corporations may, how-
ever, be formed for the construction and operation of railways without the
State ; also telegraph and telephone companies, gas and electrical companies,
with the same limitations (sec. 6).
2. Incorporators. — Any number of persons not less than three may in-
corporate. There are no specific residential requirements (sec. 6).
Ulmer v. Company, 98 Me. 579; 57 Atl. 100.
3. Procuring the Charter. — The incorporators should first prepare and
sign written articles of association, setting forth the purposes of the corporation,
the place where the first meeting of incorporators shall be held, and the date
thereof, together with the names and residences of the incorporators. The first
meeting of incorporators may be called by one or more of the signers of said
articles of association by giving notice thereof, stating the time, place, and
purposes of the meeting to each signer in writing, or by publishing it in some
newspaper printed in the county where the corporation is to be domiciled, at
least fourteen days prior to the time appointed therefor. If all the signers of
said articles shall in writing waive notice and fix a time and place for such
meeting, no notice of publication shall be necessary. Whether the meeting be
called by notice or by means of a waiver of notice, the same must describe the
purposes of said meeting as follows: (1) To organize into a corporation; (2) to
adopt a corporate name ; (3) to define the purposes of the corporation ; (4) to
fix the amount of capital stock and divide the same into shares ; (5) to elect a
president, not less than three directors, a clerk, a treasurer, and all other neces-
sary officers ; (6) to adopt a code of by-laws ; (7) to act upon any other business
which may properly come before the meeting (Laws of 1907, chap. 86). The
meeting should then be held, whereat a chairman and a clerk are chosen. The
clerk should forthwith be sworn. After the business described above is con-
cluded, a certificate of organization should be prepared and signed by the
president and a majority of the board of directors (for contents of certificate
of organization see sec. 4, post). This certificate must be sworn to by the persons
signing the same. The certificate of organization must next be submitted to
the Attorney-General for examination and approval. After this is obtained,
the certificate of organization, together with the certificate of the Attorney-
General approving the same, must be recorded in the office of the register of
deeds of the county where the principal place of business of the corporation is
located. Within sixty days after the date of the organization meeting, a copy
of the certificate of organization duly certified by such register of deeds must
be filed in the office of the Secretary. As soon as the certificate above referred
to is filed in the office of the Secretary of State the corporate existence com-
mences (sees. 6, 8, 10).
348
DIGEST OF INCORPORATION ACTS. — MAINE.
4. Contents of the Certificate of Organization. — The certificate must
set forth:
a. Name. — The name of the corporation. Similarity of names is not for-
bidden.
b. Purposes. — As many purposes as may be desired may be inserted, pro-
vided they are not covered by special acts.
c. Capital Stock. — The capital stock cannot be less than §1,000.
d. Capital Stock paid in. — No particular amount required by statute.
e. Par Value of Shares. — This may be any amount.
/. Stockholders. — Names and residences of the subscribers to capital stock.
g. Domiciliary Office. — The name of the county where the corporation is
located.
Chafee r. Bank, 71 Me. 514.
h. Directors. — Number and names of directors. There must be at least
three, and all must be stockholders. There are no residential requirements.
i. Clerk. — Name and residence of the clerk. The clerk must be a resident
of the State (sees. 3, 7).
5. Statutory Powers. — In addition to the enumeration of the common
law powers of corporations, the statute grants to corporations a number of
additional powers, which may be enumerated as follows : To hold stock and
bonds in other corporations, to conduct business in other States and countries,
to issue preferred stock, to consolidate with other corporations, to vote by
proxy, to forfeit stock for non-payment of assessments, to hold directors'
meetings outside of the State, to issue stock for sendees and property (sees.
16, 17, 37, 38, 46, 51). Corporations are expressly empowered to determine
by their by-laws the manner of calling and conducting meetings, the number
of members that shall constitute a quorum, the number of votes to be given by
shareholders by whom any and all officers, except president and directors,
shall be elected, by whom vacancies in the board of directors or other offices
may be filled, the tenure of their several offices, the mode of voting by proxy
and of selling shares, for neglect to pay assessments, and may enforce such
by-laws by penalties not exceeding $20 (Laws of 1907, chap. 154).
Franklin Co. v. Bank, 68 Me. 43.
6. Corporate Indebtedness. — There is no statutory limitation as to the
amount of indebtedness.
7. Organization Tax. — The organization tax is $10 for companies having
a capital stock of $10,000 or less. Beyond that and up to $500,000 the organiza-
tion tax is s")0, and for each hundred thousand dollars in excess of $500,000,
$10 additional (sec. 8).
8. Filing and Recording Fees. — Fee to Attorney-General for examin-
ing and approving the certificate of organization, $5 ; fee to register of deeds for
recording certificate of organization and making certified copy thereof, usually
about $5; fee to Secretary of State for receiving, filing, and recording certi-
fied copy of certificate of organization, $5 ; fee to Secretary of State for certified
copy of certificate of organization, $3.
'.). Commencing Business. — Aside from the right to perfect the organi-
zation of the corporation, no business can be transacted until after the certifi-
cate of organization is approved by the Attorney-General, recorded in the
office of the register of deeds, and a certified copy thereof filed in the office of
the Secretary of State (sec. 10). Within twenty days after the acceptance by
349
DIGEST OF INCORPORATION ACTS. — MAINE.
the clerk of the corporation of his office, he should file in the office of th&
register of deeds in the county where the corporation is located, and where it
has a place of business or a general agent, a certificate of his election as such
clerk (sees. 22, 23).
10. Organization Meeting. — Must be held within the State in the ab-
sence of any statute authorizing it to be held elsewhere (sec. 7). The first
directors' meeting should also be held there (Laws of 1903, chap. 182).
Freeman v. Company, 38 Me. 343.
11. Meetings of Stockholders and Directors. — All meetings of stock-
holders must be held within the State. Directors' meetings may be held with-
out the State if the by-laws so provide (sees. 7, 19).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three directors, each of whom must be a stockholder.
There are no residential requirements. They may be classified if desired, and
may act through committees (sec. 19).
b. Liabilities. — Directors are liable for the illegal declaration of dividends
(sec. 32).
13. Stockholders' Liabilities. — Stockholders in ordinary business cor-
porations are liable only for their unpaid stock subscriptions (sees. 84, 95).
They are also liable to creditors to the extent of illegal dividends received by
them (sec. 32).
Grindle v. Stone, 78 Me. 176; 3 Atl. 183.
14. Stock Certificates. — Each shareholder is entitled to have a stock
certificate issued to him signed by the president or vice-president, and by the
cashier, clerk, or treasurer (sec. 34).
15. Preferred Stock. — Two or more kinds of stock may be created with
such distinctions, preferences, and voting powers as shall be fixed and deter-
mined by the by-laws or by vote of the stockholders at a meeting called for
that purpose. Any or all of the capital stock may be preferred, and any dividend
paid thereon that may be desired (sec. 49).
16. Payment of Capital Stock. — A corporation may purchase mines,
manufactories, or other property necessary for its business, and the stock of
other companies owning mining, manufacturing apparatus, mills, or other
property necessary for its business, and issue stock to the amount of the value
thereof in payment therefor. May likewise issue stock for services rendered
to such corporation, and the stock so issued shall be full-paid stock and not
liable to any further call or payment thereon, and in the absence of actual
fraud in the transaction the judgment of the directors as to the value of the
property purchased or services rendered shall be conclusive (sees. 50, 51).
Libby v. Tobey, 82 Me. 397; 19 Atl. 904.
17. Books. — The clerk is required to keep at the office of the corpora-
tion within the State all corporate records and a stock register which shall be
open at all reasonable hours to the inspection of persons interested, who may
make extracts therefrom (sees. 19, 21).
18. Office and Clerk. — All domestic corporations must have a clerk, and
must keep at some fixed place within the State a clerk's office where shall be
kept the corporate records and the stock register (sees. 3, 20).
19. Reports. — Corporations must file in the office of the Secretary of
State annually on or before the 1st day of June a statement signed and sworn
350
DIGEST OF INCORPORATION ACTS. — MAINE.
to by the president or treasurer containing the names of the directors, the
president, treasurer, and clerk, with the residence of each, the location of its
principal office within the State, and the amount of authorized capital stock
(sec. 26). Whenever there is a change in the office of clerk of a corporation,
the clerk shall, within twenty days after the acceptance of the office, file a cer-
tificate of his election in the office of the registry of deeds in the county where
the corporation is located, or where it has a place of business or a general agent
(sec. 22).
20. Anti-Trust Statute. — Combinations for regulating prices are pro-
hibited (sees. 53, 55).
21. Annual Franchise Tax. — All domestic business corporations must
pay an annual franchise tax of $5 where the authorized capital stock of the cor-
poration does not exceed $50,000; $10 where the same exceeds S50,000 and
does not exceed S200.000 ; $50 where the same exceeds 8200,000 and does not
exceed $500,000; $75 where the same exceeds $500,000 and does not exceed
$1,000,000, and a further sum of $50 a year for each one hundred thousand
dollars or part thereof in excess of $1,000,000 (Laws of 1907, chap. 185).
22. Statutory Grounds for Forfeiture of Charter. — Failure to organ-
ize within two years from the date when the certificate of organization has
been filed with the Secretary of State renders the charter liable to forfeiture ;
also whenever the annual franchise tax shall have remained in arrears for the
period of one year after the same shall have become payable (chap. 1, sees. 28,
29; chap. 8, sees. 21, 22; chap. 47, sec. 31. See Laws of 1907, chap. 109; Laws
of 1909, chap. 127).
23. Amendments. — To change the par value of the shares of the capital
stock requires a meeting of the stockholders called for that purpose, accompa-
nied by a vote thereat representing a majority of the stock issued in favor of
the change. A certificate thereof, signed by the president or clerk, shall be
filed in the office of the Secretary of State in the same manner as provided by
law for changing any charter or certificate of organization (sec. 36).
To increase the capital stock or change the number of directors the stock-
holders may, by a vote representing a majority of the stock issued, increase
the amount of its capital stock to any amount, and may change the number of
directors in hke manner. The corporation shall file a certificate thereof with
the Secretary of State within ten days thereafter. Thereupon such vote shall
take effect (sec. 39).
To decrease the amount of the capital stock the stockholders, at a meeting
duly called for that purpose, or at any annual meeting when notice shall have
been given of such proposed action in the call therefor, may, by a vote repre-
senting a majority of the stock issued, decrease the amount of its capital stock
to any amount desired, and the corporation shall give notice of such change to
the Secretary of State within ten days thereafter, and each stockholder shall
within three months after such meeting surrender such a proportion of his stock
as the amount of decrease shall bear to the amount of the capital stock before
the decrease, so that each stockholder shall have the same proportion of the
whole capital stock of the company as before the decrease (sec. 40). (For cer-
tificates of reduction of capital when impaired, see sees. 41—41.)
A corporation at a legal meeting of its stockholders may vote to change its
name and adopt a new one; and when the proceedings of such meeting, certified
by the clerk thereof, shall be returned to the office of the Secretary of State to
be recorded by him, the name shall be deemed changed; and the corporation
:;.M
DIGEST OF INCORPORATION ACTS. — MAINE.
under its new name has the same rights, powers, and privileges, and is subjec t
to the same duties, obligations, and liabilities as before, and may be sued and
may sue by its new name ; but no action brought against it by its former name
shall be defeated on that account, and on motion of the other party the new
name may be substituted therefor in the action (Laws of 1907, chap. 154;
Laws of 1909, chap. 61).
Any corporation may by a vote representing a majority of the stock issued
change its location from one county to another in the State, provided it shall
file by its clerk or other officer in the registry of deeds in each of said coun-
ties, twenty days after such change of location, the certificate required by
sec. 22 of chap. 47 of the Revised Statutes, 1904 (sec. 52).
The law also provides that whenever a corporation shall make a change in
its charter or certificate of organization in any manner for the more conven-
ient transaction of its business, it shall forward a notice of such change to the
Secretary of State, who shall record the same in a book kept for that purpose
(sec. 45).
The purposes of the corporation cannot be changed, apparently, except by
special act of the legislature.
24. Extension of Corporate Existence. — There is no provision for the
extension of corporate existence.
25. Dissolution. — Corporations may be dissolved upon application to the
courts (sees. 77, 83).
26. Foreign Corporations. — Every corporation established under laws
other than those of this State for any lawful purpose other than as a bank,
savings bank, trust company, surety company, safe deposit company, insurance
company, or public service company, which has a usual place of business in
this State permanently or temporarily, without a usual place of business
therein, shall, before doing business in this State, in writing appoint the Secre-
tary of State and his successor in office to be its true and lawful attorney upon
whom all lawful processes in any action or proceeding against it may 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 on it,
and that the authority shall continue in forte so long as any liability remains
outstanding against it in this State. The power of attorney and a copy of the
vote authorizing its execution, duly certified and authenticated, shall, upon
payment of a fee of ten dollars, be filed in the office of the Secretary, and copies
certified by him shall be sufficient evidence thereof. Service of such process
shall be made by leaving a copy of the process and a fee of two dollars in the
hands or in the office of the Secretary, and such service shall be sufficient ser-
vice upon the corporation (Laws of 1909, chap. 113, sec. 1).
When legal process against any such corporation has been served upon the
Secretary, he shall immediately give notice to the corporation of such service
by mail, postage prepaid, directed, in the case of a corporation established in
a foreign country, to the resident manager, if any, in the United States, and
shall, within two days after such service in the same manner forward a copy
of the process served upon him to such corporation or manager, or to any
other person designated by the corporation by written notice filed in the office
of the Secretary. The fee of two dollars paid by the plaintiff to the Secretary
at the time of the service shall be taxed in his costs, if he prevails in the suit.
The Secretary shall keep a record of the day and hour of the service of all such
process (Laws of 1909, chap. 113, sec. 2).
352
DIGEST OF INCORPORATION ACTS. — MAINE.
Every such foreign corporation, before transacting business in this State,
shall, upon payment of the fee hereinafter provided, file with the Secretary of
State a copy of its charter, articles, or certificate of incorporation, certified
under the seal of the State or country in which such corporation is incorporated
by the Secretary of State thereof or by the officer having charge of the original
record therein, a true copy of its by-laws, and a certificate in such form as the
Secretary of State may require, setting forth, (a) the name of the corporation;
(b) the location of its principal office; (c) the names and addresses of its
president, treasurer, clerk, or secretary and of the members of its board of
directors; (d) the date of its annual meeting for the election of officers; (e)
the amount of its capital stock authorized and issued; the number and par
value of its shares and the amount paid in thereon to its treasurer. Said cer-
tificate shall be subscribed and sworn to by its president, treasurer, or clerk.
The officers and directors of such corporation shall be subject to the same
penalties and liabilities for false and fraudulent statements and returns as
officers and directors of a domestic corporation. Every officer of such a cor-
poration which fails to comply with the requirements of this section and of
sections one and six, and every agent thereof who transacts business as such
in this State shall, for such failure, be liable to a fine of not more than five hun-
dred dollars. Such failure shall not affect the validity of any contract with
such corporation, but no action shall be maintained, or recovery had, in any
of the courts of this State by any such foreign corporation so long as it fails
to comply with the requirements of said sections (Laws of 1909, chap. 113,
sec. 3).
The Secretary of State shall refuse to accept or file the charter, certificate,
or other papers of, or accept appointment as attorney for service for, any such
corporation, which does a business in this State, the transaction of which by
domestic corporations is not then permitted by the laws of this State (Laws of
1909, chap. 113, sec. 4).
All such foreign corporations shall within thirty days after the payment
in of an increase of capital stock, upon payment of the fee hereinafter provided,
file in the office of the Secretary of State a certificate of the amount of such in-
crease and the fact of such payment, signed and sworn to by its president,
treasurer, or clerk. Within thirty days after the vote of such corporation au-
thorizing a reduction of its capital stock, a copy of such vote, signed and sworn
to by the clerk of the corporation, shall, upon payment of the fee hereinafter
provided, be filed in the office of the Secretary of State (Laws of 1909, chap.
113, sec. 5).
Every such foreign corporation shall annually, within thirty days after
the date fixed for its annual meeting last preceding the date of such certificate,
or within thirty days after the final adjournment of said meeting, but not more
than three months after the date so fixed for said meeting, prepare and file
in the office of the Secretary of State, upon payment of a fee of ten dollars, a
certificate signed and sworn to by its president, treasurer, or clerk, showing
the change or changes, if any, in the particulars included in the certificate re-
quired by section 3 made since the filing of said certificate or of the last annual
report (Laws of 1909, chap. 113, sec. 6).
Any such foreign corporation which omits to file the certificate required bi-
section 6, shall forfeit to the State not less than live nor more than ten dollars
for each day for fifteen days after the expiration of the period therein named,
and not less than ten nor more than two hundred dollars for each day there-
23 353
DIGEST OF INCORPORATION ACTS. — MAINE.
after, during which such omission continues (Laws of 1909, chap. 113,
sec. 7).
The officers of such foreign corporations shall be jointly and severally
liable for all the debts and contracts of the corporation contracted or entered
into while they are officers thereof, if any statement or report which is required
by the provisions of this act is made by them which is false in any material
representation and which they know to be false ; but only the officers who sign
such statement or report shall be so liable (Laws of 1909, chap. 113, sec. 9).
354
DIGEST OF INCORPORATION ACTS. — MARYLAND.
MARYLAND.
(The references cited below are to the Revised Corporation Act of 1908, approved March
31, 1908, to become operative on June 1, 1908. They are found in the Session Laws of
Maryland, 1908, chapter 240.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Maryland is embodied in the Revised Cor-
poration Act of 1908, found in the Session Laws of 1908, chap. 240. Under
this act corporations may be formed for any business purpose or purposes.
Special provisions, affecting certain classes of corporations, found in Article 23
of Public General Laws of the State of Maryland, are still in force and effect
in so far as they may be consistent with the provisions of the Act of 1908. The
special provisions here referred to, together with a reference to the same in
the Code of Public General Laws, is here given : bridge companies (Code, Art.
23, sees. 113-121); building and homestead associations (Id. sees. 122-131);
cemetery companies (Id. sees. 132-136); gas and electric light companies
(Id. sees. 142-143 a) ; insurance companies (Id. sees. 144-19S e) ; fraternal
societies (Id. sees. 210-225) ; mining companies (Id. sees. 207-239) ; railway
companies (Id. sees. 242-300 d) ; railroad corporations (Id. sees. 301-316) ;
safe deposit companies (Id. sec. 317) ; savings institutions (Id. sees. 318-321) ;
telephone and telegraph companies (Id. sees. 322-338 c) ; trust, surety, and
fidelity companies (Id. sees. 339-342) ; turnpike, plank road, and passenger
railway companies (Id. sees. 343-356) ; water companies (Id. sees. 358-359) ;
banks (Code, Art. 11).
2. Incorporators. — Any three or more adult persons of whom at least one
shall be a citizen of the State. The statute does not expressly provide that the
incorporators shall be subscribers for the capital stock of the company.
3. Contents of the Certificate of Incorporation. — The certificate must
state, (a) Incorporators' names in full and residence of incorporators. The names
of incorporators who should be subscribers to the certificates, with a statement
that they associate themselves together with the intention of forming a cor-
poration (sec. 3). (b) Name. Name of the proposed corporation, which shall
always be such as to indicate that it is a corporation as distinguished from a
natural person or partnership. It shall be deemed sufficient compliance with
this provision if the name of the corporation begins with the word " the " and
ends with the word " company " or " corporation," or if the title shall contain the
word " incorporated." Similarity of names is not expressly forbidden (sec. 3).
(c) Purpose. The purpose or purposes for which the corporation is formed
and the business or objects to be carried on or promoted by it. Under the
foregoing any number of business purposes may be included in one certificate
(sec. 3). (d) Domiciliary office. The place in Maryland where the principal
office of the corporation will be located (sec. 3). (e) Capital stock. The
total amount of capital stock of the proposed corporation, if any (sec. 3).
Also the number and par value of the shares and the restrictions, if any, imposed
upon the transfer of shares. The total amount of capital stock may be any
amount except in the case of mining companies operating in Maryland, whose
capital is limited to $3,000,000. The par value of shares may also be any
amount. If preferred stock is to be issued, the certificate-shall state how much
DIGEST OF INCORPORATION ACTS. — MARYLAND.
of the total capital stock is to be preferred, and the provisions, voting powers,
restrictions, and qualifications of the preferred stock (sec. 3). (/) Directors.
The number of directors, trustees, or managers, which shall not be less than
three, together with the names of those who shall act as such for the first year
or until their successors are duly chosen and qualify. At least one of the direc-
tors must be a citizen of the State of Maryland and actually residing within
the State (sec. 3). (g) Proviso for the regulation of internal affairs. Any pro-
visions may be here inserted which may be deemed desirable for the purpose of
defining, limiting, and regulating the powers of the directors and stockholders
or any class of stockholders. Such provisions however must not be contrary
to the law of the State or inconsistent with any of the terms and limits of the
Revised Corporation Act of 1908.
4. Statutory Powers. — In addition to the statutory enumeration of com-
mon law powers (sec. 7), corporations have the following additional powers:
to issue preferred stock (sec. 34) ; to forfeit stock for non-payment of assess-
ments (sec. 39) ; to accumulate votes in election of directors (sec. 20) ; to
hold stock in other corporations (sees. 7, 18) ; to vote by proxy at stockholders'
meetings (sec. 19) ; to establish voting trusts for a period not exceeding five
years (sec. 77) ; to classify directors into classes not exceeding five in number
(sec. 11) ; to appoint executive committee from the full board of directors
(sec. 10) ; to consolidate with other corporations (sees. 30, 31) ; to hold property
within or without the State (sec. 7).
5. Procuring the Charter. — The certificate of incorporation must be exe-
cuted and acknowledged by each of the incorporators before some officer compe-
tent to take the acknowledgment of deeds for land situate in the State (sec. 3).
If the certificate is acknowledged before a justice of the peace, his official charac-
ter must be first certified to by the clerk of the Superior Court under his official
seal. The certificate must be then submitted to one of the judges of the judi-
cial circuit within which the principal office of the corporation is to be located
(in Baltimore to one of the judges of the Supreme Bench at Baltimore City),
and if the latter approves it he certifies that fact upon the certificate. (Note
case of Boyce v. Trustees, 46 Md. 359.) The certificate when so certified must
be delivered to the tax commissioner, who, upon payment of the organization tax
and recording fees, shall receive and endorse thereon the date and time of receipt
and promptly record the same in a book to be kept by him for that purpose.
Upon recording the certificate in his office the State tax commissioner transmits
the original certificate and a copy thereof duly certified by him to the clerk of the
Circuit or Superior Court (to whom certificate was submitted in the first instance)
by whom the same shall be again recorded. At the time of receipt of such cer-
tificate the State tax commissioner shall collect double the fees allowed by law
to clerks of courts for recording a document of similar length. One-half of the sum
so collected by him shall be paid by him to the clerk of the Circuit or Superior
Court to whom such certificate shall be transmitted for record as hereinbefore
set forth, and for the other half he is required to account to the comptroller and
pay the same forthwith to the State treasurer for the use of the State (sec. 4).
6. Corporate Indebtedness. — There are no limitations upon the amount of
indebtedness which a corporation may incur (sec. 7) .
7. Organization. Tax. — The organization tax is one-eighth of one per cent
upon the capital stock authorized (Code, Art. LXXXI. sec. 98). The same
organization tax is payable upon any subsequent increase. This organization
tax becomes due and payable upon the recording of the certificate of incorpora-
356
DIGEST OF INCORPORATION ACTS. — MARYLAND.
tion, and no company shall have or exercise any corporate powers until such
tax is paid to the State treasurer.
8. Filing and Recording Fees. — The State tax commissioner is entitled to
the following fees; for filing any paper in his office and entering same, 10 cents;
for affixing seal to any paper, 20 cents; for certificate under seal for the
qualification of any judge to any instrument in writing, ,30 cents; for record-
ing certificate of incorporation and for copies of any paper, for each ten words
or figures, 2 cents (Code, Art. XXXVI. sec. 12). The fees of the clerks of
courts for the above services are just one-half of this charge by the State tax
commissioner (sec. 4).
9. Commencing Business. — Corporations may commence business as soon as
the organization tax is paid and the certificate of incorporation filed and recorded
as provided by law. There is no statutory requirement as to the amount of
capital with which the ordinary business corporation may commence business.
One-fourth of the authorized capital stock, however, must be paid in within
one year from the date of incorporation; one-fourth in two years, one-fourth
in three years, and the remainder in four years (Laws of 190S, chap. 305).
Within thirty days after the payment of the last instalment of the capital
stock, the president and a majority of the directors must file a statement sworn
to by the president, showing the amount of capital stock paid in, of property
received in payment of subscriptions and extent to winch payments have been
made in property. This certificate must be filed with the clerk of the court
where the original certificate was recorded (sec. 36).
10. Organization Meeting. — The organization meeting must be held within
the State in the absence of any statute providing otherwise (sec. 17).
11. Meetings of Stockholders and Directors. — Directors' meetings can be
held within or without the State (sec. 12).
12. Directors' Qualifications and Liabilities. — (a) Qualifications. There
must not be less than three directors, at least one of whom must be a citizen
and actual resident of Maryland. For the first year and until their successors
are chosen and qualified the board consists of the persons named as such in the
certificate of incorporation. Cumulative voting may be provided for in the
by-laws if desired. Directors may provide for an executive committee of two
or more members, to be elected from and by the board of directors, and to
such committee may delegate the management of the current and ordinary
business of the corporation and such other duties as the by-laws may pre-
scribe (sees. 19 and 20).
(6) Liabilities. If the trustees, managers, or directors of any corporation
shall declare and pay any dividend when the corporation is insolvent, or any
dividend the payment of which would render it insolvent, or would diminish
the amount of the capital stock, they shall be jointly and severally liable to the
extent of the dividends so declared and paid for all the debts of the corporation
then existing, and also for all that shall thereafter be contracted, while they
shall respectively continue in office, even although the whole amount of the
capital of said corporation has been paid in. But if any of the trustees, direct-
ors, or managers of said corporation shall object to declaring such dividend, or
to the payment of the same, and shall, at any time before the time fixed for tin-
payment of the same, record a certificate of their objection in writing witli the
clerk of the court in which the certificate of incorporation is recorded, they shall
be exempt from tin', liability imposed hereby.
No loan of money shall be made by any corporation to any stockholder or
357
DIGEST OF INCORPORATION ACTS. — MARYLAND.
director therein, and if any such loan shall be made, the officer or officers or
directors who shall make it or assent thereto shall be jointly and severally
liable for all the debts of said corporation to the extent of the loss that may
result from such loan, but this paragraph shall not apply to any building or
homestead association, or any corporation whose principal business under its
charter is to loan money on real or personal property, or to any corporation
receiving and authorized to receive money on deposit, or to any life insurance
company lending money to any of its policy holders on their policies.
In the event of the insolvency of the corporation, the liability of the directors
and officers under this section (50) shall be collectible by the receiver or other
person winding up its affairs, as an asset of said corporation (sec. 50).
Any officer or agent whatsoever of any corporation who shall fraudulently
sign, or in any other manner assent to any statement or publication, either for
the public or shareholders thereof, containing untruthful representations of
its affairs, assets, or liabilities with a view either to enhance or depress the
market value of the shares therein, or the value of its corporate obligations, or
in any other manner to accomplish any fraud thereby, shall be deemed guilty
of a misdemeanor, and upon conviction thereof, by indictment in any court of
law, shall be fined not less than $1,000 nor more than $10,000, and be im-
prisoned in jail or penitentiary, or either fined or imprisoned at the discretion
of the court for not less than six months nor more than three years (Code,
Art. XXVII. sec. 134).
13. Stockholders' Liabilities. — Except as hereinafter stated, stockholders
in all ordinary business corporations are not liable for corporate debts save to
the extent of their unpaid subscriptions to the capital stock of the corporation.
Every stockholder of a domestic business corporation, in case of a reduction of
its capital stock, is liable to the corporation or its receiver for the payment of
its liabilities existing at the time of said litigation to the extent of the amount
withdrawn and paid to such stockholder, and every stockholder of any such
corporation shall remain liable for the benefit of its creditors for the amount
of the face value of his stock or of his subscription in case the stock has not
been issued, less the amount he shall already have paid thereon until he shall
have paid such amount in good faith; and in the event of the insolvency of
the corporation, such liability shall be considered as an asset of the corporation
and may be enforced by the receiver or other person winding up the affairs of
such corporation notwithstanding any release, agreement, or arrangement short
of actual payment which may have been made between said corporation and
said stockholder.
In addition to the foregoing it is provided by chapter 305, of the Laws of
1908, as follows :
All the stockholders of any such corporation shall be severally and indi-
vidually liable to the creditors of the corporation of which they are stock-
holders, to an amount equal to the amount of stock held by them respectively,
for all debts and contracts made by the corporation, until the whole amount
of the capital stock fixed and limited by the corporation shall have been paid
in, and a certificate thereof made and filed as prescribed in the following sec-
tion, which certificate may, however, be filed at any time after thirty days
mentioned in said section, but no stockholder shall be individually liable to the
creditors of such corporation except to the amount of his, her, or their unpaid
subscriptions to the capital stock ; and the liability of such stockholder shall
be an asset of the corporation for the benefit ratably of all the creditors of
358
DIGEST OF INCORPORATION ACTS. — MARYLAND.
such corporation, if necessary, to pay the debts of such corporation, and shall
be enforceable only by appropriate proceedings by such corporation or by a
receiver, assignee, or trustee of such corporation, acting under the orders of a
court of competent jurisdiction, provided, however, that this section shall not
affect the right of any creditor under the existing laws of this State against
the stockholders who were liable to such creditors at the date of the passage of
this act; and provided, further, that nothing in this section shall be consid-
ered as a construction by the legislature of the law hereby amended, and the
capital stock so fixed and limited shall be paid in, one-fourth thereof in one
year, one-fourth in two years; one-fourth in three years, and one-fourth or
the balance in four years from and after the incorporation of said company,
or such corporation may be dissolved, provided, however, that it shall be law-
ful for the trustees, directors, or managers of any such corporation to collect
and enforce the payment of all subscriptions to the capital stock as other debts
are collected, after notice being given, as required by section 70 of this article,
and if suit shall be brought by the trustees, directors, managers of any such
corporation against all delinquent stockholders for the full amount of unpaid
subscriptions within four years from the incorporation of said company, such
corporation shall not be dissolved ; and provided, furthermore, that the pro-
visions of this section shall not apply to any homestead or building association
(sec. 41 a).
The exclusive remedy for the enforcement by creditors against stockholders
of all rights existing under the preceding section 64 as the same stood prior to
the time of the passage of this act, and which were declared by said section as
amended by this act not to be affected by the terms thereof as herein amended,
shall be as against stockholders residing in the State of Maryland, by bill in
equity in the nature of a creditors' bill filed against such stockholders by one
or more creditors on behalf of themselves, and all other creditors of the cor-
poration who may come in and make themselves parties thereto in a court
having jurisdiction within the limits of the county or city of Baltimore, in
which, as the case may be, the principal office of the corporation is situated at
the time of the filing of the bill, or in case any such corporation has, by reason
of having been placed in the hands of a receiver, or from any other cause,
ceased to have any principal office at the time of the fifing of the bill, then the
bill shall be filed in a court having jurisdiction within the limits of the county
or the city of Baltimore in which, as the case may be, the said corporation had
its last principal place of business; and to any such bill stockholders residing
beyond the limits of the State of Maryland may become parties defendant,
and upon so becoming parties shall not be proceeded against in any other State
or Territory or in the District of Columbia, in respect of any liability imposed
by said section 64 as said section stood before the repeal thereof, and which ex-
isted at the time of the passage of this act hereinbefore referred to. This sec-
tion shall become operative as of July 1st, 1907, and shall cause the abatement of
all actions at law which shall have been brought against said stockholders since
that date to enforce any liability created by section 64 as said section stood be-
fore the repeal thereof and which existed at the time of the passage of this act,
hereinbefore referred to, provided, however, that as to any plaintiff or plaintiffs
in any of said abated suits, who shall, within sixty days from the passage of this
act, become a party or parties to a bill in equity of the character mentioned in
this section, then, as regards the operation of the Statute of Limitations upon
the claim- -o sued on, tin; time elapsed between the institution of said abated
359
DIGEST OF INCORPORATION ACTS. — MARYLAND.
suits and the time of such plaintiff or plaintiffs becoming a party or parties to
said bill in equity, shall be included in ascertaining the period within which
suits are required to be brought by the said Statute of Limitations, the costs
taxable to any plaintiff or plaintiffs in any action at law which shall be abated
under the provisions of this section, the plaintiff or plaintiffs in which action
shall become a party or parties to a bill in equity, under the provisions of this
section shall become a part of the costs taxable in the proceedings in said equity
case (sec. 41 b).
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him, signed by the president or vice-president and by the
secretary or assistant secretary, treasurer or assistant treasurer of the cor-
poration, and sealed with its seal. Any certificate for stock which is restricted
or limited as to its transferability or voting powers or which is preferred or
limited as to its dividends, or as to its share of the principal upon dissolution,
shall have a statement of such restriction, limitation, or preference plainly
stated thereon (sec. 33). Title to a certificate and to the shares represented
thereby can be transferred only
(a) By delivery of the certificate endorsed either in blank or to a specified
person by the person appearing by the certificate to be the owner of the shares
represented thereby; or
(b) By delivery of the certificate and a separate demand containing a written
assignment of the certificate or a power of attorney to sell, assign or transfer
the same or the shares represented thereby, signed by the person appearing by
the certificate to be the owner of the shares represented thereby. Said assign-
ment or power of attorney may be either in blank or to a specified person.
37 n. A creditor whose debtor is the owner of a certificate shall be entitJed
to such aid from courts of competent jurisdiction, by injunction and otherwise
in attaching said certificate, or in specifying the claim by means thereof as is
allowed at law or in equity; in regard to property which cannot readily be at-
tached or levied upon by ordinary legal process.
37 o. There shall be no lien in favor of a corporation upon the shares repre-
sented by the certificate issued by such corporation, and there shall be no re-
striction upon the transfer of shares so represented by virtue of any by-law of
such corporation or otherwise unless the right of the corporation to such lien
or the restriction is stated upon the certificate (Laws of 1910, chap. 73, sec.
37 a, n, and o).
15. Preferred Stock. — Every corporation may create two or more classes
of stock with such preferences, voting powers, restrictions and qualifications
thereof, as shall be expressed in the certificate of incorporation or by any
amendment to its charter or certificate which may be adopted. Such pre-
ferred stock may, if desired, be made subject to redemption at not less than
par at a time and place to be fixed in the certificate of incorporation, or articles
of amendment, and it may be provided that the holders thereof shall receive
and the corporation ■ shall be bound to pay the fixed annual dividends to be
expressed in the said certificate or articles of amendment, payable quarterly,
half yearly, or yearly before any dividends shall be set apart for or paid to the
holders of the common stock ; such dividends may be made cumulative, and
such stock may be preferred over the common stock as to its distributive share
of the assets of the corporation upon dissolution; but in case of insolvency
the debts and other liabilities of the corporation shall be paid before the holders
of said preferred stock shall receive anything ; nothing in the laws of this State
360
DIGEST OF INCORPORATION' ACTS. — MARYLAND.
shall be so construed as to limit the dividends on said preferred stock to six
per cent per annum, if greater or less dividend is provided to be paid on said
stock (sec. 34).
16. Payment of the Capital Stock. — Stock may be issued, whether com-
mon or preferred, either for cash or for services or property of any description,
provided, however, that such services are rendered to or adopted by said cor-
poration, or for property, and that the same is suitable for any of the purposes
for which the corporation was formed, provided further that the value of such
services and property, and the propriety of issuing stock therefor shall be agreed
upon and the issue authorized by the affirmative vote of a majority of all the
stock (both common and preferred) outstanding entitled to vote, given at any
meeting duly called as provided for in sections 15 and 16 of the Corporation Act.
Provided further that, in counting the majority of the outstanding stock neces-
sary to authorize the issuance of stock for services or property, no stock shall
be counted whose owner or holder is interested in such services or property,
or no stock that has merely been subscribed for and payment for which is to
be made in services.
Whenever the stock of any corporation is issued for services or property, in
accordance with the preceding section, the books of the corporation shall be
so kept as to show at all times fully what property was received, and what
services were rendered for the said stock; at what value, and the number of
shares issued for the same. Whenever any stock is issued in payment for ser-
vices or property as aforesaid, a certificate signed by the president or vice-
president and secretary, and sworn to by the treasurer, setting forth the amount
of stock so issued, and the property or services in payment for which said
stock is issued and particularly specifying the nature and character of
such property or services, shall, within thirty days after the issue of said
stock, be filed in the office of the clerk of the Circuit Court for the county in
which the principal office of the corporation is located (or of the clerk of the
Superior Court of Baltimore City, if such principal office is located in Baltimore
City), and any officer or director of such corporation wilfully and knowingly
authorizing or consenting to the failure to so file such a certificate within thirty
days from the issue of said stock, or wilfully and knowingly making or con-
senting to any false statement contained in the entries required by this section
to be made on the books of the corporation, or of said certificate, shall be
deemed guilty of a misdemeanor, and upon conviction shall be subject to the
pains and penalties described by section 134 of Article 27 of the said Code of 1904 ;
provided, however, that the valuation placed by the stockholders upon such
services or property at the meeting duly warned, as aforesaid, and the pro-
priety of their action in accepting the same and issuing the agreed number of
shares therefor, shall, in the absence of actual fraud, be conclusive against and
binding upon any and all creditors of the corporation (sec. 36).
17. Books. — The books of every corporation of this State, including such
books as show the names of the stockholders thereof, and their places of resi-
dence and the number of shares held by them, shall, during the usual business
hours of every business day, be open for t he inspection of any person or persons
holding in the aggregate five per cent of the outstanding capital stock, or five
per cent of any class thereof, if two or more classes have been issued, at its
principal office in this State; every officer or agent of any such corporation
who shall refuse to exhibit the same shall be guilty of a misdemeanor, and the
corporation shall forfeit and pay to the stockholder demanding .such inspec-
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DIGEST OF INCORPORATION ACTS. — MARYLAND.
tion the sum of $50 for every such refusal (sec. 48). The directors are re-
quired to keep a full and fair account of every transaction (sec. 49).
18. Office. — Every corporation must maintain its principal office within
the State (sec. 3, subdivision d).
19. Reports. — Noannual reports (aside from those required by the tax law)
are exacted of domestic corporations. The directors of every business corporation
are required annually to prepare a full and true statement of the affairs of the
corporation, which shall be submitted at the annual meeting of stockholders.
If any person or persons owing in the aggregate five per cent of the out-
standing capital stock of any corporation of this State (or five per cent of any
class of such stock, if two or more classes have been issued) shall present to the
president or treasurer a written request for a statement of its affairs, it shall
be his duty to make such a statement under oath, embracing a particular ac-
count of its assets and liabilities in detail, and to have the same ready and on
file at the principal office of the corporation within twenty days after the
presentation of such request. And such statement shall at all times during
business hours be open to the inspection of any stockholder, and he shall be
entitled to copy the same. And if such president or treasurer to whom such
request thall be delivered, shall neglect to file such statement, he shall forfeit and
pay to the person presenting the request the sum of $50 for each and every
day's delay; and if he shall refuse to permit any stockholder to inspect such
statement and copy the same, he shall forfeit and pay to such stockholder the
sum of $50 for each and every refusal (sec. 47).
As to taxation of corporations and reports in connection therewith see
Code, Art. 81.
20. Anti-Trust Statute. — There is no anti-trust statute in Maryland.
Under the Constitutional declaration of rights, section 41, it is declared that
monopolies are odious, contrary to the spirit of a free government and the
principles of commerce, and should not be suffered.
21. Statutory Grounds for Forfeiture of Charter. — Whenever any
domestic corporation, other than a railroad, shall be determined by legal pro-
ceedings to be insolvent, or shall be proven to be insolvent by proof offered
under any bill filed under the provisions of this section, it may be dissolved
after hearing according to the practice of courts of equity in the county or
city in which its principal office is located. Such bill may be filed by any stock-
holder or creditor of the corporation (sec. 53).
The charter may also be forfeited for such misuse, abuse, or non-use of its
powers and franchises as would by law make proper the forfeiture of its charter
(sees. 57-61).
If any corporation shall fail or neglect to pay the bonus or organization
tax provided for by law to the treasurer of the State, for the space of two months
after the same has been due and payable, it then becomes the duty of the
comptroller to make out said account and to cause suit to be brought for the
recovery of such bonus. If after suit brought and judgment rendered, any
corporation from which said bonus or organization tax shall be due shall con-
tinue in arrears, and shall fail to neglect to pay said bonus or organization tax
to the State treasurer for the space of two years after the same shall be so in
arrears, such failure and neglect shall be deemed to amount to and shall con-
stitute a forfeiture of the charter of such corporation, and said charter shall
be decreed to be so forfeited and annulled, ipso fact (Code, Art. 81, sec. 101).
22. Amendments. — Every corporation of this State now existing or here-
362
DIGEST OF INCORPORATION ACTS. — MARYLAND.
after formed may, from time to time, at any meeting duly warned as provided
for by sections 15 and 16 of this article, by the affirmative vote of a majority
of all its members or a majority of all its stock (or if two or more classes of
stock have been issued, of a majority of each class), outstanding and entitled
to vote, amend its charter -or certificate of incorporation, and thereby accom-
plish any one or more of the following objects: The addition to or diminution
of the corporate powers and purposes, or the substitution of other powers and
purposes in whole or in part for those prescribed by any charter or certificate;
provided that such additional or substituted powers are such as are authorized
by this article ; the changing of the corporate name ; the changing of the cor-
porate business; the increasing or decreasing of the capital stock and the
classification of any increase ; the reduction of the number of outstanding
shares: the classification of any unissued part of the authorized capital stock;
and the changing of the location of the principal office (sec. 24).
Articles of amendment, signed, and acknowledged in the same manner as
in the original certificate, by the president and a majority of the directors,
managers, or trustees shall within thirty days after such meeting be prepared,
setting forth such amendment and the particulars thereof, and stating that it
has been duly adopted by the stockholders or members; but no amendment
shall take effect until the articles have been duly executed and delivered to
the State tax commissioner with the recording fees (to be charged at the same
rates and by said commissioner divided, accounted for, and paid over, as in the
case of an original certificate). Articles of amendment shall be promptly re-
corded by the State tax commissioner, and when recorded the original or a
certified copy thereof shall be sent by him for recording to the clerk of the
Circuit Court or Superior Court as is hereinabove provided for, in the case of
an original certificate; and a duly certified copy of such articles of amend-
ment from the records of the State tax commissioner or of the Circuit or
Superior Court shall be prima facie evidence of the rights and powers of the
corporation as amended (sec. 25).
If any increase of the capital stock of any corporation shall have been duly
authorized as in section 24 provided, the articles of amendment shall also set
forth, (a) the total amounts of capital stock already authorized and issued;
(6) the amount of cash paid in for stock already issued, and the amount of stock
already issued for property or services; (c) the amount of additional stock
authorized; (d) and the classes, if any, into which the additional stock is to
be divided, with the preferences, voting powers, restrictions, and qualifica-
tions of the increased shares (sec. 26).
If a reduction of the capital stock shall have been duly authorized, as in
section 24 provided, the articles of amendment shall also set forth: (a) the total
amounts of capital stock authorized and issued; (6) the amount of the reduc-
tion and the manner in which it shall be effected ; (c) the copy of the resolu-
tion authorizing the reduction, but, except as provided in the next succeeding
section, no corporation shall be entitled to reduce its capital stock until the
amount of its unsecured debts and liabilities shall be so far paid and satisfied
as not to exceed the amount to which the capital stock shall be reduced
(sec. 27).
When the capital stock of any corporation has become impaired by losses,
the outstanding shares may be reduced to an amount representing their true
value without reducing the amount of capital stock, which, by its charter <>r
certificate, the corporation is authorized to have ; the outstanding certificates
363
DIGEST OF INCORPORATION ACTS. — MARYLAND.
may be called in and new certificates issued for the proportionate number of
shares as reduced to the persons entitled thereto; and the stock representing
the difference between the authorized issue and the number of shares as re-
duced may be reissued without thereby increasing the capital stock, and may
be classified as preferred or common. If such reduction in the number of
shares shall be authorized as provided in section 24, the articles of amendment
shall, in addition to the requirements of section 25, set forth, (a) the number of
shares originally authorized ; (6) the number of shares actually issued and
outstanding; (c) the number of shares as reduced; (d) the classification, if
any, of the stock representing the difference between the original authorized
issue and the number of shares as reduced (sec. 28).
23. Extension of Corporate Existence. — Every corporation formed
under this article shall have, until forfeiture, the right of perpetual succession;
and all provisions in the charter or certificate of any existing corporation, or
imposed upon it by any act in force at the time of its creation or formation,
limiting its duration, are hereby annulled and repealed (sec. 75).
24. Dissolution. — Every corporation of this State other than a public
service corporation may, by the affirmative vote of a majority of all of its
members or of a majority of all of its stock (or if two or more classes of stock
have been issued, of a majority of each class) outstanding and entitled to vote,
close its affairs and authorize a bill for its dissolution to be filed in the manner
hereinafter set forth. The meeting for such purpose shall be duly warned ac-
cording to the provisions of sections 15 and 16 of this article ; and if at such
meeting the said majority shall so decide, a petition for dissolution shall be
forthwith filed in the name of the corporation, and on its behalf in a court of
equity of the county or city in which its principal office is located (sec. 51).
Every such petition shall contain a statement of the reasons why the dis-
solution of the corporation is sought, and there shall be filed as an exhibit with
it, a full and true inventory of its assets and liabilities ; a list of all the stock-
holders, if any, their respective addresses, the number of shares belonging to
each, and the amount, if any, remaining due thereon; a full statement of all
the incumbrances on the property of the corporation, and a full list of its cred-
itors, with their respective addresses and the amounts due each. Such ex-
hibit shall be verified by the oath or affirmation of some officer or stockholder
of the corporation, and upon the filing of such petition accompanied by the
exhibit, the corporation shall pass an order requiring all persons interested in
the corporation to show cause by a day to be named, if any they have, why it
should not be dissolved on another day to be named in said order, which said
order shall be published for such time as the court shall direct, in some news-
paper published in the county or city in which such court is held, if an answer
shall be filed to such petition, evidence shall be taken in the manner usual in
courts of equity ; if no answer is filed, or if upon consideration of the petition,
answer and proof, the court shall be of opinion that no sufficient cause against
a dissolution has been shown, a decree shall be entered dissolving the said cor-
poration and appointing one or more receivers of its estate and effect, if any,
and any of the directors or other officers or any of the stockholders or members
of the corporation may be appointed its receivers or such other person or per-
sons as the court may select (sec. 52) .
Whenever any corporation of this State, other than a railroad, shall have
been determined by legal proceedings to be insolvent or shall be proven to be
insolvent by proof offered under any bill filed under the provisions of this sec-
364
DIGEST OF INCORPORATION ACTS. — MARYLAND.
tion, it may be dissolved, after a hearing according to the practice of the courts
of equity in this State, upon a bill for that purpose hied in a court of equity of
the county or city in which its principal office is located. Such bill may be
filed by any stockholder or creditor of the corporation (sec. 53).
Whenever any corporation shall be dissolved by the decree of any court of
this State, its property shall vest in its receivers appointed and named therein,
and all preferences, payments, and transfers, howsoever made by it or any of
its officers on its behalf, which would be void or fraudulent under the provisions
of the Insolvency Laws of this State, if made by a natural person, shall to the
like extent and with like remedies be fraudulent and void; and for the pur-
pose of setting aside such preferences, payments, and transfers the receiver of
such corporation shall have all the powers vested in the permanent trustee of
an insolvent debtor, and the date of the filing of the petition or bill by or against
such corporation shall, for the purpose of determining the validity of prefer-
ences and for all other purposes, be treated as the date of the filing of the peti-
tion in insolvency by or against a natural person ; provided, however, that if
any real or personal property of such corporation shall have been decreed to
be sold by any court of equity for the enforcement of a mortgage, deed of trust,
or deed of trust in the nature of a mortgage ; or if there be a power of sale or a
consent to a decree for a sale contained in any mortgage, deed of trust, or deed
of trust in the nature of a mortgage of real or personal property made by such
corporation, then (unless with the written consent of the other parties in in-
terest) the receiver of such corporation shall be authorized to sell only the
equity of redemption in the property mentioned in such decree, mortgage,
deed of trust, or deed of trust in the nature of a mortgage; and, unless such
consent be given, such decree and the powers of sale contained in such mort-
gage, deed of trust, or deed of trust in the nature of a mortgage, may be
executed as if proceedings against the corporation had not been instituted
(sec. 54).
Upon the dissolution of any corporation of this State in any manner other-
wise than by judicial proceedings, and until other persons shall be appointed
as receivers by some court of competent jurisdiction, the directors at the time
of dissolution shall become and be trustees for the creditors, stockholders, and
members of the corporation so dissolved. They shall take title to its assets,
real and personal, and shall have full power to wind up and settle its affairs,
to sue for and collect its assets, and to pay its debts; and they shall divide
among the stockholders or members the money and other property that shall
remain after the payment of the debts and necessary expenses; and the said
trustees shall be jointly and severally liable to the creditors, stockholders, and
members of such corporation to the extent of its property and effects that
shall come into their hands (sec. 55).
The dissolution of a corporation shall not relieve its stockholders or directors
or other officers from any obligations and liabilities imposed on them by law ;
nor shall it abate any pending suit or proceeding by or against the corporation,
and all such suits may be continued with such change of parties, if any, as the
court in which the same are pending shall direct. No receiver shall institute
suit except by order of the court appointing him ; and such suit may be brought
in his own narn<- as receiver or (notwithstanding its dissolution) in the name of
the corporation to his use (sec. 56).
25. Annual Franchise Tax. — There is no annual franchise tax imposed
in the case of business corporations.
365
DIGEST OF INCORPORATION ACTS. — MARYLAND.
26. Foreign Corporations. — The term "foreign corporation," as used in
this article, shall mean every corporation, association, or organization, other
than a national bank, which has been established, organized, or chartered under
laws other than those of this State (sec. 65).
No foreign corporation shall engage or continue in any kind of business in
this State, the transaction of which by domestic corporations is not permitted
by the laws thereof. And every foreign corporation doing business in this
State shall be deemed thereby to have assented to all the provisions of the laws
thereof (sec. 66).
Every officer of any such foreign corporation which fails to comply with
the proceedings of the preceding section, and every agent of such non-complying
corporation who transacts business for it in this State, shall be guilty of a
misdemeanor and liable to a fine of two hundred dollars. Such failure shall
not affect the validity of any contract made with such non-complying cor-
poration, but no suit shall be maintained in any of the courts of this State by
any such corporation until it has complied with the requirements of this ar-
ticle (sec. 69).
Every foreign corporation which has a usual office or place of business in
this State, except insurance companies hereinafter provided for, but including
any corporation which is engaged in this State permanently or temporarily and
with or without a usual place of business therein, in the construction, altera-
tion, erection, or repair of any building, bridge, railroad, railway, or structure
of any kind, shall, before doing business herein, file with the Secretary of State,
who shall record the same, (1) a certified copy of its charter or certificate of
incorporation ; (2) a certificate to be renewed annually before the first day of
April in every year, subscribed and sworn to by its president or treasurer, or a
majority of its board of directors and accompanied by the annual fee of one
dollar for recording such renewal showing, (a) the corporate name; (b) the
names and addresses of its president, treasurer, secretary, and the members of
its board of directors; (c) its principal office in this State and in the State of
incorporation; (d) the amount of its capital stock authorized and issued, the
number and par value of the shares and the amount paid in thereon and the
names and addresses of its shareholders in this State, and the number of shares
held by each, and the amount of its capital employed in this State; (e) the
name and address of its agent resident in this State, and authorized to accept
service of process upon it; and (/) its willingness that so long as any liability
remains outstanding against it in this State, the authority of such agent shall
continue until a substitute is appointed and certified to the Secretary of State.
At the time of filing the original papers required by this section every such
foreign corporation shall pay to the Secretary of State for the use of the State
a fee of $25, upon receipt of which he shall issue to it the certificate setting
forth that it is entitled to do business in this State, and for all such fees said
Secretary of State shall account quarterly to the comptroller and pay the same
forthwith to the State treasurer for the use of the State, less the costs and ex-
penses of recording the same (sec. 68).
Any person or corporation whether a resident or a non-resident of this
State, may sue any foreign corporation regularly doing business or regularly
exercising any of its franchises herein for any cause of action. Such a suit may
be brought in any county or in the city of Baltimore, as the case may be, where
its principal office in this State, named in the certificate provided for by the
next succeeding section of this article, is located, or where it regularly transacts
366
DIGEST OF INCORPORATION ACTS. MARYLAND.
business or exercises its franchises, or in a local action, where the subject matter
thereof lies; and a corporation acting as surety may be sued wherever a similar
corporation of this State could be sued under the provisions of section 62 of this
article. Process may be directed to the sheriff, constable, or other proper officer
of any county or of the city of Baltimore, returnable to the clerk of the court
out of which, or to the justice of the peace by which, the same was issued, and
may be served as follows: if such corporation has a resident agent authorized
and prepared to accept service as provided by section 68 of this article, such pro-
cess shall be served upon him. If the corporation has no resident agent so author-
ized and prepared, process may be served (subject to the special provision for
insurance companies and fraternal beneficiary societies, orders or associations
hereinafter mentioned) upon any president, manager, director, ticket agent, or
officer of the corporation, or upon any agent or other person in its service. In
all cases, however, a copy of the process shall be left with the person upon
whom it is served; and where process is served upon any person other than
the resident agent, president, director, or other officer of the corporation, a
copy of the process shall also be left at its principal office in this State, if there
be one named as aforesaid. If any foreign corporation shall, after incurring
liability in this State or after making any contract with a resident thereof,
cease to do business or have such resident agent or a president, director, manager,
or other officer herein, then and in such case suit im be brought in the county
or city in which the plaintiff resides, and process may be served upon any per-
son in this State who was last a resident agent, president, director, manager,
or other officer of such corporation in this State; provided, however, that a
copy of such process shall also be served on the president or some director
of such foreign corporation wherever he may be found, and an affidavit of sucli
service may be made by the person serving the same (whether he be a resident
or a non-resident of this State) before any officer authorized by the laws of this
State to take the acknowledgment of deeds to be recorded therein. And the
affidavit showing such service and the time thereof shall be returned to the
court in which the suit against such foreign corporation is pending. Nothing
herein shall prevent or affect the issue of attachments against foreign corpora-
tions as now or hereafter allowed by law (sec. 67). (See Crooks v. Girard Iron
Co., 87 Md. 139.)
Any corporation not chartered by the laws of this State, which shall trans-
act business therein, shall be deemed to hold and exercise franchises within
this State, and shall be liable to suit in any of the courts of this State on any
dealings or transactions therein, and also shall be liable to suit in any of the
courts of this State, or any controversy which may arise between such cor-
poration and any resident of this State (Laws of 1908, chap. 309).
Every foreign corporation, except railroad companies, telegraph or cable
companies, express or transportation companies, oil or pipe line companies,
title insurance companies, electric light or gas companies, guano, phosphate,
or fertilizer companies, electric construction companies, telephone companies,
parlor car or sleeping car companies, safe deposit companies, trust companies,
national banks, life, fire, marine, casualty, and other insurance companies, anil
guarantee and fidelity companies, or any corporation paying a gross receipt
tax, which maintains an office and regularly exercises its franchises in this
State, shall, at the time of filing its annual certificate, to wit: before the 1st day
of April in each year, pay to the State treasurer for the use cf the State a fran-
chise tax for such year at the following rate, that is to say, the sum of $25 for
307
DIGEST OF INCORPORATION ACTS. — MARYLAND.
every full $50,000 of capital employed by it in this State up to $500,000 —
but in no case less ttian $25 ; if the amount of such capital is more than
$500,000, and not more than $5,000,000, then an additional amount equal to
one-fortieth of one per cent on the excess ; and if more than $5,000,000, then
an additional amount at the fate of $30 for every $1,000,000 of such last-named
excess (sec. 70).
If the annual certificate and tax shall not be filed and paid as required by
the preceding sections, then on the 1st day of November following the comp-
troller shall place the tax bill in the hands of the attorney-general for collection
by suit ; and the officers and agents shall be liable to the penalty imposed by
section 69 of this article.
For license tax to be paid by telegraph or express or transportation com-
panies, see Code, Art. 16, sees. 119, 120, and 121. For license tax to be paid by
domestic corporations doing business as surety or guarantor on bonds of any
kind, or the business of issuing policies of any kind of insurance, except life,
fire, and marine policies, and except industrial insurance, see sees. 170, 171, 176,
and 177 ; and for license to be paid by foreign corporation doing special lines
of business, see sec. 174.
368
DIGEST OF INCORPORATION ACTS. — MASSACHUSETTS.
MASSACHUSETTS.
(The references cited below are to the Laws of 1903, chap. 437, commonly known as the
"Business Corporation Law.")
1. Statutes under which Business Corporations may incorporate. —
Under the act that went into effect August 1, 1901-5, parties may incorporate for
any lawful purpose not covered by special act. Special acts are provided for
banking, trust, surety, safe deposit, insurance, railway, street railway, tele-
graph, telephone, gas, electric light, heat, power, canal, aqueduct, cemetery,
and crematory companies (sec. 70, as amended by Acts of 1906, chap. 286; Acts
of 1910, chap. 395). The corporate existence of real estate corporations is
limited to fifty years (Acts of 1912, chap. 595).
2. Incorporators. — There must be at least three incorporators. There
are no residential requirements (sec. 7).
Walworth v. Brackett, 98 Mass. 98.
3. Articles of Association. — The incorporators should first prepare
and sign an agreement of association, stating (a) that the subscribers
thereto associate themselves together with the intention of forming a cor-
poration. The agreement should also set forth (6) the corporate name to
be assumed, (c) the location of the principal office of the corporation in
the Commonwealth and elsewhere, if the corporation is organized to do busi-
ness wholly outside of the Commonwealth. In addition to the foregoing the
agreement should also set forth (d) the purposes for which the corporation
is formed, the nature of the business to be transacted, 1 (e) total amount of
authorized capital stock of the corporation not to be less than $1,000, par value
of the shares not to be less than $5, and the number of shares into which the
capital stock is to be divided, and the restrictions if any imposed upon its
transfer. If there are more than two classes of stock, a description of the classes
and a statement of the terms upon which they are to be created and the method
of voting thereon. (/) If desired, provisions may be inserted for the conduct
and the regulation of the business of the corporation, for its voluntary dissolu-
tion, or for limiting or defining or regulating the powers of the corporation or
of its directors or stockholders, (t/) The subscribers by whom the first meet-
ing of the corporation is to be called must be stated, or, in lieu thereof, the
notice of said meeting is waived in writing by each of the incorporators, (h)
There must also appear the names and residences of the incorporators, and the
amount of stock subscribed for by each. The meeting should then be held,
whereat a chairman and temporary clerk should be chosen. The clerk should
be forthwith sworn. After by-laws have been adopted the incorporators must
proceed to the election of directors, a treasurer, clerk, and such other officers
as the by-laws may prescribe. A majority of the directors must forthwith
make, sign, and make oath to the articles of organization (for contents of arti-
cles of organization see sec. 4, post). The articles of organization and the records
of the first meeting of incorporators must be submitted to the commissioner
of corporations for examination, and he may require such amendments 1 hereof
and such additional information as lie may think necessary. If he finds the
articles conform to the provision of l he statute, he shall so certify and endorse
1 The Secretary of Stale permit s t ho insertion of any number of purposes in the articles
of association not covered by special act.
• 24 3G!)
DIGEST OF INCORPORATION ACTS. — MASSACHUSETTS.
his approval thereon. Thereupon the articles shall, upon payment of the organ-
ization tax, be filed for record in the office of the Secretary of State of the Com-
monwealth, who will issue a certificate of incorporation. The corporate existence
commences upon the filing of the articles of organization in the office of the
Secretary of the Commonwealth. The certificate of incorporation or a certified
copy thereof is conclusive evidence of the existence of the corporation (sees. 8,
9, 10, 11, 12).
Bird v. Daggett, 97 Mass. 494.
4. Contents of the Articles of Organization. — The articles of organi-
zation must set forth : (a) A true copy of the agreement of association, and
the names of the subscribers thereto. (6) The date of the first meeting and all
adjournments thereof, if any. (c) Amount of capital stock to be issued, the
amount thereof to be paid for in cash, by instalments, and the instalment to
be paid before the corporation commences business, and the amount thereof
to be paid for in property. If such property consists in part of real estate,
its location and the amount of stock to be issued therefor shall be stated. If
any part of such property is personal, it shall be described in such detail as the
commissioner of corporations may require, and the amount of stock to be issued
therefor shall be stated. If any part of the capital stock is issued for services
or expenses, the nature thereof and the amount of stock which is issued there-
for shall be stated, (d) The name, residence, and post-office address of each
of the officers of the corporation (sec. 11).
5. Corporate Name. — The name used shall indicate that it is a corpora-
tion as distinguished from a natural person or partnership. It is forbidden to
use the name of another domestic corporation or of a foreign corporation, or
of any partnership or association carrying on business in the Commonwealth
at the time of such organization or within three years prior thereto, or a name
so similar thereto as to be liable to be mistaken for it, except with the consent
in writing of said corporation, association, or partnership. Courts are given ex-
press jurisdiction in equity to enjoin the illegal use of the corporate name (sec. 5).
B. R. Co. v. Company, 149 Mass. 436; 21 N. E. 875.
6. Statutory Powers. — In addition to the enumeration of common law
powers of corporations, the statute grants to corporations a number of extraor-
dinary powers which may be enumerated as follows : To have perpetual suc-
cession ; to insert in the agreement of association rules for the regulation of the
internal affairs of the corporation ; to appoint an executive committee from
its board of directors, to whom may be delegated the management of the current
and ordinary affairs of the corporation. The act expressly forbids a corporation
to vote upon any share of its own stock. It authorizes corporations to vote
by proxy, to forfeit shares for non-payment of assessments, to issue preferred
stock, and to classify directors (sees. 4, 16, 19, 23, 24; Acts of 1903, chap. 423;
Acts of 1912, chap. 175).
Commonwealth v. Railway, 142 Mass. 146; 7 N. E. 716; McNeil v. Boston Chamber of
Commerce, 154 Mass. 277; 28 N. E. 245; S. W. Co. v. Lamb, 143 Mass. 420; 9 N. E. 823;
French v. Company, 145 Mass. 261; 14 N. E. 113; Kelly v. Biddle, 180 Mass. 147; 61 N. E.
821 ; U. W. Co. v. Stone, 127 Fed. 587.
7. Corporate Indebtedness. — There is no limit to the amount of cor-
porate indebtedness in Massachusetts.
8. Organization Tax. — The organization tax is one-twentieth of one per
cent (50 cents) on each one thousand dollars of authorized capital stock, except
that in uo case shall it be less than $25 (Acts of 1907, chap. 396).
370
DIGEST OF INCORPORATION ACTS. — MASSACHUSETTS.
9. Filing and Recording Fees. — There are no filing or recording fees
due the Secretary of State other than the payment of the organization tax.
The charge for issuing certified copy of certificate of incorporation is $1. The
charge for filing and recording amendments to articles of incorporation is $5,
except in the case of increase of capital stock. The charge for fifing annual
certificate of condition is So.
10. Commencing Business. — Aside from the right to perfect the organ-
ization of the corporation, no business can be transacted until the articles of
organization have been approved by the commissioner of corporations, the or-
ganization tax paid, and the certificate recorded in the office of the Secretary
of the Commonwealth (sec. 12). Whenever any change is made in the officers
of a domestic corporation, the corporation shall forthwith file in the office of
the Commissioner of Corporations, within thirty days after such change has
been made, a certificate of such change, signed and sworn to by the president,
clerk, and a majority of the directors (Act of April 6, 1907).
Chase Elevator Co. v. Company, 152 Mass. 428; 28 N. E. 300; Hawes v. Anglo-Saxon
Co., 101 Mass. 385; A. M. F. Insurance Co. v. Jesser, 87 Mass. 446.
11. Organization Meeting. — The various steps necessary to procure the
organization of the corporation have already been set forth in sec. 3, ante.
The organization meeting must take place within the Commonwealth. The
statutory officers in Massachusetts are a president, clerk, and treasurer (sees. 9,
10, 20).
Packard v. Company, 168 Mass. 92; 46 N. E. 433; Walworth v. Brackett, 98 Mass. 98.
12. Meetings of Stockholders and Directors. — All meetings of stock-
holders must be held within the State. Directors' meetings may be held with-
out the State if the by-laws so provide (sees. 20, 25; Laws of 1904, chap. 207).
There must be an annual meeting of the stockholders held within ninety days
after the end of the fiscal year of the corporation. The time, place, and manner
of holding and conducting said meeting shall be fixed by the by-laws (Acts of
1904, chap. 207; see also Acts of 1912, chap. 175).
Sargent v. Webster, 54 Mass. 497.
13. Directors' Qualifications, Powers, and Liabilities, a. Quali-
fications. — There must be at least three directors, each of whom must be a
stockholder unless the by-laws otherwise provide. There are no residential re-
quirements. The president of the corporation must be elected annually by
and from the board of directors. The other officers are elected by the stock-
holders. Directors may be divided into classes not exceeding five, if desired
(sec. 18). Under the statute the board may elect from its members an executive
committee, to whom may be delegated the management of the current and
ordinary business of the corporation (sees. 17, 18, 19).
b. Liabilities. — Directors who make oath falsely to articles of organization
are jointly and severally liable to any stockholder for actual damages caused
by false statements therein and which they knew to be false. Also, for debts
and contracts of the corporation where they declare or assent to a dividend
when the corporation is or thereby is rendered bankrupt or insolvent, to the
extent of such dividend. Also, for debts contracted between the time of making
or assenting to a loan to the directors and the time of its repayment, to the
extent of such loan unless they voted against such dividend <>r the paying <>f
such loan (sees. 34, 35). No director can be held liable for ils debts or con-
tracts uidess the corporation has been duly adjudicated bankrupt or unless a
371
DIGEST OF INCORPORATION ACTS. MASSACHUSETTS.
judgment has been recovered against it and it has neglected for thirty days after
demand made upon it to pay the amount due (sees. 14, 36. As to liability for
making political contributions, see Acts of 1908, chap. 483; Acts of 1911, chap.
428). An officer of a mining corporation who makes false statement knowing
the same to be false, in any application to any stock exchange to sell the shares
of such corporation shall be punished by a fine not exceeding five hundred dol-
lars or by imprisonment for not more than two years.
No officer, agent, clerk or servant of a mining corporation, nor any person
dealing in the shares of such corporation, shall cause to be published any adver-
tisements of the shares of such corporation in which any statement is made as
to the value of the property of the corporation, or of its present or prospective
earnings or of a prospective increase in the price of the shares unless the Presi-
dent and a majority of the directors of such corporation within sixty days prior
to the date of the publication of such advertisement shall have filed with the
Commissioner of Corporations in such form as he shall prescribe a statement,
under oath, of the financial condition of the corporation, a full description of its
property and a statement of the earnings, if any, from the operation of the same
for the fiscal year next preceding the date of the fifing of such statement (Acts
of 1911, chap. 492, sec. 1. See also Acts of 1912, chap. 175).
Cole u. Cassidy, 138 Mass. 437; Felker v. Company, 148 Mass. 226; 19 N. E. 220; Wight
v. Company, 117 Mass. 226.
14. Stockholders' Liabilities. — Stockholders are liable for the debts of
the corporation in any event to the extent of their unpaid stock subscriptions.
The statute also provides that stockholders who vote to reduce the capital stock
of the corporation contrary to law shall be liable for the payment of the debts and
contracts of the corporation existing at the time of such reduction to the extent
of the amount withdrawn. Stockholders are also liable for all moneys due to
operatives for services rendered within six months before demand made upon the
corporation and its neglect or refusal to make such payment (sees. 33, 36, 39;
Acts of 1911, chap. 488).
Hancock National Bank v. Ellis, 166 Mass. 414; 44 N. E. 349; Pettibone v. Company,
148 Mass. 411 ; 19 N. E. 337; Stedman v. Eveleth, 47 Mass. 114; Flint v. Pierce, 99 Mass. 68.
15. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him, signed by the president and treasurer (sec. 26. See as
to transfer of stock Acts of 1910, chap. 171).
Wyman v. Powder Co., 62 Mass. 168; Sibley v. Bank, 133 Mass. 515.
16. Preferred Stock. — One or more kinds of stock may be created under
such terms and conditions as may be provided for in the agreement of associ-
ation or in an amendment thereto adopted as provided by statute (sees. 27, 40).
Am. Tube Works v. Machine Co., 139 Mass. 5; 29 N. E. 63.
17. Payment of Capital Stock. — Capital stock may be issued for cash,
property, services, or expenses. If it is paid for in instalments, this fact must
be set forth upon the certificate. If any stock be issued subsequent to the issue
of stock authorized by the articles of association, then a certificate is prepared
within thirty days after the date when said stock has been authorized, and is
signed and sworn to by the president, treasurer, and a majority of the directors,
setting forth: (1) Total amount of capital stock authorized. (2) The amount
of stock already issued for cash, payable in instalments, and the amount paid
thereon; also the amount of full-paid stock already issued for either property,
services, or expenses. (3) A description of said property and the nature of said
372
DIGEST OF INCORPORATION ACTS. — MASSACHUSETTS.
services or expenses. This certificate must be submitted to the Commissioner
of Corporations. If he finds it conforms to the law, he shall so certify and en-
dorse his approval thereon. The certificate must then be filed in the office of
the Secretary of the Commonwealth, who upon payment of the proper fee shall
cause it and tlie endorsement thereon to be recorded. The law provides that
no stock shall be at any time issued unless the cash or property, servict
expenses for which it was authorized to be issued has Keen actually received or
incurred by or conveyed or rendered to the corporation, and the president.
treasurer, and directors shall be jointly and severally liable to any stockholder
of the corporation for actual damages caused to him by such issue (sec. 14).
18. Books. — The clerk is required to keep a record of all proceedings of
the stockholders and board of directors. The corporation is required to keep
a stock transfer book within the State. These books are open to the inspection
of stockholders at all times (sec. 30).
19. Office and Clerk. — All corporations must have an office within the
State, and must appoint a clerk who is a resident of the Commonwealth (sees.
8, 18).
20. Reports. — Every corporation shall annually within thirty days after
the date fixed by the by-laws for the annual meeting, or within thirty days
after the final adjournment of such meeting, prepare a report of the condition
of the company, signed and sworn to by its president, treasurer, and at least
a majority of its directors, stating the name of the corporation ; location of its
principal office in the Commonwealth or elsewhere in case the corporation is
organized to do business wholly outside of the Commonwealth ; date of its last
preceding annual meeting ; total amount of its authorized capital stock ; amount
due and outstanding and amount then paid thereon ; the class, or classes, if
any, into which it is divided; the par value and number of its shares; names
and addresses of all the directors and officers, and the date on which the term
of office of each expires ; statement of the assets and liabilities of the corpora-
tion as of the date of the end of its last fiscal year. This report must be sub-
mitted to the commissioner of corporations for his approval and who shall
endorse his approval thereon if in conformity with the law. If the corporation
has a capital stock of 8100,000 or more, it shall be accompanied by a written
statement of the affairs of such corporation. The statement of the auditor of
the corporation's books must be filed with the annual report in the office of the
Secretary of State (sees. 45-50, Acts of 1906, chap. 34G; Acts of 1908, chap.
300; Acts of 1909, chap. 326).
In addition to the foregoing, every corporation shall annually, between the
first and tenth of April, make a return to the tax commissioner under oath of
its treasurer, stating the name of the corporation and setting forth the follow-
ing as of the first day of April of the year in which the return is made: the
total amount of the capital stock of the corporation, amount issued and out-
standing, and the amount then paid thereon; classes into which it is divided;
par value of shares; number of its shares, and their market value, as to each
class of shares, if there are two or more classes; statement of the real estate,
machinery, merchandise, and other assets belonging to the corporation within
and without the Commonwealth; a list of the stockholders of the corporation,
their residences, the amount, and class of stock (if more than one) belonging
to each (Acts of 1911, chap. 379). If stock is pledged, the name and residence of
the pledgor and pledgee must be given (sees. 15 50 inclusive). By chap. 222 of
Acts of 1905, if by-laws are amended making a change in the date of the annual
373
DIGEST OF INCORPORATION ACTS. — MASSACHUSETTS.
meeting, the commissioner of corporations must be notified thereof. Whenever
any change is made in the officers of a domestic corporation the corporation
shall forthwith file in the office of the Commissioner of Corporations, within
thirty days after such change has been made, a certificate of such change, signed
and sworn to by the president, clerk, and a majority of the directors (Act of
April 6, 1907).
21. Anti-Trust Statute. — There is no anti-trust statute.
22. Annual Franchise Tax. — The annual franchise tax is based upon
the value of the corporate franchises. This tax upon the value of the corpo-
rate franchises, after making certain deductions enumerated in the act, shall
necessitate a tax levied at a rate equal to the average rate in all cities and
towns in the Commonwealth during the same year, as returned by the assessors
of the several cities and towns of the State, upon an amount, less said deduc-
tions, not exceeding twenty per cent in excess of the value as found by the
tax commissioner, of the real estate, machinery, merchandise, and securities,
which, if owned by a natural person, resident of the Commonwealth, would be
liable to taxation ; and the total amount of taxes to be paid by such corpora-
tion in any year upon its property to be taxed in the Commonwealth, and
upon the value of its corporate franchises, shall amount to not less than one-
tenth of one per cent of the market value of its capital stock at the time such
assessment is made by the tax commissioner (sees. 74, 76-87 inclusive). The
tax becomes due and payable on November 1st. (See also Acts of 1904,
chaps. 225, 442; Acts of 1910, chap. 270. See as to abatement of unpaid
taxes, Acts of 1908, chap. 220; Acts of 1912, chap. 497.)
23. Statutory Grounds for Forfeiture of Charter. — Charters may be
forfeited for usurpation of franchises or privileges not conferred by law (P. S.,
chap. 186, sec. 1724). Also for failure to pay annual taxes and make an-
nual statements for two successive years (sees. 49, 78 ; Acts of 1906, chap.
346).
Russell v. M'Lellan, 14 Pick. 63.
24. Amendments. — Every corporation may, at a meeting duly called for
that purpose, by the vote of a majority of all its stock, or, if two or more classes
of stock have been issued, of a majority of each class outstanding and entitled
to vote, authorize an increase or reduction of its capital stock and determine
the terms and manner of the disposition of such increased stock, may authorize
a change of the location of its principal office or place of business in this Common-
wealth, or change of the par value of the shares of its capital stock.
It may, at a meeting duly called for the purpose, by the vote of two-thirds
of all its stock, or, if two or more classes of stock have been issued, of two-
thirds of each class of stock outstanding and entitled to vote, or by a larger
vote if the agreement of association so requires, change its corporate name,
the nature of its business, the classes of its stock subsequently to be issued
and their voting power, or make any other lawful amendment or alteration in
its agreement of association or articles of organization, or sell, lease, or ex-
change all its property and assets, including its good-will and its corporate
franchises, upon such terms and conditions as it deems expedient.
Articles of amendment, signed and sworn to by the president, treasurer,
and a majority of the directors, shall within thirty days after said meeting be
prepared, setting forth such amendment or alteration, and stating that it has
been duly adopted by the stockholders. Such articles shall be submitted to
374
DIGEST OF INCORPORATION ACTS. — MASSACHUSETTS.
the commissioner of corporations, who shall examine them in the same man-
ner as the original articles of organization. If he finds that they conform to
the requirements of law, he shall so certify and endorse Ins approval thereon,
and they shall thereupon be filed in the office of the Secretary of the Com-
monwealth, who, upon payment of the fees hereinafter provided, shall cause
them, and the endorsement thereon, to be recorded. No amendment or alter-
ation of the agreement of association or articles of organization shall take
effect until said articles of amendment shall have been filed in the office of
the Secretary of the Commonwealth as aforesaid.
If an increase in the total amount of the capital stock of any corporation
shall have been authorized by a vote of its stockholders in accordance with
the provisions of sec. 40, the articles of amendment shall also set forth (1) the
total amount of capital stock already authorized ; (2) the amount of stock
already issued for cash payable by instalments and the amount paid thereon,
and the amount of full-paid stock already issued for cash, property, services, or
expenses ; (3) the amount of additional stock authorized ; (4) the amount
of such stock to be issued for cash, property, services, or expenses respectively ;
(5) a description of said property and a statement of the nature of said services
or expenses, in the manner required by the provisions of sec. 11 of the act.
All corporations, both domestic and foreign, must, whenever any change is made
altering the date fixed in the by-laws for the annual meeting, file in the office
of the Commissioner of Corporations a certificate of such change, signed and
sworn to by the clerk of said corporation (Acts of 1905, chap. 222).
Where any change is made in the office of a domestic corporation organized
under the general act, there must be filed in the office of the Commissioner of
Corporations a certificate of such change, signed and sworn to by the president,
clerk, and a majority of its directors (Acts of 1907, chap. 282; Acts of 190S,
chap. 180).
25. Extension of Corporate Existence. — There is no express provision
for the extension of corporate existence. (See, however, sec. 40.)
26. Dissolution. — By a majority vote of all classes of stock entitled to
vote, a petition for dissolution, to be addressed to the courts having jurisdic-
tion in the premises, may be authorized (sees. 51-55 inclusive; Acts of 1905,
chap. 156).
Stone v. Framingham, 109 Mass. 303; Olds v. Company, 185 Mass. 500; 70 N. E. 1022.
27. Foreign Corporations. — Every foreign corporation which has a
usual place of business within the Commonwealth or which is engaged therein
permanently or temporarily, and with or without the usual place of business
therein, in the construction, erection, alteration, or repair of buildings, bridges,
railroads, or structures of any kind, shall, before doing business in this Common-
wealth, in writing appoint the Commissioner of Corporations to be its attorney
upon whom all lawful process may be served. A copy of the power of attorney
and a copy of the vote authorizing its execution, duly certified, must be filed
in the office of the State Corporation Commissioner ; also a certified copy of its
articles of association, together with a true copy of its by-laws, and a certificate
in such form as the Commissioner of Corporations may require, setting forth
the name of the corporation, location of its principal office, names and addresses
of its president, treasurer, clerk, or secretary, and the members of its board
of directors, date of its annual meeting for the election of officers, amount of
its capital stock authorized and issued, number and par value of its shares
375
DIGEST OF INCORPORATION ACTS. — MASSACHUSETTS.
and the amount paid in, and if any part of such payment has been made other-
wise than in money, the details of such payment. This certificate must be
signed and sworn to by the president and treasurer and by a majority of its
directors. No foreign corporation can transact any business which is not
permitted to domestic corporations by the laws of the Commonwealth (sees.
56-60; Laws of 1905, chap. 242).
Before transacting business within the State foreign corporations must
pay $25 for filing copies of the charter, by-laws, and certificate required by
the act. All corporations having a usual place of business within the Common-
wealth, must within thirty days fixed for its annual meeting last preceding the
date of said certificate, or within thirty days after the final adjournment of
said meeting but in three months before the date so fixed for said meeting,
prepare and file in the office of the Secretary of the Commonwealth, a certificate
signed and sworn to by its president, treasurer, and by a majority of its board
of directors, showing the amount of its authorized capital stock, its assets and
liabilities as of a date not more than thirty days prior to said annual meeting,
in such form as is required of domestic corporations under the statutes of the
State (Acts of 1905, chap. 233). The foregoing certificate must be accom-
panied by a written statement under oath by the auditor as provided by sec-
tion 47 of the Acts of 1903, chap. 437, as amended by Acts of 1908, chap.
300. Before the certificate is filed it must be submitted to the Commissioner of
Corporations, who must examine and approve such certificate before it can be
filed, and who must assess upon such corporation an excise tax in accordance
with the Laws of 1903, chap. 437, sec. 75. The charge for filing this
annual certificate of condition is $5 (sec. 91). Each year foreign corporations
are required to pay an excise tax of one hundredth of one per cent of the par
value of its authorized capital stock, as stated in its annual statement of condi-
tion, this amount never to exceed $2,000 (sec. 75 as amended by Acts of 1908,
chap. 300). (As to special provisions covering corporations engaged in the
construction, erection, etc., of buildings, bridges, railroads, or structures of
any kind, see Acts of 1905, chaps. 233, 242 ; Acts of 1906, chap. 346.)
Broadway Nat. Bank v. Baker, 176 Mass. 294; 57 N. E. 603; Kennebec Ins. Co. v. Au-
gusta Ins. Co., 6 Gray, 204; American Ins. Co. v. Owen, 15 Gray, 491; Enterprise Brew-
ing Co. v. Grime, 173 Mass. 252; 53 N. E. 855; Hayward v. Leeson, 176 Mass. 310; 57 N. E.
656; Bishop v. Globe Co., 135 Mass. 132; Johnston v. Insurance Co., 132 Mass. 432; Attor-
ney-General v. Company (Mass.), 74 N. E. 467.
376
DIGEST OF INCORPORATION ACTS. — MICHIGAN.
MICHIGAN.
(The references below are to the Session Laws of 1903, chap. 232, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Michigan is found in the Session Laws of 1903,
chap. 232. Special acts are provided for banking, insurance, and railway com-
panies. Under the act referred to above, corporations may be organized for
any lawful purpose. Special provision is, however, made for raining corpora-
tions. (See Laws of 1903, chaps. 130, 233, 244 ; Laws of 1905, chaps. 28, 105,
232; Laws of 1905, Act 167.;
2. Incorporators. — Three or more persons may incorporate. There are
no residential requirements (Laws of 1903, chap. 232, sec. 1).
3. Contents of the Articles of Association. — The articles of associa-
tion should contain :
a. Name. — Similarity of names amongst either domestic or foreign cor-
porations doing business within the State is forbidden (Laws of 1903, chap.
232. sec. 2; Laws of 1907, chap. 146).
People v. Company, 111 Mich. 405; 69 N. W. 663.
b. Purposes. — A company may incorporate and carry on manufacturing
or mercantile business or any union of the two, or for buying, selling, or breed-
ing live-stock, or for engaging in maritime commerce or navigation; or for
purchasing, holding, or dealing in real estate; or for conducting warehouses
and storage business, or for erecting and owning buildings, or for the production
and supplying of gas and electricity; or for printing, publishing, and book-
making, or for carrying on any other lawful business except such as is excluded
by sec. 36 of the act, but a company cannot combine any two hues of business
except manufacturing and mercantile, which is expressly provided for in the
act (Laws of 1903, chap. 232, sees. 1, 2).
D D. Club v. Fitzgerald, 109 Mich. 670; 67 N. W. 899; Attorney-General v. Lorman,
59 Mich. 157; 26 N. W. 311.
c. Location of Business. — Location of the principal place or places where
the corporate operations are to be conducted (Id.).
d. Capital Stock. — The total authorized capital stock, which shall not be
less than $1,000 nor more than $25,000,000 (Id. ; see also Laws of 1903, chap.
233). The capital stock of oil companies cannot be less than $50,000 nor more
than $250,000 (Laws of 1907, Act 167).
e. Number and Par Value of Shares. — The par value of the shares must be
either $10 or $100 (Id.). In mining companies the par value must be $25 (Laws
of 1903, Act 233). In mining companies the capital stock cannot be less than
$10,000 nor more than $10,000,000 (Laws of 1903, Act 233).
/. The Amount of Stock Subscriptions. — This must not be less than fifty
per cent of the authorized capital stock (Id.).
g. Preferred Stock. — If preferred stock is desired, this must be provided
for in the articles, and an exact statement of the terms upon which the com-
mon and preferred stock are created, and the amount of each subscribed and
the amount of each paid in (Id.).
h. Capital Slock paid in. — The amount of capital stock paid in at the time
of executing the articles, which shall not be less than ten per cent of the author-
377
DIGEST OF INCORPORATION ACTS. — MICHIGAN.
ized capital, and not less than $1,000, except where the capitalization is $2,000
or under, when it shall be twenty-five per cent thereof. Under this section
the manner of payment of the capital stock is required to be set forth in detail
— this to include an itemized description of the property in which the stock
payment is made, with the value at which each item is taken, which valuation
shall be conclusive in the absence of actual fraud (Id.). There must be made
and attached to the articles of association an affidavit by at least three of the
organizers of such corporation, that they know the property described in such
articles of association and that the same has been actually transferred to such
corporation, and that such property is of the actual value therein stated (Laws
of 1907, Act 146).
i. Domiciliary Office. — The location of the office in the State of Michigan
for the transaction of business (Id.).
j. Duration. — The corporate existence, which shall not exceed thirty
years (Id.).
k. Stockholders. — The names of stockholders, residences, and number of
shares of stock subscribed for by each must be set forth (Id.).
I. Provisions for the Regulation of Internal Affairs. — The articles of asso-
ciation may contain any provision for the regulation of the business and for
the conduct of the affairs of the corporation, and any provision creating, defin-
ing, limiting, or regulating the powers of the corporation, the directors, and the
stockholders, or any class or classes of stock and stockholders, that may be
deemed desirable (sec. 2).
People ex rel. v. Company, 111 Mich. 405; 69 N. W. 653.
4. Statutory Powers. — In addition to the statutory enumeration of the
common law powers of corporations the act gives the following extraordinary
powers: The corporation may conduct its business in whole or in part, if it
desires, without the State and within the United States or any foreign country
(Laws of 1907, Act 51). Also the power to issue capital stock in exchange for
real and personal property, with the power to make such capital stock full paid
stock and not liable for any further call, and to relieve the holders thereof from
any stockholders' liability in the absence of actual fraud in the transaction.
To vote by proxy, to forfeit stock for non-payment of assessments, to enforce
a lien for non-payment of debts, to issue preferred stock (Laws of 1903, chap.
223, 232, sees. 10, 11, 13, 14, 20; see also Laws of 1901, chaps. 176, 183; Laws
of 1905, chap. 61; Laws of 1907, chaps. 141 and 162). Mining companies may
acquire stock in certain designated corporations (Laws of 1903, chap. 233).
In all elections for directors of any corporation organized under any general
law of this State other than municipal, insurance, banking corporations, build-
ing and loan associations, every stockholder shall have the right to vote in
person or by proxy the number of shares of stock owned by him for as many
persons as there may be directors to be elected, or to cumulate their shares, and
give one candidate as many votes as will equal the number of directors multi-
plied by the number of shares of his stock; or to distribute them on the same
principle among as many candidates as he shall see fit. All such corporations
shall elect their directors annually and the entire number of directors shall be
balloted for at one and the same time and not separately; provided, that the
by-laws of any such corporation shall not be so amended as to reduce the number
of directors of such corporation in case the votes of a sufficient number of
shares are recorded against such proposed amendment, which if cumulatively
378
DIGEST OF INCORPORATION ACTS. — MICHIGAN.
voted as herein provided, would elect one or more directors where the same
number of shares if cumulatively voted would not be sufficient to elect the same
number of directors of the reduced board (Laws of 1911, chap. 268, sec. 1).
Eakins v. Company, 75 Mich. 56S; 42 X. W. 982: Shadford v. Company, 130 Mich. 300;
89 N. \Y. 960; Whiter. Rice, 112 Mich. 403; 70 N. W. 1024.
5. Procuring the Charter. — The articles of association must be signed
and acknowledged by each of the incorporators. It seems to be contemplated
by the statute that the corporation shall be organized before the articles are
filed in any State or local office (see Organization Meeting, post, sec. 10). The
statute provides that before any corporation organized to operate in the State
shall commence business, the president shall cause the articles of association
to be recorded in the office of the Secretary of State and in the office of the
county clerk of the county in which its operations are to be carried on. If it
is organized to operate outside of the State, the requirement is the same, except
that the articles must then be filed in the office of the Secretary of State and
in the office of the county clerk of the county in the State where the domiciliary
office is located. The corporate existence, however, commences as soon as
articles are subscribed and acknowledged (Id. sees. 2, 9).
Carmody v. Powers, 60 Mich. 26; 26 N. W. 801 ; Whipple v. Parker, 29 Mich. 369.
6. Corporate Indebtedness. — There is no limit prescribed by statute
upon the creation of corporate indebtedness.
7. Organization Tax. — One-half of one mill on each dollar of authorized
capital stock, that is, 50 cents on each thousand dollars, with a minimum fee of
$5 (Laws of 1891, chap. 2; Laws of 1893, chap. 79; C. L. of 1897, sec. 8574).
Michigan Fern. Sem. v. Sec. of State, 115 Mich. 118; 73 N. W. 131.
8. Filing and Recording Fees. — The Secretary of State charges a fifing
fee of 50 cents or a recording fee of 20 cents per folio of one hundred words, or
both, according as the act under which the corporation is incorporated may
provide. The Secretary of State does not issue a certificate of incorporation.
His charge for issuing a certified copy of articles of incorporation is 20 cents
per folio of one hundred words. For filing and recording amendments the
charge is 50 cents for filing, and 20 cents per folio of one hundred words for
recording. For fifing annual reports, 50 cents each. The filing fee in local
county offices is usually 50 cents, and the recording fees vary from 10 to 20
cents per folio of one hundred words.
9. Commencing Business. — Corporations may commence business as
soon as the articles of association are filed and recorded in the office of the
Secretary of State, and — in the case of corporations formed to carry on its
business within the State — in the office of the clerk of the county in which
its corporate business is to be carried on, or — in the case of non-resident cor-
porations — in the office of the county clerk of the county where the domiciliary
office is located (Id. sec. 9). In the case of manufacturing, commercial com-
panies, etc., before commencing business, at least ten per cent of the capital
must be paid in and fifty per cent subscribed (Laws of 1903, chap. 232, sec. 2).
O. V. & P. Co. v. Secretary of State, 8 Detroit Leg. News, 795; Whitney v. Wyman, 101
U. S. 392.
10. Organization Meeting. — Any two of the stockholders named in the
articles of association may call a meeting of the stockholders for the purpose of
■ dzation, !>y publishing notice thereof in the manner required by statute. This
379
DIGEST OF INCORPORATION ACTS. — MICHIGAN.
notice may be waived in writing by all the stockholders specifying the time for the
organization meeting. The organization meeting should be held within the State
in order to avoid any possible question as to the legality thereof (Id. sec. 3).
11. Meetings of Stockholders and Directors. — The statute specifi-
cally provides that corporations may establish an office or offices for the trans-
action of business without the State and within the United States, and to hold
any meetings of the stockholders and directors thereat. The place must be
chosen by a vote of a majority of the stockholders at a meeting duly called for
that purpose, and after being fixed cannot be changed within one year, and
must be certified by the directors of the corporation to the Secretary of State
within two months from the time such office is located (Id. sec. 20). Cumulative
voting in the election of directors is permitted (Laws of 1905, chap. 61).
12. Directors' Qualifications and Liabilities, a. Qualifications. — There
must be at least three directors who shall be stockholders. In mining companies
the maximum number of directors is nine (Laws of 1903, chap. 233). There
are no residential requirements (Id. sec. 4). Cumulative voting is provided for
(Laws of 1903, chap. 224; Laws of 1905, chap. 61; Laws of 1907, Act 141).
Anderson Carriage Co. v. Pungs, 127 Mich. 534; 86 N. W. 1040.
b. Liabilities. — The directors are liable to creditors for failure to make
annual reports as provided by law ; for declaration of dividends when the com-
pany is insolvent, or when the payment of the same would- render it insolvent ;
and are jointly and severally liable to the extent of three times the amount
paid on the stock outstanding in their name for violation of any provision of
the Business Corporation Act (Id. sees. 12, 22, 23 ; also for making false state-
ments or reports, Laws of 1909, chaps. 25, 85).
Bank v. Pierson, 112 Mich. 410; 70 N. W. 901 ; M. I. W. C. & S. Co. v. Mosher, 114 Mich.
64; 72 N. W. 117; Keeney v. Converse, 99 Mich. 316; 58 N. W. 325; Gennert v. Ives, 102
Mich. 547; 61 N. W. 9; Silberman v. Munroe, 104 Mich. 352; 62 N. W. 555.
13. Stockholders' Liabilities. — If the capital stock of a corporation is
withdrawn before the payment of the corporate debts for which such stock
would have been liable, the stockholders are jointly and severally liable to
any creditor to the amount that has been withdrawn. Stockholders are indi-
vidually liable for all labor performed for the corporation. They are also liable
to the amount of their unpaid stock subscriptions (Cons., Art. XV. sec. 7, Public
Acts of 1903, Act 232, sees. 21, 24, 28, 29, 35). Incorporators are liable for false
statements as to the amount of capital stock paid in.
A. M. & G. B. Co. v. Bulkley, 107 Mich. 447; 65 N. W. 291; Graves v. Brooks, 117 Mich.
424; 75 N. W. 932; A. S. & W. Co. v. Eddy, 130 Mich. 266; 89 N. W. 952; McBryan v.
Company, 130 Mich. Ill; 89 N. W. 683; P. S. Bank v. Company, 105 Mich. 535; 63 N. W.
514; Ten Eyckv. Company, 114 Mich. 494; 72 N. W. 362; Kamp v. Wintermute, 107 Mich.
447, 635; 65 N. W. 570; A. M., etc. Co. v. Bulklev, 107 Mich. 447; 65 N. W. 291; Mussel-
man v. Wright, 107 Mich. 639 ; 65 N. W. 569; Voight v. Dregge, 97 Mich. 322; 56 N. W. 557.
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him signed by such officers as the by-laws may prescribe.
The par value of shares may be either $10 or $100, except in the case of mining
companies, where it must be $25 (Laws of 1903, Act 232 ; Laws of 1907, Act
167).
15. Preferred Stock. — The corporation may provide in its articles of
association or by amendment thereto, by a three-fourths vote of the stock, for
the issuance of preferred stock, not to exceed two-thirds of the capital stock
paid in, which shall be subject to redemption at par at a certain time to be
fixed by the by-laws of the corporation and to be expressed in the certificate
380
DIGEST OF INCORPORATION ACTS. — MICHIGAN.
therefor. The holders of preferred stock shall be entitled to a dividend payable
quarterly, half yearly, or yearly, same to be cumulative, and not to exceed
eight per cent per annum. Preferred stockholders are not liable for the debts
of the corporation excepting debts for labor. Preferred stockholders shall have
voting power except when otherwise provided in the articles of association or
amendments thereto. The right to vote is also given under certain other con-
ditions (Id. sec. 35).
16. Payment of Capital Stock. — The statutes of Michigan are peculiar
with respect to the manner of the payment of capital stock. Only such prop-
erty may be taken in payment for capital stock as the purposes of the corpora-
tion may require, and only such property as can be sold and transferred by
the corporation and as shall be subject to levy or sale on execution or other
process issued out of any court having competent jurisdiction for the satisfac-
tion of any judgment or decree against such corporation (Laws of 1907, Act 146).
A recent amendment of the act requires that there shall be made and attached
to the articles of association an affidavit by at least three of the organizers of
such corporation, that they know the property described in said articles of
association, and that the same has been actually transferred to such corpora-
tion and that sucli property has the actual value therein stated (Laws of 1907,
Act 146). All stock must be issued and paid for at par (Laws of 1907, Acts
51, 146).
Graves v. Brooks, 117 Mich. 424.
17. Books. — Books containing accounts of the company must be kept at
the office of the treasurer of the corporation within the State for the inspection
of stockholders (sec. 15). Corporations having their principal place of business
within the State are required to keep their stock transfer book at such office.
18. Office and Agent. — Every corporation must maintain an office within
the State and an agent to receive process. Such office cannot be changed within
one year after incorporation (Laws of 1903, chap. 232, sec. 2).
19. Reports. — Corporations must annually in the month of January or
February make duplicate reports showing the condition of such corporation
on the 31st day of December next preceding, or, if the fiscal year of any cor-
poration shall close within ninety days preceding said 31st day of December,
the report may be as at the close of said fiscal year, provided flour-milling cor-
porations shall make and deposit reports in the month of July for the year
ending June 30th preceding, such report to state the amount of common and
preferred capital stock authorized, and the amount thereof subscribed for and
the amount thereof actually paid for in cash, and the amount thereof paid for
in property, the total value as near as may be estimated of all property owned
by the corporation, the value of the different items or classes of property as
follows : real estate used in the business, real estate not used in the business,
goods, chattels, merchandise, material and other similar tangible property ;
patent rights, copyrights, trade-marks, and formuke, good-will, and other prop-
erty specifying the kind; value of all credits owing to the corporation; the
amount of debts of the corporation ; the name and post-office address of each
stockholder and the number of shares of preferred and common stock held by
him at the date of such report, the name and post-office address of each officer
and director of the corporation. Such reports must be signed by a majority
of the board of directors and verified by the oath of the secretary of the cor-
poration and deposited in the office of the Secretary of State within the said
month of January or February, or witlun sixty days after the dose of Buch
381
DIGEST OF INCORPORATION ACTS. — MICHIGAN.
fiscal year, accompanied by a filing fee of 50 cents. The Secretary of State,,
after filing one of the reports in his office, is required to forward the other to
the county clerk of the county in which the principal place of business of the
corporation is situated, said county clerk to file the same in his office. Upon
failure to file the report within the time specified, if continued in default
until February 10th, the corporate powers shall be suspended thereafter until
it shall have filed such report. During the default directors are made liable
for the debts of the corporation contracted since the filing of the last report of
said corporation (Laws of 1905, chap. 194; Laws of 1907, Act 137). For special
provisions as to mining and smelting and certain classes of manufacturing cor-
porations, see Laws of 1911, chap. 269).
20. Anti-Trust Statute. — Under the Act of March 3, 1899, all trusts or
combinations intended to prevent free competition in business are prohibited
(Stat., sees. 9354 j-9354 p ; Laws of 1899, chap. 255 ; Laws of 1905, chaps. 229,
329).
21. Statutory Grounds for Forfeiture of Charter. — The charter may
be forfeited for entering illegal trusts or combines, for attempting to act as a
corporation when not legally incorporated, or for misuser or non-user (Stat.,
sees. 8618, 8657, 9354 m). Also for failure to file annual reports for ten days
after February 1st corporate powers are suspended (sec. 12 ; Laws of 1905,
Act 194). Failure to keep stock and transfer books at principal office in the
State is also ground for forfeiture (C. L. sec. 8567 ; see also C. L. 9950 ; Laws
of 1899, Act 255 ; Laws of 1905, Acts 229, 329).
22. Amendments. — The capital stock may be increased or decreased at
any annual meeting of the stockholders or at any special meeting thereof called
for that purpose, notice of such purpose to be given with the notice of such
annual or special meeting by a vote of two-thirds of the capital stock of the
corporation. In voting upon the increase of the capital stock the stockholders
shall have power, by the same statutory majority, to fix the value thereof,
and the price per share, which shall not be less than par, at which the increase
of the capital stock shall be subscribed and paid for by the stockholders, as
well as the time and manner of the subscription and payment, and by the
same vote to authorize the directors of the corporation to sell, at not less than
the price so fixed, any part of such increase not subscribed by the stockholders
after they have had a reasonable opportunity to make subscription of their pro-
portionate shares thereof; and to make provision for calling in and cancelling
the old and issuing new certificates of stock ; but nothing herein contained shall
in any way operate to discharge any company, which may diminish its capital
stock, from any obligation or demand that may be due from said company.
When a corporation shall so increase or diminish its capital stock, the president
and a majority of the directors shall make a certificate thereof, which shall be
signed by them and recorded and returned as provided herein for recording
and returning the original articles of incorporation, and such increase or diminu-
tion shall commence and be operative from the date when such certificate is
recorded in the office of the Secretary of State. Provided, that in order to en-
title such certificate to be recorded it must show that at least fifty per cent of
the total authorized stock, after such increase, has been subscribed, and that
at least ten per cent of the total authorized capital stock has been actually paid
in (sec. 3; Laws of 1907, chap. 146).
The articles of association may be amended in any other respect desired at
any annual meeting or at any special meeting of the stockholders duly called
382
DIGEST OF INCORPORATION ACTS. — MICHIGAN.
for that purpose by a resolution adopted by a vote of two-thirds in interest of
its capital stock. Such amendment shall not become operative until a copy
of such resolution, signed by the president and secretary of the corporation,
shall have been recorded as is provided herein for the recording of original
articles of association (sec. 17).
Any corporation organized or existing under the provisions of this act may
remove its place of business from any city, village, or town in this State, where
it is or may be located, to any other city, village, or town in this State, by a
vote of two-thirds of its stockholders in interest. But in case of a removal
from one county to another, the president and secretary of such corporation
shall attach to their articles of association a certificate that such corporation
has thus removed, and said articles of association, together with said certifi-
cate, shall be left for record immediately on such removal, in the office of the
county clerk of the county to which such corporation shall remove, and they
shall be recorded by such clerk at full length in the book kept by him for that
purpose. And the president and secretary of such corporation shall, imme-
diately upon such removal, cause a certificate thereof to be recorded in the
office of the county clerk of the county from which it removes (sec. 18).
Detroit Cham, of Com. v. Sec. of State, 109 Mich. 691; 67 N. W. 897; People v. Green,
116 Mich. 505; 74 N. W. 714.
23. Extension of Corporate Existence. — At any meeting called for
that purpose to be held within one year immediately preceding the date of the
termination of the corporate existence as fixed by the articles of association,
the corporation may by a vote of two-thirds of its capital stock direct the con-
tinuance of the corporate existence for a further term not exceeding thirty
years. After the adoption of this resolution, the president and secretary of
the stockholders' meeting shall make, sign, and acknowledge duplicate articles
of association as in the case of a new corporation, to which shall be appended
a copy of such resolution certified and verified by the oath of the secretary,
which shall be filed and recorded as in the case of a new corporation (Id. sec. 33 ;
as amended by Laws of 1905, chap. 328 ; Cons., Art. XV. sec. 107).
24. Annual Franchise Tax. — There is no annual franchise tax in force
in Michigan.
25. Dissolution. — Corporations may be dissolved only upon application
to the courts (Stat., sec. 4161 b, 4161 d 7-4164 inclusive, 8174, 8211 a; Laws
of 1905, chaps. 10, 96).
26. Foreign Corporations. — Foreign corporations must file a certified
copy of their articles with the Secretary of State and evidence of appointment
of agent to receive process. Must pay franchise fee of one-half of one mill on
each dollar of the proportion of its authorized capital stock represented by
its business in Michigan to the Secretary of State, but which fee shall never
be less than $25 (Laws of 1901, chap. 206, as amended by Laws of 1907, chap.
310). It must also pay the prescribed filing and recording fees in addition to
the franchise tax (Laws of 1907, Act 310). Every foreign corporation by its
president, secretary, treasurer, and superintendent, or any two of them, shall
make and file with the Secretary of State a statement duly sworn to by at least
two of such officers in such form as the Secretary of State shall prescribe, con-
taining the following facts: (1) Location of its principal place or places of busi-
ness and the names and addresses of its principal officers. (2) The location
of its principal office and the principal place of business in Michigan, ami the
name and addresses of the officers or agent of the company in charge of its
::s:;
DIGEST OF INCORPORATION ACTS. — MICHIGAN.
business in Michigan. (3) Total value of the property owned and used by the
company in its business, giving its location, general character, and stating
separately the value of its tangible property, of its cash credits, its franchises,
patents, trade-marks, formulas, good-will. (4) Value of the property owned
and used in Michigan and where situated. (5) The total amount of business
transacted during the year and the amount of business, if any, transacted in
Michigan. (6) Such other facts bearing on the matter as the Secretary of State
may require, including a statement of the particular purpose or the particular
kind of business for which the company desires admission to this State (Laws
of 1907, Act 310). When such corporation has fully complied with the provi-
sions of this act, the Secretary of State may issue to such corporation a certifi-
cate of authority to carry on such business in this State during the period of its
corporate existence, but not exceeding thirty years; provided, that no such
foreign corporation shall be formed to transact business in this State unless it
be incorporated in whole or in part for the purpose or object for which a corpora-
tion may be formed under the laws of Michigan, and then only for such purpose
or object. The Secretary of State shall in the certificate which he issues state
under what act said corporation is to carry on business in this State, and said
corporation shall have all the powers, rights and privileges and be subject to
all the restrictions, requirements and duties granted to or imposed upon cor-
porations organized under said act; and the officers and directors of every such
corporation shall be subject to all such requirements and duties as are imposed
upon officers and directors of corporations organized under such act, and shall be
subject to the same penalties and liabilities for failure to perform any duties im-
posed by such act as are the officers and directors of corporations organized under
such act; provided, that the carrying on in this State by such corporation of
business for which it has not been so admitted or failure to fully comply with the
requirements of the act under which it has been so admitted, shall be sufficient
cause for revoking the certificate of authority to do business in this State, and
the Secretary of State may revoke such certificate, and shall promptly notify
such corporation of such revocation and the reasons therefor by notice sent by
mail to the home office of such corporation (Laws of 1911, chap. 266, sec. 4).
Foreign corporations must file the same annual report as is required of domestic
corporations (Laws of 1907, Act 137). Permits to do business run for thirty
years (Laws of 1911, chap. 455).
People v. Hawkins, 106 Mich. 479; 64 N. W. 736; Rough v. Breitung, 117 Mich. 48;
75 N. W. 147; Wilcox Cordage Co. v. Mosher, 114 Mich. 64; 72 N. W. 117; Holder v. Com-
pany, 169 U. S. 81; M. P. Co. v. Wilkinson, 105 Mich. 57; 62 N. W. 1119; W. S. Co. v. Sec.
of State, 115 Mich. 234; 73 N. W. 107; Seamans v. Company, 105 Mich. 400; 63 N. W.
408.
384
DIGEST OF INCORPORATION ACTS. — MINNESOTA.
MINNESOTA.
(The references cited below are to the Revised Laws of Minnesota for 1905, unless other-
wise stated.)
1. Statute under which Business Corporations may incorporate. —
The Business Corporation Act of Minnesota is found in the Revised Laws of
that State (1905), chap. 58, sees. 2838-2890, 3068-3071, 3169-3190 inclusive.
Special acts are provided for public service corporations (sees. 2841-2843, 2391-
2934), cemetery associations (sees. 2935-2966); banking (sees. 2969-2982),
savings banks, trust companies, local building and loan associations, and
general building and loan associations (sees. 3009-3067), mortgage loan com-
panies, co-operative associations, agricultural associations, chambers of com-
merce, insurance and eleemosynary corporations (see sees. 3072-3168 inclusive).
If the incorporators wish to avoid the double stockholders' liability incident
to the holding of stock in ordinary business corporations they may do so by
organizing a corporation under sees. 3068-3071 for the purpose of carrying on
an exclusively manufacturing or mechanical business.
2. Incorporators. — Any number of persons not less than three may form
a corporation. There are no residential requirements (sec. 2849).
State v. Critchett, 57 Minn. 13; 32 N. \V. 787.
3. Contents of the Certificate of Incorporation. — The certificate must
specify (sec. 2849).
a. Corporate Name. — Such name must distinguish it from all other cor-
porations, domestic or foreign, authorized to do business in the State, and shall
end with the word "company," "corporation," "bank," or "association," or
the word "incorporated" (Laws of 1907, chap. 468).
b. General Nature of the Business to be transacted. — The Secretary of State
permits the insertion of any number of purposes in the articles, providing the
same do not come within the purview of the special acts (sees. 2844-2884
inclusive). (See also sees. 3068, 3070.)
c. Principal Place of Business. — The location of the principal place for the
transaction of the corporate business must be set forth.
d. Duration. — The period of its duration if limited. The duration cannot
exceed thirty years (sec. 2856).
e. Incorporators. — The names and places of residence of the incorporators
(sec. 2849).
/. Directors. — The certificate must set forth in what board the corporation's
management shall be vested, together with the date of the annual meeting at
which they shall be elected and the names and addresses of those composing
the board until the first election. If desired there may also be inserted the names
of the corporate officers who are to act until the first annual meeting (haws of
1909, chap. 298). If desired, the corporation may provide in its certificate of
incorporation for classifying its directors in respect to the times for which they
shall hold office, the several classes to be elected for different terms, provided
that no class shall be elected for a term of less than one nor more than five
years, and that the term of office of at least one class shall expire each year
(sec. 2869). The certificate of incorporation may also provide that at all elec-
tions of directors each stockholder shall be entitled to as many votes as shall
25 385
DIGEST OF INCORPORATION ACTS. — MINNESOTA.
equal the number of shares of stock multiplied by the number of directors
to be elected, and that he may cast all of such votes for a single director or
may distribute them among the number to be voted for as he may see fit
(sec. 2S62).
g. Capital Stock. — The amount of capital stock and how the same is to be
paid in. The authorized capital can never be less than $10,000. The number
of shares into which the stock is to be divided and the par value of each share
must be stated. The par value cannot be less than $1 nor more than $100. If
there is to be more than one kind of stock issued, a description thereof must
be inserted, together with the terms of issue of each class of stock and the method
of voting thereon (sees. 2868, 2878). In the case of corporations formed to
carry on a manufacturing or mechanical business the shares cannot be less than
$10 nor more than $100 (sec. 3068).
State v. Company, 40 Minn. 213; 41 N. W. 1020.
h. Corporate Indebtedness. — The highest amount of indebtedness or liability
to which the corporation shall at any time be subject (sec. 2849).
State v. Company, 40 Minn. 213; 41 N. W. 1020.
i. The certificate may contain any other lawful provision that may be
desired, defining or limiting the powers or business of the corporation, its offi-
cers, directors, and stockholders (sec. 2849).
4. Statutory Powers. — In addition to a statutory enumeration of the
common law powers of corporations, the act gives the following extraordinary
powers : To issue preferred stock (sees. 2853, 2878). In the case of corporations
organized for the purpose of carrying on a manufacturing, mechanical, or mining
business, or for buying, working and dealing and selling mineral lands, power is
given to such corporations to hold stock in other corporations if a majority of
the stockholders shall so elect (sec. 2853, Laws of 1907, chap. 293, sec. 3, as
amended by Laws of 1909, chap. 280). To renew corporate existence (sees.
2856, 2857). To vote by proxy (sec. 2861). To cumulate votes in the election
of directors (sec. 2862). To enforce a lien upon the stock of its members for all
debts due from them to the corporation, as well as to forfeit stock for non-
payment of assessments (sec. 2863). To hold such real and personal property
as shall be necessary for the business of the corporation (sec. 2852; Laws of
1911, chap. 130). To classify directors (sec. 2860). Express power is conferred
upon the directors of mining and manufacturing corporations to meet with-
out the State, and the corporation is empowered to establish offices without the
State for the transaction of its business (sees. 2870, 3071; see also sees. 3237,
3238; Laws of 1907, chap. 439; Laws of 1911, chap. 129).
Blien v. Rand, 77 Minn. 110; 79 N. W. 606; N. T. E. Co. v. Company, 76 Minn. 334;
79 N. W. 315; Sullivan v. Murphy, 23 Minn. 6; Auerbach v. LeSueur Mill Co., 28 Minn. 291.
5. Procuring the Charter. — The certificate of incorporation must be
signed and acknowledged by each of the incorporators. After execution and
acknowledgment of the certificate by incorporators the same must be filed for
record with the Secretary of State, who, if he finds that it conforms to law and
that the required fee for incorporation has been paid, shall record the same and
certify that fact thereon. Thereafter such certificate shall be filed for record
with the register of deeds of the county where the principal business office of
the corporation as specified in the certificate of incorporation is located. Cer-
tificates of incorporation must also be published in full in a qualified newspaper
386
DIGEST OF INCORPORATION ACTS. — MINNESOTA.
in the county wherein the principal place of business of the corporation is
located as specified in the certificate. Such publication must be made for two
successive days in a daily newspaper or for two successive weeks in a weekly
newspaper. As soon as the publication is completed sworn proof thereof must
be filed with the Secretary of State. When this is done the corporate organiza-
tion is by statute held to be completed. Before the certificate of incorporation
can be filed for record in the office of the Secretary of State, the organization
tax must be paid to the State Treasurer. The latter officer issues a receipt in
duplicate showing the payment of the organization tax. One of these duplicate
receipts must be filed with the certificate of incorporation in the office of the
Secretary of State. No organization tax need be paid by corporations formed
to operate solely in the raising or improving live-stock, or for the cultivation or
improvement of farms, gardens, or agricultural lands, growing beets or for can-
ning fruits or vegetables, or by any telephone company connecting towns or
villages of less than 2,000 inhabitants (sec. 2873, as amended by Laws of 1909,
chap. 202) . Upon observing the formalities already described, the Secretary of
State issues a certificate of incorporation specifying the names of the incorpora-
tors, the nature and purpose of the corporation, the amount of its capital stock,
the fact of its compliance with all prescribed statutory provisions, and that it
is duly organized and exists as a corporation in "the name and of the kind
specified (sees. 2850, 2851, 2873, 2874).
Finnegan v. Noeremberg, 52 Minn. 239; 53 N. W. 1150; Trustee v. Froslee, 37 Minn.
447; Christian v. Bowman, 49 Minn. 99; House v. Manheinier, 67 Minn. 174; Richards v.
Minn. Sav. Bank, 75 Minn. 196.
6. Corporate Indebtedness. — There is no limit upon the creation of
corporate indebtedness save as to certain classes of corporations : to wit, those
empowered to take private property for public use.
7. Organization Tax. — Fifty dollars for the first $50,000 or fraction
thereof of capital stock, and $5 for each additional 510,000 or fractional part
thereof. But corporations raising or improving five-stock or formed for the
cultivation or improvement of farms, gardens, or agricultural lands, growing
beets, canning fruits or vegetables, or any telephone company connecting towns
and villages of less than 2,000 inhabitants are not required to pay any organiza-
tion tax (sec. 2873; Laws of 1907, chap. 329; Laws of 1909, chap. 202).
8. Filing and Recording Fees. — The recording fee in the office of the
Secretary of State is 15 cents per folio. For issuing certificate of incorporation,
$1. The cost of certified copy of certificate of incorporation is 15 cents per folio.
For attaching certificate thereto, 50 cents. Filing affidavits of proof of publica-
tion, free. Filing and recording fees in local county offices averages about $3.
If the certificates are short this charge may be substantially reduced. Cost of
publishing articles, about $15. Usually a discount of 50 per cent of this amount
can be obtained by attorneys.
9. Commencing Business. — Corporations may commence business as
soon as the articles of incorporation are filed and recorded in the office of the
Secretary of State and in the office of the register of deeds of the county where
the principal place of business is located, and as soon as the articles are pub-
lished as required by law, and an affidavit of proof thereof filed in the office of
the Secretary of State (sees. 2851, 2874).
10. Organization Meeting. — Unless the certificate of incorporation
otherwise provides, the first meeting of every corporation shall be called upon
not less than three weeks prior personal notice signed by one of the incorporators
387
DIGEST OF INCORPORATION ACTS. MINNESOTA.
to the others, and to each subscriber of the capital stock, specifying the time,
place, and purpose thereof (sees. 2875, 3071).
11. Meetings of Stockholders and Directors. — Unless otherwise
provided in the certificate of incorporation or corporate by-laws, every annual
meeting shall be called and held at the principal place of business upon three
weeks published notice thereof signed by the secretary of the corporation
(sees. 2875, 2876, 2877, 3071).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three directors, each of whom must be a stockholder.
A majority of the directors shall constitute a quorum for the transaction of
business (sec. 2858). There are no residential requirements. The statute pro-
vides that the president of every domestic corporation shall be a director.
Directors may be classified with respect to the time for which they shall severally
hold office. The several classes to be elected for different terms, provided that
no class shall be elected for a term of not less than one or more than five years
and that the term of office of at least one class shall expire each year (sec. 2860).
Unless otherwise provided in the certificate or by-laws, each stockholder shall
be entitled to one vote in person or by proxy for each share held by him. No
stock can be voted at any election within twenty days after its transfer on the
books of the coiporation (sec. 2861). If the certificate of incorporation so
provides the right of cumulating votes for directors may be exercised by the
stockholders (sec. 2862).
b. Liabilities. — The act provides that every officer who knowingly and
wilfully subscribes or makes any false statement, false .report, or false entry in
or upon any of the books, papers, or documents of a corporation, or shall know-
ingly and wilfully subscribe or exhibit any false payment book or document
with intent to deceive any person or officer authorized to examine the financial
condition of such corporation, or shall knowingly or wilfully subscribe or make
any false report whatsoever, shall be guilty of a felony and be punishable by
imprisonment in the State prison for not less than one nor more than ten years
(sees. 2865, 2869, 2884, 2885, 3069, 3071, 3171; Laws of 1909, chap. 479; see
also sees. 5116-5120).
The corporation act provides that if the directors shall pay a dividend when
such corporation is insolvent, knowing such corporation to be insolvent, or
that such dividend would render it so, or when its payment would render it
insolvent, those assenting thereto shall be jointly and severally liable in an
action on the statute for all debts due from such corporation at the time of any
such dividend. Every officer who shall neglect or refuse to perform any duty
imposed upon him by law shall be liable for all corporate debts contracted
during the period of such neglect. If the corporation shall violate any pro-
vision of law whereby it becomes insolvent the directors ordering or assenting
to such violation shall be liable in an action under the statute for all debts con-
tracted after such violation (sec. 3069).
13. Stockholders' Liabilities. — Stockholders in all classes of corpora-
tions are liable in any event to the amount of stock subscribed by them and
unpaid (sec. 2865). Stockholders of all ordinary business corporations that
may be organized under the General Act, except those organized to carry on
exclusively a manufacturing or mechanical business, are liable to the amount
of stock held or owned by them. This is a constitutional liability not requiring
any statute to put it into effect, the Supreme Court having held it to be self-
executing. Stockholders in corporations organized to carry on an exclusively
388
DIGEST OF INCORPORATION ACTS. — MINNESOTA.
manufacturing business or a mechanical business are only liable to the amount
of their unpaid stock subscriptions (Cons., Art. X.; sees. 3, 2865). Stock-
holders are liable for failure on the part of the corporation to comply sub-
stantially with the provisions as to organization and publicity. They are also
liable for personally violating any of said provisions in the transaction of any
corporate business, as officer, director, or member, and for fraudulent or dis-
honest conduct in the discharge of their official duty (sec. 286.3). Stockholders in
manufacturing or mechanical corporations are also liable to the extent of capital
illegally withdrawn from the corporation and received by them (sec. 3069).
Wallace v. Company, 70 Minn. 321; 73 NT. W. 189; Frost v. Company, 57 Minn 325;
59 N. W. 30s; 1'. F. Co. v. Company, 64 Minn. 386; 07 N. W. 217; Famsworth u. Robbing
36 Minn. 369; 31 N. W. 349; S. M. Co. v. Company, 81 Minn. 294; 84 N. W. 109.
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him signed by the president or vice-president and by the
secretary under the corporate seal (sees. 2861, 2S79). The par value of the
shares may be any amount not less than $1 nor more than $100 (sees. 2849,
2868.) Under sec. 2830 the par value of shares of mining and manufactur-
ing companies is fixed at not less than §10 and not more than $100 each (see
also sec. 3068).
15. Preferred Stock. — Corporations having capital stock divided into
classes, unless specifically authorized, shall not issue any shares for a less amount
to be actually paid in on each share than the par value of the shares as issued ;
provided that railroad, navigation, and manufacturing corporations and corpora-
tions for buying, holding, improving, selling, and dealing in lands, tenements,
hereditaments, real, mixed, and personal property, created or organized under
this chapter, or under any charter or special act of incorporation heretofore
passed, shall have power to create, issue, and dispose of such amount of special,
preferred, or full paid stock of the capital stock of such corporation, as may be
deemed advisable by the board of directors of such corporation. Provided,
that any corporation may by its articles of incorporation, or by any amended
articles of its articles of incorporation, provide for special, preferred, and common
stock of the capital stock of such corporation ; and any corporation heretofore
or hereafter organized, without changing its articles of incorporation, may
issue its capital stock as a part special and a part preferred and a part common,
or a part common and a part special or preferred, by direction of its board of
directors, when so authorized by a majority of its stockholders at its annual
meeting, or at a meeting called for that purpose ; and said board of directors
when so authorized by said meeting of saici stockholders may give such pref-
erences as it may deem best to such special or preferred stock, or such special
and preferred stock (sec. 2878).
16. Payment of Capital Stock. — Stock is payable in money or money's
worth. Stock cannot be issued for a less amount to be actually paid in on
each share than the par value of the shares so issued (sec. 2853). The foregoing
provision does not apply to such corporations as are specially authorized to
issue and dispose of special, preferred, or full paid stock in such amounts as
may be deemed advisable by their board of directors (sec. 2878).
17. Books. — Books of account shall be kept, and shall at all reasonable
times be open to inspection, in the county where such corporation is located or
at the office of the treasurer within the State (sees. I'Sfil, 2X09). A copy of the
by-laws of every corporation, together with the names of its officers and a state-
ment of the capital stock actually in good faith subscribed for the amount and
389
DIGEST OF INCORPORATION ACTS. — MINNESOTA.
character of payments actually paid thereof, must be kept posted by the corpo-
ration at its principal place of business.
18. Office and Agent. — Every corporation must maintain an office within
the State, and must at all times have an agent within the State upon whom
process may be served (sees. 2870, 3071).
19. Reports. — The only report required of any domestic corporation is
that relating to taxation. The president, secretary, or principal accounting
officer of any corporation shall make out and deliver to the assessor of the
county wherein such corporation has personal property a sworn statement of
the amount of its capital stock, setting forth particularly (1) the name and
location of the company or association ; (2) the amount of capital stock author-
ized and the number of shares into which it is divided; (3) the amount of
capital stock paid up ; (4) the market value, or if they have no market value,
then the actual value of the shares of stock ; (5) the value of its real property,
if any; (6) the value of its personal property; (7) the total amount of all
indebtedness except the indebtedness for current expenses, excluding from
such expenses the amount paid for the purchase or improvement of property
(sec. 838).
20. Anti-Trust Statute. — Under the Act of April 10, 1901, all pools,
trusts, and conspiracies for certain unlawful purposes are declared illegal (sees.
2098, 5168). (See also Laws of 1907, chap. 269.)
21. Statutory Grounds for Forfeiture of Charter. — The charter may
be forfeited for violation of law, for misuser and non-user of corporate powers
(sec. 58). It may also be forfeited if the charter was procured on some fraudu-
lent suggestion, or the concealment of material facts by the persons incor-
porating, or some of them, or with their knowledge and consent (sees. 3170,
3174). The charter may be forfeited also if it remains insolvent for one year,
or for one year refuses to discharge its debts, or for one year suspends its lawful
business (sec. 3174); also for violation of Anti-Trust Acts (sees. 5168, 5169).
M. C. R. Co. v. Melvin, 21 Minn. 339.
22. Amendments. — The certificate of incorporation may be amended in
respect to amount of stock or any other matter which the original certificate
of a corporation of the same kind might lawfully have contained, by the adop-
tion of a resolution specifying the proposed amendment at a regular or at a
special meeting called for that expressly stated purpose in either of the follow-
ing ways: (1) By a majority vote of all of its shares, if a stock corporation, or
if not (2) by a majority vote of its members : or in either case (3) by a majority
vote of its entire board of directors, trustees, or other managers, within one
year after having been thereto duly authorized by specific resolution duly
adopted at said meeting of stockholders or members, and by causing such
resolution to be expressed in a certificate duly executed by its president, sec-
retary, or other presiding regular officers under its corporate seal, and approved,
filed, recorded, and published in the manner prescribed for the execution, ap-
proval, filing, recording, and publishing of a like original certificate (sec. 2871).
Any corporation may, without change of its certificate of incorporation
when its board of directors do so authorize by a majority vote of its stock-
holders at its annual meeting, or at a meeting called for that purpose, issue its
capital stock, part special and part preferred and part common, or part common,
part either special or preferred, and give such preference as it deems best to
such special or preferred stock (sec. 2878).
390
DIGEST OF INCORPORATION ACTS. — MINNESOTA.
23. Extension of Corporate Existence. — Express provision is made for
renewing the corporate existence from time to time for a further term not
exceeding thirty years, whenever a three-fourths vote of the stock represented
at any regular meeting or at any special meeting called for that purpose shall
adopt a resolution to that effect, and those desiring it shall have purchased at
its value the stock of those opposed thereto. No resolution of extension of
corporate existence shall take effect until a duly certified copy thereof shall have
been filed, recorded, and published in the same manner as in the case of an
original certificate (sees. 2856, 2857; Laws of 1911, chap. 24-4; see also as to
reorganization of existing corporations, sec. 2S86).
2 !-. Annual License Tax. — There is no annual license tax.
2,"). Dissolution. — Corporations may be dissolved upon application to the
courts (sees. 2882, 2883, 3171-3178, 3190: Laws of 1909, chap. 276).
26. Foreign Corporations. — Every foreign corporation before doing
business within the State must file in the office of the Secretary of State a copy
of its charter or articles of incorporation duly certified and authenticated. They
must also maintain an office within the State and appoint an agent resident
therein upon whom sen-ice of process may be had (sees. 2888, 2889). At the
time of fifing a copy of its charter or articles of incorporation with the Secre-
tary of State, there must also be filed with that official, a statement duly sworn
to showing the proportion of the capital stock of said corporation that is repre-
sented by its property located and business transacted in the State, and such
corporation shall pay into the State treasury 850 for the first 850,000 or frac-
tional part of such proportion of capital stock, and a further sum of $5 for every
additional 810,000 or fractional part of such proportion of capital stock, and
no increase of capital stock of any corporation shall be valid until the cor-
poration shall have paid into the State treasury 85 for every 810,000 or frac-
tional part thereof of such increase of such proportion of capital stock of such
corporation. In determining the proportionate share of capital stock upon
which license fees shall be paid as aforesaid, the business of such corporation
transacted in and out of the State during the year immediately preceding the
filing of its articles or certificate as above provided must be considered and
have control. Upon compliance with the above provision the Secretary of
State issues a certificate to such foreign corporation authorizing it to do busi-
ness in the State, stating the amount of its capital stock and the proportion
thereof which is represented in the State. This certificate is valid for a period
of thirty years from and after the date of such certificate (sees. 288S-2890).
State v. Company, 43 Minn. 17; 44 N. W. 1032; Heileman Co. v. Peimeisl, 85 Minn.
121; 88 N. \Y. 441; R. I. P. Co. v. Peterson (Minn.), 101 N. \Y. 616.
391
DIGEST OF INCORPORATION ACTS. — MISSISSIPPI.
MISSISSIPPI.
(The references cited below are to the Mississippi Code of 1906, unless otherwise
stated.)
1. Statutes under which Business Corporations may incorporate.
— The Business Corporation Act of Mississippi is found in the Annotated
Code of 1906, chap. 24, sees. 897-938 inclusive. Under this act corpora-
tions may be created for every lawful purpose, except for the construction
and operation of a railroad other than street railroads and the carrying on of
an insurance business. Special acts are provided for railroad and insurance
corporations.
2. Incorporators. — There must be at least two incorporators. There
are no residential requirements (sec. 898).
3. Contents of the Charter. — The Charter must contain (sec. 898) :
a. Purposes. — Any number of purposes, not including those for which
corporations can be organized only under special acts, may be inserted.
b. Incorporators. — The names of the corporators must be inserted.
c. Name. — Similarity of names is forbidden (sec. 930).
d. Corporate Powers. — The powers to be exercised must be set forth.
e. Duration. — This cannot exceed fifty years.
/. Capital Stock. — There is no maximum or minimum amount of capital
stock fixed by law for corporations. There is an implied limit by reason of
the provision that no corporation, except manufacturing companies, may hold
real and personal estate exceeding $1,000,000 in amount. Manufacturing com-
panies may purchase and hold property to the amount of $2,000,000.
g. Any provisions that may be desired for the regulation of the internal
affairs of the corporation (sec. 833).
4. Statutory Powers. — The act enumerates the common law powers of
corporations (sec. 901). All domestic business corporations created under the
provisions of this chapter or the laws of this State may hold personal property
in any amount necessary and proper for its uses and purposes, and every such
corporation except manufacturing corporations may hold land to an amount
not exceeding $1,000,000 in value, but building, machinery, or fixtures on such
land shall be excluded in valuing the land. And a corporation shall not have a
trust, use, or "benefit in any property held in the name of any person or cor-
poration for its - use, either expressly or secretly, to an amount greater than it
may lawfully hold, nor shall any corporation employ its capital, money, or either
in any way than in pursuit of its legitimate "business, and the corporation offend-
ing against any of these provisions shall forfeit its charter, and shall also forfeit
to the State all real estate held, even that which it may lawfully hold ; but an
increase in the market value of real estate after it has been acquired by a cor-
poration over the limit it was or is authorized to hold shall not operate to
forfeit the charter or any part of the real estate of such corporation. Nothing
herein contained shall prevent a corporation from taking land or a hen on land
to a greater amount than it may lawfully hold in payment of or as security for
a debt, if the same shall not be held for a longer period than ten years (Laws of
1906, chap. 252). Corporations are forbidden to own or purchase the capital
stock of other corporations, or to acquire the franchise plant, or equipments
392
DIGEST OF INCORPORATION ACTS. — MISSISSIPPI.
of other corporations (Laws of 1900, sec. 5, chap. SS; Laws of 1910, chap.
223). Corporations are expressly given power to execute bonds in suits in
which the corporation is interested (sec. 907). Voting by proxy is permitted ;
also forfeiture of stock for non-payment of assessments (sees. 901-903, 908).
May cumulate votes in election of directors (sec. 902).
Greenville Compress & Warehouse Co. v. Company, 70 Miss. 669; 13 Sou. 879.
5. Procuring the Charter. — The charter must be signed and acknowl-
edged by each of the incorporators. It must then be published for three con-
secutive weeks in a newspaper published at the domicile of the corporation.
After publication it must be submitted for approval to the Governor, who is
required to take advice of the Attorney-General as to the constitutionality
and legality of the provisions of the charter (sec. 89S). If the charter i> ap-
proved, the governor so endorses such approval thereon, and the Secretary of
State shall affix the State seal thereto. Upon the payment of the organization
tax and upon recording the charter in the office of the Secretary of State the
corporate existence commences. The law provides that it shall not be a de-
fence to any suit against the corporation that there was a defect or informality
in the organization thereof (sees. 833, 835). The charter must be recorded also
in the office of the clerk of the Chancery Court of the county in which the cor-
poration does business. Collateral inquiry into the legality of corporate ex-
istence is forbidden by statute (sees. 89S, 900, 906, 916, 917).
6. Corporate Indebtedness. — Domestic business corporations are not
permitted to contract debts in excess of the amount of the capital actually
paid in (sec. 924). No loan of money can be made by the corporation to one
of its stockholders (sec. 922).
Fargason v. Company, 78 Miss. 65; 27 Sou. 877.
7. Organization Tax. — Capital stock not exceeding $10,000, $20; be-
tween 810,000 and $30,000, $40; between $30,000 and $50,000, $60'; exceeding
$50,000 one-tenth of one per cent, but no fee to exceed $250 (sec. 938).
8. Filing and Recording Fees. — There is no filing or recording fee
imposed other than the organization tax required to be paid to the Secretary
of State. The Secretary of State is entitled for other services as follows: For
recording each amendment to the charter, $5 ; for each certified copy of domestic
or foreign charters, $10; for filing articles of consolidation, $25; for filing
other articles of agreement between corporations, $20 ; for filing each charter
of a foreign corporation, $15 (sec. 938).
9. Commencing Business. — Corporations may commence business as
soon as the charter is duly executed, published, and approved by the gov-
ernor, the organization tax paid, and the charter recorded in the office of the
Secretary of State and with the clerk of the Chancery Court of the county in
which the corporation does business (sees. 898-900). Before commencing
business all corporations must within thirty days after organization make
report thereof to the Secretary of State, who is required to furnish blank forms
for that purpose, as provided by statute. The Secretary of State shall enter
such report and index the same in a record to be kept for that purpose in his
office (sees. 930, 931).
10. Organization Meeting. — The organization meeting must be held
within the State. Unless the incorporators sign an agreement fixing the time
and place for the organization meeting of the corporation, a notice signed by
one or more persons named in the charter must be published in some business
393
DIGEST OF INCORPORATION ACTS. — MISSISSIPPI.
newspaper for at least ten days before the time appointed for such meeting.
At this meeting the by-laws must be adopted and the board of directors chosen.
Immediately after the adjournment of the organization meeting the board of
directors elected thereat should meet and elect such officers as may be provided
for in the by-laws (sec. 901).
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held within the State. Directors' meetings may be held without the
State if the by-laws so provide (sec. 902).
Thompson v. Company, 68 Miss, 423; 9 Sou. 821.
12. Directors' Qualifications and Liabilities, a. Qualifications. —
The corporation may have any number of directors desired. There are no
residential requirements. No person can serve on the board of directors who
is engaged or interested in a competing business, without the consent of a major-
ity in interest of the stockholders thereof (sec. 902).
b. Liabilities. — Directors are jointly and severally liable for the payment
of dividends when the company is insolvent or when such payment would
render it insolvent. Directors are also liable for illegal withdrawal of capital
stock. Officers and directors are jointly and severally liable for permitting
the loan of money to stockholders. They are also liable in case debts are con-
tracted in excess of the amount of capital stock paid in (sees. 922-924).
Directors are also liable for contributing corporate funds for political purposes
(Laws of 190S, chap. 124).
13. Stockholders' Liabilities. — Stockholders are liable in any event to
the amount of stock subscribed by them and unpaid (sees. 909, 921).
Scott v. Windham, 73 Miss. 76; 16 Sou. 206.
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him signed by such officers as the by-laws may prescribe.
The par value of shares may be any amount (sees. 898, 909).
15. Preferred Stock. — The act does not provide in terms for the issuance
of preferred stock.
16. Payment of Capital Stock. — The statute seems to contemplate that
stock must be paid for either in money or money's worth. The act provides
that a note, obligation, or security of any kind given or transferred by any
subscriber for stock shall not be considered, taken, or held as payment of any
part of the capital stock of the company (sees. 909, 921).
Fargason v. Company, 78 Miss. 65 ; 27 Sou. 877.
17. Books. — Stock books must be kept in which shall be recorded the
necessary data relative to transfers of stock (sec. 909).
18. Office and Agent. — The statute by implication woidd seem to require
the maintenance of a domiciliary office within the State.
19. Reports. — Within thirty days after organization of business corpora-
tions they must make a report thereof to the Secretary of State upon blank
forms provided by him for that purpose. This report gives the date of incorpo-
ration and organization, the place where organized, the names of the directors
and officers for the ensuing year. It also requires the name of the post-office
address of the president and secretary. This report must be certified by the
president and attested by the secretary of the corporation (sees. 930, 931).
20. Anti-Trust Statute. — All pools, trusts, or combinations for certain
394
DIGEST OF ^CORPORATION ACTS. — MISSISSIPPI.
designated purposes are declared illegal (chap. 145, sees. 5002-5021 ; Laws of
190S, chap. 119).
Woodberry o. McClurg, 78 Miss. 831; 29 Sou. 514.
21. Statutory Grounds for Forfeiture of Charter. — The charter may
be forfeited for entering unlawful trusts or combines or for misuse or abuse of
its powers (chap. 145, sees. 4017-4020, 5010; Laws of 1906, chap. 252).
22. Amendments. — The act provides in the case of amendments as fol-
lows: Every corporation desiring an amendment of its charter shall make
publication in the same maimer as is required in the case of original charters,
setting forth at length in such publication the nature and extent of the amend-
ment desired, and the covenant that the Attorney-General may grant the
same. Every amendment shall be recorded at length in the office of the Secre-
tary of State, and in the office of the clerk of the Chancery Court of the county
in which the corporation does business (sees. 899, 900).
23. Extension of Corporate Existence. — The act refers to renewals of
charters, and makes express provision with reference thereto (sec. 899).
24. Dissolution. — Corporations may be dissolved upon application to the
courts (sees. 912, 913). Whenever stockholders in any corporations formed
under this chapter shah desire to surrender their charter, a meeting of the corpo-
ration shall be called for that purpose after three weeks' notice published in some
newspaper at the domicile of the corporation, and a copy of such paper shall be
mailed to each stockholder at his post-office address if known, and if at said
meeting two-thirds of the stockholders of the company shall vote, either in per-
son or by proxy, for the dissolution of the corporation, a petition shall be filed
in the Chancery Court of the domicile of the corporation in the name of the
corporation and against the dissenting stockholders if any, and if none, the
proceedings shall be ex ■parte. If upon the hearing of the petition it .shall appear
that two-thirds of the stockholders have voted for such dissolution, and that
it would be to the best interests of all parties in interest that the corporation
be dissolved, then liquidators of the corporation shall be appointed by the
Chancery Court, not exceeding three in number, who shall give bond in such
sum as the court may fix, conditioned to faithfully perform their duties as
liquidators ; and if there are creditors of such corporation, such liquidators shall
pay out of the assets of the corporation the debts of the corporation in full, if
there be sufficient funds, and if not, then pro rata; and if there shall be any
assets left after paying the debts, then the same shall be distributed among the
shareholders. If there are no debts, the said liquidators shall distribute
assets among the stockholders. The Chancery Court may allow the liquidators
such compensation as may be just and proper. When the assets of the corpora-
tion have been fully liquidated and distributed, they shall report to the Chancery
Court, and the Chancery Court shall thereupon enter a decree dissolving the
corporation, confirming the acts of the liquidators and ordering their dis-
charge, and a certified copy of such decree shall be filed in the office of the
Secretary of State, and after filing of said decree in said office the corporation
shall be dissolved. And all rights, privileges, judgments, and franchises which
had theretofore been granted to such corporation by the State or any county
or municipal corporation shall revert back and become the property of the
grantor (sec. 93
'2.'). Annual License Tax. — There is no annual license tax imposed.
20. Foreign Corporations. — Every foreign corporation before doing
151)5
DIGEST OF INCORPORATION ACTS. — MISSISSIPPI.
business within the State must file in the office of the Secretary of State a copy
of its charter or articles of incorporation duly certified and authenticated. The
same must be duly certified by the president, secretary, or other chief executive
officer of such corporation, and the corporate seal attached thereto (sec. 935).
If foreign corporations desire to become domesticated they may do so by
filing with the Governor of the State a copy of their charter or articles of associa-
tion. Upon doing so the Governor shall first take the advice of the Attorney-
General of the State as to the constitutionality and legality of the provisions
thereof, and if the Attorney-General shall certify to the Governor that he finds
nothing in said charter or articles in violation of the constitutional laws of
the State, the Governor of the State may approve the same, and he shall write
his approval thereon and sign his name thereto, and shall cause the seal of the
State to be thereto affixed by the Secretary of State. But the Governor may
require amendments or alterations to be made previous to signing the same,
or, if deemed expedient by him in the matter, withhold his approval entirely.
The Secretary of State shall then cause all such charters or articles of incorpora-
tion, after he has received the same from the Governor with his approval, to be
duly recorded in a book to be kept for that purpose, and shall cause to be issued
to such corporation a copy of the charter or articles so filed, properly certified
under the seal of his office. But such corporation shall pay to the Secretary of
State the same fees required of similar corporations formed under the laws of
Mississippi. Any corporation shall, upon compliance with the foregoing pro-
visions, become to all intents and purposes a domestic corporation. In any
action against such domesticated foreign corporation, service upon it may be
served upon the Secretary of State in its behalf (sees. 914-920 inclusive).
The fee to the Secretary of State for filing charter of foreign corporations, $15
(sec. 935; Laws of 1906, chap. 114).
Williams v. Bank of Commerce, 71 Miss. 858; 16 Sou. 238.
396
DIGEST OF INCORPORATION ACTS. — MISSOURI.
MISSOURI.
(The references cited below are to the Revised Statutes of 1909, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Missouri is found in the Revised Statutes of
1909, sees. 2963-3047, 3339-33S2. Special acts are provided for banking, bond,
investment, booming and rafting, savings and loan, building, railway, street
railway, telegraph, telephone, and trust companies. (See also Laws of 1905,
p. 97.) .
2. Incorporators. — Any number not less than three. There are no resi-
dential requirements (sec. 3339).
3. Contents of the Articles of Agreement. — The articles must set
forth: (See Laws of 1911, pp. 148-149).
a. Name. — Similarity of names is forbidden. When the name of a person
or firm is assumed, it must designate the nature of the business to be carried
on and end with "company" or "corporation" (sec. 297S).
b. Domiciliary Office. — The name of the city or town in the county in which
the corporation is to be located (sec. 1312).
c. Capital Stock. — The amount of capital stock, the number of shares into
which it is to be divided and the par value thereof, together with a statement
that the same has been bona fide subscribed and one-half thereof actually paid
up in lawful money of the United States, or in property of the full value
thereof, and in the custody of the persons named as the first board of
directors. Capital stock cannot be less than $2,000 nor more than $50,000,000
(sec. 3347).
d. Stockholders. — The names and places of residence of the stockholders
and the number of shares subscribed by each (sec. 3339).
e. Board of Directors. — Number of directors and names of the board for
the first year. There must be not less than three nor more than thirteen. Three
of these must be citizens and residents of the State, and all must be stockholders
(sees. 2992, 3035, 3339, 3341).
/. Duration. — The number of years the corporation is to continue, which
must not exceed fifty years (sec. 3339).
g. Purposes. — The statute specifies eleven classes of corporations which
may be organized under the General Act (sec 3346).
Provided that if any part of the capital stock is paid in property, the
articles of agreement must give an itemized description of such property, set-
ting out the cash value of each item entered, and sucli itemization shall show
(a) if such property be real estate, the exact description by metes and bounds
and location of such real estate and the actual cash value of each tract ; (b)
if such property be personal property, such itemization shall give the location
of each class of personal property and the actual cash value of each class of
such personal property. No stock shall be issued by the corporation except
such as is actually paid for at its par value, in cash or in property of :i cash
value equal to the par value of the stock. All stock of the corporation not
subscribed and paid for at the lime of its organization may be sold at its par
value by said corporation, and the officers of said corporation shall, upon the
completion of the sale of one-fourth of its subscribed stock thereof, report to
397
DIGEST OF INCORPORATION ACTS. — MISSOURI.
the Secretary of State the amount of stock sold and whether the same has
been sold for cash or for property, and its value and itemization thereof, as
provided herein for the articles of agreement, and such report shall be sworn
to by all of the officers and directors of said corporation (Laws of 1911,
pp. 148, 149).
If preferred stock is desired, the articles must set out the amount thereof,
the number of shares thereof, the names of the subscribers therefor, the num-
ber of shares subscribed by each person, and the preferences, priorities, quali-
fications, and character thereof, as provided in sec. 3358 of the Revised
Statutes of Missouri, 1909 (Laws of 1911, pp. 148, 149).
State v. McGrath, 92 Mo. 355; 5 S. W. 29.
4. Statutory Powers. — The Missouri statutes enumerate the common
law powers of corporations, and also confer the following additional powers:
Permitting the use of proxies; authorizing cumulative voting for directors;
allowing directors to forfeit stock for non-payment of assessment ; permitting
the classification of directors ; allowing the issuance of preferred stock and the
issuance of stock for sendees or property (sees. 2973, 29S0, 29S1, 2990).
Corporations engaged in a similar fine of business may consolidate (sec. 3360).
Bonds may be issued and afterwards converted into stock, if desired (sec. 3363).
5. Procuring the Charter. — The articles must be signed and acknowl-
edged by the incorporators and by each of the directors named in the ar-
ticles (Laws of 1911, p. 150). They must then be recorded in the office of the
recorder of deeds of the county or city where the corporation is to be located.
A certified copy of the articles must then be filed with the Secretary of State,
and the corporate existence commences from the time of the filing of such copy.
A certificate by the Secretary of State that such corporation has been duly
organized is evidence of the corporate existence of the corporation. A certified
copy of such certificate must be filed and recorded in the office of the recorder
of deeds of the county in which the corporation is organized. Before the articles
can be filed in the office of the Secretary of State the organization tax must be
paid to the State, and a duplicate receipt of the State Treasurer showing the
payment of such tax must be filed with the Secretary of State (sees. 2975,
2976, 3340, 3341).
Hurt v Salisbury, 55 Mo. 310; Com'rs v. Shields, 62 Mo. 247; Granby Co. v. Richards,
95 Mo. 106; 8 S. W. 246; Hyatt v. Van Riper (Mo.), 78 S. W. 1043.
6. Organization Tax. — Fifty dollars for the first fifty thousand dollars
or less of capital stock, and $5 for each additional ten thousand dollars (sec.
2976).
7. Filing and Recording Fees. — For issuing and recording certificate of
corporate existence, $1.50 (sec. 10716). For filing and recording articles of incor-
poration, $2.50. For issuing a certified copy of articles of incorporation the
charge is 10 cents per hundred words for copying and $1 for certificate. The
recording fee in local county office is 8 cents per hundred words and 10 cents
for indexing.
8. Corporate Indebtedness. — There is no statutory limitation upon the
amount of debts a corporation may contract, except that the bonded indebted-
ness must not exceed the amount of authorized capital (sec. 2981). By a major-
ity vote bondholders may be authorized to convert their bonds into stock
(sec. 3363).
9. Commencing Business. — As soon as the certificate of organization
398
DIGEST OF INCORPORATION ACTS. — MISSOURI.
is issued by the Secretary of State and a certified copy thereof filed in the office
of the recorder of deeds, the company may at once commence business. As
preliminary to the foregoing, however, one-half of the authorized capital stock
of the corporation must be paid in and the balance subscribed for (sec. 3339).
Shepard v. Drake, 61 Mo. App. 134; Reinhard v. Milling Co., 107 Mo. 616; 18 S. IV. 17;
St. J. & I. R. R. Co. v. Shambaugk, 100 Mo. 557; 17 S. \V. 5S1 ; Q. C. F. & C. Co. t>. Crawford,
127 Mo. 356; 30 ri. \Y. 163.
10. Organization Meetings. — Must be held within the State (sees.
2964-2966).
Camp v. Byrne et al, 41 Mo. 525; N. M. R. R. Co. v. Winkler, 33 Mo. 354.
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held within the State. All meetings of directors, other than boards of
mining and railway corporations, must be held at the general office of the cor-
poration within the State (sec. 2992).
O & M. R. R. Co. v. McPherson, 35 Mo. 13; M. L. M. & S. Co. v. Reinhard, 114 Mo. 218;
21 S. W. 4SS.
12. Directors' Qualifications and Liabilities. — (a) Qualifications. —
There must be not less than three nor more than thirteen directors. Three of
them must be citizens and residents of the State and each must be a shareholder.
Directors may be classified if desired. Cumulative voting for directors per-
mitted (sees. 2990, 2993, 3035, 3339, 3347). Inspectors of election are provided
for (sees. 2967, 2968). Directors may within certain prescribed limits make
by-laws. (See sec. 2998.)
Hap v. Mill Co., 39 Mo. App. 453.
(b) Liabilities. — Directors are liable for knowingly declaring and paying
dividends when the corporation is insolvent or which will render it insolvent.
This liability is a joint and several one, and extends to debts of the corporation
then existing or thereafter contracted. Directors voting against the declara-
tion of such dividends are not liable (sees. 3302, 3348). They are also liable for
making loans to stockholders (sec. 3350). There are penal provisions against
fraud in corporate affairs relating to the fraudulent issue of stock or bonds,
failure to file tax returns, for making loans to stockholders, and for refusing to
permit examination of books (sees. 3348, 3350). If the officers and directors of
any corporation shall knowingly purchase for the corporation of which they arc
officers and directors any property, real or personal, and pay therefor more
than the actual value thereof they shall be jointly and severally liable for the
debts of the corporation to an amount equal to the difference between the pur-
chase price of such property paid and the actual value therefor; provided, that
if any of the officers or directors be absent at the time of making such purchase
or shall object thereto, and shall file their objection in writing with the clerk or
other officer of the corporation having charge of the books, they shall be exempt
from the said liability (Laws of 1911, p. 151).
Every person who shall wilfully, corruptly and falsely, before any officer of
this State, having a seal, under oath or affirmation voluntarily make any false
affidavit or statement of any injury concerning any corporation or any proposed
corporation, shall be deemed guilty of a felony, and shall upon conviction be
punished by imprisonment in the penitentiary not exceeding five years or by
imprisonment in the county jail not exceeding one year (Laws of 191 1, p. 151).
399
DIGEST OF INCORPORATION ACTS. — MISSOURI.
13. Stockholders' Liabilities. — Stockholders are liable for corporate
debts to the extent of their unpaid stock subscriptions (Cons., Art. XII. sec. 9 ;
sees. 3004, r 9-371).
Ramsey v. Mfg. Co., 116 Mo. 313; 22 S. W. 719; Ollesheimer v. Mfg. Co., 44 Mo. App. 172.
14. Stock Certificates. — Each stockholder is entitled to have a certifi-
cate issued to him, signed by such officers as the by-laws may provide. Par
value of shares may be any amount.
15. Preferred Stock. — Preferred stock may be issued by inserting pro-
vision therefor in the original articles of agreement or by amendment thereto,
or by the vote of all the stockholders of the corporation. Dividends not exceed-
ing eight per cent per annum may be made on the preferred stock out of the
net yearly income, and whether such dividends shall be made cumulative or
not, and what priority, if any, any class of such preferred stock shall have over
the common stock or other preferred stock out of the assets of the corporation
in case of its dissolution or liquidation, may be provided for (sees. 3358-3359).
Winscott v. Investment Co., 63 Mo. App. 367.
16. Payment of Capital Stock. — Stock can only be issued for money
paid, labor done, or property actually received. All fictitious increase of stock is
void (Cons., Art. XII. sec. 8 ; see also sees. 2981,3350). All the authorized capital
stock must be subscribed for before beginning business, and one-half paid in
(sees. 3354-3355, 3339; Laws of 1911. p. 149).
Schickle v. Watts, 94 Mo. 410; 7 S. W. 274; Grocer Co. v. Crow, 36 Mo. App. 288; Gar-
rett v. Mining Co., 113 Mo. 330; 20 S. W. 965; MoDaniel v. Harvey, 51 Mo. App. 198; Berry
v. Rood, 168 Mo. 316; 67 S. W. 644.
17. Books. — A transfer book and stock register shall be kept at the gen-
eral office of the corporation, which shall be open to inspection of stockholders
during usual business hours for thirty days previous to an election of directors
(sec. 2985). The books and records of the proceedings of such corporation shall
be kept open for the inspection of all persons interested (sees. 3349-3353 ; Cons.,
Art. XII. sec. 15).
18. Office. — Every domestic corporation is required to keep an office
within the State (sec. 3035). The secretary of the corporation must have his
office at the principal corporate office within the State (sec. 3035 ; see also Cons.,
Art. XII. sec. 15).
Cleaton v. Emery, 49 Mo. App. 345; M. L. M. & S. Co. v. Reinhard, 114 Mo. 218; 21
S. W. 488.
19. Reports. — The president, secretary, or managing officer of every do-
mestic corporation must, within thirty days after the 1st day of July of each
year, make what is known as the anti-trust affidavit in the form prescribed by
statute (Laws of 1907, pp. 374-377). Corporations shall annually, on or before
July 1st, report to the Secretary of State the location of the principal office,
name of president and secretary, amount of capital stock both subscribed and
paid up, par value of stock and actual value of stock at the time, cash value
of all personal property and real estate within this State, on June 1st preceding,
and amount of taxes paid by the corporation in this State for the year last pre-
ceding the report (sec. 3026; see also Laws of 1905, p. 71). The president or
other chief officer of all corporations must deliver to the assessor a list of the
names of the persons holding stock therein, the number of shares and the face
value thereof ; also a complete statement of all reserve funds, undivided profits,
premiums on earnings, and of all other values belonging to the corporation (sec-
11357).
400
DIGEST OF INCORPORATION ACTS. — MISSOURI.
20. Anti-Trust Statute. — All combinations to limit prices of certain
designated articles are by statute declared to be illegal (Laws of 1901, chap. 143 ;
Laws of 1907, pp. 234, 235). Anti-trust affidavit is required to be made out
and sworn to by the president, secretary, or treasurer of each corporation
bn or before July 1st of each year (sec. 10306; Laws of 1907, pp. 234, 235,
374-382).
21. Statutory Grounds for Forfeiture of Charter. — The charter may
be forfeited for entering illegal trusts or combinations ; also for failure to main-
tain an office within the State, and have at least three directors residents of
the State for six months consecutively; also for abuse, non-use, or misuse of
corporate rights and privileges (sees. 3035, 3036, 10304), and for violation of
Anti-Trust Acts (Laws of 1907, pp. 234. 235, 374-3S4).
22. Extension of Corporate Existence. — Corporate existence may be
extended for a further period of fifty years by complying with the law in respect
thereto (sec. 2991). Corporations may also reincorporate under the old name,
if they so desire (sec. 3021).
23. Annual Franchise Tax. — There is no annual franchise tax.
24. Amendments. — To increase the capital stock requires the consent of
all persons holding the larger amount in value of the stock, such consent to
be obtained at a meeting of the stockholders called for that purpose. Sixty
days' notice of the time and place of such meeting to be given by publication
at least once a week in some newspaper published in the county wherein the
principal office of the corporation is located, the first insertion to be not less
than sixty days, the last to be not less than one nor more than six days pre-
vious to the date on which said meeting shall be held. The notice must also
state the amount of the proposed increase of stock. L T pon the stock of any cor-
poration being increased, the change and amount of such increase of stock shall
be certified by the proper corporate officers to the Secretary of State, who shall
record the same. In increasing stock the same proceedings shall be had so far
as practicable as in the original proceeding for incorporation (sees. 2981-2983;
Laws of 1911, p. 150).
To change the name or number of directors requires action by a majority
of the stockholders taken at a meeting called for that purpose. The action
so taken must be set forth in an affidavit of the president and secretary of the
corporation, setting forth the name adopted or the number of directors fixed,
together with the date on which said change of name or number of directors
was voted by the stockholders of the corporation. This affidavit must be first
recorded in the office of the recorder of deeds of the county in which the cor-
poration is located and then afterwards filed with the Secretary of State (sec.
Laws of 1903, p. 114).
Corporations may, at a stockholders' meeting called and held in the same
manner provided for in the increase of capital stock, reduce the par value of
its shares of stock and correspondingly increase the number thereof by vote
of a majority of the stock of the corporation. The same certificate of such
change must be made out, recorded, and filed as is provided in the case of
change of name or change in the number of directors (sec. 2990; Laws of 1903,
p. L14).
The Manufacturing and Business Company Act contains a provision for
changing the corporate business in the following manner, to wit: A meeting
of the stockholders must be called by the directors upon notice signed by at
least a majority of the directors and published in a newspaper in the county
26 401
DIGEST OF INCORPORATION ACTS. — MISSOURI.
where the principal place of business of the corporation is located for a period
of sixty days. This notice must also be sent to each stockholder by post at
his usual place of residence at least sixty days previous to the date fixed upon
for holding such meeting and specifying the object of the meeting, the time and
place when and where such meeting is to be held, and the amount to which
the stock is to be increased or diminished or the business changed. An affirma-
tive vote of all persons holding the larger amount in value of all the shares
of stock is necessary to effect the amendment. The published notice provided
for requires that it shall be published at least once a week and the first
publication must be at least sixty days before the date of said meeting. A
statement of the proceedings at the stockholders' meeting must be prepared,
showing compliance with the law, the amount of capital actually paid in, the
business to which it is extended or changed, the whole amount of assets and
liabilities of the corporation, and the amount to which the capital stock shall
be increased or diminished. This statement must be acknowledged by the
chairman and recorded in the same manner as is provided in the case of original
charters (sec. 3356).
Ollesheimer v. Mfg. Co., 44 Mo. Ap. 122; N. S. H. Co. v. Cook, 178 Mo. 189; 77 S. W.
559.
25. Dissolution. — A corporation may be dissolved only on application to
the courts for cause shown by a majority vote of the stockholders or without
cause shown by a two-thirds vote thereof (sec. 3000). The affidavit of disso-
lution must be filed with the Secretary of State (sec. 3031).
26. Foreign Corporations. — Foreign corporations, in order to transact
business within the State, must file in the office of the Secretary of State a
copy of their charter, duly authenticated by the proper authority, together
with a sworn statement under the corporate seal setting forth the business of
the corporation which it is engaged in carrying on or which it proposes to carry
on in the State ; and the principal officer or agent in Missouri must make and
forward to the Secretary of State, with the affidavits required, a statement,
sworn to, of the proportion of capital stock which is represented by its prop-
erty located and business transacted in Missouri, and setting forth the location
of its principal office within the State where legal service may be obtained upon
it. The corporation is required to pay into the State treasury, upon the pro-
portion of its capital stock represented by its property and business in Missouri,
incorporating taxes and fees equal to those required of similar domestic cor-
porations, with an addition of $10 as the license fee. For a corporation employ-
ing $50,000 capital in Missouri, it would have to pay first a tax of $50 thereon ;
this in addition to $10 for license and $1.50 for certificate. The tax on all
additional capital employed in Missouri would be $5 on each additional $10,000
or fractional part thereof. The Secretary of State is not permitted to issue a
license to any foreign corporation bearing the same name as that of a domestic
corporation (R. S. sec. 3039).
In addition to the foregoing, every foreign corporation must maintain a
place of business within the State where service of process may be made and
where books shall be kept showing all of the corporate assets and liabilities as
well as the names and residences of the shareholders and the officers and man-
agers of the corporation (Laws of 1903, pp. 119-121). A license will not be
issued to any foreign corporation that could not be organized under the Laws
of Missouri (sec. 3343), nor to any foreign corporation organized by residents
of Missouri to evade the Laws of Missouri (Laws of 1903, p. 121). Foreign
402
DIGEST OF INCORPORATION ACTS. — MISSOURI.
corporations must annually file a report on July 1st of each year in the office
of the Secretary of State, giving (1) the location of office; (2) name of prin-
cipal officer in State; (3) cash value of real and personal property in State
on June 1st; (4) amount of taxes paid in preceding year (sec. 3027). Also
an affidavit must be filed on or before July 1st in each year in response to a
letter of inquiry from the Secretary of State, and on forms supplied by him,
in regard to trusts and conspiracies, on penalty of forfeiture of right to do busi-
ness in the State (Laws of 1907, pp. 374-377).
The proportion of capital of foreign corporations employed within the State
of Missouri cannot exceed $50,000,000 (Laws of 1907, p. 16S).
Carson-Rand Co. v. Stern, 129 Mo. 381; 31 S. W. 772; Tooney v. S. L. K. P., 74 Mo.
App. 129; Woollen Mills Co. v. Edwards, 84 Mo. App. 448; Kimball v. Davis, 52 Mo. 194; Hay*
v. Merkle, 70 Mo. 509; State ex rel. v. Cook, 181 Mo. 596; 80 S. W. 929.
403
DIGEST OF INCORPORATION ACTS. MONTANA.
MONTANA.
(The references cited below are to the Revised Codes of 1907, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Montana is found in sees. 3805-3908, 4403-
4412 of the Revised Codes of 1907 of Montana and acts amendatory thereof.
Special acts are provided for banking, trust, mutual insurance, building and
loan, railway, telegraph, and telephone companies (sees. 3909-3991). Corpora-
tions may be formed under the General Act for practically any kind of business
(sec. 3808; Laws of 1909, chap. 106).
2. Incorporators. — There must be at least three incorporators. There
are no residential requirements, except that it is customary to have at least one
resident incorporator (sec. 3807).
3. Contents of the Articles of Incorporation (sec. 3817). — The articles
must contain:
a. Name. — Similarity of names is expressly forbidden (sec. 3S25).
b. Purposes. — The General Act, after enumerating the various purposes
for which corporations may be formed, provides specifically that corporations
may be created to carry on one or more of the aforesaid branches of business
or for any of the purposes for which private corporations may be formed, as
set forth in sec. 3808 of the Revised Code of 1907 of Montana and Laws of 1909,
chap. 106. As a matter of practice the Secretary of State permits the insertion
in the articles of incorporation of any number of purposes not covered by special
act.
c. Domiciliary Office. — The place where the principal business is to be
transacted must appear (sec. 3817).
d. Duration. — Term for which the corporation is to exist not to exceed
twenty years. In case of mining, manufacturing, mechanical, etc., corpora-
tions, forty years (sec. 3817).
e. Board of Directors. — The number, which shall not be less than three
nor more than thirteen, and the names and residences of those who are to
serve for the first, three months (sec. 3817).
/. Capital Stock. — The amount of its capital stock and the number of shares
into which it is divided, and if there be more than one class of stock created by
the articles of incorporation, a description of the several classes, with the terms
on which the respective classes are created. The capital stock and par value
of shares may be any amount (sec. 3817).
g. Stock Subscriptions. — Amount actually subscribed, and by whom (sec.
3817).
h. Stock Assessments. — If stock is assessable, it must be so stated (sec. 31S8).
4. Statutory Powers. — The Montana statutes enumerate the common
law powers of corporations, and also confer the following additional powers :
To remove directors ; permitting stockholders to vote by proxy ; permitting
mining companies to consolidate ; authorizing forfeiture of stock for non-
payment of assessments ; permitting the imposition of fines, not to exceed
$100, for violation of by-laws; allowing cumulative voting for directors; to
hold stock and bonds in other corporations (sees. 3889-3891, 3893, 3895, 3896,
4405^407, 4408^412, 3835, 3897, 3841, 3847 ; Laws of 1909, chap. 106, sec.
404
DIGEST OF INCORPORATION ACTS. — MONTANA.
4; Cons., Art. XV. sec. 4). ( 'orporations are given power to dispose of and sell
their property either in whole or in part under certain restrictions as therein
provided. Provision is made for the protection of dissenting stockholders.
Macginness v. Company, 29 Mont. 478; 75 Pac. 89.
5. Procuring the Charter. — The articles must be signed and acknowl-
edged by each of the incorporators. They must then be filed in the office of
the county clerk of the county in which the principal place of business is to be
located, and a copy thereof certified by the county clerk with the Secretary of
State. Thereupon the latter official issues a certificate that a copy of the arti-
cles containing the required statement of facts has been filed in his office. There-
upon the corporate existence commences (sees. 3820, 3823, 3825; Laws of 1909,
chap. 94 ; Laws of 1909, chap. 106, sec. 2). Collateral inquiry as to the legality
of corporate existence is forbidden (sec. 3S92).
No corporation hereafter formed shall purchase, locate or hold property in
any county in this State, without filing a copy of the copy of its articles of in-
corporation filed in the office of the Secretary of State, in the office of the county
clerk of the county in which such property is situated, within sixty days after
the purchase or location is made. Every corporation now in existence, whether
formed under the provisions of this code or not, must, within ninety days after
the passage of this code, file such certified copy of the copy of its articles of in-
corporation in the office of the county clerk of every county in this State in
v/hich it holds any property, except the county where the original articles of
incorporation are filed: and if any corporation hereafter acquire any property
in a county other than that in which it now holds property, it must, within
ninety days thereafter, file with the clerk of such county such certified copy of
the copy of its articles of incorporation. The copies so filed with the several
county clerks and certified copies thereof shall have the same force and effect
in evidence as would the originals. Any corporation failing to comply with
the provisions of this section shall not maintain or defend any action or pro-
ceedings in relation to such property, its rents, issues or profits, until such articles
of incorporation and such certified copy of its articles of incorporation shall be
filed at the places directed by the general law and this section: provided, that
all corporations shall be liable in damages for any and all loss that may arise
by the failure of such corporation to perform any of the foregoing duties within
the time mentioned in this section ; and provided, further, thai the said damages
may be recovered in an action brought in any court of this State of competent
jurisdiction, by any party or parties suffering the same (Code, sec. .3823).
6. Organization Tax. — For recording and filing each certificate of incor-
poration and each certificate of increase of capital stock, there must be paid to
the Secretary of State an organization tax in the following amounts: On all
capitalization up to $100,000, 50 cents per thousand dollars, but in no case
less than $20; additional from $100,000 to $250,000, 40 cents per thousand
dollars ; additional from $250,000 to $500,000, 30 cents per thousand dollars ;
additional from $500,000 to $1,000,000, 20 cents per thousand dollars; addi-
tional over $1,000,000, 10 cents per thousand dollars (Political Code, see.
410).
For recording and filing the certificate of continuance of corporate exist-
ence the following amounts are charged: On amount of capitalization up to
$100,000, 25 cents per thousand dollars; additional from $100,000 to $250,000,
20 cents per thousand dollars; additional from $250,000 to $500,000, 15 cents
405
DIGEST OF INCORPORATION ACTS. — MONTANA.
per thousand dollars; additional over $500,000 to $1,000,000, 10 cents per
thousand dollars; additional over $1,000,000, 5 cents per thousand dollars.
7. Filing and Recording Fees. — The recording and filing fees to the Sec-
retary of State are included in the organization tax. For issuing certificate of
incorporation, the charge is $3 ; for certified copy of the articles of incorpora-
tion, 20 cents per folio for making copy and for affixing seal, $1. For issu-
ing each certificate of decrease of capital stock, $3; for recording and filing
each certificate of decrease of capital stock, $5 ; for issuing certificate of con-
tinuance of corporate existence, $3 ; for recording and fifing each notice of
removal of place of business, each certificate of change of name, or each cer-
tificate making capital stock assessable, $3. Recording fees in local county
office, 15 cents per hundred words ; for acknowledgment, 50 cents, and 10 cents
for indexing. Usually $3 covers this entire service (Political Code, sec.
165).
8. Corporate Indebtedness. — Must never exceed the amount of capital
stock (sec. 3894).
9. Commencing Business. — As soon as the certificate of incorporation
has been recorded in the office of the county clerk and a copy thereof duly
certified with the Secretary of State, and the latter has issued a certificate
that a copy of the articles, properly drawn, has been filed in his office, the
corporation may commence business (Laws of 1909, chap. 106, sec. 2). By-laws
must be adopted within one month after filing articles (sec. 3S29). No corpora-
tion can purchase, locate, or hold property in any county in the State, without
filing a certified copy of its articles of incorporation in the office of the county
clerk of the county in which such property is situated, within sixty days after
such purchase or location is made (sec. 3823). The corporation must or-
ganize and commence business within one year after date of incorporation
(sec. 3892).
Morrison v. Clarke, 24 Mont. 515; 63 Pac. 98.
10. Organization Meetings. — These must be held within the State, in
the absence of any statute providing otherwise.
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held at the office or principal place of business of the corporation
within the State. Directors' meeting may be held within or without the State
if the by-laws so provide. If held without the State, either the original or a
copy of all proceedings had at such meeting, certified by the president and secre-
tary under the corporate seal, shall be sent to and kept at the principal office of
the corporation in Montana, and shall be part of the records thereat (sec. 3847).
McConnell v. Company (Mont.), 76 Pac. 194.
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be not less than three nor more than thirteen directors, who must
likewise be stockholders to the amount prescribed in the by-laws. The only
exception is that the directors authorized by the articles of incorporation to
act as such for the first three months need not be stockholders (sec. 3833).
b. Liabilities. — Directors r.re jointly and severally liable to the corporation
and the creditors in the event of its dissolution, to the full amount of capital
stock illegally withdrawn, paid out or reduced, and for debts contracted beyond
the subscribed capital stock. Dissenting directors may protect themselves
by causing their dissent to be entered at large in the minutes of the directors'
meetings (sec. 3837). Directors are also liable for failure to file annual reports
406
DIGEST OF INCORPORATION ACTS. — MONTANA.
unless they make an affidavit in the form required by statute, explaining the
reason for their neglect (sec. 3S50 as amended by Act of March 11, 1909).
The Revised Code (sec. 3S52) contains somewhat unique provision for reliev-
ing directors of personal liability. The act referred to provides that any director,
trustee, or other officer of a corporation may resign his office by delivering to the
secretary or president of the corporation, or depositing in the post-office in an
envelope securely sealed with the necessary amount of postage prepaid thereon
and addressed to the corporation at its principal place of business, his written
resignation, and filing in the office of the clerk and recorder of the county where
the principal office or place of business of the said corporation is situated a
duplicate of such resignation, together with an affidavit of the delivery or mail-
ing of said resignation as above specified, or an acknowledgment of service
thereof, and by publishing in two consecutive issues of the official newspaper of
the county where said company may be doing business, a notice of such resigna-
tion, and the director, trustee, or other officer shall upon such filing and publica-
tion no longer be responsible for any act or default of the corporation or of the
other officers thereof occurring after the date of such filing, provided, however,
that any director, trustee, or other officer shall also comply with the laws of the
corporation relating to resignations of directors or officers. This act shall apply
to resident directors of foreign corporations having a place or places of business
in this State, as well as to directors and other officers of domestic corporations
(sec. 3852; see also Civ. Code, 3834, 3S59; P. C, sec. 8709, 8730 inclusive;
Laws of 1909, chap. 96).
Gans v. Switzer, 9 Mont. 408; 24 Pac. 18; State Sav. Bank v. Johnson, 18 Mont. 440;
45 Pac. 662.
13. Stockholders' Liabilities. — Stockholders are liable, to the extent of
their unpaid stock subscriptions, for all acts and contracts made by such cor-
poration until the whole amount of capital stock subscribed by them shall
have been paid in (sec. 3853).
14. Stock Certificates. — Each stockholder is entitled to a certificate of
stock signed by the president and secretary (sec. 3855). Par value of shares
may be any amount.
15. Preferred Stock. — Corporations may create two or more kinds of
stock of such classes and with such distinct preferences and voting powers as
shall be expressed in the articles of incorporation. The amount of preferred
stock cannot exceed two-thirds of the capital stock paid in in cash or property.
Preferred stock may be made subject to redemption at not less than par at
a fixed time and price to be named in the stock certificate thereof, and the
holders thereof shall be entitled to receive, and the corporation shall be bound
to pay thereon, a fixed yearly dividend to be expressed in the certificate, not
exceeding eight per cent, payable quarterly, semi-annually, or annually, before
any dividend shall be declared by said board or paid on the common stock, and
such dividend may be made cumulative. Unless the original or amended
articles shall so provide, no corporation may create preferred stock (sec. 3SS9).
16. Payment of Capital Stock. — Corporations can issue stock or bonds
only for labor done, services performed, money or property actually received.
All fictitious increase of stock is void (sec. 3824, Cons., Art. XV. sec. 10). Tin-
Code provides that the directors may purchase mines, manufactories, and
other property necessary for its business, and issue stock in the amount of I lie
value thereof in payment thereof, and the stock so issued shall be declared and
407
DIGEST OF INCORPORATION ACTS. — MONTANA
deemed to be full-paid stock and not liable to any further call. Neither shall
the holders thereof be liable for unpaid stock subscriptions as provided in sec.
3S53 of the Code. The law provides that any arbitrary value may be fixed on
for mines, irrespective of actual value. Wherever stock has been issued there-
for, such stock shall be deemed full-paid stock, regardless of the actual value
of the mine at the time of such purchase (sec. 3824).
17. Books. — Books of by-laws, stock register, transfer book, and record
books of corporation must be kept at principal office within the State. Stock-
holders have the right of inspection at any time during business hours (sec.
3832).
18. Office. — Every domestic corporation is required to keep an office
witliin the State. The statute provides that the principal place of business
within the State must be named in the articles of incorporation (sees. 3847,
3849).
19. Reports. — All corporations must, within twenty days from the 31st
day of December of each year, file in the office of the clerk of the county in
which their principal place of business is situated, a report, stating the amount
of the capital stock, the proportion thereof actually paid in, and the amount
thereof actually paid in in cash and the amount issued in payment of properties
purchased and the amount of existing debts, and also the names and addresses
of the directors or trustees, and of the president, vice-president, general manager,
and secretary of the corporation. Such report shall be signed by the president
and a majority of the directors, inclusive of the president, secretary, or treasurer
of such corporation. In the absence or inability of the president to act, the
vice-president may sign and verify the said report (sec. 3850 as amended by
Act of March 11, 1909).
20. Anti-Trust Statute. — Certain kinds of trusts and combinations are
declared illegal by statute. (See Cons., Art. XV. sec. 20 ; Penal Code, chap. 8,
sees. 321, 325; Laws of 1909, chap. 97, 106, sec. 4.)
21. Statutory Grounds for Forfeiture of Charter. — The charter may
be forfeited upon direct proceedings taken by the State for misuser or non-
user thereof. Also for failure to organize and commence business within one
year from date of incorporation (Code Civ. Pro., sec. 1411; sec. 3892).
22. Extension of Corporate Existence. — The corporate existence may
be extended by compliance with the statute in such case made and provided
(sees. 3815, 3826).
23. Annual Franchise Tax. — There is no annual franchise tax.
24. Amendments. — To increase or decrease capital stock, extend or
change the business, it is the duty of the trustees to publish a notice signed
by at least a majority of them in a newspaper published in the county where
the corporation's principal place of business is located, for lA, least six succes-
sive weeks, and deposit a copy thereof in the post-office, addressed to each
stockholder, at his usual place of residence, at least six weeks previous to the
date fixed for holding such meeting, specifying the object of the meeting, the
time and place when and where such meeting shall be held, and the amount
to which it is proposed to increase or decrease the capital, and the business to
which the company would be extended. At the meeting so called, the vote of
at least two-thirds of all the shares of stock must be cast in favor of the pro-
posed amendment. A certificate of the proceedings showing compliance with
the provisions of law, the amount of capital paid in, the business to which it is
extended or changed, the whole amount of debts and liabilities of the company,
408
DIGEST OF INCORPORATION ACTS. — MONTANA.
and the amount to which the capital stock shall be increased or diminished,
must be made out, signed, and verified by t he affidavit of the chairman and
countersigned by the secretary, and such certificate shall be acknowledged by
the chairman and filed and recorded in the same manner as is required in the
case of original charters (sees. 3826-3828 inclusive, sec. 3).
To change the location of the principal place of business, or to increase or
diminish the number of trustees, it is necessary to obtain the consent in writ-
ing of the holders of two-thirds of the capital stock. After such consent is
obtained and filed in the office of the corporation, notice of the intended change
of location or of the intended increase or diminishment of the number of trustees
must be published at least once a week for three successive weeks in a news-
paper published in the county wherein such principal place of business is located
(sec. 3849) .
Porter v. Company, 29 Mont. 347; 74 Pac. 938.
25. Dissolution. — Dissolution may be had only by application to the
courts (Code Civ. Pro., sees. 6944, 6946, 6961, 6962, 7323-7329 ; see also Code,
sees. 3905, 3906).
Gans v. Switzer, 9 Mont. 408; 24 Pac. 18.
26. Foreign Corporations. — Foreign corporations desiring to do business
in Montana must file in the office of the Secretary of State and in the office of the
county recorder of the county wherein they propose to carry on their business,
a duly authenticated copy of their charter or certificate of incorporation, and a
verified statement made by the president and secretary and attested by a
majority of the board of directors, showing name of corporation and location of
its principal place of business witliin and without the State ; amount of capital
stock; amount of capital stock paid in in money, or in any other way ; amount
of assets of the corporation, of what they consist and actual value thereof;
statement of the liabilities of the corporation secured and unsecured. Such
corporation shall also file at the same time and in the same offices a certificate
under the seal of the corporation and the signature of its president or vice-
president or other acting head, and its secretary, certifying that said corpora-
tion has consented to be sued in the courts of the State and that service of process
may be made upon some person a citizen of the State whose name and place of
residence shall be designated in such certificate (sec. 4413). In case of amend-
ments to its charter in any respect it must, within thirty days after the same is
adopted by the corporation, file a duly authenticated copy of such amendment
in the office of the Secretary of State and in the office of the county clerk of
the county where it intends to carry on business. In case the corporation in-
creases its capital stock or extends its corporate existence, it must then pay
to the Secretary of State at the time of fifing in his office a duly authenticated
copy of the certificate thereof. The same fee is required that is required by
law from domestic corporations for filing certificates of increase of capital
stock or certificates of extension of corporate business (sec. 4413). Must also
file annual reports (sec. 3850 as amended by Act of March 11, 1909). For
filing each certified copy of charter of any foreign corporation, the same fees
shall be charged by the Secretary of State as is provided for in the case of
domestic corporations. The Secretary of State is also entitled to collect the
following fees from foreign corporations : For filing each notice of appointment
of agent, $5; for filing annual statements of foreign corporations, $5. (As to
when foreign corporations may exercise the right of eminent domain, see sec.
400
DIGEST OF INCORPORATION ACTS. — MONTANA.
4420.) Under Laws of 1909, House Bill No. 291, approved March 8, 1909, all
foreign corporations or joint stock companies and corporations otherwise pro-
vided for, organized under the laws of any other State or Territory of the United
States, or of the United States, or of any foreign government, and doing business
in this State, or which may hereafter engage in business in this State, shall be
deemed and taken to be corporations of this State for the purposes of jurisdic-
tion and shall be subject to the jurisdiction of the courts of this State, and may
sue and be sued therein in the mode and manner that is, or may be by law
directed in the case of corporations created or organized under the laws of this
State. The stocks or shares of such foreign corporations and joint stock
companies doing business in this State shall be subject to attachment in the
same manner as now provided by law in the case of domestic corporations.
Powder River Cattle Co. v. Commissioners, 9 Mont, 145; 23 Pac. 383 ; Amer. H S. Co.
v O'Rourke, 23 Mont. 630; 59 Pac. 910; McNaughton Co. v. McGirl, 20 Mont. 124; 49
Pac. 651.
410
DIGEST OF INCORPORATION ACTS. — NEBRASKA.
NEBRASKA.
(The references are to Cobbey's Annotated Statutes of Nebraska for 1907, unless otherwise
stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Nebraska is found in Cobbey's Annotated
Statutes of Nebraska for 1907. Special acts are provided for banks, building
and loan, railway, safe deposit and trust, street railway, fidelity, and guaranty
companies. Under the General Act parties may incorporate for any lawful
business, including the construction of canals, railways, bridges, and other
works of internal improvement.
2. Incorporators. — Any number of persons may incorporate. There are
no residential requirements (sec. 4116).
3. Contents of the Articles of Incorporation. — It is customary to pro-
vide in the articles of incorporation for the following matters :
a. Name. — The name of the corporation. Similarity of names is not for-
bidden (sec. 4123).
b. Domiciliary Office. — The principal place within the State for the trans-
action of business (Id.).
c. Purposes. — The general nature of the business to be transacted. This
would seem to permit of the incorporation of a company for more than one
purpose. The Secretary of State construes the act to permit of the insertion
of any number of purposes (Id.).
d. Capital Stock. — The amount of capital stock authorized, and time and
conditions upon which it is to be paid in. The capital stock may be any amount.
The par value of shares may be any amount. It is customary to insert provision
that in case new stock is issued it shall be distributed pro rata among the exist-
ing stockholders (Id.).
e. Duration. — Time of the commencement and termination of the corpo-
ration. The corporate existence may be perpetual if desired (Id.).
/. Corporate Indebtedness. — Highest amount of indebtedness or liability to
which the corporation is at any time to subject itself. The corporate indebted-
ness cannot exceed two-thirds of the capital stock (sec. 4120).
g. Directors. — A statement must be made to the effect that the affairs and
business of the corporation shall be conducted by a board of directors of a cer-
tain designated number and by the officers by them to be elected as hereinafter
provided (sec. 4123).
h. Organization and Annual Meeting. — A statement to the effect that the
first meeting of the corporation shall be held upon the day of the organization
of the corporation, and thereafter the annual meeting shall be held at the office
of the corporation on a certain designated day. This should be followed by
a statement that at such meeting and at the annual meetings thereafter the
board of directors shall be elected by the stockholders from their own number
to hold office until the annual meeting next after their election and until their
successors are elected and qualify (Id.).
i. Officers. — A provision to the following effect should be inserted. The
directors shall in each instance, as soon as convenient after their election, elect
from their own number a president, vice-president, secretary, and treasurer, who
411
DIGEST OF INCORPORATION ACTS. — NEBRASKA.
shall hold office until the annual meeting next after their election and until their
successors are elected and qualify. Any two of said offices may be held by one
and the same person, excepting the offices of president and vice-president (Id.).
j. By-Laws. — The board of directors shall have full power and authority
to make all rules and by-laws for the proper government and control of the
business affairs of the corporation, and (if desired) they may alter and amend
the same at pleasure (Id.).
k. Filling of Vacancies. — Vacancies occurring in the board of directors
shall be filled by the stockholders. Offices vacated from whatever cause shall
be filled by the board of directors (Id.).
I. Amendments. — Provisions may be inserted providing as follows : These
.articles of incorporation may be amended at any time. Every amendment
shall be first approved by a two-thirds vote of the entire board of directors,
and upon being so approved, it shall be entered at large upon the records of
the board. A draft of the proposed amendment, or amendments as the case
may be, shall then be submitted to each stockholder, with the notice of the
meeting called for the purpose of voting upon the same, which notice shall be
given at least ten days prior to the date fixed for the meeting. If such amend-
ment or amendments, or either of them, shall then be approved by the holder
or holders of two-thirds of the capital stock of the corporation, each and every
amendment so approved shall be considered adopted and be made a part of the
articles of incorporation, and the board of directors shall thereafter subscribe,
acknowledge, record, and publish the same, as by law required (sec. 4125).
4. Statutory Powers. — The statute merely enumerates the common law
powers of corporations (sec. 4117; also sees. 4101, 4120, 4129, 4249). By con-
stitutional provision the legislature is required to provide by law for cumula-
tive voting in person or by proxy in the election of directors (Cons., Art. XIII.
sec. 5).
Williams v. Lowe, 4 Neb. 382; Enterprise Ditch Co. v. Moffitt, 58 Neb. 642; 79 N. W.
560; Fremont Carriage Co. v. Thomsen (.Neb.), 91 N. W. 376; McLeod v. Lincoln Medical
College (Neb.), 98 N. W. 672.
5. Procuring the Charter. — The articles of incorporation must be signed
and acknowledged by each of the incorporators (sec. 4123). After the articles
have been thus signed and acknowledged they must be filed in the office of
the Secretary of State. Before such copy can be filed the organization tax
must be paid, together with the fifing fees. Thereupon the corporation be-
comes a body corporate. The law specifically provides that no body of men
acting as a corporation under the provisions of the Business Corporation Act
shall be permitted to set up the want of legal organization as a defence to any
action brought against them as a corporation: nor shall any person suing on
a contract made with such corporation or for an injury to the property of said
corporation, be permitted to set up the want of legal organization in defence of
said action. The articles of incorporation must also be filed with the county
clerk in the county where the corporation's headquarters are to be located
(sec. 4124).
6. Corporate Indebtedness. — The amount of corporate indebtedness
must not exceed two-thirds of the capital stock (sec. 4120).
7. Organization Tax. — On filing articles of incorporation there shall be
paid to the Secretary of State the following fees : Where the capital stock of the
proposed corporation is $10,000 or less, the filing fee is $10; where such capi-
talization is more than $10,00G but does not exceed $25,000, $20; where such
412
DIGEST OF INCORPORATION ACTS. — NEBRASKA.
capitalization is more than $25,000 and does not exceed S100,000, $50; where
the capitalization is more than $100,000, the filing fee is 50 cents for each addi-
tional $1,000 in excess of $100,000 (sec. 9525).
8. Filing and Recording Fees. — There are no fees payable to the Secre-
tary of State for filing articles of incorporation, except the payment of the organ-
ization tax. A recording fee, however, of 10 cents per folio of one hundred words
is charged. For issuing a certified copy of the articles of incorporation the
charge is 10 cents per hundred words and $1 for certificate. For copies of ex-
emplification of records with seal for each one hundred words, 10 cents ; for filing
certificate of increase of capital stock of any corporation, domestic or foreign,
$5 ; for each one thousand dollars of increase capital stock so certified, 50 cents ;
for filing certificate of decrease of capital stock, $5 ; for filing articles of decree
of court changing the name of any corporation, $5; for filing amendment to
articles of incorporation, $5; for issuing license, $1. The fees for filing in the
office of the county clerk average about $3. Publication of notice of intention
to incorporate averages from $10 to $15 (sec. 9525).
9. Commencing Business. — Before a corporation can transact any busi-
ness except its own organization, it must, in addition to adopting articles of
incorporation and filing and recording them in the office of the Secretary of
State, also, file said articles with the county clerk of the county where their
headquarters are to be located (sec. 4124; Laws of 1911, chap. 28). Within four
months after fifing the articles a notice must be published in a newspaper near
the principal place of business for four weeks, setting forth the corporation's
name, principal place of business, general nature of the business, amount of
capital stock authorized, the time and conditions of payment, time of com-
mencement and termination, highest amount of indebtedness or liability to
which the corporation is at any time to subject itself, and by what officers its
affairs are to be conducted. It is not necessary, however, for the corporation
before commencing business to await the completion of the publication of the
notice above referred to (sec. 4123). In manufacturing corporations the incor-
porators are ipso facto commissioners to open the books for stock subscriptions.
When ten per cent of the capital stock is subscribed, such corporations may
commence business (sec. 4140). The corporation must organize within one year
after its incorporation (sec. 4140).
10. Organization Meeting. — Organization meetings must be held within
the State. In the case of manufacturing corporations the law provides that
the incorporators shall be commissioners to open books for the subscription
to the capital stock of said company before the corporation is organized by the
adoption of articles of incorporation as set forth above. Immediately after
these articles have been adopted the incorporators should meet as stockholders
and choose a board of directors of the number designated in the articles. The
board of directors shall elect at this meeting the officers and adopt by-laws. The
corporation must organize within one year after incorporation (sec. 4119).
11. Meetings of Stockholders and Directors. — In the absence of any
statute authorizing the holding of stockholders' meetings outside the State,
such meetings should be held within the State. Directors' meetings may be
held without the State if the by-laws so provide (sec. 4139).
Haskell v. Read (Neb.), 93 N. W. 997.
12. Directors' Qualifications and Liabilities. — a. Qualifications. The
law does not prescribe the number of directors. There are no residential re-
413
DIGEST OF INCORPORATION ACTS. — NEBRASKA.
quirements. The directors of manufacturing corporations must be stockholders,
and they must elect a president from their own number. (See sec. 4139.)
6. Liabilities. — Directors are liable for the illegal payment of dividends
(sees. 4133, 4139). They are also liable if they are guilty of any deception as
to assets or liabilities (sec. 2098).
13. Stockholders' Liabilities. — Stockholders are liable to the extent
of their unpaid stock subscriptions. If the corporation fails to publish the
annual notice of existing debts hereafter referred to, then in case the assets of
the corporation are thereafter exhausted, leaving debts unpaid, the stockholders
are liable to the amount of stock owned by them for all debts contracted before
such notice was given (sec. 4128). If any corporation fails to comply substan-
tially with the provisions of law relative to giving notice and other requisites of
organization, then in such case, after the assets of the corporation are first ex-
hausted, the property of stockholders shall be liable for corporate debts to the
amount of capital stock owned by them (sec. 4131). (See also Const., Art. XL
b, sec. 4.)
G. & A. Co. v. Company, 46 Neb. 333; 64 N. W. 978, 1097; F. L. & T. Co. 13. Funck, 49
Neb. 353; 68 N. W. 520; Gorder v. Connor, 56 Neb. 781; 77 N. W. 383; Brown v. Brink,
57 Neb. 606; 78 N. W. 280.
14. Stock Certificates. — Every stockholder is entitled to have a stock
certificate issued to him signed by such officers as the by-laws may prescribe.
15. Payment of Capital Stock. — Neither the Constitution nor the statute
prescribes how the capital stock shall be paid in. In the absence of such pro-
vision it is implied that it must be paid in in money or money's worth.
G. & A. Co. v. Company, 46 Neb. 333; 64 N. W. 978, 1097; Troup v. Horback, 63 Neb.
795; Penfield v. Company, 57 Neb. 231.
16. Books. — Stock books and books of account must be kept at the princi-
pal place of business of the corporation within the State, and be open to the
inspection of stockholders. The foregoing provision would seem to apply only
to manufacturing companies (sec. 4139).
17. Office. — Every corporation is required to keep an office within the
State (sec. 4123). A copy of the by-laws must be posted in a conspicuous
place in the office of the corporation and be open to public inspection (sec.
4127).
18. Reports. — Every corporation must give notice annually by publica-
tion in a newspaper published in the county where its principal place of business
is located of the amount of existing debts. This statement must be verified by
the oath of the secretary, president, and clerk (sec. 4128; see also Laws of 1909,
chap. 111).
19. Anti-Trust Statute. — Under the Act of 1897, chap. 79, all trusts and
conspiracies against trade and business as defined in the statute are declared
to be illegal and void. See also Revised Civil Code, 12000 et seq., 12028 et seq.>
12012 et seq.
State v. Neb. Dis. Co., 29 Neb. 700; 46 N. W. 155.
20. Preferred Stock. — There is no express provision in the statute au-
thorizing the issuance of preferred stock.
21. Statutory Grounds for Forfeiture of Charter. — The charter may
be forfeited through, any violation of the provisions of the General Corporation
Act, such as the payment of dividends when the corporation has insufficient
funds to meet its liabilities, etc. Repeated acts of misuser or non-user have
been held to constitute grounds for forfeiture of franchise (sec. 4134; Civil
414
DIGEST OF INCORPORATION ACTS. — NEBRASKA.
Code, sees. 704-727 inclusive). The charter may be forfeited if the corporation
does not organize within one year after its incorporation.
State v A. & N. R. R. Co.. 24 Neb. 143; 38 N. W. 43; State v. Nebraska Dis. Co., 29
Neb. 700; 46 N. W. 155; State v. Company, 4 Neb. 354.
22. Annual Franchise Tax. — No corporation heretofore or hereafter
incorporated under the laws of this State, or of any other State, shall do or
attempt to do business by virtue of its charter or certificate of incorporation,
in this State without a State occupation permit therefor (Laws of 1909, chap.
25, sec. 1).
It shall be the duty of every corporation incorporated under the laws of
the State, and of every foreign corporation now doing business or which shall
hereafter engage in business in this State, to procure annually from the Secre-
tary of State an occupation permit, authorizing the transaction of business in
this State, and it shall pay therefor, if the capital stock of such corporation is
$10,000 or less, $5; over $10,000, but not exceeding $25,000, $10; over $25,000
and not exceeding $50,000, $20; over $50,000 and not exceeding $100,000,
$30 ; over $100,000 and not exceeding $250,000, $50 ; over $250,000 and not
exceeding $500,000, $75 ; over $500,000 and not exceeding $1,000,000, $100;
over $1,000,000 and not exceeding $2,000,000, $150; over $2,000,000, $200.
Said occupation fee shall be due and payable on the 1st day of July each
and every year to the Secretary of State, who shall pay the same into the State
treasury for the benefit and use of the general fund. If not paid on or before
the hour of four o'clock P. M., on the 20th day of September, next thereafter,
the same shall become delinquent and there shall be added to the occupation
(license fee), as a penalty for such delinquency, the sum of $10. The oc-
cupation fee hereby provided authorizes the corporation to transact busi-
ness during the year or for any fractional part of such year in which such occu-
pation fee is paid. "Year" within the meaning of this act means from and
including the 1st day of July to and including the 30th day of June next
thereafter (Laws of 1909, chap. 25, sec. 2, as amended by Laws of 1911, chap.
29).
23. Amendments. — The act does not specify just what amendments to
the articles of incorporation may be made. It simply provides that every change
in the articles shall be recorded and published in the same manner as original
articles are required to be filed and recorded by law (sec. 4125). Special pro-
vision, however, is made in the case of reduction of capital stock. In this re-
gard the law provides that the board of directors may, with the written con-
sent of the persons in whose name a majority of the shares of the capital stock
thereof shall stand, reduce the amount of the capital stock to the nominal value
of the shares thereof, and issue certificates therefor (sec. 4102).
24. Dissolution. — Corporations may be dissolved by consent of two-thirds
of the stockholders (sec. 4126; see also sees. 4106, 4107).
Harrington v. Connor, 51 Neb. 214; 70 N. W. 011.
25. Extension of Corporate Existence. — Provision is made for the ex-
tension of corporate existence for companies incorporated for the purpose of
erecting any public improvement (sees. 1991, 1992).
26. Foreign Corporations. — From and after June 30, 1905, all foreign
corporations (except transportation companies), before they may engage in
business within the State, must file a statement in the office of the Attorney-
General of the State, signed and sworn to by its president, treasurer, or gen-
415
DIGEST OF INCORPORATION ACTS. — NEBRASKA.
eral manager, and a majority of the directors, on or before the 15th day of
September in the year 1906, and in each year thereafter, for the year ending
June 30 in said year, showing (a) The amount of its capital stock, (b) The
market value of the same, (c) How much of the same has been paid in full in
cash, or if the same has not been paid in full in cash, what has been received by
the said corporation, joint-stock company, or other association in lieu thereof,
and the value of whatever shall have been so received by it. (d) The names
of the officers and directors of such corporation, joint-stock company, or other
association, and all agents intrusted with the general management of its affairs,
(e) The amount which has been paid in dividends during said year, the rate of
percentage of such dividends, and times of paying the same. (/) A statement
of all the stock owned by it, or any other corporation, joint-stock company, or
other association, and the number and value of each share in it ; the amount
of its own capital stock by other corporations, joint-stock companies, or other
associations held, and the value thereof, and the amount of stock in other cor-
porations, joint-stock companies, or other associations held in trust for it, or
in which it is interested, directly or indirectly, absolutely or conditionally, legally
or equitably, specifying the corporations, joint-stock companies, or other associa-
tions, (g) It shall also, on or before the 30th day of June in the year 1906,
file in the office of the Attorney-General of this State an undertaking, signed
by such officers, general manager, and directors, that they will comply with
the provisions of this and all other laws of this State in the management of the
affairs of such corporation, joint-stock companies, or associations, and that they
accept the provisions and liabilities of this act, and the obligations by it imposed,
so long as they shall continue to hold or exercise such office, and shall thereafter,
within ten days of their entering upon the duties of such offices, file a like under-
taking, signed by every officer, general manager, or director thereof elected or
appointed to such office or employment (sec. 12031).
This statement shall be in addition to all statements now or hereafter re-
quired by law, or by any other public authority, in this State. In addition to
the foregoing every foreign corporation shall, before it is authorized to trans-
act business in the State, make and file a certificate signed by the president or
secretary of such corporation, duly acknowledged, with the Secretary of State
and in the office of the register of deeds in the county in which its principal
place of business in this State is located, designating the principal place where
the business of this corporation shall be carried on in this State, and therein
naming and appointing an agent or agents in this State, one of whom shall be
the auditor of public accounts of the State, who shall in such certificate be
designated by his official title, and one of whom shall reside at the principal
place of business of said corporation, upon whom service of process in behalf
of the corporation may be had (Laws of 1909, chap. 28). The Secretary of
State shall keep a book in which shall be recorded all such certificates and
books and addresses to be filed with him, and shall charge and receive from
every such foreign corporation 10 cents per folio for recording and transcribing
the same (Laws of 1907, chap. 32). Under Laws of 1905, chap. 162, sec. 7,
foreign corporations are not permitted to control domestic corporations. The
license and annual franchise taxes imposed upon foreign corporations are the
same as that imposed upon domestic corporations of like capitalization. (See
ante, sec. 7.)
Schmitt & Bro. Co. v. Mahoney, 60 Neb. 20; 82 N. W. 99; Pioneer Savings & Loan
Ass'n v. Eyer, 62 Neb. 810; 87 N. W. 1058; State v. Standard Oil Co., 61 Neb. 28; 84 N. W.
413; State v. Fleming (Neb.), 97 N. W. 1063.
416
DIGEST OF INCORPORATION ACTS. NEVADA.
NEVADA.
(References below are to the Laws of Nevada, 1903, chap. 88, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Nevada is to be found in the Laws of 1903,
chap. 88, sees. 1-114. Under this act corporations may be formed for the
transaction of any lawful business, within or without the State, except insur-
ance, surety, or railway companies. These last may be incorporated under
the act if formed to transact business exclusively out of the State.
2. Incorporators. — Three or more. No residential requirements (sec. 1).
See In re L. B. Co., 1 San. 349.
3. Contents of the Certificate of Incorporation. — The certificate must
set forth :
a. Name. — Similarity of names is forbidden (sec. 4, sub. 1). It must end
with "incorporated," or contain one of the following words: "Association,"
f company," "corporation," "club," "society," or "syndicate" (Id.).
b. Purposes. — Objects for which the company is formed. Any number of
purposes may be inserted (sec. 4, sub. 3).
c. Capital Stock. — Not less than $2,000 ; number of shares and par value
thereof, which may be any amount. Amount of subscribed capital stock with
which it will begin business not less than $1,000. Amount actually subscribed
and amount actually paid up, if any. If preferred stock is to be issued, a descrip-
tion thereof and terms of its creation must be set forth (sec. 4, sub. 4).
d. Duration. — May be perpetual, if desired (sec. 4, sub. 6).
e. Original Subscribers. — The names of each of the original subscribers to
the capital stock and the amount subscribed by each (Laws of 1905, p. 51).
/. Directors. — Whether the members of the first governing board shall be
styled "directors" or "trustees," and the number thereof, which shall not be
less than three (sec. 4, sub. 7).
g. Domiciliary Office. — The location of the principal office within t ho State,
giving the street and number if practicable (sec. 4, sub. 2). If not so described
as to be easily located, the Secretary of State shall refuse to issue a certificate
until such location is made and established (Laws of L905, chap. 51).
h. Assessments. — Whether the stock shall be subject to assessments or not
after the subscribed price or par value thereof has been paid. Unless assess-
ments are provided for, paid up stock and stock issued as fully paid up is non-
assessable, and articles cannot be amended in this respect.
i. Regulation of Internal Affairs. — Any provision for the regulation of the
internal affairs of the corporation that may be desired may be inserted (sec. 4,
sub. 9).
4. Statutory Powers. — The act enumerates the common law powers,
and also confers the following additional powers: To vote by proxy, to forfeit
stock for non-payment of assessments, to issue preferred stock, to transact
business outside of the State, to hold stockholders' and directors' meetings out-
side of the State, to permit cumulative voting, to appoint an executive com-
mittee from the board of directors, to consolidate with other corporations, to
issue stock for labor or property, to issue bonds, to remove director-, to dele-
27 417
DIGEST OF INCORPORATION ACTS. NEVADA.
gate the power to directors to adopt by-laws, to surrender charter, to hold stock
in other corporations, and to fix number of directors by by-laws (sees. 7-10,
14, 17, 20, 23, 43-, 54, 78, 110).
Sutro v. Company, 19 Nev. 121; 7 Pac. 271; Bassett v. Company, 15 Nev. 293.
5. Procuring the Charter. — The corporators must subscribe and acknowl-
edge the articles, after which they must be filed and recorded in the office of
the clerk of the county where the principal place of business is to be located.
Next, a copy of these articles, certified under the seal of the clerk of said county,
must be filed and recorded with the Secretary of State. This official, after
payment to him of the organization tax and fifing fees, issues a certificate that
a copy of the articles containing the required statement of facts has been filed
in his office. Thereupon the corporate existence commences (sees. 3, 5, 6).
Within thirty days after organization there must be filed with the Secretary of
State a certificate of the election of trustees, together with certain details
required by sec. 85 of the Code. A certified copy of the articles must be
filed in every county in which the corporation holds property or transacts
business or to which its office may be removed (sees. 69, 70).
6. Corporate Indebtedness. — There is no statutory limitation upon
corporate indebtedness. By a two-thirds vote of the stock, corporate bonds
may be issued and the board of directors may make the same convertible into
common stock (sec. 36). Bondholders may be given the right to vote and to
inspect books (sec. 11).
7. Organization Tax. — Before incorporation there must be paid to the
Secretary of State 10 cents for each thousand dollars of capital stock author-
ized, but in no case less than $10 (Laws of 1905, chap. 51).
8. Filing and Recording Fees. — There is no charge for filing and record-
ing in the Secretary of State's office other than the payment of the organiza-
tion tax. Neither is any charge made for furnishing certificates of incorporation. .
The cost of certified copy of charter is 40 cents per folio of one hundred words,
and $5 for certificate and seal of State. The charge is only $2 when copy is
furnished. In drafting the certificate of incorporation it is always best to have
four copies prepared, one for filing in the county clerk's office, one for filing in
the Secretary of State's office, one to be certified by law and returned to the
incorporators, and one to be filed in the office of the Nevada agent. The charge
for filing and recording amendments to articles is $10. The filing and recording
fees in local county offices vary according to the population of the county. The
filing fee ranges from 15 to 25 cents, and the recording fee from 20 to 30 cents
per folio ; the cost of affixing certificate to copy ranges from 75 cents to $1.
The cost of filing certificate of election of directors, etc., with Secretary of State
is$l (sec. 102).
9. Commencing Business. — Business may be commenced as soon as the
certified copy of articles is filed in the office of the Secretary of State. The
time limited by statute within which business must be commenced is two years
(sec. 5). Corporate existence cannot be collaterally attacked (sec. 52). A
certified copy of the articles must be filed in every county in which the corpora-
tion holds property or transacts business, or to which its office may be removed
(sees. 69, 70).
10. Organization Meeting. — May be held within or without the State.
Provision for calling the same is made in the act (sees. 12, 13, and 38). Sur-
viving incorporators are given the right to appoint persons to act in place of
deceased incorporators (sec. 38).
418
DIGEST OF INCORPORATION ACTS. — NEVADA.
11. Meetings of Stockholders and Directors. — Stockholders' meetings
may be held within or without the State, according as the by-laws provide.
Voting by proxy permitted. Cumulative voting allowed. Directors' meet-
ings may be held wherever the by-laws provide (sees. 13, 14, 17, 20, and 23).
12. Directors' Qualifications and Liabilities, a. Qualifications. — ■
There must be at least three directors. They need not be stockholders. They
must take the oath of office. No residential requirements (sec. 4, sub. 7, 9).
They are empowered to appoint an executive committee of two or more of their
number (sec. 23). The power to adopt by-laws may be delegated to the directors
either by making provision therefor in the original articles, or by vote or written
assent of two-thirds of the stockholders (sec. 21). Cumulative voting in the
election of directors is mandatory unless otherwise prescribed in the certificate
of incorporation (sec. 20). Bondholders and secured creditors may be allowed
to vote at the election of directors by making provision to that effect in the
certificate of incorporation (sec. 11). No stock may be voted at any election
for directors which has been transferred on the books of the company within
twenty days before such election (sec. 58). Fractions of shares cannot be
voted (oec. 17).
b. Liabilities. — Jointly and severally liable where they give out fraudulent
reports. Also liable for illegal declaration of dividends or unlawful withdrawal
of capital stock, where they consent thereto (sees. 68, 73, 77). They are also
liable for corporate debts contracted before filing a certificate of any decrease
of capital stock (sec. 42). As to penalty for filing false reports, see Laws of
1907, chap. 60.
13. Stockholders' Liabilities. — Stockholders are only liable for debts
of the corporation to the extent of their unpaid stock subscriptions (sees. 31,
32). The statutory liability of stockholders or directors of foreign corpora-
tions will not be enforced in Nevada (sec. 33). By provision made therefor in
the articles of incorporation, full paid stock may be made liable for corporate
debts (sec. 4). For non-compliance with law in respect to reduction of capital
stock, stockholders are liable for such sums as they receive respectively out of
the amount of reduced stock (sec. 42).
Thompson v. Bank, 19 Nev. 171; 7 Pac. 870.
14. Stock Certificates. — Must be signed by president or vice-president
and secretary or treasurer.
From and after the 15th day of April, 1909, every corporation owning,
leasing, working, or developing any patented or unpatented mining claim in
this State, and selling or offering for sale, either directly or indirectly, or au-
thorizing or causing to be issued or sold, any of its stock or shares for the pro-
motion or development of any such mining claim, shall print or stamp across
the face of each certificate of its treasury stock or shares (as defined by this
act) the words "Treasury Stock" in English letters or characters a1 least one-
half of an inch in height, and not less than one-eighth of an inch in width, said
letters or characters to be printed or stamped as aforesaid in ink of a conspicu-
ously different color than the ink used in printing, writing, or stamping the
body or other matter printed, stamped, or written thereon (Laws of 1909,
p. 62, sec. 3).
From and after the 15th day of April, A. D. 1909, every corporation own-
ing leasing, working, or developing any patented or unpatented mining claim
in this State, and selling or offering for sale, either directly or indirectly, or
419
DIGEST OF INCORPORATION ACTS. — NEVADA.
authorizing or causing to be issued or sold, any stock or shares therein
that have not been specifically set aside by such corporation for the purposes
of raising money or means for the development of the mineral resources
of such mining claims or claim, or for making necessary improvements
thereon, shall print or stamp across the face of each certificate so. issued or
authorized to be issued, sold, or offered for sale, as aforesaid, the words " Pro-
motion Stock" in English letters or characters at least one-half of an inch in
height and one-eighth of an inch in width, and said letters or characters to be
printed or stamped thereon, as aforesaid, in ink of a conspicuously different
color than the ink used in printing, writing, or stamping the body, or other
matter printed, stamped, or written thereon.
All stock, or shares of every mining corporation doing business in this
State that have been or shall be specifically set aside to sell for money, or other
valuable consideration, and the proceeds of which are to be used for the actual
development of the mineral resources of any mining claim or for the purpose
of making necessary improvements thereon, is hereby deemed and declared
to be treasury stock, and all other stock of such corporation is hereby deemed
and declared to be promotion stock, within the meaning of this act.
From and after the 15th day of April, 1909, it shall be unlawful for any
corporation or any officer, agent, or director thereof, owning, claiming, leasing,
or working, or developing any mining property in the State to issue any written
or printed certificate representing one or more shares of its stock, or to sell or
offer for sale any certificate thereafter issued by any such corporation upon
which certificate is not stamped or printed the words "Treasury Stock" or
"Promotion Stock" as defined and required by the provisions of this act, and
it shall be unlawful for any person, or any officer, agent, or director of any
corporation subject to this act to so stamp or print any such certificate as
"Treasury" stock when in fact the same represents "promotion" stock, or to
bo stamp or print any such certificate " promotion " stock when in fact the same
represents "treasury" stock, as said classes of stock are defined by section 5
hereof.
Each and every provision of this act is hereby declared to be mandatory,
and the officer or agent of any mining corporation subject to the provisions
hereof who shall fail or neglect to execute and to file the statement or affidavits
required by sections 1 and 2 of this act, or to otherwise comply with all other
provisions hereof, or who shall wilfully do or perform any act or thing herein
declared to be unlawful, shall be deemed guilty of a misdemeanor, and shall
upon conviction be fined in any sum not less than $100 nor more than $500, or
shall be imprisoned in the county jail for a period of not less than fifty days,
nor more than six months, or be punished by both such fine and imprisonment.
Any person who shall act as agent for any foreign corporation, subject to
the provisions of this act, that has not strictly complied with sections 1 and 2
hereof shall be guilty of a misdemeanor, and shall be filed in any sum not less
than $100 nor more than $500, or be confined in the county jail for a term
of not less than fifty days nor more than six months, or by both such fine and
imprisonment.
Evei*y corporation, domestic and foreign, violating any of the provisions
or requirements of this act, shall forfeit to the State of Nevada the sum of one
thousand ($1,000) dollars and costs of suit, to be recovered in an action in the
name of the State instituted by the Attorney-General, or any district attorney
at the request of the Attorney-General, nor shall any such corporation failing
420
DIGEST OF INCORPORATION ACTS. — NEVADA.
to comply with sections 1 and 2 of this act maintain or defend any action in any
court of this State, provided that upon the production of a certificate of the
county recorder that the statements and affidavits required by said sections
have been duly filed (except as to the time the same was required to be filed),
any such action may be maintained or defended ; provided that the provisions
of this act shall not apply to any action now pending.
In corporations already formed, or which may hereafter be formed, under
this act, or otherwise, for mining purposes, where the amount of the capital
stock of such corporation consists of the aggregate valuation of the whole
number of feet, shares, or interest in any mining claim in this State, for the
working and development of which such corporation shall be or has been formed,
no actual subscription to the capital stock of such corporation shall be neces-
sary, but each owner in said mining claim shall be deemed to have subscribed
such an amoimt to the capital stock of such corporation as under the by-laws
will represent the value of so much of his or her interest in said mining claim,
the legal title to which he or she may, by deed, deed of trust, or other instru-
ment, vest, or have vested in such corporation, for mining purposes, such sub-
scription to be deemed to have been made and to have been fully paid on the
execution and delivery to such corporation and its acceptance by such cor-
poration of such deed, deed of trust, or other instrument ; nor shall the validity
of any assessment levied or which may hereafter be levied, by the board of
directors or trustees of such corporation, provided such corporation has the
right and power to levy assessments, be affected by reason of the fact that the
full amount of the capital stock of such corporation, as mentioned in its cer-
tificate of incorporation, shall not have been subscribed as provided in this
section, provided that the greater portion of said amount of capital stock shall
have been subscribed, 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 regulat-
ing the mode of making subscriptions to its capital stock and calling in the same
by by-laws or express contract; provided further, that no corporation here-
after formed shall ever have power to assess paid up stock unless in its original
articles or certificate of incorporation such power is reserved, and no amend-
ment of such original in this respect, or to give such power, shall ever be
made.
15. Preferred Stock. — The act expressly authorizes corporations organ-
ized thereunder to create two or more kinds of stock, of such classes and with
such designations, preferences, or voting powers as shall be expressed in the
certificate of incorporation or in any amendment thereof. At no time, how-
ever, may the total amount of preferred stock issued and outstanding exceed
two-thirds of the capital stock paid for in cash or property, and such preferred
6tock may, if desired, be made subject to redemption at any time after three
years from the issue thereof at a price not less than par, and the holders thereof
shall be entitled to receive and the corporation shall be bound to pay thereon
dividends at such rates and on such conditions as shall be stated in the original
or amended certificate of incorporation not exceeding ten per cent per annum,
payable quarterly, half yearly, or yearly, and such dividends may be payable
before any dividend shall be set apart or paid on the common stock. Such
dividends may be made cumulative provided the corporation shall set apart
or pay such dividends to the holders of non-cumulative dividends before any
dividends shall be paid on the common stock, but in no event shall tho holders
421
DIGEST OF INCORPORATION ACTS. — NEVADA.
of any class of stock be personally liable for the debts of the corporation nor
for the payment of dividends (sec. 4, sub. 4, sec. 10). (See as to conversion of
preferred stock into bonds, sec. 36.)
16. Payment of Capital Stock. — May be paid for in money, labor, or
property (sees. 28, 54, 55, 99).
F. A. N. Co. v. Tides, 26 Nev. 158; 65 Pac. 373.
17. Books. — Original or duplicate stock ledger must be kept at principal
office within the State for inspection of stockholders (sec. 14). There must also
be kept at the principal office a copy of the articles of incorporation and of the
by-laws (sees. 14, 22, 58, 71). Stockholders and creditors may demand sworn
copies of the stock register on payment of expenses (sec. 71). Information
must be furnished to creditors relative to stockholdings on affidavit made to
the effect that they are such creditors (sec. 72).
18. Office and Agent. — Every domestic corporation must maintain a
principal office within the State and an agent in charge thereof (sees. 14, 16).
The corporate name of such corporation must be printed in a conspicuous place
on its principal office in letters sufficiently large to be easily read. Every cor-
poration which shall fail so to do for a period of thirty days, or fail to maintain
such office, or fail to have a competent agent in charge thereof, on all business
days of the year, shall be subject to a fine of not less than $100 nor more than
$500. Failure to comply with this requirement shall render the certificate issued
by the Secretary of State void (Laws of 1907, chap. 117).
19. Reports. — Except in the case of mining companies, the only report
required is the filing of a certificate of election or changes in the governing
board of the corporation. This must be filed within thirty days thereafter in
the office of the Secretary of State, giving details required by section 85 of the
Code (filing fee $1). The penalty for failure to file the same is a fine of $100
(Laws of 1905, chap. 51).
Every corporation owning, claiming, holding, leasing, or engaged in the
business of working or developing any mining claim or mining property or in-
terest therein, in this State, end selling or offering for sale, either directly or
indirectly, any of its shares or capital stock, shall, during the months of June
and November of each calendar year hereafter, file in the office of the county
recorder of each county wherein such mining property is situated, and in the
office of the Attorney-General of this State, a statement duly subscribed and
sworn to before a notary public (or other officer authorized by law to admin-
ister oaths) by its president (or vice-president) and its secretary if it is a domestic
corporation, and also by its resident agent, if a foreign corporation, which shall
contain the following facts and information :
(a) The name of each mining claim and the total number of such claims or
fractions thereof Owned or leased, and the number thereof being worked and
developed, also the county and mining district (if there be one) wherein said
claims are located, and the nearest post-office and the distance therefrom, as
near as can be ascertained.
(6) The nature of the title thereof, or interest therein, whether leasehold
or otherwise, also the date each claim or interest therein was purchased, leased,
or otherwise acquired by such corporation.
(c) The character, value, and a general description of all buildings, works,
machinery, and other improvements on each unpatented claim, and the char-
acter, value, and a general description of all buildings, works, machinery, and
4-22
DIGEST OF INCORPORATION ACTS. — NEVADA.
other improvements being actually used or operated by such corporation on
its patented ground, taken as a whole.
(d) The total number of days' labor employed and expended in actual de-
veloping the mineral resources of each unpatented mining claim, if any, and
of the entire patented property, if any, during the six months next preceding,
and the total sum of money or other valuable consideration given or paid out
therefor.
(e) The total number of shares such corporation is by law authorized to
issue, and the different classes, and par value thereof.
(J) The total number of shares of stock originally set aside by such cor-
poration, if any, in its treasury or otherwise, to sell or otherwise dispose of, for
the purpose of working, developing, or otherwise improving any patented or
unpatented mining claim, or claim, owmed or leased or being worked or de-
veloped by such corporation, and the total amount of money realized from
the sale of any portion thereof during the six months next preceding.
(g) The total number of shares of treasury stock sold, the price thereof per
share, and the total sum of money or other consideration received therefor during
the six months next preceding the date of filing of the statement herein required,
and the number of shares of treasury stock remaining unsold at said time.
(h) The amount of money, if any, actually paid by such corporation to
each of its officers, superintendents, or to other persons, exclusive of persons
included in subdivisions of this section, as salary or compensation for services
rendered such corporation, stating the nature of such services; also the respec-
tive amounts, if any, expended for advertising and as commissions for sales
of stock, during the six months next preceding.
(i) The total amount of bullion tax paid during the six months next
preceding.
The affidavit shall state that affiant is the president (or other officer of
such corporation or other person required to make such affidavit) and has
read the foregoing statement and knows the contents thereof; that the same
is true and correct to the best of his knowledge and belief.
At the same time, or within ten days after the sworn statement prescribed
by section 1 of this act shall have been filed with the county recorder as in
this act provided, the secretary or resident agent, or one officer of such cor-
poration required by this act to subscribe to the same, shall duly mail or cause
to be mailed to each person appearing at said time on the books of such corpora-
tion as a stockholder therein, a true typewritten or printed copy of such state-
ment, and shall in addition thereto make an affidavit before some officer duly
authorized to administer oaths, that a true copy of such statement has been
duly deposited in the United States post-office (giving the name of the post-
office) addressed to each stockholder of such corporation, as appears from the
books thereof, at his or her last known address, or place of residence, and that
sufficient postage has been prepaid thereon, and thereupon such secretary or
resident agent, or other person making such affidavit, shall file the same in
the office of such county recorder, who shall attach the same to the original
statement previously filed, pursuant to section 1 of this act, and to which such
affidavit pertains. The county recorder shall charge as a filing fee 50 cents
for every original statement required by the preceding section, and 50 cents
for filing and attaching the affidavit required by this section, unless the same
is attached to said original statemenl (Laws of 1909, p. 02. As to penalty
for filing false reports see Laws of 1907, chap. 00).
423
DIGEST OF INCORPORATION ACTS. — NEVADA.
20. Anti-Trust Statute. — There is no anti-trust statute in this State.
21. Statutory Grounds for Forfeiture of Charter. — Charters may be
forfeited for failing within two years to organize and commence in good faith
the business of promoting the objects or purposes for which the corporation
was organized (sec. 51). Also for failure to keep office and agent, etc., in the
State for ninety days (Laws of 1905, chap. 51 ; Laws of 1907, chap. 117) ; also
for failure to keep corporate name conspicuously displayed at said office (sec. 16,
as amended by Laws of 1905, chap. 51). Quo warranto may be brought by the
district attorney cf the county, for ultra vires acts (C. L. sec. 3873).
22. Annual License Tax. — There is no annual license tax.
23. Amendments. — The incorporators before the payment of any part of
its capital may record with the clerk of the county in which its original cer-
tificate of incorporation is recorded, and file with the Secretary of State, an
amended certificate duly signed by the incorporators named in the original
certificate of incorporation duly acknowledged, amending the original certificate
of incorporation in whole or in part (Laws of 1903, chap. 88, sec. 3). Corpora-
tions may also correct errors and omissions in the certificate of incorporation
in the manner following:
The board of directors shall pass a resolution declaring that such error exists
and that such corporation desires to correct the same. A certificate of such
case shall be made, signed, and acknowledged by the president and secretary
under the corporate seal. This certificate, together with the written assent in
person or by proxy of two-thirds in interest of all of the stockholders of the
corporation, shall be filed in the office of the Secretary of State (Laws of 1903,
chap. 88, sec. 391).
Corporations may also change the nature of their business, their corporate
name, increase their capital stock, change the par value of the shares of their
capital stock, change the location of their principal office in the State, change the
number of their directors or trustees, create one or more classes of stock, and
make such other amendments as may be desired, in the manner following : The
board of directors shall pass a resolution declaring that such change or altera-
tion is advisable, and calling a meeting of the stockholders to take action thereon.
The meeting shall also be held on such notice as the by-laws provide, and in
the absence of such provision upon ten days' notice given personally or by
mail; if two-thirds in interest in each class of the stockholders having voting
powers and all other persons having like powers shall vote in favor of such
amendment, change, or alteration, a certificate thereof shall be signed by the
president and secretary under the corporate seal, acknowledged or proved as
in the case of deeds of real estate, and such certificate, together with the written
assent in person or by proxy of two-thirds in interest of each class of said
stockholders and creditors having voting powers, shall be filed in the office
of the Secretary of State, and upon the filing of the same, and filing a certified
copy of the said certificate of amendment with the county clerk of the county
where the corporation has its principal place of business, the certificate or
articles of incorporation shall be deemed to be amended accordingly
(sees. 40-41; Laws of 1909, p. 198).
The decrease of capital stock may be effected by the retiring or reducing
of any class of stock, or by drawing the necessary number of shares by lot for
retirement, or by the surrender of each shareholder of his shares and the issu-
ing to him in lieu thereof of a decreased number of shares, or by the purchase
at not above par of certain shares for retirement or by retiring shares owned
424
DIGEST OF INCORPORATION' ACTS. — NEVADA.
by the corporation or by reducing the par value of shares ; and when any cor-
poration shall decrease the amount of its capital stock hereinbefore provided
by amendment pursuant to this or the two preceding sections, the certificate
decreasing the same shall be published for three weeks consecutively at least
once in each week in a newspaper published in the county in which the prin-
cipal office of the corporation is located, the first publication to be made within
fifteen days after the fifing of said certificate (sec. 42. See as to removal of
place of business without amendment, sec. 69).
24. Extension of Corporate Existence. — Charters may be renewed, if
desired (sees. 107, 108).
25. Dissolution. — The charter may be surrendered by the incorporators
before organization, if desired (sec. 88). By resolution of a board of directors
a meeting of the stockholders may be called to vote upon the question of dis-
solution. Two-tliirds in interest of the stockholders or creditors entitled to
vote are required to bring about a voluntary dissolution; it may be effected
by written consent of nine-tenths interest of secured creditors entitled to vote
with stockholders without a meeting (sec. 89). Voluntary dissolutions or
receiverships are provided for by statute (sees. 93-98).
26. Foreign Corporations. — Every foreign corporation must file in the
office of the Secretary of State a certified copy of its articles of incorporation
or of the statute or statutes or other instrument of authority by which it was
created, and a certified copy thereof duly certified by the Secretary of State in
the office of the county clerk of the county where its principal place of busi-
ness in this State is located, and shall pay to the Secretary of State the same
fee therefor as is paid by corporation under the laws of this State (Laws of
1907, p. 190).
Foreign corporations either doing business or owning property in the State
shall by an authenticated certificate filed with the Secretary of State appoint
an agent in the State upon whom legal process may be served (sec. 899).
Every foreign corporation who shall fail or neglect to comply with the
provisions of the act shall be subject to a fine of not less than $500 to be recov-
ered in a court of competent jurisdiction, and shall not be allowed to com-
mence, maintain, or defend any action or proceeding in any court of this State
until it shall have fully complied with the provisions of this act, and any person
or persons who shall act as agent within this State of any such corporation who
shall fail for a period of ten days after the taking effect of this act to comply
with the provisions herein, shall be personally and individually liable to a fine
of not less than 3500. It is hereby made the duty of the Secretary of Stale,
as he may be advised that such corporation is doing business in contravention
of this act, to report it to the governor, who shall instruct the district attorney
of the county wherein such corporation has its principal office or place of busi-
ness, or the Attorney-General of the State, or both, as soon as practicable to
institute proceedings to recover the fine or fines provided for in this action
(Laws of 1907, chap. 89).
425
DIGEST OF INCORPORATION ACTS. NEW HAMPSHIRE.
NEW HAMPSHIRE.
(References below are to Public Statutes of New Hampshire, 1891, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of New Hampshire is to be found in the Public
Statutes of New Hampshire, 1891, chap. 147, and Laws of 1895, chaps. 1 and 2.
Under this act corporations may be formed for the purpose of carrying on any
lawful business, excepting banking and life insurance, and the making of con-
tracts for the payment of money at a fixed date or upon the happening of
some contingency and the construction and maintenance of railroads and
trading stamp corporations, or of companies engaged in the business of issuing,
selling, or redeeming trading stamps, coupons, tickets, or other similar devices
(Laws of 1905, chap. 70).
2. Incorporators. — There must be five or more incorporators of lawful
age. There are no residential requirements (chap. 147, sec. 1).
3. Contents of Articles of Association. — The articles must set forth :
a. Name. — Similarity of names is forbidden (chap. 147, sees. 2, 3).
o. Purposes. ; — Object for which the corporation is formed. State officials
construe this to authorize incorporation for any number of purposes not pro-
vided for by special act (chap. 147, sec. 2 and chap. 148, sec. 2).
c. Domiciliary Office. — Location of principal place of business (chap. 147,
sec. 2).
d. Officers. — If desired, statement may be made as to what officers of the
corporation are to be provided for in the by-laws (chap. 149, sec. 4).
e. Capital Stock. — Amount thereof. Capitalization shall not be less than
$1,000 or more than $5,000,000. Par value not less than $25 nor more than $500
(Laws of 1907, chap. 129 ; chap. 147, sec. 6).
/. Meeting of Incorporators. — Date and place of organization meeting and
waiver of notice thereof (chap. 148, sec. 4).
g. Incorporators. — Names and post-office addresses of the incorporators
(chap. 147, sec. 2).
The duration of corporate existence is unlimited, unless a limited term is
specially used (chap. 148, sec. 3).
4. Statutory Powers. — In addition to the statutory enumeration of
common law powers, the act authorizes stockholders to vote by proxy, and
provides for the forfeiture of stock to the corporation of enough at published
sale to pay up on whole for non-payment of assessments. No one can vote on
more than one-eighth the whole capital ; a stockholder can hold proxies to that
extent except in railroad corporations (chap. 148, sees. 1-9 inclusive; chap.
149, sees. 22, 23, 25, 26; Laws of 1901, chap. 68; Laws of 1905, chaps. 61,
111).
5. Procuring the Charter. — Articles must be recorded in the office of the
clerk of the town in which the business of the corporation is to be carried on,
and also in the office of the Secretary of State. The charter fee, if any, must
be paid to the State Treasurer at the time articles are filed (chap. 147, sec. 4).
6. Corporate Indebtedness. — Debts cannot be contracted exceeding
one-half of the value of the corporate property (chap. 150, sec. 4).
C. R. S. Bank v. Fiske, 62 N. H. 78, 180.
426
DIGEST OF INCORPORATION ACTS. — NEW HAMPSHIRE.
7. Organization Tax. — Corporations formed to carry on business without
the State pay the State Treasurer the following fees: If capitalization does not
exceed $25,000, $10 ; from S25,000 to $100,000, $25 ; from $100,000 to $500,000,
$50; from $500,000 to $1,000,000, S 100; over $1,000,000, $200. Corporations
formed by special act of the legislature, $50 (chap. 14, sees. 5, 6 ; Laws of 1S95,
chap. 18, sec. 1). Corporations formed to carry on business and having their
principal office within the State, when incorporated by special act of the legis-
lature, must pay to the State Treasurer a fee of $50 (chap. 14, sec. 6).
8. Filing and Recording Fees. — The Secretary of State is entitled to
fees for recording articles which average about $1.50. Usually this fee does
not exceed $1.50, unless the articles are very long. For certified copy of articles
the charge is 25 cents per page for typewriting and 50 cents for the certificate.
The charge for recording articles of incorporation in city or town clerk's office
does not exceed $1.50, and is often much less.
9. Commencing Business. — Corporations may commence business as
eoon as the charter is filed as required by law and the organization perfected.
Business must be commenced within three years from the date of incorpora-
tion (chap. 147, sec. 4 ; chap. 149, sec. 2).
10. Organization Meeting. — The organization meeting must be held
within the State. This in the absence of any statute expressly authorizing
such meeting to be held without the State. (See chap. 148, sees. 4, 5.)
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held within the State. Directors' meetings may be held without the
State if the by-laws so provide. There is no statute authorizing the holding
of stockholders' meetings without the State, and at stockholders' meetings
each stockholder may give one vote for each share he owns or has proxies
for therein, not exceeding one-eighth part of the whole number of shares (chap.
149, sec. 9 ; Laws of 1905, chap. 68).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three directors, one of whom must be a resident of the
State, provided the corporation has any stockholders within the State (chap. 149,
sec. 4).
b. Liabilities. — Directors are liable for improper loans to the stockholders,
for the declaration of illegal dividends, or for permitting contraction of cor-
porate indebtedness beyond the amount limited by law. The directors and
treasurer must, within tliirty days after the whole amount of capital stock
has been paid in, make, subscribe, and file in the office of the clerk of the town
where the corporation has its principal place of business a certificate to that
effect, under penalty of being liable for all the debts of the company contracted
after the expiration of said tliirty days and before said certificate shall be so
made and filed ; they are also liable for all debts of the company contracted
while they are in office, if false certificates, returns, or notices arc made by them
(chap. 150, sees. 2-6, 14, 19). Directors are also individually liable for all debts
of the corporation until the annual report is made as required by law (chap. 150,
sec. 16).
13. Stockholders' Liabilities. — Stockholders are liable to the extent
of their unpaid stock subscriptions. Stockholders receiving unlawful refund
from the capital stock, or knowingly receiving illegal dividends, are individ-
ually liable to the amount of such loan, for debts of the corporation then ex-
isting or afterwards contracted, until the same is refunded or paid to the creditors
of the corporation. They are also liable as partners if the charter is void (chap.
427
DIGEST OF INCORPORATION ACTS. — NEW HAMPSHIRE.
150, sec. 7 ; chap. 14, sec. 9). Stockholders are liable for all debts and contracts
of the corporation until the whole amount of capital shall have been paid in,
and a certificate thereof, signed by the treasurer and a majority of the directors,
has been filed and recorded with the clerk of the city or town where such corpora-
tion has its principal place of business. No note or obligation given by a stock-
holder shall be considered as payment of any part of the capital stock (chap. 150,
sees. 8, 9).
Swan v. Burnham, 70 N. H. 580; 49 Atl. 93; March v. Eastern R. R., 43 N. H. 516;
Smith v Bank of New England, 69 N. H. 254; 45 Atl. 1082; Lancaster Starch Co. v. Moore,
62 N. H. 671.
14. Stock Certificates. — Each stockholder is entitled to have a certificate
issued to him, signed by the treasurer or cashier and such other officer as the
by-laws may prescribe. No certificate can be issued until the par value of the
shares mentioned in it has been fully paid to the corporation. The par value
of the shares must not be less than $25 nor more than $500 (chap. 149, sees. 5, 10).
15. Preferred Stock. — Preferred stock is authorized (chap. 149, sec. 8).
16. Payment of Capital Stock. — Stock must be paid for in money or
money's worth. The statute forbids the payment of capital stock by promis-
sory note. The statute also provides that no shares shall be sold at less than
par (chap. 149, sec. 9; chap. 150, sec. 9). No certificate can be issued until
the par value of the shares mentioned in it has been fully paid (chap. 149,
sec. 10; see also chap. 150, sees. 10, 11).
Libby v. Company, 68 N. H. 444; 44 Atl. 602; Lincott et al. v. Company, 68 N. H. 260;
44 Atl. 392; Kimball a Company, 69 N. H. 485; 45 Atl. 253.
17. Books. — Records of the proceedings of stockholders and directors,
and all papers, must be recorded in the office of the clerk of the corporation
in the State (chap. 148, sees. 10, 11). Books of account, names and residences,
number of shares owned by each stockholder, shall also be kept with the officer
authorized to issue stock certificates. All records, accounts, and papers are
open to inspection of stockholders (chap. 148, sec. 12).
18. Office and Agent. — Every corporation must maintain an office
within the State, and a clerk therein to receive process, who shall keep the
records of the company (Pub. Stat., chap. 148, sees. 10-12).
19. Reports. — Corporations, excepting insurance, railroad, bank, and
loan and building associations, shall annually on or before March 1st make a
report to the Secretary of State, and to the clerk of the town in which the prin-
cipal business is carried on, stating amount of assessments voted and paid in;
amount of debts due to and from the corporation, and value of all property and
assets of the corporation on the 1st day of January. Non-compliance makes the
treasurer and directors individually liable for all debts and contracts (Laws of
1911, chap. 159).
20. Anti-Trust Statute. — There is no anti-trust statute. But see Con-
stitution, Art. LXXXII., reading as follows: "The General Court is author-
ized and directed to pass such laws as will most effectually prevent monopoly,
the stifling of competition, the artificial raising of prices and unfair methods
of trade; to control and regulate the acts of all corporations doing business
within the State, and to prevent their encroachments upon the liberties of the
people."
21. Statutory Grounds for Forfeiture of Charter. — The charter may
be declared void for failure to pay the fees required by law or for falsely pre-
tending that the corporation is to carry on its business and have its principal
428
DIGEST OF INCORPORATION ACTS. — NEW HAMPSHIRE.
office within the State for the purpose of avoiding the payment of the charter
fee required by law. (See chap. 14, sees. 8-10; Laws of 1S92, p. 319.)
State v. Baron, 58 N. H. 370; Parsons v. Eureka Powder Works, 48 N. H. 66.
22. Amendments. — Corporations may change their name, increase or
decrease their capital stock, or amend their articles of association in any other
respect, by a majority vote of such corporation, at a meeting duly called for
that purpose, by recording a certified copy of such vote in the office of the
Secretary of State, and in the office of the clerk of the town or city wherein
its principal place of business is located (chap. 147, sec. 4; Laws of 1S95,
chap. 1, sec. 2; Laws of 1897, chap. 49).
23. Extension of Corporate Existence. — There is no provision for the
extension of corporate existence.
24. Dissolution. — Stockholders owning one-fourth of the stock may
petition in the Superior Court for dissolution. (See P. B., chap. 147, sees. 10-
12; see also chap. 148, sec. 18.)
School District v. Greenfield, 64 N. H. 84; 6 Atl. 484.
25. Annual License Fee. — There is no annual license fee.
26. Foreign Corporations. — No special requirements exacted to carry
on business, except trading stamp companies (Laws of 1905, chap. 83).
They need not declare the name of their agent, except foreign insurance com-
panies, who must appoint an insurance commission agent to receive service
(chap. 169, sec. 4). May maintain a suit in the State. Foreign corporations
doing business in the State must file with the State Librarian on or before
January 1st of each year all printed reports of their condition issued by them
during the twelve months preceding (Laws of 1895, chap. 3 ; chap. 148, sec. 20 ;
see chap. 148, sec. 21). Foreign manufacturing companies doing business in
the State must make annual May returns, same as domestic corporations.
Lumbard v. Aldrich, 8 N. H. 31.
429
DIGEST OF INCORPORATION ACTS. — NEW JERSEY.
NEW JERSEY.
(The references cited below are to Laws of 1896, chap. 185, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act is to be found in chap. 185, Laws of 1896, and
amendments thereto made annually since that time. Special acts are provided
for the incorporation of savings banks, building and loan associations, surety,
railway, telegraph, telephone, canal, turnpike, banking, safe deposit, and trust
companies. The statute, however, provides that corporations may incorporate
under the General Act for the purpose of constructing, maintaining, and operat-
ing railroads, telegraph and telephone companies outside of the State (Laws of
1907, sec. 12).
2. Incorporators. — Three or more persons. There are no residential
requirements (sec. 6).
C. R. R. v. P. R. R. Co., 31 N. J. Eq. 475; Coddington v. Exrs. of Havens, 8 N. J. Eq.
590.
3. Contents of the Certificate of Incorporation (sec. 8). — The certifi-
cate must set forth:
a. Name. — No name can be used already in use by any existing corpora-
tion of the State, or so nearly similar thereto as to lead to uncertainty or con-
fusion. It must be in the English language (sec. 8 ; Laws of 1897, chap. 274 ;
Laws of 1903, chap. 149). The name insurance, safe deposit, trust company,
or bank cannot form part of the name (Laws of 1897, p. 274).
G. S. R. Co. v. Company, 22 N. J. L. J. (May, 1899), p. 147; Peck Bros. & Co. v. Com-
pany, 51 C. C. A. 251.
b. Domicile. — The location of the principal office in the State ; street and
number must be given if located in a city (sec. 8) ; also the name of the agent
in charge thereof and upon whom process may be served (Laws of 1898, p. 410).
Nicholson v. Company, 110 Fed. 705.
c. Purposes. — Any number of objects may be inserted, provided they are
not covered by the special acts above referred to (sec. 8; Laws of 1907,
chap. 12).
Stewart v. Company, 12 N. J. L. J. 110.
d. Capital Stock. — Amount of total authorized capital stock (not less than
$2,000), the number of shares into which the same is divided, and the par
value of each share (par value may be any amount). The amount of capital
with which the corporation will begin business, which cannot be less than
$1,000. If there be more than one class of stock, a description of the different
classes, with the terms on which the different classes are created, must be set
forth (sees. 8, 18).
e. Duration. — May be unlimited, if desired (sec. 8).
/. Provisions for the Regulation of the Internal Affairs of the Corporation. —
If desired, provisions may be inserted for the regulation of the business and
for the conduct of the affairs of the corporation as well as for creating and
defining and limiting or regulating the powers of the corporation, the directors,
and the stockholders or any class of stockholders (sees. 8, 11, 12, 17, 34, 47)
430
DIGEST OF INCORPORATION ACTS. — NEW JERSEY.
The provisions which are hereby specifically authorized by statute are the fol-
lowing : Clauses empowering directors to make and alter by-laws (sec. 11);
classifying directors (sec. 12) ; giving to any class of stock the sole right to
choose directors of some specified class (sec. 12) ; clause regulating the manner
of calling and conducting meetings (sec. 17) ; clauses relating to the voting
power of stock, such as providing for cumulative voting in the election of direc-
tors, or granting or taking away from preferred stockholders the right to vote in
the election of directors (Laws of 1900, chap. 172) ; clause fixing the number
of shares or amount of stock in interest (not more than a majority) necessary to
constitute a quorum at a stockholders' meeting; clause providing that any
action which now requires the consent of holders of two-thirds of the entire
stock at any meeting after notice to them given, or requires their consent in
writing to be filed, may be taken upon the consent of, and the consent given
and filed by, the holders of two-thirds of the stock of each class represented at
said meeting in person or by proxy (sec. 170, as amended by Laws of 1901,
chap. 119); clause giving power to directors to fix the amount to be reserved
from profits for the payment of dividends (sec. 47); clause giving power to
directors to meet without the State (sec. 44).
g. Incorporators. — Names and post-office addresses of the incorporators
and the number of shares subscribed for by each. The aggregate amount of
stock subscriptions must be equal to the amount of stock with which the cor-
poration will commence business, which renders stock subscriptions necessary
to the amount of $1,000 (sec. 8; Laws of 1898, p. 410).
4. Statutory Powers. — In addition to the statutory enumeration of
common law powers, the statute confers the following additional powers : To
conduct business in other States and foreign countries; to have one or more
offices out of the State ; to hold, purchase, mortgage, and convey real and per-
sonal property out of the State. Corporations for the construction of railroads,
water, gas, or electric works, canals, tunnels, bridges, viaducts, hotels, wharves,
piers, etc., may subscribe for, pay for, hold, use, and dispose of stock or bonds
in any corporation for the purpose of constructing, maintaining, and operating
works of a similar character, and the directors of such corporations may accept
in payment of stock subscriptions real or personal property necessary for the
purposes of such corporation, or work, labor, and services performed or mate-
rials furnished to or for such corporation, to the amount of the value thereof,
and issue full-paid stock in payment thereof. All classes of corporations which
may be incorporated under the General Act are given express power to pur-
chase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of the
shares of the capital stock or any bonds, securities, or evidences of indebted-
ness created by any corporation of New Jersey or any other State, and while
the owner of such stock to exercise all the rights, powers, and privileges of
ownership, including the right to vote thereon. Other enumerated powers are
the right to vote by proxy, to issue preferred stock, to lease its property and
franchises to another corporation, to extend the corporate existence, to consoli-
date with other corporations, to dissolve itself, to enforce a lien upon the stock
of its members for debts due the corporation, to sell stock subscribed for for
non-payment of stock subscriptions, and to provide for cumulative voting in
the election of directors. Power to adopt by-laws may be delegated to the
directors by inserting a clause to that effect in the charter. Directors may
also be given power to fix amount of prohts to be reserved as working capital.
A corporation may acquire and hold its own shares (sees. 1-3, 7, 11, 17, 18, 29,
431
DIGEST OF INCORPORATION ACTS. — NEW JERSEY.
34, 36, 38, 48, 49, 51, 104, 105 ; Laws of 1899, p. 334 ; Laws of 1900, p. 418 ;
Laws of 1902, p. 217; Laws of 1905, chap. 263).
Hilles v. Parrish, 14 N. J. Eq. 380; M. T. & T. Co. v. D. T. & T. Co., 44 N. J. Eq. 568;
14 Atl. 907; Berger v. U. S. Steel Corporation, 63 N. J. Eq. 809; 53 Atl. 68; State v. Mans-
field, 23 N. J. L. 510; Ellerman v. Company, 49 N. J. Eq. 217; State R. R. Co. v. Hancock,
35 N. J. L. 537; State v. Roklffs, 19 Atl. Rep. 1099; C. S. Co. v. Company (N. J.), 55 Atl.
876.
5. Procuring the Charter. — The certificate of incorporation must be
proved or acknowledged as required for deeds of real estate. If acknowledged
without the State, the officer taking the acknowledgment must procure a
county clerk's certificate of his appointment. The certificate, together with
two copies thereof, should be taken to the office of the clerk of the county
wherein the principal office of the corporation within the State is to be estab-
lished. The clerk will then keep one of the copies for the purpose of recording
the same, and will endorse upon the original and the other copy, certificates
that they have been filed in his office. Then the original is filed in the office of
the Secretary of State, and a duplicate copy with the county clerk's certificate
endorsed thereon can be used by the Secretary of State for the purpose of fur-
nishing the incorporators with a certified copy of the certificate of incorporation
(sees. 8, 9).
E. G. L. Co. v. Green, 49 N. J. Eq. 329; 24 Atl. 560; Stockton v. Company, 55 N. J.
Eq. 352.
6. Corporate Indebtedness. — There is no statutory limitation upon the
amount of indebtedness which a corporation may incur.
7. Organization Tax. — Twenty cents for each thousand dollars of capital
stock authorized, but never less than $25.
8. Filing and Recording Fees. — To the Secretary of State for recording
the certificate of incorporation, 10 cents per folio, with a minimum charge of
$1. For issuing certified copy of the certificate of incorporation, where same
is furnished for that purpose, $1. For fifing report of officers and directors,
$1. Fee to county clerk for recording certificate of incorporation, 25 cents per
folio of one hundred words (Laws of 1904, chap. 148).
9. Commencing Business. — Before any corporation can begin business,
at least $1,000 of capital stock must be subscribed, and before it can incur debts
the said $1,000 shall, within the discretion of the board of directors, be paid in
either money or property. The law requires the president and secretary or
treasurer, upon payment of each instalment of capital stock, or every increase
thereof, to file in the Secretary of State's office within ten days thereafter a cer-
tificate stating the amount paid in in cash or in property, and the amount pre-
viously paid. There is no penalty attached for failure to comply with this
provision, but officers neglecting or refusing to do so, for a period of thirty days
after written request served on them by any stockholder, shall be jointly and
severally liable for all debts contracted before said filing (sees. 25, 26). The act
provides that a certificate of election of directors and officers must be filed in
the office of the Secretary of State within thirty days from the election (sec. 43 ;
see post, sec. 19).
Stout v. Zulick, 48 N. J. L. 599.
10. Organization Meeting. — Must be held within the State. The law
provides that where one or more of the incorporators shall die before the cor-
poration is organized, the survivors may in writing designate other persons
who may take the place of the deceased incorporators in the organization (sec.
432
DIGEST OF INCORPORATION ACTS. — NEW JERSEY.
115). The first meeting of every corporation shall be called by a notice
signed by a majority of the incorporators, designating the time, place, and
purpose of the meeting, which notice shall be published at least two weeks
before the meeting in some newspaper of the county where the corporation is
established ; or said first meeting may be called without publication if two
days' notice be personally served on all the incorporators; or if all the in-
corporators shall, in writing, waive notice and fix a time and place of meeting,
no notice or publication shall be required.
Babbitt v. Company, 1 Stew. Dig. p. 208, § 13.
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held within the State at the registered office. Directors' meetings may
be held without the State, if the by-laws so provide (sec. 44).
Elkins v. Company, 36 N. J. Eq. 467; In re Election of St. L. S. Co., 44 N. J. L. 529;
Chapman v. Bates, 61 N. J. Eq. 658; C. & A. R. R. Co. v. Elkins, 37 N. J. Eq. 273; Loewen-
thal v. Company, 52 N. J. Eq. 440; Schwarzwalder v. Tegen, 58 N. J. Eq. 319; Kreissel v.
Distilling Co., 47 Atl. Rep. 471.
12. Directors' Qualifications and Liabilities, a. Qualifications. — The
minimum number of directors in New Jersey is three, one of whom must be a
resident of the State. All directors must be stockholders, the number of shares
to be fixed by the charter or by the by-laws. They may be classified, if desired.
Cumulative voting may be provided for in the certificate of incorporation, if
desired (sees. 12, 36, 39; Laws of 1900, p. 418). An executive committee may
be provided for by inserting provision therefor in the certificate of incorpora-
tion (sec. 3, sub. 7). The power to make by-laws may be delegated to the
board of directors (sec. 11).
Collier v. Company (N. J.), 57 Atl. 417.
b. Liabilities. — The directors are jointly and severally liable for paying
dividends out of capital or for reducing the same. They are also liable for not
making and publishing notice of decrease of capital; for failing to display
name of the company at the principal office, and for failure to allow inspection
of books or to furnish a list of stockholders at elections ; also for failure to file
certificate of payment of capital stock within thirty days of written notice so
to do. They are also liable for making loans to stockholders (sees. 25, 26, 32,
33, 45, 48; Laws of 1898, p. 410; Laws of 1903, p. 362; Laws of 1904, chap.
143). They are also liable for making false reports, and for other breaches of
trust (sees. 30, 33). Absent or dissenting directors may relieve themselves from
liability by entering their dissent in the corporate minutes at the time or when
they have notice of any such unlawful act on the part of other members of the
board, such entry to be followed by publication of a true copy of dissent within
two weeks thereafter in a newspaper of the county in which the principal office
of the corporation is located (sec. 30). They are jointly and severally liable
to a fine of $200 for failure to display the name of the corporation at the princi-
pal office (sec. 45). Officers are liable for making certificates or publications
materially false (sees. 32, 52). (1) Any person who shall knowingly make or
cause to be made, either directly or indirectly or through any agency whatso-
ever, any false statement in writing, with the intent that it shall be relied upon,
respecting the financial condition, or means or ability to pay, of himself, or any
other person, firm or corporation, in whom he is interested, or for whom he is
acting, for the purpose of procuring in any form whatsoever, either the delivery
of personal property, the payment of cash, the making of a loan or credit, the
28 433
DIGEST OF INCORPORATION ACTS. — NEW JERSEY.
extension of a credit, the discount of an account receivable, or the making, ac-
ceptance, discount, sale or endorsement of a bill of exchange, or promissory
note, for the benefit of either himself or of such person, firm or corporation ; or
(2) Who knowing that a false statement in writing has been made, respecting
the financial condition or means or ability to pay, of himself, or such person, firm
or corporation in which he is interested, or for whom he is acting, procures,
upon the faith thereof, for the benefit either of himself or of such person, firm or
corporation, either or any of the things of benefit mentioned in the first sub-
division of this section; or
(3) Who, knowing that a statement in writing has been made, respecting
the financial condition or means or ability to pay, of himself, or such person, firm
or corporation in which he is interested, or for whom he is acting, represents on
a later day, in writing, that such statement theretofore made, if then again
made on said day would be then true, when knowing in fact that said statement
if then made would be false, and procures upon the faith thereof, for the benefit
either of himself or such person, firm or corporation, either or any of the things
of benefit mentioned in the first subdivision of this statement shall be guilty of
a misdemeanor (Laws of 1912, chap. 241, sec. 1).
Williams v. Boice, 38 N. J. Eq. 364; Loewenthal v. Company, 52 N. J. Eq. 440; P. L.
F. Co. v. Buck, 52 N. J. Eq. 279; Ellerman v. Company, 49 N. J. Eq. 217; Titus v. Company,.
37 N. J. L. 98; Wells v. Company, 19 N. J. Eq. 402; Fearing v. Glenn, 73 Fed. Rep. 116;
International Bank v. Faber, 86 Fed. Rep. 443; M. T. Co. v. D. T. Co., 44 N. J. Eq. 568;
Weinburg v. Company, 55 N. J. Eq. 640; In re A. A. Griffing Iron Co., 63 N. J. L. 168; Kear-
ney v. Andrews, 10 N. J. Eq. 70; Matter of S. L. S. Co., 44 N. J. L. 529.
13. Stockholders' Liabilities. — Stockholders are personally liable to
creditors to the amount of unpaid stock held by them where the capital stock
is insufficient to meet the corporate debts and obligations.
Nat. Trust Co. v. Miller, 33 N. J. Eq. 155; Wetherbee v. Baker, 35 N. J. Eq. 501; Bick-
ley v. Schlag, 46 N. J. Eq. 533; 20 Atl. 250; Hood v. McNaughton, 54 N. J. L. 425; 24 Atl.
497; Bank v. Hendrickson, 40 N. J. L. 52; C. L. Company v. C. H. Co., 57 N. J. Eq. 627;
Hebberd v. S. C. Co., 55 N. J. Eq. 18; Williams v. Boice, 38 N. J. Eq. 364.
14. Stock Certificates. — Stock certificates may be signed by the presi-
dent or a vice-president, and either the treasurer or an assistant treasurer, or
the secretary or an assistant secretary (sec. 19, as amended by Laws of 1911,
chap. 53).
L. G. Co. v. Smith, 51 Atl. Rep. 152.
15. Preferred Stock. — The right to create preferred stock must be re-
served either in the original charter or in a certificate of amendment thereto.
At no time must the total amount of preferred stock issued and outstanding
exceed two-thirds of the capital stock paid in in cash or property. The pre-
ferred stock may, if desired, be made subject to redemption at any time after
three years from the issue thereof at not less than par. No dividend exceeding
eight per cent per annum, payable yearly, half yearly, or quarterly, can be paid
thereon. Dividends may be made cumulative or non-cumulative as desired
(sec. 18; see also Laws of 1902, p. 217, sec. 2). Preferred stock may be made
convertible into bonds, if desired (Laws of 1902, p. 217).
Elkins v. Company, 36 N. J. Eq. 233; McGregor v. Company, 33 N. J. Eq. 181 ; Pronick
v. Company, 58 N. J. Eq. 97 ; Smith v. Company, 58 N. J. Eq. 331 ; Berger v. U. S. Steel Corp.,
63 N. J. Eq. 809; 53 Atl. 68; State ex rel. Smith v. Company, 52 Atl. Rep. 23; Mayer v.
Atty.-Gen., 32 N. J. Eq. 815.
16. Payment of Capital Stock. — Nothing but money shall be considered
as payment of any part of the capital stock of any corporation except in the
following cases: Any corporation formed under the provisions of the General
Act may purchase mines and manufactories or other property necessary for its
434
DIGEST OF INCORPORATION ACTS. — NEW JERSEY.
business, or the stock of any company or companies owning mines or manu-
factories, or purchase materials or other property necessary for its business, and
issue stock to the amount of the value thereof in payment therefor, and stock
so issued shall be fully paid and non-assessable and not liable to any further
call. In the absence of actual fraud in the transaction the judgment of the
directors as to the value of the property shall be conclusive (sees. 48, 49). Within
ten days after the payment of the capital stock a certificate of such payment,
signed and verified by the president and secretary or treasurer, must be filed
with the Secretary of State. All officers neglecting to make such certificate,
after written request so to do by a creditor or stockholder, are jointly and sever-
ally liable for all debts contracted before the filing of such certificate (sees. 25,
26). As to payment of capital stock in public service corporations, see Laws
of 1906, chap. 331.
G. I. U. Co. v. L'Anson'a Exrs., 42 N. J. L. 10; 43 N. J. L. 442; N. J. M. Ry. v. Ptrait,
35 N. J. L. 322; Downing v. Potts, 23 N. J. L. 66; Nassau Bank v. Brown, 30 N. J. Eq.
478; Waters v. Quimby, 27 N. J. L. 296; 28 N. J. L. 533; Donald v. Company, 48 Atl. Rep.
771; P. T. F. Co. v. Buck, 52 N. J. Eq. 219; E. N. Bank v. Company (N. J.), 60 Atl. 54;
Clevenger v. Moore (N. J.), 58 Atl. 88.
17. Books. — The books of the corporation, except the stock and transfer
books, may be kept outside the State, if the by-laws or the certificate of incor-
poration so provide (sees. 33, 44). The two books mentioned are open to the
inspection of stockholders.
State ex rel. O'Hara v. Nat. Biscuit Co., 54 Atl. 241; Downing v. Potts, 23 N. J. L. 66;
Matter of S. L. S. Co., 44 N. J. L. 529; Rosenfield v. Einstein, 46 N. J. L. 479; Fuller v.
Company, 61 N. J. Eq. 648; Mitchell v. Company, 24 Atl. Rep. 407; Huylar v. Company, 42
N. J. Eq. 139.
18. Office and Agent. — Every corporation must maintain its principal
office within the State, and have an agent in charge thereof, wherein shall be
kept the stock and transfer books of the corporation. The name of the corpo-
ration must be at all times conspicuously displayed at the entrance of such office
(sees. 44, 45; Laws of 1897, p. 175; Laws of 1898, p. 410).
Hilles v. Parrish, 14 N. J. Eq. 380; Coe v. Company, 31 N. J. Eq. 105.
19. Reports. — Within thirty days after the first election of officers, and
thereafter within thirty days after the annual election, a report must be filed in
the office of the Secretary of State, signed either by the president and one other
officer, or by two directors, setting forth the name, registered office within the
State, and agent in charge thereof, business authorized, capital stock and amount
actually issued and outstanding, names and addresses of officers, terms thereof,
and the date of the next annual election. It must also state whether the
name of the company has been at all times displayed at the entrance of its
registered office, and whether it has kept at its registered office a transfer book
and stock book containing the names and addresses of the stockholders and
the number of shares held by them. In addition to the foregoing the corporation
must on or before the 1st day of May make a report as of January 1st preced-
ing, signed by the president or treasurer, showing the amount of stock actually
i lied and outstanding as of that date as well as the amount of authorized stock,
and whether payment has been made therefor in cash or property (sees. 43, 43 a;
Laws of 1898, p. 410; Laws of 1901, chap. 9, p. 31). Every report must Bel
forth the location of the principal office in the State, and the name of the agent
in charge thereof upon whom process may be served (sec. 43). A certificate of
payment of capital stock signed by the president and secretary or treasurer
must be filed within ten days after such payment (sec. 25).
435
DIGEST OF INCORPORATION ACTS. — NEW JERSEY.
20. Anti-Trust Statute. — There is no anti-trust statute in force in New
Jersey. (See as to decision of courts relative to what agreements are valid and
what not, Trenton Potteries Co. v. Olyphant, 58 N. J. Eq. 507 (1897) ; Meredith
v. Company, 55 N. J. Eq. 211 (1897) ; 56 N. J. Eq. 454 (1897) ; Ellerman v. Com-
pany, 49 N. J. Eq. 217 (1891).)
21. Statutory Grounds for Forfeiture of Charter. — Charters may be
forfeited in New Jersey upon the following grounds : For failure to comply with
a court order requiring corporate books to be brought within the State ; for
non-payment of the annual franchise tax (sec. 44; Laws of 1896, p. 319; Laws
of 1904, chap. 219; Laws of 1905, chap. 259).
22. Amendments. — Before the payment of any part of the capital stock
incorporators are permitted to record with the clerk of the county in which the
original certificate of incorporation is recorded and filed, and with the Secre-
tary of State, an amended certificate duly signed and acknowledged by all the
incorporators modifying, changing, or altering the original certificate of incorpo-
ration in whole or in part. The charge for filing and recording this amendment
is $20 (sec. 26 a; see also Laws of 1899, p. 174).
To change the nature of the business, the corporate name, increase or de-
crease the capital stock, change the par value of the shares, change the location
of the principal office of the corporation within the State, to extend corporate
existence, or to create one or more classes of preferred stock, to change its
common stock into one or more classes of preferred stock, the following method
of procedure must be adopted: First, the board of directors must pass a reso-
lution declaring that such amendment is advisable and calling a meeting of
the stockholders to take action thereon. The meeting must be held upon such
notice as the by-laws provide, and in the absence of such provision, upon ten
days' notice given personally or by mail. If two-thirds in interest of each
fclass of the stockholders having voting powers shall vote in favor of such amend-
ment, a certificate thereof shall be signed by the president and secretary under
the corporate seal, acknowledged or proved as in the case of deeds of real estate,
and such certificate, together with the written assent in person or by proxy,
of two-thirds in interest of each class of such stockholders, shall be filed in the
office of the Secretary of State, and upon the filing of the same the certificate
of incorporation shall be deemed to be amended accordingly (sec. 27 ; see also
sec. 134; Laws of 1908, p. 84).
Special provision is made in the case of change of location of office or
decrease of capital stock. The law provides that the board of directors may
change the location of the principal office by resolution adopted at a regular
or special meeting of said board by the vote of at least two-thirds of the mem-
bers of such board. No certificate, however, is required to be filed in the case
of the removal of any office from one point to another in the same town or
city in the State. The foregoing provision generally covers cases where it is
desired to change the resident agent in charge of the office. Upon the adoption
of a resolution as aforesaid, a copy thereof must be filed in the office of the
Secretary of State signed by the president and secretary of the corporation and
sealed with its corporate seal. For filing this certificate the Secretary of State
charges a fee of $5 (sec. 28 a; Laws of 1897, p. 175).
Decrease of capital stock may be effected by the retiring or reducing any
class of the stock, or by drawing the necessary shares by lot for retirement, or
by the surrender by every shareholder of his shares and the issuance to him in
lieu thereof of a decreased number of shares, or by the purchase at not above
436
DIGEST OF INCORPORATION ACTS. NEW JERSEY.
par of certain shares for retirement, or by retiring the shares owned by the
corporation, or by reducing the par value of the shares. The certificate reduc-
ing the capital stock must be published for three weeks successively, at least
once in each week, in a newspaper published in the county in which the princi-
pal office of the corporation is located, the first publication to be made within
fifteen days after the filing of such certificate (sec. 29).
Meredith v. Company, 59 N. J. Eq. 257; 60 N. J. Eq. 445; Pronick v. Companv, 58 N.
J. Eq. 97; Donald v. Company, 48 Atl. Rep. 771 ; Way v. Company, 60 N. J. Eq. 263.
23. Extension of Corporate Existence. — May be extended by compli-
ance with the statute for any period desired (sees. 27, 119; Laws of 1903,
chap. 205).
N. L. Lead Co. v. Dickinson (N. J.), 57 Atl. 138.
24. Dissolution. — Voluntary dissolution of the corporation requires a
majority vote of directors and written assent of two-thirds in interest of the
stock. If the written assent of all the stockholders is obtained, a meeting for
the purpose of voting upon the question of dissolution is unnecessary (sec. 31 ;
Laws of 1900, p. 316). The incorporators also have power to dissolve the cor-
poration before capital is paid in and business commenced (sec. 32). Whenever
any corporation shall become insolvent or shall suspend its ordinary business
for want of funds to carry on the same, or if its business has been and is being
conducted at a great loss and greatly prejudicial to the interest of its creditors
or stockholders, any creditor or stockholder may by petition or bill of com-
plaint, setting forth the facts and circumstances of the case, apply to the Court
of Chancery for a writ of injunction and the appointment of a receiver or re-
ceivers or trustee or trustees, and the court being satisfied by affidavit or
otherwise of the sufficiency of said application, and of the truth of the allega-
tions contained in the petition or bill, and upon such notice, if any, as the court
by order may direct, may proceed in a summary way to hear the affidavits,
proofs and allegations which may be offered on behalf of the parties, and if
upon such inquiry it shall appear to the court that the corporation has become
insolvent and is not about to resume its business in a short time thereafter,
or that its business has been and is being conducted at a great loss and greatly
prejudicial to the interest of its creditors or stockholders so that its business
cannot be conducted with safety to the public and advantage to the stock-
holders, it may issue an injunction to restrain the corporation and its officers
and agents from exercising any of its privileges or franchises and from collect-
ing or receiving any debts or paying out, selling, assigning, or transferring any
of its estate, moneys, funds, lands, tenements or effects, except to a receiver
appointed by the court, until the court shall otherwise order (Laws of 1912,
chap. 300).
Benedict v. Company, 49 N. J. Eq. 23.
2"). Annual Franchise Tax. — An annual franchise tax is imposed upon
all domestic business corporations at the rate of one-tenth of one per cent on
all amounts of capital stock issued and outstanding up to and including the
sum of $3,000,000. On all sums of capital stock issued and outstanding in
excess of $3,000,000, and not exceeding $5,000,000, the tax is one-twentieth of
one per cent, and the further sum of $50 per annum per $1,000,000 or any part
thereof on all amounts of capital stock issued and outstanding in excess of
$5,000,000. Any shares of stock either fully paid or partly paid in cash or by
437
DIGEST OF INCORPORATION ACTS. NEW JERSEY.
property purchased, whether issued or otherwise, shall be deemed to be shares
of stock issued and outstanding until such shares or any substitute therefor
shall have been retired and actually cancelled (Laws of 1906, chap. 19). Manu-
facturing or mining corporations are exempt from the payment of the annual
franchise tax provided at least fifty per cent of their capital stock issued and
outstanding is invested in mining or manufacturing carried on within the State,
and provided also that they shall state in their annual returns to the State
Board of Assessors the location of such mine or manufacturing establishment,
the grade of the ores mined, or the goods manufactured, the total amount of
the capital stock embarked in such business, and the amount of capital stock
actually employed in New Jersey in carrying on such business. If any manu-
facturing or mining company carrying on business in the State shall have less
than fifty per cent of its capital stock issued and outstanding invested in busi-
ness carried on within the State, such company shall pay the annual license
fee or franchise tax herein provided for companies not carrying on business in
the State, and shall be entitled in the computation of such tax to a deduction
from the amount of its capital stock issued and outstanding of the assessed
value of its real and personal estate so used in manufacturing or mining (Laws
of 1906, chap. 19).
N. C. Co. v. Assessors, 53 N. J. L. 564; E. P. Co. v. Assessors, 55 N. J. L. 55; E. P. T.
Company's Case, 51 N. J. Eq. 71; E. U. P. Co. v. Assessors, 57 N. J. L. 520; S. B. Co. v.
Assessors, 60 N. J. L. 66; 61 N. J. L. 289; Printing Co. v. Assessors, 51 N. J. L. 75; E. J.
Ass'n v. Assessors, 47 N. J. L. 36.
26. Foreign Corporations. — Must file copy of charter with the Secretary
of State attested by its president and secretary under its corporate seal, and a
statement attested in like manner of the amount of its capital stock authorized,
and the amount actually issued, the character of the business wliich it is to trans-
act in the State and designating its principal office in the State, and an agent
who shall be a domestic corporation or a natural person of full age, actually
resident in the State, together with his place of abode, upon whom process may
be served. For filing copy of charter and statement in the Secretary of State's
office, the fee is $10 (sec. 114). The fee for recording certificate of incorporation
of foreign corporations is 10 cents per folio of one hundred words. They must
also file the same reports required of them in their domiciliary State, if any,
before they are allowed to transact business therein. They must pay the same
license tax as is required by the laws of such domiciliary State, of New Jersey
corporations. Annual reports are also required (Laws of 1897, p. 124 ; Laws
of 1904, chap. 221 ; Laws of 1896, sees. 43, 97-99, 100). Foreign corporations
are expressly exempt from the provisions of law as to keeping stock and trans-
fer books within the State (sec. 43; Laws of 1908, chap. 113).
D. & H. Canal Co. v. Mahenbrock, 63 N. J. L. 281 ; 43 Atl. 978; Del., etc. Co. v. Pensau-
ken, 116 Fed. 910; Faxon Co. v. Lovett, 60 N. J. L. 128; A. N. & T. Co. v. Gintlens, et al., 21
N. J. L. 190; Man, etc. Loan Ass'n v. Massareli, 42 Atl. Rep. 284; Benton v. City of Eliza-
beth, 61 N. J. L. 411; 61 N. J. L. 693.
438
DIGEST OF INCORPORATION ACTS. — NEW MEXICO.
NEW MEXICO.
(Unless otherwise stated, references below are to the Territorial Assembly Laws of 1905,
chap. 79.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of New Mexico is to be found in chap. 79 of
the Territorial Laws of 1905, approved March 15, 1905. Under it corpora-
tions may be formed for any lawful purpose or purposes whatsoever, except
for the construction and operation of railroads, telegraph lines, express com-
panies, savings banks, banks, building and loan associations, insurance, surety,
and irrigation companies. Corporations may, however, be incorporated for
the purpose of constructing, maintaining, and operating railroads, telegraph
lines, express companies, or any of the other excepted purposes above enu-
merated, for the purpose of transacting business outside of the Territory
(sec. 5; see also Laws of 1909, C. H. B. No. 27, approved March 18, 1909).
2. Incorporators. — Any number not less than three. There are no resi-
dential requirements (sec. 5). If before incorporation one of the incorporators
dies, the survivors may in writing designate another person or persons to take
the place or places of the deceased incorporator (sec. 121).
3. Contents of the Certificate of Incorporation. — The certificate must
set forth :
a. Nome. — There cannot be more than one corporation of the same name
(sec. 7).
b. Domiciliary Office. — The location (town or city and street number, if
name of the agent therein and in charge thereof, upon whom process against
number there be) of its principal office within the Territory (sec. 7), and the
the corporation may be served.
c. Purposes. — Any number of purposes not covered by special act are
permitted (sec. 7).
d. Capital Stock. — The amount of the total authorized capital stock of the
corporation, which cannot be less than $3,000 ; the number of shares into which
the same is divided, and the par value of each share ; the amount of the capital
stock with which it will commence business, which cannot be less than $2,000,
and if there be more than one class of stock created by the certificate of incor-
poration a description of the different classes with the terms on which they are
created (sec. 7).
e. Incorporators. — The names and post-office addresses of the incorporators
and the number of shares subscribed for by each. The aggregate of said sub-
scriptions shall be the amount with which the company will begin business,
and must be at least $2,000.
/. Duration. — The number of years, if any, limited for the duration of the
company. The maximum duration is fifty years (sec. 7).
g. Directors. — The number of directors, not less than three, and the names
of those who are to act as such for the first three months (sec. 16).
h. Regulation of Internal Affairs. — The certificate of incorporation may
also contain any provision which the incorporators may choose to insert for
the regulation of the business and for the conduct of the affairs of the corpora-
tion, and any provision creating, defining, limiting, and regulating the powers
439
DIGEST OF INCORPORATION ACTS. — NEW MEXICO.
of the corporation, the directors, and the stockholders, or any class or classes
of stockholders (sec. 7).
4. Statutory Powers. — In addition to a statutory enumeration of com-
mon law powers, the following additional powers are granted : To conduct
business in other States and foreign countries ; to confer upon directors power
to alter by-laws ; to classify directors ; to authorize voting by proxy ; to issue
preferred stock; to convert preferred stock into bonds; to issue bonds con-
vertible into common stock ; provide for cumulative voting ; to hold stock in
other corporations; to consolidate with other corporations; to appoint an
executive committee; to lease its property to other corporations; to forfeit
stock for non-payment of assessments; to hold stock and bonds in other cor-
porations (sees. 1, 2, 11, 24-26 inclusive, 40, 57, 58, 112, 114, 124; Laws of
1909, C. H. B. No. 49, approved Feb. 26, 1909).
5. Procuring the Charter. — The certificate of incorporation must be
signed in person or by attorney in fact, by all of the subscribers to the capital
stock named therein. It must be acknowledged in the same manner as is re-
quired for deeds of real estate, and must be filed in the office of the Secretary
of the Territory. A copy thereof duly certified by the Secretary of the Terri-
tory must be recorded in a book to be kept for that purpose in the office of
the recorder of the county, where the principal office of said company shall
be established, and thereupon corporate existence commences (sees. 5, 7, 8, 9).
Within twenty days after the filing of the same, a certified copy of the cer-
tificate of incorporation (and certificate of stockholders' non-liability, if any)
shall be published in some newspaper of general circulation in the county where
the principal office of the corporation is located. Proof of such publication
shall be filed with the Secretary of the Territory.
Within thirty days after filing of the same a certified copy of the certificate
of incorporation and all amendments or supplements thereto, and all amended
certificates of incorporation and certificates thereto, and all amended certifi-
cates of incorporation and certificates of stockholders' non-liability, shall be
published three times in three successive issues of some newspaper of general
circulation in the county where the general place of business of such corpora-
tion is designated, and in the case of foreign corporations in the county wherein
resides the agent of such corporation on wKom process may be served, and proof
of such publication shall be filed with the Secretary of the Territory within
twenty days after the date of the last publication. And upon failure to comply
with this provision for a period of twenty days thereafter, such corporation,
whether domestic or foreign, shall forfeit the right to do business in this Terri-
tory and be fined in a sum not less than $100 for such failure, to be recovered
by suit in the name of the Territory.
For such publications and all other publications required under this act,
the publisher shall receive not to exceed the fees allowed for publication of
notice of pendency of suits, as prescribed by the laws of the Territory. Any less
rate may be contracted between the parties as they may see fit (sec. 135).
6. Corporate Indebtedness. — There is no limitation upon the amount
of indebtedness which corporations may incur.
7. Organization Tax. — Ten cents for each thousand dollars of total
authorized capital, but in no case less than $25 (sec. 119).
8. Filing and Recording Fees. — The Secretary of the Territory is en-
titled to no fees for filing and recording the certificate of incorporation other than
the payment of the organization tax. The payment of this fee also entitles
440
DIGEST OF INCORPORATION ACTS. — NEW MEXICO.
the corporators to a certificate of incorporation. The charge for certified copy
of certificate of incorporation is ten cents per hundred words for making copy
and SI for the certificate. For fifing increase of capital stock, 10 cents for
each thousand dollars of the total increase authorized, but in no case less than
$20 ; consolidation and merger of corporations, 10 cents for each thousand
dollars of capital stock authorized, beyond the total authorized capital of the
corporation consolidated, but in no case less than $20. For filing change of
name, change of nature of business, amended certificates of organization, decrease
of capital stock, increase or decrease of par value or number of shares, S20 ; for
filing certificate of change of location of principal office, $5 ; for filing list of
officers and directors, $1 ; recording fees in recorder of deeds' office, 10 cents
a folio for the first ten folios of one hundred words, and 10 cents a folio for all
over (sec. 119) ; for filing certificate in same office, 50 cents. Cost of publication
averages about SI 2.
9. Commencing Business. — Corporations may commence business as
soon as the certificate of incorporation is filed, as required by law. The law
provides that the president and secretary or treasurer upon payment of the
capital stock, and of every increase thereof, shall make a certificate stating
the amount of capital so paid, whether paid in cash or by the purchase of prop-
erty, and stating also the total amount of capital stock, if any, previously paid
and reported. This certificate after being signed and sworn to by the president
and secretary or treasurer is within ten days after such payment to be filed
in the office of the Secretary of the Territory (sec. 27). There is no absolute
penalty for failure to comply with this provision, but officers neglecting or
refusing to do so for a period of thirty days after written request served on
them by any stockholder, are jointly and severally liable for all debts con-
tracted before such filing.
10. Organization Meeting. — The organization meeting must be held
within the Territory. If all of the incorporators shall in writing waive notice
and fix a time and place for the meeting, no notice or publication shall be
required (sec. 15). At the organization meeting the president must be elected
(who must also be a member of the board of directors), and a secretary and
treasurer. The secretary must be sworn and the treasurer must give such
bond as may be provided for by the by-laws (sec. 12). The officers must be
elected either by the stockholders or directors as the by-laws provide.
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held within the Territory (sees. 16, 37-46 inclusive, and sec. 50).
Directors' meetings may be held within or without the Territory as the by-laws
may provide (sec. 50).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three directors who must be stockholders. One director
must be a resident of the Territory, and directors may be classified into not
more than five classes, according to the length of their term. The directors
may by authority conferred in the by-laws, or by the certificate of incorporation,
appoint an executive committee to act for and m the name of the board of
directors (sees. 11, 44). Cumulative voting for directors may be provided for
in the certificate of incorporation (sec. 40).
6. Liabilities. — Directors are liable for the illegal declaration of dividends,
and for the unlawful reduction of capital, unless they enter their dissent from
such action at length upon the minutes of the meetings of the board of directors,
and causing a true copy of such dissent to be published within two weekB
441
DIGEST OF INCORPORATION ACTS. — NEW MEXICO.
after the same shall have been so entered, in a newspaper published in the
county where the corporation has its principal place of business (sees. 33, 34).
Directors are also forbidden to make loans to stockholders or officers of the
corporation, and are liable for making false certificates (sees. 54, 59). Any
officer neglecting or refusing to file the certificate required by law relative
to the payment of capital stock within thirty days after written request so to
do by a creditor or stockholder of the corporation, is jointly and severally
liable for all debts contracted before the filing of such certificate. Directors
are liable for failure to publish certificates of decrease of capital stock (sec. 33).
Any officer who refuses to exhibit books or list of stockholders forfeits $200
for each offence, and directors by such refusal render themselves ineligible to
office at next election (sec. 37). Directors are also ineligible to re-election by
reason of failure to file annual report within thirty days after demand by the
Territorial Secretary (sec. 48).
13. Stockholders' Liabilities. — Stockholders are personally liable to
creditors to the amount of unpaid stock held by them where the capital stock
is insufficient to meet the corporate debts and obligations (sec. 22). Even
this liability may be avoided by filing with the certificate of incorporation a
separate certificate signed and executed in the same manner as in the case
of the original certificate of incorporation, declaring that there shall be no
stockholders' liability on account of any stock issued. Tins certificate must
be filed in the office of the Secretary of the Territory at the same time as the
certificate of incorporation, and must be likewise certified and recorded in the
office of the county recorder. To obtain the benefit of such a certificate, how-
ever, both the certificate of incorporation together with the declaration of non-
liability of stockholders must be published in the manner provided by law (sec.
23). After this is done, stockholders in any corporation are only liable for the
amount of the capital certified to have been actually paid in property or cash
at the time of the commencement of business. (See also sees. 96-98.)
14. Stock Certificates. — Each stockholder is entitled to a certificate
showing the number of shares owned by him and signed by the president and
secretary (sec. 20).
15. Preferred Stock. — Corporations may issue two or more kinds of
stock of such classes and with such distinctions and preferences and voting
powers as shall be stated and expressed in the certificate of incorporation, or
any certificate of amendment thereof. At no time, however, can the total
amount of the preferred stock issued and outstanding exceed two-thirds of the
capital stock paid in in cash or property. The preferred stock may if desired
be subject to redemption at any fixed time after the issue thereof at a price
not less than par, and the holders thereof shall be entitled to receive and the
corporation shall be bound to pay thereon dividends at such rates and on such
conditions as shall be stated in the original or amended certificate of incorpora-
tion, not exceeding ten per cent per annum, payable quarterly, half yearly, or
yearly. Such dividends may be made cumulative if desired. Preferred stock-
holders are expressly exempted from liability for debts of the corporation, and
in case of insolvency the corporation's debts or other liabilities must be paid
in preference to the preferred stock (sec. 18). Preferred stock may be made
convertible into bonds if desired (sec. 19).
16. Payment of Capital Stock. — The law provides that nothing but
money shall be considered as payment of any part of the capital stock except
in the case of the purchase of property (sec. 54). The law, however, specifically
442
DIGEST OF INCORPORATION ACTS. NEW MEXICO.
provides that any corporation formed under the act may purchase mine,
manufactories, or other property necessary or proper for its business, or the
stock of any company or companies owning mines and manufacturing or pro-
ducing materials or other property necessary or proper for its business, and
issue stock to the amount of the value thereof in payment therefor, and the
stock so issued shall be full paid stock and not liable to any further call, neither
shall the holders thereof be liable for any further payment under any of the
provisions of this act, and in the absence of fraud in the transaction the judg-
ment of the directors as to the value of the property purchased shall be con-
clusive ; and in all statements and reports of the corporation to be published or
filed this stock shall not be stated or reported as being issued for cash paid to
the corporation, but shall be reported in this respect according to the fact
(sees. 55, 57). The law provides that the president and secretary or treasurer,
upon payment of the capital stock and of every increase thereof, shall make a
certificate stating the amount of the capital stock so paid, whether paid in cash
or by the purchase of property, and stating also the total amount of capital
stock, if any, previously paid and reported. Tliis certificate, after being signed
by the president and secretary or treasurer, and sworn to by the above officers,
is within ten days after such payment to be filed in the office of the Secretary of
the Territory (sec. 27).
17. Books. — Stock and transfer books must be kept at the principal and
registered office of the corporation in the Territory (sec. 37). These books
must be open to the examination of any stockholder during business hours.
Any officer having charge of such books and refusing or neglecting to exhibit
the same to a stockholder during the usual hours for business, shall for such
offence forfeit the sum of $200. The law provides, however, that no stock-
holder or other person shall have the right to inspect such books for any im-
proper purpose or any purpose not connected with the business of the corporation
(sec. 37). All other books excepting the stock and transfer books may be kept
outside of the Territory if desired (sec. 50).
18. Office and Agent. — The corporation must set forth in its certif-
icate of incorporation the name of its agent therein, the one in charge of its
registered office within the State and upon whom process against the cor-
poration may be served. The office designated in the certificate shall be
deemed the office and post-office address of the corporation (sees. 49 and
50). The maintenance of this office is made obligatory upon the corpora-
tion. (See sec. 50.) The law also requires the name of every corporation
at all times to be conspicuously displayed at the office of the corporation
in the Territory (sec. 51).
19. Reports. — All corporations, both foreign and domestic, must file in
the office of the Secretary of the Territory within thirty days after the first
election of officers and directors, and annually thereafter, within thirty days
after the time appointed for holding the annual election of directors, a report,
authenticated by the signatures of the president and one other officer, or by
any two directors of the company, stating: (1) Name of the corporation. (2)
The specific location of its registered office in the Territory and the name of
the agent upon whom process against the corporation may be served. (3)
The character of its business. (4) The amount of its authorized capital stock,
if any, and the amount actually issued and outstanding. (5) The names and
addresses of all the directors and officers of the company and when the term
of office of each expires. (G) The date appointed for the next annual tneel
443
DIGEST OF INCORPORATION ACTS. — NEW MEXICO.
ing of the stockholders for the election of directors. If such report is not made
and filed, the Secretary of the Territory is entitled to a fee of $1 for notifying
the corporation of such delinquency, and if the report is not made and filed
within thirty days after such notice, the corporation shall forfeit to the Terri-
tory $25 (sec. 48, as amended by Laws of 1907, chap. 41). The law further
provides that if the report is not so made and filed, all directors of any domestic
corporation wilfully refusing to comply with the law and who are in office
during the default shall at the time appointed for the next election, and for a
period of one year thereafter, be rendered ineligible for the election or appoint-
ment to any office in the corporation (sec. 48, also sec. 49). The law provides
that the president and secretary or treasurer, upon payment of the capital
stock and of every increase thereof, shall make a certificate stating the amount
so paid, whether paid in cash or in the purchase of property, and stating also
the total amount of capital stock, if any, previously paid and reported. This
certificate, after having been signed and sworn to by the above officers, is
within ten days after such payment required to be filed in the office of the
Secretary of the Territory.
20. Anti-Trust Statute. — Trusts, pools, combinations having for their
object the restriction of trade or commerce or the control of the quantity and
price of any article of manufacture or product of the soil or mine, is declared to
be illegal. (Compiled Laws of New Mexico, 1897, sees. 1292-1294 a, as amended
by Laws of 1907, chap. 18.)
21. Statutory Grounds for Forfeiture of Charter. — All charters are
subject to repeal by the legislatures (sec. 3). Also in case the corporation
fails to comply with the order of any court calling for the producing of stock
and transfer books for the inspection of those authorized to see the same, the
charter of such corporation may be declared forfeited by the court making such
order (sec. 50). The right to do business within the territory may be forfeited
for failure to comply with the provisions as to publication of certificate of
incorporation and filing proof thereof (sec. 135).
22. Amendments. — The incorporators before the payment of any part of
its capital stock may file with the Secretary of the Territory and record a cer-
tified copy thereof in the office of the recorder of the county in which its principal
place of business is located, an amended certificate duly signed by all the
incorporators named in the original certificate of incorporation modifying or
changing the original certificate in whole or in part (sec. 29).
Corporations may also change the nature of their business, change their
name, increase or decrease their capital stock, change the location of their
principal office, and make such other amendment as may be desired in manner
following :
The board of directors shall pass a resolution declaring that such change or
alteration is advisable and calling a meeting of the stockholders to take action
thereon. The meeting may be held upon such notice as the by-laws provide,
and in the absence of such provision upon twenty days' notice either personally
or by mail. If two-thirds in interest of each class of the stockholders having
voting powers shall vote in favor of such amendment, a certificate thereof shall
be signed and acknowledged by the president and secretary under the corporate
seal, and such certificate, together with the written assent in person or by
proxy of two-thirds in interest of each class of the stockholders, or the affidavit
of the president and secretary that the assent of two-thirds in interest of each
class of stockholders is given to such amendment, shall be filed in the office
444
DIGEST OF INCORPORATION ACTS. — NEW MEXICO.
of the recorder of the county in which the principal place of business of such
corporation is located, and in the office of the Secretary of the Territory (sec. 30).
The board of directors may change the location of the principal office of such
corporation within the Territory to any other place within the Territory by
resolution adopted at a regular or special meeting of such board by the vote of
at least two-thirds of the members thereof. No certificate, however, is neces-
sary in case of removal of the office from one point to another in the same town
or city. Upon the adoption of the resolution as aforesaid, a copy thereof shall
be filed in the office of the Secretary of the Territory, signed by the president and
secretary under the seal of the corporation, and a certified cop}' thereof shall
be recorded in the office of the recorder of the county in which its principal
place of business is located as changed (sec. 32).
Special provision is made in case it is desired to decrease capital. This
may be effected by retiring or reducing any class of the stock, or by drawing
the necessary shares by lot for retirement, or by the surrender by every share-
holder of his shares and the issue to him in lieu thereof of a decreased number
of shares, or by the purchase at not above par of certain shares for retirement,
or by retiring the shares owned by the corporation, or by reducing the par value
of shares. The certificate relative to the decrease of capital stock must be
published for three weeks successively at least once in each week in a news-
paper published in the county in which the principal office of the corporation is
located, the first publication to be made within fifteen days after the filing of
such certificate, and in default thereof the directors of the corporation shall
be jointly and severally liable for such sums as they shall respectively receive
of the amount so reduced (sec. 33).
23. Extension of Corporate Existence. — Corporate existence may be
extended to any period of time desired by complying with the statute in such
case made and provided. (See sec. 30.)
24. Dissolution. — Corporations may be dissolved by any corporation be-
fore the paying in of capital stock either in whole or in part (sec. 36). Dissolu-
tion after organization and the paying in of all the capital stock may only be
had by application to. the courts (sees. 60 to 67 inclusive). Corporations may
surrender the charter before payment of any part of the capital stock (sec. 36).
Corporations may be voluntarily dissolved by unanimous written consent of
the stockholders or by vote of two-thirds of the stock at any special meeting
called for that purpose. Such action or consent must be duly certified to the
Territorial Secretary and the certificate of dissolution be duly published.
2.5. Annual License Tax. — There is no annual license tax imposed.
26. Foreign Corporations. — Every foreign corporation before transact-
ing business in the Territory must file in the office of the Secretary thereof a
certificate of its charter certified by the proper authority of the foreign State
or country and a statement of the amount of its capital stock authorized, and
the amount actually issued, the character of the business which is to be trans-
acted in the Territory, and the agent therein, who must be a domestic corpora-
tion or a natural person of full age actual resident in the Territory, together
with the last place of abode, upon which agent process against said corporation
may be served. Upon the filing of such copy and statement the Secretary of
the Territory shall issue to such corporation a certificate that it is authorized
to transact business in the Territory (sec 102). Within thirty days after the
filing of the above, the charter must be published in some newspaper of general
circulation in the county wherein resides the agent of the foreign corporation
445
DIGEST OF INCORPORATION ACTS. — NEW MEXICO.
upon whom process may be served. Proof of such publication must be filed
with the Secretary of the Territory within twenty days after the date of the
last publication (sec. 135). Penalties are provided to the extent of $200 for
each offence (sees. 103 and 105; see also sees. 99, 100, 101, 104, and 106).
Foreign corporations must file annual reports as are required of domestic cor-
porations. The Secretary of the Territory charges foreign corporation for filing
articles, 10 cents per thousand dollars of its authorized capital with a minimum
charge of $25 ; for filing statement naming agent, $5 ; for making certified copy
of statement naming agent, $1.50 ; for filing proof of publication, $5 ; for filing
annual report after the first year, $1.
446
DIGEST OF INCORPORATION ACTS. — NEW YORK.
NEW YORK.
(The reference below, B. C. L., refers to the Business Corporations Law, chap. 4, Consolidated
Laws of 1909. The reference G. C. L. refers to the General Corporation Law, chap. 23 of Con-
solidated Laws of 1909. The reference S. C. L. refers to the Stock Corporation Law, chap.
59, Consolidated Laws of 1909. The reference T. L. refers to the Tax Law, chap. 60, Con-
solidated Laws of 1909. The reference C. C. P. refers to the Code of Civil Procedure.)
1. Statutes under which Business Corporations may incorporate. —
All business corporations, excepting public service corporations, money institu-
tions, insurance companies, and transportation corporations, are formed under
the Business Corporations Law (chap. 4 of the Consolidated Laws of 1909).
The organization of such corporations is further regulated and governed by the
General Corporation Law (chap. 23 of the Consolidated Laws of 1909), and the
Stock Corporation Law (chap. 59 of the Consolidated Laws of 1909). Special
acts are provided for railway, banking, navigation, stage-coach, tramway, pipe-
line, gas, electric light, water works, telegraph, telephone, turnpike, plank road
and bridge companies, banks, insurance, savings and loan associations, mortgage,
loan, safe deposit and investment companies. (See Laws of 1890, chap. 565,
as amended by Laws of 1S92, chap. 676; Laws of 1892, chap. 6S9; Laws of
1S90, chap. 566; Laws of 1892, chap. 690; Laws of 1907, chap. 177, 310, and
975.) Chapter 646 of the Laws of 1907 provides that three or more persons
may become a stock corporation for any lawful business purposes or purpose,
other than a moneyed corporation or a corporation provided for by the banking,
insurance, and transportation laws or a technical institution or corporation
which may be incorporated as provided in the university law.
2. Incorporators. — Three or more adult persons. Two-thirds must be
citizens of the United States and at least one a resident of the State of New
York. Each incorporator must be a subscriber for one or more shares of stock
(B. C. L., sec. 2; G. C. L., sec. 4).
In re N. Y. L. E. & W. R. R. Co., 35 Hun, 220; 99 N. Y. 12; King v. Barnes, 109 N. Y.
267.
3. Contents of Certificate of Incorporation (Laws of 1903, chap. 525).
— The certificate must set forth :
a. Name. — The name must not conflict with that of any existing domestic
corporation or of any foreign corporation authorized to do business in the State.
The words "trust," "bank," "banking," "insurance," "assurance," "title,"
"indemnity," "guaranty," "guarantee," "savings," "investment," "loan," or
"benefit," cannot be used (G. C. L., sec. 6; B. C. L., sec. 2).
No business corporation shall be authorized to do business in this State
unless its name has such words affixed or prefixed therein or thereto as will
clearly indicate that it is a corporation as distinguished from a natural person,
firm, or co-partnership. (Laws of 1911, eh. 638.)
b. Purposes. — Any number of objects may be inserted provided they are
not covered by the special acts above referred to (B. C. L., sec. 2).
Wilson v. Tennent, 61 App. Div. 100; People ex rcl. Fairchild v. Preston, 140 N. Y. 549;
U. S. Vinegar Co. v. Foehrenbach, 148 N. V. 58; Chapman v. Lynch, 156 N. V. 551.
c. Capital Stock. — Amount of total authorized capital stock not less than
$500. If any proportion be preferred stock, the preference thereof must be set
447
DIGEST OF INCORPORATION ACTS. — NEW YORK.
forth (B. C. L., sec. 2 ; S. C. L., sec. 61). A provision may be inserted authoriz-
ing the issue of the whole or any part of the capital stock as partly paid stock,
subject to calls thereon until the whole thereof shall have been paid in. In such
case, by inserting upon the stock certificate the amount paid thereon, the holder
is exempt from any liability thereon, except for the payment to the corporation
of the amount remaining unpaid upon such stock and for the statutory liability
to employees (S. C. L., sec. 60).
d. Shares. — Number of shares with the par value, which must not be less
than $5 nor more than $100 (B. C. L., sec. 2).
e. Amount of Capital with which the Corporation will begin Business. — This
must not be less than $500 (B. C. L., sec. 2).
/. Domicile. — State the village or town in which the principal business
office is to be located. If in New York City, state the borough (B. C. L.,
sec. 2).
People ex rel. Knickerbocker Press v. Barker, 87 Hun, 341; 147 N. Y. 715; People ex rel.
Edison Electric Light Co. v. Barker, 91 Hun, 594.
g. Duration. — May be perpetual if desired (B. C. L., sec. 2).
h. Directors. — Number and names of directors. There must be not less
than three directors, and the names and post-office addresses of the directors
for the first year must be set forth (B. C. L., sec. 2; G. C. L., sec. 34; B. C. L.,
sec. 25).
Hamilton Trust Co. v. Clemes, 163 N. Y. 423; McDowell v. Sheehan, 129 N. Y. 200;
Davidson v. Westchester Gas Light Co., 99 N. Y. 558.
i. Stock Subscriptions by Incorporators. — Names and post-office addresses
of the incorporators, and a statement of the numbers of shares of stock sub-
scribed for by each (B. C. L., sec. 2).
Buffalo & Jamestown R. R. Co. v. Gifford, 87 N. Y. 294; Yonkers Gazette Co. v. Taylor,
30 App. Div. 334.
/. Provisions for the Regulation of the Internal Affairs of the Corporation. —
The certificate may contain any other provision for the regulation of the busi-
ness and the conduct of the affairs of the corporation and any limitation upon
its powers or upon the powers of its directors and stockholders which does
not exempt them from any obligation or from the performance of any duty
imposed by law (G. C. L., sec. 10). The provisions which are hereby specifi-
cally authorized by statute are the following: clauses permitting the corpora-
tion to cumulate votes in the election of directors (G. C. L., 24) ; clause permit-
ting corporations to hold and dispose of stocks and bonds of other corporations
(S. C. L., sec. 52); clause allowing the issuance of partly paid stock (S. C. L.,
sec. 60) ; clauses for the classification of directors (S. C. L., sec. 25) ; clause
permitting directors' meetings to be held within or without the State (B. C. L.,
sec. 2); clauses requiring the consent of more than two-thirds in interest of
the stockholders to extend corporate existence (G. C. L., sec. 37) ; clause dele-
gating to .directors the right to adopt by-laws (B. C. L., sec. 2; G. C. L., sec.
34); clause permitting the corporation to transact business in other States
and Territories (G. C. L., sec. 14) ; clause permitting directors to fix a quorum
at less than a majority of the board (G. C. L., sec. 34). The Secretary of State
permits the insertion of the following clause relative to the appointment of
an executive committee, to wit: "The board of directors may, by means of a
resolution adopted by a majority of the whole board at a meeting duly called
for that purpose, designate directors to constitute an executive committee,
which committee shall have and exercise all the powers and rights of the full
448
DIGEST OF INCORPORATION ACTS. — NEW YORK.
board of directors in the management of the business and affairs of the corpora-
tion which may tx' lawfully delegated."
Under the authority of Sheridan E. L. Company v. Bank, 127 N. Y. 517,
and Alcott v. Company, 27 N. Y. 546, there can be no doubt that the board
may delegate its authority to such a committee.
k. Corporations issuing Stock without Pur Value. — Issuance of shares of
stock without nominal or par value. Upon the formation or reorganization
of any stock corporation, other than a moneyed corporation, and other than a cor-
poration under the jurisdiction of any public service commission, the certificate
of incorporation may provide for the issuance of the shares of stock of such cor-
poration, other than preferred stock having a preference as to principal, without
any nominal or par value, by stating in such certificate:
(1) The number of shares that may be issued by the corporation, and if
any of such shares be preferred stock, the preferences thereof. If such preferred
stock or any part thereof shall have a preference as to principal, the certificate
shall state the amount of such preferred stock, having such preferences, and
the amount of each share thereof, which shall be five dollars or some multiple
of five dollars, but not more than one hundred dollars.
(2) The amount of capital with which the corporation will carry on business,
which amount shall not be less than the amount of preferred stock (if any)
authorized to be issued with a preference as to principal and in addition thereto
a sum equivalent to five dollars or to some multiple of five dollars, for every share
authorized to be issued other than such preferred stock ; but in no event shall the
amount of such capital be less than five hundred dollars.
Such statements in the certificate shall be in lieu of any statements pre-
scribed by the law under which the corporation shall have been formed or re-
organized as to the amount or the maximum amount of its capital stock or the
number of shares into which the same shall be divided, or of the amount or the
par value of such shares.
Each share of such stock without nominal or par value shall be equal to
every other share of such stock, subject to the preferences given to the preferred
stock if any authorized to be issued. Every certificate for such shares without
nominal or par value shall have plainly written or printed on its face the
number of such shares which it represents and the number of such shares which
the corporation is authorized to issue, and no such certificate shall express any
nominal or par value of such shares. The certificates for preferred shares hav-
ing a preference as to principal shall state briefly the amount- which the holders
of each of such preferred shares shall be entitled to receive on account of prin-
cipal from the surplus assets of the corporation in preference to the holders of
other shares, and shall state briefly any other rights or preferences given to the
holders of such shares.
Such corporation may issue and may sell its authorized shares, from time to
time, for such consider.) lion as may be prescribed in the certificate of incorpora-
tion, or as from time to time may be fixed by t he Board of Directors pursuant to
authority conferred in such certificate, or if such certificate shall not so pro-
vide, then by the consent of the holders of two-thirds of each class of shares
then outstanding given at a meeting called for that purpose in such manner as
shall be prescribed in the by-laws. Any and all shares issued as permitted by this
section shall be deemed fully paid and non-assessable and the holder of such
shares shall not be liable to the corporation or to its creditors in respect thereof
(Laws of 1912, chap. 351, sec. 19).
29 449
DIGEST OF INCORPORATION ACTS. — NEW YORK.
Commencement of Business. — No corporation formed, pursuant to
section nine hereof, shall begin to carry on business or shall incur any debts
until the amount of capital stated in its certificate of incorporation shall have
been fully paid in money, or in property taken at its actual value. In case the
amount of capital stated in its certificate of incorporation shall be increased as
herein provided, such corporation shall not increase the amount of its indebted-
ness then existing until it shall have received in money or property the amount
of such increase of its stated capital. The directors of the corporation assenting
to the creation of any debt in violation of this section shall be brought under
the foregoing provision of this section unless within one year after the debt shall
have been incurred the creditor shall have served upon the director written
notice of intention to hold him personally liable for such debt. Any director
who, because of any such liability under this section, shall pay any debt of the
corporation, shall be subrogated to all rights of the creditor in respect thereof
against this corporation, and its property, and also shall be entitled to contribu-
tion from all other directors of the corporation similarly liable for the same debt
and the personal representative of any such director who shall have died before
making such contribution.
No such corporation shall declare any dividend which shall reduce the
amount of its capital below the amount stated in the certificate as the amount of
capital with which the corporation will begin business. In case any such divi-
dend shall be declared, the directors in whose administration the same shall
have been declared, except those who may have caused their dissent therefrom
to be entered upon the minutes of such directors at the time or who were not
present when such action was taken, shallj be liable jointly and severally to
such corporation and to the creditors thereof to the full amount of any loss sus-
tained by such corporation or by its creditors respectively by reason of such
dividend (Laws of 1912, chap. 351, sec. 20).
Taxation. — The organization tax payable under section one hundred and
eighty of the tax law by any corporation issuing such shares without designated
monetary value shall be at the rate of five cents on each such share which the
corporation is authorized to issue, and a like tax upon any subsequent increase
thereof. The tax payable under section two hundred and seventy of the tax law
in respect of any sale or agreement of sale or any memorandum of sale or deliv-
ery or transfers of shares or certificates of any share without designated mone-
tary value hereafter issued by any such corporation issuing such shares shall
be at the rate of two cents for each and every share of such stock so transferred.
The franchise tax upon any corporation issuing such shares of stock payable
under section one hundred and eighty-two of the tax law shall be determined
by the amount of the gross assets of such corporation employed in any business
within this State, less .such proportion of its liabilities as shall represent the
ratio of its gross assets wherever employed in business, and the rate of such
franchise tax shall be fixed in the manner provided in said section one hundred
and eighty-two of the tax law. For this purpose the rate of dividends shall be
computed by dividing the total amount of dividends which have been paid during
the year by the amount of assets of the corporation upon the first day of such
year (Laws of 1912, chap. 351, sec. 21).
Increase or Reduction of Shares or Capital. — Any corporation formed
or reorganized pursuant to section nineteen may amend its certificate of incor-
poration so as to increase or to reduce the number of shares which it may issue
or so as to increase or to reduce the amount of its stated capital, by filing, in the
450
DIGEST OF INCORPORATION ACTS. — NEW YORK.
manner provided for the original certificate of incorporation, a certificate of amend-
ment under seal executed by its president or vice-president and by its secretary or
its treasurer, stating the amendment proposed and that the same has been duly
authorized by a vote of a majority of the directors and also by the vote of the
holders of at least three-fifths of the outstanding shares of each class issued by
the corporation, at a meeting of the stockholders called for the purpose in the
manner provided in section sixty-three hereof, and by filing with such certificate
of amendment a copy of the proceedings of such meeting, made, signed, verified
and acknowledged by the president or a vice-president and by the secretary or
the treasurer of the corporation; but an amendment cannot be made under this
section unless as so amended the certificate of incorporation could lawfully
have been filed under section nineteen of this chapter. In case of a reduction of
the amount of capital of a corporation, a certificate setting forth the whole
amount of the ascertained debts and liabilities of the corporation shall be made,
signed, verified, and acknowledged by the president or a vice-president and by the
secretary or the treasurer of the corporation, and shall be filed with the certifi-
cate of amendment; and such certificate of amendment shall have endorsed
thereon the approval of the comptroller to the effect that as so stated the reduced
amount of capital is sufficient for the proper puposes of the corporation and
is in excess of its ascertained debts and liabilities (Laws of 1912, chap. 351,
sec. 19).
4. Statutory Powers. — In addition to the statutory enumeration of
common law powers (G. C. L . sec. 11), the statute confers the following addi-
tional powers :
To purchase, hold, and dispose of the stock and bonds and other evidences
of indebtedness of any other corporation (S. C. L., sec. 52).
Also to issue in exchange therefor its own stock and bonds if authorized
so to do by a provision in the certificate of incorporation ; or, without such
provision in the certificate, if the corporation whose stock is so purchased
is engaged in a business similar to that of the holding corporation, or
engaged in the manufacture, use, or sale of the property, or in the construc-
tion or operation of works necessary or useful in the business of such hold-
ing corporation or in which or in connection with which the manufactured
article, produce, or property of the holding corporation may be used, or is
a corporation with which the latter is authorized to consolidate (S. C. L., sec.
52).
To vote by proxy (G. C. L., sec. 26).
To issue preferred stock (S. C. L., sec. 61).
To enforce a lien upon the stock of its members for debts due the corpora-
tion (S. C. L., sec. 50).
To sell stock subscribed for non-payment of stock subscriptions (S. C. L.,
sec. 54).
To acquire or dispose of property in other States or foreign countries (G. C. L.,
6ec. 14).
To consolidate with other corporations organized to carry on any kind of
business of the same or a similar nature which a corporation organized under
the General Act might carry on (S. C. L., sec. 9 ; S. C. L., sec. 15 ; B. C. L., sees.
4. 8, 9, 10, 11, 12).
To provide for cumulative voting (G. C. L., sec. 24).
To delegate the right to directors to adopt by-laws (B. C. L., sec. 2 ; G. C. L.,
:*4).
451
DIGEST OF INCORPORATION ACTS. — NEW YORK.
To fix a quorum of directors less than a majority of the board (G. C. L.,
sec. 34).
To classify directors (S. C. L., sec. 25).
To issue stock in exchange for property (S. C. L., sec. 55).
To sell all the corporate assets (S. C. L., sec. 15; S. C. L., sees. 16, 17).
To guarantee bonds of other domestic corporations engaged in the same
line of business (S. C. L., sec. 8).
Voting trusts limited to five years are permitted (G. C. L., sec. 25).
To borrow money and mortgage and pledge the corporate assets (S. C. L.,
sec. 6).
5. Procuring the Charter. — The certificate of incorporation must be
acknowledged by each of the incorporators before some officer authorized to
administer oaths. It must then be filed and recorded in the office of the Secre-
tary of State. A certified copy of the certificate or a duplicate original, together
with the receipt of the State Treasurer for payment of the organization tax,
must be filed and recorded in the office of the county clerk of the county where
the principal place of business of the corporation is to be located (B. C. L., sec.
2; G. C. L., sec. 4, 5).
People ex rel. Blossom v. Nelson, 46 N. Y. 477; Raisbeok v. Oesterricher, 4 Abb. New
Cases, 434; People ex rel. v. Rice, 128 N. Y. 591; 28 N. E. 251; Lamming v. Galusha, 81
Hun, 247; 30 N. Y. S. 767; aff'd 151 N. Y. 648; 45 N. E. 1032; Union S. Co. v. City of
Buffalo, 82 N. Y. 351; N. Y. Car Oil Co. v. Richmond, 6 Bosw. 213; Western Transportation
Co. v. Schen, 19 N. Y. 408; Oswego Starch Factory v. Olloway, 21 N. Y. 449; Jessup v, Car-
negie, 80 N. Y. 441; Eaton v. Aspinwall, 19 N. Y. 121; Card v. Moore, 68 App. Div. 327;
People v. O'Brien, 101 App. Div. 296; 91 N. Y. Sup. 649.
6. Corporate Indebtedness. — There is no limitation upon the amount
of indebtedness which a corporation may incur. The capital stock cannot,
however, be reduced below the amount of the corporation's debts and liabilities
(S. C. L., sec. 62). All corporate mortgages except purchase-money mortgages
must be consented to by the holders of not less than two-thirds of the capital
stock of the corporation, which consent shall be given either in writing or by
vote at a special meeting of the stockholders called for that purpose upon the
same notice as is required for the annual meeting of the corporation, and a
certificate under the seal of the corporation that such consent was given by the
stockholders in writing or that it was given by a vote at a meeting as aforesaid,
shall be subscribed and acknowledged by the president or vice-president and by
the secretary or assistant secretary of the corporation, and shall be filed and
recorded in the office of the clerk or register of the county wherein the corpora-
tion has its principal place of business. When authorized by such consent, the
directors may confer on the holders of any debt secured by such mortgage the
right to convert the principal thereof after two, and not more than twelve years
after the date of the mortgage into stock of the corporation (S. C. L., sec. 6).
Strong v. R. R. Co., 93 N. Y. 426.
7. Organization Tax. — One-twentieth of one per cent upon the amount
of capital stock which the corporation is authorized to have, and a like tax
upon any subsequent increase provided that in no case shall the tax be less
than $5. This tax is due and payable upon the incorporation of such corpora-
tion. Neither the Secretary of State nor the county clerk where the certifi-
cate of incorporation is filed is permitted to file the same until they have been
furnished a receipt showing the payment of the organization tax from the State
Treasurer, and no such corporation shall have or exercise any corporate fran-
chises or powers, nor carry on business in the State until such tax shall have
452
DIGEST OF INCORPORATION ACTS. — NEW YORK.
been paid. In ease of a decrease of capital stock upon which the tax required
by law has been paid, and the subsequent increase thereof, a tax shall be paid
only upon so much of such increase as exceeds the amount of capital stock
upon winch the tax has been before paid. In case of the consolidation of ex-
isting corporations into a corporation, such new corporation shall be required
to pay the tax herein provided for only upon the amount of its capital slock
in excess of the aggregate amount of capital stock of such corporations (Laws
of 1910, chap. 472).
People ex rel. Eickemeyer Field Co. v. Rice, 138 N. Y. 614; People v. R. R. Co L29
N. V. 474; People v. R. R. Co., 129 N. Y. 654; In re C. K. C. S. & R. Co., 13 App. Div. 50.
8. Filing and Recording Fees. — To the Secretary of State for filing
certificate of incorporation, $10; for recording, 15 cents per folio; for certified
copy of articles, 15 cents per folio, and $1 additional for certificate, under the
Great Seal of the State; for recording certificate of payment of capital stock,
15 cents per folio ; to the County Clerk for filing certificate, 6 cents, and for
recording, 10 cents per folio. For recording certificate of consolidation, $10
(Laws of 1907, chap. 213; Laws of 1909, chap. 23, sec. 26).
9. Commencing Business. — At least $500 of stock must be subscribed
before the corporation may begin business. Before any corporation can incur
debts the amount of capital specified in the certificate of incorporation as the
amount of capital with which the corporation will begin business must have
been paid in, either in money or in property. One-half of the stock must be
paid in, either in money or property, within one year. Within thirty days after
such payment a certificate duly signed and verified by a majority of the direct-
ors and the president or vice-president and the secretary or treasurer must be
filed with the Secretary of State and with the clerk of the county in which the
principal office is located. If one-half the capital is not paid in within one
year, the charter is subject to forfeiture (B. C. L., sec. 5). The charter is sub-
ject to forfeiture if use is not made of the corporate franc hises within two
years after incorporation (B. C. L., sees. 2, 3; S. C. L., sec. 55; G. C. L.,
sec. 36).
People v. B. S. & C. Co., 131 N. Y. 140; People v. U. & D. R. R. Co., 128 N. Y. 240; Denike
v. N. Y.. etc. Lime Co., 80 N. Y. 599; Matter Brooklyn El. R. H. Co., 125 N. Y. 434; Hard-
man v. Sage, 124 N. Y. 25; Vedder v. Mudgett, 95 N. Y. 295; Brown v. Smith, 13 Hun, 408;
80 N. Y. 650.
10. Organization Meeting. — The organization meeting must be held
within the State, and within two years after the date of incorporation (G. C. L.,
sec. ,36). At this meeting all the incorporators and stockholders should sign
written waivers of notice of the meeting and consent to the holding of the
same. If such waivers cannot be obtained, notices of the organization meet-
ing will have to be given in the same manner as is provided by statute
relative to calling annual meeting of stockholders (G. C. L., sec. 43; S. C. L.,
sec. 25). At the organization meeting of the directors the inspectors of the
first election of directors and of all previous meetings of the stockholders prior
to the annual meeting, shall be appointed by the board of directors named in
the certificate of incorporation (S. C. L., sec. 31).
11. Meetings of Stockholders and Directors. — While there are no
statutory requirements as to holding either stockholders' or directors' meetings
within the State, it is the general practice as well as unquestionably the only
safe practice to hold all stockholders' meetings within the State. (See Ormsby
v. Company, 56 N. Y. 62)5.) If meetings of the board of directors are to be
45-3
DIGEST OF INCORPORATION ACTS. — NEW YORK.
held only in New York, the certificate or by-laws must so provide (B. C. L.,
sec. 2, sub. 9).
The corporation may by its by-laws fix the amount of stock which must be
represented at meetings of the stockholders in order to constitute a quorum
(G. C. L., sec. 11). Unless otherwise provided in the certificate of incorpora-
tion, every stockholder of record of a stock corporation shall be entitled at
every meeting of the corporation to one vote for every share of stock standing
in his name on the books of the corporation ; and at every meeting of a non-
stock corporation, every member, unless disqualified by the by-laws, shall be
entitled to one vote. The stockholders of a stock corporation, by a by-law
adopted by vote at any annual meeting, or at any special meeting duly called
for such purpose, may prescribe a period not exceeding forty days prior to meet-
ings of the stockholders, during which no transfer of stock on the books of the
corporation may be made. Except in cases of express trust or in which other
provision shall have been made by written agreement between the parties,
the record holder of stock which shall be held by him as security, or which
shall actually belong to another upon demand therefor and payment of neces-
sary expenses thereof, shall issue to such pledgor or to such actual owner of
such stock a proxy to vote thereon. The certificate of incorporation cf any
stock corporation may provide that at all elections of directors of such corpora-
tion, each stockholder shall be entitled to as many votes as shall equal the
number of his shares of stock multiplied by the number of directors to be elected,
and that he may cast all of such votes for a single director or may distribute
them among the number to be voted for, or any two of them as he may see
fit, which right, when exercised, shall be termed cumulative voting. The stock-
holders of a corporation heretofore formed, who, by the provisions of laws
existing on April 30, 1891, were entitled to the exercise of such right, may here-
after exercise such right according to the provisions of this section. A stock-
holder may, by agreement in writing, transfer his stock to any person or
persons for the purpose of vesting in him or them the right to vote thereon
for a time not exceeding five years upon terms and conditions stated, pursuant
to which said person or persons shall act; every other stockholder, upon his
request therefor, may by a like agreement in writing also transfer his stock to
the same person or persons, and thereupon may participate in the terms, con-
ditions, and privileges of such agreement ; the certificates of stock so trans-
ferred shall be surrendered and cancelled, and certificates therefor issued to
Buch transferee or transferees in which it shall appear that they are issued pur-
suant to such agreement ; and in the entry of such transferee or transferees as
owners of such stock in the proper books of said corporation that fact shall
also be noted, and thereupon he or they may vote upon the stock so transferred
during the time in such agreement specified; a duplicate of every such agree-
ment shall be filed in the office of the corporation where its business is trans-
acted and be open to the inspection of any stockholder daily, during business
hours. No member of a corporation shall sell his vote or issue a proxy to
vote to any person for any sum of money or anything of value. The books
and papers containing the record of membership of the corporation shall be
produced at any meeting of its members, upon the request of any member.
If the right to vote at any such meeting shall be challenged, the inspectors of
election or other persons presiding thereat shall require such books, if they can
be had, to be produced as evidence of the right of the person challenged to
vote at such meeting, and all persons who may appear from such books to be
454
DIGEST OF INCORPORATION ACTS. — NEW YORK.
members of the corporation may vote at such meeting, in person or by proxy,
subject to the provisions of this chapter (G. C. L., sec. 23).
Every member of a corporation, except a religious corporation, entitled to
vote at any meeting thereof may so vote by proxy. No officer, clerk, teller, or
bookkeeper of a corporation formed under or subject to the banking law shall
act as proxy for any stockholder at any meeting of any such corporation. Every
proxy must be executed in writing by the member himself or by his duly author-
ized attorney. No proxy hereafter made shall be valid after the expiration of
eleven months from the date of its execution unless the member executing it
shall have specified therein the length of time it is to continue in force, which
shall be for some limited period. Every proxy shall be revocable at the pleas-
ure of the person executing it ; but a corporation having no capital stock
may prescribe in its by-laws the persons who may act as proxies for mem-
bers, and the length of time for which proxies may be executed (G. C. L.,
sec. 26).
If the directors shall not be elected on the day designated in the by-laws or
by-law, the corporation shall not for that reason be dissolved, but every di-
rector shall continue to hold office and discharge his duties until his successor
has been elected (G. C. L., sec. 28).
The directors of every stock corporation shall be chosen at the time and
place fixed by the by-laws of the corporation by a plurality of the votes at such
election. Each director shall be a stockholder unless otherwise provided in the
certificate, or in a by-law adopted by a stockholders' meeting. Vacancies in
the board of directors shall be filled in the manner prescribed in the by-laws.
Notice of the time and place of holding any election of directors shall be given
by publication thereof at least once in each week for two successive weeks
immediately preceding such election, in a newspaper published in the county
where such election is to be held, and in such other manner as may be pre-
scribed in the by-laws. Policy holders of an insurance corporation shall be
eligible to election as directors. At least one-fourth in number of the directors
of every stock corporation shall be elected annually (S. C. L., sec. 25). Inspectors
of election shall be appointed in the manner prescribed in the by-laws. No
director or officer of a moneyed corporation shall be eligible or act as an inspector.
Each inspector shall be entitled to receive a reasonable compensation for his
services, to be paid by the corporation, and if any inspector shall refuse to
i' or neglect to attend at the election, or his office become vacant, the stock-
holders may appoint an inspector in his place unless the by-law otherwise pro-
vide. The inspectors appointed to act at the meeting of the stockholders shall,
before entering upon the discharge of their duty, be sworn to faithfully execute
all the duties of inspectors at said meeting with strict impartiality and accord-
ing to the best of their ability, and the oath so taken shall be subscribed by
them, and immediately filed in the office of the clerk of the county in which
such election shall be held with the certificate of the result of the vote taken
thereat (S. C. L., sec. 31).
Ormsby v. V. C. M. Co., 26 N. Y. 623.
12. Directors' Qualifications and Liabilities, a. Qualifications. — Min-
imum number of directors under the statute are three. At least one-fourth of
them must be elected annually. They must all be stockholders unless otherwise
provided in the certificate of incorporation or in the by-laws. At. least one of
them must be a resident of New York (B. C. L., sec. 2 ; G. C. L., sec. 34 ; S. C L.,
455
DIGEST OF INCORPORATION ACTS. — NEW YORK.
sec. 25). They may be classified if desired. Inspectors of elections are provided
for (S. C. L., sec. 31). Cumulative voting is permitted if authorized by the
certificate of incorporation (G. C. L., sec. 24). Directors have power to adopt
by-laws for their own government subject to the provisions of the by-laws
adopted by the stockholders ; this too, in the absence of express power to that
effect conferred in the certificate of incorporation (G. C. L., sees. 11, 34). In
the certificate of incorporation power may be given to the directors to adopt
all by-laws for the government of the corporation (B. C. L., sec. 2; G. C. L.,
sec. 10). Unless otherwise provided by law, a majority of the board of directors
of a corporation at a meeting duly assembled shall be necessary to constitute a
quorum for the transaction of business, and the act of a majority of the directors
at a meeting at which a quorum shall be present shall be the act of the board
of directors. The stockholders may in the by-laws fix the number of directors
necessary to constitute a quorum at a number less than a majority of the board,
but at least equal to one-third of such board (G. C. L., sec. 34). The act pro-
vides that no by-law adopted by the board of directors regulating the election
of directors or officers shall be valid unless published for at least once a week
for two successive weeks in a newspaper in the county where the election is to
be held and at least thirty days before such election (G. C. L., sec. 11; see
Wood v. Knapp, 100 N. Y. 10).
Marshall v. Ind. Federation, 84 N. Y. Sup. 866; Joseph v. Raff, 176 N. Y. 611; 68 N. E.
1118.
b. Liabilities. — Directors are jointly and individually liable to the corpo-
ration and its creditors for making unauthorized dividends or for withdrawing
or in any way paying to the stockholders or any of them any part of the capital
or for reducing the capital stock in any unauthorized way, the loss sustained
by any such unlawful action being the measure of their liability (S. C. L., sec.
28; such action is also a misdemeanor under the Penal Law, sec. 664). But
any director absent from the meeting where such unlawful action was taken,
or if present, causing his dissent from such action to be entered en the minutes
at large, is not liable therefor (S. C. L., sec. 28).
Directors and officers are jointly and severally personally liable for making
loans to stockholders, for discounting any note or other evidence of debt for
stockholders, or for receiving the same in payment in whole or in part due or
to become due on any stock in the corporation, or for receiving or discounting
any note or other evidence of debt to enable any stockholder to withdraw any
part of the money paid in by him on his stock (S. C. L., sec. 29). The directors
and officers involved shall jointly and severally be personally liable to the ex-
tent of such loan and interest for all debts of the corporation contracted before
payment of the said loan, and to the full amount of the notes and other evi-
dences of debt so received or discounted with interest from the time such liability
accrued (S. C. L., sec. 29). Such unlawful action is also a misdeameanor under
Penal Law, sec. 664.
Directors and officers making transfers of the corporate property to officers,
directors, or stockholders for the payment of debt or in inducement of insolvency,
or in event of insolvency, with intent to prefer or defraud creditors, shall be per-
sonally liable to the stockholders and creditors of the corporation to the full
extent of any loss sustained (S. C. L., sec. 66).
Directors and officers are also jointly and severally personally liable for any
reports or published notice made by them which shall be false in any material
respect, to the amount of damage sustained by the stockholders or creditors
456
DIGEST OF INCORPORATION ACTS. — NEW YORK.
acting upon the faith thereof. Action must be brought within two years from
the time any such report was so made (S. C. L., sec. 35). Directors and officers
making or concurring in such false reports are guilty of a misdemeanor (Penal
Law, sec. 665). Any officers or directors having custody or control of the stock-
books of the corporation wilfully neglecting or refusing to make any proper
entry as required by law or refusing an inspection thereof to any person en-
titled by law to inspect the same, are guilty of a misdemeanor (Penal Law .
sec. 665).
A director is deemed to have such knowledge of the corporate affairs as to
enable him to determine whether any act, proceeding, or omission of the board
to which he belongs is in violation of the Penal Law relating to directors, and
if in violation thereof he must, to prevent or escape liability therefor, cause or
in writing require his dissent to be entered on the minutes of the directors. Or,
if absent from the particular meeting, he will nevertheless be held liable for any
violations of the Penal Law occurring thereat — if they appear upon the minutes
— unless he ceases being a stockholder within six months thereafter or other-
wise causes or requires his dissent to be entered on the minute within that period
(Penal Law, sec. 667). Officers neglecting or refusing to make annual report
within ten days after written request by a stockholder or creditor shall forfeit
to the people the sum of $50 for every day they shall neglect or refuse (S. C. L.,
sec. 34). Under section 90 of the General Corporation Law, actions may be
maintained against the directors of a business corporation (1) compelling them
to account for their official conduct including any neglect or failure to perform
their duties in the management and disposition of the funds and property com-
mitted to their charge; (2) compelling them to pay to the corporation which
they represent or to its creditors any money and the value of any property
which they have acquired to themselves or transferred to others, or lost or
wasted by or through any neglect or failure to perform, or by other violation
of their duties.
United Growers' Co. v. Eisner, 22 App. Div. 1; Chem. Nat. Bank v. Colwell, 132 N. Y.
250; Beardsley v. Johnson, 121 N. Y. 224; In re Newcomb, 42 St. Rep. 442; Matter of
Elias, 17 Misc. 718; Sinclair v. Fuller, 158 N. Y. 607.
13. Stockholders' Liabilities. — Stockholders are personally liable to
creditors to an amount equal to the amount of unpaid stock held by them for
debts of the corporation contracted while such stock was held by them, and
are jointly and severally liable for all debts due or owing to laborers or servants
or employees other than contractors, provided written notice of intention to
enforce such liability is given within thirty days after termination of the services
rendered (S. C. L., sees. 56, 59). Every corporation formed under this chapter
may be or become a full liability corporation by inserting a statement in the
certificate of incorporation that the corporation thereby formed is intended to
be a full liability corporation; and in case of an existing corporation, which is
not a full liability corporation, it may become such by filing in the office where
certificates of incorporation are required to be filed a supplemental certificate
stating thai thereafter the corporation intends to be a full liability corporation,
which certificate shall be executed and acknowledged by the president and treas-
urer of the corporation or by the board of directors, and shall have annexed
thereto a copy of a resolution, adopted by a two-thirds vote of the board of
directors, and the written consent of all the stockholders of the corporation
authorizing and consenting to the change of the corporation to a full liability
corporation. If the corporation is formed as or becomes a full liability corpo-
457
DIGEST OF INCORPORATION ACTS. NEW YORK.
ration, all the stockholders of the corporation shall be severally individually
liable to its creditors for all its debts and liabilities and may be joined as defend-
ants in any action against it. No execution shall issue against any stockholder
individually until execution has issued against the corporation and returned
unsatisfied, and all the stockholders shall contribute a proportionate share, ac-
cording to the number of shares of stock owned by each of the amount paid by
any stockholder on a judgment recovered against him individually for a debt
of the corporation, and he may recover from the other stockholders in the
corporation in a joint or several action the proper portion due by them and
each of them of the amount paid by him on any such judgment (B. C. L.,
sec. 6).
Billings v. Robinson, 94 N. Y. 415; Weeks v. Love, 50 N. Y. 568; Tucker v. Gilman,
121 N. Y. 189; 24 N. E. 302; Close v. Potter, 155 N. Y. 145; Herbert v. Duryea, 34 App.
Div. 478; Bristor v. Smith, 158 N. Y. 157; White, Corbin, & Co. v. Jones, 45 App. Div. 241;
Natl. Tube Works v. Gillan, 124 N. Y. 302; Sinclair v. Fuller, 158 N. Y. 607; Moosburger
v. Walsh, 89 Hun, 564; Walton v. Coe, 110 N. Y. 109; Cochran v. Wiechers, 119 N. Y.
399.
14. Stock Certificates. — Stock certificates must be signed by the presi-
dent or vice-president, and by the secretary or treasurer (S. C. L., sec. 50).
Stock certificates are not transferable without the consent of the corporation,
until all indebtedness to the corporation has been paid (S. C. L., sec. 51). The
par value of shares may be any amount not less than $5 nor more than SI 00
(B. C. L., sec. 2, sub. 4). There is hereby imposed and shall immediately accrue
and be collected a tax, as herein provided, on all sales, or agreements to sell or
memoranda of sales of stock, and upon any and all deliveries or transfers of
shares or certificates of stock, in any domestic or foreign association, com-
pany or corporation, made after the first day of June, 1905, whether made
upon or shown by the books of the association, company or corporation, or
by any assignment in blank, or by any delivery, or by any paper or agreement
or memorandum, or other evidence of sale or transfer, whether intermediate or
final, and whether investing the holder with the beneficial interest in or legal
title to said stock, or merely with the possession or use thereof, for any purpose
or to secure the future payment of money, or the future transfer of any stock,
on each hundred dollars of face value or fraction thereof, two cents. It shall be
the duty of the person or persons making or effectuating the sale or transfer to
procure and affix the stamps and pay the tax provided by this article. It is not
intended by this act to impose a tax upon an agreement evidencing the deposit-
ing of stock certificates as collateral security for money loaned thereon, which
stock certificates are not actually sold, nor upon such stock certificates so de-
posited, nor upon mere loans of stock or the return thereof. The payment of
such tax shall be denoted by an adhesive stamp or stamps affixed as follows : In
the case of a sale or transfer where the evidence of the transaction is shown only
by the books of the association, company or corporation, the stamp shall be
placed upon such books, and it shall be the duty of the person making or effectu-
ating such sale or transfer to procure and furnish to the association, company or
corporation, the requisite stamps, and of such association, company, or corpora-
tion to affix and cancel the same. Where the transaction is effected by the deliv-
ery or transfer of a certificate, the stamp shall be placed upon the surrendered
certificate; and in cases of an agreement to sell, or where the sale is effected by
delivery of the certificate assigned in blank there shall be made and delivered by
the seller to the buyer, a bill or memorandum of such sale, to which the stamp
provided for by this article shall be affixed. Every such bill or memorandum of
458
DIGEST OF INCORPORATION ACTS. NEW YORK.
sale or agreement to sell shall show the date of the transaction which it evidences,
the name of the seller, the stock to which it relates, and the number of shares
thereof; and no further tax is hereby imposed upon the delivery of the certifi-
cates of stock, or upon the actual issue of a new certificate when the original
certificate of stock is accompanied by the duly stamped memorandum of sale as
herein provided (sees. 270 to 280 as amended by Laws of 1912, chap. 292).
Reno Oil Co. v. Culver, 60 App. Div. 129; Yonkers Gazette Co. v. Taylor. 30 App. Div.
334; sullivan County Club i». Butler, 20 N. Y. Misc. 306; Reyder v. Bushwick R. R. Co.,
134 N. Y. 83.
15. Preferred Stock. — Preferred stock may be issued if the certificate
of incorporation so provides, or by consent of the holders of two-thirds of the
capital stock given at a meeting duly called for that purpose. The corporation
may, upon the written request of the holders of preferred stock by a two-thirds
vote of its directors, exchange the same for common stock (S. C. L., sec. 61).
Every domestic stock corporation may issue preferred stock and common stock
and different classes of preferred stock, if the certificate of incorporation so pro-
vides, or by the consent of the holders of records of two-thirds of the capital
stock, given at a meeting called for that purpose upon notice such as is required
for the annual meeting of the corporation. A certificate of the proceedings of
such meeting, signed and sworn to by the president or a vice-president and by
the secretary or assistant secretary of the corporation, shall be filed and recorded
in the offices where the original certificate of incorporation of such corporation
was filed and recorded; and the corporation may, upon the written request of
the holders of any preferred stock, by a two-thirds vote of its directors, exchange
the same for common stock, and issue certificates for common stock therefor,
upon such valuation as may have been agreed upon in the certificate of organi-
zation of such corporation, or the issue of such preferred stock, or share for
share, but the total amount of such capital stock shall not be increased thereby.
Hinckley v. Company, 91 X. Y. Sup. 893; 45 X. Y. Misc. Rep. 176; Campbell v. A. Z.
Co., 122 X. Y. 455; Kent v. O. M. Co., 78 X. Y. 159; Mich. Bank v. X. Y. & N. 11. R. R.
Co., 13 X. Y. 599; Ernst v. Company, 24 N. Y. Misc. 583.
16. Payment of Capital Stock. — Corporations cannot issue stock except
for money, labor done, or property actually received for the use or lawful pur-
poses of the corporation. The statute provides further that in the absence of
fraud in the transaction the judgment of the directors as to the value of prop-
erty so purchased shall be conclusive (S. C. L., sec. 55). The original or amended
certificate of incorporation may contain a provision expressly authorizing the
sale of the whole or any part of the capital stock as partly paid stock subject
to calls thereon until the whole thereof shall have been paid in. In such case,
if in or upon the certificate issued to represent said stock the amount paid thereon
shall be specified, the holder thereof shall not be subject to any liability except
for the payment to the corporation of the amount remaining unpaid upon such
stock and for the payment of indebtedness to employees. In any such case the
corporation may declare and may pay dividends upon the basis of the amounts
actually paid upon the respective shares of stock, instead of upon the par value
thereof (S. C. L., sec. 60). If the whole capital stock shall not have been sub-
scribed at the time of filing the certificate of incorporation, the directors named
in the certificate may open books of subscription to fill up the capital stock at.
the time of subscribing. Every stockholder whose subscription is payable in
money shall pay to the directors ten per cent upon the amount subscribed by
him in cash, and no such certificate ball be received without such payment.
■I.V.I
DIGEST OF INCORPORATION ACTS. — NEW YORK.
(S. C. L., sec. 61 ; see also S. C. L., sec. 54, as to forfeiture of stock for non-
payment of subscription).
White Corbin, & Co. v. Jones, 167 N. Y. 158; 60 N. E. 422; Martin v. Company, 95
Ann Uiv 'l8" 88 N Y. Sup. 573; O. D. C. M. Co. v. Lewisohn, 136 Fed. 915; McBnde v.
Farr'in-ton 131 Fed. 797; F. C. N. Bank v. Shire, 179 N. Y. 587; 72 N. E. 1141; Close v.
Noye, 147 N. Y. 597; Rafferty v. Company, 37 App. Div. 618; Herbert v. Duryea, 34 App.
Div. 478; Drake v. Company, 26 App. Div. 499.
17. Books. — Every corporation must keep at its office within the State
correct books of account of all its business transactions, and also a stock book
containing an alphabetical list of the stockholders of the corporation, showing
their places of residence and the number of shares held by them respectively,
the time when they respectively became owners thereof, and the amount paid
thereon (S. C. L., sec. 32). The stock book is open to the inspection of stock-
holders and judgment creditors. Every person, firm, company, association, or
corporation engaged in whole or in part in the making or negotiating of sales,
agreements to sell, deliveries or transfers of shares or certificates of stock, or
conducting or transacting a brokerage business, shall keep or cause to be kept
at some accessible place within the State of New York, a true and just book of
account, in such form as may be prescribed by the Comptroller, wherein shall
be plainly and legibly recorded, in separate columns, the date of making of every
sale, agreement to sell, delivery or transfer of shares or certificates of stock, the
name of the stock and the number of shares thereof, the face value of the stock,
the name of the seller or transferror, the name of the purchaser or transferee,
and the number and face value of the adhesive stamps affixed as provided for
by section two hundred and seventy of this chapter.
Every association, company or corporation shall keep or cause to be kept at
some accessible place within the State of New York, a stock certificate book
and a just and true book of account, transfer ledger or register, in such form as
may be prescribed by the Comptroller, wherein shall be plainly and legibly re-
corded in separate columns, the date of making of every transfer of stock, the
name of the stock, and the number of shares thereof, the serial number of each
surrendered certificate, the name of the party surrendering such certificate, the
serial number of the certificate issued in exchange therefor, the number of shares
covered by said certificate, the name of the party to whom said certificate was
issued, and the number and face value of the adhesive stamps affixed, as pro-
vided by section two hundred and seventy of this chapter. It shall also retain
and keep all surrendered or cancelled shares or certificates of its stock and all
memoranda relating to the sale or transfer of any thereof.
All such books of account, transfer ledgers, registers and stock certificate
books shall be retained and kept as aforesaid for a period of at least two years
subsequent to the date of the last entry made therein as herein required; and all
such surrendered or cancelled shares or certificates of stock and memoranda re-
lating to the sale or transfer of stock shall be retained and kept for a period of at
least two years from the date of the delivery thereof. For the purpose of as-
certaining whether the tax imposed by this article has been paid, all such books
of account, transfer ledgers, registers, stock certificate books, surrendered or
cancelled share or certificates of stock and memoranda relating to the sale or
transfer thereof, shall at all times between the hours of ten o'clock in the fore-
noon and three o'clock in the afternoon, except Saturdays, Sundays and legal
holidays, be open to examination by the Comptroller or his duly authorized rep-
resentative. The Comptroller may enforce his right to examine such books of
460
DIGEST OF INCORPORATION ACTS. NEW YORK.
account and bills or memoranda of sale or transfer; and such transfer ledger,
register and stock certificate books and surrendered or cancelled shares or cer-
tificates of stock by mandamus. If the Comptroller ascertains that the tax pro-
vided for in this article has not been paid, he shall bring an action in his name as
such Comptroller, in any court of competent jurisdiction, for the recovery of such
tax and for any penalty incurred by any person under the provisions of t his art icle.
Every person, firm, company, association or corporation who shall fail to
keep such book of account, or bills or memoranda of sale or transfer, or transfer
ledger, register or stock certificate book, or surrendered or cancelled shares of
certificates of stock as herein required, or who alters, cancels, obliterates or
destroys any part of said records, or makes any false entry therein, or who shall
refuse to permit the Comptroller or any of his authorized representatives freely
to examine any of said books, records or papers at any of the times herein pro-
vided, or who shall in any other respect violate any of the provisions of this
section, shall be deemed guilty of a misdemeanor and on conviction thereof shall
for each and every such offense pay a fine of not less than five hundred dollars
nor more than five thousand dollars, or be imprisoned not less than three months,
nor more than two years, or both, in the discretion of the court (sec. 276, as
amended by Laws of 1912, chap. 292).
Matter of Steinway, 159 N. Y. 250; 53 N. E. 1103.
18. Office. — Every corporation must maintain a domiciliary office within
the State (B. C. L., sec. 2; Tax Laws, sec. 11).
Conroe v. Company, 10 How, Pr. 405; Rossie Iron Works v. Westbrook, 36 N. Y. St.
Rep. 555.
19. Reports. — All domestic business corporations must annually during
the month of January, or, if doing business without the United States, before
the month of May, make a report as of the 1st day of January, which will state :
(1) The amount of its capital stock and proportion actually issued. (2) The
amount of its debts or an amount which they do not exceed. (3) The amount
of its assets or an amount which its assets at least equal. (4) The names and
addresses of all of the directors and officers of the company, and, in the case
of a foreign corporation, the name also of a person designated in the manner
prescribed by the Code of Civil Procedure as the person upon whom process
against the corporation may be served within the State (S. C. L., sec. 34). Such
report to be made by the president or vice-president, secretary or treasurer, and
filed in the office of the Secretary of State. If such report is not made and
filed, any officer of the corporation who shall thereafter neglect or refuse to
make and file such report within ten days after written request so to do
shall have been made by a stockholder or a creditor of the corporation, shall
forfeit to the people the sum of $50 for every day he shall so neglect or
refuse. In addition to the foregoing the corporation is required between No-
vember 1st and 15th to make an annual report to the State Comptroller showing
the condition of the business on October 31st of that year, stating the amount
of the capital stock paid in, the amount of its dividends declared during the
year ending October 31st of that year, the amount of its entire capital, and the
percentage thereof employed within the State during the preceding year. This
report must be signed and sworn to by the president, vice-president, secretary,
or treasurer (S. C. L., sec. 34; Tax Laws, sec. 192). After each annual election
of directors a certificate of the result of such election made by the inspectors
must be filed, with the oath of the inspectors, in the office of the clerk of the
461
DIGEST OF INCORPORATION ACTS. — NEW YORK.
county in which the election is held (S. C. L., sec. 31 ; see Union Nat. Bank v.
Scott, 53 App. Div. 65 ; see also S. C. L., sec. 69). The president or other proper
officer of every moneyed or stock corporation deriving an income or profit from
its capital or otherwise shall, on or before June 15th, deliver to one of the asses-
sors of the tax district in which the company is liable to be taxed, and, if such
tax district is in a county embracing a portion of the forest preserve, to the
Comptroller of the State, a written statement specifying:
1. The real property, if any, owned by such company, the tax district in
which the same is situated, and, unless a railroad corporation, the sums actually
paid therefor; 2. The capital stock actually paid in and secured to be paid
in, excepting therefrom the sums paid for real property and the amount of
such capital stock held by the State and by any incorporated literary or chari-
table institution; and 3. The tax district in which the principal office of the
company is situated, or, in case it has no principal office, the tax district in
which its operations are carried on.
Such statement shall be verified by the officer making the same to the
effect that it is in all respects just and true. If such statement is not made
within twenty days after the 15th day of June, or is insufficient, evasive, or
defective, the assessors may compel the corporation to make a proper state-
ment by mandamus (Tax Law, Consolidated Laws of 1909, chap. 60, sec. 27) .
Stockholders owning five per centum of the capital stock of any corporation
other than a moneyed corporation, not exceeding $100,000, or three per centum
where it exceeds $100,000, may demand a written statement of its affairs un-
der oath, embracing a particular account of all its assets and liabilities, and
the treasurer shall make such statement and deliver it to the person present-
ing the request within thirty days thereafter, and keep on file for twelve months
thereafter a copy of such statement, which shall at all times during business
hours be exhibited to any stockholder demanding an examination thereof;
but the treasurer or such chief fiscal officer shall not be required to deliver
more than one such statement in any one year. The Supreme Court or any
justice thereof may upon application, for good cause shown, extend the time
for making and delivering such certificate. For every neglect or refusal of the
treasurer or other chief fiscal officer thereof to comply with the provisions of
this section, he shall forfeit and pay to the person making such request the sum
of $50, and the further sum of $10 for every twenty-four hours thereafter until
such statement shall be furnished (S. C. L., sec. 69).
H B Co v Hand, 104 App. Div. 390; 93 N. Y. Sup. 834; Davidson v. Whithouse, 94
N. Y. Sup. 428.
20. Anti-Trust Statute. — The Anti-Trust Act of New York is to be
found in Laws of 1909, chap. 25, sees. 340-346; Laws of 1910, chap. 394.
Matter of Davies, 168 N. Y. 89; 61 N. E. 118; People v. Milk Exchange, 133 N. Y. 565;
30 N. E. 850.
21. Statutory Grounds for Forfeiture of Charter. — Charters may be
forfeited for failure to organize and commence the transaction of corporate
business or the discharge of corporate duties within two years from the date
of incorporation (G. C. L., sec. 36) ; also if one-half the capital stock is not
paid in within one year (B. C. L., sec. 5) ; also for failure to pay the annual
State tax within one year from the time a statement of the tax is sent to it
(Tax Law, sec. 203; see also General Corporation Law, sees. 130-136).
Day v. Company, 107 N. Y. 129; 13 N. E. 765; People v. Company, 133 N. Y. 140; 29
N. E. 947.
462
DIGEST OF INCORPORATION ACTS. — NEW YORK.
22. Annual Franchise Tax. — For the privilege of doing business or
exercising its corporate franchises in this State, every corporation, foreign or
domestic, doing business in the State must pay to the State Treasurer annually
in advance an annual license tax to be computed upon the basis of the amount
of its capital employed during the preceding year within the State, and upon
each dollar of such amount. The measure of the amount of capital stock
employed in this State shall be such a proportion of the issued capital stock as
the gross assets employed in any business within this State bears to the gross
assets wherever employed in business. For purposes of taxation the capital
of a corporation invested in the stock of another corporation shall be deemed
to be assets located where the physical property represented by such stock is
located. If the dividends upon the capital stock amount to six or more than
six per cent upon the par value of the capital stock during any year ending with
the 31st day of October, the tax shall be at the rate of one-fourth of a mill for
each one per cent of any dividend made or declared upon the par value of the
capital stock during such year. If such dividend or dividends amount to less
than six per cent of the par value of the capital stock, and (1) the assets do not
exceed liabilities, exclusive of capital stock; or (2) the average price at which
such stock sold during said year did not equal or exceed its par value; or (3)
if no dividend was declared, — then each dollar of the amount of capital stock
employed in this State, determined as hereinbefore provided, shall be taxed at
the rate of three-fourths of one mill. If such dividend or dividends amount to
less than six per cent of the par value of the capital stock, and (1) the assets
exceed the liabilities exclusive of capital stock by an amount equal to or greater
than the par value of the capital stock; or (2) the average price at which said
stock sold during such year is equal to or greater than the par value, — then the
amount of capital stock determined as hereinbefore provided to be employed in
this State shall be taxed at the rate of one and one-half mills on each dollar
of the valuation of the capital stock employed in this State ; but such valuation
shall not be less than (1) the par value of such stock; (2) the difference be-
tween the assets and liabilities exclusive of capital stock; (3) the average
price at which such stock sold during said year. If such corporation, joint
stock company, or association shall have more than one kind of capital stock,
and upon one of such kinds of stock a dividend or dividends amounting to
six or more than six per cent upon the par value thereof has been declared,
and upon the other no dividend has been made or declared, or the dividend
or dividends made or declared thereon amounted to less than six per cent upon
the par value thereof, then the tax shall be at the rate of one-fourth of a mill for
each one per cent of dividends declared upon the capital stock upon the par
value of which the dividends declared amount to six or more than six per
cent, and in addition thereto a tax shall be charged upon the capital stock,
(1) upon any dividend so made or declared; or (2) upon which the dividend
or dividends made or declared did not amount to six per cent on the par
value, at the rate as hereinbefore provided for the taxation of capital stock
upon which no dividend was made or declared, or upon which the dividend
or dividends made or declared did not amount to six per cent on the par value
(Tax Law, sec. 182).
Under section 182 of the Tax Law, all corporations not taxable under the
foregoing shall be taxed in an amount not less than what would be produced
by a tax of one and one-half mills on each one dollar of the actual value of its
capital stock determined to be employed in this State, or at one and one-half
463
DIGEST OF INCORPORATION ACTS. — NEW YORK.
mills on each dollar of said capital stock at the average price at which said stock
sold during the year.
Laundry corporations, manufacturing corporations, to the extent only of
the capital actually employed in this State in manufacturing and in the sale
of the product of such manufacture, mining corporations wholly engaged in
mining ores within this State, agricultural and horticultural societies or associa-
tions and corporations, shall be exempt from the payment of the franchise tax.
But such laundrying, manufacturing, or mining corporation shall not be exempt
from the payment of such tax unless at least forty per cent of the capital stock
of such corporation is invested in property in this State and used by it in its
laundrying, manufacturing, or mining business in this State (Tax Law, sec. 183).
If the dividend or dividends amount to less than six per cent of the par
value of the capital stock, or no dividend is declared, the president, treasurer,
or secretary of the corporation shall, under oath, between the 1st and 15th
days of November in each year estimate and appraise the capital stock of
such corporation at its actual value. If the Comptroller is not satisfied with
such appraisal, he is authorized to make a valuation thereof and settle an
account upon the valuation so made by him and the taxes, penalties, and
interest to be paid the State (Tax Law, sec. 193). If an application be filed
with the Comptroller by the corporation against whom the account is stated,
or by the Attorney-General within one year after such account shall have been
audited and stated, the Comptroller may at any time, upon notice thereof,
sent to the corporation against whom it is stated, revise and readjust such
account (Tax Law, sec. 198). (See, as to taxation of stock having no par
value, Laws of 1912, chap. 351, sec. 19.)
People ex rel. U. V. C. Co. v. Roberts, 156 N. Y. 585; People ex rel. E. E. L. Co. v. Camp-
bell, 138 N. Y. 543; People ex rel. A. C. & D. Co. v. Wemple, 129 N. Y. 558; People ex rel.
B. R. T. Co. v. Morgan, 57 App. Div. 335; People ex rel. Am. Sur. Co. v. Campbell, 74 Hun,
101; 143 N. Y. 625; People ex rel. Klipstein v. Roberts, 36 App. Div. 597; 167 N. Y. 617;
People ex rel. Am. Soda F. Co. v. Roberts, 158 N. Y. 168.
23. Amendments. — If the certificate of incorporation contains any mat-
ter not authorized by law to be stated therein, or if the proof or acknowledg-
ment thereof shall be defective, either the incorporators or directors of the
corporation may make and file an amended certificate correcting such infor-
mality or defect or striking out such unauthorized matter. The Supreme
Court may, upon due cause shown and proof made, and upon notice to the
Attorney-General and such other persons as the court may direct, and upon
such terms and conditions as it may impose, amend any certificate of incor-
poration which fails to express the true object and purpose of the certificate
so as to truly set forth such object and purpose (G. C. L., sec. 7).
To change the corporate name requires a petition to the Supreme Court,
special term, held in the judicial district in which the corporation's principal
business office is situated. The petition must have annexed thereto a certifi-
cate of the Secretary of State that the name which such corporation proposes
to assume is not the name of any other domestic corporation. The petition
must be in writing, signed and verified in like manner as a pleading by an officer
of the corporation (usually the president), and must specify the present name
of the corporation as well as the name it proposes to assume. Notice of the
presentation of the petition to the court must be published once in each week
for six successive weeks in two newspapers. A copy of the petition and notice
of motion must be filed with the Secretary of State prior to the commencement
of publication of such notice. If the court is satisfied that the petition should be
464:
DIGEST OF INCORPORATION ACTS. — NEW YORK.
granted, it then makes an order authorizing the petitioner to assume the name
proposed on a day specified not less than thirty days after the entry of the
order. The order and the papers on which it was granted must be filed within
ten days thereafter in the clerk's office of the county in which the original certifi-
cate of incorporation was filed, and a certified copy of such order must witliin
ten days after the entry thereof be filed in the office of the Secretary of State.
Such order must also direct the publication witliin ten days after the entry
thereof of the order in a designated newspaper once in each week for four suc-
cessive weeks. If the order is fully complied with, and if within forty days
after the making of the order an affidavit to the publication thereof shall be
filed and recorded in the office in which the order is entered, and in each office
in which certified copies are required to be filed, if any, the petitioner shall, on
and after the day specified for that purpose in the order, be known by its new
corporate name (General Corporation Laws, sees. 60-65).
To change the number of directors requires the vote of a majority of the
stock of the corporation at a meeting held at the usual place of meeting of the
directors, on two weeks' notice in writing to each stockholder of record. Such
notice may be served personally or by mail. Proof of the service of such notice
shall be filed in the office of the corporation at or before the time of such meet-
ing. The proceedings of such meeting shall be entered in the minutes of such
corporation, and transcript thereof verified by the president and secretary of the
meeting shall be filed in the office where the original certificates of incorporation
were filed. Such change in the directorate may also be effected by unanimous
consent without a meeting; in which case there shall be filed in the offices
above specified the unanimous consent of the stockholders in writing signed
by them or by their proxies, to which must be attached an affidavit of the cus-
todian of the stock book of such corporation, stating that the persons who
have signed such consent are the holders of record of the entire capital stock
of said corporation, issued and outstanding (S. C. L., sec. 26). If the number
of directors be increased, the additional directors must be elected by a vote
of a majority of the directors in office at the time of the increase (S. C. L., sec. 26).
Stock Corporation Law, section 18, provides for amendment of the certifi-
cate of incorporation, so as to include therein the purposes, powers, or privileges
which at the time of such alteration may be applied to corporations engaged in
business of the same general character, or which might be included in the certifi-
cates of incorporation of a corporation organized under any general laws of
the State for business of the same general character.
The amendment is effected by filing, in the manner provided for the original
certificate of incorporation, an amended certificate executed by the president
and secretary stating the alteration proposed, and that the same has been duly
authorized by a vote of a majority of the directors, and also by a vote of stock-
holders representing at least three-fifths of the capital stock at a meeting of the
stockholders called for the purpose in the manner provided in sec. IS of the
Stork Corporal ion Law.
To increase or reduce the capital stock the same must be authorized either
by the unanimous consent of the stockholders expressed in writing and filed
in the office of the Secretary of State, and in the office of the clerk of the county
in which the principal business office of the corporation is located, or by vote
of the stockholders owning at least a majority of the stock of the corporation,
taken at a meeting of the stockholders specially called for that purpose in the
manner provided by law or by the by-laws. Notice of the meeting, stating the
M 465
DIGEST OF INCORPORATION ACTS. — NEW YORK.
time, place, and object, and the amount of the increase or reduction proposed,
signed by the president or vice-president and secretary, shall be published once
a week for at least two successive weeks in a newspaper in the county where
the corporation's principal place of business is located, and a copy of such
notice shall be duly mailed to each stockholder or member at his last known
post-office address at least two weeks before the meeting, or shall be personally
served on him at least five days before the meeting. At such meeting a majority
of the stockholders must be present either in person or by proxy. A sufficient
number of votes shall be given in favor of such increase or reduction, and if the
same shall be authorized by the unanimous consent of the stockholders expressed
in writing, a certificate of the proceedings showing the compliance to the pro-
visions of law and the amount of capital theretofore authorized and the pro-
portion thereof actually issued and the amount of the increased or reduced
capital stock, and in the case of a reduction of capital stock the whole amount
of the ascertained debts or liabilities of the corporation, shall be made and filed
in the office of the clerk of the county where its principal place of business is
located, and a duplicate thereof in the office of the Secretary of State. In case
of the reduction of the capital stock the certificate of consent hereinbefore re-
ferred to must have endorsed thereon the approval of the Comptroller to the
effect that the reduced capital is sufficient for the proper purposes of the corpora-
tion and is in excess of its ascertained debts and liabiUties. When the certificate
of the unanimous consent of stockholders in writing, approved as aforesaid,
has been filed, the capital stock of the corporation shall be increased or reduced
as the case may be to the amount specified in such certificate or consent (S. C. L.,
sees. 63, 64).
To increase or reduce the number of shares requires a two-thirds vote of all
rtock duly represented at a meeting held and conducted in like manner, and
upon the filing of like certificate as required for the increase or reduction of
its capital stock (S. C. L., sec. 65; see also G. C. L., sec. 7; S. C. L., sees. 18,
51, 62, and 63). To change the location of the place of business the change must
be authorized either by the unanimous consent of all the stockholders expressed
in writing and duly acknowledged and filed in the office of the Secretary of
State or by a vote of stockholders at a special meeting called for that purpose.
The president and secretary and a majority of directors must sign a certificate
stating the name of the corporation, and stating the town and county where the
principal office and place of business was originally located and to which it may
have been subsequently changed, and the city, town, and county to which it is
desired to change the same, and that it is the purpose of said corporation to
actually transact and carry on its regular business at such place, and that such
change has been authorized as provided by law, and the names of the directors
and their places of residence. This certificate must be verified and acknowledged
by all persons signing the same, and must be filed in the office of the Secretary
of State, and a duplicate copy thereof in the office of the clerk of the county
from which said present office or place of business is to be removed or changed,
and entered in the office of the clerk of the county to which such removal or
change is to be made (S. C. L., sec. 13 ; Laws of 1905, chap. 489). The number
of shares may be increased or decreased without changing the amount of the
authorized capital, thereby changing the par value of shares, by a two-thirds
vote of all stock (S. C. L., sec. 65).
24. Extension of Corporate Existence. — Corporate existence may be
extended, if desired, by compliance with the statute (G. C. L., sec. 37). Cor-
466
DIGEST OF INCORPORATION ACTS. — NEW YORK.
porate existence may be extended by consent of stockholders owning two-
thirds in amount of the capital stock. This consent must be given either in
writing or by a vote at a special meeting of the stockholders called for that
purpose upon the same notice as is required for annual meetings. A certificate
under the corporate seal must be prepared showing that such consent was given
by the stockholders in writing, or that it was given by a vote at a special stock-
holders' meeting. This certificate must be subscribed and acknowledged by
the president or the vice-president, and by the secretary or assistant secretary of
the corporation, and must be filed and recorded in the office of the Secretary of
State, and a certified copy of such certificate with a certificate of the Secretary
of State of such filing and recording, or a duplicate original of such certificate,
must be filed and recorded in the office of the clerk of the court of the county
where the corporation has its principal place of business. The act also provides
that the certificate of incorporation may require that the consent of stock-
holders owning a greater percentage than two-thirds of the stock shall be
requisite to vote an extension of corporate existence (G. C. L., sec. 37).
25. Dissolution. — Voluntary dissolution may be brought about in two
ways : First, by a two-thirds vote in interest of the stockholders favoring dis-
solution preceded by a resolution to that effect passed by the board of directors ;
second, by application to the Supreme Court (G. C. L., sees. 221, 230-276; Code
of Civ. Pro., sees. 90-102, 170-195). The charter maybe surrendered by the
incorporators before the payment of any part of the capital stock and before
commencing business (G. C. L., sec. 220).
26. Foreign Corporations. — The General Corporation Law (sees. 15
and 16) provides as follows:
§ 15. Certificate of Authority of a Foreign Corporation. — No foreign stock
corporation other than a moneyed corporation shall do business in this State
without having first procured from the Secretary of State a certificate that it
has complied with all the requirements of law to authorize it to do business
in this State, and that the business of the corporation to be carried on in this
State is such as may be lawfully carried on by a corporation incorporated under
the laws of this State for such or similar business, or if more than one kind
of business, by two or more corporations so incorporated for such kinds of
business respectively. The Secretary of State shall deliver such certificate to
every such corporation so complying with the requirements of law. No such
corporation now doing business in this State shall do business herein after
December thirty-first, eighteen hundred and ninety-two, without having pro-
cured such certificate from the Secretary of State, but any lawful contract
previously made by the corporation may be performed and enforced within
the State subsequent to such date. No foreign stock corporation doing business
in this State shall maintain any action in this State upon any contract made
by it in this State unless prior to the making of such contract it shall have
procured such certificate. This prohibition shall also apply to any assignee of
such foreign stock corporation and to any person claiming under such assignee
of such foreign stock corporation, or under either of them. No certificate of
authority shall be granted to any foreign corporation having the same name
as an existing domestic corporation, or a name so nearly resembling it as to be
calculated to deceive, nor to any foreign corporation, other than a moneyed
or insurance corporation, with the word "trust," "bank," "banking," "insur-
ance," "assurance," "title," "indemnity," "guarantee," "guaranty,"" savings,"
"investment," "loan," or "benefit," as a part of its name.
467
DIGEST OF INCORPORATION ACTS. — NEW YORK.
Proof to be filed before granting Certificate. — Before granting such cer-
tificate the Secretary of State shall require every such foreign corporation to
file in his office a sworn copy of its charter or certificate of incorporation, and
a statement under its corporate seal, particularly setting forth the business
or objects of the corporation which it is engaged in carrying on, or which it
proposes to carry on, within the State, and a place within the State which is
to be its principal place of business, and designating, in the manner prescribed
in the Code of Civil Procedure, a person upon whom process against the corpora-
tion may be served within the State. The person so designated must have an
office or place of business at the place where such corporation is to have its
principal place of business within the State. Such designation shall continue
in force until revoked by an instrument in writing designating in like manner
some other person upon whom process against the corporation may be served in
this State.
If the person so designated dies, or removes from the place where the cor-
poration has its principal place of business within the State, and the corpora-
tion does not within thirty days after such death or removal designate in a
like manner another person upon whom process against it may be served within
the State, the Secretary of State may revoke the authority of the corporation
to do business within the State, and process against the corporation in an
action upon any liability incurred within this State before such revocation
may, after such death or removal and before another designation is made, be
served upon the Secretary of State.
The statement under the foregoing provisions must set forth the following,
to wit :
1. The business or objects of the corporation which is engaged in carrying
on, or which it proposes to carry on, within the State.
2. The place within the State which is to be its principal place of business.
3. The designation of a person upon whom process against the corporation
may be served within the State. Such person must have an office or place of
business within the State.
The written consent of the person designated, duly acknowledged by such
person, must also be attached.
Said statement must be executed in the name and on behalf of the cor-
poration by an officer thereof.
The customary proof must be appended to the instrument, showing that
the same was executed by authority of the corporation and proving the cor-
porate seal.
There must be annexed to the papers a copy of the charter or the certifi-
cate of incorporation of the company, sworn to as a true copy thereof by an
officer of the corporation.
All papers must be attached in convenient form for filing.
An acknowledgment or affidavit taken by a notary public in another State
must be authenticated by a clerk of a court of record.
The filing fees are $11, under sec. 26 of the Laws of 1909, chap. 23, which
sum must accompany the papers.
The papers when received will be referred to the State Comptroller, who
will later communicate with the corporation, and adjust the tax under sec. 181,
chap. 908, Laws of 1896.
Annual reports required as of domestic corporations. Stock book with
data of stockholders must be kept at office of transfer agent in the State, and
468
DIGEST OF INCORPORATION ACTS. — NEW YORK.
shall be open to inspection, under penalty of S2.">0. Every foreign corporation,
except banking corporations, fire, marine, casualty, and life insurance companies,
co-operative fraternal insurance companies, and building and loan associations
authorized to do business under the General Corporation haw shall pay to the
State Treasurer for the use of the State a license fee of one-eighth of one per
cent for the privilege of exercising its corporate franchises, or carrying on its
business in such corporate or organized capacity in this State, to be computed
upon the basis of the capital stock employed by it within this State during the
first year of carrying on its business in this State ; and if in any year thereafter
such corporation shall employ an increased amount of its capital stock within
this State, the same license fee shall be due and payable upon such increase.
The measure of the amount of capital stock employed in this State shall be
such a proportion of the issued capital stock as the gross assets employed in
any business within this State bears to the gross assets wherever employed
in business. For purposes of taxation the capital of a corporation invested in
the stock of another corporation shall be deemed to be assets located where
the physical property represented by such stock is located: No action shall be
maintained or recovery had in any of the courts in this State by such foreign
corporation after thirteen months from the time of beginning such business
within the State without obtaining a receipt from the Comptroller for the pay-
ment of the license fee upon the capital stock employed by it within this State
during the first year of carrying on its business in this State (Laws of 1910,
chap. 340). Foreign corporations are required to pay the same annual license
tax as is imposed upon domestic corporations. This is assessed, however, upon
the basis of the amount of capital stock within the State. (See ante, sec. 22;
G. C. L., sees. 15, 16; S. C. L., sees. 33, 70; C. C. P., sees. 432, 1779; Tax Laws,
sec. 181.)
Demarest v. Flack, 128 N. Y. 205; 28 N. E. 645; People ex rel. H. & H. Co. v. Camp-
bell, 139 N. Y. 68; 34 N. E. 753; People ex rel. S. T. Clock Co. v. Wemple, 133 N. Y 323;
31 N. E. 238; People v. A. B. T. Co., 117 N. Y. 241; 22 N. E. 1057; People ex rel. Wemple,
138 N. Y. 582; 34 N. E. 386; O'Reilly, Skellv, & Fogarty Co. v. Greene, 40 N. Y. 360; Peo-
ple v. Kelsev, 93 N. Y. Sup. 971; People v. Miller, 94 N. Y. Sup. 193; Tying v. Company,
93 N. Y. Slip. 928; Fay v. Company, 94 N. Y. Sup. 628; Miller v. Quincy, 179 N. Y . 294;
72 N. E. 116; P. C. Company v. McKeever, 93 App. Div. 303; 87 N. Y. Sup. 869; Bishoff
v. Company, 97 App. Div. 17; 89 N. Y. Sup. 594; Harvard Co. v. Wicht, 91 N. Y. Sup. 48;
99 App. Div. 507; A. C. P. Co. v. Bagge, 91 N. Y. Sup. 73; Grant v. Co., 189 N. Y. 241.
469
DIGEST OF INCORPORATION ACTS. NORTH CAROLINA.
NORTH CAROLINA.
(The references cited below are to the Revisal of 1905, of the Laws of North Carolina, un-
less otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of North Carolina is to be found in the Revisal
of 1905, chap. 21, sees. 1128-1248 inclusive. Under this act corporations may-
be formed for any purpose excepting railroad, insurance, banking companies,
building companies, and eleemosynary corporations (sec. 1137).
2. Incorporators. — Any number of persons not less than three. There
are no residential requirements (sees. 1137, 1143; Laws of 1909, chap. 502).
3. Contents of the Certificate of Incorporation. — The certificate must
set forth :
a. Name. — No name can be used already in use by another domestic cor-
poration (sec. 1137). The name must end with the word "company" or the
word "incorporated" (sec. 1137, sub. 1).
6. Domicile. — Location of principal office within the State (sec. 1137,
sub. 2; see Laws of 1909, chap. 874).
c. Purposes. — The object or objects for which the corporation is formed.
Any number of purposes may be inserted in the certificate (sec. 1137, sub. 3).
d. Capital Stock. — Authorized capital stock (unlimited). Number of
shares into which divided, and par value (any amount) thereof, amount of
capital stock with which corporation will begin business (no amount limited
in the act). If there is more than one class of stock, a description of all classes
must be inserted, together with terms upon which created (sec. 1137, sub. 4).
e. Stock Subscriptions. — Names and post-office addresses of subscribers for
stock and the number of shares subscribed by each. The act provides that
the aggregate of such subscriptions shall be the amount of capital stock with
which the corporation will begin business (sec. 1137, sub. 5).
/. Duration. — May be perpetual (sec. 1137, sub. 6).
g. Provisions for the Regulation of the Internal Affairs of the Corporation. —
Provisions may be inserted for the regulation of the business and for the
purpose of creating, defining, limiting, or regulating the powers of the cor-
poration, directors, and stockholders (sec. 1137, sub. 7).
4. Statutory Powers. — In addition to & statutory enumeration of com-
mon law powers corporations have the following additional powers : To au-
thorize voting by proxy ; to forfeit stock for non-payment of assessments ; to
provide suitable penalties for violation of by-laws, not exceeding $20 for any
one offence ; to delegate the power to directors to adopt by-laws ; to issue pre-
ferred stock to the extent of one-half of actual capital paid in in cash or property
and to make the same subject to redemption ; to authorize the holding of di-
rectors' meetings and keeping of corporate books, except stock and transfer
books, outside of the State ; to classify directors ; to permit cumulative voting
in election of directors, and to conduct business in other States and foreign
countries ; to issue and sell bonds for less than par (sees. 1128-1130, 1145-1147,
1170-1173, 1183-1184; Laws of 1909, chap. 874).
Heggie v. Association, 107 N. C. 581; 12 S. E. 275; Meares v. Improvement Co., 126
N. C. 662; 36 S. E. 130.
470
DIGEST OF INCORPORATION ACTS. — NORTH CAROLINA.
5. Procuring the Charter. — Incorporators must subscribe and acknowl-
edge the certificate of incorporation. The certificate must then be filed and
recorded in the office of the Secretary of State, the organization tax being then
paid. A certified copy of the certificate and probate must be forthwith re-
corded in the office of the clerk of the Superior Court of the county where the
principal office of the corporation is to be established (sec. 1139).
AshvUie Div. v. Oston, 92 N. C. 578.
6. Corporate Indebtedness. — There is no statutory limitation upon the
amount of corporate indebtedness. The law expressly permits bonds of cor-
porations to be sold for less than par (Laws of 1903, chap. 154; see as to issue
and sale of bonds of construction companies, sec. 1172).
7. Organization Tax. —Twenty cents for each one thousand dollars of
the amount of capital stock authorized, but in no case less than $25 (sec. 1233).
8. Filing and Recording Fees. — For filing and recording certificate of
incorporation in the office of the Secretary of State, SI for the first three copy
sheets, and 10 cents per copy sheet thereafter ; also 50 cents for seal. The same
charge is made for certified copy of certificate of incorporation; for filing list
of officers and directors, $1 ; for increase of capital stock, 20 cents for each one
thousand dollars of the total increase authorized, but in no case less than $20;
extension or renewal of corporate existence, same as in the original certificates;
for filing other certificates of amendment, $20 ; for filing certificate of dissolu-
tion or change of principal place of business, $5. There must be paid to the
clerk of the Superior Court for recording the certificate of incorporation in the
county where the principal office of the corporation is established a fee that
averages about $3 (sees. 1233, 1234).
9. Commencing Business. — Corporations may commence business aa
soon as the certificate of incorporation is filed as required by law (sec. 1140).
Within thirty days after the election of the first board of directors there must
be filed in the office of the Secretary of State a statement authenticated by
the signatures of the president and secretary containing the names of all the
directors and officers, with the date of the election or appointment, term of
office, residence and post-office address of each, the character of its business
and location, giving the street and number, if any, of its principal office in the
State, and the name of the agent in charge of said office upon whom process
may be served. Business must be commenced within two years from the time
certificate is filed (sec. 1246).
. 10. Organization Meeting. — The organization meeting must be held
within the State. The first meeting of every corporation shall be called by a
notice signed by a majority of the incorporators designating the time, place,
and purpose of the meeting, which notice shall be published at least two weeks
before the meeting in some newspaper of the county where the corporation is
established ; which said first meeting may be called without publication if two
days' notice be personally served on all of the incorporators, or if all of the
incorporators shall in writing waive notice and fix a time and place of meeting
no notice of publication shall be required (sees. 1142, 1143). The incorporators
are given the direction of affairs of the corporation until the directors are elected
(sec. 1141).
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held within the State. Directors' meetings may be held without the
State, if the by-laws so provide (sees. 1147, 1149).
471
DIGEST OF INCORPORATION ACTS. — NORTH CAROLINA.
12. Directors' Qualifications and Liabilities, a. Qualifications. — There
must be a board of not less than three directors. At least one of them must
be a resident of the State. They must all be bona fide stockholders. They
may be divided into classes, provided no class is elected for a shorter period
than one year or for a longer period than five years (sees. 1147, 1148, 1160, 1182).
Any corporation which shall have more than one kind of stock may, by so
providing in its certificate of incorporation, confer the right to choose the
directors of any class upon the stockholders of any class to the exclusion of
the others (sec. 1147). Cumulative voting in the election of directors is per-
mitted whether provision therefor is made in the certificate of incorporation
or not (sec. 1183, Laws of 1907, chap. 457).
Any stockholder owning or controlling more than twenty-five per cent of
the stock of any corporation shall have the same right to vote cumulatively as
any other stockholder, and no amendment of the certificate of incorporation,
charter or by-laws of any corporation which may be hereafter adopted or al-
lowed shall have the effect of abrogating or abridging any right herein conferred,
provided further that such right to vote cumulatively shall not be exercised
unless some stockholder shall announce in open meeting before the balloting
vote for directors, trustees, or managers begins his purpose to exercise such
right, in which case each and every stockholder may likewise vote cumulatively
(chap. 827, sec. 1).
b. Liabilities. — Directors are liable for the illegal declaration of dividends,
for loans to stockholders, for refusing after demand made upon them to make
reports within thirty days thereafter. They are also liable for not publishing
notice of decrease of capital, for illegally voting in favor of a reduction of capi-
tal, and for making false certificates, and for fraud (sees. 1154-1156, 1163, 1164,
1179, 1191, 1192, 1202).
Solomon v. Bates, 118 N. C. 321 ; 24 S. E. 746.
13. Stockholders' Liabilities. — Stockholders are liable for their unpaid
stock subscriptions (sec. 1162). They are also liable for fraud committed by
them to creditors and others injured thereby (sec. 1156). They are also per-
sonally liable for all dissolution expenses (Laws of 1909, chap. 730) .
Harmon v. Hunt, 116 N. C. 678; 21 S. E. 559; Cooper v. Company, 127 N. C. 219; 37
S. E. 216; Cotton Mills v. Cotton Mills, 116 N. C. 647; 21 S. E. 431.
14. Stock Certificates. — Every stockholder is entitled to a certificate,
signed by the president and treasurer or secretary, specifying the number of
shares held by him in the corporation (sec. 1165).
15. Preferred Stock. — Every corporation shall have power to create
two or more kinds of stock of such classes, with such distinctions, preferences,
and voting powers, or restriction or qualification thereof as shall be prescribed
by those holding two-thirds of the capital stock outstanding, and the power to
increase or decrease the stock as herein elsewhere provided shall apply to all
or any of the classes of stock; and such preferred stock may, if desired, be
made subject to redemption at not less than par at a fixed time and price to
be expressed in the certificate thereof, and the holders thereof shall be entitled
to receive and the corporation shall be bound to pay thereon a fixed yearly
dividend to be expressed in the certificate, payable quarterly, half yearly, or
yearly before any dividends shall be set apart or paid on the common stock, and
such dividends may be made cumulative ; and in case of insolvency its debts
and other liabilities shall be paid in preference to the preferred stock. No cor-
poration shall create preferred stock except by authority given to the board of
472
DIGEST OF INCORPORATION ACTS. — NORTH CAROLINA.
directors by a vote of at least two-thirds of the stock voted at a meeting of the
common stockholders duly called for that purpose (sec. 1159).
16. Payment of Capital Stock. — Stock may be issued in exchange for
money, labor done, personal property, real estate or leases thereof. In the
absence of fraud in the transaction, the judgment of the directors as to the
value of such labor, property, real estate or leases thereof shall be conclusive
(sec. 1159). Corporations may purchase mines and manufactories and issue
stock in payment therefor to the amount of the value thereof, and the stock so
issued shall be full paid stock and not liable to any further call. In the absence
of fraud the judgment of the directors as to the value of the property so taken
shall be conclusive. Upon the payment in full of each instalment of capital
stock, a certificate setting forth the particulars thereof, verified by the president
and secretary or treasurer, must within ten days after such payment be filed
in the office of the Secretary of State (sees. 1159-1161).
17. Books. — Must keep at its principal office in the State the transfer
books and the stock books of the corporation (sec. 11S0). These are open to the
inspection of all stockholders.
18. Office and Agent. — Every corporation is required to have an oflice
within the State, where its name must be displayed in conspicuous letters. Must
have an agent in charge of its principal office within the State residing therein
(sees. 1179, 1242, 1243).
Simmons v. Steamboat Co., 113 N. C. 147; 18 S. E. 117.
19. Reports. — Every corporation authorized to transact business in this
State shall file in the office of the Secretary of State annually on or before
December 1st a statement authenticated by the signatures of the president
and secretary containing the names of all the directors and officers, with the
date of election or appointment, term of office, residence and post-office address
of each, the character of its business and location, giving the street and number,
if any, of its principal office in the State, and the name of the agent in charge
of said office upon whom process against the corporation may be served (sec.
1152, as amended by Laws of 1907, chap. 944). Also on or before July 1st of
each year an annual report must be filed with the State Auditor (Laws of 1905,
chap. 90, sec. 34 ; sec. 5270. See also as to compulsory auditing of books of
corporations, Laws of 1911, chap. 1349).
20. Anti-Trust Statute. — There is a somewhat drastic anti-trust statute
in force in North Carolina (Laws of 1899, chap. 666; Laws of 1901, chap. 586;
Laws of 1907, chap. 218; also sec. 3739).
21. Statutory Grounds for Forfeiture of Charter. — Charters may be
forfeited for failure to bring the books of the corporation into the State after
an order to that effect made by the Superior Court upon proper cause shown
(sees. 1217, 1218). Charter may also be dissolved by the State for abuse, mis-
user, or non-user of its corporate powers and privileges and for violation of the
anti-trust statute (sees. 1196-1198, 1209, 1246); also for assuming or exer-
cising any franchise or transacting any business not allowed by its charter
(sec. 49, Laws of 1899, chap. 66, sec. 5; Laws of 1901, chap. 2, sec. 107;
sec. 1198). Charters may also be forfeited if the corporators for two years
should neglect or fail to organize the company, or when organized if they for
two years at any time shall cease to act (sees. 1198, 1246), also for failing t>>
pay annual franchise tax for three consecutive years (Laws of 1905, chap. 588,
sec. 83).
Cotton Mills v. Burns, 114 N. C. 353; 19 S. E. 238.
473
DIGEST OF INCORPORATION ACTS. — NORTH CAROLINA.
22. Amendments. — The incorporators before the payment of any part of
the capital stock may file with the Secretary of State an amended certificate
of incorporation duly signed by all the incorporators, amending the original
certificate of incorporation in whole or in part. The amended certificate when
recorded in the local county office takes the place of the original certificate of
incorporation (sec. 1174). Every corporation after the payment of its capital
stock may change its name, increase or decrease its capital stock, change the
par value of its shares, and make any other amendment desired in manner fol-
lowing, to wit :
The board of directors shall pass a resolution declaring that such amendment
is advisable and calling a meeting of the stockholders to take action thereon.
The meeting shall be held upon such notice as the by-laws provide, and, in the
absence of such provision, upon ten days' notice given personally or by mail.
If two-thirds in interest of each class of the stockholders having voting powers
shall vote in favor of the amendment, a certificate thereof shall be signed and
acknowledged by the president and secretary under the corporate seal, and such
certificate, together with the written assent in person or by proxy of two-thirds
in interest of each class of such stockholders, shall be filed in the office of the
Secretary of State, and upon such fifing they shall be recorded in the county
in which the original certificate of incorporation is recorded. Thereupon the
certificate of incorporation shall be deemed to be amended accordingly (sec.
1174).
The board of directors may change the location of the principal office of
such corporation within the State to any other place therein by resolution
adopted at a regular or special meeting of such board by the vote of at least
two-thirds of the members of such board. No certificate, however, is required
to be filed on account of the removal of any office from one point to another
in the same city or town of the State. Upon the adoption of a resolution as
foresaid a copy thereof must be filed in the office of the Secretary of State,
signed by the president and secretary of such corporation under the corporate
seal (sec. 1176).
Special provision is made in the case of decrease of capital stock as follows :
The decrease may be effected by retiring or reducing one class of stock or by
drawing the necessary shares by lot for retirement, or by the surrender by every
shareholder of his certificates and the issuance to him in lieu thereof of a de-
creased number of shares, or by the purchase at not above par of certain shares
for retirement, or by retiring shares owned by the corporation, or by reducing
the par value of shares one-fourth. A certificate showing the decrease must
be published for three weeks successively at least once in each week in a news-
paper published in the county in which the principal office of the corporation
is located, the first publication to be made within fifteen days after the filing
of such certificate, and in default thereof the directors of the corporation shall
be jointly and severally liable for all debts of the corporation contracted before
the filing of said certificate, and the stockholders shall also be liable for such
sums as they may respectively receive of the amount so reduced (sec. 1164).
Special provision is made for correcting errors in the certificate of incorporation.
The law provides (sec. 1144), whenever in any certificate of incorporation under
any general law there shall be any error or omission in the recital of the act
under which said corporation is created, or in the omission of any other matters,
which is required to be stated in the certificate, it shall be lawful for such cor-
poration to correct such error in the manner following : The board of directors
474
DIGEST OF INCORPORATION ACTS. — NORTH CAROLINA.
of such corporation shall pass a resolution declaring that such error exists, and
that such corporation desires to correct the same, and shall call a meeting of
the stockholders of said corporation to take action upon said resolution, the
meeting of said stockholders to be held upon such notice as the by-laws provide,
and, in the absence of such provision, ten days' notice given personally or by
mail. If two-thirds in interest of all of the stockholders shall vote in favor of
the correction of such error or omission, a certificate of such action shall be
made and signed by the president and secretary under the corporate seal ; which
certificate shall be acknowledged and proved as in the case of deeds of real
estate, and such certificate, together with the written assent in person or by
proxy of two-thirds in interest of all of the stockholders of such corporation,
shall be filed in the office of the Secretary of State, and upon the fifing thereof
the certificate of incorporation shall be deemed to be corrected and amended
accordingly, and the fifing of such certificate in conformity with tins chapter
shall have the same force and effect as if such certificate of incorporation had
been originally drafted in conformity with the amendment so made (sec. 1144).
23. Extension of Corporate Existence. — Corporation may extend its
corporate existence for any period desired (sees. 1175, 1178).
24. Dissolution. — A corporation may be dissolved by mutual consent
upon the vote of two-thirds in interest of the stockholders (sees. 1195, 1200-
1208, 1211, 1219-1232; Law of 1909, chap. 15). The charter may be surren-
dered by the incorporators before the payment of any part of the capital and
before beginning business by complying with the statute in such case made
and provided (sec. 1177; see also Laws of 1909, chap. 730).
25. Annual License Fee.— Where the corporation has a capital stock
paid in or subscribed of $25,000, the annual tax is $5 ; up to $50,000, $10 ; up
to $100,000, $25 ; up to $250,000, $50 ; up to $500,000, $100 ; up to $1,000,000,
$200; over $1,000,000, $500 (sec. 5190).
26. Foreign Corporations. — Foreign corporations must file with the
Secretary of State a copy of their charter attested by the president and secretary
under the corporate seal, and accompanied by a statement attested in like man-
ner setting forth the amount of capital stock authorized, amount issued, location
of principal office in the State, and name of agent in charge thereof, character
of the business to be transacted, and names and post-office addresses of officers
and directors (sec. 1194). Such corporations must also pay a tax of 10 cents
per thousand dollars on authorized capital stock, provided, however, that the
same shall never be less than $10 nor more than $100 (sec. 5190). Foreign cor-
porations are subject to the same annual license tax imposed upon domestic
corporations (Laws of 1905, chap. 588, sec. 83). Annual reports must also be
filed (sec. 1152, as amended by Laws of 1907, chap. 944. As to service of pro-
cess upon foreign corporations, see Public Laws of 1907, chaps. 460, 473).
Debnam v. Company, 126 N. C. 831; 36 S. E. 269; Howard v. Association, 125 N. C. 49;
34 S. E. 199; Commissioners v. Company, 128 N. C. 558; 39 S. E. 18; Shields v. Life Ins.
Co., 119 N. C. 380; 25 S. E. 951; J. A. H. Co. v. Company (N. C), 50 S. E. 650.
475
DIGEST OF INCORPORATION ACTS. — NORTH DAKOTA.
NORTH DAKOTA.
(The references cited below are to the Revised Code of 1905, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of North Dakota is to be found in the Revised
Code of 1905, chaps. 11 and 15. Under this act corporations may be formed for
any purpose for which individuals may lawfully associate themselves, except
that special acts are provided for railway, wagon road, insurance, bridge,
agricultural fair, and eleemosynary corporations (sec. 4168). There are some
special provisions applicable to mining and manufacturing companies.
2. Incorporators. — Not less than three, one-third of whom must be resi-
dents of the State (sec. 4176).
3. Contents of the Articles of Incorporation. — The articles must set
forth (sec. 4169) :
a. Name. — There is no statute expressly forbidding the use of a name
already in use by another domestic corporation, but the power is assumed by
the Secretary of State to refuse articles attempting to make use of such
name.
6. Purposes. — Purpose for which it is formed. The Secretary of State per-
mits the insertion of any number of purposes in the articles not covered by
special acts (sees. 4168).
c. Domiciliary Office. — Place where its principal business is to be transacted.
d. Duration. — Term for which it is to exist, not exceeding twenty years.
e. Directors. — Number of directors and names and residences of those who
are to serve until their successors are elected and qualified.
/. Capital Stock. — Amount of capital stock, number of shares into which
it is divided. Both may be any amount desired (sec. 4173). If preferred stock
is to be issued make provision for it here (Laws of 1909, chap. 61).
4. Statutory Powers. — In addition to a statutory enumeration of com-
mon law powers, the following additional powers are granted: To authorize
voting by proxy ; to forfeit stock for non-payment of assessments ; to own its
own stock ; to provide penalties for violation of by-laws not to exceed $100 ; to
permit cumulative voting, and to remove directors (sees. 4214, 4193 et seq.,
4202,4207,4213).
Tourtelot v. Whithead, 9 N. D. 407; 84 N. W. 8.
5. Procuring the Charter. — The charter must be subscribed and ac-
knowledged by the incorporators (sec. 4176). The articles must then be filed
with the Secretary of State (sec. 4180). There must be filed with the Secretary
of State a duplicate receipt of the S^ate Treasurer showing payment of organiza-
tion tax. When all these formalities have been complied with, the Secretary
of State issues a certificate of incorporation. Collateral inquiry into the legality
of corporate existence is forbidden (sees. 2852, 2867).
6. Corporate Indebtedness. — Corporate indebtedness must not exceed
the amount of subscribed capital stock. Express authority is given to issue
bonds (sec. 4225).
7. Organization Tax. — For capitalization up to $25,000, the fee is $25;
for capitalization up to $50,000, the fee is $50 to be paid to the State Treasurer,
476
DIGEST OF INCORPORATION ACTS. — NORTH DAKOTA.
and S5 for every additional $10,000 or fractional part thereof. Every corpora-
tion for profit except corporations organized for the purpose of irrigation, water
users associations, building and loan associations, county mutual insurance
companies, corporations for the manufacturing of dairy products, agricultural
fair associations, corporations whose capital stock does not exceed $5,000,
formed for the purpose and maintenance of male animals for the improvement of
stock, corporations whose capital stock does not excite 1 $2,000, formed for the
purchase of musical instruments, music and uniforms for bands of musicians, and
corporations whose capital stock does not exceed $5,000, formed for the purpose
of purchasing or leasing grounds for the erection thereon of necessary fences,
buildings, and seats, and purchasing the necessary equipments for the use of
base ball clubs, foot ball teams, and other athletic associations when composed
of non-salaried members or players shall, at or before the filing of the articles of
incorporation, pay into the State treasury the sum of $25 for the first $25,000
or fraction thereof of the capital stock of such corporation, and the sum of $50
for $25,000 up to $50,000 of the capital stock of such corporation, and the fur-
ther sum of $5 for every additional $10,000 or fraction thereof of its capital stock
(Laws of 1911, chap. 105).
8. Filing and Recording Fees. — For filing and recording articles of in-
corporation in the office of the Secretary of State, $3 ; for issuing a certificate
of incorporation, $5 ; for issuing certified copy of articles of incorporation, 25
cents per folio of one hundred words and $1 for certificate. The charge for filing
and recording amendments to articles of incorporation is 25 cents per folio of
one hundred words.
9. Commencing Business. — Business may be commenced as soon as the
articles are executed and filed as required by law (sec. 1480). Every corporation
formed under this chapter must within one month after filing articles of incor-
poration adopt a code of by-laws for its government, not inconsistent with the
Constitution and laws of this State. The assent of stockholders representing a
majority of all of the subscribed capital stock, or of a majority of the members,
if there is no capital stock, is necessary to adopt the by-laws if any are adopted
at a meeting called for that purpose, and in - event of such meeting being called
notice thereof shall be published two times, once in each week for two successive
weeks in some newspaper published in the county in which the principal place
of business of the corporation is located, or if none is published therein, then in a
newspaper published at the seat of government. The written assent of the hold-
ers of two-thirds of the stock or of two-thirds of the members, if there is no
capital stock, shall be effectual to adopt a code of by-laws without a meeting
for that purpose; provided, however, that any corporation incorporated in this
State after the taking effect of this act may by its articles of incorporation pro-
vide that each stockholder shall have only one vote on any question arising
at any of its stockholders' meetings regardless of the amount of stock owned, and
provided further that any corporation may amend its articles of incorporation
at any time and adopt such provisions of unit vote by the unanimous vote of
all Stockholders owning stock in such corporation (haws of 1911, chap. 101).
10. Organization Meeting. — In the absence of a provision in the articles
providing otherwise the organization meeting must be held within the State
(sec. 4217). By making provision in the articles therefor all meetings may he
held without the State, at some place within the United States (sec. 4520).
Unless the same is waived in writing by all the incorporators, notice of the
organization meeting must be published twice a week for two successive weeks
477
DIGEST OF INCORPORATION ACTS. — NORTH DAKOTA.
in a newspaper published in the county where the corporation's principal office is
located (sec. 4201). The by-laws adopted at this organization meeting must be
certified by a majority of the directors and kept in the book of by-laws (sec.
4204).
11. Meetings of Stockholders and Directors. — In the absence of a pro-
vision in the articles providing otherwise meetings of stockholders and directors
for the election of officers of the corporation must be held at its principal place
of business within the State. Other meetings of the board of directors may be
held at such place within or without the State as the by-laws may provide
(sec. 4217). By making provision in the articles therefor, all meetings may
be held without the State at some place within the United States (sec.
4520).
12. Directors' Qualifications and Liabilities. — a. Qualifications.
There must be at least three and not more than eleven directors, all of
whom must be stockholders, and one a resident of the State (sec. 4208).
Power to make by-laws may be delegated to the board of directors (sec.
4204).
b. Liabilities. — Directors are liable to creditors to the extent of the amount
of debts in excess of the subscribed capital stock. They are also liable for the
declaration of illegal dividends. Express provision is made in the act for their
removal from office (sees. 4210, 4211 as amended by Laws of 1909, chap. 63).
Directors are also liable for illegal issue of bonds (sec. 2905). Directors in
mining and manufacturing companies are liable for violations of law which
result in insolvency of the company (sec. 3161). There is also a liability for
issuing stock at less than par value paid thereon (sec. 4194). They are also-
liable for making false reports, certificates, etc. (sees. 4212, 4521). For issuing
stock or bonds for insufficient value given therefor in property or labor, they
are liable for the difference between the value of the stock or bonds issued and
the actual value of the property or labor (sec. 4195).
13. Stockholders' Liabilities. — Stockholders are liable to the extent of
their unpaid stock subscriptions. Stockholders of manufacturing and mining
corporations are jointly and severally liable for all debts to mechanics, work-
men, and laborers employed by such corporation (sees. ,2902, 3157).
14. Stock Certificates. — Each stockholder is entitled to a certificate show-
ing the number of shares owned by him, signed by the president and secretary
(sec. 4194).
No shares or certificates of stock in any mining corporation established
under the laws of this State, or of any State, Territory, province, country, or
government, shall be sold or offered for sale within this State by such cor-
poration, or by any person, firm, association, or corporation acting as agent,
representative, attorney, or broker, for such corporation, until such corpora-
tion shall have filed in the office of the Secretary of State a statement under
oath, showing the financial condition of such corporation; the location of the
mine or mines, owned by such corporation, with plans of the same ; the amount
of work done therein and the condition of the plant and machinery connected
therewith. Such statement shall be signed by the president, secretary, and
treasurer of the corporation, and shall be verified by the oath of each of such
officers to the effect that the same is in all respects true (Laws of 1909, chap.
169, sec. 1).
The statement provided for in section 1 of this act shall be substantially
in the following form :
478
DIGEST OF INCORPORATION ACTS. — NORTH DAKOTA.
STATEMENT
of the a corporation under the laws of the State, Territory, or
province of and operating mines located in or near
the town of or mining district of county of State
of
1. Amount of authorized capital stock
2. Amount of capital stock issued
3. Amount of capital stock held by corporation
4. Amount of capital stock issued in payment of property
5. Amount of capital stock sold for cash
6. Amount of cash received in payment for stock
7. Value and description of property received in payment for stock
8. Amount of debts and liabilities in
(a) Bonds (stating rate of interest and time at which bonds fall due)
(6) Other indebtedness
9. Amount of cash on hand
10. Amount of credits and estimated value thereof:
(a) Notes
(b) Bills receivable
(c) Accounts receivable
11. Present value of property of corporation
12. Number and amount of dividends declared.
13. Rate of last dividend, and date when same was declared and paid.
II.
1. Location of property owned (to be accompanied by plans of the same)
2. Amount of work done on the property, showing extent of development.
3. Amount of cash expended for improvements on said properties
4. Description of plant and machinery and their present condition. Dated
at this day of 191. .
President.
Secretary.
Treasurer.
State of )
County of )
On this day of 19 . . , personally appeared
president and secretary and treasurer of the
and who, being by me duly sworn, did each for himself depose and say that
the foregoing statement by them signed is in all respects correct, true, and
accurate.
Notary Public
A fee of $25 for filing such statement shall be paid to the Secretary of Stale
by such corporation, at the time such statement is presented for filing (Laws of
1909, chap. 169, sec. 2).
479
DIGEST OF INCORPORATION ACTS. — NORTH DAKOTA.
15. Preferred Stock. — Laws of 1909, chap. 61, authorizes the issuance
of preferred stock.
16. Payment of Capital Stock. — Stock may be issued for money, labor
done, or property estimated at its true money value actually received by it. All
officers who consent to the issuance of stock for labor or property in excess of
its actual cash value, or who, having knowledge thereof, do not formally dissent
therefrom, are jointly and severally liable to creditors of such corporation for
the difference between the actual value of such labor or property at the time
the stock was issued and the par value of the stock issued therefor. Corpora-
tions are expressly forbidden to accept notes in payment of stock subscriptions
(sees. 2877, 2878). Corporations are expressly forbidden to issue stock with the
understanding that the full par value shall not be paid (sec. 287G). The act pro-
vides that the directors named in the certificate of incorporation shall proceed
to open books of subscription to the capital stock then unsubscribed, and to
secure subscriptions to the capital stock still unsubscribed, and to secure sub-
scription to the full amount of the fixed capital (sec. 2874).
17. Books. — Regular books of account of all of the business of the corpo-
ration must be kept, which with the vouchers shall at all reasonable times be
open for the inspection of any of the stockholders, and any stockholder in mak-
ing such inspection shall be privileged to take with him an expert accountant
to aid him in making the inspection, and as often as once in each year a statement
of said accounts shall be made by order of the directors and laid before the--
stockholders (sec. 4516, Laws of 1907, chap. 55). Stock and transfer books
must be kept which are open to tins inspection of stockholders and creditors
(sec. 4226).
18. Office and Agent. — All corporations must maintain an office within
the State, and an agent to receive process (sees. 2861, 2885, 2907, 3160, 3265 a).
19. Reports. — Must file annually with the Secretary of State an anti-
trust affidavit. The fifing fee is $2.50 (Laws of 1905, chap. 188). Between July
1st and August 1st every domestic or foreign corporation must report to the
Secretary of State, on blank forms sent out by him before June 1st, the location
of its principal office in the State, names, post-office addresses, and residence of
its officers, with date of expiration of their respective terms of office, whether
or not the corporation is pursuing active business under its charter and the kind
of business engaged in. The report is to be sworn to by one of the chief officers
under the corporate seal. A $50 penalty for failure for sixty days after notice
to file such report by registered letter, forfeiture of charter or right to do business
by entry on records in Secretary of State's office (Law of 1905, chap. 65). Tax
returns sworn to by the president, secretary, or principal accounting officer must
be made to the county assessor where the principal office is located, or if there
is no such office, where the business is carried on (sec. 1183). These returns are
filed between April 1st and June 1st of each year as of April 1st (sec. 1189), and
set forth (1) name and location of company ; (2) amount of capital stock author-
ized and number of shares into which it is divided. (3) Amount of capital stock
paid in. (4) Market value, or if there is no market value, the actual value of
the shares of stock. (5) Total amount of indebtedness except that for current
expenses, excluding from such expenses the amount paid for, purchase or im-
provement of property. (6) Value of real property. (7) Value of personal
property (sec. 4518).
Every mining, manufacturing, or other industrial company must annually,
within twenty days from January 1st, make a report signed by the president and
480
DIGEST OF INCORPORATION ACTS. — NORTH DAKOTA.
a majority of the directors, verified by the president and secretary, to be pub-
lished in the newspaper nearest the corporation's place of business, and to be
filed with the register of deeds of the county in which its business is carried on,
stating the capital stock and the amount thereof actually paid in. amount and
nature of its indebtedness and amounts due the corporation; number and
amounts of dividends and when paid, and the net profits. Neglect to make,
publish, and file such report is a misdemeanor (sec. 4518). Publication of notice
of meetings may be dispensed with by waiver or written assents, except in case
of increase of stock or indebtedness where personal service can be had.
Notices of dissolution or of sale of stock for non-payment of assessments must
be published. 'All corporations engaged in transacting business in this State
who shall issue, sell or offer for sale their stocks, securities, notes, obligations,
bonds or other evidences of indebtedness by whatever name the same may be
designated, shall on demand of the State Bank Examiner furnish him with a
detailed itemized report of their assets, Liabilities and business transacted, which
reports shall be made to the State Examiner in such form as he may prescribe,
and shall be made and filed in his office for the information of the public. Such
reports shall be verified by the oath of the Secretary or chief executive officer
of such corporation.
Sec. 2. When requested in good faith by any resident of this State and
when good faith and sufficient reasons are given therefor, the State Examiner
may, if necessary, cause an examination of the financial condition of such cor-
poration to be made, and he shall report the findings thereof to the person ap-
plying for such examination. His powers and duties in connection therewith
shall be the same as in the examination of banks, and the same fees shall be
charged and paid therefor as for the examination of banks. His report shall be
submitted to and filed with the State Banking Board.
Sec. 3. The State Banking Board, on being satisfied of the insolvency, mis-
management, fraud or breach of trust of any such corporation, or of any viola-
tion of any provision of this act by any such corporation, may forthwith take
charge of such corporation pending action in the District Court to dissolve and
wind it up, which action shall be brought by the Attorney-General in the name
of the State, under the direction of such Board.
Sec. 4. Any officer, agent or employee of any such corporation who makes
or subscribes any false report under this act, or who hinders, deceives or ob-
structs the State Examiner or his deputy in the discharge of any lawful duty
hereunder, shall on conviction for each offence be punished by fine of not less
than 150 and not more than $1,000, or by imprisonment in the jail of the county
for not more than one year, or by both such fine and imprisonment (Laws of
1911, chap. L02, sec. 1).
20. Anti-Trust Statute. — The anti-trust Act of North Dakota is to be
found in Laws of 1907, chap. 258, 259, 260.
21. Statutory Grounds for Forfeiture of Charter. — Charter may be
forfeited for entering illegal trusts and combinations (Laws of 1907, chap. 258).
It may also be forfeited for misuser or non-use by proper act inn taken by the
State. Also for failing for one year to transact its usual business within the
State, or for failing for one year to keep and maintain a public office a1 its
principal place of business within the State for the transaction of its usual and
regular business, and at the same time, by instrument duly filed in the Secretary
of State's office, appoint tlie last named officer its resident agent, upon whom
process may be served. Also for failure to organize and commence bu u
31 481
DIGEST OF INCORPORATION ACTS. — NORTH DAKOTA.
within one year (sec. 4232) ; or for failure to file annual reports within sixty
days after notice received;, or for violation of anti-trust act (sec. 2913; Laws
of 1905, chap. 188).
22. Amendments. — To increase or diminish the capital stock corporate
action must be taken at a meeting of the stockholders called for that purpose
by the directors as follows : Notice of the time and place of the meeting, stating
its object and the amount to which it is proposed to increase or diminish its
capital stock, must be personally served on each stockholder resident in the State
sixty days prior to the time of such meeting at his place of residence, if known ;
and the notice must be given to stockholders whose places of residence are un-
known, or who are not residents in the State, by the publication of such notice
in a newspaper published in the county where the principal office of the corpora-
tion is situated not less than once a week for sixty days prior to such meeting.
The capital stock must in no case be diminished to an amount less than the
indebtedness of the corporation, or the estimated cost of the works which it may
be the purpose of the corporation to construct. At least two-thirds of the entire
capital stock must be represented by the vote in favor of the increase or diminu-
tion before it can be effected. A certificate must be signed by the chairman and
secretary of the meeting and a majority of the directors showing a compliance
with the requirements of this section, the amount to which the capital stock has
been increased or diminished, the amount of stock represented at the meeting,
and the vote by which the object was accomplished (sec. 4224).
Articles may be amended in any respect desired at a meeting called for that
purpose by the directors as follows : Notice of the time and place of the meeting,
stating its object, must be served in the manner prescribed in the case of increase
or decrease of capital stock. At least two-thirds of the entire capital stock must
be represented by the vote in favor of the amendment or change in the articles
of incorporation. A certificate must be signed by the chairman and secretary of
the meeting and a majority of the directors, showing a compliance with the re-
quirements of this section, the articles to be amended or changed, the amount
of stock or the number of members represented at the meeting, and the vote by
which the object was accomplished. The certificate must be filed in the office
of the Secretary of State, there to be recorded in the book of corporations, and
thereupon the articles shall be so amended. The written assent of the holders
of three-fourths of the capital stock or members shall be as effectual to authorize
the change or amendment of the articles of incorporation as if a meeting of the
stockholders as prescribed by this section was called and held ; upon such written
assent the directors may proceed to make the certificate to the Secretary of State
as herein provided (sees. 4227, 4229, 4230 ; as to change of corporate domicile,
see sec. 4230).
23. Extension of Corporate Existence. — Corporations may be extended
for an additional period of twenty years if desired (sec. 4227; see Laws of 1911,
chap. 101).
24. Dissolution. — Dissolution may be had through the District Court by
the State or by a private person in the name of the State (sec. 4231).
25. Annual License Fee. — There is no annual license fee.
26. Foreign Corporations. — Foreign corporations must file articles of
incorporation and execute a power of attorney to the Secretary of State to
receive process before commencing business (sees. 4695-4699). They must
also maintain an office within the State (Cons., Art. VII. sec. 136). The Secre-
tary of State collects a fee of $20 for filing and recording certified copy of articles
482
DIGEST OF INCORPORATION ACTS. — NORTH DAKOTA.
of incorporation of foreign companies, and So for the filing and recording of
appointment of Secretary of State as attorney to receive service of process.
Foreign corporations must also file annual reports. (See ante, sec. 19.) The
filin g fee is $2.50 (Laws of 1905, chap. 1SS, sec. 5).
G. R. L. Co. t>. Company, 6 N. D. 276; 69 N. W. 691; Nat. Cash Register Co. v. Wilson,
9 N. D. 112; 81 N. W. 285; Washburn Mills Co. v. Bartlett, 3 N. D. 138; 64 N. W. 644.
483
DIGEST OF INCORPORATION ACTS. — OHIO.
OHIO.
(The references cited below are to Bates's Annotated Statutes, 1904, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Ohio is to be found in the revised statutes
of Ohio, 1904, sees. 3232, 3269-3274 inclusive; also sees. 3855-3867. Cor-
porations may be organized for any purpose for which individuals may law-
fully associate themselves, excepting for carrying on professional business
(sec. 3235).
2. Incorporators. — Not less than five, a majority of whom must be
citizens of Ohio (sec. 3236).
Hessler v. Company, 61 Ohio St. 621 ; 56 N. E. 469.
3. Contents of Articles of Incorporation. — The articles must set forth :
a. Name. — The name must begin with the word "The" and end with
the word "Company." Similarity of names as between domestic corporations
is forbidden (sec. 3236, sub. 1 ; sec. 3238).
b. Domicile. — Place where it is to be located, and where its principal
business is to be located (sec. 3236, sub. 2).
c. Purpose. — The purpose for which it is formed. This provision is con-
strued by the Secretary of State to forbid the incorporation of companies for
more than one purpose (sec. 3236, sub. 3).
d. Capital Stock. — Amount of its capital stock. Number of shares. Capi-
talization and par value may be any amount (sec. 3236, sub. 4). If a corpora-
tion desires to do away with cumulative voting provided for by the act, a
provision must be inserted in the articles expressly providing that each share
of stock shall be entitled to one vote and no more (sec. 3245 a). Provision
may be inserted in subdivision d, providing for the issuance of preferred stock,
and that the holders thereof shall be entitled to dividends of eight per cent
per annum in each year in preference to all other stockholders (sec. 3235 a).
Duration may be perpetual except for corporations engaged in buying and sell-
ing real estate, which are limited to twenty-five years (sec. 3235). Corpora-
tions may also provide in their articles that each stockholder, irrespective of
the amount of stock he may own, shall be entitled to one vote and no more at
any election of directors, etc. (sees. 3245 a 1, 3245 b 1).
4. Statutory Powers. — In addition to the statutory enumeration of com-
mon law powers, the following additional powers are granted : To issue preferred
stock, to authorize voting by proxy in the election of directors, also for cumula-
tive voting in the election of directors, if desired ; for forfeiture of stock for
non-payment of assessments, and for consolidating with other corporations.
May hold stock in other non-competing corporations (sees. 3239, 3235, 3244,
3245, 3253, 3256). Manufacturing corporations may subscribe for stock in rail-
road and transportation companies (sec. 3863). Mining and manufacturing
corporations may hold and convey real estate, and transact business outside
of the State (sec. 3862). Corporations may stipulate that their obligations may
be converted into stock (sec. 3257). Corporations may also sell out their entire
property and assets under certain restrictions. (See Laws of 1906, pp. 229-231.)
Greene v. Company, 62 Ohio St. 67; 56 N. E. 642; Lander v. Burke, 65 Ohio St. 532;
63 N. E. 69.
484
DIGEST OF INCORPORATION ACTS. — OHIO.
5. Procuring the Charter. — Articles must be subscribed and acknowl-
edged by each of the incorporators, and the official character of the officer taking
the acknowledgment must be certified to by the clerk of the court of common
pleas of the county wherein taken. The articles must then be filed in the office
of the Secretary of State (sees. 3236, 3238).
State ex rel v. Ins. Co., 49 Ohio St. 440; 31 N. E. 65S; Society Perun v. Cleveland, 43
Ohio St. 481; 3 N. E. 357.
6. Corporate Indebtedness. — Corporate indebtedness must not exceed
the amount of its authorized capital stock. Provision may be made in the
case of mortgage indebtedness where the same does not exceed one-half of
the capital stock actually paid in, that the holders of the debt secured by such
mortgage shall have the right to convert the same into either common or pre-
ferred stock (sees. 3256, 3257, 3265).
7. Organization Tax. — Corporations having authorized capital stock of
810,000 or under, 810; corporations with more than 810,000, one-tenth of one
per cent on such capital stock (sees. 148, 148 a).
8. Filing and Recording Fees. — The payment of the organization tax
includes the filing and recording fees in the Secretary of State's office. The
incorporators are also entitled free of charge to one certified copy of the articles
of incorporation. For additional copies the charge is 10 cents per hundred
words and 50 cents for attaching certificate. The cost of filing certificate as
to stock subscriptions is $2. For filing and recording amendments to articles
of incorporation the charge is $5.
9. Commencing Business. — The incorporators, or a majority of them,
must order books to be opened for subscriptions to the capital stock at such
times and places as they may deem expedient. The act requires thirty days'
notice thereof, unless the incorporators waive the same in writing, such waiver
to be entered in the corporate records (sec. 3242, as amended by Laws of 1906,
p. 294). As soon as ten per cent of the capital stock is subscribed, the sub-
scribers of the articles of incorporation, or a majority of them, shall so certify
in writing to the Secretary of State, and thereupon give notice to the stock-
holders as provided in sec. 3242, to meet at such time and place as they may
designate for the purpose of choosing not less than five, nor more than fifteen
directors who shall continue in office until the time fixed for the annual election
(Laws of 1906, p. 294). Publication of this notice may be waived by all of the
stockholders in writing, who must be present either in person or by proxy
(Laws of 1906, p. 294). As soon as these directors are elected the corporation
may begin business. Business must be commenced within five years after date
of incorporation (sees. 3242-3244 inclusive, 6780, Laws of 1904, p. 170).
State ex rel. v. Ins. Co., 49 Ohio St. 440; 31 N. E. 658.
10. Organization Meeting.— The organization meeting must be held
within the State (sec. 3252). The law provides that the incorporators shall
give notice to the stockholders, as provided in the Revised Statutes (sec. 3242),
to meet at such time and place as may be designated, for the purpose of choos-
ing not less than five nor more than fifteen directors, who shall continue in
office until the time chosen for the annual election. The law, however, provides
thai in case all the subscribers to the capital stock are present in person or by
proxy, the notice required by statute may be waived in writing (Laws of 1904,
p. 170). At the first election incorporators are authorized to act as inspectors
of election (sec. 3245).
485
DIGEST OF INCORPORATION ACTS. — OHIO.
11. Meetings of Stockholders and Directors. — Stockholders' meet-
ings must be held within the State. Directors' meetings may be held without
the State if the by-laws so provide (sees. 323S a, 3245 a (1), 3252). The law
provides that a corporation may provide in its articles of incorporation that
each stockholder, irrespective of the amount of stock he may own, shall be
entitled to one vote and no more at any election of directors (sec. 3245 a). The
law further provides that where a corporation limits the votes of its stock-
holders in the manner indicated above, then in such case, no person shall hold
or own stock in excess of $1,000 face value (sec. 3245 b (1)). As to right to
cumulate votes, see State ex rel. Stockley, 45 Ohio St. 304 ; State ex rel. Hen-
derson v. Hogan, 1 W. L. B. 227; State ex rel. Dent v. Halloway, 1 C. C.
157.
12. Directors' Qualifications and Liabilities, a. Qualifications. — There
must be not less than five nor more than fifteen directors (Laws of 1906, pp. 294,
295). All must be stockholders, and a majority citizens of Ohio. The statute
expressly authorizes the directors to adopt a code of by-laws for their own
management. The directors must each subscribe to an oath of office (sees. 3244,
3247, 3248, 3250; Laws of 1909, p. 12). Cumulative voting is permitted in the
election of directors.
6. Liabilities. — Directors are liable for the illegal declaration of dividends
(sees. 3269, 1-4). They are also personally liable for contracting debts before
ten per cent of the capital stock has been subscribed, and for issuing false
statements and reports (Laws of 1908, p. 336). There is also a liability for
allowing contributions of corporation for political purposes (Laws of 1909,
p. 23).
Trust Co. v. Floyd, 47 Ohio St. 525; 26 N. E. 110.
13. Stockholders' Liabilities. — Since the Constitutional Amendment
adopted in 1903, stockholders in Ohio corporations are liable only to the extent
of their unpaid stock subscriptions. (See former statute, sec. 3258; see also
Laws of 1904, p. 396.) The law requires that a majority of the subscribers to
the articles of incorporation shall certify to the Secretary of State that ten
per cent of the capital stock is subscribed. The law further provides that such
stockholders shall be liable to any person affected thereby to the amount of
any deficiency in the actual payment of such ten per cent at the time of so cer-
tifying (Laws of 1904, p. 170).
Wick Nat. Bank v. Union Nat. Bank, 62 Ohio St. 446; 57 N. E. 320; Kulp v. Fleming,
65 Ohio St. 321 ; 62 N. E. 334; Boice v. Hodge, 51 Ohio St. 236; 37 N. E. 265.
14. Stock Certificates. — Each stockholder is entitled to have a stock
certificate issued to him, signed by the president and secretary (see. 3254) . There
shall be no hen in favor of a corporation upon the shares represented by a cer-
tificate issued by such corporation, and there shall be no restriction upon the
transfer of shares so represented by virtue of any by-law of such corporation or
otherwise, unless the right of the corporation to such lien or the restriction is
stated upon the certificate (Laws of 1911, p. 503, sec. 15).
15. Preferred Stock. — Preferred stock is expressly authorized by pro-
viding therefor in the articles of incorporation or by subsequent action of
the stockholders. Holders of preferred stock are entitled to dividends not io
exceed eight per cent per annum out of the surplus profits in preference to all
other stockholders. At no time can the preferred stock exceed two-thirds of
the actual stock paid in in cash or property (sees. 3235 a, 3263).
486
DIGEST OF INCORPORATION ACTS. — OHIO.
16. Payment of Capital Stock. — Stock may be issued only for money
or property. (See sec. 3235 a. )
Gates v. Company, 57 Ohio St. 60; Peter v. Company, 56 Ohio St. 181.
17. Books. — Must keep a stock book open to inspection of stockholders
in which are recorded subscriptions and transfers of stock. Minutes of the
stockholders' and directors' meetings must be kept (sec. 3254). Manufac-
turing companies must keep their books of account at their principal office.
This is open to inspection of assessors.
C. V. Co. v. Hoffmeister, 62 Ohio St. 189; 56 N. E. 1033.
18. Office and Agent. — Every corporation must maintain an office and
agent to receive service of process, and keep accounts of financial condition,
and also transfer books (sees. 3236, 3855, 5651).
Mercantile Tr. Co. v. Elsa Iron Works, 4 Ohio Cir. Ct. 579.
19. Reports. — During May a report must be filed with the Secretary of
State, containing among other things names and addresses of the officers and
directors; amount of capital stock subscribed, issued, outstanding, and paid
in ; kind of business engaged in. Annual reports must also be made to stock-
holders (sees. 3268, 3269. Laws of 1902, p. 124. See also Act of April 12, 1911).
20. Anti-Trust Statute. — Ohio has a somewhat drastic anti-trust statute
on its statute-books (sees. 4427, 1-12).
State v. Gage, 72 Ohio St. 210.
21. Statutory Grounds for Forfeiture of Charter. — Charters may be
forfeited by the State for misuser or non-user for five years, or for violation
of the anti-trust act, or for failure to pay annual license tax ; also for failure to
file annual report (sees. 4427-4432, 6760, 6761, 6780; Laws of 1904, pp. 381-
383).
State v. Company, 62 Ohio St. 350; 57 N. E. 62.
22. Amendments. — Before the capital stock can be increased, all of the
original authorized stock must be fully subscribed for, and ten per cent paid
in either in cash or in property. The amendment providing for the increase
of stock is rendered effective by a majority vote cast at a stockholders' meet-
ing called by a majority of the directors. At least thirty days' notice of the
time, place, and object of such meeting must be given by publication and by
letter addressed to each stockholder whose place of residence is known. If
all of the stockholders are present in person or by proxy at said meeting, the
foregoing prescribed notice may be waived. The stockholders must also agree
in writing to said increase, naming the amount thereof to which they agree.
A certificate of the action taken at said meeting must be filed with the Secre-
tary of State (sec. 3262 ; see also Peters v. Company, 56 Ohio, 200). It would
appear to be necessary, also, that a copy of such amendment to the original
articles should be filed with the Secretary of State, together with a certifi-
cate thereto attached, signed by the president and secretary of the corpora-
tion and sealed with the coqiorate seal, stating the nature and date of the
adoption of the amendment, and certifying that a copy thereof, to which
the certificate is attached, is a true copy of the amendment as adopted (sec.
3238 a).
A corporation may by a vote of a majority of its stock at any regular meeting
of the company increase the number of directors to any Dumber not greatei
487
DIGEST OF INCORPORATION ACTS. — OHIO.
than fifteen ; in like manner the number of directors may be decreased to any
number not less than five, at any stockholders' meeting called in the manner
as provided in sec. 246. At said meeting the corporation may by a vote of a
majority of its stock increase the number of its directors in the manner above
set forth, who shall hold office respectively until the next annual meeting for
directors (Laws of 1906, p. 295).
Any corporation may at any meeting of its stockholders, of which and of
the business to come before said meeting thirty days' notice has been given by
a majority of the directors in a newspaper of general circulation published in
the county where the principal place of business of said corporation is located,
by a vote of three-fifths of its subscribed capital stock, amend its articles so as
to change its corporate name, or its domiciliary office, or so as to modify, enlarge,
or diminish "the purposes for which it is formed, provided the original purposes
are not substantially changed, or so as to add anything omitted therefrom, or
which might lawfully have been provided for in the original articles. When
adopted, a copy of such amendment with a certificate thereto attached, signed
by the president and secretary of the corporation under the corporate seal,
stating the fact and date of the adoption of the amendment, and that such
copy is a true copy of the original, must be recorded in the office of the Secre-
tary of State. Before the amendment can take effect, the secretary of the
corporation must give notice of such amendment for three successive weeks
in some newspaper of general circulation in the county where the principal
place of business is located. Publication of all of the foregoing notices may
be waived in writing by all of the stockholders signing such waiver (sec.
3238 a).
State ex rel. Taylor, 55 Ohio St. 67.
23. Extension of Corporate Existence. — There is no provision for
extension of corporate existence.
24. Dissolution. — A majority of the managing board or stockholders,
representing one-third of the capital stock, may apply to the court of common
pleas for dissolution (R. S., sees. 5651-5688 inclusive, 6781, 6782; Laws of 1909,
pp. 102-104; O. L., 1902, p. 274). Charters may be surrendered, if desired,
before any instalment of capital stock has been paid in or debts incurred, by
complying with the statute in such case made and provided (sec. 5674; Laws
of 1904, p. 3S3).
Domestic corporations may sell out their entire property and assets under
the following conditions : First. That three-fourths of the directors of such
corporation shall authorize the execution of an agreement therefor, prescribing
the terms and conditions thereof, which considerations may be money, stocks,
bonds, or other instruments for the payment of money, or any valuable con-
sideration. Second. Such sale must not be made for the purpose of forming
any "trust or combination for the purpose of restricting trade or competition.
Third. Such agreement shall be submitted to the stockholders of such corpora-
tion, at a meeting called for the purpose, of taking the same into consideration,
of which ten days' notice of the time and place of holding the same, and the
object thereof, shall be given by registered letter, containing a written or
printed notice addressed to each of the persons in whose names the capital stock
of the said corporation stands on the books thereof; and also by like notice
published in some newspaper in the city or town where such corporation has
its principal office or place of business ; provided that in case all the stockholders
488
DIGEST OF INCORPORATION ACTS. — OHIO.
are present at said meeting in person or by proxy, such notice may be waived in
writing. At the meeting of the stockholders the agreement of the directors
shall be considered, and the vote by ballot taken for the adoption or rejection
of the same, and if each share of stock upon which has been paid all the instal-
ments called for by the board of directors, the holder thereof shall be entitled
to one vote. The ballots shall be cast in person or by proxy, and if three-fourths
of the votes cast at the meeting be for the adoption of the agreement by the
stockholders of said corporation, the officers thereof shall execute and deliver
to the purchaser good and sufficient deeds to purchasers of all of the property
and assets of the corporation upon the terms and conditions in said agreement
provided. Fourth. If any stockholder in the said corporation shall be dissatis-
fied with the said sale and refuses to participate in the proceeds thereof, he shall,
within thirty days after the adoption of such agreement by said corporation,
state his objections thereto in writing and file the same with said corporation
and demand in writing from said corporation payment for his stock, and said
corporation shall within sixty days thereafter pay to him the value of his
stock at the time of the adoption of said agreement. In case of a disagreement
as to the value of said stock it shall be ascertained by three disinterested persons,
one of whom shall be chosen by the said stockholder, one by the directors of the
corporation, and the other by the two selected as aforesaid, who shall conduct
such arbitration in all respects as provided by law regarding arbitrations. And
in case the said award is not paid within sixty days from the making thereof
and notice thereof given to said stockholder and to said corporation, the amount
of the award shall be evidence of the amount due from such corporation and
may be collected as other debts are by law collectible, but on receiving payment
of the award such stockholder shall stirrender his stock to said corporation.
Fifth. If any stockholder refuses to submit the question to arbitration, the
judge of the court of common pleas shall, upon the application of a director of
such company, appoint the arbitrators, who shall proceed to ascertain the value
of the stock in the same manner as if the question had been submitted by
consent of both parties; and if the party owning the stock refuses to receive
the amount awarded in the case, the company may deposit the same with the
clerk of the court of common pleas of the county in which the arbitration is
held, which deposit shall operate the same as if payment were made to the
owner of the stock, and shall further operate as a cancellation of said stock
upon the books of the company. In all cases of such arbitration the party
desiring such arbitration shall give the opposite party ten days' notice at least
of his intention to apply for the judge for the appointment of arbitrators, which
notice shall be served in the same manner as is provided for the service of
summons and shall specify the time and place of the hearing of the application ;
but in cases of non-residents, the notice shall be by publication for four con-
secutive weeks in some newspaper printed in the county (Laws of 1906,
pp. 229-231).
2.3. Annual License Fee. — One-tenth of one per cent upon subscribed
or issued and outstanding stock (sec. 27S0, sub. d. 24). Tax is due in
September.
20. Foreign Corporations. — Before commencing to transact bu
within the State every foreign corporation must, under oatli of its president,
secretary, treasurer, superintendent, or managing officer within the State.
make and file with the Secretary of State a statement containing the following
facts : f 1; Number of shares of authorized capital stock and par value thereof .
4S9
DIGEST OF INCORPORATION ACTS. — OHIO.
(2) Name and location of the office and officers of the company in Ohio, and
the name and address of the officers or agents of the company in charge of its
business in Ohio ; (3) The value of the property owned and used by the com-
pany in Ohio, where situate, and the value of the property owned and used
outside of Ohio ; (4) The proportion of the capital stock of the company which
is represented by property owned and used, and by business transacted in Ohio.
Thereupon the Secretary of State shall determine the proportion of the capital
stock represented by property and business in Ohio, and shall impose and col-
lect a tax of one-tenth of one per cent upon the proportion of the authorized
capital stock of the corporation, represented by property owned and used,
and business transacted in Ohio. This tax is payable annually thereafter, and
can never be less than $10 (sec. 2780, sub. 24-31). Foreign corporations trans-
acting business without a permit are subject to fine, and are cut off from all
recourse to the courts. The law, however, provides that a foreign corporation
obtaining a permit shall not be subject to attachment as a foreign corporation
(Laws of 1904, p. 383).
It must be noted that there are two laws in this State applying to foreign
corporations. The one referred to below — the Act of April 25, 1893 — re-
quires a foreign corporation doing business in the State — that is, a corporation
which maintains an office or an agent in the State to file with the Secretary of
State a sworn copy of its charter or articles of incorporation, and a statement
under its corporate seal setting forth the amount of its authorized capital stock,
the kind of business proposed to be carried on, and designate a principal office
or place of business and a person upon whom process may be served, and pay a
fee proportioned to the amount of its authorized capital stock. Upon the
foregoing enumerated papers being filed with the Secretary of State, the latter
official is entitled to receive and must be paid fees according to the amount
of capital stock of each foreign corporation of the character enumerated above
as follows: Where authorized capital is $100,000 or less, $15; more than
$100,000 and not exceeding $300,000, $20; more than $300,000 and not
exceeding $500,000, $25; more than $500,000 and less than $1,000,000, $30;
$1,000,000 or more, $50 (R. S. sec. 148 d).
The other is the Act of May 16, 1894, additional to the Act of April 25, 1893,
but it applies only to such foreign corporations as own or use a portion or all of
their capital or plant in this State. Such corporations must comply with both
laws ; and, in addition to the license fee prescribed by the Act of April 25, 1893,
must pay a franchise tax of one-tenth of one per cent upon the proportion of
the authorized capital stock represented by property owned, or business done
in the State of Ohio. If only a portion of the property is owned and used, and
only a portion of the business is done in this State, the corporation is taxed
only in the proportion so represented, which is the measure of the franchise
enjoyed here; but if all the property owned and all the business done by the
corporation is in Ohio, then the tax must be paid on the entire authorized capital
stock, no matter if only a portion of the authorized capital stock has been
issued.
Under section 148, known as the Massie Law, Ohio corporations are required
to pay to the State, for the privilege of becoming incorporated, a fee or franchise
tax of one-tenth of one per cent upon the authorized capital stock. It matters
not what the subsequent issue of capital stock may be, the fee is based upon the
entire amount of the authorized capital stock. The Act of May 16, 1894, is de-
signed to impose upon foreign corporations the same burden that is imposed
490
DIGEST OF INCORPORATION ACTS. — OHIO.
upon domestic corporations. It is not for the privilege of doing business, but is
a condition upon which a foreign corporation may exercise its franchises in
Ohio. By express provision, it exempts from its application all corporations
engaged in Ohio in interstate commerce business, and foreign corporations,
entirely non-resident, soliciting business, or making sales in this State by cor-
respondence or travelling salesmen. The tax, therefore, is imposed only upon
those corporations which the State, in the exercise of its sovereign power, may
either exclude from the State altogether, or admit upon such terms and condi-
tions as it may see fit to impose. Foreign corporations must make annual
report to the Secretary of State during the month of September, setting forth:
(1) Name of corporation and under laws of what State or country organized.
(2) Location of principal office. (3) Names of president, secretary, treasurer, and
directors and post-office address of each. (4) Date of annual election of officers.
(5) Authorized capital stock and par value of each share. (6) Amount of stock
subscribed, amount issued, and amount paid up. (7) Nature of business and
place or places of business within the State and without the State. (8) Name
and location of its office or offices in Ohio and the name and address of the
officers or agents in charge of the corporate business in Ohio. (9) Value of
property owned and used by the company in Ohio, where situated, and value
of property owned and used outside of Ohio and where situated. (10) Change
or changes, if any, in the above particulars since the last report (Laws of 1904,
p. 383).
This report must be signed and sworn to by one of the executive officers of
the corporation and filed with the Secretary of State.
W. U. Telegraph Co. v. Mayer, 28 Ohio St. 521; Clarke v. C. R. R. & B. Co. et al., 50
Fed. Rep. 338; Toledo, etc. Co.V Glum, etc. Co., 55 Ohio St. 217; 45 N. E. 197; Gen. Elec-
tric Co. v. Lima Electric Co., 4 Ohio Nisi Prius Rep. 167; State v. Sherman, 22 Ohio St.
411: Lander v. Burke, 65 Ohio St. 532; 63 N. E. 69.
491
DIGEST OF INCORPORATION ACTS. — OKLAHOMA.
OKLAHOMA.
(The references cited below are to Wilson's Annotated Statutes of 1903, chap. 18, unless
otherwise stated J
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act is to be found in chap. 18 of Wilson's Revised
and Annotated Statutes of Oklahoma, 1903. Parties may incorporate under
the General Act for the following purposes : Mining, manufacturing, and other
industrial pursuits, the construction of railroads, wagon roads, street railways,
electric light, power, and gas plants, water works, irrigating ditches, eleemosy-
nary purposes, for conducting the business of insurance, banks of discount and
deposit (but not of issue), building and investment companies, loan, trust, and
guarantee corporations, merchandizing, wholesale or retail or both; for the
purpose of locating, laying out, and improving town sites, and buying and sell-
ing real estate therefor, including the sale and conveyance of the same in lots,
subdivisions, or otherwise; for the purpose of constructing telegraph and tele-
phone lines and systems, and the organization and maintenance of commercial
clubs and business exchanges, and for the purpose of constructing sewers and
other municipal improvements (sees. 930, 1084, 1085 as amended by Laws of
1903, chap. 9).
No corporation shall be created or licensed in this State for the purpose of
buying, acquiring, trading, or dealing in real estate other than real estate located
in incorporated cities and towns and as additions thereto; nor shall any cor-
poration doing business in this State buy, acquire, trade, or deal in real estate
for any purpose except such as may be located in such towns and cities and as
additions to such towns and cities, and further except as shall be necessary and
proper for carrying on the business for which it was chartered or licensed, nor
shall any corporation be created or licensed to do business in this State for the
purpose of acting as agent in buying and selling land; provided, however,
that corporations shall not be precluded from taking mortgages on real estate
to secure loans or debts, or from acquiring title thereto upon the foreclosure
of such mortgages or in the collection of debts, conditioned that such corpora-
tion or corporations shall not hold such real estate for a longer period than
seven years after acquiring such title; and provided further, that this section
shall not apply to trust companies taking only the naked title to real estate in
this State as a trustee, to be held solely as security for indebtedness pursuant
to such trust; and provided, further, that no public service corporation shall
hold any land, or the title thereof in any way whatever in this State, except
as the same shall be necessary for. the transaction and operation of its business
as such public service corporation (Cons., Art. XXII, sec. 2).
2. Incorporators. — Not less than three, one-third of whom must be resi-
dents of the State (sec. 946 as amended by Laws of 1903, chap. 9).
3. Contents of the Articles of Incorporation. — The articles must set
forth:
a. Name. — The Secretary of State will not permit two domestic corpora-
tions of the same name.
b. Purposes. — Purposes for which it is formed. State officials allow articles
to pass allowing incorporation for different lines of industrial business, so long
492
DIGEST OF INCORPORATION ACTS. — OKLAHOMA.
as they do not conflict with any special statute in regard to the organization
of corporations.
c. Domicile. — The place where the principal business is to be transacted.
Any corporation formed for the purposes mentioned in the act, may provide
in the articles of incorporation for having a business office without this State,
at any place within the United States, and to hold any meeting of the stock-
holders or directors of the corporation at such office so provided for; but every
such corporation having a business office out of this State must have its main
office for the transaction of business within the State, to be also designated in
such articles (sec. 1090).
d. Duration. — The term of existence of corporations formed for manufac-
turing and other industrial pursuits is limited to twenty years.
e. Directors. — Number of directors and names and residences of those who
are to serve until formal election of the first board of directors. The qualifi-
cations of the directors must also be set forth.
/. Capital Stock. — The amount and number of shares into which it is
divided. Both the capital and the par value of shares may be any amount
(sec. 943; see also for additional provisions in the case of irrigation, flume, and
tunnel companies, sees. 1092, 1096, 1097, 1098).
4. Statutory Powers. — In addition to the enumeration of common law
powers, the statute confers the following additional powers : To purchase its
own shares; to vote by proxy; to have a business office without the State
at any place within the United States, and to hold any meeting of the stock-
holders or directors of the corporation at said office ; to forfeit stock for non-
payment of assessments; to remove directors; to provide penalties to the
amount of $100 for violation of by-laws (sees. 959, 961, 973, 999-1004, 1090).
The power to adopt by-laws may be delegated to the board of directors by a
two-thirds vote of the stockholders (sec. 964).
All corporations formed under the laws of this State shall be bodies corporate
for the period for which they are organized and chartered, unless such license
or charter be altered or amended as provided bylaw, or unless the same be
forfeited or revoked prior to the expiration thereof; may sue and be sued; may
have a common seal with which they may alter or renew at pleasure; may
own, possess and enjoy so much real estate as shall be necessary and proper for
carrying on the business for which each of such, respectively, is licensed or
chartered, and may sell and dispose of the same when not required for the use
of the corporation. Provided, that no corporation shall be created, licensed, or
chartered in this State for the purpose of acquiring, buying, selling, trading,
or dealing in real estate other than real estate located in incorporated cities and
towns, and as additions to such cities and towns; nor shall any corporation
doing business in this State, acquire, buy, sell, trade, or deal in real estate for
any purpose, except such lands as may be located in incorporated cities and
towns and as additions thereto, and except such as shall be necessary and
proper for carrying on the business for which such corporation was licensed or
chartered; nor shall any corporation be created, licensed, or chartered to do
business in this State for the purpose of acting as agenl in buying or selling
real estate except as herein provided; provided, however, that corporations
shall not be precluded from taking mortgages on real estate to secure loans or
debts, or from acquiring title thereto upon foreclosure of such mortgages or
in the collection of debts, conditioned that such corporation or corporations
shall not hold any real estate so acquired for a longer period than seven years
493
DIGEST OF INCORPORATION ACTS. — OKLAHOMA.
and conditioned that disposition or incumbrance of such land shall in no
way be made to another corporation or corporations; Provided, however,
that this section shall not apply to trust companies taking only the naked
title to real estate in this State, as trustee, to be held solely as security for
indebtedness pursuant to such trust (Act of May 26, 1908, sec. 1 ; Laws of
1908, p. 196).
No corporation chartered or licensed to do business in this State shall own,
hold, or control in any manner whatever, the stock of any competitive corpora-
tion or corporations engaged in the same kind of business, in or out of the
State, except such stock as may be pledged in good faith to secure bona fide
indebtedness acquired upon foreclosure, execution sale, or otherwise for the
satisfaction of debt. In all cases where any corporation acquires stock in any
other corporation, as herein provided, it shall be required to dispose of the
same within twelve months from the date of acquisition; and during the period
of its ownership of such stock it shall have no right to participate in the control
of such corporation, except when permitted by order of the corporation com-
mission. No trust company or bank or banking company shall own, hold, or
control in any manner whatever, the stock of any other trust company, or bank
or banking company, except such stock as may be pledged in good faith to
secure bona fide indebtedness acquired upon foreclosure, execution sale, or
otherwise for the satisfaction of debt; and such stock shall be disposed of in
the time and manner hereinbefore provided (Const., Art. IX. sec. 41).
5. Procuring the Charter. — The articles must be subscribed by each of
the incorporators and acknowledged before some officer authorized to take
acknowledgments of conveyances of real property (sec. 946). The articles
must then be filed and recorded with the Secretary of State (sec. 948). Col-
lateral inquiry into the legality of corporate existence is forbidden (sees. 933,
947, 949).
6. Corporate Indebtedness. — The corporate indebtedness is limited to
the amount of subscribed capital stock (sec. 970).
Rodgers v. Bonnett, 2 Okla. 553; 37 Pac. 1078.
7. Organization Tax. — The organization tax is one-tenth of one per cent
upon the whole authorized capital stock. The mi nim u m tax is $3 (Laws of
1908, p. 194).
8. Filing and Recording Fees. — To the Secretary of State for recording
articles, 25 cents per folio of one hundred words; for affixing certificate to copy
of articles, $1 ; for making copy of articles, 10 cents per folio (Laws of 1908,
p. 194).
9. Commencing Business. — The company must be organized and busi-
ness must be commenced within one year from the date of the issuance of the
certificate of incorporation (sec. 981). Mining, manufacturing, and industrial
corporations must commence the construction of their works within ninety days
from the date of issuance of certificate of incorporation and must complete the
same within two years (sees. 1099, 1100). The company must be organized —
to the extent of the adoption of by-laws at least — within thirty days after the
filing of articles of incorporation (sees. 962, 964).
Before commencing business all corporations must first file in the office of
the Corporation Commission a fist of its stockholders, officers, and directors with
the residence and post-office of, and the amount of stock held by each (Const.,
Art. IX. sec. 43).
494:
DIGEST OF INCORPORATION ACTS. — OKLAHOMA.
10. Organization Meeting. — The organization meeting may be held with-
out the State if the charter so provides (sec. 1090). By-laws must be adopted
within thirty days after filing articles of incorporation. The by-laws must be
adopted by a majority vote of the subscribed capital stock at a meeting called on
two weeks' notice in a newspaper published in the comity where the principal
place of business is located. The first meeting may, however, be dispensed with
and by-laws be adopted by written assent or two-thirds vote of the stockholders
(sec. 962). The by-laws must be certified to by a majority of the directors and
the secretary and be kept in a book of by-laws (sec. 964). The corporation
must be organized antl commence business within one year from date of incor-
poration (sec. 9S1; see also sees. 1099, 1100).
11. Meetings of Stockholders and Directors. — If the charter so pro-
vides, both the stockholders' and directors' meetings may be held without the
State. Otherwise the stockholders' meetings must be held within the State
and the directors' meetings wherever the by-laws provide (sees. 968, 973, 974,
976, 1090).
12. Directors' Qualifications and Liabilities, a. Qualifications. — There
must be at least three directors and not more than eleven, all of whom must
be stockholders to an amount prescribed in the by-laws (sec. 968). The power
to adopt by-laws may be delegated, by a two-thirds vote of the stockholders,
to the directors (sec. 964) .
b. Liabilities. — Directors are liable for illegally increasing or reducing the
stock of the corporation, for declaring illegal dividends ; also for making false
reports, for creating debts beyond the amount of subscribed capital stock, and
for making loans to stockholders (sees. 970, 978). Penal provisions are also
in force, punishing frauds on the part of boards of directors and officers of a
corporation. Directors are deemed to have knowledge of acts of the board,
and any director will be held liable therefor unless he causes his dissent to be
entered in the corporate records provided he remains a director for six months
thereafter (sees. 971, 1091, 2542-2544, 2553-2555, 2559-2563).
13. Stockholders' Liabilities. — Stockholders are liable for debts of the
company to the extent of their unpaid stock subscriptions. Also for debts
due mechanics, workmen, and laborers employed by the corporation (sees. 975,
1087).
Chicago Bldg. & Mfg. Co. v. Lyon, 10 Okla. 704; 64 Pac. 6.
14. Stock Certificates. — Stock certificates must be signed by the presi-
dent and secretary (sec. 957).
15. Preferred Stock. — The act makes- no special provision for the issu-
ance of preferred stock.
16. Payment of Capital Stock. — Corporations can issue stock for money,
labor done, or money or property actually received. The act expressly pro-'
vides that all stock certificates issued in excess of the capital stock shall be
void (Const., Art. IX. sec. 39; sec also Stat., sec. 958).
1 7. Books. — Stock transfer books and a journal of the meetings of directors
and stockholders must be kept open for inspection of stockholders, but the
place where such book is to be kept is n«>t specified by statute (sees. 979, 1086;
see also Cons., Art. II. sec. 28; Laws of 190S, p. 2'.YA).
18. Office. — The act requires every corporation to have its main office for
the transaction of its business within tin- Si " (sees. 45, 161).
19. Reports. — Corporations for ruin 'Manufacturing, and other indufl-
495
DIGEST OF INCORPORATION ACTS. — OKLAHOMA.
trial pursuits must annually, within twenty days from the 1st day of January,
make a report which must be published in some newspaper published at the
place where the principal business of the corporation is carried on, stating the
capital stock, and the amount thereof actually paid in, the amount and rating
of its indebtedness, and the amount due the corporation, the number and
amount of dividends and when paid, and the net amount of profits. This
report must be signed by the president and a majority of the directors, and
verified by the president or secretary, and filed in the office of the register of
deeds of the county where the corporate business is carried on (sec. 1088; see
also sec. 1089).
20. Anti-Trust Statute. — Certain classes of trusts and combinations are
prohibited (Cons., Art. II. sec. 32; Art. V. sec. 44; Art. IX. sec. 45; Laws of
1908, p. 750 etseq.).
21. Statutory Ground for Forfeiture of Charter. — The charter may be
forfeited for failure to organize and commence the transaction of business within
one year from filing articles, also by neglect, abuse, or surrender of its corporate
rights (sees. 981, 1099, 5357-5359).
22. Annual Franchise Tax. — There is no annual franchise tax in
Oklahoma.
23. Amendments. — Articles may be amended in any particular, except
for increasing or decreasing the capital stock, by having the directors and officers
of the company execute new articles to be known as "Amended Articles of
Incorporation." The latter must set forth clearly and specifically the amend-
ments desired. The articles as amended must be filed with the Secretary of
State (sec. 945). The foregoing section undoubtedly, contemplates action by
fhe stockholders on the proposed amendment prior to the execution of the
certificate of amendment by the directors and officers.
To increase or diminish the capital stock action must be taken at a meeting
of the stockholders called for that purpose by the directors as follows : (1) Notice
of the time and place of the meeting, stating its object and the amount to
which it is proposed to increase or diminish its capital stock, must be person-
ally served on each stockholder resident in the State, at his place of business,
if known, and if not known, at the place where the principal office of the cor-
poration is situated, and be published iii a newspaper published in the county
of such principal place of business, once a week for four weeks successively.
(2) The capital stock must in no case be diminished to an amount less than
the indebtedness of the corporation or the estimated cost of the works which
it may be the purpose of the corporation to construct. (3) At least two-thirds
of the entire capital stock must be represented by the vote in favor of the
increase or diminution before it can be effected. (4) A certificate must be
signed by the chairman and secretary of the meeting and a majority of the
directors, showing compliance with the requirements of this section, the amount
to which the capital stock has been increased or diminished, the amount of
stock represented at the meeting, and the vote by which the object was accom-
plished. (5) The certificate must be filed in the office of the Secretary of State,
there to be recorded in the book of corporations, and thereupon the capital
stock shall be so increased or diminished. (6) The written assent of the holders
of three-fourths of the subscribed capital stock shall be as effectual to authorize
the increase or diminution of the capital stock as if a meeting were called and
held, and upon such written assent the directors may proceed to make the cer-
tificate herein provided for (sec. 978).
496
DIGEST OF INCORPORATION ACTS. — OKLAHOMA.
24. Extension of Corporate Existence. — Corporate existence may be
extended, if desired, by compliance with the statute (sec. 1223).
25. Dissolution. — Two-thirds vote of the stockholders authorizes petition
for dissolution in the District Court (sec. 980).
26. Foreign Corporations. — Foreign corporations must file in the office
of the Secretary of State an authenticated copy of their charter, and appoint
an agent to receive process. This agent must reside in the county where the
principal business of the corporation is to be carried on. An authenticated
copy of the agent's appointment must be filed in the office of the Secretary of
State.
Every foreign corporation must, before being licensed to do business in the
State, file in the office of the corporation commission a list of its stockholders,
officers, and directors, with the residence and post-office address of and the
amount of stock held by each (Const., Art. IX. sec. 43). No annual license
fees are imposed upon foreign corporations (see generally Laws of 190S, p. 214).
To obtain a license foreign corporations must pay the same fee as is required
by domestic corporations (see sec. 8, ante). No corporation except created
solely for religious or charitable purposes shall transact business within this
State until it shall have filed in the office of the Secretary of State a certified
copy of its charter or articles of incorporation, which shall be recorded in a book
to be kept by the Secretary of State for that purpose, and shall have paid the
fees required by law. Every foreign corporation shall, before it shall be author-
ized or permitted to transact business in this State, or continue business there-
in if already established, by its certificate under the hands and seal of the
company appoint an agent, who shall be a citizen of the State, and residing at
the State capital, upon whom service of process may be made in any action in
which said corporation be a party, and said action may be brought in any
county in which the cause of action arose as now provided by law, and service
upon such agent shall be taken and held as due service upon said corporation.
Such certificate shall also state the principal place of business of such corporation
in this State, with the address of the resident agent. A duly authenticated
copy of the appointment of such agent shall be filed and recorded in the office
of the Secretary of State, for which a fee therefor of $1 shall be paid to the Sec-
retary and a like fee of $1 for each subsequent appointment of any agent so
filed (Laws of 1909, chap. X. Art. I. sec. 1).
32 497
DIGEST OF INCORPORATION ACTS. — OREGON.
OREGON.
(The references cited below are to Bellinger & Cotton's Annotated Code and Statutes
(1902), unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Oregon is to be found in sees. 5052-5073 of
chap. 1, Title 41, Bellinger & Cotton's Annotated Code of the Statutes of Oregon,
as amended by the Laws of 1903. Under this act corporations may be formed
for any lawful business enterprise.
2. Incorporators. — Three or more persons. There are no residential re-
quirements (sec. 5052).
Rutherford v. Hill, 22 Ore. 218; 29 Pac. 546; Miller v. Company, 3 Ore. 25; Coyote, etc.
Co. v. Ruble, 8 Ore. 285.
3. Contents of the Certificate of Incorporation. — The certificate must
set forth :
a. Name. — Similarity of names with existing corporations is expressly for-
bidden (Laws of 1903, p. 41).
b. Duration. — May be unlimited if desired.
c. Purposes. — Enterprise, business, pursuit, or occupation in which the
corporation proposes to engage. State officials permit the insertion of any
number of purposes in the articles.
Maxwell v. Akin, 89 Fed. 180.
d. Domiciliary Office. — Place where the corporation proposes to have its
principal place of business or places of business.
e. Capital Stock. — Amount thereof, which is unlimited.
/. Number and Par Value of Shares. — These may be any amount.
g. If the corporation is formed for the purpose of navigation, constructing
railroads, roads, canals, or bridges, the termini of such navigation road or of
the site of the bridge must be set forth (sec. 5055).
Killingsworth v. Company, 18 Ore. 351 ; 23 Pac. 66.
4. Statutory Powers. — In addition to the statutory enumeration of com-
mon law powers the corporation has the following additional powers : To accept
donations of real and personal property from cities, municipalities, and persons ;
to forfeit the stock of its members for non-payment of assessments ; to permit
railroad companies to consolidate ; to authorize voting by proxy (sees. 5056,
5071) ; to sell all the property of the corporation upon the consent of two-thirds
of the stockholders (Laws of 1905, chap. 194). As to the power to exercise the
right of eminent domain, see Laws of 1907, chap. 147.
O. R. & N. Co. v. O. R. Co., 130 U. S. 1; 9 Sup. Ct. 409; Holladay v. Elliott, 8 Ore. 85
5. Procuring the Charter. — The articles must be subscribed and acknowl-
edged by each of the incorporators, and should be executed in triplicate. One
of these must be filed in the office of the Secretary of State, another with the
clerk of the county where the corporate business is to be carried on, or where
the principal place of business is to be located, and a third should be retained
in the possession of the company (sec. 5053). Before a certificate of incorpora-
tion will be issued, not only must the organization tax be paid, but the propor-
498
DIGEST OF INCORPORATION ACTS. — OREGON'.
tionate amount of the annual franchise tax for the first year as well (Laws of
1903, p. 44). The Secretary of State thereupon issues a certificate of incorpora-
tion (Laws of 1903, pp. 40, 41 ; Laws of 1905, chap. 50).
Wash., etc. Asa'n v. Stanley, 38 Ore. 319; 63 Pac. 489.
6. Corporate Indebtedness. — There is no limit upon the amount of
corporate indebtedness.
7. Organization Tax. — "Where the capital stock shall not exceed $5,000,
the organization tax is $10; where it exceeds $5,000 and does not exceed
$10,000, $15 ; where it exceeds $10,000 and does not exceed $25,000, $20 ; where
it exceeds $25,000 and does not exceed $50,000, $25 ; where it exceeds $50,000
and does not exceed $100,000, $35 ; where it exceeds $100,000 and does not
exceed S250,000, $45 ; where it exceeds S250,000 and does not exceed $500,000,
$60 ; where it exceeds $500,000 and does not exceed $1,000,000, $75. Where the
capital stock shall exceed $1,000,000 a fee of $75, for each $1,000,000 or fraction
thereof in excess of $1,000,000 must be paid (Laws of 1907, chap. 237).
8. Filing and Recording Fees. — The payment of the organization tax
covers the filing and recording fees in the office of the Secretary of State. The
charge for certified copy of certificate of incorporation is 25 cents for each one
hundred words, and $2 for affixing certificate thereto. For fifing and recording
certificate with county clerk the fee is $2.50 (Laws of 1907, chap. 237).
9. Commencing Business. — As soon as the articles are filed as required
by law and one-half of the capital stock has been subscribed and the annual tax
for the succeeding fraction of the fiscal year has been paid, the corporation
may commence the transaction of business (sees. 5053, 5057, Laws of 1907,
chap. 237). Directors must be elected and business commenced within one
year from time of filing articles (sees. 5057, 5067; Laws of 1905, chap. 50).
C G. & S. M. Co. v. Ruble, 8 Ore. 285; Holladay v. Elliott, 8 Ore. 85; Willamette
Freighting Co. v. Stanners, 4 Ore. 262; McVicker v. Cone, 21 Ore. 353 ; 28 Pac. 76; Nickum
v. Burckhardt, 30 Ore. 464; 47 Pac. 788; 48 Pac. 474.
10. Organization Meeting. — The organization meeting must be held
within the State in the absence of any statute providing otherwise. Provision
is made for the calling of the organization meeting. At the incorporators' meet-
ing the incorporators act as inspectors of election, and certify that they will
elect directors, and appoint time and place for their first meeting (sec. 5058).
Directors cannot be elected until one-half of the capital stock has been sub-
scribed (sec. 5057).
Nickurn v. Burckhardt, 30 Ore. 464; 47 Pac. 789; 48 Pac. 474.
11. Meetings of Stockholders and Directors. — Stockholders' meet-
ings must be held within the State. The provision that a majority of the directors
shall be residents of the State practically renders it necessary to hold the di-
rectors' meetings witlun the State unless the expedient is resorted to of delegat-
ing the powers of directors to an executive committee composed of a minority
of the directors (sec. 5062). Under a recent amendment mining corporations
may hold meetings of its directors outside of the State of Oregon (Laws of 1905,
chap. 190).
Doembecker v. Company, 21 Ore. 573; 28 Pac. 899.
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must not be less than three directors, all of whom must be stockholders,
and, except in the case of corporations of the character mentioned below, ;t
majority of the board must be residents of the State (sees. 5057, 5059). A ma-
499
DIGEST OF INCORPORATION ACTS. — OREGON.
jority of the directors of any corporation incorporated for the purpose in whole
or in part of and actually engaged as its principal business in acquiring, owning,
or working mines, or acquiring or owning or operating mills, reduction works,
smelters, or power plants for mining purposes, or acquiring or constructing or
operating steam or electric railroads as a common carrier may, while said cor-
poration is so engaged in the business aforesaid as its principal business and no
longer, reside out of the State of Oregon. Any such corporations may also have
officers and directors without this State and meetings of directors may be held
without the State; but at least one director of every such corporation shall
reside in the State, and every such corporation, if its president does not reside
within the State, must at all times maintain within the State, and within the
county where its principal office and place of business is located, an agent upon
whom service of summons and process issued to or against such corporation
may be served (Laws of 1907, chap. 146). Each director must subscribe to an
oath of office (sec. 5059). Less than a majority may constitute a quorum if
desired (sec. 5062). There shall be an annual election of directors, and at e?.ch
election after the first, the president of the corporation shall act as inspector of
election and certify who are elected directors. The directors chosen shall hold
their offices for one year thereafter and until their successors are elected and qual-
ify, or if the stockholders shall so decide they may be elected in the following
manner: Of the directors first chosen as nearly one-third of the whole number as
may shall be elected for the term of one year, as nearly one-third of the whole
number as may be, for the term of two years, the remainder for the term of
three years, all of whom shall serve for such terms respectively and until their
•successors are elected and have qualified. Thereafter as the terms of the directors
expire, their successors shall be chosen for the term of three years and until
their successors are elected and qualify. Any vacancy in the Board of Directors
who are elected for a term of more than one year shall be filled by election
for the remainder of the term. The powers vested in the directors maj r be exer-
cised by a majority of them, and any such number may constitute a quorum
at all regular or stated meetings authorized by the by-laws of the corporation
in all cases when either the directors or incorporators shall have filed with the
Secretary of State and county clerk a written statement designating such less
number sufficient to form a quorum and insurance companies formed under
this law may designate in their articles of incorporation what amount of per
centum of the capital stock shall be required to be paid in before commencing
business, and the stockholders shall be liable for their respective stock held by
them respectively when the business or liability of the corporation shall require
it (Laws of Oregon, 1911, chap. 160, amending sec. 6693).
Silsby v. Strong, 38 Ore. 36; 62 Pac. 633.
6. Liabilities. — Directors are liable for the illegal declaration of dividends,
and for the unlawful withdrawal of capital (sec. 5066) .
Patterson v. Thompson, 86 Fed. 85; 90 Fed. 647.
13. Stockholders' Liabilities. — Stockholders are liable to the extent of
their unpaid stock subscriptions (Cons., Art. XL Laws of 1911, p. 519).
Lee v. Imbrie, 13 Ore. 510; 11 Pac. 270; Brundage v. Companv, 12 Ore. 322; 7 Pac.
314; Hawkins v. Company, 38 Ore. 544; 64 Pac. 320; Aldrich v. A. C. & D. Co., 24 Ore.
32; 32 Pac. 756; Balfour v. Company, 27 Ore. 300; 41 Pac. 164.
14. Stock Certificates. — Each stockholder is entitled to a certificate
showing the number of shares held by him, signed by such officers as the by-
laws may prescribe.
500
DIGEST OF INCORPORATION ACTS. — OREGON.
15. Preferred Stock. — There is no express provision authorizing the
issuance of preferred stock.
16. Payment of Capital Stock. — Stock may be paid for in money or
money's worth.
On the subject of payment of capital stock the Supreme Court, of Oregon
has recently given utterance to the following valuable opinion:
"The appellant's contention is that the corporation, through its board of
directors, exercised its best judgment as to values of properties taken over in
exchange for stock, and acted in good faith in accepting the property, includ-
ing the good- will of a partnership concern, in full payment of the capital stock
issued, and therefore the transaction is unimpeachable at the suit of creditors;
in other words, the stockholders must be held to be exonerated from all liability
to the corporation for the benefit of the creditors, except in case of actual fraud
charged against the corporation and stockholders, and affirmatively proven.
''The directors of a corporation, in the absence of a constitutional or statu-
tory inhibition to the contrary, may receive property in payment for stock in
any case in which they are authorized under the charter to purchase for the
benefit of the corporation, and to subserve the purposes for which it is organized.
" If the nature of the property [so purchased] and the extent of the over-
valuation thereof [by the directors] are such that the excess valuation may have
possibly been due to error in honest conviction or judgment, then, to render
the transaction invalid, actual fraud must be shown, and it is one of fact. The
real question in cases of this character being whether the property was placed
and taken at a high valuation with a fraudulent intent of evading the plain
meaning of the law. It is competent for the determination of this question to
take into consideration the value of the property, the purposes for which it is
accepted, and all the conditions and circumstances attending and surrounding
the transaction, and if, from the whole, it appears that the board has acted in
good faith in the honest exercise of its best judgment, no adverse presumption
impeding, then are its acts conclusive, otherwise not." Macbeth v. Banfield
(Ore.), 78 Pac. G93.
17. Books. — The stock book and all other books of the corporation, neces-
sary in carrying on its business, must be kept within the State at the principal
office (sec. 50G3). They are open to inspection at all reasonable hours.
18. Office and Agent. — Every corporation must maintain an office within
the State at all times (sec. 5055). In the case of mining and those corporations
specially authorized to have a majority of the directors non-residents of the
State (see ante, sec. 12), the law provides that such corporations must file with
their annual statement a power of attorney appointing a person therein named
a- its .Inly authorized agent to receive service of process upon it. This power
of attorney must also give the full name and residence of the agent (Laws of
1907. chap, l Mi).
19. Reports. — All corporations shall, during the month of June of each
year, furnish the Secretary of State with a statement sworn to by one of the
officers, setting forth the name of the corporation, location of its principal office,
names of its president, secretary, and treasurer, and their post-office addn
date of annual election of officers and directors, amount of authorized capital
stock, number and par value of shares, amount of capital stock subscribed)
amount issued and paid up (Act of Feb. L6, L903, sec .">). In the case of mining
and other corporations specially authorized to have a majority of their board
of directors non-residents of the State (see ""/< , sec. 12), there must be filed with
501
DIGEST OF INCORPORATION ACTS. — OREGON.
the annual statement a power of attorney appointing a person therein named
as duly authorized agent of the corporation for service of process upon it. This
power of attorney shall state the agent's full name and residence (Laws of 1907,
chap. 146). Mining corporations must, during the month of June in each year,
furnish to the Secretary of State a report setting forth certain particulars as to
their business. Mining corporations whose annual output shall not exceed the
sum of $1,000, shall, upon the filing of such report, be exempt from the payment
of the annual license fee now provided by law, and in lieu thereof shall pay an
annual license fee of $10. They can, however, avoid the making of such report,
if they shall pay the annual license fee required of other domestic corporations
of like capitalization (Laws of 1905, chap. 50; Laws of 1911, pp. 40, 41).
20. Anti-Trust Statute. — There is no anti-trust statute in force in
Oregon.
21. Statutory Grounds for Forfeiture of Charter. — Charters may be
forfeited, if the corporation for any period of six months after the commence-
ment of business neglects or ceases to carry on the same. They may also be
forfeited for abuse or misuser of corporate powers, or for failure to elect directors
and commence business within one year after riling articles of incorporation
(sec. 5067). The right to transact business is in abeyance while the annual
franchise tax is in default (Laws of 1903, p. 39 et seq.). The charter may be
forfeited for non-payment of license fee for two successive years (Laws of 1905,
chap. 172). Charter may be forfeited for violation of statute law, for non-
user of its franchise, for doing or omitting to do any act which amounts to a
surrender of its franchise, or for exercising a franchise or privilege not conferred
upon it by law (sees. 366, 367).
22. Amendments. — Any corporation may, at any meeting of the stock-
holders called for that purpose, by a vote of a majority of the stock, increase
or diminish its capital stock or the amount of shares thereof (sec. 3235, Hills'
Annotated Laws of Oregon). The stockholders may, by a majority vote of
the stock, change the general place of business (sec. 5072).
The directors of any corporation may file supplemental articles of incor-
poration at any time when a three-fourths vote of all the stock subscribed shall
so determine, for the purpose of engaging in any business cognate or germane
to the original objects or primary purposes of said corporation not in violation
of law, or at any time when a seven-eighths vote of all the stock subscribed
shall so determine, for the purpose of engaging in any new enterprise or pur-
suit not in violation of law, or for the purpose of change in part of their road or
canal or other terminus, or both, when not in violation of law or any contract
entered into by such corporation ; the directors shall cause a notice to be pub-
lished of the filing of such supplemental articles setting forth the object of the
same (sec. 5073; Laws of 1905, chap. 50).
23. Extension of Corporate Existence. — There is no provision for the
extension of corporate existence.
24. Dissolution. — Corporations may be dissolved by a majority vote of
the stockholders of the corporation (sec. 5070; Laws of 1903, p. 41).
25. Annual License Fee. — Every corporation organized under the laws
of the State of Oregon, except corporations formed or organized for any edu-
cational, literary, scientific, religious, or charitable purpose, and every foreign
corporation, joint-stock company, or association now doing business in this
State, or that may hereafter do business within this State, except fire, marine,
fire and marine, life, accident, life and accident, plate glass and steam boiler
502
DIGEST OF INCORPORATION ACTS. — OREGON.
insurance companies, and surety companies, shall pay an annual license fee in
proportion to the amount of its authorized capital stock; viz.: Where total
authorized capital stock is not in excess of $5,000, $10; where it exceeds $5,000
and does not exceed $10,000, $15; where it exceeds $10,000 and does not
exceed $25,000, $20 ; where it exceeds S25,000 and does not exceed S50,000,
$30; where it exceeds $50,000 and does not exceed $100,000, $50; where it
exceeds $100,000 and does not exceed $250,000, $70 ; where it exceeds $250,000
and does not exceed $500,000, $100; where it exceeds $500,000 and does not
exceed $1,000,000, $125; where it exceeds $1,000,000 and does not exceed
$2,000,000, $175; where it exceeds $2,000,000, $200 (Laws of 1903, p. 43).
The tax becomes due and payable August 15th of each year.
Every corporation formed or organized under and pursuant to the laws of
the State of Oregon, for the purpose of engaging in the business of mining for
any of the precious metals, and whose business it shall be to engage in said
business only, and whose annual output or products shall not exceed in value
the sum of $1,000, shall thereupon be exempt from the payment of the annual
license fee above set forth, but in lieu thereof shall pay an annual license fee
of $10 (Laws of 1907, chap. 237; see also Laws of 1909, chap. 40).
26. Foreign Corporations. — A foreign corporation must file with the
Secretary of State a declaration of its purposes to engage in business within
the State, and state name under which it proposes to transact business, name
of State under whose laws it is organized, location of its home office, date of
its incorporation, amount of capital stock, nature of its business, location of its
principal office within the State, name of its attorney in fact, names and ad-
dresses of its principal officers and directors, and name and residence of prin-
cipal agent within the State ; also certified copy of its charter, certified to by
the legal keeper of the original, together with a certificate of the Secretary of
State of the State issuing the charter as to whether said articles of incorporation
are genuine ; and must pay to the Secretary of State $50 for filing and record-
ing the same, together with annual license fee for the succeeding fraction of
the year. The amiual license tax is the same as for domestic corporations.
Must also file annual reports same as domestic corporations, and must appoint
an attorney within the State upon whom process may be served (Act of February
16, 1903, sees. 6, 7). The attorney so appointed must be a citizen of the United
States, and a citizen and resident of Oregon (Laws of 1903, p. 47, sec. 7. See
also Laws of 1911, pp. 71-73).
O. & W. T. J. Co. v. Rathburn, 5 Saw. 32; Commercial Bank v. Sherman, 28 Ore. 573;
43 Pac. 658; Singer Mfg. Co. v. Graham, 8 Ore. 18; Aldrich v. Anchor Coal, etc. Co., 24
Ore. 32; 32 Pac. 756.
503
DIGEST OF INCORPORATION ACTS. — PENNSYLVANIA.
PENNSYLVANIA.
(The references below are to the Legislative Assembly Laws of Pennsylvania for the vari-
ous years mentioned, and are referred to under the date the act was adopted, together with
the reference to pages of the Pamphlet Laws of that particular year. The latter are referred
to as P. L.)
1. Statutes under which Business Corporations may incorporate. —
Much of the hopeless confusion that may be discovered upon a cursory examina-
tion of the Business Corporation Laws of Pennsylvania may be removed by the
following explanatory statement: On April 7, 1849, the Legislature of Penn-
sylvania passed an act for the incorporation of manufacturing companies. This
was followed in 1854 by the enactment of the Mining Company Act, providing
for the incorporation of mechanical and mining companies. On July 18, 1863,
an act was passed providing for the incorporation of quarrying, manufacturing,
and mechanical companies. On April 29, 1874, a general act was passed pro-
viding for the organization of a large number of classes of corporations. Under
this act corporations could be organized for any specific purpose mentioned in
the act. It was, however, limited at that time in its operation and did not
permit of incorporation for all purposes. The act was later amended so as to
permit of incorporation for any one kind of business not otherwise provided
for (1901, July 9, P. L. 624, sec. 1). Corporations are now incorporated under
the Act of April 29, 1874, and acts amendatory thereof. The various statutes
in Pennsylvania referring to the earlier Incorporation Acts of 1849, 1854, and
1863 are binding only upon corporations previously created under these acts.
The Corporation Act of July 9, 1901 (P. L. 313), provides that all previous acts
inconsistent therewith shall be repealed by the provisions of this act (see Laws
of 1909, P. L. 2887). Special acts are provided for banks, trust companies,
railway, canal, navigation, insurance, building, and loan companies, and elee-
mosynary corporations (1874, April 29, P. L. 73; 1893, June 10, P. L. 435; 1901,
July 9, P. L. 624, sec. 1; 1903, April 23, P. L. 204; April 26, 1911), P. L. 79.
2. Incorporators. — Three or more persons, one of whom must be a citizen
of Pennsylvania (1901, May 29, P. L. 326, sec. 1 ; 1903, April 23, P. L. 273).
3. Contents of the Certificate of Incorporation. — The certificate must
set forth :
a. Name. — Similarity of names is forbidden. A charter will be refused
where the proposed name is already in use by another domestic corporation
(1874, April 29, P. L. 73, sec. 3; 1903, April 22, P. L. 251; Laws of 1909,
P. L. 215).
American Clay Mfg. Co. v. Company, 198 Pa. 189; 47 Atl. 936; Nether Providence Ass'n,
12 Pa. C. C. 666.
b. Purposes. — Purposes for which corporation is formed. Only one pur-
pose may be inserted. Certificates for incorporation of manufacturing or
mercantile companies must describe in a general way the goods to be manu-
factured or sold (1874, April 29, P. L. 73, sec. 3; 1893, June 10, P. L. 435.
See cases in Vol. 3 of Pepper & Lewis' Digest of Pennsylvania Decisions, pp.
4769-4777, 4S01-480S).
c. Domicile. — Place or places where business is to be transacted (1874,
April 29, P. L. 73, sec. 3).
504
DIGEST OF INCORPORATION ACTS. — PENNSYLVANIA.
d. Duration. — Term of existence. May be perpetual, if desired (1874,
April 29, P. L. sees. 1, 3, 4).
e. Subscribers' Names and Subscriptions. — Names and residences of sub-
scribers and number of shares subscribed for by each (1874, April 29, P. L. 73,
sec. 3).
/. Directors. — Number of directors to be not less than three; also names
and residences of those for the first year (1S74. April 29, P. L. 73, sec. :; ; 1901,
April 19, P. L. 51). Where a corporation has only three director-;, it lias been
held that the treasurer cannot be named as one of these (Corporation Officers,
3 Pa. Cir. Ct. 188).
g. Capital Stock. — Amount thereof. Number and par value of shares.
Capital stock may be any amount. Par value of shares must not exceed S100
(1S74, April 29, P. L. 73, sees. 3, 11, 39; 1899, May 3, P. L. 120; 1901, Feb. 9,
P. L. 1 ; 1901, July 2, P. L. 302). Par value of shares in the case of mining
companies may be SI (1865, March 27, P. L. 34, sec. 8). If any stork is issued
for property, a statement of the amount so issued must be inserted (187G, April
17, P. L. 10, sec. 4).
h. Preliminary Payment of Stock Subscriptions. — A statement that ten per
cent of the capital stock has been paid in in cash to the treasurer, together
with his name and residence (1874, April 29, P. L. 73, sec. 2).
Cook v. Marshall, 191 Pa. 315; 43 Atl. 314.
4. Statutory Powers. — The statute enumerates the common law powers
of corporations (1S74, April 29, P. L. 73, sec. 1). The following additional
powers are also conferred: To consolidate with other corporations (1901, May
29, P. L. 349; 1905, March 31, P. L. 95 (1909, P. L. 229). To purclu.se and
hold stock in other corporations (1905, March 31, P. L. 95; 1895, June 26, P. I..
27S, sec. 1 ; 1901, July 2, P. L. 298; 1887, June 17, P. L. 411, sec. 3). To issue
preferred stock (1874, April 29, P. L. 73, sees. 16, 39; 1S72. April 3, P. L. 39,
sec. 1 ; 1873, April 28, P. L. 39, sec. 1). To vote by proxy (1874, April 29, P. L.
73, sec. 6; 1820, March 28, 7 Sm. L. 320, sec. 1; 1903, March 5, P. L. 14). To
enforce a lien for corporate debts (1S74, April 29, P. L. 73, sec. 39.) To forfeit
stock for non-payment of assessments (1895, June 26, P. L. 27S, sec. 1). To
cumulate votes in the election of directors and to classify directors (ls76, April
25, P. L. 47, see. 1; 1887, June 17, P. L. 411, sees. 1. 2). The power to adopl
by-laws may be delegated in the charter to the board of directors (189 1 . May 14,
P. L. 61, sec. 1. See generally on Corporate Powers, Constitution, XVI. sees. 6,
7; 1874, April 29, P. L. 73, sees. 38, 39, 43; 1887. May 24, P. I.. 188, sec. 1;
1868, March 31, P. L. 50, sec. 1 ; 1893, May 18, P. L. 81, sec. 1 ; 1905, March 31 ,
P. L. 95). (As to reorganization of corporations see I'. L. of 1911, June -'().
p. 192).
5. Procuring the Charter. — The certificate must be subscribed and
acknowledged by at least two of the incorporators, who must swear thai the
statements contained in the certificate are true. This certificate must be ac-
knowledged before a recorder of the county in which the corporation is to be
located, or before any notary public of Pennsylvania. Notice of intention to
apply for charter must be published in Hie legal journal, if any of Hie proper
county in which court notices usually appear, which journal for such publica-
tion shall be deemed a newspaper of general circulation, provided that the
rati- charged for such publication shall not be in excess of the usual current
rates charged by such newspapers. This notice must be published once a wet k
505
DIGEST OF INCORPORATION ACTS. — PENNSYLVANIA.
for three weeks and must state the character and object of the proposed cor-
poration (Laws of 1909, P. L. 215). The notice of intention to apply for charter
should give the names of at least three incorporators, designating the time
when application will be made to the Governor for the charter, the Act of the
Assembly under which it is made, and the purposes proposed. The proof of
publication of the notice must be filed in the office of the Secretary of State
upon the recording of the certificate. The certificate of incorporation should
be on file in this office during the period of publication. Re-advertisements
will be required for applications received thirty days after the time designated
in the notice. The certificate must have at least two subscribers, one of whom
must be a citizen of the Commonwealth, and must be acknowledged and veri-
fied by at least two subscribers. The object of the corporation should be re-
stricted to the purposes set forth definitely in the incorporation act, and so
concisely stated as to be void of diversity. Special care should be taken that
only the purpose is stated and not the powers which come to the corporation
by grant of law, and that the certificate be confined to the statement of a single
purpose. Certificates for the incorporation of manufacturing and mercantile
companies should describe in a general way the character of the articles to be
manufactured and sold. The certificate, together with proof of publication,
must then be forwarded to the Governor, who, if he approves of it, endorses
his approval thereon and directs letters patent to issue. The certificate is then
recorded in the office of the Secretary of State, registered with the Auditor-
General, and the original articles, with the endorsement mentioned, must then
be recorded in the office of the recorder of deeds of the county where the chief
operations of the company are to be carried on (1874, April 29, P. L. 73, sees. 3,
4, 26, 45; 1891, April 15, P. L. 18; 1874, May 15, P. L. 107; 1901, May 29,
P. L. 207 ; 1903, April 23, P. L. 273).
M. B. Co. v. Company, 196 Pa. St. 25; 46 Atl. 99.
6. Corporate Indebtedness. — Loans to an amount not exceeding one-
half the capital stock may be made on real estate and machinery, or on real
estate alone. Corporations belonging to classes designated in the statute as
4, 5, 6, 7, 9, 11, 24, may borrow money to an amount not exceeding double
the amount of capital stock paid in. Under the Laws of 1905, chap. 190, all
other business corporations are given right to mortgage, borrow, and pledge
without limit as to amount (Cons., Art. XVI. sec. 7 ; 1874, April 29, P. L. 73,
sees. 38, 39; 1874, April 18, P. L. 61, sec. 1; 1874, May 15, P. L. 86, sec. 1;
1879, May 13, P. L. 57, sec. 1 ; 1881, June 8, P. L. 69, sec. 1 ; 1889, May 21,
P. L. 257, sec. 1 ; 1901, Feb. 9, P. L. 1, sec. 1).
7. Organization Tax. — A bonus of one-third of one per cent upon the
authorized capital stock must be paid (1878, May 22, P. L. 97, sec. 1 ; 1897,
June 15, P. L. 155; 1899, May 3, P. L. 120; 1899, May 7, P. L. 115, sec. 1;
1901, Feb. 9, P. L. 1).
8. Filing and Recording Fees. — Filing fees in the office of the Secretary
of State, $30 ; for making copy of certificate, 25 cents per typewritten page and
75 cents for certificate, and $1 for affixing great seal of State. Recording
fees in local county office, 25 cents per folio ; fee upon organization for filing
statements, $5; cost of publishing notice of application for letters patent,
usually about $9. In Philadelphia the cost of publishing notice is usually
about $13.
9. Commencing Business. — Before the corporation can commence busi-
506
DIGEST OF INCORPORATION ACTS. — PENNSYLVANIA.
ness ten per cent of the authorized capital stock must have been paid in in cash
to the treasurer of the intended corporation. The corporation cannot com-
mence business without first filing with the Auditor of the Commonwealth the
name of the corporation, the date of the incorporation, the authority under which
incorporated, place of business, post-office address and names of the president,
secretary, and treasurer, the amount of capital authorized by the charter, and
amount of capital paid in to the treasurer of the company (1S76, April 17, P. L.
30, sec. 6; 1879, June 7, P. L. 112, sec. 1; 1889, June 1, P. L. 420, sec. 19).
Business must be commenced within two years after incorporation (1889, May
16, P. L. 241, sec. 2 ; 1883, June 13, P. L. 122, sec. 5 ; see Corporation Officers.
3 Pa. C. C. 1SS; Potter Gas Co., 15 Pa. C. C. 347). One-fourth of the capital
stock must be paid up within two years (1883, June 13, P. L. 122, sec. 5). Work
must be begun in two years and finished in five years (18S9, May 16, P. L. 241,
sec. 2).
10. Organization Meeting. — The organization meeting must be held
within the Commonwealth, unless a majority of the incorporators or stock-
holders are citizens of another State (1891, May 14, P. L. 61, sec. 1). When
a majority of the directors, corporators, or stockholders thereof are citizens of
another State, the corporation may be organized without the State, if desired
{1865, Nov. 27, P. L. (1866) 1228, sec. 1 ; 1874, April 29, P. L. 73, sec. 38; 1826,
March 28, 7 Sm. L. 320, sees. 1, 2).
11. Meetings of Stockholders and Directors. — The annual meetings
for the election of officers must be held in the State of Pennsylvania. Special
stockholders' meetings and meetings of the board of directors may be held
without the State, if a majority of the stockholders and a majority of the direc-
tors are respectively citizens of another State (1865, Nov. 27, P. L. (1866) 1228,
sec. 1). Iron and steel corporations may hold all meetings without the State, if
desired (1820, March 28, 7 Sm. L. 320, sees. 1, 2 ; 1874, April 29, P. L. 73, sec. 38 ;
1893, June 8, P. L. 351).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three directors, one of whom must be a resident of the
State. Directors need not be stockholders (Corporate Directors, 7 Pa. C. C. 178).
If the by-laws so provide, the number of directors may be changed from time
to time by the directors without a vote of the stockholders and without amend-
ing the certificate of incorporation. Directors may be classified, if desired. If
the certificate so provides, directors may adopt by-laws (1891, May 14, P. L. 61,
sec. 1). The right of stockholders to cumulate their votes in the election of
directors is a constitutional right (1874, April 29, P. L. 74, sec. 38; 1876, April
25, P. L. 47; 1877, June 17, P. L. 411, sees. 1, 2; 1887, May 31, P. L. 281, sec.
1 ;' 1887, June 17, P. L. 411 ; 1901, April 19, P. L. 80, sec. 1).
Commonwealth v. Stevenson, 200 Pa. St. 509; 50 Atl. 91.
b. Liabilities. — Directors are liable for the declaration of illegal dividends
and for the illegal withdrawal of capital stock. They are also liable to creditors
and stockholders for moneys embezzled by officers (1874, April 29, P. L. 73, sec.
39 ; 1878, June 12, P. L. 196, sec. 1). Directors absent or objecting to any such
action may exempt themselves from liability by filing objection in writing with
the clerk of the company (1874, April 29, P. L. 73, sec. 39). Directors of all
corporations organized under the Act of July 18, 1863 (P. L. 1102, sec. 1), are
liable: First, for property used for other purposes than that stated in the charter
(1S63, July 18, P. L. 1102, sec. 2); second, for neglect of duties relative to filing
507
DIGEST OF INCORPORATION ACTS. — PENNSYLVANIA.
certificates of amendments to increase and reduce capital stock (1863, July 18,
P. L. 1102, sees. 21-22); third, for loans to stockholders (1863, July 18, P. L.
1102, sec. 25); fourth, for permitting the corporation to contract debts in
excess of the capital stock paid in (1863, July 18, P. L. 1102, sec. 26). Probably
this last provision is repealed by Laws of 1905, chap. 190. Directors are also
liable for making false certificates (1863, July 18, P. L. 1102, sees. 27, 34).
Strunk v. Owen, 199 Pa. St. 73; 48 Atl. 888.
13. Stockholders' Liabilities. — Stockholders are liable to the extent of
their unpaid stock subscriptions. They are also liable for debts to laborers,
clerks, and operatives for services rendered within six months after demand
made and neglect or refusal on the part of the corporation to make payment.
This liability extends to the amount of stock held by each stockholder. They
are also jointly and severally liable for all debts contracted by them for work
or labor done or materials furnished for opening, improving, and preparing
their lands for mining purposes. They are also liable for the illegal withdrawal
of capital (Cons., XVI. sec. 7; 1854, April 21, P. L. 437, sec. 5; 1874, April 29,
P. L. 73, sees. 15, 24, 38, 39; 1876, April 17, P. L. 32, sec. 3; 1863, July 18,
P. L. 1102, sees. 39, 47).
Adv. Ben. Order v. Company, 195 Pa. St. 602; 46 Atl. 102; Bates v. Day, 198 Pa. St.
513; 48 Atl. 407; McNeal Pipe, etc. Co. v. Bullock, 174 Pa. St. 93; 34 Atl. 594.
14. Stock Certificates. — Each stockholder is entitled to a certificate
signed by the president or vice-president and countersigned by the treasurer,
and sealed with the seal of the corporation (1874, April 29, P. L. 73, sec. 7 ; 1895,
June 24, P. L. 258).
15. Preferred Stock. — Preferred stock may be issued, if authorized in the
certificate of incorporation, or with the consent of a majority in interest of the
stockholders after incorporation. It may be divided into classes, if desired.
The amount of preferred stock cannot at any time exceed one-half of the au-
thorized capital stock. The amount of dividends thereon is limited to twelve
per cent. The holders of preferred stock are not liable for debts of the corpora-
tion (1872, April 3, P. L. 37, sec. 1 ; 1873, April 28, P. L. 79. sec. 1 ; 1874, April
29, P. L. 73, sees. 16, 39 ; 1876, April 17, P. L. 30, sec. 4).
16. Payment of Capital Stock. — Stock may be issued in exchange for
money, labor done, or property actually received. Stock may be issued for real
and personal estate, mineral rights, patent rights, and other property necessary
for the purposes of organization. The stock so issued shall be declared and
taken to be full paid stock and not liable to any further calls or assessments.
One-quarter of the capital stock must be paid up within two years. No note
of a stockholder can be accepted in payment of stock. The president and
directors, with the treasurer and clerk, must, in the case of manufacturing com-
panies, before the payment of the last instalment of the capital stock, make a
certificate stating the amount of the capital so fixed and paid in, which certifi-
cate must be signed and sworn to by the officers last mentioned, and must be
recorded in the office of the recorder of deeds for the county wherein the corpo-
ration has its principal place of business. (See Cons., XVI. sec. 7; 1874, April
29, P. L. 73, sec. 39 ; 1876, April 17, P. L. 30, sec. 4 ; 1895, June 26, P. L. 369,
sec. 1 ; 1905, March 24, P. L. 39.)
17. Books. — Directors of manufacturing, mechanical, mining, quarrying,
and other business, provided in sec. 18 of the enumeration of the classes of busi-
ness corporations, are required to keep a stock book or stock register, which
508
DIGEST OF INCORPORATION ACTS. — PENNSYLVANIA.
must be opened for inspection during business hours to all persons (1S49, April
7, P. L. 563, sec. 24 ; 1891, May 14, P. L. 61, sec. 1 ; 1893, May 26, P. L. 141,
sees. 1, 2 ; June 8, P. L. 355, sec. 1 ; 1849, April 7, P. L. 563, sec. 24).
Commonwealth v. Phoenix Iron Co., 105 Pa. 111.
IS. Office and Agent. — Aside from all iron and steel manufacturing com-
panies, the principal office of all business corporations must be located in the
State, and the place where the business is to be transacted must be designated
in the certificate. In the case of iron and steel companies, the latter may have
an office without the State, if the by-laws so authorize, where meetings of stock-
holders and directors may be held (1874, April 29, P. L. 73, sees. 3, 38).
19. Reports. — Every corporation shall make an annual report to the
Auditor-General in the month of November of the condition of the corporation.
This report must state : (1) Total authorized capital stock; (2) total author-
ized number of shares; (3) number of shares issued; (4) par value of each
share ; (5) amount paid on each share ; (6) amount of capital stock paid in ;
(7) amount of capital stock on which dividends have been declared ; (8) date
of each dividend during the year ending the 1st Monday in November;
(9) rate per cent of each dividend ; (10) amount of dividend during the
year ending 1st Monday of last month; (11) gross earnings during the year;
(12) net earnings during said year; (13) amount of surplus; (14) amount
of profits added to sinking fund during said year; (15) highest price on sales
of stock between November 1st and 15th; (16) highest price on sales of stock
during the year (1901, May 8, P. L. 150). Two officers of the company are re-
quired to appraise the stock between November 1st and 15th, and one of these
must verify the report (1905, April 14, P. L. 166 ; 1905, April 17, P. L. 186).
20. Anti-Trust Statute. — There is no anti-trust statute. (See Nester v.
Company, 161 Pa. St. 473 ; 29 Atl. 102.) Combinations of telegraph, railroad,
or canal companies running parallel or competing lines and discrimination in
rates are prohibited (Cons., Art. XVI. sec. 12; Art. XXIII. sees. 4, 7, 8; see
also Morris R. C. Co. v. Company, 68 Pa. St. 173).
21. Statutory Grounds for Forfeiture of Charter. — Charter maybe
forfeited for failure to organize within two years after the issuance of charter.
It may also be forfeited for misuser or non-user, or by the commission of any
act whereby forfeiture thereof shall by law be created. Neglect to pay the
bonus tax renders the charter liable to forfeiture (1836, June 14, P. L. 621,
sec. 2; 1883, June 13, P. L. 123, sec. 5; 1901, May 21, P. L. 176; 1870, April I,
P. L. 45, sec. 1 ; 1872, April 4, P. L. 46, sec. 1 ; 1883, June 13, P. L. 122, sec. 5 ;
1889, May 16, P. L. 241, sec. 2).
22. Amendments. — Charters may be amended for the purpose of improv-
ing, amending, or altering the conditions upon which they were formed and
established, by securing the approval of the Governor to such proposed amend-
ment. Notice of intention to apply for such amendment must be given by
publication thereof in two newspapers of general circulation, printed in the
county wherein the corporation's principal place of business is located, once
a week for three weeks. This notice must set forth briefly the character and
objects of the desired improvements, amendments, or alterations, and the inten-
tion to make application therefor. Thereupon the corporation shall prepare
a certificate under its corporate seal, setting forth the character and objects of
the proposed amendment; also setting forth that all reports required by the
Auditor-General of the Commonwealth have been filed, and thai all taxes due
509
DIGEST OF INCORPORATION ACTS. — PENNSYLVANIA.
the Commonwealth of Pennsylvania have been paid. This certificate must
be acknowledged by the president and secretary of the corporation before the
recorder of deeds of the county wherein such corporation has its principal
office or place of business, which certificate, together with proof of publication
of notice, shall then be produced to the Governor of the Commonwealth for
his approval. After this is obtained, the certificate shall then be recorded in
the office of the Secretary of the Commonwealth, and with all these endorse-
ments shall then be recorded in the office of the recorder of deeds in and for
the proper county wherein the principal place of business of such corporation
is located (1883, June 13, P. L. 122, sees. 1-4, as amended by 1905, March 31,
P. L. 93).
The capital stock or indebtedness, or both, of any corporation created by gen-
eral or special law may, with the consent of all persons or bodies corporate hold-
ing the larger amount in value of its stock, be increased to such amount in the
aggregate of each, without regard to the amount of the other and regardless
of any limitation upon the amount of either, prescribed in any general or special
law regulating any such corporation as it shall deem necessary to accomplish,
carry on, and enlarge the business and purposes of such corporation. Such
increase of either may be made at once or from time to time, as a majority
in interest of the stockholders shall determine, as aforesaid; and upon the
authorization of any such increase of indebtedness by the stockholders of such
corporation in the manner herein provided for, it shall be lawful for such corpora-
tion to secure the payment of the principal or interest, or both, of all or any
part of such indebtedness by mortgage or deed of trust or other pledge or con-
veyance by way of security of all or any part of its real and personal property,
rights, privileges, and franchises, and in such manner and upon such terms as
its board of directors shall determine (1899, May 3, P. L. 189, sec. 2; 1901,
Feb. 9, P. L. sec. 1 ; 1905, April 22, P. L. 280).
As preliminary to the increase of stock, the board of directors, by a majority
vote, must call a meeting of the stockholders to vote thereon. The question
may be presented either at any annual meeting or a special meeting called
by publishing notice of the time, place, and object thereof once a week for
sixty days prior thereto, in at least one newspaper published in the locality
wherein the corporation's principal place of business is located. Within
thirty days after the proper consent is given to such increase, the corporation
must file in the office of the Secretary of the Commonwealth one of the copies
of the certificate of the president and secretary of the annual meeting, or
one of the copies of the return of such election at the special meeting held for
that purpose, with a copy of the resolution and notice calling the same thereto
annexed. Also the president and treasurer must, within thirty days thereafter,
make a return to the Secretary of the Commonwealth, under oath, of the amount
of such increase actually made ; and concurrently therewith the bonus tax on
the increase must be paid (1901, Feb. 9, P. L. 1, sees. 1-3). The capital stock
of any corporation created by general or special law may be reduced from
time to time by consent of the persons or bodies corporate holding the larger
amount in value of the stock of such corporation, provided that such reduc-
tion shall not be below the minimum amount of capital stock required by law
for the formation of corporations formed for similar purposes (1905, April 22,
P. L. 264).
To change the par value of the shares requires that such change shall be
authorized by a majority of the stockholders at any annual or special meeting
510
DIGEST OF INCORPORATION ACTS. — PENNSYLVANIA.
called for that purpose. Upon the adoption of any such amendment, the
proper officers of the company must file a certificate of that fact in the office
of the Secretary of the Commonwealth, under the seal of the corporation (1901,
July 2, P. L. 606, sec. 2).
The board of directors may change the location of the principal office,
place, and time of the annual meeting of stockholders by a two-thirds vote of
the board, approved by two-tlnrds vote of the stockholders. Upon such action
being taken, the president must file in both the office of the Secretary of State
and Auditor-General a report under seal of the corporation specifying the changes
so made (1830, Feb. 6, P. L. 42, sec. 2 ; 1893, June 8, P. L. 355, sec. 1).
Cook v. Marshall, 191 Pa. St. 315; 43 Atl. Rep. 315.
To change the corporate name requires a resolution of the board of directors,
adopted by a two-thirds vote thereof, approved at any annual or special meet-
ing of the stockholders duly called by a two-thirds vote thereof. Thereupon
the president of the corporation shall file in the office of the Secretary of the
Commonwealth a certificate under the seal of the company, setting forth the
resolution adopted by the board of directors and approved by the stockholders,
the date of the adoption of such resolution by the board of directors, the date
of the approval by the stockholders, the date of the original incorporation of the
company, the Act of Assembly under which the said corporation was created,
the name under which it was originally incorporated, and the name which the
corporation desires to adopt. All corporations required to record the original
certificate of incorporation in the office for the recording of deeds must like-
wise record, in the office for the recording of deeds where the original certificate
of incorporation was recorded, the certificate granted by the Secretary of the
Commonwealth authorizing the use of the new corporate name (1903, April 22,
P. L. 251). The Act of March 27, 1865 (P. L. 34, sec. 6), provides that errors
in incorporation may be corrected at a meeting of stockholders specially called
for that purpose. Thereafter a certificate must be first submitted to the Attorney-
General and certified to by him to the effect that the same is in conformity with
law. Thereupon this certificate, after being duly attested by the proper officers
of the corporation, must be filed with the Secretary of the Commonwealth.
23. Extension of Corporate Existence. — Provision is made for the ex-
tension of corporate existence of business corporations (1874, April 29, P. L.
73, sees. 4, 40; 1895, June 25, P. L. 310).
24. Dissolution. — Court of Common Pleas may accept surrender of
powers and enter a decree dissolving corporation, with consent of a majority
of the stockholders and after advertisement in two newspapers (1856, April
9, P. L. 283, sec. 1 ; 1872, April 4, P. L. 40, sec. 1 ; 1887, May 31, P. L. 278,
sees. 1, 3; 1903, March 27, P. L. 79; 1907, May 23, P. L. 105).
M. B. Co. v. Company, 196 Pa. St. 25; 46 Atl. 99.
25. Annual License Fee. — Five mills upon each dollar of the actual
value of its whole capital stock of all kinds, including common, special, and
preferred, must be paid to the Treasurer of the Commonwealth annua l ly within
thirty days from date of settlement of the accounl by the Auditor-General
and State Treasurer. Manufacturing companies with property exclusively in
the State are generally exempt from this annual license fee ( 1893, June 8, P. L.
353, sec. 1 ; 1899, May 3, P. L. 120; Laws of 1907, June 7, P. L. 29 I ).
26. Foreign Corporations. - -Statement must he filed with the Secretary
of the Commonwealth, showing name and object of the corporation, location of
;,1 1
DIGEST OF INCORPORATION ACTS. — PENNSYLVANIA.
its office, and resident agent therein ; must also pay State Treasurer a bonus
of one-third of one per cent upon the capital actually employed or to be em-
ployed wholly within the State ; must file annual report with the Auditor-
General. Foreign corporations may become domestic, if they so desire, by
complying with the statute in such case made and provided. The same annual
tax is required as of domestic corporations, based, however, upon the amount
of capital actually employed within the State (1881, June 9, P. L. sees. 1, 3;
1887, May 23, P. L. 176, sees. 1, 2; 1893, June 8, P. L. 389, sees. 1, 2; 1893,
June 16, P. L. 466, sec. 1; 1901, May 8, P. L. 121; 1903, April 15, P. L. 200;
1903, Feb. 5, P. L. 4; 1903, March 11, P. L. 23; 1903, March 26, P. L. 67; 1905,
Feb. 28, P. L. 27; Laws of 1907, June 7, P. L. 294). Every foreign corporation,
before doing any business in this Commonwealth, shall appoint in writing the
Secretary of the Commonwealth and his successor in office to be his true and
lawful attorney and authorized agent upon whom all lawful process in any
action or proceeding against it may be served; and service of process on the
Secretary of the Commonwealth shall be of the same legal force and validity as
if served on it; and the authority for such service of process shall continue in
force so long as any liability remains outstanding against it in the Commonwealth.
The power of attorney shall be executed with the seal of the corporation and
signed by the president and secretary thereof, and shall contain a statement,
showing the title and purpose of such corporation and location of its principal
place of business in the Commonwealth, and the post-office address witlun the
Commonwealth to which the Secretary of the Commonwealth shall send by
mail any process against it served on him; which address such corporation may
change from time to time as it may find occasion, by filing a certificate under
its corporate seal with the Secretary of the Commonwealth, setting forth such
change of address. Upon the payment of a fee of $10 for the use of the Common-
wealth, the said power of attorney and statement shall be filed in the office of
the Secretary of the Commonwealth, and copies, certified by him, shall be suffi-
cient evidence thereof. Service of such process shall be made by attorney of
Dauphin County by leaving two copies of the process and a fee of $2 in the
hands or at the office of the Secretary of the Commonwealth, and he shall make
due return of his service of such process to the court, magistrate or justice of
the peace issuing the same. Such process may be issued by any court, or magis-
trate or justice of the peace having jurisdiction of the subject matter in contro-
versy, in any county of the Commonwealth in which such corporation shall
have its principal place of business, or any such county in which the right of
action arose. Upon the filing of the said power of attorney with the Secretary
of the Commonwealth it shall be his duty to certify forthwith to the auditor-
general the corporate name of the corporation filing the same and the location
of its principal place of business in the Commonwealth as set forth in said power
of attorney (P. L. 1911, p. 710, sec. 2).
Sec. 3. When legal process against any such corporation has been served
upon the Secretary of the Commonwealth it shall be sent by mail, postage pre-
paid, and one copy of such process directed to the corporation at the post-office
address designated by it as hereinbefore provided. The fee of $2 paid by the
plaintiff to the Secretary of the Commonwealth at the time of the service shall
be taxed in his costs if he prevails in the suit. The Secretary of the Common-
wealth shall keep a record of the day and hour of the service of such process on
him, and a certified copy of such report shall be sufficient evidence thereof (P. L.
1911, p. 711).
512
DIGEST OF INCORPORATION* ACTS. PENNSYLVANIA..
Sec. 5. The act entitled " An Act to prohibit foreign corporations from
doing business in Pennsylvania without having a known place of business and
authorized agent," approved the 22d day of April, 1S74, P. L. 10S) be and the
same is hereby repealed, and all other acts of Assembly inconsistent with the
provisions hereof or supplied hereby are also hereby repealed; provided, how-
ever, that the license fee or fine of $250 prescribed in the fourth section of tins
act shall not be required or imposed upon any foreign corporations now duly
registered under such act approved the 22d day of April, 1874, and hereby re-
pealed, if such foreign corporation shall file the power of attorney and statement
provided for in section 2 of this act in the office of the Secretary of the Com-
monwealth within one year after the date of the approval hereof; nor shall the
repeal of such act be construed as in any wise affecting the existing rights or
liabilities of any foreign corporation now duly registered therein ; and provided
further, that this act shall not be construed to apply to foreign insurance com-
panies, but the doing of business in this Commonwealth by such companies
shall be regulated by existing laws (P. L. 1911, p. 712, sec. 5). Every foreign
corporation must further, before commencing business in the State, make a
report, under oath, to the Auditor-General, stating: (1) State or country in
which incorporated or created; (2) date of incorporation; (3) location of chief
office in the State; (4) name and address of president; (5) amount of bonded
indebtedness; (6) amount of authorized capital stock; (7) amount of capital
paid in; (8) amount of capital employed wholly in Pennsylvania. A similar
report must be filed annually thereafter before November 30th of each year
(1901, May 8, P. L. 121). A fifing fee of $10.75 must accompany the applica-
tion for permit to do business within the State. With some few exceptions
foreign corporations have no power to hold real estate in Pennsylvania (1893,
Acts 296, 338; P. L. 65, April 20, 1911; see also as to foreign iron and steel
corporations, 1893, June 8, P. L. 389, sec. 1; 1901, April 19, P. L. 86, sec. 1).
Mr ('anna & Fraser Co. v. Citizens' Trust, etc. Sur. Co., 76 Fed. 420; 24 CCA. 11 ; Com-
monwealth v. Company, 98 Penn. 90; In re Hovey's Estate, 198 Pa. St. 385; 48 Atl. 311;
P B. L. & S. Ass'n v. "Berlin, 201 Pa. St. 1; 50 Atl. 308; Madden v. Company, 199 Pa. St.
454; 49 Atl. 296.
33 513
DIGEST OF INCORPORATION ACTS. — PHILIPPINE ISLANDS.
PHILIPPINE ISLANDS.
(The references below are to Acts of the Philippine Commission, 1459, enacted March 1,
1906.)
1. Statutes under which Business Corporations may incorporate.
— On March 1, 1906, the Philippine Commission enacted a General Business
Corporation Act, to take effect on April 1, 1906. Special provision is made for
railways, savings and mortgage banks, banking corporations, trust companies,
insurance companies, building and loan associations, colleges, and eleemosy-
nary corporations. Under the General Act no corporation can be authorized
to conduct the business of buying and selling real estate, nor is it permitted to
hold or own real estate except such as may be reasonable and necessary to enable
it to carry out the purposes for which it was created. (See sec. 13, sub. 5.)
2. Incorporators. — Not less than five nor more than fifteen. A ma-
jority thereof must be residents of the Philippine Islands (sec. 6).
3. Contents of the Articles of Incorporation. — The articles of incor-
poration must contain :
a. Name. — Any name is permitted not already in use by another domestic
corporation, or by a foreign corporation authorized to transact business in the
Philippines.
b. Purpose. — The purpose for which the corporation is formed. The in-
sertion of more than one line of business is permitted, provided the same is not
covered by special act.
c. Domicile. — The place where the principal office is to be established or
located, which place must be within the Philippine Islands.
d. Corporate Existence. — The term for which it is to exist, not exceeding
fifty years.
e. Incorporators. — The names and residences of the incorporators.
/. Directors. — The number of directors of the corporation, not less than
five nor more than eleven. The names and residences of the directors who are
to serve until their successors are elected and qualify must be set forth.
g. Capital Stock. — Amount of capital stock in Philippine currency and the
number of shares into which it is divided. The par value of the shares may be
any amount.
h. Stock Subscriptions. — The amount of capital stock actually subscribed,
the names and residences of the persons subscribing, the amounts subscribed
by each, and the sum paid by each on his subscription (sees. 6, 7).
4. Statutory Powers. — The statutory powers enumerated in the act are
in the main the usual common law powers of corporations. In addition to these
the following extraordinary powers are granted: To delegate to the directors
the power to adopt and amend by-laws; to remove directors; to forfeit stock
for non-payment of assessments. Voting by proxy is also permitted (sees. 13,
21, 22, 34).
5. Procuring the Charter. — The articles of incorporation must first be
drawn in accordance with the form set forth in the Corporation Act. The arti-
cles must then be signed by the incorporators, and the execution thereof be
duly acknowledged before a notary public. To the articles must be annexed
the affidavit of the treasurer elected by the incorporators, to the effect that he
514
DIGEST OF INCORPORATION ACTS. — PHILIPPINE ISLANDS.
was duly elected by the subscribers named in the articles of incorporation as
treasurer of the corporation, to act as such until his successor has been duly
elected and qualified in accordance with the by-laws of the corporation, and
that as such treasurer he has been authorized by the subscribers to receive for
the corporation all subscriptions paid in by the subscribers for the capital
stock. Next, he must name the amount of money in pesos that has been actu-
ally subscribed and the amount that has been actually paid in for the benefit
and to the credit of the corporation. He must further certify that at least
twenty per cent of the capital stock has been subscribed and at least twenty-
five per cent of subscriptions have been actually paid in to him for the benefit
and to the credit of the corporation. Next, the articles must be filed in the
office of the Chief of the Division of Archives, Patents, Copyrights, Trade Marks,
of the Executive Bureau. At the same time there must be paid to lnm the
organization tax provided by law.
It will be noted that before the articles can be filed the subscribers to the
capital stock of the corporation as named in the articles must meet and elect a
treasurer, who is required to take subscriptions to at least twenty per cent of
the entire capital stock and to receive at least twenty-five per cent of the stock
subscribed for. The Chief of the Division of Archives, Patents, Copyrights, and
Trade Marks issues a certificate of incorporation as soon as the requirements
named above have been complied with (sees. 6-11 inclusive).
6. Corporate Indebtedness. — There is no limit upon the amount of
indebtedness which a corporation may incur.
7. Organization Tax. — There is an organization tax or filing fee of
twenty-five pesos imposed without regard to the amount of capitalization
(sec. 8).
8. Filing and Recording Fees. — Payment of the organization tax of
twenty-five pesos includes the fees of the Chief of the Division of Archives,
Patents, Copyrights, and Trade Marks for filing the articles of incorporation.
The charge for issuing a certified copy of articles of incorporation is approxi-
mately five pesos (sec. 8).
9. Commencing Business. — The corporation must be properly organ-
ized and commence the transaction of its business or the construction of its
works within two years from the date of its incorporation; otherwise, its cor-
porate powers shall cease. Before any business may be transacted, twenty per
cent of the entire capital stock must be subscribed, and at least twenty-five
per cent of the subscription paid in to the treasurer of the corporation for the
benefit and to the credit of the corporation. Within one month after the filing
of the articles of incorporation a code of by-laws must be adopted by a majority
vote of all the subscribed capital stock. The by-laws must be signed by the
stockholders voting for them, and kept in the principal office of the corpora-
tion subject to the inspection of the stockholders during office hours. A copy
thereof, duly certified to by a majority of the directors, countersigned by the
secretary of the corporation, shall be filed with the Chief of the Division of
Archives, Patents, Copyrights, and Trade Marks, who shall attach the same
to the original articles of incorporation, and collect a fee of two pesos for the
filing thereof (sec. 20).
10. Organization Meeting. — The organization meeting must be held
within the Philippine Islands. The act provides that it shall be held where the
principal office of the corporation is established or located, and, where prac-
ticable, in the principal office of the corporation (sec. 24).
515
DIGEST OF INCORPORATION ACTS. — PHILIPPINE ISLANDS.
11. Meetings of Stockholders and Directors. — The stockholders'
meetings must be held in the Philippine Islands at the place where the principal
office of the corporation is established or located, and, where practicable, in the
principal office of the corporation. Directors' meetings may be held at the
place fixed by the by-laws (sec. 24).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least five and not more than eleven directors, all of whom
must be stockholders. At least two of the directors must be residents of the
Philippine Islands. Any director who ceases to be the owner of at least one
share of stock of the corporation of which he is a director shall thereby cease
to be a director (sees. 6, 28).
b. Liabilities. — Directors are liable for the declaration of illegal dividends
and for the distribution of the capital stock or property other than actual profits
among the stockholders without having first paid the debts of the corporation
(sec. 16).
13. Removal of Directors. — Directors of a corporation may be removed
from office by a vote of two-thirds of the members entitled to vote, or, if the
corporation be a stock corporation, by a vote of the stockholders holding or
representing two-thirds of the subscribed capital stock entitled to vote ; pro-
vided, however, that such removal shall take place either at a regular meeting
of the corporation or at a special meeting called for that purpose, and in either
case after previous notice to stockholders or members of the intention to pro-
pose such removal at the meeting. A special meeting of the stockholders or
members of a corporation for the purpose of removal of directors, or any of
them, must be called by the secretary or clerk on order of the president, or on
the written demand of a majority of the members entitled to vote, or, if it be a
stock corporation, on the written demand of the stockholders representing or
holding at least one-half of the shares entitled to be voted. Should the secretary
or clerk fail or refuse to call the special meeting demanded, or fail or refuse to
give the notice, or if there is no secretary or clerk the call for the meeting may
be addressed directly to the members or stockholders by any member or stock-
holder of the corporation signing the demand. Notice of the time and place of
such meeting, as well as of the intention to propose such removal, must be given
by publication or by written notice as prescribed in sec. 29. In case of removal
on the vote of the stockholders or the members, as the case may be, the vacancy
so created may be filled by election at the same meeting without further notice
or at any general meeting or at any special meeting called for the purpose, after
giving notice as prescribed by sec. 29 (sec. 34).
14. Stockholders' Liabilities. — Stockholders are personally liable to
creditors to an amount equal to their unpaid stock subscriptions (sees. 36-50).
15. Stock Certificates. — Stock certificates must be signed by the presi-
dent or vice-president and countersigned by the secretary or clerk and sealed
tvith the seal of the corporation. Any share of stock against which the corpora-
tion holds any unpaid claim is not transferable on the books of the corporation.
No certificate of stock shall be issued to a subscriber as fully paid, until the par
value thereof has been paid by him (sees. 35, 36).
16. Preferred Stock. — The issuance of preferred stock is not specifi-
cally authorized by the act. Provision may, however, be made for the issuance
of preferred stock by reference thereto in the articles of incorporation.
17. Payment of Capital Stock. — No corporation can issue stock except
in exchange for actual cash paid to the corporation, or for property actually
516
DIGEST OF INCORPORATION ACTS. — PHILIPPINE ISLANDS.
received by it at a fair valuation equal to the par value of the stock issued
against it (sec. 16).
18. Books. — All business corporations must keep a record of all their
business transacted and the minutes of all meetings of directors ami stockhold-
ers. Such records and minutes are open to the inspection of any director or
stockholder of the corporation at reasonable hours. A stock and transfer book
must also be kept ; this is likewise open to the inspection of any stockholder or
director at reasonable hours (sees. 51, 52).
19. Office. — Every corporation must maintain a principal office within the
Philippine Islands (sec. 6).
20. Reports. — No public reports are required to be regularly made or
published. (See, however, sees. 54. 55.)
21. Anti-Trust Statute. — There is no local anti-trust statute exclusively
applicable to the Philippine Islands in force and effect therein.
22. Statutory Grounds for Forfeiture of Charter. — If a corporation
does not formally organize and commence the transaction of its business or the
construction of its works within two years from the date of its incorporation its
charter may be forfeited by proper action brought in that behalf by the At-
torney-General.
23. Amendments. — To increase or diminish the capital stock requires a
two-thirds vote of the entire capital stock subscribed cast in favor thereof at
a stockholders' meeting regularly called for that purpose. "Written or printed
notice of the proposed increase or diminution of the capital stock, and of the
time and place of the stockholders' meeting at which the proposed increase or
diminution of the stock is to be considered, must be addressed to each stock-
holder at his place of residence as shown by the books of the corporation and
registered and deposited so addressed in the post-office with postage prepaid.
A certificate in duplicate must be signed by a majority of the directors of the
corporation and countersigned by the chairman and secretary of the stock-
holders' meeting, showing compliance with the requirements of this section,
the amount of the increase or diminution of the capital stock, the amount of
stock represented at the meeting, and the vote authorizing the increase or
diminution of the capital stock. One of the duplicate certificates shall be kept
on file in the office of the corporation and the other shall be filed in the office of
the Chief of the Division of Archives, Patents, Copyrights, and Trade Marks of
the Executive Bureau, and attached by him to the original articles of incorpora-
tion. From and after the filing of the duplicate certificate with the Chief of the
said division the capital stock shall stand increased or reduced.
The Chief of the said Division of Archives, Patents, Copyrights, and Trade
Marks shall be entitled to collect the sum of twenty pesos for filing said duplicate
certificate (sec. 17).
Any corporation may amend its articles of incorporation by a majority vote
of the board of directors or trustees and the vote or written assent of two-thirds
of its members, if it be a non-stock corporation, or, if it be a stock corporation, by
the vote or written assent of the stockholders representing at least two-thirds
of the subscribed capital stock of the corporation. A copy of the articles of in-
corporation as amended, duly certified to be correct by the president and the
secretary of the corporation and a majority of the board of directors or trustees,
shall be filed in the office of the Chief of the Division of Archives, Patents. Copy-
rights, and Trade Marks of the Executive Bureau and attached to the original
articles of incorporation, and from time of filing of such copy of the amended
517
DIGEST OF INCORPORATION ACTS. — PHILIPPINE ISLANDS.
articles of incorporation the corporation shall have the same powers, and it and
the members, or stockholders thereof shall thereafter be subject to the same
liabilities, as if such amendment had been embraced in the original articles of
incorporation: provided, however, that the life of said corporation shall not
be extended by said amendment beyond the time fixed in the original articles ;
and provided, that the original articles and the amended articles together shall
contain all provisions required by law to be set out in the articles of incorpora-
tion ; and provided further, that nothing in this section shall be construed to
authorize any corporation to increase or diminish its capital stock so as to affect
any rights or actions which accrued to others between the time of the filing of
the original articles of incorporation and the filing of the amended articles
(sec. 18).
The number of directors may be increased to any number not exceeding
eleven, or diminished to any number not less than five, by the assent of the stock-
holders of the corporation at a regular or special meeting of stockholders repre-
senting the holders of a majority of the stock. Thereafter a certificate setting
out such increase or diminution in the number of directors of any corporation
shall be duly signed and sworn to by the president, managing agent, secretary,
or clerk or treasurer of such corporation and forthwith filed in the office of the
Chief of the Division of Archives, Patents, Copyrights, and Trade Marks of
the Executive Bureau (sec. 6).
24. Extension of Corporate Existence. — There is no provision for the
extension of corporate existence.
25. Dissolution. — The corporation may be dissolved by the Court of
First Instance for the province where the principal office of the corporation is
situated upon the voluntary application of stockholders holding at least two-
thirds of the stock issued or subscribed. Application for dissolution must be
in writing, and shall set forth all claims and demands against the corporation.
It must be signed by a majority of the board of directors or other officers having
the management of the affairs of the corporation, and must be verified by the
president, secretary or clerk, or some director of the corporation (sees. 62-67
inclusive).
26. Annual Franchise Tax. — There is no annual franchise tax imposed.
27. Foreign Corporations. — No foreign corporation or corporations
formed, organized, or existing under any laws other than those of the Philippine
Islands shall be permitted to transact business in the Philippine Islands until
after it shall have obtained a license for that purpose from the chief of the
division of archives, patents, copyrights, and trade-marks of the executive
bureau upon order of the secretary of finance and justice in case of banks, sav-
ings and loan banks, trust corporations, and banking institutions of all kinds,
and upon order of the Secretary of Commerce and Police in case of all other
foreign corporations. No order for a license shall be issued by either of said
secretaries except upon a statement under oath of the managing agent of the
corporation, showing to the satisfaction of the proper secretary that the cor-
poration is solvent and in sound financial condition, and setting forth the
resources and liabilities of the corporation within sixty days of the date of
presenting the statement, as follows :
(1) Name of the corporation.
(2) The purpose for which it was organized.
(3) The location of its principal or home office.
(4) The capital stock of the corporation and the amount thereof actually
518
DIGEST OF INCORPORATION ACTS. — PHILIPPINE ISLANDS.
subscribed and paid into the treasury on the day of (here in-
sert date, month, year).
(5) The net assets of the corporation over and above all debts, liabilities,
obhgations, and claims outstanding against it on (here in-
sert date, month, year).
(6) The name of an agent residing in the Philippine Islands authorized I>y
the corporation to accept service of summons and process in all legal proceed-
ings against the corporation and of all notices affecting the corporation.
Upon filing in the division of archives, patents, copyrights and trade marks,
of the executive bureau the said statement, a certified copy of its charter and
the order of the secretary of finance and justice or of the secretary of commerce
and police, as the case may be, for the issuance of a license, the chief of the said
division shall issue to the foreign corporation as directed in the order a license
to do business in the Philippine Islands, and for the issuance of said license the
chief of the said division shall collect a fee of fifty pesos, provided, however,
that the secretary of finance and justice or the secretary of commerce and police,
as the case may be, may issue to any foreign commercial corporation transact-
ing business in the Plulippine Islands at the time of the passage of this act and
continuously in the Philippine Islands for more than three years prior thereto
a license to do business in the Philippine Islands without requiring the state-
ment prescribed by this section, but the license to so transact business shall be
secured and the fee paid therefor by such corporation (sec. 68).
On May 8, 1907 (Act No. 659) the following statute was enacted :
"Any corporation operating at the time of the passage of this act under a
special franchise granted by the Philippine Commission is hereby exempted from
compliance with the provisions of sixty-eight, sixty-nine, seventy, and seventy-
one of the corporation law T : Provided, however, that the corporation so exempted
shall be obliged to name an agent residing in the Philippine Islands authorized
by the corporation to accept service of summons and process in all legal proceed-
ings against the corporation, and of all notices affecting the corporation, and
shall file its designation of such agent in the division of archives, patents, copy-
rights, and trademarks of the executive bureau, together with a duly authenti-
cated copy of its articles of incorporation, and pay a fee of fifty pesos for the
filing of said designation and copy of articles of incorporation, on or before the
first day of August, nineteen hundred and seven: And provided further, that
any corporation by this section exempted from compliance with sections sixty-
eight, sixty-nine, seventy, and seventy-one of the corporation law, as above
provided, shall file with the division of archives, patents, copyrights, and trade-
marks of the executive bureau a statement of the amount of stocks and bonds
actually issued and the cash or property consideration for such issue of stocks
or bonds. In case stocks or bonds were issued in consideration of property
transferred or conveyed to such corporation, then such statement shall contain
a declaration of the fair valuation of such property. And provided, further,
that all other sections of the corporation law which are applicable to foreign
corporations or to corporations not formed <>r organized under the laws of the
Philippine Islands shall be applicable to corporations exempted by this section
from compliance with the provisions of sections sixty-eight, sixty-nine, seventy,
and seventy-one of the said corporation law."
519
DIGEST OF INCORPORATION ACTS. — PORTO RICO.
PORTO RICO.
(The references cited below are to the Civil Code of Porto Rico, Revision of 1902, unless
otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Law of Porto Rico is to be found in the Revised
Statutes and Acts of 1902, Title II, of the Civil Code, sees. 32-71. Under the
general law corporations may be formed for any lawful purpose, except bank-
ing, building and loan, insurance, railroad, telegraph, telephone, canal or turn-
pike companies.
2. Incorporators. — Three or more, of full legal capacity (sec. 35). There
are no residential requirements.
3. Contents of Articles of Incorporation. — The articles must contain
(sec. 36):
a. Name. — Similarity of names is forbidden (sec. 36, 1").
b. Domiciliary Office. — The location, including the town, or city, street and
number if there be any, of the principal office in Porto Rico (sec. 36, 2).
c. Duration. — The period, if any, limited for the duration of the corpora-
tion. The duration may be perpetual if desired (sec. 36, 3).
d. Pur-poses. — The object or objects for which the corporation is formed
(sec. 36, 4).
e. Capital Stock. — The amount of the total authorized capital stock, which
cannot be less than $2,000. Also the number of shares into which the same is
divided and the par value of each share. (The par value may be any amount.)
The amount of paid in capital with which the corporation may commence busi-
ness, which shall not be less than $1,000 (sec. 36, 5).
/. Incorporators. — Names and post-office addresses of the incorporators and
the number of shares subscribed for and the amount of subscriptions paid in by
each (sec. 36, 6).
g. Provision for Regulation of Internal Affairs. — Any provision which the
incorporators may choose to insert for the regulation of the business and the
conduct of the affairs of the corporation, or for creating, defining, or limiting
and regulating the powers of the corporation, directors, or of the stockholders
(sec. 36, 7).
4. Statutory Powers. — The usual common law powers are enumerated.
Under the act banking powers are specifically prohibited (sec. 33). Only
such property may be held as may be necessary to accomplish the purposes
stated in the articles of incorporation (sec. 32). Agricultural corporations are
limited to holding five hundred acres of land. Corporations other than agri-
Cultural corporations may hold stock in other corporations, provided such cor-
porations own property necessary for its business (sec. 45). Other express
powers conferred are the right to permit stockholders to vote by proxy (sec. 42),
to classify directors (sec. 40) ; to confer upon directors power to adopt by-laws
(sec. 39).
5. Procuring the Charter. — The articles must be subscribed and ac-
knowledged by each of the corporators. They must then be filed and recorded
in the office of the Secretary of Porto Rico and payment of filing fees made to
that official. Thereupon there is issued to the corporation a certificate of due
520
DIGEST OF INCORPORATION ACTS. — PORTO RICO.
incorporation (sec. 37). Corporate existence commences as soon as the articles
are so filed (sec. 37).
6. Corporate Indebtedness. — Corporate indebtedness must never ex-
ceed the paid up value of the capital stock or the value of the corporation's prop-
erty or assets (sec. 62).
7. Organization Tax. — The organization tax is 15 cents on each one
thousand dollars of authorized capital stock. This is further regulated by the
provision that the minimum fee shall be S25 and the maximum fee S500 (sec.
G3, 1, Code, sec. 59).
8. Filing and Recording Fee. — For recording articles, 20 cents per
folio ; for making certified copies thereof, 20 cents per folio ; for affixing cer-
tificate and seal thereto, SI ; for issuing certificate of corporate existence, S3;
for filing notice of removal of place of business, or other certificates of amend-
ment. 55 ; for filing certificate of continuance of corporate existence, S3 (sec. 44,
Pol. Code, sec. 59).
9. Commencing Business. — Before beginning business an authenti-
cated copy of the articles of incorporation must be filed with the treasurer of
Porto Rico, together with a statement verified by the oath of the president, and
attested by a majority of the directors, stating the name of the corporation,
its domicile and the kind of business engaged in, branches elsewhere, and the
commercial registry in which the articles have been recorded (Pol. Code, sec. 353).
Another requirement is that business cannot be commenced until the amount
of capital is paid in which is designated in the articles of incorporation as the
amount with which it will commence business (sec. 36).
10. Organization Meeting. — Within sixty days after the filing of the
articles of incorporation the first meeting of the corporation shall be called by
a notice subscribed by a majority of the incorporators, designating the time,
place, and purpose of the meeting. Such notice shall be served upon each of
the subscribers to the said articles of incorporation either personally or by
publication of the said notice on two successive weeks in a newspaper of Porto
Rico, and by mailing a copy of such notice by registered mail, addressed to
each subscriber at the post-office address mentioned in the articles of incorpora-
tion. This notice, however, may be waived in writing by all of the incorporators
(sec. 38).
11. Meetings of Stockholders and Directors. — The articles of incor-
poration, or the by-laws of every corporation, may determine the time and
manner of calling and conducting all stockholders' meetings (sec. 42). In all
cases where it is not otherwise provided by law, the meetings of stockholders
must be held at the principal office of the corporation in Porto Rico (sec. 42 a).
Voting by proxy is provided for (sees. 42, 48). To permit of cumulative voting
for directors, provision therefor must be made in the articles of incorporation
(sec. 49). Xo share of stock can be voted upon which has been transferred on
the books of the company within twenty days before the election i.^-v. 49).
Directors, if the by-laws or articles of incorporation so provide, may hold their
meetings and have an office outside of Porto Rico (sec. 41).
12. Directors' Qualifications and Liabilities, a. Qualifications. The
directors must not be less than three in number (sec. 38). They must all be
stockholders (sec. 40). At lea I one musl be a resident of Porto Rico (sec. 38).
They may be classified, provided no class shall hold office for less than one
year nor more than iive years. At least one-fifth must be elected cad! year
(sec. 40). If desired, the stockholders may delegate to the directors the adop-
521
DIGEST OF INCORPORATION ACTS. — PORTO RICO.
tion of by-laws (sec. 39). Unless otherwise provided in the by-laws they may
fill vacancies in the board and among officers (sec. 40).
b. Liabilities. — Directors are liable for contracting debts in excess of the
paid up capital stock or the value of the corporation's assets (sec. 62). They
are also liable for making any dividend except from surplus profits, or for
dividing and paying capital stock in any manner except as provided by law
(sec. 46). Directors are also liable for making false statements in certificate
of public notice (sec. 61). The Code provides punishment for contempt, for
failure on the part of the directors to obey the order of the court directing them
to bring books of the corporation into the island (sec. 41 ; see also Penal Code,
chap. 11).
13. Stockholders' Liabilities. — Stockholders are liable only to the
extent of the unpaid balance due on their stock subscriptions (sees. 42 b, 45).
Stock may be forfeited for non-payment of assessments (sec. 42).
14. Stock Certificates. — Every stockholder is entitled to a certificate
signed by the president and treasurer, certifying the number of shares owned
by him (sec. 42). The par value may be any amount (sec. 36).
15. Preferred Stock. — The statute does not in express terms authorize
the issuance of preferred stock.
16. Payment of Capital Stock. — Any corporation may purchase prop-
erty necessary for its business or shares in the stock of any other corporation
owning property necessary for its business, and may issue shares to the amount
of the value thereof in payment of the same, and the shares so issued shall be
fully paid stock and not liable to any further call. In the absence of actual
fraud in the transaction, the judgment of the directors as to the value of the
property purchased shall be conclusive. In all statements and reports of the
corporation published or filed, its shares of stock shall be reported according
to the facts (sec. 45).
17. Books. — The stock and transfer books of the corporation must be
kept at the principal office of the corporation in Porto Rico (sec. 41). If the
articles so provide, all other books may be kept outside of Porto Rico. The
stock and transfer books must be open to the inspection of stockholders during
business hours (sec. 47).
18. Office and Agent. — All domestic corporations must maintain a prin-
cipal office in the island, and have an agent in charge thereof wherein shall be
kept the stock and transfer books (sec. 41).
19. Reports. — Upon the payment of any instalment of capital stock
made subsequent to the filing of articles of incorporation and of each instal-
ment of every increase thereof, the president, secretary or treasurer, shall make
a certificate stating the amount so paid, and whether paid in cash or by the pur-
chase of property, stating also the total amount of capital stock previously
paid and reported, which certificate shall be signed and sworn to by them, and
the same witliin ten days after such payment be filed in the office of the Secre-
tary of Porto Rico. If any of said officers shall neglect or refuse to perform
the duty thus imposed upon them for thirty days, at the written request so to
do by a creditor or stockholder of any corporation, they shall be jointly and
severally liable for all its debts contracted before the filing of such certificate
(sec. 43).
Every domestic corporation and every foreign corporation doing business in
the island of Porto Rico shall file in the office of the Secretary of Porto Rico
annually, and witliin the month of July, a report authenticated by the signature
522
DIGEST OF INCORPORATION ACTS. — PORTO RICO.
of the president and one other officer, or by any two directors of the company,
stating: (1) The name of the corporation; (2) The location, town or city, street
and number, if number there be, of its principal office in the island of Porto
Rico, and if a foreign corporation, the name of the agent upon whom process
against the corporation may be served; (3) The object or objects of its busi-
ness; (4) The amount of its authorized capital stock, the amount actually
issued, and outstanding, and the amount thereof actually paid in. a statement
of its existing liabilities ; (5) The names and post-office addresses of all of the
directors and officers of the company, and the time when the term of office of
each expires; (6) The date appointed for the next annual meeting of stock-
holders for the election of directors; (7) Whether such corporation has kept
at its principal office in the island of Porto Rico a transfer book in which trans-
fers are made, and a stock book containing the names and addresses of all the
stockholders and the number of shares held by them respectively, open at all
times to the inspection of stockholders, as required by law. Any corporation
failing to make such a full report shall forfeit to the island of Porto Rico $200,
to be recovered with costs in an action to be prosecuted by the Attorney-
General (sec. 56).
20. Anti-Trust Statute. — The Territory of Porto Rico has no anti-
trust statute.
21. Statutory Grounds for Forfeiture of Charter. — The Legislative
Assembly of Porto Rico has power to dissolve all corporations (sec. 34). The
corporation may also be dissolved for failure to bring books into the island
when ordered so to do by the court (sec. 41).
22. Amendments. — Every corporation organized under this code may
amend its articles of incorporation by changing the corporate object or objects,
changing the name, increasing or decreasing the capital stock, changing the
par value and number of shares of its capital stock, changing the location of
its principal office in the island of Porto Rico, extending the term of corporate
existence limited in the articles of incorporation, or making such other amend-
ments, change, or alteration as may be required, provided that said certificate
of amendment, change, or alteration shall contain only such provisions as it
will be lawful and proper to insert in original articles of incorporation made at
the time of making such amendment, and provided also that for filing such
amendment to the articles of incorporation the Secretary of Porto Rico shall
charge the same fees as for filing original articles. Such amendments, changes,
or alterations shall be made in the following manner. The board of directors
shall pass a resolution declaring that such change or alteration is advisable and
calling a meeting of the stockholders to take action thereon. The meeting shall
be held upon such notice as the by-laws provide, and in the absence of such
notice upon thirty days' notice given personally or by registered mail. If
holders of two-thirds in amount of the capital stock issued shall vote in favor
of such amendment, alteration, or change, a certificate thereof shall be signed
by the president and secretary under the corporate seal, and acknowledged by
a Notarial Act, and such certificate, together with the assent given in person or
by proxy of stockholders representing two-thirds of the total number of shares
issued, shall be filed in the office of the Secretary of Porto Rico, and upon the
filing of the same the articles of incorporation shall be deemed amended accord-
ingly (sec. 44).
23. Extension of Corporate Existence. — This may be effected by
amendment to the articles of incorporation. (See ante, 6ec. 22.)
523
DIGEST OF INCORPORATION ACTS. — PORTO RICO.
24. Annual License Tax. — There is no annual license tax.
25. Dissolution. — The corporation may be dissolved by joint action of
the board of directors and stockholders. A two-thirds vote of the stockholders
is required to carry into effect a dissolution. When two-thirds of the stock-
holders shall have consented to dissolution in writing, such consent, together
with the names and residences of the directors and officers, certified by the
president or secretary and treasurer, shall be filed in the office of the Secretary
of Porto Rico, who, on being satisfied by due proof that the requirements of
law have been complied with, shall cause such certificate to be published four
w r eeks successively in a newspaper published in Porto Rico. Upon affidavit
being made that such certificate has been published, the corporation shall be
dissolved, and the board of directors shall proceed to liquidate the business
and affairs of such corporation. Whenever all the stockholders shall consent
in writing to a dissolution in meeting, the notice thereof shall be inserted, and
the Secretary of Porto Rico shall forthwith issue a certificate of dissolution on
filing such consent in his office, which certificate shall be published as above
provided (sees. 55-60 inclusive).
26. Foreign Corporations. — All foreign corporations before commencing
business in Porto Rico must file in the office of the Secretary of Porto Rico a
duly authenticated copy of its charter or articles of incorporation (sec. 65).
A statement must also be made, verified by the oath of its president and sec-
retary and attested by a majority of its board of directors, showing: (1) The
name of such corporation, the location of its principal place or places of busi-
ness in Porto Rico, if it have any place or places of business or principal office
within Porto Rico, then the location thereof must be given; (2) The amount
of its capital stock; (3) The amount of its capital stock actually paid in in
money ; (4) The amount of its capital stock paid in in any other way, and in
what ; (5) The amount of the assets of the corporation and what the assets
consist of, with the actual cash value thereof; (6) The liabilities of such cor-
poration, and if any of its indebtedness is secured, how secured, and upon what
property (sec. 65). The president or acting head of the corporation and the
secretary under the corporate seal must also file a certificate consenting to be
sued in the courts of Porto Rico upon all causes of action arising against it
therein, and further that sendee of process may be made in its behalf upon
some person a resident of Porto Rico and whose name and place of residence
shall be designated in such certificate (sec. 66). To this must be attached the
written consent of the person so designated to act as such agent (sec. 67).
Foreign corporations must make the same annual reports as are required of
domestic corporations (sec. 69 ; see ante, sec. 19). In order to procure a license
all foreign corporations must pay to the Treasurer of Porto Rico a license fee
of $25, and the same fee must be paid annually on or before the 1st day of July
of each year following (Political Code, sec. 353 ; see also sec. 68, Penal Code,
sec. 498). They must also keep a stock and transfer book at the principal office
in the island (sec. 52). They must also make the same tax returns as are re-
quired of domestic corporations. (See Pol. Code, sees. 316-320.)
524
DIGEST OF INCORPORATION ACTS. — RHODE ISLAND.
RHODE ISLAND.
(The references cited below are to General Laws, 1896, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Rhode Island is to be found in the General
Laws, chaps. 176, 177, 180. L T nder this act corporations may be formed for the
transaction of any ordinary business, except railroad, canal, turnpike, insurance,
banking and trust companies, and corporations created for dealing in bonds,
notes, and other evidences of indebtedness (see also Const., Art. IX.).
2. Incorporators. — Three or more persons of lawful age. No residential
requirements (chap. 176, sec. 2).
3. Contents of the Articles of Incorporation. — The certificate must set
forth:
a. Name. — Agreement to constitute an ordinary business corporation under
a designated name. The latter must be one that must not be mistaken for that
of a copartnership, and one not in use by an existing domestic corporation.
6. Purposes. — Business for which it is constituted. State officials construe
this to authorize the insertion of any number of purposes in the articles not
covered by special acts.
c. Domiciliary Office. — Town or city in which it is to be located.
d. Capital Stock. — Amount of capital stock, whether common or preferred,
and how much of it, and the par value of shares. Capital stock may be any
amount. The par value of shares may be any amount. If preferred stock is
desired, the articles must set forth the advantages thereof over common stock
(chap. 176, sec. 2).
e. If desired, provision may be made that the corporation shall have a lien
on all shares for indebtedness of the shareholders due to the corporation. The
right may also be given to the corporation in case of sale of stock by any stock-
holder to purchase said stock at the lowest price at which he is willing to sell
before the same shall be sold by him to any other party (sec. 9) (Laws of
1906, chap. 1326).
The duration of a corporation is perpetual unless it shall expire by its own
limitation or shall be legally annulled (G. C. L., sees. 1, 9, chap. 177).
4. Statutory Powers. — In addition to a statutory enumeration of com-
mon law powers, the following additional powers are conferred : The right to
authorize voting by proxy ; the right to issue preferred stock ; the creation of
a hen upon shares for assessments or indebtedness due the corporation ; the
right to forfeit such stock for non-payment of assessments (chap. 177, sees. 1,
3, 9). Corporations may be dissolved for certain causes enumerated in the
statute upon the petition of either stockholders or creditors (see Laws of 1909,
chap. 424).
5. Procuring the Charter. — The articles (if incorporation must be signed
by each of the corporators (setting forth the place of residence of each) and
must be acknowledged in the same manner in which deeds of real estate are
required to be acknowledged within the State. The agreemenl must then be
filed in the office of the Secretary of State, together with the certificate of the
general Treasurer, that the organization tax lias been paid (chap. 17(i, sec
4). Upon payment of $1 the Secretary of State issues a certificate of incor-
525
DIGEST OF INCORPORATION ACTS. — RHODE ISLAND.
poration in the form prescribed by statute (chap. 176, sec. 4). As soon as a
treasurer is elected, his name and address must be filed with the Secretary
of State (chap. 176, sec. 16). If the treasurer be a non-resident, then the cor-
poration must appoint an agent residing within the State with authority to
accept service of process in behalf of the corporation.
6. Corporate Indebtedness. — Corporate indebtedness in manufactur-
ing corporations cannot be created beyond the amount of the actual capital paid
in without subjecting the directors to personal liability therefor (chap. 180,
sec. 15).
7. Organization Tax. — On capital stock less than $100,000, the tax is
$100 ; on capitalization of $100,000 or more, the tax is one-tenth of one per cent
on authorized capital stock. The tax is payable to .the General Treasurer.
8. Filing and Recording Fees. — The payment of the organization tax
includes the filing and recording fees in the office of the Secretary of State. The
Secretary of State charges 10 cents per folio of 100 words for making copy of
certificate of incorporation, and $1 for affixing certificate thereto. The fee for
issuing certificate of incorporation is $1, for fifing appointment of agent in
behalf of a foreign corporation, $1.50.
9. Commencing Business. — Business may be commenced as soon as the
articles are filed as prescribed by law. Within thirty days after organization
there must be filed with the Secretary of State a certificate under oath of the
treasurer, or other officer authorized to make same, setting forth the name of
the corporation, date of organization, amount of capital stock actually paid in
upon organization, the town in which such corporation is located, and the name
and post-office address of its treasurer (chap. 177, sec. 24). Corporation must
be organized within two years after incorporation (chap. 177, sec. 23).
10. Organization Meeting. — The organization meeting must be held
within the State, in the absence of any statute providing otherwise. The meet-
ing of the incorporators to form the corporation shall be called by a notice
signed by one or more of the corporators, stating the time, place, and purpose of
the meeting, and copy of which shall be mailed at least five days before the
date appointed for the meeting to each corporator, addressed to his usual place
of business or residence, which notice may be given as soon as said agreement
and the certificate of the general treasurer have been filed with the Secretary
of State, provided, however, that such first meeting may be held by agreement
in writing of all the corporators without such notice; said first meeting to be
held in any event subsequent to the issuing of said certificate by the Secretary
of State (chap. 176, sec. 6).
The first meeting of the corporation, unless notice be waived in writing by
all of the corporators, must be called by a notice signed by one or more of the
corporators setting the time, place, and object of the meeting, and such notice
shall, seven days before such meeting, be delivered to each member, or published
in some newspaper of the county where such corporation may be established,
or if there be no newspaper in the county, then in some newspaper of an ad-
joining county (chap. 177, sec. 4. As to contents of by-laws, see chap. 177,
sec. 3).
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held within the State. Voting by proxy at all stockholders' meet-
ings is permitted (chap. 177, sec. 3). Directors' meetings may be held with-
out the State if the by-laws so provide (chap. 177, sec. 3).
12. Directors' Qualifications and Liabilities, a. Qualifications. — The
526
DIGEST OF INCORPORATION ACTS. — RHODE ISLAND.
number of directors is not limited; nor are there any residential requirements.
The practice in Rhode Island is to require that all directors shall hold at least
one share of stock in order to qualify them to act.
b. Liabilities. — Directors of manufacturing corporations are liable to the
creditors for failure to file a certificate executed by themselves, together with
the president, treasurer, and clerk of the company, within ten days after the
payment of the last instalment of the capital stock fixed and limited by the
charter, or by vote of the company, stating the amount of the capital so fixed
and paid in. The certificate must then be recorded within the said ten days
in the office of the town clerk of the town wherein the manufactory shall be
established. They are also liable for illegal declaration of dividends. They
are also liable under certain conditions (see chap. 180, sees, 15, 16) to the
extent of the debts created by them in excess of the amount of stock actually
paid in. Directors are also liable for making false certificates, knowing them
to be false. They are also liable for making loans to stockholders to the extent
of such loan and interest thereon (chap. ISO, sees, 2, 3, 6, 7, 15, 16, 20, 21).
Officers and directors are also liable for wilfully making any false statement in
the tax statement required by the Tax Act of 1912 (see Laws of 1912, chap. 769,
sec. 17).
13. Stockholders' Liabilities. — Stockholders are liable to the extent of
their unpaid stock subscriptions (Laws of 1901, chap. 839). The members of
every incorporated manufacturing company shall be jointly and severally liable
for all debts and contracts made and entered into by such company except as
hereinbefore provided, until the whole amount of the capital stock fixed and
limited by the charter of such company, or by vote of the company, in pur-
suance of the charter, or of law, shall have been paid in, and a certificate thereof
shall have been made and recorded in a book kept for that purpose in the office
of the town clerk of the town wherein the manufactory is established and no
longer, except as hereinafter provided (chap. 180, sec. 1).
The president and directors, with the treasurer and clerk of such company,
within ten days after the payment of the last instalment of the capital stock
fixed and limited by the charter or by vote of the company, in pursuance of
the charter or of law, shall make a certificate, stating the amount of the capital
so fixed and paid in, which certificate shall be signed and sworn to by the
president, treasurer, and clerk and by a majority of the directors, and they
shall within said ten days lodge the same to be recorded in the book kept as
aforesaid in the office of the town clerk of the town wherein the manufactory
shall be established. In case of increase of the capital stock of said companies,
like proceedings shall be had as to the amount added and paid in (chap. 180,
sec. 2).
The liability provided by section 1 of chapter ISO is specifically limited to
the shares of such stockholders in such corporation paid up and the par value
thereof.
14. Stock Certificates. — Each stockholder is entitled to a stock certifi-
cate showing the number of shares held by him, signed by such officers as the
bydaws may prescribe.
15. Preferred Stock. — The issue of preferred stock is expressly authorized
by law, and provision therefor must be made in the articles of incorporation
(chap. 176, sees. 2, 7).
16. Payment of Capital Stock. — Capital stock may be paid for either in
money or in property. This no! by virtue of any specific statute, but under
527
DIGEST OF INCORPORATION ACTS. — RHODE ISLAND.
well-recognized principles of corporation law (see in this connection, chap. 180,
sees. 8, 9, 10).
17. Books. — Records of transfers of stock of domestic corporations shall
be made and kept within the State, and the officer of every such corporation
whose duty it may be to record the transfers of shares in the capital stock
thereof, shall at the time of his election or appointment be a resident of the
State (chap. 177, sec. 19).
18. Office and Agent. — All corporations must have a place of business
within the State, and shall have a clerk, treasurer, or other agent, who shall
reside therein (chap. 177, sec. 21). The officer whose duty it is to record stock
transfers must be a resident of the State (chap. 177, sec. 1). If the treasurer
of a domestic corporation does not reside within the State, the corporation
must forthwith appoint some competent person resident in the State as its
attorney upon whom service of process upon the corporation may be made. A
copy of the power of attorney designating such agent duly certified and au-
thenticated must be filed with the Secretary of State (chap. 176, sec. 16).
19. Reports. — -Annual reports are required to be filed with the Board of
Tax Commissioners on or before the first day of March of each year (as to con-
tents of report, see sec. 25, Annual Franchise Tax). By section 39, chapter 557
of the Laws of 1910, it is provided as follows:
" No stock, shares, or instalment shares in any investment company or in any
real estate, mining, or co-operative corporation, society, association, or organi-
zation other than building and loan associations, or notes or bonds or other securi-
ties thereof, shall be sold or offered for sale in this State by any such company,
corporation, society, organization, or association, or by any agent or broker
representing such company, corporation, society, organization, or association
until such company, corporation, society, organization, or association has filed
in the office of the Secretary of State a statement and certificate showing its
financial condition, the location of its property or properties with plans of the
same, the amount of work done thereon, the amount of cash expended for im-
provements thereon, and the condition of the plant and machinery, if any, con-
nected therewith. Such statement and certificate shall be subscribed and
sworn to by the president, treasurer, and secretary of such company, corporation,
society, organization, or association. A like statement and certificate shall be
filed annually thereafter on or before the 1st day of July of each year. For
the filing of such statement or certificate a fee of $10 shall be paid to the
Secretary of State, and such statements and certificates shall be recorded by the
Secretary of State in a book kept for that purpose and open for public
inspection.
"Any company, corporation, society, organization, or association, or any
agent or broker representing such company, corporation, society, organization,
or association, selling or offering for sale any stock, shares, or instalment shares,
or any notes, bonds, or other securities in any such company, corporation, society,
organization, or association which has failed to file a statement or certificate as
herein provided, shall be fined not exceeding §5500 for each offence (Laws of
1910, chap. 557, sec. 40)."
"The provisions of this act shall not apply to any corporation incorporated
under the laws of this State where at least ninety per centum of the property
of such corporation is located in this State (Laws of 1910, chap. 557, sec. 41)."
On the request of the governor or Secretary of State, the bank commissioner
shall privately examine the books and accounts of any such company, corpora-
528
DIGEST OF INCORPORATION ACTS. — RHODE ISLAND.
tion, society, organization, or association, and if in his opinion such company,
corporation, society, organization, or association is insolvent, or its condition is
such as to render a continuance of the business hazardous to the public, said
bank commissioner may petition the Superior Court for the counties of Provi-
dence and Bristol for the appointment of a receiver of the estate and effects in
tliis State of such company, corporation, society, organization, or association
and for an injunction to restrain such company, corporation, society, organiza-
tion, or association, its officers or agents, from doing business in this State, and
from selling or offering for sale in this State its stock, shares, notes, bonds, or
other securities, and if incorporated under the laws of this State, for a dissolution,
and said court shall have jurisdiction in equity of such petition. Such receiver
shall have the rights and powers given to receivers under the provisions of
sections 28, 29, and 30 of this chapter, and all acts in amendment thereof or in
addition thereto. The actual expenses of such examination of the books and
accounts of such company, corporation, society, organization, or association
shall be paid by such company, corporation, society, organization, or associa-
tion, if found by the bank commissioner to be insolvent or the continuance of
its business to be hazardous to the public, or of failing to file any report as
required by law'" (Laws of 1910, chap. 557, sec. 42).
" If any company, corporation, society, organization, or association refuses
to allow an examination of its books and accounts by the bank commissioner,
he shall apply to the Superior Court for the counties of Providence and Bristol
alleging such fact, and said court, on proof thereof, shall enjoin such company,
corporation, society, organization, or association from doing business within
this State, and from selling or offering for sale in this State its stock, shares,
notes, bonds, or other securities, and if such corporation is incorporated under
the laws of this State, the court may order a dissolution of said corporation and
may appoint a receiver, who shall have the rights and powers above referred
to" (Laws of 1910, chap. 557, sec. 42).
20. Anti-trust Statutes. — There is no anti-trust statute in force in
Rhode Island.
21. Statutory Grounds for Forfeiture of Charter. — The charter may
be forfeited for failure to organize within two years after filing articles of agree-
ment (chap. 177, sec. 23).
Any corporation having a non-resident treasurer and failing for the period
of one year to appoint a resident agent within the State may be dissolved upon
application by any creditor or by any other party in interest to the appellate
division of the Supreme Court (chap. 176, sec. 16).
22. Amendments. — Whenever a corporation is created as provided by
law, and more capital than the amount prescribed in the articles of agreement
shall be necessary or desirable, such articles may be amended in pursuance of a
vote therefor representing in amount three-quarters of the whole capital stock
passed at a meeting of the corporation duly called for that purpose, by the
filing in the office of the Secretary of State of a certificate of such vote duly
attested by the president and secretary of said corporation, together with the
certificate of the general treasurer thai said corporation has, with previous pay-
ments to the general treasurer, paid into the treasury, for the use of the State, a
sum equal to one-tenth of one per centum of its capital stock when .so increased.
Such vote shall set forth the amount, the par value, and kinds, of additional
stock and the advantages of the preferred, if any, over the common stock. Such
agreement may be amended in any other particular, excepting as provided in
34 529
DIGEST OF INCORPORATION ACTS. — RHODE ISLAND.
the following section, by like vote of the corporation, and the filing in the office
of the Secretary of State of a copy of such vote duly attested by the president
and secretary of said corporation (chap. 176, sec. 7).
Whenever a corporation is created as provided by law and it is deemed
necessary or desirable to decrease the amount of capital stock of the corpora-
tion, prescribed in the articles of agreement or any amendment thereof, said
articles may be so amended in pursuance of a vote therefor representing in
amount three quarters of the whole capital stock passed at a meeting of the
corporation duly called, when a copy of such vote duly attested by the president
and secretary of said corporation, has been duly filed in the office of the Secre-
tary of State ; and the secretary of such corporation shall immediately notify
in writing every stockholder of record of such decrease, and each stockholder
shall forthwith present his certificate or certificates to be exchanged for others,
or to have endorsed thereon proper evidences of the decrease of the par value
thereof, as the case may be (chap. 176, sec. 8).
The articles of incorporation may be amended so as to provide that the
corporation shall have a lien upon all shares for assessments or other indebted-
ness due from shareholders, or they may amend so as to give the corporation the
right in case of sale of stock by any stockholder to purchase such stock at the
lowest price at which he is willing to sell, before the same shall be sold by him
to any other party, by compliance with the following provisions:
The amendment must be carried by a vote of the stockholders representing
the whole capital stock, passed at a meeting of the corporation duly called for
that purpose, and followed by the filing in the office of the Secretary of State of
a certificate of such vote, duly attested by the president and secretary of the
corporation (chap. 176, sec. 9, as' amended by Laws of 1906, chap. 1326).
23. Extension of Corporate Existence. — There is no statutory pro-
vision for the extension of corporate existence.
24. Dissolution. — Corporate powers cease if organization is not com-
pleted within two years, and court of common pleas may dissolve any company
for non-user. May also dissolve voluntarily by resolution of stockholders rep-
resenting a majority of capital stock (chap. 177, sec. 27, as amended by Laws of
1909, chap. 424). Whenever any corporation incorporated under the laws of
this State, except a bank, savings bank or trust company incorporated under
the laws of this State, is insolvent or whenever by reason of fraud, negligence,
misconduct or continued absence from the State of the executive officers of any
such corporation, or whenever by reason of the neglect, refusal, or omission by
the stockholders of any such corporation for an unreasonable time to hold
meetings or attend to its concerns, the estate and effects of such corporation are
being misapplied or are in danger of being wasted or lost, or whenever any such
corporation has done or omitted to do any act, which act or omission is ground
for the forfeiture of its charter, or whenever a majority in interest of the members
of such corporation having a capital stock, or a majority of the members of
such corporation having no capital stock, shall have voted to dissolve said cor-
poration, and to wind up its affairs, the Superior Court may, upon the petition
of any stockholder or creditor of such corporation, and upon such reasonable
notice as the court may prescribe, decree a dissolution of such corporation and
appoint a receiver of its estate and effects, or may decree such dissolution
without appointing a receiver, or may appoint such receiver without decreeing
a dissolution (Laws of 1912, chap. 780, sec. 27).
25. Annual License Fee. — All business corporations, except public
530
DIGEST OF INCORPORATION ACTS. RHODE ISLAND.
utility and those organized for banking purposes, etc., in addition to a tax on
their real estate and tangible personal property locally or otherwise assessed,
must pay an annual tax to the State on the value of that part of its tangible
property, called its corporate excess, and must on or before the first day of March
in each year, return to the Board of Tax Commissioners, under the oath of its
treasurer or other duly authorized agents or officers, as of December 31st next
preceding, unless otherwise provided:
(1) The name and location within this State of such corporation; and if it
have no location within this State, where such corporation is located.
(2) The amount of its capital stock authorized and the amount outstanding,
with the number of shares of each; and if there are different classes of stock,
the amounts and numbers of shares of each class.
(3) The average fair cash value of each class of its capital stock for three
years next prior to the first day of the next preceding January, or for such
lesser time as such corporation has been carrying on business; Provided, that
until the year 1915 such value shall be returned for one year prior to the first
day of the next preceding January. A majority of the Board of Directors, or the
president, chairman, treasurer, assistant treasurer, or secretary, or any duly
authorized agent or officer of such corporation, shall estimate and appraise the
capital stock at its average fair cash value for such time. Such estimate shall
be signed by the directors or officer or agent making it, and shall be attached to
the corporate return.
(4) The amount and value of its bonded indebtedness; the amount and value
of its indebtedness evidenced by debentures; and also the amount and value of
its other indebtedness incurred for the acquisition of real estate, or of tangible
personal property; and if at any time the Boajd of Tax Commissioners believes
that any other indebtedness is not bona fide, but is used as a cover for distribution
of profits, the Board may require the return of the several classes of indebted-
ness.
(5) The value in each city or town, as assessed for taxation at the next
prior assessment, of its real estate and tangible personal property located in
this State, including the value, as fixed by the assessors of taxes in any city or
town or any property exempt under any local exemption.
(6) The location and the fair cash value of the real estate and tangible per-
sonal property, if any, used in its business, and located outside this State, to
the best knowledge and belief of the person making the return. And the return
shall show whether the valuation returned is the value assessed of taxes in other
jurisdiction or is an estimated value.
(7) A list of the securities and other property and the value thereof owned
by such corporation as its own property and not used in its business, or which
is exempt from taxation by the laws of the United States or of this State, and
any other property which such corporation claims to be exempt from taxation
in this State or not taxable by law in this State, with the reason for any such
exemption or non-taxation (Laws of 1912, chap. 7G1), sec. '.)).
The Board of Tax Commissioners shall annually fix from the return afore-
said, or from other information, the average fair cash value of each class of the
capital stock of each corporation, for the said three years or lesser time tin-
corporation has carried on business (except as otherwise provided in this act),
and notify each corporation of such value on or before the first day of May m
each year, and if any corporation is not satisfied with the valuation so fixed,
said Board upon being so notified, on or before the tenth day of May, shall fix an
531
DIGEST OF INCORPORATION ACTS. RHODE ISLAND.
early day at its office when said corporation can be heard, to show cause why
said valuation should be changed, and after such hearing said Board shall fix
such valuation as is proper (Laws of 1912, chap. 769, as amended by chap.
784, sec. 2).
Each of the corporations required to make the return aforesaid shall be
taxed upon the value of its corporate excess, which shall be determined by the
Board of Tax Commissioners, for the purposes of assessment and taxation as
follows:
(1) To the value of the total number of its shares outstanding, determined as
aforesaid, there shall be added as part of the measure of value of the property
of such corporation: (a) the total value of its outstanding bonded indebted-
ness, if any; (b) the total value of its outstanding indebtedness evidenced by
debentures, if any; (c) the total value of its other indebtedness, if any, in-
curred for the acquisition of real estate or of tangible personal property, and
such other of its indebtedness as such corporation shall return; (d) and such
other of its indebtedness, if any, as is a cover for a division of its profits (Laws
of 1912, chap. 769, sec. 11, sub sec. 1).
(2) In case of corporations also carrying on business outside of this State,
a portion of the value ascertained under the prior clause shall be apportioned
to this State as follows: " In the case of corporations deriving their profits
principally from ownership sale, or rental of real estate, and in the case of man-
ufacturing corporations, and such other corporations as derive their profits
principally from the sale or use of tangible personal property, such a proportion
of the fair cash value of their real estate and tangible personal property in this
State on December thirty-first next preceding bears to the fair cash value of
their entire real estate and tangible personal property then used in their business,
without any deduction on account of any mortgage or incumbrance thereon;
in the case of corporations deriving their profits principally from the holding or
sale of intangible property, such a proportion as their gross receipts for the year
ending on December thirty-first next preceding in this State bears to their total
gross receipts for such year, both within and without this State; and in any case
to which these proportions are not equitably applicable, in such proportion as is
equitable. And said Board shall have power to require from time to time, such
reports, sworn to as hereinbefore provided as will give said Board the informa-
tion necessary to make said apportionment " (Laws of 1912, chap. 769, sec. 11,
sub sec. 2, as amended by Laws of 1912, chap. 784, sec. 3).
(3) From the total value ascertained under the first clause of this section;
or, in the case of corporations also carrying on business outside of this State,
from the portion of the value apportioned to this State under the next preced-
ing clause, there shall be deducted the assessed value of their real estate and
tangible personal property located in this State as last assessed for local or
State taxation, including in the deduction the value of any such property ex-
empt from taxation by local authority (Laws of 1912, chap. 769, sec. 11, sub
sec. 3).
(4) Said Board shall also make such allowance for such property as is ex-
empt from taxation, or is not taxable in this State, by deducting it from the entire
value ascertained under the first clause of this section, or from the portion as-
signed to this State, or from the portion assigned to other jurisdictions as the
circumstances make equitable (Laws of 1912, chap. 769, sec. 11, sub sec. 4).
(5) The remainder shall constitute the value of the " corporate excess "
for the taxation of said corporation (Laws of 1912, chap. 769, sec. 11).
532
DIGEST OF INCORPORATION ACTS. RHODE ISLAND.
Said Board, on the first business day of Juno in each year, shall make up a
list of all corporations subject to tax upon their corporate excess, with the
amount of the corporate excess of each, and shall assess a tax upon each such
corporation at the rate of forty cents for each one hundred dollars of the amount
of its corporate excess, and enter the amount of the tax against t lie name of each
such corporation. Said Board shall certify to the correctness of such lisl ami
deliver a duly attested copy thereof as a public record to the general treasurer,
who shall receive and collect the taxes so assessed in the same manner and with
the same powers as are prescribed for, and given to, collectors of taxes by chap-
ter 60 of the General Laws, and by any acts in amendment thereof or in addition
thereto. Said Board shall also forthwith mail a notice of the amount of the
tax to each such corporation, but the failure to receive such notice shall not
excuse the non-payment of said tax. The tax assessed as aforesaid shall be
payable on the first day of July next after its assessment as aforesaid, and if
not paid by the fifteenth day of such July shall bear interest from the first day
of such July at the rate of eight per centum per annum until paid, if such pay-
ment is made before the commencement of legal proceedings for the recovery
of the tax, and at the rate of ten per centum per annum if made after the com-
mencement of such proceedings. Such tax, if unpaid, shall constitute a lien
upon the real estate of such corporation within this State for the space of two
years after the assessment thereof, and if such real estate be not aliened, then
until the same is collected (Laws of 1912, chap. 769, sec. 11).
26. Foreign Corporations. — Foreign corporations must file with the
Secretary of State declaration designating principal place of business in State
and name of agent to receive service of process, and must also file in same
office copy of the charter and by-laws with amendments. Must also file annual
statement showing residence of corporation, amount of capital stock actually
paid, names of officers and board of directors, with their residences (Stat., sees.
1466, 1467, 1469). Foreign corporations must appoint by written powers some
resident of the State as their attorney with authority to accept service of process
against such corporation in this State, and upon whom all process may be served.
A copy of such power of attorney duly certified and authenticated shall be filed
with the Secretary of State (Laws of 1902, chap. 980).
Pierce v. Compton, 13 R. I. 312; Stafford & Co. v. American Mill Co., 13 R. I. 310; Evans
v. Pease, 21 R. I. 187; 42 Atl. 506.
533
DIGEST OF INCORPORATION ACTS. — SOUTH CAROLINA.
SOUTH CAROLINA.
(The references cited below are to the Code of Laws, 1902, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of South Carolina is found in the Code of Laws
of 1902, chaps. 47, 48. Parties may incorporate under this act for any purpose
whatsoever.
2. Incorporators. — Two or more persons. There are no residential re-
quirements (chap. 48, sec. 1880).
3. Contents of the Petition for Incorporation (chap. 48, sec. 1880). —
The petition must set forth :
a. Incorporators. — Names and residences of the incorporators.
6. Name. — Name of the proposed corporation. Similarity of names not
forbidden.
c. Domiciliary Office. — Principal place of business.
d. Purposes. — May be formed for any number of purposes not covered by
special acts.
R. G. Co. v. Company, 126 Fed. 712.
e. Capital Stock. — Amount of capital stock, and how and when payable.
Both capital and par value of shares may be any amount.
/. Number and Par Value of Shares (see e, ante).
g. Provisions for Internal Regulation of Affairs. — Any other matter may be
inserted which it is deemed desirable to set forth. Duration may be unlimited,
if desired (sec. 1891).
4. Statutory Powers. — In addition to the statutory enumeration of com-
mon law powers, the following additional powers are granted by statute : To
cumulate votes in the election of directors; to have a lien upon the shares of
stockholders; to issue preferred stock; to enforce payment of assessments
due upon capital stock ; to forfeit the stock for non-payment thereof ; to vote
by proxy in the election of directors ; to enforce a lien upon the stock of stock-
holders for debts due the corporation (chap. 47, sees. 1843, 1846, 1848, 1856,
1863 ; chap. 48, sec. 1893 ; see also Laws of 1903, pp. 74, 79 ; Laws of 1905,
chap. 418).
Ex parte Fisher, 20 S. C. 190.
5. Procuring the Charter. — The petition must be signed and acknowl-
edged by each of the incorporators, and then be recorded by the Secretary of
State. He then issues to the incorporators a commission constituting them
a board of corporators, and authorizing them to open books of subscription to
the capital stock of the proposed corporation, after such public notice, not
exceeding ten days, as may be required in such commission. When not less
than fifty per cent of the capital stock shall have been subscribed by bona fide
purchasers, the board of corporators shall call the subscribers together. At
this meeting the company shall organize by the election of a board of directors,
not to exceed nine in number. They shall also adopt by-laws. The board
of directors shall then elect from their number a president, a secretary, and a
treasurer. Upon the payment to the treasurer of the corporation of at least
.twenty per cent of the aggregate amount of the capital subscribed, payable in
534
DIGEST OF INCORPORATION ACTS. — SOUTH CAROLINA.
money, and also upon securing the delivery to such officer of at least twenty
per cent of the property subscribed to the aggregate amount of the capital
stock, the board of corporators, or a majority of them, shall certify to the
Secretary of State that all the requirements of law have been y mplied with.
This certificate is known as the "return of the corporators." Upon the filing
of the return and the receipt of the charter fee, and upon payment of all fil-
ing fees, the Secretary of State issues to the board of corporators a certificate
known as a charter. Thereupon a copy of the charter must be recorded in
the office of the register of conveyances or clerk of each county wherein the
corporation shall have a business office. In cases where, by the terms of the
declaration, the capital stock of the corporation is to be paid in instalments,
the treasurer may issue stock when fifty per cent of the first instalment of the
capital stock has been paid in and the provisions of the act have in other
respects been complied with. Collateral inquiry into validity of corporate
existence is forbidden (chap. 48, sees. 1880, 18S5).
6. Corporate Indebtedness. — There is no statutory limitation upon the
amount of corporate indebtedness.
7. Organization Tax. — On capital stock not exceeding $100,000, one mill
on each dollar, but never less than $5 on any authorized capital ; over SI 00,000
and not exceeding $1,000,000, one-half mill on each dollar in addition to the
$100 tax on the first $100,000; exceeding $1,000,000, one-fourth of a mill on
each one dollar exceeding S1,000,000 (chap. 48, sees. 1888, 1889; Laws of 1904,
chap. 245; Laws of 1905, chap. 437).
P. M. Co. v. Gautt, 68 S. C. 199; 46 S. E. 100S.
8. Filing and Recording Fees. — To the Secretary of State for recording
declaration, $2.50 ; for recording return, $2.50 ; for each certificate under seal
of State, $1.07; for certified copy of the charter, $1.07 for attaching certificate
and 10 cents per folio of one hundred words for making copy. For recording
amendments, $5; for fifing papers of foreign corporations necessary to secure
permit to do business within the State, $5; for recording articles in local
county office, $2.
9. Commencing Business. — (See also ante, "Procuring Charter.") The
corporation must organize and commence business within two years from the
date of its incorporation or the date of the commission appointing the board
of corporators (chap. 47, sec. 1850).
10. Organization Meeting. — The organization meeting must be held
within the State, in the absence of any statute providing otherwise (see chap.
47, sec. 1846).
11. Meetings of Stockholders and Directors. — At least one meeting
of the stockholders shall be held annually within the State. Directors' meetings
may be held at such place as the by-laws may provide (chap. 47, sec. 1846).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There may be any number of directors not exceeding nine. There are no resi-
dential requirements (chap. 48, sec. 1883). A most unique and unusual enact-
ment in connection with directors of banking, insurance, shipbuilding, and
trust companies is to be found in the Session Laws of 1906, Act 40. We refer
here to the division of "boards" into "active" and "advisory" directors.
b. Liabilities. — Directors are liable for making false representations as to
resources and for misrepresentations in certificates (chap. 18, sec. 1843). They
are also liable for unlawful payments of dividends (Laws of 1909, Act 110).
535
DIGEST OF INCORPORATION ACTS. — SOUTH CAROLINA.
13. Stockholders' Liabilities. — Stockholders are liable to creditors only
to the extent of their unpaid stock subscriptions (Cons., Art. IX. sec. 18).
Under chap. 418 of the Laws of 1905 the liability of the stockholders is ex-
pressly limited to the amount remaining due to the corporation on the stock
owned by them.
M. C. Mills v. Springs, 56 S. C. 534; 35 S. E. 222; Lauraglen Mills v. Ruff, 57 S. C. 53;
35 S. E. 387; Williams v. Benet, 34 S. C. 112; 13 S. E. 97.
14. Stock Certificates. — Each stockholder is entitled to a certificate
under the seal of the corporation signed by the secretary or treasurer (chap.
47, sec. 1847, as amended byLawsof 1905, chap. 436; as to right of stockholder
to require corporation to issue new certificate, in place of lost certificate, see
Laws of 1911, chap. 26).
15. Preferred Stock. — There is express provision for the issuance of
preferred stock (chap. 47, sec. 1856).
16. Payment of Capital Stock. — Stock can be issued only for labor
done or money or property actually received (chap. 47, sec. 1855 ; chap. 48,
sec. 1882). Unless the charter provides that stock may be paid in instalments,
it cannot be issued until fully paid (chap. 48, sec. 1894). No subscriptions in
labor or property can be received unless the same and value thereof are approved
by the board of corporators (chap. 48, sec. 1882).
17. Books. — Books are required to be kept open to inspection of stock-
holders, and it may be inferred from the statute that they must be kept in
the State (chap. 48, sec. 1897).
18. Office and Agent. — There are no express requirements as to having
a principal office or place for the transaction of business within the State, but
by construction it is necessary to maintain a domiciliary office. (See Cromwell
v. Ins. Co., 2 Rich. Law, 512.)
19. Reports. — All corporations, both domestic and foreign, shall annually
during the month of February of each year file with the Comptroller-General
a statement containing: (1) The name of the company; (2) location of princi-
pal office; (3) name and post-office addresses of the president, secretary,
treasurer, superintendent, and general manager, and the members of the board
of directors ; (4) date of annual election of officers ; (5) amount of authorized
capital stock and par value of each share; (6) amount of capital stock sub-
scribed, issued, and outstanding, and the amount of capital stock paid up;
(7) the nature of the business and location thereof (Laws of 1905, chap. 407).
The president or such other officer who shall have the custody of the affairs
of any corporation organized and doing business under the laws of this State,
shall annually, on or before the 30th day of December of each and every year,
make and submit to each and every stockholder of any such corporation who
may make such request therefor in writing, a duly itemized statement under
oath, showing the actual assets and liabilities of such corporation, and shall
deliver a copy of such statement to each and every such stockholder of such
corporation as herein provided for, either in person or by mail, and proof of the
mailing of any such notice as required by the terms of this act shall be a suffi-
cient compliance therewith, provided that in such report it shall not be necessary
to state the names of any corporate officer of such corporation (Laws of 1909,
Act 110).
20. Anti-Trust Statute. — There is an anti-trust statute in force in South
Carolina. (See C. C, 1902, sees. 2845, 2847.)
21. Statutory Grounds for Forfeiture of Charter. — Charter may be
536
DIGEST OF INCORPORATION ACTS. — SOUTH CAROLINA.
forfeited for non-user for five years, or for non-payment of taxes, or for non-
payment of annual franchise tax, or for violation of anti-trust statute (chap.
48, sec. 1898; chap. 47, sec. 1865; see also C. C, 1902, sees. 308, 2845, 2847).
It may also be forfeited for failure to organize and commence business within
two years from incorporation (chap. 47, sec. 1S50).
22. Amendments. — Any corporation may increase or decrease its capital
stock in the manner following : Whenever by resolution of the board of directors
an increase of the capital stock of the corporation is determined upon, a meet-
ing of the stockholders shall be called to consider such resolution, by not ire
published at least once a week for four successive weeks previous to the date
fixed in such notice for same in some newspaper published in the county where
the corporation has its principal place of business, which notice shall state
the time and place of the meeting, the purpose for which it is called, and the
maximum amount to which it is proposed the capital stock shall be increased.
The vote of two-thirds of the stock of the corporation shall be necessary to
make an increase, which increase may be so made to any amount not exceed-
ing the maximum amount stated in such notice of the meeting of stockholders.
The board of directors shall certify the resolution of the stockholders to the
Secretary of State, and that all the requirements of tlus section as to said
increase of capital stock have been complied with. In case the corporation
increasing its capital stock is incorporated under the general law, the board of
directors shall likewise return to the Secretary of State the original charter or
certificate of incorporation for the endorsements herein mentioned. The Secre-
tary of State shall thereupon record the said certificate of the board of directors,
and shall likewise endorse upon the charter or certificate of incorporation a
certificate of the increase of the capital stock, and shall forthwith return the
charter or certificate of incorporation with such endorsement thereon to the board
of directors, and in cases where the law under which such corporation is created
or organized requires the charter or certificate of incorporation to be recorded
in the office of the register of mesne conveyances and clerk of court, a certificate
of such increase of the capital stock endorsed by the Secretary of State. On
the charter or certificate of incorporation as hereinbefore required shall be re-
corded across the face of the record of the charter or certificate of incorporation,
in the office of the register of mesne conveyances or clerk of court where the
charter or certificate of incorporation is required to be recorded, such increase
of the capital stock of such corporation as shall be authorized when the certifi-
cate is lodged for record in said office.
In cases where the capital stock is increased as by this section provided, the
stockholder or stockholders thereof registered in the books of such corporation
at the time when said increase of stock was authorized shall have the pref-
erence of taking such increase of stock in proportion to the amount of stock
he, she, or they may own; but if such stockholder or stockholders shall
not avail himself, herself, or themselves of such privilege within ten days
after the lodgment for record of such certificate to increase their capital
stock, the board of directors may dispose of the said increased capital stock
as they may deem best at its market value in money or property (haws of
1904, chap. 248).
23. Extension of Corporate Existence. - Provision is made for exten-
sion of corporate existence. (See chap. 47, sec. 1871 ; chap. IS, sec. IX9I.)
24. Dissolution. — Corporate powers cease if organization is no! com-
pleted and business commenced within two years, and Court of Common Pleas
DIGEST OF INCORPORATION ACTS. — SOUTH CAROLINA.
may dissolve any company for non-user; may also dissolve voluntarily by reso-
lution of stockholders representing a majority of capital stock (chap. 47, sees.
1866, 1873; Laws of 1902, Act No. 566; see Code of Civil Procedure, 1902,
sec. 265 ; Laws of 1904, chap. 269 ; Laws of 1906, Act 1).
25. Annual License Fee. — Under the franchise tax of 1903, which did
not go into effect until April 1, 1904, all business corporations except those
of a quasi-public nature must pay to the State Treasurer on or before April 1
of each year an annual license fee of one-half mill upon every dollar paid in
upon the capital stock, and not less than $5 in any case (Laws of 1904, chap.
269 ; Laws of 1905, chap. 407).
26. Foreign Corporations. — Foreign corporations must file with the
Secretary of State a declaration designating principal place of business in the
State and the name of agent to receive service of process, and must also file
in same office a copy of the charter and by-laws with amendments. Must also
file annual statement showing residence of corporation, amount of capital stock
actually paid, names of officers and board of directors, with their residences, etc.
They are required to pay a fee of one-half mill on each dollar of property owned
by them within the State (C. C, 1902, sees. 1779, 1795, 2360; Laws of 1904,
chaps. 247, 269 ; Laws of 1905, chap. 407). The fee for filing necessary papers
in the Secretary of State's office for securing permit to transact business within
the State is $5.00.
Central R. R., etc. Co. v. Company, 32 S. C. 319; 11 S.E. 192; Cone, etc. Co. v. Poole, 41
S. C. 70 ; 19 S. E. 203 ; Hollingsworth v. Sou. R. R. Co., 86 Fed. 353 ; State v. Company (S. C),
61 S. E. 455.
538
DIGEST OF INCORPORATION ACTS. — SOUTH DAKOTA.
SOUTH DAKOTA.
(The references cited below are to the Revised Civil Code of 1903 and to the Compiled
Laws of 1887, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate.
— The Business Corporation Act of South Dakota is to be found in Revised
Civil Code of 1903, sees. 396-479 (Compiled Laws of 1887, sees. 2889-2971).
Those relating to mining, manufacturing, and other industrial corporations are
sees. 780-797, Revised Civil Code, 1903 (Compiled Laws, 1887, sees. 3108-
3125; Laws of 1907, chap. 104). The provisions relating to amendment of
charters are found in chap. 106, Session Laws of 1903. As to the extension of
corporate existence see chap. 105, Session Laws of 1903. Many and effective
amendments to the General Act are to be found in Laws of 1907, chap. 104.
Under this act corporations may be formed for any lawful purpose. Special
acts are, however, provided for incorporation of railway, street railway, wagon
road, irrigation, insurance, loan, trust, mortgage companies, and for banks of
discount. Laws of 1905, chap. 74, as amended by Laws of 1907, chap. 109,
provides for organization of trust companies.
2. Incorporators. — Three or more, one-third of whom must be residents
of the State (R. C. C, sec. 407 ; C. L , sec. 2900; Laws of 1907, chap. 104).
Singer Mfg. Co. v. Peck, 9 S. D. 29; 67 N. W. 947.
3. Contents of the Certificate of Incorporation. — The certificate must
set forth :
a. Name. — The Secretary of State will not permit the use of another name
already in use by a domestic corporation.
b. Purposes. — The purpose for which it is formed. The Secretary of
State allows the insertion of any number of purposes not covered by special
acts.
Vokes v. Eaton (Ky.), 85 S. W. 174.
c. Domicile. — Place where the principal business of the corporation is to
be transacted. All corporations having any business offices out of the State
must have their main office for the transaction of business within the State,
and this must also be designated in the articles of incorporation (Laws of 1907,
chap. 104). Any corporation may provide in its articles of incorporation for
having one or more business offices without the State, at any place to be named
in the articles of incorporation (R. C. C. 786, as amended by Laws of 1907, chap.
104). If desired, the name of the resident agent may be inserted in the articles
of incorporation (Laws of 1907, chap. 104).
d. Duration. — Not to exceed twenty-five years (Laws of 1907, chap. 104).
e. Directors. — Number and names and residences of those who are to
serve until the election of their successors, and qualifications must also be set
forth.
/. Capital Stock. — Amount and number of shares into which the same is
divided. There is no limit to the amount of capital stock. The par value of
shares may be any amount (R. C. C, sec. 408; C. L., sec. 2902). If preferred
stock is to be issued, it shall be provided for in the articles of incorporation
(Laws of 1907, chap. 104).
539
DIGEST OF INCORPORATION ACTS. — SOUTH DAKOTA.
g. The articles of incorporation may prescribe the qualifications of its
directors, trustees, and other officers ; fix and limit the number of votes of stock-
holders in such corporation, provided that no one stockholder shall be entitled
to more votes than the number of shares of stock owned by him, provided
that when the number of votes is limited to less than one vote for each
share of stock, such limit shall be stated on the face of each certificate of
stock issued. The articles may also limit the liability of such stockholder
to the amount remaining unpaid on his capital stock (Laws of 1909, chap.
264).
Any corporation, excepting banking corporations, trust companies, and
surety companies heretofore organized under the provisions of this act, by each
stockholder in said corporation signing a statement in writing to the effect that
such stockholder desires said corporation to have an additional power granted
to such corporation, by subdivision 7 of section 408 of the Revised Civil Code
of this State, and filing such statement with the secretary of such corporation ;
thereupon such corporation may amend its charter and conform to the pro-
visions of this act in the manner provided by section 419 of the Revised Civil
Code of 1903, upon making the proper proof by affidavit signed by all of the
officers and directors of such corporation, that all of the stockholders of such
corporation have signed and filed such statement with the secretary of such
corporation (Laws of 1909, chap. 264, sec. 22).
4. Statutory Powers. — In addition to the statutory enumeration of
common law powers the act provides for voting by proxy at elections of direc-
tors; for cumulative voting; for forfeiture of shares for non-payment of sub-
scriptions; for having a business office without the State but within the United
States, and for holding therein any meeting of the stockholders or directors;
for removal of directors ; for extension of corporate existence ; for purchase of
the corporation's own stock ; for issuing stock in exchange for property or ser-
vices (R. C. C, sec. 427; C. L., sec. 2199; R. C. C, sec. 429; C. L., sec. 2921 ;
Cons., Art. XVII. sec. 5; R. C. C, sees. 453-649 inclusive; R. C. C, sec. 786;
C. L., sec. 3114 ; R. C. C, sec. 438 ; C. L., sec. 2930 ; R. C. C, sec. 439 ; C. L., sec.
2931; Laws of 1903, chap. 105; R. C. C, sec. 425; C. L., sec. 2917; R. C. C,
sec. 422 ; C. L., sec. 2914 ; R. C. C, sec. 464 ; C. L., sec. 2956 ; Cons., Art. XVII.
sec. 8). To issue preferred stock (Laws of 1907, chap. 104). The board of direc-
tors are given power to appoint an executive committee (Laws of 1907, chap.
104). Cumulative voting in the election of directors is provided for by consti-
tutional provision. (See Cons., Art. VII. sec. 5.) By vote of three-fourths of
the stockholders the corporation may direct the sale or mortgage of all of its
corporate properties (Laws of 1909, chap. 118). Directors may be classified
if provision is made therefor in the articles of incorporation (Laws of 1911,
chap. 106).
Summers v. Company, 86 N. W. 749; Magowan v. Greneweg (S. D.), 91 N. W. 335; 86
N. W. 626.
5. Procuring the Charter. — The certificate must be signed and ac-
knowledged by the incorporators before the same can be filed and charter issued.
Two of the incorporators must take oath that the corporation is not formed
for the purpose of enabling it to avoid the purposes of the South Dakota Anti-
Trust Act, and upon the filing and recording of the certificate in his office the
Secretary of State issues a certificate of due incorporation (R. C. C, sees. 410,
411; C. L., sees. 2904, 2905; Revised Penal Code, sec. 781).
Mason v. Stevens et al. (S. D.), 92 N. W. 424; B. & L. Ass'n v. Chamberlain, 4 S. D. 271;
56 N. W. 897; Thomas v. Wilcox (S. D.), 110 N. W. 1072.
540
DIGEST OF INCORPORATION* ACTS. — SOUTH DAKOTA.
6. Corporate Indebtedness. — Debts cannot be contracted beyond the
amount of stock subscribed (R. C. C, sec. 436; C. L., sec. 2928).
7. Organization Tax. — Where the authorized capital stock is $25,000 or
less, S10; over 825,000 and not exceeding S100,000, 815; over §100,000 and
not exceeding S500.000, S20; over 8500,000 and not exceeding 81,000,000,
$30; over S1,000,000 and not exceeding Sl,500,000, 840; over 81,500,000 and
not exceeding S2,000,000, 850 ; over 82,000,000 and not exceeding S2,500,000,
860; over S2,500,000 and not exceeding 83,000,000, 870; over 83,000,000 and
not exceeding 83,500,000, 880; over 83,500,000 and not exceeding 84,000,000,
890 ; over 84.000.000 and not exceeding 84,500,000, 8100 ; over 84,500,000 and
not exceeding S5,000,000, 8110; over 85,000,000, 8150 (Laws of 1907, chap.
149).
8. Filing and Recording Fees. — The payment of the organization tax
covers all filing and recording fees in the office of the Secretary of State. For
making certified copy of articles of incorporation the charge is 25 cents per
folio of one hundred words for copying, and 81 for certificate. No charge is
made for issuing a certificate of incorporation. For examining and fifing amended
articles of incorporation, 810, where the same does not provide for the increase
of stock ; in the latter case an organization tax must be paid on the increased
capital stock as authorized ; for making transcript of articles of incorporation,
25 cents per folio; for official certificate, 81 ; for examining and filing articles
of incorporation of foreign corporations and issuing authority to do business,
$10 ; for examining and filing annual statement, $5 ; for making and filing and
recording appointment of resident agent of foreign corporation, 810.
9. Commencing Business. — Where a resident agent is not named in
the certificate of incorporation, all domestic corporations not doing business
within the State must, before commencing business, appoint a resident agent
residing at the domiciliary office of the corporation. One of the officers of the
corporation may be appointed as such agent, if desired (Laws of 1907, chap. 104).
After the issuance of the certificate of incorporation, the incorporation act
directs (without providing any penalty therefor) that the directors must pro-
ceed in the manner specified in the by-laws, or if none is specified, then in such
manner as they may adopt, to secure subscriptions to the full amount of the
fixed capital (R. C. C, sec. 421 ; C. L., sec. 2913). Unless the corporation organ-
izes and commences the transaction of business or the construction of its works
within one year from the date of its incorporation, its corporate powers cease.
Every corporation shall, within one month after filing articles of incorporation,
adopt a code of by-laws for its government, but no penalty or forfeiture is
declared in case of non-compliance with this provision, and it is regarded as
directory only (R. C. C, sec. 411 ; C. L., sec. 2905). No collateral inquiry into
corporate existence is permitted (R. C, sec. 399 ; C. L., sec. 2892).
10. Organization Meeting. — The organization meeting may be held at
the principal office of the corporation without the State if provision is made
therefor in the articles, otherwise it must be held within the State (R. C. C,
sec. 786 ; C. L., sec. 31 14 ; R. C. C, sec. 440 ; C. L., sec. 2932). The act provides
that when all the stockholders of a corporation are present at any meeting,
however called or notified, and sign a written consent thereto on the records
of such meeting, the doings of such meeting are as valid as if had at a meeting
legally called and noticed (R. C. C, sec. 442; C. L., sec. 2934).
11. Meetings of Stockholders and Directors. — Incorporators', stock-
holders', and directors' meetings must be held at the office or principal place
541
DIGEST OF INCORPORATION ACTS. — SOUTH DAKOTA.
of business of the company. All meetings of stockholders and directors of
mining, manufacturing, and other industrial corporations may be held at the
outside office named in the articles of incorporation; and this may be pro-
vided for in the articles ; and the articles may be amended to change the loca-
tion of the outside office. The mode of calling meetings is as provided in the
by-laws. The domiciliary office is kept at the place in the State named in the
articles as the principal place of business. The original books and records
may be kept at the outside business office, if there be one (R. C. C, sec. 786;
C. L., sec. 3114; see also R. C. C, sec. 440; C. L., sec. 2932). Under the
1907 Amendment offices may be named without the State, in any other State,
or in any foreign country, wherein may be held all stockholders' and directors*
meetings, if desired (Laws of 1907, chap. 104).
Wrieht v Lee, 4 S. D. 237; 55 N. W. 931; In re Argus Printing Co., 1 N. D. 434; 84
N. W. 347; Troy Min. Co. v. White, 10 S. D. 475; 74 N. W. 236.
12. Directors' Qualifications and Liabilities, a. Qualifications. — The
act provides that one of the directors or officers of the corporation shall be a
resident of the State (Laws of 1907, chap. 104, sec. 1). Directors are elected
annually by a majority vote of the stockholders. The board must be composed
of at least three and not more than eleven directors. The president of the
corporation must be a member of the board. The directors must be stockholders
to an amount to be fixed by the by-laws. Immediately after their election the
directors must organize by the election of a president, secretary, and treasurer.
An executive committee composed of two or more members of the board may
be appointed by resolution of the board of directors. Such committee may be
provided for in the by-laws of the corporation, and such committee shall have
the same powers as the board of directors (R. C. C, sec. 434; C. L., sec. 2926;
Laws of 1907, chap. 104; Laws of 1909, chap. 264, sec. 3). Directors may be
classified if provision is made therefor in the articles of incorporation (Laws
of 1911, chap. 106).
Magowan v. Greneweg (S. D.), 86 N. W. 626; 91 N. W. 335.
b. Liabilities. — Directors are liable for the illegal declaration of dividends,
or for the unlawful withdrawal of capital, or for any violation of law applying
to corporations whereby the latter become insolvent. Directors assenting to
such violation are jointly and severally liable for all debts contracted after
such violation (R. C. C, sec. 436; C. L., sec. 2928; R. C. C, sec. 787; C. L.,
sec. 3115). Any officer wilfully making false reports, certificates, or entries is
liable in damages to any person injured thereby (R. C. C, sec. 437; C. L.,
sec. 2929). Any superintendent, director, secretary, manager, agent, or other
officer of any corporation formed or existing under the laws of South Dakota
or transacting business in the said State, and any person pretending or holding
himself out as such superintendent, director, secretary, manager, agent, or
other officer who shall wilfully subscribe, sign, endorse, verify, or otherwise
assent to the publication, either generally or privately to the stockholders or
other persons dealing with such corporation or its stock, knowing the same to
be untrue, or wilfully and fraudulently issues exaggerated report, prospectus,
account, statement of operations, values, business, profits, expenditures, or
prospecti, 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 or less apparent or market value than they really possess, or with the
intention of defrauding any particular person or persons, or the public or per-
542
DIGEST OF INCORPORATION ACTS. — SOUTH DAKOTA.
sons generally, shall be deemed guilty of a felony, and on conviction thereof
shall be punished by imprisonment in State prison or a county jail not exceed-
ing two years or by a fine not exceeding $5,000, or both (sec. 1, chap. 108;
Sess. Laws, 1907).
13. Stockholders' Liabilities. — Stockholders are liable to the amount
of their unpaid stock subscriptions (R. C. C, sec. 431 ; C. L., sec. 2933). They
are also liable for labor claims (R. C. C, sec. 783 ; C. L., sec. 3111. As to con-
stitutionality of this statute, see cases cited below).
S. B. T. M. Co. v. Company, 4 S. D. 173; 56 N. W. 98; Busby v. Riley et al., 6 S. D.
401 ; 61 N. W. 164; Singer Mfg. Co. v. Peck, 9 S. D. 29; 67 N. W. 947; R. O. T. Co. v. Well-
man, 10 S. D. 122; 72 N. \V. 89.
14. Stock Certificates. — Each stockholder is entitled to a certificate
signed by the president and secretary (R. C. C, sec. 423; C. L., sec. 2915;
Laws of 1907, chap. 104). The by-laws may provide for issuing certificates of
stock prior to full payment, if desired (Laws of 1907, chap. 104).
15. Preferred Stock. — Preferred stock may be issued in such amounts as
may be provided for in the articles of incorporation or in the by-laws (Laws of
1907, chap. 104).
16. Payment of Capital Stock. — Stock may be issued in exchange for
money, labor done, or money or property actually received (Cons., Art. XVII.
sec. 8). When property is taken by the corporation in consideration for capital
stock of the corporation, the judgment of the board of directors, made in good
faith and entered in the minutes of the corporation, shall be conclusive as to
the value of such property (Laws of 1907, chap. 104). The act provides that
the directors named in the articles of incorporation must proceed to open
books of subscription to the capital stock unsubscribed and to secure sub-
scriptions to the full amount of the fixed capital (R. C. C, sec. 421 ; C. L.,
sec. 2913).
Hennesy v. Griggs et al., 1 N. D. 52; 44 N. W. 1010; C. H. S. Co. v. Ferguson et al.,
8S. D. 534; 67 N. W. 615.
17. Books. — Every corporation must keep a journal of meetings of direc-
tors and stockholders. They must also keep a stock and transfer book, which
with the journal is open to inspection of stockholders, directors, and creditors
of the corporation, containing a record of all stock, the names of stockholders
alphabetically arranged, instalments paid or unpaid, transfers, etc. Also a book
of by-laws, to be open to inspection during office hours. The law does not pro-
vide, however, that any of these books shall be kept within the State, and pro-
visions in the articles of incorporation for keeping them at the outside office
are regularly allowed by the Secretary of State (R. C. C, sec. 423; C. L., sec.
2915; R. C. C, sec. 428; C. L., sec. 2920; R. C. C, sec. 445; C. L., sec. 2937;
R. C. C, sec. 782).
Section 3110 of the Compiled Laws provides as follows: Regular books of ac-
count of all the business of corporations must be kept, which, with the vouchers,
shall be at, all reasonable limes open for I he inspection of any of the stockhold-
ers; and as often as once in each year a statement of such accounts shall be made,
by order of the directors, and laid before the stockholders.
18. Office and Agent. — Every corporation of the State which is not doing
or carrying on business within the State shall appoint a resident agent who
shall reside at the place of business or domiciliary office of such corporation
in the State designated in the articles of incorporation, and such resident agent
543
DIGEST OF INCORPORATION ACTS. — SOUTH DAKOTA.
may be one of the officers of the corporation, and service of legal process upon
such agent shall constitute legal and valid service upon such corporation. Such
appointment of resident agent shall be made in writing signed by the president
or secretary of the corporation and duly acknowledged, and shall be filed in
the office of the Secretary of State. If desired, such resident agent may be
appointed in the articles of incorporation (Laws of 1907, chap. 104).
19. Reports. — The statute provides that business corporations doing
business within the State shall annually, within twenty days from the 1st day
of January, make a report which must be published in some newspaper at or
nearest to the place where the business of the corporation is carried on, which
report must state the capital stock and the amount thereof actually paid in,
the amount and nature of indebtedness, and the amount due the corporation,
the number and amount of dividends and when paid, and the net amount of
profits. Such report must be signed by the president and a majority of directors,
and be verified by oath of the president or secretary, and filed in the office of
register of deeds of county where the business of the corporation is carried on.
The only penalty provided for failure to comply with the statute is that a person
who wilfully neglects or refuses to make, sign, or publish such report shall be
guilty of misdemeanor (R. C. C, sec. 784; C. L., sec. 3112). Upon written
request of twenty per cent of the issued capital stock the treasurer is required
to furnish a written statement of the affairs of the corporation (R. C. C, sec. 785 ;
C. L., sec. 3113).
20. Anti-Trust Statute. — There is a somewhat drastic anti-trust statute
in force in South Dakota (Laws of 1909, chap. 224).
21. Statutory Grounds for Forfeiture of Charter. — Unless the cor-
poration is organized and commences business within one year after incorpora-
tion, the corporate powers cease. Charters may also be forfeited by the State
on any of the following grounds : For violating any of the laws creating, alter-
ing, or renewing corporations ; by violating any express provisions of the law
whereby the corporation shall have forfeited its charter by abuse of its powers ;
by failure to exercise its powers; whenever it shall have done or omitted to
do any act which amounts to a surrender of its corporate rights ; for exercising
franchises or privileges not conferred upon it by law (R. C. C, sec. 447; C. L.,
sec. 2939; R. C. C, sec. 571 ; C. L., sec. 5346).
22. Amendments. — Articles may be amended so as to modify or enlarge
corporate business or purposes, change number of directors, change name or
location of its business within the State or without the State, increase or decrease
the capital stock, or in any other respect, by vote of two-thirds of all outstand-
ing stock at any regular or special meeting called for that purpose after thirty
days' notice (sixty days for increase of stock) given to each stockholder, stating
nature of proposed amendment. After notice of proposed amendment is served
upon stockholders, time may be waived by all of them, and amendment can be
adopted immediately. Capital stock cannot be diminished to an amount less
than indebtedness of corporation or estimated cost of works which it may be
the purpose of the corporation to construct. After amendment is adopted, the
president and secretary of the corporation shall prepare in duplicate a certifi-
cate setting forth amendment, stating number of votes cast therefor, and total
number of shares of stock subscribed and outstanding, and that legal notice was
given. One of these certificates must be filed with the Secretary of State, and
the other with the secretary of the corporation. The signature of president
and secretary to such certificate must be acknowledged before some officer
544
DIGEST OF INCORPORATION ACTS. — SOUTH DAKOTA.
authorized to take acknowledgments, who knows the parties signing the same
to be the president and secretary of the corporation, and when such certificate
is filed with the Secretary of State he shall issue a certificate of amendment,
setting forth in what particular the original articles of incorporation have been
amended (Laws of 1903, chap. 106, sees. 1-7 inclusive. As to increase of stock
see Cons., Art. XVII. sec. 8).
23. Extension of Corporate Existence. — Under Laws of 1903, chap.
105, as amended by Laws of 1907, chap. 106, sec. 1, special provision is made
for the extension of corporate existence for a period not to exceed twenty-five
years. To effect the extension such application must be signed by stockholders
owning three-fourths of the capital stock, and opposite the signature of each
stockholder shall be stated the number of shares of stock owned by each. The
application must be made in the same manner as articles of incorporation. Be-
fore presenting this application to the Secretary of State, the corporation must
file with him a statement verified by oath of the president and secretary of the
corporation, setting forth: (1) The assets and liabilities of the corporation;
(2) the nature of its business ; (3) the number of shares of stock issued and
outstanding; (4) the number of shares of stock subscribed and not issued;
(5) the names and post-office addresses of each stockholder and the number
of shares owned by each; (6) the names and post-office addresses of the
directors.
24. Dissolution. — Voluntary dissolution is effected by application to
the Circuit Court of the county where the corporation's principal place of busi-
ness is situated, upon verified petition of a majority of the board of directors,
the proceedings being simple and brief. The application must set forth that at
a meeting of the stockholders called for that purpose the dissolution of the
corporation was resolved upon by a vote of not less than two-thirds of the out-
standing stock, and that all claims and demands against the corporation have
been satisfied and discharged (C. C, sec. 446, sub. 2 of sub. 3 as amended
by Laws of 1907, chap. 105). Involuntary dissolution is effected under Code
of Civil Procedure by action in the name of the State on leave of the Circuit
Court or judge (R. C. C, sec. 446; C. L., sec. 2938; see also Laws of 1911,
chap. 103).
25. Annual License Fee. — There is no annual license fee.
26. Foreign Corporations. — Before any corporation can transact busi-
ness within the State, or acquire, hold, and dispose of property within the State,
or sue in the courts therein, it must file and record in the office of the Secretary
of State a duly authenticated copy of its charter or articles of incorporation,
and shall also appoint an agent within the State upon whom process may be
had. A duly authenticated copy of the appointment of such agent or officer
must be filed and recorded in the office of the Secretary of State and register
of deeds of the county whore said agent resides (R. C. C, sec. 883, 884; C. L.,
sees. 3190, 3191). The State constitution provides that no foreign corpora-
tion shall do business in the State without having one or more known places of
business and an authorized agent or agents in the same upon whom proi
may be served (Cons., Art. XVII. sec. 6). The fee for filing articles and issu-
ance of certificates of authority to do business is $10. For recording certifi-
cates of appointment of agent and issuing certificates of appointment, $10.
Wright v. Lee et al., -» s. I). 237; 55 N'. W. 931; Acme Mer. Agenoy i. Roohford, 10
S.D.203; 72N.W.466; Foster v. Company, 6 8. D. 27; 58N.W.9: Peck Mfg. Co. v. Groves,
S. I). 504; 02 N. W. 109; F. & J. Co. v. Foster, 4 Dak. 329; Nut. 15ank I). CorkingS. 9 S. 1).
614; 70 N. \Y. 1059.
35 K I K
DIGEST OF INCORPORATION ACTS. — TENNESSEE.
TENNESSEE.
(The references cited below are to the Code of 1884, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate.
— The Business Corporation Act of Tennessee is based upon the Act of March
19, 1875 (Session Laws of 1875, chap. 142). The law is peculiar in that it spe-
cifically prescribes for what purposes companies may be incorporated, and sets
forth the form of charter for each. The above "Charter Act " has been amended
from time to time, until now it is possible to incorporate in Tennessee under
said act for all ordinary business purposes (Laws of 1903, chap. 474 ; Laws of
1905, chap. 174).
2. Incorporators. — Not less than five, except for brewery corporations,
where only three incorporators are required. There are no residential require-
ments (sec. 1692; Laws of 1903, chap. 474).
3. Contents of the Certificate of Incorporation. — The forms for draw-
ing charters are set out at length in the statutes, and vary according to the
purposes sought to be obtained by incorporation. Speaking generally, all the
forms set forth: First, name of the corporation, which the Secretary of State
requires shall be different from that of any existing corporation. Second,
the purposes must be set forth, and the incorporators are limited strictly to
purposes included in one class. Third, the amount of capital stock, with the
amount and par value thereof. If preferred stock is to be issued, provision
should be made therefor as provided by law. The charter must state whether
it is to be redeemed at not less than par, and if so the time and price thereof
(Laws of 1905, chap. 174). The amount of capital stock is unlimited, except
in the case of brewery companies, which latter must be capitalized for not less
than $5,000 and not more than $500,000. Fourth, an enumeration of the
general powers of the corporation, which are in substance merely an enumera-
tion of common law powers. The statutory form also contains a large number
of provisions for the regulation of the internal affairs of the corporation. In
this connection provision should be made relative to by-laws, powers, and pro-
ceedings of the board of directors, keeping of corporate books, the assessments
of stock, provisions for amendments and dissolution, etc. The statute also pro-
vides that the first board of directors shall consist of the incorporators named
in the charter of incorporation (sees. 1692, 1852 ; Laws of 1897, chap. 32 ; Laws
of 1899, chaps. 17, 224, 300, 304 ; Laws of 1903, chap. 474). Duration may be
unlimited, if desired.
4. Statutory Powers. — The statute enumerates the common law powers
of corporations, and in addition thereto grants the following powers : For the
purpose of repairs, rebuilding, or to meet contingencies, or for the purpose of
a sinking fund, corporations may establish a fund of which they may loan, and
in relation to which they may take proper securities. Mining companies are au-
thorized to subscribe for stock in a railway corporation whose line of road is
contiguous to their works. Manufacturing corporations are given power to
.locate, on their own lands, elevators, hoisting, warehouses, transfer trucks, etc.
They are also given power to purchase, use, or dispose of patent rights. All
corporations are given power to vote by proxy and to consolidate with other
corporations engaged in the same general business; also to sell in its entirety
546
DIGEST OF INCORPORATION ACTS. — TENNESSEE.
all the assets of the corporation to any corporation engaged in the same general
line of business. (See references cited at end of sec. 3; also sees. 1704, 1709-
1711 a, 1853, 1860-1862, 1864, 1866-1868, 1872; Act of March 28, 1887 '; Laws
of 1903, chap. 486.) Also to issue preferred stock (Laws of 1905, chap. 174) ;
to vote by proxy (Laws of 1907, chap. 104) ; to dispose of the corporate assets
as an entirety (Laws of 1907, chap. 437).
5. Procuring the Charter. — Incorporators must subscribe and ac-
knowledge the execution of the charter, which is in fact a petition for incor-
poration. The charter must be acknowledged or any one or more signatures
proved by a witness before the clerk of the county court (Laws of 1903, chap.
474). This instrument when so acknowledged must be registered in the county
where the principal office of the company is situated, and also in the office of
the Secretary of State. The latter officer issues a certificate of registration,
which in turn must be registered in the register's office of the county where the
principal business office of the company is situated. If agencies are established
in other counties, the incorporation papers must be registered there (sec. 2027).
Thereupon the formation of the corporation is completed (sees. 1692, 1694).
Collateral inquiry into the legality of corporate existence is forbidden (sees.
1693, 1712; Laws of 1903, chap. 474).
Shields v. Clifton Co., 94 Tenn. 123; 28 S. W. 668.
6. Corporate Indebtedness. — Corporations are limited in the creation
of debts to the amount of the authorized capital stock (sec. 1858 ; Laws of 1903,
chap. 474).
7. Organization Tax. — For business corporations a tax of one-tenth of
one per cent on the authorized capital stock is exacted. There is also a regis-
tration tax of $10 (Act of June 17, 1895 ; Laws of 1897, chap. 32 ; Laws of 1899,
chap. 432).
8. Filing and Recording Fees. — In addition to the payment of the or-
ganization tax, the Secretary of State is entitled to a fee of $10 for registering
the company. In lieu of issuing a certificate of incorporation, the Secretary of
State attaches his certificate of registration to the papers recorded in his office
and returns them to the incorporators. For issuing certified copy of the articles
of incorporation his fee is $10. The fee for recording in the local county regis-
ter's office averages $3.
9. Commencing Business. — Business may be commenced as soon as the
charter is registered as required by law and the organization completed. If
the corporation establishes agencies in any other county, the charter must be
recorded there (sec. 1694).
10. Organization Meeting. — The organization meeting must be held
within the State, in the absence of any statute providing otherwise. The incor-
porators act as the first board of directors (Laws of 1903, chap. 474).
11. Meetings of Stockholders and Directors. — Annual stockholders'
meetings must be held within the State. Directors' meetings may be held
without the State if the by-laws so provide (sees. 1706, 1863).
Synnott v. Association, 117 Fed. 379; 54 C. C. A. 553.
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be, except in the case of brewery companies, where there may be
three, at least five directors. There are no residential requirements (sees. 1702,
1706; Laws of 1903, chap. 474).
b. Liabilities. — Directors are liable for illegal declaration of dividends, or
547
DIGEST OF INCORPORATION ACTS. — TENNESSEE.
for authorizing the creation of any indebtedness in excess of the capital stock
paid in. Directors are liable for loans to stockholders in mining corporations,
quarrying, boring, or manufacturing companies; they are also liable for in-
tentional fraud in failing to comply substantially with the articles of incorpo-
ration, or in deceiving the public or individuals in relation to their liabilities
(sees, 1716, 1717, 1856-1858, 1859; Laws of 1897, chap. 49; Jaws of 1903,
chap. 474). Directors are liable for contributing corporate funds for political
purposes (Laws of 1907, chap. 402).
Allison v. Coal Co., 87 Tenn. 60; 9 S. W. 226.
13. Stockholders' Liabilities. — Stockholders are liable for the amount
of their unpaid stock subscriptions. They are also jointly and severally liable
for moneys due or owing to the laborers, servants, clerks, or operators of the
company in case the corporation becomes insolvent (sees. 1708, 1858; Laws of
1903, chap. 474).
14. Stock Certificates. — The par value of stock certificates may be $100
or less (sec. 2052). Each shareholder is entitled to a certificate showing the
number of shares held by him, signed by such officers as the by-laws may
prescribe.
15. Preferred Stock. — Capital stock may be divided into common and
preferred stock, provided it shall be stated in the charter of incorporation to-
gether with the respective amounts of each, and provided the preferred stock
does not exceed two-thirds of the total authorized capital stock, and provided
further that the capital stock shall be issued only for cash. It must be stated
in the charter of incorporation whether the preferred stock is subject to re-
demption at not less than par, and, if so, the time and price of such redemption.
Preferred stockholders are entitled to receive a fixed yearly dividend not ex-
ceeding ten per cent, payable annually or semi-annually, before any dividend
can be paid on the common stock, and such dividend may be made cumula-
tive. No preferred stock can be issued except by authority given to the board
of directors by a vote of at least two-thirds of the common stock at a meeting
duly called for that purpose, nor shall preferred stockholders have any voting
powers except such as may be given by a two-thirds vote of the common stock-
holders. If there are more than two classes of stock, each share must have
written or printed thereon the words "common stock" and "preferred stock"
(Laws of 1905, p. 373).
16. Payment of Capital Stock. — In the case of mining, quarrying, bor-
ing, and manufacturing companies nothing but cash or land at a fair cash valu-
ation can be accepted in payment of capital stock (sec. 2335). Manufacturing
companies are, however, authorized to receive an assignment of a patent in
payment of stock subscribed to the amount of the value of such patent (sec.
2351). The act specifically provides that the amount of any unpaid stock due
from the subscriber to the corporation shall be a fund for the payment of any
debts due from the corporation; the transfer of stock by any subscriber does
not relieve liim from payment unless his transferee has paid up all or any of
the balance due on said original subscription (sees. 1708, 1856, 1872; Laws of
1903, chap. 474). Construction companies are authorized to receive stock and
bonds in payment for their capital stock (Laws of 1905, chap. 479).
Searight v. Payne, 6 Lea, 283; Kelley v. Fletcher, 94 Tenn. 1; 28 S. W. 1099.
17. Books. — The act requires the keeping of books showing the list of
stockholders, with their respective interests, the amount paid on shares sub-
548
DIGEST OF INCORPORATION ACTS. — TENNESSEE.
ecribed, and all stock transfers by and to whom made (sec. 1707; Laws of
1903, chap. 474).
18. Office and Agent. — There are no express statutory provisions re-
quiring the maintenance of an office and agent within the State. By impli-
cation, however, the company must maintain a domiciliary office within the
State. (See sec. lOgS.^
19. Reports. — By acts adopted previous to 1903 semi-annual statements
are required of banks and trust companies, and annual statements of building
and loan companies, mining, quarrying, boring, and manufacturing companies.
Annual statements are required of all corporations securing their charters under
the Act of 1903 (Laws of 1903, chap. 474). The report must be published in a
newspaper printed in the county where the principal office or business is located,
showing the amount of capital stock, existing liabilities, and list of names of
stockholders. Without expressly repealing chap. 474 of the Laws of 1903, the
Tennessee Legislature in 1907 (Laws of 1907, chap. 684) passed an act requir-
ing each domestic corporation to prepare and file annually on or before the 1st
day of July in the office of the Secretary of State a written statement signed
by its president or vice-president, and attested by its corporate seal and sworn
to by either its secretary or president, containing the following information, to
wit : The name and style of the corporation and its principal office or place
of business in the State of Tennessee, if it be a domestic corporation ; if it be
a foreign corporation, its principal office or place of business in the State of its
creation and also in Tennessee ; the amount of its capital stock authorized by
its charter and the amount of capital stock issued and outstanding ; the names
of its principal officers, to wit, its president, vice-president or vice-presidents,
secretary, and treasurer, and a complete list of its board of directors; and, finally,
the nature and character of the business in which it is engaged.
20. Anti-Trust Statute. — There is an anti-trust statute in force in Ten-
nessee. (See Act of March 10, 1890 ; Act of March 30, 1891 ; Act of April 30,
1897; Laws of 1905, chap. 479; Laws of 1907, chap. 36.)
21. Statutory Grounds for Forfeiture of Charter. — Charters may be
forfeited where the corporation has by neglect, non-user, abuse, or surrender
forfeited its corporate rights. Any act of the board of directors as a board con-
stituting an express violation of the statute is declared to be a forfeiture of the
charter (sees. 1718, 4162; see also sec. 2484; Code of 1896, sec. 6625).
22. Amendments. — Any corporation may change its name, increase its
capital stock, or obtain any powers granted by law, by the board of directors
preparing a certificate and making application to the Secretary of State in these
words:
"We, the undersigned, comprising the Board of Directors of Corpora-
tion, apply to the State of Tennessee by virtue of the General Laws of the country
for amendment to said charter of incorporation for the purpose of investing said
corporation with the power" (here state the clause in the general law aforesaid
which is desired as an amendment, or if it be simply to change the name, so
state the fact).
"Witness our hands this day of " (to be signed by the directors).
This instrument must be acknowledged, and a certificate of alteration, given
by the Secretary of State under the great seal of the State, shall complete the
amendment to such corporation. The amendment must be registered in all
respects the same as the original charter (Code of Tennessee, 1896, sees. 2028,
2029, 2344; Laws of 1907, chap. 304).
549
DIGEST OF INCORPORATION ACTS. — TENNESSEE.
23. Extension of Corporate Existence. — Perpetual existence is open
to incorporators, if they desire it. There is no provision for the extension of
corporate existence.
24. Dissolution. — The corporation may be dissolved on application to
the courts. Directors are by statute made trustees for that purpose, unless
other persons are appointed by the court (sees. 1719-1723; Act of March 28,
1887. As to sale of entire corporate assets and provision for the protection
of minority stockholders in case of said sale, see Laws of 1907, chap. 437).
25. Annual License Tax. — On or before the 1st day of July in each
year all domestic business corporations must pay to the Secretary of State the
following annual license taxes : Where the authorized capital stock is $25,000
or less, $5; where it is more than $25,000 and not more than $50,000, $10;
where it is more than $50,000 and less than $100,000, $20 ; where it is more than
$100,000 and less than $250,000, $30; where it is over $250,000 and less than
$500^000, $50; over $500,000 and less than $1,000,000, $100; over $1,000,000,
$150 (Laws of 1907, chap. 434).
26. Foreign Corporations. — Every foreign corporation upon applying for
a permit to do business in the State must pay into the office of the Secretary of
State a tax upon its authorized capital stock as follows, to wit: Companies of
$50,000 or less, $50; over $50,000 and less than $100,000, $100; over $200,000
and less than $300,000, $200; over $300,000 and less than $400,000, $250; over
$400,000 and less than $500,000, $300; over $500,000 and less than $750,000,
$400; over $750,000 and less than $1,000,000, $500; over $1,000,000 and less
than $2,000,000, $750; over $2,000,000 and less than $5,000,000, $1000; over
$5,000,000 they shall pay a fee of $1500; provided that any company chartered
under the laws of another State desiring to locate its principal office and do
all of its business in and from Tennessee, and have all of its main property hold-
ings in Tennessee, shall pay a privilege tax of one-tenth of one per centum on
the authorized capital stock, just as domestic corporations are now required to
do; provided also that insurance companies shall be credited by the amount
of fees paid to the Insurance Commissioner upon entering the State to do busi-
ness (Laws of 1909, chap. 504). Foreign corporations must pay the same
annual license tax as is required of domestic corporations. (See ante, sec. 25.)
For filing charter of foreign corporation the Secretary of State is entitled to
a fee of $20 ; for each abstract thereof, $20 (sees. 2546, 2553 ; Laws of 1895,
chap. 21; 'sec. 119, Laws of 1899, chap. 2; Laws of 1899, chaps. 14-31; Laws
of 1903, chap. 239).
State v. Schlitz Brewing Co., 104 Tenn. 715; 59 S. W. 1033; L. P. Co. v. City of Nash-
ville (Tenn.), 84 S. W. 810; N. & S. Co. v. Lloyd (Tenn.), 76 S. W. 911; State v. Company,
(Tenn.), 86 S. W. 390.
550
DIGEST OF INCORPORATION ACTS. — TEXAS.
TEXAS.
(The references cited below are to the Revised Statutes, 1895, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Texas is to be found in the Revised Statutes
of 1895, sees. 640-670 inclusive, sees. 680-686, sees. 744-749 c, and the
amendments of 1897, 1899, 1900, 1901, 1903, 1905, and 1907. Special Acts
are provided for railroad and insurance corporations. Under the General Act
corporations are divided into some seventy-one different classes, covering almost
all lines of business (sec. 642; Laws of 1907, chaps. 9, 23, 150, 151).
Hamilton v. Company, 15 Texas App. 338; 39 S. W. 641.
2. Incorporators. — Three or more persons. Two must be citizens of
Texas (sees. 641, 644).
Hamilton v. Company, 15 Texas App. 338; 39 S. W. 641.
3. Contents of the Articles of Incorporation. — The articles must set
forth:
a. Name. — No corporation can be incorporated under a name already in
use by a domestic corporation.
b. Pitrposes. — Corporations are limited in their purposes to those named
in some one of the seventy-one classes specifically named in the classification of
purposes for which a corporation may be incorporated, except that in certain
enumerated cases where the corporation act expressly permits incorporation for
more than one purpose. (See sec. 642, sub. 1-71.) The cases here referred to
are as follows: Provided corporations may be formed for two or more of the
purposes following, namely, the construction of bridges and the maintenance of
mills and gins; the manufacture and supply to the public of ice, gas, light,
heat, water, and electric motor for power or use in connection with such mills
and gins or either; the harvesting of grain or the harvesting and threshing of
grain; provided that the authorized capital stock of all such corporations shall
not exceed 8250,000 (Laws of 1903, p. 227). Corporations may also be created
for two or more of the following purposes, namely, the supply of water to the
public, the manufacture and supply of ice, electric light and motor power, or
either of them, to the public, and the manufacture, supply, and sale of car-
bonated water and the operation of cottonseed-oil mills, provided that all
private corporations including one or more of the purposes mentioned in this
article in their charter shall each pay a franchise tax as provided by law on each
of the purposes included in their respective charters, and provided further that
the authorized capital stock of corporations authorized by this article shall
not exceed 8200,000, and the provisions of the act shall not apply to cities of
over ten thousand inhabitants (650 a and 650 b; see also Laws of 1905, chaps.
24, 53; Laws of 1907, pp. 292-294; see also Laws of 1911, chaps. 22, 111; see
Borden v. Company, 82 S. W. 463).
c. Domiciliary Office. — Place or places where the business is to be
transacted.
d. Duration. — Term for which it is to exist not to exceed fifty years.
Where no period is limited the duration is twenty years (Laws of 1907, chap.
158).
551
DIGEST OF INCORPORATION ACTS. TEXAS.
e. Directors. — Number and names and residences of the board for the first
year (Laws of 1907, chap. 158). The number of directors shall be not less than
three, nor more than twenty-one (Laws of 1909, chap. 115).
/. Capital Stock. — Amount thereof and number of shares into which it is
divided (sec. 643). Both capital stock and par value thereof may be any
amount (sec. 633 ; see also Laws of 1907, chap. 166).
4. Statutory Powers. — In addition to a statutory enumeration of com-
mon law powers of corporations, the following additional powers are granted:
To vote by proxy, to forfeit stock for non-payment of assessments, to issue
preferred stock, and to authorize directors to adopt by-laws (sees. 651-653, 668,
669; Laws of 1907, chap. 158; Laws of 1909, chap. 115). Corporations may be
formed to own and hold stock in manufacturing companies (sees. 642 s. d. 49;
see also Laws of 1903, chap. 94) ; also to transact business in other States and
countries (sec. 642, Laws of 1901, chap. 43).
5. Procuring the Charter. — The articles must be subscribed and acknowl-
edged by each of the incorporators, before application can be made to the
Secretary of State for the issuance of a charter. Stock must be subscribed in
good faith to the full amount of the authorized capital stock, and fifty per cent
thereof must be paid in before said corporation can be chartered. At the time
that the articles of incorporation are presented to the Secretary of State for filing
and recording in his office, they must be accompanied by evidence satisfactory
to the Secretary of State that the full amount of the authorized capital stock
has in good faith been subscribed and fifty per cent thereof paid in cash or its
equivalent in property (Laws of 1907, p. 309. The sub. 56 of section 642 seems
to have been amended by Laws of 1907. p. 309). When this evidence has been
presented and payment has been made of all recording and filing fees, of the
organization tax and of the portion of the annual francliise tax due for the re-
maining portion of the State fiscal year, then the Secretary of State is authorized
to receive, file, and record the articles in his office and to give a certificate show-
ing the record thereof. As to what constitutes satisfactory evidence relative to
the payment of fifty per cent of the authorized capital stock, the statute provides
as follows : Satisfactory evidence shall consist of the affidavit of those executing
the charter, stating therein (1) The name, residence, and post-office address of
each subscriber to the capital stock of such company; (2) the amount sub-
scribed by each and the amount paid by each ; (3) the cash value of any property
received, giving the description, location, and from whom and the price at which
it was received; (4) the amount, character, and value of labor done, from whom
and price at which it was received; provided, that if the Secretary of State is
not satisfied he may, at the expense of the incorporators, require other and more
satisfactory evidence before he shall be required to receive, file, and record said
charter; and provided further, that the corporations created under sections 21,
29, 37, 54, and 61 of the Article 642, Revised Statutes of this State, are exempt
from the provisions of this section ; provided further, that the provisions of
this act shall not apply to corporations formed for the construction, purchase,
and maintenance of mills and gins having a capital stock of not exceeding
$15,000, nor to mutual building and loan associations, nor to water works,
ice plants, electric-light plants, and cotton warehouses in cities of less than
ten thousand inhabitants (Laws of 1907, chap. 166).
6. Corporate Indebtedness. — Corporate indebtedness cannot be created
in excess of the amount of the authorized capital stock (sec. 653).
7. Organization Tax. — For ordinary business corporations (exclusive of
552
DIGEST OF INCORPORATION ACTS. — TEXAS.
public service and eleemosynary corporations) the organization tax is $50.
provided that if the authorized capital stock of such corporation shall exceed
$10,000 it shall be required to pay an additional fee of S10 for each addi-
tional §10,000 of its authorized capital stock or fractional part thereof after
the first (sec. 2439, as amended by Laws of 1909, chap. 4, sec. 1). Before filing
its articles of incorporation the corporation must pay not only the organization
tax, but also pay the fractional part of its annual franchise tax, corresponding
to the length of time before the next following 1st day of May (Laws of 1907,
Special Session, chaps. 22, 23).
8. Filing and Recording Fees. — The payment of the organization tax
includes the filing and recording fees. The charge for certified copy of the
articles of incorporation is 15 cents for each one hundred words and $1 for
certificate issued by the Secretary of State.
9. Commencing Business. — Whenever a private domestic corporation
is chartered in this State, and whenever a foreign corporation is authorized to
do business in this State, such corporation shall be required to pay in advance
to the Secretary of State, as its franchise tax from that time down to and
including the 30th day of April next following, only such proportionate part
of its annual franchise tax as the period of time between the date of filing
of its articles of incoq^oration or the issuance of its permit to do business, as
the case may be, and the 1st day of May next following bears to a calendar
year. (See post, sec. 25 ; also Laws of 1907, chap. 23, Special Session.) Busi-
ness may be commenced as soon as the Secretary of State has issued a certificate
showing payment of all fees and taxes and the filing and recording of the
articles of incorporation in his office. By reference to sec. 4 {ante, sec. 4), it will
be seen that the articles cannot be received for record until the entire amount
of the capital stock has been subscribed for in good faith and fifty per cent
thereof paid in. The balance of the authorized capital stock must be paid in
within two years from the date of the filing of the articles in the office of the
Secretary of State. Proof of this fact must be furnished the Secretary of State
in the same manner as is required with reference to the payment of the first
fifty per cent of the authorized capital stock at the time the articles are filed
(Laws of 1907, Special Session, chap. 166). Business must be commenced
within three years of the filing of the charter, or the latter will be thereby
forfeited and the corporation dissolved (Laws of 1907, Special Session, chap.
166).
10. Organization Meeting. — The organization meeting must be held
within the State. The statute makes no provision for the organization of
the corporation.
11. Meetings of Stockholders and Directors. — Meetings of stock-
holders must be held within the State at such time and place as the by-laws
of the corporation may require. Directors' meetings may be held without the
State if the by-laws so provide.
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three and not more than thirteen directors. There are no
residential requirements (sec. 651, sub. 8). By-laws may be adopted by the
directors subject to the control of the stockholders (sec. 657; Laws of 1907,
chap. 158).
b. Liabilities. — Directors are liable for knowingly declaring illegal divi-
dends. The extent of their liability is, however, limited to the amount of such
dividends (sec. 670). Directors are also liable for violation of the Anti-Trust
553
DIGEST OF INCORPORATION ACTS. TEXAS.
Acts. (See Laws of 1907, chaps. 12, 97, 120, 173 ; chap. 10, Special Session.)
Directors are also liable for diversion of corporate assets and for intentional
violation of law, unless within one year of such violation they have caused to
be entered upon the records of the board of directors within the State of Texas
an order repudiating the wrong and permanently dismissing from their service
all persons directly or indirectly connected with such violation (Laws of 1907,
chap. 166).
13. Stockholders' Liabilities. — Stockholders are liable to the extent of
their unpaid stock subscriptions (sec. 686).
M B C Co. v. Company, 89 Texas, 511; 39 S. W. 1047; Cole v. Adams, 92 Texas, 171;
46 S. W. 790.
14. Stock Certificates. — Stockholders are entitled to certificates showing
the number of shares owned by them, signed by such officers as the by-laws
may prescribe.
15. Preferred Stock. — The right to issue preferred stock is only given
in express terms to corporations organized for the purpose of storing, trans-
porting, buying, and selling oil, gas, salt, brine, and other mineral solutions.
16. Payment of Capital Stock. — Stock can be issued only for money
paid, labor done, or property actually worth at least the sum for which it
was taken by the company (Laws of 1907, chap. 166; Cons., Art. XII. sec. 6).
17. Books. — A stock register, transfer book, and record of business trans-
actions must be kept (statute does not provide where to be kept), and the
books and records must be open to inspection of stockholders at all reasonable
times. By inference from reading sec. 5 of chap. 166 of Laws of 1907 it appears
to be necessary that the corporation minute book should be kept within
the State. The secretary must furnish to any creditor or his attorney, in an
action to enforce stockholders' liability, a list of stockholders, with residences
and amounts of holdings (sec. 672 ; see also Cons., Art. X. sec. 3). The Attorney-
General or any of his assistants or representatives, when authorized in writing
by the Attorney-General, shall have the power and authority to make diligent
investigation into the organization, conduct, and management of any corpora-
tion authorized to do business within this State, and shall have the power to
examine or inspect all or any of the books, accounts, records, minutes, letters,
memoranda, documents, checks, vouchers, telegrams, constitution, and by-laws
of such corporation, and take copies of any or all of such records or documents
herein set forth as in his judgment may show or tend to show that said corpora-
tion has been or is engaged in acts or conduct in violation of any law of
this State; provided that the Attorney-General or his assistant or assistants,
or representative or representatives, shall not make public or use such copies,
or any information derived in the course of said examination of said records or
documents as herein above set forth, except in the course of some judicial
proceedings of which the State is a party, or in a suit by the State to cancel
the permit or forfeit the charter of such corporation, or to collect penalties
for a violation of the law of this State, or for the information of any of the
officers of this State charged with the enforcement of its laws (Laws of 1907,
chap. 21).
18. Office and Agent. — An office must be kept in the State, and an agent
therein upon whom process may be served (sees. 673, 1222, 1223 ; Cons., Art. X.).
Beattie v. Hardy, 93 Texas, 131.
19. Reports. — The directors shall, when required by one-third of the
554
DIGEST OF INCORPORATION ACTS. — TEXAS.
stockholders, make report showing amount of company's business, etc. An-
nual reports are required (see sec. 25, post. For reports required in connection
with payment of annual franchise tax, see Laws of 11)07, pp. 502 to 508).
20. Anti-Trust Statute. — Texas has enacted a bountiful collection of the
most drastic anti-trust statutes to be found anywhere within the country. (See
Laws»of 1907, chaps. 12, 97, 120, 173, and chap. 10 of the Special Session.)
21. Statutory Grounds for Forfeiture cf Charter. — Charters may be
forfeited for violation of the Anti-Trust Act, or for acts of misuser or non-user,
or for failing to organize and commence business within three years from date
of incorporation (see Laws of 1903, chap. 92) ; also for failure to pay annual
franchise taxes (Laws of 1909, p. 224; Laws of 1911, chap. 21). Charters may
be forfeited by failure to pay up the full amount of authorized capital stock
witliin two years (Laws of 1907, chap. 166); also for express violations of law
whereby it is provided charter should be forfeited without judicial ascertainment
(Laws of 1907, chap. 166); and may also be forfeited for contributing corporate
funds for political purposes and for further employing the assets in other than
the legitimate objects of the corporation's creation (Laws of 1907, chap. 166).
22. Amendments. — Charters may be amended in any respect desired,
except to so change the original purpose as to prevent the execution thereof,
or to decrease the capital stock (sees. 647, 649, 651, 652). The act provides
that the articles may be amended by filing copies of such amendments with
the Secretary of State in the manner required in the case of original charters
(sec. 647). The act unquestionably contemplates action by the stockholders
at a meeting convened for that purpose in order to make the amendment effec-
tive. It also undoubtedly contemplates the making of a certificate by the
president or other officer of the corporation, showing the manner in which the
amendment was adopted. The act also provides that the number of directors
may be increased or diminished to any number not less than three nor more
than tliirteen by a vote of the stockholders cast as the by-laws may provide.
To increase the capital stock to any amount not exceeding at any one time
double the amount of its authorized capital requires the vote of the stockholders
cast in conformity with the by-laws, and if a majority of the stockholders shall
vote for the increase of such stock the same may be increased by the board of
directors. Upon such increase of stock being made in accordance with the
by-laws, the date and amount shall be certified to the Secretary of State by the
directors, and from the time such certificate is filed the increase of stock shall
become a part of the capital thereof. Such certificate shall be filed and recon lei 1
in the same manner as the original charter (sec. 652). The following provision
relative to the increase or decrease of capital stock is to be found in chap. 166
of the Laws of 1907, to wit: A corporation may increase its authorized capital
by a two-thirds vote of all its stock; and when such vote is given in favor of
the increase the same may be done by the board of directors, trustees, or man-
aging board of such corporation; and upon such increase of stock being made
in accordance with the above provisions and certified to the Secretary of State
by the directors, together with satisfactory proof, which shall be the affidavit
of the directors, showing that the full amount of the increase has been in good
faith subscribed and fifty per cent thereof paid, and in other respects conform-
ing to the proof required as on an original application for charter; or showing
that such portion thereof has been subscribed, or subscribed and paid in, as is
required for the corporation, thus increasing its stock; and if the Secretary
of State is satisfied that the increase of stock has been made in accordance
555
DIGEST OF INCORPORATION ACTS. TEXAS.
with law, and that the requirements of the law have been complied with as to
the subscription and payment of stock and other respects as on an original
application for charter, he shall file such certificate of increase, and thereupon
the same shall become a part of the capital stock of such corporation ; and in
case of failure by the stockholders to pay the unpaid portion of the increase
within two years from the date of filing of sucn certificate of increase in the
office of the Secretary of State, the charter of such company shall be forfeited
and the provisions of sec. 2 of this act shall govern same as in case of an original
creation of a corporation ; provided, that a corporation may decrease its capital
stock by such amount as its stockholders may decide by a two-thirds vote of
all its outstanding stock, in like manner as is required for an increase as above
provided, but no such decrease shall prejudice the rights of any creditor of
such corporation in any claim or cause of action as such creditor may have
against the company, or the stockholder or director thereof ; nor shall such
decrease become effective until full proof is made by the affidavit of the directors
to the Secretary of State of the financial condition of such corporation, giving
therein all its assets and liabilities, with names and post-office addresses of all
creditors and amount due each, and the Secretary of State may require as a
condition precedent to the filing of such certificate of decrease that the debts
of such corporation be paid or reduced.
23. Extension of Corporate Existence. — There is no express provision
for the extension of corporate existence. (See however, sec. 61, sub. 1.)
24. Dissolution. — The corporation may be dissolved by expiration of the
charter, or by judgment of dissolution by a court of competent jurisdiction;
also through failure to commence business within three years from the date
of charter (sees. 680-681). Under the Laws of 1907, chap. 166, the following
provision is made for the dissolution of the corporation, to wit : Where four-
fifths in interest of all the stock outstanding shall vote in favor of a dissolu-
tion at a stockholders' meeting called for that purpose on notice signed by a
majority of the directors, stating time, place, and object of the meeting, served
personally, or by mail at least thirty days next before the meeting. If at said
meeting four-fifths in interest of all the stockholders of said company shall
signify their consent in writing to the dissolution of the corporation, such con-
sent in writing, together with a list of the directors and officers of the company,
giving post-office address and place of residence of each, certified by the presi-
dent and the secretary and treasurer as true and correct action of the stock-
holders, shall be filed with the Secretary of State ; or when, without a
stockholders' meeting, all the stockholders of the corporation consent in
writing to a dissolution, the same shall be certified to as above and filed
with the Secretary of State. When any such certificate as above mentioned
is filed with the Secretary of State, he shall issue a certificate that such consent
has been filed and that the corporation is dissolved, and said officer shall so
note on the ledger in his office.
25. Annual Franchise Tax. — All domestic corporations are required on
or before the 1st day of May of each year to pay in advance to the Secretary
of State a franchise tax for the year following, which shall be computed as
follows, to wit: 50 cents on each $1,000, or a fractional part thereof of the
authorized capital stock of such corporation, unless the total amount of cap-
ital stock of such corporation issued and outstanding, plus its surplus and
undivided profits, shall exceed its authorized capital stock, and in that event
the franchise tax of such corporation for the year following shall be 50 cents on
556
DIGEST OF INCORPORATION ACTS. — TEXAS.
each SI, 000 of capital stock of such corporations issued and outstanding, plus its
surplus and undivided profits; provided, that such franchise tax shall not in
any case be less than $10; provided, that where the authorized capital exceeds
$1,000,000, such franchise tax shall be 50 cents for each $1,000 up to and
including $1,000,000, and for each additional SI, 000 in excess of $1,000,000 it
shall be 25 cents. The franchise tax herein provided for shall be computed
upon the basis of the total amount of the capital stock issued and outstand-
ing, plus the surplus and undivided profits of the corporations, instead of upon
the authorized capital stock, whenever such total amount is different from the
authorized capital stock. Affidavit of the head of the corporation and secretary
thereof to these facts may be filed with the Secretary of State, or may be re-
quired whenever in his judgment the same is necessary to protect the interests
of the State. Any corporation, either domestic or foreign, which shall fail to
pay the tax provided for in this article at the time specified herein shall imme-
diately become liable to a penalty of twenty-five per cent on the amount of
the tax due by it, and if the amount of said tax and penalty be not paid in full
on or before the 1st day of July thereafter such corporation shall for such de-
fault forfeit its right to do business in the State, which forfeiture shall be
consummated without judicial ascertainment by the Secretary of State entering
upon the margin of the ledger kept in his office relating to such corporation the
word "Forfeited," giving the date of such forfeiture; and any corporation
whose right to cio business may be thus forfeited shall be denied the right to
sue or defend in any of the courts of this State, and in any suit against such
corporation on a cause of action arising before such forfeiture no affirmative
relief may be granted to such corporation unless its right to do business is
revived as provided in Article 5243 j. And each and every director of any cor-
poration whose right to do business within the State shall be so forfeited shall
as to any and all debts of such corporation which may be created or in-
curred, with his knowledge, approval, and consent within the State, after
such forfeiture by any such directors or officers, and before the revival of the
right of such corporation to do business, be deemed and held liable thereon in
the same manner and to the same extent as if such directors and officers of
such corporation were partners (Laws of 1907, Special Session, chap. 23).
Nothing in this act shall affect the amount of the franchise tax to be paid by
any corporation for the period of time ending with April 30, 1907, excepting
only such domestic corporations as may be chartered after this act shall take
effect and such foreign corporations as may, after this act shall take effect,
apply to the Secretary of State for a permit to do business within the State.
For the purpose of determining the amount of the first franchise tax payment
required by this act of any domestic corporation which may be hereafter
chartered, or of any foreign corporation which may hereafter apply for a permit
to do business within the State, and also for deter mining the correctness of any
report which is provided in this act, the Secretary of State may, whenever he
may deem it necessary or proper to protect the interests of the State, require
any one or more of the officers of such corporations to make and file in the office
of the Secretary of State an affidavit or affidavits in writing which shall be sub-
scribed by such officers, and by him sworn to before some officer who is by
law duly authorized to administer oaths, and verified by his seal of office, set-
ting forth fully the facts concerning the amount of the surplus and undivided
profits respectively, if any, of such domestic or foreign corporation ; and until
the Secretary of State shall be fully satisfied as to the amount of such surplus
557
DIGEST OF INCORPORATION ACTS. — TEXAS.
and undivided profits, respectively, if any, he shall not file the articles of incor-
poration of such proposed domestic corporation, or issue such permit or accept
such franchise tax. For the purpose of ascertaining and determining the
amount of any annual franchise tax prescribed by this act, the president, vice-
president, general manager, secretary, treasurer, and superintendent of each
and every domestic or foreign corporation embraced within the provisions of
this act shall annually, and between the 1st and 10th days of March, and also
whenever called upon by the Secretary of State in writing and under oath to
do so, report to the Secretary of State, as required by sec. 4 of this act, the
total amounts of the capital stock issued and outstanding, and the surplus
and undivided profits respectively, if any, of such corporation, on the 1st day
of March next preceding, and the Secretary of State may ascertain such facts
from other sources, and if the true aggregate of such amounts shall exceed the
authorized capital stock of such corporation as disclosed by its then current
original or amended articles of incorporation, the amount of its annual franchise
tax for the year beginning the 1st day of May next thereafter shall be collected
and paid ; otherwise, its annual franchise tax shall be calculated and paid upon
the amount of its authorized capital stock as shown by its aforesaid original or
amended articles of incorporation. The making and filing by any one of such
officers of such corporation of the record required by this section shall relieve the
other officers of the corporation from the duty of making any report required
by this section, except such report or reports as may be required by the Secre-
tary of State. In the event of increase in the authorized capital stock of any
domestic or foreign corporation, it shall also pay in advance a supplemental
franchise tax thereon for the remainder of the year down to and including the
30th day of April next thereafter, the amount of which shall be determined as
is provided in sec. 3 of this act in case of the first franchise tax payment to be
made under this act by a domestic corporation which may be hereafter author-
ized to do business within the State.
Every person required by this act to make any annual report to the Secretary
of the State who shall for a longer period than five days, and every person who
shall for more than ten days after the mailing by the Secretary of State demand
upon him any other report which the Secretary of State is by this act authorized
to require, fail or refuse to make such report, shall be deemed guilty of a misde-
meanor, and upon conviction thereof shall be fined in any sum not less than $50
and not more than $200, and each day of such failure or refusal after the expi-
ration of said five days or ten days, as the case may be, shall constitute a
separate offence (Laws of 1907, pp. 502-508, as amended by Laws of 1909,
p. 224).
26. Foreign Corporations. — Foreign corporations must file with the
Secretary of State a certified copy of their articles of incorporation, a permit to
do business within the State being issued by said official upon payment of the
original license fee hereinafter set forth, and in addition to this the proportionate
part of the annual license tax for the remaining portion of the State's fiscal year
must be paid. The permit issued by the Secretary of State runs for only ten
years (sec. 748). The corporation seeking to procure the permit must furnish
satisfactory proof that either $100,000 in cash or fifty per cent of the authorized
capital stock has been subscribed and at least ten per cent paid in before permit
will issue (sec. 642, sub. 56; Laws of 1901, chap. 15). The Secretary of State
may require an anti-trust affidavit in the same form required for domestic
corporations (sec. 2439, as amended by Laws of 1909, p. 266). If the authorized
558
DIGEST OF INCORPORATION ACTS. — TEXAS.
capital stock be $10,000 or less, the fee for permit shall be $50; if the authorized
capital stock be in excess of $10,000, fee for permit is 150 for the first $10,000 and
$10 for the additional $10,000 and fractional part thereof (Laws of 1907, Special
Session, chap. 22; sec. 2439 as amended by Acts of 1909, p. 266). Each and
every foreign corporation authorized or that may hereafter be authorized to do
business in this State shall, on or before the 1st of May of each year, pay in
advance to the Secretary of State a franchise tax for the year following, which
shall be computed as follows: viz., $1 on each $1,000 or fractional part thereof
of the authorized capital stock of the corporation up to and including $100,000,
and $2 on each $5,000 or fractional part thereof of such stock in excess of
$100,000 and up to and including $1,000,000; and $2 on each $20,000 or frac-
tional part thereof of such stock in excess of $1,000,000 and up to and includ-
ing $10,000,000, and $2 on each $50,000 of such stock in excess of $10,000,000;
unless the total amount of the capital stock of such corporation issued and
outstanding, plus its surplus and undivided profits, shall exceed its author-
ized capital stock, and in that event the franchise tax of such corporation
for the year following shall be $2 on each $1,000 or fractional part thereof
of the authorized capital stock of such corporation issued and outstanding,
plus its surplus and undivided profits, up to and including $100,000, and $2
on each $5,000 or fractional part thereof of such stock, surplus, and undivided
profits in excess of $100,000 and up to and including $1,000,000; and $2 on
each $20,000 or fractional part thereof of such stock, surplus, and undivided
profits in excess of $1,000,000 and up to and including $10,000,000; and $2
on each $50,000 of such stock, surplus, and undivided profits in excess of
$10,000,000; provided that such franchise tax shall not in any case be less
than $25. (See ante, sec. 25.)
Lake View Land Co. v. Company, 95 Texas, 252; 66 S. W. 766; Security Co. v. Bank,
93 Texas, 575: 57 S. W. 22; Wilson v. Peace (Texas App.), 85 S. W. 31; De Witt v. Com-
pany, 81 S. W. 334.
559
DIGEST OF INCORPORATION ACTS. UTAH.
UTAH.
(The references below are to the Revised Statutes of Utah, 1898, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Utah is to be found in the Revised Statutes
of 1898 of that State, sees. 314-373, as amended by the Laws of 1899 and 1901.
Under this act corporations may be formed for any purpose for which individ-
uals may lawfully associate themselves. Special provisions are made for in-
surance, irrigation, trust, banking, and railway companies.
2. Incorporators. — Five or more persons, one of whom must be a resident
of the State (sec. 314 ; see also Laws of 1905, chap. 22).
3. Contents of the Articles of Agreement. — The articles must set
forth : a. Name. — No corporation can use the name of a corporation already
organized within the State or of any foreign corporation duly authorized to
transact business within the State (sec. 315, sub. 1; Laws of 1899, chap. 52;
Laws of 1901, chap. 81 ; Laws of 1905, chap. 22).
b. Domicile. — The precinct or city where it is organized (Laws of 1905,
chap. 22).
c. Incorporators. — The names of the incorporators and their places of
residence (Id.).
d. Duration. — Not to be less than three nor more than one hundred years
(Id.).
e. Purposes. — Pursuit or business agreed upon, specifying it in general
terms. The Secretary of State permits the insertion of any number of objects
in the articles not covered by special acts.
/. Place of General Business.
g. Stock Subscriptions. — The amount of stock each party has subscribed.
The amount of each share and the limit of capital stock agreed upon. If the
capital stock is to be divided into different kinds and classes, the rights and
privileges of each class must be provided for, and the power of voting may be
confined to such classes as the articles may designate. Unless otherwise pro-
vided, each shareholder is entitled to one vote for each share of stock owned by
him or held in trust for others (Id.; see also Laws of 1903, chap. 59).
h. Officers and Directors. — The number and kinds of officers, their qualifi-
cations, and the terms of office, and time and manner of their election, removal,
and resignation, with the names of the officers who are to serve until the first
general election, provided that in no case shall the number of directors be less
than three nor more than twenty-five. Provision may be made also for
classifying directors into three classes to hold office, each for one, two, and three
years respectively, one-third being elected annually (Id.)-
i. Quorum of Directors. — Number of the entire board of directors that are
necessary to constitute a quorum to be authorized to transact the business
and exercise the corporate powers of the corporation, provided that a quorum
shall not be less than one-fourth of the entire number (Id.).
j. Stockholders' Liabilities. — Whether or not the private property of the
stockholders shall be liable for its obligations (Id.).
k. Provisions for the Regulation of Internal Affairs. — Such general clauses
560
DIGEST OF INCORPORATION ACTS. — UTAH.
as incorporators may deem necessary for conducting the business of the cor-
poration for its future welfare (Id.). The law provides that articles of agree-
ment shall also contain provisions as to the payment of stock subscriptions in
property, if it is desired to pay them in this manner. (See sec. 5, post, "Pro-
curing the Charter.") Provision may also be made in the articles of incorpora-
tion designating what proportion of the outstanding capital stock shall be
represented at a stockholders' meeting, and what proportion of the stock so
represented shall be necessary to determine any question relative to the election
of officers (sec. 316, as amended by Laws of 1901, chap. 81). When so provided in
the articles of agreement, meetings of the board of directors may be held for the
transaction of any business of the corporation at such place without the State as
the directors may by resolution or by by-law provide (sec. 324.: Laws of 1903,
chap. 94). The articles of agreement may provide that the entire property of
the corporation may be sold, mortgaged, or otherwise disposed of by the direc-
tors or by the stockholders (Laws of 1905, chap. 131).
4. Statutory Powers. — In addition to statutory enumeration of common
law powers corporations have the following additional powers : To authorize
voting by proxy, to forfeit stock for non-payment of assessments, to consoli-
date with other corporations engaged in the same line of business in the same
vicinity, to enforce a hen upon the stock of its members for debts due the cor-
poration, to remove directors and to authorize directors to adopt by-laws, to
dispose of the assets of the corporation when such power is inserted in the arti-
cles of agreement and is given to the board of directors (R. S., sec. 322 ; R. S.
sees. 335, 356, 373; R. L., sees. 340, 341; R. S., sec. 333; R. L., sees.
322, 32 1, 333, 335, 340, 341, 356, and 376; see also Laws of 1905, chap. 27;
Laws of 1905, chaps. 108, 131). Corporations other than irrigation companies
are by implication forbidden to hold stock in other corporations (Laws of 1905,
chap. 108, sec. 57; sec. 4411). Domestic corporations may transact business
without the State (sec. 324 ; also Laws of 1903, chap. 94).
Bear River Co. v. Hanley, 15 Utah, 506.
5. Procuring the Charter. — The agreement must be subscribed by all of
the incorporators, and sworn to and acknowledged by at least three of their
number before the county clerk or any notary public of the county in which they
have established or intend to establish their principal place of business (Laws of
1905, chap. 22). In addition to the foregoing, three or more of the incorpora-
tors must make oath to the effect that they have commenced, or it is bona fide
their intention to commence, carrying on the business mentioned in the agree-
ment ; that the affiants" verily believe that each party to the agreement has
paid, or is able to and will pay, the amount of the stock subscribed by him, pro-
vided that such affidavit shall not be made until not less than ten per cent
of the stock subscribed and ten per cent of the capital stock of the corpora-
tion has been paid in, and provided also, where subscriptions to the capital
stock shall consist of property necessary to the pursuit agreed upon, there
must appear in the articles of incorporation a description of the property so
taken, with a statement of the fair cash value thereof, which statement, except
in the case of corporations organized for mining or irrigation purposes, shall be
supplemented by the affidavit of three persons to the effect that they are ac-
quainted with the said property, and that it is reasonably worth the amount
in cash for which it was accepted by the corporation, and the owner of such
property shall be deemed to have subscribed such amount to the capital stock
501
DIGEST OF INCORPORATION ACTS. — UTAH.
of said corporation as will represent the fair cash value of so much of said prop-
erty and of such interest therein as they may have conveyed to the corpo-
ration by deed actually executed and delivered (Laws of 1905, chap. 111).
Before the first officers shall enter upon the duties of their respective offices they
shall take and subscribe an oath of office that they will discharge the duties of
such office to the best of their judgment, and that they will not do or consent
to the doing of any matter or tiling relating to the business of the corporation
with intent to defraud any stockholder or creditor or the public. Thereupon
the articles of agreement, together with the oath of office of the officers, shall
within ten days from its due execution be filed and recorded in the office of the
county clerk of the county in which the corporation's general business is to be
carried on (sees. 316-318). The county clerk issues a certificate to the effect
that the agreement and oaths of office have been filed in his office, which certifi-
cate, together with a copy of the agreement and oaths, must be filed in the office
of the Secretary of State, and thereupon he issues a certificate that the above
mentioned instruments have been filed in his office (sees. 316, 320, as amended
by Laws of 1901, chap. 81).
P. T. C. Co. v. Company, 23 Utah, 474; 65 Pac. 735.
6. Corporate Indebtedness. — The capital stock cannot be diminished
to an amount less than fifty per cent in excess of the indebtedness of the cor-
poration (sec. 338; Laws of 1905, chap. 30).
7. Organization Tax. — Twenty-five cents on each $1,000 of the capital
stock (Laws of 1897, chap. 1 ; Laws of 1901, chap. 60).
8. Filing and Recording Fees. — The payment of the organization tax
includes the filing fees in the Secretary of State's office. To the Secretary of
State for issuing certificate of incorporation, $5 ; for certified copy of articles of
agreement, 15 cents per folio of one hundred words end $1 for certificate ; for
filing and issuing certificate of amendment, $5 ; to the county clerk for filing
and indexing articles of agreement, $2.50; for recording the same, 20 cents per
folio ; for filing oath of officers, 50 cents each ; for issuing certificate of com-
pliance on the part of a foreign corporation, $5; for receiving and filing
acceptance of the provisions of the constitution on the part of an incorporating
company and issuing certificate thereof, $3 (sees. 965, 972; Laws of 1901,
chap. 60; Laws of 1905, chaps. 73, 127; Laws of 1911, chap. 50).
9. Commencing Business. — Business may be commenced as soon as the
articles are filed as required by law, and ten per cent of the capital stock sub-
scribed, and ten per cent of the authorized capital stock has been paid in, and
the officers have duly taken their oaths of office. Business must be commenced
within the period of two years after the time of filing articles, to avoid forfeiture
of charter (Laws of 1891, chap. 81, amending R. S., sees. 316, 321).
10. Organization Meeting. — The organization meeting must be held
within the State'; this in the absence of any statute expressly authorizing the
holding of organization meetings without the State.
11. Meetings of Stockholders and Directors. — Meetings of stock-
holders and directors may be held at the time and place designated in the articles
of agreement. In the absence of any statute expressly authorizing the holding
of stockholders' meetings without the State, it is safe to say that without the
consent of all stockholders such meetings must be held within the State (R. L.,
ecs. 334, 336). When so provided in the articles of incorporation meetings of
the board of directors may be held for the transaction of any business of the
562
DIGEST OF INCORPORATION ACTS. — UTAH.
corporation at such place without the State as the directors may by resolution
or by-law provide (sec. 324; Laws of 1903, chap. 94). Voting by proxy is per-
mitted. In order to permit of cumulative voting provision must be made in the
articles of incorporation. The right to vote may be withheld from any class
of stock by making provision to that effect in the articles of agreement (sees.
335, 337; Laws of 1903, chap. 59).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three and not more than twenty-five directors, one-third
of whom must be residents of the State. Directors may be classified into three
classes, one-third to be elected annually (sec. 315; Laws of 1905, chap. 22).
They must take the oath of office (sec. 317). In case of corporations doing an
interstate business no directors need be residents or stockholders unless ex-
pressly required by the articles of incorporation (sec. 324 ; Laws of 1903, chap.
94). One-fourth of the entire number may constitute a quorum if the articles
so provide. Directors must be stockholders. Special provision is made for their
removal by the stockholders (R. S., sees. 324, 327; Laws of 1901, chap. 81).
b. Liabilities. — Quo warranto proceedings may be brought against corporate
officers who unlawfully exercise the duties of a corporate office (sec. 3609).
Directors are liable for fraud; for making false reports to public officers,
for the unauthorized use of names in prospectus ; for the illegal declaration of
dividends or illegal withdrawal of capital; for receiving notes in payment of
capital stock, or for receiving from any other stock corporation stock of such
corporation in exchange for that of the corporation and of which the above
person is a director (sees. 4408-4413). Every director who is present at a meet-
ing is deemed to concur in the action taken thereat, unless his dissent is entered
on the minutes of the directors' meeting (sees. 4419, 4420).
13. Stockholders' Liabilities. — Unless the articles of agreement other-
wise provide, stockholders are only liable to the creditors to the extent of their
unpaid stock subscriptions (R. S., sec. 331; see also Cons., Art. XII. sec. 18;
see also R. S., sees. 338, 354).
Richardson v. Company, 23 Utah, 366; 65 Pac. 74; Salt Lake Hardware Co. v. Com-
pany, 13 Utah, 423; 45 Pac. 200; Henderson v. Turngren, 9 Utah, 432; 35 Pac. 495; Crowfoot
v. Thatcher, 19 Utah, 212.
14. Stock Certificates. — Each shareholder is entitled to a certificate show-
ing the number of shares owned by him, signed by such officers as the by-laws
may prescribe. Par value of shares may be any amount.
15. Preferred Stock. — The issue of preferred stock is expressly author-
ized by statute (Laws of 1903, chap. 59). Preferred stock may be issued on such
terms and with such voting powers as may be prescribed in the articles of agree-
ment (sec. 335 ; Laws of 1903, chap. 59).
16. Payment of Capital Stock. — Capital stock may be paid for in prop-
erty by providing therefor in the articles of agreement and describing such
property therein (Laws of 1901, chap. 81, amending R. S., sec. 316; Laws of
1905, chap. 111). Assessments cannot be made on full paid stock for any pur-
pose unless so provided in the articles of agreement (sec. 354). No amend-
ments to articles to make it assessable can be made except by unanimous
consent of stockholders (sec. 338).
17. Books. — Correct books of the proceedings and business of the corpo-
ration must be kept open for inspection by stockholders. The place where such
books are to be kept is not regulated by statute (II. S., sees. 328, 329, 4415).
18. Office and Agent. — The Constitution provides that no corporation
5G3
DIGEST OF INCORPORATION ACTS. UTAH.
shall do business within the State without having one or more places of busi-
ness within the State and an agent located thereat upon whom process.may be
served (Art. XII. sec. 9; see also R. S., sec. 4415).
19. Reports. — The statutes do not require reports to be made except for
insurance, banking, loan, trust, and guaranty companies.
20. Anti-Trust Statute. — There is a moderate anti-trust statute in force
in Utah (R. S., sees. 1752-1762).
21. Statutory Grounds for Forfeiture of Charter. — Charter may be
forfeited for non-user for a period of two years consecutively, or for entering
illegal pools or trusts (R. S., sees. 321, 1758). Quo warranto lies for misuse or
non-use of charter (sees. 3610-3626 inclusive).
Jackson v. Company, 21 Utah, 1 ; 59 Pac. 238.
22. Amendments. — Articles of incorporation may be amended in any
respect desired, by conforming to the provisions of law in such case made and
provided (sec. 338). To carry the amendment into effect requires the vote of
a majority of the stockholders cast at a stockholders' meeting called for that
purpose. The law provides that if all the stockholders vote in favor of such
amendment, notice thereof required by law, hereinafter referred to, need not be
given, and provided further that the original purpose of the corporation shall
not be altered or changed without the approval or consent of all the outstand-
ing stock, and provided further that adding to the purposes or objects or ex-
tending the power and business of the corporation shall not be deemed to change
the original purposes of the corporation (Laws of 1903, chap. 94 ; Laws of 1905,
chap. 30). In the absence of unanimous consent on the part of the stockholders,
notice of the meeting must be given by the president or secretary of the corpora-
tion in some newspaper having general circulation in the county where the
corporation has its principal place of business for at least twenty-one days,
stating the nature of the proposed amendment and the time and place of said
meeting. Such change or amendment when adopted shall be signed by the
president and secretary of such corporation, and be filed and recorded in the
manner provided for the filing and recording of original articles (sec. 339 ; Laws
of 1905, chap. 30).
23. Extension of Corporate Existence. — There is no provision for the
extension of corporate existence.
24. Dissolution. — Voluntary dissolution may be had by application to
the District Court upon two-thirds vote of the stockholders at a special meeting
of the stockholders (R. S., sees. 3114, 3661-3667; Laws of 1909, chap. 50).
25. Annual License Fee. — All domestic business corporations except
water, canal, and irrigation corporations of a certain designated character, and
all foreign corporations doing business within the State, must on or before the
15th day of November of each year pay to the Secretary of State a corporation
license tax. All corporations with an authorized capital stock of $10,000 or
less, $5; more than $10,000 and not to exceed $25,000, $10; more than
$25,000 and not exceeding $50,000, $15; more than $50,000 and not exceeding
$75,000, $20; more than $75,000 and not exceeding $100,000, $25; more
than $100,000 and not exceeding $150,000, $35; more than $150,000 and not
to exceed $200,000, $40; any amount over $200,000, $50 (Laws of 1909, chap.
106). Upon payment of the license tax the Secretary issues to such corpora-
tion a certificate authorizing it to transact its business in the State for the period
of one year (Laws of 1909, chap. 106. See Laws of 1911, chap. 57).
564
DIGEST OF INCORPORATION ACTS. — r UTAH.
26. Foreign Corporations. — Foreign corporations must file with the Sec-
retary of State and county clerk of the county where the principal office of the
corporation is to be located a copy of their articles of incorporation and by-laws.
The board of directors of such corporations must appoint some person residing
within the county where the corporation's principal place of business is located
to receive service of process upon the corporation. A similar resolution must
be passed accepting in behalf of the corporation the provisions of the Constitu-
tion of the State of Utah. The fee for filing such acceptance is $3. Otherwise
the fifing and recording fees are the same as for domestic corporations. Foreign
corporations pay the same fees to the Secretary of State as domestic corpora-
tions of like capitalization (Laws of 1911, chap. 50). Foreign corporations
must also pay the same annual license tax as is exacted from domestic cor-
porations (sees. 351, 352; Laws of 1907, chap. 107). Under the Constitution,
Art. XIII. sec. 6, no corporation organized outside of the State is permitted to
transact business within the State on conditions more favorable than those pre-
scribed by law to similar corporations organized under the laws of Utah. (As
to right of foreign corporations to exercise the power of eminent domain, see
Laws of 1909, chaps. 20, 47.)
R. G. W. Ry. Co. v. Company, 23 Utah, 22; 63 Pac. 995; Hiakey v. Company, 27 Utah,
409; 76 Pac. 20; A. Booth & Co. v. Weigand (Utah), 79 Pac. 570.
5G5
DIGEST OF INCORPORATION ACTS. — VERMONT.
VERMONT.
(The references cited below are to the Public Statutes of Vermont, Revision of 1906,
unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Vermont is found in the statutes of Vermont,
Revision of 1906, title 25, chap. 182, sees. 4101-4174. Under it corporations
may be formed for carrying on any object or business not repugnant to public
policy or the laws of the State, excepting express, banking, insurance business,
construction and operation of railroads or in aiding in the construction thereof,
and the business of savings banks, trust companies, or corporations intended to
derive profit from the loan of money (sec. 4138, as amended by Laws of 1908,
chap. 103; see as to incorporation by special act of the General Assembly, Laws
of 1910, chap. 143).
2. Incorporators. — Three or more adult persons. There are no residential
requirements (sec. 4138; Laws of 1908, chap. 103).
3. Contents of Articles of Association. — The articles of association
must contain:
a. Name. — Similarity of names with that of existing corporations for-
bidden (sec. 4139).
b. Purposes. — Object or objects for which established. Any number of
purposes may be inserted in the articles (sec. 4139).
c. Domicile. — Place in which corporate business is to be carried on
(sec. 4139).
d. Capital Stock. — Amount thereof. Capital stock is limited to a minimum
of $500 and a maximum of $1,000,000. The par value of shares must not exceed
$100 (sees. 4139, 4162). Duration of corporate existence is unlimited unlesB
incorporated for a limited term (sec. 4153).
4. Statutory Powers. — In addition to a statutory enumeration of com-
mon law powers, the following additional powers are granted : The right to
vote by proxy at stockholders' meetings, to forfeit stock for failure to pay
assessments, and to have a lien upon the stock of its members for debts due
to the corporation (sees. 4153, 4155, 4161).
5. Procuring the Charter. — Articles must be subscribed by all the incor-
porators and then submitted to the Secretary of State for his approval. The
latter may, if he sees fit, refer the same to a judge of the Supreme Court, who
is given power to determine whether the proposed corporation may or may not
be organized under the General Act (Laws of 1908, chap. 103). If the articles
are approved, they are recorded in the office of the Secretary of State, and a
certified copy thereof must be recorded in the office of the clerk of the town in
wliich the principal place of business of the corporation is located. The organi-
zation tax must be paid to the Secretary of State before corporate existence
begins (sees. 4139-4141 inclusive).
Lawrie v. Silsby (Vt.), 57 Atl. 1106.
6. Corporate Indebtedness. — One-fourth of the capital stock must be
paid in before the corporation can contract debts. No debts can be contracted
in any event exceeding in amount two-thirds of the capital stock actually paid
in (sec. 4158).
7. Organization Tax. — Capital stock up to $5,000, $10 ; not exceeding
566
DIGEST OF INCORPORATION ACTS. VERMONT.
$10,000, $25; not exceeding $50,000, $50; not exceeding $200,000, $100;
not exceeding S500,000, $200; not exceeding $1,000,000, S300; exceeding
$1,000,000, $500 (sees. 731, 732, 734).
8. Filing and Recording Fees. — The payment of the organization tax
includes the filing and recording fees in the Secretary of State's office. The
charge for issuing certified copy of articles of association is $2. Recording
fees in local town or city office, $1 ; fee for fifing certificate of payment of capital
stock, $1.
9. Commencing Business. — Before commencing business, also, the presi-
dent or clerk must make a certificate under oath stating the amount of capital
actually paid in. This must be at least one-fourth of the capital stock, if debts
are to be contracted. This certificate is filed in the office of the Secretary of
State, and a certified copy thereof with the clerk of the town in which the prin-
cipal place of business is to be located (sees. 4156, 4158).
10. Organization Meeting.- — The organization meeting must be held
within the State. Any three of the signers of the articles of association may
call the first meeting of the persons signing such articles, by delivering to each,
or leaving at Iris abode, or mailing, postage prepaid, to his address at least seven
days prior to the time of such meeting, a notice of the time and place thereof.
Such meeting may be held without previous notice if all the signers of such
articles voluntarily assemble for such purpose or agree thereto in writing (sec.
4142). At said first meeting the signers of said articles shall effect an organiza-
tion by choosing a temporary clerk by ballot, the adoption of by-laws, and the
election of officers (sec. 4143).
When by reason of death or other disqualifications of any of the persons
named as incorporators or commissioners in an act of incorporation, heretofore
or hereafter passed, such corporation cannot be organized, the governor may,
upon application of any one of the incorporators ov commissioners named in
the act on such reasonable notice to the surviving incorporators or commis-
sioners and the commissioner of State taxes as the Governor shall order, des-
ignate other persons to act as incorporators or commissioners with the sur-
vivors named in the act, and such persons shall, with the survivors named,
have all the rights and powers to receive subscriptions for capital stock and
organize such corporations as the persons named in the act (Laws of 1908, No.
102; Laws of 1909, p. 90).
11. Meetings of Stockholders and Directors. — There is no statute
authorizing the holding of stockholders' meetings without the State, and by
implication at least they must be held there. Directors' meetings may be held
within or without the State, as the by-laws may provide (sees. 4144, 4145,
4152).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three directors, who must be stockholders, and two of
them must be residents of the State. Directors may fill vacancies in the board
or in the office of the clerk of the corporation (sees. 4146, 4151). It would
appear that an executive committee of the board of directors may be provided
for in the by-laws. (See Roebling Sons v. Barre, 76 Vt. 131.)
Buck v. Company (Vt.), 56 Atl. 285.
b. Liabilities. — Directors are liable if the corporation contracts debts before
a copy of its articles of association and a certificate as to the amount of capital
stock paid in are filed in the office of the clerk of the town in which the prin-
5G7
DIGEST OF INCORPORATION ACTS. VERMONT.
cipal office of the corporation is to be located. They are also liable for illegal
payment of dividends, or for permitting the creation of indebtedness in excess
of two-thirds of the capital stock paid in (sees. 4156, 4157; see also sees. 4150,
4109, 4110).
Fair v. Briggs Estate, 72 Vt. 225; 47 Atl. 793; Davenport v. Newton, 71 Vt. 11;
42 Atl. 1087.
13. Stockholders' Liabilities. — Stockholders are liable to the extent of
their unpaid stock subscriptions. If the capital stock is withdrawn or refunded
to the stockholders before the full payment of its debts, each stockholder is
personally liable to the amount thereof refunded to him (sees. 4159, 4160).
Barton Nat. Bank v. Atkins, 72 Vt. 33; 47 Atl. 176; Corey v. Morril, 61 Vt. 598; 17
Atl. 840.
14. Stock Certificates. — Stockholders are entitled to a certificate signed
by such officers as the by-laws prescribe. The par value of shares must not
exceed $100 each (sec. 4162). As to obtaining new certificates for lost ones, see
sees. 4124-4126.
15. Preferred Stock. — There is no provision expressly authorizing the
issuance of preferred stock.
16. Payment of Capital Stock. — Stock may be issued in payment for
any property deemed necessary for the business of the corporation, and the
6tock so issued shall be fully paid stock, and not liable to further call (sec. 4158).
17. Books. — Stock book must be kept within the State, containing the
names of the holders of stock, their places of residence, and number of shares
held by each, amount actually paid in on each share, and time when they
acquired the same (sees. 4111, 4148, 4167). All records, amounts, and papers
of the corporation are open to the inspection of stockholders (sees. 4109, 4110,
4148, 4150, 4167). Special power is granted to the courts to require the pro-
duction of corporate books and papers by corporate officers of either domestic
or foreign corporations doing business within the State (Laws of 1906,
Act 75).
18. Office and Agent. — Must have an office within the State in charge
of a clerk in the town where its principal place of business is located (sees. 4146,
4167, 4108). If the corporation neglects for six months to appoint and have a
clerk residing in the State, it shall forfeit $50 to the person injured (sec. 4108).
19. Reports . — All domestic corporations must within ten days after organ-
ization file their annual tax returns with the State Treasurer and the Commis-
sioner of State Taxes in the manner hereinafter set forth to cover the unexpired
portion of the fiscal year commencing the 1st day of February next preced-
ing. The report here required must be upon blanks furnished by the Commis-
sioner of State Taxes. The corporation must fill out such blanks and answer
all interrogatories therein contained. Such blanks so filled out shall be sub-
scribed and sworn to by the clerk, treasurer, or other proper officer of the cor-
poration. One copy of the blank so filled out and sworn to, shall be returned
to the Commissioner of Taxes, one copy shall be sent to the State Treasurer,
and one copy shall be retained by the corporation. Such returns are required
to be made annually, and should be filed on or before the 1st day of March
(sees. 645-647, 699, as amended by Laws of 1906, chap. 36). Every domestic
corporation, by its clerk, treasurer or other proper officer and cashiers of national
banks, shall annually, on or before the 5th day of April, file with the Commis-
sioner of Taxes, on blanks to be furnished by him, a sworn return showing the
name and residence of each shareholder therein, the number of shares standing
568
DIGEST OF INCORPORATION ACTS. — VERMONT.
in the name of each shareholder on the first day of said last-named month, and
the par value of such shares (Laws of 1911, chap. 37, sec. 1).
20. Anti-Trust Statute. — There is no anti-trust statute in force in
Vermont.
21. Statutory Grounds for Forfeiture of Charter. — Charter may be
forfeited for failure to pay license taxes (sees. 695, 704, 705; Laws of 1906, Acts
36, 75).
22. Amendments. — Articles may be amended for the purpose of increas-
ing or decreasing capital stock, for the purpose of changing the corporate name
or place of domicile, or for the purpose of altering, adding to, or changing the
business of the corporation. To increase the capital stock requires a meeting
of the stockholders warned for the purpose. After the increase has been voted
a certificate must be prepared, and signed and sworn to by the president and
clerk, stating the nature of the amendment. This must be filed and recorded
with the Secretary of State, and a certified copy thereof returned and re-
corded in the town clerk's office in the same manner as the original articles of
association.
To reduce the capital stock requires a meeting of the stockholders warned
for that purpose, and action thereat had by two-thirds of its stockholders
in amount. After such reduction a certificate thereof, signed and sworn to
by the president and clerk, must be filed and recorded with the Secretary
of State, and a certified copy thereof returned and recorded in the town clerk's
office in the manner provided in the case of increase of capital stock. The
name of the corporation may be changed by a two-thirds vote of the stockholders
representing two-thirds of the capital stock cast at a meeting duly warned for
that purpose. Thereafter a certificate signed by the clerk must be filed and
recorded in the office of the Secretary of State, setting forth the name and
the substance of the voting. A certified copy of such certificate must be recorded
in the town clerk's office, where the certified copy of the original articles of
association is required to be recorded.
The purposes of the corporation may be changed by a vote of all of the
stockholders at a meeting duly called for that purpose. A certificate setting
forth such change, signed and sworn to by the president and clerk of such
corporation, must be filed and recorded with the Secretary of State, and certified
copy thereof returned and recorded in the town clerk's office in the same manner
as the original articles of association (Laws of 1904, chap. 91). The domicile of
a corporation formed under chap. 165 of Vermont statutes may be changed
from any town of this State in which it may be located to any other town of
this State, by a two-thirds vote of the stockholders representing two-thirds of
the capital stock, or if it has no capital stock, by a two-thirds vote of all the
members present at a meeting duly warned for that purpose, and by trans-
mitting and causing to be recorded in the office of the Secretary of State a
certificate signed by the clerk, setting forth the change made and the substance of
the vote, and causing a certified copy thereof to be recorded in the town clerk's
office where a certified copy of the original articles of association is required to
be recorded, and causing a certified copy of the original articles of association
and a certified copy of the certificate hereinbefore referred to, to be recorded in
the town clerk's office in the town of the new domicile (Acts of 1898, No. 68).
23. Extension of Corporate Existence. — Companies may be incorpo-
rated for an unlimited term. The only provision for extension of corporate
existence is found in Laws of 1906, chap. 38. This act provides that the payment
5G9
DIGEST OF INCORPORATION ACTS. — VERMONT.
of the charter tax on or before the 1st day of March in each year shall extend
the time one year from said date within which the corporation may organize
under its charter notwithstanding the time limited may be fixed in such charter
for its organization.
24. Dissolution. — Dissolution may be voted at any meeting called for
that purpose at which a majority vote of the total stock issued and outstanding
is voted in favor of winding up the corporate affairs. The decree of dissolution
must be obtained by application to the Court of Chancery through the medium
of a bill of complaint setting forth the county wherein the corporation has its
principal office, together with such facts as may be material, and praying for
the winding up of such corporation. After decree of dissolution is obtained the
clerk of the court shall forthwith cause a certificate copy of the decree to be
filed in the office of the Secretary of State, and when so filed the existence of
the corporate shall terminate in accordance with the terms of the decree (sees.
4132-4137). Voluntary dissolution to avoid payment of annual tax may
be accomplished by filing and recording with the Secretary of State and the
Commissioner of State Taxes a verified statement sworn to by the president,
secretary, or any two officers of the corporation stating that all debts have been
paid and that the corporation owns no property in the State (sees. 705, 706).
25. Annual License Fee. — On capital stock up to $50,000, $10 ; and for
each $50,000 or part thereof in excess of $50,000, $5 ; but no tax shall exceed
$50. The fiscal year for the purpose of the imposition of the annual license tax
commences the 1st day of February. All domestic corporations must file their
annual license tax returns as of that date. The tax must be paid on or before
the 1st day of April in each year (sees. 690, 695, 697, 703, 704-706, as amended
by Laws of 1906, Act 36).
26. Foreign Corporations. — Every foreign corporation desiring to do
business in Vermont must first procure from the Secretary of State a certificate
that it has complied with all requirements of law to authorize it to do business
in this State, and that the business of the corporation to be carried on in Vermont
is such as may be lawfully carried on by a corporation incorporated under the
laws of the State for such or similar line of business. The requirements here
referred to are : First, that it has filed in the office of the Secretary of State and
in the office of the Commissioner of State Taxes a sworn statement in the Eng-
lish language of its charter or certificate of incorporation, and a statement under
its corporate seal stating the business it is engaged in or which it proposes to
carry on in the State, and the place within the State which is to be its principal
place of business, with the person residing in the State upon whom process may
be served. The person designated must have a principal place of business
within the State (sees. 707, 714, 715; Laws of 1907; Act 36; Laws of 1910, chap.
54). Within ten days after the date of its certificate of registration in Vermont
it must file its annual tax returns and pay the pro rata proportion of the annual
tax for the unexpired portion of the current year (sec. 700, as amended by Laws
of 1906, Act 36; see ante, sec. 19). A fee of $2 must be paid to the Secretary of
State and to the Commissioner of State Taxes (sec. 716). By non-payment
of annual license tax by April 1st it forfeits the right to sue in the State, and may
be enjoined from doing business therein (sec. 710, as amended by Laws of
1906, Act 36; see also sees. 1344, 4644^649 of the Laws of 1906, Act 75). For-
eign corporations must file the same reports as domestic corporations (Laws of
1911, chap. 37, sec. 2).
Osborne v. Ins. Co., 57 Vt. 278.
570
DIGEST OF INCORPORATION ACTS. — VIRGINIA.
VIRGINIA.
(The references cited below are to Pollard's Virginia Code, 1904.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Virginia is to be found in Pollard's Virginia
Code of 1904, title 17, sees. 46 and 46 a, 1068 to 1105 e. The same is also to be
found in the Session Laws of Virginia for 1902-1904, chaps. 437-484. Under
the foregoing, charters may be procured for any lawful business. (See also
Laws of 1904, chap. 50.)
2. Incorporators. — Three or more. There are no residential require-
ments (sec. 1105 a, ss. 1).
3. Contents of the Articles of Incorporation. — The articles must set
forth :
a. Name. — Name must contain the word "corporation " or "incorporated,"
and must be such as to distinguish it from any other corporation engaged in a
similar line of business (sec. 1105 a, 2).
b. Domicile. — Name of the county, and the post-office address therein,
city, or town where the principal office within the State is to be located (Id. ;
Acts of 1910, p. 43).
c. Purposes. — Purposes for which it is formed. There may be any number
not covered by special act (Id.).
d. Capital Stock. — Maximum and minimum amount of capital stock and
number of shares. If preferred stock is desired, there must be inserted a
■description of the several classes of stock, with the terms on which they are
created (Id.).
e. Duration. — May be perpetual, if desired (Id.).
/. Officers and Directors. — Names and residences of officers and directors
for the first year (Id.). Directors may be classified, if desired (sec. 1105 e, 12).
g. Real Estate. — Limitation upon amount of holdings thereof (Id.).
h. Regulation of Internal Affairs. — Any provisions may be inserted for
the conduct of the affairs of the corporation ; also any provisions defining,
limiting, or regulating the powers of the corporation to the directors or stock-
holders (Id.).
4. Statutory Powers. — In addition to a statutory enumeration of com-
mon law powers, the following additional powers are granted : To take real
and personal estate by gift, devise, or bequest; to subscribe, guaranty, or
become surety in respect to stock and bonds of other corporations ; to conduct
business in other States and Territories and foreign countries ; to hold meetings
of directors within or without the State ; to have offices, to hold, purchase,
mortgage, or convey real and personal property both within and without the
State ; to authorize voting by proxy in the election of directors ; to classify
directors ; to permit the insertion in the articles of a provision delegating the
power to adopt by-laws to the directors; to remove directors; to forfeit
stock for non-payment of assessments ; to issue preferred stock ; to permit
cumulative voting by inserting provision therefor in the articles; power to
insert in the articles provision conferring upon the bondholders right to vote
in respect to corporate affairs, management, and consolidation with other
•corporations (sec. 1105 e, 2-8, 10, 12, 13, 16, 19, 40-42). The statute authorizes
571
PIGEST OF INCORPORATION ACTS. — VIRGINIA.
the directors to appoint an executive committee of two or more directors from
their own number (sec. 1105 a, 13).
5. Procuring the Charter. — Such certificate shall be signed by at least
three persons, and shall be acknowledged by them, before an officer authorized
by the laws of this State to take acknowledgment of deeds, and shall be pre-
sented in term time or in vacation to the judge of the Circuit Court of the court,
or of the circuit, corporation, or chancery court of the city wherein the principal
office of the corporation is to be located. Such judge shall thereupon certify
thereon whether in his opinion such certificate is signed and acknowledged in
accordance with the requirements of this act, and if in all respects it is valid.
As soon as the certificate is so endorsed by the judge and the fee and tax, if
any, required by law to be paid to the State upon the charter shall have been
duly paid, it, together with the receipt for such payment, separate certified
checks or bank drafts, postal note or money order, one payable to the Secretary
of the Commonwealth, and one payable to the clerk of the proper court for the
amount of the proper fees for recording such charter, may be presented to the
State Corporation Commission, which shall ascertain and declare whether the
applicants have complied with the requirements of the law entitling themselves
to the charter, and shall issue or refuse the same accordingly. When so issued
the certificate with all endorsements, together with the order thereon to the
State Corporation Commission as required by law to the Secretary of the Com-
monwealth, and by the last-named officer recorded in the charter records of
his office, who shall thereupon certify the same to the clerk of the Circuit
Court of the county, or to the corporation court of the city wherein the principal
office of such corporation is located, or to the clerk of the chancery court of
the city of Richmond, when such principal office is located in said city, who
shall likewise record the same in a book to be provided and kept for the pur-
pose in his office, and when so recorded the fact of such recordation shall be
endorsed upon the said certificate, and the said certificate with all endorsements
thereon shall be returned by the said clerk to the State Corporation Commis-
sion and lodged and preserved in the office of its clerk. As soon as the charter
shall have been lodged for recordation in the office of the Secretary of the Com-
monwealth, the persons who signed and acknowledged said certificate, and
their successors and such other persons as may be associated with them, accord-
ing to the provisions of law or of their charter shall be a body politic and cor-
porate by the name set forth in the said certificate together with the powers,
and upon the terms set forth therein, and so far as not in conflict with this act ;
and in addition shall have all the general powers and be subject to all general
restrictions and liabilities conferred and imposed by this act, and by the gen-
eral laws of this State applicable thereto, not in conflict with this act, or with
said charter as hereinbefore provided. Any failure on the part of the said clerk
to comply with the provisions of this section shall subject him to a fine of not
less than $10, nor more than $100, to be imposed by the State Corporation
Commission (sec. 1105, a, 3; as amended by Acts of 1908, chap. 335).
6. Corporate Indebtedness. — There is no statutory limitation upon the
amount of corporate indebtedness. The statute expressly gives the right to
a corporation to create a bonded indebtedness. No corporation created under
the laws of this State shall create any bonded indebtedness, or increase its
bonded indebtedness, to be secured by hen on any of its property or franchises,
until the creation of such bonded indebtedness, or the increase of such bonded
indebtedness be sanctioned by a vote in person or by proxy of a majority in
572
DIGEST OF INCORPORATION ACTS. — VIRGINIA.
amount of all the stockholders having voting powers present or represented and
voting, at a meeting of the stockholders called by the Board of Directors of the
corporation for that purpose, of which meeting notice by publication at least
six times a week for two successive weeks prior to such meeting, in some news-
paper published in or near the place where its principal office is located, or notice
in writing must be given to each stockholder of record by serving the same on
him personally, or by mailing to him, addressed to the postoffice nearest his
place of residence, as it appears on the stock books of the corporation, at least
ten days prior to such meeting; and in such notice must be stated the time and
place of the meeting and its object. If at such meeting a majority in amount of
all the stockholders present or represented and voting, shall vote in favor of
creating such bonded indebtedness or of increasing such bonded indebtedness,
bonds of such corporation may then be issued to the amount authorized by the
vote of the stockholders, as hereinbefore provided, and the payment thereof
with the interest to accrue thereon, may be secured in such manner and upon
such terms as the stockholders at such meeting may by resolution prescribe -
provided, however, that no such bonds shall be issued until after full compliance
with the provisions of article one hundred and sixty-seven of the Constitution
of this State, so far as applicable; and in default thereof any such corporation
shall be subject to all the penalties prescribed in this act against corporations
for issuing bonds or stock without having first complied with the provisions of
said article of the Constitution; provided, further, that nothing in this act
shall apply to any note or bond given for the deferred instalments of the pur-
chase price of property and secured by deeds of trust on the property, nor to
any corporation dealing in real estate, taken in the usual course of business,
nor to any note or bond given for the deferred instalments of the purchase
price of rolling stock leased or purchased by railroad corporations (Laws of 1912,
p. 57). If provision is so made in the articles of incorporation or by amendment
thereto, voting powers in the corporation may be granted to bondholders (sec.
1105 e, 4, 29).
7. Organization Tax. — On capitalization of $50,000 or less, $10; over
$50,000 and less than $3,000,000, 20 cents for each $1000 or fraction thereof;
$3,000,000 or more, $600. (The foregoing schedule does not apply to trans-
portation or transmission companies.) (Laws of 1902-3-4, chap. 148, sec. 38;
see Act of February 26, 1910.)
8. Filing and Recording Fees. — The organization tax is payable to the
Secretary of the Commonwealth. The following additional fees are charged :
$1 for application of the seal of the Charter Commission to the certificate, and
50 cents per page plus $2 for recording the charter in the office of the Secretary
of the Commonwealth. The registration fee as well as the franchise tax is pay-
able annually on or before March 1st of each year. The annual franchise tax
is payable to the order of the Treasurer of Virginia, and forwarded to the Audi-
tor of Public Accounts at Richmond. There is no charge for the approval of
the local judge, or for obtaining his certificate to the effect that the certificate
of incorporation is executed according to law. The State Charter Commission
charges SI for certificate under seal that the applicants for a charter have com-
plied with the requirements of law and are entitled to a charter. The Secretary
of the Commonwealth makes no additional charge other than the charges re-
ferred to above for giving his certificate to the clerk of the Circuit Court as to
the filing in his office of the certificate of incorporation. The charges for filing
573
DIGEST OF INCORPORATION ACTS. — VIRGINIA.
and recording in the local office (e. g., clerk of the State court) are the same as
for the Secretary of the Commonwealth given above. The State Charter Com-
mission makes no charge for finally lodging the certificate of incorporation in
their office. The Secretary of the Commonwealth charges $1.50 for issuing cer-
tificate of incorporation. The cost of certified copy of the certificate of incor-
poration is 50 cents per page, 50 cents for certificate plus $1 for application of
seal when required under seal. There are no charges made for filing and record-
ing report as to officers, directors, etc. Under sec. 39, chap. 5, of the act concern-
ing corporations, a report is required to be filed with the Charter Commission.
Under sec. 14, chap. 1, of the same act a report is required to be filed with the
clerk of the court. There is no charge as to the report under sec. 39, chap. 5, of
the Corporation Act, but a charge of 25 cents to the clerk of the court for the
report under sec. 14, chap. 1, is made. There is an* additional charge of 50
cents per page where the certificate of incorporation exceeds two pages in
length.
9. Commencing Business. — Business may be commenced as soon as
the certificate has been recorded and approved as required by law, and as soon
as the minimum capital stock as fixed by the certificate of incorporation has
been filed. Before any capital stock can be issued there must be submitted to
the State Corporation Commission a statement relative to the financial plan on
which such stock issued is to be made. (See post, sec. 16.) The corporation
must commence business within two years after the date of the issuance of
the charter (sec. 1105 e, 39; 1105 a, 14). Within thirty days after the first
election of officers and directors a report authenticated by the signature of the
president or one of the vice-presidents or the secretary of the corporation must
be filed in the office of the State Corporation Commission, stating character of
its business, corporate name, location, name of agent upon whom process may
be served, amount of its authorized capital stock, amount actually issued and
outstanding, names and addresses and terms of office of officers and directors,
and date of annual meeting (sec. 1105, 14).
Every corporation, all of whose officers and directors are non-residents of
the city or county in which its principal offices are located, shall, before com-
mencing to do business, by written power of attorney appoint some practising
attorney at law, residing in the city or county wherein the principal office of
such corporation is located, its attorney or agent, upon whom all legal process
against the corporation may be served, and who shall be authorized to enter
an appearance in its behalf. Such power of attorney shall be recorded in the
clerk's office of the Circuit Court of the county or of the clerk's office of the
circuit, corporation, or chancery court of the city wherein the principal office
of such corporation is located. And such power of attorney shall remain effective
until lawfully revoked, and when lawfully revoked shall be immediately re-
executed and recorded. A duplicate of such power of attorney shall be filed
with the clerk of the State Corporation Commission. Written notice of the
resignation or voluntary revocation of such power of attorney by the cor-
poration shall be forthwith filed in the clerk's office wherein it is recorded, and
the clerk shall note such resignation or revocation on the margin of the page
of the book wherein the power of attorney is recorded, and be entitled to a fee
of twenty-five cents therefor, and until this is done such revocation shall be
ineffective and the original power of attorney shall remain effective. If there
be no such attorney in fact in office residing in such county or city, then alL
legal process against such corporation may be served upon the clerk of the court
574
DIGEST OF INCORPORATION ACTS. — VIRGINIA.
of such county or city, wherein is such principal office having jurisdiction of
the suit, action, or proceeding. Any such corporation failing to comply with
the provisions of this section within sixty days after its annual meeting, shall
be fined not less than $50 nor more than $100, and each day's continuance of
such failure may be construed to be a separate offence under this section, such
fine to be imposed and enforced by the State- Corporation Commission, with
right of appeal to the Supreme Court of appeals; and if any such corporation
shall be in default for more than six months in complying with the provisions
of this section, the State may proceed against such corporation by writ of quo
warranto, or information in the nature of a writ of quo warranto, for the vaca-
tion and forfeiture of its charter, and upon judgment in such proceeding against
any such corporation, its charter shall thereafter be vacated and forfeited. Such
proceeding shall be instituted and prosecuted by the attorney general, at the
request of the State Corporation Commission (Acts of 1910, p. 43).
10. Organization Meeting. — The organization meeting should prop-
erly be held within the State (sec. 1105 a, sub. 4). The corporation must or-
ganize and commence business within two years after granting of the charter.
Incorporators may assign their interests, if desired (sec. 1105 e, 6; sec.
1105 e, 51).
11. Meetings of Stockholders and Directors. — The annual meeting
of the stockholders must be held within the State. It would seem that special
meetings should likewise be held within the State (Acts of 1910, p. 43) . Direc-
tors' meetings may be held within or without the State as the by-laws provide
(sec. 1105 e, 7).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three directors, including the president, who must be a
director. The act provides for the appointment by directors of an executive
committee to manage the business of the corporation (sec. 1105 a, sub. 13;
sec. 1105 e, 10). Directors may be classified, if desired (sec. 1105 e, sub. 12).
b. Liabilities. — Directors are jointly and severally liable for any damage
resulting from their wilfully and fraudulently causing to be published or given
out a report of the condition or business of the corporation known to them to
be false in any material respect. To enforce this liability action must be brought
within two years after the right of action accrues (sec. 1105 e, 26, 35).
They are also liable for illegal declaration of dividends, if they do not dissent
therefrom (1105 e, 60).
13. Stockholders' Liabilities. — Stockholders are only liable for their
unpaid stock subscriptions (1105 e, 9). No stock can be assigned on the books
of the corporation without the consent of the corporation until all dues and
debts are paid thereon (1105 e, 57). If the stock is assigned before all stock
subscriptions are paid thereon, the assignee is liable for any instalments which
have accrued or which may thereafter accrue under the subscription agree-
ment (Id.).
14. Stock Certificates. — Each stockholder is entitled to a certificate
signed by the president or one of the vice-presidents and the treasurer, or by
any two officers of the corporation thereto authorized by the board of directors
i c. 1 105 e, 14). As to lost certificates of stock, see Acts of 1910, p. 580.
15. Preferred Stock. — Preferred stock is expressly authorized by the
act. Provision may be made for the issuance of the same either in the original
certificate or by subsequent amendment thereto. Preferred stock may be
issued, if desired, subject to redemption, three years after the issue thereof
575
DIGEST OF INCORPORATION ACTS. — VIRGINIA.
at a price not less than par. Every corporation shall have power to create
two or more kinds of stock of such classes, with such distinctions, pref-
erences, and voting powers or restrictions or qualifications as shall be stated
or expressed in the charter, certificate of incorporation, or articles of associa-
tion, or in any amendment thereof ; and the power to increase or decrease the
stock, as in this act elsewhere provided, shall apply to all or any of the classes
of stock. Any preferred stock that may be issued may, if desired, be made sub-
ject to redemption at any time after three years from the issue thereof at a price
not less than par, and the holders thereof shall be entitled to receive, and the
corporation bound to pay thereon, dividends at such rates and on such conditions
as shall be stated in its charter or any amendment thereof, or in the original or
amended certificate of incorporation or articles of association or any amend-
ment thereof, and such dividends may be made payable before any dividends
shall be set apart or paid on the common stock, and such dividends may be
made cumulative (sec. 1105 a, 2, also 1105 e, 3).
16. Payment of Capital Stock. — Stock may be issued for money, land,
or other property, real or personal, leases, options, mines, minerals, mineral
rights, patent rights, rights of way, easements, contracts, labor, or services.
The act provides that there shall be no individual liability on any subscriber
beyond the obligation to comply with his contract of subscription. Under the
Constitution of 1902, sec. 167, it is provided that whenever stocks or bonds
are to be issued by a corporation it shall, before issuing the same, file with the
State Corporation Commission a statement (verified by the oath of the president
or secretary of the corporation) in such form as may be prescribed by the com-
mission, stating fully and correctly the basis or financial plan upon which stock
or bonds are to be issued; and where such basis or financial plan includes ser-
vices or property received or to be received by the company, such statement
shall correctly specify and describe, in the manner prescribed or required by the
commission, the services and property, together with the valuation at which
the same are received or to be received. (See also Code of 1904, sec. 1105 e, 9.)
The act further provides that the judgment of the directors as to the value of
the property taken in exchange for stock shall, in the absence of fraud in the
transaction, be conclusive. For violating this provision a fine of $1,000 may
be imposed, and judgment entered therefor by the said Corporation Commission,
which is given judicial powers for this purpose (sec. 1105 e, 9).
17. Books. — Transfer books must be kept (sec. 1105 e, 18).
18. Office and Agent. — Corporations must have a principal office within
the State. In case the officers and directors are non-residents of the county,
city, or town where the principal office is located, they must annually, by
written power of attorney, appoint some practising attorney at law residing
therein, as their attorney or agent upon whom service of process may be made,
who shall be authorized to enter an appearance in its behalf. This power of
attorney must be recorded in the clerk's office of the Circuit Court of the county
or the Corporation or Chancery Court of the city wherein the principal office
of the corporation is located. It must also be filed in the office of the Secre-
tary of the Commonwealth (sec. 1105 a, 2; also sec. 1105 e, 5, 39).
19. Reports. — Companies incorporated under the general laws must,
within thirty days after the annual meeting, file in office of State Corporation
Commission a report stating name of the corporation, location, character of
business, authorized capital stock, amount issued and outstanding, names and
addresses of officers and directors, date of next annual meeting. Every cor-
576
DIGEST OF INCORPORATION ACTS. — VIRGINIA.
poration must file with the State Corporation Commission by February 1st of
each year report of the amount of its maximum capital stock. Every corpora-
tion shall also, at the time of paying its annual registration fee, make to the State
Corporation Commission such report of its status, business, or condition as the
State Corporation Commission shall require. Non-compliance with these pro-
visions subjects the corporation to a fine of not less than $25 and not more than
SI 00 for each thirty days' default (sec. 1105 e, 39). Every corporation shall,
after the annual meeting of its stockholders, certify to the clerk of the Circuit
Court of the county or the clerk of the Circuit, Corporation, or Chancery Court
of the city wherein is located its principal office, a list of the officers and
directors of such corporation elected at said annual meeting (chap. 1, sec.
14). A fee of 25 cents must be paid for filing such certificate (Acts of 1910
p. 43).
20. Anti-Trust Statute. — The Constitution of 1902, sec. 165, provides
that the General Assembly shall enact laws preventing all trusts, combinations,
and monopolies inimical to the public welfare. (See Laws of 1907.)
21. Statutory Grounds for Forfeiture of Charter. — Whenever the
principal purpose for which the corporation was formed has failed, or the man-
agement thereof is abandoned by its officers, or when operations under the
charter have been suspended or abandoned for a period of three years, or the
corporation has become insolvent, the charter of such corporation is liable to
forfeiture or may be dissolved (sec. 1105 a, 15; Acts of 1908, chap. 335).
Charters may be forfeited for failure to appoint resident agent when all the
officers and directors are non-residents of the county wherein the principal place
of business is located (Acts of 1910, p. 43).
22. Amendments. — Before the amount of stock fixed by the incorpo-
rators as the minimum capitalization shall have been subscribed, any amend-
ment to the original certificate may be made by a supplemental certificate
signed and acknowledged by the incorporators, and certificate issued and re-
corded in the office of the State Corporation Commission in the same manner
as provided in reference to the original certificate (sec. 1105 a, 5).
At any time after such subscription shall have been completed, the sub-
scribers to the capital stock may, until the corporation is duly organized, apply
to the State Corporation Commission for any amendment to the original certifi-
cate, and to that end may present the State Corporation Commission a supple-
mental certificate signed and acknowledged by them in the same manner as in
the case of the original certificate certified by a judge as provided in the case
of original certificates, and thereupon said State Corporation Commission shall
act thereon in the same manner as provided in the case of such original certifi-
cates ; and if the amendment be issued, then such supplemental certificate, to-
gether with all endorsements and order of the commission thereon, shall be
recorded in the office of the State Corporation Commission as is provided in the
case of original certificates, and when lodged in the office of the Secretary of the
Commonwealth for record the original charter shall he deemed to he altered or
amended accordingly (sec. 1105 a, 6).
At any time after organization any such corporation may change the nature
of its business, change its name, decrease its capital stock, change the par value
of the shares of its capital stock, change the location of its principal office in
this State, extend its corporate existence, create one or more classes of pre-
ferred stock, and make such other amendments, changes, or alterations as may
be desired in the manner following, except that no increase of capital stock
37 577
DIGEST OF INCORPORATION ACTS. — VIRGINIA.
shall be made otherwise than in the manner prescribed in sec. 9 of this act (sec.
1105 a, 7).
The board of directors shall pass a resolution declaring that such amend-
ment, change, or alteration is advisable, and calling a meeting of the stock-
holders to take action thereon, the meeting to be held upon notice by publication
at least six times a week for two successive weeks prior to such meeting in some
newspaper published in or near the place where its principal office is located,
or notice in writing to each of the stockholders, to be served on him personally,
or by mailing the same to him to his last known post-office address, at least ten
days prior to such meeting ; such notice must state the time and place of the
meeting and its object. If two-thirds in interest of each class of the stockholders
having voting power shall vote in favor of such amendment, change, or alteration,
a certificate thereof shall be made by the president or by one of the vice-presi-
dents, under the seal of the corporation, attested by the secretary and acknowl-
edged by them before an officer authorized by the laws of the State to take
acknowledgments of deeds. Such certificate, and if the amendment or altera-
tion be one in respect to which the payment of a fee to the State is imposed
by law, a receipt for such payment shall be presented to the State Corporation
Commission, which shall ascertain and declare whether the said applicant, by
complying with the requirements of the law, is entitled to the amendment,
alteration, or extension set forth in said certificate, and shall issue or refuse the
same accordingly. If the same is issued, the said certificate with the endorse-
ments thereon, together with the order thereon of the commission, shall be forth-
with certified as required by law to the Secretary of fhe Commonwealth, to be
recorded by the last-named officer as provided in reference to original certifi-
cates, and shall be certified by him to the clerk of the Circuit Court of the county,
or the Circuit, Corporation, or Chancery Court of the city in which the original
certificate of incorporation is recorded, and the clerk of such court shall there-
upon record the same in his office in a book provided and kept for the recorda-
tion of charters, and shall endorse the fact of such recordation upon the said
certificate, and return the same to the State Corporation Commission, to be
lodged and preserved in the office of its clerk. As soon as the said certificate
is lodged for recordation in the office of the Secretary of the Commonwealth,
the original certificate of incorporation shall be deemed to be amended accord-
ingly; provided, however, that such certificate of amendment, change, or altera-
tion shall contain only such provisions as it would be lawful and proper to insert
in an original certificate of incorporation, made at the time of making such
amendment or alteration, (sec. 1105 a, 8; as amended by Laws of 1910, chap.
174).
In case the capital stock of any corporation organized under this chapter
or under any charter heretofore granted by any court, or by the General As-
sembly of this State, for any purpose permitted under sec. 1 of this chapter,
is found to be insufficient for its purposes, such corporation may increase its
capital stock from time to time to any amount that it may deem requisite, such
increase to be sanctioned by a vote in person or by proxy of two-thirds in
amount of all the stockholders who shall be present or represented and voting
at a meeting of the stockholders, which two-thirds shall amount to at least a
majority of the capital stock of the corporation, called by the directors for that
purpose by a notice by publication at least six times a week, for two successive
weeks prior to such meeting, in some newspaper published in or near the place
where its principal office is located, or notice in writing to each of the stock-
578
DIGEST OF INCORPORATION ACTS. VIRGINIA.
holders, to be served on him personalty, or by mailing the same to him at his
last known post-office address, at least ten days prior to such meeting ; such
notice must state the time and place of the meeting and its general object, and
the amount to which it is proposed to increase the capital stock. The proceed-
ings of said meeting must be entered on the minutes of the proceedings of the
stockholders ; and if two-thirds in amount of such stockholders vote in favor
of such increase, a certificate thereof shall be made by the president, or by one
of the vice-presidents, under the seal of the corporation attested by the secretary,
and shall be acknowledged by said officers signing the same before any officer
authorized by the laws of the State to take acknowledgments of deeds; and
when so acknowledged, it, together with the receipt for the payment of any fee
to the State which may be imposed by law for such increase of capital, may be
presented to the State Corporation Commission, which shall ascertain and declare
whether the said corporation has, by complying with the requirements of the
law, entitled itself to make such increase of the capital stock of said corporation,
and accordingly shall issue or refuse a certificate for said increase of capital.
If the amendment to the charter of such corporation allowing such increase of
capital be issued, it shall be certified by the commission as required by law to
the Secretary of the Commonwealth, and recorded by the last-named officer
in the charter records of his office, and by him certified to the clerk of the court
of the county or city in which the original certificate of incorporation is recorded,
who shall likewise record the same in his office, and endorse upon such certifi-
cate the fact of such recordation, and return the same to the State Corporation
Commission, to be lodged and preserved in the office of its clerk. As soon as the
said certificate is lodged for recordation in the office of the Secretary of the
Commonwealth, the charter of said corporation shall stand so amended, and
the increase of capital stock shall become effective, and from time to time the
board of directors may proceed to dispose of the capital stock as so increased,
upon such terms and conditions and for such considerations as they may deem
for the best interests of the corporation, but not until after full compliance with
the requirements in that regard of sec. 167 of the Constitution of the State (sec.
1 105 a, 9) . Whenever the actually issued and outstanding capit al stock of any cor-
poration organized under this chapter or under any charter heretofore granted
by any court or by the general assembly of this State for any purposes permitted
under sec. 1 of this chapter, shall be found to be more than sufficient for its
purposes, it may with the concurrence of two-thirds in amount of all its stock-
holders, given as hereinafter provided, decrease its capital stock from time to
time to any amount, not less than the minimum fixed in its charter, or some
amendment thereof. Such decrease must be sanctioned by a vote, in person or
by proxy, of two-thirds in amount of the stockholders of the corporation at a
meeting of such stockholders called by the Board of Directors for that purpose,
of which meeting notice by publication, at least six times a week for two suc-
cessive weeks prior to such meeting in some newspaper published in or near the
place where its principal office is located, or notice in writing must be given to
each stockholder of record by serving the same on him personally, or by mailing
it to him, addressed to the post-office nearest his place of residence, us it appears
upon the stock books of the corporation, at least ten days prior to such meet-
ing, and in such notice must be stated the time and place of the meeting, its
object, and the amount to which it is proposed to decrease the capital stock
If at such meeting two-thirds in amount of all the stockholders vote in favor of
decreasing the capital stock to an amount not less than the amount mentioned
579
DIGEST OF INCORPORATION ACTS. — VIRGINIA.
in such notice, which shall not be less than the minimum amount of authorized
capital of the corporation, a copy of the proceedings so far as they relate to this
subject, entered upon the records of the corporation, may be certified by the
president, or by one of the vice-presidents, under the seal of the corporation,
attested by its secretary and acknowledged by them before an officer authorized
by the laws of this State to take acknowledgments of deeds. A copy thus cer-
tified may be presented to the State Corporation Commission, which shall
ascertain whether the applicants have, by complying with the requirements of
the law, entitled themselves to make such decrease of the capital stock, and
accordingly shall issue or refuse a certificate permitting the same, which cer-
tificate shall be certified to the Secretary of the Commonwealth to be recorded
by the last-named officer as provided with reference to original certificates and
shall be certified by him to the clerk of the circuit court of the county or the cir-
cuit, corporation or chancery court of the city in which the original certificate
of incorporation is recorded, and the clerk of such court shall thereupon record
the same in his office in a book provided and kept for the recordation of char-
ters and shall endorse the fact of such recordation upon the said certificate and
return the same to the State Corporation Commission to be lodged and preserved
in the office of the clerk. When so recorded in the office of the Secretary of the
Commonwealth, the power of the said corporation to make such decrease, sub-
ject to the provisions of sec. 167 of the Constitution, so far as applicable thereto,
shall be complete.
The capital stock may thereupon be decreased in the manner following, that
is to say, by retiring or reducing any class of stock, or by the surrender of every
stockholder of his shares, and the issue to him in lieu thereof of a decreased
number of shares, or by the purchase at the fair market value not exceeding
par, of certain shares for retirement, or by retiring shares owned by the cor-
poration, or by reducing the par value of shares, and when any corporation shall
decrease the amount of its capital stock as hereinbefore provided, the certificate
decreasing the same shall be published for three weeks successively, at least
once a week in a newspaper published in the county or city in which the prin-
cipal office of the corporation is located, and if no newspaper be published therein,
then in a newspaper published in a county or city convenient thereto, the first
publication to be made within fifteen days after the filing of such certificate;
provided, however, that no such decrease in capital stock shall affect the right of
any creditor of the said corporation existing at the time of such decrease (Acts
of 1912, p. 79).
23. Extension of Corporate Existence. — There is no provision for the
extension of corporate existence after the expiration of the charter.
24. Dissolution. — The incorporators before the payment of any part of
the capital stock and before beginning business may surrender all their corpo-
rate rights and franchises by following the steps prescribed in the statutes.
After organization, on resolution of a majority of the bv>ard of directors, with
the consent of two-thirds in interest of the stockholders, Ihe corporation may
be voluntarily dissolved (sec. 1105 a, 11, 12, 15; see also Acts of 1908, p. 338).
25. Annual Franchise Tax. — Before the 1st day in October in each year
every domestic corporation and every foreign corporation doing business in
this State must pay into the treasury of the State a tax to be assessed by the
State Corporation Commission, as follows:
Every corporation, joint stock company, or association organized or created
under, by, or pursuant to law in this State, except railway, canal, light,
580
DIGEST OF INCORPORATION ACTS. — VIRGINIA.
heat, and power companies, insurance, banking, and surety companies, tele-
phone companies having an authorized maximum capital stock of $5000
or less, cemeteries, religious and charitable associations, shall in addition to
the charter fee, tax on property and income or receipt and license tax,
and the registration fee prescribed by law, pay into the treasury of the State
on or before the 1st day of March of each and every year, an annual State
franchise tax to be assessed by the State Corporation Commission, as follows:
Where the maximum capital stock is $25,000 and under, $10; over $25,000
and not in excess of $50,000, $20; over $50,000, and not in excess of $100,000,
$•40; over $100,000 and not in excess of $300,000, $60; over $300,000 and
not in excess of $500,000, $100; over $500,000 and not in excess of $1,000,000,
$200; over $1,000,000, an additional sum of $10 for each $100,000 or fraction
thereof in excess of $1,000,000.
The State Corporation Commission shall ascertain the amount of the author-
ized maximum capital stock of said corporation, company, or association as of
the 1st day of January in each year, and shall assess against such corporation,
company, or association, the State franchise tax herein imposed, and a certified
copy of such assessment when so made shall be forwarded by the clerk of the
State Corporation Commission before the 15th day of February, to the Auditor
of Public Accounts and to the president or other proper officer of every such
corporation, company, or association.
Any such corporation, company, or association failing to pay the said tax
into the State Treasury within the time prescribed shall incur a penalty thereon
of five per centum and interest at the rate of six per centum on the total amount
of tax and penalty from the date when the same was due until paid, which
shall be added to the amount of such tax (Acts of 1903, p. 182 as amended by
Acts of 1908, p. 590; Act of Feb. 26, 1910; Laws of 1910, p. 87).
26. Annual Registration Fee. — All domestic corporations other than
charitable and foreign corporations doing business within the State shall pajr
annually into the treasury of the State before March 1 of each year the follow-
ing registration fee : With capitalization of $15,000 or under, $5 ; over $15,000
and not exceeding $50,000, $10 ; over $50,000 and not exceeding $100,000, $15 ;
over $100,000 and not exceeding $300,000, $20; over $300,000, $25. This fee
is payable in addition to the annual franchise tax or other taxes imposed upon
the corporation. Failure to pay such fee for two years and ninety days operates
as revocation of the charter of the corporation (Act of 1908, p. 338; Acts of 1909,
p. 338; see also Cons., 1902, sec. 157).
27. Foreign Corporations. — The Constitution of 1902, sec. 163, provides
that no foreign corporation shall be authorized to carry on in the State any
kind of business which domestic corporations are prohibited from doing, or be
relieved from compliance with any of the requirements of similar domestic cor-
porations by the Constitution and laws of the State where the same can be made
applicable to such foreign corporations without discriminating against it. Every
incorporated company doing business in this State shall have an office in the
State, at which all claims against the company due residents of the State may
be audited, settled, and paid. Every such company incorporated under a juris-
diction beyond the limits of the State (and hereinafter designated as a foreign
corporation) shall, before doing business in this State, present to the State Cor-
poration Commission (a) a written power of attorney executed in duplicate, ap-
pointing some person residing in this State its agent upon whom all legal process
against the corporation may be served, and who shall be authorized to enter an
581
DIGEST OF INCORPORATION ACTS. VIRGINIA.
appearance in its behalf ; (b) two duly authenticated copies of the charter of
the corporation ; and (c) a certificate of the Auditor of Public Accounts, show-
ing the payment into the treasury of the fee required by law to be paid by such
corporation, and shall obtain from said Corporation Commission a license to
transact business in the State. If it shall be made to appear to the State Corpo-
ration Commission that said corporation has complied with the law relative to the
licensing of a foreign corporation of the character of the applicant corporation,
then said Corporation Commission shall issue to said corporation a license to
transact business in the State. Certain mining and manufacturing corporations
are given special power with reference to the acquisition of real estate, subject to
the limitation that they shall not be allowed to acquire and hold save in Tazwell,
Russell, and Buchanan counties more than ten thousand acres of land in any
one county (sec. 1103 b). Under the Constitution foreign corporations may be
taxed the same as domestic corporations (Cons., 1902, sec. 163). Under Laws
of 1902-3-4, chap. 148, sec. 38, they pay the same fee upon commencing to
do business as is imposed upon domestic corporations at the time of organiza-
tion. In the case of the foreign corporation, tins fee is based upon the amount
of their property located within the State. Foreign corporations doing business
within the State are subject to payment of the annual registration tax, and the
annual franchise tax (Cons., 1902, chap. 157; see also Laws of 1903, chap. 242).
Foreign corporations are also required to make the same reports as are required
in the case of domestic corporations (sees. 1105 e, 39; Cons., 1902, sees. 157,
163; sees. 1103b, 1104, 1105, 1105a).
Slaughter v. Commonwealth, 13 Grat. 767; Nickels v. P. B. L. & S. Ass'n, 93 Va. 380;
25 S. E. 8; Goldsberry v. Carter, 100 Va. 438; 41 S. E. 858; American Surety Co. v. Com-
monwealth, 102 Va. 841 ; 47 S. E. 994.
Every foreign corporation when it obtains from the State Corporation Com-
mission a certificate of authority to do business in this State, shall pay an en-
trance fee into the treasury of Virginia to be ascertained and fixed as follows:
For a company whose maximum capital stock is $50,000 or less, $30; over
$50,000 and not to exceed $1,000,000, 60 cents for each $1,000 or fraction
thereof; over $1,000,000 and not to exceed $10,000,000, $1,000; over
$10,000,000, and not to exceed $20,000,000, $1,250; over $20,000,000 and not to
exceed $30,000,000, $1,500; over $30,000,000 and not to exceed $40,000,000,
$1,750; over $40,000,000 and not to exceed $50,000,000, $2,000; over
$50,000,000 and not to exceed $60,000,000, $2,250; over $60,000,000, and not
to exceed $70,000,000, $2,500; over $70,000,000 and not to exceed $80,000,000,
$2,750; over $80,000,000, and not to exceed $90,000,000, $3,000; over
$90,000,000, $5,000; provided, however, that foreign corporations without
capital stock shall pay $50 only for such certificate of authority to do business
in this State (Act of Feb. 26, 1910).
582
DIGEST OF INCORPORATION ACTS. — WASHINGTON.
WASHINGTON.
(The references below are to Ballinger's Code and Statutes of Washington (1897), unless
otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Wasliington is to be found in Ballinger's Code,
seci. 4250-4302, and acts amendatory thereof. Parties may incorporate there-
under for manufacturing, mining, milling, wharfing, and docking, mechanical,
banking, mercantile, improvement, and building purposes, or for the building,
equipping, and managing water flumes for the transportation of wood and
lumber, or for the purpose of building, equipping, and running railroads, or con-
structing canals or irrigation canals, or engaging in any other species of trade or
business. (See Laws of 1903, chap. 84; Laws of 1905, chap. 11.)
2. Incorporators. — Two or more persons. There are no residential re-
quirements (sec. 4251 ; Laws of 1905, chap. 11).
Hastings v. Company, 29 Wash. 224; 69 Pac. 776.
3. Contents of the Articles of Incorporation. — The articles of incor-
poration must set forth :
a. Name. — No name can be used similar to that of an existing domestic
corporation or of any foreign corporation that has obtained a permit to do
business within the State (sec. 4251 ; Laws of 1903, chap. 84 ; Laws of 1905,
chap. 11).
b. Purposes. — The objects for which the corporation is formed must be
stated. The law expressly authorizes incorporation for one or more purposes
(Laws of 1905, chap. 11).
c. Capital Stock. — The amount of capital stock, which may be any amount
(Laws of 1905, chap. 11).
d. Duration. — The time of existence, not to exceed fifty years (Laws of
1905, chap. 11).
e. Number of Shares. — Number of shares into which the capital stock is to
be divided (Laws of 1905, chap. 11).
/. Trustees. — The number of trustees and the names of those 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 the articles (Laws of 1905,
chap. 11).
g. Domicile. — Name of the locality and county in which the principal place
of business of the company is to be located (Laws of 1905, chap. 11).
4. Statutory Powers. — In addition to the statutory enumeration of com-
mon law powers, the statute confers the following additional powers: The right
to vote by proxy, to remove trustees, to forfeit stock for non-payment of assess-
ment, and giving stockholders in mining companies the right to inspect property
(sees. 4253, 4255, 4262; Laws of 1901, chap. 120) ; to subscribe for, acquire by
purchase or otherwise, shares of stock of other corporations (Laws of 1905, chap.
27).
Parsons v. Company, 25 Wash. 492; 65 Pac. 765; Barto v. Nix, 15 Wash. 563; 46 Pac.
1033; Pitcher v. Company (Wash.), 81 Pac. 1047.
5. Procuring the Charter. — The incorporators must subscribe and ac-
knowledge before an officer authorized to take acknowledgments the articles
583
DIGEST OF INCORPORATION ACTS. — WASHINGTON.
of incorporation in triplicate. One of these must be filed in the office of the
Secretary of State and another with the county auditor of the county in which
the principal place of business of the company is intended to be located. A
third copy should be retained by the incorporators (sec. 4251 ; Laws of 1905,
chap. 11).
6. Corporate Indebtedness. — There is no Umitation upon the amount
of corporate indebtedness which a corporation may incur. (See, however,
sec. 4266.)
7. Organization Tax. — Every corporation having a capital stock divided
into shares shall pay to the Secretary of State upon filing its articles of incor-
poration a filing fee of $25 (Laws of 1907, chap. 140).
8. Filing and Recording Fees. — To the Secretary of State for filing and
recording articles of incorporation, including issuance of certificate of incor-
poration, $25 ; for filing and recording amendatory or supplemental articles of
incorporation, including issuance of certificate, $10; for fifing and recording
certificate of increase or decrease of capital stock, including issuance of cer-
tificate, $5 ; for recording any of the foregoing documents in excess of twenty
folios, and for all such excess per folio, 15 cents ; for copy of articles of incor-
poration duly certified under the seal of the State, $5 ; for filing and recording
in local county office the fee generally averages about $3 (sees. 4285, 4287, 4288).
The act provides that there shall be no charge for recording certificate of incor-
poration or making certified copy of the same other than those already men-
tioned, unless the same shall exceed twenty folios, in which case there shall be a
further charge of 15 cents per folio for all such excess (Laws of 1907, chap. 140).
For filing certificate of appointment of agent by a foreign corporation, $5 ; for
certifying to the printed compilation of the corporation laws of the State, $5
(Laws of 1907, chap. 140).
9. Commencing Business. — Before commencing business and within
thirty days after it shall have filed its certificate of incorporation with the
county auditor of the county in which it has its principal place of business, the
corporation must file with the latter a statement sworn to by its president and
attested by its secretary and sealed with its corporate seal, containing a list of all
its officers and names and addresses and terms of office for which they have been
chosen (sees. 4259, 4260). Except in the case of mining corporations, all the
capital stock must be subscribed before business can be commenced (sec. 4266).
City of Spokane v. Trustees, 22 Wash. 172; 60 Pac. 141.
10. Organization Meeting. — The organization meeting must be held
within thirty days after the certificate of incorporation is filed with the county
auditor as required by law. The meeting must be held within the State, and
statutory provision is made for calling the same (sees. 4255, 4258, 4260. The
first meeting of the trustees shall be called by a notice, signed by one or more
persons named as trustees in the certificate, setting forth the time and place
of meeting, which notice shall be delivered personally to each trustee or pub-
lished at least twenty days in some newspaper in the county wherein the cor-
poration's principal place of business is located (sec. 4258).
11. Meetings of Stockholders and Trustees. — Meetings of stockholders
must be held at the principal office within the State. Meetings of the board of
trustees or directors may be held at such place or places within or without the
State as may be designated in the articles of incorporation or the by-laws. In
case the meetings of the board of trustees or directors of a corporation shall be
584
DIGEST OF INCORPORATION ACTS. — WASHINGTON.
held outside of the State, either the original or full and complete copies or
duplicates of all proceedings had at said meeting or meetings, certified by the
secretary under the corporate seal, shall be sent to and kept at the principal
office or place of business of the corporation in this State, and shall be part of
the records of the corporation in this State (Laws of 1907, chap. 607).
12. Trustees' Qualifications and Liabilities, a. Qualifications. — There
must be at least two trustees who must be stockholders and one of whom shall
be a resident of the State of Washington, and a majority of them citizens of
the United States, and must take and subscribe to an oath of office (sec. 4255).
O. & B. F. C. M. & M. Co. v. Conlan (Wash.), 75 Pac. 798.
b. Liabilities. — All trustees not formally dissenting to the declaration of
illegal dividends or to the unlawful withdrawal of any part of the capital stock
are jointly and severally liable to the corporation and to the creditors to the
full amount so divided or reduced or paid out (sec. 4265; see also Laws of
1903, chap. 93; Laws of 1909, chap. 249). They are also liable for making
fraudulent reports, prospects, etc. (Laws of 1903, p. 141 ; Laws of 1909, chap.
249).
13. Stockholders' Liabilities. — Stockholders are only liable to the ex-
tent of their unpaid stock subscriptions (sec. 4262; Cons., Art. XII. sec. 4).
14. Stock Certificates. — Stock certificates must be signed by such
officers as the by-laws prescribe.
15. Preferred Stock. — The act does not expressly authorize the issuance
of preferred stock.
16. Payment of Capital Stock. — Stock must be paid for in money or
money's worth. Special provision is, however, made in the case of mining
corporations. Where the amount of capital stock of such corporations con-
sists of the aggregate valuation of the whole number of feet, shares, or interest
in any mining claim within the State, no material subscription to the capital
stock is necessary, but each owner thereof shall be deemed to have subscribed
such an amount to the capital stock of the corporation as in its by-laws shall
represent the value of so much of his interest in said mining claims or legal
title to which he may by deed or other instrument vest in the corporation for
mining purposes (sec. 4280; Cons., Art. XII. sec. 6).
Dunlap v. Rauch, 24 Wash. 620; 64 Pac. 807; Krisch v. Company (Wash.), 81 Pac. 855.
17. Books. — Stock transfer books must be kept at all times at the prin-
cipal office of the corporation in the State (sec. 4269). These are open to the
inspection of stockholders.
State v. Company, 21 Wash. 451; 58 Pac. 584.
18. Office and Agent. — Every corporation must maintain an office within
the State and an agent thereat to receive service of process (sec. 4251).
19. Reports. — Before the second Tuesday in January all corporations both
domestic and foreign must file with the auditor of the county where business is
located a statement showing names and addresses and titles of company's
officers and terms of office, and also, within thirty days of date of incorporating,
must file a similar report. No penalty, however, is provided for failure to com-
ply therewith, and the provision is generally disregarded (sees. 4259, 4260;
see also Laws of 1905, chap. 115).
20. Anti-Trust Statute. — There is no anti-trust statute in force in this
State. The Constitution, however, prohibits combinations to fix the price or
limit the production of commodities (Cons., Art. XII. sec. 22).
585
DIGEST OF INCORPORATION ACTS. — WASHINGTON.
21. Statutory Grounds for Forfeiture of Charter. — The provisions of
law as to the bringing of information in the nature of quo warranto against
corporations will be found in Ballinger's Codes and Statutes (sees. 5189, 5190).
The Secretary of State is authorized to strike from the records of his office the
names of all corporations which have neglected for a period of two years to pay
their annual license fee. If the corporation does not apply within six months
after its name has been so stricken from the record in the office of the Secretary
of State for reinstatement, then the corporation shall thereupon be dissolved, and
the trustees of such corporation shall hold title to the property of the corporation
for the benefit of its stockholders and creditors, to be disposed of under proper
court proceedings (Laws of 1909, chap. 19). The name of any corporation which
is stricken from the records of the office of the Secretary of State for non-pay-
ment of its annual license tax may be adopted by another corporation at the
termination of the period of six months next ensuing from the date when such
name has been so stricken from said records (Laws of 1909, chap. 19; see
also sec. 5789, Laws of 1909, p. 928).
22. Annual Franchise Tax. — On or before July 1st of each year every
corporation must pay an annual license tax of $15. For failure to pay the
annual license fee on or before the 1st day of July and prior to the 1st day of
January next following, a fine of $2.50 is imposed (Laws of 1907, chap. 140).
Any corporation neglecting for a period of two years to pay its annual
license fee shall have its name stricken from the records in the office of the Sec-
retary of State. Any corporation may apply within six months after its name
has been stricken from the records of the office of the Secretary of State for
reinstatement by it and payment of license fees and penalties then due from
it and the sum of $25 for additional penalty (Laws of 1909, chap. 19).
23. Amendments. — Amendments for any purpose may be made by a
majority vote of the trustees and the vote or written assent of two-thirds of
the capital stock of the corporation. If the written assent of two-thirds of the
capital stock has not been obtained, the vote of said stock may then be taken
at any regular meeting called for that purpose in the manner provided in the
by-laws for special meetings of stockholders. The president and secretary of
the said corporation shall certify such amendments in triplicate under the seal
of said corporation to be correct, and file a copy of the same as in the case
of the original articles. The time of existence of such corporation shall not be
extended by amendment beyond the time fixed in the original articles of incor-
poration (Laws of 1905, chap. 11).
Whenever a corporation shall execute and file in the office of the Secretary
of State and in the office of the county auditor of the proper county supple-
mental articles of incorporation changing its corporate name, such corporation
shall file in the office of such county auditor at the time of filing such sup-
plemental articles, or within ten days thereafter, a written notice signed by
the president, vice-president, or secretary, setting forth its original corporate
name, its corporate name as changed, and stating that supplemental articles
making such change of name have been filed in the office of the Secretary of
State and in the office of the county auditor of the county (Laws of 1905, chap.
109).
Whenever it is desired to increase or diminish the amount of capital stock,
a meeting of the stockholders shall be called by a notice signed by at least a
majority of the trustees, and published at least eight weeks in some news-
paper published in the county where the principal place of business of the
586
DIGEST OF INCORPORATION ACTS. — WASHINGTON.
company is located, or if no newspaper is published in the county, then the
nearest thereto in that State, which notice shall specify the object of the meet-
in"-, 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 the
capital stock (sec. 4272).
If at a meeting so called a sufficient number of votes have been given in
favor of increasing or diminishing the amount of capital, a certificate of the
proceedings showing 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 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 by a majority of the trustees, and filed in the same man-
ner as is required in the case of original articles, and when so filed the capital
stock of the corporation shall be increased or diminished to the amount specified
in the certificate (sec. 4273).
Any corporation desiring at any time to remove its principal place of busi-
ness into some other county in the State shall ule in the office of the county
auditor a certified- copy of its certificate of incorporation. If it is desired to
remove its principrv place of business to some other city, town, or locality
within the same county, publication shall be made of such removal at least
once in each week for four weeks in the newspaper published nearest to the
city, town, or locality from which the principal place of business of such cor-
poration is desired to be removed. The formation or corporate acts of any
corporation hereafter formed under this chapter shall not be rendered invalid
by reason of the fact that its principal place of business may not have been
designated in the certificate of incorporation: Provided that within three
months from the passage of this chapter such corporation shall cause publica-
tion to be made once a week for at least four weeks in a newspaper published
nearest the city, town, or locality, and where the principal place of business of
such corporation has been located, designating the city, town, or locality and
county where its principal place of business shall be located. On compliance
with the provisions of the section in the several cases herein mentioned, the
principal place of business of any corporation shall be deemed established or
removed at or to any designated city, town, or locality and county in the State
(sec. 4276).
24. Extension of Corporate Existence. — No provision is made for the
extension of corporate existence.
25. Dissolution. — Corporations may be dissolved on vote of two-thirds
of all stockholders upon application to the courts, or by three-fourths vote of
all its members it may surrender its corporate powers (sec. 4275).
26. Foreign Corporations. — Every foreign corporation must cause to
be filed and recorded in the office of the Secretary of State a copy of its charter,
articles of incorporation, memorandum of association, or certificate of incor-
poration, certified to by the officer who is the custodian of the same, according
to the laws of the State or Territory, country or colony, where such corporation
is incorporated, or who is authorized to issue certificates of incorporation ac-
cording to laws of such State or Territory or foreign country or colony. The
instruments herein required to be filed and recorded shall be attested by such
certifying officer under his hand and seal of office, which attestation shall be
■prima facie evidence of the facts therein stated, and the genuineness of the
587
DIGEST OF INCORPORATION ACTS. — WASHINGTON.
certificate. If such officer has no official seal, his certificate shall state that fact
over his signature, and thereupon the Secretary of State or of the Territory, in
case of corporations within the United States, and the consul-general, consul,
vice-consul, deputy consul, consular agent, or commercial agent of the United
States, at or nearest to the place where such certificate is made, in the case of
corporations not within the United States shall certify under his hand and seal
of office to the genuineness of the signature of the officer making the 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 (sec. 4292).
Such corporations shall also constitute and appoint an agent, who shall
reside at the place in the State where the principal business of the corporation
is to be carried on, to be designated as hereinafter required. Such appointment
shall be in writing, signed by the president or chief officer of such corporation,
and shall be attested by its corporate seal, and shall contain the name of the
agent, his place of residence, and the place where the principal business of such
corporation is to be carried on, and shall authorize such agent to accept service
of process in any action or suit pertaining to the property, business, or transac-
tions of such corporation within this State, in which such corporation may be
a party. The signature of such president or chief officer, attested by the cor-
porate seal to such written appointment, shall be sufficient proof of the appoint-
ment of such agent. Such appointment when duly executed shall be filed for
record in the office of the Secretary of State by such corporation, and shall be
there recorded, and such corporation shall have and keep continually some
resident agent, empowered as aforesaid, during all the time such corporation
shall conduct or carry on any business within this State, and service of any
process, pleading notice, or other paper shall be taken and held as due service on
such corporation. Such corporation may change its agent or its principal place
of business from time to time by fifing and recording with the Secretary of State
a new appointment stating the change of such agent or the change in the prin-
cipal place of business, and in the event such foreign corporation shall withdraw
from this State and cease to transact business therein it shall continue to keep
and maintain such agent within this State upon whom service of process, plead-
ings and papers may be made, until the statute of limitations shall have run
against anyone bringing an action against said corporation, which accrued
prior to its withdrawal from this State. In case said corporation shall revoke
the authority of its designated agent after its withdrawal from this State and
prior to the time when the statute of limitation would run against causes of
action accruing against it, then in that event service of process, pleadings, and
papers in such actions may be made upon the Secretary of State, of the State
of Washington, and the same shall be held as due and sufficient service upon
such corporation (sec. 4293; Laws of 1890, sec. 3, p. 290, as amended by Laws
of 1909, p. 72).
Every foreign corporation filing in the office of the Secretary of State a cer-
tificate of the appointment of an agent residing in this State, or a certificate
of the revocation of such appointment of the resident agent, shall pay to the
Secretary of State a fee of five dollars (Laws of 1907, p. 270).
Foreign corporations must pay the same license tax and the same annual
license tax as is required of domestic corporations (Const., Art. XII. sec. 7;
Laws of 1907, p. 271). They must also file annual reports (sec. 4259; Laws of
1905, p. 355).
588
DIGEST OF INCORPORATION ACTS. — WEST VIRGINIA.
WEST VIRGINIA.
(The references below are to the Code of West Virginia, 1899, chaps. 52-54.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act is to be found in the Code of West Virginia
(Laws of 1899, as amended in 1901, chap. 52, sees. 1-24; chap. 53, sees. 1-G3 ;
chap. 54, sees. 1-83). For convenience in classification for prescribing and
assessing license tax on charters or certificates of incorporation, corporations
are divided into two classes, domestic and foreign. A domestic corporation is
(a) one incorporated by or under the laws of this State, or (b) under the laws
of the State of Virginia before June 20, 1863, and which has its principal plac<>
of business and cliief works (if it have chief works) in this State. Every other
corporation is a foreign corporation. Domestic corporations are subdivided
into two classes, resident and non-resident. A resident corporation is a domestic
corporation whose principal place of business or chief works (if it have chief
works) are located within this State, and a non-resident corporation is a do-
mestic corporation whose principal place of business or cliief works are located
without this State. The words "cliief works" as used in the act include
shops, factories, mines, manufacturing plants, or any building or other place
where mechanics, artisans, or laborers are employed. No corporation can be
incorporated for the sole purpose of purchasing real estate in order to sell the
same for profit (Code 52 : 3, as amended by Laws of 1901, chap. 35, and Laws
of 1903, chap. 3).
2. Incorporators. — Five or more persons. There are no residential
requirements (Code 54 : 6).
Crumlish Admr. v. Ry. Co., 40 W. Va. 627; 22 S. E. 90; Greenbrier Ind. Exposition
v. Rodes, 37 W. Va. 738; 17 S. E. 305.
3. Contents of the Agreement of Incorporation. — The agreement of
incorporation must contain :
a. Name. — Similarity of corporate names forbidden (Code 54 : 6, sub. 1 ;
see also Code 53 : 11 ; Laws of 1903, chap. 3, sec. 3).
b. Domicile. — Location of its principal place of business and its chief
works (Code 54 : 6, sub. 2). The principal office need not be within the State.
(See Code 53 : 46.)
c. Purposes. — Objects for which the corporation is formed. Any number
of purposes may be inserted (Code 54 : 6, sub. 3).
d. Capital Stock. — Amount of total authorized capital stock, number of
shares and par value thereof, and the amount of the same paid in. If pre-
ferred stock is desired, the terms on which the same is issued must be set forth
(Code 54 : 6, sub. 4 ; see also Code 53 : 17, as amended by Laws of 1901, chap.
35). Capitalization and par value of shares may be any amount (Code 53 : 15).
e. Stock Subscriptions by Incorporators. — Names and post-office addresses
of the incorporators and the number of shares subscribed for by each (Code
54 : 6, sub. 5). There must be at least five bona fide stockholders who are re-
quired to pay in ten per cent of their subscriptions forthwith (Code 53 : 17, 25).
/. Duration. — Period of corporate existence not to exceed fifty years (Code
54 : 6, sub. 6 , see also Code 54 : 11, as amended by Laws of 1901, chap. 35).
589
DIGEST OF INCORPORATION ACTS. — WEST VIRGINIA.
g. Provisions for Regulation of Corporate Affairs. — Any provisions desired
may be inserted for the regulation of the business and for the conduct of the
affairs of the corporation, or denning, limiting, or regulating the powers of
the corporation, the stockholders, and directors (Code 54 : 6, sub. 7).
h. If the corporation desires to hold more than ten thousand acres of land
in West Virginia, the agreement must set forth the maximum number of acres
it desires to hold (Code 54 : 6). Every corporation, including railroad and all
other corporations holding more than ten thousand acres of land in this State,
shall pay a tax of five cents per acre for each acre in excess of ten thousand
acres. Corporations heretofore incorporated and foreign corporations hereto-
fore authorized to hold property and transact business in this State, which are
liable to pay such tax and have not paid the same, shall pay the same to the
Secretary of State before August 1, 1905. Such corporations shall, under the
hand of the president and seal of the corporation, and attested by the secretary,
apply to the Secretary of State for a certificate authorizing the holding of the
number of acres stated in such application, and pay the tax thereon, and it
shall be the duty of the Secretary of State to issue to such corporation a cer-
tificate stating the amount of tax paid and number of acres on which paid,
and the number of acres the corporation is thereby entitled to hold. Here-
after a domestic corporation shall state in its agreement for incorporation,
and a foreign corporation shall state in its application for authority to hold
property and transact business in this State, the number of acres it desires to
hold and pay the tax thereon to the Secretary of State before the certificate
of incorporation or of authority is issued. If any corporation desires to in-
crease the number of acres it may hold, it shall make application therefor to
the Secretary of State. Such application shall be signed by the president of
the corporation, sealed with its corporate seal and attested by the secretary,
and it shall state the number of acres it then holds and the number of acres it
desires to hold. The Secretary of State shall collect the proper amount of tax,
and shall issue to the corporation a certificate, reciting the number of acres
the corporation may hold and the amount of tax paid to him. If any corpora-
tion shall fail to comply with the provisions of this section, it shall be liable to
a fine of not less than $25 and not exceeding $500, and be liable to pay such
tax due to the State with a penalty of ten per cent on the total amount
due, and be liable to all the provisions of sees. 136 and 137 so far as they
are applicable. All moneys received by the Secretary of State under the
provisions of this section he shall report to the auditor and pay into the
State treasury in the manner prescribed for the payment of other moneys
received by him.
4. Statutory Powers. — In addition to a statutory enumeration of the
common law powers of corporations (Code, chap. 52, sec. 1), the following
additional powers are granted : To subscribe, with the consent of the stock-
holders, for the stock of other corporations; to vote by proxy; to transact
business in other States and countries ; to hold its organization, stockholders',
and directors' meetings outside of the State ; to purchase its own stock ; to
transfer all its assets; to issue its stock for property or services; may have
an office, own property, and carry out the corporate purposes without the
State ; cumulative voting in the election of directors is mandatory ; to appoint
an executive committee from the board of directors ; to forfeit stock for non-
payment of assessments ; to remove directors, and to issue preferred stock and
bonds (Code 52 : 1 ; 52 : 3 ; 53 : 3 ; 53 : 18 ; 54 : 6 ; 54 : 23 ; 54 : 83, as amended
590
DIGEST OF INCORPORATION ACTS. — WEST VIRGINIA.
by Laws of 1901, chap. 35 ; 53 : 16 ; 53 : 24 ; 53 : 42 ; 53 : 44 ; 53 : 53 ; 54 : 82 c,
sub. 11).
Cross v. Ry. Co., 35 W. Va. 174; 12 S. E. 1071; Rece v. Company, 32 W. Va. 164;
9 S. E. 212; P. L. R. Co. v. Board of Education, 20 W. Va. 360; Smith v. Cornelius, 41 W.
Va. 59; 23 S. E. 599.
5. Procuring the Charter. — The agreement of incorporation must be
signed and acknowledged by each of the five incorporators. Eacli incorpora-
tor must be a subscriber for at least one share of stock. Two of the incorpora-
tors must give their affidavit that the amount stated therein to have been paid
on the capital stock has been in good faith paid in for the purposes of the busi-
ness of the intended corporation and with no intention or understanding that
the same shall be withdrawn. 'When application is made to the Secretary of
State for a certificate of incorporation for a resident corporation, two of the
incorporators must make affidavit to the following effect that the statement
made in such certificate, to wit, "That said corporation shall keep its principal
place of business at in the county of and State of West Vir-
ginia, " is true, and that said principal place of business and chief works have
been so located in good faith, and not for the purpose of evading any law of the
State of West Virginia, etc. Within three months after filing the agreement
of incorporation in the office of the Secretary of State, a certified copy thereof
must be recorded in the office of the clerk of the county in which the principal
office is located, if within West Virginia ; or if the principal office is located
out of the State, then such certified copy must be filed in the office of the clerk
of the county in which the statutory attorney resides (chap. 54, sec. 20 ; Laws
of 1901, chap. 35; Laws of 1905, chap. 36, sec. 127).
Greenbrier Ind. Exposition v. Rodes, 37 W. Va. 738; 17 S. E. 305; Singer Mfg. Co. v.
Bennett, 28 W. Va. 16.
6. Corporate Indebtedness. — There is no statutory limitation upon the
amount of indebtedness which the corporation may incur.
7. Organization Tax. — The organization tax is in fact the first year's
annual tax. The statute distinguishes between resident corporations and non-
resident corporations in the matter of organization taxes. Resident corpora-
tions are those whose principal place of business and chief works are located
outside of West Virginia. For both classes of corporations the license year
begins July 1st. On every certificate issued after September 30th of any year
the State collects only one-tenth of the amount of the annual tax for each month
or fractional part of a month to ensue before the first day of the next license
tax year, which commences on July 1st of each year. But in no case shall the
amount assessed and collected be less than $5 for a resident corporation, nor
less than $10 for a non-resident corporation. If the certificate of incorporation
be issued on or after the 1st day of May in any one year, and before the 1st day
of July of any year, the Secretary of State shall assess and collect the tax for
the full year beginning on said July 1st in addition to the annual tax for the
current year (Acts of 1907, Extra Session, chap. 16).
For resident corporations the annual license tax is as follows: $5,000 or
less, $10; more than $5,000 and not more than $10,000, $15; more than si 0,000
and not more than $25,000, $20 ; more than $25,000 and not more than $50,000,
$25; more than $50,000 and not more than $75,000, $45; more than $75,000
and not more than $100,000, $50; more than $100,000 and not more than
$125,000, $55; more than $125,000 and not more than $150,000, $60; more
than $150,000 and not more than $175,000, $70; more than $175,000 and not
501
DIGEST OF INCORPORATION ACTS. — WEST VIRGINIA.
more than $200,000, $75; more than $200,000 and not more than $300,000,
$90 ; more than $300,000 and not more than $400,000, $105 ; more than $400,000
and not more than $500,000, $120; more than $500,000 and not more than
$1,000,000, $170; $1,000,000, $170, and $60 on each $1,000,000 or fraction
thereof in excess of $1,000,000 (Laws of 1909, chap. 68, sec. 126).
For non-resident corporations the annual license tax is as follows: $10,000
or less, $15; more than $10,000 and not more than $25,000, $20; more than
$25,000 and not more than $50,000, $30 ; if more than $50,000 and not more
than $75,000, $40; if more than $75,000 and not more than $100,000, $50;
if more than $100,000 and not more than $1,000,000, $50, and an additional
25 cents on each $1,000 or fraction thereof in excess of $100,000; if more
than $1,000,000 and not more than $2,000,000, $275, and an additional 20
cents on each and every $1,000 or fraction thereof in excess of $1,000,000;
if more than $2,000,000 and not more than $4,000,000, $475, and an additional
10 cents on each and every $1,000 or fraction thereof in excess of $2,000,000;
if more than $4,000,000, $675, and an additional $50 on each and every
$1,000,000 or fraction thereof in excess of $4,000,000 (Laws of 1905, chap. 36,
sec. 128). Non-resident domestic corporations must, at the time of taking
out their charter, pay to the State Auditor, as their attorney in fact, upon
whom service of process may be made (see post, sec. 9), $10 for his services as
such for the then current year ending on the 30th day of April next ensuing ;
and on or before the 1st day of May of each year thereafter such corporation
shall pay to the State Auditor the like sum of $10 for his services as such attor-
ney (Laws of 1907, Special Session, chap. 9).
8. Filing and Recording Fees. — To the Secretary of State for certificate
of incorporation or copy thereof, $10 ; for each certified copy of certificate of
incorporation, $10; for each certificate of change of name, or increase or de-
crease of authorized capital stock, or change of principal office, or amendment
to certificate of incorporation, $5 ; for recording power of attorney, $3 ; for
endorsing and filing reports of corporations, $1 each (Laws of 1904, chap. 13).
Filing and recording fees in local county office average about $2.50.
9. Commencing Business. — The corporation must hold its organization
meeting within six months after the issuance of the certificate of incorporation.
Every domestic corporation shall within thirty days after its first election of
officers, by power of attorney duly executed, appoint some person residing in
the county in this State wherein its business is conducted to accept service on
behalf of said corporation and upon whom service may be had of any process
or notice ; such power of attorney to be recorded in the office of the county
clerk of the county in which the attorney resides, and filed and recorded in the
office of the Secretary of State. Any corporation failing to comply with such
requirement within twelve months from the date of incorporation shall thereby
forfeit its charter (Acts of 1907, Extra Session, chap. 10). Within ninety days
after incorporation non-resident domestic corporations must, by power of
attorney, duly executed and acknowledged and filed in the Auditor's office of
the State, appoint the said Auditor and his successors in office their attorney
in fact to accept service of process and notice in the State for such corporation,
and by the same instrument they must declare their consent that service of
any process or notice in the State upon said attorney in fact, or his acceptance
thereof endorsed thereon, shall be equivalent for all purposes, and shall be and
constitute due and legal service upon said corporation. The post-office address
of all non-resident domestic corporations must be filed with the power of at-
592
DIGEST OF INCORPORATION ACTS. — WEST VIRGINIA.
torney. Non-resident domestic corporations may, if they choose, however, des-
ignate, in addition to the State Auditor, other persons within the State as their
attorney in fact upon whom service of process may be made (Laws of 1905,
Senate Bill No. 77, passed February 22, 1905). Business must be commenced
within one year after incorporation (Laws of 1901, chap. 35).
Bank v. Lumber Co., 32 W. Va. 357; 9 S. E. 243; Richardson v. Graham, 45 W. Va.
134; 30 S. E. 92.
10. Organization Meeting. — May be held within or without the State
(Code 54 : 15, 23).
11. Meetings of Stockholders and Directors. — If the by-laws so pro-
vide, any stockholders' or directors' meetings may be held without the State.
Otherwise they must be held within the State (Code 54 : 23 ; see also Code
53:51, as amended by Laws of 1901, chap. 35).
Reilly v. Oglebay, 25 W. Va. 36; R. S. & G. Ry. Co. v. Woodyard, 46 W. Va. 558; 33
S. E. 285.
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least five directors, unless the by-laws otherwise prescribe.
Unless otherwise provided by the by-laws, directors must be stockholders and
residents of the State (Code 53 : 49).
Donnally v. Hearndon, 41 W. Va. 519; 23 S. E. 646; Darr'ah v. Company, 50 W. Va.
417; 40 S. E. 373.
b. Liabilities. — Assenting directors are jointly and severally liable to
creditors for the illegal declaration of dividends, to the extent of the capital ille-
gally withdrawn in this manner (Code 53 : 40).
Zenn v. Mendel, 9 W. Va. 580; Smith v. Cornelius, 41 W. Va. 59; 23 S. E. 599; Liner
v. Company, 44 W. Va. 175; 28 S. E. 730; Kyle v. Wagner, 45 W. Va. 349; 32 S. E. 213.
13. Stockholders' Liabilities. — Stockholders are liable to creditors to
the amount of their unpaid stock subscriptions. They are also liable to creditors
to the extent of any illegal dividends received by them (Cons., Art. II. sec. 2;
Code 53 : 22, 40).
W. E. R. E. Co. v. Nash, 51 W. Va. 341 ; 41 S. E. 182.
14. Stock Certificates. — Must be signed by the president or vice-president
and such other officers, if any, as the board of directors may direct. The certifi-
cates must show the amount paid on each share (Code 53 : 35, as amended by
Laws of 1901, chap. 35).
15. Preferred Stock. — The act specially provides that preferred stock
may be issued either by providing for it in the certificate of incorporation, or
by resolution adopted at a general meeting of the corporation (Code 53 : 61 ;
Code 54:6, as amended by Laws of 1901, chap. 35).
16. Payment of Capital Stock. — The statute provides that at least ten
per cent of the par value of each share shall be paid at the time of such sub-
scription, and the residue as required by the board of directors or the commis-
sioners having control of the subscription. Stock in corporations other than
mining and manufacturing shall not be sold or disposed of at less than par,
except by a vote of three-fourths of all the stock of the corporation outstand-
ing after the advertisement of such intention. Hut mining or manufacturing
corporations may issue stocks or bonds, and negotiate the sale of the same, in
payment for real and personal property, at such price and upon such terms
and conditions as may be agreed upon by the owners and the directors or
stockholders. All stock so issued shall be fully paid and not liable for any
further call or assessment, and in absence of actual fraud in the transaction
38 593
DIGEST OF INCORPORATION ACTS. — WEST VIRGINIA.
the valuation placed by the directors upon the property so purchased shall be
conclusive (Code 52 : 24, 53 : 25, as amended by Laws of 1901, chap. 35).
Richardson v. Graham, 45 W. Va. 134; 30 S. E. 92.
17. Books. — No books are required to be kept in the State. (See Code
53:47, 54.)
Lipscombs Adm'r v. Condon (W. Va.), 49 S. E. 392.
18. Office and Agent. — Every non-resident corporation must, within
ninety days after its organization, execute a power oi attorney appointing
the State Auditor as its statutory attorney. This power of attorney must be
filed in the office of the State Auditor (Laws of 1905, Senate Bill No. 77, passed
February 22, 1905). All domestic corporations must appoint a resident attor-
ney on whom process against the corporation may be served (Laws of 1907,
Extra Session, chap. 10).
19. Reports. — The board of directors must make an annual report to the
stockholders of the condition of the corporation. They must also, within
ninety days after the first election, and after every annual meeting thereafter,
make a report giving the names and post-office addresses of the president and
secretary, and post-office address of the principal office of the corporation. A
penalty is provided for not making this report (Code, chap. 53, sec. 46, as
amended by Laws of 1901, chap. 35). All corporations having their principal
office or place of business in West Virginia must annually, between the first day
of the assessment year and the 1st day of May, make a written report verified
by the oath of the president or chief managing officer to the assessor of the
county in which its principal office or chief place of business is situated, show-
ing the following items : (a) The amount of authorized capital to be employed
by it ; (b) the amount of cash actually paid on each share of stock ; (c) the
amount of money on hand or on deposit anywhere subject to its check or draft
on the first day of the assessment year; (d) the amount of credits and invest-
ments other than its own capital stock held by it on said day, with their true
and actual value; (e) the quantity, location, and true and actual value of all
of its real estate and the magisterial district or districts in which it is located ;
(/) the kinds, quantity, and true and actual value of all tangible property in
each magisterial district in which it is located; and in case such company
desires to have its indebtedness deducted from its money, credits, investments as
hereinbefore provided, it shall also include in such report (g) an itemized state-
ment such as is provided for in sec. 67 of this chapter, and all of the provisions
of said sec. 67 shall apply to such statement so far as they are applicable, —
which statement shall be verified by the oath of the president or chief account-
ing officer of such company substantially in the form required for individuals
under sec. 67 (Acts of 1907, chap. 80, sees. 77, 78).
20. Anti-Trust Statute. — There is no anti-trust statute in force in West
Virginia.
21. Annual License Tax. — Every resident corporation shall pay an annual
license tax on its charter, based on its authorized capital stock as follows :
If the authorized capital stock be $5,000 or less, $10; if more than $5,000
and not more than $10,000, $15; if more than $10,000 and not more than $25,000,
$20; if more than $25,000 and not more than $50,000, $25; if more than
$50,000 and not more than $75,000, $45; if more than $75,000 and not more
than $100,000, $50; if more than $100,000 and not more than $125,000, $55;
if more than $125,000 and not more than $150,000, $60; if more than $150,000
594
DIGEST OF INCORPORATION ACTS. — WEST VIRGINIA.
and not more than $175,000, $70; if more than $175,000 and not more than
$200,000, $75; if more than $200,000 and not more than $300,000, $90; if
more than $300,000, and not more than $400,000, $105; if more than $400,000
and not more than $500,000, $120; if more than $500,000 and not more than
$1,000,000, $170; and $60 on each $1,000,000 or fraction thereof in excess of
$1,000,000 (Laws of 1909, chap. 68, sec. 126).
For non-resident corporations the annual license tax is as follows: $10,000
or less, $15; more than $10,000 and not more than $25,000, $20; more than
$25,000 and not more than $50,000, $30 ; if more than $50,000 and not more
than $75,000, $40; if more than $75,000 and not more than $100,000, $50; ■
if more than $100,000 and not more than $1,000,000, $50, and an addi-
tional 25 cents on each $1,000, or fraction thereof in excess of $100,000;
if more than 51,000,000 and not more than $2,000,000, $275, and an addi-
tional 20 cents on each and every $1,000 or fraction thereof in excess of
$1,000,000: if more than $2,000,000 and not more than $4,000,000, $475,
and an additional ten cents on each and every $1,000 or fraction thereof in
excess of $2,000,000 ; if more than $4,000,000, $675, and an additional $50
on each and every $1,000,000 or fraction thereof in excess of $4,000,000
(Laws of 1905, chap. 36, sec. 128).
The State Auditor, between the 15th day of April and the 15th day of
May, must notify every corporation liable to the annual license tax of the
time of payment of such tax and the amount thereof. The tax must be paid
on or before the 30th day of June of each year. At the time of making the
payment to the Auditor every domestic corporation shall deliver to him a
statement which shall show the name of the corporation, the date of its charter,
the name and post-office address of its attorney of record in the State, the names
and post-office addresses of its president, secretary, and treasurer, the amount
of its authorized capital stock, the number of acres of land it holds in the State if
the number exceeds ten thousand acres, and such other facts as the Auditor may
require. Such statement shall be signed by the president, secretary, or treas-
urer of the corporation. The amount of such tax shall be deemed a preferred
debt due the State, and shall be a hen on all property and assets of the corpora-
tion prior to all other hens except the hen of the taxes levied on its property
for State, district, or county purposes (Acts of 1907, Extra Session, chap. 16).
If the tax is not paid on or before August 1st of each year, the Auditor pub-
lishes a list of delinquent corporations. Any delinquent corporation may, on
or before the 1st day of November following, or at any time before judgment
or decree is entered, pay the amount of such taxes, and a penalty of one per
cent for each month or fractional part thereof that such failure has continued,
but the amount thereof shall not be less than $5. Between the 1st day of
February and the 1st day of December the Auditor shall certify to the gov-
ernor and Secretary of State a list of all delinquent corporations (Acts of 1907,
Extra Session, chap. 16. As to amount of annual license taxes see ante, sec. 7).
22. Statutory Grounds for Forfeiture of Charter. — The charter may
be forfeited on the following grounds:
(1) For failing to have five stockholders for a period of six months (Code,
chap. 53, sec. 17).
(2) For failure to pay license tax (Code, chap. 32, sec. 90, as amended by
Laws of 1901, chap. 35; Laws of 1903, chap. 4; Acts of 1907, chaps. 9, 16,
Extra Session).
(3) For suspension of business for two years (Code, chap. 53, sec. 7).
595
DIGEST OF INCORPORATION ACTS. — WEST VIRGINIA.
(4) For failure to organize and commence business within one year after
incorporation (Code, chap. 53, sec. 6, as amended by Laws of 1901, chap. 35).
(5) For misuse or abuse of charter (Code, chap. 109, sees. 6-12).
(6) Where the certificate has been obtained for a fraudulent purpose, or
for a purpose not authorized by law (Code, chap. 109, sees. 6-12).
(7) For failure to appoint resident agent as required by law (Code, chap.
54, sec. 24 ; Laws of 1905, Senate Bill No. 77 ; Acts of 1907, chap. 10, Extra
Session).
Moore v. Schoffert, 22 W. Va. 282; G. L. Co. v. Ward, 30 W. Va. 43; 3 S. E. 227.
23. Amendments. — Any corporation formed, or which may hereafter be
formed, or which has accepted or may accept the provisions of this chapter,
may, by a resolution at a general or special meeting of the stockholders thereof,
change the place of its principal office, or make such reduction or increase in
the number of shares of its capital stock, or the par value of each share, as
may be decided upon by said stockholders, a majority of the stock of such
company being represented by the holders thereof at such meeting in person
or by proxy and voting therefor; provided that notice be given by advertise-
ment published at least two weeks before such action in some newspaper of
general circulation printed in the county wherein the principal office of such
corporation is located, if such office be within the State ; and if such office be
not in this State, then in some newspaper printed at the capital of this State,
of the intention to offer such resolution ; and provided, further, that such
resolution may be adopted without such notice being published, if the meeting
at which it is adopted be assented to in writing by all of the stockholders of
the company at the time or before the meeting is held. Any corporation here-
tofore incorporated, or that may be incorporated before this act takes effect
(that is, before February 18, 1901), may reduce its authorized capital stock,
in the manner prescribed in this act. If such application be made to the Sec-
retary of State before January 1, 1903, he shall charge no fee whatever for
such certificate, or for any work in connection therewith or relating thereto
provided in this act, nor shall he collect a tax for the State seal thereon (Code
54:21, amended 1901, Act 35).
When such change of principal office or increase or reduction shall have
been made by any such corporation, the president thereof shall, under his sig-
nature and the seal of the corporation, certify the resolution to the Secretary
of State ; and the Secretary of State, under his hand and the great seal of the
State, shall issue to the corporation so making such change of principal office
or increase or reduction, a certificate reciting the resolution and declaring the
proposed change of principal office or increase or reduction to be authorized
by law, which certificate shall be received in all courts and places as evidence
of the change in the number or par value of the shares of the capital stock
of such corporation, and of the authority to increase or reduce the same, or of
such change of said principal office (Code 54 : 22, as amended by 1901, Acts 35).
A corporation at any time, when it accepts the provisions of this chapter, may
change the par value of its shares, as the stockholders thereof in general meet-
ing, or the board of directors under the authority given them by the stock-
holders, may determine ; in which case the statement to be filed as aforesaid
with the Secretary of State shall show the proposed change, and the same
shall have effect from the date of the certificate of incorporation (Code 54 : 13).
If the stockholders of a joint company desire to change the name thereof,
596
DIGEST OF INCORPORATION ACTS. — WEST VIRGINIA.
they may do so in the same manner that they may increase or reduce the num-
ber of shares of the capital stock, and, after doing so, such resolution chang-
ing such name, certified under the common seal and signature of the president
of the corporation, shall be delivered to the Secretary of State, who shall issue
his certificate under seal reciting the resolution, and declaring that the cor-
poration is to be thereafter known by the new name so adopted; and such
certificate shall be evidence of the change of name therein specified, and the
Secretary of State shall keep an index in his office showing the new name and
the change from the old name, and the old name showing the change to the
new name (Code 53: 12, amended 1901, Act 35).
Any corporation, except railroad companies, may agree to and adopt a new
agreement, so as to enlarge or diminish the objects and purposes for which it
was incorporated, by signing and acknowledging a new agreement in all respects
as the original agreement was signed and acknowledged. Such new agree-
ment must be signed and acknowledged by the holders of a majority of the
stock of the corporation, and a resolution showing that such new agreement
has been made must be spread upon the minutes of the stockholders' meeting
and concurred in by the holders of a majority of the stock. When such new
agreement is made, the same and a certified copy of such resolution, under
the hand of the president of the corporation and the seal of the corporation,
shall be delivered to the Secretary of State, and the Secretary of State shall
issue his certificate in the form prescribed in the ninth section of this chapter,
so far as the same may be found practicable; and from thence such corpora-
tion shall be subject to such new agreement and certificate. And all the pro-
visions of this chapter shall apply to such new certificates and to the corporations
receiving the same, in like manner as to original certificates of incorporation
and agreements, except as herein otherwise provided.
L. F. & S. H. R. R. Co. v. Company, 25 W. Va. 324.
24. Extension of Corporate Existence. — May be extended upon com-
pliance with the statute for an additional period of fifty years (Code 54, sec.
11, as amended by Laws of 1901, chap. 35).
25. Dissolution. — A majority of the stockholders may at any time at a
meeting resolve to discontinue the corporate business, and may divide the
property and assets that may remain after paying the debts and liabilities of
the corporation. Before a certificate of dissolution shall issue, all State license
taxes must be paid. Not less than one-third in interest of the stockholders
of a corporation desiring to wind up its affairs may petition the Court of Chancery
in the county in which the principal office or place of business is situated;
but if there be no such office or place of business in the State, they may petition
the Circuit Court of the county in which the other stockholders or any one or
more of them reside, stating the grounds of their application. The charter
may also be voluntarily surrendered before organization (Code, chap. 53, sec. 56 ;
chap. 53, sees. 57-59; chap. 53, sec. 6, as amended by Laws of 1901, chap. 35;
Laws of 1903, chap. 3, sec. 4).
Weigand v. Company, 44 W. Va. 133; 28 S. E. 803; Hurst v. Company, 30 W. Va. 158;
3 S. E. 564.
26. Foreign Corporations. — Foreign corporations must file in the Secre-
tary of State's office and in the office of the county clerk of the county where
the principal office is located, a copy of the charter. It must also file in the
latter office a certificate from the Secretary of State showing that it has com-
plied with the laws of the State regulating the transaction of business therein
597
DIGEST OF INCORPORATION" ACTS. — WEST VIRGINIA.
by foreign corporations. It must also file with the Secretary of State a
written acceptance of the condition that it will exercise its powers subject
to same conditions imposed upon domestic corporations. Foreign corpora-
tions must at the time of procuring authority to do business in the State,
by power of attorney duly executed and acknowledged and filed in the State
Auditor's office, appoint such State Auditor as its attorney in fact upon whom
process and notices may be served. At the same time they must pay to the
State Auditor $10 for his services as such for the then current year ending on
the 30th day of April next ensuing; and on or before the 1st day of May for
each year thereafter such corporation shall pay to the State Auditor a like sum
of $10 for his services as such attorney. The post-office address of the corpora-
tion must be filed at the same time (Laws of 1905, Senate Bill No. 77, passed
February 22, 1905 ; Acts of 1907, Extra Session, chap. 9). If the certificate of
authority be issued after the last day of July the Secretary of State shall assess
and collect $1 for each month or fractional part thereof to ensue before the
1st day of the next May ; and on or before the said 1st day of May in each year
the said corporation shall pay to the Auditor a like sum of $10 for his services
as such attorney, provided that if the certificate of authority be issued in the
month of March or April the Secretary of State shall assess and collect the sum
of $1 for each month and shall in addition thereto at the same time assess and
collect the full fee of $10 for the year beginning with the 1st day of the ensuing
May (Acts of 1907, Extra Session, chap. 9).
Every foreign corporation at the time of its application for the certificate
mentioned in sec. 30, chap. 54, of the Code, shall file with the Secretary of
State a report, preliminary to the annual report hereinafter mentioned, which
preliminary report shall contain sufficient information upon which to base an
assessment of its license tax for the then current year. Before issuing such
certificate the Secretary of State shall collect the amount of license tax he
finds to be proper for the license tax year ending with the 30th day of June. If
the certificate be issued after the 30th day of September and before the 1st day
of July of the ensuing year the Secretary of State shall assess and collect such
taxes at the rate of one-tenth of the amount of the annual license tax for each
month or fractional part of a month to ensue before the said 1st day of the
ensuing license tax year. Thereafter on or before the 1st day of the license
tax year next following the date of the certificate of authority, and on or before
every succeeding first day of the license tax year, the Auditor shall collect such
tax for the full year, provided that if the certificate of authority be issued in
either the months of May or June of any one year the Secretary of State shall
assess and collect the license tax for said months as well as for a full year begin-
ning with the 1st day of July of the ensuing license tax year (Acts of 1907,
Extra Session, chap. 16).
Every foreign corporation holding property or doing business in the State
shall make a report to the Auditor annually in the month of April of each year,
in which report shall be set out :
1. The name of such corporation, the name of the State or country by
which incorporated, the date of incorporation, the date of the certificate of
the Secretary of State authorizing it to do business in this State, the place of
its principal office, the names and post-office addresses of its president, secre-
tary, and of its officer (if any) charged with the duty of making returns of
its property for taxation, and the name and post-office address of its attorney
of record in this State.
598
DIGEST OF INCORPORATION ACTS. — WEST VIRGINIA.
2. The number of shares of its authorized capital stock and the par value
of each share.
3. The value of the property owned and used by such corporation within
the State, where situate, of what it consists, and the number of acres of land
it holds in this State, and the value of its property owned and used without
this State ; and
4. The proportion of its capital stock which is represented by property
owned and used in the State of West Virginia, which report shall be verified
by the affidavit of the president, secretary, or other executive officer of such
corporation. It shall be the duty of the Auditor to assess and fix the license
tax according to the proportion of the capital stock which is represented by
the property owned and used in this State, according to the rates prescribed
in sec. 126 of tliis chapter, if the assessed value of its property located in this
State amounts to $5,000; but if the assessed value of such property be less
than $5,000, the assessment shall be according to the rates prescribed in sec. 128
of this chapter ; provided that no such corporation shall pay an annual license
tax of less than $100. The Auditor may in any case require such additional
information as he may deem necessary to enable him to assess and fix the
just amount of license tax of such corporation; and it shall be his duty to
notify every such corporation of the amount so assessed by him ; and it shall
be the duty of the corporation to pay the same into the treasury of this State
within thirty days thereafter, and if it shall fail to do so, it shall be liable to
the penalties prescribed in sees. 136 and 137 of this chapter.
If the corporation has property to the amount of $5,000 or over within the
State, it must pay the same annual license tax as is required of domestic corpora-
tions. If the amount of its property is not $5,000, it must pay the same annual
tax as is required of non-resident domestic corporations (Laws of 1905, chap. 36,
sees. 126, 128, 130, 137; Laws of 1909, chap. 68, sec. 126).
If any foreign corporation desires no longer to hold property and transact
business in this State, it may surrender to the State its authority therefor in
the following manner: It shall publish once in each week for four successive
weeks, in some newspaper of general circulation published in the county in the
State where it carries on its business, a notice of its intention to withdraw
from the State. After such publication it shall make application to the Secretary
of State for a certificate of withdrawal, which application shall be signed by
the president of the corporation, sealed with its corporate seal and attested
by its secretary, and be accompanied by a copy of the said notice and the
publisher's certificate of its publication. The Secretary of State shall file the
eame in his office and issue to said corporation a certificate of withdrawal, but
said certificate of withdrawal shall not be issued unless and until the corporation
has paid into the State treasury any amount it may owe as license tax, including
all fines, interest, and penalties as provided in sec. 56 of chap. 53 of the Code.
The issuance of such certificate of withdrawal shall not relieve the corporation
of any debt or obligation due from it to the State or any resident thereof.
Toledo, etc. Co. v. Thomas, 33 W. Va. 556; 11 S. E. 37; B. J. Co. v. Scherr, 510 W Va.
533; 40 S. E. 514; Floyd v. N. L. & I. Co., 49 W. Va. 327; 38 S. E. 053; Rell v. Company, 32
W. Va. 164; 9 S. E. 212; Quesenberry v. Association, 44 W. Va. 512; 30 S. E. 73; Guilds v.
Hurd, 32 W. Va. 66; 9 S. E. 362; Thompson v. Association (W. Va.), 50 8. E. 756.
599
DIGEST OF INCORPORATION ACTS. — WISCONSIN.
WISCONSIN.
(The references are to the Wisconsin Statutes of 1898, unless otherwise stated. They are
published in two volumes, and are edited and annotated by Sanborn & Berryman.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act of Wisconsin is found in the Revised Statutes
of Wisconsin, 1898, Title XIX. chap. 85, sees. 1748 to 1776. Special acts are
provided for banking, insurance, railway construction, and operation companies
and plank and turnpike roads.
2. Incorporators. — Three or more adult persons. All must be residents
of the State (R. S., 1771).
3. Contents of the Articles of Incorporation. — The articles of in-
corporation must contain :
a. Purposes. — Any number of the classes specified (R. S., sec. 1771).
State ex rel. Lederer v. Company, 88 Wis. 512; 60 N. W. 796.
b. Name. — Similarity of names expressly forbidden. Cannot use the names
of individuals in the manner in which they are ordinarily used in co-partnerships
(R. S., sec. 1772, sub. 2). The name must be such as to distinguish it from
any other corporation organized under the Laws of the State (Laws of 1905,
chap. 507). No corporate name shall be held illegal because of the omission
of the word "limited" (Laws of 1907, chap. 507).
I. O. of F. v. Commissioner, 98 Wis. 94; 73 N. W. 326.
c. Domicile. — The location in some city, village, or town in the State
(R. S., sec. 1772, Laws of 1905, chap. 507).
d. Capital Stock. — Amount, number of shares, and par value of same
(R. S., sec. 1772). If preferred stock is to be issued, provision therefor should
be inserted in this subdivision of the articles (Laws of 1903, chap. 109). The
capital stock, number and par value of shares are unlimited as to amount
(sec. 1759 as amended by Laws of 1907, chap. 576).
e. Directors and O cers. — Designation of general officers and number of
directors. There must be at least three directors, and they may be divided into
three classes if desired (R. S., sees. 1772, sub. 4, 1776 ; Laws of 1905, chap. 507).
/. Duties of Officers. — Principal duties of the several officers respectively
(R. S., sec. 1772, sub. 5).
g. Membership. — Method and conditions upon which members shall be
accepted, discharged, or expelled (R. S., sec. 1772, sub. 6).
h. Regulation of Corporate Affairs. — Provisions for the interests of the
corporation, the accomplishment of the purposes thereof (Laws of 1907, chap.
562; Laws of 1909, chap. 355).
Ford v. Hill, 92 Wis. 188; 66 N. W. 115.
i. Corporate Existence. — Duration may be inserted if desired ; otherwise
unlimited (Laws of 1905, chap. 507).
j. Organization Meeting. — Time and place for first meeting for election of
officers (R. S., sec. 1773).
4. Statutory Powers. — In addition to a very full statutory enumeration
600
DIGEST OF INCORPORATION ACTS. — WISCONSIN.
of the "common law" and "incidental powers" the act provides for the follow-
ing additional powers : A limited power to hold stock in other corporations ; to
vote by proxy ; to issue preferred stock ; to acquire the rights, privileges, or
franchises conferred upon any person by the law of the State where the same
would be in direct aid of the corporation's business ; may establish a sinking
fund for the payment of corporate debts, classify directors, and hold stock in
other corporations; may sell all of its property (R. S., sees. 1748, 1754, 1757,
1759 a, 1760, 1775; Laws of 1899, chaps. 100, 198; Laws of 1903, chap. 12;
Laws of 1905, chap. 382) ; may transact business outside of the State and
establish branch offices therein (sec. 1748, Laws of 1905, chap. 507, sec. 5).
N M T S Co No. 2 v. Bishop, 103 Wis. 492; 79 N. W. 785; Marvin v. Anderson, 111
Wis. 387; 87 N. W. 226; Grabiner v. Post, 119 Wis. 392; 96 N. W. 783.
5. Procuring the Charter. — The articles of association duly signed and
acknowledged, or a true copy thereof, verified as such by the affidavits of two
of the signers thereof, must be first filed in the office of the Secretary of State.
A like verified copy and certificate of the Secretary of State showing the date
when the articles were filed and accepted, must within thirty days thereafter
be recorded by the register of deeds of the county where the corporation is
located. The register of deeds must forthwith transmit to the Secretary of State
a certificate stating the time when such copy was recorded, for which he shall
receive a fee of twenty-five cents. Upon receipt of such certificate the Secretary
of State shall issue a certificate of incorporation (Laws of 1905, chap. 507;
Laws of 1909, chap. 355). The better practice is upon incorporation to have
the articles executed as duplicate originals. No corporation shall have a legal
existence until such articles have been so left for record. The organization tax
must be paid to the Secretary of State at the time the articles are presented to
him for filing (R. S., sec. 1773, as amended by chap. 238, Session Laws of 1901).
Business cannot be commenced until one-half of the capital stock is subscribed
and twenty per cent paid in (R. S., sec. 1773).
Attorney-General v. Company, 35 Wis. 425; B. P. Co. v. Rose et al., 95 Wis. 146; 70
X. W. 302; Slocum v. Head, 105 Wis. 431; 81 X. W. 673.
6. Corporate Indebtedness. — Bonds can only be issued for money,
labor, or property estimated at its true money value, equal to seventy-five per
cent of the par value thereof (R. S., sec. 1753). There is no statutory limitation
upon the amount of corporate indebtedness.
7. Organization Tax. — For filing articles of beet sugar or dairy com-
panies, $10; for filing articles of companies formed for the purpose of mining,
smelting, and owning mines and minerals in the State of Wisconsin, $25, if the
capitalization is $25,000 or less, and $1 for each additional $1,000 capitalization
up to $150,000; and for all such corporations with a capitalization in excess
of $150,000, a fee of $150. For all other business corporations the tax is $25
if the capital stock is $25,000 or less; if in excess of $25,000, there is an addi-
tional tax of $1 for each additional thousand dollars of capitalization (R. S.,
sec. 1772, as amended by chap. 238, Session Laws of 1901 ; Laws of 1905, chap.
507; Laws of 1907, chap. 562; Laws of 1909, chap. 355).
Heath v. Company, 39 Wis. 146.
8. Filing and Recording Fees. — There are no fees for filing articles in
the office of the Secretary of State other than the payment of the organization
tax. For certified copy of articles of incorporation, the charge is 12 cents per
601
DIGEST OF INCORPORATION ACTS. — WISCONSIN.
folio, and 25 cents for certificate ; for filing amendments, $10 ; for recording
certificate in the local county office, 10 cents per folio of one hundred words.
9. Commencing Business. — A corporation cannot transact business ex-
cept with its members, until one-half of the authorized capital stock is sub-
scribed, and twenty per cent thereof actually paid in (R. S., sec. 1773). Business
must be commenced within one year after articles are filed (R. S., sec. 1763).
Twenty days after the election of officers it is advisable that a list of the officers
elected at the organization meeting, giving their names and addresses, be filed
in the office of the Secretary of State (Laws of 1905, sec. 5 ; see also post, sec. 19).
10. Organization Meeting. — Must be held within the State. The meet-
ing may be called by any two of the incorporators on ten days' notice in writing
given personally or by two weeks' publication, but the notice may be waived
if all of the subscribers for stock are present in person or by proxy (R. S., sec.
1773). The meeting cannot be held until one-half of the capital stock has been
subscribed (R. S., sec. 1773). Until organization the incorporators have by
statute the direction of the affairs of the corporation (Id.).
Heath v. Company, 39 Wis. 146.
11. Meetings of Stockholders and Directors. — Stockholders' meetings
must be held within the State (R. S., sec. 1762). Directors' meetings may be
held without the State if the by-laws so provide (R. S., 1776). Unless a pro-
vision to the contrary is inserted in the articles of incorporation and recited in
each certificate for any share of stock issued by the corporation, every stock-
holder of any corporation shall be entitled to one vote for each share of stock
owned and held by him at every meeting of the stockholders, and at every elec-
tion of the officers thereof, and may vote either in person or by proxy at such
elections, and by proxy at other meetings when so provided by the by-laws of
the corporation; and every executor, administrator, guardian, assignee for
creditors, receiver or trustee shall represent the shares of stock in his hands at
all meetings of the stockholders and may vote thereat as a stockholder (sec. 1760,
as amended by Laws of 1911, chap. 532).
12. Directors' Qualifications and Liabilities, a. Qualifications. —
There must be at least three directors, all of whom must be stockholders (R. S.,
sec. 1772, sub. 4, sec. 1776). There are no residential requirements.
b. Liabilities. — Directors are liable for illegal declaration of dividends and
for transacting business before one-half of the capital stock is subscribed for,
and twenty per cent actually paid in (R. S., sees. 1765, 1773) ; also for failure
to make reports or refusing to allow inspection of books and accounts (Laws of
1905, chap. 347). Directors may avoid liability by entering their dissent in
writing in the minutes of the directors' meeting (Laws of 1903, chap. 474).
Directors are liable for misappropriating corporate funds or for failing to
make proper entries thereof in the books of account and for falsifying accounts
or making false reports (Laws of 1909, chap. 43).
Gores v. Day, 99 Wis. 276; 74 N. W. 787.
13. Stockholders' Liabilities. — Stockholders authorizing the transaction
of business before half of its authorized capital is subscribed and twenty per
cent paid in, are liable for debts of the corporation incurred prior thereto (R. S.,
sees. 1755, 1756, 1773). They are also personally liable to the amount of the
stock held by them for wages due clerks, servants, and laborers, for services
performed for a period not exceeding six months in length (R. S., sec. 1769).
602
DIGEST OF INCORPORATION ACTS. — WISCONSIN.
They are also liable for the debts of the corporation to the extent of their un-
paid stock subscriptions (R. S., sec. 1756). They are also liable to existing
creditors to the extent of any diminution of capital stock (R. S., sec. 1755; see
also Laws of 1901, chap. 129).
Sleeper v. Goodwin, 67 Wis. 577; 31 N. W. 335; Clokus v. Company, 92 Wis. 325- 66
N. W. 398.
14. Stock Certificates. — Certificates are ordinarily signed by the presi-
dent and secretary (R. S., sec. 1751).
15. Preferred Stock. — Any corporation may provide for preferred stock
in its original articles of organization or by amendment thereto adopted by the
unanimous vote of the stockholders, and may in such original articles or such
amendment thereto adopted by unanimous vote of the stockholders, provide
for the payment of dividends on such preferred stock out of the profits at a
specified rate before dividends are paid on the common stock ; for the cumula-
tion of such dividends ; for a preference on such preferred stock not, however,
exceeding the par value thereof over the common stock in the distribution of
the corporate assets from its profits ; for the redemption of such preferred stock
and for defining or restricting the voting power of such preferred stock. Neither
preferred nor common stock shall bear interest. Certificates of both preferred
and common stock shall state on the face thereof all the privileges accorded to
and all restrictions imposed upon the preferred stock. No change or amend-
ment in relation to such preferred stock shall be made except by way of amend-
ment to the articles of organization adopted by unanimous vote of the holders
of all the outstanding stock, both preferred and common (sec. 1759 a, as amended
by Laws of 1907, chap. 576).
16. Payment of Capital Stock. — Stock can be issued only for money,
labor, or property estimated at its true money value equal to the par value
thereof. An exception is made in the case of stocks listed on the stock exchanges
of New York, Chicago, Boston, and Philadelphia. No corporate bonds can be
issued except for money or for labor or property estimated at its true money
value actually received by it equal to seventy-five per cent of the par value
thereof. All fictitious increase of the capital stock of any corporation is declared
to be void (sec. 1753 as amended by Laws of 1907, chap. 576).
First Ave. Land Co. v. Parker, 111 Wis. 1; 86 N. W. 604; Shaw v. Gilbert, 111 Wis.
165; 86 N. W. 188.
17. Books. — Stock books and books of account must be kept by the cor-
poration at its principal office in the State (R. S., sees. 1750, 1757). The former
are open to the inspection of stockholders and creditors (Laws of 1905, chap.
347). The books required by statute are open to the inspection of stockholders
and creditors.
18. Office and Agent. — Every business corporation must have its prin-
cipal office in the State, and its managing officer or superintendent shall also
reside therein (R. S., sec. 1750).
19. Reports. — Must within ten days after election of its officers file in
the office of the register of deeds of county in which the corporation is located,
and where its articles of incorporation are recorded, a list containing name of
its president, vice-president, if any, secretary, cashier or managing agent, upon
whom service of process may be made (R. S., sec. 1775 b; Laws of 1905, chap.
347). All domestic corporations must, between the 1st day of January and the
1st day of March of each year, file with the Secretary of State a report, sworn
G0:3
DIGEST OF INCORPORATION ACTS. — WISCONSIN.
to by the president, secretary, treasurer, or general manager, stating: (1) name
of such corporation and location, giving street and number ; (2) the name and
address of the officers and directors of said corporation, giving street and number;
(3) amount of authorized capital stock; (4) amount of capital stock paid in
money, property, and services; (5) whether such corporation was engaged in
active business during preceding year; (6) nature of business transacted during
preceding year; (7) in what State such corporation is licensed to transact busi-
ness as a foreign corporation (sec. 1774, as amended by Laws of 1907, chap. 562).
20. Anti-Trust Statute. — Combinations and monopolies are provided
against by both civil and penal laws (see Cons., Art. I, sec. 22; sees. 1770 e, f,.
g, Laws of 1905, chap. 506; Laws of 1907, chap. 562).
21. Annual License Tax. — There is no annual license tax.
22. Statutory Grounds for Forfeiture of Charter. — The charter may
be forfeited for failing to keep an office and a managing officer or superintendent
within the State (R. S., sec. 1750), for entering into illegal trusts (sec. 1791 j, k,
1, Laws of 1905, chap. 507; Laws of 1907, chap. 562), also where charter is
procured upon some fraudulent suggestion or enactment (R. S., sees. 3240, 3241).
If a corporation remains insolvent or neglects to pay its debts or suspends its
ordinary business for one year, it is deemed to have surrendered its charter, and
shall be adjudged to be dissolved (R. S., sec. 1763). The charter may be for-
feited for failing to file annual report (Laws of 1907, chap. 562).
Phillips v. Albany, 28 Wis. 340; State ex rel. Cornish v. Tuttle, 53 Wis. 45; 9 N. W.
791; Attorney-General v. Company, 93 Wis. 604; 67 N. W. 1138; Harrigan v. Gilchrist,
121 Wis. 127; 99 N. W. 901.
23. Amendments. — Any corporation may at any meeting of the stock-
holders, by a vote of at least the owners of two-thirds thereof, unless a greater
vote shall be required in its articles, amend the same so as to modify its business
or purposes, change its name or location, increase or decrease its capital stock,
change its officers or the number of directors, or provide anything which might
have been originally provided for in such articles. Such amendment shall be
adopted only in accordance with the articles of organization, which shall be
therein prescribed. Duplicate copies of such amendment must be prepared
with a certificate thereto attached signed by the president and secretary and
sealed with the corporate seal, stating the fact and the date of the adoption of
such amendment, the total number of shares voting in favor of such amendment,
and that such copy is a true copy of the original. These are then forwarded to
the Secretary of State, one to be filed by him and the other copy to be returned
with his certificate attached to the register of deeds, who must record the same
within thirty days after filing with the Secretary of State. The register of deeds
then transmits to the Secretary of State a certificate stating time when such
amendment, was recorded in his office. Upon receipt of such certificate the
Secretary of State issues a certificate of amendment (Laws of 1905, chap. 507).
No amendment to the articles of any corporation increasing the capital stock
shall be filed unless accompanied by the vote of the president and secretary that
at least one-half of the capital stock, including the proposed increase, has been
duly subscribed and at least twenty per cent thereof actually paid in. The
aforesaid officers and any other officer or stockholder consenting to the incurring
of any debt or liability by such corporation, while having knowledge that less
than one-half of the authorized capital stock has been subscribed, or that less
than twenty per cent thereof has been actually paid in shall be personally
liable upon the same (Laws of 1911, chap. 532, sec. 2).
604
DIGEST OF INCORPORATION ACTS. — WISCONSIN.
Whenever the corporate name shall be changed, the secretary shall publish
a notice thereof in a newspaper published at or nearest the place of location of
such corporation for three weeks. Xo change of location of any such corpora-
tion if beyond the limits of the county shall be valid until the articles of organiza-
tion be amended and thereafter shall have been recorded in the office of the
register of deeds of the county to which the same shall be changed (Laws of
1901, chap. 238; see also R. S., sees. 1774, 1790).
Wood v. Association, 63 Wis. 9; 22 N. W. 756.
24. Dissolution. — Corporation may be dissolved by two-thirds vote of
capital stock, at a meeting called for the purpose (R. S., sec. 1789). The charter
may also be surrendered before organization (R. S., sec. 1773, as amended by
Laws of 1905, chap. 407). The statute provides that a dissolution shall follow
a rejection of a fundamental amendment to a charter by more than one-half
of the stock (Laws of 1903, chap. 474, p. 1315).
Hinckley et al. v. Pfister el ah, 83 Wis. 64; 33 N. W. 21.
25. Extension of Corporate Existence. — There is no provision for
extension of corporate existence.
26. Foreign Corporations. — Foreign corporations must file a certified
copy of articles of incorporation in the office of the Secretary of State, accom-
panied by a sworn statement of an officer of the corporation stating the name
of such corporation and location without and within the State ; names and
addresses of its officers, and name and address of agent within the State ; amount
of capital stock paid in ; nature of business to be transacted within the State ;
proportion of capital stock represented by property within the State, etc.
The Secretary of State must be appointed agent of the corporation for the
acceptance of service of process. The certificate must also state when the cor-
poration was authorized to do business in the State where incorporated, and
that it will comply with all the laws of the State relative to foreign corporations.
An initial license tax is exacted of $25 and $1 for every $1,000 of its capital in
excess of $25,000 employed within the State. Annual reports must be filed
between the 1st day of January and the 1st day of March of each year. A fee
of $2 is required for filing this report. The report must state : (a) Name of such
corporation, and the location of its principal office or place of business without
this State, and its place of business or principal office within this State, if main-
tained. (6) The names and addresses of the officers of such corporation, and
the name and address of the agent or manager who may represent such cor-
poration in this State, (c) The nature of the business transacted in this State
during the year preceding, (d) The amount of capital stock paid in money,
property, or services, (e) The proportion of the capital stock represented in
the State of Wisconsin by its property located and business transacted therein
during the preceding year. In determining the proportion of capital stock
employed in the State, the same shall be computed by taking the gross business
in dollars of the corporation in the State, and the full value in dollars of the
property of the corporation located in the State. The same shall be the nu-
merator of a fraction of which the denominator shall consist of the total gross
business in dollars of the corporation, both within and without the State,
added to the full value in dollars of the entire property of the corporation, both
within and without the State. The fraction so obtained shall represent the
proportion of the capital stock represented within the State. The Secretary
605
DIGEST OF INCORPORATION ACTS. — WISCONSIN.
of State may demand as a condition precedent to the filing of such report such
further figures, information, and statements as he may deem proper in order
to determine the accuracy of the report submitted. The additional information
so obtained shall not become a matter of record in the department of State.
The corporation shall pay a fee of $2 for filing such report. In case such report
shows that such corporation employs in this State a proportion of its capital
stock in excess of $25,000, such corporation shall pay to the Secretary of State
at the time of filing of said report, an additional fee of $1 for each $1,000 in excess
of said amount, except that the said corporation shall receive a credit for the
proportion of its capital stock already paid for in excess of $25,000. (/) That
said corporation as a condition of its being permitted to begin or continue doing
business within this State shall comply with all of the laws of the State with
regard to foreign corporations. In case of failure to file such report in the time
above stated, the corporation shall pay to the Secretary of State a penalty of
$25, if the same is not filed before May 1st. In case such report is not filed by
May 1st, or if said corporation shall remove or make application to remove in
any District or Circuit Court of the United States any action or proceeding
commenced against it by any citizen of Wisconsin, upon any claim or cause of
action arising within this State, the license issued to said corporation shall be
void, and the Secretary of State shall enter such forfeiture in the records of his
department (sec. 1770 b, as amended by Laws of 1907, chap. 562). An anti-
trust affidavit must be filed at the time application for permit is made and also
with the annual report (Laws of 1905, chap. 506; R. S., sec. 1770, a and b as
amended;. Laws of 1901, chaps. 351, 399, 434, sec. 1).
State ex rel. Drake v. Doyle, 40 Wis. 175; Ashland Lumber Co. v. Detroit Salt Co., 114
Wis. 66; 89 N. W. 904; D. G. Co. v. Company, 187 U. S. 611; 23 Sup. Ct. 206; C. T. T.
Co. v. Bashford, (Wis.) 97 N. W. 940.
606
DIGEST OF INCORPORATION ACTS. — WYOMING.
WYOMING-.
(The references below are to the Revised Statutes of Wyoming, 1899, unless otherwise stated.)
1. Statutes under which Business Corporations may incorporate. —
The Business Corporation Act is found in Revised Statutes of Wyoming, 1899,
sees. 3029-3079, 3255-3270. (See also Laws of 1901, chap. 83.) Under it cor-
porations may be found for carrying on any kind of manufacturing, mining,
chemical, merchandising, or mechanical business, constructing wagon roads,
railroads, telegraph lines, digging ditches, building flumes, mining tunnels,
dealing in real estate, or carrying on any business designed to aid in the indus-
trial or productive interests of the country (Laws of 1907, chap. 70).
2. Incorporators. — Three or more. No residential requirements (R. S.,
sec. 3029; Laws of 1907, chap. 70).
Durlacher v. Frazer,'8 Wy. 58; 55 Pac. 306.
3. Contents of the Certificate of Incorporation. — Duplicate certifi-
cates must be executed, setting forth (Laws of 1907, chap. 70) :
a. Name. — (Similarity of names not expressly forbidden by statute, but
Secretary of State will not allow the use of any name already adopted by an
existing domestic corporation.)
b. Purposes. — Object for which the company is formed. Under the Con-
stitution (Art. X. sec. 6) no corporation can have power to transact more than
one general line or department of business, which shall be distinctly specified
in its charter of incorporation.
c. Capital Stock. — Amount thereof (unlimited by law). If preferred stock
is to be issued, this must be set forth (R. S., sec. 3042).
d. Duration. — Term of existence not to exceed fifty years.
e. Number of Shares. — Number and par value of shares (par value may be
any amount).
/. Directors. — Number and names of the board for the first year (Laws of
1907, chap. 70).
g. Domiciliary Office. — Name of the town and county in which the opera-
tions of the company shall be carried on. More than one locality may be named
if desired. If it is to transact business outside of the State, this must also be
set forth (R. S., sees. 3029, 3033, 3034).
h. If directors are to adopt by-laws, provision therefor must be made in the
certificate.
4. Statutory Powers. — In addition to a statutory enumeration of the
common law powers, the law provides for the following additional powers : To
hold stock in such other corporations as are subsidiary to and contribute to the
objects and purposes of the corporation ; to issue preferred stock ; to purchase
mines, manufactories, and other appropriate property in exchange for capital
stock; to vote by proxy; mining companies may construct and operate rail-
ways, tramways, and wagon roads for their own particular purposes ; to trans-
act business outside of the State; to levy assessments and forfeit stock for
non-payment thereof (R. S., sees. 3032, 3034, 3035, 3038, 3040, 3041, 3046,
3056, 3059, 3078, 3079; Laws of 1907, chap. 70). If the certificate of incor-
poration so provides, the power to adopt by-laws may be bestowed upon the
directors.
G07
DIGEST OF INCORPORATION ACTS. — WYOMING.
5. Procuring the Charter. — Duplicate certificates must be executed
and acknowledged by each of the incorporators. One of them must be filed
and recorded in the office of the county clerk where the business of the corpora-
tion is to be carried on and one in the office of the Secretary of State (sees.
3029, 3032 ; Laws of 1907, chap. 70). All corporations must, within thirty days
after the filing of their articles of incorporation with the Secretary of State,
cause to be published in a newspaper of general circulation a notice of their in-
corporation. Such notice shall contain the corporate name of the company,
the object for which the company shall be formed, the amount of the capital
stock of the company, the term of its existence, the number of shares of which
the said stock shall consist, the number of trustees, and the names of those who
shall manage the business of the company for the first year, the name of the
town and county in which the operation of said company shall be carried on,
the location (by town, city, giving the street number if any there be) of its prin-
cipal office within the State, and the name of the agent in charge thereof. Such
notice shall be published three times in such newspaper, for which a charge
of $5 shall be the legal rate for the publication of the three notices. The
incorporators must, within said thirty days, file in the office of the Secretary
of State the publishers' proof of such publication and receipt for same, and
pay the Secretary of State for filing and indexing such proof (Laws of 1905,
chap. 13).
6. Corporate Indebtedness. — The indebtedness shall at no time ex-
ceed amount of the capital stock (R. S., sees. 3049, 3053; Laws of 1907, chap.
70).
7. Organization Tax. — Capital stock not exceeding $5,000, $5; over
$5,000 and not exceeding $100,000, $10 ; over $100,000, $10, and 5 cents ad-
ditional for each $1,000 in excess of $100,000 (sec. 3030).
8. Filing and Recording Fees. — The payment of the organization tax
includes the filing and recording fees in the office of the Secretary of State.
The latter's fee for filing proof of publication of charter is $1 ; for certified
copy of the articles, 15 cents per folio of one hundred words for copy and $1
for certificate and seal ; for filing appointment of agent, $2.50 ; for fifing cer-
tificate of full-paid stock in the office of the county clerk, the fee averages $1.20.
The average fee for filing and recording certificate of incorporation in the county
clerk's office is $2.
9. Commencing Business. — Within ninety days after the incorporation
there must be filed in the office of the Secretary of State a certificate designating
the location of the principal office in the State and the agent in charge thereof
upon whom process may be served. Within thirty days after the payment of
the last instalment of capital stock a certificate thereof, sworn to by the
president and a majority of the directors, must be recorded in the office of the
county clerk of the county wherein the business of the corporation is carried
on (Laws of 1907, chap. 70). Ten per cent of the capital stock must be paid
in within one year (sec. 3045).
10. Organization Meeting. — Should be held within the State (sees. 3035,
3036).
11. Meetings of Stockholders and Directors. — The act does not au-
thorize meetings of stockholders to be held without the State. Directors'
meetings may be held wherever the by-laws prescribe (R. S., sees. 3035, 3036).
Notice of annual meetings must be published ten days prior thereto (Laws of
1907, chap. 70).
608
DIGEST OF INCORPORATION ACTS. — WYOMING.
12. Directors' Qualifications and Liabilities. — a. Qualifications. — The
stock, property and concerns of such company shall be managed by not less
than three directors, who shall respectively be stockholders in such company, and
who shall (except the first year) be annually elected by the stockholders at such
time and place as shall be directed by the by-laws of the company; public
notice of the time and place of holding such election shall be published not less
than ten days previous thereto in the newspaper printed nearest to the place
where the operations of said company shall be carried on, and the election shall
be made by such of the stockholders as shall attend for that purpose either in
person or by proxy, provided a majority of the stock is represented at said meet-
ing or adjourned meeting, the stockholders so present to name the Board of
Directors to be elected, each stockholder having the right to nominate. The
election shall be by ballot on which each person voting shall write the names of
as many persons as are to be elected from the nominees. Each stockholder shall
have the right to vote in person or by proxy the number of shares owned by
him or her, and in balloting for directors he or she may cumulate such shares,
and give one candidate as many votes as the number of directors multiplied
by the number of his or her shares of stock shall equal, or to distribute them on
the same principle among as many candidates as he or she may desire, and the
person having the highest number of votes in consecutive order shall be declared
elected as the Board of Directors for that year, and such directors shall not be
elected in any other way, and when vacancy shall happen among the directors
by death, resignation or otherwise, it shall be filled for the remainder of the
year as shall be provided by the by-laws of said company (Laws of 1911, chap. 27).
The president must be a member of the board of directors (Laws of 1907, chap.
70). Executive committee may be provided for in the by-laws (sees. 3037,
3039, 3078). If the certificate of incorporation so provides, the power to
adopt by-laws may be bestowed upon the directors.
b. Liabilities. — Directors are personally liable for payment of corporate
debts where they participate in an illegal declaration of a dividend or in the
creation of corporate indebtedness in excess of the capital stock (R. S., sees.
3048, 3049). To avoid this liability as to dividends only, a certificate of
objection must be filed with the secretary of the company, and with the
county clerk of the county wherein the meeting is held (Laws of 1907,
chap. 70). They are also liable for issuing false certificates of stock (sees.
5151, 5158). ,
13. Stockholders' Liabilities. — Stockholders are only liable to creditors
for their unpaid stock subscriptions (R. S., sec. 3045).
14. Stock Certificates. — Must be signed by such officers as the by-laws
prescribe.
15. Preferred Stock. — May be provided for in the certificate of incor-
poration, or may be issued thereafter by the unanimous consent of all the stock-
holders (R. S., sees. 3041, 3042). Dividends thereon cannot exceed seven per
cent. The holders of common stock have the first right to subscribe for pre-
ferred stock, in proportion to their holdings (sees. 3041-3043).
16. Payment of Capital Stock. — Capital stock may be issued in ex-
change for mines, manufactories, and other necessary property to the amount
of the value thereof. The act specifically provides that stock so issued shall
be taken to be full stock, and the holders thereof shall not be liable thereon
either to the corporation or to creditors (R. S., sec. 3046; Laws of 1907, chap.
70). Within thirty days after the payment of the last instalment of capital
39 009
DIGEST OF INCORPORATION ACTS. — WYOMING.
Btock the president and a majority of the trustees must record in the office of
the register of deeds of the county where the principal business is carried on, a
certificate stating the amount of the capital so fixed and paid in (R. S., sec.
3047; Laws of 1907, chap. 70). Ten per cent of the capital stock must be
paid in within one year (sec. 3045).
17. Books. — There is no provision as to what books must be kept other
than the stock book (R. S., sec. 3055). Fifteen per cent of the stockholders
may demand a statement of the company's affairs from the treasurer (R. S.,
sec. 3057).
18. Office and Agent. — The corporation must maintain an office within
the State and have an agent in charge thereof on whom process against the
corporation may be served (Laws of 1903, chap. 53).
19. Reports. — Within thirty days after the payment of the last instal-
ment of capital stock a certificate thereof, sworn to by the president and a
majority of the directors, must be recorded in the office of the register of deeds
of the county wherein the business of the corporation is carried on (Laws of
1907, chap. 70). Whenever stockholders owning 15 per cent of the capital stock
of any company shall present written request to the treasurer thereof asking
for a statement of the affairs of the company, the latter officer must make such
a statement under oath within 20 days after service upon him of such request
(sec. 3057).
20. Anti-Trust Statute. — Anti-trust statute is found in the Laws of
1911, chap. 62.
21. Statutory Grounds for Forfeiture of Charter. — The charter may
be forfeited for non-user and misuser of its corporate franchises and privileges
(R. S., sec. 4214) ; also for failing to file certificate of agent and place of
business (Laws of 1903, chap. 53) or to publish articles as required by law (Laws
of 1905, chap. 13), or for violation of anti-trust statute (Laws of 1911, chap.
62).
Any person who knowingly makes or publishes in any way whatever, or
permits to be so made or published, any book, prospectus, notice, report, state-
ment, exhibit, or other publication of or concerning the affairs, financial con-
dition, or property of any corporation, joint stock association, co-partnership,
or individual, which said book, prospectus, notice, report, statement, exhibit,
or other publication shall contain any statement which is false or wilfully ex-
aggerated, or which is intended to give, or which shall have tendency to give,
a less or greater apparent value to the shares, bonds, or property of said corpora-
tion, joint stock association, co-partnership, or individual, or any part of said
shares, bonds, or property, than said shares, bonds, or property, or any part
thereof, shall really and in fact possess, shall be deemed guilty of a felony, and
upon conviction thereof shall be imprisoned for not more than ten years or
fined not more than $10,000, or shall suffer both said fine and imprisonment
(Laws of 1909, chap. 162, sec. 1).
Any corporation organized under the laws of this State, or organized under
the laws of any other State, and holding property and doing business in
this State by virtue of compliance with the general corporation laws, whose
officers or agents shall be convicted of violation of the provisions of this act,
shall be deemed to have forfeited their Charter rights in this State and
shall not be permitted to do business within same (Laws of 1909, chap. 162,
sec. 2).
22. Amendments. — Any corporation or company formed prior to Feb-
610
DIGEST OF INCORPORATION ACTS. — WYOMING.
ruary 13, 1S90, either by special act or under the general law, and now exist-
ing, or any company which may be formed under this title, may increase or
diminish its capital stock by complying with the provisions of this chapter to
any amount which may be deemed sufficient and proper for the purposes of
the corporation, and may also extend its business to any other branch named
in sec. 3029, and may also change its corporate name, subject to the provi-
sions and liabilities of this chapter. But before any corporation shall be enti-
tled to diminish the amount of its capital stock, if the amount of its debts and
liabilities shall exceed the amount of capital to which it is proposed to be re-
duced, such amount of debts and liabilities shall be satisfied and reduced so
as not to exceed such diminished amount of capital, and any existing company
heretofore formed under the general law or any special act, may come under
and avail itself of the privileges and provisions of tliis chapter by complying
with the following provisions, and thereupon such company, its officers and
stockholders, shall be subject to all the restrictions, duties, and liabilities of
this chapter (sec. 3053).
Whenever the owner or owmers of a majority of the shares of the capital
stock of any company shall desire to call a meeting of stockholders, for the
purpose of enabling the company to avail itself of the privileges of this chap-
ter, or for increasing or diminishing the amount of its capital stock, or for ex-
tending or changing its business, or changing its name, such owner or owners
shall make application in writing to the president or other chief officer of the
company for the time being, to call a meeting of the stockholders of the com-
pany, which application shall state the purpose or purposes for which such
meeting is desired. It shall thereupon be the duty of the officer of the company
to whom such application is made to publish a notice to be signed by him in a
newspaper in the county wherein is situated the principal office of the company
in this State, if any shall be published therein, at least four successive weeks,
and to deposit a written or printed copy thereof in the post-office addressed to
each stockholder at his usual place of residence, at least fifteen days previous
to the day fixed for holding such meeting, specifying the object of the meeting,
the time and place when and where such meeting shall be held, and the amount
to which it is proposed to increase or diminish the capital stock, and the busi-
ness to which the company would be extended or changed, and stating one or
more names proposed for a change as the case may be, and a vote of at least
two-thirds of all the shares of the stock lawfully issued and outstanding.
Thereupon a certificate of the proceedings, showing a compliance with the pro-
visions of this chapter, the amount of capital actually paid in, the business to
which it is extended or changed, the whole amount of debts and liabilities of
the Company, and the amount to which the capital stock shall be increased
or diminished, shall be made out, signed, and verified by the affidavits of the
chairman and the secretary of said stockholders' meeting, and such certificates
shall also be acknowledged by such chairman and secretary and filed and re-
corded as required by the first section of this chapter, and when so filed and
recorded, the capital stock of such corporation shall be increased or diminished
to the amount specified in such certificate and business extended or changed
or corporate name changed as aforesaid, and the company shall be entitled to
the provisions and privileges and be subject to the liabilities of this chapter
as the case may be (see. 3056).
23. Annual License Tax. — There is no annual license tax.
24. Extension of Corporate Existence. — Corporations may renew cor-
G1L
DIGEST OF INCORPORATION ACTS. — WYOMING.
porate existence for any number of years desired by complying with the terms
of the statute (see Laws of 1911, chap. 32).
25. Dissolution. — By a termination of its period of existence; and vol-
untarily by a two-thirds vote of the stockholders, whereupon the trustees
become trustees for the creditors and stockholders (R. S., sees. 3255-3264
inclusive).
Inter. Trust Co. v. Company, 3 Wy. 803; 31 Pac. 408.
26. Foreign Corporations. — Every foreign corporation must, within thirty
days after commencing business in the State, file in the office of the Secretary
of State, and also in the office of the register of deeds of each county in which
it transacts business, a copy of its charter with a copy of the general law under
which it is incorporated, duly authenticated by the proper authorities of the
State, wherein it was created (sees. 3265-3268, as amended by Laws of 1901,
chap. 83; Laws of 1903, chap. 40; Laws of 1909, chap. 93). The filing fees are
the same as for domestic corporations of like capitalization. In addition to
the foregoing provisions every foreign corporation must file with the Secretary
of State a certificate signed by its president or secretary, designating the location
of its principal office in the State and the name of the agent in charge thereof
and upon whom process against such corporation may be served. This certifi-
cate must be filed within ninety days after fifing with the Secretary of the State
its certified copy of the certificate of incorporation. For filing the certificate
above referred to, a fee of $2.50 must be paid to the Secretary of State (Laws
of 1909, chap. 156). No annual license fee to pay and no reports to make (R. S.,
sees. 3265-3270 inclusive). Acceptance of provisions of State Constitution
must be filed with the Secretary of State (Cons., Art. X. sec. 5; sees. 3030,
3058, 3268). The filing fee is $2.50.
612
PART III.
FORMS AND PRECEDENTS.
SPECIFIC OBJECT CLAUSES.
INDEX.
Acquisition of Existing Business
Actuaries
Adding Machines
Adjusters
Aeroplanes
Air Brakes
Air Motors
Aluminum Goods
Ammonia
Ammunition
Amusement Company ....
Angora Goats
Animal Fanciers
Form
1
2
'. 3
4
5
6
7
8
9
10
11
12
13
Apartment Houses 14
Appraisers 15
Aqueducts 16
Architects 17
Architectural Woodwork 18
Arms and Ammunition 19
Art Galleries 20
Art Goods 21
Artichokes 22
Artificial Flowers 23
Artists' Materials 24
Asbestos Materials 25
Assayers and Refiners 26
Auctioneers 27
Awnings, Tents, etc 28
Baby Carriages 29
Bags and Trunks 30
Bakery 31
Ballot Boxes 32
Bankers 33
Banking and Trust Companies . . 34
Barbers 35
Barrel Manufacture 36
Bathing Establishments 37
Bedsteads 38
Belting 39
Binding and Tapes 40
Blacksmiths 41
Blank Books 42
Boiler Markers and Dealers .... 43
Books 44
Bookbinders 45
Bottle Manufacturers 46
Bowling Alleys 47
Form
Braiding Machines 48
Brandies 49
Brass Goods 50
Breeders 51
Bric-a-Brac 52
Brick 5S
Bridge Builders 54
Bronze 55
Brooms 56
Brushes 57
Building Materials 58
Butchers 59
Butter, Cheese and Eggs 60
Buttons . . . 6L
Cabinet Makers , 62"
Canned Goods * 63
Car Builders „ 64
Carbon Engines 65
Carpenters and Builders 66
Carpets 67
Carriages and Wagon Manufacturers 68
Cash Registers 69
Caterers 70
Chewing Gum 71
China, Glass and Earthenware . . 72
Chiropodists 73
Chocolate and Cocoa Manufac-
turers 74
Cigars 75
< lloaks and Suits 76
Cloth Cleaners, Finishers, Refinish-
ers, Pressers, Dyers and Dryers . 77
Coal Briquette 7*
Coal Transportation Company . . 70
Coffee SO
Cold Storage 81
Collars and Cuffs 82
Collection Agency 83
Commission Merchants 84
Construction Company 85
Contractors and Builders .... 86
Cooperage 87
Coppersmiths ss
Cornices and Skylights 89
Costuiners 90
( 'otton Brokers 91
Cotton Plantations 92
613
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Form
Customhouse Brokers 93
Cutlery 94
Delicatessen 95
Dental Supplies 96
Designers 97
Diamonds and Precious Stones . . 98
Distillers 99
Dock Company 100
Dredging 101
Dressmaking 102
Drilling 103
Drugs 104
Electric Generating Machinery . . 105
Elevators (Grain) 106
Elevators (Passenger) 107
Embroiderers 108
Employment Agencies 109
Engineering and Dredging Company 110
Explosives Ill
Express 112
Extracting Company 113
Fancy Glass 114
Fancy Goods and Notions .... 115
Farm Products, Southern .... 116
Financial Agents 117
Fireproofing 118
Fireworks 119
Fisheries 120
Florists 121
Food Products 122
Foreign Commercial Company . . 123
Fruit Company 124
Fruits (Tropical) 125
Fuel Saving Machines 126
Furniture 127
Furriers 128
Garbage Machinery 129
Gas 130
Ginneries 131
Glass 132
Gloves and Mittens 133
Gold and Silver Ware 134
Granite 135
Graphite 136
Grocers 137
Hair Goods, Hair Importers and
Hair Dressers 138
Harness and Saddlery 139
Hat and Cap Manufacturers . . . 140
Heating 141
Hosiery and Underwear 142
House Furnishers 143
Ice . 144
Inspection of Elevators 145
Insurance 146
Iron and Steel 147
Jewellers 148
Knit Goods 149
Laces and Embroideries 150
Lamps 151
Laundry 152
Lead Company 153
614
Form
Leather 154
Lighterage 155
Lime and Plaster 156
Lithographers 157
Liveries 158
Locomobiles 159
Lumber and Nursery 160
Machinists 161
Magazines 162
Manganese, etc 163
Manufacturers' Agents 164
Marble Dealers 165
Masons and Builders 166
Mechanical Engineers 167
Medical College 168
Medical Institute 169
Mica 170
Mining (Limited Powers) .... 171
Mining (Full Powers) 172
Mining Investments ....... 173
Mining Rights 174
Mortgage and Trust 175
Motor Cars 176
Motor Companies 177
Musical Instruments 178
Newsdealers 179
Newspapers 180
Nickel 181
Novelties 182
Nurseries 183
Office Supplies 184
Oil and Petroleum 185
Oil and Pipe Line Company . . . 186
Paints 187
Painters 188
Paper 189
Paper Manufacturers 190
Passenger and Baggage Transfer . . 191
Patents 192
Phonographs 193
Photography 194
Pianos and Musical Instruments . . 195
Perfumers 196
Pipe Foundry 197
Plantation Company 198
Poultry 199
Printers 200
Produce 201
Provision Dealers 202
•Publishers 203
Quarry 204
Railwav Equipment 205
Real Estate (City) 206
Realty 207
Reduction Company 208
Refineries 209
Restaurants 210
Roofers 211
Rubber Company 212
Saloons 213
Salt 214
Sanitariums 215
Sashes, Doors and Blinds .... 216
Sauces and Pickles 217
FORMS AND PRECEDENTS.
Form
Saw Mills 218
Scaling 219
Separators 220
Sewing Machines 221
Sheep 222
Ship Brokers and Chandlers . . . 223
Ship Building 224
Shirt Manufacturers 225
Silk 226
Silversmiths and Plated Ware . . 227
Slate and Tile 228
Slaughter Houses 229
Slot Machines 230
Soap 231
Sporting Goods 232
Stationary Engines 233
Steamboats 234
Steel Lath and Fireproofing Company 235
Steel Manufacture Part of Charter 236
Stereopticon Machines 237
Stevedores 238
Stock Brokers 239
Storage Batteries 240
Storage Warehouse 241
Stoves, Ranges and Heaters . . . 242
Sugar Refineries 243
Surgical Instruments 244
Tailors 245
Tar Manufacturing 246
Tea, Coffee and Cocoa 247
Telegraph and Telephone Companies 248
Form
Theatres 249
Tiles 250
Tools _'51
Toy Manufacturers 252
Trading Stamp Company .... 253
Train Control 254
Transportation Company .... 255
Tropical Trading Company . . . 250
Truckmen 257
Trust Company 258
Turbine Engines 259
Typesetting Machines 260
Umbrellas and Parasols 261
Undertakers 262
Upholsterers 263
Valve Company 264
Varnish Remover 265
Wall Paper 266
Watches, Jewelry and Diamonds . 267
Water Heaters 268
Water Works 269
Weighing Machines 270
Wharf and Warehouse 271
Wines and Liquors 272
Woolen and Worsted 273
Yarn Mill 274
FORM 1.— ACQUISITION OF EXISTING BUSINESS.
To purchase, acquire, aud take over the business and property, both real and
personal, name aud assets of every nature aud description, of the business uow
being carried ou by iu the City of , State of
FORM 2. — ACTUARIES.
To carry on the business of life insurance actuaries in all its various branches.
FORM 3. -ADDING MACHINES.
To manufacture, buy, sell, export, import, and generally deal in adding machines
of all characters and descriptions.
FORM 4. — ADJUSTERS.
To carry on the business of insurance adjusters, and in connection therewith
to adjust fire, life, marine and liability, accident and fidelity insurance losses.
FORM' 5. — AEROPLANES.
To manufacture, buy, sell, import, export, aud generally deal in, exhibit, and
license aeroplanes of every nature and description, including biplanes, mouoplaues,
and flying machines of every nature and description.
FORM 6. — AIR BRAKES.
To carry on the business of manufacturers and dealers in air or pneumatic brakes
and braking devices and appliances of every description; to manufacture, buy,
sell, export, import, and generally deal in air or pneumatic braking devices and
appliances, car tracks, railway appliances and supplies, machinery and appliances
of every description. Also, to manufacture, buy, sell, export, import, and
generally deal in compressed air machinery and parts, and to acquire by
purchase or otherwise inventions, patents, licenses, and patent rights, and such
615
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
brakes, braking devices, railway machinery and appliances, and compressed air
machinery and apparatus as may be manufactured, bought, sold, imported, exported,
and dealt in by manufacturers and dealers in a similar line of business.
FORM 7. — AIR MOTORS.
To manufacture, construct, purchase, or otherwise acquire, deal in, sell, hire,
lease, use, repair, operate, and maintain machinery, engines, compressors, or motors,
tools, devices operated by compressed air or other expansible fluids, apparatus and
appliances of any aud every character.
FORM 8. —ALUMINUM GOODS.
To manufacture, buy, sell, export, import, and generally deal in aluminum goods,
and such other goods, wares, and merchandise as are usually manufactured, bought,
sold, exported, or imported and dealt in by manufacturers and dealers in a similar
line of business. To carry on the business of mining, milling, concentrating, con-
verting, smelting, treating, prepariug for market, manufacturing, buying, selling,
and otherwise producing and dealing in aluminum and other products.
FORM 9. —AMMONIA.
To prepare, distil, manufacture, buy, sell, and generally deal in ammonia and
such other products as are usually distilled, manufactured, bought, sold, and dealt
in by manufacturers and dealers in a similar line of business.
FORM 10. — AMMUNITION.
To manufacture, buy, sell, export, import, and generally deal in gunpowder,
shot, bullets, cartridges, shells, explosives, and such other goods, wares, and mer-
chandise as are usually manufactured, bought, sold, exported, imported, and dealt in
by dealers in a similar line of business.
FORM 11. — AMUSEMENT COMPANY.
To build, buy, lease, or otherwise acquire, own, operate, and maintain merry-
go-rounds, loop-the-loops, gravity aud pleasure railways, aerial coasting swings,
Ferris Wheels, and all other devices of a like nature calculated to offer amusement
to the public and profit to the company. Also to manufacture, locate, buy, lease,
or otherwise acquire, sell, and deal in scenery, stage appliances, theatre appliances,
and other articles suitable for use on stage or in amusement enterprises, theatres, or
other public places. Also to purchase, own, lease, or otherwise acquire, license,
or sell plays, operas, songs, musical or dramatic manuscripts or copyrights what-
soever which may be used as a basis for the amusement or entertainment of per-
sons in public or private places. To carry on the business of, and to do any and all
things that may be ordinarily conducted by dramatic and operatic agents and mana-
gers of amusement enterprises of any kind, including the manufacture of appliances
used in theatrical amusement enterprises. Also to conduct amusement enterprises
of all kinds. To purchase, lease, or otherwise acquire, buy, sell, or otherwise dis-
pose of lands and buildings for the erection, operation, and maintenance of theatres,
opera houses, and amusement enterprises of every character with suitable plants,
machinery, lighting, and heating apparatus, and other appliances connected therewith.
FORM 12. — ANGORA GOATS.
To carry on in all its various branches a general stock-raising farm and ranch
business ; particularly to buy, sell, breed, raise, or otherwise deal iu Angora Goats
and other domestic animals.
FORM 13. —ANIMAL FANCIERS.
To buy, sell, import, export, and generally deal in all kinds of animals, domestic
or wild ; and particularly to buy, sell, import, export, and deal in dogs, cats, goats,
birds, and such other animals as are usually bought, sold, imported, and exported
by dealers in a similar line of business.
616
FORMS .VXD PRECEDENTS.
FORM 14. — APARTMENT HOUSES.
To erect, build, equip, operate, maintain, buy, and sell apartment houses ; to
supply electricity for lighting, heating, power, signalling, and other purposes. To
construct, own, and operate electric telephone exchanges.
FORM 15. — APPRAISERS.
To carry on the business of appraisers hi all its various branches and particu-
larly, in connection therewith, to act as appraisers of real estate, stocks, bonds, and
other securities, aud to act as appraisers of goods, wares, and merchandise of every
class and description.
FORM 16. — AQUEDUCTS.
To enter into contracts for the construction, maintenance, and operation of
aqueducts, pipe lines, conduits, and ditches for the purpose of providing water
for drinking, fire, urban, horticultural, and agricultural purposes.
FORM 17. — ARCHITECTS.
To conduct, manage, aud carry on the business of architects and engineers in
all or any of their respective branches, and also the development of real estate
situate in the State of or elsewhere ; to make contracts for the preparation
of phms or other drawings and specifications of buildings or parts of buildings of
any kind and description; to superintend the construction thereof and to do any
and all acts in the line of the businesses of architects and engineers which it may
deem necessary, profitable, or desirable for the promotion of its business. To ac-
quire by purchase or otherwise own, hold, buy, sell, convey, lease, mortgage, or en-
cumber real estate includiug quarry lands or other property, personal or mixed.
To survey, subdivide, plat, improve, and develop lauds for purposes of sale or other-
wise, and to do and perform all things needful and lawful for the development and
improvement of the same for residence, trade, or business. To acquire to the
same extent as natural persons and without limit as to amount, by purchase, lease,
exchange, hire, or otherwise, lands, improved or unimproved, tenements, heredita-
ments, chattels, real or personal, or any interest therein ; to erect and construct
houses, buildings, and works of every description on any lauds of the company or
upon any other lands ; to rebuild, enlarge, alter, or improve existing houses, build-
ings, or works thereon ; to subdivide, improve, and develop lands for purposes of
sale or otherwise ; to convert and appropriate any such land into and for roads,
streets, aud other conveniences, and to do aud perform all things needful and lawful
for the development and improvement of the same, and generally to deal with and
improve the property of the company and of other parties ; to own, hold, aud main-
tain any property acquired by the company; to sell, convey, lease, release, let, ex-
change, mortgage, or otherwise encumber or dispose of lauds, houses, buildings,
hereditaments, appurtenances, chattels, and other property of the company ; to equip,
furnish, conduct, operate, manage, lease, and maintain hotels, apartment houses,
boarding houses, dwelling houses, sanitariums, warehouses, or any kind of building
for dwelling, amusement, recreation, charitable, or religious purposes; to undertake
or direct the management and sale of the property of the company, real and per-
sonal; to sell, assign, release, hold, or satisfy mortgages which may become the
property of the company; to loan on bond or mortgage or otherwise, or to ad-
vance money to, and to enter into contracts and arrangements of all kinds with con-
tractors, laborers, skilled or otherwise, builders, property owners, and others."
FORM 18.- ARCHITECTURAL WOODWORK.
To design, construct, manufacture, and install in houses, buildings, and struc-
tures of all kinds woodwork of every class and description.
FORM 19. — ARMS AND AMMUNITION.
To manufacture, buy, sell, import, export, and generally deal in guns, revolv-
ers, knives, powder, shot, shells, aud explosives of every class and description.
617
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
FORM 20. — ART GALLERIES.
To maintain and operate art galleries for the display therein of paintings, sculp-
tures, and other works of art.
FORM 21.— ART GOODS.
. To buy, sell, export, import, and generally deal in paintings, sculpture, can-
vases, paints, and artists' materials of every class and description.
FORM 22. — ARTICHOKES.
To plant, raise, and cultivate, buy, sell, export, import, and generally deal in all
varieties of artichokes.
FORM 23.— ARTIFICIAL FLOWERS.
To manufacture, buy, sell, import, export, and generally deal in artificial flowers
of every class and description.
FORM 24.— ARTISTS* MATERIALS.
To manufacture, buy, sell, export, import, and generally deal in canvases,
easels, brushes, paints, oils, pencils, crayons, and artists' materials of every class
and description.
FORM 25. — ASBESTOS MATERIALS.
To manufacture, buy, sell, export, import, and generally deal in asbestos and all
the materials that enter into the manufacture thereof.
FORM 26. — ASSAYERS AND REFINERS.
To carry on the business in all its various branches of assayers and refiners of
gold, silver, copper, lead, minerals, and metals of every class and description.
FORM 27. — AUCTIONEERS.
To carry on the business of general auctioneers of real estate, goods, wares, and
merchandise of every class and description.
FORM 28. — AWNING, TENTS, ETC.
To manufacture, buy, sell, export, import, and generally deal in awnings, tents,
tennis nets, hammocks, and articles of the same general description.
FORM 29. — BABY CARRIAGES.
To manufacture, buy, sell, export, import, and generally deal in baby carriages,
perambulators, go-carts, baby-jumpers, carriage cushions, upholstery, and carriage
fittings of every class and description.
FORM 30.— BAGS AND TRUNKS.
To manufacture, buy, sell, export, import, and generally deal in travelling boxes,
suitcases, telescopes, commercial travellers' bags, steamer trunks, and travellers'
necessities of every class and description.
FORM 31. — BAKERY.
To carry on the business of bakers in all its various branches in the city of
and vicinity; to manufacture, make, purchase, sell, export, and import
bread, crackers, biscuits, cake, sweetmeats, and confectionery of all kinds ; also to
manufacture, buy, sell, import, export, and generally deal in baking powders,
yeasts, cream* of tartar, and all other articles which may be necessary or conven-
iently used in connection with the aforementioned business or businesses.
FORM 32. — BALLOT BOXES.
To manufacture, buy, sell, lease, export, import, and generally deal in articles
commonly known as voting or ballot boxes, and particularly to purchase or other-
618
FORMS AND PRECEDENTS.
wise acquire letters patent of the United States or of foreign countries governing
the manufacture of such voting or ballot boxes, together with all extension and
renewals of the same.
FORM 33. — BANKERS.
To carry on the business of private bankers and in connection therewith to dis-
count bills," notes, and other evidences of indebtedness, receive and pay out deposits,
with or without interest, receive on special deposit moneys or bullion, to buy
and sell foreign and domestic exchange, gold and silver bullion and foreign coins ;
to lend money on percentage, security, or bond ; to buy and sell stocks, bonds, and
mortgages of every class and description.
FORM 34. — BANKING AND TRUST COMPANIES.
To carry on a banking and trust company business and in connection therewith
to discount" bills, notes, and other evidences of debt, receive and pay out deposits
with or without interest, receive on special deposit money or bullion or foreign coin,
stocks, bonds, or other securities ; to buy and sell foreign and domestic exchange,
gold and silver bullion, foreign coins, bonds, stocks, bills of exchange, notes, and
other negotiable paper ; to lend money on percentage, security, or bonds, pledges of
bonds, or other negotiable securities • to take and receive security, by mortgage or
otherwise npon property, real and personal; to invest money for individuals or
corporations, and to act as Trustee for any purpose ; to do any business and
exercise any powers incident to the business of trust companies doing a banking
business.
FORM 35. — BARBERS.
To operate, maintain, and carry on business as barbers, and in connection there-
with to shave, shampoo, and massage customers and in connection therewith to carry
on a manicuring business. Also to maintain bootblacking and cigar stands and to
operate and maintain bathrooms.
FORM 36. — BARREL MANUFACTURE.
To manufacture, buy, sell, export, import, and generally deal in barrels and
barrel heads, hogsheads", and boxes made from wood or metal.
FORM 37. — BATHING ESTABLISHMENTS.
To erect, maintain, and operate bathing establishments for the purpose of giving
hot and cold baths, Turkish baths, vapor and shower baths, swimming pools and
medicinal baths of all classes and descriptions. Also to operate in connection there-
with massage parlors and sleeping rooms.
FORM 38. — BEDSTEADS.
To manufacture, buy, sell, export, import, aud generally deal in bedsteads of
every class and description. Also to manufacture, buy, sell, export, import, and
generally deal in springs, mattresses, rollers, slats, and all other appurtcuauces
pertaining to or connected with the manufacture of beds.
FORM 39. — BELTING.
To manufacture, buy, sell, export, import, and generally deal in all kinds of
belting for use in connection with machinery of all classes and descriptions.
FORM 40. — BINDING AND TAPES.
To manufacture, buy, sell, export, import, and generally deal in all kinds of
braids, bindings, and tapes of all kiuds and descriptions.
FORM 41. —BLACKSMITHS.
To carry on the business of blacksmiths, including the shoeing of horses and
mules; to manufacture torse shoes, and to carry on a general carriage repair,
wagon and farm implement repair business.
G19
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
FORM 42.— BLANK BOOKS.
To manufacture, buy, sell, export, import, and generally deal in blank books of
every class and description, including books of account, check books, ledgers,
journals, blotters, and office sundries of every class and description.
FORM 43. — BOILER MAKERS AND DEALERS.
To manufacture, buy, sell, export, import, and generally deal in boilers, furnaces,
steam and hot water fixtures and appurtenances of every class and description.
FORM 44. — BOOKS.
To carry on the business of booksellers, stationers, bookbinders, and engravers,
lithographers, publishers, and manufacturers of inks and all articles and things of
the same character as the foregoing or connected therewith.
FORM 45.— BOOKBINDERS.
To carry on in all its various branches the business of binding books, magazines,
and printed and written matter of every class and description.
FORM 46. — BOTTLE MANUFACTURERS.
To manufacture, buy, sell, export, import, and generally deal in bottles, glasses,
and glass ware of every class and description.
FORM 47. — BOWLING ALLEYS.
To operate and maintain bowling alleys, billiard rooms, and pool rooms.
FORM 48. — BRAIDING MACHINES.
To manufacture, buy, sell, export, import, and generally deal in braiding machines
for the manufacture of either whip lash or basket braid. Also to manufacture, buy,
sell, import, export, and generally deal in shoe strings, corset strings, fish lines,
gas or rubber hose, insulators for electric or other kinds of wiring, and braided
articles of every nature and description.
FORM 49. — BRANDIES.
To carry on the business of manufacturers, distillers, and dealers in brandies,
wines, and liquors of every class and description. To manufacture, buy, sell, export,
import, store, warehouse, and generally deal in brandies, wines, whiskey, malt liquors,
gin, spirits, and beverages of all kinds, and their products and by-products of every
nature whatsoever. To carry on the general business of distilling and rectifying
brandies, wines, whiskey, and liquor, and the blending of gins and whiskeys of all
classes and description, and generally deal in grain, sugar, molasses, and all liquors
used in connection with the operation of a distillery. To manufacture, buy, sell,
import, and export machinery for the manufacture, distillation, and rectification of
liquors of every class and description. To build, operate, and maintain warehouses,
bonded or otherwise, and to do a general warehouse business. To issue, register,
and certify warehouse receipts. To manufacture, buy, sell, and deal in ice.
FORM 50. — BRASS GOODS.
To manufacture, buy, sell, export, import, and generally deal in all kinds of
goods made from brass, copper, iron, or other metals.
FORM 51.— BREEDERS.
To carry on the business of breeding, raising, training, buying, selling, import-
ing, and exporting horses. To conduct any and all manner of business permitted
at fair and race courses, and in general to do any and all things in accordance
with law that may directly or indirectly be connected with the raising of horses.
To keep careful lists of the most celebrated horses of all noted breeds, and their
620
FORMS AND PRECEDENTS.
pedigree and distinguishing characteristics, and to publish from time to time every
kind of information on such subjects of interest to horsemen. To buy, sell, raise,
and handle live stock of all kinds and descriptions.
FORM 52. — BRIC-A-BRAC.
To buy, sell, export, import, and generally deal in bric-a-bracs, curios, and
antiques of every class and description.
FORM 53. — BRICK.
To manufacture for purposes of sale pressed brick, building brick, terra cotta,
tile, roofing, ritrilied, and other building materials which can be made from clay.
FORM 54.— BRIDGE BUILDERS.
To manufacture, sell, export, and generally deal in bridges and structural work.
To manufacture, buy, sell, export, and import steel, iron, tin, aluminum, and other
metals. Also to manufacture, buy, sell, export, and import engines, boilers, ma-
chinery, plates, apparatus, tools, appliances, and materials useful or convenient for
carrving on any of the several lines of business heretofore set forth.
FORM 55. — BRONZE.
To manufacture, buy, sell, export, import, and generally deal in bronzes of all
kinds, classes, and descriptions. Also to manufacture, prepare, buy, sell, export,
import, and generally d^al in silicon, aluminum, and all kinds of metals or metallic
compounds suitable and convenient to be used or commonly used by dealers in
bronzes.
FORM 56.— BROOMS.
To carry on the business of manufacturers and dealers in brooms of all classes
and descriptions; to manufacture, buy, sell, import, export, and generally deal in
brooms, broom corn, broom hangers, binding twine, binding wire, and all other
articles suitable for use in such manufacture; also to deal in such other goods,
wares, and merchandise as are usually manufactured or dealt in by manufacturers
and dealers in a similar line of business.
FORM 57. — BRUSHES.
To manufacture, buy, sell, export, import, and generally deal in hair brushes,
scrubbing brushes, nail brushes, electric brushes, brooms and dusters of all classes
and descriptions. Also to manufacture, buy, sell, export, import, and generally deal
in such other goods, wares, and merchandise as are commonly manufactured and
dealt in by those engaged in a similar line of business.
FORM 58. — BUILDING MATERIALS.
To manufacture, export, import, buy, sell, and generally deal in building
materials of every class and description.
FORM 59 — BUTCHERS.
To carry on the business of wholesale and retail dealers in meat and meat
{iroducts, and to operate in connection therewith slaughter-houses, stock yards, and
ive-stock farms and ranches; also to operate and maintain cold-storage ware-
houses, plants, and all buildings necessary or expedient for carrying on the aforesaid
uUSlIlGSS
FORM 60. — BUTTER, CHEESE, AND EGGS.
To buy, sell, export, import, and generally deal in butter, milk, cheese, eggs,
dairy and farm products of every class and description.
FORM 61. — BUTTONS.
To carry on the business of manufacturers and dealers in buttons of all kinds,
classes, and descriptions; to manufacture, buy, sell, import, export, and generally
621
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
deal in buttons and all products necessary or useful in the business of button manu-
facturing. To purchase or otherwise acquire letters patent of the United States or
of foreign countries, together with all extensions or renewals of the same, covering
the manufacture of buttons and button machinery ; also to buy, manufacture,
and keep in stock for purposes of sale such goods, wares, and merchandise as are
usually manufactured by and dealt in by manufacturers and dealers in a similar line
of business.
FORM 62. — CABINET MAKERS.
To carry on the business of furniture dealers and makers of cabinet goods of
every class and description.
FORM 63. — CANNED GOODS.
To raise, cultivate, can, buy, sell, export, import, and generally deal in fruits and
vegetables of every class and description. Also to can fish, poultry, and meats of
every kind.
FORM 64. — CAR BUILDERS.
To carry on the business of manufacturing, buying, leasing, or otherwise acquir-
ing, equipping, constructing, altering, repairing, maintaining, operating, and selling
steam, electric, or cable cars, and to manufacture, buy, lease, or otherwise acquire,
construct, alter, repair, and sell ail apparatus, appliances, devices, machinery, and
materials for use in operating, constructing, or maintaining steam, electric, or cable
cars, or used in constructing, operating, or maintaining any line of railway, steam, or
electric lines or otherwise, or the stations, terminals, or equipment thereof.
FORM 65. — CARBON ENGINES.
To manufacture, buy, sell, import, export, and deal in carbon engines and all
kinds of machinery, tools, and implements incidental to the development of new and
useful mechanical devices, and to obtain letters patent thereupon ; to acquire
letters patent, domestic or foreign, for the right to construct machines upon which
patents have already been issued and applied for.
FORM 66. —CARPENTERS AND BUILDERS.
To erect, construct, and repair houses, buildings, and structures of all classes
and descriptions. Also to carry on the trade of carpenters and builders.
FORM 67.— CARPETS.
To manufacture, buy, sell, export, import, and generally deal in carpets, rugs,
oil cloths, mattings, linoleums, and mats of all kinds and descriptions.
FORM 68. — CARRIAGES AND WAGON MANUFACTURERS.
To build, buy, sell, export, import, and generally deal in carriages, carts, drays,
wagons, and vehicles of every class and description.
FORM 69. — CASH REGISTERS.
To manufacture, buy, sell, export, import, and generally deal in cash registers,
check, slip, and automatic printing registers, autographic registers, weighing, adding,
calculating, and registering machines of all kinds, classes, and descriptions.
FORM 70. — CATERERS.
To carry on the business of caterers and in connection therewith to operate
delicatessen shops, restaurants, tea rooms, coffee rooms, and bakeries.
FORM 71. — CHEWING GUM.
To manufacture, buy, sell, export, import, and generally deal in chewing gums
of every class and description.
622
FORMS AND PRECEDENTS.
FORM 72. — CHINA, GLASS AND EARTHENWARE.
To manufacture, buy, sell, export, import, aud generally deal in china, porcelain,
glass, terra cotta, and earthenware of all classes aud descriptions.
FORM 73. — CHIROPODISTS.
To carry on the business of chiropodists and manicurists, and in connection
therewith to manufacture, export, import, and generally deal in chiropodists' and
manicurists' instruments of all kinds.
FORM 74. — CHOCOLATE AND COCOA MANUFACTURERS.
To manufacture, buy, sell, export, import, and generally deal in chocolates and
cocoas.
FORM 75. — CIGARS.
To carry on the business of manufacturers and dealers in cigars and tobacco.
To manufacture, buy, sell, exchange, import, export, aud generally deal in leaf
tobacco, chewing tobacco, cigars, cigarettes, and cheroots ; to plant, grow, and treat
leaf tobacco, and to manufacture, sell, lease, or otherwise acquire machinery, tools,
implements, and appliances incidental and necessary in the cultivation, care, and
treatment of leaf tobacco, or in the manufacture of cheroots, chewing and smoking
tobacco, cigars, and cigarettes. To build, operate, maintain, lease, or otherwise
acquire factories, warehouses, and buildings suitable for the caring, storing, prep-
aration, and manufacture of tobacco and its several products.
FORM 76. — CLOAKS AND SUITS.
To manufacture, buy, sell, export, import, and generally deal in cloaks and suits
of every class and description. To carry on generally the business of manufacturers
of cloaks and suits.
FORM 77. — CLOTH CLEANERS, FINISHERS, REFINISHERS,
PRESSERS, DYERS, AND DRYERS.
To carry on the business of cleaners, finishers, refinishers, pressers, dyers, and
dryers of cloths and clothing of every kind and description.
FORM 78. — COAL BRIQUETTE.
To manufacture, buy, sell, deal in, and deal with coal briquettes; to mine, buy,
sell, deal in, and deal with coal and other minerals, and to manufacture and sell
coke and its bv-products; to acquire by purchase, lease, or otherwise coal mines,
coal lands, coal properties, minerals and mining rights; to manufacture, purchase,
or otherwise acquire, hold, own, mortgage, lease, assign, transfer, invest, deal in
and deal with and trade in goods, wares, merchandise, and property of every class
and description.
FORM 79. - COAL & TRANSPORTATION COMPANY.
To mine, buy, sell, import, export, and generally deal in anthracite, bituminous,
and semi-bituminous coal; to act as agent and broker for coal and to make con-
tracts with coal companies with reference to handling and selling their coal and on
such terms as may be agreed upon. To buy, lease, build, and own sales-rooms,
storerooms, storehou aouses, docks, piers, and real estate necessary to the
carrying on of such business. To carry on the business of engaging, receiving,
transporting, and delivering coal and merchandise of all kinds upon freight or lor
hire between any port or ports of the Tinted Slates and au\ foreign port or ports;
or between any foreign port or ports and any port or ports of the United SI
to engage in the business of chartering vessels therefor and operate vessels in such
623
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
service. To act as agent for vessels employed in such service ; to contract and
arrange for the transportation of cargo to and from any of such ports by rail,
boat or otherwise from or to any inland or coastwise place or places. To build,
buv, sell, charter, equip, operate, and own steamships, steamboats, sailing ships,
coal barges, canal boats, and other property to be used in such business, trade,
commerce, and navigation.
FORM 80. — COFFEE.
To raise, cultivate, produce, export, import, treat, cure, ripen, polish, burn,
roast, brown, buy, sell, aud generally deal in coffees of every grade, character, and
description. To acquire by purchase, lease, or otherwise lands and properties suit-
able for planting and raising coffee plants. To buy, sell, and generally deal in
such other goods, wares, and merchandise as are usually dealt in by those engaged
in a similar line of business.
FORM 81. — COLD STORAGE.
To preserve in cold storage and generally deal in all kinds of food products of
a perishable nature or otherwise. To manufacture, buy, sell, and deal in ice. To
buy, sell, store, import, and export fruit, fish, butter, milk, and all kinds of food
products, whether animal or vegetable. To operate and maintain stores, buildings,
warehouses, depots, and wharves for the carrying on of any of the aforesaid lines of
business.
FORM 82. — COLLARS AND CUFFS.
To manufacture, buy, sell, export, import, and generally deal in collars, cuffs,
shirts, and other articles of- wearing apparel.
FORM 83. — COLLECTION AGENCY.
To maintain and conduct a general collection agency for the collection of debts,
and act as agent for creditors and other claimants in the collection and settlement of
debts and claims.
FORM 84. — COMMISSION MERCHANTS.
To engage in the business of selling goods, wares, and merchandise as commis-
sion merchants, and as general selling agents ; particularly to act as agents or
brokers for the selling upon commission or otherwise of the following classes of
property, to wit : (here insert description of property to be sold.)
FORM 85. — CONSTRUCTION COMPANY.
To manufacture, buy, sell, or otherwise acquire, import, export, and generally
deal in sheet iron, copper, tin, galvanized iron, cornices, skylights, smokestacks,
water, gas, and electric works, wharves, roads, reservoirs, canals, factories, ware-
houses, and mills ; to manufacture, buy, sell, import, export, and generally deal in
iron, steel, manganese, copper, and other materials or alloy thereof, coke, gas, coal,
lumber, and building materials or any article consisting or partly consisting of iron,
steel, copper, and other materials, and any products thereof.
FORM 86. — CONTRACTORS AND BUILDERS.
To construct, erect, equip, repair, and improve houses, buildings, public or pri-
vate roads, alleys, tramways, railways, reservoirs, irrigation ditches, wharves,
sewers, tunnels, conduits, and subways.
FORM 87. — COOPERAGE.
To manufacture, buy, sell, export, import, and generally deal in barrels, kegs,
>casks, staves, boxes, and cisterns.
(624
FORMS AND PRECEDENTS.
FORM 88. — COPPERSMITHS.
To carry on the business of coppersmiths, brass founders, aud manufacturers of
all articles made from copper, brass, iron, tin, or aluminum.
FORM 89. — CORNICES AND SKYLIGHTS.
To manufacture, buy, sell, import, export, and generally deal in cornices, ■wood-
work, skylights, and building materials and house furnishings of every class and
description.
FORM 90. — COSTUMERS.
To buy and sell costumes, masks, habits, armor, and theatrical goods of every
class and description. Also to carry on the general business of costumers and. deal-
ers in theatrical goods of every kind and description.
FORM 91. — COTTON BROKERS.
To carry on the business of buyiug, selling, and otherwise dealing in cotton, either
as principals or on commission.
FORM 92. — COTTON PLANTATIONS, ETC.
To manufacture from the cotton plant or other substances pulp, paper, chemi-
cals, and other material, and all or any articles consisting or partly consisting of
pulp, paper, chemicals, or other materials, and all or any products thereof. To
acquire, own, lease, occupy, use, improve, cultivate, or develop any cotton planta-
tions, wood lands, lands containing coal, iron, or other ores, or other lands for any
purpose of the company. To gather, remove, mine, or otherwise extract cotton
plants, timber, or other vegetation, coal, ores, or other minerals from any lands
owned, acquired, leased, or occupied by the company or from any other lands. To
buy and sell or otherwise to deal or to traffic in raw cotton, cotton plant, pulp,
paper or chemicals, wood, lumber, coal, iron, ores and other materials, and any
of the products thereof and any articles consisting or partly consisting thereof. To
purchase, hire, make, construct, or otherwise acquire, provide, maintain, equip, alter,
erect, improve, repair, manage, and work any private roads, private telegraph and
telephone lines, bridges, piers, wharves, wells, reservoirs, flumes, watercourses, water
works, aqueducts, shafts, tunnels, furnaces, coke ovens, crushing works, gas works,
electric light and power plants, compressed-air plants, chemical works of all kinds,
concentrators, smelters, smelting plants and refineries, matting plants, warehouses,
workshops, factories, dwelling houses, stores, hotels, or other buildings, engines,
machinery, implements and other works, conveniences and properties of any de-
scription iu connection with or which may seem directly or indirectly conducive to
any of the objects of the company, and to contribute to, subsidize, or otherwise aid
or'take part in any such operations. To charter, hire, build, or otherwise acquire
and maintain steamships and other vessels of any description, and private steam,
compressed air, gravity, or electric railroads and tramways, and to employ the
same in the transportation of the company's raw material, products, and supplies.
To buy, sell, manufacture, and deal in machinery, implements, conveniences, pre
visions, aud things capable of being used in connection with manufacturing opera-
tions or any of the business of the company or required by workmen and others
employed by the company. To buy, sell, hold, manage, lease, turn to account, and
otherwise acquire land and freehold estates and interests therein ; and to lay off
realty into lots and blocks, street alleys and parks, and to dedicate such portion
thereof to the public as the company may think proper.
FORM 93. — CUSTOM HOUSE BROKERAGE.
To carry on the business of custom house brokers in the city of and
elsewhere, and in connection therewith and as auxiliary thereto to act as marine
and fire insurance brokers.
FORM 94. — CUTLERY.
To manufacture, buy, sell, lease, export, import, and generally deal iu cutlery,
razors, tools, and machinery of all kinds, classes, and descriptions.
625
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
FORM 95. — DELICATESSEN.
To carry on a general restaurant and delicatessen business. Also in connection
therewith to operate bakeries, ice cream saloons, and cigar stands, and to do a general
catering business.
FORM 96. — DENTAL SUPPLIES.
To manufacture, buy, sell, export, import, and generally deal in dentists' chairs,
files, saws, gold, silver, amalgam, and other dental accessories.
FORM 97. — DESIGNERS.
To engage in business as designers, pattern makers, manufacturers of blue
prints, and to carry on a general drafting business.
FORM 98. — DIAMONDS AND PRECIOUS STONES.
To export, import, buy, sell, and generally deal in diamonds, emeralds, pearls,
rubies, opals, amethysts, bloodstones, and all precious stones. Also to carry on a
general jewelry business and watchmakers' business in connection therewith.
FORM 99. — DISTILLERS.
To manufacture, distil, and rectify whiskeys, brandies, and spirituous liquors of
every class and description. Also to carry on the business of distiller and dealer
in whiskeys and brandies of every class and description.
FORM 100. — DOCK COMPANY.
To construct, erect, and maintain docks, elevators, piers, basins, loading and
unloading machines, coal-yards and all kinds of terminal and transfer facilities for
railway or water transportation. Also, to engage in freighting, lighterage, wharfage,
and warehousing business. Also, to load and unload cars and vessels of all kinds
and descriptions. Also, to purchase docking and berthing facilities for steam and
sailing vessels of all kinds and descriptions.
FORM 101. — DREDGING.
To carry on the business of dredging in all its various branches ; to buy, sell,
manufacture, purchase, lease, or otherwise acquire, own, maintain, and operate
docks, scows, lighters, derricks, vessels — steam or otherwise — engines,_ cars,
wagons, tools, and personal property of every class and description convenient or
necessary in carrying on the business of dredging.
FORM 102. — DRESSMAKING.
To design, cut, make up, and fit dresses, gowns, coats, suits, and all other
articles of feminine apparel, and in connection therewith to carry on a general
dressmaking and tailoring establishment.
FORM 103. — DRILLING.
To prospect, bore, drill for, and produce oil and natural gas; to purchase,
lease, or otherwise acquire lands believed to contain oil and gas, and to erect and
maintain thereon pumping and drilling stations, reservoirs, tanks, pipe lines, and
other facilities and conveniences that may be necessary or required in and about
said business.
FORM 104. — DRUGS.
To manufacture, buy, sell, import, export, and generally deal in all kinds of
drugs, druggists' sundries, pharmaceutical, medicinal, chemical, and all other prepa-
rations; to manufacture, buy, sell, import, export, and generally deal in compounds,
pigments, electrical, medicinal, surgical, and scientific apparatus and proprietary
articles of all kinds. To maintain a laboratory for the analysis of all kinds of
chemical, animal, and vegetable products.
626
FORMS AXD PRECEDENTS.
FORM 105. — ELECTRIC GENERATING MACHINERY.
To manufacture, construct, purchase, or otherwise acquire, deal in, sell, hire-
lease, use, repair, operate, and maintain electric generating machinery and apparatus?
dynamos, motors, meters, electric engines, accumulators, and any and all parts,
devices, instruments, and things adapted to be used in the construction of or upon
or in connection with or in the operation of such electric generating machinery
and apparatus, dynamos, motors, meters, electric engines, and accumulators, and
also all apparatus, machinery, engines, tools, devices, and appliances for generating
or producing, accumulating, distributing, and using electricity for any purpose, and
also all parts, attachments, devices, instruments, articles, and things to be used there-
with or in the construction and operation thereof. To construct, purchase, or other-
wise acquire, deal in, sell, hire, lease, use, repair, operate, and maintain electric
light plants, etc.
FORM 106.— ELEVATORS (GRAIN).
To erect, buy, sell, lease, or otherwise acquire and maintain and operate eleva-
tors for the storage of grains and cereals of every kind and description. To build,
operate, and maintain warehouses aud to do a general warehouse business ; to issue,
register, and certify warehouse receipts. To manufacture, buy, sell, and deal in ice.
FORM 107. —ELEVATORS (PASSENGER).
To manufacture, buy, sell, lease, or otherwise, acquire, import, export, equip,
maintain, and operate elevators and hoisting machinery of every class and descrip-
tion, whether propelled by electricity, air, power, steam, or otherwise.
FORM 108. — EMBROIDERIES.
To design and embroider dresses, coats, table linens, bed linen, and ladies' wear
of all kinds and descriptions, aud in couuection therewith to deal in sewing silks,
embroidery silks, fancy laces, and scissors, pins, needles, and other articles neces-
sary or useful in said business.
FORM 109. — EMPLOYMENT AGENCIES.
To secure employments for adults of both sexes, and in connection therewith to
carry on a general employment bureau.
FORM 110. — ENGINEERING AND DREDGING COMPANY.
To carry on a general dredging, contracting, and engineering business in all
of their branches ; also to design, construct, enlarge, extend, repair, complete,
take down and remove, or otherwise engage in any work upon bridges, piers,
docks, foundations, mines, shafts, tunnels, wells, waterworks, lighthouses, build-
ings, railroads, telegraph and telephone lines, canals and all kinds of excavations,
and iron, wood, masonry, and earth constructions in all parts of the world, and
to make, execute, and take or receive any contracts or assignments of contracts,
therefor or relating thereto or connected therewith.
To engage in the business of manufacturing, buying, selling, and dealing in
cranes for lifting, hoisting, dredging, and conveying materials of all kinds, and in
conveying machinery, hoisting machinery, and coal-handling machinery of every
description, and in hydraulic, electric, pneumatic, and power machinery of everj
description, and in steam hammers, charging machines, drilling, concentrati
milling, and mining machines, ingot extractors and foundry plants, and in all kinds
of fittings, tools, supplies, and apparatus pertaining thereto: or for any other pur-
pose winch now is or may be incidental or necessary for a general contracting or
engineering business.
To manufacture or purchase, or both, all fools, machinery, and appliances neces-
sary, proper, or convenient for the carrying on of the said manufactures.
To manufacture, buy, sell, and generally deal in iron, steel, and other metals,
and any and all the products thereof.
To quarry, mine, cut, saw, finish, prepare for market, buy, sell, and deal in min-
62?
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
erals and mineral substances of all kinds ; to buy, lease, or otherwise acquire, use,
build, sell, lease, or otherwise dispose of lauds or any interest thereon ; to build,
maintain, own, lease, and operate roads, railroads, or bridges (together with rights
of way for the same), canal boats, steamboats, and other means and mechanism of
transportation ; reservoirs, dams, watercourses, aqueducts, wharves, mills, hydraulic
works, power and lighting plants, equipment works, factories, warehouses, dwell-
ing houses, and other works which may be necessary or convenient to the carrying
out of the objects of the company.
To purchase and otherwise acquire, and to operate, maintain, and dispose of the
mills, plants, aud business of individuals, corporations, and firms in any business
similar to the business of this company or allied therewith.
To purchase or otherwise acquire, sell, dispose of, aud deal in real and personal
property of all kinds, and in particular lands, buildings, business concerns and un-
dertakings, mortgages, shares, book debts and claims, and any interest in real or
personal property, and any claims against such property or against any person
or company, and to carry on any business, concern, or undertaking so acquired.
To enter into, make, perform, aud carry out contracts of every kind and for any
lawful purpose with any person, firm, association, or corporation.
FORM 111.— EXPLOSIVES.
To manufacture, buy, sell, export, import, and generally deal in blasts, sporting
powder, and high explosives of every class, nature, and description. To manufac-
ture, buy, sell, export, import, and generally deal in machinery, supplies, tools, and
appliances, necessary, proper, or convenient for the carrying on of the above
described lines of business.
FORM 112. — EXPRESS.
To carry on the business of engaging, receiving, transporting, and delivering
merchandise upon freight, or for hire, within the corporate limits of any city, town,
or village in the United States, or between any cities, towns, or villages in the
United States, or between any port of the United States and any port or ports of
the United States, or between any foreign port or ports and any port or ports of the
United States. To carry on the business of equipping, maintaining, and operating
wagons, drays, cars, and vessels of every class and description for the carrying on
of the business hereinbefore provided for. To enter into contracts for the trans-
portation of merchandise between any of the localities hereinbefore mentioned, and
to enter into contracts for the carriage of mails, passengers, goods, wares, and
merchandise by any means, either by its own vessels, railways, or conveyances, or
by the vessels, railways, or conveyances of others. To carry on a general express,
freight, aud transportation business ; to gather, receive, distribute, and deliver
goods, wares, and merchandise of every class and description. To establish stores
and warehouses for receiving and delivering packages and circular matter.
FORM 113. — EXTRACTING COMPANY.
To mine and extract gold, silver, and other pi-ecious metals from places and
lodes or other mineral lands in any part of the United States, aud in any and all
foreign countries, and to this end to purchase, lease, or otherwise acquire, hold,
own, mortgage, sell, operate, and control mining property, and all necessary plants
and machinery adapted for the purposes of mining and extracting gold, silver, and
precious metals.
FORM 114. — FANCY GLASS.
To manufacture, buy, sell, export, import, and generally deal in stained glass,
transparent vault and sidewalk lights, hail-proof glass for greenhouses, skylights,
and ornamental stained glass of all kinds and descriptions.
FORM 115. — FANCY GOODS AND NOTIONS.
To buy, sell, export, import, and generally deal in fancy goods of all kinds and
descriptions, laces, trimmings, lingerie robes, dry goods, and notions of all kinds
aud descriptions.
628
FORMS AND PRECEDENTS.
FORM 116. — FARM PRODUCTS, SOUTHERN.
To produce, manufacture, refine, buy, sell, import, export, and generally deal
in cotton, sugar cane, sugar, molasses, syrups, and tobacco in all forms, and other
products of agriculture or industry.
FORM 117. — FINANCIAL AGENTS.;
To act as financial agents for governments, corporations, firms, and individuals
for the purpose of buying and selling bonds, stocks, mortgages, and debentures,
and for the purpose of raising funds to carry on business of every nature and
description.
FORM 118. — FIREPROOFING.
To manufacture, buy, sell, import, export, and generally deal in fireproofing
brick and building material of every kind, nature, and description. Also to manu-
facture, buy, sell, import, export, and generally deal in building material and appli-
ances for the construction of fireproof buildings and the protection of the same
from fire.
FORM 119. — FIREWORKS.
To manufacture, buy, sell, export, import, and generally deal in fireworks, fire
crackers, torpedoes, gunpowder, and pyrotechnics of every class and description.
FORM 120. — FISHERIES.
To engage in the business of producing, selling, exporting, importing, and deal-
ing in fish and sea products, nets, lines, and seines, and all kinds of appliances for
the catching or preserving of fish. Also, to engage in the business of catching,
storing, freezing, packing, salting, canning, and otherwise preserving fish. Also to
engage in the business of propagating fish and maintaining ponds for that purpose ;
to construct, purchase, lease, or otherwise acquire, maintain, and operate cold-
storage and refrigerator plants and refrigerating cars, and to do a general warehouse
and storage business, and in connection therewith to issue registered^ certified, and
guaranteed warehouse receipts.
FORM 121. — FLORISTS.
To cultivate, raise, buy, sell, export, import, and generally deal in flowers,
plants, shrubs, trees, and bushes of every class and description. Also, in connec-
tion therewith to maintain and operate hot beds, greenhouses, and nurseries.
FORM 122. — FOOD PRODUCTS.
To produce, manufacture, buy, sell, import, export, and generally deal in food
and cereal products of all classes and description. Also to can, export, import, and
sell, meats, fish, vegetables, and fruits of all kinds and descriptions.
FORM 123. — FOREIGN COMMERCIAL COMPANY.
This corporation is formed for the carrying on, in any foreign countries, of the
several lines of business herein described. To purchase, sell, exchange, lease, or
otherwise acquire real or personal property, and in particular lands, oil wells, refin-
eries, mines, mining rights, minerals, ores, buildings, machinery, plants, stores,
licenses, concessions, rights ef way, light or water rights, and any rights or privi-
leges which may seem to the directors convenient with reference to the business of
the company, and whether for the purpose of resale, realization, or otherwise, to
manage, develop, lease, mortgage, or otherwise deal with the whole or any part of
such property or rights. To prospect, explore, develop, maintain, and carry on all
or any lands, wells, mines, or mining rights, minerals, ores, works, or other prop-
erties from time to time iii the possession of the < many in any number deemed
desirable; to erect all accessary or convenient refineries, mills, works, machinery,
laboratories, workshops, dwelling-houses for workmen and others, and other build-
ings, works, and appliances, and to aid or subscribe towards or subsidize any such
629
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
objects. To clear, plat for town-site purposes, manage, farm, cultivate, plant, and.
otherwise exploit, work, or improve any land which or any interest in which may
belong to the company ; and to deal with or otherwise turn to account any farm
or other products of any such land. To construct, purchase, lease, or otherwise
acquire, maintain, and operate private railways, tramways, wagon roads, private
telegraph and telephone lines. To carry on busiuess as merchants, shipowners,
builders, or contractors ; to acquire by grant, purchase, or otherwise concessions of
any property or privileges from any government or from any authority, individual,
municipal, or otherwise, and to perform and fulfil the conditions thereof. To carry
on, iu all its branches, any kind of manufacturing and trading business. To buy,
sell, and deal in generally all kinds of manufactured products. To acquire by pur-
chase or otherwise, under franchise or grant, all or any rights or privileges here-
tofore granted or hereafter to be granted by any country, state, or city, foreign
or domestic.
To generally trade in, store, carry, and transport all kinds of goods, wares, mer-
chandise, provisious, and supplies. To acquire by purchase or otherwise, to own,
hold, buy, sell, or convey, lease, mortgage, or encumber real estate or other prop-
erty, persoual and mixed. To erect and construct houses, buildings, warehouses,
and works of every description on any land of the company acquired by purchase,
lease, or otherwise.
To buy, sell, or otherwise acquire, import, export, and generally deal in all
kinds of agricultural machinery ; without the State of , to acquire, construct,
maintain, own, and operate water works, and to supply municipalities, corpora-
tions, and individuals with water and water power; also to acquire, erect, maintain,
and construct any and all necessary dams, buildings, plants, machinery, fixtures, and
apparatus of every sort for supplying municipalities, corporations, and individuals
with water and water power for all purposes, and to carry on any business inci-
dental thereto, including the purpose of acquiring, constructing, maintaining, and
operating water works, pumping stations, and conduits thereto appertaining without
the State of , and in any foreign country, State, or municipality ; also to
supply the citizens and inhabitants thereof and the corporations located and trans-
acting business therein with water and water power for domestic, mechanical, public,
and fire or irrigation purposes, with power to acquire, hold, lease, and convey real
and personal estate for the business of the corporation, and to acquire, hold, own,
possess, and convey franchises and grants from foreign governmental, State, or
municipal authorities for supplying cities, villages, and towns or either, and the in-
habitants thereof with water for all purposes ; also to carry on the business of
operating water works, and to acquire and own stock and bonds of other corpora-
tions organized for like purposes, and to acquire, own, hold, and possess all such
other personal property as may be suitable or convenient for the business of the
company, with the right to issue bonds and secure the same by mortgage of
the franchises, rights, contracts, and property of the corporation, real and per-
sonal, and to issue common or preferred stock, and to do all and everything
necessary, suitable, or proper for the accomplishment of any of the purposes or
the attainment of any of the objects hereinbefore enumerated which shall at any
time appear for the benefit of the corporation ; and in general to carry on any
other business, whether manufacturing or otherwise, which may seem to the cor-
poration capable of being conveniently carried on in connection with the above or
calculated to enhance the value or render profitable any of the corporation's prop-
erty or rights.
Without the State of and in any foreign country, State, or municipality
to acquire water by grant, purchase, development, or otherwise, and in connection
therewith to furnish and sell water to corporations, public and private manufac-
tories, and individuals for fire protection, manufacturing, domestic and irrigation
purposes, and to collect payments or rentals for the same.
To exercise without the State of and within any foreign country, State,
or municipality, the right of eminent domain, and in the lawful exercise thereof to
condemn for use by said company, its successors or assigns, lands, tenements,
hereditaments, and watercourses for the purpose of constructing thereon artificial
water ways, irrigation and canal ditches, aqueducts, dams, reservoirs, tanks, stand-
630
FORMS AND PRECEDENTS.
pipes, pumping stations, pumping houses, water works, hydrants, mains, pipe lines,
gates, and valves.
In connection with the power to exercise the right of eminent domain as here-
inbefore provided, said lands, tenements, hereditaments, and watercourses shall,
subject to the consent and approval of the State, country, or municipality wherein
the said right of eminent domain shall be exercised, be condemned and its value
assessed by a board of commissioners appointed by said foreign country, State, or
municipality acting jointly with a like commission appointed by the board of di-
rectors of tins company. In case the two commissions cannot tor any reason agree,
an arbitrator shall be appointed by the mutual consent of such foreign State, coun-
try, or municipality and by the company, whose decision shall be final and conclusive
upon both parties to the arbitration.
Without the State of , subject to the approval and consent of the gov-
ernment, State, or municipality wherein the rights hereinbefore provided shall be
exercised, the company shall have the right to make such rules and regulations
governing the distribution of water and fixing the prices for water distribution as
shall be deemed by it from time to time necessary and proper in the premises ; such
rules when filed with the proper authorities of the State, county, or municipality to
become law.
Without the State of and subject to the approval and consent of the
government, State, or municipality wherein the rights hereinbefore provided for shall
be exercised, the company shall have the right to make such rules and regulations
for the collection of debts due the company from corporations, public or private,
and from individuals when the same shall have been incurred for water furnished
by said company to any such corporation or individual for the use and benefit of
real estate owned or leased by them; such rules to provide, by and with the consent
of the State, government, or municipality, that the same shall be and become a first
hen against such real estate just above referred to.
Without the State of said Company shall have the power and in any
foreign country, State, or municipahty wherein it installs water works to accept
such guaranties from foreign municipalities as to the water of such consumption
municipalities as the company shall require in the premises.
The company shall have the right to accept subsidies from foreign governments,
States, or municipalities, and shall have the right to organize sub-companies for any
purpose or purposes authorized by law. The said company shall have the right
without the State of and without the United States and in any foreign coun-
try, by and with the consent of the government of said country, to import all materi-
als used in the construction of plants erected by it, and to import the same free
from all governmental dues and tariffs of said foreign country, provided said materi-
als cannot be purchased therein at prices offered in other countries.
The company shall have the right to sell, assign, and transfer to any corporation
or individual any or all of its property upon the consent of two-thirds of its stock-
holders first obtained at a meeting duly called for that purpose, said sale, assignment,
and transfer to include, if the company so elect, any right, grant, franchise, and
privilege at any time bestowed upon said company by any government, State, or
municipality, foreign or domestic.
FORM 124. — FRUIT COMPANY.
To buy, sell, import, export, and generally deal in fruits and fruit products.
To buy, sell, lease, or otherwise acquire, mortgage, sell, or otherwise dispose
of real estate to any amount not limited by law. To engage in the cultivation,
planting, and production of fruits and agricultural products. To prepare and
manufacture fruit and vegetable products and kindred goods of every class
and description.
FORM 125. — FRUITS (TROPICAL).
To plant, cultivate, grow, buy, sell, export, import, and generally deal in bananas
oranges, pineapples, mangoes, guava, grapes, limes, olives, dates, figs, pecans, and
all kinds of tropical fruits, plants, and nuts.
G31
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
FORM 126.— FUEL-SAVING MACHINES.
To manufacture, buy, sell, lease, or otherwise acquire and generally deal in
smoke-preventing and fuel-saving mechanical and electrical apparatus and devices.
FORM 127. — FURNITURE.
To manufacture, prepare, produce, sell, import, export, lease, and generally deal
in furniture for domestic and business uses. Also to buy, sell, import, export, and
generally deal in furnishings of every class and description.
FORM 128. — FURRIERS.
To buy, sell, export, import, and generally deal in both natural and artificial furs
of all kinds and descriptions. Also to buy and sell coats, robes, and rugs and all kinds
of winter wearing apparel.
FORM 129. —GARBAGE MACHINERY.
To manufacture, buy, sell, import, export, and generally deal in street cleaning,
garbage, snow removal wagons and carts, and all kinds of machinery, apparatus, and
appliances connected with the cleaning of streets, walks, areas, platforms, the
sprinkling of streets, and the removal of garbage.
FORM 130. — GAS.
To manufacture, store, sell, distribute, and supply gas, and to operate a gas
plant at • Also to construct works for holding, receiving, and distributing
gas. Also to manufacture, buy, sell, export, import, and generally deal in gas
meters, pipes, stoves, burners, engines, and other appliances and conveniences
necessary for the business of the company.
FORM 131. — GINNERIES.
To erect, maintain, purchase, or otherwise acquire, operate, and maintain cotton-
seed oil mills and ginneries. Also, in connection therewith, to produce cotton-seed
oil. To buy and sell cotton seed; to manufacture, buy, sell, export, import, and
generally deal in cotton-seed oil, and the products and by-products of cotton seed.
Also to manipulate and compound cotton-seed oil, with other substances, so as to
make fertilizers to be sold for fertilizing land. Also to gin and compress cotton
into bales for marketing purposes or otherwise.
FORM 132. — GLASS.
To manufacture, export, import, and generally deal in window, plate,' and colored
glass of all kinds and descriptions. Also to manufacture, buy, sell, export, import,
and generally deal in table glass ware, vases, and glass ware of all kinds and descrip-
tions. Also to manufacture, buy, and import such crude materials as are necessary
or convenient for the manufacture of glass or glass ware.
FORM 133. —GLOVES AND MITTENS.
To manufacture, buy, sell, export, import, and generally deal in kid gloves, cotton
gloves, silk gloves, mits and mittens of every kind and description.
FORM 134. — GOLD AND SILVER WARE.
To manufacture, buy, sell, export, import, and generally deal in gold and silver
ware, both solid and plated, of all classes and descriptions. Also to manufacture,
buy, sell, export, import, and generally deal in novelties, glass ware, and fine cut-
lery, leather goods, and carved goods of all classes and descriptions.
FORM 135. — GRANITE.
To quarry, prepare, finish, manufacture, buy, sell, export, import, and generally
deal in granite, marble, building and pavement stone of every class and description.
632
FORMS AND PRECEDENTS.
FORM 136. — GRAPHITE.
To manufacture, purify, prepare, export, import, buy, sell, and generally deal in
graphite and carbon of all classes and descriptions. Also to engage in the business
of manufacturing, buying, selling, exporting, and generally dealing in paints, elec-
trotyping, and kindred lines of business.
FORM 137. — GROCERS.
To carry on the business of retail and wholesale grocers, and to operate in con-
nection with the same a meat market and coal storage establishments.
FORM 138. — HAIR GOODS, HAIR IMPORTERS, AND
HAIR DRESSERS.
To manufacture, buy, sell, export, import, and generally deal in both natural and
artificial hair and hair goods of every class and description. Also in connection
therewith to carry on the business of hair dressers.
FORM 139. — HARNESS AND SADDLERY.
To manufacture, buy, sell, export, import, and generally deal in harnesses,
saddles, and leather goods of all kinds and descriptions.
FORM 140. — HAT AND CAP MANUFACTURERS.
To manufacture, buy, sell, export, import, aud generally deal in hats, caps, head-
gear of all kinds and descriptions.
FORM 141. — HEATING.
To manufacture, buy, sell, export, import, and generally deal in apparatus for
heating buildings and houses by gas, electricity, steam, or furnace.
FORM 142. — HOSIERY AND UNDERWEAR.
To manufacture, buy, sell, export, import, and generally deal in men's and
women's hosiery and underwear of all kinds and descriptions.
FORM 143. — HOUSE FURNISHERS.
To manufacture, buy, sell, export, import, and generally deal in furniture, car-
pets, rugs, curtains and kitchen utensils, china, silver ware, glass ware, refrigerators,
and all kinds of household furniture.
FORM 144. — ICE.
To manufacture, sell, buy, export, import, and generally deal in machinery,
tools, and devices of every character and description for the cutting or manufacture
of ice. To purchase chemicals for the manufacture of artificial ice. To erect, build,
purchase, lease, or otherwise acquire suitable laud and plants for the manufacture
and storage of ice. To engage in the business of wholesaling aud retailing ice to
middlemen and consumers.
FORM 145. — INSPECTION OF ELEVATORS.
To engage in the business of inspecting and repairing freight and passenger ele-
vators in office buildings, business blocks, stores, warehouses, hotels, and apartment
houses, for the protection of the owners or lessees or for insurance companies en-
gaged in the business of guaranteeing owners or their lessees against accidents in
the operation of such freight and passenger elevators.
FORM 146.- INSURANCE.
To carry on the general business of insurers of persons and property, including
thereunder the transaction of a general life, fire, marine, casualty, plate glass, bur-
glary, and guaranty insurance business.
633
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
FORM 147. —IRON AND STEEL.
To purchase, lease, or otherwise acquire lands in any part of the world for the
purpose of prospecting for iron, coal, and other ores. To mine or otherwise to re-
move from such lands iron, coal, and such other minerals as may be found thereon.
To manufacture, buy, sell, export, import, and generally deal in iron, steel, manga-
nese, coke, and coal. To sell and generally deal at wholesale and retail, in iron,
steel, manganese, coal, coke, stone, asphaltum, wood, lumber, and other materials,
and the products thereof.
FORM 148. — JEWELLERS.
To manufacture, buy, sell, export, import, and generally deal in jewelry, precious
stones, watches, clocks, silver and gold ware, and enamel goods of every class and
description.
FORM 149. — KNIT GOODS.
To manufacture, buy, sell, export, import, and generally deal in sweaters, caps,
leggings, gloves, mittens, shawls, and knit goods of every kind and description.
FORM 150. — LACES AND EMBROIDERIES.
To manufacture, buy, sell, export, import, and generally deal in domestic and
imported laces and embroideries of all kinds.
FORM 151. — LAMPS.
To manufacture, buy, sell, import, export, and generally deal in kerosene, elec-
tric, and gas lamps, burners, and fixtures, and devices of all kinds and descriptions.
FORM 152. — LAUNDRY.
To build, erect, purchase, lease, equip, or otherwise acquire a suitable plant for
the purpose of carrying on a general steam and hand laundry business. Also to
launder, color, dye, disinfect, mend, clean, renovate, and prepare for use personal
wearing apparel, household linen, curtains, clothing, carpets, rugs, and fabrics of
all kinds.
FORM 153. — LEAD COMPANY.
To purchase, lease, or otherwise acquire, to own, develop, and sell lands be-
lieved to contain lead and other minerals ; also to construct, operate, and carry on
works for smelting, parting, refining, or working lead or other metals.
FORM 154. — LEATHER.
To manufacture, purchase, export, import, sell, and generally deal in leather
and all products thereof; also to buy and sell lands, timber, bark, lumber, and
leather, both raw and manufactured, and all kinds of leather belting.
FORM 155. — LIGHTERAGE.
To operate and maintain vessels, sloops, barges, dredging machines, tugs,
steamers, and' hoisting machinery necessary for the carrying on of a lighterage
business.
FORM 156. — LIME AND PLASTER.
To manufacture, buy, sell, export, import, and generally deal in Ume, plaster,
cement, stone, and all kinds of building materials and supplies.
FORM 157.— LITHOGRAPHERS.
To carry on the business of lithographers, printers, electrotypers, and engravers.
FORM 158. — LIVERIES.
To maintain stables for the care of horses, mules, carriages, and vehicles of all
kinds and descriptions. Also to maintain in connection therewith an auto garage-
634
FORMS AND PRECEDENTS.
FORM 159. — LOCOMOBILES.
To manufacture, construct, purchase, or otherwise acquire, deal in, sell, hire,
lease, use, repair, operate, and maintain automobiles, locomobiles, autocycles, and
motor vehicles, wagons, carriages, and stages of every kind and character whatso-
ever; also all parts, devices, and instruments, appliances, engines, machinery, and
things adapted for use in the construction of, upon, or in connection with or in the
operation of such automobiles, locomobiles, autocycles, wagons, carriages, stages,
and motor vehicles of every kind and character whatsoever ; also generating and
propelling apparatus, motive power and machinery therefor.
FORM 160. — LUMBER AND NURSERY.
To purchase, lease, or otherwise acquire real or personal property of every class
and description ; to raise, produce, buy, sell, exchange, and deal in trees, plants,
shrubs, cereals, and any and all kinds of vegetable products. To do a general
nursery business. To grow and produce trees and timber suitable for manufacture
into lumber. To manufacture lumber, shingles, laths, staves, boxes, and barrels.
To buy, lease, or otherwise acquire, maintain, and operate saw-mills and lumber
yards.
FORM 161.— MACHINISTS.
To repair, construct, alter, and build machines and machinery of every kind and
description.
FORM 162. — MAGAZINES.
To prepare for publication, print, electrotype, bind, sell, and distribute maga-
zines, newspapers, books, and publications of every class and description, and to
engage generally in the business of job and book printers, bookbinders, engravers,
and electrotypers.
FORM 163.— MANGANESE, ETC.
To carry on the business of mining, milling, concentrating, converting, smelting,
treating, preparing for market, manufacturing, buying, selling, exchanging, and
otherwise producing and dealing in manganese, copper, lead, zinc, brass, iron, steel,
and in all kinds of ores, metals, and minerals, and in the products and by-products
thereof of every kind and description ; and by whatsoever process tin; same can be
or mav hereafter be produced, and generally and without limit as to amount, to buy,
sell, exchange, lease, acquire, and deal in lands, mines, and mineral rights and
claims, and in the above specified products, and to conduct all business appurtenant
thereto.
FORM 164. — MANUFACTURERS' AGENTS.
To act as manufacturers' agents for corporations, firms, individuals engaged in
the manufacture of any kind of goods, wares, and merchandise.
FORM 165.— MARBLE DEALERS.
To manufacture, buy, sell, export, import, and generally deal in marble, onyx,
granite, and building and monumental stone of every character and description.
Also to deal in statuary, antiques, bronzes, and other articles of a similar character.
FORM 166. — MASONS AND BUILDERS.
To carrv on a general masonry and contractors' business. Also to repair, con-
struct, fit, and operate buildings, houses, and structures of every character and
description.
FORM 167. —MECHANICAL ENGINEERS.
To carry on the business of mechanical engineers in all its various branches ; also
to manufacture engines, dynamos, implements, rolling-stock, and hardware of all
kinds; also to engage in business as tool makers, brass founders, mill workers,
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
boiler makers, millwrights, machinists, manufacturers of iron and steel compressors,
merchants, electrical, civil, and water-supply engineers.
FORM 168. — MEDICAL COLLEGE.
To build, construct, buy, lease, or otherwise acquire, equip, maintain, and con-
duct a college for the purpose of giving instruction and courses of study in medi-
cine, materia medica, clinics, therapeutics, surgery, and pathology, and in connection
with' the foregoing to maintain clinics, dispensaries, and hospitals ; to issue to those
who have pursued such courses of instruction therein as entitle them to the same,
and to such as have duly completed such courses, the degree of Doctor of Medi-
cine (M.D.). Also the granting of diplomas to those who have not completed the
courses necessary to obtain the degree of " Doctor of Medicine," showing the com-
pletion of such work as they may have successfully completed while in the institution.
FORM 169. — MEDICAL INSTITUTE.
To build, equip, maintain, and operate institutions for the treatment and care
of the sick, young, and infirm. To furnish massage and electrical treatment of all
kinds ; to furnish baths of all kinds and descriptions ; to operate dispensaries, chem-
ical and physical laboratories ; to furnish instruction in osteopathy, massage, medical
electricity, chiropody, dermatology, and manicuring.
FORM 170. — MICA.
To purchase, lease, or otherwise acquire lands suitable for mining purposes, and
to equip, work, excavate, develop, and mine the same ; to mine, quarry, smelt, refine,
dress, amalgamate, aud prepare for market mica, nickel, and talc ores. To manu-
facture, buy, sell, import, export, and generally deal in plants, machinery, imple-
ments, and conveniences required in connection with the mining, quarrying,
smelting, refining, dressing, and amalgamating of mica, nickel, and talc ores.
FORM 171. —MINING. (Limited powers.)
To prospect for, locate, acquire by discovery, lease, license, option, purchase,
franchise, grant, gift, devise, or otherwise, hold, possess, enjoy, develop, mine, work,
' operate, and exploit mines, mineral lands and claims, mining rights, metalliferous
lands and rights in or elsewhere. Also to carry on the business in all its various
branches of mining for gold, silver, tin, lead, iron, and coal.
FORM 172. — MINING. (Full powers.)
(To the objects set forth in form 171 add the following :)
To construct, purchase, or otherwise acquire, maintain, and operate tunnels,
sluices, reservoirs, and ditches for mining, irrigation, and transportation purposes.
Also to purchase, lease, or otherwise acquire lands, mills, mill sites, tunnel sites,
buildings, machinery, power houses, dumping plants, pump machinery, pump rights,
ditch rights, flumes, pipes, pipe lines, private railways, private tramways, private
roads, easements, franchises, and licenses. Also to purchase, construct, lease, or
otherwise acquire, operate, aud maintain electric lighting and power plants, buildings,
machinery, appliances, and equipments appertaining thereto. To purchase, construct,
lease, or otherwise acquire, operate, and maintain telegraph and telephone lines for
the transmission of messages and sound by electricity. To furnish gas, water, elec-
tricity, power, heat, and light for mining, milling, agricultural, domestic, and other
uses aud purposes, and to sell, lease, or dispose of the same to such persons or cor-
porations, and for such price or prices aud on such terms and conditions as to this
corporation may seem proper. To develop, sell, store, contract for, and generally
deal in and dispose of to such persons or corporations, and for such price or prices
and on such terms and conditions as to this corporation may seem proper, electri-
cal and other power for the generation, distribution, and supply of electricity for
miniug, heating, and power purposes. To purchase, lease, or otherwise acquire,
construct, and maintain plants for the purpose of extracting values from refractory
ores. To purchase, treat, refine, extract, reduce, crush, calcine, smelt, concentrate,
and manipulate all kinds of ores, minerals, and metalliferous substances with a view
636
FORMS AND PRECEDENTS.
to obtaining therefrom gold, silver, tin, lead, copper, iron, and other metals, combi-
nation of metals, or other valuable substances with a view to preparing the same
for market. Generally to engage in smelting, reducing, crushing, refining, milling,
treating, assaying, and selling minerals and ores of all kinds, classes, and descrip-
tions. "To buy, sell, manufacture, and generally deal in machinery, blasting powder,
and high explosives of every description, fuses, caps, implements, candles, and con-
veniences suitable for use in connect ion with mining and metallurgical operations.
To purchase, lease, or otherwise acquire lauds for the purpose of erecting thereon,
office buildings, plants, workshops, dwelling houses, warehouses, stores, hotels
aud other buildings in connection with the foregoing purposes.
FORM 173. — MINING INVESTMENTS.
To invest in, take over, buy, sell, pledge, and exchange stock, shares, bonds,
and securities of mining companies, whether incorporated under the laws of the
several commonwealths or under the laws of any foreign country ; to make advances
upon, hold in trust, buy and sell on commission, sell or dispose of any of the invest-
ments aforesaid, or to act as auditor for any of the above or like purposes. To
hold, purchase, or otherwise acquire, to sell, assign, transfer, mortgage, pledge, or
otherwise dispose of shares of the capital stock, bonds, and securities issued or
created by other corporations, aud while the holder thereof to exercise all the rights
and privileges of ownership, including the right to vote thereon. To cause or allow
the legal title, estate, and interest in any property acquired, established, or carried
on by the company to remain or to be vested or registered in the name of or carried
on by any other company or companies, foreign or domestic, formed or to be formed,
and either upon trust for or as agents or nominees of this company, or upon any
other terms or conditions which the Board of Directors may consider for the benefit
of this company, and to manage the affairs or take over and carry on the business of
such company or companies so formed or to be formed, either by acquiring the
shares, stocks, or other securities thereof, or otherwise howsoever, and to exercise
all or any of the powers of holders of shares, stocks, or securities thereof,
and to receive and distribute as profits the dividends and interest on such shares,
stocks, or securities. To guarantee the payment of dividends or interest on
any share, stocks, debentures, or other securities issued by or any other contract or
obligation of any corporation when in the judgment of its directors the same is
proper or necessary for the business of the company ; and provided the required
authority be first obtained from the Board of Directors for that purpose. To
remunerate any person or persons or corporation for services rendered or to be
rendered in placing or assisting to place, or guaranteeing the placing of any of the
shares of the company's capital, or any debentures or other securities of the company,
or in or about the formation or promotion of the company or the conduct of its
business.
FORM 174. — MINING RIGHTS.
To search for, prospect, and explore for ores and minerals, and to locate
mining claims, grounds, or lodes in the United States of America or the territories
thereof, or in foreign countries, and record the same pursuant to the mining laws
of the said United States or other countries; and to acquire mining and mineral
rights or interest therein when desirable; to mine, quarry, work, and develop min-
ing grounds, claims, or lodes, mining and mineral rights; to crush, concentrate,
smelt, refine, dress, amalgamate, and prepare for raarkel ores, metals, and mineral
substanc* s of all kinds, and to do all other acts and things necessary or conducive
to the company's objects, including the erection of buildings or works and the
installing 01 machinery and appliances of every description whenever required ; to
mortgage any mining grounds, claims, or lodes, mining and mineral rights, or other
property belonging to said company, and to issue bonds of the company whenever
it may be determined so to do. To purchase, acquire by lease, license, or otherwise
mining grounds, claims, or lodes, mining and mineral rights, concessions or grants,
or any interest, I herein, and to obtain patents therefor when desirable. To buy,
-ill, and deal in ores and minerals, plants, machinery, tools, implements, groceries,
provisions, clothing, boots and shoes, furnishing articles, hardware, wooden and
637
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
metallic ware, with all other articles and things in any wise required or capable of
being used in connection with mining operations, and to make and manufacture
such articles when required. To construct, carry out, maintain, improve, equip,
manage, control, and superintend auy roads, ways, private railways, private tram-
ways, bridges, reservoirs, water courses, aqueducts, wharves, piers, docks, bulk-
heads, furnaces, mills, crushing, concentrating, and smelting works, hydraulic works,
factories, dwelling houses, and warehouses ; to purchase vessels or other means of
transportation, except railroads other than private railroads, and equip and operate
the same as required for the uses and purposes of the company, and also to do any
other acts and things relating to mining.
FORM 175. — MORTGAGE AND TRUST.
To issue, secure, or offer for sale stocks, bonds, mortgages, and other obligations ;
to invest for individuals or corporations any stocks, bonds, mortgages, debentures,
and securities of any government. State, corporation, — public or private, — and to
vary the investments of the company. To transfer, register, and countersign certifi-
cates of stock, bonds, receipts, or other evidences of indebtedness. To act as agent
of any corporation, domestic or foreign, public or private. To act as trustee under
any deed of trust, mortgage, bond, or other instrument issued by any municipality,
body politic or corporate, person, or association, and to accept and execute any
business in relation thereto. To act as registrar of stocks, bonds, certificates, and
debentures, and as transfer agent of any corporations or individuals. To act as
resident agent for domestic or foreign corporations. (See also Form 258.)
FORM 176.— MOTOR CARS.
To manufacture, buy, sell, import, export, and generally deal in all kinds of
automobiles, motors, engines, machines, and all kinds of machinery and devices for
the operation of steam, electricity, and other forms of power. To manufacture,
buy, sell, export, import, and generally deal in cars, carriages, wagons, engines,
apparatus, and vehicles of every kind and description for the transportation of pas-
sengers and goods. To manufacture, buy, sell, import, export, and generally deal
in machinery, machine supplies, and engineering appliances incidental to the con-
struction of motor cars.
FORM 177.— MOTOR COMPANIES.
To manufacture, buy, sell, export, import, and generally deal in motors run
and operated by water, steam, or electricity, including the manufacturing, buying,
selling, importing, exporting, and generally dealing in any and all kinds of motors
and other parts and materials entered into or used in the manufacture and opera-
tion of the same, and generally to carry on the manufacturing and selling of any
articles or specialties, patented or otherwise, which can be carried on in conjunction
with any of the matters aforesaid in or upon the premises of the company, and for
that purpose to purchase, lease, or otherwise acquire and sell real and personal
property, including all necessary machinery adapted to such apparatus.
FORM 178. - MUSICAL INSTRUMENTS.
To manufacture, buy, sell, import, export, and generally deal in musical instru-
ments of all kinds, classes, and descriptions. Also to purchase, print, publish, and
sell vocal and instrumental sheet music.
FORM 179. — NEWSDEALERS.
To buy, sell, export, import, and generally deal in newspapers, magazines, quar-
terlies, books, and periodicals of every character and description.
FORM 180. — NEWSPAPERS.
To engage in business as proprietors and publishers of newspapers to be printed
at the City of ^ , State of , and to be known as " ,"
and in connection therewith to carry on the business of job printing, engravers,
publishers, lithographers, and electro typers.
638
FORMS AND PRECEDENTS.
FORM 181. —NICKEL.
To prospect for, acquire, lease, and develop lands containing or believed to con-
tain nickel and other ores, coal, or oil. Also to nunc, mill, reduce, smelt, manu-
facture, and prepare for market uiekel and other wares and all or any products
thereof.
FORM 182. — NOVELTIES.
To manufacture, buy, sell, import, export, and generally deal in novelties of
every class aud description, whether patented or otherwise. To engage generally
in buying, selling of goods, wares, and merchandise of every class and description.
FORM 183. — NURSERIES.
To cultivate, care for, grow, buy, sell, export, import, and generally deal in trees,
shrubs, vines, flowers, and vegetables of every character and descriptiou.
FORM 184. — OFFICE SUPPLIES.
To manufacture, buy, sell, export, import, aud generally deal in desks, tables,
chairs, filing cases, cabinets, safes and all other kinds of office furniture. Also to
deal in writing papers, typewriting paper, carbons, books, and other articles of a
similar nature.
FORM 185. — OIL AND PETROLEUM.
To locate, purchase, lease, or otherwise acquire lands, mines, mineral claims,
water rights and franchises, mill sites, timber lands, limestone quarries, and particu-
larlv lands containing or believed to contain petroleum and other oil springs and
deposits ; to carry on the business of searchiug for, prospecting, preparing, produc-
ing, refining, piping, storing, transporting, supplying, buying, selling, manufacturing,
and distributing petroleum and other oils and their products and by-products. To
construct, build, operate, and maintain oil wells, refineries, buildings, machinery,
plants, stores, and warehouses. To handle, store, transport, and prepare for market
oils and oil products and by-products, and to erect, maintain, and operate refineries,
mills, works, laboratories, workshops, and dwelling houses for workmen and others.
To search for, prospect, examine, refine, smelt, reduce, crush, concentrate, manipu-
late, and treat gold, silver, lead, copper, iron, and minerals of every class and descrip-
tion. To manufacture, buy, sell, import, export, and generally deal in machinery,
pumps, drills, fuses, caps, candles, implements, and conveniences suitable for use in
connection with the oil or mining business.
FORM 186. — OIL AND PIPE LINE COMPANY.
To purchase, lease, or otherwise acquire lands, mineral and oil rights and
privileges in the State of • Also to purchase, lease, or otherwise acquire,
in the'State of and other parts of the world, lands containing or believed
to contain petroleum or other oil spring deposits. Also to store and transport oil,
gas, brine, and other mineral solutions, and to make reasonable charges therefor.
To buy, sell, and furnish oil and gas for lighting, heating, and other purposes. _ To
lay down, construct, maintain, and operate pipe lines, tubes, tanks, pump stations,
connections, fixtures, storage houses, and such machinery, apparatus, and devices
as may be necessary to operate such pipes and pipe lines between various points.
Also, wherever permitted by law, to have right and power to enter upon
rights of wav, easements, properties of all persons and corporations, and to have
the right to 'lay its pipes and pipe lines across and under any public road, railroad,
right of way, street railroad, canal, or stream. To lay its pipe and pipe lines across
and under anystrect or alley in any incorporated city or town, with the consenl and
under the direction of the proper authorities of such cities or towns. Also to cam
on the business of producing, refining, and storing petroleum products, vegetable
and mineral oils.
FORM 187. — PAINTS.
To manufacture, buy, sell, import, export, and generally deal in paints and
painters' supplies.
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
FORM 188. — PAINTERS.
To carry on a general painting, varnishing, kalsomining, decorating and white-
washing business. Also to deal in paints, oils, lime, cement, plaster, wall paper,
wainscoting, and mouldings.
FORM 189. — PAPER.
To engage in business as manufacturers and dealers in paper, and paper sub-
stitutes of all kinds. Also to buy, sell, export, import, and generally deal in wall
paper, wood pulps, and all kinds of materials useful or necessary in the manufacture
of paper.
FORM 190. — PAPER MANUFACTURERS.
To manufacture, buy, sell, export, import, and generally deal in writing paper,
wrapping paper, newspaper, and wall paper. Also in connection therewith to buy,
sell, and generally deal in rags, wood pulp, and other articles incident to the manu-
facture of paper.
FORM 191.— PASSENGER AND BAGGAGE TRANSFER.
To engage in the business of transfer for hire within the city of
(or between certain designated cities) passage, baggage, and freight. Also to
purchase, lease, or otherwise acquire carriages, coupes, hansoms, automobiles, bag-
gage, express and mail wagons, carts, and drays. Also to purchase horses, barns,
and warehouses in order to facilitate the carrying on of the above lines of business.
Also to store and care for all kinds of vehicles, trunks, and personal property of
every description in connection therewith. To operate and maintain one or more
barns, warehouses, and storerooms.
FORM 192. — PATENTS.
To establish, conduct, and carry on the business of buying, selling, and other-
wise dealing in improvements, trade marks, trade names, and any letters patent,
registration, or grants, both domestic and foreign, whether issued by the United
States or any foreign country or government. To apply for, procure, and obtain
any and all necessary letters patent or grants, both foreign and domestic, for all
inventions, improvements, and secret processes for the account and in the name of
the corporation, or as the agent for any person, firm, or corporation. To exploit
and develop any and all such inventions, improvements, trade marks, and processes
by establishing'in this or any foreign country any and all necessary plants, factories,
and machinery for the manufacture of patent articles of any class, nature or
description.
FORM 193. — PHONOGRAPHS.
To manufacture, buy, sell, export, import, lease, or otherwise acquire, invest,
and generally trade in sound-reproducing machines, talking machines, and records
for such machines, and all appurtenances thereto, together with all rights, patents,
and improvements thereon, now held or hereafter to be obtained by purchase or
otherwise, including all necessary machinery adapted for such purposes.
FORM 194. — PHOTOGRAPHY.
To carry on a general photographic business in all its various branches within
the city of . To purchase, lease, or otherwise acquire the necessary
chemicals, screens, drugs, cameras, and apparatus for the taking, developing, and
finishing of all kinds of photographs. To purchase, sell, and generally deal in
cameras, photographic supplies, pictures, picture-frames, prints, drugs, chemi-
cals, and supplies necessary or useful in the taking, development, and printing of
photographs.
FORM 195. — PIANOS AND MUSICAL INSTRUMENTS.
To manufacture, buy, sell, export, import, and generally deal in pianos, pianolas,
church and cottage organs, violins, and brass and string musical instruments of every
class and description.
640
FORMS AND PRECEDENTS.
FORM 196. — PERFUMERS.
To manufacture, buy, sell, export, import, and generally deal iu perfumery,
cologne, toilet waters, cold cream, talcum powder, and cosmetics of every class and
description.
FORM 197. — PIPE FOUNDRY.
To manufacture, buy, sell, export, import, and generally deal in water pipe,
sewer pipes, faucets, and plumbers' supplies of every class and description.
FORM 198. — PLANTATION COMPANY.
To engage iu the buying, selling, raising, importing, and exporting o f truit and
vegetable products. To cultivate, plant, produce, buy, sell, and raise all kinds of
vegetable products. To do a general importing and exporting business by and
between domestic and foreign ports, and also a general coastwise business to do-
mestic ports.
FORM 199. — POULTRY.
To engage in the business of raising, selling, and preparing for market all
poultry and eggs. To purchase, lease, or otherwise acquire land, buildings, and
necessary equipment for the carrying on of the aforesaid business. To buy and
sell chicken food and incubators. To buy, sell, import, export, and generally deal
iu poultry and poultry products of every kind, class, and description. To hatch,
breed, and raise, either by natural means or incubators, poultry of every kind, class,
and description. To buy and sell chickens, ducks, geese, and guinea-fowls. To
print, publish, and distribute magazines and literature of every class and description.
FORM 200. — PRINTERS.
To carry on the business of job printers, publishers, electrotypers, lithographers,
and linotypers.
FORM 201. — PRODUCE.
To buy, sell, export, import, and generally deal iu hay, oats, corn meal, barley,
buckwheat, wheat, bran, middlings, shorts, and farm produce of every character
and description.
FORM 202. — PROVISION DEALERS.
To buy, sell, export, import, and generally deal in hams, canned goods, poultry,
fruit, vegetables, and groceries of every class and description.
FORM 203. — PUBLISHERS.
To engage in business as proprietors and publishers of newspapers, journals, and
magazines. To acquire, print, publish, conduct, or otherwise deal with any news-
paper, magazine, books, or other publications ; to carry on the business of news-
paper and magazine proprietors and publishers. To carry on the business of job
printers, lithographers, electrotypers, engravers, and advertising agents.
FORM 204. - QUARRY.
To acquire, mine, cut, finish, buy, sell, import, export, and generally deal in
marble, and all kinds of building and paving shines. Also to acquire by purchase,
lease, or otherwise lands believed to contain marble, building, and paving stone.
FORM 205. — RAILWAY EQUIPMENT.
To buy, lease, or otherwise acquire, construct, maintain, and operate Bmelters,
rolling mills, carriages, machine shops, furnaces, crushing works, and hydraulic works
of every class and description ; to manufacture, buy, sell, import, export, and gener-
ally deal in all kinds of rails, tics, switches, signals, torpedoes, fuses, engines, and
supplies for railroads and street railways; to manufacture, buy, import, export, and
generally deal in iron, steel, aluminum, manganese, lead, zinc, tin, copper, and
lumber.
t;i l
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
FORM 206. — REAL ESTATE. (City.)
To purchase, lease, or otherwise acquire, sell, and exchange lands, tenements,
and hereditaments, situated in the city of and vicinity ; also to build, con-
struct, reconstruct, alter, furnish, equip, and maintain thereon offices, apartment
houses, business blocks, buildings, shops, and structures of all kinds for others on
commission or otherwise. Also to manage business blocks, apartment houses for
owners, and to guaranty the income thereof, and to collect rents therefrom, and to
supply to tenants and others janitor service, light, heat, and power appliances,
messenger and elevator service. Also to assist financially or otherwise contractors
and builders engaged in the business of building or improving any lands wherever
situated.
FORM 207. —REALTY.
To buy, sell, exchange, and generally deal in real properties, improved and
unimproved, office buildings, store buildings, dwelling houses, barns, wharves,
water rights and privileges ; to build, construct, operate, maintain, lease, and sell
dwelling houses, apartment houses, and business blocks of all kinds and descriptions.
To maintain a general real estate agency and broker's business, including the right
to manage estates, to act as agent, broker, or attorney in fact for any person or cor-
poration ; to make and obtain loans upon real estate, improved or unimproved, and
to supervise, manage, and protect such property and loans, and all interests and
claims affecting the same ; to have the same insured against fire and other casual-
ties ; to investigate the credit, financial solvency and sufficiency of borrowers,
mortgagors, and sureties upon bonds, mortgages, and undertakings. To improve,
manage, operate, sell, mortgage, lease, or otherwise dispose of any property, real
or personal, and take mortgages and assignments of mortgages upon the same.
FORM 208. — REDUCTION COMPANY.
To buy, lease, or otherwise acquire, construct, maintain, and operate plants of
every nature and description, for the purpose of extracting refactory ores and
minerals of every description.
FORM 209.— REFINERIES.
To buy, lease, or otherwise acquire lands containing or believed to contain
petroleum, natural gas, oil springs, or mineral deposits ; to carry on the business of
producing, refining, storing, supplying, and distributing petroleum products of all
classes and descriptions ; to refine, store, distribute, and sell vegetable and mineral
oils ; to purchase or otherwise acquire, lease, construct, operate, and maintain re-
fineries, mill works, laboratories, pipe lines, storage tanks, dwelling houses for
workmen and others in connection with the purposes hereinbefore set forth.
FORM 210. —RESTAURANTS.
To purchase, lease, own, and operate restaurants and lunch stands in the city
of . Also to buy and sell cigars and liquors.
FORM 211. — ROOFERS.
To erect, prepare, and construct wooden, metallic, concrete, tin, and slate roofs
of every character and description.
FORM 212. — RUBBER COMPANY.
To acquire by purchase, lease, exchange, or otherwise lands, tenements, here-
ditaments, and property of every class and description, for the planting, cultivation,
and growing of rubber trees, and for the purpose of producing, buying, exporting,
importing, selling, and generally dealing in rubber, and the articles and goods of
all kinds of which rubber is a component part, together with the various materials
which enter into the manufacture of such goods. To carry on the business of
planters. To purchase, or otherwise acquire, manufacture, prepare for market,
export, import, and sell any products or by-products of rubber, and to sell, dispose
642
FORMS AND PRECEDENTS.
of, and generally deal in the same, either in their prepared, manufactured, or taw
state, both at wholesale and retail.
FORM 213. — SALOONS.
To operate and maintain liquor saloons, bar rooms, beer gardens, cafes, res-
taurants, cigar stands, boot-blacking parlors, and picnic grounds.
FORM 214. — SALT.
To manufacture, buy, sell, export, import, and generally deal in salt and the
products thereof. Also to acquire by purchase, lease, or otherwise lauds believed to
contain salt and other minerals.
FORM 215.— SANITARIUMS.
To build, construct, purchase, lease, or otherwise acquire, equip, and maintain
sanitariums for the treatment and care of the sick, disabled, and infirm. To
maintain in connection therewith dispensaries, hotels, and training schools for nurses.
FORM 216. — SASHES, DOORS, AND BLINDS.
To manufacture, buy, sell, export, import, and generally deal in sashes, doors,
blinds, window sills, mouldings, wainscoting and ornamental woods of every class
and description.
FORM 217. — SAUCES AND PICKLES.
To manufacture, buy, sell, import, export, and generally deal in sauces, catsups,
relishes, pickles, and garnishing supplies ; to buy, lease, or otherwise acquire, con-
struct, maintain, and operate sauce and pickle factories, cold-storage receptacles,
warehouses, and depots. To raise vegetables and fruits of all classes and descriptions.
FORM 218. — SAW-MILLS.
To purchase, lease, or otherwise acquire timber-lands, tracts, and rights. To
buy, sell, export, import, boom, saw, and prepare for market, and generally deal in
timber and wood of all kinds. Also to manufacture, buy, sell, export, import, and
generally deal in all kinds of goods and articles manufactured from wood, and
generally to carry on business as saw-mill proprietors, timber and lumber dealers.
FORM 219. — SCALING.
To scale steam boilers, bilges, water tanks, and kindred articles ; to clean and
furnish shafts and tunnels ; to build wells and kindred articles, and to do all kinds
of repair work ; to build, repair, own, buy, and sell scaling works and shops of
every nature and description ; to manufacture, buy, sell, import, export, and gen-
erally deal in engines, boilers, shop machinery, fixtures, and supplies, aud all kinds
of heavy hardware.
FORM 220. — SEPARATORS.
To manufacture, buy, sell, import, export, and generally deal in separating
machines of all kinds, classes, and descriptions ; to buy, lease, or otherwise acquire,
construct, operate, and maintain factories, workshops, warehouses, and depots
for the manufacture of separating machines.
FORM 221. — SEWING MACHINES.
To manufacture, buy, Bell, import, export, and generally deal in sewing ma-
chines of all kinds, and all tools and appliances appertaining thereto.
FORM 222. — SHEEP.
To carry on in all its branches a general live-stock and stock-raising farm and
range business; to buy, sell, breed, raise, export, import, and generally deal in
»;i;;
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
sheep, cattle, horses, poultry, and all kinds of domestic animals. To buy, lease, or
otherwise acquire, construct, maintain, and operate slaughter-houses, factories,
stock yards, and to carry on a dairy business in all its several branches.
FORM 223. — SHIP BROKERS AND CHANDLERS.
To carry on in all its various branches the business of ship brokers and
chandlers.
FORM 224. — SHIP BUILDING.
To build, operate, and maintain docks, wharves, water ways, machine shops and
lumber yards for the purpose of constructing steamships, sailing vessels and all kinds
of sailing craft.
FORM 225. — SHIRT MANUFACTURERS.
To make, buy, sell, export, import and generally deal in shirts and gentlemen's
•wearing apparel of every description.
FORM 226. — SILK.
To manufacture, produce, export, import, buy, sell, and generally deal in^ silk
and other fabrics; to raise silkworms and cocoons, aud deal in each and all of the
products thereof; to manufacture, buy, sell, import, export, aud generally deal in
cocoon yarn, thread, and other like material, and to spin, weave, and handle the
same and deal with other fabrics. To plant, raise, buy, and sell cotton plants and
convert the same into fabrics. To plant and raise mulberry trees and other silk-
worm foods.
FORM 227.— SILVERSMITHS AND PLATED WARE.
To manufacture, buy, sell, export, import, and generally deal in silver ware, gold
ware, copper, tin, bronze, and plated ware of every character and description.
FORM 228. — SLATE AND TILE.
To manufacture, buy, sell, export, import, and generally deal in slate, stone, tile,
brick, marble, and building materials of all kinds aud descriptions.
FORM 229.— SLAUGHTER-HOUSES.
To raise and purchase cattle, hogs, and sheep for the purpose of fattening the
same for food purposes. Also to carry on the business of maintaining and operat-
ing slaughter-houses for the purpose of slaughtering cattle, hogs, and sheep. To
operate and maintain stock yards, cold-storage plant, and warehouses. To buy and
sell hay, oats, bran, corn, alfalfa, and other grains, grasses, and cereals. Also to
engage in the manufacture and production of hides, oil, glue, and animal fertilizers
of all kinds and descriptions.
FORM 230. — SLOT MACHINES.
To manufacture, buy, sell, import, export, and generally deal in slot machines of
whatsoever name and nature; to manufacture, buy, sell, import, export, and gen-
erally deal in all articles, apparatus, plants, and machinery useful in or which may
be used in connection with the foregoing described business or any of its branches.
FORM 231. — SOAP.
To manufacture, buy, sell, import, export, and generally deal in soap for toilet
and domestic use. Also to purchase all materials suitable or necessary for the
proper manufacture of soap.
FORM 232. — SPORTING GOODS.
To manufacture, buy, sell, export, import, and generally deal in base balls,
tennis, football, golf, fishing, rowing aud sporting goods of every class and
description.
644
FORMS AND PRECEDENTS.
FORM 233. — STATIONARY ENGINES.
To manufacture, construct, purchase, or otherwise acquire, deal in, sell, hire,
lease, use,, repair, operate, and maintain stationary engines and engines or power-
applying machinery and devices of any and every character, and any and all parts,
devices," appliances, instruments, and thiugs adapted for use in the construction
of, upou, ur in connection with or in the operation of such stationary engines and
entities or power-applying machinery and devices of any and every character.
FORM 234. — STEAMBOATS.
To buy, lease, or otherwise acquire, construct, maintain, aud operate steamboats
and other' vessels of any class ; to establish aud maintain liues of regular service of
steamboats and other vessels to be employed in inland or coastwise service in the
United States aud between the ports of the United States and foreign countries.
To carry ou the business of shipowners, and to enter into contracts for the carriage
of mails, passengers, goods, and merchandise by any means, either by its own vessels,
railways, or conveniences or by or over the vessels, railways, or conveniences of
others. To insure against loss by fire, flood, or other calamity the cargo carried
or transported upon the company's steamboats or other vessels, aud upon such
steamboats and vessels themselves'. To buy, lease, or otherwise acquire, construct,
maintain, and operate wharves, piers, docks, warehouses, aud depots ; to manufac-
ture, buy, sell, and generally deal in all kinds of materials, articles, machinery,
engines, boilers, and furniture entered into or suitable or convenient for the con-
struction, equipment, and operation of steamboats and other vessels; to design,
construct, and repair vessels, ships, boats, wharves, docks, dry docks, and piers.
To carry ou the business of cold-storage warehouse and any business incidental or
impliedly incidental thereto. To issue certificates, negotiable or otherwise, to per-
sons warehousing goods with the corporation, and to make advances or loans upon
the security of such goods or otherwise.
FORM 235. — STEEL LATH AND FIREPROOFING COMPANY.
To manufacture, sell, import, export, and generally deal in all kinds of sheet-
steel lath suitable for the fireproofing of buildings and structures of 'every kind
and description; to manufacture, sell, import, export, and generally deal in sheet
iron and steel of all kinds and descriptions ; to carry on the business of contractors
aud builders in all the various branches of said business.
FORM 236. —STEEL MANUFACTURE. (Part of charter of U. S. Steel
Corporation.)
To mine, prepare for market, and transport coal, iron, steel, and all mineral sub-
stances. To manufacture, buv, sell, and deal in iron, steel, copper, manganese,
lumber, and other materials, and all or any articles consisting or partly consist-
ing of iron, steel, copper, wood, or other materials, and all or any products there-
of. To acquire, own, lease, occupy, use, and develop any lands containing coal
or iron, manganese, stones, or other ores or oil, and any woodlands or other lauds for
any purpose of the company. To mine or otherwise extract or remove coal, ore,
stone, and other minerals and timber from any lands owned, acquired, leased, or
occupied bv I he company, or from any other lands. To buy, sell, or otherwise deal
or traffic iii iron, steel, manganese, copper, stone, ores, coal, coke, wood, lumber,
and other materials and any of the products thereof, and any articles consisting or
partly consisting thereof. To promote, construct, divide, acquire, approve, manage,
develop, control, take on lease or agreement, sell and use, work and dispose of ai,v
roads, sidinps, private railways, pipe lines, wharves, docks, bridges, reservoirs,
canals, water courses, hydraulic works, pas works, electrical works, mills, foundries.
furnaces, warehouses, ships, buildings, buildings for employees and others, and other
works and appliances- To construct, lease, own, operate, and sell transportation
rights by land or water iii any State or country subject to the laws thereof, either
directly or through the ownership of stock in any corporation. To manufacture,
purchase, lease, acquire, and own goods, wares, and merchandise and personal
645
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
property of every class and description. To hold, own, sell, and otherwise dispose
of, trade, deal in, and deal with the same. To acquire aud undertake the good
will, property, rights, franchises, and assets of every kind and the liabilities of any
person, firm, or association, either wholly or partly, and to pay for the same in cash,
stock, or bonds of the company or otherwise. To the extent permitted by the
local laws of any State or foreign country where the property may be situated,
the company may cause or allow the legal title, estate, aud interest in any property,
or business acquired or carried on by the company to remain or be vested or regis-
tered in the name of or carried on by an individual, or to be operated by another
company or companies, foreign or domestic, formed or to be formed, and either
upon trust for or as agents of this company or upon any other terms and condi-
tions which the board of directors may consider for the benefit of this company,
to manage the affairs so taken over. To carry on the business of such company or
companies so formed or to be formed, either by acquiring the stock or other secu-
rities thereof, and acquire all or any of the powers of holders of shares, stock, or
securities thereof, and receive and distribute dividends on such stock, shares, and
spoii n tics*
FORM 237. — STEREOPTICON MACHINES.
To manufacture, construct, buy, sell, import, export, and generally deal in
stereopticon machines, whether automatic or otherwise, of all kinds and descrip-
tions ; and in connection therewith to buy, sell, lease, or otherwise acquire suitable
stores, space in expositions and fairs, and concessions of all kinds.
FORM 238.— STEVEDORES.
To carry on business as stevedores in the city of and vicinity, and
in connection therewith to buy and sell trucks, wheelbarrows, hoisting machin-
ery, apparatus, donkey engines, draft animals and all kinds of appliances necessary,
useful, or convenient to the proper transaction of the business of stevedores.
FORM 239. — STOCK BROKERS.
To buy, sell, negotiate, exchange, pledge, trade, and deal in and with shares,
stocks, debentures, scrip, bonds, and securities of any government, state, or public
or private corporation or any corporate body ; to trade and deal in and with real
estate, mines, metals, minerals, and oil, cotton, grain, produce, or other commod-
ities ; to invest in any or either of the foregoing, and from time to time to change
the investments of the company ; to mortgage, pledge, or otherwise change all or
any part of the investments of the company or its property and rights; to make
advances on, sell or dispose of, any property or investments, or to act as agent,
factor, or broker for any or either of the corporate purposes. To purchase or other-
wise acquire the capital stock, shares, debentures, scrip, bonds, or other evidence
of indebtedness of any other corporation, and to issue in exchange its own stock,
shares, bonds, debentures, scrip, or other evidences of indebtedness in payment
therefor, and while the owner thereof to exercise all the rights of ownership,
including the power to vote upon such stock or shares. To purchase, receive,
hold, and own mortgages, debentures, shares, and other securities or obligations
of any public, private, or municipal corporation, or bonds or other securities or
obligatious of the government of the United States, or of any State, district, ter-
ritory, colony, or dependency of the United States or any foreign country, State,
or colony ; to collect and receive, disburse and dispose of, all interest, dividends,
accumulations, earnings, and income from, upon, or on account of any bonds, deben-
tures, stocks, shares, securities, contracts, evidences of indebtedness, obligatious, or
other property held or owned by the corporation therein ; to do any aud all lawful
acts tending to increase or enhance the value of the property of the company.
To issue stock, shares, bonds, debentures, certificates, scrip, or other corporate
obligations and to secure the payment thereof by mortgage, pledge, or deed of
trust of or upon the whole or auy portion of the corporate property or funds ;
to sell, pledge, or otherwise dispose of bonds, debentures, or other corporate
obligations for proper and lawful purposes, as and when the Board of Directors
shall deem necessary, advisable, or expedient ; to promote the corporate business
646
FORMS AND PRECEDENTS.
of investment and dealing in securities in all lawful ways; and to receive, col-
lect, transmit, pav out, and disburse funds in the course of its business; and to
the extent authorized bv law to lease, purchase, or otherwise acquire, hold, use,
sell, trade, and deal in and with, assign, pledge, mortgage, transfer, and convey-
real and personal property of any name or nature ; to issue and accept drafts,
bills of exchange, promissory notes, scrip, drafts, acceptances, or other corporate
obligations and negotiate the same.
FORM 240.— STORAGE BATTERIES.
To manufacture, buy, sell, export, import, and generally deal in electrical stor-
age batteries, machineries, and appliances for the storage of electricity for the pur-
poses of furnishing power for business or domestic purposes.
FORM 241. — STORAGE WAREHOUSES.
To build, construct, maintain, and operate warehouses for the storage of goods,
■wares, and merchandise of every character and description.
FORM 242. — STOVES, RANGES, AND HEATERS.
To manufacture, buy, sell, export, import, and generally deal in stoves, furnaces,
ranges, and steam and hot water, gas and electric heaters of every character and
description.
FORM 243. — SUGAR REFINERIES.
To plant, cultivate, grow, produce, manufacture, buy, sell, export, import, and
generally deal in sugar. Also to purchase, lease, or otherwise acquire sugar lands
and plantations, refineries, buildings, mills, and machinery. To plant, cultivate,
produce, and raise sugar cane. Also to carry on the business of refining, prepar-
ing, buying, selling, importing, exporting, and generally dealing in sugar cane,
sugar mills, and syrups.
FORM 244.— SURGICAL INSTRUMENTS.
To manufacture, buy, sell, export, import, and generally deal in surgical and
dental instruments of every character and description.
FORM 245. — TAILORS.
To carry on the business of tailoring and dealing in cloth and clothes and all
kinds of gents' furnishing goods.
FORM 246. — TAR MANUFACTURING.
To purchase, lease, or otherwise acquire lands for the erection and establish-
ment of a manufactory or manufactories and workshops with suitable plants,
engines, and machinery, with a view to manufacturing, purchasing, leasing, or other-
wise dealing in coal tar, and each and every by-prodnct of coal tar, utilizing the
same in any condition, connection, or form whatsoever ; to manufacture, purchase,
lease, export, import, and generally deal in coal tar and any by-product thereof, and
any materials, articles, and things* required for, or in connection with or incidental
to the manufacturing thereof.
FORM 247. — TEA, COCOA, AND COFFEE.
To cultivate, raise, export, import, buy, sell, and generally deal in all kinds of
tea, coffees, and cocoas.
FORM 248. — TELEGRAPH AND TELEPHONE COMPANIES.
To acquire, manufacture, buy, Bell, and generally deal in telegraph and tele-
phone instruments, machines, and apparatus; to construct, erect, build, operate,
and maintain telegraph and telephone stations for the transmission and reception
of messages by electricity, wire, or wireless instruments ; to receive and transmij
messages by signal or other device and by any and all other electrical devices anil
contrivances from, upon, and by wire or wireless instruments and any and all
647 '
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
similar, kindred, and like instruments and devices ; to transmit and receive mes-
sages for hire over, upon, and by wire and wireless systems, of telegraphing and
telephoning by any and all systems and devices for transmitting and receiving
messages. To buy, build, or cause to be built, operate, and maintain stations
for the transmission and reception of telegraph and telephone messages by means
of wire or wireless systems; to carry on the business of transmitting and receiving
messages from such stations. To acquire and hold lauds, property, and buildings
necessary or useful in the conduct of the business of telegraph and telephone com-
panies under wire and wireless systems, and in connection therewith to manufac-
ture and construct machinery, instruments, apparatus, wires, and any and all other
materials and articles used with or pertaining to telegraph and telephone lines.
FORM 249. — THEATRES.
To construct, purchase, lease, or otherwise acquire theatres, concert halls, and
amusement places of all kinds and descriptions. Also to carry on the business of
theatrical proprietors, and music hall proprietors. Also to manage theatrical, con-
cert hall, and vaudeville companies of all kinds, classes, and descriptions. Also to
engage and employ actors, singers, dancers, athletic, theatrical, and musical artists
of "aU kinds. Also to purchase, own, produce, and present, and to license others
to produce and present, theatrical plays, operas, and exhibitions of various kinds.
FORM 250.— TILES.
To manufacture, buy, sell, export, import, and generally deal in tiles, flower
pots, brick and stone ware of every character and description.
FORM 251. — TOOLS.
To manufacture, buy, sell, export, import, and generally deal in trade tools of
every character and description.
FORM 252. — TOY M AN LTFACTURERS.
To manufacture, buy, sell, export, import, and generally deal in toys and chil-
dren's playthings of every character and description.
FORM 253. — TRADING STAMP COMPANY.
To design, manufacture, print, and engrave premium stamps, tickets, or coupons,
and to use, sell, or otherwise dispose of the same to merchants, manufacturers, or to
any person, firm, copartnership, or corporation, for distribution or sale by them to
their customers ; to exchange such stamps, tickets, or coupons for goods, chattels,
wares, and merchandise ; to co-operate and contract with merchants, manufacturers,
copartnerships, corporations, or other persons for the purpose of furnishing them
witli premium stamps, tickets, or coupons for their customers, and to give them
goods, chattels, wares, and merchandise in exchange for such premium stamps,
tickets, or coupons ; to carry on a general advertising business in all its branches,
both as principals and agents ; to carry on the business of printers, stationers, en-
gravers, designers, and dealers in paper ; to establish and conduct a general store
for the sale or exchange of goods, chattels, wares, and merchandise of any and
every class and description.
FORM 254. — TRAIN CONTROL.
To manufacture, buy, sell, import, export, install, maintain, and generally deal
in railroad switches, train-controlling devices, signals, and equipment ; to manufac-
ture, buy, sell, export, import, and generally deal in iron, steel, manganese, coke,
copper, lumber, and all or any articles consisting or partly consisting of iron, steel,
copper, wood, or other materials, and all or any products thereof ; to acquire by
purchase or otherwise land or buildings, mills, plants, machinery, secret processes,
or other things found necessary or convenient for the purposes of the company.
To manufacture or purchase, or both, all tools, machinery, and appliances necessary,
proper, or convenient for the carrying on of the said business.
648
FORMS AM) PRECEDENTS.
FORM 255. — TRANSPORTATION COMPANY.
To carry on the business of engaging, receiving, transporting, and delivering
merchandise upon freight or for hire, oetween any port-of the United States and
any other port or ports of the United States, or between any foreign port or
ports and auv port or ports of the United Slates ; the business of owning or char-
tering vessels therefor ; the business of operating vessels iu such service ; t he busi-
ness of contracting or arranging for the. transportation of merchandise to or
from any of such ports by rail, boat, or otherwise, or to any inland or coastwise
place or places. To enter into contracts for the carriage of mails, passengers,
goods, and merchandise by any means, either by its own vessels, railways, or con-
veyances, or by or over the vessels, railways, or conveyances of others ; to construct,
purchase, and operate steamships and other vessels of any class, and generally carry
on the business of shipowners; to construct bridges, buildings, ami machinery,
engines, cars, and other equipments, railroads, ships, elevators, viaducts, canals, and
water ways, and any other means of transportation, and to sell the same or other-
wise to dispose thereof, or to maintain and operate the same. To gather, receive,
distribute, and deliver goods and merchandise, and to carry on a general trans-
portation, freight, and express business, and to that end to own and operate its own
vessels, cars, and vehicles of whatsoever nature or description, or to contract with
transportation, railway, express, and other companies for the use of their vessels,
cars, and vehicles of whatsoever nature or description, by this company, or to con-
tract with said companies for the collection, transportation, or distribution of goods,
wares, and merchandise to and from all points and places where it may seem ad-
vantageous and profitable to carry on such business. To carry on the business of
storage, wharfage, warehousing, and forwarding, and the doing of every act or acts,
thing or things, incidental or growing out of or connected with said business, in-
cluding the owning, leasing, holding, erecting, and maintaining of docks, bulkheads,
piers, basins, and warehouses ; the storage of all kinds of goods, wares, and merchan-
dise ; the storage and docking of ships, steam vessels and boats of every kind and
description ; the loading and unloading thereof ; the issue of storage, dock, and ware-
house receipts, negotiable and non-negotiable, covering all kinds of goods, wares, and
merchandise, the collection and receipt of dockage, wharfage, and storage dues,
and other compensation ; the loaning of money on the pledge of goods, wares, and
merchandise and other propertv, or on the pledge of storage, dock, or warehouse re-
ceipts therefor ; and the advancing of freights, duties, fire and marine insurance,
and liens of every kind and nature upon goods, wares, and merchandise received on
storage or for the purpose of being warehoused.
FORM 256. —TROPICAL TRADING COMPANY.
To buy, sell, import, export, manufacture, and generally deal in timber of all
kinds and descriptions; to manufacture, prepare, sell, and generally deal in cabinet
and other woods ; to build, maintain, and operate milk, saw-mills, Hour-nulls, and
factories to be operated by steam, electricity, or other power; to buy, sell, and gen-
erally deal in lands; to "establish, maintain, and operate plantations; to produce,
manufacture, purchase, market, export, import, and generally deal in rubber,
chickle gum, tobacco, coffee, fruits, gram, live stock, and any and all kinds of trop-
cal and sub-tropical fruits.
FORM 257. — TRUCKMEN.
To carry on a general trucking business and in connection therewith to do ;i
general baggage transfer and freight transfer and moving business.
FORM 258. - TRUST COMPANY.
To act as trustee fur individuals and corporations, to receive deposits, issue for-
eign and domestic bills of exchange, and generally to engage in a. banking business
in all its various branches. To carry on and undertake any business, undertaking,
transaction, or operation commonly earned on or undertaken by capitalists, promol
ers, financiers, contractors, merchants, commission men and agents, and iu the course
111!)
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
of such business to draw, accept, endorse, acquire, and sell all or any negotiable or
transferable instruments and securities, including debentures, bonds, notes, and bills
of exchange. To sell on commission, subscribe for, acquire, hold, sell, exchange,
and deal in shares, stocks, bonds, obligations, or securities of any public or private
corporation, government, or municipality, and the company shall have express
power to hold, purchase, or otherwise acquire, to sell, assign, transfer, mortgage,
pledge, or otherwise dispose of, shares of the capital stock, bonds, debentures, or
other evidences of indebtedness created by any corporation or corporations, and
while the owner thereof to exercise all the rights and privileges of ownership, in-
cluding the right to vote thereon. To form, promote, and assist financially or
otherwise, companies, syndicates, partnerships, and associations of all kinds, and to
give any guarantee in connection therewith or otherwise for the payment of money,
or for the performance of any obligation or undertaking. To acquire, improve, man-
age, work, develop and exercise all rights in respect of, lease, mortgage, sell, dispose
of, turn to account, and otherwise deal with property of all kinds, and in particular
business concerns and undertakings. To act as fiscal agent for persons, firms, and
corporations. To buy or otherwise acquire, to own, hold, mortgage, pledge, sell,
assign, and transfer or otherwise dispose of, and to invest, trade, and deal in any
goods, wares, merchandise, and property of every class and description, includ-
ing patents and patent rights, inventions, or other improvements, trade marks, op-
tions, shares, or rights in corporations, real property of any description, including
mines, railroads, and also bonds, mortgages, securities of any kind or description or
other evidences of indebtedness, and investments or investment securities of any
kind or description whatever, to act as agent for the sale or purchase of any
of the same, or for any other purpose connected with any of the said above-de-
scribed powers ; to promote corporate enterprises of any kind, including industrial
enterprises, railroads, mines, real estate companies, banking institutions, and all
businesses or enterprises in which the company is interested ; to endorse, underwrite,
or guarantee stock, securities, or undertakings of any corporation or persons. To
raise money by the issue of shares or otherwise, and to invest the moneys so raised
in the purchase of, or otherwise to acquire and hold, any of the investments follow-
ing, that is to say, any stock, bonds, debentures, shares, scrip, or securities issued
or having any guarantee by any government, municipality, trust, local authority, or
other body, incorporated or unincorporated, public or private, of the United States,
or any stock, bonds, debentures, shares, scrip, or securities issued or having any
guarantee by any corporation or company incorporated, constituted, or carrying on
business in the United States or elsewhere. To borrow or raise money by the issue
or sale of any bonds, mortgages, debentures, or debenture stock of the company, and
to invest any money so raised in any such investments as aforesaid. To acquire any
such investments as aforesaid by original subscription, underwriting, participation
in syndicates or otherwise, and whether or not fully paid up, aud to make payments
thereon as called for, or in advance of calls or otherwise, and to underwrite or
subscribe for the same conditionally or otherwise, either with a view to invest-
ment or for resale or otherwise, and to vary the investments of the company and
generally to sell, exchange, or otherwise dispose of, deal with, and turn to account
any of the assets of the company. To negotiate loans, to offer for public subscrip-
tion, or otherwise aid or assist in placing any such investments as aforesaid ; to give
any guarantee in relation to any such investments issued by or acquired through
the company or otherwise. To offer for public subscription any shares or stock in
the capital, debentures, or debenture stock or other securities of, or otherwise to
establish, promote, or concur in establishing or promoting, any company, associ-
ation, undertaking, public or private body. To guarantee the payment of divi-
dends or interest on any stock, shares, debentures, or other securities issued by, or
any other contract or obligation of, any such company, association, undertaking, or
public or private body. To purchase, lease, hire, or otherwise acquire real and per-
sonal property, improved and unimproved, of every kind and description, and to sell,
dispose of, lease, convey, and mortgage said property, or any part thereof; to ac-
quire, hold, lease, manage, operate, develop, control, build, erect, maintain for the
purposes of said company, construct, reconstruct, or purchase, either directly or
through ownership of stock in any corporation, any lands, buildings, offices, stores,
650
FORMS AND PRECEDENTS.
•warehouses, mills, shops, factories, plants, gas houses, machinery, rights, easements,
permits, privileges, franchises, and licenses, and all other things which may at any
time be necessary or convenient in the judgment of the board of directors for
the purposes of the company. To sell, lease, hire, or otherwise dispose of the
lauds, buildings, or other property of the company or any part thereof. To hold,
purchase, or oiherwise acquire, sell, assign, transfer, mortgage, pledge, or otherwise
dispose of, shares of the capital stock and bonds, debentures, or other evidence
of indebtedness created by any other corporation or corporations, and while the
holder thereof to exercise all the rights or privileges of ownership, including the
right to vote thereon.
FORM 259. — TURBINE ENGINES.
To manufacture, construct, purchase, or otherwise acquire, deal in, export, import,
sell, hire, lease, use, repair, operate, and maintain ships, vessels, yachts, launches,
torpedo boats, tug-boats, and boats and vessels of any and every character, and any
and all parts, devices, instruments, engines, machinery, materials, appliances, ami
things whatsoever adapted to be used in the construction of, upon, or in connec-
tion with or in the operation of ships, vessels, yachts, launches, torpedo boats, tug-
boats, and boats and vessels of any and every character; also to equip such ships,
vessels, yachts, launches, torpedo boats, tug-boats, and boats and vessels of any and
every character.
FORM 260. — TYPESETTING MACHINES.
To manufacture, buy, sell, import, export, and generally deal in machinery for
the setting of type, together with all tools, implements, and conveniences necessary
or useful in connection therewith.
FORM 261. — UMBRELLAS AND PARASOLS.
To manufacture, buy, sell, export, import, and generally deal in umbrellas and
parasols of every character and description.
FORM 262. — UNDERTAKERS.
To carry on the business of embalmers and undertakers and in connection
therewith to operate and maintain crematories.
FORM 263. — UPHOLSTERERS.
To carry on a general upholstering business and in connection therewith to
manufacture and repair chairs, sofas, mattresses and household furnishings of
every character and description.
FORM 264. — VALVE COMPANY.
To manufacture, buy, sell, import, export, and generally deal in valves, engines,
boilers, tools, and machinery of all kinds, classes, and descriptions, and in connection
therewith to purchase, lease, or otherwise acquire lands and buildings for the erec-
tion of an establishment thereon, and manufactories and workshops with necessary
plants, engines, machinery, and structures thereon.
FORM 265. —VARNISH REMOVER.
To manufacture, buy, sell, import, export, and generally deal in chemical or
other processes for the removal of varnish and kindred products.
FORM 266. —WALL PAPER.
To manufacture, buy, sell, export, import-, and generally deal in wall papers and
wall furnishings of every character and description, and in connection therewith to
deal in paints, oils, and varnishes.
FORM 267. — WATCHES, JEWELRY, AND DIAMONDS.
To buy, sell, manufacture, export, import, and generally deal in jewelry, watches,
and diamonds; to buy, lease, or otherwise acquire, maintain, and operate jewelry
CM
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
stores ; to carry on the business of wholesale and retail dealers, watch manufacturers,
and diamond merchants.
FORM 268. — WATER HEATERS.
To manufacture, buy, sell, import, export, and generally deal in water heaters
for domestic and business uses, and in connection therewith to manufacture, buy,
sell, import, export, and generally deal in engines, boilers, water pipes, and plumbers'
suppbes of every class and description.
FORM 269.— WATER WORKS.
To construct, purchase, lease, or otherwise acquire, maintain, operate, and sell
water works for the purpose of supplying manufactories, corporations, and indi-
viduals with water and water power for domestic or business use. Also to con-
struct, purchase, lease, or otherwise acquire, maintain, and sell all necessary power
houses, water towers, water mains and pipes, convenient for the carrying on of the
aforesaid line of business.
FORM 270. — WEIGHING MACHINES.
To manufacture, buy, sell, import, export, lease, operate, and generally deal in
weighing machines ; to apply for, acquire, by purchase or otherwise, patents per-
taining to weighing machines, and to sell or lease the same, together with territorial
rights in such patents for weighing machines.
FORM 271. — WHARF AND WAREHOUSE.
To purchase, lease, or otherwise acquire lands and riparian rights of every class
and description. Also to construct, purchase, lease, or otherwise acquire docks,
wharves, piers, warehouses, and public scales.
FORM 272. —WINES AND LIQUORS.
To carry on a general wholesale and retail wine and liquor business. Also to
carry on the business of rectifiers, distillers of wines and malt and spirituous
liquors.
FORM 273. — WOOLLEN AND WORSTED.
To manufacture, buy, sell, import, export, and generally deal in woollen and
worsted goods and other fabrics manufactured and sold by other concerns engaged
in the same general line of business.
FORM 274. — YARN MILL.
To engage in the business of manufacturers of yarn goods, and in connection
therewith to carry on the business of weavers, silk combers, and yarn spinners.
Also to purchase, sell, weave, or otherwise manufacture linen cloths and other
fabrics.
652
FORMS AND PRECEDENTS.
GENERAL OBJECT CLAUSES.
PATENT AND TRADE MARK CLAUSE.
To acquire by purchase or otherwise patent and patent, rights, and to accept
assignments of the same. To register trade marks, and to exploit and commercially
develop patents and patent rights, and to dispose of territorial rights under letters
patent, either for a cash consideration or on a royalty basis.
GENERAL MERCHANDISE CLAUSE.
To buy, sell, export, import, and generally deal in goods, wares, and merchan-
dise of every nature and description (insert for New York State, " excepting bills
of exchange, gold and silver bullion").
REAL ESTATE.
To acquire, by purchase, lease, or otherwise, such real estate as may be nec-
essary or convenient for the proper carrying on of the business of the corporation.
ACQUIRING AN ESTABLISHED BUSINESS.
To purchase the real estate, personal property, and good will of any person,
firm, or corporation.
HOLDING STOCK IN OTHER CORPORATIONS.
To acquire by purchase, subscription, or otherwise, and to hold or dispose of,
stocks, bonds, or other obligations of any corporation formed for, or then or here-
tofore engaged in or pursuing any one or more of the kinds of business, purposes,
objects, or operations above indicated, or owning or holding the stocks or the
obligations of any such corporation. (U. S. Steel Corporation charter.)
CONDUCTING BUSINESS IN OTHER STATES.
To conduct its business in all its branches, and to have one or more busiuess
offices, and without restriction to contract, buy, sell, lease, mortgage, anil convey
such real and personal property in any of t lie States, Territories, distru ts, or colonial
possessions of the United States and any foreign countries as shall from time to
time be found necessary and convenient for the purposes of the company's
business.
BOND CLAUSE.
Without in any particular limiting any of I he objects and powers of the corpora-
tion, it is hereby "expressly declared and provided that the corporation shall have
power to issue bonds and other obligations in payment for property purchased or
acquired by it, or for any other object in or about its business; to mortgage or
pledge any stocks, bonds or oilier obligations or any property which may be
acquired by it, to secure any bonds or other obligations by it issued or incurred;
to guarantee any dividends or bonds or contracts or other obligations; to make and
perform contracts of any kind and description and iii carrying on iis business, or
for the purpose of attaining or furthering any of its objects, to do any and all other
acts and things, and In exercise any and all other powers which a, co-partnership or
natural person could do and exercise, ami which nowor hereafter may be authorized
by law. (U. 8. Steel Corporation charter.)
POWER TO DISPOSE OF ALL CORPORATE PROPERTY.
The board of directors shall have the power and authority to sell, assign, mort-
gage, convey, or otherwise dispose of all the property ami assets of the corporation
653
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
on such terms and conditions as they shall prescribe whether for cash or property
or stock and bonds in other corporations.
(I.) GENERAL PURPOSE CLAUSE.
To do and perform every act and thing necessary to carry out the above enu-
merated purposes in other States and jurisdictions which like corporations organized
under the law of such States and jurisdictions may lawfully do or cause to be done
therein.
(II.) GENERAL PURPOSE CLAUSE.
To foster, protect, and promote the business welfare and interests of persons
engaged in the business of and its product, and for the protection
and encouragement of such business by combining against impositions, fraud, and
oppression therein.
(III.) GENERAL PURPOSE CLAUSE.
To carry on any and all kinds of manufacturing and commercial, mercantile,
mechanical, trading, mining, or real estate business.
CLAUSES REGULATING BUSINESS.
(I.) CLASSIFICATION OF DIRECTORS.
The directors shall be divided as equally as possible into classes, to be known
as directors of the first, second, third classes, etc. The terms of office of director
of the first class shall expire on the first Monday of , 191 , and the second
class on the first Monday of , 191 , etc.
(II.) CLASSIFICATION OF DIRECTORS.
The number of directors may be increased in the manner provided by law. In
ease of any increase of the number of the directors the additional directors shall be
elected as may be provided in the by-laws by the directors or by the stockholders
at an annual or special meeting ; and one-third of the directors of the first class shall
be elected for the then unexpired portion of the term of the directors of the first
class ; one-third of their number for the unexpired portion of the term of the direc-
tors of the second class, and one-third of their number for the unexpired portion of
the term of the directors of the third class, so that each class of directors shall be
increased equally.
In case of any vacancy in any class of directors through death, resignation,
disqualification, or other cause, the remaining directors, by affirmative vote of a
majority of the board of directors, may elect a successor to hold office for the un-
expired portion of the term of the director whose place shall be vacant, and until
the election of a successor. (U. S. Steel Corporation charter.)
POWER TO ADOPT AND ALTER BY-LAWS.
Subject always to the by-laws made by the stockholders, the board of directors
may make by-laws and, from time to time, may alter, amend, or repeal any by-laws;
but any by-laws made by the board of directors may be altered or repealed by the
stockholders at any annual meeting, or at any special meeting, provided notice of
such proposed alteration or repeal be included in the notice of the meeting. (U. S.
Steel Corporation charter.)
AUTHORITY OF DIRECTORS TO ISSUE BONDS.
The directors and officers of the company are authorized to make and issue
bonds — either secured by mortgage or trust deed or otherwise — at such times and
in such amounts as to them shall be deemed advisable.
654
FORMS AND PRECEDENTS.
TO ISSUE STOCK AND BONDS IN EXCHANGE FOR REAL AND
PERSONAL PROPERTY.
The company may at any time, through its board of directors, issue its capital
stock or its corporate bonds in exchange for or in the purchase of real or personal
property, or for services performed for the use aud benefit of the corporation, in
such amounts as to said board of directors shall appear advisable in the premises.
And the judgment, of said board of directors in appraising the value of said real and
personal property or of said services, in consideration of which such stock or bonds
shall have been issued, shall be conclusive as to the value thereof.
LIMITATIONS ON THE RIGHT OF THE BOARD OF DIRECTORS
TO MORTGAGE AND PLEDGE.
Unless otherwise authorized, by votes given in person or by proxy by stock-
holders holding at least two-thirds of the capital stock of the company, which is
represented and voted upon in person or by proxy at a meeting specially called for
that purpose, or at an annual meeting, the board of directors shall not mortgage or
pledge any property of the company, or any shares of the capital stock of any other
corporation owned by it; but this prohibition shall not be construed to apply to the
execution of any purchase money mortgage or any other purchase money lieu.
EXAMINATION OF BOOKS BY STOCKHOLDERS.
Except where otherwise provided by law, the board of directors shall have the
power to determine under what conditions and regulations, and at what times and
places, the accounts and books of the corporation shall be opened to the inspection
of stockholders.
CUMULATIVE VOTING.
The by-laws may provide that at all elections of directors each stockholder shall
be entitled to as many votes as shall equal the number of his shares of stock multi-
plied by the number of directors to be elected, and that he may cast all of said
votes for a single director, or may distribute them among the number to be voted
for, or any two or more of them, as he may see fit, which right when exercised shall
be termed cumulative voting.
FIRST MEETING OF INCORPORATORS.
The first meeting of the corporation shall be called by a notice signed by a
majority of the incorporators named in the certificate of incorporation, designating
the time, place, and purpose of the meeting ; and such notice shall, at least two
weeks before the time of any such meeting, be published three; times in some news-
paper of the county where the corporation may be established or have its principal
place of business ; or said first meeting may be called without such publication of
notice if two days' notice thereof be personally served on all the parties named in
the certificate of incorporation, or if the parties named in the certificate of incorpo-
ration shall, in writing, waive notice and fix a time and place of meeting, then no
notice or publication thereof whatever shall be required of such first meeting.
HOLDING STOCKHOLDERS' MEETINGS WITHOUT THE
DOMICILIARY STATE.
To maintain an office without the State of (here name the domiciliary State), at
the city of , Mate of , and any meetings of incorporators, directors,
or stockholders of this company may be held at either of said offices or places of
business, and the books of this corporation may be kept at either of said offices or
places of business, and any incorporator or stockholder entitled to be present and
to vote at any organization or stockholders' meetings may be represented and vote
at such meeting by proxy in writing.
EXECUTIVE COMMITTEE (GENERAL FORM).
The Board of Directors, bv tin; affirmative voir of a majority of the whole number
may appoint from the Directors and Executive Committee, of which a majority shall
055
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
constitute a quorum, aiid to such extent as may be provided in the by-laws such
C > ii tnittee shall have aud may exercise all or any of the powers of the Board of
Directors, including power to cause the seal of the corporation to be affixed to all
papers that may require it. (U. S. Steel Corporation charter.)
EXECUTIVE COMMITTEE CLAUSE (NEW YORK).
An executive committee may be appointed by or from the Board of Directors in
such manner and subject to such regulations as may be provided in the by-laws,
whicli committee shall have and exercise all the powers of said board during the
intervals between the meetings of said board which may be lawfully delegated to
them, subject to such limitations as may be provided in the by-laws or by resolu-
tions of the board. The board of directors shall determine the compensation of
the members of the executive committee and of the board.
POWER TO PLACE STOCK IN VOTING TRUST.
Any stockholder may, by an agreement in writing, transfer his stock to any per-
son, for the purpose of vesting in him the right to vote thereon for a time not
exceeding five years, upon terms and conditions set forth in such agreement; and
such transferees shall in all things act, during the time limit of such agreement,
in such manner aud by such part, of their number as it shall provide, and shall
exercise such discretion in formulating or carrying out policies and plans of action
as may be granted to them in such agreement, and may elect one or more of their
number directors of the corporation.
POWER TO PLACE TITLES IN INDIVIDUALS.
If deemed desirable (and to the extent permitted by the local laws of each State
aud foreign country where the property may be situated, and subject always to
sueh local laws) the company may cause or allow the legal title, estate, and interest
in any property or business acquired, established, or carried on by the company to
remain or be vested, or registered in the name of or carried on by an individual or
by any other company or companies, foreign or domestic, formed or to be formed,
and either upon trust for, or as agents or nominees of, this company, or upon any
other terms or conditions which the board of directors may consider for the bene-
fit of this company, and manage the affairs or take over and carry on the business
of such company or companies so formed or to be formed, either by acquiring the
shares, stock, or other securities thereof or otherwise howsoever, and exercise all
or any of the powers of holders of shares, stocks, or securities thereof, and receive
and distribute as profits the dividends and interests on such shares, stocks, and
securities.
"SAFETY CLAUSE" FOR THE BENEFIT OF PROMOTERS, INCOR-
PORATORS, AND DIRECTORS.
To authorize and permit any or all of the promoters, incorporators, or directors
of the company, notwithstanding their relations — official or otherwise — to it, to
enter into, negotiate, consummate, and perform any contract or agreement of any
name or nature between the company and themselves, or any or all of the individu-
als from time to time constituting the board of directors of the company, or any
firm or corporation in which any such director, promoter, or incorporator may be
interested directly or indirectly, whether such individual or individuals, firm, or cor-
poration thus contracting with the company shall thereby derive personal or cor-
porate profit or benefits, or otherwise ; the intent hereof being to relieve each aud
every person who may be or become a promoter, incorporator, or director of the
company from any disability that might otherwise exist of contracting with the com-
pany for the benefit of himself, or of the copartnership or corporation in which he
may be in any wise interested.
LIMITATION ON AMOUNTS OF DIVIDENDS.
No dividends upon the capital stock of the company in excess of per cent
656
FORMS AND PRECEDENTS.
upon the entire amount thereof at any time outstanding shall at any time be declared
except upon the written consent of the holders of record of a majority of the stock at
such time outstanding, and not more than one such dividend of per cent shall
be declared in any one year except upon such written consent.
LIMITATION ON LIABILITY OF ORIGINAL SUBSCRIBERS TO
CAPITAL STOCK.
The subscribers hereto, and each other subscriber for the stock of the company,
shall at all times be liable for the purchase price of stock for which he subscribed
until per cent of the par value thereof has been paid thereon, but after the pay-
ment of said per cent the subscriber shall no longer be liable for any unpaid
part of his subscription exceptiug upou such shares as shall stand of record on the
books of the company in the subscriber's name at the time a call or assessment
is made ; but the holders of such shares of record on the books of the company,
and they only, shall be liable for the same.
RIGHTS OF SHAREHOLDERS TO PARTICIPATE IN PURCHASE
OF NEW STOCK ISSUE.
The board of directors shall, before the issue of any new shares of the capital
stock, determine that the same, or any part thereof, shall be offered in the first
instance to all of the then stockholders in proportion to the amount of the capital
stock held by them, or make any other provision as to the issue and allotment of
the new shares ; but in default of any such determination, or so far as the same
shall not extend, the new shares may be dealt with as if they formed part of the
shares in the original capital stock of the company.
POWER TO DIRECTORS TO FIX WORKING CAPITAL.
The board of directors shall have power from time to time to fix and to deter-
mine and to vary the amount of the working capital of the corporation, to determine
whether any, and if any, what part of any, accumulated profits shall be declared in
dividends and paid to the stockholders ; to determine the time or times for the
declaration and the payment of dividends ; and to direct and to determine the use
and disposition of any surplus over and above the capital stock paid in ; and in its
discretion the board of directors may use and apply any such surplus or accumu-
lated profits in purchasing or acquiring its bonds or other obligations, or shares of
the capital stock of the corporation, to such extent and in such manner and upon
such terms as the board of directors shall deem expedient ; but shares of such
capital stock so purchased or acquired may be resold, unless such shares have been
retired for the purpose of decreasing the capital stock of the corporation to the
extent authorized by law.
FORM FOR CLAUSE IN CHARTER PROVIDING FOR ISSUANCE
OF INTERIM CERTIFICATES IN LIEU OF CERTIFICATES OF
CAPITAL STOCK.
"The Board of Directors may, upon the payment of the capital stock of this
Company, either in whole or in part, in the manner above set forth, issue against
the money so paid, or the stock or bonds or real or personal property transferred
to the Company, or against the services rendered to the Company, non-transferable
interim certificates, which shall read in substance as follows, to wit :
This is to certify that on or before the day of , 190 , or before,
at the option of the Board of Directors of the Company, the holder hereof
will receive shares of the full-paid and non-assessable eaiiital stock of the
to be issued only upon the surrender of this certificate, properly
endorsed by the above-named holder or his legal representatives. This certificate
entitles the holder thereof to voting powers in said Company, equal to
the numb sr of shares named above, and further entitles the bolder thereof to all I lie
rights and privileges of a stockholder I hi • rein fco the number of shares set forth, and
657
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
further entitles the holder above named to all dividends that are declared upon said
Company stock prior to said , 190 , save and excepting that
this certificate shall not be transferred or assigned, prior to , 190 , save
and excepting upon the written consent of all or a majority of the Executive Com-
mittee of the° Company provided for in Section herein.
This certificate certifies further that it is issued by said Company
and accepted by the holder thereof, subject at all times to the terms and conditions
hereinbefore set forth. .
Witness the seal of the Company and the signatures ot its duly
authorized officers, affixed this day of , 190 ."
PROVISION FOR INTERIM CERTIFICATES IN LIEU OF
CERTIFICATES OF STOCK.
The board of directors of the company may at any time after organization and be-
fore any certificates of stock have been issued to any stockholder, or at any time, by
and with the consent of all the stockholders provide by resolution from and after the
date of the passage thereof, that in lieu of certificates of stock there shall be issued to
all stockholders in, or to all subscribers for the capital stock of , a corpora-
tion, " interim certificates," which shall state, over the signature of the president
and the of the corporation, the amount of stock in the company to
which the holder of said certificate may be entitled, together with a statement
that such certificate is non-transferable for a period of years thereafter, and
that at the expiration of said period, or sooner if the board of directors of said
company shall so elect, the holder thereof will receive the number of shares of stock
in the corporation named in said " interim certificate," said shares of stock so issued
to be full paid and non-assessable, and deliverable only on the surrender of said
" interim certificate," by the party therein named, or in case of his death by his
heirs, executors, or administrators. Said certificate shall further provide that the
holder thereof shall be entitled to voting powers in the corporation equal to the
number of shares of stock for which said " interim certificate " is issued, and shall
further entitle the holder thereof to all the rights and privileges possessed by
stockholders in corporations of a simdar character, save and excepting that the
said certificates shall not be transferable, nor shall the holders thereof be entitled
to demand as of right the exchange thereof for an equal amount of stock in the
company, until the expiration of the period limited in said certificate for that
purpose.
POWER TO BORROW.
To borrow money, to make and issue its bonds payable to bearer or otherwise,
and with or without interest coupons attached or drafts or notes for the same, or for
any debts or obligations incurred by it or for any of the purposes of the corpora-
tion, and to secure the same by mortgage or deed of trust on all of its works, prop-
erty, and franchises or any part thereof.
REMOVAL OF DIRECTORS.
Any officer or director, whether elected by the stockholders or named in the
certificate of incorporation or elected or appointed by the board of directors, may
be removed at any time, by affirmative vote of a majority of the stockholders of the
corporation with or without cause.
REMOVAL OF OFFICERS.
Any officer elected or appointed by the board of directors may be removed at
any time by the affirmative vote of a majority of the whole board of directors. Any
other officer or employee of the company may be removed at any time by vote of
the board of directors or by any committee or superior officer upon whom such
power of removal may be conferred by the by-laws or by a vote of the board of
directors. (U. S. Steel Corporation charter.)
658
FORMS AND PRECEDENTS.
POWER TO CONTRACT AND TO ACQUIRE REAL AND
PERSONAL ESTATE.
To contract and be contracted with, to purchase, hold, and grant sucli real and
personal estate as the purposes of the corporation shall require, and all other real
estate which shall have been bona fide, conveyed or mortgaged to the said corpora-
tion, or for its benefit, by way of security or in satisfaction of debts, or purchased
at sales upon judgment or decree obtained for such debts, and to mortgage or
pledge or convey by way of deed of trust, or otherwise encumber any such real or
personal estate as is mentioned in this section, together with the franchises of such
corporation in whole or in part. The power to hold real and persoual estate shall
include the power to take the same by gift, devise, or bequest
POWER TO APPOINT ADDITIONAL OFFICERS.
The board of directors may appoint not only other officers of the company, but
also one or more vice-presidents, one or more assistant treasurers, and one or more
assistant secretaries ; and to the extent provided in the by-laws the persons so
appointed respectively shall have and may exercise all the powers of the president,
of the treasurer, and of the secretary respectively.
TO LEND MONEY AND TO BECOME SECURITY FOR PERSONS
OR CORPORATIONS.
To lend money, or to extend credit, or to become security for individuals, firms,
and corporations with whom the company may have business dealings in the line of
carrying out the purposes for which the corporation was organized, whenever and
in such amounts as to the board of directors of this company may deem advisable
in the premises.
TO GUARANTEE DIVIDENDS.
To guarantee the payment of dividends on the capital stock, or of interest on the
notes or bonds of any other corporation engaged in cognate or allied lines of busi-
ness, whenever in the judgment of a majority of the board of directors of this cor-
poration such a guaranty shall seem proper or necessary for the business of the
corporation.
PARTNERSHIP CLAUSE.
To enter into partnership with one or more persons or corporations for the pur-
pose of carrying on in conjunction with them lines of business of the character
hereinbefore specified.
GENERAL CLAUSE PRESCRIBING POWERS OF BOARD OF
DIRECTORS.
1. To hold their meetings, to have one or more offices, and to keep the books
of the company within or without the State of , at such places as may be
from time to time designated by them ; but the company shall always keep at its
principal and registered office in a transfer book in which the transfers of
stock can be made, entered, and registered, and also a stock book containing the
names and addresses of the stockholders and the number of shares held by them
respectively, which said transfer book and stock book shall be at all times during
business hours open to the inspection of stockholders in person.
2. To determine from time to time whether, and if allowed, when, and under
what conditions and regulations, the accounts and hooks of the company (other
than the stock and transfer hooks), or any of them, shall he open to the inspection
of the stockholders, and the stockholders' rights in this respect are ami shall be
restricted and limited accordingly.
3. To make, alter, amend, and rescind the by-laws of this company, to fi\ the
amount to be reserved as working capital, to authorize and cause to be exeouted
G59
INCORPORATION AND ORGANIZATION OP CORPORATIONS.
mortgages and liens upon the real and personal property of the corporation, pro-
vided always, that a majority of the whole board concur therein.
4. With the consent in writing, and pursuant also to the affirmative vote of
the holders of a majority of the stock issued and outstanding, at a stockholders'
meeting duly called for that purpose, to sell, assign, transfer, or otherwise dispose
of the property of the company as an entirety, provided always that a majority of
the whole board concur therein.
5. By a resolution passed by a majority vote of the whole hoard under suit-
able provision of the by-laws to designate two or more of their number to constitute
an executive committee, which committee shall for the time being, as provided in
said resolution or in the by-laws, have and exercise all the powers of the board of
directors which may be lawfully delegated in the management of the business and
affairs of the company, and shall have power to authorize the seal of the company
to be affixed to all papers which may require it.
The company may use and apply its surplus earnings or accumulated profits
authorized by law to be reserved to the purchase or acquisition of property, and to
the purchase or acquisition of its own capital stock from time to time, to such
extent and in such manner and upon such terms as its board of directors shall
determine; and neither the property nor the capital stock so purchased and acquired,
nor any of its capital stock taken in payment or satisfaction of any debt due to the
corporation, shall be regarded as profits for the purpose of declaration or payment
of dividends, unless otherwise determined by a majority of the board of directors
or a majority of the stockholders.
To divide corporate assets in specie among the stockholders without dis-
solution.
The corporation may, with the unanimous consent of all its stockholders, first
obtained at a meeting duly convened for that purpose, distribute any or all of the
corporate property among such stockholders in proportion to their prospective
holdings.
POWER TO MAKE CONTRACTS.
To make and enter into contracts pertaining to the business of the company in
all parts of the United States and in foreign countries ; also to apply for, obtain,
accept, and utilize f rancliises and concessions from governments, States, and munici-
palities, in connection with the carrying out of the general purposes for which the
company is organized.
PROVISION MAKING STOCK NON-ASSESSABLE.
The capital stock of the corporation, after the same shall have been fully paid
in, in accordance with the statutes of this State in such case made and provided,
either in cash, or iu property or services, shall be and hereby is made forever
exempt from all liability for the corporate debts and obligations of the company,
and there shall thereafter be no individual liability thereon as to the holders thereof.
COMMON LAW POWERS.
1. To have succession by its corporate name, for the time stated in the certifi-
cate of incorporation, and when no period is limited, it shall be perpetual.
2. To sue and be sued, complain and defend, in any court of law or equity.
3. To make and use a common seal and alter the same at pleasure.
4. To hold, purchase, and convey real and personal estate, and to mortgage
any such real and personal estate with its franchises ; the power to hold real and
personal estate, except in the case of religious corporations, shall include the power
to take the same by devise or bequest.
5. To appoint such officers and agents as the business of the corporation shall
require, and to allow them suitable compensation.
6. To make by-laws not inconsistent with the Constitution or the laws of the
United States or of this State, fixing and altering the number of its directors for
the management of its property, the regulation and government of its affairs, and
660
FORMS AND PRECEDENTS.
for the qualification and transfer of its stock, with penalties for the breach thereof
not exceeding twenty dollars.
7. To wind up and dissolve itself, or to be wound up and dissolved in the
manner prescribed by law.
8. In addition to the powers above enumerated, this corporation, its officers,
directors, and stockholders shall possess and exercise all the powers and privileges
expressly conferred by law upon all corporations of its general character, and the
powers expressly given in its charter or in its certificate under which it was incorpo-
rated, so far as the same are necessary or convenient to the attainment of the
objects set forth in such charter or certificate of incorporation ; and shall be
governed by the provisions and be subject to the restrictions and liabilities estab-
lished by law for the government of business corporations in this State.
PREFERRED STOCK CLAUSES.
(I.) PREFERRED STOCK CLAUSES (Short Form).
The capital stock of the company shall consist of shares of common
stock of the par value of S per share, and shares of preferred stock
of the par value of $ per share. The rights of holders of preferred stock
shall be set forth, and determined by the by-laws to be adopted by the corporation
at its organization meeting. Such parts of said by-laws as relate to the rights
of preferred stockholders shall not thereafter be altered, amended, or rescinded
without the consent of all of said preferred stockholders.
(II.) PREFERRED STOCK CLAUSE (Short Form).'
The holders of preferred stock shall be entitled to non-cumulative dividends
thereon at the rate of, but not to exceed, per cent for each and every fiscal year
of the company, payable out of any and all surplus or net profits of the company annu-
ally, semiannually, or quarterly, as and when declared by the board of directors.
In the event of dissolution or liquidation of the corporation, the holders of the pre-
ferred stock shall be entitled to receive the par value of their preferred shares out
of the assets of the corporation before anything shall be paid thereon to the holders
of the common stock. The holders of the preferred stock shall be entitled to voting
powers in the corporation, in all respects the same as appertain to the holders of the
common stock.
(III.) PREFERRED STOCK CLAUSES.
The holders of preferred stock shall be entitled to cumulative (or non-cumula-
tive) dividends thereon at the rate of, but not to exceed, per cent for each
aud every fiscal year of the company payable out of any and all surplus or net prof-
its annually (semi-annually or quarterly), and when declared by the board of
directors. In the event of dissolution or liquidation of the corporation the holders
of the preferred stock shall be entitled to receive the par value of their preferred
shares out of the assets of the corporation before anything shall be paid thereon to
the holders of the common stock. The holders of preferred stock shall (not) be
entitled to (any) all voting powers in the corporation. The preferred stock shall
be subject to redemption at the option of the corporation at any time after the
day of , 190 , at the price of $ for each .share, and the amount
of dividends cumulated and unpaid thereon at the date of redemption.
The holders of preferred stock shall have the riffhl at any time to eon veil the same
into common sloek of the corporation by presenting the same to the treasurer of
the corporation for cancellation, and shall then he entitled to receive forthwith an
amount of common stock equal to the par value of the preferred stock so tendered
for purposes of conversion into common stock.
(i«;i
INCORPORATION AND ORGANIZATION OP CORPORATIONS.
(IV.) PREFERRED STOCK CLAUSE (Long Form).
From time to time the preferred stock and the common stock may be increased
according to law, and may be issued in such amounts and proportions as shall be
determined by the Board of Directors, and as may be permitted by law.
The holders of the preferred stock shall be entitled to receive when and as de-
clared, from the surplus or net profits of the corporation, yearly dividends at
the rate of per centum per annum, and no more, payable quarterly on
dates to be fixed by the By-Laws. The dividends on the preferred stock shall be
cumulative, and shall be payable before any dividends on the common stock shall
be paid or set apart ; so that, if in any year dividends amounting to per
centum shall not have been paid thereon, the deficiency shall be payable before any
dividends shall be paid upon or set apart for the common stock.
Whenever all cumulative dividends upon the preferred stock for all previous
years shall have been declared and shall have become payable, and the accrued
quarterly instalments for the current year shall have been declared, and the Com-
pany shall have paid such cumulative dividends for previous years and such accrued
quarterly instalments, or shall have set aside from its surplus or net profits a sum
sufficient for the payment thereof, the Board of Directors may declare dividends on
the common stock, payable then or thereafter, out of any remaining surplus or net
profits.
In the event of any liquidation, or dissolution, or winding up (whether voluntary
or involuntary) of the corporation, the holders of the preferred stock shall be entitled
to be paid in full, both the par amount of their shares and the unpaid dividends ac-
crued thereon, before any amount shall be paid to the holders of the common stock •.
and after the payment to the holders of the preferred stock of its par value, and the
unpaid accrued dividends thereon, the remaining assets and funds shall be divided
and paid to the holders of the common stock pro rata according to their respective
shares.
(V.) PREFERRED STOCK CLAUSES.
Special Clause for Cumulative Dividends.
The holders of the preferred stock shall be entitled to receive, when and as de-
clared from the surplus profits of the company, yearly dividends at the rate of six
per cent per annum, and no more, payable semiannually on dates to be fixed by
the by-laws. The dividends on the preferred stock shall be cumulative, and shall
be payable before any dividend on the common stock shall be paid or set apart, so
that if in any year dividends amounting to six per cent shall not have been paid
thereon, the deficiency shall be payable before any dividends shall be paid upon or
set apart for the common stock.
Whenever all cumulative dividends on the preferred stock for all previous years
shall have been declared aud shall have become payable, and the accrued semiannual
instalment for the current year shall have been declared, and the company shall
have paid such cumulative "dividends for previous years aud such accrued semi-
annual instalment or shall have set aside from its surplus or net profits a sum suffi-
cient for the payment thereof, the board of directors may declare dividends on the
common stock payable then or thereafter out of any remaining surplus or net prof-
its, provided, however, that the dividends upon the common stock shall be so lim-
ited that the same shall never in any one year exceed the rate of ten per cent, so
long as there shall remain outstanding and unredeemed any of the four and a half
per cent mortgage aud collateral trust gold bonds of the company.
In distribution of assets other than profits, there shall be paid, as far as the same
will go, first, upon the preferred stock to the amount of the par value thereof and
its six per cent cumulative dividends that are unpaid, if any, less the amount, if any,
paid thereon, in any previous distribution of such assets; next, upon the common
stock, to the amount of the par value thereof, less the amount, if any paid thereon in
any previous distribution of such assets, and then upon the two classes of stock
equally per share.
662
FORMS AND PRECEDENTS.
FORMS FOR DRAWING CHARTERS IN ALL
THE STATES AND TERRITORIES.
ALABAMA.
CERTIFICATE OF INCORPORATION
OF THE
Company.
Know all Men by these Presents : That we, the undersigned, associate our-
selves together for the purpose of forming a corporation under the laws of the State
of Alabama, and do declare
I. That the name of the corporation shall be Company (or
corporation).
II. The objects for which the corporation is formed are :
III. The location of the principal office of the corporation within the State is
IV. The amount of the capital stock shall be dollars ($ ), to be
divided into shares of the par value of ($ ) each. (If
preferred stock is desired this clause should read as follows : The amount of the
capital stock shall be dollars ($ ), of which shares of the
par value of dollars each shall be common stock and shares of
the par value of dollars ($ ) each shall be preferred stock. The pre-
ferred stock is entitled to preference and priority over the common stock in manner
following, to wit : )
The amount of capital stock with which the company will begin business will
be dollars ($ ).
V. That , residing in the City of , County of
, State of Alabama, is hereby designated by the undersigned as com-
missioner for said Company to receive subscriptions to the capital
stock thereof.
VI. The names and post-office addresses of the incorporators and the number
of shares subscribed for by each are as follows :
Names. No. of Shares. Addresses.
VII. The names and post-office addresses of the directors and officers chosen
for the first year are as follows :
Names. Post-office Addresses.
Directors.
Officers. Post-office Addresses.
President, — ■
"Vice-President,
Secretary,
Treasurer, —
VIII. The duration of the company shall be perpetual.
6G3
INCORPORATION AND ORGANIZATION OP CORPORATIONS.
IX. The following provisions for the regulation of the business and the con-
duct of the affairs of the company are hereby established :
In Witness Whereof, we have hereunto set our hands and seals this day
of , 190 . .
Signed, sealed, and delivered in the presence of :
State of Alabama, 7 sg
County of £
I } , a Notary Public in and for the said County and State,
do hereby certify that , whose names are signed to the foregoing
instrument, and who are known to me, have acknowledged before me this day that,
being informed of the contents of said instrument, they have severally executed the
same voluntarily on the day the same bears date.
Given under my hand this day of , 190 .
, Notary Public,
County,
Alabama.
TERRITORY OF ALASKA.
ARTICLES OF INCORPORATION
OF THE
Company.
We, the undersigned, , residents of the District of ,
Territory of Alaska, do by these presents, pursuant to and in conformity with the
provisions of Section Five of an Act of Congress, approved March 2nd, 1903, en-
titled " An Act Amending the Civil Code of Alaska, providing for the Organization
of Private Corporations and for other Purposes," associate ourselves together as a
body politic and corporate, and we do hereby certify in writing :
First. The corporate name and style of our said corporation shall be :
Second. The nature and character of the business to be carried on is as follows :
Third. The principal place for the transaction of the business of the corpora-
tion shall be at in the Territory of Alaska.
Fourth. The time for the commencement of this corporation shall be the date
of the filing of these articles of incorporation in the office of the Secretary of
the District of , Territory of Alaska, and the termination thereof
shall be fifty years thereafter.
Fifth. The capital stock of the corporation shall be
dollars, divided into shares of the par value of dollars per
share. (Also state how the same shall be paid in.)
Sixth. The highest amount of indebtedness or liability, direct or contingent, to
which this corporation is at any time subject shall be dollars.
Seventh. The names and residences of the incorporators of this corporation
are as follows :
Names. Addresses.
Eighth. The affairs of this corporation shall be conducted by a Board of
Directors who shall be elected annually by the stockholders. The names
and post-office addresses of the Board of Directors for the first year are :
Names. Addresses.
6G4
FORMS AND PRECEDENTS.
Ninth. The annual meeting of the stockholders for the election of a Board of
Directors shall be held on the day of in each year, and the
Board of Directors so elected shall hold office for a period of one year.
In Witness Whereof, we have hereunto set our hands and seals this day
of , 190 .
[■ ss.
State of
County of
I, , a Notary Public in and for said County and State, do hereby
certify that , personally known to me to "be the persons whose
names are subscribed to the foregoing instrument, appeared before me this day is
person, and acknowledged to me that they signed, sealed, and delivered the said
instrument in writing as their free and voluntary act for the uses and purposes
therein set forth.
Given under my hand and notarial seal this day of , 1904.
, Xotary Public.
County,
State of
ARIZONA.
ARTICLES OF INCORPORATION
OF THE
Company.
Know all Men by these Presents : That we, the undersigned, have this
day associated ourselves together for the purpose of forming a corporation, and for
that purpose do adopt the following charter :
First. The name of the corporation shall be :
Second. The names of the incorporators are :
Third. The principal place in which the business of the corporation within the
Territory of Arizona is to be transacted is at County, Arizona. The name
of the agent in charge thereof, and upon whom process may be served in any ac-
tion, suit, or proceeding that may be had or brought against the company in any
of the courts of Arizona, is , residing at the said city of
Territory of Arizona.
Fourth. The general nature of the business in which this corporation shall
engage is as follows, to wit :
Fifth. The authorized amount of capital stock of this corporation shall be
dollars, divided into shares of the par value of
dollars each. The Board of Directors may cause said capital siock or any part
thereof to be subscribed or paid for in cash, in the purchase or exchange or trans-
fer of real or personal property or for services rendered, and to issue or cause to
be issued any part or all of the capital stock as required, at anv time or from time
to tune, and when so issued it shall be fully paid and non-assessable, and in the
absence of fraud in the transaction, the judgment of the Board of Directors as
to the value of the property purchased or transferred or exchanged or services ren-
dered shall be conclusive. Shares of stock maj be voted by proxy at all stockhold-
ers' meetings.
Sixth. The time of the commencement of this corporation -hall be the date of
665
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
the filing of a certified copy of these articles of incorporation in the office of the
Territorial Auditor of Arizona, and termination thereof shall be twenty-five years
thereafter, with privilege of renewal thereof as provided by law.
Seventh. The affairs of this corporation shall be conducted by a Board of
Directors, who shall be elected annually by the stockholders at the annual stock-
holders' meeting. Until the first annual meeting of stockholders, and until their
successors are elected and qualified, the following named persons shall constitute
the Board of Directors of the corporation :
Eighth. The annual meeting of the stockholders shall be held on the
in of each year.
Ninth. The highest amount of indebtedness or liability, direct or contingent,
to which this corporation is at any time subject, shall be :
Tenth. The private property of the stockholders of this corporation shall be
exempt from corporate debts of any kind whatever.
Eleventh. (Here insert any clause that may be desired for the regulation of the
internal affairs of the corporation.)
In Witness Whereof, we have hereunto set our hands and seals this day
of , 190 .
[■ ss.
(seal.)
(seal.)
(seal.)
State of
County of
On this day of , 190 , before me, a Notary Public, in
and for the State aforesaid, residing therein, duly commissioned and sworn, per-
sonally appeared , known to me to be the persons described in, and
whose names are subscribed to the foregoing instrument, and they acknowledged
to me that they executed the same for the purpose and considerations therein
expressed.
In Witness Whereof, I have hereunto set my hand and affixed my official seal at
my office in the said State and County, the day and year last above written.
, Notary Public.
My commission expires :
ARKANSAS.
ARTICLES OF AGREEMENT AND INCORPORATION
OF THE
Know all Men by these Presents : That the corporators hereinafter
named have this day, and by these presents, formed a corporation under and in
pursuance of the laws of the State of Arkansas, in that behalf provided, for
" Incorporations for manufacturing and other lawful business," and in evidence
thereof do hereby execute the following Articles of Incorporation :
First. The name of said corporation shall be :
Second. The corporators are :
Third. The place of business is to be located at , and its office for
transaction of business shall be in or at such other place as the Board
of Directors may select.
Fourth. The' general nature of the business proposed to be transacted by this
corporation is :
Fifth. The amount of the capital stock of said corporation shall be
dollars ; of which dollars has been subscribed by the corporators afore-
said, and the residue thereof may be issued and disposed of as the Board of
JJirectors may from time to time order and direct.
666
FORMS AND PRECEDENTS.
Sixth. The said capital stock shall be divided into shares of the value
of dollars each.
Seventh. The atfairs and business of the corporation shall be conducted and
controlled by a Board of Directors, consisting of members, all of whom
shall be stockholders of the corporation. Said Board of Directors shall elect one
of its members as President, and one of its members as Vice-President, and shall
also elect a Secretary and Treasurer.
Eighth. The first election of Directors shall be held immediately after the
organization of the corporation, and said Directors shall serve for one year and
until their successors are elected.
Ninth. The Board of Directors are empowered to ordain and establish all
by-laws and regulations necessary to the management and business of said cor-
poration, and alter and repeal same at pleasure.
Tenth. The first meeting of said corporation or organization shall be held, in
at the office of at o'clock on the day of
, 190 . The subscribers hereto hereby waive notice of said meeting.
In Testimony Whereof, we have hereunto set our hands on this, the
day of , 190 .
CERTIFICATE.
Whereas, have associated themselves together as a body politic
and corporate, to be known as , and
Whereas, The said corporators, being the subscribers to the capital stock of
the said corporation, have waived the fifteen days' notice as required by law and
called a meeting for organization, to be held in at the office of
at o'clock on the day of , 190 .
Whereas, At the time and place above set out, a meeting of the subscribers
aforesaid was held to organize said corporation and elect Directors ; and
Whereas, At said meeting the following gentlemen were elected Directors,
to wit : , and
Whereas, At a meeting of the said Board of Directors was
elected President, and was elected Vice-President, and was
elected Secretary, and was elected Treasurer :
N >w, Therefore, The said as President, and the said
as President, do, in pursuance of law, issue this, their Certificate, verified by their
oaths, and do hereby certify as follows:
First. Said corporation is formed for the purpose of :
Second. Its capital stock is dollars, divided into shares of
dollars each.
Third. dollars of capital stock have been actually paid in by the
subscribers hereto.
Fourth. The names of the stockholders and the number of shares owned by
them, respectively, is as follows :
Names. No. of Shares.
In Testimony Whereof, the said , President of the said corpora-
tion, and , a majority of the Board of Directors of said corporation
have hereunto set their hands on this day of , 190 .
, President.
Directors. Directors.
GG7
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
State of Arkansas, )
County of £
on their oaths say that the matters and things in the foregoing certificate set out
are true, to the best of their knowledge and belief.
(Signed)
Subscribed and sworn to before me this day of , 190 .
In Testimony Whereof, I have hereunto set my hand and seal of office.
CALIFORNIA.
ARTICLES OF INCORPORATION
OP THE
Company.
Know all Men by these Presents : That we, the undersigned, a majority of
whom are citizens and residents of the State of California, have this day volun-
tarily associated ourselves together for the purpose of forming a corporation under
the laws of the State of California.
And We Hereby Certify,
First. That the name of said corporation shall be :
Second. That the purpose for which it is formed is :
Third. That the place where the principal business of said corporation is to be
transacted is :
Fourth. That the term for which said corporation is to exist is
years, from and after the date of its incorporation.
Fifth. That the number of Directors of said corporation shall be not less than
three, and that the names and residences of Directors, who are appointed for the
first year, and to serve uutil the election and qualification of their successors, are
as follows, to wit :
Names. Residences.
Sixth. That the amount of the capital stock of said corporation is
dollars, and the number of shares into which it is divided is , of the par
value of each.
Seventh. That the amount of said capital stock which has been actually
subscribed is dollars, and the following are the names of the persons
by whom the same has been subscribed, to wit :
Names of Subscribers. No. of Shares. Amount.
In Witness Whereof, we have hereunto set our hands and seals, this
day of , A. D. 190 .
Signed and sealed in the presence of
State of ?
County of $ Ss>
On this day of , in the year A. D. nineteen hundred and ,
before me, County, personally appeared ,
known to me to be the person whose name subscribed to the within in-
strument, and acknowledged to me that executed the same.
In Witness Whereof I have hereunto set my hand and affixed my official seal,
the day and year last above written.
(seal.) , Notary Public,
County.
008
FORMS AND PRECEDENTS.
State of l
County of j ss '
I, , County Clerk of , County of , State of ,
do hereby certify the within to be a full, true, and correct copy of Articles of Incor-
poration of as remains on file in this office.
In Witness Whereof, I have hereunto set mv hand and affixed mv Official Seal,
this day of , A. D. 190 .
, Clerk.
B , Deputy Clerk.
COLORADO.
CERTIFICATE OF INCORPORATION
OF
Know all Men by these Presents : That we, residents of the
State of , have associated ourselves together as a corporation under the
name and style of " The Company," for the purpose of becoming a
body politic and corporate, under and by virtue of the laws of the State of Colorado,
and in accordance witli the provisions of the laws of said State of Colorado, we do
hereby make, execute, and acknowledge these triplicate certificates in writing of
our intention so to become a body corporate by virtue of said laws, which when
filed shall constitute the articles of incorporation of
First.
The corporate name and style of our said company shall be :
Second.
The objects for which our said company is formed and incorporated are for
the following purposes, to wit : (the statement of objects must be very full, as
under Colorado laws there can be no amendment so as to enlarge the corporate
purposes).
Third.
The capital stock of said company is dollars, divided into shares
of the par value of dollars each, and said stock shall be non-assessable.
Fourth.
Said company is to exist for years.
Fifth.
The affairs and management of this company is to be under the control of a
Board of Directors, and are hereby selected to act as
said Board of Directors, and to manage the affairs and concerns of the said company
for the first year of its corporate existence.
Sixth .
The operations of the said company will be carried on in the County of ,
State of Colorado, and outside of said Slate of Colorado, in any State or Territory
of the United States, and the principal place of business and business office of said
company shall be located in the City of , in the County of , and State
of Colorado aforesaid.
Seventh
The Board of Directors shall have power to make such prudential by-laws as
they may deem proper for tin- management of the affairs of this company, according
to the statute in such case made and provided.
669
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Eighth.
Meetings of the Board of Directors may be held without the State of Colorado,
if the by-laws so provide.
In Testimony Whereof, we have hereunto set our hands and seals this
day of , 190 .
State of 7 ss
County of )
I, , a Notary Public in and for said County and State, do hereby
certify that , personally known to me to be the persons whose names
are subscribed to the foregoing instrument, appeared before me this day in person,
and acknowledged that they signed, sealed, and delivered the said instrument in
■writing as their free and voluntary act for the uses and purposes therein set
forth.
Given under my hand and notarial seal this day of , 190 .
, Notary Public.
My commission expires
CONNECTICUT.
CERTIFICATE OF INCORPORATION.
We, the subscribers, certify that we do hereby associate ourselves as a body
politic aud corporate under the statute laws of the State of Connecticut ; and we
further certify :
First. That the name of the corporation is (a) The Company,
Corporation, (b) Incorporated.
Second. That said corporation is to be located in the town of , in
the State of Connecticut.
Third. That the nature of the business to be transacted, and the purposes to
be promoted or carried out, by said corporation, are as follows •
Fourth. That the amount of the capital stock of said corporation hereby
authorized is dollars, divided into shares of the par value of
dollars each, which stock shall be divided into classes as follows :
Fifth. That the amount of capital stock with which this corporation shall
commence business is dollars.
Sixth. That the duration of said corporation is ««limited.
Seventh. The following provisions for the regulation of the business and the
conduct of the affairs of the corporation are hereby established :
Signatures op Incorporators.
Name. Residence.
of State of
of State of
of State of
of State of
of State of
of State of
of State of
of State of
of State of
of State of
of State of
Dated at this day of , 190 .
670
FORMS AND PRECEDENTS.
State of I gs
County of £
Personally appeared , being all of the incorporators of The-
and made solemn oath to the truth of the foregoing-
certificate by them respectively subscribed, before me.
, Notary Public.
CERTIFICATE OF ORGANIZATION".
The undersigned, a majority of the directors of The
located in the town of , hereby certify as follows :
First. That the amount of the authorized capital stock subscribed for is
shares, being shares of preferred stock and
shares of common slock, amounting to dollars, and being not less
than the full amount of dollars, with which the incorporators in the
certificate of incorporation stated the company would begin business.
Second. That the amount paid thereon in cash is dollars.
Third. That the amount paid thereon in property other than cash is
dollars.
Fourth. That dollars has been paid upon each share subscribed
for except shares, upon which dollars only has been paid.
Fifth. That the name, residence, and address of each of the original subscribers to
said stock, with the number aud class of shares subscribed for by each, are as follows :
Name. Residence. P. 0. Address. No. of Shares. No. of Shares.
Preferred. Common.
Sixth. That the directors and officers of said corporation have been duly
elected, and that its by-laws have been adopted.
Seventh. The name, residence, and post-office address of each of the officers and
directors of said corporation are as follows :
Name. Residence. P. O. Address.
President,
Vice-President,
Treasurer,
Asst. Treasurer,
Secretary,
Asst. Secretary,
Directors. Residence. P. O. Address.
Eighth. The location of its principal office in this State is No.
Street, , and the name of the agent or person iu charge thereof on
whom process against it may be served is
Dated at this day of
A Majority
of the
Directors.
State of Connecticut, )
County of J S3,
Personally appeared
signers of the foregoing certificate of organization, a majority of the Directors of
The , and made oath to the truth of the
same before me
, Notary Public.
, Justice of the Peace.
671
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
CERTIFICATE OF INCORPORATION.
Trust and Investment Company (Delaware Charter).
This is to Certify, that the undersigned do hereby associate themselves to
establish a corporation under and by virtue of the provisions of an Act of the
General Assembly of the State of Delaware, entitled " An Act Providing a General
Corporation Law," and do severally agree to take the number of shares of capital
stock as hereinafter stated, and that
First.
The name of the corporation is Company.
Second.
The principal office or place of business of the corporation in the State of Dela-
ware is to be located in the City of Wilmington, New Castle County, and said
office is to be registered with
Third.
The nature of the business and the objects and purposes proposed to be trans-
acted, promoted, or carried on by the corporation are as follows :
To carry on a banking and trust company business, and in connection there-
with to discount bills, notes, and other evidences of indebtedness ; to receive and pay
out, with or without interest, or receive on special deposit money, bullion or
foreign coin, stocks, bonds, or other securities ; to buy and sell foreign and domes-
tic exchange, gold and silver bullion, foreign coins, bonds, stock, bills of exchange,
notes, and other negotiable paper ; and to lend money on personal security. To
act as trustee for individuals and corporations.'
To carry on and undertake any business, undertaking, transaction, or operation
commonly carried on or undertaken by capitalists, promoters, financiers, contrac-
tors, merchants, commission men and agents, and in the course of such busiuess to
draw, accept, endorse, acquire, aud sell all or any negotiable or transferable instru-
ments and secui'ities, including debentures, bonds, notes, and bills of exchange.
To issue on commission, subscribe for, acquire, hold, sell, exchange, and deal in
shares, stocks, bonds, obligations, or securities of any public or private corporation,
government, or municipality, and the Company shall have express power to hold,
purchase, or otherwise acquire, to sell, assign, transfer, mortgage, pledge, or other-
wise dispose of shai-es of the capital stock, bonds, debentures, or other evidences of
indebtedness created by any other corporation or corporations, and while the
owner thereof to exercise all the rights and privileges of ownership, including the
right to vote thereon.
To form, promote, and assist financially or otherwise companies, syndicates,
partnerships, and associations of all kinds, and to give any guarantee in connection
therewith or otherwise for the payment of money, or for the performance of any
obUgation or undertaking. To acquire, improve, manage, work, develop, exercise
all rights in respect of, lease, mortgage, sell, dispose of, turn to account and other-
wise deal with property of all kinds, and in particular business concerns and
undertakings. To act as fiscal agent for persons, firms, and corporations.
To buy, or otherwise acquire, to hold, own, mortgage, pledge, sell, assign, and
transfer, or otherwise dispose of, and to invest, trade in, and deal in any goods,
wares, and merchandise and property of every class and description, including
patents and patent rights, inventions or other improvements, trade marks, options,
shares or rights in corporations, real property of any description, including mines,
railroads, and also bonds, mortgages, securities of any kind or description, or other
evidences of indebtedness, and investments or investment securities of any kind or
description whatsoever, to act as the agent for the sale or purchase of any of the
same, or for any other purpose connected with any of the said above-described
powers; to promote corporate enterprises of any kind, including industrial enter-
672
FORMS AND PRECEDENTS.
prises, railroads, mines, real estate companies, banking institutions, and all busi-
nesses or enterprises of any character, and to own and operate or finance the same ;
to aid in any manner any corporation or enterprise in which the Company is
interested; to endorse, underwrite, or guarantee stock, securities, or undertaking
of any corporation or persons.
To raise money by the issue of shares or otherwise, and to invest the moneys so
raised in the purchase of, or otherwise to acquire and hold any of the investments
following, that is to say, any stocks, bonds, debentures, shares, scrip, or securities
issued, or having any guarantee by any government, municipality, trust, local
authority, or other body, incorporated or unincorporated, public or private, of the
United States, or in any country or State under the protection of the United Stales,
or any stock, bonds, debentures, shares, scrip, or securities issued or having any
guarantee by any corporation or company incorporated, constituted or carrying on
business in the United States or elsewhere.
To borrow or raise money by the issue or sale of any bonds, mortgages, deben-
tures, or debenture stock of the Company, and to invest any money so raised in any
such investments as aforesaid.
To acquire any such investments as aforesaid by original subscription, under-
writing, participation in syndicates or otherwise, and whether or not fully paid up,
and to make payments thereon as called for, or in advance of calls or otherwise,
and to underwrite or subscribe for the same conditionally or otherwise, and either
with a view to investment or for re-sale or otherwise, and to vary the investments
of the Company, and generally to sell, exchange, or otherwise dispose of, deal with,
and turn to account any of the assets of the Company.
To negotiate loans, to offer for public subscription, or otherwise aid or assist in
placing any such investments as aforesaid ; to give any guarantee in relation to any
such investments issued by or acquired through the Company or otherwise.
To offer for public subscription any shares or stock 1 the capital of, or deben-
tures or debenture stock or other securities of, or othei ise to establish or promote,
or concur in establishing or promoting, any company, association, undertaking, or
public or private body.
To guarantee the payment of dividends or interest on any stock shares, deben-
tures, or other securities issued by, or any other contract or obligation of any such
company, association, undertaking, or public or private body.
To purchase, lease, hire, or otherwise acquire real and personal property, im-
proved and unimproved, of every kind and description, and to sell, dispose of,
lease, convey, and mortgage said property, or any part thereof ; to acquire, hold,
lease, manage, operate, develop, control, build, erect, maintain for the purposes of
said Company, construct, reconstruct, or purchase either directly or through
ownership of stock in any corporation, auy lands, buildings, offices, stores, ware-
houses, mills, shops, factories, plants, gas houses, machinery, rights, easements,
permits, privileges, franchises, and licenses, and all other things which may at any
time be necessary or convenient in the judgment of the Board of Directors for the
purposes of the Company. To sell, lease, hire, or otherwise dispose of the lands,
buildings, or other property of the Company or any part thereof.
To hold, purchase, or otherwise acquire, to sell, assign, transfer, mortgage,
pledge, or otherwise dispose of shares of the capital stock and bonds, debentures, or
other evidences of indebtedness created by other corporation or corporations, and
while the holder thereof, to exercise alf the rights and privileges of ownership,
including the right to vote thereon.
To conduct its business, and have one or more offices, and unlimitedly and
without restriction to hold, purchase, lease, mortgage, and convey real and personal
property in or out of this State, and in such place and places in the several States,
Territories, colonial possessions, or territorial acquisitions of the United States, as
shall from time to time be found necessary and convenient for the purposes of the
Company's business.
In General, to carry on any other business in connection therewith, whether
manufacturing or otherwise, and with all the powers conferred by the laws of
Delaware under the act hereinbefore referred to.
G73
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
It is the intention that the objects specified in the third paragraph shall, except
where otherwise expressed in said paragraph, be nowise limited or restricted by
reference to or inference from the terms of any other clause or paragraph in this
charter, but that the objects specified in each of the clauses of this paragraph shall
be regarded as independent objects.
Fourth.
The amount of the total authorized capital stock of the corporation is
dollars ($ ), divided into shares of the par value of dollars
each. The amount of capital with which the corporation will begin business is
dollars.
Fifth.
The names and places of residence of the original subscribers to the capital stock
a^e:
Names. Residences. No. of Shares.
Sixth.
The corporation shall have perpetual existence.
Seventh.
The private property of the stockholders shall not be subject to corporate debts.
Eighth.
The officers and persons by whom the affairs of the corporation are to be con-
ducted are its Directors, who may act through a President, Vice-President, Secre-
tary, and Treasurer, and such assistants to them and subordinate officers, agents, and
employes as may be selected pursuant to the by-laws of the corporation, the resolu-
tion of said Directors, or authority given by them.
Directors shall be elected at the principal office or place of business of the Com-
pany at the annual election to be held by the stockholders on the first
in iu each year between the hours of A. M. and P. M.
Ninth.
The Board of Directors shall have power without the assent or vote of the
stockholders to make, alter, amend, and repeal the by-laws of this corporation,
to authorize and cause to be executed mortgages and liens upon the real and
personal property of this corporation.
The Directors shall, from time to time, determine whether and to what extent
and at what times and places and under what conditions the accounts and books of
the corporation or any of them shall be open to the inspection of the stockholders ;
and no stockholder shall have any right to inspect any account or book of the cor-
poration except as conferred by statute or authorized by the Directors, or by a
resolution of the stockholders.
The Directors shall have power to hold their meetings, and to keep the books of
the corporation (except the stock and transfer books) outside of the State, at such
places as may be from time to time designated by them.
The corporation may conduct its business in the State of Delaware, in other
States, the District of Columbia, the Territories and Colonies of the United States
and in foreign countries, and may have one or more offices out of this State, and
may hold, purchase, mortgage, lease, and convey real and personal property out of
the State of Delaware.
Witnessour hands and seals this day of , 190 .
In presence of :
674
FORMS AND PRECEDENTS.
State of _ ? ss
County of \
Be it Remembered, that on this day of , A. D. 190 , per-
sonally came before me, , a Notary Public for the said State of ,
, the original corporators named in the foregoing certificate, who
signed and sealed the same, known to me personally to be such, and severally ac-
knowledged the same to be the act and deed of the signers respectively, and that the
facts therein stated are truly set. forth.
In Witness Whereof, I have hereunto set my hand and seal of office the day and
year aforesaid. , Notary Public.
DISTRICT OF COLUMBIA.
CERTIFICATE OF INCORPORATION.
We, the undersigned, being all of the trustees of the , a majority of
whom are residents of the District of Columbia, do by these presents, pursuant to
and in conformity with the provisions of six hundred and five (605) and six
hundred and six (606) of an Act of Congress, approved March 3rd. 1901, entitled
" An Act to establish a Code of Law for the District of Columbia," and with the
amendments thereto made by an Act approved June 30th, 1902, entitled " An Act
to amend an Act entitled ' An Act to establish a Code of Law for the District of
Columbia,' " associate ourselves together as a body politic and corporate, and we
do hereby certify in writing :
First. That the name of the company shall be :
Second. That the purposes for which said corporation is formed are :
Third. That the existence of this company shall be perpetual.
Fourth. That the capital stock of this company shall be dollars,
divided into shares of the par value of dollars each.
Fifth. That the number of trustees who shall manage the concerns of the com-
pany for the first year or until their successors are elected shall be, namely :
Names. Residences.
The Board of Trustees, by the affirmative vote of a majority of the whole Board,
may appoint from the Trustees an Executive Committee of members,
of which a majority shall constitute a quorum, and to such extent as may be pro-
vided in the by-laws, such committee shall have and may exercise all or any of
the powers of the Board of Trustees.
Sixth. That the place in the District of Columbia in which the operations
of the company are to be carried on is at in t he City of Washington,
District of Columbia.
Witness our hands this day of 190 .
City of Washington, \
District of Columbia, y
X ; , a Notary Public in and for the District of Columbia, do
hereby certify that , whose names arc signed to the
writing hereto annexed, bearing date the day of 190 , personally
appeared before me in the District of Columbia on the day and year aforesaid,
and separately, severally, and individually acknowledged the same before me, and
that they severally signed the same tor the purposes therein set forth.
Given under my hand and notarial seal day of , 190 .
, Notary Public.
(See page 817 for form of certificate of paymeni on capital Mock.)
675
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
FLORIDA.
(Form for publication of notice of intention to apply for charter.)
NOTICE OF INCORPORATION.
The undersigned hereby give notice that on , the day of
, A. D. 190 , at o'clock M, or as soon thereafter as they can
be heard, they will apply to the Honorable , Governor of the
State of Florida, at his office, in the Capitol Building of said State, in the City of
Tallahassee, for Letters Patent incorporating them, their associates and successors,
into a body politic and corporate in deed and in law, under the name of
Company, under the following Charter and Articles of Incorporation, the original
of which will be on file in the office of the Secretary of State of said State of
Florida, at the City of Tallahassee, during the time required by law for the publica-
tion of this notice.
(Names of incorporators.)
Charter of the Company.
The undersigned hereby agree to become associated together, and do hereby
associate themselves together for the purpose of becoming a body politic and
corporate under the laws of the State of Florida, the provisions of which are hereby
accepted. The following Articles of Incorporation shall constitute and become
its Charter upon the issuance of Letters Patent according to law :
1.
The name of this corporation shall be . Its principal office and place
of business shall be the City of , County, Florida. Branch
offices may be established at such other places as may be selected by the
Board of Directors.
2.
The general nature of the business to be transacted by the said corporation
shall be:
3.
The amount of capital stock of this corporation shall be dollars,
divided into shares of the par value of dollar each : said capital stock
shall be paid for in lawful money of the United States, ten per cent of which shall
be paid within ten days after Letters Patent shall have been granted and before
said corporation shall transact any business. The unpaid balances due on stock of
the subscribers hereto shall be paid in lawful money of the United States in such
instalments and within such time as may be designated by the Board of Directors,
provided that subscribers shall be entitled to ten days' notice of demand for such
deferred payments. The remaining stock shall be sold by the Directors from time
to time, as the same may be needed, at not less than its par value.
This corporation shall exist for a period of years, unless sooner dissolved
according to law.
The business of this corporation shall be conducted by a Board of not less than
nor more than Directors.
The Board of Directors shall select from themselves a President, Vice-President,
Secretary, and Treasurer. One person may hold the office of Secretary and Treas-
urer. Said Board of Directors shall have authority to appoint all necessary agents
of this corporation.
676
FORMS AND PRECEDENTS.
Annual meetings of the stockholders shall be held at the principal offices of tlie
corporation on the in of each year, at ten o'clock A. M.
or as soon thereafter as practicable, at which the Board of Directors shall be duly
elected by the stockholders.
The By-Laws for the government of this corporation shall be adopted at the
first annual meeting of the stockholders, or as soon thereafter as practicable.
Until a Board of Directors shall have been first duly chosen by the stockholders,
the business of the said corporation shall be conducted by the following named
persons and officers :
, President.
, Vice-President.
, Secretary.
, Treasurer.
Temporary By-Laws may be adopted by said officers until the first annual meet-
ing of the stockholders.
6.
The highest amount of indebtedness or liability this corporation shall at any
time subject itself is dollars.
7.
The names and residences of the subscribers to these Articles of Incorporation,
together with the amount of capital subscribed by each, are as follows:
Names. Residences. No. of Shares.
In Witness Whereof, we have hereunto set our hands this the day of
A. D. 190 .
(Signatures of subscribers.)
Witness :
State of Florida, 7 sg
County of )
I, , a Notary Public for the State of Florida at large, do hereby
certify that , who are to me well known, this day appeared before
me and each for himself acknowledged that he signed the foregoing Articles of
Incorporation and the accompanying notice for the uses and purposes therein
stated.
la Witness Whereof, I have hereunto set my hand and seal of office this
day of , A. D. 190 .
, Notary Public.
State of Florida at large.
Commission expires
GEORGIA.
APPLICATION FOR CHARTER.
State of Georgia,
County of , To the Superior Court of said County.
The petition of respectfully shows -.
I. That they desire for themselves, their associates, successors, and assigns, to>
be constituted a body corporate under the name and style of Company,
for the term of twenty years with the privilego of renewal at the expiration of said
lime as provided by law.
II. They desire for said corporation the right to buy, sell, hold, encumber, and
otherwise depose of real and personal property, which may be necessary and udvau-
G77
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
tageous to the purposes of said corporation, to sue and be sued, and to have a
common seal, to receive donations by gift or will, to make by-laws for its govern-
ment, elect directors for the management of its affairs and confer upon them the
rio-ht to elect officers and appoint employees, together with all other rights, powers,
and privileges, incident, useful, or necessary to carry into effect the purposes of the
corporation as hereinafter set forth or for securing debts due it.
III. The object of the corporation is pecuniary gain to its stockholders.
IV. The particular business proposed to be carried on by said corporation is :
V. The capital stock of said corporation shall be dollars, divided into
shares of dollars each ; at least ten per cent of which is to be
actually paid in before commencing business. But petitioners desire that said cor-
poration shall have the right to increase said capital stock to any amount not
exceeding dollars, whenever the holders of a majority of the stock may so
determine.
VI. The principal place of business of said corporation shall be in the City of
, County and State aforesaid, but petitioners desire that said corporation
shall have the right to establish brauch offices or agencies at any other places, either
within or without the State of Georgia, as the holders of a majority of the stock
may determine upon.
Wherefore petitioners pray that after this petition has been filed and published
in accordance with the law an order be passed by the Court declaring them a body
corporate under the name and style aforesaid, and granting to said corporation all
the right, power, and privileges set out and prayed for in this application, or which
may be incident, usual, and necessary under the laws of said State, for the purposes
of their incorporation. And your petitioner will ever pray, etc.
, Petitioner s Attorney.
IDAHO.
ARTICLES OF INCORPORATION
OF THE
Company.
Know all Men by these Presents : That we, the undersigned, at least one of
whom is a bona fide resident of the State of Idaho, have this day voluntarily as-
sociated ourselves together for the purpose of forming a corporation under the laws
of the State of Idaho. And we hereby certify :
First. That the name of the corporation shall be :
Second. That the purpose for which it is formed shall be :
Third. That the place where the principal business is to be transacted is :
Fourth. That the term for which it is to exist is (not to exceed fifty
years) from and after the date of its incorporation.
Fifth. That the number of its directors (or trustees) shall be (a majority
must be, in all cases, citizens, and actual bona fide residents within the State), and
the names and residences of those who are appointed for the first year are :
Sixth. That the amount of the capital stock of said corporation is dol-
lars, and the number of shares into which it is divided is , of the par value
of dollars each.
Seventh. That the amount of capital stock which has been actually subscribed
is dollars, which has been subscribed by the following persons :
Names of Subscribers. No. of Shares. Par Value.
In Witness Whereof, we have hereunto set our hands this day of
A. D. 190 .
Signed and executed in the presence of :
678
FORMS AND PRECEDENTS.
State of )
County of $
On this day of , A. D. 190 , before me personally
appeared , known to me to be the persons whose names are subscribed
to the within instrument, and acknowledged to me that they executed the same.
In Witness Whereof, I have hereunto set my hand and affixed my Official Seal
the day and year in this certificate first above written.
(seal.)
ILLINOIS.
State of Illinois, }
County of £ SS *
To , Secretary of State :
"We, the undersigned, , propose to form a corporation,
under an Act of the General Assembly of the State of Illinois, entitled" An Act
Concerning Corporations," approved April 18th, 1872, and all acts amendatory
thereof; and for the purpose of such organization we hereby state as follows,
to wit :
First. The name of such corporation is :
Second. The objects for which it is formed are :
Third. The capital stock of the company shall be dollars.
Fourth. The amount of each share is dollars.
Fifth. The number of shares is
Sixth. The location of the principal office is at No. Street, in the City of
, in the County of , State of Illinois,
Seventh. The duration of the corporation shall be (not to exceed ninety-nine)
years.
State of Illinois, 7
County of )
I, , a Notary Public in and for the County of and State
of Illinois, do hereby certify that on the day of , 190 , personally
appeared before me , to me personally known to be the same
persons who executed the foregoing statement, and severally acknowledged that
they executed the same for the purposes therein set forth.
In Witness Whereof, I have hereunto set my hand and seal the day and year
above written.
Notary Public.
(seal.)
To ,
Secretary of State of the State of Illinois :
The Commissioners, duly authorized to open Books of Subscription to the capital
stock of the Company, pursuant to license heretofore issued, bear-
ing date the day of , A. D. 190 , do hereby report that they
opened Books of Subscription to the Capital Stock of said Company, and that
the said stock was fully subscribed ; that the following is a true copy of such
subscription, viz. :
We, the undersigned, hereby severally subscribe for the number of shares set
opposite our respective names, to the Capital Stock of Company,
(;7!»
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
and we severally agree to pay the said Company, for each share, the sum of
dollars.
Name. Shares. Amount.
That the aforesaid stockholders waived notice of the time, place, and object of
the nieeliug of stockholders herein next set forth, which was held on ,
A. D. 190 , at which meeting directors were elected as stated herein, and the fol-
lowing is the original waiver :
We, the undersigned, being all of the stockholders of the Com-
pany, organized under the laws of the State of Illinois, do hereby severally waive
notice of the time and place of the meeting of the stockholders of said
company, and the purpose thereof, and any and all every notice required by the
laws of the State of Illinois.
That on the day of , A. D. 190 , at the , Illinois,
at the hour of M., they convened a meeting of the subscribers aforesaid
pursuant to notice required by law, which said notice was deposited in the post-
office, properly addressed to each subscriber, ten days before the time fixed therein,
a copy of which said notice is as follows, to wit :
To
You are hereby notified that the Capital Stock of has been fully
subscribed, and that a meeting of the subscribers of such stock will be held at
on the day of A. D. 190 , at
o'clock M., for the purpose of electing a Board of Directors for said Com-
pany and for the transaction of such other business as may be deemed necessary.
Signed
Commissioners.
That said subscribers met at the time and place in said notice specified, and pro-
ceeded to elect Directors, and that the following persons were duly elected for the
term of year , viz. :
And that the post-office address of the business office of said Company is at
Number Street in the City of ,in the County of
and State of Illinois.
— > Commissioners.
State of )
County of $ ss *
On this day of , A. D. 190 , personally appeared before me,
a Notary Public in and for said County in said State, , and made oath
that the foregoing report by them subscribed is true in substance and in fact.
, Notary Public.
680
FORMS AND PRECEDENTS.
INDIANA.
ARTICLES OF INCORPORATION
OF TUE
Company.
We, the undersigned, hereby associate ourselves together pursuant to the stat-
utes of tne State of Indiana for the organization of corporations by the following
written articles :
Art. One. — Name.
The name shall be :
Art. Two. — Capital Stock.
The capital stock of this association shall be dollars, divided into
shares of dollars each.
Art. Three. — Object.
The object of this association and the proposed plan for the transaction of its
business shall be :
(To be stated in all cases. Care should be taken to name as broad an object as
possible and at the same time to avoid mentioning any of the proposed powers of
the corporation.)
Art. Four. — Place of Operations.
The business of this corporation shall be carried on in :
(To be stated in all cases. Where the work is from one point to another, this
should be stated. For railroads, name all counties through which the road passes
and give length as near as possible.)
Art. Five. — Number of Directors.
There shall be directors for this corporation, who after the first year
shall be elected annually by the stockholders. All the corporate officers shall be
appointed by the directors.
Art. Six. — Directors for First Year.
The following directors shall manage the business and prudential concerns of
this corporation for the first year of its existence.
Art. Seven. — Term of Existence.
The association shall have an existence of (not to exceed fifty) years
from the date hereof.
In Witness Whereof, we have hereunto set our hands this day of
, A. D. 190 .
(The subscribers affix, in addition to their names, their residences, and, if a stock
corporation, the number of shares taken by each. In the case of savings banks
state occupation and post-office address. Articles for the incorporation of educa-
tional and religious corporations must be sworn to. Articles for Board of Trade,
steam packet, telegraph, telephone, building and loan, health resort, Y. M. 0. A.,
boards of relief for orphans, etc., and manufacturing companies must be acknowl-
edged as deeds are acknowledged. All others are signed merely.)
State of Indiana, >
County of >
Be It Remembered, that on this day of , 190 , before me, a
Notary Public, in and for County, Indiana, duly commissioned and qualified,
personally appeared (names of incorporators) the parties named in the foregoing
Articles of Incorporation, and severally acknowledged the; execution of the same.
In Witness Whereof, I have hereunto set my hand and affixed my official seal
the day and year aforesaid.
Notary Public,
Count \, Indiana.
681
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
IOWA.
ARTICLES OF INCORPORATION
OF THE
Company.
We, whose names are hereunto subscribed, have associated ourselves as a body
corporate, under the provisions of Chapter 1, Title IX. of the Code of Iowa, and
acts amendatory thereto, and to that end have adopted the following articles of
incorporation.
Article I.
The name of this corporation shall be :
Article II.
The principal place of business of this corporation shall be at the city of
in the county of , and State of Iowa.
(Note. If the corporation does not transact business in this State, it is not necessary that
the articles name its principal place of business, or that such principal place of business be in
this State.)
Article III.
The general nature of the business to be transacted by this corporation shall be :
(Note. It is customary to state the general nature of the business to be transacted quite
fully, making this statement broad enough to cover all the contingencies that may possibly
arise.)
Article IV.
This corporation shall have all of the powers necessary for, or incidental to, the
convenient transaction of the business for which it has been organized, including
the power to borrow money, and to issue its negotiable notes, bonds, or other evi-
dences of such indebtedness, and to secure the repayment of the same by liens
upon all or any portion of its property, real or personal, by way of mortgage or
otherwise, and including the power to own, lease, buy, and sell real estate ; and
further among its powers shall be the following :
1. To have perpetual succession;
2. To sue and be sued by its corporate name ;
3. To have a common seal, which it may alter at pleasure ;
4. To render the interests of the stockholders transferable ;
5. To exempt the private property of its members from liability for corporate
debts ;
6. To make contracts, acquire and transfer property, — possessing the same
powers in such respects as natural persons ;
7. To establish by-laws, and make all rules and regulations necessary for the
management of its affairs.
(Note. This section is not absolutely necessary. It is, however, customary, and the pro-
visions, especially with reference to borrowing money, etc., will be found in actual practice
to facilitate such transactions.)
Article V.
The amount of the authorized capital stock of this corporation is the sum of
dollars divided into shares, each of the par value
of dollars. Not less than dollars of the capital stock
of this corporation shall be paid in in cash, or in property at its reasonable cash
value, before the corporation transacts business except the business incident to its
organization.
682
FORMS AND PRECEDENTS.
(1) The remainder of the capital stock of this corporation shall be issued and
paid in from time to time as the boar I of directors may direct.
(2) The par value of all stock shall be paid in, either in cash or in property at
its reasonable cash value, at the time that the stock is issued.
(Note. The sentence indicated as (1) above, may be omitted if the stock is all to be
paid in when the corporation commences business. If it is not all to be so paid in, there
should be something of this character inserted, prescribing when the remainder of the stock
shall be issued. The sentence (1) follows the method usually adopted in Iowa, but any
method may be adopted which makes the articles state when the stock not issued when the
corporation is organized shall be issued.)
(Sentence (2) above, should be omitted unless the stock is to be paid up as stated. If the
stock is to be paid up entirely in cash when issued, or all of it in property when issued,
modify this article to conform to the facts. It is not essential that this sentence be inserted,
but if the stock is to be fully paid, it is desirable that the articles should show it.)
Article VI.
This corporation shall commence on the day of , A. D. 19 , and
shall continue for the term of twenty years thereafter, with the right of renewal as
prodded by law, unless sooner dissolved by a vote of not less than of the stock
then outstanding.
(Note. Under the law it takes unanimous consent to dissolve before the expiration of
the term unless the articles provide otherwise. It is therefore not unusual to put in a pro-
vision that a designated majority, as two-thirds or three-fourths, may dissolve the corpora-
tion. The italicized portion above is, however, not necessary, if such right is not desired.)
Article VII.
The affairs of this corporation shall be conducted by a board of not less than
nor more than directors.
Within said limits the number of directors may be fixed by the stockholders at
anv regular or special meeting; until otherwise fixed by the stockholders the board
of directors shall consist of members.
The board of directors shall have general charge of the business and affairs of
this corporation, and all of the powers of this corporation are vested in its board
of directors except as otherwise provided by law, or by the by-laws of this corpora-
tion, and subject to such action restricting said powers as may be taken from time
to time by the stockholders, either at an annual or at a special meeting, duly called
therefor.
The directors of this corporation may delegate their powers and may in writing
authorize others to act for them, as their proxies, at any meeting or meetings of
its board of directors ; provided, however, that the stockholders of this corpora-
tion may at any time limit, restrict, or prohibit such delegation of power by its
directors, and while so limited or restricted said power shall only be delegated pur-
suant to such limitations or restrictions; and if so prohibited it shall not be dele-
gated during the continuance of such prohibition.
(Note. Much of the above is not necessary. It has, however, proved to be a matter of
verv great convenience. In lieu of the above the following article would till the requirements
of the law :
" The affairs of this corporation shall be conducted by a board of directors
who shall have general charge of its business.")
Article VIII.
The officers of this corporation shall be a president, vice-president, secretary,
and treasurer. The directors may appoint a cashier and executive committee and
such other officers as the convenient transaction of its business may require.
All officers and directors of this corporation shall hold office for one year, M
until their successors are chosen and qualified, and anv vacancy i" any office, or in
the board of directors, may be filled by the remaining directors until the successor
(is:;
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
of the person thus chosen to fill such vacancy is elected by the stockholders or
directors, at an annual or special meeting, and has duly qualified.
Article IX.
The board of directors of this corporation shall be elected at the annual meeting-
of the stockholders, which shall be held on the second Tuesday of in each
year, commencing with the year A.D. 19 , at the principal office of the company
at such hour as may be fixed by the directors or by the by-laws. The officers of
this corporation shall be chosen by the directors at the annual meeting of the
directors, which shall be held each year immediately after the annual meeting of
the stockholders.
Until the annual meeting of the stockholders in the year A.D. 19 , and until
their successors are chosen and have qualified, shall constitute the board
of directors of this corporation, and its officers shall be president,
vice-president, secretary, and treasurer.
(Note. Of course any date may be fixed for the annual meeting.)
Article X.
Each director shall be a stockholder, and if any director shall cease to be a stock-
holder he shall forthwith by virtue of that fact cease to be a director. Two or more
offices may be held by the same person at the same time.
(Note. The preceding article is not necessary to a legal organization.)
Article XL
At all meetings of the stockholders each stockholder shall be entitled to one
vote for each share of stock held by him, which votes may be cast either in person
or by proxy duly authorized in writing.
(Note. The preceding article is not necessary to a legal organization).
Article XII.
The highest amount of indebtedness to which this corporation shall at any time-
subject itself shall be an amount not in excess of two-thirds of its capital stock then
issued and outstanding.
Article XIII.
The private property of the stockholders of this corporation shall be exempt from
corporate debts.
Article XIV.
These articles may be amended at any annual meeting of the stockholders or at
any special meeting called for that purpose ; but no such amendment shall be made
without the affirmative vote in its favor of of the shares of stock then
outstanding.
(Note. This article is probably unnecessary but it is better to have it, and it is re-
quired, if an amendment by a bare majority of a quorum is to be precluded.)
In Witness Whereof, we have hereunto subscribed our names on this day
of A. D. 19 .
State of ")
County of ) ss '
Before me, , a notary public, in and for said county, personally
appeared , said persons being to me personally known to be the iden-
tical persons whose names are subscribed in the foregoing articles of incorporation*
684
FORMS AND PRECEDENTS.
■and each for himself acknowledged the same to be his free and voluntary act and
deed for the uses and purposes therein expressed.
Witness my hand and notarial seal at , in the county of
and State of Iowa, the day and year last above written.
, Notary Public in and for said count;/ and State.
(Note. It is not necessary that the incorporators subscribe for any stock, and they
need not become stockholders.)
KANSAS.
APPLICATION FOR CHARTER.
To the Charter Board of the State of Kansas : The undersigned hereby apply to
the Charter Board of the State of Kansas, consisting of the Attorney-General, Secre-
tary of State, and State Bank Commissioner, for permission to organize a private
corporation under the law of the State of Kansas, and for that purpose make the
following statement, to wit :
First.
The name of the proposed corporation shall be :
Second.
The place where the principal office or place of business of said corporation is
to be located is :
Third.
The length of time for which said corporation is to exist shall be years.
Fourth.
The full nature and character of the business in which said corporation proposes
to engage is :
Fifth.
The names and addresses of the proposed incorporators are :
Sixth.
The proposed amount of the capital of said corporation is dollars, to
be divided into shares, of dollars each.
We further state that the above application is made in good faith, with the in-
tention that said corporation shall actually engage in the business specified, and
none other.
In Witness Whereof we, the above-named incorporators, have hereunto sub-
scribed our names, this day of , A. D. 190 .
State of Kansas, )
County of \
Personally appeared before me, a , in and for said county and State,
the above-named , who are personally known to me to be the
same persons who executed the foregoing instrument in writing, and they each
duly acknowledged the execution of the same.
In Testimony Whereof, I have hereunto subscribed my name and affixed my seal,
this day of , A. D. 190 .
(My commission expires , 190 .)
G85
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
CHARTER
OF
The undersigned, citizens of the State of Kansas, do hereby voluntarily associate
ourselves together for the purpose of forming a private corporation under the laws
of the State of Kansas, and do hereby certify :
First.
That the name of this corporation shall be The
Second.
That the purposes for which this corporation is formed are to :
Third.
That the place where its business is to be transacted at :
Fourth.
That the term for which this corporation is to exist is :
Fifth.
That the number of directors of this corporation shall be , and the
names and residences of those who are appointed for the first year are :
Sixth.
That the estimated value of the goods, chattels, lands, rights, and credits owned
by the corporation is dollars.
That the amount of the capital stock of this corporation shall be dol-
lars, and shall be divided into shares, of dollars each.
Seventh.
That the names and residences of the stockholders of said corporation, and the
number of shares held by each, are as follows, to wit:
Names. Residences. No. of Shares.
In Testimony Whereof, we have hereunto subscribed our names, this
day of , A. D. 190 .
State of Kansas, }
County, |
Personally appeared before me, a Notary Public in and for County,
Kansas, the above-named who are personally known to me to
be the same persons who executed the foregoing instrument of writing, and duly
acknowledged the execution of the same.
In Testimony Whereof, I have hereunto subscribed my name and affixed my
notarial seal, this day of , A. D. 190 .
(seal )
, Notary Public.
(My commission expires .)
Office of Treasurer of State.
Received of the sum of dollars, the same being the
Charter Fee for the
Dated this day of , A. D. 190 .
, Treasurer of State of Kansas.
By
686
FORMS AND PRECEDENTS.
KENTUCKY.
ARTICLES OF INCORPORATION.
The corporators whose names are hereto signed have executed these articles of
incorporation for the purpose of forming a corporation under the laws of the State
of Kentucky, in accordance with the following provisions :
1. The name of the corporation shall be:
2. The place where the principal office of the corporation shall be is the City of
, County of , State of Kentucky.
3. The purposes for which this corporation is formed are :
4. The amount of the capital stock of this corporation shall be
dollars, divided into shares of the par value of dollars each. (If
preferred stock is desired, insert provision therefor at this point.)
5. The names and residences of the stockholders and the number of shares sub-
scribed for by each are as follows :
6. This corporation shall begin on , and the period of continuance shall
be years (or perpetual).
7. The affairs of the corporation are to be conducted by (state the officers to
conduct the affairs of the corporation), who shall be elected annually at (name, time,
and place).
8. The corporation shall not at any time incur a higher amount of indebtedness
or liability than dollars.
9. The private property of the stockholders shall not be subject to the corpo-
rate debts (or shall be subject, and state to what extent).
In Witness Whereof, we have hereunto subscribed our names this day of
, A. D. 190 .
State of Kentucky, \
County of \ ss>
I , a Notary Public in and for said county and State, do hereoy
certify that this instrument of writing from (here insert names of incorporators) was
this day produced to me by the above parties, and was acknowledged by the
said to be their act and deed.
Given under my hand and seal this day of , 190 .
, Notary Public.
LOUISIANA.
CERTIFICATE OF INCORPORATION
Company.
State of Louisiana,
Parish of ,
City of
Be It Known, that on this day of , in the year one thousand
nine hundred and , before me, , a Notary Public in and for the
Parish of , State of Louisiana, duly commissioned and qualified, and in the
presence of the witnesses hereinafter named and undersigned, personally came and
appeared the persons whose names are hereunto subscribed, all above the lull ae;e
01 majority, who severally declared that, availing themselves of the provisions of
the laws of this State relative to the organization of corporations, they have formed
and organized, and by these presents do form themselves and of those whom they
represent into and constitute a corporation and body politic in law for the objects
v INCORPORATION AND ORGANIZATION OF CORPORATIONS.
;aud purposes, and under the stipulations and agreements hereinafter set forth and
expressed, which they hereby adopt as their charter. (If a limited corporation is
to be formed, the above clause should read, from the words " availing themselves,"
as follows: Availing themselves of Act 36 of 1888 as well as the general laws of
the State relative to the organization of corporations, they hereby form themselves
into and constitute a corporation for the objects and purposes, and under the stip-
ulations hereinafter set forth : )
Article 1.
The name and title of the corporation hereby formed is declared to be
Its domicile shall be in the City of , State of Louisiana, and it shall
have and enjoy succession by its corporate name for a period of years
from and alter the date hereof.
This corporation shall have power and authority to contract, sue, and be sued
in its corporate name ; to make and use a corporate seal ; to hold, receive, hire,
and purchase real and personal property and to sell, mortgage, or pledge the same,
and to borrow money and issue bonds, notes, and other obligations.
All citations or other legal process shall be served upon the President, and in
the event of his absence or inability to act from any cause, the same shall be served
upon the Vice-President or Secretary-Treasurer.
Article II.
The objects and purposes for which this corporation is organized, and the nature
of the business to be carried on by it are hereby declared to be :
(Objects and purposes.)
Article III-
The capital stock of this corporation is hereby fixed at the sum of dol-
lars, divided into and represented by shares of the par value of
dollars, which shall be paid for in at the time of subscription.
This corporation shall commence business as soon as dollars of its cap-
ital stock shall have been subscribed for.
Article IV.
All the corporate powers of this corporation shall be vested in and exercised by
a board of directors, to be composed of stockholders, of whom
shall constitute a quorum for transacting all business. The Board of Directors
shall be vested with full power and authority to make all contracts, purchases, and
sales, and adopt all by-laws, rules, and regulations for the government of the busi-
ness and affairs of the company, and alter, amend, and change the same at pleasure ;
.appoint, hire, and discharge all officers, agents, and employees, fix all salaries, and
generally do and perform all things necessary in the transaction of the business and'
affairs of the company. Any vacancy occurring in said board shall be filled by the
stockholders in the manner as provided for in the election of directors.
The first Board of Directors of this corporation shall consist of (names), with
the said as President, as Vice-Presideut, and
as Secretary-Treasurer, who shall hold their offices until the
first (name day) in ,'l90 , or until their successors are duly elected and
qualified.
On the first (name day) in , 190 , and annually thereafter, an election
.for directors shall be held at the office of the company, under the supervision of
commissioners to be appointed by the President, and the directors then
elected shall take their seats immediately and shall hold office until their successors
are duly elected aud qualified. Each board shall elect its own officers, which shall
fconsist of a President, a Vice-President, and a Secretary-Treasurer.
All corporate elections shall be by ballot, and a majority of the votes cast shall
688
FORMS AXD PRECEDENTS.
elect, and each share of stock shall be entitled to one vote either in person or by
proxy.
Written notice of elections shall be given to each stockholder by the Secretary-
Treasurer at least days prior to elections.
Article V.
This act of incorporation may be changed, altered, or modified, or this corpora-
tion dissolved, with the assent of three-fourths of the stock present or represented
at any general meeting of the stockholders convened for that purpose after thirty
days' prior notice of such meeting shall have been given by publication in one of
the daily newspapers published in the City of by five publications during
said period, and such changes as may be made in reference to the capital stock
shall require in addition days' notice in writing to each stockholder.
Article VI.
Whenever this corporation is dissolved, either by limitation of its charter or
from any cause, its affairs shall be liquidated by commissioners to be appointed
from among the stockholders at a meeting of the stockholders convened for that
purpose after days' prior notice shall have been given by the Secretary to
each stockholder. Said commissioners shall remain in office, until the affairs of said
corporation shall have been fully liquidated. In case of the death of either com-
missioner, the survivor shall continue to act.
Article VII.
No stockholder of this corporation shall ever be held liable or responsible for
the contracts or faults thereof in any further sum than the unpaid balance due to
the corporation on the shares owned by him, nor shall any mere formality in organ-
ization have the effect of rendering this charter null, nor of exposing a stockholder
to any liability beyond the amount of his stock.
The subscribers hereto have each written opposite their names the number of
shares subscribed for, so that this act may also serve as the original subscription
fist.
Thus done and passed in my notarial office in the City of aforesaid,
in the presence of and , competent witnesses of lawful
age and residing in this city, who hereunto subscribe their names, together with
said parties and me, notary, on the day and date set forth in the caption hereof.
Original signed :
and others.
Witnesses :
, Notary Public.
I, the undersigned, Recorder of Mortgages, iu and for the Parish of ,
State of Louisiana, do hereby certify that the above and foregoing act of incorpora-
tion of the Company was this day duly recorded in my office, in book
, folio , City of , (date)
Signed :
(seal.) Recorder.
I hereby certify the foregoing and within to be a true and correct copy of the
original act of incorporation of the Company, together with the certifi-
cate of the Recorder of Mortgages on file ami of record in my office.
In faith whereof 1 hereunto set my hand and seal this day of , A. D. 190 .
(seal.) , Notary Public.
OS!)
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
ARTICLES OF ASSOCIATION OF THE FINANCE AND CONSTRUC-
TION COMPANY.
(Maine Corporation.)
In accordance with the Revised Statutes of the State of Maine, chapter 47,
sections 6, 7, 8, and 10, we, the undersigned, whose residences are set opposite
our respective names, hereby associate ourselves together by these written Articles-
of Agreement, for the purpose of forming a corporation under the laws of the State
of Maine, the purposes of which said corporation are :
To carry on the business in all its various branches of contractors for the con-
struction of steam and electric railways, street railways, canals, and public work of
every nature and description, outside of the State of Maine, and in other States,
countries, and jurisdictions, when and where permissible under the laws thereof.
To construct, erect, equip, repair, and improve houses, buildings, wharves,
sewers, tunnels, conduits, and subways ; to manufacture, buy, sell, or otherwise
acquire, import, export, and generally deal in sheet iron, tin, galvanized iron, cor-
nices, skylights, smokestacks, water, gas and electric works, wharves, roads, reser-
voirs, factories, warehouses, and mills; to manufacture, buy, sell, import, export,
and generally deal in iron, steel, manganese, copper, and other materials or alloy
thereof, coke, gas, coal, lumber, and building materials, or any article consisting or
partly consisting of iron, steel, copper, and other materials, and any products
thereof.
To carry on the business of electrical engineers and dealers in electricity and
electric motive power for lighting and heating, outside of the State of Maine, and
in other States, countries, and jurisdictions when and where permissible under the
laws thereof.
Outside of the State of Maine, and in other States, countries, and jurisdictions
when and where permissible under the laws thereof, to manufacture, construct, pur-
chase, or otherwise acquire, deal in, sell, hire, lease, use, repair, operate, and main-
tain electric generating machinery and apparatus, dynamos, motors, meters, electric
engines, accumulators, and any and all parts, devices, instruments, and things
adapted to be used in the construction of or upon or in connection with or in the
operation of such electric generating machinery and apparatus, dynamos, motors,
meters, electric engines and accumulators, and also all apparatus, machinery, engines,
tools, devices, and appliances for generating or producing, accumulating, distributing,
and using electricity for any purpose, and also all parts, attachments, devices, in-
struments, articles, and things to be used therewith or in the construction and oper-
ation thereof.
To carry on a general dredging, contracting, and engineering business in all of
their branches ; also outside of the State of Maine and in other States, countries, and
jurisdictions when and where permissible under the laws thereof, to design, con-
struct, enlarge, extend, repair, complete, take down and remove or otherwise
engage in any work upon bridges, piers, docks, foundations, mines, shafts, tunnels,
wells, waterworks, lighthouses, buildings, railroads, telegraph and telephone lines,
canals and all kinds of excavations, and iron, wood, masonry, and earth construc-
tions in all parts of the world, and to make, execute, and take or receive any con-
tracts or assignments of contracts therefor or relating thereto or connected
therewith.
To engage in the business of manufacturing, buying, selling, and dealing in
cranes for lifting, hoisting, dredging, and conveying materials of all kinds, and in
conveying machinery, hoisting machinery, and coal handling machinery of every
description, and in steam hammers, charging machines, drilling, concentrating, mill-
ing, and mining machines, ingot extractors and foundry plants, and in all kinds of
fittings, tools, supplies, and apparatus pertaining thereto ; or for any other purpose
which now is or may be incidental or necessary for a general contracting or
engineering business.
To manufacture or purchase all tools, machinery, and appliances convenient
for the carrying on the foregoing lines of business.
690
FORMS AND PRECEDENTS.
To purchase, lease, or otherwise acquire timber lands, tracts, and rights. To
buy, sell, export, import, boom, saw, and prepare for market, and generally deal in
timber and wood of all kinds. Also to manufacture, buy, sell, export, import, and
generally deal in all kinds of goods and articles manufactured from wood, and gen-
erally to carry on business as saw mill proprietors, timber and lumber dealers.
To prospect for, locate, acquire by discovery, lease, license, option, purchase,
franchise, grant, gift, devise, or otherwise hold, possess, enjoy, develop, mine,
work, and operate and exploit mines, mineral lauds and claims, mining rights, metal-
liferous lands and rights wherever situate. Also to carry on the business in all its
various brauches of mining for gold, silver, tin. lead, iron, and coal.
To enter into any agreements, arrangements, or contracts with any person or
persons for the purchase, either conditionally or absolutely, of any mines, mining
claims, mills, plants, machinery, shares of capital stock, or securities of any com-
pany, and to sell, assign, and transfer and set over the same upon such terms and
for such consideration as may be deemed advisable. To sell the undertakings and
contracts of the Company or any part thereof or any of its property or rights for
such consideration as may be proper, and to accept payments for any property or
rights sold or otherwise disposed of by the Company, either in cash or otherwise,
or in any shares of stock of any Company, or by means of a mortgage or by deben-
ture stock or debenture bonds of any corporation or partly in one mode and partly
in another. To establish or promote or assist in establishing or promoting any
company and to guarantee or underwrite or cause to be guaranteed or underwritten
subscriptions for the shares of securities of any such company, or to subscribe for
the same or any part thereof. To distribute among the stockholders of the Com-
pany any shares of stock or securities of any corporation acquired by the Company
so long as the capital stock of the Company is not impaired thereby. To act as
the general fiscal agent or registrar of any corporation, association, or person. To
do all and everything necessary, suitable, or proper for the accomplishment of any
of the purposes or the attainment of any of the objects hereinbefore enumerated,
either alone or in association with other corporations, firms, or individuals, as prin-
cipals, agents, contractors, trustees, or otherwise, and by or through trustees, agents,
or otherwise, and in general to engage in any and all lawful business whatever
necessary or convenient in connection with the business of the Company and for
the purposes appertaining thereto.
The corporation shall have power to own, hold, and manage property and to
conduct its business, or any part thereof, in the various States and Territories of the
United States of America and its territorial acquisitions and possessions, the District
of Columbia, and in any foreign country or countries.
The first meeting of said Associates shall be held in accordance with the pro-
visions of section 7 of chapter 47, at the office of , , Maine,
on the day of April, 1907-
Dated at Maine, this day of April, 1907.
Names. Residences.
Maine,
Maine.
Maine,
Maine,
Maine.
Waiver of Notice op First Meeting of Incorporators.
We, the undersigned, being all the signers of the foregoing Articles of Associ-
ation, hereby waive notice of the time, place, and purpose ot the first meeting of
the signers of said Articles of Association, as required by section 7 of chapter 17
of the Revised Statutes of the State of Maine, and acts additional thereto and
amendatory thereof, and do hereby lix the day of April, A. D. 1907, at
GUI
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
o'clock in the noon, as the time and the office of , , Maine,
as the place of said meeting, and we do hereby severally consent that said first
meeting be held at the time, place, and for the purposes aforesaid, to wit :
1. To organize into a corporation.
2. To adopt a corporate name.
3. To define the purposes of the corporation.
4. To fix the amount of capital stock and divide the same into shares.
5. To elect a President, not less than three directors, a Clerk, a Treasurer, and
all other necessary officers.
6. To adopt a Code of By-laws.
7. To act upon any further business which may properly come before the
meeting.
Dated at , Maine, this day of April, A. D. 1907.
Fikst Meeting.
Pursuant to the foregoing Articles of Association and Waiver of Notice of First
Meeting of Incorporators, signed by all the incorporators, a meeting of said signers
of said articles was held at the office of , Maine, on the
day of April, 1907, at o'clock in the noon.
Of the signers the following were present :
The meeting was called to order by Mr. . was chosen Chairman
and presided, and was chosen Clerk.
The Clerk was then duly sworn as appears by the following certificate :
State of Maine ? gs
County of S
J , Maine, April , 1907-
Then personally appeared , Clerk of the Meeting of Associates,
mentioned in the foregoing Articles of Agreement, and made oath that he would
faithfully and impartially perform the duties of his office.
Before me,
, Notary Public.
The original Articles of Association and Waiver of Notice of First Meeting of
Incorporators were presented and ordered to be made a part of this record.
On motion, it was Voted, to organize a corporation under sections 6, 7, 8, and 10
of chapter 47 of the Revised Statutes of Maine and acts additional thereto and
amendatory thereof. _
On motion, it was Voted, that the name of said corporation shall be : The
Finance and Construction Company.
On motion, it was Voted, that the purposes of the corporation shall be as set
forth, stated, specified, and defined in the Articles of Association, which are ex-
pressly referred to and made a part of this vote.
On motion, it was Voted, that the place of business of this corporation shall be
at , Maine, but the corporation may maintain other general offices and
places of business at such other place or places, either within or without this State,
as the Directors may from time to time determine to be for the interests of the
corporation.
On motion, it was Voted, that the capital stock of this corporation shall be and
is hereby fixed at five hundred thousand dollars ($500,000) divided into one hun-
dred thousand (100,000) shares of the par value of five dollars ($5.00) per share.
On motion, it was Voted, that the Chairman appoint a committee of one to
examine and report at once the names and residences of persons who have sub-
scribed for stock in this Company and the amount of stock subscribed for by each.
The Clerk was appointed as such committee, and made the following report of the
list of stockholders, and the report was accepted, and the persons therein named
were declared to be stockholders in this corporation.
692
FORMS AXD PRECEDENTS.
Report of Committee.
Names. Residences.
No.
of Shares.
, Maine.
One
, .Maine.
One
. Maine.
One
, Maine.
One
. Maine.
One
The following subscription for stock was then filed.
Subscription' for Stock.
, Maine, April , 1907.
We, the undersigned, hereby severally agree, each with the other, and with the
corporation hereinafter named, in consideration of the mutual agreements herein
contained, to take, pay for, and receive the number of shares set opposite our re-
spective names of the capital stock of The Finance and Construction Company.
Names. Residences. No. of Shares.
, Maine.
, Maine.
, Maine.
, Maine.
, Maine.
On motion, it was Voted, to have the following Code of By-laws :
BY-LAWS OF THE FINANCE AND CONSTRUCTION COMPANY.
Article I. Title, Location.
Sec. 1. The title of this corporation is The Finance and Construction
Company.
Sec. 2. The principal office in the State of Maine shall be and is registered with
, Maine. The corporation may also have an office in the City of
, State of , and also have offices in such other places as the
Board of Directors may from time to time appoint or the business of the corpora-
tion may require.
Article II. Seal.
Sec. 1. The corporate seal shall have inscribed thereon the name of the cor-
poration, the year of its organization, and the words " Corporate seal, Maine."
Article III. Stockholders' Meetlngs.
Sec. 1. All meetings of the stockholders must be held within the State of Maine,
and at the principal office of the corporation in , Maine.
Sec. 2. At the meeting of the stockholders shareholders may vote either in
person or by proxy in writing. Proxies to be valid must be granted not more I ban
thirty days before the meeting, which shall be, named therein, and shall not be
valid after a final adjournment thereof.
Sec. 3. A majority in amount of the stock outstanding represented by the
holders in person or by proxy shall be requisite at every meeting to constitute
a quorum.
Sec. 4. The annual meeting of stockholders after the year 190 shall be held
on the Wednesday in of each and every year al the principal office of
the corporation in , Maine, at 11 o'clock in the forenoon. Al such
annual meeting the shareholders shall elect by a plurality vote bv ballot Dircc-
693
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
tors, a Clerk, and a Treasurer to serve for one year, and until their successors are
elected and qualified, each stockholder being entitled to one vote in person or by
proxy for each share of stock standing registered in his or her name on the day
preceding the meeting.
Sec. 5 . Notice of the annual meeting shall be mailed to each stockholder at his
or her residence, as the same appears upon the books of the corporation, at least
thirty days prior to the meeting.
Sec. 6. Special meetings of the stockholders shall, at the request of three di-
rectors, be called by the President by mailing notice stating the object and business
to be transacted at said meeting, at least ten days prior to the date of the meeting,
to each stockholder of record at his or her address as the same appears on the
records of the corporation.
Article IV. Directors.
Sec. 1. The property and business of the corporation shall be managed by the
Board of Directors, in number, who shall- be chosen from the stockholders
annually and shall hold office until others are chosen and qualified in their stead ;
every director shall be a stockholder, and when a director ceases to be a stock-
holder the office of director thereby becomes vacant.
Sec. 2. At the first meeting after the election of directors when there shall be
a quorum, the Board of Directors shall elect by ballot a President and Vice-Presi-
dent from their own number, who shall hold office for one year, and until their
successors are chosen and qualified.
The Board shall also annually choose a Secretary, who need not be a member
of the Board, to hold office at the pleasure of the Board for one year unless sooner
removed by the Board, which the Board shall have power to do at any time with or
without cause.
Sec. 3. The Board of Directors shall meet whenever called together by the
President upon due notice given to each director. On the written request of any
director, the Secretary shall call a special meeting of the Board. At such meeting
a majority shall constitute a quorum for the transaction of business.
Sec. 4. A majority of the directors in office shall be present at all meetings to
constitute a quorum for the transaction of any business, except to adjourn.
Sec. 5. The directors may hold their meeting and have an office or offices and
keep the books of the corporation (except the record and stock books) outside of
the State of Maine, at the city of , or such other place or places as they
may from time to time determine.
Sec. 6. The Board of Directors shall have the management of the business
of the corporation, and may exercise all such powers and do all such things
as may be exercised or done by the corporation, but subject nevertheless to the
provisions of the statutes, of the charter, and of these by-laws.
Sec. 7. The directors may purchase, lease, and acquire in any lawful manner
any and all lands, stock, buildings, tools, machinery, fixtures, franchises, patents,
contracts, trade-marks, copyrights, and other real and personal property which in
their judgment is necessary or beneficial to the purpose of the corporation, and
may issue stock of the corporation at par in payment thereof and when they deem
it for the interest of the Company, and may sell, mortgage, or otherwise convey the
real or personal estate of the corporation when they deem it for the interest of the
corporation to do so.
Sec. 8. The directors shall not receive any compensation for their services as
such, but shall be allowed a reasonable compensation for their services when
actually engaged in the business of the corporation.
Sec. 9. All powers not otherwise provided for by these by-laws and the laws of
the State of Maine are hereby conferred upon the directors.
Article V. President.
Sec. 1. The President shall preside at all meetings of the Board of Directors.
He shall sign all certificates of stock, and countersign all checks, bills, and notes
694
FORMS AND PRECEDENTS.
drawn by the Treasurer. He shall submit a complete report of the operations aud
condition of the Company for the year to the stockholders at their regular meetings
in of each year, and from time to time shall report to the directors all
matters within li is knowledge which the interests of the Company may require to be
brought to their knowledge ; he shall be ex officio member of all standing com-
mittees, and shall have the general powers and duties of supervision and manage-
ment usually vested in the office of a president of a corporation.
Article VI. Vice-President.
Sec. 1. The Vice-President shall, in the absence or incapacity of the President,
perform the duties of that officer until the Board shall otherwise determine.
Article VII. Secretary.
Sec. 1. The Secretary shall be an ex officio Clerk of the Board of Directors, and
shall attend all sessions of the Board and act as Clerk thereof, and shall record all
votes and the minutes of all proceedings in a book to be kept for that purpose.
He shall give proper notice of all meetings of stockholders of the corporation and
of the Board of Directors, and shall perforin such other duties as may be required
by the President, and shall at all times be subject to the orders of the Board of
Directors.
Article VIII. Treasurer.
Sec. 1. The Treasurer of the Company shall have the custody of all the funds
and securities of the corporation, and deposit the same in the name of the corpo-
ration in such bank or banks as the directors may elect ; he shall sign all checks,
drafts, notes, and orders for the payment of money, which shall be countersigned by
the President, and he shall pay out and dispose of the same under the direction
of the President. He shall at all times exhibit his books and accounts to any
officer or director or stockholder of the Company upon application at the office of
the Company during business hours. He shall sign all certificates of stock signed
by the President ; he shall give such bond for the faithful performance of his duties
as the Board of Directors may require.
Article IX. Clerk.
Sec. 1. The Clerk shall be a resident of the State of Maine, and shall keep
at the principal office of the corporation at the records of this corpo-
ration, and a book showing a true and complete list of all stockholders, their resi-
dence, and the amount of stock held by them, which said book shall be open at all
reasonable hours to the inspection of persons interested. He shall act as the
agent of this corporation in the State of Maine, upon whom process against this
corporation may be served.
Article X. Executive and other Committees.
Sec. 1 . The Board of Directors may appoint three of their own number to act
as an Executive Committee, to serve during the life of the Board that appointed it.
Sec. 2. The Executive Committee shall have entire control and supervision of
all of the property and business affairs of the corporation, and shall have and exer-
cise all the powers and privileges which are possessed or exercised by the Board of
Directors.
Sec. 3. All aotion of the Executive Committee shall be reported to the Board at
its meeting next succeeding, and such action shall be subject to revision or altera-
tion by the Board, provided that no rights of third parties shall be affected by any
such revision or alteration.
Sec. 4. Eroru time to time the Board may appoint atiy other committee or com-
mittees for any purpose or purposes, who shall have and exercise such powers as
shall be specified in the resolution of appointment.
695
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Article XI. Vacancies.
Sec. 1. If the office of any director or of the President, Vice-President, Clerk,
Secretary, or Treasurer, one or more, becomes vacant by reason of death, resigna-
tion, disqualification, or otherwise, the directors may choose by a majority vote a
successor or successors, who shall hold office for the unexpired term.
Article XII. Resignations.
Sec. 1. Any director or other officer may resign his office at any time, such
resignation to be made in writing. The acceptance of a resignation shall not be
required to make it valid.
Article XIII. Duties of Officers may be delegated.
Sec. 1. In case of the absence of any officer of the corporation or for any other
reason that may seem sufficient to the Board, the Board of Directors may delegate
for the time being the powei-s and duties of such officer to any other officer or to
any director, except where otherwise provided by statute.
Article XIV. Capital Stock.
Sec. 1. The capital stock of this corporation shall be divided into
shares of the par value of dollars per share. All of said shares shall be known
as common stock and shall be forever non-assessable.
Sec. 2. All certificates of stock shall be numbered and registered in the order
they are issued, and shall be signed by the President and by the Treasurer, and the
seal of the corporation shall be affixed thereto. All certificates shall be bound in a
book and shall be issued in consecutive order therefrom, and in the margin thereof
shall be entered the name and address of the person owning the shares therein
represented, and the number of shares and date of issuing thereof. All certificates
exchanged or returned to the corporation shall be marked cancelled by the Secretary
and shall be immediately pasted in the certificate book opposite the memorandum
of its issue.
Sec. 3. Transfers of shares shall only be made upon the books of the corpora-
tion by the holder in person or by power of attorney duly executed and acknowl-
edged and filed with the Secretary of the corporation, and on the surrender of the
certificate or certificates of such shares.
Sec. 4. The corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof, and accordingly shall not be
bound to recognize any equitable or other claim to or interest in such share on the
part of any other person or persons whether or not it shall have express or other
notice thereof, save as expressly provided by the laws of Maine.
Sec. 5. Any person claiming a certificate of stock to be lost or destroyed shall
make an affidavit or affirmation of that fact and advertise the same in such manner
as the Board of Directors may require, and shall give the corporation a bond of
indemnity in form and with one or more sureties satisfactoi-y to the Board in at
least double the par value of the stock represented by such certificate, whereupon a
new certificate may be issued of the same tenor and for the same number of shares
as the one alleged to be lost or destroyed, but always subject to the approval of the
Board of Directors.
Article XV. Fiscal Year.
Sec. 1. The fiscal year of the Company shall begin on the first day of
in each year, beginning in 190 .
Article XVI. Inspection of Books.
Sec. 1. The records of the meetings of stockholders and all books relating to
the transfer of stock shall be open to the inspection of stockholders during the
696
FORMS AM) PRECEDENTS.
ordinary and usual hours of business. All other books shall be under the control
of the directors, who are hereby empowered to decide when and under what condi-
tions ami circumstances said books may be examined by the stockholders, and all
the rights of the stockholders in this regard are limited and restricted in accordance
with tins by-law.
Article XVII. Annual Statement.
Sec. 1. The Board of Directors shall present at each annual meeting, and when
called for by the stockholders, at any special meeting, a full and clear statement of
the business and condition of the corporation.
Article XVIII. Amendments.
Sec. I. The stockholders, by the affirmative vote of a majority of the stock
issued and outstanding, may at any regular or upon notice at any special meeting
alter or amend these by-laws in any manner not contrary to law.
On motion, it was Voted, to proceed to the election of officers for the ensuing
year by written ballot, and that the Clerk be a committee to receive, sort, and
count the votes thrown. Having attended to that duty, he reported that for
directors , had each received votes, being all the votes thrown ;
that for Treasurer had received votes, being all the votes
thrown ; that for Clerk had received votes, being all the votes
thrown ; that for Secretary had received votes, being all the
votes thrown.
The report was accepted and the persons therein named were declared to .be duly
elected to the respective offices.
The Clerk was then duly sworn, as appears by the following certificate :
State of Maine >
County of Hancock \ s "
, Maine, April , 1907.
Then personally appeared the above named , and being duly sworn
made oath that he would faithfully and impartially perform the duties of his said
office.
Before me,
, Notary Public.
On motion, it was Voted, to prepare a Certificate of Incorporation setting forth
the name and purposes of the corporation and other particulars required by said
chapter 47, and the same was accordingly (lone.
On motion, it was Voted, to adjourn. Adjourned.
Attest : , Secretary.
, Clerk of Meeting of Associates.
Ratification of Records.
We, the undersigned, being all the members of said corporation, hereby ac-
knowledge that the above are true records of the organization of the aforesaid
corporation, and all the proceedings of the aforesaid meeting, and hereby consent
to approve, ratify, and confirm all of the aforesaid proceedings and the above
records thereof.
Dated , Maine, this day of 190 .
A true copy of the records of the proceedings of the first meeting.
Attest :
, Clerk.
G07
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
CERTIFICATE OF ORGANIZATION OF A CORPORATION
UNDER THE GENERAL LAW.
The undersigned, officers of a corporation organized at , Maine, at a
•meeting of the signers of the articles therefor, duly called and held at the office of
, in the City of , on the day of , A. D. 190 ,
hereby certify as follows :
The name of said corporation is :
The purposes of said corporation are :
The amount of capital stock is dollars.
The amount of capital stock already paid in is
The par value of the shares is dollars.
The names and residences of the owners of said shares are as follows :
Names. Residences. No. of Shares.
Unissued and in the Treasury.
Said corporation is located at
The number of directors is
The name of the Clerk is
The undersigned
Treasurer ; and the undersigned
of said corporation.
Witness our hands this
Total.
in the County of
, and their names are .
, and his residence is
is President ; the undersigned is
are a majority of the Directors
day of
, A. D. 190
, President.
, Treasurer.
, Directors.
190 .
ss.
Then personally appeared
: foregoing certificate that the same is true.
Before me,
and severally made oath to the
, Justice of the Peace.
State of Maine.
Attorney General's Office, 190
I hereby certify that T have examined the foregoing certificate, aud the same is
properly drawn and sigued, and is conformable to the Constitution aud laws of
the State.
, Attorney General.
Company-
Received
at h. a
Recorded in Vol.
Attest :
A true copy of record.
Attest :
Registry of Deeds.
190 .
Pa°re
Register.
Register.
698
FORMS AND PRECEDENTS.
MARYLAND.
CERTIFICATE OF INCORPORATION.
Know all Men by these Presents : That we, being citizens of the
United States and a majority of whom are citizens of the State of Maryland, do
hereby certify that we do under and by virtue of the General Laws of this State,
authorizing the formation of corporations, hereby form a corporation under the
name of of City.
2. We do further Certify, That the said corporation so formed is a corporation
for ; that the term of existence of said corporation is limited to
years ; and that the said corporation is formed upon the articles, conditions
and provisions herein expressed, and subject in all particulars to the limitations re-
lating to corporations which are contained in the General Laws of this State.
3. We do further Certify, That the operations of said corporation are to be
carried on in and that the principal office of said corporation will be
located in City.
4. We do further Certify, That the aggregate of the capital stock of the said
corporation is dollars, and that the said capital is divided into
shares, of the par value of dollars each.
5. We do further Certify, That the said corporation will be managed by
(Board of Directors), and that are the names of the (Directors) who
will manage the concerns of the said corporation for the first year.
hi Witness Whereof We have hereunto set our hands and seals this day
of , in the year nineteen hundred and
Witness : (seal.)
. (seal.)
(seal.)
(seal.)
(seal.)
State of Maryland :
Baltimore City, to wit :
Before the subscriber, a Notary Public, of the State of Maryland, in and for
the City of personally appeared on this day of , nine-
teen hundred and , and did severally acknowledge the foregoing certificate
to be their act and deed.
Witness my hand and notarial seal.
I, , one of the Judges of the do
hereby certify that the foregoing certificate has been submitted to me for examina-
tion ; and I do further Certify, That the said certificate is in conformity with the
provisions of the law authorizing the formation of said corporation.
MASSACHUSETTS.
We, whose names are hereto subscribed, do, by this agreement, associate our-
selves with the intention of forming a corporation according to the provisions of
Chapter 437 of the Acts of the year 1903, of the Commonwealth of Massachusetts,
and the Acts in amendment thereof and in addition thereto
The name by which this corporation .shall be known is
The location of the principal office of the corporation within the Commonwealth
is the of , and outside the Commonwealth, the of , State of
The purposes for which the corporation is formed and the nature of the busi-
ness to be transacted by it are as follows:
The total amount of the capital stock to be authorized is dollars. Tin-
par value of its shares is, preferred dollars, common dollars. The
number of its shares is, preferred , common
699
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
(State the restrictions, if any, imposed upon the transfer of stock, and if there
are to be two or more classes of stock, a description of the different classes, and a
statement of the terms on which they are to be created, and the method of voting
thereon.)
( State any other provisions not inconsistent with law for the conduct and regu-
lation of the business of the corporation, for its voluntary dissolution, or for limit-
ing, defining, or regulating the powers of the corporation, or of its directors or
stockholders, or any class of stockholders.)
The first meeting shall be called by of (or if notice is waived);
and we hereby waive all requirements of the statutes of Massachusetts for notice
of the first meeting for organization, and appoint the day of
at o'clock M., at as the time and place of holding said meeting.
The names and residences of the incorporators, and the amount of stock
subscribed for by each, are as follows :
Name. Residence. Amount subscribed for.
In witness whereof, we have hereunto set our hands, this day of
in the year nineteen hundred and
NOTICE OF FIRST MEETING.
To
You are hereby notified, that the first meeting of the subscribers to an agree-
ment to associate themselves with the intention of forming a corporation to be
known by the name of dated , for the purpose of organizing said
corporation by the adoption of by-laws, and election of officers, and the transaction
of such other business as may properly come before the meeting, will be held on
, the day of , at o'clock, M., at
One of the subscribers to said agreement.
, 190 .
, 190.
State of ?
County of £
I certify that I have served the foregoing notice upon each of the subscribers
by copy served as follows (state whether delivered in hand, or deposited in the
post-office, postpaid, addressed to each at his place of business or residence, or left
at his residence or usual place of business) seven days at least before the day
fixed for the first meeting.
County of , ss.
Subscribed and sworn to,
Before me,
190
Justice of the Peace.
We, being a majority of the directors of the Company,
elected at its first meeting in compliance with the requirements of Section 11 of
Chapter 437 of the Acts of 1903, do hereby certify that the following is a true copy
of the agreement of association to form said corporation, with the names of the
subscribers thereto :
We, whose names are hereto subscribed, do, by this agreement, associate our-
selves with the intention of forming a corporation according to the provisions of
Chapter 437 of the Acts of the year 1903 of the Commonwealth of Massachusetts,
and the acts in amendment thereof and in addition thereto.
The name by which the corporation shall be known is
The location of the principal office of the corporation within the Commonwealth
700
FORMS AND PRECEDENTS.
, and outside the Commonwealth the
of
is the of
, State of .
The purposes for which the corporation is formed and the nature of the business
to be transacted by it are as follows :
The total amount of its capital stock to be authorized is dollars. The
par value of its shares is, preferred , common dollars. The num-
ber of its shares is, preferred , common
(State any other provisions set out iu the original certificate.)
The first meeting shall be called by of (or if notice is
waived), and we hereby waive all requirements of the statutes of Massachusetts for
notice of the first meeting for organization, and appoint the day of
at o'clock, M., at as the time and place of holding said first
meeting. ,
The names and residences of the incorporators and the amount ot stock sub-
scribed for by each are as follows :
Name. Residence. ' Amount subscribed for.
In Witness Whereof, we have hereunto set our hands this day of in
the year nineteen hundred and
That the first meeting of the subscribers to said agreement was held on the
day of in the year nineteen hundred and
That the amount of the capital stock now to be issued is shares of
preferred stock and shares of common stock, to be paid for as follows:
Amount and Class of Stock Issued.
Shares Preferred. Shares Common.
In Cash :
In full
By instalments
Amount of instalment to be paid before
commencing business
In property :
Real Estate :
Location
Area
Personal Property :
Machinery
Merchandise
Bills Receivable
Stocks and Securities
Patent Rights
Trade marks
Copyrights
Goodwill ■ . . .
Services
Expenses
(Stale clearly the nature of such services or expenses and the amount of stock
to be issued therefor.)
The name, residence, and post-office address of each of the officers are as follows :
Name of Office. Name. Residence. P. 0. Address.
President,
Treasurer,
Clerk or Secretary,
Directors,
In Witness Whereof, we have hereunto signed our names this day of
in the year nineteen hundred and
701
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Commonwealth of Massachusetts.
, 190.
County of , ss.
Then personally appeared the above-named , and severally made
oath that the foregoing certificate by them subscribed is true to the best of their
knowledge and belief.
Before me,
, Notaru Public-
AGREEMENT OF ASSOCIATION (MASSACHUSETTS).
The Co., Inc.
We, whose names are hereto subscribed, do by this agreement associate our-
selves with the intention of forming a Corporation according to the provisions of
Chapter 437 of the Acts of the year 1903, of the Commonwealth of Massachusetts,
and the Acts in amendment thereof and in addition thereto.
The name by which this Corporation shall be known is
The location of the principal office of the Corporation within the Commonwealth
is the City of Boston, and outside the Commonwealth the City of , State
The purpose for which the Corporation is formed and the nature of the business
to be transacted by it are as follows.: to buy, sell, negotiate, exchange, pledge, trade,
and deal in and with any shares, stocks, debentures, scrip, bonds, and securities of
any government, State, or public or private corporation or any corporate body ; to
trade and deal in and with mines and mining rights, metals, minerals, and oil, cotton,
grain, produce, or other commodities ; to invest in any or either of the foregoing,
and from time to time to change the investments of the Company ; to mortgage,
pledge, or otherwise change all or any of the investments of the Company or its
property and rights ; to make advances on, sell, or dispose of any property or in-
vestments ; or to act as agent, factor, or broker for any or either of the corporate
purposes; to purchase or otherwise acquire the capital stock, shares, debentures,
scrip, bonds, or other evidences of indebtedness of any corporation, and to issue
and exchange its own stock, shares, bonds, debentures, scrip, or other evidences of
indebtedness in payment therefor, and while the owner thereof to exercise all the
rights of ownership, including the power to vote upon such stock or shares ; to-
purchase, receive, hold, and own mortgages, debentures, shares, and other securities
or obligations of any public, private, or municipal corporation, or bonds of other
securities or obligations of the government of the United States, or of any State,
district, Territorv, colony, or dependency of the United States or of any foreign
country, State, or colony ; to collect and receive, disburse and dispose of all interest,
dividends, accumulations, earnings, and income from, upon, or on account of any
bonds, debentures, stocks, shares, securities, contracts, evidences of debt, obligations,
or other property held or owned by the Corporation thereto ; to do any and all
lawful acts tending to increase or enhance the value of the property of the Company;
to issue stock, shares, bonds, debentures, certificates, scrip, or other corporate obli-
gations, and to secure the payment thereof by mortgage, pledge, or deed of trust of
or upon the whole or any portion of the corporate property or funds ; to sell, pledge^
or otherwise dispose of bonds, debentures, or other corporate obligations for proper
and lawful corporate purposes, as and when the Board of Directors shall deem
necessary, advisable, or expedient ; to promote the corporate business of investment
and dealing in securities in all lawful ways ; and to receive, collect, transmit, pay
out, and disburse funds in the course of its business, and to the extent authorized
by law to lease, purchase, or otherwise acquire, hold, use, sell, trade, and deal iu
and with, assign, pledge, mortgage, transfer, and convey real and personal property
of any name or nature, excepting bills of exchange, gold or silver bullion ; to issue
and accept drafts and bills of exchange ; to issue promissory notes, scrip, drafts,
acceptance, or other corporate obligations, and negotiate the same.
702
FORMS AXD PRECEDENTS.
Generally to purchase, take on lease or in exchange, hire or otherwise acquire
any personal property, and any tights or privileges which the Company may deem
useful, necessary, desirable, proper, or convenient for the purposes of its business,
or in the development or extension thereof.
To apply for, acquire, buy, sell, assign, lease, pledge, mortgage, or otherwise
dispose of letters patent of the United States or of any foreign country, and all or
any rights, territorial or otherwise, thereunder. To apply for, acquire, hold, sell,
assign, lease, mortgage, or otherwise dispose of patent rights, licenses, privileges,
inventions, trade names, trade marks, and pending applications therefor, relating to
or useful in connection with any business of the Corporation. To use, manufacture,
or grant licenses under auy letters patent owned or controlled by the Company, and
to expend mouey in experimenting upon and testing the validity or value of any
patent rights the Company may acquire or proposes to acquire.
To enter into any agreements, arrangements, or contracts with any person or
persons for the purchase, either conditionally or absolutely, of any property, shares
of capital stock, or securities of any company, and to sell, assign, transfer, and set
over the same upon such terms and for such consideration as may be deemed advis-
able. To sell the undertakings and contracts of the Company, or any part thereof,
or any of its property or rights for such consideration as may be proper, and to
accept payment for any property or rights sold or otherwise disposed of by the
Company, either in cash or otherwise, or in any shares of stock of any company,
or by means of a mortgage or by debenture stock or debenture bonds of any
corporation or partly in one mode and partly in another. To establish or promote
or assist in establishing or promoting any company, and to guarantee or underwrite
or cause to be guaranteed or underwritten subscriptions for the shares or securities
of any such company, or to subscribe for the same or any part thereof. To act as
the general fiscal agent or registrar of any corporation, association, or person.
To do all and everything necessary, suitable, or proper for the accomplishment of
any of the purposes or the attainment of any of the objects hereinbefore enumerated,
either alone or in association with other corporations, firms, or individuals, as prin-
cipals, agents, contractors, trustees, or otherwise, and by or through trustees, agents,
or otherwise, and in general to engage in any and all lawful business whatever
necessary or convenient in connection with the business of the Company and for
the purposes appertaining thereto.
The Corporation shall have power to own, hold, and manage property and con-
duct its business, or any part thereof, in the various States and Territories of the
United States of America and its territorial acquisitions and possessions, the
District of Columbia, and in any foreign country or countries. The Corporation
may have one or more offices without the State of Massachusetts, at such place or
places as the Board of Directors may establish.
The total amount of the capital stock to be authorized is one hundred thousand
dollars (§100,000). The par value of its shares is ten dollars ($10.00) each.
The Board of Directors shall have power to hold its meetings and to have one
or more offices outside of the State of Massachusetts, at such place or places as
may from time to time be designated by them.
We hereby waive all requirements of the statutes of Massachusetts for notice of
the first meeting for organization, and appoint the day of . 1907,
at o'clock \i., a1 , as the time and place of holding said meeting.
The names and residences of the incorporators, and the amount of common
stock subscribed for by each, are as follows :
Name. Residence. Amount subscribed for.
In Witness Whereof, we have hereunto set our hands this day of
, in the year nineteen hundred and seven.
We, , , and , being the directors of the
Company, Inc., elected at the first meeting, in compliance with the requirements of
703
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Section 11 of Chapter 437 of the Acts of 1903, do hereby certify that the following
is a true copy of the agreement of association to form said Corporation, with the
names of the subscribers thereto : (here insert copy of the foregoing Agreement
of Association).
That the first meeting of the subscribers to said agreement was held on the
day of , in the year nineteen hundred and seven.
That the amount of capital stock now to be issued is one hundred thousand
dollars ($100,000), divided into ten thousand (10,000) shares of common stock of
the par value of ten dollars ($10.00) per share, to be paid for by a contract, valued
at $100,000, reading as follows, to wit : (here is inserted copy of Contract).
The names, residences, and post-office address of each of the officers is as
follows :
Name of
Office Name. Residence. P. O. Address.
President.
Treasurer,
Clerk,
Secretary,
Directors,
In Witness Whereof, we have hereunto signed our names this day of
, in the year nineteen hundred and seven.
Commonwealth op Massachusetts.
Suffolk, ss.
Then personally appeared the above named , , and _ ,
and severally made oath that the foregoing certificate by them subscribed is true to
the best of their knowledge and belief.
Before me,
, Justice of the Peace.
MICHIGAN.
ARTICLES OF ASSOCIATION
or
We, the undersigned, desiring to become incorporated under the provisions of
Act 232 of the Public Acts of 1903, entitled " An Act to revise and consolidate the
laws providing for the incorporation of manufacturing and mercantile companies or
any union of the two, and for the incorporation of companies carrying on any other
lawful business except such as are precluded from organization under this act by its
express provisions, and to prescribe the powers and to fix the duties and liabilities
of such corporations," and the acts amendatory thereof and supplementary thereto,
do hereby make, execute, and adopt the following articles of association, to wit :
Article I.
The name assumed by this association, and by which it shall be known in law,
is
704
FORMS AND PRECEDENTS.
Article II.
The purpose or purposes of this corporation are as follows :
Article III.
The principal place at which operations are to be conducted is at
, in the County of , State of
Article IV.
The capital stock of the corporation hereby organized is the sum of
dollars, of which dollars shall be common stock, and dollars
shall be preferred stock. The preferred stock shall be subject to redemption at par
on the ^ day of , A. D. 190 , and the holder shall be entitled to
a dividend of per cent per annum, payable , which shall be
cumulative and payable before any dividend shall be set apart or paid on the com-
mon stock. The preferred stockholders shall be entitled to vote for directors.
Article V.
The number of shares into which the capital stock is divided is of the
par value of dollars each.
Article VI.
The amount of common stock subscribed is dollars. The amount of
preferred stock subscribed is dollars.
Article VII.
The amount of common stock actually paid in is the sum of dollars,
of which dollars has been paid in cash, and dollars has been
paid in other property, an itemized description of which, with the value at which
each item is taken, is as follows, viz.:
The amount of preferred stock actually paid in is the sum of dollars, of
which dollars has been paid in cash, and dollars has been paid
in other property, an itemized description of which, with the valuation at which
■each item is taken, is as follows, viz. :
Article VIII.
The office in the State of Michigan for the transaction of business shall be kept
at
Article IX.
The term of existence of this corporation is fixed at years from the date
hereof.
Article X.
The names of the stockholders, their respective residences, and the number of
shares of stock subscribed for by each are as follows :
X unes. Residence. No. of Shares.
In Witness Whereof, we, the parlies hereby associating, lor the purpose of giving
legal effect to these articles, hereunto sign our names, this day of
A. D. 190 .
Names. Names.
705
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
State of Michigan, \ gs
County of y
On the day of , 190 , before me, personally appeared (names
of incorporators) to me known to be the persons described in and who executed the
foregoing instrument, acknowledged they executed the same as their free act and
deed. , Notary Public,
County, Michigan.
MINNESOTA.
CERTIFICATE OF INCORPORATION OF THE COMPANY.
We, the undersigned, for the purpose of forming a corporation under and pursu-
ant to the provisions of Chapter fifty-eight (58), Revised Laws of Minnesota for
1905, and any amendments thereof, do hereby associate ourselves as a body corpo-
rate, and do hereby adopt the following Certificate of Incorporation :
Article I.
The name of the corporation shall be . The general nature of its
business shall be • The principal place of transacting the business of
this corporation shall be the city of , county of , Minnesota.
Article II.
The time for the commencement of this corporation shall be , 190 ,
and the period of its duration shall be thirty years.
Article III.
The names and places of residence of the persons forming this corporation are
of , of , and of
Article IF.
The management of this corporation shall be vested in a Board of Directors,
composed of not less than and not more than members.
The names and addresses of the first Board of Directors are , and
. The first officers of this corporation shall be, President, , Vice-
President, , Secretary, , and Treasurer, _ . All
of the above named officers and directors shall hold their respective offices
aforesaid until the next annual meeting of the corporation, to be held ,
190 , at which time and annually thereafter a Board of Directors shall be elected
from and by the stockholders of this corporation. The annual meeting of the cor-
poration shall be held at its principal place of business on the Tuesday in
in each year. Immediately after the election of directors, or as soon
thereafter as practicable, the directors shall meet and elect from their number a
president and a vice-president, and from their number or from the stockholders a
secretary and a treasurer. Any office except that of president and vice-president
may be held by one person. The directors and officers of this corporation shall
hold their respective offices until their successors have been duly elected and
entered upon the discharge of their duties. The first meetings of the stockholders
and of the Board of Directors shall be held at on the day of
, 190 , at 10 o'clock respectively.
Article V.
The amount of the capital stock of this corporation shall be dollars,
which shall be paid in, in money or property, or both, in such a manner, at such
times, and in such amounts as the Board of Directors shall order. The capital
stock shall be divided into shares of the par value of $ each.
706
FORMS AND PRECEDENTS.
Article J' I.
The highest amount of indebtedness or liability to which this corporation shall
at any time be subject shall be the sum of 8
In Testimony Whereof, we have hereunto set our hands, this day of
190 . J
In presence of .
State of Minnesota, )
County of J
On this day of , 190 , personally appeared before me ,
to me known to be persons named in and who executed the foregoing Certificate of
Incorporation, and each acknowledged that he executed the same as his free act and
deed, for the uses and purposes therein expressed.
, Notary Public, County, Minn.
My commission expires
MISSISSIPPI.
THE CHARTER OF INCORPORATION
OF
Section One. Be it known, That and their associates, successors,
and assigns, are hereby created and constituted a body corporate, and as such shall
have succession for a period of fifty years.
Section Two. The domicile of said corporation shall be at
Mississippi, but may be changed to any other point within Mississippi by a vote of
the holders of a majority of the stock of said corporation.
Section Three. Said corporation is empowered and authorized to have and to
hold, receive, purchase, and enjoy real estate and personal property, and the same,
or any part thereof, to sell, rent, lease, convey, mortgage, or otherwise encumber;
to issue notes, bonds, debentures or other evidences of debts ; to sue and be sued,
contract and be contracted with ; to plead and be impleaded in the courts of the
country ; to use a common seal, and the same to change, alter, or renew at pleasure.
And said corporation is further authorized and empowered to do all other acts
necessary to promote its welfare which are not in conflict with the laws of the State
of Mississippi or of the United States of America. And said corporation shall have
and enjoy all the powers, privileges, and rights conferred upon corporations by
Chapter 25 of the Annotated Code of 1892.
Section Four. The purposes for which the corporation is created are, and it is
hereby authorized and empowered to , and said corporation is further
authorized to do all acts necessary and convenient in the judgment of the. officers or
directors of said corporation, for the welfare and business of said corporation; and
.said corporation shall have, possess, and enjoy all the rights, powers, and privileges
enumerated in or created or conferred by Chapter- 25 of the Annotated Code oi
1892, which are necessary and proper for carrying out the purposes of this
charter.
Section Fine. The capital stock of said corporation shall be
divided into shares of each, but said capital stock may be increased or
diminished at any time by a vote of the holders of a majority of the capital stock of
said corporation.
Section Six. The management of the business of said corporation shall be con-
fined to such a number of directors as may be fixed, and altered from time to lime,
by a vote of a majority of the stock issued h\ said corporation; said directors shall
be stockholders of said corporation ; the majority of said directors shall constitute
707
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
a quorum for the transaction of business. The said directors shall elect from their
number a President, and also elect a Vice-President, a Secretary, and a Treasurer,
and may appoiut or elect such other officers, agents, or employees as they may deem
proper; shall hold office until their successors are duly elected and shall have
qualified, and shall have power to fill all vacancies in their number caused by death,
resignation, or otherwise.
Section Seven. The directors of said corporation shall have power and authority
to make any and all needful rules, by-laws, and regulations for the control and man-
agement of the business affairs and property of said corporation, and may from
time to time alter or renew the same as they may see fit.
Section Eight. At all stockholders' meetings a vote of the holders of a majority
of the stock then present in person or by proxy shall decide all questions legally
submitted at such meeting. Each stockholder shall be entitled to one vote for each
share of stock held by him, it, or her, but all elections of directors or managers of
said corporation shall be held in accordance with Section 194 of the Constitution
of Mississippi and Section 837 of the Annotated Code of Mississippi.
Section Nine. No stockholder of any such corporation shall be in any way
personally liable for the debts of said corporation beyond the amount of his, her, or
its unpaid subscription to said stock.
Section Ten. All subscriptions to said capital stock shall be paid for in cash or
property.
Section Eleven. Any two of said incorporators may open books of subscription
to the capital stock of said corporation, and as soon as shall have been
subscribed, said corporation may organize, elect directors, and commence business.
Witness our hands and seals this day of
State of >
County of ) ss *
Personally appeared before me the within named
, who acknowledged that they signed and delivered the
foregoing instrument on the day and year therein mentioned.
Given under my hand and official seal this the day of , 190 ,
FORM FOR REPORT OF ORGANIZATION IN MISSISSIPPI.
The Company, incorporated the day of , 190 , was organized
on the day of in the County of , by the election of as
directors (or trustees), who elected the following officers to serve for year .
The post-office address of the President is ; of the Secretary is
I, , elected President of the Company on the
day of , 190 , certify that the foregoing report of the organization of
said corporation is correct and true.
, President.
Attest : , Secretary.
MISSOURI.
FORM FOR INCORPORATING MANUFACTURING AND BUSINESS
CORPORATIONS.
Know all Men by these Presents : That we, the undersigned, desirous of forming
a corporation under the laws of Missouri, and more particularly under the provis-
ions of Article IX. Chapter 12, R. S. 1899, governing the formation of manufactur-
ing and business companies, do hereby enter into the following agreement :
First. That the name of the corporation shall be (name designating the busi-
ness contemplated; but not the name of any corporation existing under the laws
of this State for simdar purposes. When the name of a person or firm is assumed,
it must be joined with some word designating the business to be carried on, fol-
lowed by the word " company" or "corporation ").
708
FORMS AND PRECEDENTS.
Second. That the corporation shall be located in the of the
County, Missouri.
Third. That the amonnt of the capital stock of this Company shall be
thousand dollars, of which dollars shall be preferred stock, — which shall
be entitled to a preferential dividend of (not exceeding S per cent) per
annum, — divided into shares of the par value of dollars each ;
that the same has bee:i bona fide subscribed and (at least one-halt) thereof
actually paid up in lawful money of the United States, which is in the custody of
the persons hereinafter named as the first Board of Directors.
Fourth. That the names, places of residence of the several shareholders, and
the number of shares of stock, both common and preferred, subscribed for by each,
are as follows :
Common Stock.
Name. Residence. Number of Shares.
Preferred Stock.
Name. Residence. Number of Shares.
Fifth. The Board of Directors shall consist of (not less than three nor
more than thirteen ; at least three of whom shall be citizens and residents of
Missouri) shareholders, and the names of those agreed on for the first year are :
Sixth. That the corporation shall continue for a term of (not exceed-
ing fifty) years.
v nth. That the corporation is formed for the following purposes :
In Testimony Whereof, we have hereunto set our hands this day of
190 .
(Signatures.)
State of Missouri, )
County of >
On this day of , 190 , before me personally appeared
(names of all the stockholders), to me known to be the persons de-
scribed in and who executed the foregoing instrument and acknowledged that they
executed the same as their free act and deed.
In Testimony Whereof I have hereunto set my hand and affixed my notarial
seal the day and year last above mentioned.
, Notary Public.
My commission expires , 190 .
(seal.)
MONTANA.
State of Montana, )
County of \
We, , do by these presents, pursuant to and in conformity with
Article I. of Chapter I., Title L,and Part IV. of the Civil Code oi the Slate of Mon-
tana, associate ourselves together, and do hereby adopt, the following Articles or
Incorporation :
1. The corporate name of said company is hereby declared to be:
2- The objects for which the company is formed are as follows:
3. The names of the city, town, or locality, and county in which the operations of
the said company are to he carried on arc :
4. The said company shall commence on the day of in the
701)
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
year one thousand nine hundred and , and shall continue in existence for
the term of years.
5. The number of trustees who shall manage the concerns of said company for the
first three months, shall be , aud their names and addresses are
6. The capital stock of the said company shall be dollars, which shall
be divided iuto shares of dollars each.
7. Amount actually subscribed is dollars, subscribed by (here insert
names aud addresses of subscribers).
8. The stock is assessable.
Witness Our hands and seals, this day of , 190 .
a
State of Montana, }
County of J
On this day , A. D. 190 , before me
in and for said county and State, personally appeared , whose names
are subscribed to the foregoing instrument as the parties thereto, known to me to be
the same persons described in, and who executed the said foregoing instrument, and
who each of them duly acknowledged to me that they each of them respectively
executed the same.
In Witness Whereof, I have hereunto set my hand and affixed my official seal
the day and year in this certificate first above written.
NEBRASKA.
ARTICLES OF INCORPORATION
OF THE
Company.
We, the undersigned, incorporators, do hereby, in pursuance of the Statutes of
the State of Nebraska in such cases made and provided, associate ourselves as a body
politic and corporate in the manner and for the purposes hereinafter mentioned.
Art. I.
The said corporation shall be named and known as Company.
Art. II.
The principal place of transacting the business of the corporation shall be in the
City of , County, Nebraska.
Art. Ill
The general nature of the business to be transacted by the corporation is:
Art. IF.
The authorized capital stock of the corporation shall be dollars, divided
into shares of dollars each; which shall be fully paid up
when issued, of such shares shall be subscribed for and fully paid up
upon the organization of the corporation, the remaining shares, or any part
thereof, may be issued at any time by the Board of Directors. The stockholders of
the company shall be entitled to a pro rata distribution of all subsequent issues of
stock, in such manner and under such rules and regulations as may be prescribed
by the Board of Directors. Said stock may be paid for in cash, or its equivalent
in property necessary and useful to the corporation in the transaction of its business.
Art. V.
The highest amount of indebtedness or liability to which the corporation may at
any time subject itself shall not exceed an amount equal to per cent of
the capital stock issued.
710
FORMS AXD PRECEDENTS.
Art. VI.
The corporation shall date from and commence on the day of ,
190 , and it shall terminate on the day of , 190 .
Art. VII.
The affairs and business of the corporation shall be conducted by a Board of
Directors, and by the officers by them to be elected, as hereinafter
provided.
Art. Fill
The first meeting of the stockholders shall be held on the date of the commence-
ment of the corporation, or as soon thereafter as practicable, and thereafter their
regular annual meeting shall be held in the City of on the
day of . At said first meeting, and at the annual meetings thereafter,
the Board of Directors shall be elected by the stockholders from their own number,
to hold office until the annual meeting next after their election and until their suc-
cessors are elected and qualified.
Art. IX.
The Directors shall in each instance, as soon as convenient after their election,
elect from their own number a President, Vice-President, Secretary, and Treasurer,
who shall hold office until the annual meeting next after their election and until
their successors are elected and qualified. Any two of said offices may be held by
one and the same person, except the offices of President and Vice-President.
Art. X.
The Board of Directors shall have full power and authority to make all rules
and by-laws for the proper government and control of all the business affairs of the
corporation, and they may alter and amend the same at pleasure.
Art. XI
Vacancies occurring in the Board of Directors shall be filled by the stockhold-
ers, and other offices vacant from whatever cause shall be filled by the Board of
Directors.
Art. XII.
These articles of incorporation may be amended at any time. Every amend-
ment shall be first approved by a two-thirds vote of the entire Board of Directors,
and upon being so approved, it shall be entered at large upon the records of the
Board. A draft of the proposed amendment or amendments, as the case may be,
shall then be submitted to each stockholder, with the notice of the meeting called
for the purpose of voting upon the same, which notice shall be given ten days at
least prior to the date fixed for the meeting. If such amendment or amendments,
or either of them, shall then be approved by the holder or holders of two-thirds of
the capital stock of the corporation, each and every amendment so approved shall
be considered adopted and be made a part of the Articles of Incorporation, and
the Board of Directors shall thereafter subscribe, acknowledge, record, and publish
the same, as by law required.
In Testimony Whereof, we have hereunto set our hands this day of
In presence of :
State of Nebraska,
County of
On this day of personally before me (name of officer and title
of office held) in and for County, Nebraska, duly commissioned and
qualified came , to me well known to be the identical persons whose
names are affixed to the foregoing articles of incorporation, and they severally ac-
knowledged the execution of the same to be their voluntary act and deed for the
711
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
purposes in said articles expressed. la testimony whereof I have hereunto sub-
scribed my hand and affixed my official seal the day and date last above written.
Notary Public,
County, Nebraska.
NEVADA.
ARTICLES OF INCORPORATION OF
. Company.
Know all Men by these Presents: That we, the undersigned, have this day
voluntarily associated ourselves together for the purpose of forming a corpora-
tion under the laws of the State of Nevada ; and we hereby certify:
First. The name of this corporation is
Second. The location of the principal office of this corporation in the State of
Nevada is in the Building, Number Street, in the City of ,
County of , and State of Nevada.
Third. The objects for which this corporation is formed are :
Fourth. The total authorized capital stock of this corporation shall be
dollars (not less than $2,000), divided into shares of the par value of
dollars per share. The amount of subscribed capital stock with which it will com-
mence business is dollars (not less than $1,000). The amount actually
subscribed is dollars, and the amount actually paid up is dollars.
(At this point should be stated a description of different classes of stock, terms of
their creation, and amount of each class subscribed, and the amount paid thereon ;
or if a non-stock corporation, state the terms and condition of membership.)
Fifth. The names and post-office addresses and residences of each of the origi-
nal subscribers to the capital stock, and the amount subscribed by each are as
follows :
Names (not less than three). P. O. Address and Residence. No. of Shares.
Amount subscribed.
Sixth The period of existence of this corporation is unlimited.
Seventh. The members of the Governing Board of this corporation shall be
styled directors, and shall be in number.
Eighth. The resident agent of this corporation who shall be in charge of said
company in the State of Nevada shall be , a resident of
County, Nevada, whose office is at No. Street, in said City of
Ninth. The capital stock of this corporation after the amount of the subscribed
price or par value has been paid in, or it has been issued as fully paid up, shall not
be subject to assessment to pay debts of the corporation.
Tenth. (Here may be added such regulations and details as may be desired for
regulating the business, officers, etc.)
In Witness Whereof, we have hereunto set our hands this day of
A. D. 19 . (Signatures.)
Witnesses :
State of \ sg>
County of >
Be it. remembered that on this day of , A. D. 190 , personally
appeared before me, a in and for said County and State, ,
known to me to be the persons described in, and who executed the foregoing
instrument, who acknowledged to me that they executed the same freely and
voluntarily, and for the uses and purposes therein mentioned.
NEW HAMPSHIRE.
ARTICLES OF AGREEMENT.
The undersigned, being persons of lawful age, hereby associate under the pro-
visions of Chapter 147 of the Public Statutes of New Hampshire, by the following
articles of agreement:
712
FORMS AND PRECEDENTS.
Article 1 The name of this corporation shall be :
Article 2. The object for which this corporation is established is :
Article 3. The place in which the business of this corporation is to be carried
on is:
Article 4. The amount of the capital stock is to be dollars, and
shall be divided into shares of the par value of $ each.
Article 5. The first meeting of the corporation shall be held at ,
on the day of at the hour of M. Further notice of the time
and place of said meeting is hereby waived.
Article 6. If desired, a statement may be inserted as to what officers of the
corporation are to be provided for in the by-laws.
Names (at least five). Post-Office Addresses.
(Incorporators)
CERTIFICATE OF INCORPORATION
OF
United States Steel Corporation (as Amended) (New Jersey Charter).
We, the undersigned, in order to form a corporation for the purposes herein-
after stated, under and pursuant to the provisions of the Act of the Legislature of
the State of New Jersey, entitled "An Act concerning Corporations (Revision of
3896)," and the acts amendatory thereof and supplemental thereto, do hereby
certify as follows:
I. The name of the corporation is United States Steel Corporation.
II. The principal and registered office of the Company is in the
Building, , New Jersey, and the name of the agent therein and
in charge thereof and upon whom process against this corporation may be served,
is
III. The objects for which the corporation is formed are :
To manufacture iron, steel, manganese, coke, copper, lumber, and other mate-
rials, and all or any articles consisting, or partly consisting, of iron, steel, copper,
wood, or other materials, and all or any products thereof.
To acquire, own, lease, occupy, use, or develop any lands containing coal or
iron, manganese, stone, or other ores, or oil, and any wood lauds, or other lands
fur any purpose of the Company.
To mine, or otherwise to extract or remove, coal, ores, stone and other minerals
and timber from any lauds owned, acquired, leased, or occupied by the Company ,
or from any other lands.
To buy' and sell, or otherwise to deal or to traffic in iron, steel, manganese,
copper, stone, ores, coal, coke, wood, lumber, and other materials, and any of the
products thereof, and any articles consisting or partly consisting thereof.
To construct bridges, buildings, machinery, ships, boats, engines, cars, and other
equipment, railroads, docks, slips, elevators, water works, gas works, and electric
works, viaducts, aqueducts, canals, and other water-ways, and any other means of
transportation, and to sell the same, or otherwise to dispose thereof, or to maintain
and operate the same, except that the Company shall not maintain or operate any
railroad or canal in the State of New Jersey.
To apply for, obtain, register, purchase, lease, or otherwise to acquire, and to
hold, use, own, operate, ana introduce, and to sell, assign, or otherwise to dispose
of, any trade marks, trade names, patents, inventions, improvements, and processes
used in connection with or secured under letters patent of the United States, or
elsewhere or otherwise, and to use, exercise, develop, grant licenses in respect of,
or otherwise to turn to account any such trade marks, patents, licenses, processes,
and the like, or any such property or ri^rlit s.
To engage in any other manufacturing, mining, construction, or transportation
business of any kind fir character whatsoever, and ro that, end to acquire, hold, own.
and dispose of anv and all property, assets, stocks, bonds, and rights of any and
71:;
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
every kind, but not to engage in any business hereunder which shall require the ex-
ercise of the right of eminent domain within the State of New Jersey.
To acquire by purchase, subscription, or otherwise, and to hold or to dispose of,
stocks, bonds, or any other obligations of any corporation formed for, or then or
heretofore engaged in or pursuing, any one or more of the kinds of business, pur-
poses, objects or operations above indicated, or owning or holding any property of
any kind herein mentioned, or of any corporation owning or holding the stocks
or the obligations of any such corporation.
To hold for investment, or otherwise to use, sell, or dispose of, any stock, bonds,
or other obligations of any such other corporation ; to aid in any manner any cor-
: poration whose stock, bonds, or other obligations are held or in any manner guaran-
teed by the Company, and to do any other acts or things for the preservation,
protection, improvement, or enhancement of the value of any such stock, bonds, or
other obligations, or to do any acts or things designed for any such purpose ; and,
while owner of any such stock", bouds, or other obligations, to exercise all the rights,
powers, and privileges of ownership thereof, and to exercise any and all voting
power thereon.
The business or purpose of the Company is from time to time to do any one or
more of the acts and things herein set forth ; and it may conduct its business in
other States, and in the Territories, and iu foreign countries, and may have one
office, or more than one office, and keep the books of the Company outside of the
State of New Jersey, except as otherwise may be provided by law ; and may hold,
purchase, mortgage, and convey real and personal property, either in or out of the
State of New Jersey.
Without in any particular limiting any of the objects and powers of the cor-
poration, it is hereby expressly declared and provided that the corporation shall
have power to issue bonds and other obligations iu payment for property purchased
or acquired by it, or for any other object in or about its business ; to mortgage or
pledge any stocks, bonds, or other obligations, or any property which may be ac-
quired by it, to secure any bonds or other obligations by it issued or incurred; to
guarantee any dividends, or bonds, or contracts, or other obligations ; to make and
perform contracts of any kind and description and in carrying on its business, or
for the purpose of attaining or furthering any of its objects, to do any and all other
acts and things, and to exercise any and all other powers which a copartnership
or natural person could do and exercise, and which now or hereafter may be
authorized by law.
IV. The 'total authorized capital stock of the corporation is eleven hundred
million dollars ($1,100,000,000), divided into eleven million shares of the par value of
one hundred dollars each. Of such total authorized capital stock, five million five
hundred thousand shares, amounting to five hundred and fifty million dollars, shall
be preferred stock, and five million five hundred thousand shares, amounting to five
hundred and fifty million dollars, shall be common stock.
From time to time, the preferred stock and the common stock may be increased
according to law, and may be issued in such amounts and proportions as shall be
determined by the Board of Directors, and as may be permitted by law.
The holders of the preferred stock shall be entitled to receive when and as de-
clared, from the surplus or net profits of the corporation, yearly dividends at the
rate of seven oer centum per annum, and no more, payable quarterly on dates to be
fixed by the by-laws. The dividends on the preferred stock shall be cumulative, and
shall be payable before any dividend on the common stock shall be paid or set
apart ; so that, if in any year dividends amounting to seven per cent shall not have
been paid thereon, the deficiency shall be payable before any dividends shall be
paid upon or set apart for the common stock.
Whenever all cumulative dividends on the preferred stock for all previous years
shall have been declared and shall have become payable, and the accrued quarterly
instalments for the current year shall have been declared, and the Company shall
have paid such cumulative dividends for previous years, and such accrued quarterly
instalments, or shall have set aside from its surplus or net profits a sum sufficient
for the payment thereof, the Board of Directors may declare dividends on the com-
mon stock, payable then or thereafter, out of any remaining surplus or net profits.
714
FORMS AXD PRECEDENTS.
In the event of any liquidation or dissolution or winding up (whether voluntary
or involuntary) of the corporation, the holders of the preferred stock shall be en-
titled to be paid in full both the paramount of their shares, and the unpaid dividends
accrued thereon, before any amount shall be paid to the holders of t lie common
stock ; and after the payment to the holders of the preferred stock of its par value,
and the unpaid accrued dividends thereon, the remaining assets and funds shall be
divided aud paid to the holders of the common stock according to their respective
shares.
V. The names and post-office addresses of the incorporators, and the number of
shares of stock for which severally and respectively we do hereby subscribe (the
aggregate of our said subscriptions being thousand dollars, is the amount of
capital stock with which the corporation will commence business), are as follows :
(Here follow the names and post-office addresses of each of the incorporators,
and the number of shares of stock subscribed for by each.)
VI. The duration of the corporation shall be perpetual.
VII. The number of Directors of the Company shall be fixed from time to time
by the by-laws; but the number, if fixed at more than three, shall be some multiple
of three/ The Directors shall be classified with respect to the time for which they
shall severally hold office by dividing them into three classes, each consisting of one-
third of the whole number of the Board of Directors. The Directors of the first
class shall be elected for a term of one year ; the Directors of the second class for a
term of two years ; and the Directors of the third class for a term of three years ;
and at each annual election the successors to the class of Directors whose terms shall
expire in that year shall be elected to hold office for the term of three years, so that
the term of office of one class of Directors shall expire in each year.
The number of the Directors may be increased as may be provided in the by-laws.
In case of any increase of the number of the Directors the additional Directors
shall be elected as may be provided in the by-laws by the Directors or by the
stockholders at an annual or special meeting ; and one-third of their number shall
be elected for the then unexpired portion of the term of the Directors of the first
class, one-third of their number for the unexpired portion of the term of the Direc-
tors of the second class, and one-third of their number for the unexpired portion of
i he term of the Directors of the third class, so that each class of Directors shall be
increased equally.
In case of any vacancy in any class of Directors through death, resignation, dis-
qualification or other cause, the remaining Directors, by affirmative vote of a
majority of the Board of Directors, may elect a successor to hold office for the
unexpired portion of the term of the Director whose place shall be vacant, and until
the election of a successor.
The Board of Directors shall have power to hold their meetings outside of the
State of New Jersey at such places as from tune to time may be designated by the
by-laws or by resolution of the Board. The by-laws may prescribe the number of
Directors necessary to constitute a quorum of the Hoard of Directors, which number
may be less than a majority of the whole number ofth<- Directors.
' Unless authorized by votes given in person or by proxy by stockholders holding
at least two-thirds of the capital Stock Ot the corporation, which is represented and
voted upon in person or by proxy at a meeting specially called for that purpose, or
at an annual meeting, the Board of Directors shall not moil -age or pledge any of its
real property, or any shares of the capital stock of any other corporation ; but this
prohibition shall not be construed to apply to the execution of any purchase-money
mortgage or any other purchase-money lien.
As authorized by the Act of the Legislature of the State of New Jersey, passed
March 22, 1901, amending the seventeenth section of the Act. concerning Corpora-
tions (Revision of L896), anj action which theretofore required the consent of the
holders of two-thirds of the stock at any meeting, after notice to them given, or
required their consent in writing to be filed, may be taken upon the consent of, and
the consent given aud filed by, the holders of two-thirds of the stock of each class
represented at Buch meeting in person or by proxy.
Any officer elected or appointed by Hie Board of Directors may be removed at
any time by the affirmative vote of a majority of the whole Board of Directors.
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Any other officer or employee of the Company may be removed at any time by
rote of the Board of Directors, or by any committee or superior officer upon whom
such power of removal may be conferred by the by-laws or by a vote of the Board
of Directors.
The Board of Directors, by the affirmative vote of a majority of the whole
board, may appoint from the Directors an executive committee, of which a majority
shall constitute a quorum ; and, to such extent as shall be provided in the by-laws,,
such committee shall have and may exercise all or any of the powers of the Board
of Directors, including power to cause the seal of the corporation to be affixed to
all papers that may require it.
The Board of Directors, by the affirmative vote of a majority of the whole
board, may appoint any other Standing Committees, and such Standing Committees
shall have and may exercise such powers as shall be conferred or authorized by the
by-laws.
The Board of Directors may appoint not only other officers of the Company,,
but also one or more vice-presidents, one or more assistant treasurers, aud one or
more assistant secretaries ; and, to the extent provided iu the by-laws, the persons
so appointed respectively shall have and may exercise all the powers of the presi-
dent, of the treasurer, and of the secretary respectively.
The Board of Directors shall have power from time to time to fix and to deter-
mine and to vary the amount of the working capital of the Company ; and to direct
and determine the use and disposition of any surplus or net profits over and above
the capital stock paid in ; and in its discretion the Board of Directors may use aud
apply any sucli surplus or accumulated profits in purchasing or acquiring its bonds,
or other obligations, or shares of its own capital stock, to such extent and in such
manner and upon such terms as the Board of Directors shall deem expedient ; but
shares of such capital stock so purchased or acquired may be resold, unless such
shares shall have been retired for the purpose of decreasing the Company's capital
stock as provided by law.
The Board of Directors from time to time shall determine whether and to what
extent, and at what times and places, and under what conditions and regulations,
the aceounts and books of the corporation, or any of them, shall be open to the in-
spection of the stockholders, and no stockholder shall have any right to inspect any
account or book or document of the corporation, except as conferred by Statute or
authorized by the Board of Directors or by a resolution of the stockholders.
Subject always to by-laws made by the stockholders, the Board of Directors
may make by-laws, and, from time to time, may alter, amend, or repeal any by-laws ;
but anv by-laws made by the Board of Directors may be altered or repealed by the-
stockholders at any annual meeting, or at any special meeting, provided notice of
such proposed alteration or repeal be included in the notice of the meeting.
In Witness Whereof, we have hereunto set our hands and seals the 23d day of
February, 1901.
(Signatures of Incorporators.)
State of )
County of ) '
Be It Remembered, that on this day of , 190 , before me, a Notary
Public in and for said County, personally appeared , who I am satisfied
are the persons named in, and who executed the foregoing certificate, aud I having
first made known to them the contents thereof, they did each acknowledge that
they signed, sealed, and delivered the same as their voluntary act and deed.
, Notary Public.
(For use when acknowledgment is taken out of the State.)
State of )
County of $
I, Clerk of the County of and also Clerk of the Supreme
Court for the said County, the same being a Court of record, Do Hereby Certify that
, whose name is subscribed to the Certificate of the proof or acknowledg-
ment of the annexed instrument and thereon written, was at the time of the taking
of such proof of acknowledgment a Notary Public, in and for said County, duly com-
716
FORMS AND PRECEDENTS.
•missioned and sworn aud authorized by the laws of said State to take the acknowl-
edgments and proofs of deeds or conveyances for lands, tenements, or hereditaments,
in said State of . And further, that I am well acquainted with the
handwriting of such Notary Public, and verily believe that the signature to said
-certificate of proof of acknowledgment is genuine.
In testimony whereof, I have hereunto set my hand and affixed the seal of the
:said Court and County the day of , 190 .
, Clerk.
NEW MEXICO.
CERTIFICATE OF INCORPORATION
OF THE
Company.
We, the undersigned, for ourselves, our associates and successors, have asso-
ciated ourselves together for the purpose of forming a corporation under the laws
of the Territory of New Mexico, United States of America, and we hereby certify
^nd declare as follows, to wit :
I. The name of the corporation is :
II. The principal and registered office of the Company is at No.
Street, in the city (or town) of in the Territory of New Mexico, and the
name of the agent therein and in charge thereof, aud upon whom process against
this corporation may be served, is :
III. Che objects for which and for each of which the corporation is formed are :
V. The following provisions for the regulation of the business and the couduct
of the affairs of the company are hereby established :
VI. The company shall be authorized to issue capital stock to the amount of
dollars (not less than $3,000). The number of shares of which the capital
stock shall consist is shares, of the par value of each. The
amount of capital stock with which the company shall commence business shall be
dollars (not less than $2000). (If preferred stock is desired,
■insert the provisions therefor in this article.)
VII. The number of directors who shall manage the concerns of the company
for the first three mouths are , all of whom are citizens of the United
States, and one of whom is a resident of New Mexico. The names and addresses
of said first Board of Directors are as follows :
Names. Addresses.
VIII. The duration of the corporation shall be fifty years.
IX. The names and post-office addresses of the incorporators and the number
of shares of stock for which severally and respectively we do hereby .subscribe, the
•aggregate of our said subscriptions being dollars, and is the amount of
capital stock with which the Company will begin business, are as follows :
Names. Post Office Addresses. No. of Shares.
In Witness Whereof, we have hereunto set our hands and seals this
day of , 190 .
(l. s.)
(l. s.)
(l. s.)
State of > ss>
County of y
I certify that on this day of , 190 , before me personally
came , to me personally known, and known to me to be the same
persons described in and who executed the foregoing instrument, and severally
duly acknowledged to me that they had signed and executed the same.
In Witness Whereof, I have hereunto .set my hand and affixed my official seal
at said county the day and year last above written.
, Notary Public,
County.
717
INCORPORATION AND ORGANIZATION OF CORPORATIONS
Territory op New Mexico.
Office of the Secretary.
Certificate.
I , Secretary of the Territory of this office, do hereby certify there
was filed for record in this office, at o'clock, M., on the day of ,
A.D. 190 ,
Article op Incorporation
of the
Company,
and also, that I have compared the foregoing copy of the same with the original
thereof now on file, and declare it to be a correct transcript therefrom and of the
whole thereof. _ .
In Witness Whereof, I have hereunto set my hand and affixed my official seal
this day of , 190 .
, Secretary of New Mexico.
CERTIFICATE OF INCORPORATION
OF
Brokerage Company (New York Charter).
We, the undersigned, being all persons of full age, all being citizens of the
United States and all residents of the State of New York, desiring to form a Stock
Corporation pursuant to the provisions of the Business Corporations Law of the
State of New York, do hereby make, sign, acknowledge, and file this certificate for
that purpose as follows.
Name.
First. The name of the proposed corporation is :
Objects.
Second. The purposes for which it is formed are to buy, sell, negotiate, exchange
pledge, trade, and deal in and with shares, stocks, debentures, scrip, bonds, and se-
curities of any government, State, or public or private corporation, or any corporate
body ; to trade and deal in and with real estate, mines, metals, minerals, and oil,
cotton, grain, produce, or other commodities ; to invest in any or either of the fore-
going, and from time to time to change the investments of the Company ; to mort-
gage, pledge, or otherwise charge all or any part of the investments of the Company
or its property and rights ; to make advances on, sell, or dispose of any property or
investments ; or to act as agent, factor, or broker for any or either of the corporate
purposes ; to purchase or otherwise acquire the capital stock, shares, debentures,
scrip, bonds, or other evidences of indebtedness of any other corporation, and to issue
and exchange its own stock, shares, bonds, debentures, scrip, or other evidences
of indebtedness in payment therefor, and while the owner thereof to exercise all the
rights of ownership, including the power to vote upon such stock or shares ; to pur-
chase, receive, hold, and own mortgages, debentures, shares, and other securities or
obligations of any public, private, or municipal corporation, or bonds or other securi-
ties or obligations of the Government of the United States, or of any State, district,
territory, colony, or dependency of the United States or of any foreign country, State,
or colony ; to collect and receive, disburse and dispose, of all interest, dividends, ac-
cumulations, earnings, and income from, upon, or on account of any bonds, deben-
tures, stocks, shares, securities, contracts, evidences of debt, obligations, or other
property held or owned by the corporation thereto ; to do any and all lawful acts
tending to increase or enhance the value of the property of the Company ; to issue
stock, shares, bonds, debentures, certificates, scrip, or other corporate obbgations, and
to secure the payment thereof by mortgage, pledge, or deed of trust of or upon the
whole or any portion of the corporate property or funds ; to sell, pledge, or otherwise
718
FORMS AND PRECEDENTS.
dispose of bonds, debentures, or other corporate obligations for proper and lawful cor-
porate purposes, as and when the Board of Directors shall deem necessary, advisable,
or expedient ; to promote the corporate business of investment and dealing in secur-
ities in all lawful ways ; and to receive, collect, transmit, pay out, and disburse funds
in the course of its 'business ; and to the extent authorized by law to lease, pur-
chase, or otherwise acquire, bold, use, sell, trade, and deal in and with, assign, pledge,
mortAiije, transfer, and convey real and personal property of any name or nature, ex-
cepting^bi'lls of exchange, gold or silver bullion ; to deal in foreign exchange, to issue
and accept drafts and bills of exchange; to issue promissory notes, scrip, drafts,
acceptances, or other corporate obligations, and negotiate the same.
Generally to purchase, take on lease or in exchange, hire, or otherwise acquire
any real or personal property, and any rights or privileges which the Company may
deem useful, necessary, desirable, proper, or convenient for the purposes of its
business or in the development or extension thereof.
Amount of Capital Stock.
Third. The amount of capital stock is dollars ($ ). The amount
of capital with which the Company will begin business is dollars.
Number of Shares.
Fourth. The number of shares of which the aforesaid capital shall consist
is shares of the par value of % each. shares thereof shall be
preferred stock, and shares thereof shall be common stock. The preferred
stock shall be entitled, in preference to the common stock, to cumulative dividends
at the rate of per cent payable yearly, half yearly, or quarterly. Dividends on
the common stock shall not be paid except when all dividends to which the preferred
stock is entitled at full rate to date are paid or set apart for payment, and both
classes of stock shall share equally in auy addition to the profits of any fiscal year
of the Company in excess of the dividend required to be paid on the preferred stock
and per cent upon the common stock. Such excess dividend shall not be
offset against any subsequent dividend upon the preferred stock thereafter, as all
dividends shall be the same as if such excess dividends had not been made. _ Any
distribution of assets other than profits shall be paid, as far as the same will go,
first upon the preferred stock to the amount thereof, and its per cent cu-
mulative dividends that are unpaid if any, less the amount paid thereon, in any previ-
ous distribution of such assets ; next upon the common stock to the amount of the
par thereon, less the amount, if auy, paid thereon in any previous distribution of
such assets, and then upon the two classes of stock equally per share.
Principal Office.
Fifth. The principal office of this Corporation is to be located in the Borough
of Manhattan, in the City, County, and State of New York.
Duration.
Sixth. Its duration is to be perpetual.
Number of Directors.
Seventh. The number of its Directors is to be
Directors for the First Year.
Eighth. The names and post-office addresses of its Directors for the first year
are as follows :
Names. l'ost-Office Addresses.
Tl!»
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Subscribers to Capital Stock.
Ninth. The names and post-office addresses of the subscribers, and the number
-of sbares which each agrees to take in the corporation are as follows :
Tenth. The Directors need not be stockholders of the corporation. A majority
of the stockholders shall be necessary to constitute a quorum for the transaction of
business at any meeting of the Board, but a less number may adjourn such meeting.
All Directors shall hold office until the election of their successors, and Directors
shall not be subject to removal during their respective terms.
Vacancies in the Board of Directors may be filled by the remaining Directors,
provided there is present at the meeting at which such vacancy is filled a majority
of the full Board of Directors as authorized by the certificate of incorporation.
The Directors may hold their meetings, have an office, and keep the books of the
corporation, except the stock book, outside the State of New York.
The Board of Directors by the affirmative vote of a majority of the whole Board
may appoint an Executive Committee of three members of the Board, of whom a
majority shall constitute a quorum. Sucli Executive Committee shall have any and
all powers of the full Board of Directors which may be lawfully delegated. The
term of office of each member of such Committee shall continue until the expiration
of his term as Director and until his successor shall be elected : vacancies in this
committee shall be filled by the Board of Directors.
By-laws may be made by the Board of Directors except as otherwise provided
by law, and may be altered in such manner as may be therein provided.
Stockholders shall have no right except as conferred by statute or by the by-laws
of the corporation to inspect any books, papers, or accounts of the corporation. The
transfer books of the corporation may be closed by order of the Board of Directors
or the Executive Committee for thirty days or any shorter time, before any meeting
■of the stockholders and until the day after the final adjournment of such meeting.
In Witness Whereof, we have made, signed, acknowledged,-aud filed this certificate
Dated, February , 190 .
State of 1 gs
County of \
I hereby certify that on this day of , 190 , before me person-
ally came , to me personally known, and known to me to be the
persons described in and who executed the foregoing instrument, and severally
duly acknowledged to me that they executed the same.
, Notary Public.
(For use out of the State.)
State of ) os
County of $ "
I, , Clerk of the County of , and also Clerk of the
Court for the said County, the 'same being a Court of Record, Do Hereby
Certify, that , whose name is subscribed to the Certificate of the proof
or acknowledgment of the annexed instrument, and thereon written, was, at the
time of the taking of such proof of acknowledgment, a Notary Public in and for
the County of , dwelling in the said county, commissioned and sworn, and
duly authorized to take the same. And further, that I am well acquainted with the
handwriting of such Notary, and verily believe that the signature to the said certifi-
cate of proof of acknowledgment is genuine.
In Testimony Whereof, I have hereunto set my hand and affixed the seal of the
said Court and County, the day of , 190 .
, Clerk.
720
FORMS AND PRECEDENTS.
NORTH CAROLINA.
CERTIFICATE OF INCORPORATION
OF THE
Company.
This is to certify that we do hereby associate ourselves into a
corporation, under and by virtue of an act of the Legislature of the State of North
Carolina (session 1901) entitled " An Act to Revise the Corporation Laws of North
Carolina," and the several supplements thereto and acts amendatory thereof, and
do severally agree to take the number of shares of capital stock set opposite our
respective names.
First. The name of the corporation is Company.
Second. The location of the principal office in this State is at No.
Street, in the of , County of
Third. The objects for which this corporation is formed are to :
Fourth. The total authorized capital stock of this corporation is
dollars, divided into shares of par value of dollars each.
Fifth. The names and post-office addresses of the incorporators and the number
of shares subscribed for by each, the aggregate of which, $ , is the amount
of capital stock with which this company will commence business, are as follows:
Name. Post-Office Address. No. of Shares.
Sixth. The period of existence of this corporation is limited to years.
Seventh. (Here insert any provisions for the regulation of internal affairs of the
corporation that may be desired.)
In Witness Whereof, we have hereunto set our hands and seals the day
of , 190 .
(seal.)
(seal.)
Signed, sealed, and delivered in the presence of
State of
County of
This is to certify that this day before me, a , personally appeared
, who I am satisfied are the persons named in and who executed the fore-
going certificate of incorporation, and I having first made known to them the con-
tents thereof, they did each acknowledge that they did sign, seal, and deliver the
same as their voluntary act and deed, for the uses and purposes therein expressed.
In Testimony Whereof, I have hereunto set mv hand and affixed my official seal,
this day of , A. D. 190 .
NORTH DAKOTA.
ARTICLES OF INCORPORATION
OF Tin:
Company.
Know all Men by these Presents: That we, the undersigned, have this day volun-
tarily associated ourselves together for the pur[>ose of forming a corporation under
the laws of the State of North Dakota. And we hereby certify :
First. The name of the said corporation is the
Second. The purpose for which it is formed ifl to carry on the business of
in the County of and State of North Dakota.
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Third. That the place where its principal business is to be transacted shall be the
of , County of , and State of North Dakota. But it may have a
business office without this State at the City of , State of , and any meet-
ings of incorporators, stockholders, or directors may be held at either of said offices.
Fourth. That the term for which it is to exist is years from and after
the date of its incorporation.
Fifth. That the number of its directors shall be , and that the names
and residences of those who are appointed to serve until their successors are elected
and qualified are :
Names. Residences.
Sixth. That the amount of the capital stock of this corporation shall be
dollars, divided into shares of the par value of dollars each.
Seventh. That the amount of said capital stock which has been actually sub-
scribed is dollars, and the following are the names of the persons by whom
the same has been subscribed and number of shares held by each :
Names of Subscribers. No. of Shares. Amount.
In Witness Whereof, we have hereunto set our hands and seals this day
of , one thousand nine hundred and
(Signatures and seals.)
Signed and sealed in the presence of
State of North Dakota, >
County of )
On this day of , in the year one thousand nine hundred and
, before me, a Notary Public in and for said county, personally appeared,
known to me to be the persons who are described in, and who
executed the within instrument, and they each duly acknowledged to me that they
executed the same.
In Witness Whereof, I have hereunto set my hand and affixed my official seal
the day and year last above written.
(seal.)
, Notary Public,
Co.
OHIO.
ARTICLES OF COMPANY FOR PROFIT.
These articles of incorporation of the Company witnesseth : That
we, the undersigned, all (or a majority) of whom are citizens of the State of Ohio,
desiring to form a corporation for profit, under the general corporation laws of said
State, do hereby certify :
First. The name of said corporation shall be :
Second. Said corporation is to be located at in County, Ohio,
and its principal business there transacted.
Third. Said corporation is formed for the purpose of :
Fourth. The capital stock of said corporation shall be dollars, divided
into shares of dollars each. (If preferred stock is to be issued,
provision therefor should be inserted at this point.)
In Witness Whereof we have hereunto set our hands this day of
, A. D. 190 .
(Signatures.)
State of Ohio, >
County of £ ss<
Personally appeared before me the undersigned, a in and for said
county, this day of , A. D. 190 , the above named ,
722
FORMS AND PRECEDENTS.
and each severally acknowledged the signing of the foregoing articles of incorpora-
tion to be his free act and deed for the uses and purposes therein mentioned.
Wit /less, my hand and official seal on the day and year last aforesaid.
(seal.) (Signatures aud title.)
State of Ohio, } gg
County of >
I, , Clerk of the Court of Common Pleas within and for the county
aforesaid, do hereby certify that , whose name is subscribed to the fore-
going acknowledgment as a , was at the date thereof a in and for
said county, duly commissioned and qualified, and authorized as such to take said
acknowledgment ; and further, that I am well acquainted with his handwriting, and
believe that the signature to said acknowledgment is genuine.
In Witness Whereof, I have hereunto set my baud and affixed the seal of said
Court at this day of , A. D. 190 .
(seal.)
OKLAHOMA.
ARTICLES OF INCORPORATION.
Be It Known, That the undersigned, citizens of the Territory of Oklahoma, do
hereby voluntarily associate ourselves together for the purpose of forming a pri-
vate corporation, under the laws of the Territory of Oklahoma, and do hereby
certify :
First.
That the name of this corporation shall be
Second.
That the purpose for which this corporation is (are) formed is (are) to :
Third.
That the place(s) where its principal business is to be transacted is (are) at :
Fourth.
That the term for which this corporation is to exist is :
Fifth.
The number of directors or trustees of this corporation, and the names and
residences of such of them who are to serve until the election of such officers and
their qualification :
Names. Post-Office Addresses.
Sixth.
That the estimated value of the goods, chattels, lands, rights, and credits owned
723
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
by the corporation is dollars.
That the amount of the capital stock of this corporation shall be dollars,
and shall be divided into shares of dollars each.
In Testimony Whereof, we have hereunto subscribed our names this day
of , A. D. 190 .
Territory of Oklahoma, \
County \
Personally appeared before me, a Notary Public in and for said County, Territory
above named, . , who are personally known to me to be the same
persons who executed the foregoing instrument of writing, and duly acknowledged
the execution of the same.
In Testimony Whereof, I have hereunto subscribed my name, and affixed my
Notarial Seal this day of , 190 .
, Notary Public.
OREGON.
ARTICLES OF INCORPORATION.
We, and and , whose names are hereunto
subscribed, do hereby associate ourselves together for the purpose of forming a cor-
poration under and by virtue of the laws of the State of Oregon for the formation
of a private corporation.
Article I. The name of this corporation shall be , and its duration
shall be perpetual.
Article II. The enterprise, business, pursuit, or occupation in which this cor-
poration proposes to engage is :
Article III The principal office and place of business of this corporation shall
be at :
Article IF. The capital stock of this corporation shall be dollars.
Article V. The capital stock of this corporation shall be divided into
shares, of the par value of dollars each.
(If the corporation is formed for the purpose of navigation or making or con-
structing any railroads, roads, canal or bridge, the termini of the same or the site of
such bridge must be set forth.)
In Witness Whereof, we, the undersigned, have hereunto set our hands and seals
this day of , 19 .
In the presence of
(seal.)
(seal.)
(seal.)
State of Oregon,
County of
Be It Remembered, that on this day of , 190 , before me, the
undersigned, a Notary Public in and for said County and State, personally appeared
, all to me personally known, and known to me to be the indivi-
duals named in, and who executed the foregoing articles of incorporation, and
severally acknowledged to me that they executed the same.
In Witness Whereof, I have hereunto set my hand and notarial seal the day
and year last above written.
, Notary Public for Oregon.
724
FORMS AND PRECEDENTS.
PENNSYLVANIA.
FORM FOR APPLICATION FOR CHARTER.
Notice is hereby given that an application will be made to the Governor of the
State of Pennsylvania on the day of , 190 , by (here insert
names of proposed incorporators) under an Act of Assembly of the Common-
wealth of Pennsylvania, entitled "An Act to provide for the incorporation and
regulation of certain corporations," approved April 29th, 1874, and the supple-
ments thereto, for a charter of an intended corporation, to be called (here insert
name of proposed company), the character and object of which arc the (here insert
generally the purposes of the proposed corporation), and for these purposes, to
have, possess, and enjoy all the rights, benefits, and privileges of said Act of
Assembly and its supplements.
, Solicitor.
PENNSYLVANIA.
TO THE GOVERNOR OP THE COMMONWEALTH OF PENNSYLVANIA:
Sir, — In compliance with the requirements of an Act of the General Assem-
bly of the Commonwealth of Pennsylvania, entitled "An Act to provide for the
incorporation and regulation of certain corporations," approved the 29th day of April,
A. D. 1874, and the several supplements thereto, the undersigned,
of whom are citizens of Pennsylvania, having associated themselves together for
the purpose hereinafter specified, and desiring that they may be incorporated, and
that letters patent may issue to them and their successors according to law, do
hereby certify :
1. The name of the proposed corporation is :
2. Said corporation is formed for the purpose of:
3. The business of said corporation is to be transacted in :
4. Said corporation is to exist for the term of years.
5. The names and residences of the subscribers and the number of shares
subscribed by each are as follows :
Names. Residence. No. of Shares.
0. The number of directors of said corporation is fixed at , and the
names and residences of the directors who are chosen directors for the first year
are as follows :
Name. Residence.
7. The amount of the capital stock of said corporation is , dollars,
divided into shares of the par value of dollars, and dollars,
being ten per centum of the capital stock, lias been paid in cash to the Treasurer
of said corporation, whose name and residence is :
(Signatures of Incorporators.)
State of Pennsylvania, )
County of )
Before me , in and for the county aforesaid, personally came the
above named , who, in due form of law, acknowledged the fore-
going instrument to be their act and deed for the purposes therein specified.
Witness my hand and seal of office, the day of , A. D. 190 .
(seal)
721
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
State of Pennsylvania, ?
i
County of
Personally appeared before me, this day of , A. D. 190 ,
who being duly sworn, according to law, depose and say that the statements
contained in the foregoing instrument are true.
Sworn and subscribed before me, the day and year aforesaid
PHILIPPINES.
ARTICLES OF INCORPORATION
OF THE
(Here insert full name of the corporation.)
Know all Men by these Presents : That we, a majority of whom are residents of
the Philippine Islands, have this day voluntarily associated ourselves together for
the purpose of forming a corporation under the laws of the Philippines.
And we hereby certify —
First. That the name of said corporation shall be the (Here in-
sert full name of corporation.)
Second. That the purposes for which such corporation is formed are :
(Here insert full purposes of corporation.)
Third. That the place where the principal office of the corporation is to be
established or located is . (Here insert where principal office of the
corporation is to be established or located.)
Fourth. That the term for which said corporation is to exist is fifty years from
and after the date of incorporation.
Fifth. That the names and residences of the incorporators of said corporation
are as follows :
Sixth. That the number of directors of said corporation shall be
(here insert number of Directors, not less than five nor more than fifteen), and
that the names and residences of the Directors of the corporation who are to serve
until their successors are elected and qualified as provided by the by-laws, are as
follows, to wit:
Name. Whose residence is at
Seventh. That the capital stock of said corporation is pesos
(here insert amount of capital stock), and said capital stock is divided into
shares (here insert number of shares), of the par value each of pesos (here
insert par value of each share).
Eighth. That the amount of said capital stock which has been actually sub-
scribed is (here insert full amount of capital subscribed) pesos, and
the following persons have subscribed for the number of shares and amount of
capital stock set out after their respective names :
726
FORMS AXD PRECEDENTS.
Number of Amount of Capital
Name. Residence. Shares. Stock subscribed.
Total . . .
Ninth. That the following persons have paid on the shares of capital stock for
-which they have subscribed the amounts set out after their respective uames :
Amount paid on
Name. Residence. Subscription.
Total . . .
Tenth. That (here insert treasurer's name elected by subscribers) has
been elected by the subscribers as treasurer of the corporation to act as such until
his successor is duly elected and qualified iu accordance with the by-laws, and that
as such treasurer he has been authorized to receive for the corporation and to
receipt in its name for all subscriptions paid in by said subscribers
Eleventh. (If the corporation be a railroad, tramway, wagon-road, telegraph or
telephone corporation, here insert estimated length of railroad, tramway, wagon-
road, telegraph or telephone hue, provinces through which such line will pass, and
all of its intermediate branches and connections.)
Twelfth. (If the corporation be a railroad or tramway corporation, here insert
gauge of road, motive power to be used, means of applying such power, and
materials to be used in construction.)
Thirteenth. (If the corporation be a wagon-road corporation, here insert width
of the road, method of construction, and the construction material to be used.)
Fourteenth. (If the corporation be a telegraph or telephone corporation, here
insert construction material, appliances, methods of construction, and system to be
used.)
In Witness Whereof, We have hereunto set our hands and seals this
day of , A. D. 190 .
Signed and sealed in presence of (seal.)
City or Municipality of
Province of
Philippine Islands.
On this day of , in the year A. J), one thousand nine hundred and
, before me, , a notary public in and for the ,
personally came (here insert names of incorporators)
known to me to be the persons whose names are subscribed and who executed the
within instrument, and each of them acknowledged to me that he freely and
voluntarily executed the same.
In Witness Whereof I have hereunto set my hand and affixed my official seal
the day and year last above written.
, Notary Public.
City or Municipality of
Province of
Philippine Islands.
(Here insert name of treasurer elected by subscribers), being duly
sworn, deposes and says that on the day of , A. D. 190 , he was
duly elected by the subscribers named in the foregoing articles of incorporation as
treasurer of the corporation, to act as such until his successor has been duly elected
and qualified in accordance with the by-laws of the corporation, and that as such
727
> ss.
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
treasurer he has been authorized by the subscribers to receive for the corporation
all subscriptions paid in by subscribers for the capital stock ; that pesos
has been actually subscribed, and that pesos has been paid to him for the
benefit and to the credit of the corporation, and that at least twenty per centum of
the subscriptions have been actually paid to him for the benefit and to the credit of
the corporation.
Subscribed and sworn to before me this day of , A. D. 190 .
PORTO RICO.
ARTICLES OF INCORPORATION.
Know all Men by these Presents: That we the undersigned (naming
themselves) have this day associated ourselves together for the purpose of forming
a corporation under Title II. of the Civil Code of Porto Rico. We hereby certify
1. That the name of the corporation shall be the
2. That the principal place of business of the corporation shall be at number
city , Porto Rico.
3. That the duration of the corporate existence shall be perpetual.
4. That the objects for which the corporation is formed are as follows :
5. That the amount of the capital stock of said corporation hereby authorized
is dollars (not less than $2,000), divided into shares of the par
value of each.
6. That said corpoi-ation will commence business with a capital stock of
dollars (not less than $1,000).
7. The names and addresses of the incorporators, and the number of shares of
stock which each agrees to take in the corporation, and the amount paid in thereon
by each are as follows :
Names. P. O. Address. No. of Shares Amount
subscribed. paid in.
8. (Here insert any provisions for the regulation of the internal affairs of said
corporation which may be desired.)
In Witness Whereof, We hereunto set our hands and seals this day
of , 190 .
(seal.)
(seal.)
(seal.)
City or Municipality of )
Province of ;- ss.
Porto Rico. )
On this day of , in the year A. D. one thousand nine hundred and
, before me, , a notary public in and for the ,
personally came (here insert names of incorporators)
known to me to be the persons whose names are subscribed and who executed the
within instrument, and each of them acknowledged to me that he freely and volun-
tarily executed the same.
In Witness Whereof, I have hereunto set my hand and affixed my official seal
the day and year last above written.
, Notary Public.
728
FORMS AND PRECEDENTS.
RHODE ISLAND.
ARTICLES OF ASSOCIATION.
Know all Men by these Presents : That we, all of lawful
nge, hereby agree to and with each other :
1. To associate ourselves together for the purpose of constituting a corporation
under aud by virtue of the powers conferred by Chapter 176 of the General Laws
of the State of Rhode Island.
2. Said corporation shall be known by the name of :
3. Said corporation is constituted for the purpose of engaging in business of:
4. Said corporation shall be located in :
5. The capital stock of said corporation shall be common stock in the amount
of dollars, to be divided into shares of the par value of dollars,
and preferred stock in the amount of thousand dollars, to be divided into
shares of the par value of dollars each. (The advantages of the preferred
stock over the common, if any, must be set forth.)
Li Testimony Whereof, we have hereunto set our hands and stated our resi-
dences this day of , A. D. 190 .
(Signatures and addresses.)
State of Rhode Island, County of , ss.
In the of in said County this day of ,
A. D. 190 , then personally appeared before me , each and all
known to me and known by me to be the parties executing the foregoing instrument,
and that they acknowledged the said instrument to be their free act aud deed.
, Notary Public
SOUTH CAROLINA.
DECLARATION AND PETITION FOR CHARTER.
State of South Carolina,
County of
To the Secretary of State of South Carolina :
The undersigned petitioners (insert names and residences), by this their declara-
tion would respectfully show :
1st. That their names and residences are as above given.
2nd. The name of the proposed corporation which they desire In form is;
3rd. The place at which it proposes to have its principal place of business, or
to he located, is:
4th. The general nature of the business which it proposes to do is :
5th. The amount of the capital stock to be dollars payable :
t'.lli. The number of shares into which the capital stock is to be divided is
of the par value of dollars each.
7th. (Any other matters which m;iy be advisable to set forth.)
Wherefore -join petitioners pray that the Secretary of State do issue to them
a commission authorizing them to open books of subscription to the capital stuck
729
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
of the proposed corporation, after days' public notice in the , a
newspaper published in the county of
And your petitioners will ever pray, etc.
(Signatures.)
Date.
Return of Corporators. (South Carolina.)
State of South Carolina, )
County of )
To the Secretary of State of South Carolina :
Whereas, did on file in the office of Secretary
of State of South Carolina a written declaration, signed by themselves, setting
forth :
1st. The names and residences of the petitioners to be, as above given,
2nd. The name of the proposed corporation to be with principal
place of business at , and the nature of the business it proposes
to do.
3rd. The amount of the capital stock to be dollars and the number
of shares iuto which the same is to be divided to be , of the par value
of dollars each ; and
Whereas, the above named petitioners were appointed by you a Board of Corpo-
rators, the undersigned, being a majority thereof, respectfully certify :
1st. That all the requirements of an Act entitled " An Act to provide for the
formation of certain corporations and to define the powers thereof" approved the
9th day of March, A. D. 1896, and all amendments thereto, have been duly and
fully complied with, fifty per cent of the aggregate amount of the capital stock
having been subscribed by bona fide subscribers.
2nd. That, pursuant to notice published as required, a meeting was held on
, at which a majority of all stock in value, being present, in person or
by proxy, the following were elected Directors :
3rd. That subsequently there was elected as President, ; as Vice-
President, ; as Secretary and Treasurer
4th. That over twenty per cent of the aggregate capital stock has been paid to
said Treasurer.
Wherefore, your petitioners pray that a charter be issued in the name and for the
purposes indicated in their written declaration.
(Signatures.)
SOUTH DAKOTA.
ARTICLES OF INCORPORATION
Know all Men by these Presents: That we, the undersigned, ,
for ourselves, our associates and successors, have associated ourselves together for
the purpose of forming a corporation under and by virtue of the statutes and laws
of the State of South Dakota, and we do hereby certify and declare as follows, viz. :
First.
The name of the corporation shall be
730
FORMS AND PRECEDENTS.
Second.
The purposes for which this corporation is formed
Third.
The place where the principal business of this corporation shall be transacted
is in the City of , South Dakota ; but it may have business offices without
this State, one at the City of , State of , and another at the
City of , in the of ; and any meetings of the Incor-
porators, Stockholders, or Directors of this Company may be held at either or any
of said offices or places of business ; and the books of this corporation may be
kept at either or any of said offices or places of business ; and any Incorporator or
Stockholder of this Company entitled to be present and vote at any such meeting
may be represented by proxy.
The Domiciliary Office of this corporation shall be at the office of The
Company in said city of , South Dakota.
This Corporation hereby appoints as its Resident Agent in South Dakota, and
upon whom legal process against this corporation may be served,
of the City of , South Dakota.
Fourth.
The term for which this corporation shall exist shall be twenty-five (25) years,
with such right of renewal for other and similar periods as may now or hereafter
be permitted under the laws of South Dakota.
Fifth.
The number of Directors of this corporation shall be , and
each Director shall hold at least one share of stock. The names and residences of
the Directors who are to serve until their successors are elected are as follows :
Names. Residences.
An Executive Committee composed of two Directors may be
appointed by the Board of Directors of this corporation, in which event such Com-
mittee shall be provided for in its By-Laws ; and said Executive Committee shall
have the same power as the Board of Directors ; but this provision shall not apply
to the election of the Company's officers.
Sixth.
The amount of the Capital Stock of this corporation shall be and is
Dollars ($ ), divided into shares of the par value of
Dollars each ; of which total number of shares shares shall be Common
Stock, and shares shall be Preferred Stock.
When and in the event that Property is taken by this corporation in considera-
tion for Capital Stock of the corporation, the judgment of the Board of Directors
of the Company, made in good faith and entered in the minutes of the corporation,
shall be conclusive as to the value of such property.
In Testimony Whereof, We have hereunto set our hands this day of ,
190 .
(Signatures.)
State of >
County of J SS '
Be It Remembered, That on this day of , A. D. 190 , before
tin' undersigned, personally appeared the above named
well and personally known to me to be the same persons described in, and who exe-
731
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
cuted the foregoing instrument, and severally duly acknowledged to me that they
executed the same.
In Witness Whereof, I have hereunto set my hand and affixed my official seal at
said county, the day and year last above written.
, Notary Public.
State of 7 ss
County of \
and , being duly sworn, each for himself deposes and says :
That he is one of the persons described in, and who signed the foregoing Articles of
Incorporation as an incorporator therein ; that he has read the said articles and
knows the contents thereof ; that the incorporators intended in good faith to form a
corporation for the purpose of a lawful business as set forth in said articles, and
not for the purpose of enabling any corporations to avoid the provisions of sections
770 to 781 inclusive of the Revised Penal Code of 1903 of the State of South
Dakota relating to unlawful trusts and combinations, and laws ameudatory thereto .
Subscribed and sworn to before me this day of , A. D. 190
, Notary Public.
STATE OF TENNESSEE (ORDINARY FORM
PRESCRIBED BY STATUTE).
CHARTER OF INCORPORATION.
Be It Known, That by virtue of the general laws of the land (here insert names
of incorporators) are hereby constituted a body politic and corporate, by the name
and style of for the purpose of
The capital stock of said corporation shall be dollars.
The general powers of said corporation are : To sue and be sued by the cor-
porate name ; to have and use a common seal, which it may alter at pleasure ; if
no common seal, then the signature of the name of the corporation by any duly au-
thorized officer shall be legal and binding; to purchase and hold or receive by gift,
in addition to the personal property owned by said corporation, any real estate
necessary for the transaction of the corporate business, and also to purchase or
accept, any real estate in payment or part payment of any debt due to the corpora-
tion, and sell realty for corporation purposes ; to establish by-laws and make all rules
and regulations, not inconsistent w r ith the laws and Constitution, deemed expedient
for the management of corporate affairs, and to appoint such subordinate officers
and agents in addition to a President, Secretary, or Treasurer, as the business of
the corporation may require, designate the name of the office, and fix the compensa-
tion of the officer.
The following provisions and restrictions are coupled with said grant of powers :
A failure to elect officers at the proper time does not dissolve the corporation, but
those in office hold until the election or appointment and qualification of their suc-
cessors. The term of all officers may be fixed by the by-laws of the corporation ;
the same not, however, to exceed two years. The corporation may, by by-laws,
make regulations concerning the subscriptions for, or transfer of stock ; fix upon
the amount of capital to be invested in the enterprise ; the division of the same into
shares ; the time required for payment thereof by the subscribers for stock ; the
amount to be called for at any one time, and in case of failure of any stockholder
to pay the amount thus subscribed by him at the time and in the amounts thus
called, a right of action shall exist in the corporation to sue said defaulting stock-
holder for the same. The Board of Directors — which may consist of five or more
members, at the option of the corporation, to be elected either in person or by
proxy, by a majority of the votes cast, each share representing one vote — shall
keep a full and true record of all their proceedings, and an annual statement of
732
FORMS AND PRECEDENTS.
receipts and disbursements shall be copied on the minutes, subject at all times to
the inspection of any stockholder. The books of the corporation shall show the
original or subsequent stockholders, their respective interests, the amount which
has been paid on the shares subscribed, the transfer of stock, by and to whom
made ; also other transactions in which it is presumed a stockholder or creditor
may have an interest.
The amount of any unpaid stock due from a subscriber to the corporation shall
be a fund for the payment of any debts due from the corporation, nor shall the
transfer of stock by any subscriber relieve him from payment unless his transferee
has paid up all or any of the balance due on said original subscription.
By no implication or construction shall the corporation be deemed to possess
any powers except those hereby expressly given or necessarily implied from the
nature of the business for which the charter is granted, and by no inference what-
ever shall said corporation possess the power to discount notes or bills, deal in gold
or silver coin, issue any evidence of debts as currency, or engage in any business
outside the purpose of the charter.
The right is reserved to repeal, annul, or modify this charter. If it is repealed,
or if the amendments proposed, being not merely auxiliary but fundamental, are re-
jected by a vote representing more than half of the stock, the corporation shall
continue to exist for the purpose of winding up its affairs, but not to enter upon any
new business. If the amendments or modifications being fundamental are accepted
by the corporation as aforesaid, in a general meeting to be called for that purpose,
any minor, married woman, or other person under disability, or any stockholder not
agreeing to the acceptance of the modification, shall cease to be a stockholder, and
the corporation shall be liable to pay said withdrawing stockholders the par value of
their stock, if it is worth so much; if not, then so much as may be its real value in
the market on the day of the withdrawal of said stockholders as aforesaid ; Provided,
That the claims of all creditors are to be paid in preference to said withdrawing
•stockholders.
A majority of the Board of Directors shall constitute a quorum and shall fill all
vacancies until the next election. The first Board of Directors shall consist of the
five or more corporators who shall apply for and obtain the charter.
The said corporation may have the right to borrow money and issue notes or
bonds upon the faith of the corporate property, and also to execute a mortgage or
mortgages as further security for repayment of money thus borrowed.
Said corporation shall have the power to raise, buy, sell, and deal in agricultural
products, operate flouring and other mills, and deal in merchandise.
Annually, during the month of January, the President shall make and publish
in a newspaper printed in the county where the principal office of business is located,
or if no newspaper is printed in that county, then in an adjoining, or the nearest
county where a newspaper is printed, a sworn statement, showing the amount of the
capital stock and existing liabilities, and a list of the names of the stockholders.
Nothing but cash shall be taken in payment of any part of the capital stock, or
land at, a fair cash valuation, or patents to the amount of their value, as agreed on by
the subscriber and the corporation, and no loan of money shall at anytime be made
to any stockholder thereof, and any such loan shall render the Directors consenting
thereto individually liable for the amount thereof ; this liability to extend in favor
of innocent stockholders as well as creditors.
The making of a false statement, to be printed as aforesaid, shall render all per-
sons assenting thereto individually liable to all persons dealing or trading with said
Company upon the faith of said fraudulent statement.
If the indebtedness of said Company shall at any time exceed the capital Btock
paid in, the Directors assenting thereto shall be individually liable to the creditors
for said excess. The stockholders arc jointh and severally liable individually at all
times, for all moneys due and owing to the laborers, servants, clerks, and operatives
of the Company in case the corporation becomes insolvent.
If the Directors declare and pay any dividend when the Company is insolvent,
on which declaration of a dividend would diminish the amount of the capital stook,
they shall be jointly and severally liable to creditors for the amount of dividends
7:;:>
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
thus declared. Any Director may avoid liability by voting against the dividend, or
by filing his objections in writing as soon as he ascertains a dividend has been
made.
We, the undersigned, apply to the State of Tennessee, by virtue of the laws of
the land, for a Charter of Incorporation for the purposes and with the powers, etc.,
declared in the foregoing instrument.
Witness our hands, this day of , 190 .
TEXAS.
FORM OF CHARTER.
State of Texas )
County of $
Know all Men by these Presents, That we, , and , all
citizens of , County, Texas, under and by virtue of the laws
of this state, do hereby form and incorporate ourselves into a voluntary association
under the terms and conditions hereinafter set out, as follows :
1. The name of the corporation is
2. The purpose for which it is formed (here quote statutory purpose).
3. The place where the business of the corporation is to be transacted is at
, County, Texas.
4. The term for which it is to exist is years.
5. The number of directors, their names and postoffice addresses are as follows :
6. The amount of the capital stock is % divided into shares
of % each, at least fifty per cent of which capital stock has been subscribed
and ten per cent paid in.
In Testimony Whereof, we hereto sign our names this the day of
, A. D. 190 .
State of Texas )
County of $
Before me, the undersigned authority on this day personally appeared
and known to me to be the persons whose names are sub-
scribed to the foregoing instrument, and severally acknowledged to me that he
executed the same for the purposes and consideration herein expressed.
In Testimony Whereof, I hereto subscribe my name and affix the seal of my
office, this the day of , A. D. 190 .
State of Texas, ?
County of >
I, , of County, Texas, upon oath do hereby state that
fifty per cent of the authorized capital stock of said , amounting to
dollars, has been subscribed, and ten per cent of such authorized capital stock,
amounting to dollars, has been paid in.
Sworn to and subscribed before me by , this the day of , A. D. 19 .
, Notary Public,
County, Texas.
734
FORMS AND PRECEDENTS.
UTAH.
ARTICLES OF INCORPORATION
This Agreement made and entered into by and between , all of
, State of Utah, Witnesseth :
That the parties are desirous of forming a corporation under the laws of the
State of Utah for the purposes and on the terms hereinafter stated :
Article One.
Said corporation shall be called and known by the name of , and is
organized at
Article Two.
Said corporation shall exist and continue for a term of fifty years unless sooner
dissolved or disincorporated according to law.
Article Three.
The object, business, and pursuit of said corporation shall be to :
Article Four.
The place of the general office and business of said corporation shall be at
, State of Utah.
Article Five.
The amount of the capital stock of said corporation shall be shares of
the face or par value of dollars each.
Article Six.
The amount of the capital stock subscribed by each of the incorporators above
named, parties to this agreement, is as follows, that is to say :
Article Seven.
The officers of said corporation shall be :
Article Eight.
To be eligible to an office in this corporal ion the person must be the owner, as
shown by the books of the corporation, of at least one share of the capital stock
thereof, and the President and Treasurer must be directors of said corporation;
the Secretary may or may not be a director of said corporation, and if a director
may be joined with the office of Treasurer.
Article Nine.
The following named persons, parties hereto, shall be directors of said corpora-
tion until the next annual meeting of the stockholders thereof, as hereinafter pro-
vided, namely: . And the said shall be President, said
shall be Secretary and Treasurer, and until their successors shall lie duly
elected and qualified. Any vacancy caused by the resignation, death, or removal of
either or any of the said directors or officers, may he Idled by the Board of Directors.
7:;:.
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Article Ten.
The term of office of the officers of said corporation after the first annual meet-
ing, shall be , and until their successors shall be duly elected and shall
have duly qualified.
Article Eleven.
The annual stockholders' meeting of said corporation for the election of officers
and for the transaction of any such other business as shall lawfully come before it,
shall be held on the in each year, at , Utah, and representation
of a majority of the capital stock of said corporation shall be necessary to legally
hold said meeting, and all stockholders' meetings of said corporation shall be
either general or special. The officers of said corporation, at such meetings, shall
be elected and declared to be elected to said offices respectively. Each stock-
holder shall be entitled to as many votes as he holds of said capital stock.
Stock representation, by proxy, duly appointed, shall be allowed at all meetings of
said corporation, either general or special. No public notice shall be required of
the holding of the annual stockholders' meetings. Special meetings of the stock-
holders may be called by the President or by any directors, and notice
thereof shall be sufficient if personally served on each stockholder, or by letter post-
paid, addressed to him at his place of residence.
Article Ticelve.
members of the Board of Directors shall constitute a quorum to
transact business of the corporation.
Article Thirteen.
The private property of the stockholders of the corporation shall not be liable
for the debts of the corporation.
Article Fourteen.
Any director or officer of said corporation maybe removed at a stockholders'
meeting, general or special, by vote of two-thirds of the capital stock of this cor-
poration, and any officer or director may resign by filing a written resignation with
the Secretary of the corporation.
Article Fifteen.
The capital stock of said corporation subscribed by is fully paid by
the conveyance to said corporation by of the _ . (For all cor-
porations but mining and irrigation companies there must be inserted here a full
description of the property conveyed having a fair cash value equal to the par value
of the stock for which it is transferred.)
Article Sixteen.
It shall be the duty of the Board of Directors to elect a manager who shall have
the general supervision and management of the business of said corporation.
In Witness Whereof, said parties have hereunto set their hands and seals the day
and year first above written.
State of Utah, ) gg
County of $
, being each severally duly sworn, on oath do depose and
say that they have commenced to carry on,' and it is their bona fide intention to
carry on, the business mentioned in the foregoing agreement and Articles of
Incorporation, and affiants verily believe that each party to said agreement has
paid and is able to and will pay' the amount of stock subscribed for by him, and
736
FORMS AND PRECEDENTS.
that ten per cent of the capital stock and ten per cent of the stock subscribed by each
stockholder has been paid in.
Subscribed in my presence and sworn to before me this day of ,
190 .
(In the case of all but mining and irrigation companies the following affidavit
must be made.)
State of Utah, J gs
County of )
, , and , being each severally sworn, on oath
deposes and says that he has examined and appraised the conveyed by
to the corporation by these articles formed, in full payment of their
capital stock, and they do each hereby on their oath say that the said property so
conveyed to said corporation is reasonably worth the sum of dollars, and
that said sum of dollars is a fair cash market value of said property.
Subscribed iu mv presence and sworn to before me this
day of , 190 .
VERMONT.
ARTICLES OF ASSOCIATION
OF THE
We, the subscribers, hereby associate ourselves together as a corporation under
the laws of the State of Vermont, to be known by the name of , for
the purpose of at , in the County of , in the
State of Vermont, with a capital stock of dollars, divided into
shares of dollars each.
Dated at , in the County of , this day of , A. D.
190 .
Subscribers. Post-Office Address.
VIRGINIA.
CERTIFICATE OF INCORPORATION
OF
(Corporation or Incorporated).
This is to certify that we do hereby associate ourselves to establish a corpora-
tion under and by virtue of the provisions of an Act of the General Assembly of
the State of Virginia, entitled " An Act Concerning Corporations," which became
a law on the 21st day of May, 1903, for the purposes and under the corporate
name hereinafter mentioned, and to that end we do, by this our certificate, set forth
as follows :
First. The name of the corporation is to be Company (or
Incorporated).
Second. The name of the county (city, or town) wherein the principal oflice iu
this State is to be located is :
737
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Third. The purposes for which it is formed are as follows :
Fourth. The maximum amount of the capital stock of the corporation is to be
dollars; the minimum amount of the capital stock of the corporation is to
be dollars, and the capital stock of the corporation is to be divided into
shares of dollars each.
(If preferred stock is to be issued, a statement of the amount, together with
the terms on which it is created, must be here set forth.)
Fifth. The period for the duration of the corporation is unlimited.
Sixth. The names and residences of the officers and directors who, unless
sooner changed by the stockholders, are for the first year to manage the affairs
of the corporation are as follows :
Officers. Offices. Residences.
Directors. Residences.
Seventh. The amount of real estate to which its holdings at any time are to be
limited is acres.
Eighth. The following provisions for the regulation of the business and the
conduct of the affairs of the corporation are hereby established.
Given under our hands this day of , 190 .
(Signatures.)
State of Virginia,
County of , to wit:
I, , a Notary Public, for the county aforesaid in the
State of Virginia, do certify that , and , whose
names are signed to the writing above, bearing date on the day of ,
190 , have acknowledged the same before me in my county aforesaid. My term
of office expires on the day of , 190 .
Given under my hand this day of , 190 .
, Notary Public.
Virginia.
In the Circuit Court of County.
The foregoing certificate of incorporation of the Company, incor-
porated, was presented to me , Judge of the Court of
in term time (or in vacation), ^d having been examined by me, I there-
upon certify hereon that the said certificate of incorporation is, in my opinion, signed
and acknowledged in accordance with the requirements of the Act of the General
Assembly of Virginia, entitled " An Act Concerning Corporations," which became
a law on the 21st day of May, 1903, for such cases made and provided.
Given under my hand this day of , 190 .
, Judge.
WASHINGTON.
ARTICLES OF INCORPORATION
OF THE
We, the undersigned persons, one of whom is a resident of the State of Wash-
ington and a majority of whom are citizens of the United States, hereby associate
738
FORMS AND PRECEDENTS.
ourselves for the purpose of forming a corporatiou, and for that purpose execute
these Articles of Incorporation iu triplicate.
Article First. The name of this corporation shall be :
Article Second. The objects for which this corporation is formed are: To have
offices, conduct its business, and promote its objects both within and without the
State of Washington, and in all parts and places elsewhere, wherever may be de-
sired, without any restriction whatsoever as to place, upon compliance with the
laws of such place.
Article Third. The capital stock of this corporation shall be dollars,
divided into shares of the par value of dollars a share. (If
preferred stock is issued, add :) Of such capital stock shares, amounting to
dollars, shall be preferred stock, and shares, amounting to
dollars, shall be common stock. The preferred stock shall be entitled
out of any and all surplus net profits, whenever declared by the trustees, to non-
cumulative dividends at the rate of, but uot to exceed per cent (not to
exceed twelve per cent) per annum for the fiscal year beginning on the
day of 19 , and to priority of payment of any dividend on the common stock for
such fiscal year. The common stock shall be subjeei to the prior rights of the
holders of the preferred stock as herein above set forth. If, after providing for
the payment in full of the dividends for any fiscal year on the preferred stock,
there shall remain any surplus net profits of such year, and of any other
fiscal year for which full dividends shall have been paid on the preferred stock,
then and from time to time the same shall be declared by the trustees: and out of
such surplus net profits, after the close of any said fiscal year, the trustees may
declare a dividend upon the common stock of this corporation for such fiscal year.
No dividend, however, shall be paid upon any common stock until after the divi-
de nils upon the preferred stock have been set aside to the owners of the said
preferred stock.
In case of the liquidation or dissolution of this corporation, the holders of pre-
ferred stock shall receive the par value of their preferred shares out of the surplus
funds of the corporation before anything shall be paid therefrom to the holders of
the common stock. (If non-assessable stock is desired, as :) The capital stock
of this corporation (is issued fully paid up and) shall be and is hereby made abso-
lutely and forever non-assessable by this corporation for any purpose.
Article Fourth. The time of existence of this corporation shall be fifty years.
Article Fifth. The number of trustees of this corporation shall not be less than
two nor more than , and the names of the first trustees who shall manage
the affairs of this Company until the day of , 19 (not less than
two nor more than six months) are (two or more).
Article Sixth. The Board of Trustees shall have power to make the By-Laws of
this corporation.
Article Seventh. The stockholders and trustees shall have power to hold their
meetings and to keep the books, documents, and papers of this corporation without
the State of Washington, at sucli place or places as the Board of Trustees may
determine, except such books and meetings as are required by the law of the Stati
of Washington to be kept aud to be held within the State. (Note: The annual
election of trustees must be held within the State. Their election may be held
by instructed proxies sent to the resident trustee. The law further requires thai
the trustees cause a book to be kept- at the principal place of business, which book
shall contain the "names of all persons, alphabetically arranged, who are or shall
be stockholders of the corporation, and showing the Dumber of shares of stock held
by them respectively, and the time when they became the owners of such shares.")
Article Eighth. The principal place of business of ibis corporation shall be in
the City "'" > County. State of Wasliington, with such
branch office or offices, either within or without the State of Washington, as
the trustees may desire, at any of which branch offices, as may be selected by the
trustees, all stockholders 9 and trustees' meetings not required to be held in the
State of Washington may be held : Provided, Thai this corporation shall at all
times keep at its principal place of business within this State a resident trustee
739
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
In Witness Whereof, we have this day of , A. D.
hereunto set our hands and seals in triplicate.
(seal.)
(seal.)
Witness :
State of >
County of |
I> , a Notary Public in and for the State of , duly
commissioned, sworn, and qualified, do hereby certify that on this day
of ,19 , before me personally appeared , to me known
to be the individuals described in, and who executed the within instrument, and
acknowledged that they signed and sealed the same as their free and voluntary
act and deed for the uses and purposes therein mentioned.
Given under my hand and official seal this day of , A. D. 19 .
, Notary Public.
TRUSTEE'S OATH OF OFFICE.
State of I
County of j
each being duly sworn, on oath deposes and says :
That on the day of , 19 , I was duly and regularly elected
a trustee of , a corporation with its principal place of business in
the City of , in the County of , and State of Washington, to
serve as such trustee until the day of , 19 . That I will
faithfully and conscientiously perforin all duties of my said office as such trustee.
Subscribed and sworn to before me
this day of , 19 .
, Notary Public.
WEST VIRGINIA.
CERTIFICATE OF INCORPORATION.
I. We, the undersigned, agree to become a corporation by the name of
II. The principal place of business of said corporation shall be located at No.
, Street, in the City (2) town, village of , in the county of
and State of . Its chief works will be located in (3)
(Insert number and name of street if in a city having street numbers: if not, strike out.
2. Erase the word city, town, or village as the case may be. 3. Give location of chief works
of, at same place as principal place of business; say, '" The Chief Works will be located at
the same place." If the chief works are not in West Virginia, it is only necessary to state
the name of the State or Territory in which they are located; if the chief works and prin-
cipal place of business are both in West Virginia, then it is necessary to state the magisterial
District and County in which the chief works are located, thus, " in the District of ,
in the County of , in the State of West Virginia," or, if the nature of the case
may require it, say " in the district of and County of, and else-
where in the State of West Virginia." If there be no chief works, say, '* Said Corporation
will have no chief works.")
III. The objects aud purposes for which this corporation is formed are as
follows :
IV. The amount of the total authorized capital stock of said corporation shall
be dollars, which shall be divided into shares of the par
value of dollars each ; of which authorized capital stock the amount
740
FORMS AXD PRECEDENTS.
of dollars has been subscribed, and the amount of dollars
has been paid.
V. The names and post-office addresses of all the incorporators, and the number
of shares of stock subscribed for by each are as follows :
Post-Office No. of Shares No. of Shares Total No. of
Names. (7) Addresses. (8) Common Stock. Preferred Stock. Shares. (9)
VI. This corporation is to expire (1)
VII. (Here insert any special provisions desired ; and also number of acres of
laud desired to hold in West Virginia, if such number be above ten thousand
acres.)
Given under our hands this day of , 190 .
(All the incorporators must sign here.)
State of
I
County of
I, , a Notary Public in and for the County and State aforesaid,
hereby certify that , whose names are subscribed to the fore-
going agreement bearing date the day of , 190 , this day
personally appeared before me in my said county, and severally acknowledged their
signatures to the same.
And I further certify that and , two of the incorpora-
tors named in said agreement, made oatli before me that the amount therein stated
to have been paid on the capital has been in good faith paid in, for the purpose and
business of the intended corporation, without any intention or understanding that
the same shall be withdrawn therefrom before the expiration or dissolution of this
Corporation.
Given under my hand and official seal this day of , 190 .
, Notary Public.
(The following affidavit must be made by at least two of the incorporators named in
the agreement wherein it is stated that the "principal place of business" is located in West
Virginia, and for which it is proposed to pay the rate of annual license tax prescribed for
resident corporations.)
State of ")
County of > ss '
I, , a Notary Public in and for the County and State aforesaid,
do hereby certify that and , two of the persons who
have executed the foregoing agreement, bearing date of the day of
, 190 , this day personally appeared before me in my said county, and
made oath that the statement in said agreement, to wit, " that the principal place
of business of said corporation shall be located at in the County
of and State of West Virginia" is true, and that said principal
place of business and chief works have been located as therein stated in good
faith, and not for the pnrpose of evading any law of the State of West Virginia, and
especially not for the purpose of avoiding the payment of the difference bel ween the
amount of the annual license tax on the charters of corporations having their
principal place of business within the State of West Virginia, and those corpora-
tions having their principal place of business or chief works without said State ; and
that said corporation named in said agreement proposes in good faith to carry on its
business and to have its principal place of business and its chief works (if it have
such) within the State of Wesl Virginia.
Given under my hand and official seal this day of , 1 90 .
, Notary Public.
(seal.)
Til
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
WISCONSIN.
Know all Men by these Presents : That the undersigned, adult residents of
the State of Wisconsin, do hereby make, sign, and agree to the following
ARTICLES OF ORGANIZATION.
Article I. The undersigned have associated, and do hereby associate themselves
together for the purpose of forming a corporation under Chapter 86 of the Wiscon-
sin Statutes of 1898, and the acts amendatory thereof and supplementary thereto,
the business and purposes of which corporation shall be , which said
business is to be carried on within the State of , and especially within
the County of in said State.
Article II. The name of said corporation shall be , and its location
shall be in the , Wisconsin.
Article III. The capital stock of said corporation shall be , and the
same shall consist of shares, each of which said shares shall be of the
face or par value of dollars.
Article IF. The general officers of said corporation shall be a President, Vice-
President, Secretary, and Treasurer, and the Board of Directors shall
consist of stockholders. (Provision may be here made for dividing the
directors into three classes if desired.)
Article V. The principal duties of the President shall be to preside at all meet-
ings of the Board of Directors, and to have a general supervision of the
affairs of the corporation.
The principal duties of the Vice-President shall be to discharge the duties of the
President in the event of the absence or disability, for any cause whatever, of the
latter.
The principal duties of the Secretary shall be to countersign all deeds, leases,
and conveyances executed by the corporation, affix the seal of the corporation
thereto, and to such other papers as shall be required or directed to be sealed, and
to keep a record of the proceedings of the Board of Directors, and to safely and
systematically keep all books, papers, records, and documents belonging to the
corporation, or in any wise pertaining to the business thereof.
The principal duties of the Treasurer shall be to keep and account for all mon-
eys, credits, and property, of any and every nature, of the corporation, which shall
come in his hands, and keep an accurate account of all moneys received and dis-
bursed, and proper vouchers for moneys disbursed, and to render such accounts,
statements, and inventories of moneys received and disbursed, and of money and
property on hand, and generally of all matters pertaining to this office, as shall be
required by the Board of Directors.
The Board of Directors may provide for the appointment of such additional
officers as they may deem for the best interests of the corporation.
Whenever the Board of Directors may so order, the offices of Secretary and
Treasurer may be held by the same person.
The said officers shall perform such additional or different duties as shall from
time to time be imposed or required by the Board of Directors, or as may be pre-
scribed from time to time by the By-Laws.
Article VI. Only persons holding stock according to the regulations of the
corporation shall be members of it.
Article VII. These articles may be amended by resolution setting forth such
amendment or amendments, adopted at any meeting of the stockholders by a vote
of at least two-thirds of all the stock of said corporation then outstanding.
Article VIII. The existence of this corporation shall be years (or
perpetual).
742
FORMS AND PRECEDENTS.
Article IX. (Any other provisions for the regulation of the internal affairs of
the corporation not inconsistent with law may be inserted.)
In Witness Whereof, we have hereunto set our hands, this day of
, A. D. 190 .
Signed in presence of
State of Wisconsin, ")
County of )
Personally came before me this day of , A. D. 190 , the
above named , to me known to be the persons who executed the
foregoing instrument, and acknowledged the same.
, Notary Public, Wisconsin.
State of Wisconsin, ?
County of \
and , being each duly sworn, doth each for himself de-
pose and say that he is one of the original signers of the above declaration and arti-
cles ; that the above and foregoing is a true, correct, and complete copy of such
original declaration and articles, and of the whole thereof. Subscribed and sworn
to before me, this day of , A. D. 190 .
Notary Public.
WYOMING-.
CERTIFICATE OF INCORPORATION
OF THE
Company.
Know all Men by these Presents : That we, the undersigned, citizens of
the United States, over the age of twenty-one years, desiring to aid in the indus-
trial (or productive) interests of the country, do by these presents voluntarily asso-
ciate ourselves together for the purpose of forming a corporation, under the laws of
the State of Wyoming.
And we hereby certify :
First. That the corporate name of our said corporation is and shall be the
Company.
Second- That the object for which our said corporation or Company is formed
is (here state object, confining same to one general line or department).
Third. The capital stock of our said Company shall be dollars, to be
divided into shares of the par value of dollars each and non-
assessable. (If preferred stock is to be issued, provision therefor must be inserted
at this point.)
Fourth. The term of existence of our said Company shall be (not exceeding
fifty years), from and alter the date of this certificate.
Fifth. The affairs and management of our said Company shall be under the
control of trustees (not less than three, nor more than nine), and
are hereby selected and appointed to act as such trustees, and to
manage the affairs and concerns of our said Company for the first year of its exist-
ence, and until their successors are elected and qualified according to law and the
by-laws of our said Company.
Sixth. The name of the town in which the operations of our said Company
shall be carried on is the City of , County of , and State of
(if the Company is formed for the purpose of carrying on any part
of its business in any place outside of the State, add: " and the said business IS also
formed for the purpose of carrying on part of its business outside of the State of
743
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Wyoming, to wit, in the City of , County of , and State of ,
and elsewhere in the United States as the trustees of our said Company may by
resolution or otherwise direct "), but the name of the town and county in which
the principal part of the business within the State of Wyoming is to be transacted
is the City of , in the said County of , at which place its principal
office and place of business shall be located.
Seventh. All suits against our 6aid Company shall be commenced in the said
County of
In Witness Whereof, we have executed this certificate in duplicate this
day of , A. D. 19 .
If the adoption of by-laws is to be delegated to the trustees, the following clause
should be inserted: The trustees of our said Company shall have the exclusive
power to make such prudential by-laws as they may deem proper for the manage-
ment and disposition of the stock and business affairs of our said Company, not in-
consistent with the laws of the State, prescribing the duties of officers, artificers, and
servants that may be employed, for the appointment of all officers, and for carrying
on all kinds of business within the objects and purposes of our said Company.
(l. s.)
(L. S.)
(L. S.)
Witnesses :
State of Wyoming, ? sg>
County of J
I, , a Notary Public in and for the said County and State, do
hereby certify that , who are personally known to me to be the same
persons whose names are subscribed to the foregoing instrument, appeared before
me this day in person, and each separately acknowledged that he signed, sealed,
and delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
My commission expires
Given under my hand and notarial seal this day of , A. D. 190 .
, Notary Public.
744
FORMS AND PRECEDENTS.
FOREIGN CORPORATIONS.
FORMS FOR SECURING PERMITS TO TRANSACT BUSI-
NESS AS A FOREIGN CORPORATION IN THE SEVERAL
STATES AND TERRITORIES.
(A) GENERAL FORMS.
FORM 1. — FORM FOR CERTIFIED COPY OF INCORPORATION ACT.
United States of America.
State of
Office of the Secretary of State.
I, , Secretary of State of the State of , do hereby certify
that the foregoing printed pamphlet, pages to _ inclusive, con-
tains the existing laws of the State of relative to incorporation and
powers of industrial corporations in force in the State of on the
day of 190 , and now in force and effect in said State of
Li Witness Whereof, I have hereunto set my hand and caused the great seal of
the State of to be affixed at , the capital, this day
of , 190 .
(great seal.)
FORM 2. - FORM FOR CERTIFIED COPY OF CERTIFICATES OF
INCORPORATION.
State of
Office of Secretary of State.
I, , Secretary of State of the State of , do hereby certify
that the above and foregoing is a true and correct copy of the certificate of incor-
poration of the Company, as received and filed in this office the
day of , 190 .
" In Testimony Whereof, I have hereunto set my hand and official seal at
this day of , 190 .
, Secretary of State.
(seal of state.)
FORM 3 —CERTIFICATE TO BE ATTACHED TO CERTIFIED COPY
OF BY-LAWS.
T, , Secretary of the Company, hereby certify thai tin-
copy of the by-laws above set forth is a full ami true, copy of the lis laws of
said" Company aa adopted by the stockholders of said (' panj at a
meeting thereof duly held oil the day of , 190 , and that the
746
INCORPORATION AND ORGANIZATION OP CORPORATIONS.
same has been taken from and compared by me with the original by-laws as
recorded in the minute book of the said Company.
Witness my hand and the seal of the Company this day of ,
190 .
, Secretary.
FORM 4. — RESOLUTION RELATIVE TO SECURING PERMIT TO
TRANSACT BUSINESS IN A FOREIGN STATE.
At a special meeting of the Board of Directors of the Company,
held at on the day of , 190 , the following
resolution was adopted :
Be it Resolved, that a certified copy of the certificate of incorporation of the
above named Corporation be filed with the Secretary of State of the State of
, with the request that a certificate be forthwith issued permitting
said Company to transact business within the State of
and be it further
Resolved, that the proper officers of this Corporation be and they hereby are
authorized and instructed to do any and all things necessary to carry out the
provisions of this resolution and to secure the necessary permit for said Company
to transact business as a foreign corporation within the State of
FORM 5. — POWER OF ATTORNEY APPOINTING A RESIDENT
AGENT.
Know all Men by these Presents : That the Company, a
corporation duly organized under aud by virtue of the laws of the State of
, has made, constituted, and appointed, and does hereby make,
constitute, and appoint , a citizen of the United States and a citi-
zen and resident of the State of , residing at No. Street
in the City of in said State of , whose place of
business is No. Street in said city, its true and lawful attorney in fact
and authorized agent for it and in its name, place, aud stead to make and accept
service of all process and summons in any action, suit, or proceeding in any of the
courts of the State of , or in the United States courts therein, and
upon whom process and summons may be served with the same effect as though
the Company existed in the State of , requisite and necessary to give
competent and complete jurisdiction of the said Company to any oi
the said courts ;
Giving and Granting unto the said full power and authority to
do and perform every act and thing necessary and requisite to be dona in and about
the premises as fully to all intents and purposes as said Company
might or could do if personally present, hereby revoking and confirming all that
the said shall lawfully do or cause to be done by this power granted
to him.
This power is irrevocable except by substitution of another qualified person
for the one hereby appointed attorney in fact.
In Witness Whereof, said Corporation, in pursuance of resolution duly adopted
by its Board of Directors, has caused this instrument to be executed in its name
by its President and Secretary and its corporate seal to be hereunto affixed at the
city of , State of , this day of , 190 .
Company.
By , President.
Attest: , Secretary.
State of )
County of \
This certifies that on the day of , before the under-
signed, a Notary Public in and for said county and State, personally appeared the
746
FORMS AND PRECEDENTS.
above named , the President, and , the Secretary, of the
Company, the Corporation mentioned in and which executed the fore-
going power of attorney, and acknowledged that they executed the same by the
authority and on behalf of said Company, pursuant to a resolution
of the Board of Directors of said Corporation duly adopted on the day
of , 190 , and , the Secretary of said Company, further
acknowledged that the corporate seal hereuntobefore" attached and impressed
herein is the corporate seal of said corporation and was affixed thereto by him.
In Testimony Whereof, I have hereunto set mv hand and notarial seal this
day of , 190 .
FORM 6— .GENERAL FORM FOR APPLICATION BY FOREIGN
CORPORATION TO TRANSACT BUSINESS IN A
FOREIGN STATE.
To the Secretary of State of the State of
State of
County of
, President, and , Secretary, each of lawful age, being
duly sworn, upon their oaths state that they make this affidavit for the purpose of
complying with (here insert reference to the statute governing the
admission of foreign corporations to transact business in the foreign State).
That they are respectively President and Secretary of , a Corporation
duly incorporated under the laws of the State of on the
day of , 190 , for a term of years.
That the business said Corporation proposes to pursue under its charter in the
State of is as follows :
That the amount of capital stock of said Corporation is dollars,
and the proportion of the capital stock of said Corporation which is represented
by the property located and business transacted in the State of is
(express in fraction, one-half, etc., as the case may be) thereof, and the
amount of the said capital stock so represented in the State of is
dollars.
(That said Corporation is transacting, or intends to transact, business in the
following counties in said State of : .)
That the amount paid in upon its capital stock is as follows :
That the property and assets and the estimated value thereof that will be em-
ployed in the business of said Corporation in the State of is as
follows -.
That the disposition made of capital stock subscribed for, and not paid in, is
as follows :
That the officers and directors of said Corporation are as follows :
Name. Residence, Town, Street, and Number.
President,
Secretary,
Treasurer,
Directors,
That the names and residences of all of the stockholders as shown by the
records are as follows:
Names. Residences.
That the principal office in is at Street in the city
of , State of . That the name of the attorney in tact
upon whom service can be had in all suits commenced in the said State ia
, and his address is Street in the city of
, President.
, Secretary,
747
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
INDIVIDUAL ACKNOWLEDGMENT.
State of > ss
County, f
On this day of , A. D. 190 , personally appeared before me,,
a Notary Public in and for said county in said State, and ,
■who are respectively President and Secretary of the above described Corporation,
and made oath that the foregoing statement by them subscribed is true in substance
and in fact.
, Notary Public.
CORPORATION ACKNOWLEEGMENT.
State of > ss
County of £
I (here give name of officer and his official title) do hereby certify that ,
the President, and , the Secretary, of the Company, above
named, who are personally known to me to be the same persons whose names are
subscribed to the foregoing instrument as such President and Secretary, as having
executed the said instrument on behalf of the said Company,
appeared before me this day in person, and acknowledged that they signed and
affixed the corporate seal of said Corporation to said instrument, and delivered the
same freely and voluntarily as the act and deed of the said Company for
the uses and purposes therein set forth.
Given under my hand and official seal this day of , A. D. 190 .
ATTORNEY'S CERTIFICATE AS TO DUE ORGANIZATION.
State of 7 sg>
County of \
, having first been duly sworn, on oath says : that he resides in
the city of , State of ; that he is a duly qualified and
practising attorney of the State of , and has an office for the trans-
action of his law business at No. Street in said City of ,
State of
Affiant further says that the certificate of incorporation, minutes, and by-laws of
the Company hereto attached, constitute the legal organization of
the said Company under the laws of the State of ,
U. S. A.
Affiant further declares and certifies that said Company has been
duly and legally organized under and according to the laws of the said State of
in such case made and provided.
Subscribed and sworn to before me this 18th day of December, 1907=
CERTIFICATE OF CORPORATE OFFICERS AS TO ORGANIZATION
MINUTES AND BY-LAWS.
State of ) gs
County of J
and , having first been duly sworn, on oath say
that they are. respectively the President and Secretary of the Com-
pany, a corporation organized and existing under the laws of the State of _ ,
U. S. A., and that they are fully cognizant of all matters connected with the incor-
poration and organization of said Company.
748
FORMS AND PRECEDENTS.
Affiants further say that the copy of the minutes hereto attached, marked " Ex-
hibit A," is a true and correct copy of the minutes of the organization meeting of
said Company duly held and convened according to the laws of the said ;State of
, on the day of December, 190 , at Room No. ,
Street, in the city of , State of , U. S. A.
Affiants further say that the by-laws hereto attached marked " Exhibit B" are a
true and correct copy of the by-laws of said Company duly adopted at the organi-
sation meeting of said Company held at Room , Street, in the city of
, State of , U. S. A., on the day of December,
190 .
Affiants further say that the copy of the minutes hereto attached marked " Ex-
hibit C " is a true and correct copy of the minutes of the first meeting of the Board
of Directors of said Company duly held and convened according to the laws of the
State of , on the day of December, 190 , at Room ,
Street, in the city of , State of , U. S. A.
Affiants further say that the said meeting above referred to (a copy of the
minutes of which is hereto attached marked " Exhibit A ") was the first, only, and
last meeting of the incorporators and stockholders of the Company
held since the filing of its articles of incorporation in the office of the Secretary
of State in and for the State of on the day of , 190 .
, President.
, Secretary.
Subscribed and sworn to before me this day of , 190 .
Notary Public, County,
(B) SPECIAL FORMS FOR PARTICULAR STATES.
ALABAMA.
CERTIFICATE DESIGNATING AGENT AND PLACE OF BUSINESS IN
ALABAMA, FOR FILING IN OFFICE OF SECRETARY OF
STATE OF ALABAMA.
Office of
Located at
In compliance with the provisions of section 1316 of the Code of Alabama, 1896,
and section 232 of the Constitution of Alabama, 1901, , a corporation or
association organized under the laws of the State of , and having its
principal place of business at , in the city of , State of ,
herewith files a certified copy of its articles of incorporation or association under the
laws of said State of , and designates as its known place of business in
the State of Alabama, , in the city of , County of
and as its authorized agent thereat, , on whom, as such agent, service of
process may be made ami all legal notices served, for all the purposes contemplated
by the laws of the State of Alabama.
In Witness Whereof, the said corporation or association has caused these presents
to be signed by its President and Secretary, and attested by its corporate seal, at its
office in , this day of , 190 .
, President.
, Sec ret 'dry .
CERTIFICATE TO BE FILED WITH THE STATE AUDITOR.
To the Statk Auditor of Axa3a.ua: The , a Corporation organized
under the laws of , being desirous of entering the State of Alabama for the
transaction of business therein, files the following statement under an Act approved
7 1'.'
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
March 7, 1907, entitled An Act to amend sections 1321 and 1322 of the Code of
1896.
That the name of the Corporation is , that it was incorporated under
the laws of , that its principal place of business is , that its
principal place of business in Alabama is , that the name of its authorized
agent thereat is , whose post-office address is , that the amount
of the total authorized capital is $ , that the amount of the actual paid
in capital is f> , and that the actual amount of capital employed or to be
employed in the State of Alabama is S
The foregoing statement is rendered by the President and Secretary of said
Corporation and signed by them respectively under oath, with the corporate seal
attached.
, President.
, Secretary.
Sworn to and subscribed before me this day of , 190 , as
witness my seal of office.
CORPORATION ACKNOWLEDGMENT.
State of > gs
County of \
I (name and title of officer), for said county, in said State, hereby certify that
A. B., as President, and C. D., as Secretary, of (name of Corporation), whose names
are signed to the foregoing conveyance, and who are known to me to be the Presi-
dent and Secretary of said (name of Corporation), acknowledged before me on this
day that, being informed of the contents of the conveyance, they executed the same
voluntarily as the act and deed of said (name of Corporation), on the day the same
bears date.
Given under my hand this day of , A. D. 18
ARIZONA.
APPOINTMENT OF AGENT.
The Company.
Know all Men by these Presents : That the Company, a cor-
poration organized under the laws of Arizona, has, at a regularly held meeting of
the of the said Corporation, by resolution properly carried and spread
upon the minutes of said meeting, authorized and empowered and does by these
presents authorize and empower of Phoenix, Arizona, who for more than
three years last past has been a bona fide resident of Arizona, for and in behalf of
said Company, to accept and acknowledge service of, and upon whom may be served
all notices or processes or summons in any action, suit, or proceeding that may be
had or brought against the said Company in any of the courts of Arizona, such
service of process or notice, or the acceptance thereof by said agent endorsed thereon,
to have the same force as if served personally upon the Corporation or the President
and Secretary thereof, the said Corporation hereby revoking any power of attorney
or appointment of agent heretofore made by it for the purpose designated above.
Witness the signature of the President and Secretary of said Company this
day of , 190 .
Company.
By , President.
Attest : Secretary.
750
FORMS AND PRECEDENTS.
FORM FOR CORPORATION ACKNOWLEDGMENT.
State of I ss
County of y
Before me (here insert name and character of officer) the Company,
by its President, , known to riie to be the person whose name is subscribed
to the foregoing instrument as President of said Company, and who acknowledged
to me that he executed the same as such President, for the purposes and considera-
tion therein expressed.
Given under my hand and seal ot office this day of , A. D.
[seal.]
ARKANSAS.
CERTIFICATE OF FOREIGN CORPORATION. NAMING AN AGENT
UPON WHOM SUMMONS MAY BE SERVED.
Know all Men by these Presents: That the , a Corporation
duly organized, created, and existing under and by virtue of the laws of the State
of , and having its principal office or place of business in the City of
in said State, does hereby designate and appoint , residing in the
Citv of in the State of Arkansas, he being a citizen of said State, as
its agent for the said State of Arkansas, upon whom service of summons and all
other legal process may be had and made in all actions or proceedings against said
Corporation in any of the courts of said State of Arkansas, accordiug to the provi-
sions of an act of the General Assembly of the State of Arkansas, entitled " An
Act to prescribe the conditions upon which Foreign Corporations may do business
in this State," approved on the sixteenth day of February, 1S99.
The said Corporation hereby designates the City of in the said State
of Arkansas as its principal place of business in said State.
In Testimony Whereof, The said Corporation has, by its President, caused these
presents to be signed and sealed with its corporate seal at the City of in
the State of on this day of , 190 .
By , President.
ACKNOWLEDGMENT BY CORPORATION.
State of )
County of \ '
Be it remembered, that on this day of , A. D. 18 , before the un-
dersigned (name and title of officer), within and for the county aforesaid, duly
commissioned and acting, appeared in person A. B., as President (or other officer,
as the case may be) "f (name of Corporation), to me personally well known as the
person whose name appears upon the foregoing instrument as the party grantor, and
stated that he had exeeutcd the same for the consideration and purposes therein
mentioned, and 1 do hereby so certify.
/// Testimony Whereof, I have hereunto set my hand and affixed my official seal,
on this day of , A. D. 18 .
FORM FOR USE OF FOREIGN CORPORATION.
We, , as President, and , as Secretary, of the
a Corporation organized under the laws of , and having its principal
office or place of business at No. Street, in the City of , in
the State of , hereby certify that the Charter and Articles of incor-
ion of said , together with all amendments thereto duly authen-
ticated and certified by the proper authority, is herewith filed with the Secretary
of State of the State of Arkansas; and further, the said has assets
751
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
of $ , and liabilities of $ , and that the amount of its capital
employed in Arkansas is $ , and its general office or place of business in
Arkansas is ; and of is hereby appointed as agent, upon
whom process may be served.
Each of us further certify that the following is a true and correct copy of a
resolution adopted by the Board of Directors of , on the day
of , 190 :
" Be it Resolved, that service of process upon any agent of in the
State of Arkansas, or upon the Secretary of State, in any action brought or pending
in said State, shall be valid service upon this Company."
"Be it further Resolved, that the President and Secretary certify to a copy
of this resolution and file the same with the Secretary of State of the State of
Arkansas."
Witness our hands this day of ,190 .
, as President of
, as Secretary of
Subscribed and sworn to before me by each of the persons who have signed
their names hereto, this day of , 190 .
, Notary Public.
CALIFORNIA.
DESIGNATION OF AGENT.
Know all Men by these Presents : That pursuant to sections 405 and
406 of the Civil Code of the State of California, relating to Foreign Corporations,
the , a Corporation formed under the laws of , and carrying
on the business of in the State of California, has constituted, appointed,
and designated, and by these presents does constitute, appoint, and designate, in
accordance with a resolution duly adopted at a meeting of the Board of Directors
of said Corporation, held on the day of , A. D. 19 , ,
residing in the City of , State oi California, its General Agent.
That said , so designated as aforesaid, is the agent of the said Com-
pany in the State of California, upon whom process, issued by authority by or
under any law of said State of California, may be served.
In Witness Whereof, The said Company has to these presents affixed its Corpo-
rate Seal, and caused the same to be subscribed by its President and attested by
its Secretary, this day of , A. D. 19 .
Attest :
, Secretary.
, President.
FORM FOR CORPORATION ACKNOWLEDGMENT.
State of California, }
County of )
On this day of in the year one thousand nine hundred and ,
before me (here insert name and quality of officer) personally appeared
known to me (or proved to me on the oath of ) to be the President (or the
Secretary) of the corporation that executed the within instrument, and acknowl-
edged to me that such corporation executed the same.
In Witness Whereof, I have hereunto set my hand and affixed my official seal
the day and year in this certificate first above written.
(l."s-) (Signature and quality of officer.)
752
FORMS AND PRECEDENTS.
COLORADO.
CERTIFICATE OF BUSINESS AND AGENT.
Know all Men by these Presents : That we, , President, and
, Secretary, of the , a Corporation duly organized under
and by virtue of the laws of the State of , do hereby certify that the
principal place where the business of said Corporation is to be carried on in the
State of Colorado is the County of , and we hereby designate, con-
stitute, and appoint , residing in the city of , County of
and State aforesaid, the duly authorized agent of said Corporation,
upon whom process may be served, pursuant to the statute in such case made and
provided.
Given under our hands and the seal of the said Corporation, at their office in
and State of on this day of ,
A. D. 190 .
, President.
, Secretary.
State of ) ss
County X)f £
I , a Notary Public within and for the County and State aforesaid,
do hereby certify that President, and , Secretary, of the ,
who are personally known to me to be the persons who subscribed the above
and foregoing instrument in writing, and acknowledged that they signed, sealed,
and delivered the same as their free and voluntary act and deed, for the uses and
purposes therein set forth.
Given under my hand and notarial seal, this day of ,
A. D. 190 .
My commission expires , A. D. 190 .
, Notary Public.
FORM FOR CORPORATE ACKNOWLEDGMENT.
State of Colorado, f
County of \
I, , a Notary Public, in and for said county, in the State aforesaid, do
hereby certify that , President, and , Secretary, of The
Company, who are personally known to me to be such President and Secretary, and
who are personally known to me to be the same persons who executed the within
instrument in writing on behalf of the Company, appeared before me this
day in person and acknowledged that they signed, sealed, and delivered the said
instrument as their free and voluntary act of said Company for the uses and
purposes therein specified.
Given under my hand and notarial seal this day of , A. D.
19 .
(seal.) (Signature) Notary Public.
CONNECTICUT.
Know all Men by these Presents : That , a Corporation duly
organized under the laws of the State of , and located and doing business
at , acting herein by its , duly authorized thereunto, bj these
presents makes, ordains, constitutes, and appoints the Secretary of the State <>f
Connecticut, and his successor in office, its true and lawful attorney, upon whom
all lawful process in any action or proceeding against the said Corporation, in the
State of Connecticut, including the process of foreign attachment, may be Berved.
753
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
And said Corporation hereby agrees that any lawful process against it which is
served on said attorney, shall be of the same legal force and validity as if served on
the Corporation, and that said appointment shall continue in force as long as any
liability remains outstanding against it in this State.
In Witness Whereof, the said Corporation has caused its corporate name and seal
to be hereto affixed by * its * thereunto duly authorized this
day of , 190 .
State of > 190 .
County of >
Personally appeared * of said Corporation, signer and sealer of the
above instrument, he being thereunto duly authorized by the Corporation above
named, and acknowledged the same to be his free act and deed, and the free act
and deed of said Corporation, before me,
, Notary Public.
Fee for Recording in Secretary's Office, $1.00.
* Insert name and title of office.
STATEMENT BY THE
In accordance with the provisions of an act of the General Assembly of the
State of Connecticut, entitled "An Act concerning corporations," being chapter
194 of the Public Acts of 1903, The , a Corporation organized under the
laws of the State of , does hereby certify and set forth :
First. That the paper hereto attached is a true and correct copy of its charter
or certificate of organization filed with the Secretary of State of the State of
, and properly certified by the said Secretary.
Second. The total amount of capital stock said Company is authorized to issue
is dollars, and the amount actually paid in is dollars, of which
amount dollars has been paid in in cash, and dollars has been
paid as follows :
Third. The character of the business which said Corporation is to transact in
this State is
Dated at , this day of , 190 .
, President.
, Treasurer.
A Majority
of
Directors.
State of } gs> 190
County of >
Personally appeared , President, , Treasurer, and t
a majority of the Directors of The , and made oath to the truth of the
foregoing" statement by them subscribed, before me,
, Notary Public.
CERTIFICATE OF ACKNOWLEDGMENT BY CORPORATION.
State of
County of
, A. D. 18 . Then and there before me (name and title of officer),
within and for the County and State aforesaid, duly commissioned and acting as
such, personally appeared , agent of the Company, signer
and sealer of the foregoing instrument, and acknowledged the same to be his free
act and deed, and the free act and deed of said Company, before me.
Witness my hand and seal of office, on this day of , A. D.
18 .
754:
FORMS AND PRECEDENTS.
DISTRICT OF COLUMBIA.
APPOINTMENT OF RESIDENT AGENT.
Know all Men by these Presents: That the , a Corporation organ-
ized under the laws of the District of Columbia, does hereby appoint the
Company, of Washington, D. C, its lawful agent in and for the District of Co-
lumbia, for and in behalf of said Company, to accept and acknowledge service of,
and upon whom may be served, all necessary process or processes in any action,
suit, or proceeding that may be had or brought against the said Company in any of
the courts of said District of Columbia, such service, process, or notice, or the
acceptance thereof by said agent endorsed thereon, to have the same force, and effect
as if served upon the President and Secretary of said Company, the said Corpora-
tion hereby revoking any power of attorney or appointment of agent heretofore
made by it for the purposes designated.
Witness the signature of the President and Secretary of said Company, this
day of , 190 .
, President.
, Secretary.
United States of America.
State of , to wit :
I, , a Notary Public in and for the State aforesaid, do hereby certify
that and , parties to the annexed Certificate of Appointment,
bearing date on the day of , 190 , personally appeared before
me in the State aforesaid, the said and , being personally known
to me to be the persons who made and signed the said Certificate and severally
acknowledged the same to be their act and deed for the purposes therein set
forth.
Witness my hand and seal this day of , 190 .
, Notary Public.
CORPORATION ACKNOWLEDGMENT.
State of > gs
County of >
I (name and title of officer), in and for the County of and State
aforesaid, do hereby certify that G. H., to whom the power of attorney is given by
the party grantor in a certain deed of indenture, bearing date the
dav of , in the year of our Lord one thousand nine hundred and
, and hereto annexed, personally appeared before me in my county afore-
said, the said G. H., being personally well known to me as the person named as
the attorney in the said deed, and the said G. H. did acknowledge the same to be
the act and deed of the (name of Corporation in full).
Given under my hand and official seal, this day of , A. D.
18 .
DELAWARE.
Note. — Use general forms numbered 1 to 10, ante.
ACKNOWLEDGMENT BY CORPORATION.
State of j ss
County of \
Be it Remembered, that on the day of , A. D. 18 , person-
ally came before me (name and title of officer) , President of the
Company, a corporation of the State of Delaware, party to the foregoing inden-
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
ture, known to me personally (or proved on the oath of the witness) to be such,
and acknowledged the said indenture to be his act and deed, and the act and deed
of the said Company ; that the signature of the said President is his own proper
handwriting ; that the seal affixed is the common or corporate seal of the said Com-
pany ; and that his act of sealing, executing, and delivering said indenture was duly
authorized by resolution of the directors (or trustees or other managers) of said
Company.
Given under my hand and official seal the day and year aforesaid.
FLORIDA.
Note. — Use general forms numbered 1 to 10, ante.
CORPORATION ACKNOWLEDGMENT.
State of \
County of >
On this day of , A. D. 18 , before me (name and title of
officer), personally appeared A. B., President (or other officer) of (name of Corpo-
ration), to me known to be the person described in and who executed the foregoing
instrument, and acknowledged the execution thereof to be the free act and deed of
the (name of Corporation), for the uses and purposes therein mentioned.
In Witness Whereof, I have hereunto set my hand and affixed my official seal (if
the officer have a seal) the day and year first above written.
GEORGIA.
CERTIFIED STATEMENT FOR REGISTRATION
BY
Name of Corporation,
Principal Office,
Nature of Business,
When By what Authority
Incorporated. Where Incorporated. Incorporated. Capital Stock.
I hereby certify that the above statement is correct.
CORPORATION ACKNOWLEDGMENT.
State of ?
County of £
I, , a (here insert official position) in and for the
in the State of , residing at , do hereby certify that the
foregoing instrument in writing was executed by the above named A. B., as Presi-
dent of the (name of Corporation), and the seal of said Corporation attached thereto
by him in my presence on the day of , A. D. 18 , in due form of
law.
Witness my hand and official seal, this the day of , A. D. 18 .
Note. — This blank must be filled out and returned to the Secretary of State annually,
before November 1st, with a fee of one dollar for first return and fifty cents annually there-
After.
756
HAWAII.
Note. — Use general forms 1 to 10, ante.
FORMS AND PRECEDENTS.
IDAHO.
State of I gs
County of |
, being first duly sworn, deposes and says :
That he is (title of office) of (name of corporation, joint-stock
company, or association)
That the principal office of said Company is located at , County of
, State of
That the names and post-office addresses of its officers are as follows :
Name. Post-Office Address.
President,
Secretary,
Treasurer,
That the date of the annual election of directors and officers of said (name of
Company) is the day of of each year.
That the amount of authorized capital stock of the said Company is
($ ) dollars, which is divided into shares of the par value of
($ ) dollars each; that the amount of capital stock subscribed
is shares ; the amount of capital stock issued and the amount of capi-
tal stock paid up is shares, aggregating dollars.
And that the names and addresses of the said Company's Managing Agent and
Attorneys in Fact in the State of Idaho are as follows :
Name. Office. Post-Office Address.
Office :
Subscribed and sworn to before me this day of , 190 .
, Notary Public.
DESIGNATION OF AGENT, AND ACCEPTANCE OF THE PROVI-
SIONS OF THE CONSTITUTION OF THE STATE OF IDAHO.
Know ail Men by these Presents: That , a Corporation or-
ganized and existing under the laws of the State of , having Sled in I be
office of the Secretary of State of the State of Idaho a duly authenticated copy of its
Articles of Incorporation, does hereby, in pursuance of the laws of the State; of Idaho,
make this certificate, and does hereby designate County, in the State of
Idaho, as the county in which the principal place of business of said Corporation in
said State of Idaho is and shall be conducted, aud docs hereby designate ,
residing at fo said County, as the Authorized Agent
of said Corporation in said State of Idaho, upon whom process issued by authority
of, or under any law of the State of Idaho, may be served, as provided by the Con-
stitution aud laws of said State of Idaho.
And the said , desiring and intending to conform in all respects to
the Constitution and laws of said State, and to avail itself of the rights, privileges,
and immunities guaranteed by said Constitution and laws, does hereby accept the
provisions of the Constitution of the State of Idaho for all the intents and purpi
contemplated by the provisions thereof, relating to such acceptance by other than
municipal corporations. (Article XL section 7, Constitution of Idaho.)
In Witness Whereof, the said lias caused this Certificate and
Acceptance to be executed, acknowledged, and delivered in its name on its In I
by its President, and to be attested by its Secretary, ami hath caused its corporate
seal tobe hereunto affixed at in the County of and
State of this day of , 190 .
By , "President*
Attest:
, Secretary.
757
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
State of Idaho, \
County of y
On this day of in the year 190 , before me a
in aud for said county, in the State aforesaid, personally appeared , known
to me to be the President of the Corporation that executed the within and foregoing
instrument, and acknowledged to me that such Corporation executed the same.
In Witness Whereof, I have hereunto set my hand and affixed my seal
this day of ,190 .
My commission expires on the day of , 190 .
Note. — Original to be filed for record with the Secretary of State, Boise, Idaho, and
duplicate with the Clerk of the District Court in the county" where the principal place of
business is located.
ILLINOIS.
AFFIDAVIT OF PRESIDENT AND SECRETARY.
State of >
County, \
, President, and , Secretary, each of lawful age, being duly
sworn, upon their oaths, state that they make this affidavit for the purpose of com-
plying with An Act entitled " An Act to regulate the admission of foreign corpo-
rations for profit, to do business in the State of Illinois." Approved May 18, 1905.
In force July 1, 1905.
That they are respectively President and Secretary of , a Corporation
duly incorporated under the laws of the State of on the day
of , 19 , for a term of years.
That the business said Corporation proposes to pursue under its charter in the
State of Illinois is as follows :
That the amount of capital stock of said Corporation is dollars and
the proportion of the capital stock of said Corporation which is represented by the
property located and business transacted in the State of Illinois is (express
in fraction, as one-half, one-fourth, etc., as the case may be), and the amount of the
said capital stock, so represented in the State of Illinois, is dollars; That
said Corporation is transacting, or intends to transact, business in the following
States or countries :
That the amount paid in upon its capital stock is as follows :
That the property and assets and the estimated value thereof that will be em-
ployed in the business of said Corporation in the State of Illinois is as follows :
That the disposition made of capital stock subscribed for and not paid in, is as
follows :
That the officers and directors of said Corporation are as follows :
Residence, Town, Street,
Name. and Number.
President
Secretary
Director .
That the names and residences of all of the stockholders as shown by the records
are as follows :
Names. Residences.
That the principal office in Illinois is at Street, in the city of
758
FORMS AND PRECEDENTS.
Illinois. That the name of the attorney in fact upon whom service can be had in
all suits commenced in the State is , and his address is Street,
in the city of , Illinois.
, President.
(corporate seal.) , Secretary.
State of > ss
County, \
On this day of , A. D. 19 , personally appeared before me a
Notary Public in and for said County in said State. and , who
are respectively President and Secretary of the above described Corporation, and
made oath that the foregoing statement by them subscribed is true in substance and
in fact.
, Notary Public.
CORPORATION ACKNOWLEDGMENT.
State of \ ss _
County of J
I (here give name of officer and his official title), do hereby certify that A. B.,
the President, and C D., the Secretary of the (here insert the name of Corpora'
tiou), above named, who are personally known to me to be the same persons whose
names are subscribed to the foregoing instrument as such President and Secretary,
as haviug executed the said instrument on behalf of the said (here insert name of
Corporation), appeared before me, this day, in person, and acknowledged that they
signed and affixed the corporate seal of said (here insert name of Corporation) to
said instrument, and delivered the same freely and voluntarily as the act and deed of
the said (here insert name of Corporation), for the uses aud purposes therein set
forth.
Given under my hand and (private or official, as the case may be) seal this
day of , A. D. 18 .
ANTI-TRUST AFFIDAVIT.
State of Illinois, 7
County of >
I. , do solemnly swear that I am the of the Corporation
known and styled , duly incorporated under the laws of on t lie
dav of , and now transacting and conducting business in the
State of Illinois, and that I am duly authorized to represent said Corporation in
the making of this affidavit, and I do' further solemnly swear that the said
known and styled as aforesaid, has not since the first day of July, A. D. 1893,
created, entered into, or become a member of, or a party to, and was not on the
day of nor at any day since that date and is not now, a member
of, or a party to, any pool, trust, agreement, combination, confederation, or under-
standing with any other corporation, partnership, individual, or any other person or
association of persons, to regulate or fix the pnee of any article of merchandise or
commodity; aud that it has not entered into or become a member of, or a party to,
any pool/trust, agreement, contract, combination, or confederation, to fix or limit
the amount or quantity of any article, commodity, or merchandise to be manufac-
tured, mined, produced, or sold in this State, and that it has not issued and does
not own any trust certificates ; and for any corporation, agent, officer, or employee,
or for the directors or stockholders of any corporation, has not entered into, and is
not now in, any combination, contract, or agreement with any person or persons,
corporation or corporations, or With any stockholder or director thereof, the pur-
pose and effect of which said combination, contract, or agreement would be to place
the management or control of such combination or combinations, or the manufac-
tured product thereof, in the. hands of any trustee or trustees, with the intent to
limit or fix the price or lessen the production and sales of any article of commerce,
7;.'.)
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
use, or consumption, or to prevent, restrict, or diminish the manufacture or output
of any such article.
Subscribed and sworn to before me, a within and for the County of
, this day of 19 .
(seal.)
INDIANA.
AFFIDAVIT OF PRESIDENT AND SECRETARY
State of ) sg
County, J
, President, and , Secretary, each of lawful age, being duly
sworn, upon their oaths, state that they make this affidavit for the purpose of com-
plying with An Act entitled " An Act to regulate the admission of foreign corpo-
rations for profit, to do business in the State of Indiana." Approved March 9, 1907.
In force April 10, 1907-
That they are respectively President and Secretary of , a Corporation
duly incorporated under the laws of the State of on the day
of , 19 , for a term of years.
That the business said Corporation proposes to pursue under its charter in the
State of Indiana is as follows :
That the amount of capital stock of said Corporation is dollars and the
proportion of the capital stock of said Corporation which is represented by the
property located and business transacted in the State of Indiana, is (express
in fraction, as one-half, one-fourth, etc., as the case may be), and the amount of the
said capital stock, so represented in the State of Indiana, is dollars ; That
said Corporation is transacting, or intends to transact, business in the following
States or countries :
That the amount paid in upon its capital stock is as follows :
That the property and assets and the estimated value thereof that will be em-
ployed in the business of said Corporation in the State of Indiana is as follows :
That the disposition made of capital stock subscribed for and not paid in is as
follows :
That the officers and directors of said Corporation are as follows :
Residence, Town, Street
Name. and Number
President .
Secretary ■
Director
That the principal office in Indiana is at Street in the city of
Indiana. That the name of the agent or attorney in fact upon whom service can be
had in all suits commenced in the State is , and his address is
Street, in the city of
, . , President.
(corporate seal.) > Secretary.
State of l
County, J ss *
On this day of , A. D. 19 , personally appeared before me,
a Notary Public in and for said county, in said State, and , who
are respectively President and Secretary of the above described Corporation, and
made oath that the foregoing statement by them subscribed is true in substance
and in fact.
, Notary Public.
760
FORMS AND PRECEDENTS.
CORPORATION ACKNOWLEDGMENT.
State of ) sg
County of >
Personally appeared before me (name and title of officer), this day of
, A. D. 19 , A. B., President of the (name of Corporation), and S. P.,
Secretary of (name of Corporation), and A. B. as such President, and S. P. as such
Secretary, and on behalf of said (name of Corporation) acknowledged the execution
of the annexed instrument.
Witness my band and seal of office (if officer have a seal), this day of
, A. D. 19 .
IOWA.
RESOLUTION OF BOARD OF DIRECTORS
At a meeting of the Board of Directors of the held at
, on the day of , A- D., 190 , the following resolution
was adopted :
Be it Resolved, That a certified copy of the articles of the above incorporation
be filed with the Secretary of State, of the State of Iowa, with a request thai a cer-
tificate be issued permitting said Corporation to transact business within the State
of Iowa.
Be it further Resolved, That service of process is hereby authorized to be made
upon any of the officers or agents of said Corporation, acting for, or engaged in the
transaction of its business within the said State.
Be it further Resolved, That the permit so issued shall be subject to all the
provisions of the statutes of Iowa relating to corporations for pecuniary profit.
Be it further Resolved, That the Secretary of this Corporation be and is hereby
authorized and instructed to do any and all things necessary to carry out the
provisions of this resolution.
, President.
, Secretary.
CORPORATION ACKNOWLEDGMENT.
H
State of
County of
On this day of , A. D. 19 , before me (name and title of
officer), in and for said county, personally came A. B., President (or other officer)
of (name of Corporation), to me personally known to be the identical person whose
name is subscribed to the above instrument as President (or other officer) of (name
of Corporation), grantor therein named, and acknowledged the execution of said
instrument to be the voluntary act and deed of the said Corporation by him, as such
officer, voluntarily done and executed.
In Testimony Whereof, I have hereunto set my hand and official seal (if the officer
have a seal) the day and year above written.
KANSAS.
APPLICATION FOR AUTHORITY TO ENGAGE IN BUSINESS IN
THE STATE OF KANSAS AS A FOREIGN CORPORATION.
To thk Charter Board of the State of Kansas: The , a cor-
poration organized under the laws of the State of , applies for permission
to engage in business in the State of Kansas, and for that purpose submits the
following statement, to wit :
761
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
First.
A certified copy of its Charter or Articles of Incorporation, which is filed
herewith.
Second.
The place where the principal office or place of business of said Corporation is
located is
Third.
The full nature and character of the business in which said Corporation proposes
to engage within the State of Kansas is
Fourth.
The names and addresses of the officers and trustees or directors are :
Fifth.
Resources. Dollars. Cts. Liabilities. Dollars. Cts.
Bills receivable, Capital paid up,
Keal estate, Surplus,
Personal property, Undivided profits,
Stocks, bonds, and other Bills payable.
securities, Accounts payable,
Merchandise, Bonded indebtedness,
Cash on hand, Encumbrance on real estate
Due from banks, or plant,
Accounts, receivable,
Judgments, ^
Total, Total,
Sixth.
The amount of the capital stock of said Corporation is dollars
divided into shares, of dollars each.
We further state that the above application is made in good faith, with the in-
tention that said Corporation shall actually engage in the business specified, and
none other.
State of >
County, \
I, , President, and I, , Secretary, of the above-named Cor-
poration, do solemnly swear that the above is a full and complete statement of the
resources and liabilities of said Corporation as shown by the books of the same, and
that said statement and the several matters and things contained in this application
are true in every particular, to the best of my knowledge and belief. So help me
God.
, President.
, Secretary.
Subscribed and sworn to before me, this day of , A. D. 190 .
[seal.]
, Notary Public.
My commission expires , 19
CONSENT OF CORPORATION.
Know all Men by these Presents : That the , a Corporation
organized under the laws of the State of , and with its principal office at
762
FORMS AND PRECEDENTS.
, in said State, hereby consents, without power of revocation, that actions
■may 'be commenced against it, the said , in the proper court of any county
in the State of Kansas in which a cause of action against such Corporation may
arise, or may have heretofore arisen, or in which plaint ill' may reside, l> v service of
process on the Secretary of State of the State of Kansas ; and the said Corporation
stipulates and agrees that such service shall be taken and held in all courts to be as
valid and binding as if due service had been made upon the President or any other
chief officer of said Corporation.
In Witness Whereof, said Corporation has caused these presents to be executed
by its President and its Secretary, and authenticated by its corporate seal, at
in said State of this day of , A. D. 190 .
, President.
Attest :
, Secretary.
RESOLUTION
BY
The of
,190 .
At a meeting of the Directors of , duly held at the office of said
Company, on the day of , 190 , Mr. offered the fol-
lowing resolution and moved its adoption :
Resolved, That the President ana Secretary of this be and they are
hereby authorized and instructed to execute the written consent thereof to be sued
in the State of Kansas, in the manner provided in section 3 of an Act of the Legis-
lature of the State of Kansas concerning private corporations, approved January 7,
1899.
The resolution was adopted.
State of }
County of J
, being duly sworn, says he is Secretary of the of
, and that the foregoing is a true and correct copy of a resolution
adopted by the Board of Directors of said , on the day of
, 190 , together with the minutes concerning said resolution.
, Secretary.
Sworn to and subscribed before me, this day of , 190 .
, Notary Public.
My commission expires 19 .
CERTIFICATE OF FILING OF ANNUAL STATEMENT.
Office of the Secretary of State,
Topeka, ,190 .
I, , Secretary of State, do hereby certify that the annual state-
ment of the of for the year ending ,190 , has been
made and is on file in this office.
, Secretary of State.
By , Charter Clerk.
CORPORATE ACKNOWLEDGMENT.
State of Kansas, )
County of $
Be it Remembered, That on this day of , 19 , before
me, the undersigned, a within and fur the county and State aforesaid,
came , President of , a Corporation duly organized, incorporated,
and existing under the laws of the State of , who is personally known to
763
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
me to be such officer, and who is personally known to me to be the same person
who executed as such officer the within instrument of writing, and such person duly
acknowledged the execution of the same to be the act and deed of said Corporation.
In Witness Whereof, I have hereunto subscribed my name and affixed my official
seal on the day and year last above written.
(Signature and title of officer.)
KENTUCKY.
STATEMENT OF CORPORATION
[To be filed in the office of the Secretary of State before doing business in this State.]
(Date) , 190 .
To the Secretary of State, Frankfort, Ky. :
S IR) — I hereby give natice that the place of business for the (name of
Corporation) (a Corporation of the State of ) in Kentucky
[is] [are] , and that of , Ky., of ,
Ky., of , Ky., [is] [are] our agent thereat, upon whom
process may be served in any suit "that may be brought against our Company within
the State of Kentucky.
Done at this day of , 190 .
, President.
, Secretary.
[seal.]
Note. — This statement may be signed by the President or Secretary.
(Fill out and return, with fifty cents recording fee.)
CORPORATE ACKNOWLEDGMENT.
State of Kentucky,
County of
Personally appeared before me, a within and for the county and State
aforesaid, President of , a Corporation duly organized, incor-
porated, and existing under and by the laws of the State of , and ,
Secretary of said Corporation, who are personally known to me to be such officers,
and who are personally known to me to be the same persons who executed as such
officers the within instrument of writing, and such persons duly acknowledged the
execution of the same to be the act and deed of said Corporation.
Subscribed to in my presence this day of , 190 .
LOUISIANA.
ACT No. 54 OF 1904.
Know all Men by these Presents : That the Company of
in the State of , doing business, or being about to do busi-
ness in the State of Louisiana, in conformity with the laws thereof, does, pursuant
to the laws of said State, hereby make this its written declaration that the place or
locality of its domcile is ; that it is doing business at the following
place , in the State of Louisiana, to wit : , and that it does hereby
make, constitute, and appoint of the city of parish of
its true and lawful attorney, in and for the State of Louisiana on whom all pro-
cess of law, whether mesne or final, against said Company, may be served in any
action or special proceedings against said Company in the State of Louisiana, sub-
ject to and in accordance with all the provisions and statutes and laws of said State
of Louisiana now in force and such other acts as may be hereafter passed amenda-
torv thereof and supplementary thereto, and the said attorney is hereby dulv
764
FORMS AND PRECEDENTS.
authorized and empowered, as the agent of said Company, to receive and accept
service of process in all cases as provided for by the laws of the State of Louisiana,
and such service shall be deemed valid personal service and binding upon this
Company, agreeably to Article 264 of the Constitution of Louisiana, and in com-
pliance with Act No. 54 of 1904. This appointment is to continue in force for
the period of time and in the manner provided for by the statutes of the State of
Louisiana, and until another attorney shall be duly and regularly substituted,
/// Witness Whereof, The said Company, in accordance with a resolution of its
Board of Directors, duly passed on the day of , A. D. 100
(a certified copy of which is hereto attached), has to these presents affixed its cor-
porate seal, and caused the same to be subscribed and attested to by its President
and Secretary at the city of in the State of on the
day of , A. D". 190 .
, President.
[skal.] , Secretary.
CERTIFIED COPY OF A RESOLUTION DULY PASSED BY THE
BOARD OF DIRECTORS OF THE COMPANY ON
THE DAY OF , 190 .
At a meeting of the Board of Directors of the Company, held on the
day of , A. D. 190 , at the office of the Company in the city
of , State of , a quorum of said board being present, on mo-
tion the following resolution was duly passed :
" Resolved, That this Company having been admitted or having applied for
admission to transact business in the State of Louisiana, in conformity with the
laws thereof, hereby makes, constitutes, and appoints of
its true and lawful attorney in and for the State of Louisiana, with the powers
hereinafter set forth ; and hereby authorizes the President and Secretary, under the
-corporate seal of the Company to file a written declaration in the office of the Secre-
tary of State, setting forth the place or locality of the domicile of this Corporation,
the' place or places in the State of Louisiana where it is doing business, and the
name of its agent in said State upon whom process may be served, and for said pur-
pose particularly does hereby authorize the said President and Secretary, under the
corporate seal of the Company to make, constitute, and appoint of the
city of its true and lawful attorney, in and for the State of Louisiana,
on whom all process of law, whether mesne or final, against said Company may be
served in any action or special proceedings against said Company in the Stale of
Louisiana, subject to and in accordance with all the provisions and statutes and laws
of said State of Louisiana now in force, and such other acts as may hereafter be
Eassed, amendatory thereof and supplementary thereto; and the said attorney to
e duly authorized and empowered, as the agent of said Company, to receive and
accept service of process, in all cases as provided for by the laws of the State of
Louisiana, and such service to be deemed valid personal service aud binding upon this
Company, agreeably to Article 264 of the Constitution of Louisiana, and in com-
pliance with Act 54 of 1904. Said appointment, is to continue in force for the
period of time, and in the manner provided for by the statutes of the Stale of
Louisiana, and until another attorney shall be duly and regularly substituted."
I hereby certify that the above is a correct copy of the vote or resolution of the
Directors of said Company, authorizing the appointment of an attorney for the
State of Louisiana.
Witness my hand and the seal of said Company at , this
day of ,190 .
(SEAL.) ' , Secretary.
State of
County of
City of
On this day of , 190 , before me, the subscriber
765
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
duly appointed to take proof and acknowledgment of deeds and other instruments,,
came , President, and , Secretary of the Company,
to me personally known to be the individuals described in and who executed the
preceding instrument, and they each duly acknowledged to me, and in the presence
of the subscribing witnesses, the execution of the same ; and being by me each duly
sworn severally and each for himself deposeth and saith that they are the officers of
the Company aforesaid, and that the seal affixed to the preceding instrument is the
corporate seal of the said Company ; and that the said corporate seal and their sig-
natures as such officers were duly affixed and subscribed to the said instrument by
the authority- and direction of said Corporation.
In Testimony Whereof, I hereunto set my hand and affix my official seal, at the
city of , the day and year first above written.
[seal.]
CORPORATION ACKNOWLEDGMENT.
State of
County of
[• ss.
f (name and title of officer) do hereby certify that G. H., attorney in fact for
(name of Corporation), grantor in the foregoing instrument, appeared before me, and
acknowledged on behalf of said Corporation that he executed the said instrument for
the purposes therein mentioned, and that the same is the act and deed of the said
Corporation.
In Testimony Whereof, I have hereunto set my hand and official seal this
day of , A. D. 18 . (Signature and title.)
MAINE.
Note. — All foreign corporations are at liberty to carry on any legal business in
Maine without a permit.
CORPORATION ACKNOWLEDGMENT.
State of 7
County of J
day of , A. D. 19 , personally appeared A. B., President
of (name of Corporation), and acknowledged the foregoing instrument to be the free
act and deed of the said (name of Corporation), before me.
In Witness Whereof, I have hereunto set my hand and seal on the day and year
above written.
MARYLAND.
Note. — See general forms numbered 1 to 10, ante.
CORPORATION ACKNOWLEDGMENT.
Instruments must end as follows:
" And this deed further witnesseth, that the said A. B. Co. doth hereby appoint
T. G., its attorney, to acknowledge these presents as the act of said A. B. Company."
Witness the corporate seal of the said Company and the signature of the President
thereof. J- T- K., President.
State of 7 gs
County of S
I hereby certify that on this day of , in , before the
subscriber, a (title of officer), personally appeared T. G., he being known to me to
be the person who is known and described as and professing to be the attorney
named in the letter or power of attorney contained in the foregoing deed, and by
766
FORMS AND PRECEDENTS.
virtue and in pursuance of the power and authority thereby granted, acknowledged
the said deed or instrument of writing to be the act and deed of the party of the hrst
part hereto.
COMMONWEALTH OF MASSACHUSETTS.
We, , President,
a majority of the Directors of
, Treasurer, and , being
, a Corporation organized under the laws of
, in compliance with the provisions of chapter 437 of the Acts of 1903,
do hereby certify as follows concerning said Corporation :
1. That the name of said Corporation is
2. That the location of its principal office is
3. That the names and addresses of its officers are as follows:
Names (Full Proper Names). Address.
President,
Treasurer,
Clerk or Secretary,
Directors,
4. That the date of its annual meeting for the election of officers is
5. That the amount of its capital stock authorized is dollars.
The amount of capital stock iisued is dollars.
The number of its shares is } Common
„, , -. ., , \ Preferred dollars.
The par value of its shares is j Common dollars .
The amount paid in thereon to ] Preferred dollars,
the treasurer is \ Common dollars.
The amount of such payment made otherwise than in money is as follows :
Paid in property, viz. : [State here the number of shares issued on
each item.]
Real Estate ....
Location . . .
Area ....
Machinery ....
Merchandise . . .
Bills Receivable . .
Stocks and Securities
Patent Rights . . .
Trademarks . . .
Copyrights ....
Goodwill ....
Services* . . . .
Expenses* ....
Common.
* State the nature of such service or expenses.
6. Usual place of business in this Commonwealth.
7. To whom and where shall notice and copies of legal process be addressed ?
In Witness Whereof, we have hereunto signed our names, this day of
, in the year nineteen hundred aud
State of | S3
Then personally appeared the above-named
, 190 .
, and severally made oath
767
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
that the foregoing certificate, by them subscribed, is true to the best of their knowl-
edge and belief.
Before me,
(If out of Massachusetts, oath before a Commissioner for Massachusetts or
Notary Public ; if within Massachusetts, before a Notary Public or Justice of the
Peace.)
Know all Men by these Pkesents, That the , a Corpora-
tion located in the of , in the State of , and
established under the laws of said State, desiring to transact business in the Com-
monwealth of Massachusetts in conformity with the laws thereof, hereby constitutes
and appoints the Commissioner of Corporations of said Commonwealth, or his suc-
cessor in office, to be the true and lawful attorney of said Corporation, in and for
the said Commonwealth, upon whom all lawful processes in any action or proceed-
ing against said Corporation in said Commonwealth may be served, in like manner
and with the same effect as if said Corporation existed therein. And the said
Corporation hereby stipulates and agrees that any lawful process against said Cor-
poration, which is served on its said attorney, shall be of the same legal force and
validity as if served ou said Corporation.
This appointment and the authority of said attorney shall continue in force
so long as any liability remains outstanding against said Corporation in said
Commonwealth.
In Witness Whereof, the aforesaid Corporation, pursuant to a resolution of its
Board of Directors, duly passed on the day of , A. D. 190
(a certified copy whereof is hereto annexed), hath caused these presents to be sub-
scribed by its President and countersigned by its Clerk or Secretary, and the corpo-
rate seal of said Corporation to be hereunto affixed, this day of
in the year one thousand nine hundred and
, President.
, Clerk [or Secretary].
N. B. — The seal of the Corporation should be affixed.
State of ) gs
County of £
On this day of , A. D. 190 , before me, the sub-
scriber, a 1 , duly appointed and qualified, personally appeared the
before-named President, and Clerk (or Secretary), of the
(who are personally known to me), and severally acknowledged
the execution of the foregoing instrument by them subscribed, and they severally
made oath that they are respectively the aforedescribed officers of said Corporation ;
that the seal affixed to said instrument is its true and proper corporate seal ; and
that they suoscribed said instrument, and said corporate seal was affixed by virtue
of authority duly conferred by said Corporation.
[fitness my hand and official seal, at in the State and county afore-
said, the day and year above written.
1 If out of Massachusetts, before a Commissioner for Massachusetts or Notary Public.
If within Massachusetts, before a Notary Public or Justice of the Peace.
[copy.]
At a meeting of the Board of Directors of the , a Corporation
established under the laws of the State of , duly held on the
day of , A. D. 190 , a quorum being present, the following Resolution
was adopted :
" Resolved, that this Corporation hereby appoints the Commissioner of Corpo-
rations of the Commonwealth of Massachusetts, or his successor in office, to be its
true and lawful attorney, in and for said Commonwealth, upon whom all lawful
processes in any action or proceeding against this Corporation in said Common-
wealth may be served, in like manner and with the same effect as if this Corpora-
768
FORMS AND PRECEDENTS.
tion existed therein. And this Corporation hereby stipulates and agrees that any
lawful process against it, which is served on its said attorney shall be of the same
legal force and validity as if served on this Corporation. This appointment, and the
authority of said attorney, shall continue in force so long as any liability remains
outstanding against this Corporation in said Commonwealth; and the President
and Clerk or Secretary are hereby authorized to execute, in the name of the Corpo-
ration, and under its corporate seal, a certificate of authority or power of attorney
to the said Commissioner of Corporations, in conformity with this Resolution and
the laws of said Commonwealth."
/ hereby Certify, that the above is a true copy of the Resolution of the Directors
of this Corporation, authorizing the appointment of an attorney for the Common-
wealth of Massachusetts, as recorded by me.
, Clerk [or Secretary].
MICHIGAN.
, 190 .
To tue Secretary of State, Lansing. Michigan:
, a foreign Corporation organized and existing under and by virtue
of the laws of the State of , hereby makes the following declaration,
pursuant to an Act of the Legislature of Michigan, entitled " An Act to prescribe
the terms and conditions on which foreign corporations may be admitted to do busi-
ness in Michigan," approved June 6, 1901, as amended:
First. The location of its principal office is
The location of its principal place or places of business
The names and addresses of the principal officers are
Second. The location of its principal office and the principal place of business
in Michigan
The names and addresses of the officers or agents of the Company in charge of
its business in Michigan are
Third. The authorized capital stock of said Corporation is Dollars
($ )•
Fourth. The total value of the property owned and used by the Company in its
business, giving the location and general character, and stating separately the value
of its tangible property, of its cash and credits, its franchises, patents, trade-marks,
formulas, good will, is
Fifth. The value of property owned and used in Michigan and where situated,
showing different kinds as in item fourth
Sixth. The total amount of business transacted during the preceding year
Seventh. The amount of business, if any, transacted in Michigan
Eighth. The particular purpose or particular kind of business for which the
company desires to be admitted is the following
Ninth. Its corporate term will expire •
In Witness Whereof, said has caused its corporate seal to be affixed
and its name to be hereunto attached this day of , A. D. 190 .
(l. s.) By
State of ) sg
County of ) _
, being duly sworn, depose and say, that they are officers, to wit,
the and respectively of , that the foregoing
statement, executed in the name and on behalf of said Corporation, and under its
corporate seal, is true.
Sworn to before me and subscribed in my presence, this day of
, A. D. 190 .
My commission expires 10, •
Office of the Secretary of State,
Lansing, Michigan, ■ 190 .
From the foregoing statement made bv the said , and from utuei
8 b 769
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
facts coming to my knowledge, I find the proportion of the capital stock of the
Company, represented by its property and business in Michigan, to be
per cent of its authorized capital stock, to wit, the sum of dollars, on
which the franchise fee of one-half of one mill on each dollar will be the sum of
dollars.
, Deputy Secretary of State.
APPOINTMENT OF AGENT.
At a Special Meeting of the Board of Directors of the Company
duly called, and held at the office of the Company at the City of , on
the day of , A. D. 190 , the following resolution was adopted :
Resolved, That of , Michigan, be and he is duly appointed
the agent of this Company, and authorized to acknowledge service of any and all
process for and on behalf of this Company ; and this Company does hereby consent
that service of process upon said shall be taken and held to be as
valid as if served upon this Company, according to the laws of the State of
Michigan or any other State, and this Company hereby waives all claim of error by
reason of such service.
Secretary of the Company.
State of I ss
County of £
I, , President of the Company, do hereby certify that
the above and foregoing is a true and correct copy of a resolution adopted
on this day of , A. D. 190 , appointing the agent
of said Company, to acknowledge service of process.
In Witness Whereof, I have hereunto set my hand and caused to be affixed the
seal of said Companv, at the city of , this day of
, A. D. 190 .
(l. s.) , President.
CORPORATION ACKNOWLEDGMENT.
State of
County of
On this day of , A.D. 19 , before me (name and
title of officer in full), personally came A.B , known to me to be the President of
the (name of Corporation in full), and CD., known to me to be the Secretary of
said Company, and severally acknowledged the foregoing instrument of writing
to be their free act and deed and the free act and deed of said (name of Corporation).
And I further certify that I know the seal affixed to said instrument to be the
corporate seal of the said Corporation.
In Testimony Whereof, I do hereby set my hand and affix my official seal the
day and year last above written.
MINNESOTA.
Know all Men by these Presents : That , in the State of
, a Corporation duly organized and existing under the laws of said
State of , has and maintains a public office and place of business in
the State of Minnesota, to wit: , in the City of in said
State of Minnesota, and does hereby constitute and appoint , of said
City of , its agent and attorney, who is duly authorized to accept
service of process and upon whom service of process may be had in any action
to which said company may be a party, and service on said agent shall be taken
and held as personal service upon said Corporation. This appointment to be and
770
FORMS AND PRECEDENTS.
continue in force for the" period of time and maimer provided by sections 2888,
2SS9, 2890, Revised Laws of Minnesota, 1905, and until another attornev shall be
substituted and appointed, and the appointment of as agent is hereby
revoked.
Witness our bauds and seal of said company, this dav of
A.D. 190 .
, President.
, Secretary
State of >
County of | '
Personally appeared before me , President, and , Secre-
tary, and acknowledged the foregoing to be their free act and deed.
, Notary Public.
AFFIDAVIT OF CORPORATE OFFICERS.
State of
County
ss.
, of lawful age, being duly sworn, upon his oath states that he
makes this affidavit for the purpose of complying with sections 2SS8, 28S9, 2890,
Revised Laws of Minnesota. 1905.
" An Act to require every foreign Corporation, organized for pecuniary profit,
now or hereafter doing business in this State, to have a public office in this State,
at which to transact its business, and to appoint an agent duly authorized to accept
service of process, and requiring such Corporation to file its articles or certificates
of incorporation with the Secretary of State, and pay into the State Treasury
certain fees, providing penalties for a violation of the provisions of this act, and
repealing Chapter 70, General Laws of 1899;- approved April 17, 1899."
That he is the of , a Corporation duly incorporated
under the laws of the State of on the day of ,
190 , for a term of years; that the amount of Capital Stock of said
Corporation is dollars; and the proportion of the Capital Stock of
said Corporation which is represented by the property located and business trans-
acted in the State of Miunesota is 1 and the amount of said Capital
Stock so represented in the State of Minnesota is dollars; that
represents said Corporation in the State of Minnesota; and that the
public office of said Corporation or place for the transaction of its business in
the State is at in the City of Minnesota.
State of )
County of \ ss -
On this day of personally appeared before me, a
in and for said county, in said county, in said State,
and made oath that the foregoing statement by him subscribed is true
in substance and fact.
[seal]
1 One-fourth, nine-tenths, etc., as the facts may be.
CORPORATION ACKNOWLEDGMENT.
On this day of , A I). 19 , before me, appeared
A.B., to me personally Known, who being by me duly sworn (or affirmed), did sav
that he is the President (or other officer or agent of the Corporation or association)
771
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
of (describing the Corporation or association), and that the seal affixed to said
instrument is the corporate seal of said Corporation (or association), and that said
instrument was signed and sealed in behalf of said Corporation (or association) by
authority of its board of directors (or trustees), and said A.B. acknowledged said
instrument to be the free act and deed of said Corporation (or association).
MISSISSIPPI.
CORPORATION ACKNOWLEDGMENT.
Note. — Use general forms numbered 1 to 10, ante.
State of
County of
Personally appeared before me (name and title of officer) the within named A. B.,
President (or other officer) of (name of Corporation), who acknowledged that he
signed and delivered the foregoing instrument, on the day and year therein
mentioned.
Given under my hand and seal of office (if the officer has a seal), this
day of , A. D. 18 .
MISSOURI.
A foreign Corporation desiring to obtain certificate of authority and license to
do business in Missouri is required to file in the office of the Secretary of State :
First. A copy of its articles of association and charter certified by the Secretary
of State of the State in which the Company is incorporated. The articles should
show that the full amount of the authorized capital stock has been bona fide sub-
scribed, and that at least one-half thereof has been paid up according to the laws of
Missouri. If the articles should not set out these facts, but if subsequent to its
incorporation the full amount of the authorized capital has been bona fide subscribed,
and one-half thereof has been paid up, it will be permissible for an authorized officer
of the Company to make affidavit to that effect in the following form :
State of ?
County of £
I, (President or Secretary) of the , a Corporation organized
under the laws of , with a capital stock of dollars, divided into
shares, of the par value of dollars each, as authorized by its certificate of in-
corporation issued by the Secretary of State of the State of , on the
day of 18 , do hereby certify that all of said stock has been bona fide
subscribed and per cent (not less than 50) actually paid up according to the
laws of the State of Missouri.
Witness my hand this day of , 19 .
, (President or Secretary).
Subscribed and sworn to before me, this day of , 19 .
My commission expires 19 .
(seal.) , Notary Public.
Second. A statement, duly sworn to by the principal officer or agent in Missouri,
setting forth the proportion of the capital stock which is represented by its property
located and business transacted in Missouri : and designating a public office or
place of business in this State for the transaction of its business where legal service
may be obtained upon it, as follows :
State of Missouri,
County of
, Principal Officer (or Principal Agent) in Missouri of , a
Corporation duly incorporated under the laws of the State of on the
day of 19 , for a term of years, being duly sworn, upon his oath,
states that he represents said corporation as its principal agent in the State of
Missouri ; that the amount of capital stock of said Corporation is dollars,
772
FORMS AND PRECEDENTS.
and the proportion of the capital stock of said Corporation which is represented by
its property located and business transacted in the State of Missouri, is
dollars ; and that the principal office of said Corporation or place for the transaction
of its business in the State of Missouri, where legal service may be obtained upou
it, is located at the city of , Missouri.
Subscribed and sworn to before me, this day of , 19
My commission expires 19 .
, Notary Public.
Third. Affidavit that said Corporation is not in contravention of the laws of
Missouri against pools, trusts, and conspiracies, as follows :
State of Missouri, }
County of $
I, , do solemnly swear that I am the (President, Secretary,
or Managing Officer), of the Corporation known and styled , duly incorpo-
rated under the laws of , on the day of , and now transact-
ing or conducting business in the State of Missouri, and that I am duly authorized to
represent said Corporation in the making of this affidavit. And I do further swear
that the said , known and styled as aforesaid, is not now, and lias not at
any time within one year from the date of this affidavit, created, entered into, be-
come a member of, or participated in any pool, trust, agreement, combination, con-
federation, or understanding with any other corporation, partnership, individual, or
any other person or association of persons, to regulate or fix the price of any article
of manufacture, mechanism, merchandise, commodity, convenience, repair, any pro-
duct of mining, or any article or thing whatsoever, or the price or premium to be
paid for insuring property against loss or damage by fire, lightning, or storm ; and
that it has not entered into, or become a member of or a party to any pool, trust,
agreement, contract, combination, or confederation to fix or limit the amount or
quantity of any article of manufacture, mechanism, merchandise, commodity, con-
venience, repair, any product of mining, or any article or thing whatsoever, or the
price or premium to be paid for insuring property against loss or damage by fire r
lightning, or storm ; and that it has not issued and does not own any trust certifi-
cates, and for any corporation, agent, officer, or employee, or for the directors or
stockholders of any corporation, has not entered into and is not now in any combi-
nation, contract, or agreement with any person or persons, corporation or corpora-
tions, or with any stockholder or director thereof, the purpose and effect of which
said combination, contract, or agreement would be to place the management or con-
trol of such combination or combinations, or the manufactured product thereof, in
the hands of any trustee or trustees, with the intent to limit or fix the price or
lessen the production and sale of any article of commerce, use, or consumption, or
to prevent, restrict, or diminish the manufacture or output, of any article ; and that
it has not made or entered into any arrangement, contract, or agreement with any
person, association of persons, or corporation designed to lessen, or which tends to
lessen, full and free competition in the importation, manufacture, or sale of any
article, product, or commodity in this State, or under the terms of which it is pro-
posed, stipulated, provided, agreed, or understood that any particular or specified
article, product, or commodity shall be dealt in, sold, or offered for sale in this State.
to the exclusion, in whole or in part of any competing article, product, or
commodity.
, (President, Secretary, or Managing Officer).
Subscribed and sworn to before me, a within and for the County of
, this day of , 19 .
(SKAL.)
Additional affidavit required under Act of 1903 to be filed with the application
for license to do business in Missouri.
State of >
County of \ SS "
We, , President, and , Secretary, of the , a Corporation
duly organized and existing under the laws of the State of , by charter bear-
ing date , 19 , located at , in the State of , do solemnly
77:;
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
swear that in making application for license to do business in Missouri, under pro-
visions of section 1025, R. S. 1899, as amended by an Act approved March 24,
1903, we are duly authorized to represent said Corporation in making this affidavit,
and that it is the desire of said Corporation to carry on in the State of Missouri,
solely, the business of , which is authorized by its charter ; and that if said
corporation is licensed it shall not and will not do or transact any other business in
Missouri, or exercise any other or further powers, rights, or privileges than those
set out above, whether or not its charter powers be so limited.
Attest :
(corporate seal.) , President.
, Secretary.
Subscribed and sworn to before me, this day of , 19 .
(seal.) , Notary Public.
Fourth. Send draft or certified check payable to the order of the State Treasurer,
to cover the State tax and fees, estimated as follows : On a capital of $50,000 or
less, invested in Missouri, $50.00 ; license, $10.00, and fee for issuing certificate,
$1.50 ; minimum total, $61.50. For each $10,000 capital so invested in excess of
$50,000, $5.00 additional.
CORPORATION ACKNOWLEDGMENT.
> ss.
State of
County of
On this day of , A. D. 19 , before me, appeared A. B., to
me personally known, who, being by me duly sworn (or affirmed), did say that he
is the President (or other officer or agent of the Corporation or association) of
(name of Corporation or association), and that the seal affixed to said instrument is
the corporate seal of said Corporation (or association), and that said instrument
was signed and sealed in behalf of said Corporation (or association), by authority of
its board of directors (or trustees), and said A. B. acknowledged said instrument
to be the free act and deed of said Corporation (or association).
In Witness Whereof, I have hereunto set my hand and affixed my official seal, the
day and year aforesaid.
MONTANA.
Note. — Use general forms numbered 1 to 10, ante.
CORPORATION ACKNOWLEDGMENT.
State of \
County of \
On this day of , A. D. 19 , personally appeared before
me (name and title of officer), in and for said city (or county), A. B., President of
the (name of Corporation), personally known to me as such person described in and
who executed the foregoing instrument, and he acknowledged to me that he executed
the same freely and voluntarily as the act and deed of the said Corporation, and for
the uses and purposes therein mentioned.
Witness my hand and seal.
NEBRASKA.
Know all Men by these Presents : That the , a Corporation
with a principal office at , State of , and a branch office in
the State of Nebraska, at , County of
The name of our agent in charge of our branch office is , and we
do hereby appoint the Auditor of Public Accounts of the State of Nebraska, our
true and lawful attorney upon whom all lawful process in any action or proceeding
774
FORMS AND PBECKDENTS.
against the Company may be served with the same effect as if the Company existed
in this State.
And it is hereby strictly agreed on the part of the Company that any lawful
{>rocess against said Company, which is served on said attorney, shall be of the same
e^al torce aud validity as if served on the Company, and that this authority shall
continue in force so long as any liability remains outstanding against the Company
in the State of Nebraska.
Witness our signatures this day of 190 .
, President.
, Secretary.
State of } ss
County of $
Before me a notary public in and for the County of , in State of ,
personally appeared , President, and , Secretary, and acknowledged
the signing of the above instrument.
, Notary Public.
(File one copy with the Secretary of State, recording fee 30 cts. And tile one
copy with Register of Deeds in county where branch office is located.)
CORPORATION ACKNOWLEDGMENT.
State of Nebraska, ) sg
County of S "'
On this day of A. D. 190 , before me, a duly
commissioned and qualified in and for said county, personally came the above named
, President, and , Secretary, of , who are personally
known to me to be the identical persons whose names are affixed to the above deed
as President and Secretary of said Corporation, and they acknowledged the instru-
ment to be their voluntary act and deed and the voluntary act and deed of said
Corporation.
Witness my hand and official seal at ui said county the day and year
aforesaid.
NEVADA.
APPOINTMENT OF RESIDENT AGENT.
Know all Men by these Presents : That we , and
respectively the President and Secretarv of the , do hereby certify and
declare as 'and for the act and deed of such officers of said Corporation, as follows:
viz : That the Company is a Corporation duly created, organized, am!
existing under and by virtue of the laws of the Stale of . and bas its
office aud the place where the principal business of said Corporation is transact, d at
the city . And said Corporation owns and holds property in the Mat, o
Nevada and does business therein. That this Corporation has appointed and will
keep in the State of Nevada, as an agent upon whom all legal process
may be served for this Corporation .
'Now therefore, this Corporation does hereby file this certificate properly authen-
ticated by the proper officers of this Corporation, with the Secretary ol Mat,- oi
Nevada and does hereby certify specially and declare that, the lull nam,' of their
said agent, upon whom all legal process may be served lor tins Corporation is,
, that the residence of said agent is at , W the county of
in the State of Nevada. or i • i
Done at the said city and county of , State of , this day
of , A. D. , in pursuance of a resolution duly passed by the board 01
directors of said corporation, and entered on the minutes thereof.
, President, and •
, Secretary, of the
Company.
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
CORPORATION ACKNOWLEDGMENT.
State of ) sg>
County of $
On this day of , A. D. 19 , before me (name and title of
officer in full) personally appeared A. B., the President of the (name of Corpora-
tion), to me personally known to be the individual whose name is subscribed to the
foregoing instrument as the President of the said (name of Corporation), and he
acknowledged to me that he executed the same as the President of said Corporation
for, on behalf and in the name of said company, as its free and voluntary act and
deed, for the uses and purposes therein mentioned, and in pursuance to the order
and resolution of said company directing such instrument to be executed, by signing
the same as President thereof and affixing thereto its corporate seal.
In Witness Whereof I have hereunto set my hand and affixed my official seal (if
the officer have a seal), the day and year first above written.
NEW HAMPSHIRE.
Note. — No permit to transact business is required of Foreign Corporations
in New Hampshire.
CORPORATION ACKNOWLEDGMENT.
State of • I ss>
County of \
On the day of , A.D. 19 , (name of Corporation),
by (name of agent), its agent for this purpose, duly authorized, appeared and
acknowledged the foregoing instrument, by it signed, to be its free act and deed.
Before me, . (Title).
NEW JERSEY.
STATEMENT BY FOREIGN CORPORATION.
The Company.
In accordance with the provisions of an act of the Legislature of the State of
New Jersey, entitled "An Act Concerning Corporations (Revision of lS9fi)," the
Company, a Corporation of the State of , does hereby
certify and set forth :
First. That the paper hereto attached is a true and correct copy of its charter
or certificate of organization filed with the Secretary of State of the State of
, which copy is attested by its President and Secretary under its
corporate seal.
Second. The total amount of capital stock said Company is authorized to issue
is % , and the amount actually issued is $
Third. The character of business which said Corporation is to transact in this
State is the
Fourth. The place within the State of New Jersey which now is and is to be its
principal place of business is No. Street, in the city of
Fifth. , of full age, an actual resident of this State, whose abode
is at number Street, in the State of New Jersey, is the
Agent of said Corporation in this State, upon which Agent process against such
Corporation may be served in this State ; said Agent's office is at the said principal
place of business of said Corporation in the State of New Jersey.
In Testimony Whereof, the said Corporation hath caused its corporate seal to be
hereto affixed,' and these presents to be signed by its President and attested by its
Secretary, the day of , A.D. 190 .
The Company.
By , President.
Attest :
, Secretary.
776
FORMS AND PRECEDENTS.
(Attach statement of directors, officers, etc. Then annex copy of charter or
certificate of incorporation.)
The undersigned, president and secretary, of the Company do hereby
certify, that the annexed is a true aud correct copy of the certiticate of incorpora-
tion of the aforesaid company aud the whole thereof.
In Attestation Whereof, we have affixed our hauds aud the corporate seal of the
company this • day of , 19 .
, President.
, Secretary.
REPORT OF A FOREIGN CORPORATION.
The Company.
Organized uuder the Laws of the State of
The Corporation above named, organized under the Laws of the State of
, does hereby make the following report in compliance with the pro-
visions of an act of the Legislature of New Jersey, entitled " An Act Concerning
Corporations (Revision of 1896)," and the various acts amendatory thereof and
supplemental thereto.
First. The name of the Corporation is
Second. The location of the registered office is at No. Street,
, and is the agent upou whom process may be served.
Third. The character of the business is
Fourth. The amount of the authorized capital stock is & . The
amount actually issued and outstanding is $
Fifth. The names and addresses of all the Directors and Officers, and the term
when the office of each expires are as follows :
Names of Directors. Address. Expiration of Term.
Officers :
Sixth. The next annual meeting of the stockholders for election of Directors is
appointed to be held on
Witness our hands the day of , A.D. 190 .
, Preside/it.
, Secretary.
CORPORATION ACKNOWLEDGMENT.
State of > sg
County of J
Be it remembered that on the day of , A.D. 19 ,
before me (name and title of officer), personally appeared E.D., to me known, who,
being by me duly sworn according to law, on his oath doth depose and say that he
is the Secretary (or other officer) of the (name of Corporation), the grantors in the
foregoing deed named; that the seal affixed to the .said deed is the corporate seal of
the said (name of Corporation) ; that it was so fixed by order of the said (name of
Corporation); that A. B. is the President (or other executive officer) of the said
(name of Corporation); that he saw the said A. 15., as such President, sign the
said deed, and heard him declare that lie Bigned, scaled, and delivered the saun-
as the voluntary act and deed of the said (name of Corporation) by their order;
and that this deponent signed his name thereto, at the same time, as a subscribing
witness.
Subscribed and sworn before me, the day and year above written.
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
NORTH CAROLINA.
APPLICATION FOR DOMESTICATION BY A FOREIGN
CORPORATION.
The Company, organized under the laws of the State of
, does hereby make the following statement in compliance with the pro-
visions of section 1194 of the Revisal of 1905 of North Carolina :
First, The name of the Corporation is
Second, The location of the registered office is at No. Street,
, and the location of the principal office in North Carolina is at ,
N. C, County of , and is the agent upon whom pro-
cess may be served.
Third, The character of the business is
Fourth, The amount of the authorized capital stock is $ . The amount
actually issued and outstanding is $
Fifth, The names and addresses of all the Directors and Officers, and the term
when the office of each expires, are as follows :
Names of Directors. Address Expiration of term.
Officers :
President,
Vice-President,
2d Vice-President,
Treasurer,
Secretary,
[corporate seal.]
Witness our hands the day of A. D. 190 .
, President.
, Secretary.
CORPORATION ACKNOWLEDGMENT.
State of I ss
County of \
I, (name and title of officer) (if before a Commissioner of affidavits of North
Carolina use title, &c, as in foregoing form) do hereby certify that personally ap-
peared A. B., who being by me duly sworn did depose and say that he resides at
; that he is the President of (name of Corporation), the Corporation described
in, and who executed the foregoing instrument; that the seal affixed to said instru-
ment is the corporate seal of said Corporation, affixed by their authority, and at the
same time the said A. B. acknowledged to me that he executed the said instrument
for the purposes therein expressed as President of the (name of Corporation), the
Corporation therein described, as his act and deed. And at the same time and place
personally appeared E. F. and J. H., who being by me severally duly sworn, did
depose and say that they were severally members of the (name of Corporation), the
Corporation described in, and who executed the foregoing instrument ; that the
seal attached to said instrument is the corporate seal of said Corporation ; and
at the same time and place the said E. F. and J. H. acknowledged to me
that they severally executed the said instrument for the purposes therein ex-
778
FORMS AND PRECEDENTS.
pressed as two of the members of the (name of Corporation), the Corporation
therein described.
In Witness Whereof \ have hereunto set my hand and affixed my official seal, at
aforesaid, the day and year in the corporation first above mentioned.
NEW MEXICO.
Note. — Use general forms numbered 1 to 10, ante.
CORPOEATION ACKNOWLEDGMENT.
State of 7 gs
County of )
Be it remembered that on this day of , A. D. "19 , before me, the
undersigned, a (title of officer) in and for said city (or county) aforesaid, oame the
(uame of Corporation), by A. B., its President, who is to me well and personally
known as the same person whose name is subscribed to the foregoing deed, and
he duly acknowledged that he signed, sealed, and executed the said instrument of
writing as his free and voluntary act, for the uses and purposes therein set forth.
Witness my hand and official seal, this the day and year last above written.
NORTH DAKOTA.
APPOINTMENT OF ATTORNEY BY CORPORATION.
Know all Men by these Presents : That , a Corporation organ-
ized, existing, and doing business under and by virtue of the laws of the State of
, located in the city of in said State, does hereby constitute
and appoint , Secretary of State of the State of North Dakota and his
successors in office, its true and lawful attorney, duly authorized to accept service
of process and upon whom all process in any action or proceeding against it may be
served, and the said Corporation does hereby stipulate and agree that any process
which may be served upon the said attorney shall be of the same force and validity
as if served upon it personally in this State. This appointment shall continue in
force and shall not be revoked so long as any liability of said Corporation remains
•outstanding in this State. This appointment is executed in compliance with and
under the provisions of section 4697 of the Revised Codes of 1905 of the State of
North Dakota.
In Witness Whereof, the said Corporation, by its President, has caused these
presents to be executed, sealed with its corporate seal, and attested by its Secretary,
this day of , A. D. 190 .
, President.
Attested: , Secretary.
State of ") s3
County of y
On this day of , A. D. 190 , before me, a notary public in
and for the County of and State of , personally appeared
, President, and , Secretary, of said Corporation, and each
being duly sworn deposes and says that they arc the President and Secretary re-
spectively of said Corporation and that jointly they have full light and authority to
execute and sign the foregoing instrument on behalf of and for the said Corporation,
and that the same is as valid and binding as if executed and signed by the Board of
Directors of said Corporation. , President.
, Secretary.
Subscribed and sworn to before me this day of , A. I >. 190
, Notary Public.
779
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
CORPORATION ACKNOWLEDGMENT.
State of / ss>
County of S
On this day of in the year 18 , before me (name and title of
officer), personally appeared , known to me (or proved to me on the oath of
) to be the President (or Secretary) of the Corporation that is described
in and that executed the within instrument, and acknowledged to me that such Cor-
poration executed the same.
OHIO.
FORM OF APPLICATION UNDER ACT OF MAY 16, 1894.
To the Secretary of State, Columbus, Ohio:
, a foreign Corporation organized and existing under and by
virtue of the laws of the State of , with its principal office located at
, in County, , iu compliance with an act of the
General Assembly of Ohio, entitled " An Act to further supplement section 148 of
the Revised Statutes," passed May 16, 1894 (as amended May 10, 1902), requir-
ing a foreign Corporation organized for purposes of profit, and owning or using, or
which proposes to own or use, a part or all of its capital stock or plant in said State
of Ohio, before being permitted to do business, exercise its franchises, or maintain
an action therein, under the oath of its President, Secretary, or other officer, to make
and file with the Secretary of State a statement of facts and pay a certain stipulated
fee, hereby makes the following declaration:
First. The authorized capital stock of said Corporation is dollars
($ ), divided into ( ) shares of the par value of
dollars ($ ) each.
Second. The value of the property owned and used in Ohio, situate at
is dollars ($ ).
Third. The value of the property of the Company owned and used outside of
Ohio is dollars ($ ).
Fourth. The proportion of the capital stock of the Company represented by
property owned and used, and by business transacted iu Ohio is
Fifth. The location of its office or offices in Ohio is at
Sixth. The names and addresses of the officers or agents of the Company in
charge of its business in Ohio are as follows :
Name of President,
Address,
Name of Secretai'y,
Address,
Name of Treasurer,
Address,
Names and addresses of managers or agents, other than as above enumerated :
In Witness Whereof, said has caused its corporate seal to be affixed
and its corporate name to be hereunto attached by an officer thereof, to wit : its
this day of , A. D. 190 .
By
(L. S.)
State of i ss
County of >
, being duly sworn, deposes and says that he is an officer, to wit:
the of , that he executed the foregoing statement, in the
name and on behalf of said Corporation, and caused its corporate seal to be thereto
780
FORMS AND PRECEDENTS.
affixed; that he was authorized to make such statement and to execute the same
by authority of the Corporation, and that the statements therein are true.
Sworn to before me and subscribed in my presence, this day of
, A. D. 190 .
(l. s.) ZZI^ZZZI
State of I ss
County, j
I, , within and for the county aforesaid, do hereby certify that
, whose name is subscribed to the foregoing acknowledgment as a
, was at the date thereof a , in and for said county, duly
commissioned and qualified, and authorized as sucli to take said acknowledgment;
and further, that I am well acquainted with his handwriting, and believe that the
signature to the same is genuine.
In Witness Whereof, I have hereunto set my hand and affixed the seal of said
Court at this day of , A. D. 190 .
Office of the Secretary of State.
Columbus, Ohio, , 190 .
From the facts thus reported by the said , I find the proportion of
the capital stock of the Company represented by its property and business iu Ohio
to be per cent of its authorized capital stock, to wit : the sum of
dollars, on which I have assessed a fee of one-tenth of one per cent, amounting to
the sum of dollars.
, Secretary of State.
(L. S.)
FORM OF APPLICATION UNDER ACT OF APRIL 25, 1893.
{Attach Copy of Articles of Incorporation hereto.)
To the Secretary of State, Columbus, Ohio:
, a Corporation organized and existing under the laws of the
State of , with its principal office located at , in
County, , desiring to conform to the laws of Ohio, regulating foreign
corporations doing business therein, does hereby make the following statement :
First. The amount of its authorized capital stock is
Second. The business or objects of the Corporation which it is engaged in
carrying on, or which it proposes to engage in or carry on in the State of
Ohio is
Third. The principal place of business of said Corporation in Ohio is to be
located at in County.
Fourth. We hereby appoint , of , in County,
Ohio, as the person upon whom process may be served iu all actions that maybe
brought against this Company in any of the courts of the State, and designate his
office , iu said city, as the principal office of the Company in the State of
Ohio.
In Witness Whereof said Corporation has caused its corporate seal to be hereto
attached, and this certificate to be executed by its President and Secretary, this
day of , A. D. 190 .
By , President.
, Secretary.
State of > sg
County \ '
, and , bein^ first duly sworn, depose and Bay that
they all did execute and sign the foregoing certificate for and on behalf of said Cor-
781
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
poration, and that the same is their free act and deed, and is the free act and deed
of said , of which they are respectively the President and Secretary ; that
the statements therein are true, and that the seal attached thereto is the genuine
seal of said corporation ; they further declare, on oath, that the charter or certificate
of incorporation hereto attached is a true copy of the articles of incorporation or
charter of said
Sworn to hefore me and subscribed in my presence, this day of
A. D. 190 .
State of >
County of \
I, , within and for the County aforesaid, do hereby certify that
, whose name is subscribed to the foregoing acknowledgment as a
, was at the date thereof a , in and for said county, duly commis-
sioned and qualified, and authorized as such, to take said acknowledgment ; an i
further, that I am well acquainted with his handwriting, and believe that the sig-
nature to the same is genuine.
In Witness Whereof, I have hereunto set my hand and affixed the seal of said
court, at this day of , A. 1). 190 .
(L- S.) _
, Ohio, ,190 .
Gentlemen, — I hereby accept the appointment as the representative of your
Company upon whom process may be served, and agree to the designation of my
office, , as your principal office in the State of Ohio.
State of Ohio. County of , ss.
Personally appeared before me the undersigned, a Notary Public in and for said
County, this day of , A. D. 190 , the above named ,
who acknowledged the signing of the foregoing to be his free act and deed for the
uses and purposes therein mentioned.
Witness my hand and official seal on the day and year last aforesaid.
(seal.) Notary Public in and for County, Ohio.
RETURN OF FOREIGN CORPORATION UNDER SECTION 148c
SHOWING AGGREGATE AMOUNT OF CAPITAL STOCK OWNED
OR CONTROLLED BY RESIDENTS OF OHIO, ETC.
The Company,
,190
To the Secretary of State, Columbus, Ohio :
The Compauy, a foreign corporation organized and existing under
and by virtue of the laws of the State of , with its principal office located
at , in County, , in compliance with section 148c of
the Revised Statutes of Ohio, as amended April 14, 1900, does hereby make its re-
turn and statement showing the aggregate amount of all of its capital stock owned
and controlled by residents of Ohio, the names and addresses of stockholders, with
t he number of shares owned by each on the day preceding the second Monday of
April, A. D. 1900, together with the assessed value of the property of such Company
returned for taxation in the name of such Corporation in the State of Ohio, and the
assessed value of the property of such Company returned for taxation outside of
Ohio:
782
FORMS AND PRECEDENTS.
First. The assessed value of the property returned for taxation in the name of
the Corporation in the State of Ohio is as follows :
Name of county (or counties)
Real property, value, $
Personal property, value, S
Total, $ .
Second. The aggregate value of the real and personal property of said Corpora-
tion returned for taxation in the name of such Corporation outside of Ohio, located
in the (State or States) is S
Third. The following is the aggregate amount of all its capital stock owned or
controlled by residents of Ohio, together with the names and addresses of the stock-
holders, with the number of shares owned by each, on the day preceding the second
Monday of April, A. D. 19UU :
Names of Stock- No. Shares Common
holders. Post office Address. S ick.
No. Shares Preferred Par Value Preferred Par Value Common
Stock. Stock. Stuck.
Total number shares preferred stock,
Total number shares common stock,
Aggregate amount of preferred stock (par value), $
Aggregate amount of common stock (par value), §
Total value of common and preferred, %
By
(Title of Officer.)
State of
County of > °
, being first duly sworn, says that he is the of said ,
and that the foregoing return and statement is true and correct.
Sworn to and subscribed before me and in my presence by the said on
this day of , A. D. 19 .
, Notary Public.
Department of State,
Columbus, Ohio, ,1900.
As the aggregate amount of all the capital stock of said Company, owned or con-
trolled by residents of the State of Ohio, is in excess of the assessed value
returned for taxation in this State, said stock is taxable in
proportion.
, Secretary of State.
CORPORATION ACKNOWLEDGMENT.
State of
County of
Be it remembered that on this day of , in the year of our
Lord one thousand eight hundred and , before me, I he subscriber, a
(title of the officer) in and for said county, personally came A. B. (state official
position), of the Company, the grantor herein, and acknowledged that, as
such officer, he did sign the foregoing instrument, and caused the corporate Beal of
said Company to be thereto attached, and the same is the voluntary act and deed of
said Company for the uses and purposes therein mentioned
In Witness Whereof, 1 have hereunto set mv hand anil official Beal, this
day of , A. D. 19 .
783
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
OREGON.
Declaration — Foreign Corporation.
This declaration must be accompanied by a certified copy of the Charter, or
articles of incorporation of such foreign Corporation, joint stock Company or Asso-
ciation, certified to by the legal keeper of the original, together with a certificate of
the Secretary of State of a State or Territory of the United States, or of the United
States Ambassador, Minister, Consul General, Vice Consul, or Charge d' Affaires in
a foreign country, under whose jurisdiction such Corporation, joint stock Company
or Association was formed, that such certifying officer has the requisite official
knowledge as to whether such charter or articles of incorporation are of a genuine,
valid, and subsisting character, and that such character is duly certified by the
officer having the legal custody of the original.
Corporation Fee Book No.
No. . P a s e No-
declaration OF PURPOSE TO ENGAGE IN BUSINESS IN THE
STATE OF OREGON.
Know all Men by these Presents:
That the , a , organized and existing under and pursuant to
the Laws of , having its principal office at Number _ Street, in
the of , hereby makes the following declaration of its desire and
purpose to engage in business within the State of Oregon, which declaration is
accompanied by a duly authenticated copy of its , in compliance with the
provisions of "An Act to provide for the licensing of Domestic Corporations, and
Foreign Corporations, Joint Stock Companies and Associations, etc.," approved
February 16, 1903 :
The full name under which it proposes to transact business is
The name of the State or Country under whose laws it was organized is
The location of its home office is at Number Street, in the
of
The date of its formation or incorporation was the day of , 19 .
The amount of its capital stock is ($ ) dollars.^
The nature of the pursuit, business, or occupation in which it is authorized to
engage,
Said corporation commenced the transaction of business in the State of Oregon
on the day of 190 . ^ T
The location of the principal office within the State of Oregon is at Number
Street, in the of , County of
The name of its Attorney in Fact, constituted and appointed in accordance with
the provisions of section 6 of "An Act to provide for the licensing of Domestic
Corporations and Foreign Corporations, Joint Stock Companies and Associations,
etc., approved February 16, 1903, is , whose business address is at
Number Street, in the of , in the County of
The names and addresses of its principal officers, and of its directors or trustees,
are as follows :
Names. Office. Postoffice Address.
The name and residence of its General Agent within the State of Oregon is
, Number Street, in the of in the County
In Witness Whereof, said Corporation, in pursuance of a resolution duly adopted
by its Board of , has caused this declaration to be signed by its
784
FORMS AND PRECEDENTS.
President and Secretary, and its Corporate Seal to be affixed, the
day of , 190 .
(corporate seal.)
President .
fSKAX )
(SEAI.J
- (SEAX).
Secretary.
I, , President, and I, , Secretary of the
, being severally duly sworn depose and say, and each for himself says,
that I am President and Secretary, respectively, of the
the Corporation mentioned in and which executed the foregoing declaration, and
that said declaration is a full, true, and correct statement of the matters therein
contained according to the best ot my information, knowledge, and belief.
Subscribed and sworn to before me this day of , 190
I, , Secretary of the , being first duly sworn depose
and say upon oath that is the President of said Corporation, and
that the signature affixed to the above and foregoing declaration is the genuine
signature of said ; that the Corporate Seal hereinbefore attached and im-
pressed herein is the Corporate Seal of said Corporation, and was affixed thereto by
me, and that the foregoing declaration was executed for the by its
President and Secretary, pursuant to a resolution of the Board of
of said Corporation duly adopted on the day of , 190 , so help
me God.
Subscribed and sworn to before me this day of , 190
POWER OF ATTORNEY.
To be executed, acknowledged, and recorded in the office of the Secretary of
State by a foreign Corporation. Required under the provisions of " An Act to
provide for the licensing of domestic corporations and foreign corporations, joint
stock companies aud associations, etc.," approved February 16, 190o. before trans-
acting business in the State of Oregon, . . . Sec. 6, p. 44, Laws of 1903.
Know all Men by these Presents :
That is a Corporation duly organized under and by virtue of the
laws of , having its principal place of business in the , and
a place of business in , in the State of Oregon ;
That said has made, constituted, and appointed, and does hereby
make, constitute, and appoint , a citizen of the United States, ami a
citizen and resident of the State of Oregon, residing at , Oregon, and
whose place of business is No. Street, its true and lawful Attorney in
Fact and authorized Agent, for it, and in its name, place, and stead to make and
accept service of all writs, processes, and summonses in any action, suit, or proceed-
ing in any of the courts of the State of Oregon, or United States courts therein,
and upon whom all lawful writs, processes, ami BU lOnses may In- served with the
same effect as though the Company existed in the State of Oregon, requisite ami
necessary to give competent aud complete jurisdiction of the said to any
of the said courts ;
Giving and Granting unto said full power and authority to do and
perforin (•very act and thing requisite and necessary to be done in ami about the
premises, as fully to all intents and purposes as the said might or oould
785
INCORPORATION AND ORGANIZATION OP CORPORATIONS.
do if personally present, hereby ratifying and confirming all that the said
shall lawfully do or cause to be done by authority thereof.
This Power of Attorney is irrevocable except by the substitution of another
qualified person for the one hereby appointed Attorney in Fact.
In Witness Whereof, said corporation, in pursuance of a resolution duly adopted
by its Board of , has caused this instrument to be executed in its name
by its President and Secretary, and its Corporate Seal to.
be hereto affixed the day of , 190 .
— — [seal.]
— [seal.]
President.
, Secretary.
(corporate seal.)
[seal.]
This Certifies, that on this day of , 190 , before the
undersigned, a in and for , personally appeared the within
named , the President, and , the Secre-
tary of the , the Corporation mentioned in and which executed the fore-
going Power of Attorney, and acknowledged that they executed the same by the
authority and on behalf of said pursuant to a resolution of the Board
of of said corporation, duly adopted on the day of ,
190 ; and ,the Secretary of said , further acknowl-
edged that the Corporate Seal hereinbefore attached and impressed herein is the
Corporate Seal of said Corporation and was affixed thereto by him.
In Testimony Whereof, 1 have hereunto set my hand and seal this
day of , 190 .
[l. s.]
CORPORATION ACKNOWLEDGMENT.
State of >
County of $ ss '
On this day of , A. D. 19 , before me, the undersigned,
(name and title of officer), in and for the city (or County) of , personally
came A. B., to me personally known to be the President (or other officer) of the
(name of Corporation), who, being duly sworn, did depose and say that the seal
affixed to the foregoing instrument as the seal of the said (name of Corporation) is
the common or corporate seal of the said Corporation ; that the said seal was affixed
in his presence by order of the board of directors of the said Corporation, and that
the said instrument was duly sealed and delivered as and for the act and deed of the
said Corporation ; and that he, as said President (or other officer) of the said Cor-
poration, and by its order, acknowledged that he executed the same, for the purposes
therein expressed.
Sworn to me and subscribed the day and year aforesaid.
Witness my hand and seal, this day of , A. D. 19 .
PENNSYLVANIA.
To the Secretary of the Commonwealth of Pennsylvania :
Sir : In pursuance of the Act of Assembly of Pennsylvania, approved April 22,
1874, entitled "An Act to prohibit foreign corporations from doing business in
Pennsylvania, without having known places of business and authorized agents."
I, , President or Secretary of , a Foreign Corporation or
Company, do hereby certify :
786
FORMS AND PRECEDENTS.
That the title of said Corporation or Company is . (Must be
full, correct corporate or company title.)
That it is incorporated or formed under the laws of the State of ,
-with the principal office at
The object of said Corporation or Company is
The office of said Corporation or Company in the Commonwealth of Pennsyl-
vania has been established at No. Street, in the County of
in said Commonwealth.
The name of its duly authorized agent to transact its business at said office is
. (Write name plainly.)
In Testimony Whereof, I have hereunto set my hand and caused the seal of said
company to be affixed, this day of , A. D. 190 .
, President or Secretary.
(corporate seal.)
(The fee for filing this statement is 810.75.)
REGISTRY OF FOREIGN COMPANIES.
(Excepting Foreign Ins. Co's.)
Commonwealth of Pennsylvania.
Office of the Company, 190 .
To the Auditor General of Pennsylvania :
Sir: In addition to the requirements of the Act of May 8, 1901, relating to
Foreign Corporations, Limited Partnerships, and Joint-Stock Associations, and in
pursuance to an Act approved June 1, 1889, and the several supplements thereto,
the said Company Certifies, for Registration in your Department, the following infor-
mation, viz. :
1. The name or title of the Company is
2. That it was incorporated or organized , 190 , under the Laws of
the State of
3. That its principal office is located at
4. That its office in Pennsylvania is located at , and the duly author-
ized agent to transact business at said office is
5. That the object and business of the Company is
6. That its authorized Capital Stock is % . Paid in Capital %
7. That the names and addresses of its officers are as follows :
President (or Chairman). Secretary. Treasurer or Cashier.
Address. Address. Address.
In Witness Whereof, the seal of the Company is hereto affixed, attested by the
signature of its President (or chairmai) and Secretary or Treasurer.
, President (or Chairman).
, Secretary or Treasurer-
(seal of company.)
CORPORATION ACKNOWLEDGMENT.
State of > gs
County of )
Be it remembered that on this day of , A. D. 19 , before
me (name and title), personally came C D , who being duly sworn (or affirmed),
according to law, doth depose and say that lie was personally present and did Bee
the common or corporate seal of the above named (name of Corporation) affixed t<>
the foregoing indenture; that the seal so affixed is the common or corporate seal
of the said (name of Corporation), and was so affixed by the authority of the said
787
INCORPORATION AND ORGANIZATION OP CORPORATIONS.
Corporation as the act and deed thereof; that the above named A. B. is the Presi-
dent of the said Corporation, and did sign the said indenture as such in the presence
of this deponent ; that this deponent is the Secretary of the said Corporation, and
that the name of this deponent, above signed in attestation of the due execution
of the said indenture, is of this deponent's own proper handwriting. (Signature
of Secretary.)
Sworn to and subscribed before me.
PHILIPPINES.
CHIEF OF THE DIVISION OF ARCHIVES, PATENTS, COPYRIGHTS,
AND TRADE MARKS OF THE EXECUTIVE BUREAU.
I, , managing agent of the Company, a Corporation organized
and executed under the laws of the State of , U. S. A., hereby make
application in behalf of said Company for a license to transact business as a foreign
Corporation within the Philippine Islands, in pursuant thereto hereby declared.
1. The corporate name of said corporation is , and the purpose for
which it is organized is as follows :
2. Location of principal home office is
3. Capital stock of the corporation of the amount thereon actually subscribed
and paid into the treasury on the (here insert day, month, and year) is as
follows :
4. Net assets of corporation over and above debts, liabilities, obligations, and
claims outstanding and against it on the (here insert day, month, and year) are as
follows :
5. , residing in the city of , in the Philippine Islands is
hereby designated and authorized to accept service of summons in process in all
legal proceeding against said Company and of all notices affecting Corporation.
, Managing Agent of Company.
City or municipality of
Province of \- ss.
Philippine Islands
(acknowledgment.)
PORTO RICO.
Note. — Use general forms numbered 1 to 10, ante.
RHODE ISLAND.
APPOINTMENT OF AGENT.
Know all Men by these Presents : That the , a Corporation
created by and duly organized under the laws of the State of , and lo-
cated in the of , in the State of aforesaid, hereby
' constitutes and appoints , of the of , in the State
of Rhode Island and Providence Plantations, to be its true and lawful attorney, to
accept and acknowledge service of all process, whether mesne or final, for and in
behalf of said Corporation, in any action or proceeding against said Corporation,
which may be brought in any court in the State of Rhode Island and Providence
Plantations, including the process of garnishment, and it is hereby admitted and
agreed that such service of process aforesaid shall be taken and held to be as valid
and sufficient in that behalf as if served upon said Corporation according to the
laws of the State of Rhode Island, and all claim or right of error by reason of such
service is hereby expressly waived and relinquished. This appointment is to con-
tinue in force for the period of time and in the manner provided by Chapter 29 of
the Court and Practice Act, and until another attorney shall be substituted and
apnointed.
788
FORMS AND PRECEDENTS.
In Testimony Whereof, the Corporation aforesaid has caused its name to be hereto
subscribed aud its corporate seal to be affixed by its for that purpose
duly authorized tliis day of ,190 .
2^^]^^^^ ^^7 (corporate seal.)
State )
County of S
In the of , on this day of , 190 ,
before me personally appeared the above named , who is known to me to
be the of the Corporation above named, and described in ami who executed
the foregoing instrument, who, being by me duly sworn, did depose and saj thai he
is of the above named, ami that lie knows the corporate
seal thereof; that the seal affixed to the foregoing instrument is the corporate seal
of said Corporation and was affixed thereto by order of the Hoard of Directors of
said Corporation, and that he has subscribed the name of said Corporation thereto
by the like order, as of said Corporation.
Subscribed and sworn to before me this day of , L90
, Notary Public.
(notarial seal.)
State of Rhode Island, \
Providence, sc. )
I, of the of , in said State, do hereby consent
to and accept the foregoing designation this , day ol . L90
State of Rhode Island. }
Providence, sc. f
In the of this day of , 190 , personally
appeared before me the above named , who is known to me to be the
person described in and who executed the foregoing consent and acceptance aud
acknowledged that he executed the same for the purposes therein mentioned.
Before me,
, Notary Public.
(notarial seal.)
CORPORATION ACKNOWLEDGMENT.
State of I ss
County of )
Be it remembered that on this day of , A. 1). 19 , before
me (name and title of officer), personally appeared A. 1!., the Presidenl (or Treas-
urer) of the (name of Corporation), and acknowledged the foregoing instrument, by
him signed, to be the free and voluntary act of (name of Corporation).
In Witness Whereof, I have set my hand and seal at , the day and year
aforesaid.
SOUTH CAROLINA.
DECLARATION.
Secretary of State, Columbia, S. C.
Sie: — I hereby give notice thai the principal place of business for the (name
of Corporation) — a Corporation organized and executed under the laws of t In 1 State
of is located at in the city of , State of South
Carolina, and that, , residing at , iu the city of . State
of South Carolina, is our agent thereat upon whom process may lie ser\rd m an\
suit, that may be broughi against the said Company within the State of
South Carolina. Done at this day of L90
(i ORPORATE SEAL.)
, President of ( lompany.
789
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
PROOF BY SUBSCRIBING WITNESS OF CORPORATION DEED.
State of ?
County of $
Before me (name and title ol officer), personally appeared C. D., who being duly
sworn, says that he saw the seal of the (name of Corporation), a body corporate,
affixed to this deed, and that the same was then duly executed and delivered, and
that he, with E. F., witnessed the execution thereof.
(Signature of witness C. D.)
Sworn to this day of , A. D. 19 .
SOUTH DAKOTA.
APPOINTMENT OF RESIDENT AGENT.
FOR
To all to Whom these Presents mat Come, Greeting :
This Certifies, That , a Corporation duly organized and incorpo-
rated under the laws of the State of , has by its board of directors appointed
and does hereby appoint , residing at , in the County of
and State of South Dakota, its agent resident in said State, for the purposes here-
inafter named, only, and he is hereby duly authorized to accept service of process,
and upon whom service of process may be made in any action in which said Corpo-
ration may be a party, and service upon him shall be taken and held as due and
personal service upon said Corporation.
hi Witness Whereof, the said Corporation, by its board of directors, has caused
this appointment to be signed by its , and its corporate seal to be affixed
thereto this day of , A. D. 190 .
By
State of I sg
County of £
On this day of ,190 , befoie me a Notary Public
in and for said county and State, personally appeared known to me to be
the of the Corporation that is described in and that executed the within
instruments, and acknowledged to me that such Corporation executed the same for
the purposes herein expressed.
Witness my hand and the seal of my office this day of , A. D.
190 .
, Notary Public.
CORPORATION ACKNOWLEDGMENT.
> ss.
State of
County of
On this day of , in the year 19 , before me (name and title
of officer), personally appeared , known to me (or proved to me on the
oath of ) to be the President (or Secretary) of the corporation that is de-
scribed in and that executed the within instrument, and acknowledged to me that
such Corporation executed the same.
TENNESSEE.
Notb. — Use general forms numbered 1 to 10 inclusive, ante.
790
FORMS AND PRECEDENTS.
CORPORATION ACKNOWLEDGMENT.
State of ?
County of $
Be it remembered that on this day , A. D. 19 , personally
appeared before me (name and title of officer in full) of said city (or county), the
within named bargainor (name of Corporation) by its President (or other officer,
naming him), with whom I am personally acquainted, who by virtue of the authority
vested in him by the board of directors of said Corporation, acknowledged that he
executed the within instrument for the purposes therein contained.
Witness the signature ot said Corporation by its President (or other officer), and
the seal of the corporation thereto affixed by order of said board of directors.
(Name of the Corporation by A. B., its President.)
(Signature and title of officer.)
TEXAS.
The State of Texas.
Department of State.
I, , Secretary of State of the State of Texas, do hereby certify,
that a certified copy of Articles of Incorporation of incorporated under
the laws of the State of with an authorized capital stock of $ , was
filed in this department on the day of , 190 , iu accordance with the
requirements of the laws of the State of Texas ; and I further certify that said Cor-
poration, having paid the full amount of fees and taxes prescribed by the laws of
this State, and having complied fully with the law in all respects, is entitled to, and
is hereby granted permission to do business in the State of Texas, to the extent and
for the purposes as follows, to wit : for a term of
ten (fiscal) years ending May first, 19 .
Witness my official signature, aud the seal of the State of Texas affixed, at the
City of Austin, this the day of A. D. 1907.
, Secretary of State.
APPLICATION FOR PERMIT TO DO BUSINESS IN THE STATE OF
TEXAS.
, duly incorporated under the laws of , hereby makes appli-
cation for permit to do business in the State of Texas.
1. The name of said Corporation is
2. 1 The permit it desires is for the business , which said
business it is permitted to do in the State of , being the State where it is
incorporated, under the laws of said State, and which business it is now actually
engaged in in said State.
3. The home office of said Company is at and its business in Texas is
to be transacted . Name and address of agent in Texas , and
its principal place of business and principal office in 2 the State of Texas is at
4. The number of directors is and the names and residences of its
present directors are
residence
5. The authorized capital stock of said Company, subscribed or unsubscribed,
is , divided into shares of each.
i Purposes must be limited as expressed in some one subdivision Art. 642, and also author-
ized by articles of incorporation.
2 If incorporated in a foreign country and has no principal office in Texas, then give the
principal place of business and principal oflice in the United States.
7!>1
INCORPORATION AND ORGANIZATION OP CORPORATIONS.
This application is accompanied by a copy of the original articles of incorpora-
tion, together with all amendments thereto, of said Company, certified to under the
hand and seal of , the keeper of the records of articles of incorporation in
the said State of
(Must be signed officially by President and Secretary or Board of Directors.)
State of }
County of £
Personally before me the undersigned authority on this day appeared
and known to me to be the persons whose names are subscribed to the
foregoing instrument, who each for himself acknowledged to me that he executed
the same for the purpose and considerations therein expressed, and in the capacity
therein stated. And the said being further duly sworn on oath says,
that the capital stock of said Company subscribed or unsubscribed is and
, ,, , T50% of the same has been subscribed aud 10% paid in.~j i
no more, and tnat l , ill) j j n i l *j ■
|_one hundred thousand dollars has been paid in. J
Witness my hand and official seal , this day of , A. D.
190 .
(seal.)
State of
The County of
Before me, the undersigned authority, duly empowered to take acknowledgments
and administer oaths in said State and County, on this day personally appeared
, known to me, and who having been duly sworn on oath say: That
they are respectively (here insert office held by each) of the Company, a
Corporation duly and legally incorporated under and by virtue of the laws of the
State of
That said Corporation is not a trust or organization in restraint of trade in the
violation of the laws of the State of Texas, has not, within twelve months next pre-
ceding the date hereof, become or been a party to any trust agreement of any kind
or character whatsoever which would constitute a violation of any anti-trust law of
the State of Texas existing at this date, and has not, within that time, entered into
or been in anywise a party to any combination in restraint of trade within the
United States of America, and that no officer of this corporation has, within the
knowledge of affiant, within twelve months next preceding the date hereof, made, on
behalf of such Corporation or for its benefit, any such contract or entered into or
become a party to any such combination in restraint of trade.
Sworn to and subscribed before me, this the day of , A. D.,
1907, at
, Notary Public.
1 Erase clause if not applicable.
CORPORATION ACKNOWLEDGMENT.
The instrument should end as follows : (Signature) A. B., President, &c.
(corporate seal.)
State of \
County of \
Before me (name and character of officer), personally came the (name of Cor-
poration), by its President, A. B., known to me (or proved to me on oath of C. D.),
to be the person whose name is subscribed to the foregoing instrument as Presi-
dent, etc., and who acknowledged to me that he executed the same for the purposes
and consideration therein expressed.
Given under my hand and seal of office, this day of , A. D. 19 .
792
FORMS AND PRECEDENTS.
UTAH.
APPOINTMENT OF AGENT, ETC.
Whereas, was duly incorporated under the laws of
on the day of , A. D. 190 , and
Whereas, the said Corporation is now doing business, or is desirous of doing
business within the State of Utah ;
Now therefore, be it resolved, by the Board of Directors of the said corporation,
that the provisions of the Constitution of the State of Utah arc hereby accepted as
binding upon said Corporation, and
Be it further resolved, that , residing in the Counfa of
in the State of Utah that being the county in which the principal place of business
of this Corporation is now, or is about to be situated, be and he is hereby appointed
the Attorney or Agent of said Corporation upon whom process issued by authority
of or under any law of the State may be served.
We, , President and , Secretary of said Corporation
do hereby certify that the foregoing is a full, true, and correct copy of a resolution
adopted by the Board of Directors of said corporation, on the day of
A. D. 190 .
In Witness Whereof, we have subscribed our names and affixed the corporate seal
of said Corporation this day of , A. D. 190 .
, President.
, Secretary.
CORPORATION ACKNOWLEDGMENT.
State of > sg
County of )
On this day of , A. D. 19 , before me (name and title of offi-
cer), in and for the said city (or County) of , personally appeared A. B.,
known to me to be the President of the (name of Corporation), the Corporation that
executed the within instrument, and acknowledged to me that such Corporation
executed the. same freely and voluntarily, and for the uses and purposes therein
mentioned.
In Witness Whereof, I have hereunto set my hand and affixed my official seal, at
my office, in the city (or County) of , the day and year in this certificate
first above written. (Signature and title of officer.)
VIRGINIA.
POWER OF ATTORNEY.
For Appointment op Agent ry a Foreign Corporation, doing business in
Virginia, under Section 1104, Code op 1887, as amended.
Know all Men by these Presents-. That the , a Cor-
poration organized and existing under the laws of the State of , having
established an office in the State of Virginia, the same to be located at
in the said State, and desiring to transact business in the Slate ol Virginia in con-
formity with the laws thereof, hereby constitutes and appoints, with his consent
ami acceptance first obtained, , resident of Virginia, residing at
, Virginia, to be the true and lawful agent and attorney of Baid Cor-
poration in and for the said Commonwealth of Virginia pursuant to the provisions
section 1104 of the Code of Virginia, as amended, upon whom all legal process
against said Company may be served, and who is hereby authorized lo enter an ap-
pearance in its behalf in any actions and proceedings; and the said Corporation
hereby stipulates and agrees' that any lawful process against the said Corporation
793
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
which is duly served on said agent and attorney shall be of the same legal force and
validity as if served on said corporation.
In Witness Whereof, the said has executed this power of attorney in
duplicate by causing its name to be hereunto affixed by , its President,
with its corporate seal attested by , its Secretary. All done this
day of , 190 .
By , President.
Affix corporate seal here.
Attest : , Secretary.
State of
City (or County) of
I , a Notary Public in and for the State and city or county afore-
said,' hereby certify that , and whose names, respec-
tively, as President and Secretary of the Company, are signed to the
foregoing power of attorney, have acknowledged the same before me in my city or
county aforesaid.
Given under my hand and official seal this day of , 190 .
, Notary Public
Affix corporate seal here.
CORPORATION ACKNOWLEDGMENT.
State of > ss>
County £
I (name and title of officer) in the State of , do certify that A. B.,
whose name is signed to the writing above, bearing date the day of ,
A. D. 19 , has acknowledged the same before me in my city aforesaid, and 1, the
said (name and title of officer), do hereby certify that the said A. B , President of
(name of Corporation), of the city of , has this day acknowledged before me,
in my city aforesaid, that the seal attached to the said writing is the corporate seal
of the said Corporation, and that the said writing is the act and deed of the said
Corporation.
Given under my hand, the day of , A. D. 19
VERMONT.
Returns by the Company, for the purpose of registration in the
State of Vermont,
The Company, a Corporation created and existing under and by virtue
of the laws of , and having its principal office or place of business at No.
Street, in the of in the County of
and State of hereby represents that upon the issuance to it by the Sec-
retary of State of the proper certificate authorizing it to do business in the State of
Vermont, it proposes to therein engage in the business of
Pursuant to the provisions of the statute in such case made and provided, said
Corporation herewith files a copy in the English language of its charter or articles
of association which is hereby referred to and made a part hereof; and hereby rep-
resents that its principal office in the State of Vermont is to be located at
in the County of
Said Corporation hereby designates and appoints , a residVnt of
in the County of and State of Vermont, whose office or
place of business shall be located at said , as a person upon whom
process against said Corporation may be served within the State of Vermont, and
to whom all notices relating to corporate taxation under the provisions of the laws
of Vermont, shall be delivered.
794
FORMS AND PRECEDENTS.
In Witness Whereof, at in the County of and State of
, A. U. 19 , said corporation doth hereunto cause its corporate name
to be subscribed and its corporate seal to be affixed by , its ,
■who is by said Corporation duly authorized so to do.
Affix corporate seal
IU
I, , of , in the County of and State of
, on oath depose and say that the foregoing is a true and examined copy
of the 1 with all the amendments and additions thereto, under which
the said Company is organized and now operating.
State of )
County of j ss '
At in said County, on this day of , A. D. 19 ,
personally appeared and made oath in due form of law that the fore-
going affidavit by him subscribed is true.
Before me,
Retain one copy of this statement : forward one to the Secretary of State, and
one to the Commissioner of State Taxes.
The required fee of two dollars payable to the Secretary of State, and a like sum
payable to the Commissioner of State Taxes must accompany this statement.
1 Insert here the words "charter" or "articles of association."
CORPORATION ACKNOWLEDGMENT.
State of )
County |
At this day ot , 19 , personally appeared
, who has executed the foregoing written instrument as the duly author-
ized agent of and acknowledged the same to be the free act and deed
of said Corporation, and that he, as such agent, freely executed the same.
Before me, (Signature aud title.)
Proof by Subscribing Witness :
WASHINGTON.
POWER OF ATTORNEY.
Know all Men by these Presents : That , of , having
■been admitted, or having applied for admission, to transact business in the State of
Washington, in conformity with the laws thereof, does hereby make, constitute, ami
appoint to reside at the city of , County of , the
principal place of business of said Corporation in the State of Washington, its true
and lawful attorney, in and for the State of Washington, on whom all process <>f
law against said may be served in any action or special proceeding against
the said in the State of Washington, subject to and in accordance with
all the provisions of the statutes and laws of said Slate of Washington now in lone,
and such other acts as may be hereafter passed amendatory thereof and supplemen-
tary thereto. And the attorney is hereby duly authorized ami empowered, as the
iagent of said , to receive and accept service of process in all cases provided
795
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
for by the laws of the State of Washington, and such service shall be deemed valid
personal service upon said . This appointment is to continue in force
for the period of time and in the manner provided by the statutes of the State of
Washington, and until another attorney shall be duly and regularly substituted.
In Wit?iess Whereof, the said , in accordance with a resolution of its
Board of Directors, duly passed on the day of , A. D 190 ,
has to these presents affixed its corporate seal and caused the same to be subscribed
and attested by its President and Secretary at , in the State of ,
on the day of , 190 .
, President.
, Secretary.
State of ) gs>
County of >
On this day of , A. D. 190 , before me, the undersigned,
a for the duly and qualified to take the proof and
acknowledgments of deeds and other instruments, came , President, and
, Secretary of , to me personally known to be the persons
described in and who executed the foregoing instrument ; and that they each duly
acknowledged the execution thereof ; and being by me each duly sworn, severally
saith that they are the said officers of the aforesaid, and that the seal
affixed to the foregoing instrument is the corporate seal of said , and that
the said corporate seal, and their signatures as such officers, were duly affixed and
subscribed to the said instrument by the authority and direction of said Corporation,
and for the uses and purposes therein mentioned.
In Testimony Whereof, I have hereunto set my hand and affixed my official seal,
at , the day and year first above written.
WEST VIRGINIA.
FOREIGN CORPORATIONS.
In order to do business in West Virginia, a foreign Corporation must take the
following steps : . . . .
1 Pile a certified copv of its charter, or of its articles of association, with the
Secretary of State of West" Virginia. This copy may be certified as correct by the
Secretary of State or other officer who issued the original, of the State by which the
Corporation was incorporated ; or it may be certified by the President of the Corpo-
ration, under his hand and the seal of the Corporation, and attested by the Secretary
of the' Corporation; aud such certificate may be in this form :
I , President of the Company, a corporation created and
organized under the laws of the State of , do hereby certify to the Secre-
tary of State of the State of West Virginia, that the foregoing and annexed is a full,
true, and correct statement of the certificate of incorporation or articles of associa-
tion,' as the case may be, with all amendments and additions thereto, of the said
corporation. ,
Given under my hand and the seal of said corporation, this day
( SEAL .) ' , President of Company.
Correct — Attest; , Secretary of Company.
2. A copy of the charter, or of the articles of association, certified as aforesaid,
must also be filed and recorded in the office of the clerk of the county court of the
county, or one of the counties of West Virginia in which the Corporation conducts
busiuess. The proper county in which to file and record this copy would seem to
be that county in which the Corporation may have a branch office in this State, or in
which it makes its headquarters in this State, or in some county in which it does, or
will do business. .
It will be seen that two certified copies of the charter, or of the articles of asso-
796
FORMS AND PRECEDENTS.
ciation, are required: one to file in the Secretary of State's office, and one to file and
record in the county clerk's office.
3. The Corporation must also file in the Secretary of State's office a writing of
acceptance of section 30 of chapter 54 of the Code of West Virginia before he is
authorized to issue his certificate. Such certificate of acceptance may be in this
form :
I, , President of the Company, a Corporation created aud
organized under the laws of the State of West Virginia that at a meeting of the
board of directors (or other governing body of the Corporation) of said Corporation
regularly held at the office of the Corporation on the day of
the following resolution was adopted:
Resolved, by the Board of Directors of the Company, a Corporation
created and organized under the laws of the State of , That, whereas said
Corporation desires authority to hold property and transact business in the State of
West Virginia, the said Corporation hereby accepts the provisions of section 30 of
the chapter 54 of the Code of West Virginia and agrees to be governed thereby .
Given under my hand and the seal of said Corporation this day
of
(seal.) , President of Company.
4. The Corporation must also file with the Secretary of State the preliminary
report required in section 2, upon which to base the assessment of its initial license
tax for the current license-tax year. The form of this report will be furnished on
application to the Secretary of State. It must pay such tax to the Secretary of
State before it can be admitted into the State.
5. The Corporation must also appoint an attorney of record, usually called
" Statutory Attorney."
G. On receipt of the certified copy of charter, the certificate of acceptance of
the law, and the preliminary report, the Secretary of State will issue a certificate of
attorney to the Corporation, winch will be the evidence of its compliance with the
law and of its authority to hold the property and transact business in the State of
West Virginia. This certificate of authority must be filed and recorded in the said
county clerk's office of the county in which the certified copy of the charter is filed
and recorded as referred to in section 1. As the Corporation must file and record
in the county clerk's office the certificate of authority of the Secretary of State ami
as each corporation will doubtless want one also in its own possession it would seem
that two such certificates of the Secretary of State would be needed. The costs of
the proceedings in the Secretary of State's office are as follows :
For two certificates of authority $10.00
For filing and recording the certificate of acceptance . 1.00
$11.00
The other costs are : recording the copy of charter and the certificate of author-
ity in the county clerk's office, 82.50 for charter, and $1.00 for the certificate,
making .S3. 50.
(Two copies of this Report should be made at the time of making application
to be authorized to do business in this State.)
APPLICATION AND PRELIMINARY REPORT.
OF THE
Company,
TO
Secretary of Statk ok West Yikcinia
For the Current Year ending June 30, 190 .
The Company, a Corporation incorporated under I lie laws of the State
of , on tin; dav of , hereby applies In I lie Secretary
of State of the State of West Virginia, under the provisions of Section :\n of Chapter
797
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
54 of the Code, for a certificate of authority to hold property and transact easiness
in the State of West Virginia; and pursuant to the requirements of section 131 of
Chapter 32 of the Code, as amended by the Acts of 1907, submits the following-
preliminary report.
The post-office address of its principal office is
The name and post-office address of the President is
Name and post-office address of the Secretary is
The number of shares of its authorized capital stock is ; the par value
of each share is $ , the number of shares of such capital stock issued and
outstanding is , amounting to $
(1) The value of its property owned in the State of West Virginia is $ ,
situated and composed of as follows :
(2) The value of its property it expects to have in the State of West Virginia
during the license-tax year ending June 30, 190 , and where it will be situated and
of what it will consist are as follows :
(3) The number of acres of laud it holds in the State of West Virginia is
acres.
(4) The value of its property owned and used outside of the State of West Vir-
ginia is $
(5) The proportion of its capital stock which is represented by property owned
in the State of West Virginia is per cent.
(6) The assessed value of its property located in the State of West Virginia is
$ located and assessed as follows :
I, , do solemnly swear that the foregoing report is true to the best of
my knowledge and belief.
Given under my baud and the corporate seal of said corporation this day
of
(corporate seal)
Subscribed and sworn to before me, a , in and for , this
day of 190 , in my county aforesaid.
(official seal)
License tax assessed for the year ending June 30, 190 , $
License tax assessed for the year ending June 30, 190 , $
, Secretary.
By , Chief Clerk.
Notes. — If the property at (1) is the same as that at (6) the blank at (6) only need be
filled up. At (2) state carefully value of property the corporation expects to have in the
State, where it will be situated, and describe the kind of property.
REPORT BY FOREIGN CORPORATION.
(Fee for indorsing and filing above report is one dollar, which must
accompany report.)
To the Secretary of State of West Virginia :
The Board of Directors of Company, in obedience to section 46 of
Chapter 53 of the Code, hereby submit the following report :
The name of the President of such Corporation is , and his post-office
address is , and he was elected on , 19 .
The name of the Secretary is , and his post-office address is
, and he was elected on , 19 .
The post-office address of the principal office is : No.
798
FORiMS AND PRECEDENTS.
Given under our hands and the seal of said Corporation the dav of ,
19 .
The Board of Directors
of Co.
(seal.) *By
* Sign here by the President, Secretary,
or other executive officer.
Filed in the Secretary of State's office , 190 .
Secretary of Stair.
By ' ■
Know all Men by these Presents : That , a foreign Corporation,
incorporated and organized under the laws of the State of , and in con-
formity therewith, has made, constituted, and appointed and by these presents doth
make, constitute, and appoint , residing at the City of in the
State of West Virginia, for it and on its behalf, attorney in fact, to accept service
of process and notice in said State for such Corporation, and said Corporation by
these presents doth declare its consent that service of any process or notice in said
State on said attorney in fact, or his acceptance thereof endorsed thereon, shall
be equivalent for all purposes to, and shall be and constitute due and legal service
upon said Corporation.
In Witness Whereof, The has signed these presents by its President
and caused the corporate seal of said Corporation to be hereunto affixed this
day of , 190 .
By , President.
(seal of corporation.)
The post-office address of this Corporation is :
No. Street.
City.
State.
Care of
CORPORATION ACKNOWLEDGMENT.
% t&t \ oi . Ito-wit:
County of )
I, , a notary public in and for the county and State aforesaid, do
certify that personally appeared before me in my said county, and being
by me duly sworn, did depose and say, that he is the President, of the Corporation
described in writing above, bearing date the day of , 190 _ ,
authorized by said Corporation to execute and acknowledge deeds and other writ
ings of said Corporation, and that the seal affixed to said writing is the corporate
seal of said Corporation, and that said writing was signed and sealed by him, in be-
half of said Corporation by its authority duly given. And the said
acknowledged the said writing to be the act and deed of said Corporation.
Given under my hand and official seal this day of , 190 .
, Notary Public.
(notary seal.)
WISCONSIN.
STATEMENT OF FOREIGN CORPORATIONS IN ACCORDANCE
WITH THE PROVISIONS OF CHAPTER 506 OF THE LAWS OF
WISCONSIN, FOR THE YEAR 1905.
State of } ss
County of J , .
, being first duly sworn, on oath says that he is the
of the , a Corporation organized under the laws of the State of
799
INCORPORATION AND ORGANIZATION OP CORPORATIONS.
1. That the name of such Corporation is , and the location of its
principal office or place of business without the State of Wisconsin, is
Street , in the County of State of ; that its prin-
cipal office or place of business within the State of Wisconsin, is Street,
County of
2. That the names and addresses of the officers of such Corporation are as
follows :
Office. Name. Address.
That the name and address of the agent or manager of such Corporation who
shall represent such corporation in the State of Wisconsin is
3. That the amount of capital stock paid in money, property, or services
4. That the nature of the business to be transacted in the State of Wisconsin
is as follows :
5. That the proportion of the capital stock represented in the State of Wis-
consin, by its property located or to be acquired therein and by its business to be
transacted therein, is $
6. That the said Corporation acting herein by this affiant, duly authorized there-
unto, by these presents constitutes and appoints the Secretary of State and the
Assistant Secretary of State of the State of Wisconsin, ai d their successors in office,
its true and lawful attorneys upon whom all summons, notices, pleadings, and pro-
cesses, in any action or proceeding against such Corporation, shall be served. And
such Corporation hereby agrees that such service on the said attorneys shall be of
the same legal force and effect and validity as if served on the Corporation, and that
such appointment shall continue in force and effect as long as any liability remains
outstanding against such Corporation in the State of Wisconsin.
7. That such Corporation was legally authorized to transact business in the State
wherein incorporated , and is at the date hereof so authorized.
8. That such Corporation has not entered into any combination, conspiracy,
trust, pool, agreement, or contract intended to restrain or prevent competition in the
supply or price of any article or commodity in general use in the State of Wiscon-
sin, or constituting a subject of trade or commerce therein, or which shall in any
manner control the price of any such article or commodity, fix the price thereof,
limit or fix the amount or quantity thereof to be manufactured, mined, produced, or
sold in said State, or fix any standard or figure by which its price to the public shall
be in any manner controlled or established.
9. That such Corporation will comply with all the laws of the State of Wiscon-
sin, relating to foreign Corporations.
Dated ,190 .
Subscribed and sworn to before me this day of , 190 .
, Notary Public.
FORM OF ACKNOWLEDGMENT FOR A CORPORATION.
State of Wisconsin, )
County. $
Personally came before me, this day of , 19 , A. B., the
(title of officer) of the (name of Corporation), a Corporation, to me known to be the
person who, as such officer, executed the foregoing (or within) instrument in
the name of said Corporation and who affixed its corporate seal thereto, and
acknowledged said instrument as the duly authorized act of said Corporation.
(A.dd similar acknowledgment by countersigning officer, if any.)
(Insert designation of officer.)
800
FORMS AND PRECEDENTS.
WYOMING.
Note. — Use general forms numbered 1 to 10, ante.
CORPORATION ACKNOWLEDGMENT.
State of I gs
Couuty of J * •
Be it remembered tbat on this day of , A. D. 19 , before
me (name and style of officer), duly commissioned and qualified at the city (or
county) aforesaid, personally came the (name of Corporation), by its President,
A. B., who is personally known to me (or proved to me on the oath of C. D.) to
be the same person whose name is subscribed to the foregoing indenture of writing
as President of the (name of Corporation), and who acknowledged the same to be
the act and deed of the said Corporation, for the purposes therein mentioned.
In Witness Whereof, I do hereby set my hand and affix my official seal, the day
and year last above written.
(Signature and title.)
801
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
FORMS FOR AMENDMENTS TO CHARTERS.
FORM OF RESOLUTION FOR STOCKHOLDERS' MEETING AUTHOR-
IZING AMENDMENT OF CERTIFICATE OF INCORPORATION.
Resolved, That section of the certificate of incorporation of the
Company, reading as follows (here insert original text from the clause of
the certificate of which amendment is desired) be and the same hereby is amended
to read as follows : (here insert clause as amended).
RESOLUTION DECREASING CAPITAL STOCK.
Resolved, that the authorized capital stock of Company be increased
(or reduced) from shares of the par value of dollars each, to
shares of the par value of dollars each, so that the authorized
capital stock of said corporation shall hereafter be dollars instead of
dollars as heretofore.
RESOLUTION TO AUTHORIZE THE HOLDING OF MORE THAN
100,000 ACRES OF LAND IN WEST VIRGINIA.
Resolved, that this corporation desires to hold not exceeding acres
of land in West Virginia, which is acres in excess of the number it is
now authorized to hold in said State.
RESOLUTION BY DIRECTORS DIRECTING THE CALLING OF A
MEETING OF STOCKHOLDERS TO VOTE UPON A PROPOSED
AMENDMENT TO CHARTER.
Be it Resolved, By the Board of Directors of the Company at a meet-
ing duly convened at the office of the Company in the City of , State of
, that it is desirable that the certificate of incorporation (or charter or
articles of incorporation or association, as the case may be) should be amended in
the following respects, to wit: (here insert nature of proposed amendments).
Now, therefore, be it Resolved, by said Board of Directors that a meeting of the
stockholders of this Company be duly called and convened at the office of the Com-
pany in the City of , State of , on the day of ,
190 , for the purpose of voting upon a resolution that will then be formally pre-
sented to them by the President of this Company for and in behalf of its Board of
Directors, providing for amending the certificate of incorporation (charter, articles
of incorporation or association, as the case may be) in the following respects, to wit :
(Here insert proposed amendments in full.)
NOTICE OF MEETING TO AUTHORIZE ISSUANCE OF PREFERRED
STOCK.
New York, December , 190 .
A special meeting of the stockholders of , a corporation, will be held on
the day of December, 190 , at twelve o'clock noon, at the office of such
corporation, at Nos. Street, Borough of , City of , for
the purpose of voting upon a proposition to increase the capital stock of said cor-
poration from five hundred thousand dollars, consisting of five thousand shares of
the par value of one hundred dollars each, of which twenty-five hundred shares is
preferred stock and twenty-five hundred shares is common stock, to six hundred
thousand dollars, to consist of six thousand shares of the par value of one hundred
802
FORMS AND PRECEDENTS.
dollars each, of -which twenty-five hundred shares shall he preferred stock and
thirty-five hundred shares shall be common stock ; the rights attached to the two
classes of stock to be as stated in the certificate of incorporation of such corpora-
tion, to -wit: — the preferred stock shall be entitled to the following preferences and
dividends, viz., in case of a dissolution of the corporation, the preferred stork-
holders shall be paid par in full for their stock before any dividend is paid upon the
common stock; the preferred stockholders shall also be entitled to a dividend of
per cent per annum, each year, before any dividend is declared upon th<
mon stock, the preferences to be determined by the earnings of each year, and if in
any year the earnings are not sufficient to pay such dividend upon the preferred
stock, then the same shall be made up out of the earnings of the subsequent years
before any dividend shall be declared upon the common stock; the common
shall be entitled to all dividends and earnings after the dividends on the preferred
stock are paid.
, J'
, Secretary.
Majority of Board of Directors.
FORM OF CERTIFICATE RELATIVE TO AMENDMENT.
I, , President of the Company, a corporation created
and organized under the laws of the State of , do hereby certify to t he
Secretary of State of the State of , that at a meeting of the stockholders
of said corporation, regularly held in accordance with the requirements of the laws
of said State, at the office of said corporation in the City of , State of
, on the day of , 190 , at which meeting (here state
■what proportion of the stock was represented), of the stock of said company was
represented by the holders thereof in person or by proxy, and voted for the follow
ing resolution, and that the same was duly, regularly adopted and passed, to wit :
(here state the resolution adopted).
Given under my hand and the seal of this corporation.
, President of the
Company.
(seal.)
Arizona Form.
AMENDMENT TO ARTICLES OF INCORPORATION OF THE
Company.
^ &} t and , President and Secretary, respectively, of
the Company, a Corporation organized and existing under the laws
of the Territory of Arizona, hereby certify that, said Corporation at a special meeting
of the stockholders of said Company, held at its office in the City of Phoenix, Ter-
ritory of Arizona, on the 23d day of January, 1907, amended Article " Fifth of
the Articles of Incorporation so as to read as follows :
Fifth.
(Here insert article as amended.)
We further certify that there were subscribed and outstanding ai said date
shares of common stock of said Company and no more, and thai thi
vote by which said amendment was adopted was _ votes in fayoi
thereof and OOne against, being more than two-thirds of the stock outstanding
voting in favor of the said amendment.
' We further certify that said meeting was regularly called, and I ha! due and
lotral notice of I he proposed amendment had been given, and that the attached copy
* - so;;
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
r of notice is a true copy of the notice that was served upon all the stockholders
of the Company, and said notice was given in the manner provided
by law.
In Witness Whereof, we have hereunto signed this certificate as President and
Secretary, respectively, of the said Company, and caused the seal
of said Company to be attached hereto.
, President of
, Secretary of
State of Ohio,
County of
Be it Remembered, that on this day of January, 1907, before me,
the undersigned, a Notary Public in and for said County and State, personally came
and x known to me to be the persons described in and
who signed the foregoing Certificate as to the correctness of the foregoing amend-
ment to the Articles of Incorporation of the Company, and person-
ally known to me to be the President and Secretary, respectively, of said Company,
and severally acknowledged the execution and signing of same to be their free act
and deed for the purposes therein set forth.
In Witness Whereof, I have hereunto set my hand and seal the day and year
last above written.
, Notary Public.
(seal.)
Delaware Form.
MINUTES OF MEETING AMENDING CHARTER AND CERTIFICATE
RELATING THERETO.
Amendment of Certificate of Incorporation of a Delaware Company.
Minutes of a special meeting of the Board of Directors of the Com-
pany, held at the office of the Company in the City of , State of ,
on the day of , 1906, at o'clock in the
noon.
Present: Messrs. , constituting a majority (or all) of the Board.
Meeting called to order by the President, Mr. , who presided, and the
Secretary assumed the duties of his office.
The Secretary presented a waiver of notice of the meeting signed by all the
Directors, and on motion same was ordered spread upon the minutes :
Waiver.
We, the undersigned, Directors of the Company, a Corporation under
the laws of the State of Delaware, hereby waive notice of a special meeting of the
Board of Directors of said Company and of the business to be transacted thereat.
We designate the day of , 190 , as the time, and the office of the
Company in the City of , State of , as the place of said meeting.
The purpose of said meeting being to vote upon a proposition to change the (name,
purposes, increase or decrease capital stock, etc.), and the transaction of such other
business as may properly come before the meeting.
(Signatures.)
The following resolution was then presented to the meeting and, on motion duly
made and seconded, was unanimously adopted :
Whereas, it appears advisable to this Board to amend the certificate of incorpo-
ration of the Company in the following respects, to wit :
(1) Changing paragraph number of the certificate of incorporation of
said Company, so that it shall read as follows :
First.
The name of the Corporation is Company (as to other amendments
see .certificate page 755).
804
FORMS a XI) PRECEDENTS.
Now, therefore, be it
Resolved, that a meeting of the stockholders of the Company be called
for the day of , 1906, for the purpose of voting upon the question
of the acceptance or rejection of the recommendations of this Board relative to the
amendment of the certificate of incorporation of the Company as herein
proposed and advised by the Board of Directors of said Corporation; and be it
further
Resolved, that the Secretary of the Company be directed forthwith
to issue notice to the stockholders of said Corporation of the time, place, and purpose
of said meeting, so called by the Board of Directors of said Corporation.
No further business was preseuted, and on motion the meeting adjourned.
Minutes of a special meeting of the stockholders of the Corporation,
held at the office of the Company in the City of , State of , on t he
day of April, 1900, at o'clock in the noon.
The following stockholders were present in person, holding the number of shares
set opposite their respective names :
Names. No. of Shares.
By proxy :
Name. Name of Proxy. No. of Shares.
being all the stockholders of the Company.
Meeting called to order by the President, who presided, and the Secretary
assumed the duties of his office.
The Secretary presented a waiver of notice of the meeting signed by all the
stockholders, and. on motion same was ordered spread upon the minutes :
Waiver.
(Same general form as for Directors' meeting.)
The chairman stated that the purpose of the meeting was to vote upon certain
amendment to the certificate of incorporation as proposed and advised by the Board
of Directors.
On motion duly made and seconded, it was
Resolved, that the stockholders first proceed to the choice, by ballot of two
judges, to receive and report upon the vote of the stockholders cast at this meeting.
Messrs. and were then placed in nomination as judges for
the purpose of receiving and reporting upon the vote of the stockholders casi at
this meeting. Ballot was then had and votes were cast in favor of these
gentlemen for the office designated, and no votes were east in opposition thereto.
The chairman thereupon announced the foregoing gentlemen duly elected judges
to receive and report on the vote of the stockholders cast at this meeting.
On motion duly made and seconded, it was
Resolved, that the name of this Corporation be changed from Company,
its present name, to Company, by which latter name it shall be hereafter
known ; and be it further
Resolved, in pursuance of the foregoing resolution that paragraph numbered
" First " of the certificate of incorporation be changed to read as follows :
Firs/.
The name of the Corporation is Company.
Ballot, was then had and the judges reported as to the result of the ballot as
follows: That the total number of shares issued and outstanding were
shares of common stock and no more, and thai no shares of preferred stock had
been issued. They further reported that votes had been cast in favor of
the adoption of said resolution and no votes against.
The chairman thereupon announced the foregoing resolution to lie duly
adopted. (Here follow the other amendments mentioned hereafter.)
No further busiuesy was presented and on motion the meeting adjourned.
806
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
We, and , President and Secretary respectively
of The Company, a Corporation created and organized under the laws of
the State of Delaware, do hereby certify to the Secretary of State of the State of
Delaware, that at a meeting of the stockholders of said Corporation, regularly
held in accordance with the requirements of said State, at the office of said Corpora-
tion in the City of , State of , on the day of , 19 , at
which time shares of the capital stock of said Corporation was represented
in person or by proxy, which said shares were all of the shares of stock of
said Corporation issued and outstanding at the date of said meeting, and that said
shares were voted for the following resolutions, to wit :
(1) Resolved, that the name of this Corporation be changed from
Corporation, its present name, to Corporation, by which name it shall be
hereafter known; and be it further
Resolved, in pursuance of the foregoing resolution, that paragraph numbered
" Pirst " of the certificate of incorporation of the Corporation be changed
to read as follows :
First.
The name of the Corporation is : (here insert name in amended form).
(2) Resolved, that the purposes of said Corporation shall be changed by adding
thereto the following additional purposes : (here insert purposes to be added).
And be it further
Resolved, in pursuance of the foregoing resolution, that paragraph numbered
" Third " of the certificate of incorporation of the Corporation be changed
to read as follows :
Third.
(Here insert paragraph in amended form.)
(3) Resolved, that the number of shares of the capital stock be changed from
five thousand (5,000) shares of preferred stock of the par value of one hundred
dollars (§100) per share, and five thousand (5,000) shares of common stock of the
par value of one hundred dollars ($100) per share, to ten thousand (10,000) shares
of common stock of the par value of one hundred dollars ($100) per share ; and be
it further
Resolved, in pursuance of the foregoing resolution, that paragraph numbered
■" Fourth " of the certificate of incorporation be changed to read as follows :
Fourth.
The amount of the total authorized capital stock of the Corporation is one million
dollars ($1,000,000), divided into ten thousand (10,000) shares of common stock of
the par value of one hundred dollars ($100) per share. The amount of capital
stock with which the Company will begin business is one thousand dollars.
Given under our hands and the seal of the Corporation this day of
May, 1906
President of the Corporation.
Secretary of the Corporation.
State of >
County of J ss '
Be it Remembered, that on this day of May, A. D. 1906, personally
came before me, the subscriber, a Notary Public of the State of , ,
President, and , Secretary, of the Corporation, parties to this
certificate of amendment, known to me personally to be such, and severally acknowl-
edged the same to be the act and deed of the said Corporation and of the said officers
pursuant to a resolution in that behalf.
Given under my hand and seal of office the day and year aforesaid.
, Notary Public, County,
806
FORMS AXD PRECEDENTS.
JUDGES' CERTIFICATE.
We, the undersigned, having been appointed and elected judges for the purl
of receiving and reporting on the vote of the stockholders of the Corpora-
tion, pursuant to the statute in such case made and provided, at a special meeting
of the stockholders of said Corporation, held for the purpose of voting upon the
adoption of certain amendments to the certificate of incorporation of said
Corporation, do hereby certify that at said meeting there were present, either in
person or by proxy, and voting, shares of 'the stock of said Corporation,
which said shares constituted all of the stock of said Corporation issued
and outstanding.
We do further specify that at said special meeting of the stockholders of said
Corporation votes were cast in favor of the following amendments
to the certificate of incorporation of the Corporation : To w it ;
(1) Resolved, that the name of this Corporal ion be changed from
its present name, to , by which name it shall be hereafter known ; ami
be it further
Resolved, in pursuance of the foregoing resolution that paragraph numbered
"First" of the certificate of incorporation of the be changed to read
as follows :
First.
The name of the Corporation is : (Here insert name as amended.)
(2) Resolved, that the purposes of said corporation shall be changed by adding
thereto the following additional purposes : (here insert additional purposes).
And be it further
Resolved, in pursuance of the foregoing resolution that paragraph numbered
" Third" of the certificate of incorporation of the Corporation be changed
to read as follows :
(Here insert paragraph in its amended form.)
Third.
(3) Resolved, that the number of shares of the capital stock be changed from
five thousand (5,000) shares of preferred stock of the par value of one hundred
dollars (§100) per share, and five thousand (5,000) shares of common stock of the
par value of one hundred dollars ($100) per share, to ten thousand (10,000) shares
of common stock of the par value of one hundred dollars per share ; and be it
further
Resolved, in pursuance of the foregoing resolution that paragraph numbered
" Fourth " of the certificate of incorporation be changed to read as follows :
Fourth.
The amount of the total authorized capital stock of the Corporation is one million
dollars ($1,000,000) divided into ten thousand (10,000) shares of common Btock
of the par value of one hundred dollars ($100) per share. The amount of capital
stock with which the Company wdl begin business is one thousand dollars
, , Judges.
Maine Form.
MINUTES OF MEETING AMENDING CHARTER AND CERTIFICATE
RELATING THERETO.
Minutes of a special meeting of the stockholders of Company, held
at the office of , at , Maine, on the day of December,
1906, at 4 p. m., pursuant to written consent and waiver of notice signed by all the
stockholders.
Mr. called the meeting to order, and acted as temporary chairman
thereof. The clerk, Mr. , was directed to record the proceedings of the
meeting, and was chosen secretary pro tcm. The temporary chairman t hen appointed
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
the clerk a committee to ascertain if a quorum was present, and after due examina-
tion of the record of stockholders the clerk reported as follows : (here insert report
of committee).
Report of Committee.
, Maine, December , 1906.
I, , Clerk of Company, a Corporation of the State of
Maine, duly appointed a committee to ascertain and report if a quorum was
present at a special meeting of the stockholders of said Corporation, appointed to be
held this day at the office of , at , Maine, at 4 p. m., do now
report as follows :
That the capital stock of said Company is 40,000 shares
of the par value of five dollars each, according to its cer-
tificate of Incorporation, and that of said capital stock'
there has been subscribed 100 "
and there remains unissued and in the treasury of the
Company . 39,900 "
And that of said one hundred shares so subscribed the
following stockholders holding the number of shares set
opposite their respective names were present in person :
20 shares
20 "
20 "
20 "
20 "
Total 100 "
I, therefore, report that according to the law and the by-laws of the said Com-
pany the meeting is legally constituted, all the stock subscribed or issued being
present in person.
, Clerk-Committee.
Upon motion, duly seconded, the report of the Committee was accepted, and
the meeting declared duly constituted.
Upon motion, duly seconded, Mr. was unanimously chosen chairman,
and presided, and Mr. was unanimously chosen secretary of the meetiug.
The secretary then presented a waiver of notice of the meeting and consent ;
the same was read and approved, and a copy of the same ordered spread upon
these minutes. The same is as follows : (here insert waiver of notice).
Waiver of Notice of and Consent to hold a Special Meeting of
Stockholders of Company.
We, the undersigned, being all the stockholders of Company,
a Corporation organized under the laws of the State of Maine, hereby waive notice
of any provision of the laws of said State respecting stockholders' meetings, as well
as of the by-laws of said Company, and we do hereby consent that a special meet-
ing of the stockholders of said Company be held in pursuance of § 7 of that part of
the by-laws of said Company respecting stockholders' meetings, be held at the office of
the Company, namely,the office of , at , Maine, on ,
1906, at 4 p. m., for the purpose of taking action to increase the capital stock of
said Company from 40,000 shares of the par value of $5 each to 300,000 shares of
the same par value, and we do hereby consent to such increase of the capital stock
aforesaid ; and we do hereby consent that said meeting may transact any other
business that may be brought before it, hereby ratifying and confirming any action
had or proceeding taken at said meeting. (Signatures.)
Dated December , 1906.
Upon motion, duly seconded, it was voted : that the meetiug proceed to the
transaction of business.
808
FORMS AXD PRECEDENTS.
Upon motion, duly seconded, the following preamble and resolutions were
then offered, and upon a vote being taken, the same were declared unanimously
adopted :
Whereas, the stockholders of this Corporation find that the amount of its capital
stock is insufficient for the purposes for which said Corporation is organized,
Therefore, be it Resolved, that the authorized capital stock of Com-
pany be increased from forty thousand (40,0Un) snares of the par value of five
dollars ($5.00) each to three hundred thousand (300,000) .shares of the par value
of five dollars (35.00) each, so that the authorized capital stock of said Corporation
shall hereafter be one million five hundred thousand (SI, 500. 000) dollars instead
of two hundred thousand (§200,000.00) dollars as heretofore ; and be it
Further Resolved, that this Corporation, by its clerk, file a proper certificate of
such increase with the Secretary of State within ten days hereafter, and pay to the
Treasurer of State the fees required by law for the making of such incn
Upon motion, duly seconded, it was voted : that the Board of Directors of this
Company be and hereby are authorized and empowered to acquire and vest in the
Company such real or personal property as in their judgment may be necessary and
proper for the business of the Company, and pay for the same by the issue and
delivery of such part of the capital stock of this Company as may be proper in
the premises.
Upon motion, duly seconded, it was voted : that the meeting adjourn.
' Adjourned.
, Chairman.
, Clerk-Secretary.
CERTIFICATE OF AMENDMENTS.
To the Secretary of State of Maine.
I, , of , County of and State of Maine, hereby
certify that I am Clerk of the Company, a Corporation duly organized
and existing under the laws of the State of Maine, having its principal office at
, Maine. That at a special meeting of the stockholders of said Corpo-
ration held at the principal office thereof on the day of , 190 ,
at which meeting a majority of the capital stock of said Corporation issued and out-
standing was represented in person or by proxy, the following resolution was
adopted by a vote of (here state percentage of total outstanding stock voting
in favor of the resolution) in amount of the capital stock of the Corporation issued
and outstanding, to wit (here insert resolution as adopted).
I further certify that said meeting was duly and legally called and convened in
accordance with the provisions of the by-laws of the Corporation,* and that the action
proposed to be taken at said meeting was duly specified iu the notice calling said
meeting.
Dated
, Clerk.
Soutii Carolina.
APPLICATION FOR INCREASE OR DECREASE OF CAPITAL
STOCK.
State of
County of
To the Secretary of State of
Whereas, there was issued by the Secretary of State a charter dated
constituting and creating into a corporation, under the laws of this State,
with its principal place of business at , and with a capital stuck of
dollars, divided into shares, of the par value of dollars each,
empowering it to engage in the business of
The undersigned, a majority of the duly elected and qualified Board "f Directors
of the said , hereby certify that a notice (a copy of which is hereto attached)
809
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
was published once a week for four weeks iu the , a newspaper, published
in the County of , of a meeting of stockholders on , which
notice stated the time and place of meeting, and the amount of the
proposed
And, further, that said meeting was duly held pursuant to notice, and a resolu-
tion (a copy of which is hereto attached) was offered and adopted by a two-thirds
vote, to the amount of the capital stock of the aforesaid Corporation to
dollars, divided into shares of the par value of
dollars each.
And, further, your petitioners certify that they have complied in all respects with
(here insert reference to amendatory act under which application is made).
Wherefore they pray that the charter of the said be so amended.
Signed this day of
, Directors.
South Dakota Form.
AMENDMENT TO ARTICLES OF INCORPORATION
OF
We, , and , President and Secretary, respectively,
of the , a Corporation organized and existing under the Laws of the
State of South Dakota, hereby certify that said Corporation at a
meeting of the stockholders of said Company, held at its office in the City of
, State of , on the day of ,
190 , amended Article of the Articles of Incorporation so as to read as
follows :
Article. (Here insert article in amended form.)
We further certify that there were subscribed and outstanding at said date
shares of stock of said Company and no more, and that the vote by which said
amendment was adopted was votes in favor thereof and votes
against, being more than two-thirds of the stock outstanding voting in favor of the
said amendment.
We further certify that said meeting was regularly called and that due and legal
notice of the proposed amendments had been given and that the attached copy of
notice is a true copy of the notice that was served upon all the stockholders of the
, and said notice was given in the manner provided by law.
In Witness Whereof, we have hereunto signed this certificate as President and
Secretary, respectively, of the said , and caused the seal of said
Company to be attached hereto.
President of
Secretary of
State of South Dakota, )
County of \ ss<
Be it Remembered, that on this day of , 190 , before me,
, a Notary Public in and for said County and State, personally came
and , known to me to be the persons described in and
who signed the foregoing certificate as to the correctness of the foregoing amend-
ment to the Articles of Incorporation of the , and personally known
to me to be the President and Secretary, respectively, of said , and
severally acknowledged the execution and signing of same to be their free act and
deed for the purposes therein set forth.
In Witness Whereof, I have hereunto set my hand and seal the day and year
last above written.
, Notary Public.
810
FORMS AND PRECEDENTS.
DISSOLUTION OF CORPORATIONS.
VOLUNTARY DISSOLUTION.
Connecticut Forms.
We, the undersigned, a majority of the Directors of the , a Corpora-
tion organized, under the statute laws of the State of Connecticut, and located in
the town of , county of , in said State,
Hereby certify, that at a meeting of the Directors of said Corporation, held at
, on the day of , 190 , it was voted to ter-
minate its corporate existence.
That a special meeting of the stockholders was forthwith called, to be held thirty
days thereafter, to wit, on the day of , 190 .
That the call for said meeting contained a copy of said vote, and was published
four times, once during each week preceding sucli meeting, in the
a newspaper published in and having a circulation in the town where
said Corporation is located, and a copy thereof was sent by mail to the last known
address of each stockholder.
At said stockholders' meeting, there being represented in person or by proxv
shares of common stock and shares of preferred stock,' it was
voted to confirm said vote of the Directors, the number of shares of common stock
voting therefor being , and the number of shares of preferred stock vot-
ing therefor being , and each being three-fourths or more of the whole
of each class of stock.
All claims against said Corporation may be sent to
Dated at , this day of , 190 .
f A Majority of
V the
1 Directors.
State of Connecticut, \
County of j ss *
Personally appeared , being a majority of the Directors of the
and made oath to the truth of the foregoing certificate by them
signed, before me,
, Not 'ary "Public.
, Justice of the Peace.
We, the undersigned, a majority of the Directors of the , a Corpo-
ration organized under the statute laws of the State of Connecticut and located in
the town of , County of in said State,
Hereby certify, that every stockholder of said Corporation has signed and ac-
knowledged an agreement that the corporate existence of such Corporation shall
be terminated, which instrument is dated the day of , 190 .
All claims against said Corporation may be sent to
Dated at , this day of , 190 .
I A Majority of
V the
I Directors.
State of Connecticut, \ 1 90 .
County of £
Personally appeared , being a majority of the Directors of the
, and made oath to the truth of the foregoing certificate by them
signed, before me,
, Notary Public.
, Justice of the Peace*
Ml
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
VOLUNTARY DISSOLUTION.
Delaware Forms.
As required by the " General Corporation Laws" of the State of Delaware, the
Board of Directors of the Company render the following statement,
to be filed in the office of the Secretary of State of the State of Delaware upon the
dissolution of said Company.
The location of the principal office in this State is at , in the
of , comity of
The name of the agent therein and in charge thereof, and upon whom process
against the Corporation may be served, is
The following is a list of the names and residences of the Directors and officers
of said Company :
Names. Residences.
The officers of the Company are :
President,
Vice-President,
Second Vice-President, .
Third Vice-President,
Secretary,
Treasurer,
Dated , 1907-
The foregoing statement is correct and true , President.
Attest: , Secretary.
CONSENT OF STOCKHOLDERS TO DISSOLUTION.
We, the undersigned, being all the stockholders of the , a Corporation
created and existing under and by virtue of the laws of the State of Delaware,
deeming it advisable and meet for the interests of said Corporation that the same
should forthwith be dissolved, hereby consent to the dissolution of said Corpora-
tion, as provided for by the General Corporation Laws of the State of Delaware,
and do sign this consent to the end that it may be filed in the office of the Secre-
tary of State of Delaware, as provided by law.
Witness our hands this day of , 190 .
Stockholders. Number of Shares.
Attest :
, Secretary.
CERTIFICATE OF PRESIDENT, SECRETARY, AND TREASURER TO
CONSENT OF STOCKHOLDERS, LIST OF NAMES AND RESI-
DENCES OF DIRECTORS AND OFFICERS.
We, the President, Secretary, and Treasurer of the , in accordance
with the requirements of the General Corporation Laws of the State of Delaware,
and in order to obtain a dissolution of said Company, as provided by the' Genera
Corporation Laws of the State of Delaware, do hereby certify as follows :
The principal office of the in the State of Delaware is at
in the County of , and the agent, in charge thereof upon whom process
against this Corporation may be served is the
That annexed hereto is a consent in writing to the dissolution of said
signed by all the stockholders of said Company.
The following is a list of the names and residences of the Directors of the said
Company :
Name. Residence.
812
FORMS AXD PRECEDENTS.
The following is a list of the officers of the Company :
President,
Secretary and Treasurer,
State of \ ss>
County of f
, being first duly sworn, deposes and says, that he is the President
of the described in the foregoing cert ificate ; thai the foregoing certifi-
cate is true of his own knowledge; that the written consent of stockholders referred
to and annexed to the foregoing certificate is signed by all the stockholders of Baid
•Company, that the list of stockholders in the foregoing certificate is a full, true,
and exact list, as shown by the books of the Company on the daj of
, 190 ; that the fist of officers in the foregoing certificate is a full,
true, and correct list of the officers of the Company on the day of
, 190 .
, President.
Subscribed and sworn to before me this day of , L90 .
, Notary Public.
State of )
County of £
, being first duly sworn, deposes and says, that ho is the Secretary
and Treasurer of the described in the foregoing certificate; that the fore-
going certificate is true of his own knowledge ; that the written consent of stock-
holders referred to and annexed to the foregoing certificate is signed by all the
stockholders of said Company ; that the list of stockholders in the foregoing certifi-
cate is a full, true, and exact list, as shown by the books of the Company on the
day of , 190 : that the list of officers in the foregoing cer-
tificate is a full, true, and correct list of the officers of the Company on the
day of , 190 .
, Secretary and Treasurer.
Subscribed and sworn to before me this day of , 190 .
, Notary Public.
COMPOSITE FORM OF MINUTES.
(For New York, New Jersey, South Dakota, Arizona, Nevada, H
Virginia, Delaware, District of Columbia, and other States.)
Minutes of the First Meeting of the Incorporators and Subscribers to the
capital stock of the Company, held at Room No. , No.
Street, in the City of , State of , at o'clock in the
noon.
1. The meeting was called to order by Mr. , who stated the purpose
thereof.
2. Upon motion duly made and seconded, Mr. was chosen Chairman
of the meeting, and Mr. Secretary thereof.
3. The following incorporators, being also subscribers to the capital stock of
the Company in the amount hereinafter set opposite their names, were present in
person, to wit :
Names. No. of Shares Bubsoribed.
I. The following incorporators, being also subscribers to the capital stock of
Company to the amount hereinafter set opposite their names, were represented
4.
the Cc
by proxv .
Names. No. of Shares subscribed. Proxy.
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
5. The Chairman then presented a copy of the certificate of incorporation, and
stated that on the day of , 19 , the original certificate of
incorporation, duly executed and acknowledged, had been duly filed and recorded
in the office of the Secretary of State.
Upon motion duly made and seconded, a copy of said certificate of incorporation
was ordered spread upon the minutes : (insert copy of certificate.)
(In the following States, section 5 is omitted, and sections referred to inserted
in its place : Delaware A, Arizona A, New Jersey A.)
6. The President stated that proper waivers of notice of the meeting, and
notice of the purpose of the meeting, duly executed by all the incorporators and
subscribers to the capital stock of the Company, had been presented to him by the
Secretary of the meeting.
On motion duly made and seconded, it was
Resolved, that the waivers should be inserted in the minute book of the Company,
following the minutes of this meeting.
7. The proxy (or proxies) above mentioned was (or were) presented and
ordered filed. (Form of proxy same in all States. See Appendix.)
8. On motion duly made and seconded, a form of by-laws prepared by
counsel, after having first been read at length before the meeting, was unanimously
adopted as the by-laws of the Company. Said by-laws so adopted
reading as follows, to wit : (insert form of by-laws.)
9. On motion duly made and seconded, it was unanimously
Resolved, that the Chairman of the meeting be, and lie hereby is, authorized
and directed to appoint two Inspectors of Election. The Chairman thereupon
appointed and as Inspectors of Election.
(Where Inspectors are required by statute to take oath before administering the
duties of the office, the minutes should then recite in addition to the foregoing :
" The oath of office was duly administered to such inspector.")
(The foregoing provision as to Inspectors should be inserted for all States ex-
cept South Dakota, New York, and District of Columbia. In these States the pro-
visions as to Inspectors is omitted.)
10. The Chairman announced that if there was no objection, the meeting would
proceed to the election of directors. Nominations being called for, the following
persons were named as directors of the Company, to hold office until the next an-
nual election of directors and until their successors have been duly elected and
qualify :
Directors nominated. Addresses. No. of Shares held.
Nominations being closed, the Chairman declared the polls open for the
election.
On motion duly made and seconded and unanimously adopted, the Secretary of
the meeting was authorized to cast the votes of all present in favor of the election
of the directors above named.
(If unanimous consent cannot be obtained, the minutes should recite as
follows :)
Incorporators (or stockholders) prepared their ballots and the same were col-
lected by the Inspectors of Election. The Chairman thereupon declared the polls
closed. The Inspectors then counted the ballots and prepared and presented their
certificate in writing, showing that the above persons had been duly elected
directors.
The Chairman thereupon declared that the said persons had been duly elected
directors of the Company, to hold office until the uext annual election of
directors, and until their successors had been duly elected and qualified.
(In New York, South Dakota, and District of Columbia, where directors are
named in certificate of incorporation to constitute the board for the first year, the
foregoing provision as to election of directors is omitted, and the following pro-
vision inserted in lieu thereof :)
814
FORMS AND PRECEDENTS.
On motion duly made and seconded, it was
Resolved, that the Board of Directors named in the articles of incorporation be,
and they hereby are, electee! members of the Board of Directors for the ensuing
year and until their successors are elected and qualify.
11. (The following is inserted where stock is to be sold for cash.)
Upon motion duly made and seconded, it was unanimously
Bi "viced, that the Board of Directors of this Company be authorized and em-
powered to sell for cash at par shares of the capital slock, of the Com-
pany, the manner of allotment of said shares to be vested in the discretion of the
Board of Directors, so far as the same may be permitted by law.
12. (The following clause is inserted where stock is made full-paid by issu-
ance of stock for property or patent rights. This form is applicable to all
States.)
Upon motion duly made and seconded, the following resolution was unanimously
adopted :
Whereas, the stockholders and Board of Directors of this Company have re-
ceived a proposition reading as follows, to wit :
To the Stockholders and Board of Directors of the Company.
Gentlemen : I the undersigned, am the owner of the following-described prop-
erty, to wit (insert brief description of property) (or letters patent of
numbered heretofore on the day of issued to me,
being for a certain new and useful improvement in ).
1 hereby offer to sell, assign, and transfer to your Company the above-described
property (or patent rights) in consideration of the issuance to me, or my nominees
or assigns, within thirty days from date hereof, of shares of the capital
stock of your Company of the par value of dollars per share, aggregating
dollars in amount.
This offer is made subject to acceptance by your corporation within thirty days
from date hereof. If the said offer is not accepted within said time, the same shall
forthwith become null and void.
Respectfully submitted,
(Here insert uame of party makiug the offer.)
Now, therefore, be it
Resolved, that the Board of Directors be, and they hereby are, empowered, it
thev deem it advisable so to do, to purchase the property (or patent rights) de-
scribed in the foregoing proposition, and to issue shares oi stock ol the
par value of $ per share, aggregating $ in amount, in payment there-
for, to said , his nominees or assigns.
13. Where stock is issued for services performed, the following clause should
be inserted :
Whereas, has heretofore and between the day oi
and the day of performed certain services at the instance and
request and for the use and benefit of said Company : Now, therefore,
be it
Resolved, that the Board of Directors be, and they hereby are, empowered, i!
they deem it advisable so to do, to accept said services above described, ami to issue
shares of stock of the par value of S per share, aggregating
$ in amount, in payment therefor, to said , his nominees or
assigns. , . , . ,
14. (The following resolution may be inserted m the incorporators meeting, Or
may be omitted therefrom entirely, as maj be deemed desirable.)
Whereas, there has been subscribed for by (insert names oi incorporators)
shares of the capital stock of this Company of the par value of $ per share,
no part of which has been paid for ; and
Whereas, under the resolution heretofore passed at this meeting,
shares f stock are to be issued to in payment of property purchased bj
this Corporation ; and . .
Whereas, (la-re insert name of party from uliom property is pnrcha «,|) baa
agreed, with the consent of said incorporators, thai the stock to la- issued to bun u
s 1 5
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
payment of said property shall include the said stock subscribed for by the incor-
porators : Now, therefore, be it
Resolved, that the Board of Directors be, and they hereby are, empowered and
directed to accept a proportionate part of said property as payment on the part of
said incorporators of their subscriptions for stock in said Company, and
they are further empowered and directed to issue certificates of stock to said incor-
porators or their assigns to the amount of their respective subscriptions.
15. Messrs. , ,and presented transfers of sub-
scription of their shares to the following-named transferees, to wit :
Transferror. Transferee. No. of Shares.
No further business was presented, and on motion the meeting adjourned.
, Secretary.
Approved :
, Chairman.
Delaware A. The Secretary reported that the certificate of incorporation of the
Company was filed on the day of , 19 , at o'clock
in the noon, in the office of the Secretary of State, and a certified copy
thereof recorded in the office of the Recorder of Deeds for the County of
, on the day of , 19 , in Certificate of In-
corporation Record, vol. page , etc., and presented a copy of said
certificate of incorporation, which was, on motion, duly made and seconded,
ordered spread upon the minutes.
Arizona A. The Chairman reported that the certificate of incorporation of the Com-
pany was filed in the office of the County Recorder of Maricopa County,
State of Arizona, on the day of , 19 , and a cer-
tified copy thereof filed in the office of the Corporation Commission on the
day of . The Secretary presented a copy of said certificate
of incorporation, and on motion same was ordered spread upon the minutes.
New Jersey A. The Chairman reported that a copy of the certificate of incorpora-
tion had been duly recorded in the office of the County Clerk of
County on the day of , 19 , and that the original
certificate of incorporation, after having been duly endorsed by said County
Clerk, was on the day of duly filed in the office of the
Secretary of State of New Jersey. The Secretary presented a copy of said
certificate of incorporation, and on motion same was ordered spread upon
the minutes.
APPENDIX.
Waiver of Notice of First Meeting of Incorporators.
We, the undersigned, incorporators of the Company, a corporation
organized and existing under the laws of the State of , hereby waive
notice of the time, place, and object of the organization meeting of said
Company, and do hereby agree that said organization meeting may be held at
the office of , in the City of , State of , on the
day of , 19 , at o'clock in the noon of
said day.
Dated , 191 .
Proxy. Meeting of Incorporators and Stockholders.
Know all Men by these Presents : That I, , of the City of
, State of , being the registered owner of shares
of the capital stock of the Company (a corporation organized and exist-
816
FORMS AND PRECEDENTS.
ing under the laws of the State of ), do hereby constitute and appoint
my true and lawful attorney, for me and in my name, place, and Stead,
to vote said shares of stock in said Company as my proxy
at the first meeting of the incorporators and stockholders of said Company, to be
held at the office of , in the City of , State of ,
on the day of , 19 , or on such other day or days as the
meeting may be thereafter held by adjournment or otherwise.
In Witness Whereof, I have hereunto set my hand and seal this day of
, 19 .
(L. S )
In presence of
Transfer of Subscription.
The undersigned, in consideration of the sum of one dollar and other valuable
considerations to me paid, the receipt whereof is hereby acknowledged, does hereby
sell, assign, transfer, and set over unto , shares of the capital Btock of the
Company (a corporation organized and existing under the laws of t In-
state of ) which said shares of stock were heretofore subscribed for
by me, as an incorporator of said Company. The undersigned further
directs the proper officers of said Company to issue a certificate to said
for said shares of stock so subscribed by me.
In Witness Whereof, I have hereunto set my hand and seal this day of
,19 .
"Witness :
Inspectors' Oath and Certificate.
State of
County of
and , being duly sworn, say that they will well and truly
act as Inspectors of Election of the Company, a corporation organized
and existing under the laws of the State of , at any and all meetings of
said Company wherever and whenever held.
Subscribed and sworn to before me this day of , 19
Certificate.
The undersigned, duly qualified and acting inspectors of election of the
Company, a corporation organized and existing under the laws of the State of
, do hereby certify that at the election of directors >f said Company held
at the City of , State of , on the day of ,
19 , at the hour of M., of said day, we did receive the votes ol the
stockholders of said Company, as cast by ballot by said stockholders, at said meel
ing, and we faithfully and fairly counted the same, and that the following persons
were duly elected directors of said Company for the ensuing year.
Directors elected. No. of Votes received for each candidate.
Inspectors.
817
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
MINUTES OF ORGANIZATION MEETING OF DIRECTORS.
1. Minutes of the organization meeting of the directors of the
Company held (here state where held and hour thereof).
2. Present : constituting the whole (or a majority) of the Board
of Directors.
3. On motion duly made and seconded, Mr. was chosen Chairman,
and Mr. was appointed Secretary of the meeting.
4. The waiver of notice of the meeting, signed by all of the directors of the
Company, was presented, and upon motion duly made and seconded, same was
ordered inserted in the minute book, immediately following the minutes of this
meeting.
(Form of waiver same in all States. See Appendix.)
5. (Insert following clause for New York only.)
Messrs. and were appointed Inspectors of Election for
the ensuing year.
6. The following persons were unanimously elected officers of the Company to
hold office until the next annual election of officers and until their successors are
elected and qualify:
President,
First Vice-President,
Second Vice-President,
Third Vice-President,
Secretary,
Treasurer,
General Manager,
Counsel (if desired),
Officers present accepted office and assumed their duties.
7. (Insert for New Jersey, Nevada, and Delaware.)
The Secretary was then duly sworn, and subscribed the written oath presented
at the meeting. (Form of oath. See Appendix.)
8. (Where director resigns, use the following form for acceptance of resignation
and election of his successor.)
The Secretary presented the resignation of Mr. as director of the
Company, and on motion duly made and seconded, same was accepted and ordered
filed.
Mr. was thereupon elected a director of the Company to fill the
vacancy caused by the resignation of . (Form of resignation see
Appendix. Same in all States.)
9. On motion duly made and seconded, it was
Resolved, that a corporate seal be, and the same hereby is, adopted by the
Company, the same to contain within the circle the words " Corporate Seal, 19 ,"
and around the margin of the circle the words " Company " and "
(State of Incorporation)."
10. Upon motion duly made and seconded, it was
Resolved, that the stock certificates presented to this meeting be, and they hereby
are, adopted, and the President and (see note) be and they hereby are authorized
to issue certificates of stock as called for by the Board of Directors.
(Note. President and Secretary must sign in South Dakota; in New York, Arizona,
Nevada, West Virginia, District of Columbia, and New Jersey, President and Secretary or
Treasurer; in Delaware, President and Treasurer.)
11. Upon motion duly made and seconded it was
Resolved, that, until otherwise ordered, Bank be, and it hereby is,
designated as a depository of the funds of this Company, and that the Treasurer be,
and he hereby is, authorized from time to time, for and on behalf of this Company,
to make or sign checks, drafts, notes, agreements, or other instruments (which
shall be countersigned by the President), to endorse checks, drafts, or other instru-
ments; to accept drafts or to procure loans, discounts or rediscounts or advances;
818
FORMS AND PRECEDENTS.
to do all acts incidental to any of the above matters, and to pay, adjust, or secure
any transaction, matter, or Lability; and to do all acts therein, to pay all sums due
or to become due ; to accept and receive notices and demands, and generally to do
all acts and things with reference to any transaction in the name of or on behalf of
this Corporation with said Bank, or in carrying on its business relations
therewith which said Treasurer may see fit.
This resolution is to continue iu force until formally rescinded and filing of due
notice thereof with said Bauk.
13. Upon motion duly made and seconded, it was
Resolved, that the principal office of the Company in the State of ,
shall be established and maintained at No. Street in the City of
State of ; and be it further
(The following inserted for New Jersey, Delaware, Arizona, and "West
Virginia.)
Resolved, that (here insert name of agent) residing at in the City of
, State of , be, and he hereby is, appointed the agent of this
Company upon whom process against this Company may be served; and be it
further
Resolved, that the President and Secretary be, and they hereby are, authorized
and directed to sign and seal with the Company's seal a certificate of authorizu
to said (here insert name of agent) in the form presented to this meeting.
14. Upon motion duly made and seconded, it was
Resolved, that the principal business office of the Company be established and
maintained at the City of , State of ; and that meetings of
the Board of Directors or Executive Committee appointed thereby may be held
thereat.
15. (Where stock is issued for property, patent rights, etc., insert the following
clause :)
Upon motion duly made and seconded, and by the affirmative vote of all present r
the following resolution was unanimously adopted:
Whereas, at a meeting of the incorporators of this Company duly held on the
day of , 19 , the following resolution was unanimously
adopted :
" Whereas, the stockholders and Board of Directors of this Compauy have re-
ceived a proposition reading as follows, to wit : To the stockholders and Board > >f
Directors of the Company.
Gentlemen : I, the undersigned, am the owner of the following described prop-
erty, to wit: (insert brief description of property) or letters patent of
numbered heretofore on the day of issued to me
being for a certain new and useful improvement in ).
I hereby offer to sell, assign, and transfer to your Company the above-described
property (or patent rights) in consideration of the issuance to me or nvj nominees or
assigns, within thirty days from date hereof, of shares of the capital stock
of your Company of the par value of dollars per share, aggreg
dollars in amount.
This offer is made subject to acceptance by your Corporation within thirty days
from date hereof. If the said oiler is not accepted within said time, the same shall
forthwith become null and void.
Respectfully submitted,
Now, therefore, be it
Resolved, that the Board of Directors be, and they hereby arc, empowered, it
they deem it advisable so to do, to purchase the propertj (or patent rights) de-
scribed in the foregoing proposition, and to issue shares of stock oi tin
par value of $ per share, aggregating $ in amount, in payment
therefor, to said , his nominees or assigns." Ami
\V hrreas it appears advisable to the Board of Directors of this Company to ac-
quire the said property (or patent rights) described in the foregoing resolutu
the incorporators (or stockholders) of this Companyj and
Whereas this Board, after making due investigation as to the value and utility
of said property (or patent rights) tor the purposes of the Corporation, are ol the
Mil
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
opinion that the said properties (or patent rights) are reasonably worth the sum of
$ (at which price the same are hereby appraised) : Now, therefore be it
Resolved, that this Company accept the offer of to sell to it the prop-
erty (or patent rights) above described, under the terms and conditions contained
in the proposition of said above set forth ; and be it further
Resolved, that the proper officers of this Company be, and they hereby are, di-
rected and empowered to issue shares of the capital stock of this Com-
pany of the par value of $ per share, aggregating § in amount,
to , his nominees or assigns in full payment for the said property (or
patent rights) above described.
16. (Where stock is issued for services performed the following clause should
be inserted.)
Whereas, at a meeting of the incorporators of this Company duly held on the
day of , 19 , the following resolution was unanimously
adopted :
" Whereas has heretofore and between the day of
and the day of performed certain services at the instance and
request and for the use and benefit of said Company : Now, therefore,
be it
Resolved, that the Board of Directors be, and they hereby are, empowered, if
they deem it advisable so to do, to accept said services above described, and to issue
shares of stock of the par value of $ per share, aggregating
% in amount, in payment therefor, to said , his nominees or
assigns." And
Whereas it appears to the Board of Directors of this Company that the above-
described services were necessary in the premises ; and
Whereas this Board, after making due investigation as to the value of said ser-
vices, are of the opinion that said services were, and the same hereby are, appraised
at the sum of $ : Now, therefore, be it
Resolved, that the Board of Directors of this Company hereby declare the above-
described services heretofore performed on behalf of this Company by said
were necessary for the business of this Company, and that the same are reasonably
worth the sum of dollars, at which sum we do hereby appraise the same ;
and be it further
Resolved, that the proper officers of this Company be, and they hereby are,
directed and empowered to issue shares of the capital stock of the
Company of the par value of $ per share, aggregating 3 in
amount, to his nominees or assigns, in full payment for the services
above described.
17. Where stock has beeu subscribed for by the incorporators, the following
clause should be inserted :
Whereas, at a meeting of the incorporators of this Company, the following reso-
lution was adopted :
" Whereas there has been subscribed for by (insert names of incorporators)
shares of the capital stock of this Company of the par value of $
per share, no part of which has been paid for ; and
Whereas, under, the resolution heretofore passed at this meeting,
shares of stock are to be issued to in payment of property purchased by
this corporation ; and
Whereas (here insert name of party from whom property is purchased) has
agreed, with the consent of said incorporators, that the stock to be issued to him
in payment of said property shall include the said stock subscribed by the incor-
porators : Now, therefore, be it
Resolved, that the Board of Directors be, and they hereby are, empowered and
directed to accept a proportionate part of said property as payment on the part of
said incorporators of their subscriptions for stock in said Company ; and
they are further empowered and directed to issue certificates of stock to said incor-
porators or their assigns to the amount of their respective subscriptions." Now,
therefore, be it
Resolved, that this Company accept, and hereby does accept, as payment for
820
FORMS AND PRECEDENT-.
said shares of the capital stock of this Company subscribed for by the
incorporators of this Company, a proportionate part of the property agreed to be
sold to the Company by (here insert name of transferror of the property to the Com-
pany) ; and be it farther
Resolved, that the proper officers of this Company be, and they are hereby,
authorized and empowered to issue said shares of stock to said (here insert names
of incorporators) and their nominees.
IS. (Where stock is to be turned back into the treasury of the Company hi
trust, insert the following clause :)
Upon motion duly made and seconded, and by the affirmative vote of all present,
the following resolution was unanimously adopted:
Whereas is the owner of shares of the capital stock of the
Company, and is desirous of assigning the same to this Company with
a view to securing the necessary funds with which to carry on the business of this
Company and to provide a working capital therefor, said stock to be held by said
Company at all times in trust, and to be disposed of under the directs n of the
Board of Directors of said Company with a view to securing the necessary funds
with which to carry on the business of this Company ; and
Whereas the Board of Directors of this Company believe that the acceptance of
such stock is necessary to secure funds with which to carry on the business of this
Company and to provide a working capital therefor: Now, therefore, be it
Resolved, that the President and Secretary of this Company be, and they hereby
are, authorized upon the transfer by said Company of said
shares of the capital stock of this Company in trust, to make and execute on behalf
of this Company a deed of trust to read in substance as follows, to wit :
This Agreement entered into this day , 19 , by and be-
tween of the City of , State of , party of the
first part, and the Company, a corporation organized and existing under
the laws of the State of , party of the second part ;
Witnesseth as follows :
First. That in consideration of the mutual covenants herein contained, said
party of the first part does hereby assign, transfer, and set over unto saitl partj of
the second part shares of the capital stock of said Company
of the par value of dollars each, to be held by said party of the second
part in trust, and to be disposed of under the direction of the Board of Directors of
said party of the second part, with a view to securing the necessary funds with
which to carry on the business for which said Company was formed, and
to provide a working capital therefor.
Second. Said party of the second part hereby accepts the assignment and
transfer of said shares of the capital stock of said Company
to be held by and 'disposed of by it for the purposes above stated.
Third. Said party of the second part further covenants and agrees thai it will at
all times hold and dispose of, under such terms and conditions as its Board of Direc-
tors shall prescribe, said shares of the capital stock of said
Company for the sole and exclusive use and benefil of said stockholders of said
Company, with a view to securing adequate and sufficient working
capital with which to carry on the business for which said Company was
formed.
In Witness Whereof, said parties of the first and second parts have hereunto set
their hands and seals this day of, l'J
, Party of the first part.
( 'ompany.
By
, Pretident.
Attest :
, Secretary-
I'arly of the second pari.
Upon motion duly made and secouded, and by the affirmative rote of al] present,
it was
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Resolved, that this Company endeavor to sell the above stock for the purposes
outlined, and that the President and Secretary be, and they hereby are, authorized
to sell said stock on behalf of this Company upon such terms as to them may seem
most advantageous to this Company, and that they report progress in the sale of
such stock from time to time, and whenever required by the Board of Directors.
(If preferred a resolution may be passed, fixing the minimum price at which the
stock may be sold.)
20. (Insert the following clause for New York only.)
In compliance with the laws of the State of New York, the Secretary was
ordered to file a duplicate original of the certificate of incorporation of the Company
in the office of the County Clerk of County.
No further business was presented, and on motion the meeting adjourned.
, Secretary.
Approved :
, Chairman.
APPENDIX.
Secretary's Oath.
State of 1 ss •
County of > . . .
I, Secretary of the Company, a corporation organized and existing
under the laws' of the State of , being first duly sworn, do hereby swear
that I will faithfully perform the duties of Secretary of the Company
as prescribed by the laws of and by-laws of the Company and
by the resolutions of the Board of Directors of said Company.
Subscribed and sworn to before me this day of , 191 .
, Notary Public.
Waiver of Notice. First Meeting of Directors.
We, the undersigned, constituting the full Board of Directors of the
Company, a corporation organized and existing under the laws of the State of
, do hereby waive notice of the organization meeting of the Board of
Directors of said Company, and of the nature and character of the business to be
thereat transacted. We hereby agree that said organization meeting may be held
at the office of the Company in the City of , State of , on the
day f , at o'clock in the noon of said day. We fur-
ther consent that any business may be transacted thereat which may be deemed
advisable by the directors present at said meeting.
Resignation of Director.
I hereby tender my resignation as Director of the Company, to take
effect when accepted by said Company.
COMPOSITE FORM OF BY-LAWS.
For New York, New Jersey, South Dakota, Delaware, Arizona, West Virginia,
Nevada, etc.
Article I. Title, Location.
Section 1. The title of the Corporation is :
Section 2. The principal office shall be in the City of , State of
. (The agent in charge of said office upon whom process against the
Company may be served is .)
822
FORMS AXD PRECEDENTS.
Section 3. The Company may also have an office in. the City of ,
State of , and also have offices in such other places as the Board of
Directors may appoint.
Article II. Meetings of Stockholders.
Section 1. The annual meeting of the stockholders of the Company shall be
held at the principal office of the Company in the City of " , State
of , at o'clock, M., on the day of in
each year, if not a legal holiday, and if a legal holiday, then on the next sui
ing not a legal holiday, for the purpose of electing a Board of Din
and for the transaction of such other business as may properly be put before the
meeting. It shall be the duty of the Secretary to cause notice of each annual
meeting of the Company, to be given to each stockholder of record of the < iompturj
(Note A) by publication thereof in a newspaper published in the county where
such election is held at least once in each week for two successive weeks immediately
preceding such meeting; and by mailing to each stockholder, at [east two weeks
prior to said meeting, a copy of such notice addressed to him at his post-office
address as the same shall appear on the stock books of the Corpora! inn.
(Note A. In New York notice of annual meetings must be by publication and mailing
notices. In other States the notice may usually be given either by publication or by mailing!)
(Note, place of meeting.) In South Dakota meetings should be held at the business
offices as provided in the articles of incorporation. In Delaware the first meeting of stock-
holders may be held within or without the State; subsequent meetings are held in the place
fixed by the by-laws. In New York and New Jersey within the State. In Nevada and
West Virginia meetings may be held outside of the State if the by-laws so provide.
Section 2. Special meetings of stockholders shall, at the request of a majority
of the directors, or at the request of a majority of the stockholders, be called by the
President, by mailing notice thereof, stating the object of and the business to be
transacted at said meeting at least ten days prior to the date of the meeting, to
each stockholder of record at his or her post-office address as the same appears on
the records of the stock books of the Corporation.
Section 3. A majority in amount of the stock outstanding having voting
powers, represented by the holders thereof in person or by proxy, shall be requisite
at every meetiug to constitute a quorum, except when otherwise provided by statute
or by the certificate of incorporation.
Section 4. No stockholder shall be entitled to vote at any regular or special
meeting of the stockholders of the corporation either in person or by proxy onleas
his name shall appear as such stockholder on the transfer books of the corporation
at least days immediately preceding such meeting.
(Note A. In New York stock transfer books may be closed within forty days next
preceding the date of any corporate election. In New Jersey, Nevada, and Delaware within
twenty days of such election. In West Virginia no definite date is fixed.)
(Where cumulative voting for directors has been provided for, insert the follow-
ing provision (Note B).)
In all elections for directors, each stockholder may cumulate his shares, and
give one candidate as many votes as the number of his shares of stock shall equal,
or distribute them on the same principle among as many candidates as be shall
think fit.
(Note B. Cumulative voting, if desired, should always be provided for In the certifi-
cate of incorporation. In West Virginia cumulative voting for directors is require. 1 l>y it&tntfl
and must appear in by-laws. In Nevada stockholders have no right of voting cnmohUin Ij
unless articles of incorporation or by-laws otherwise provide.)
Section 5. The directors shall cause the secretary or other officer haying
charge of the stock transfer book and the stock books oi the corporation to make,
at least ten days before every election alter the firsl election, a full, true, and o
plete list, in alphabetical order, of all stockholders entitled to vote at the ensuing
election, with the residence of each, and the number of shares held by each, vhiou
823
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
list shall, at all times during the usual hours of business, be kept at such principal
and registered office open to the inspection of any stockholder at said office.
(Note. The foregoing by-law is obligatory only in New Jersey and Nevada.)
Section 6. Two inspectors of election shall be elected at the annual meeting of
stockholders to hold office during the year intervening between said annual election
at which they are chosen, and the succeeding annual meeting. Such inspectors
shall have power to receive proxies and to pass upon the balloting of the same ; to
decide all questions relative to the right of stockholders to vote in the election of
directors; and shall also receive and count all ballots for directors. Before such
inspectors shall be qualified to act, they shall first be duly sworn to faithfully per-
form the duties of their office prescribed by the statutes of the State and the by-
laws of the corporation. No person who is a candidate for the office of director
shall act as inspector at any election for directors.
Section 7. (For New York only.) Two inspectors of election shall be elected
at each annual meeting of the stockholders to conduct the election of directors for
the ensuing year, except that the inspectors who are to serve for the first year of
the Corporation shall be appointed by the Board of Directors at their first meeting.
Such inspectors shall be sworn to the faithful discharge of their duty, and in event
of the absence, inability, or refusal of either to serve, the meeting may appoint an
inspector in his place.
Section 8. At the annual meeting of stockholders the following shall be the
order of business :
1. Calling of meeting to order by President or other presiding officer.^
2. Reading notice of meeting by Secretary, and affidavit showing service of said
notice on all stockholders of record.
3. Reports of officers.
4. Appointment of inspectors of election of directors.
5. Election of directors.
6. Miscellaneous business.
Section 9. At all meetings of stockholders, upon all questions except the elec-
tion of directors, all voting shall be viva voce, unless the statute of the State of
require a stock vote to be taken. In the election of directors at the
annual meeting, or otherwise, the Secretary of the Corporation may be instructed,
by a motion duly made and carried, to cast the vote of all stockholders present for
the election of directors, to be designated in the motion so made.
Article III. Directors.
Section 1. The property and business of the Corporation shall be managed by
a Board of Directors, in number, of whom at least (Note A) shall
be a resident of , shall be chosen from the stockholders annually, and
shall hold office until others are chosen and qualified in their stead. The directors
shall each hold at least (Note B) shares of stock.
(Note A. In New York, New Jersey, and Delaware at least one director shall be a resi-
dent of the State; in Arizona, Nevada, and South Dakota omit provision as to residence;^ in
West Virginia directors need not be residents of the State if by-laws so provide. In West
"Virginia number of directors must be set out in by-laws.)
(Note B. In New York, New Jersey, Arizona, West Virginia, South Dakota, and
Nevada each director should ordinarily hold at least one share ; in Delaware, three shares.)
Section 2. Any vacancies occurring in the Board of Directors before the ex-
piration of the term of any director shall be filled by a majority vote of the remain-
ing directors at any regular or special meeting of the Board.
Section 3. The Board of Directors may be convened at any time by the
President, upon two days' notice given to each director. In the event of the
refusal of the President to call a meeting of the Board, said meeting may be
called at any time by a majority of the Board upon two days' notice to each mem-
ber thereof.
824
FORMS AND PRECEDENTS.
Section 4. The Board of Directors may, if they see fit, adopt additional rules
and regulations conformable to law for their own government and control.
Article IV. Meetings of Directors.
Section 1. Meetings of the Board of Directors of this Company or of the
Executive Committee appointed thereby, may be held either at the principal office
of the Company at , County of , and State of , or
at the business office of the Company to be opened and maintained by it at the City
of , State of
Article Y. Powers of Directors.
Section 1. The Board of Directors shall have management of the business of
the Company, and in addition to the powers and authorities by these by-laws ex-
pressly conferred upon them, may exercise all such powers, and do all such acts
and things as may be exercised or done by the Corporation, but subject, neverthe-
less, to the provisions of the statute of the charter and of these by-laws, and to any
regulations from time to time made by the stockholders, provided that no regula-
tions so made shall invalidate any prior act of the directors which would have been
valid if such regulation had not been made.
Section 2. Without prejudice to the general powers conferred by the last pre-
ceding clause and the other powers conferred by these by-laws, it is hereby ex-
pressly declared that the Board of Directors shall have the following powers, that is
to say :
a. To purchase or otherwise acquire for the Company any property, rights, or
privileges which the Company is authorized to acquire at such prices and on such
terms and conditions and for such consideration as they think fit.
b. At their discretion to pay for any property or rights acquired by the Com-
pany, either wholly or partially in money, or in stock, bonds, debentures, or other
securities of the Company.
c. To appoint and at their discretion to remove or suspend subordinate man-
agers, officers, assistants, clerks, agents, and servants permanently or temporarily,
as they may from time to time think fit, and to determine their duties, and fix, and
from time to time change, their salaries or emoluments, and to require security in
such instances and in such amounts as they think fit.
d. To confer by resolution upon any officer of the Company the right to choose,
remove, or suspend such subordinate officers, agents, or factors.
e. To appoint any person or persons to accept and hold in trust for the Com-
pany auy property belonging to the Company, or in which it is interested, or for
any other purpose, and to execute and do all such duties and things as maybe requi-
site in relation to any such trust.
f. To determine who shall be authorized to sign on the Company's behalf bills,
notes, receipts, acceptances, endorsements, checks, releases, contracts, and documents.
ff. From time to time to provide for the management of the atl'airs of the Com-
pany at home or abroad in such manner as they think fit, and, in particular, from
time to time to delegate any of the powers of the Board of Directors (which may
be lawfully delegated (Note A) to any committee, officer, or agent, and to appoint
any persons to be the agents of the Company, with such powers (including the
power to sub-delegate) and upon such terms as may be thought fit.
(Note A. Insert for New York only.)
Article VI. Executive Committek and Other Committees.
Section 1. The Board of Directors may appoint of their own number
to act as an Executive Committee to serve during the life of the board that ap-
pointed it.
(The powers of the Executive Committee depend upon the statutes, and there-
fore the above will vary with reference to particular powers that may be delegated
by the board to committees.)
825
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Section 2. The Executive Committee shall have entire control and supervision
of all of the property and business affairs of the corporation, and shall have and exer-
cise all the powers and privileges which are possessed and exercised by the Board
of Directors.
Section 3. The Board of Directors may appoint such other committees as may
seem to them advisable.
Article VII. Officers.
Section I. The newly elected Board of Directors shall meet as soon as prac-
ticable after the annual meeting of stockholders for the purpose of organization. At
such meeting the board shall elect all the officers of the Corporation prescribed by
the by-laws, and shall appoint such subordinate officers as to the board may seem
proper and necessary. All of such officers shall serve until the next annual election.
Vacancies occurring among the officers may be filled by the Board of Directors for
the unexpired term at any regular or special meeting of the board.
Section 2. The President shall preside at all meetings of the stockholders and
of the Board of Directors. Subject at all times to the control of the Board of
Directors, he shall have general charge of the busiuess of the corporation, and
shall execute in its name all contracts, bonds, and other obligations. In conjunction
with the (here fill in the name of the other officer who is authorized to
sign stock certificates) he shall sign all certificates of the shares of the capital stock
of the Company. .
Section 3. The first, second, and third Vice-Presidents shall, in the absence
or incapacity of the President, perform the duties of that officer in succession accord-
ing to their rank unless the board shall otherwise determine.
Section 4. The Treasurer shall be the fiscal officer of the Company, and as
such shall be the custodian of all moneys, bonds, notes, and other securities belong-
ing to the corporation. He shall have power to indorse in behalf of the corporation
alf checks, notes, or other obligations, payable to the order of the corporation, and
shall deposit the same to the credit of the corporation in some bank designated by
the Board of Directors of the corporation for that purpose. He shall have author-
ity (if some officer is to sign with him at this point, fill in the following, " in con-
junction with the President") to sign all checks, notes, and bills made by the
Company. He shall sign with the President all certificates of shares of the
capital stock of the Company (Note A). He shall cause to be kept full and
complete books showing all receipts and disbursements made by him for and in
behalf of the corporation.
(Note A. The President and Secretary must sign in South Dakota. In New York,
Arizona, West Virginia, New Jersey, ordinarily the President and Secretary or Treasurer.
In Delaware, the President and Treasurer.)
Section 5. The Secretary shall keep the minutes of the meetings of the stock-
holders and of the Board of Directors. He shall be the custodian of the seal
of the corporation, and shall affix the same to all contracts authorized by the
Board of Directors of the corporation. He shall attend to the sending out of all
notices of meetings of the stockholders and of the Board of Directors. In con-
junction with the President he shall sign all certificates of stock of the corporation.
(See Sec. 4, Note A.) He shall be sworn to the faithful performance of the duties
of his office. (See Note A.)
(Note A. Necessary in Delaware, Nevada, and New Jersey, and usually provided.)
The following section should be inserted where counsel is provided for :
Section 6. The counsel of the Company shall prepare all such contracts and
agreements required in the business of the Company as may be referred to him by
its officials ; he shall inspect and pass upon all instruments as may be presented to
the Company and be of sufficient importance to justify such examination.^ He
shall also advise with the officers of the Company in such legal matters pertaining to
the affairs of the Company as may require his consideration.
826
FORMS AXD PRECEDENTS.
Article YIIL Capital Stock.
Section 1. Subscriptions to the capital stock shall be payable as and when
directed by the Board of Directors of the Company.
(Note. If preferred stock is provided for, the provisions and condition of its issue should
be set forth here.
If stock is to be made full paid in the beginning, in consideration of the transfer of property,
etc., Section 1 may be omitted.)
Section 2. The certificates for shares of the capital stock of the Company shall
be hi such form, not inconsistent with the certificate of incorporation, as shall be
prepared or be approved by the Board of Directors. The certificates shall be signed
by the President or a Vice-President, and also by the Treasurer (or Secretary) (see
Art. VII, see. 4, Note A). All certificates shall be consecutively numbered.
The name of the person owning the shares represented thereby, with the number of
such shares and the date of issue, shall be entered on the Company's books. All
certificates surrendered to the Company shall be cancelled, and no new certificate
shall be issued until the former certificate for the same number of shares shall have
been surrendered and cancelled.
Section 3. Shares in the capital stock of the Company shall be transferred only
on the books of the Company by the holder thereof in person, or by his attorney,
upon surrender and cancellation of certificates for a like number of shares.
Section 4. Whenever the capital stock of the Corporation is increased each
stockholder shall be entitled to subscribe for an amount of such increased capital
stock equal in proportion to that which the number of shares of stock owned
by him bears to the total number of shares of stock issued and outstanding at the
time of such increase.
Article IX. Dividends.
Section 1. The Board of Directors may declare dividends from the surplus or
from the net profits of the corporation at such times as may be deemed advisable.
Article X. Seal.
Section 1. The Board of Directors shall provide a suitable seal, containing
within the circle the words " Corporate Seal, 19 " and around the margin
of the single circle the words " Company, (insert State of
Incorporation)".
Article XI. Notice.
Section 1. Whenever, under the provisions of these by-laws, notice is required
to be given to any director, officer, or stockholder, it shall not be construed to be
limited to personal notice, but such notice may be given in writing by depositing
the same in the post-office or letter-box in a postpaid wrapper, addressed to such
director, officer, or stockholder, at his or her address as the same appears in the
books of the corporation, and the time when the same shall be mailed shall be
deemed to be the time of the giving of such notice.
Article XII. Waiver of Notice.
Section 1. Any notice required to be given either by statute or by any by-law
of the corporation, may be waived in writing by the party to whom such notice is
to be sent.
Article XIII. Amendments.
Section 1. Any by-law may be amended at any annual meeting of stockhold-
ers without notice thereof being given in advance of such meeting; or the same
may be amended at any special meeting of the stockholders, provided notice of the
827
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
proposed amendment is given in the notice of said meeting. Tor the purpose of
amending by-laws, provided a quorum be present, a majority vote of the stockhold-
ers represented at said meeting, shall be sufficient.
(Where the statutes of the state permit the delegation of power to adopt or
amend by-laws by the stockholders to the directors, the following clause may be
inserted in lieu of the foregoing:)
Section 2. These by-laws may be amended at any directors' meeting by a
majority vote of the full Board of Directors, provided the proposed amendment is
inserted in the notice of the meeting.
Section 3. In all cases, whether amended by the Board of Directors or by
the stockholders, a copy of such amended by-laws shall be sent to each stockholder
within ten days after the adoption of the same.
(Note A. In South Dakota and West Virginia the Board of Directors may not be given
such power to " make, etc." by-laws. Certificate of incorporation should generally provide
for amendments bv directors where this power is desired.)
(Note B. What constitutes a valid vote depends upon the statutes of each State.)
BY-LAWS OF UNITED STATES STEEL CORPORATION,
AS ON APRIL 30, 1907.
Article I. Stockholders.
Section 1. Annual meeting. The annual meeting of the stockholders of the
Company shall be held annually at the principal office of the Company in the State
of New Jersey, at twelve o'clock, noon, on the third Monday of April in each year,
if not a legal" holiday, and if a legal holiday then on the next succeeding Monday
not a legal holiday, for the purpose of electing directors, and for the transaction of
such other business as may be brought before the meeting ; and the terms of office
of the directors of the several classes shall continue until the election of their suc-
cessors at such meeting as provided in Article II. hereof. It shall be the duty of
the Secretary to cause notice of each annual meeting to be published once in each
of the four calendar weeks next preceding the meeting in at least one newspaper
in each of the following places : Jersey City, N. J., New York, N. Y., Chicago,
111., and Pittsburg, Pa. Nevertheless a failure to publish such notice, or any
irregularity in such notice, or in the publication thereof, shall not affect the validity
of any annual meeting, or of any proceedings at any such meeting.
Section 2. Special Meetings. Special meetings of the stockholders may be
held at the principal office of the Company in the State of New Jersey, whenever
called in writing, or by vote by a majority of the Board of Directors.
Notice of each special meeting, indicating briefly the object or objects thereof,
shall by the Secretary be published once in each of the four calendar weeks next
preceding the meeting, in at least one newspaper in each of the following places :
Jersey City, N. J., New York, N. Y., Chicago, 111., and Pittsburg, Pa. Neverthe-
less if all' the stockholders shall waive notice of a special meeting, no notice ot
such meetino- shall be required ; and whenever all the stockholders shall meet in
person or by proxy, such meeting shall be valid for all purposes without call or
notice, and at such meeting any corporate action may be taken.
Section 3. Quorum. At any meeting of the stockholders the holders ot one
third of all of the shares of the capital stock of the Company, present in person or
represented by proxy, shall constitute a quorum of the stockholders for all pur-
poses, unless the representation of a larger number shall be required by law, and in
that case the representation of the number so required shall constitute a quorum
If the holders of the amount of stock necessary to constitute a quorum shall tail
to attend in person or by proxy at the time and place fixed by these by-laws for an
annual meeting, or fixed by notice as above provided for a special meeting called
by the directors, a majority in interest of the stockholders present in person or by
proxy may adjourn, from time to time, without notice other than by announcement
at the meeting, until holders of the amount of stock requisite to constitute a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
828
FORMS AXD PRECEDENTS.
present, any business may be transacted which might have been transacted at the
meeting as originally notified.
Section 4. Organization. The chairman of the Board, and in his absence the
chairman of the Finance Committee, and in the absence of both the President shall call
meetings of the stockholders to order, and shall act as chairman of such meetings.
The Board of Directors may appoint any stockholder as chairman of any meet-
ing in the absence of the chairman of the Board and of the chairman of the Finance
Committee and of the President.
The Secretary of the Company shall act as secretary at all meetings of the stock-
holders ; but in the absence of the Secretary at any meeting of the stockholders the
presiding officer may appoint any person to act as secretary of the meeting.
Section 5. Voting. At each meeting of the stockholders, every stockholder
shall be entitled to vote in person, or by proxy appointed by instrument in writing
subscribed by such stockholder or by his duly authorized attorney, and delivered to
the inspectors at the meeting ; and he shall have one vote for each share of stock
standing registered in his name at the time of the closing of the transfer books for
said meeting. The votes for directors, and, upon demand of any stockholder, the
votes upon any question before the meeting, shall be by ballot.
At each meeting of the stockholders a full, true, and complete list, in alphabeti-
cal order, of all of the stockholders entitled to vote at such meeting, aud indicating
the number of shares held by each, certified by the Secretary or by the Treasurer,
shall be furnished. Only the persons in whose names shares of stock stand on the
books of the Company at the time of the closing of the transfer books for such
meeting, as evidenced by the list of stockholders so furnished, shall be entitled to
vote in person or by proxy on the shares so standing in their names.
Prior to any meeting, but subsequent to the time of closing the transfer books
for such meeting, any proxy may submit his powers of attorney to the Secretary
or to the Treasurer for examination. The certificate of the Secretary or of the
Treasurer, as to the regularity of such powers of attorney, and as to the number of
shares held by the persons who severally and respectively executed such powers of
attorney, shall be received as prima facie evidence of the number of shares represented
by the holder of such powers of attorney for the purpose of establishing the
presence of a quorum at such meeting and of organizing the same, and for all other
purposes.
Section 6. Inspectors. At each meeting of the stockholders the polls shall be
opened and closed, the proxies and ballots shall be received and be taken in charge,
and all questions touching the qualification of voters and the validity of proxies
and the acceptance or rejection of votes, shall be decided by three inspectors.
Such inspectors shall be appointed by the Board of Directors before or at the meet-
ing, or, if no such appointment, shall have been made, then by the presiding officer
at the meeting. If for any reason any of the inspectors previously appointed shall
fail to attend or refuse or be unable to serve, inspectors in place of any so failing
to attend or refusing or unable to attend, shall be appointed in like manner.
Article II. Board of Directors.
Directors.
Section 1. Number, Classification, and Term of Office. The business and the
property of the Company shall be managed and controlled by the
Board of Directors.
As provided in the certificate of incorporation, the directors shall be classified in
respect of the time for which they shall severally hold office, by dividing them into
three classes, each class consisting of one-third of the whole Dumber
Classification. ()f lh( . B();u . d of jjj rectors- Thc directors of the first class shall be
elected for a term of one year; the directors of the second class shall be elected for
a term of two years, and the directors of the third class shall be elected for a term
of three years. At each annual election, the successors to the directors
eachdass °^ ' ne c 8 W '" ,M ' ' l ' 1 '" 1 s ' i;i " expire in that year, shall be elected to
hold office for the term ol three years, so that the term of office, of one
class of directors shall expire in each year.
829
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
The number of directors shall be twenty-four ; but the number of directors may
be altered from time to time by the alteration of these by-laws.
dumber of j u case f aU y increase of the number of directors, the additional
directors shall be elected by the directors then in office ; one-third of
such additional directors for the unexpired portion of the term of one year ; one-
third for the unexpired portion of the term of two years, and one-third for the
unexpired portion of the term of three years, so that each class of directors shall be
increased equally.
Every director shall be a holder of at least one share of the capital stock of
tors ^he Company. Each director shall serve for the term for which he
must be shall have been elected, and until his successor shall have been duly
Stockholders, chosen.
At all elections of the directors, the polls shall remain open for at least one hour,
Polls open unless every registered owner of shares has sooner voted in person
one hour. or by proxy, or in writing has waived the statutory provision.
Section 2. Vacancies. In case of any vacancy in the directors of any class
through death, resignation, disqualification or other cause, the remain-
Vacancies i n g directors, by affirmative vote of a majority thereof, may elect a
successor to hold office for the unexpired portion of the term of the
director whose place shall be vacant, and until the election of his successor.
Such vacancy shall be filled upon and after nominations therefor shall have been
made by the Einance Committee.
Section 3. Place of Meeting, etc. The directors may hold their meetings, and
may have an office and keep the books of the Company (except as other-
Meetine w * se m ^ ^ e P rov ided f° r Dv ^ aw ) m suca pl ace or places in the
State of New Jersey or outside of the State of New Jersey, as the
Board from time to time may determine.
Section 4s. Regular Meetings. Regular meetings of the Board of Directors
Reeular sna ^ ^ e ue ^ mou tWv on the last Tuesday of each month, if not a legaL
Monthly holiday, and if a legal holiday, then on the next succeeding Tuesday
Meetings. no t a le^al holiday. No notice shall be required for any such regular
monthly meeting of the Board.
Section 5. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by direction of the chairman of the
M^ti^es Board, or the chairman of the Einance Committee, or the presi-
dent, or of one-third of the directors for the time being in office.
The secretary shall give notice of each special meeting by mailing the same at
least two days before the meeting, or by telegraphing the same at least one day
before the meeting, to each director ; but such notice may be waived
Rehired ^y any director. Unless otherwise indicated in the notice thereof,
any and all business may be transacted at a special meeting. At any
meeting at which every director shall be present, even though without any notice,
any business may be transacted.
Section 6. Quorum. Ten directors shall constitute a quorum for the trans-
action of business ; but if at any meeting of the Board there be less than
Quorum. a quorum present, a majority of those present may adjourn the meet-
ing from time to time.
The affirmative vote of at least one-third of all the directors for the time being
in office shall be necessary for the passage of any resolution.
Section 8. Order of Business. At meetings of the Board of Directors, busi-
Order of ness shall be transacted in such order as, from time to time, the Board
Business. ma y determine by resolution.
At all meetings of the Board of Directors, the chairman of the Board, or in his
Presiding absence the chairman of the Finance Committee, or, in the absence of
Officer. both of these officers, the president, shall preside.
Section 9. Contracts. Inasmuch as the directors of this Company are men
of large and diversified business interests, and are likely to be connected with other
corporations with which from time to time this Company must have
Contracts. business dealings, no contract or other transaction between this Com-
pany and any other corporation shall be affected by the fact that directors of this
830
FORMS AND PRECEDENTS.
Company arc interested in, or are directors or officers of, such other corporation, if,
at the meeting of the Board, or of the committee of this Company, making, author-
izing, or confirming such contract or transaction, there shall be present
o/at least tin a quorum of directors not so interested ; and any director individually
disinterested may be a party to, or may be interested in, any contract or transaction
Directors. Q j- y^ Company, provided that such contract or transaction shall
he approved or be ratified by the affirmative vote of at least ten directors not
so interested.
The Board of Directors in its discretion may submit any contract or act for
approval or ratification at any annual meeting of the stockholders, or at any meet-
ing of the stockholders called for the purpose of considering any such
Stockholders act or contract ; and any contract or act that shall be approved or be
of Acts or ratified by the vote of the holders of a majority of the capital stock of
Contracts. ^ ie Company which is represented in person or by proxy at such
meeting (provided that a lawful quorum of stockholders be there represented in per-
son or by proxy) shall be as valid and as binding upon the corporation and upon all
the stockholders as though it had been approved or ratified oy every stockholder
of the corporation.
Section 10. Compensation of Directors. For his attendance at any meeting of
Compensation the Board of Directors, or of any committee, every director shall re-
of Directors, ceive an allowance of twenty dollars for attendance at each meeting.
Section 11. Election of Officers and Committees. At the first regular meeting
of the Board of Directors in each year (at which a quorum shall be present) held
Election of nex * a ^ er tue annua ^ meeting, the Board of Directors shall proceed to
Officers and the election of the executive officers o£ the Company, and of the
Committees. Finance Committee to be elected by the Board of Directors under
the provisions of Article III. and Article IV. of the By-Laws.
Article III. Finance Committee.
Section 1. The Board of Directors shall elect from the directors a Finance
Committee, and shall designate for such committee a chairman, who
Committee SDa ^ continue to be chairman of the committee during the pleasure of
the Board of Directors.
The Board of Directors shall fill vacancies in the Finance Committee by election
from the directors ; and at all times it shall be the duty of the Board
h aCa fmd' °^ Directors to keep the membership of such committee full, with due
W e ' regard to the qualifications for such membership indicated in this
Article of the By-Laws.
All action by the Finance Committee shall be reported to the Board of Direc-
tors at its meeting next succeeding such action, and shall be subject
Committee to revision or alteration by the Board of Directors ; provided that
to be reported no rights or acts of third parties shall be affected by any such
to Board. revision or alteration.
The Finance Committee shall fix its own rules of proceeding, and shall meet
where and as provided by sucli rules, or by resolution of the Board of
Rules of Directors, but in every case the presence of at least four members
shall be necessary to constitute a quorum.
In every case the affirmative vote of a majority of all of the members of I lie com-
mittee present at the meeting shall be necessary to its adoption of any resolution.
Section 2. The Finance Committee shall consist of seven members, besides
the chairman of the Board and the president, each of wh , by virtue of his
office, shall be a member of the Finance Committee. So far as
Membership, ppaeticable each of the seven elected members of the Finance Com-
mittee shall be a person of experience in matters of finance. Unless otherwise
ordered by the Board of Directors, each elected member of the Finance Committee
shall continue to be a member thereof until the expiration of his term of office as a
director.
831
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
The Finance Committee shall have special charge and control of all financial
affairs of the Company. The general counsel, the treasurer, the comp-
Powers and trailer, and the secretary, and their respective offices, shall be under
Duties. t j ie ^j rect con t ro l and supervision of the Finance Committee.
During the intervals between the meetings of the Board of Directors, the
Finance Committee shall possess, and may exercise, all the powers of the Board of
Directors in the management of all the affairs of the Company, including its pur-
chases of property, and the execution of legal instruments with or without the cor-
porate seal, in such manner as said committee shall deem to be best for the interests
of the Company, in all cases in which specific directions shall not have been given
by the Board of Directors.
During the intervals between the meetings of the Finance Committee, and sub-
ject to its review, the chairman of the Board and the chairman of the
Chairman Finance Committee together, shall possess and may exercise any of
cnairman. ^ e p 0wers f tQe com mittee, except as from time to time shall be
otherwise provided by resolution of the Board of Directors.
Except as otherwise provided by the By-Laws, or by resolution of the Board of
Salaries fixed Directors, all salaries and compensations paid or payable by the Corn-
by Finance pany shall be fixed by the Finance Committee.
Committee. j^ director not an executive officer shall become a salaried em-
ployee of the Company except by special vote of the Finance Committee.
Article IV. Advisory Committee.
The Board of Directors shall elect from the directors an Advisory Committee.
The committee shall consist of three members, besides the president of the corpo-
ration, who by virtue of bis office shall be a member and chairman of
Advisory tne com mittee. This committee, from time to time, shall consider and
Committee. ^^ recommendations concerning such questions relating to manu-
facturing, transportation, or operation as may be submitted to the committee by the
president.
Article V. Officers.
Section i. Officers. The executive officers of the Company shall be a chair-
Officers man "of the Board of Directors, a president, a vice-president, or
more than one vice-president, a general counsel, a treasurer, a secre-
Xlties ' tary, and a comptroller, all of whom shall be elected by the Board
of Directors.
The Board of Directors may appoint such other officers as they shall deem
necessary, who shall have such authority and shall perform such duties
Other Officers. &g from time to time may Re prescr ibed by the Board of Directors.
One person may hold more than one office.
In its discretion, the Board of Directors by the vote of a majority thereof may
leave unfilled for any such period as it may fix by resolution, any office except those
of president, treasurer, secretary, and comptroller.
Section 2. All officers and agents shall be subject to removal at any time by
the affirmative vote of a majority of the whole Board of Directors. All officers,
agents, and employees, other than officers appointed by the Board of
Term of Office. D i rectorSj suau hold office at the discretion of the committee or of the
officer appointing them.
Each of the salaried officers of the corporation shall devote his entire time, skill,
and energy to the business of the corporation, unless the contrary is expressly con-
sented to bv the Board of Directors or the Finance Committee. No vacations shall
be taken by any of such officers, except by consent of the Board of Directors or the
Finance Committee.
The Finance Committee shall have power to remove all officers, agents, and
employees of the Company, except officers elected or appointed by the
Removal. Bo&rd of Directors .
832
FORMS AXD PRECEDENTS.
Section 3. Towers and Duties of the Chairman of the Board. The chairman
of the Board of Directors shall preside at all meetings of the stockholders and of
ir the Board of Directors; and by virtue of his office shall be a member
Powlrsluid of the Finance Committee. He shall have supervision of such mat-
Duties, ters as may be designated to him by the Board of Directors or the
Finance Committee.
SECTION i. Powers and Duties of the President. In the absence of the chair-
man of the Board and the chairman of the Finance Committee, the president shall
President preside at all meetings of the stockholders and of the Beard of
Powers and Directors. By virtue of his office he shall be a member of tin'
Duties. Finance Committee. Subject to the Board of Directors and the
Finance Committee, he shall have general charge of the business of the corporation
relating to manufacturing, mining, and transportation and general operation. Be
shall keep the Board of "Directors and the Finance Committee fully informed, and
shall freely consult them concerning the business of the corporation in his charge.
He may sign and execute all authorized bonds, contracts, checks, or other obliga-
tions in' the name of the corporation, and with the treasurer or an assistant treasurer
may sign all certificates of the shares in the capital stock of the corporation. He
shall do and perform such other duties as from time to time may be assigned to him
bv t he Board of Directors.
Section 5. Vice-Presidents. The Board of Directors may appoint a vice-
president or more than one vice-president. Each vice-president
Presidents sna ^ * iave SU(m P owers > an( l s ^ au perform such duties, as may be
assigned to him by the Board of Directors.
Section 6. The General Counsel. The General Counsel shall be the chief
consulting officer of the Company in all legal matters, and, subject to
General t (j e Board of Directors and the Finance Committee, shall have general
Counsel. con trol of all matters of legal import concerning the Company.
SECTION 7. Powers and Duties of Treasurer. The treasurer shall have cus-
tody of all the funds and securities of the Company which may have come into
Treasurer llis uall(is > wlieu uecessai T or proper he shall endorse on behalf of
Powers and the Company, tor collection, checks, notes, and .other obligations,
Duties. ail j sna H deposit the same to the credit of the Company in such
bank or banks or depositary as the Board of Directors or the Finance Com-
mittee may designate ; he shall sign all receipts and vouchers for payments made
to the Company ; jointly with such other officer as may be designated by the
Finance Committee, he shall sign all checks made by the Company, and shall pay
out and dispose of the same under the direction of the Board or of the, Finance
Committee; he shall sign with the President, or such other person or persons as
may be designated for the purpose by the Board of Directors or the Finance
Committee, all bills of exchange and promissory notes of the Company ; he may
sign, with the president or a vice-president, all certificates of shares in the capital
stock; whenever required by the Board of Directors or by the Finance Committee,
he shall render a statement of his cash account; he shall enter regularly, in books
of the Company to be kept by him for the purpose, full and accurate account of all
moneys received and paid by him on account of the Company ; he shall, at all
reasonable times, exhibit his books and accounts to any director of the Company
upon application at the office of the Company during business hours; and he shall
perform all acts incident to the position of treasurer, subject to the control of the
Board of Directors or of the Finance Committee.
He shall give a bond for the faithful discharge of his duties in such sum as the
Board of Directors or the Finance Committee may require.
Section 8. Assistant Treasurers. The Board of Directors or the Finance
Committee mav appoint an assistant treasurer or more than one assistant treasurer.
Bacn assistant treasurer shall have such powers and shall perform
Assistant sll ,.|, duties as may be assigned to him In the Board of Directors, or
Treasurers. , . „. , , • ■.. °
by the r inance I lommittee.
Section 9. Powers and billies of Secretary. The secretary shall keep the
aninutes of all meetings of tie' B lard of Directors, and tin- minutes of all mi i
833
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Secretary. °f the stockholders, and also (unless otherwise directed by the Finance
Powers and Committee) the minutes of all committees, in books provided for that
Duties. purpose ; he shall attend to the giving and serving of all notices of
the Company ; he may sign with the president, in the name of the company, all
contracts authorized by the Board of Directors or by the Finance Committee, and,
when so ordered by the Board of Directors or the Finance Committee, he shall
affix the seal of the Company thereto ; he shall have charge of the certificate books,
transfer books, and stock ledgers, and such other books and papers as the Board of
Directors or the Finance Committee may direct, all of which shall, at all reasonable
times, be open to the examination of any director, upon application at the office of
the Company during business hours; and he shall in general perform all the duties
incident to the office of secretary, subject to the control of the Board of Directors
and of the Finance Committee. The offices of secretary and of treasurer may be
held by one and the same person.
Section 10. Assistant Secretaries. The Board of Directors or the Finance
Committee may appoint one assistant secretary or more than one assistant secre-
tary. Each assistant secretary shall have such powers and shall
Secretaries. perform such duties as may be assigned to him by the Board of
Directors or by the Finance Committee.
Section 11. Comptroller. The comptroller shall be the principal officer in
charge of the accounts of the Company, and shall perform such duties as from time
._ „ to time may be assigned to him by the Board of Directors or the
Comptroller. v - n » •++
Jtmance (,/omrnittee.
Section 12. Voting upon Stocks. Unless otherwise ordered by the Board of
Directors or by the Finance Committee, the chairman of the Board or the chairman
Votine uDon °^ * ue ^i uauce Committee shall have full power and authority in be-
Stocks Owned half of the Company to attend and to act and to vote at any meetings
in other f stockholders of any corporation in which the Company may hold
ompanies. stock, and at any such meeting shall possess and may exercise any
aud all the rights and powers incident to the ownership of such stock, and which,
as the owner thereof, the Company might have possessed and exercised if present.
The Board of Directors or the Finance Committee, by resolution, from time to
time, may confer like powers upon any other person or persons.
Article VI. Capital Stock — Seal.
Section 1. Certificates of Shares. The certificates for shares of the capital
stock of the Company shall be in such form, not inconsistent with the certificate of
incorporation, as shall be prepared or be approved by the Board of
CertiLri tes Directors. The certificates shall be signed by the president or a vice-
president, and also by the treasurer or an assistant treasurer.
All certificates shall be consecutively numbered. The name of the person own-
ing the shares represented thereby, with the number of such shares and the date
of issue, shall be entered on the Company's books.
No certificate shall be valid unless it is signed by the president or a vice-presi-
dent, and by the treasurer or an assistant treasurer.
All certificates surrendered to the Company shall be cancelled, and no new cer-
tificate shall be issued until the former certificate for the same number of shares of
the same class shall have been surrendered and cancelled.
Section 2. Tra?isfer of Shares. Shares in the capital stock of the Company
shall be transferred only on the books of the Company by the holder
Snares 61 ° f thereof in person, or by his attorney, upon surrender and cancellation
of certificates for a like number of shares.
Section 3. Regulations. The Board of Directors, and the Finance Committee
also, shall have power and authority to make all such rules and regulations as
Regulations respectively they may deem expedient concerning the issue, transfer,
and registration of certificates for shares of the capital stock of the
Company.
The Board of Directors or the Finance Committee may appoint a transfer
834:
FORMS AND PRECEDENTS.
Transfer agent and a registrar of transfers, and may require all stock certifi-
Agent. cates to bear the signature of such transfer agent and of such registrar
Registrar. of transfers.
Section 4. Closing of Transfer Books. The stock transfer books shall be
closed for the meetings of the stockholders, and for the payment of dividends,
Closing of during such periods as from time to time may be fixed bj the Board
Transfer of Directors or by the Finance Committee, and during such periods
Books. n0 s tock shall be transferable.
Section 5. Dividends. The Board of Directors may declare dividends from
the surplus or from the net profits of the Company.
Dividends. r^g dates for the declaration of dividends upon the preferred
stock and upon the common stock of the Company shall be the days by these By-
Laws fixed for the regular monthly meetings of the Board of Directors in the
months of April, July, October, and January in each year, on which
Dates for ^ays the Board of Directors in its discretion shall declare what, if
Dec ara on. ^^ dividends shall be declared upon the preferred stock and tiie
common stock, or either of such stocks.
The dividends upon the preferred stock, if declared, severally and respectively
Preferred ; shall be payable quarterly upon the thirtieth day of May, of August,
when payable. f November, and the last day of February in each year.
The dividends upon the common stock, if declared, severally and respectively,
Common ; shall be payable quarterly on the thirtieth day of June, of September,
when payable. f December, and of March in each year.
If the date herein appointed for the payment of any dividend shall in any year
fall upon a legal holiday, then the dividend payable on such date shall be paid on
the nest day not a legal holiday.
Section 6. Working Capital. The directors shall not be required in January
in each year, after reserving over and above its capital stock paid in, as a working
capital for said corporation, such sum, if any, as shall have been fixed
Working by the stockholders, to declare a dividend among its stockholders of
Capital. t j- )e wn0 | e of jts accumulated profits exceeding the amount so reserved,
and pay the same to such stockholders on demand ; but the Board of Directors may
fix a sum which may be set aside or reserved, over and above the Company's
capital paid in, as a working capital for the Company, and from time to time they
may increase, diminish, and vary the same in their absolute judgment and discretion.
Section 7- Corporate Seal. The Board of Directors shall provide a suitable
seal, containing the name of the Company, which seal shall be in
Corporate charge of the secretary. If and when so directed by the Board of
Directors or by the Finance Committee, a duplicate of the seal may
be kept and be used by the treasurer or by any assistant secretary or assistant
treasurer.
Article VII. Amendments.
Section 1. The Board of Directors shall have power to make, amend, and
repeal the by-laws of the Company, by vote of a majority of all of the directors, at
any regular or special meeting of the Board, provided that notice of
en en s. mten tj on to make, amend, or repeal the by-laws in whole or in part,
shall have been given at the next preceding meeting ; or without any such notice,
by a vote of two-thirds of all the directors.
SUBSCRIPTION AGREEMENT.
Whereas, a Corporation is to be organized under the laws of the State of
, to be called the Company, for the purpose among oilier
things of acquiring title to the following mining properties, more particularly de-
scribed as follows, to wit: (here insert description); and
Whereas, the capital stock of said Company is to be divided into
shares of the par value of dollars per share, all of said stock to be
835
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
issued to one in payment for said mining properties ; Now, in considera-
tion of the transfer to us of the several number of shares set opposite our names re-
spectively hereinafter subscribed, we do hereby covenant and agree with said (here
insert name of party from whom mines are to be purchased) that we will accept and
receive said stock and pay for the same at the rate of dollars per share.
And for the purpose of carrying out this agreement we hereby agree to pay to
and as trustees for us on demand the aforesaid sums of
money so subscribed by us, to be held by the said trustees for us, and paid over by
him to the said (here insert names of party from whom mines were purchased)
upon the delivery to the Company of a government patent or deed for
the mines and mining property above described, and the receipt from said
of the several number of shares of stock subscribed by us respectively, and not
otherwise.
WAIVER OF NOTICE OF FIRST MEETING OF INCORPORATORS.
The undersigned, being all the stockholders and incorporators of the
Company, a Corporation created under the laws of the State of , by virtue
of a charter issued by the Secretary of State of said State, bearing date the
day of , 190 , desiring to hold a meeting for the purpose of organizing
said Corporation immediately, do hereby waive notice (and publication of notice) of
said first meeting of stockholders of said Corporation, and we do hereby assent and
agree to hold the first meeting of the stockholders of said Corporation at
on the day of , 190 , at o'clock in the noon,
for the purpose of adopting by-laws and the transaction of any other business that
may legally be done at such meeting of stockholders ; and we do further agree that
any business transacted at such meeting shall be as valid and legal, and of the same
force and effect, as though said meeting was held after notice given and published.
Witness our signatures and seals.
WAIVER OF NOTICE OF MEETING OF STOCKHOLDERS FOR
GENERAL PURPOSES.
The undersigned, being all the stockholders of Company, a Corpora-
tion created and organized under the laws of the State of , by virtue of
a charter issued by the Secretary of State of said State, bearing date on the
day of , hereby assent and agree that a meeting of the stockholders of
said Corporation shall be held at , on the day of
190 , at o'clock in the noon, for the purpose of and
the transaction of other business. We do hereby waive notice and the publi-
cation of notice of such meeting, and agree that any business transacted at such
meeting shall be as valid and effective as though held after notice duly given and
published.
Witness our signatures and seals.
FORM OF LETTER ADDRESSED TO CORPORATION OFFERING TO
TRANSFER PROPERTY IN EXCHANGE FOR CAPITAL STOCK
OF A CORPORATION.
To the Stockholders of the Company :
I am the owner in fee of the following described real estate (or, in case of personal
property, the clause should read, "the owner of the following described personal
property"), to wit: (here insert description of property).
836
FORMS AND PRECEDENTS.
1 hereby offer to transfer to you the property above described within
days from date hereof, in consideration of the assignment to me within the said period
of time, of shares of the capital stock of your Company. The offer
herein contained is made subject to acceptance by your corporation within
days from the date hereof. If the offer is not accepted within said time, the same
shall forthwith become null and void.
Respectfully Submitted.
AGREEMENT FOR THE SALE OF REAL OR PERSONAL PROPERTY
TO A CORPORATION IN EXCHANGE FOR ITS CAPITAL STOCK.
This agreement made this day of , 19') . by and between
of the City of , County of , State of . party
of the first part, and the Company, a corporation organized and existing
under and by virtue of the laws of the State of , party of the second
part.
Witness, For and in consideration of the sum of SI. 00 paid by each of said parties
of the first and second parts to each, the receipt whereof is hereby acknowledged,
and in further consideration of the mutual covenants and agreements herein con-
tained, it is hereby agreed by and between the said parties of this agreement as
follows :
First. The said party of the first part hereby agrees, within days from
the date of this agreement, to sell, convey, assign, transfer, and deliver to the said
party of the second part the following described real estate (or personal property),
to wit :
(Here insert description of the property to be sold, conveyed, transferred, as-
signed, and delivered.)
Second. Said party of the first part hereby warrants that it is the owner in fee of
said real estate above described (or, in case of personal property, that it is the owner
of the personal property above described) all of which is hereby warranted to be free
and clear from all liens, charges, incumbrances, taxes, and assessments whatsoever.
Third. The said party of the second part hereby agrees that forthwith, upon due
conveyance to it (in case of personal property upon the due transfer, assignment,
or delivery) of said real estate by said party of the first part, it will, in considera-
tion therefor, assign, transfer, and deliver to said party of the first part
shares of the common stock of the Company (party of the second part
hereto) of the par value of dollars per share, aggregating $ in
amount.
In Witness Whereof, the said parties of the first and second parts have hereunto
set their hands and seals this day of , 190 .
[seal]
Co. [seal.]
By , Fres.
Attest : Sec'y.
State of
County of
On this day of , in the year , before me personally came
, to me known and known to me to be the individual described in,
and who executed the foregoing instrument, and who acknowledged to me that lie
executed the same.
, Notary Public,
Co.
Stale of
h
State of
County of
On the day in the year before me personally came , to
me known, who being by me duly sworn did depose, and say that he resided in
; that lie is the President of Company, the corporation
described in and which executed the above instrument; thai he knew the seal of said
837
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
corporation; that the seal affixed to said instrument was such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation, and
that he signed his name thereto by like order.
, Notary Public,
County,
State of
FORM OF TRUST AGREEMENT.
(This agreement will be found very convenient where it is desired to get stock back
into the treasury as full-paid and non-assessable stock, subject to sale below par if desired.)
Tins Agreement, entered into this day of , 190 , by and
between of the City of , State of ,
party of the first part, and the Company, a corporation organized
and existing under the laws of the State of , party of the second part,
witnesseth as follows :
First. That in consideration of the mutual covenants and agreements herein
contained, said party of the first part does hereby assign, transfer, and set over
unto said party of the second part shares of the capital stock of the
Company, of the par value of dollars per share to be
held by said party of the second part in trust, and to be disposed of under the
direction of the Board of Directors of said party of the second part for the benefit
of the stockholders of said party of the second part with a view to securing the
necessary funds with which to carry on the business of said
Company, and to provide a working capital therefor.
Second. The said party of the second part hereby accepts the assignment and
transfer of said shares of the capital stock of said
Company to be held by and disposed of by it for the purposes above stated.
Third. Said party 'of the second part further covenants and agrees that it will
at all times hold and'dispose of, at such prices and under such terms and conditions
as its Board of Directors may prescribe, said shares of said capital
stock of said Company, with a view to securing adequate and suf-
ficient capital with which to carry out the purposes for which said
Company was formed.
In Witness Whereof, said parties of the first and second parts have hereunto set
their hands and seals this day of , 190 .
, Party of the first part.
Company.
By , President,
, Party of the second part.
State of )
County of >
On this day of , 190 , before me personally came ,
to me known and known to me to be the person described in and who executed the
foregoing instrument, and duly acknowledged to me that he executed the same.
, Notary Public.
County.
State of \ sg
County of \
On this day of , 190 , before me personally came _ ,
who being by me duly sworn did. depose and say : that he resided in the City of
; that he was the President of the Company, the
corporation described in aud which executed the foregoing instrument; that he
knew the seal of said corporation; that the seal affixed to such instrument was
such corporate seal; that it was so affixed by order of the Board of Directors, and
that he signed his name thereto by like order.
, Notary Public,
County.
838
FORMS AND PRECEDENTS.
CERTIFICATE OF INSPECTOR OF ELECTION.
The undersigned, having been duly appointed Inspector of Election of directors
of the Company, pursuant to the statute in such case made and
provided at the annual meeting of the stockholders of said corporation held for that
purpose on the day of ,190 , at the office of the company in the City
of , do hereby certify that at such election there were'presenl and voting
shares of the stock of said corporation with the following result, to wit :
The said persons above named having received a majority of all the votes cast
at such election are hereby declared by us to have been elected directors by a
majority of the whole number of shares outstanding in said company.
RESOLUTION OF DIRECTORS AUTHORIZING THE
CONTRACTION OF A SPECIFIC DEBT.
Whereas, it appears to this board that dollars are necessary with
which to enable the company to meet its obligations now due and owing; and
Whereas, there is no money in the treasury of the company at the present time
with which to meet said obligations, Now, therefore,
Be it resolved, that the proper officers of this corporation be and they hereby
are authorized to contract a loan for this company to the amount of
dollars, and to give therefor a promissory note of this company for said amount,
same to bear interest at the rate of percent per annum until paid, and to
become due months after date thereof, and the said officers are hereby
authorized to secure payment of said note by giving a mortgage on such real estate
of the company as may be required or as may be expedient.
I, , Secretary of the Company, a corpo-
ration organized and existing under the laws of the State of >
do hereby certify that the foregoing is a true and correct copy of the resolution ot
the Board of Directors of said corporation, duly adopted at the regular meeting
of said Board of Directors held at the office of said company on the day of
, 190 , and that the same is entered as such in the minute book of said
Board of Directors.
Witness my hand and the seal of said corporation the day of , 190 .
, Secretary.
(seal.)
COMBINED FORM OF WAIVER OF NOTICE AND WAIVER OF PUB-
LICATION OF NOTICE OF SPECIAL STOCKHOLDERS' MEETING.
The undersigned, being all of the stockholders of the Company, a cor-
poration created and organized under the laws of the State of by virtue of
a charter issued by the Secretary of State of said State, beariug date the
day of , 190 , hereby assent and agree that a special meeting ol the stockholders
of said corporation be held at the office of the Company, No. Street, in the
City of , State of , on the day of , 190 , at
o'clock in the noon therein, for the purpose of (here insert nature of business
to be transacted), and the transaction of such other business as may come before
the meeting. Wedo hereby waive notice and publication of notice ot such meet-
ing, and agree that any business transacted at, said meeting be valid in effect as
though held after notice duly given and published.
Witness our signatures and seals this day of , 190 .
(Signatures.)
s:;i)
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
FORM FOR RESOLUTION RELATIVE TO OPENING DEPOSIT
WITH BANK.
Resolved, that the Bank be and the same hereby is designated as a
depository of the funds of this Company, and that , the Treasurer of said
Company, be and he hereby is authorized from time to time for and on behalf of
this Company to make or sign checks, drafts, notes, obligations, agreements, or
other instruments ; to endorse checks, drafts, or other instruments ; to accept drafts
or to procure loans, discounts or re-discounts, or advances ; to do all acts inciden-
tal to any of the above matters ; and to pay, adjust, or secure any transaction, mat-
ter, or liability, and to do all acts therein, to pay all sums due or to become due ; to
accept and receive notices and demands, and generally to do all acts and things with
reference to any transaction in the name of or on behalf of this Company with the-
bank of the City of , or in carrying on its business relations-
therewith, which any of said persons may see fit ; Providing, however, that said
Treasurer shall not make the total liabilities created by him hereunder to exceed
at one time the sum of dollars.
This Resolution is to continue in force untU formally rescinded, and filing of due
notice thereof with said Bank.
FORM FOR RESOLUTION DECLARING A DIVIDEND.
Whereas, there is now in the Treasury of this Company surplus profits arising-
from the carrying on of the business of the Company sufficient to justify the decla-
ration of a dividend of per cent upon all stock issued ; Now, therefore, be it
Resolved, that a dividend of per cent on the stock of the Company
issued and outstanding be and the same hereby is declared out of the surplus earn-
ings of the corporation already accrued or hereafter to accrue up to and including
the day of , 190 , to which date this dividend period extends,,
payable on the day of to the stockholders entitled thereto in
proportion to their respective holdings of stock ; and be it further
Resolved, that the President of this Company be directed to notify stockholders
of record of the declaration of such dividend, and to see that the same is paid when
due to the aforesaid stockholders.
FORM FOR POWER OF ATTORNEY, RELATIVE TO ACTING AS
GENERAL MANAGER OF A CORPORATION.
State of ) ss
County of £
Know all Men by these Presents : That the Company, a corporation
organized and existing under the laws of the State of , by ,
its president, and , its secretary, does hereby make, constitute, and appoint
of the City of , State of , its true, suffi-
cient, and lawful attorney, for it and in its name, place, and stead, and to its use, to
eonduct and carry on in and about the city of , State of , all
and singular its business as a company, and in connection therewith to
purchase and acquire all material, that may be necessary in the
promotion or extension of the business of said Company, to appoint
superintendents, agents, clerks, and employees of all grades, and to fix the salaries
of the same ; to enter into contracts for and in behalf of said Company
in the carrying on of its business whenever and wherever necessary ; to make and
execute, sign, seal, and deliver for it and in its name all bills, notes, deeds, or other
instruments in writing whatsoever which shall be necessary for the proper conduct
of its said business ; to secure franchises, rights, and privileges from the Government
840
FOR-MS AND PRECEDENTS.
of and municipalities thereof or from corporations, linns, unci individ-
uals residing therein ; to discharge at his discretion all or any subordinate officers
and agents, clerks or employees, now or hereafter in the employ of said
Company, and to do anything and everything that may be necessary forcouservimr.
promoting, or extending the business of said Company as carried on
in the said State of
In Witness Whereof, the said Company lias caused these presents to
be signed by its President, and its corporate seal to be hereunto affixed and attested
by its Secretary, this day of , 190 .
Company.
By , President.
Attest :
, Secretary.
State of ) gs
County of $
Before me, , a Notary Public in and for the County of ,
State of , on this day personally appeared , known to me
to be the person whose name is subscribed to the foregoing instrument, and known
to me to be the President of the Company, a corporation, and ac-
knowledged to me that he executed said instrument for the purposes therein
expressed, and as the act of said corporation.
, Notary Public.
GENERAL POWER OF ATTORNEY TO ACT AS MANAGING
AGENT OF CORPORATION.
State of )
County of $
Know all Men by these Presents : That the Company, a Corpo-
ration organized and existing under the laws of the State of , by ,
President, and , Secretary, does hereby appoint , of the city of
, State of , its true and lawful attorney for it and in its name, place,
and stead, and to its use, to act for and in behalf of the said Company as its
managing agent in ; and in connection therewith :
First. To represent the said Company in any and every capacity,
and to conduct, administer, and take charge therein of all affairs, business, and
interests of the said Company of any and every kind, to attend to its conserva-
tion and protection, to pay the charges and taxes thereon, to lease and rent the
same upon such terms and conditions as may be by him deemed advantageous for
the Company; to recover and collect the rents therefor, dispossess and remove
the lessees, and take such other steps as may be appropriate to a careful administra-
tion of the affairs of said Company.
Third. To render accounts to whomsoever they may be due, and to exact the
same from whomsoever ought to render them, to make the settlement of all claims
and accounts and approve and disapprove them, to ti.x balances, to ask and to give
compositions, and to give and receive guarantees.
Fourth. To sue for, recover, and collect such accounts as may be due at present
from or in the future that may be owing to the said Company, by whatso-
ever persons or corporations.
Fifth. To take possession, and to give and take in pledge, all the properties
which the said Company may have or shall acquire in the future, or to
which the said Company may have or shall acquire rights in.
Sixth. To issue, accept, indorse, transfer, and negotiate letters of exchange,
checks, promissory notes, due bills, drafts, and any other instruments, negotiable or
not, negotiable, and to satisfy or collect such instruments, to lix a general limited
value upon bills of exchange, promissory notes, or oi her negot table or uon-negot iuble
instruments in the manner which may be convenient.
Seventh. To compromise all the rights and actions of the said Com-
pany, judicially or extra-judicially, submitting them, if deemed advisable, to the
decision of arbitrators and third parties in case of disagreement!
Sll
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Eighth. To sell, lease, pledge, mortgage, or give in payment all the property
both real and personal whicli at the present the said Company may pos-
sess, or in the future may possess, upon such terms and conditions as the said
managing agent may deem convenient and proper, and which the said managing
agent may decide to be proper.
Ninth. To put real or personal property at such prices, and in such amounts,
and upon such terms as may seem convenient and proper.
Tenth. To deposit the moneys and things of value of the said Com-
pany in banks or in other places of deposit, and to withdraw the same at will.
Eleventh. To pay all the charges and taxes which may affect any of the property
of the said Company, and to interpose protests against such charges
and taxes.
Twelfth. To furnish and execute bonds and other securities whenever the
same may be convenient, either in the management of the business and affairs of the
said Company, or in any case in which such bonds or securities may be
necessary or convenient in the conduct of legal proceedings before any of the courts
of administrative authorities.
Thirteenth. To form and sign bills, commercial contracts, bills of lading, mani-
fests, receipts, and whatsoever other documents of such nature may be required.
Fourteenth. To satisfy and extend mortgages upon both real and personal
property.
Fifteenth. To solicit concessions or franchises, patents, and privileges.
Sixteenth. To present bids, accompanied by descriptions, specifications, plans,
and other requisites, with a view to obtain contracts from State, municipalities, and
individuals.
Seventeenth. To execute all documents, public and private, which said managing
agent may deem necessary to the exercise of the powers hereby granted.
Eighteenth. To represent the said Company for any and all purposes
in all courts of justice wherever located, and in connection therewith to retain
counsel in prosecuting or defending action therein.
Nineteenth. To represent the said Company in any and every registry
and public office, presenting to the same any and all petitions, documents, writings,
etc., for filing or registry, which the said managing agent may deem convenient.
FORM FOR CERTIFICATE OF AUTHORIZATION TO COUNTERSIGN
CERTIFICATES OF STOCK.
The Compact,
, Registrar.
This is to Certify, That at a meeting of the Directors of the
Company, duly convened and held on the day of , 190 , the following
resolutions were adopted :
Resolved, That the Company be and is hereby appointed the
Registrar of the shares of the stock of this Company.
Further Resolved, That said Company is authorized to countersign,
when signed by the President and Secretary of this Company, an original issue of
certificates of shares of this Company to the number of shares of
Common Stock and shares of Preferred Stock, and to enter the
particulars of the holdings of said shares in the register from time to time.
Further Resolved, That the Company may apply and act under
instructions of , Counsel of this Company, in respect to any legal
question arising in connection with said Agency.
Further Resolved, That the Secretary be and is hereby authorized to sign, and
seal with the Company's Seal, a Certificate of Authorization to said
Company in the form submitted at this meeting.
That the total authorized capital stock of said Company is $ , divided
into $ of Common Stock and $ of Preferred Stock.
842
FORMS AXD PRECEDENTS.
That said shares are the par value of S each.
That certificates of stock are now outstanding.
That the property for which the above-mentioned shares are issued has been
actually conveyed or transferred and delivered to the Company.
That the Officers authorized by the foregoing resolutions to sign certificates of
stock will sign as follows :
The President will sign
The Secretary wdl sign
Names of Officers. Addresses.
President,
Vice-President,
Treasurer,
Secretary.
Attorney,
Names of Directors. Addresses.
\
Business address of the Company,
Date of Annual Meeting,
Notice for calling Annual Meeting as required by the By-Laws. ,
Signed and sealed in behalf of the Company by authority of the Board of
Directors, this day of , 190 .
For the Company,
, Secretary.
State of
County of
On the day of in the year , before me personally
came , to me known, who, being by me duly sworn, did
depose and say that he resided in ; that he is the of the
Company, the corporation described in and which executed the above
instrument ; that he knew the seal of said corporation ; that the seal affixed to said
instrument was such corporate seal ; that it was affixed by order of the Board of
Directors of said Corporation, and that he signed his name thereto by like order.
, Notary Public.
County.
(A) UNDERWRITING AGREEMENT.
Company.
Covering Year, First Mortgage, per cent, Sinking Fund, Coupon
Gold Bonds ; redeemable at and interest.
Dated , 190 . Due , 19 .
Interest Payable and al the office of the Trust Company,
Trustee.
This Agreement, made and entered into this day of , 190 , by
and between of the city of , State of , parties of the
first part (hereinafter called "the Managers"), and the several subscribers to this
syndicate agreement, parties of the second part :
Whereas, the parties of the first, pari have organized a corporation known as the
Company," under the laws of the Stair of , with a capital of
divided into shares of the par value of % each, which will issue
of first mortgage, six per cent, year, sinking fund, coupon gold 1 'Is,
subject to call at ami accrued interest, of which will lie used as part
payment of the properly purchased and will be left, in the treasury for its
use, leaving which are hereby underwritten.
And Whereat, the subscribers hereto are desirous of underwriting a porti f
the proposed issue of bonds, as provided \,\ this agreement, and thereby participate
843
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
ing in the profits to be derived from the sale of said bonds or becoming the owners
thereof. Now, this agreement witnesseth :
That in consideration of the premises, and the mutual promises hereinafter con-
tained, the subscribers severally, but not jointly, agree with the Managers and with
each other as follows :
I. The subscribers severally subscribe for said first mortgage, per cent,
year, sinking fund, coupon gold bonds, to the amounts (par value) set opposite
their names respectively, and agree to take and pay for said bonds, or any part
thereof allotted to them, in cash, at per cent of par, together with accrued
interest ; payment therefor to be made to the Trust Company, hereinafter called
" the Trustee," in the City of , upon demand of the managers when bonds
or interim certificates representing the same shall be ready for delivery, but payment
shall not be required before , 190 . Upon such payment, the subscriber
shall receive an interim certificate of the Trnst Company in lieu of said
bonds, which certificate shall also provide for the delivery of the bonds and all cou-
pons attached on , 190 , or before, in the discretion of the Managers. Each
subscriber upon the payment of each exclusive of interest shall receive
par value of bonds aforesaid aud par value of the said stock.
IT. It is further agreed that all bonds allotted and taken hereunder shall be
held by the parties of the second part, subject to the demand and control of the
Managers except as hereinafter provided, until , 190 , who shall, during
such time, have full power and discretion to sell the said bonds or any part thereof
for the joint benefit of the parties of the second part at not less than and accrued
interest, by either public or private sale, and that upon notice by the Managers to
any subscriber hereto, the bonds allotted to him or the part designated by the
Managers, shall be delivered to the Trustee, except such as shall have been previ-
ously withdrawn from sale, as hereinafter provided, and said Managers shall, within
thirty days after such delivery, pay to the Trustee, to be remitted to the owners of
the bonds so deposited, per cent of their par value, together with accrued interest.
The managers shall, so far as practicable, call from the subscribers hereto, bonds
pro rata.
III. It is mutually agreed by the subscribers hereto that this syndicate shall
hold all of the said bonds subscribed for as a joint holding for a period of six months
from the day of , 190 , unless said bonds are sooner sold, and that the time-
for the joint holding of any remaining unsold bonds may be further extended for a
period to be determined by a vote of two thirds in interest of the subscribers. Any
member of this syndicate authorized by the Managers may offer and sell the bonds,
as opportunity occurs, at a price to be fixed from time to time by the Managers :
said price, however, not to be less than aud accrued interest, to the syndicate,
except by written consent of two-thirds in interest of the subscribers hereto.
IV. Any subscriber duly authorized to sell bonds, shall be paid a commission
of one per centum of the par value of the bonds sold by him, said commission to be
paid by the Managers and charged to the syndicate at the time of such sale and de-
livery ; any syndicate member selling any bonds shall at the time notify the Mana-
gers and shall receive instructions from said Managers as to whether said bonds so
sold shall be delivered from his holding, or be drawn by him from the Managers.
In the event of his being instructed to deliver his own bonds, he shall immedi-
ately remit to the said Trustee, to the credit of the Managers, the difference between
the cost, viz. : aud interest, and the selling price of the bonds ; and in the event
of drawing them from the Managers, he shall pay the Trustee, for the credit of the
Managers, for the bonds, at the full authorized selling price, together with accrued
interest to date of delivery.
V. Any subscriber hereto may withdraw his bonds from this underwriting
agreement, provided such subscriber notifies, in writing, the Managers, at the time
of signing the underwriting agreement, of his or their intentions so to do; such
party so withdrawing bonds agrees, during the life of the underwriting agreement
and any extension thereof, not to offer for sale or sell any of such bonds, and waives
profits, except stock hereunder.
VI. The right and power to enforce this agreement, when the same shall be-
come binding, operative and effective, is hereby vested exclusively in the Managers,
844
FOR-MS AM) PRECEDENTS.
who alone shall have the right to enforce payment of all obligations assumed by the
subscribers hereto.
VII. In case for any reason, whether before or after this agreement has other-
wise become binding, operative, and effective, the Managers shall determine to aban-
don this underwriting plan, and the organization of the corporation, and shall so
declare, then this agreement in all its parts, including the obligation to deliver said
bonds or any of the stock, shall be and become forthwith null and void, and the sub-
scribers hereto shall be notified accordingly by the Managers, and all moneys paid
hereunder shall be returned.
VIII. The Trustee shall be the depository of the Managers and shall hold the
joint funds and profits arising hereunder, and shall distribute the same from time to
time iu accordance with the directions of the Managers, prorata among the sub-
scribers hereto, except that it shall pay therefrom the commissions and expenses
arising hereunder.
IX. The managers shall receive no compensation for their services as Mana-
gers and shall not be liable under any of the provisions of this agreement, or in or
for any matter therewith connected, provided reasonable care and discretion shall
have been exercised by them in the discharge of their duties.
X. This agreement shall be binding upon the parties of the second part only
when subscriptions hereto shall have been made to the extent of at least
Ri^ht is reserved to reject any subscription or to allot a less amount than that
subscribed for.
In Witness Whereof, the parties of the first part have signed an original hereof,
and the subscribers, parties of the second part, have signed said original or a coun-
terpart thereof, all of which shall be taken and deemed as one original instrument.
C
Managers s __
Subscribers. Address.
(B) FORM FOR UNDERWRITING AGREEMENT.
Company.
Organized under tue Laws of the State of
Authorized Capital Stock, &
Divided into shares of $ each Common Stock.
This Company is organized to control the operation of and all
inventions and patents relating thereto in the United States of America (including
United States ships, wherever they may be), Cuba, Porto Rico, the Hawaiian
Islands, the Philippine Islands, Alaska, the Aleutian Islands, and the Danish West
Indies.
Guaranty Agreement for 8500,000 Common Stock.
, hereinafter called the "Syndicate Managers,'' have entered into
an agreement with , a copy of which is attached hereto, as Schedule
" A," aud made a part hereof, concerning the sale in accordance with the terms
of said Schedule " A " of $2,500,000 par value of the above capital stock.
The parties hereto desire to form a syndicate to guarantee the payment of the
sum of §500,000 working capital as provided in Schedule " A.''
Therefore the Syndicate Managers and the subscribers hereto, in consideration
of the agreements herein contained, and of the efforts and expenses incurred by
the Syndicate Managers in connection with this agreement, agree as follows:
First. The Syndicate Mauagers shall undertake the Bale of shares of said --lock
iii accordance with the provision-, of Schedule "A," and shall have the usual
discretionary powers hereunder.
8 1 5
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
The subscribers each severally for himself and not for any other hei-eby agree
upon the demand of the Syndicate Managers, to pay to the Syndicate Managers a
sum or sums not to exceed the amount set opposite their respective signatures
hereto as, and when, and in such instalments as such payments may be called for
by the Syndicate Managers, or, if a portion, but not the whole of said $500,000
shall have been procured by the Syndicate Managers, by means of such sales, to
pay in like manner to the Syndicate Managers, and upon their demand, such
portion of the sums respectively subscribed for by them hereunder (in the propor-
tion which the subscription of each bears to the total subscriptions hereunder), as
shall be necessary to make up the said sum of $500,000 ; provided, however, that
said demand or demands shall be made in writing by the Syndicate Managers at
least ten days before the date of the payment therein demanded, and that not more
than one-half of the total amount subscribed shall be called within sixty days from
the date hereof.
Second. The Syndicate Managers shall, if they have succeeded in thus procur-
ing said sum of $500,000, endeavor within sixty days from the date hereof to sell
enough of the remainder of said $2,500,000 par value of said stock to net the
further sum of $ 250,000, as provided in Schedule " A," and in making any sales
of said stock they shall do so at the best price which they find to be obtainable.
Third. This agreement shall become effective and obligatory upon the sub-
scribers as soon as the total sum of $500,000 shall have been subscribed hereunder.
Fourth. The money received from said sales of stock, and the stock remaining
in the hands of the Syndicate Managers after completing said sales, shall be paid
over, disposed of, and distributed as provided in Schedule " A."
Fifth. The Syndicate Managers shall not be liable hereunder except for the
exercise of good faith and of reasonable diligence, and they may become sub-
scribers hereto with like force and effect as if they were not Syndicate Managers.
Sixth. In case of default of any subscriber hereunder, the Syndicate Managers
shall have the option either to enforce this agreement against the defaulting sub-
scriber or to declare forfeited all payments theretofore made by such defaulting
subscriber, and to accept additional subscriptions for the amount of any payment
so in default, and thereupon to deprive each subscriber so in default of any
participation whatever in this agreement or of the benefits to be derived therefrom.
In the event of the dissolution of the copartnership of E. Rollins Morse & Bro.,
the survivors and successors, if any, of said copartnership shall become Syndicate
Managers hereunder, having the same powers and duties as if originally named as
Syndicate Managers.
This agreement shall bind and inure to the benefit of the parties hereto, and
their respective executors, administrators, and assigns.
Separate copies of this agreement may be executed and delivered with the
same force and effect as if all the signatures to said separate copies were appended
to one original agreement.
New York, March 15, 1902.
Names. Addresses. Subscription.
Schedule A.
Agreement, made and entered into at the City of , on the
day of , 190 , by and between , of the City of ,
State of , hereinafter called the " Purchaser," party of the first part,
and the firm of , of the City of , hereinafter called the
" Syndicate Managers," parties of the second part, Witnesseth :
Whereas, the Purchaser owns or has the right to acquire the ownership
of $2,500,000 par value of the share capital of the Company, a
Corporation organized under the laws of the State of , whose total
846
FORMS AND PRECEDENTS.
authorized capital stock is 810,500,000, on the organization of a guaranty or under-
writing syndicate which will undertake to pay to said Company the
sum of 8500,000, for working capital, on or before the daj of ,
190 , and ou further payment to of the sum of §250,000 on or
before , 190 , which latter sum is expected to be derived from the
sale of a part of said §2,500,000 of share capital as hereinafter provided, or if said
sum shall not have been procured by means of said sales, the Purchaser, in lieu
thereof, is to deliver to said the stock deposited as collateral as
hereinafter provided ; and,
Whereas, the Purchaser desires the services and assistance of the Syndicate
Managers in forming said Syndicate;
Now, therefore, the parties hereto, in consideration of the premises and of the
agreements herein contained, hereby agree as follows :
The Syndicate Managers agree to use their best endeavors to form a syndicate
-on or before the day of , to guarantee the payment of said
sum of 8500,000, as called for by the Syndicate Managers, and all of which shall
be paid in not later than the day of , 190 , and to sell said
shares as hereinafter agreed.
The Purchaser agrees upon the completion of said guaranty syndicate, and upon
the approval of said syndicate by him, to deliver to the Syndicate Managers said
S2,500.000 par value of shares, of which amount the Syndicate .Managers shall
thereupon deposit in the Trust Company 8833,000, par value, as
collateral security for the payment of said 8250,000, which deposit shall be made
under an agreement approved by the parties hereto.
The Syndicate Managers shall endeavor to sell enough of the 82,500,000 par
value of said shares to provide said sum of 8500,000 to be paid as guaranteed by
said syndicate, and enough more of said 82,500,000 of shares to provide said sum
of 8250.000 to be paid to said Trust Company on or before the first day of
September, 1902.
VOTING TRUST AGREEMENT.
This Agreement made this day of , 191 , by and between the
undersigned, stockholders of the Company, parties of the first part and
Trust Company, party of the second part :
Witnesseth, that, in consideration of the mutual covenants and agreements here-
inafter set forth, and in further consideration of the sum of one dollar by each of
the parties paid to the others, the receipt of which is hereby acknowledged, the said
parties to this agreement hereby agree by and with each other as follows, to wit:
First. The said parties of the first part do hereby assign and transfer and agree
to deliver unto the said party of the second part, the number of shares of stock of
the Company (a corporation organized and existing under the laws of the
State of ) set opposite their respective names, to be held by said party of the
second part until the day of , 19 , in trust, however, for said par-
ties of the first part, their executors, administrators, and assigns at all times subject
to the terms and conditions hereinafter set forth.
Second. Said parties of the first part do hereby covenant and agree that said
party of the second part as voting trustee for said parties of the lirst part, shall, for
a period of years from date hereof, possess, and be entitled to exercise,
without, restriction or restraint other than is herein contained, the right to vote said
shares of stock in said Company hereby conveyed by said parties of the
first part, to said party of the second part.
Third. The said party of the second part does hereby promise and agree with
said parties of the first part, tiiat, every holder of voting trust cert itieates issued as
hereinafter provided shall, immediately upon the execution <>( this agreement, and
upon the delivery by him to said party of the second pari of the Btock certificates
hereby assigned, receive from said party of the second part voting trust certificates
to an aggregate amount equal to the amount of stock so delivered, which certificate
shall be in the following form, to wit:
847
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Voting Trust Certificate.
No.- — Shares.
Issued by the Trust Company.
This is to certify, that the (here insert name of trustee) have received ou
deposit from shares of the stock of the Company
of the par value of $ each, iu trust under the provisions of an agreement
bearing date the day of , 19 , entered into between the owners of
the capital stock of the said Company and the undersigned.
This is to further certify, that (here insert name of stockholder) will,
upon the determination of the trust under which the said shares of stock of
Company were deposited, be entitled to receive from the undersigned, upon the
surrender of this certificate duly endorsed, a certificate of shares of the cap-
ital stock of Company, so deposited.
This is to certify, that the undersigned will make payments to the said (here
insert name of stockholder) prior to the determination of the trust upon which the
said stock of said Company was deposited, equal to the dividends, if any, if col-
lected, by the undersigned as Trustees upon the total number of shares of the
common stock of said Company heretofore assigned by said (here insert name of
stockholder) to the undersigned in trust; and until the day of , 19 ,
the undersigned, as voting trustee, for said shares of the stock of said
Company, shall possess and be entitled to exercise the right to vote in respect to
any of such stock ; it being expressly stipulated and agreed that no voting rights
shall pass to the holder thereof by virtue of his ownership of this certificate.
This certificate is transferable only on the voting trust certificate book (which
it is hereby covenanted and agreed shall be kept for that purpose by the under-
signed) either iu person or by power of attorney duly authorized, according to
rules which have been established for that purpose by the undersigned and upon
surrender hereof ; and until so transferred the undersigned may treat the registered
holder as the owner hereof for all purposes whatsoever, except that delivery of such
certificates herein shall not be made without the surrender hereof.
In Witness Whereof, the said Trust Company has caused these pres-
ents to be signed by its President and its corporate seal to be hereunto affixed, and
to be attested by its Secretary, this dav of , 19 .
TRUST COMPANY,
, President.
Attest :
, Secretary.
Fourth. That each and all of the covenants and agreements contained in the
foregoing form of voting trust certificate are hereby made part and parcel of this
agreement, and shall be and are hereby made binding upon the several parties to
this agreement, their executors, administrators, successors, and assigns.
Fifth. At any time until the expiration of this agreement as hereinbefore pro-
vided, the said party of the second part may receive any additional full-paid shares
of the capital stock of the Company, either common or preferred, upon
the terms and conditions of this agreement, and it shall deliver in exchange therefor
voting trust certificates as hereinbefore provided.
Sixth. Iu voting stock held by it, the said party of the second part shall exer-
cise its best judgment and discretion at all times in voting for the election of suit-
able directors for said Company, to the end that the affairs of the Company
shall be carefully and intelligently managed, and in voting on all other matters
which may come before it at any stockholders' meeting of said Company, shall exer-
cise like judgment and discretion.
Seventh. It is hereby covenanted and agreed that the said party of the second
part shall not be liable or incur any responsibility by reason of its acts of omission
or commission in the premises, except for wilful misconduct or gross negligence in
the execution of the trust hereby created, and which is hereby accepted by said
party of the second part.
In Witness Whereof, the several parties to this agreement have hereunto set
their hands and seals this day of , 191 .
848
FORMS AND PRECEDENTS.
FORM FOR MINUTES OF MEETING OF STOCKHOLDERS
AUTHORIZING BOND ISSUE.
Minutes of a special meeting of the stockholders of the Company,
held at the office of the Company in the City of , State of * ,
on the day of , 190 , at o'clock in the noon.
The following stockholders were present in person :
Names. No. of Shares.
By proxy:
Names. Names of Proxy. No. of Shares.
The meeting was called to order by the President, and the Secretary proceeded
to take the minutes :
The Secretary reported that due and proper notice of the meeting had been sent
to each stockholder, and presented the affidavit of the Secretary to thai effect. On
motion duly made and seconded, a copy of said affidavit was ordered spread upon
the minutes :
(Insert copy of affidavit and notice of meeting.)
The proxies above mentioned were presented and ordered tiled.
The following resolution was then presented to the meeting :
Whereas, it seems expedient to the stockholders of the Company that
bonds of the said Company be issued to the aggregate amount of thousand
dollars (S ), each bond to be of the amount of dollars (S ),
the entire issue to be disposed of on such terms and conditions as the Board of
Directors of the Company may hereafter by resolution determine, the said issue of
bonds to be secured by a mortgage or trust deed covering all the property both real
and personal of said Company wherever situated, such mortgage or trust deed to
run to the Trust Company, of , as Trustee tor the use and
benefit of the purchasers of said bonds ; Now, therefore, be it
Resolved, that the Board of Directors of this Company he and they hereby are
empowered to provide by appropriate resolution for the issuing of a series of bonds
of the denomination of dollars (S ) each, aggregating
dollars in all, each bond to read substantially as follows: (insert copy of bond and
coupons attached). The said bonds to be disposed of on such terms and conditions
as the Board of Directors may hereafter by resolution determine, and to be secured
by a mortgage or trust deed running to the of the City of ,
County, , as Trustee, to read as follows, to wit :
(Insert copy of trust deed, etc.)
It was moved and seconded that the foregoing resolution be adopted.
Ballot having been duly had, and all the stockholders having roted, the chair-
man announced that votes had been cast in favor of the adoption of the
foregoing resolution, and that there were no votes cast in opposition thereto. The
chairman then announced that there having been more than a majority of the total
stock of the Company cast in favor of the adoption of the resolution, the said reso-
lution was therefore duly adopted.
No further business was presented and on motion the meeting adjourned.
, Secretary.
Approved:
, Chairman.
FORM FOR MINUTES OF MEETING OF DIRECTORS AUTHOR-
IZING BOND ISSUE.
Minutes of a meeting of the Board of Directors of the Company, held
at the office of the Company, in the city of , State of , on the
day of , 190 , at o'clock in the noon.
Present, , being all (or a majority) of the Hoard of Directors.
The meeting was called to order liy the President, and the Secretary proceeded
to take the minutes ;
849
INCORPORATION AND ORGANIZATION OP CORPORATIONS.
The Secretary presented a waiver of notice of the meeting signed by all the
Directors, and. on motion duly made and seconded a copy thereof was ordered
spread upon the minutes :
(Insert waiver.)
The minutes of the last meeting of the Board were read and approved.
The chairman then presented a copy of a resolution duly passed by the stock-
holders of the Company at a meeting duly held at the office of the
Company, in the city of , State of , at o'clock of said day,
providing for the issuance of a series of bonds of the amount of dollars
each, aggregating dollars in amount, bearing per cent interest
and maturing , 190 . Said bonds to be secured by a mortgage or deed
of trust running to , of the city of , as Trustee, on the property
of the Company wherever situated, and empowering the Board of Directors of the
Company to provide by appropriate resolution for the issuing of said series of bonds
to be disposed of on such terms and conditions as this Board may by resolution
determine.
On motion duly made and seconded, the following resolution was then unani-
mously adopted :
Whereas, it has been deemed expedient by the stockholders of the
Company that bonds of the said Company in the amount of dollars each
be issued to the aggregate amount of dollars, said bonds to be according
to the following tenor and effect, to wit:
(Insert form of bond.)
And
Whereas, the stockholders of the Company have provided that said
issue of bonds to the amount of dollars shall be secured by a mortgage
or deed of trust covering all the property, both real and personal, of said Company
wherever situated, such mortgages or deed of trust to run to the of the
city of , as Trustee, for the use and benefit of the purchasers of said bonds,
and to be in form and substance as follows, to wit : (here insert copy of deed of
trust) ; and
Whereas, said resolution just referred to provided that the entire issue of bonds
therein provided for should be disposed of on such terms and conditions as this
Board should by resolution determine ; now, therefore, be it
Resolved, that the proper officers of this Company be and they hereby are directed
and empowered to proceed to issue said series of bonds hereinbefore referred to,
aggregating dollars in amount, and they are hereby further directed and
empowered to execute for and in behalf of said Company the said mortgage
or deed of trust running to the of the city of as Trustee, for the
use and benefit of the purchasers of said bonds, all as hereinbefore set forth ; and be
it further
Resolved, that the said officers of said Company be and they hereby
are empowered to dispose of said bonds at their discretion at the best price obtain-
able, the same to be not less than dollars for each bond of the denomination
of dollars (and to give as a bonus to all purchasers of said bonds if they
think it expedient so to do, shares of the treasury stock of said
Company of the par value of dollars per share for each bond of said
Company by them purchased of the denomination of dollars
as herein provided for).
(On motion duly made and carried the proper officers of the Company were
authorized to take the necessary steps to secure a permit from the State of
authorizing the said Company to do business in said State.)
No further business was presented, and ou motion the meeting adjourned.
, Secretary-
Approved :
850
FORMS AND PRECEDENTS.
CERTIFICATE OF PAYMENT OF CAPITAL STOCK.
We, the President and a majority of the Board of Trustees of the of
the State of , do hereby certify that the authorized capital stock of said
company is S , of which $ has been paid in, and that there are
debts of said Company amounting to $
, President.
Trustees
I, , Secretary of the of the , do hereby
swear that the facts stated in the above certificate are true to the best of my
knowledge and belief.
Subscribed and sworn to before me this day of January, A. D. 1905.
Notary Public for the State of
Note. — When there are no debts, insert word "no" and strike out "amounting
to §
FORM OF TRUST DEED TO BE EXECUTED BY A CORPORATION
IN CONNECTION WITH A BOND ISSUE.
This Indenture made this day of , 190 , by and between
the Company, a stock corporation duly organized and existing
under the laws of the State of , party of the first part hereinafter
called the Company and the Trust Company, a corporation organ-
ized and existing under the laws of the State of , as Trustee for the
purposes hereinafter set forth, party of the second part:
Witnesselh, Whereas, the said party of the first part is a corporation duly or-
ganized and existing under the laws of the State of , and has acquired
several plants and properties hereinafter described, and
Whereas, the Company in the exercise of the powers in that behalf possessed
by it and in accordance with the resolutions duly adopted by its Board of Directors
and by its stockholders at a meeting duly and regularly called and held, has deter-
mined to make aud issue its coupon bonds in the aggregate amount of
dollars ($ ) payable in gold coin of the United States of the present standard
of weight and fineness, said bonds to be coupon bonds of the par value of
dollars (8 ) each, each of which bonds is to bear a distinctive number,
running consecutively from one (1) to hundred ( ) and bearing in-
terest at the rate of per cent per annum from the first day of ,
190 , payable semi-annually in like gold coin on the first day of and
in each year, and
Whereas, the said party of the first part under and pursuant to the power and
authority aforesaid has determined to secure the prompl paymenl of the principal
and interest of all of said bonds by executing aud delivering to the Trustee a mort-
gage or deed of trust in the terms of this indenture, conveying the plants and prop-
hereinafter described and set forth, and to that end a mortgage or deed of
trusl securing said bonds in the form of this indenture was submitted bo and ap-
proved by the Board of Directors and by the holders of the entire capital Btoci of
the said Company, at a meeting of said directors and of said stockholders respec-
tively, duly, and regularly called and held for said purposes, and tin- President or
Vice-President and the Secretary or Assistant Secretary of the Company were dulj
authorized at said meeting on behalf of said Company as its act and deed and under
its corporate seal to execute and deliver the same to the Trustee ; and
85 l
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Whereas, the form of bonds and the coupons to be attached thereto, and of the
certificate to be signed by the Trustee for the authentication of said bonds were at
said meeting severally and respectively submitted and approved by said resolutions
of the Board of Directors and of all the stockholders of the Company, and are sub-
stantially of the following tenor, to wit :
FORM FOR REFUNDING BOND ISSUE SECURED BY TRUST DEED.
This Indenture, made this day of , in the year of our
Lord , between the , a corporation duly created, organized,
and existing under and by virtue of the laws of the State of , and here-
inafter termed " the Company," or " the said Company," party of the first part, and
the Trust Company , a corporation duly created, organized,
and existing under and by virtue of the laws of the State of , and here-
inafter termed " the Trustee," or " the said Trustees," party of the second part,
Witnesseth: That Whereas, heretofore and on, to wit, the day of
, , the properties, affairs, and concerns of , here-
inafter termed and , hereinafter termed > both
being corporations organized under the laws of the State of , were
consolidated into one organization, having all the properties, rights, privileges, and
franchises of said and said , and being amenable to all their
liabilities as appears by the certificate filed in the office of the Secretary of State of
the State of , on the day of , .setting
forth the facts of such consolidation, and also all other matters required in
original certificates of incorporation, winch said certificate was filed in the offices of
the Clerks and Recorders of the several Counties in the State of , in
which the same by the laws of said State was required to be filed, and thereby
such consolidation was perfected, aud the said and became
, party hereto of the first part ;
And Whereas the and the did, at or after the time of such
consolidation, and prior to the date hereof, severally, by proper conveyances and
instruments, convey to the said Company, party of the first part, certain property,
real, personal, and mixed, and all the effects, rights, powers, privileges, and fran-
chises of such consolidating corporations respectively, which said several convey-
ances have been duly recorded in the offices of the Clerks and Recorders of the
respective counties in said State of , where such property and effects are
situated, and said consolidating companies did severally cause to be deposited with
the directors of the said Company all the transfer books, seals, books, and papers
of each of the Companies so uniting, and the said Company is now in possession
thereof, and of all and singular the property and effects iu said several conveyances
mentioned and described ;
And Whereas the said theretofore had made and executed under its
corporate seal, and delivered to , as Trustee, its certain deed of trust
bearing date the day of , , which was duly recorded
in the several proper counties in the State of , in and by which deed of
trust the conveyed to said , as Trustee, all the certain real
estate and property in said deed of trust particularly described, for the purpose of
securing the payment of the principal and interest of its certain bonds bearing even
date therewith, to be issued under and pursuant to the provisions thereof to an
aggregate amount not exceeding , which said bonds were of the denom-
ination of each, and numbered consecutively from one (1) upwards to
thirty-five hundred (3500), both inclusive, and which, by their terms, were to become
due and payable in gold coin, twenty years after their said date, and to bear interest
at the rate of six per cent per annum, payable in like gold coin semi-annually, on
the in each year, and of and under which deed of trust is now
the Trustee ;
And Whereas the prior to the said consolidation, and on, to wit, the
day of , , had made and executed under its cor-
852
FORMS AND PRECEDENTS.
porate seal, and delivered to the , as Trustee, its certain mortgage or
deed of trust dated on that day, and on the day of
respectively, its first, second, aud third supplemental »es or deeds of
trust, all of which were thereafter duly recorded in the offices of the Recordi
the counties in the State of in which the property therein described was
situated, in and by which deeds of trust the said
, as Trustee, all the certain real estate and property in said deeds of
trust described, for the purpose of securing the payment of the principal and in:
of its certain bonds (bearing even date with said original deed of trust), to he issued
thereunder pursuant to the provisions thereof to an aggregate amount not exceed-
ing , which said bonds were of the denomination of .and
numbered consecutively from one (1) upwards to twelve hundred (1200). both inclu-
sive, and which, by their terms, were to become due and payable in gold coin on
, , and to bear interest at the rate of six per cent per annum, pay-
able in like gold coin semi-annually on the days of and
in each year;
And Whereas the said Company has assumed the obligations of the
to pay the principal and interest of such of its bonds of the date of as
are outstanding and unpaid;
And Whereas there exists an indebtedness of principal, with accrued interest, of
, a corporation organized aud existing under the laws of
of , all the. property of which was prior to the consolidation afon
purchased subject to said indebtedness, and conveyed to the , which
indebtedness is secured by two mortgages or trust deeds, namely, one executed by
, Trustee, to and others, dated , and one execut 1
by to , Trustee, dated , which indebtedness has
also been assumed by said Company ;
And Whereas the said deeds of trust of the and of the
hereinbefore mentioned, provided, among other things, for the creation of sinking
funds for the redemption and payment of the bonds by said deeds of trust respect-
ively secured, all of which will more fully aud at large appear by reference to said
trust deeds ;
And Whereas the said Company, being desirous of meeting all the said obligations
which have been assumed by it as aforesaid, and of retiring all the bonds of the
and of the , issued and outstanding as aforesaid, and of
paying the said indebtedness of , or exchanging the same for or redeem-
ing the same with the proceeds of bonds to be issued under and secured 1>\ I b
presents, to the end that said several trust deeds and the liens thereby created
maybe cancelled and discharged of record ; and also of securing the means to de-
velop, work, and improve its property, to open, mine, work, and improve and
operate its coal, iron, and other mines, aud to make the necessary and convenient
erections aud improvements appertaining thereto, and to construct, complete,
equip, maintain, and operate the certain furnaces, foundries, and manufacturing
establishments in manner and form as is contemplated by its said articles of in-
corporation, and to increase and to extend its business;
And Whereas the authority of the stockholders of the said consolidating com-
panies, owning more than two thirds of the capital stock of each of them, and more
than three fourths of all preferred stock, for the mortgaging by said compauy of all
its real and personal estate, franchises, privileges, rights, and liberties, to secure the
payment of the aforesaid indebtedness and the general mortgage bonds issued here-
under up to the aggregate sum of bv a mortgage or Ami of trust upon
its property and franchises, and conferring upon the Board of Directors of said
Company the power and authority to carry the same into effect, has been dul\ given
and entered of record in the minutes of both Baid companies, and is also Bel forth in
the articles of consolidation incorporating Baid < lompanv ;
And W&ereas, at a meeting of the Board of Directors of said Company there-
after held, to wit, on the day of , , at the City of
, , it was resolved that pursuant to the authorization bv the
stockholders hereinabove recited, and the articles of incorporation of Baid < lompany,
the proper officers of this Company be, and they are, authorized and directed to
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
prepare such bonds and to execute a mortgage or deed of trust as aforesaid, secur-
ing said last-mentioned bonds, the same to be disposed of as is hereinafter provided ;
And Whereas, in pursuance of sucli authority, the proper officers of said Com-
pany have determined that said bonds shall be in the following form :
UNITED STATES OF AMERICA,
State or
No. %
(Name of Company.)
(Of .)
General Mortgage Five Per Cent Sinking Fund Gold Bond.
Know all Men by these Presents, That the , a corporation duly
organized under the laws of the State of , hereby promises to pay to the
bearer, or, in case this bond shall be registered in accordance with the terms of the
endorsement hereupon, then to the registered owner hereof, at the office or agency
of the said company in the City of New York, one thousand dollars in gold coin of
the United States of the present standard of weight and fineness, on the
day of , , with interest thereon in like gold coin at the rate of
five per cent per annum, payable semi-annually at the same place, upon presentation
and surrender of the coupons hereto annexed, on the days of and in
each year until the said principal sum shall be full paid. And if any default shall be
made in the payment of the interest upon this bond, and such default shall continue
for a period of six mouths, the whole amount of the principal sum of this bond may
thereupon become due and payable, as provided for in the mortgage or deed of
trust hereinafter mentioned.
This bond is one of a series of 6000 bonds, all of like tenor, date, and amount,
numbered consecutively from 1 to 6000, both inclusive, all of which are secured by
a certain mortgage or deed of trust bearing even date herewith, and duly executed
and delivered by the to the , as Trustee, conveying and as-
signing to said last-named company sundry lands, leaseholds, mining rights, and
other properties, real and personal, therein specified and referred to, in trust, among
other things, to secure the payment of the entire issue of said bonds, with interest,
as aforesaid.
The holder hereof is entitled to the benefit of, and subject to the obligations of,
the sinking fund provided for in the said mortgage ; it being understood, however,
that no bonds can be compulsorily redeemed by lot, as therein provided, at less than
105 per cent and accrued interest.
This bond shall not become valid until the certificate endorsed hereon shall have
been duly signed by the said Trustee.
In Witness Whereof, the said has caused these presents to be sealed
with its corporate seal and to be signed by its President or one of its Vice-Presidents
and Secretary or Assistant Secretary, this day of ,
, President.
Attest :
, Secretary.
(Registration Clause.)
This bond may be registered in the owner's name on the Company's books in the
City of , or at any other place which the Company may determine, such
registry being noted on the bond by the Company's Transfer Agent, after which no
transfer shall be valid unless made on the Company's books by the registered owner,
and similarly noted on the bond, but the same may be discharged from registry by
being transferred to bearer, after which it shall be transferable by delivery, but it
may be again registered as before.
The registry of the bond as above shall not restrain the negotiability of the
coupons by delivery merely, but the coupons may be surrendered and the interest
854
FORMS AXD PRECEDENTS.
made payable only to tlie registered owner of the bond, such surrender to be certi-
fied thereon, as follows : This is to certify that the coupons representing the several
instalments of interest to become due on the within bond have been surrendered to
the , and cancelled, and interest on this bond, when hereafter due, will
be payable to the registered owner hereof, as certified hereon, or to his order.
Dated
, Transfer Agent*
(Coupon.)
S
The will pay to the bearer, at its office or agency in the City of
, , in U. S. gold coin, on the day of
, being six months' interest on its General Mortgage Bond, dated
No.
, Treasurer.
(Trustee's Certificate.)
It is hereby certified that this bond is one of the series of bonds mentioned in
the mortgage or deed of trust within referred to.
(Name of Trust Co.)
; Tnu
By
, Vice-President.
And Whereas each of said bonds has annexed to it one hundred coupons repre-
senting the several semi-annual instalments of interest to become due thereon, as
hereinbefore set forth, all of which are of similar tenor except as to numbers and
dates of payment, and are each for in gold coin of the United States ;
And Whereas the said Company, being authorized by the laws of the State of
to borrow money for the purposes aforesaid, and, as security therefor,
to mortgage, pledge, and convey all and singular its properties and effects herein-
after described to secure the payment of the same, and under and pursuant to the
authority conferred by said laws, and of the stockholders and directors aforesaid, in
order to provide funds for the purposes aforesaid, and to secure the payment of all
and singular the said bonds issued or to be issued under and pursuant to the terms
of this instrument, together with the interest thereon, has determined to and does
make, execute, and deliver this its deed of trust in manner and form as herein stated :
Now, therefore, This Indenture Further Witnesseth, that the said Company, in
consideration of the premises, and of dollar, lawful money of the United
States, to it paid by the said Trustee at or before the ensealing or delivery of these
presents, the receipt whereof is hereby acknowledged, in order to secure the due
and punctual payment of the principal and interest of the bonds to be issued by
it as herein provided, and outstanding at any time hereafter, and the faithful
performance of the covenants herein contained, hath granted, bargained, sold,
alienated, transferred, assigned, conveyed, and confirmed, and by these presents
doth grant, bargain, sell, alienate, transfer, assign, convey, and confirm unto said
Trustee, and to its successor or successors in trust herein, all the right, title, and
interest, claim, and demand, whatsoever, which the said Company now has or is
entitled to, or which it may at any time hereafter acquire or become entitled to, in
and to the following described real estate, premises, and property, to wit :
All and singular the several lots, tracts, pieces, and parcels of mining and other
lands of the Company situated in the State of , as follows, to wit :
Together with the appurtenances, mines, and mining rights (hereunto belong-
ing or in any wise appertaining; all houses, buildings, structures, and fixtures
erected, or to be erected upon, and in any way connected with, any of the afore-
mentioned lands and real estate; including all iron, coal, and other mines j and
mining property, machinery, and fixtures; all the coke ovens, furnaces, foundries,
mills, machine shops, steel plants, and manufactories of every kind, name, and
nature, whether the same are now constructed, in operation, or shall be hereafter
constructed or operated upon said premises, or any part thereof, including all stock
in trade, tools, equipment, machinery, material, and property of whatever kind or
855
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
nature, 'whether affixed to the freehold or movable, and owned by the said company
at the time of the execution of these presents, or at any time hereafter, appurtenant
to any such properties, together, also, with all the property, rights, title, and interest
which the said Company now has in and to the conduit pipes, pumps, and ma-
chinery used for carrying and conveying water for manufacturing purposes, or to
its factories, whether the same be on the lands aforesaid or on other lands, and all
titles, rights, and easements connected therewith, together with all renewals, re-
placements, repairs, additions, betterments, developments, and improvements now
made, or which shall at any time hereafter be made upon or to any of the said trust
properties, together with all franchises of the said Company of every nature relating
thereto, including all its mills, water-powers, ditches, canals, and the reversion and
reversions, remainder and remainders, revenues, incomes, rents, issued and profits
thereof, and all the estate, right, title, and interest, property, possession, claim, and
demand whatsoever, as well in law as in equity, present aud future, of the said
Company of, in, and to all and singular the property and effects hereinbefore de-
scribed, and every part of the same, and every parcel thereof, with the appurte-
nances ; also, all revenues, benefits, advantages, and profits to the said Company at
any time accruing from or out of the same, or the business and operations thereof
and connected with said properties.
To have and to hold the said properties, the same being herein designated
as the " trust properties ; " subject, however, as to so much of said trust properties
as is embraced in the trust deeds executed by the said and said ,
and those executed upon the lands of the , respectively, as afore-
said, to the liens thereof, respectively, and subject also to all valid and existing rail-
road and ditch rights of way, and other lawful public easements, unto the said
Trustee, its successor or successors, to its and their only proper use, benefit, aud
behoof forever.
In Trust, nevertheless, for the equal pro rata benefit and security of all
persons and parties, corporate bodies and partnership firms who may hold any of
the bonds issued hereunder, in conformity with the provisions herein contained,
and at any time hereafter outstanding, without any discrimination, preference, or
priority of any one bond over another by reason of priority in time of its actual
issue or negotiation, or otherwise, with all the powers and upon the terms and
conditions, and upon the trusts and for the purposes hereinafter reserved, created,
declared, expressed, and contained, as follows :
Article First. — The said $ of bonds, in the form hereinbefore
specified to be issued and intended to be secured by these presents, and hereinafter
designated as " general mortgage bonds," shall be disposed of in the following
manner :
I. bonds, being those numbered from one to twelve hundred, both
inclusive, shall be forthwith certified by said Trustee and delivered to the President
of said Company, to be by it sold and the proceeds used as its Board of Directors
shall deem proper in the transaction of its business as aforesaid.
II. The remaining bonds, being those numbered from twelve hun-
dred and one to six thousand, both inclusive, or out of the proceeds thereof, a sum
not exceeding , shall be reserved and deposited with said Trustee for
the protection of the purchasers of bonds issued hereunder and for the purpose of
enabling said Company to withdraw by exchange or pay the bonds heretofore
issued by the , and those heretofore issued by the , and the
said secured indebtedness of the . , amounting in the aggregate _ to
(exclusive of interest or deduction on account of payments to sinking
funds heretofore made), as hereinafter provided, which bonds and indebtedness are
hereinafter designated and referred to as " prior bonds " secured by the several
deeds of trust hereinbefore in that regard respectively referred to.
III. No interest shall be or become payable upon any of the said forty-eight
hundred general mortgage bonds as long as they shall remain in the possession of
the Trustee, unissued, and when they shall have been authenticated by the certificate
of the Trustee, and when and as they shall be issued, and delivered to owners or
holders, all coupons thereon which shall have matured prior to the date of such
issue and delivery shall be detached and cancelled.
856
FORMS AND PRECEDENTS.
Article Second. — I. Whenever the said Company sliall deliver and hand
over to the said Trustee prior bonds of any or either of the issues aforesaid, the
said Trustee shall, ou receiving the same, deliver to said Company (or to Mich
person or persons as may be designated by resolution of the Board of Directors of
the Company) general mortgage bouds in its hands, duly authenticated In its
certificate, to an amount equal to the amount of principal of such prior bonds
delivered to it by or for the Company, or the said Trustee may from tune to time
countersign, issue, and deliver to said Company such of said general mortfi
bonds as may be in its hands at the time, either all at one time, or from tin
time, in such amounts as maybe required by the Company on receiving the par
value thereof in gold coin of or equal to the standard in such prior bonds mentioned,
the sums so received by said Trustee to be returned to said Company on
entation by it to said Trustee of prior bonds, dollar for dollar, if the same be so
presented before or at the maturity of said prior bonds : provided, thai the Trustee
may loan out such moneys with the consent of the Company, on call, at
of interest as it may deem advantageous, on such security as it may (hem sufficient,
or on prior bonds aforesaid, or on bonds secured hereby aud issued hereunder, at
market value, not above par.
II. "Whenever the said Company shall deliver to said Trustee a certificate exe-
cuted by the Trustee of and under the mortgage hereinbefore referred to,
to the effect that certain of the bonds secured thereby have been cancelled in accord-
ance with the sinking-fund provisions of the mortgage or deed of trust securing the
same, which certificate shall specify the date of cancellation and the numbers of the
bonds so cancelled, the Trustee hereunder shall, on receiving the same from time to
time, deliver to said Company general mortgage bonds in its hands, duly authenti-
cated by its certificate, to an amount equal to the amount of principal of 'such prior
bonds so shown to have been cancelled.
III. Whenever the said Company shall deliver to the said Trustee a certificate
executed by the Trustee of the mortgage hereinbefore referred to, to the
effect that certain moneys have been paid into its hands or collected by it for the
purposes of and in accordance with the sinking-fund provisions of the mortgag
deed of trust securing the same, which certificate shall in the first instance specify
the amount of such moneys so received by the said last-mentioned Trustee up i
including the date of such certificate, aud each and any subsequent certificate speci-
fying the amount of such moneys so received, and the date on which they were re-
ceived, the Trustee shall, from time to time, on presentation of such certificate or
certificates, in amounts of or multiples thereof, deliver to said Company
(or to such person or persons as may be designated in an order of the said Com-
pany) general mortgage bonds in its hands, authenticated by its certificate, to an
amount equal to the amount in said certificate named ; provided that nothing herein
lined sliall authorize the Trustee to deliver general mortgage bonds in exchange
for any bonds which may have been purchased by the Trustee of and under said
mortgage for the benefit of the sinking fund under said mortgage, and
which may be still held by said Trustee.
IV. Whenever said Company shall have paid dollar indebtedness of
the , and shall deliver to the Trustee certified copies of the records of the
proper counties showing the release of the trust deeds. securing the same, the Trus-
tee shall thereupon deliver to the Company general mortgage bonds, authenticated
by its certificate, to the amount of dollars of principal.
Article Third. — Upon maturity of such prior bonds respectively, said Trns-
-iiall apply any moneys that may have been received by it, and remain in its
hand- as aforesaid, to the payment of principal of such prior bonds as may at the
time be outstanding.
All prior bonds which may be received bj said Trustee shall be cancelled forth-
with, and delivered so cancelled to the Trustee of the mortgage which was given to
secure the same.
Article Fourth. — Until default shall be made by the said Company, il
cessors or assigns, in the due and punctual observance and performance of ah\ "lie
or more of the covenants and agreements herein contained on the pari and bi half of
the said Company to be kept and performed (and possession taken bj said Trustee
857
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
by virtue hereof), the said Company, its successors and assigns, shall be suffered
aiid permittted to remain in the actual possession of all and singular the trust prop-
erties hereinbefore mentioned and described, and of the whole thereof, to use and
employ the same and every part thereof, to sell in the course of trade the personal
property and products so intended for sale, and to sell any machinery, equipment,
tools or other personal property covered by these presents, which shall either have
been replaced by other similar articles of equal value or which shall cease to be
necessary for the efficient operation of the Company's business ; and to exercise and
enjoy all the rights and franchises appertaining thereto, and to collect, receive, and
have the income, rents, revenues, issues, and profits thereof, and use the same in
auy manner which will not impair the lien created by these presents ; and the min-
ing of coal or other minerals or cutting timber from said lands shall not be deemed
such impairment.
Article Flfth. — The Company may at any time in its own discretion contract
for the sale of, and sell and convey any portion of the surface of the lands hereinbe-
fore described, and not required by it iu its operations, upon the payment to said
Trustee of the sum of per acre for the land so sold and conveyed ; reserv-
ing, however, in all such sales and conveyances, the right to said Company, its suc-
cessors and assigns, to extract and dispose of all coal or other minerals beneath such
surface without let or hindrance from or responsibility to the purchasers of such
surface on account of the operations carried on beneath the surface for the purpose
of extracting such coal or other minerals ; and upon the receipt by the Trustee of
said per acre, and of an affidavit by the President or General Manager
of the Company that the portion of the surface sought to be released is not required
by it in its operations, it shall execute a release to the purchaser of all the interest
so conveyed, which shall operate as a release of the same from the lien of these
presents. The said affidavit of the President or General Manager of the Company
shall be sufficient and conclusive evidence to the Trustee of the truth of the facts
stated therein. The said Company may also, with or without compensation there-
for, in its discretion, grant over, through, or upon the lands covered by these pres-
ents, free from the lien thereof, rights of way, of reasonable extent, for such railways,
ditches, highways, tunnels, or other improvements as may be either advantageous
or not injurious to its own business operations ; subject, however, to the right of
said Company to extract all coal and minerals as aforesaid, when the same can be
done without injury to such rights of way.
All moneys received by the Trustee under this article shall be held and applied
by it to and for the purposes of the sinking fund, hereinafter created ; provided, that
if at the time of the receipt thereof any prior bonds which are a lien on the land so
sold should be outstanding, then in case any such money shall be received by the
Trustee from or on account of any parcel of land now subject to the trust deeds se-
curing the prior bonds, the Trustee shall turn over such money to the Trustee or
Trustees thereunder for the time being, to be held and disposed of by it or them as
therein prescribed.
Article Sixth. — I. The said Company shall and will well and truly pay off
and discharge, or cause to be paid off and discharged, each and every tax, assess-
ment, or other liability and governmental charge which may from time to time
be lawfully levied or imposed by competent authority upon the said trust prop-
erties, or upon any part thereof, the hen whereof might or could be held to
be superior to the hen of these presents, so that the priority of these presents
shall at all times be duly maintained and preserved. The Company shall keep
the said mines, mining property, coke ovens, and other establishments, manufac-
tories, and manufacturing establishments, hereinbefore mentioned, in good work-
ing order and condition, and shall and will from time to time make all needful and
proper repairs, renewals, replacements, alterations, additions, betterments, develop-
ments, and improvements of all and singular said property, mines, and premises, so
that the business thereof, and of every part thereof, shall be preserved, developed,
and maintained.
II. The Company shall well and truly pay, or cause to be paid, the said prior
bonds and indebtedness and the interest thereon at maturity, and shall^ and will
well and truly observe and perform all the covenants and agreements in said several
858
FORMS AND PRECEDENTS.
trust deeds securing said prior bouds, respectively contained, in sncb maimer that
the rights of the holders of general mortgage bonds issued hereunder, and the
security afforded them bv these presents shall noi be in any wise impaired or prej-
udiced, and will not do or suffer any matter or thing whatsoever whereby the hen
of these presents might or could be diminished or impaired; provided thai nothing
herein contained shall prevent either the substitution or exchange of general mort-
gage bonds secured by these presents for the prior bonds aforesaid cow outstanding,
orthe payment of such prior bonds with the proceeds of the sale or negotiation oi
any general mortgage bonds secured hereby, as herein provided, or the release, by
the said Trustee, of any portion of the said lands and premises which may be sold
under and according to the stipulations herein contained, or the performance oi any
of the conditions of this indenture.
III. As between the Company and the Trustee, all the machinery, tools, and
other personal property used and to be used in connection with the said trust prop-
erties shall be considered fixtures, and be held to be covered by the lieu of these
^Article Seventh. — If default shall be made in the payment of any semi-
annual instalment of interest mentioned in the said general mortgage bonds, accord-
ing to the tenor or effect of said bonds, and if such default shall continue tor the
penod of six months, then the Trustee or its successor or successors m the in.si,
mav, at its or their option, and upon being requested in writing by the holders ol a
maioritv in amount of the said bonds then outstanding, shall, declare the principal
of all of the said bonds to be immediately due and payable, and thereupon the
principal of all of said bonds shall become due and payable forthwith. Such dec-
laration may be made by notice in writing to the said Company or by publication
thereof once in some daily newspaper published in the City of New J ork. In case
of any sale of the mortgaged premises pursuant to any decree of foreclosure ami
sale based upon this mortgage, the principal of all of the bonds secured hereby
shall become forthwith due and payable without any declaration to that effect or
notice thereof. , f ..,
In case default shall ha made by said Company in the performance of any of the
covenants and agreements contained in the several prior bonds, or in the trust
deeds securing the same, so as to entitle the Trustee or Trustees therein, or either
of them, to exercise the power of entry provided for therein; or in case the said
Companv shall, at any time, make default (a) in paying the principal or interest, or
.any part' thereof, which, in and by said general mortgage bonds, it has promised to
pay on any day whereon the same shall be payable and shall have been demanded ;
OT (b) in paving all or any part of the taxes and assessments which shall at any
time be lawfully imposed upon the properties covered, or intended to be covered,
by these presents, as each shall respectively fall due; or (c) in setting apart and
applying, at the times and in the manner hereinafter directed, the sinking fund
hereinafter provided for, or some part thereof; and in case one or more persons
holding a majority of said general mortgage bonds, as to which such defaults or
one or more of them, exist, shall have made a demand upon said trustee in writing
to that effect, then, upon the continuance of such defaults, or one or more ot them,
for six months, it shall be lawful for said Trustee:
I. To enter into and upon all and singular the trust properties covered, or in-
tended to be covered, bv these presents, and to take the same, and each and all ol
them, into its own possession, and to control, manage, and operate the same, by
itself, or by its agents, attorneys, and employees, as it shall think proper, m hke
manner as the said Company theretofore had or mighl have done ; and to collect,
use, and dispose of the products, earnings, rents, profits, revenues, and income
thereof (first) in and toward paying the expense of operating said properties, and
of keeping the same in good and efficient working condition and repair, including a
•reasonable compensation to the said Trustee for managing and operating the same,
and also the fee's of counsel employed by it in that behall ; and, , any sui?lus shaU
remain, then (second) to use such surplus in making good the defaull oi defaults
which mav have so occurred, whether before or after its takuig possession as afore-
said, to (or for the benefit of) the parties who may has., suffered thereby, ana.
upon and after having so made good all SUCH defaults, ,n trust to restore .he s,id
N.V.I
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
trust properties to the said Company in like manner as it had held the same before
such defaults had occurred ; or
II. In case any one or more of the defaults in this article mentioned shall have
occurred, and continued for more than six months, and upon a like written demand
upon said Trustee to that effect, made by one or more persons holding a majority
of said general mortgage bonds as to which such defaults, or any one or more of
them, shall exist, then in trust to sell, or cause to be sold, the said trust prop-
erties, or so much thereof as shall be necessary for that purpose, at public auction, at
, , after having given notice of the time and place and terms
of sale, by publishing the same once in each week for nine consecutive weeks im-
mediately preceding such sale, in one newspaper published in the City of New York
and in one newspaper published in the City of , ; and
upon such sale or sales to execute and deliver to the purchase or purchasers of
the property sold, both in its own name and in the name of the Company, and as
its attorney in fact, irrevocable (hereby duly appointed and authorized), such good
aud sufficient deeds of conveyance, or other instruments of assignment or transfer,
as may be necessary or convenient; to vest in the purchaser or purchasers all the
estate, right, title, and interest, both of the said Trustee and of the said Company,
of, in, and to the property so purchased ; and in trust, to receive, collect, use, and
apply the net proceeds of such sales, after deducting therefrom all expenses incurred
in making such sales, including a reasonable compensation to the said Trustee
for administering this trust, and also the fees of counsel employed by it in that be-
half, in and towards the payment in full (or if not in full, then pro rata), of the in-
terest first, and then of the principal, due upon any and all the said general
mortgage bonds then outstanding and unpaid, in such manner that, after such pay-
ments shall have been made, the amounts remaining unpaid upon each bond,
whether of principal or interest, shall be equal one with another.
III. Nothing in this article contained shall be construed as to prevent or
hinder the said Trustee from applying to any Court of competent jurisdiction,
after any default in the performance of any of the terms and provisions hereof, for
a judicial foreclosure of these presents, or for any relief, provisional, interlocutory,
or final, to which it may be entitled in any proceeding, either at law or in equity,
to enforce or secure any rights herein conferred. I3ut no bondholder or bond-
holders shall take, begin, institute, or prosecute, or have the right to require the
Trustee to take, begin, institute, or prosecute, any suit or suits, proceeding or pro-
ceedings, to enforce the provisions of or to foreclose this mortgage, until after the
expiration of the period of six months from the date of any such default. And no
bondholder or bondholders shall, at any time, take, begin, institute, or prosecute
auy suit or suits, proceeding or proceedings, until after he or they shall have
requested the Trustee in writing to take, begiu, or institute such suit or suits,
preceeding or proceedings, and offered proper indemnity, as hereinafter provided,
and the Trustee shall have thereupon refused to comply with such request. The
Trustee shall have the right to require the person or persons presenting any such
request, or auy request or demand mentioned or provided for in this mortgage, to
furnish proof, by affidavit or affidavits of the signers, as to the ownership of the
bonds represented by him or them, and of his or their authority to subscribe such
request, in case the same shall be subscribed by any other persons than the owner ;
and, if such proof be so required, the said request shall be without effect until
such proof shall have been furnished to the Trustee.
IV. Any of the general mortgage bonds or prior bonds and overdue coupons
thereon shall be received in payment of the purchase money of any property sold as
aforesaid as equivalent to so much cash of the said pnrchase money as would be
distributable and payable thereon ; provided that, in case of auy such sale or sales
under and by virtue of the power conferred by this instrument, the Trustee shall
sell the trust properties in such order as may be in writing directed by said Com-
pany, provided reasonable notice thereof shall be given to the Trustee.
Article Eighth. — I. For the purpose of providing against any depreciation
of the security reserved herein by reason of the mining out of coal and iron from
the aforesaid trust properties, the Company shall set aside and reserve from and
after the first day of , and while the lien of these presents con-
860
FORMS AXD PRECEDENTS.
tinues, the sum of two cents per ton on each ton of coal, and five cents per ton on-
each ton of iron ore, mined from any of the lands now or lien after covered l>v this
mortgage, such reservation to be tor the purposes of a sinking hind on the condition
hereinafter set forth.
II. On or before the first day of in each year, commencing with
, -while the lieu of these presents shall continue, the Companj shall
account to the Trustee for all moneys reserved as aforesaid for the purposes of a
sinking fund. The Company shall have the right to invest the moneys so reserved
by it in the purchase of coal aud iron lands which may be necessary or desirable for
the use of the Company, at the fair value thereof. On or before the first daj of
iu each year the Company shall deliver to the Trustee a supplemental
mortgage or deed of trust which shall vest the title to the lands so purchased, if
any, in the said Trustee, subject to all the trusts, powers, conditions, and provisions
herein contained, and shall pay over to the said Trustee the reservations of said
sinking fund which shall not have been invested iu coal or iron lauds as above pro-
vided; provided, that such delivery shall be accompanied by the affidavil of the
President, General Manager, or one of the Vice-Presidents of the Company showing
the entire amount of moneys reserved during the preceding year and the amount
invested in the purchase of lands, and setting forth that the' lauds purchased on
account of said sinking fund were necessary or desirable for the use of the Com-
pany ; that the price paid for the same was the fair cash value thereof, and thai said
property had been purchased for the Company in good faith for the consideration
expressed ; and shall be further accompanied by a certified copy of resolution adi
by the Board of Directors of the Com pany authorizing or approving the purchase of
the aforesaid coal and iron lands and the execution and delivery of the supplemental
mortgage above provided for, which affidavit and certificate shall be conclusive
evidence to the Trustee of the truth of the statements therein contained; provided,
further, that the owners of a majority in amount of the outstanding bonds shall have
the right at any time to require all sinking-fund reservations thereafter accruing
to be paid in cash; and whenever one or more persons holding a majority of said
general mortgage bonds shall have made a demand upon said Trustee in writing to
that effect, the entire sinking-fund reservation shall be payable in cash from that.
time until the maturing of the said general mortgage bouds"
III. Immediately upon the receipt of moneys for the sinking fund, or from sales
of land, as provided in Article Five, the Trustee shall proceed to invest the same in
the outstanding general mortgage bonds secured by this deed of trust by purchas-
ing them in the open market at the best price for which they can be obtained ; in
no event, however, paying more than par aud live per centum premium with accrued
interest.
IV. In case the Trustee shall not be able to purchase the bonds at the price
herein limited, then, and in that event, the Trustee shall, on or before the first day
of , in each year, draw by lot from the entire number of bonds which
shall have been outstanding on the first, day of previous thereto such a
number of bonds for redemption as it shall have funds to redeem at par aud li\<
cent premium, and the holders of said bonds so drawn shall be forthwith notified
by advertisement published daily (Sundays excepted) for two weeks iu two news-
papers in the City of New York, and in one newspaper in ,
that their bonds will be redeemed at live percent above par with accrued interest
on tlic first day of then next ensuing, and such bonds shall thereupon
cease to draw interest from the date fixed for redemption, and shall be redeemed
by the said Trustee on and after that, day, aud at the price aforesaid, out of the
moneys placed iu its hands on acci lid sinking fund.
V. All bonds that, shall, from lime to lime, lie purchased or redeemed through
the sinking fund herein created shall be destroyed forthwith by the said Trustee in
the presence of some officer or other person to be designated by the Company, and
said Trustee shall certify to said Company, in writing, the fact of such destruction
and the numbers of the bonds so destroyed.
Aetk i.k Ninth. — I. In case said Trustee shall be required by the holdi
bonds secured by these presents ho enforce any of their rights berebj ecured, if
shall not be required to incur any expense or liability in connection therewith until
861
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
it shall be satisfactorily indemnified by the parties requiring such action to be-
taken.
II. All powers in these presents conferred upon the said Trustee (except as
otherwise herein specifically provided) shall be deemed discretionary, and it shall
incur no liability in exercising any such powers, provided it acts in good faith in
exercising the same.
III. The Trustee shall not be answerable for the default or misconduct of any
attorney, clerk, or agent appointed by it in pursuance hereof, if such attorney, clerk,
or agent be selected with reasonable care, nor for any error or mistake made by it
in good faith, but only for gross negligence or willful default in the discharge of its
duties as such Trustee. The Trustee shall not be individually liable for any debts
contracted or any liabilities incurred by it, nor for any damage to persons or property
injured, nor for salaries or non-fulfilments of contracts, during any period in which
the Trustee shall manage the trust property upon entry as aforesaid, but all such
debts and liabilities shall be and constitute a first charge upon the trust funds and
properties.
The Trustees shall be entitled to such just and reasonable compensation for all
services which may hereafter be rendered by it in this trust as may be agreed upon
between it and the Company, or, in the absence of such agreement, as may be fixed
by any court of competent jurisdiction; and the services of such Trustee shall be
deemed to be continuous during the entire period while these presents shall remain
in force or effect, and it remains such Trustee ; and said Trustee shall be paid by
the Company, or out of the income of the trust properties from time to time as re-
quired, and until paid shall be secured hereby. The said Trustee shall be entitled
to be fully reimbursed in respect thereof before any distribution is made for prin-
cipal or for interest upon any bonds or coupons secured hereby.
Article Tenth. — The said Trustee, or any Trustee or Trustees hereafter ap-
pointed, may resign and be discharged of the trust created by this indenture, by
giving notice in writing to the Company, and to the general mortgage bondholders,
by publication thereof, at least six times a week for four successive weeks, in a news-
paper published in the City of New York, New York, and in a newspaper published
in the City of , , such resignation not to take effect until at
least thirty days after the last publication of such notice ; and in case of the disso-
lution of said Trustee, or of its resignation, incapacity to act, or removal as Trustee
hereunder, it shall be the duty of the Company, or of its President, or Secretary, to
call a meeting of the holders of the general mortgage bonds secured, or intended to
be secured hereby, by publishing a notice at least six times each week, for at least
four weeks, in a newspaper published in the City of New York, New York, and in
a newspaper published in the City of , , such meeting of hold-
ers of said bonds to be held in the City of New York, not less than ten days after
the last publication of each or either of said notices, for the purpose of filling the
place of said Trustee ; and a majority in interest of the holders of said bonds, so
attending such meeting, or legally represented thereat, shall be competent to elect
a new Trustee, and shall at such meeting proceed to elect a suitable person or per-
sons or corporation to act as Trustee or Trustees to fill such vacancy, and the per-
son or persons or corporation so elected shall immediately upon such election, and
upon filing with the Company an acceptance in writing of such trust, become vested
with all the estate, trust, rights, power, and duties of the said Trustee, as prescribed
herein ; and thereupon all the powers hereunder, and all the estate, right, title, and
interest in the said trust properties of the Trustee who shall have become incapable,
or have resigned, or have been removed, shall wholly cease and determine; but,
nevertheless, the Trustee or Trustees resigning, or being removed as aforesaid, shall,
upon request in writing of the new Trustee or Trustees, execute and deliver to it,
him or them all such conveyances and other instruments as shall be fit and expedi-
ent, for the purpose of assuring to such new Trustee or Trustees the legal estate in
the trust properties ; provided that the expense of the preparation and execution of
such new instruments shall be defrayed by the Company, or other parties in in-
terest ; and provided, further, that nothing herein contained shall be so construed
as to deprive any Trustee, or his or its representatives, of any right to such com-
pensation or reimbursement as such Trustee is or may be justly entitled to, for any
862
FORMS AND PRECEDENTS.
service actually rendered, or expense incurred under this indenture ; and in case of
such election of anew Trustee or Trustees, as aforesaid, the Company hereby cove-
nants to make, execute, and deliver such other or further instruments, deeds, inden-
tures, or assurances as may be necessary to enable the person or persons or corpora-
tion so elected to execute and carry out the trusts hereby created and declared as
fully and perfectly iu all respects as he, they, or it could have executed and carried
out the same, if originally made the party of the second part to this indenture;
and it is hereby declared and agreed, that in case the holders of said bonds
shall fail or omit to appoint a new Trustee or Trustees, in the manner aforesaid,
within ninety days after the incapacity of any Trustee shall occur, or within nil
days after the resignation or removal of any Trustee, the President of the Com-
pany shall thereupon become such Trustee, and shall serve as such, and shall be
subject to all the duties, and be vested with all the powers herein or hereby
created, granted, and conferred upon the said party of the second part, until a
majority in interest of the holders of the outstanding bonds shall elect a Trustee
or Trustees, in the manner aforesaid. It is further expressly agreed that all cov-
enants, stipulations, promises, and undertakings herein contained, by or on behalf
of the Company, shall bind aud be binding upon its successors or assigns, whether
so expressed or not.
Article Eleventh. — I. These presents, and the trusts, conditions, and pow-
ers hereby imposed or granted, may be altered, curtailed, enlarged, or added to in
any manner that shall be agreed upon between the said Company and the said
Trustee, provided that such alterations, curtailments, enlargements, or additions
shall have first been approved by holders of two thirds in amount of all the then
outstanding general mortgage bonds secured by these presents, at a meeting of
general mortgage bondholders to be summoned by said Trustee at the request of
the Board of Directors of said Company, and upon a two weeks' written notice of
the time, place, and purpose of said meeting, to be sent by mail to all such bond-
holders whose places of residence can be ascertained, and by publication thereof
daily (Sundays excepted) for two weeks immediately previous to such meeting, in
two' newspapers published in the City of New York, aud in one newspaper pub-
lished in the City of ,
II. The approval by the requisite numoer of bondholders of such alterations,
curtailments, enlargements, or additions shall be evidenced by some instrument in
writing duly executed by them under their hands and seals, in person or by at-
torney duly authorized, which instrument shall be lodged with the said Trustee as
its authority for assenting thereto.
III. The alterations, curtailments, enlargements, or additions, when so ap-
proved, shall be embodied in an indenture under seal duly executed by and between
the said Company and the said Trustee, in such manner as to entitle the same to be
recorded in every recording office where these presents shall have been, or shall be
intended to be, recorded. When said indenture shall have been so executed and
delivered to the said Trustee, these presents shall forthwith be deemed to have been
altered, curtailed, enlarged, or added to, in accordance therewith, and the Trustee
shall cause said indenture to be recorded in such recording offices as shall be by
law required, to give notice to all persons affected, or to be affected thereby, but the
said Trustee shall have power to refuse to agree to any such alterations, curtail-
ments, enlargements, or additions, in case it shall think that the same shall unrea-
sonably impair or prejudice the rights of the bondholders who do not assent
thereto.
Article Twelfth. — It is hereby expressly further mutually agreed t h.it when-
ever and as often as any contingency shall arise on which the act inn of a majority in
interest of the holders of general mortgage bonds Becured hereby shall be oontrol-
ling, or in which the said bondholders have by the provisions hereof any discretion-
ary voice or power, the Trustee hereunder may call a meeting of the holders of such
bonds, at the time outstanding, in manner hereinafter provided; and, until other-
wise prescribed by said bondholders, such meetings shall be held at the I litj ol New
York, and notice of the objects, time, and place of such meeting shall be nun by
publishing the same in two newspapers published in the Citj of New York, and
also in a newspaper published in , , twice a week for at least
8G3
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
eight successive weeks (the last publication to take place on the day in such notice
mentioned for such meeting), and by depositing in the Post Office, in the City of
New York, at the time or previous to the first publication thereof, a written or
printed copy of such notice properly enveloped and directed to each and every owner
or owners of and one or more of said bonds standing registered in his or their
names, at his or their registered place of residence, with the postage prepaid
thereon ; provided that the expense of publishing and giving such notice shall be a
liability of the Company hereunder, and may be defrayed, if necessary, out of any
trust funds in the hands of said Trustee.
II. It shall be the duty of the Trustee to call any such meeting, whenever the
Company or the holder or holders of general mortgage bonds to an aggregate
amount not less than shall in writing request the Trustee so to do, and
at the same time tender to the Trustee an adequate amount to cover the expenses
of calling and holding such meeting ; and if the Trustee shall fail to call such meet-
ing in manner aforesaid within thirty days after such request and tender, or if the
said Trustee shall have resigned or become otherwise incapacitated, the President
of the Company or the holder or holders of such bonds to the amount aforesaid may
call such meeting in manner herein provided, and at any meeting a majority in
interest of the holders of said bonds outstanding may prescribe and establish such
rules and by-laws as they may deem proper for the calling of future similar meetings
and the regulation of proceedings thereof, and alter, repeal, or amend the same at
pleasure.
III. At any meeting so convened the holders of said bonds shall be competent
to exercise in person or by proxy all the powers and authorities conferred upon
them by these presents, and a majority in interest shall constitute a quorum for the
transaction of any business, provided' that less than a quorum may adjourn from
time to time, and that each bond shall entitle the holder or holders thereof to one
vote, and that a majority of votes represented shall govern in all cases wherein a
majority in interest of all bonds outstanding is not hereby required.
Article Thirteenth. — The Company further agrees for itself, its successors
and assigns, that it shall and will, from time to time and at all times hereafter
during the continuance of the lien of these presents, and as often as requested by
the Trustee, execute, acknowledge, and deliver all such further deeds of conveyance
and assurances in the law for the better securing unto the Trustee upon the trusts
herein expressed the trust properties herein provided for, with all appurtenances
thereto, as may be requested by the Trustee.
Article Fourteenth. — Incase the Company shall well and truly pay, or cause
to be paid, all the bonds to be issued hereunder, or entitled to the protection of
this indenture, and the coupons thereto attached, at the times and in the manner
therein specified, and shall well and truly keep and perform the covenants and
undertakings herein and hereby required to be kept and performed by it, according
to the true intent and meaning of this indenture, then, and in that case, all the
trust properties hereby conveyed shall revert to the Company, and the estate, right,
title, and interest of the said Trustee aforesaid, its successor or successors, shall
thereupon cease, determine, and become void, and the said Trustee shall, by some
appropriate instrument, declare the lien of these presents to be discharged and shall
execute such deeds, assignments, or other instruments as shall be necessary or
convenient to free the above trust properties therefrom ; otherwise the same shall
be continued and remain in full force and virtue.
This Indenture is executed and delivered to the said Trustee in several
counterparts for the purpose of simultaneous record in the proper offices in each
of the several Counties of and wherein the trust properties
or some part thereof is situated, but all of such counterparts so executed and de-
livered each as an original, constitute but one instrument.
In Witness Whereof, the said , party of the first part, has caused these
presents to be executed on its behalf by its President, and its corporate seal
attached by its Assistant Secretary, to be hereto affixed, and the said ,
party of the second part, in evidence of its acceptance of the trust hereby created,
has likewise caused these presents to be executed on its behalf by its Vice-Pres-
864
FORMS AXD PRECEDENTS.
ident, and its corporate seal, attested by its Assistant Secretary, to be hereto
affixed, the day and year lirst above written.
Company.
By , President.
(Seal)
Attest :
(Seal)
Attest :
, Assistant Secretary.
Company.
By , Vice-President.
, Assistant Secretary.
SPECIAL CLAUSE FOR INSERTION IN TRUST DEED TO SECURE
ISSUE OF BONDS.
The trustees shall hold the moneys to arise from any sale calling in collection or
conversion into money under the primary trust for conversion upon trust that they
shall thereout in the first place pay or retain the costs or expenses incurred in or
about the execution of the primary trust for conversion or otherwise in relation to
this deed, including their own remuneration, and shall apply the residue of such
moneys, first, in or toward payment to the note holders {pari passu in proportion
to the respective nominal amounts due therefor) of all arrears or interesl ana inter-
est on interest remaining unpaid on the notes held by them respectively . secondly,
in or toward payments to the note holders pari passu in proportion to the respective
nominal amounts of the notes held by them respectively and without any preference
or priority either on account of priority of issue or of any notes having been drawn
for redemption or otherwise howsoever, of all principal moneys due in respeel of the
notes held by them respectively, and that whether the said principal moneys shall
or shall not then be payable ; and, thirdly, shall pay the surplus if any of such
moneys to the company or its assigns.
Provided always that if the amount of the moneys at any time applicable cinder
the preceding provisions of this clause to payment of the principal moneys of the
notes shall be less than 10 per cent on the notes, the trustees may at their discre-
tion invest such moneys upon some or one of the investments hereinafter authorized,
with power from time to time at the like discretion to vary such invest incuts, and
such investments, with the resulting income thereof, may he accumulated until the
accumulations together with any other funds tor the time being under the cunt ml
of the trustees and applicable for the purpose shall amount in a sum sufficient to
pay 10 per cent upon the notes and that such accumulations and funds shall lie
applied in manner aforesaid.
COPY OF RESOLUTION PASSED AT STOCKHOLDERS' MEETING,
TAKING OVER ASSETS OF A COPARTNERSHIP.
Upon motion duly made and seconded, and by the affirmative vote of all present,
the following preambles and resolution were unanimously adopted :
Whereas, , copartners doing business under the name and style
of , in the City of , have offered to assign to this Company
the good will and personal property belonging to said copartnership (which ■ lia
personal property is more particularly described in a proposed Hill of Sale therefor,
a copy thereof being inserted in the Minute Book of this Corporation) in con [dera-
tion of the issue of stock of this Company to them in the a lint of
dollars par value ; and
Whereas, it appears to the stockholders of this Company that such property is
necessary for the business of this Company, and that the same is of the value of
dollars; Now, therefore, he it
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Resolved, that the Board of Directors of this Company be and they hereby are
authorized and directed to purchase the said property above mentioned for the said
price and to issue said stock hi payment tbereof.
COPY OF RESOLUTION PASSED AT DIRECTORS' MEETING.
Upon motion duly made and seconded, it was
Resolved, that this Company accept the offer of and , co-
partners" doing business as , to sell to this Company the property described
in the resolution passed at the first meeting of the Corporation, authorizing such
purchase, and the Board of Directors do hereby adjudge and declare that said
property is of the fair value of thousand dollars ($ ); and that
the same is necessary for the business of this Company; and be it further
Resolved, that the proposed agreement for the sale of said property presented
at this meeting be and the same hereby is approved as to form, and the President
and Secretary of the Company are hereby authorized and directed to execute said
agreement in the name ana on the behalf of tins company and to affix, the corporate
seal thereto ; and be it further
Resolved, that the President and Secretary be and they hereby are authorized
and directed to issue to the order of said certificates of full paid stock
of this Company to the amount of thousand dollars.
BILL OF SALE.
Know all Men by these Presents : That I, , doing business in
, State of , under the name and style of , party
of the first part, in consideration of the sum of one dollar and other valuable con-
siderations, to me in hand paid by the Company, a Corporation organized
and existing under the laws of the State of , party of the second part,
the receipt whereof I do hereby acknowledge, have bargained, sold, granted, and
conveyed, and by these presents do bargain, sell, grant, and convey unto the said
party of the second part, its successors and assigns, all the personal property,
good will, and assets of whatsoever nature, of the business conducted by me under
the name and style of , at No. , County, State
f f of which personal property and assets a schedule is hereto annexed
marked "Exhibit A," and is hereby made a part of this Bill of Sale.
To Have and to Hold the same unto the said party of the second part, its suc-
cessors and assigns, forever.
hi Witness Whereof, I have hereunto set my hand and seal this day
of May, 1906. (L- S
Signed, sealed, and delivered in the presence of
BOND SECURING A CORPORATION FROM LOSS ON ACCOUNT
OF ISSUANCE OF DUPLICATE CERTIFICATE OF STOCK.
Know all Men by these Presents : That we, , of the City of
, State of , and , of the City of , State of
, and , of the City of , State of , are
held and firmly bound unto the Company, a Corporation organized
and existing under the laws of the State of , in the sum of twenty
thousand dollars ($20,000), good and lawful money of the United States, to be
paid to the said Company, its successors and assies ; for which pay-
866
FORMS AND IM;r.( EDENTS.
incut well and truly to be made we do bind ourselves, our heirs, executors, and
administrators, jointly and severally, firmly by these presents: and
Whereas, the Company(i ion organized and existing uuder
the laws oftlie State of ), did on the daj ,190 .
issue a certificate of stock (numbered ) lo , of the City of
State of , for ten thousand (10,000) shares of the capital stuck of said
Company, of the par value of dollars (f ) each ;
and
Whereas, said stock certificate is alleged to be lost so that the same eann.it be
found ; and
Whereas, the said has requested the said Company to
issue a new certificate to him in place of said Inst certificate; and
Whereas, the said Company is willing to issue a new certifii
place of the one alleged to he lost, provided it be properly indemnified in the
premises. Now, the condition of this obligation is such that it' the said above
bounden , and , and , their executors or adminis-
trators, or any of them, shall indemnify and save harmless the said
Company from and against any and all suits, actions, damages, costs, charges
expenses in any suit arising out of or connected with the loss of said certificate
of stock above referred to, then this obligation is to be void, otherwise to remain in
full force and effect.
State of | gs
County of \
On this day of , in the year 1906, before me personally
came and , to me known and known to me to be the indi-
viduals described in and who executed the foregoing instrument, and they severally
acknowledged to me that they executed the same.
Notary Public.
CERTIFICATE OF CLERK CERTIFYING TO HIS APPOINTMENT.
(Maine.)
L, , a resident of the Stale of Maine, residing at ,
in the City of , State of Maine, hereby certify that on the
day of , 190 . 1 was duly elected Clerk of the Com-
pany, a Corporation duly organized and existing under the laws of the State of
Maine, and that I have accepted and qualified for said office, and that m
residence is as above stated.
Dated • _, ,
, Clerk.
FORM FOR CORPORATE SIGNATURE.
In Witness Whereof, the said Company Ins hereunto caused its cor-
porate name to be signed and its corporate seal hereunto affixed DJ
us President, and by , its Secretary, at the < lity o »
State of , this day of , 190 •
( iompany.
By , President.
Attest:
, Secretary.
SOT
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
FORM FOR INSERTION IN BY-LAWS AS TO POWERS OF
GENERAL MANAGER.
The duties of the General Manager shall be to exercise general supervision and
direction of all the business interests of the Company, and in connection therewith
to control, direct, and superintend all the business of the Company wherever con-
ducted or carried on, and in connection therewith to employ all clerical help and
such labor as may be necessary to properly conduct the business of the Company.
FORM FOR APPOINTMENT OF MANAGING DIRECTORS.
That be and they hereby are appointed Managing Directors of
Company, with general supervision and direction of the business in-
terests of the Company, and with such additional powers as the
Board of Directors or the stockholders of this Company may from time to time
confer upon them.
AFFIDAVIT OF MAILING NOTICE OF STOCKHOLDERS' MEETING.
State of
County of
, having first been duly sworn, on oath says, that he is the Secretary of
the Company, a Corporation organized and existing under the laws
of the State of ; that on the day of ,
190 , he caused a notice of the annual (or special) meeting of the stockholders of
said Company, a true copy of which is hereto annexed and is hereby made a part of
this affidavit, to be mailed in a sealed envelope, postage prepaid, addressed to each
stockholder of record of said Company at his last known address as the same
appears on the books of the Company.
Sworn and subscribed to before me this day of , 190 .
, Notary Public,
County.
FORM FOR ACKNOWLEDGMENT BY ATTORNEY IN FACT.
State of
County of
I hereby certify that on this day of in the year of our
Lord before me, the subscriber (title of officer taking acknowledgment),
personally appeared (name of attorney), the attorney of (name of principal) named
in the foregoing (name of instrument), and by virtue and in pursuance of the au-
thority heretofore conferred upon him acknowledged that he executed the said
(name of instrument) as the act of said (principal's name).
ACCEPTANCE OF CONSTITUTION.
Whereas, the Company, a Corporation organized and existing
under the laws of the State of , having duly filed in the office of the
Secretary of State of the State of a duly authenticated copy of its
articles of incorporation, and having formally made application for a permit to do
business in said State of as a foreign Corporation;
Now, therefore, the said Company, desiring and intending to
conform in all respects to the Constitution and Laws of said State and to avail itself
868
FORMS AND PRECEDENTS.
of the rights, privileges, and immunities granted by said Constitution and Laws,
does hereby accept the provisions of tbe Constitution of the State of
for all intents and purposes contemplated by the provisions thereof relating to such
acceptance by all private business corporations.
In Witness Whereof^ the said Company has caused this certificate
and acceptance to be executed, acknowledged, and delivered in its name and on its
behalf by its President and to be attested by its Secretary, and hath caused its cor-
porate seal to be hereunto affixed at , in the County of ,
State of , this day of
Company.
By , President.
Attest : , Secretary.
State of >
County of \ '
Ou this day of , in the year 190 , before inc.
, a Notary Public in and for said County and in tbe State aforesaid,
personally appeared , known to me to be the President of th
poration that executed the within aud foregoing certificate, and acknowledged to me
that said Corporation executed the same.
In Witness Whereof, I have hereunto set my baud and affixed my notaris
this day of , 190 * .
My commission expires on the day of , 190 .
CERTIFICATE OF INCORPORATION
OF
Auditing Company (New Jersey Charter).
Article 1. The corporate name is :
Article 2. The objects of the corporation are :
To open, take charge of, maintain, keep, institute, examine, audit, certify to, and
guarantee the correctness of the books and accounts of all persons, firms, part-
nerships, corporations, banks, trust estates, trust companies, Building and Loan
Associations, beneficial associatious, and all other natural or corporate beings
whatsoever.
To furnish all persons, firms, partnerships, and corporations with complete and
modern system or systems of auditing and accounting, and to act as controller or
auditor thereof, and to issue certificates of efficiency to accountants.
To act as a collecting agency for its patrons, take assignments of claims against
debtors of its patrons and others, and sue thereon in its own name, if not pro-
hibited, to act as mercantile agency, to investigate and recommend persons desirous
of doing business with its patrons and others, and to issue certificates as to the
responsibility of persons, firms, partnerships, and corporations.
To make and keep, by means of photograph] or otherwise, complete and accu-
rate copies or records of the books and accounts of all persons, firms, partnerships,
corporations, trust estates, Building and Loan Associations, beneficial associations,
municipalities, and the records of all other natural or corporate beings whatsoever-
Said corporation shall indemnify and save harmless its patrons from an\ and all
costs or expenses, loss or damage, arising oul of any error committed bj Baid eor
poration or its agents in the duties aforesaid, and said corporation herebs expn
waives all rights to any benefits of any statute of limitation now in force or herein-
after to be enacted.
As subsidiary objects and powers the corporation may
Manufacture, purchase, or otherwise acquire, goods, wares, merchandise, and
personal property of every class and descripli and hold, own, mortgage, Bell, or
Otherwise dispose of. trade, deal in, and deal with the same.
800
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
Acquire and undertake the good will, property, rights, franchises, and assets of
every kind and the liabilities of any person, firm, partnership, or corporation, either
partly or wholly, and pay for the same in cash, stock, or bonds of the corporation
or otherwise.
Enter into, make, perform, and carry out contracts of every kind and for any
lawful purpose with any person, firm, association, or corporation.
Borrow or raise money without limit as to amount by the issue of, or upon war-
rants, bonds, debentures, and other negotiable or transferable instruments or
otherwise.
Hold, purchase, or otherwise acquire, sell, assign, transfer, mortgage, pledge, or
otherwise dispose of shares of the capital stock, bonds, debentures, or other evi-
dences of indebtedness created by any other corporation or corporations, and while
the owner thereof exercise all the rights and privileges of ownership, including the
right to vote thereon.
To apply for, purchase, or otherwise acquire, and to hold, own, use, operate,
and to sell, assign, or to otherwise dispose of; to grant licenses in respect of, or to
otherwise turn to account any and all inventions, improvements, processes, and
trade marks used in connection with, or secured under, letters patent or copyright
of the United States of America, or elsewhere or otherwise, and with a view to the
working and development of the same, to carry on any business, whether manufac-
turing or otherwise, which the corporation may think calculated directly or indi-
rectly to effectuate these objects.
Conduct business in any of the States, Territories, colonies, or dependencies of
the United States, in the District of Columbia, and in any and all foreign countries ;
to have one or more offices therein, and to hold, purchase, and convey and mortgage
real and personal property without limit as to amount therein, but always subject to
the laws thereof.
Remunerate any person or corporation for services rendered, or to be rendered
in placing or assist'iug to place or guaranteeing the placing of any of the shares of
the capital stock of the corporation, or any debentures or other securities of the
corporation, or in, or about the formation or promotion of the corporation, or in
the conduct of its bus ness.
Subject to the provisions of law, purchase, hold, and reissue the shares of its
capital stock.
Do any and all the things herein set forth to the same extent as natural persons
might or could do, and in any part of the world.
In general, the corporation may carry on any other business in connection with
the foregoing, whether manufacturing or otherwise, and have and exercise all the
powers conferred by the laws of New Jersey upon corporations formed under the
act hereinafter referred to ; it being hereby expressly provided that the foregoing
enumeration of specific powers shall not be held to limit or restrict in any manner
the general powers of the corporation.
Article 3. The corporation shall be authorized to issue capital stock to the
extent of two hundred thousand dollars ($200,000), divided into two thousand
shares of the par value of one hundred dollars ($100) each.
Article 4. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors are expressly authorized :
To hold their meetings, to have one or more offices, and to keep the books of
the Company within or without the State of New Jersey, at such places as may be
from time to time designated by them; but the Company shall always keep at its
principal and registered office in New Jersey, a transfer book hi which the transfers
of stock can be made, entered, and registered, and also a book containing the names
and addresses of the stockholders, and the number of shares held by them respec-
tively, which shall be at all times during the business hours open to the inspection
of the stockholders in person.
To determine from time to time whether, and, if allowed, under what conditions
and regulations the accounts and books of the Company (other than the stock and
transfer books) or any of them shall be open to the inspection of the stockholders,
and the stockholders' rights in this respect are, and shall be restricted or limited
accordingly.
870
FORMS AXD PRECEDENT-.
To make, alter, amend, rescind the by-laws of the Company, to fix the amount
to be reserved as workiug capital, to tix the times for the declaration and payment
of dividends, to authorize and cause to be executed mortgages and liens upon i lie
real and personal property of the Company, provided always that the majority of
th • whole Board concur therein.
Bv a resolution passed by a majority vote of the whole Board, under suitable
provision of the by-laws, to designate two or more of their number to constitute an
Executive Committee, which Committee shall for the time being, as provided in
said resolution, or in the by-laws, have and exercise any and all the powers of the
Board of Directors which may he lawfully delegated in the management of the h
ness and affairs of the Company, and shall have power to authorize the seal of the
Company to he affixed to all papers which may require it.
Willi the consent in writing and pursuant also to the affirmative vote of the
holders of the majority of the stock isstied and outstanding, at a stockholders 1
meeting duly called for that purpose, to sell, assign, transfer, or otherwise dispose
of the property of the Company as an entirety, provided, always, that the majority
of the whole Board concur therein.
The Company may apply and use its surplus earnings or accumulated pn
the purchase or* acquisition of property, and to the acquisition and purchase of its
own capital stock from time to time, t> such extent and in such manner, and upon
such terms as its Board of Directors may determine ; and neither the property nor
capital stock so purchased or acquired shall be regarded as profits for the purpose
of declaration or payment of dividends, unless otherwise determined by a majority
of the Board of Directors.
The corporation reserves the right to amend, alter, or repeal any provision con-
tained in this certificate of incorporation, in the manner now or hereafter prescribed
by statute, and all rights conferred to stockholders are granted subject to this
reservation.
All disputes between members of the corporation, or between it and its patrons,
shall be settled by arbitration; the party claimant delivering personally or by
United States mail' to the party defendant at his home or place of business, the claim
verified by affidavit, to which claim the party defendant shall have sixty days to
reply. The partv claimant may then appoint an arbitrator, giving written notice
thereof to the party defendant, who shall within ten days appoint the second arbitra-
tor, or the first arbitrator shall then make such appointment, both of said arbitrators
to be versed in the subject matter of dispute ; said two arbitrators shall then appoint
the third who shall be learned in the law and shall preside over the Board, whose
hearings shall be held at such time and place as may he fixed by the Board. Upon
due notice, the parties shall submit in writing to said arbitrators all the facts verified
by affidavit, and may be heard by counsel. The decision of said arbitrators, or a
majority of them, shall be final aiid conclusive and without appeal. If the award is
not settled or complied with within twenty days, the successful party, if the award
is for money, may file the same in the Court having jurisdiction and proceed to ex-
ecution and" sale in the usual course for the enforcement of said award ; or. in ease
the award is in equity, the successful party may file a bill reciting only these pro-
ceedings and the award, and praying for the aid of said Court to enforce compliance
therewith.
Article 5. (Clause designating office and agent in New Jersey )
In accordance with an Act of the Legislature of the State of New Jersey entitled
" An Act Concerning Corporations " (Revision of 1896) and the Acts amendatorj
thereof and supplemental thereto, for the purpose of forming a corporation of un-
limited duration to do business within and without the State of New Jersey, the
undersigned do respectively subscribe for the capital stuck with which the corp
tion will begin business, and do agree to take the number of shares set opposite
our names, and have accordingly Bigned tins certificate and affixed ourseala thereto.
No. of Shares
Name. taken bj each Subscriber. Amount
871
INCORPORATION AND ORGANIZATION OP CORPORATIONS.
ARTICLES OF INCORPORATION OF A MINING AND SMELTING
COMPANY. (SOUTH DAKOTA CHARTER.)
Know all Men by these Presents, that we, the undersigned,
and , for ourselves, our associates and successors, have associated ourselves
together for the purpose of forming a corporation under and by virtue of the stat-
utes and laws of the State of South Dakota, and we do hereby certify and declare
as follows, to wit :
First.
The name of this Corporation shall be Company.
Second.
The purposes for which this Corporation is formed are : To acquire by purchase,
lease, location, or otherwise all classes of mines and mining properties containing
copper, nickel, gold, silver, or other precious or base metals. To acquire by pur-
chase, lease, location, or otherwise properties contaiuing deposits of clays, stones,
coal, oil, and other substances.
To develop and operate mining properties and mines ; to carry on the business
of mining, converting, milling, reducing, smelting, treating, preparing for market,
manufacturing, buying, selling, and otherwise producing and dealing iu ores of gold,
silver, copper, iron, zinc, nickel, and lead. To acquire by purchase, lease, location,
or otherwise mineral claims, metalliferous lands, mining and water rights and
privileges, mill sites, timber lands, lime and stone quarries, lumber yards, brick
yards, and coal lands of every class and description. To build, equip, and operate
mills and other plants for the smelting, reduction, and treatment of ores of all kinds
and descriptions. To buy, sell, manufacture, and deal in machinery, blasting powder
of all descriptions, dynamite, fuses, caps, candles, implements and conveniences
suitable to or convenient for use in connection with the business of the Company.
To purchase, construct, erect, lease, own, and operate pumping plants, pipe
lines, reservoirs, canals, water ways, and ditches for the transmission of power,
sewerage, and conveyance of water for the use of the Company in conducting its
business, and for the sale and delivery of such water to others.
To build, purchase, sell, and operate electric, steam, or other plants for the pro-
duction of power and light, together with the necessary wire lines and other means
of transmission of light and power, the same to be generated for the use of the
Company, or for the sale of such light and power to others.
To construct, build, purchase, lease, operate and own electric, aerial, and sur-
face tramways for the purpose of transporting ores and supplies and other materials
to and from the Company's properties, and to operate the same by electricity, steam,
or other motive power.
To construct, purchase, build, lease, own, and operate, private railways, steam-
boats, and other vessels for the transportation of its ores and other properties ; to own
and operate wagon trains and pack trains ; to own and operate commercial stores
for the sale of merchandise to its employees and others ; to build, maintain, and
operate boarding-houses for the use of the Company's employees and others ; to
purchase, lease, rent, and acquire real estate and own the same, and to sell or lease
all or any part or portion thereof, to plat and lay out town sites and sell or dispose
of properties therein and to improve the same.
To carry on the business of producing, refining, storing, or supplying and dis-
tributing petroleum products in all its branches ; also to refine and store vegetable
and animal oils ; to construct, purchase, lease, operate, and maintain pipe lines and
tanks for the distribution and storage of oil.
To acquire shares of the capital stock and securities of any incorporated com-
pany or otherwise, and to hold, sell, or otherwise deal in and with the same. To
enter into any agreements, arrangements, or contracts with any person or persons
for the purchase, either conditionally or otherwise, and to hold, sell, or otherwise
deal in and with any mines, mining claims, mills, plants, machinery, shares of
872
FORMS AND PRECEDENTS.
capital stock or securities of any company, and to sell, assign, and transfer and Bel
over the same upon such terms and for such consideration as may be deemed advis-
able. To sell the undertakings and contracts of the Company or any part thereof
of any of its contracts or part thereof or any of its property or rights for such con-
sideration as may be proper, and to accept payment for any property or rights sold
or otherwise disposed of by the Company, cither in cash or otherwise, or in any
shares of stock of any company or by means of a mortgage or by debenture stock
or debenture bonds of any corporation, or partly in one mode and partlv in another.
To establish or promote or assist in promoting or establishing any company, and
to guaran'ee or underwrite or cause to be guaranteed or underwritten subscrip-
tions for the shares or securities of any such company, or to subscribe for the 88
or any pari thereof. To distribute among the stockholders of the Company an\
shares of stock or securities of any corporation acquired by the Company, so long
as the capital stock is not impaired thereby. To act as the general fiscal agent or
strar of any corporation, association, or person. To do all and every thing
necessary, suitable, or proper for the accomplishment of any of the purposes or the
attainment of any of the objects hereinbefore enumerated, either alone or in asso-
ciation with other corporations or individuals, as principals, agents, contractors,
trustees, or otherwise, and by or through trustees, agents, or otherwise, and in
general to engage in any and all lawful business whatever necessary or convenient
in connection with the business of the Company and for the purposes appertaining
thereto.
To manufacture, import, export, and generally deal iu goods, wares, merchandise,
and property of every class and description.
To purchase, lease, or otherwise acquire all kinds of personal property which
the Corporation may deem necessary for the purposes of its business. To purchase,
lease, or otherwise acquire real estate — improved or unimproved — without limit
as to amount in any State or Territory of the United States or foreign country.
The Corporation shall have power to own, bold, and manage property and eon-
duct its business or any part thereof in the various States and Territories of the
United States of America and its territorial acquisitions and possessions, the
District of Columbia, and in any foreign country or countries, and may have one
or more offices outside of the State of South Dakota.
Third.
The place where the principal business of this Corporation shall be transacted is
in the City of , State of South Dakota; but it may have a business office
without this State, at the City of , State of , and any huh tings of
the incorporators, stockholders, or directors of this Company may be held at either
of said offices or places of business; and the books of this Corporation may be
kept at either of said offices or places of business; and any incorporator or stock-
holder entitled to be present and to vote at any such meeting may be represented
and vote thereat by proxy.
The domiciliary office of this Corporation shall be at the office of the
Company in said City of , South Dakota.
This Corporation hereby appoints as its resident agent in South Dakota, and
upon whom legal process against this Corporation may be served, , of the
City of , South Dakota.
Fourth.
The term for which this Corporation shall exist shall be twenty-five years,
with such right of renewal for other and similar periods as ma\ now or hereafter
be permitted under the laws of South Dakota.
Fifth.
The number of directors of this Corporation shall be seven, anil each direr-
tor shall hold at hast one share of stock. The names and residences of the
878
INCOEPORATION AND ORGANIZATION OP CORPORATIONS.
directors who are to serve for the first year or until the election of their successors
are as follows :
Names. Residences.
An Executive Committee composed of three directors may be appointed by the
Board of Directors of this Corporation, in which event such committee shall be
provided for in its by-laws, and said Executive Committee shall have the same
powers as the Board of Directors ; but this provision shall not apply to the election
of the Company's officers.
Sixth.
The amount of the capital stock of this Corporation shall be and is
dollars ($ ), divided into ( ) shares of the par value of
dollar (S ) per share.
When and in the event that property is taken by this Corporation in considera-
tion for capital stock of the Corporation, the judgment of the Board of Directors
of the Company, made in good faith and entered in the minutes of the Corporation,
shall be conclusive as to the value of such property.
In Testimony Whereof, we have hereunto set our hands this day of
November, 1907.
CERTIFICATE OF INCORPORATION OF TRANSPORTATION
COMPANY.
(Arizona Charter.)
This is to Certify that we, , have this day associated ourselves
together for the purpose of forming a corporation under the laws of Arizona, and
for that purpose do adopt the following charter :
First. The name of this corporation is the Company.
Second. This Company shall keep their principal office at , Arizona,
at which place all incorporators'" and stockholders' meetings shall be held.
Third. The amount of the capital stock of this corporation shall be $ ,
divided into shares of the par value of $ each, and said capital
stock shall be paid at such time as the Board of Directors may designate, in money,
property, labor, good will, or any other valuable right or thing.
Fourth. The objects for which this corporation is formed are, as principals,
agents, or otherwise, to do in any part of the world any and every of the things
herein set forth to the same extent as natural persons might or could do, and in
furtherance and not in limitation of the general powers conferred by laws of
Arizona, it is hereby expressly provided that the corporation shall have the follow-
ing powers •.
(«) That the objects for which this Company is formed are the transportation
for hire of passengers and mails, goods, wares, merchandise, animals, and other
property and materials of all kinds and nature whatsoever to, from, and between
the various cities, towns, and ports of the world, by means of steam or sailing
vessels ; the purchase, owning, chartering, and employment of steam and other
vessels, and the purchase, owning, and holding of shares or portions of such steam
or other vessels, and of the stock, bonds, and other securities of corporations of this
and other States and countries ; to purchase, lease, acquire, and bold such real estate,
buildings, warehouses, wharves, piers, and easements situate in either the United
States or abroad as may be advantageous for carrying on its business ; to acquire,
hold, and employ such lighters, steam tugs, and shares of incorporated companies
owning the same as may be necessary in the said business in the ports of the United
874
FORMS AND PRECEDENTS.
States and in foreign ports ; to issue bonds or other evidences of indebtedness; to
mortgage the corporate franchises, the real and personal property of the Conip
the vessels and steamships owned by it, the incomes and profits accruing to it, and
the stock, bonds, and other securities of other corporations or companies owned by
it, to secure the payment of any or all of its bonds or other evidences of indebted]
in whole or in part, by such mortgage or mortgages, and to sell and dispose of any
property, real or personal, acquired by the said Company. The portion of the busi-
ness of the Company which is to be carried on out of this State is the transaction
of a general transportation business, in the carrying for hire of passengers and mails,
"■oods, wares, merchandise, animals, and other property and materials of all kinds and
nature whatsoever, upon steamships and other vessels to, from, ami between the
various ports of the world, particularly between the ports of New York and
Philadelphia, and the ports of Southampton, Liverpool, Antwerp, ami other ports
of Europe, and the procuring of contracts for, and the making of contracts for tin-
employment and freighting of the same, and to carry on ail the business, and to
posses"s and exercise any and all of the rights, powers, and privileges above specified.
(6) To apply for, purchase, or otherwise acquire, and to bold, own. use,
operate, and to sell, assign, or otherwise dispose of. to grant licenses in respect of.
or otherwise turn to account any or all inventions, improvements, formula, and
processes used in connection with or secured under Letters Patent, Copy Kiuli
Trade Marks of the United States, or elsewhere, or otherwise, and with a view to
developing the same, to carry on any other business, whether manufacturing or
otherwise! which the corporation may think calculated directly or indirectly to
effectuate these objects. .
(r) To purchase or otherwise acquire, and to hold, sell, assign, transfer, mort-
gage, pledge, or otherwise dispose of, the shares of capital stock or other evi-
dence of indebtedness created by other corporation or corporations, and while the
holders of such stock, to exercise all the rights and privileges of ownership, includ-
ing the right to vote thereon.
(V) Generally to purchase, take on lease or in exchange, lure, or otherwise
acquire, any real and personal property, and any rights, privileges, or franchises
which the corporation may think necessary or convenient for the purpose ot its
business, 'and, in full, to do any or all things in any part of the world not pro-
hibited by the laws of Arizona.
(«?) To construct, lure, purchase, and operate steamboats and other vessels o
tiny class, and especially the construction of steamboat hulls and barges alter and
upon the plans of the new method of composite construction; to
establish and maintain lines or regular services of steamboats or other vessels on
the River and its tributaries; and generally to carry on the husim
shipowners, and to enter into contracts for the carriage of mails, passengers, goods,
and merchandise by any means, either by its own vessels, railways, and conveyances,
or by or over the vessels, conveyances, and railways of others ; to insure against loss
by fire, flood, or other calamity, the cargo carried or transported upon the Com-
pany's steamboats or other vessels; to construct, purchase, take on lease, or
otherwise acquire and work any railway wharf, pier, dock, budding, or works
capable of being advantageously used in connection with the business ol the
Company as a shipping company, and in connection with any ot the objects aforesaid,
to carry on the business of a "railway company, railwaj contractors, ship builders,
engineers, manufacturers of machinery and ear builders; to acquire concessions or
licenses for I lie establishment and working of lines of steamboats and other vessels
between any ports of the world, or for the formation or working o! any railway,
wharf, pier,' dock, or other works, or for the working of an\ public conveyance.
(/•) To build, make, operate, maintain, buy. sell, deal m and with, own, lease,
pledge, and otherwise dispose of steamboats and vessels of every nature and kind
whatsoever, together with all materials, articles, tools, machinery, and appliances
entering into, or suitable and convenienl lor the construe or equipment thereof,
and together with engines, boilers, machinery and appurtenances ol all kind-, ami
tackle, apparel, and furniture of all kinds; the transportation ..I goods, merclian-
(I, • and passengers upon land or water, building, repairing and designing ho
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
structures, vessels, ships, boats, wharves, docks, dry docks, railroads, engines, cars,
machinery, and all other equipment ; constructing, maintaining, and operating rail-
roads ; to build, construct, repair, maintain, and operate water, gas, and electrical
works, tunnels, bridges, viaducts, canals, wharves, piers, and like works of internal
improvement or public use or utility ; to own, operate, and maintain steamboat
lines, vessel lines, or other lines of transportation.
(g) To carry on the business of cold storage and warehousing and all the
business necessarily or impliedly incidental thereto ; and to further carry on the
business of general warehousing in all its several branches; to construct, hire,
purchase, operate, and maintain any conveyances for the transportation in cold
storage or otherwise, by land or by water, of any and all products, goods, or manu-
factured articles ; to issue certificates and warrants, negotiable or otherwise, to
persons warehousing goods with the Company, and to make advarces or loans upon
the security of such goods or otherwise ; to manufacture, sell, and trade in all
goods usually dealt in by warehousemen ; to construct, purchase, take on lease or
otherwise acquire any wharf, pier, dock, or works capable of being advantageously
used in connection with the shipping and carrying on of other business of the Com-
pany ; and generally to carry on and undertake any business undertaking, transac-
tion, or operation commonly carried on or undertaken by warehousemen, and any
other business which may from time to time seem to the Directors capable of being
conveniently carried on in connection with the above, or calculated directly or
indirectly to enhance the value of, or render profitable any of the Company's prop-
erties or rights.
(/i) To own, operate, and maintain sugar plantations, and to grow, purchase,
manufacture, refine, and dispose of sugar, molasses, and melada, and all lawful business
incidental thereto.
(i) To carry on the business of mining, milling, concentrating, converting,
smelting, treating, preparing for market, manufacturing, buying, selling, exchang-
ing, and otherwise producing and dealing in coal, gold, silver, copper, lead, zinc,
brass, iron, steel, and in all kinds of ores, metals, and minerals, and in the products
and by-products thereof of every kind and description, and by whatsoever process
the same can be or may hereafter be produced ; and generally and without limit as
to amount, to buy, sell, exchange, lease, acquire, and deal in lands, mines, and min-
eral rights and claims, and in the above specified products, and to conduct all
business appurtenant thereto.
(?) The corporation shall also have power to conduct its business in all its
branches, and unlimitedly to hold, purchase, mortgage, and convey real and personal
property in any State, Territory, or colony of the United States and in any foreign
country or place.
Fifth. The affairs of this corporation shall be conducted by a President and
Board of Directors, who shall be elected annually, as the by-laws shall provide, and a
voting power of at least 51 per cent of the capital stock shall be pooled, aud that right
vested in the incorporators hereof, and that said right to endure for the lifetime of the
Company, and the Board of Directors can without further authorization make, alter,
amend, and rescind the by-laws, aud amend the articles in any of the particulars
herein of this Company, and to fix the amount to be reserved as working capital.
Sixth. This corporation is formed to endure for twenty-five years after its art-
icles are duly executed, but its charter rights may be renewed before its charter
expires, from time to time, for periods not exceeding twenty-five years at a time,
perpetually.
Seventh. The private property of the stockholders of this corporation shall be
and is hereby made forever exempt from all liability for its debts or obligations, and
there shall be no individual liability on the part of either Directors or stockholders.
Eighth. The capital stock of this corporation shall be and is hereby made full
paid, and forever non-assessable by this corporation for any purpose. In accepting
property in exchange for stock the judgment and appraisal of the Directors shall be
final and conclusive.
Ninth. The Board of Directors shall, as soon as practicable after the organiza-
tion of the Company, instruct the Treasurer to set apart a certain sum of money,
876
FORMS AM) PRECEDES
at such times as will jointly be agreed upon, which sum of money shall be held l>v
the Treasurer, as aud for a Sinking Fund to be utilized for the replacing of any of the
Company's boats or properties of anv description that may meet with disaster, or
for general repairs in any way upon the Company's holdings ; to anticipate the
meutof any obligations which may not be classed as regular expenses ; to meet any
contingency of any kind and thus make absolutely certain at all times the solvency
of the Company ; to insure against loss the cargo transported upon the C pany's
steamboats or other vessels; to apply to any and all of the things which the Hoard
of Directors may in their right determine.
Tenth. All stockholders of this Company shall have the righl to inspect thi
and transfer books of this corporation in the presence of the President and Board
of Directors, after proper reasons have been given for the requesl to so examine.
Eleventh. Should a stockholder so desire, a proxy can be given to the Presi-
dent or any member of the Board of Directors, and such person will act for him the
same as if lie himself were present.
Twelfth. It will not be lawful for this Company to join with, or pool its inter-
ests with any other corporation of any kind or nature whatsoever, or have as a
member of its Board of Directors any officer of any other company ; thns stringently
excluding a representative of any shareholder or shareholders of 'a competing com-
pany, or any company, whether on laud or water, from having any voice whatever
in the management or direction of this Company.
Thirteenth. This Company will not permit the listing of the stock of this cor-
poration on any exchange created for the sole purpose of the bartering and selling
of the securities of corporations.
Fourteenth. There shall be no greater amount of indebtedness incurred,
either directly or indirectly, by the Board of Directors of this Company, at anj time,
than shall exceed in amount or be equal to two-thirds of the capital sfe
Fifteenth. Without, in any particular limiting any of the objects and powers
of this corporation it is hereby expressly declared and provided, thai should it be-
come necessary and decided by those in control, this corporation shall have power
to issue bonds in payment for property purchased or acquired by it, or lor anv
•other object in aud about its business ; and said bonds after issue and before their
maturity, can be retired by the decision and vote of a majority of the holdings of
stock, and new certificates of stock can be issued to the stockholders at par.
In Witness Whereof, we have hereunto set our hands and seals this day of
, A. D. 190 . '
Signed, scaled, and delivered
in the presence of
CERTIFICATE OF INCORPORATION
OP
Coal Company (West Virginia Charter),
I. We, the undersigned, agree to become a corporation by the name of
Company.
II. The principal place of business and chief works of said corporation shall be
located in the county of , State of
III. The objects and purposes for which said corporation is formed are as
follows :
To purchase, lease, or otherwise acquire, ami to own, develop, ami mine,
cannel, bituminous, and other coal in the State of and elsewhere, ami to pur-
chase, lease, hold, and sell surface lands ami other real estate necrssarv in, or inci-
dent to, said business, and to buy, sell, import, export, and generally deal in eainiel,
bituminous, and other coal in said'Statc of and elsewhere in tin- United States
tjr in any foreign count rv.
To purchase, lease, or otherwise acquire, construct, maintain, ami operate all nec-
essary private railroads, sidings, and tramways, ami to manufacture, buy, sell, import,
export, and generally deal in coke, wood, lumber, and anyand all bj products of cannel,
877
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
bituminous, and other coal, and to purchase, lease, build, sell, maintain, and operate'
stores, shops, warehouses, dwellings, and all other buildings and structures, and to
buy, sell, and generally deal, at wholesale or retail, in merchandise of all kinds and
descriptions necessary or convenient for carrying on its said business.
To purchase or otherwise acquire, and to hold, sell, assign, transfer, mortgage,
pledge, or otherwise dispose of shares of the capital stock and bonds, debentures, or
other evidences of indebtedness created by other corporation or corporations, and
while the holder thereof, to exercise all the rights and privileges of ownership,
including the right to vote thereon.
To conduct its said business and have one or more offices, and unhmitedly and
without restriction to purchase, hold, lease, mortgage, and convey real and personal
property in or out of said State of , and in such place and places in the sev-
eral States and Territories of the United States, its colonial possessions or territorial
acquisitions, and in foreign countries, as shall from time to time be found necessary
and convenient for the purposes of the business of said corporation.
IV. The amount of the total authorized capital stock of said corporation shall
be dollars (S ), which shall be divided into shares of
the par value of dollars each ; of which authorized capital stock the
amount of dollars has been subscribed, and the amount of dollars
has been paid.
V. The names and post-office addresses of all the incorporators and the number
of shares of stock subscribed for by each are as follows :
Names. Post-Office Addresses. No. of Shares.
"VI. Said corporation is to expire on the day of
Given under our hands this day of , A. D. 190 .
SUGGESTIONS RELATIVE TO THE DRAFTING OF CHARTERS AND
THE PREPARATION OF MINUTES FOR THE ORGANIZATION
MEETINGS OF CORPORATIONS.
In presenting a few suggestions relative to the incorporation and organization of
corporations it is assumed that a choice has been made of some particular State from
which a charter is to be obtained, and that a duty has been imposed upon the attor-
ney of drafting the charter under the laws of such State and organizing the corpora-
tion ready for the transaction of business thereunder. The suggestions that follow
are made more with a view to utilizing to the best advantage the forms and prece-
dents to be found in the present work rather than with the hope of presenting any-
thing particularly new or original along this hue.
THE DRAFTING OF THE CHARTER.
First, ascertain whether all the purposes the insertion of which in the charter
is desired by the client may be embodied in one charter. By reference to the
" Synopsis Digest " contained in Part II. of this work, this question can be readily
answered. Next, turn to the forms for charters of the various States and Territories
found in Part III. of the present work, and make use of the skeleton form therein
found, for drafting a charter under the laws of the particular States in which this
particular charter is sought. The only clauses of the charter to which particular
reference need be made here are what are known as the "Object Clause," the
" Preferred Stock Clause," and the " Clause for the Regulation of the Internal
Affairs of the Corporation."
In drafting the first of these, the " Object Clause," reference should be first
had to the " Specific Object Clauses" found in Part III. pp. 613-652, of this work.
Forms for drafting the more common of such specific "Object Clauses" will be
found therein. Next, it will often be found convenient and useful to add to the
878
FORMS AND PRECEDENTS.
" Specific Object Clauses" certain "General Object Cla h, for example,
as thoi a corporation to purchase and hold its
other corporations as well, and to acquire patents, patent rights, trade m
and to hold real and personal properly without limit, and to trausacl bus
in other States and Territories ami foreign countries. Sometimes, too, it is of advan-
tage to insert a clause authorizing the corporation to acquire an existing busim
to engage in a general merchandise business. Such forms will also be found iu Pail
III. pp. 653-654, herein.
Next, attention is called to the " Preferred Stock Clauses," forms forwhicb will
be found on pp. 601—662 of Part III. herein. Iu connection with the clause for the
regulation of the internal affairs of a corporation, attention should first be directed
towards ascertaining whether the insertion of such a clause is permuted under the
e particular Commonwealth from which the charter is to be procured
Cxamples of such clauses will be found on pp. 654-661 of Part III. herein. A
stock subscription agreement should ordinarily be signed bv ail of the incorpo-
rators before the articles of incorporatiou arc signed. (See Part 111. pp.
835-836.)
Fiually, sec thai the requisite number of incorporators sign the articles and
acknowledge their execution (when the same is required) before a notary public or
other officer authorized to take acknowledgments. Iu some of the States, notably
New Jersey, if the articles are acknowledged without the Stale, a certificate must be
obtained certifying to the officer's due appointment as well as to his authority to take
such acknowledgments.
THE PROCURING OF THE CHARTER.
Ordinarily three copies of the charier should be prepared: the first of these
should be signed and acknowledged by each of the incorporators, and becomes the
original; the second is for the purpose of filing (when duly certified) in local county
office (when the same is required by statute), and the third — alter being properly
certified — remains the property of the corporation.
Inmost of the Commouwealths at the time the charter is presented to State
officials for filing and recording, it must be accompanied by a sufficient remittance
to cover not only the organization tax but the filing and recording fees as well.
(See Part II. pp. 663-744.) After the certificate of incorporation is issued bv the
proper State officials, a certified copy thereof should (when the same is required !>;.
statute) be promptly filed in the proper county office.
ORGANIZING THE CORPORATION.
(See Composite Form of Minutes and By-Laws, Pari 111. pp. 512-524.)
The organization meeting of the corporation must be held within the domiciliary
State of the corporation unless such meetings arc expressly authorized by statute to
be held without such domiciliary State. The most convenieul practice is lor the in-
c irporators to siumi a written waiver of notice fixing the time and place of the meet-
ing. (See Part III. p. 836.) If other stockholders than the incorporators have
signed the preliminary stock subscription agreement, thej also must sign the written
waiver here referred to. The meeting organizes by the election of a Chairman and
a temporary Secretary. Either the charter itself (if one is issued) or, in Inn Lherof,
a certified copy of the certificate of incorporation should he preseuted ami entered
at Length in the minutes.
The By-Laws should next be adopted section by section and entered in the
minutes. If the certificate of incorporatiou nanus the first Board of Directors, it
is not necessary to elect anew Board at the organization meeting. Where suoh
Directors are not named in the certificate of incorporation, the n c\i order ol
business is the election of Directors When required b statute (or when nol re-
879
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
quired, if the incorporators so desire), Inspectors of Election should be appointed
and sworn. If the persons so chosen as Directors are not subscribers to the
capital stock of the corporation, they may become qualified either by subscribing for
stock or by having one of the incorporators who is a subscriber to the capital stock
assign his stock subscription to them. (See Part III. pp. 816—817.)
If it is the intention of the corporation to take over certain property (either real
or personal) in exchange for its capital stock, the following suggestions may be
made : Let some party who is not an officer or director in the corporation offer to
enter into an agreement with the latter relative to the sale of such property for
stock. (See Part III. pp. 836-837-) Then draft the minutes of the incorporators'
meeting, so that provision is made for the acceptance of such offer in exchange for
a certain specified number of shares in the corporation. The resolution thus passed
may be so framed as to operate as a payment of the capital stock subscribed for by
the incorporators. (See Part III. pp. 820-821.) Under this resolution the matter
is referred to the Board of Directors for more formal action. The Board may, if
it sees fit, authorize the execution of a formal agreement covering the transfer of
such property for stock in substantially the form set forth in Part III. pp. 837-838.
This secures the issuance of the capital stock either in whole or in part as full-paid
and non-assessable, providing the Directors in appraising the property are not guilty
of fraud or gross overvaluation in appraising the same. Next, if it is desired to place
some of this stock so that it may be sold to procure working capital for the corpora-
tion, the party to whom it is issued may transfer the same in trust to the corporation
for that purpose. (See Part III. p. 838.) This stock, when so transferred, can be
sold under the order of the Board of Directors of the Corporation, at such times
and for such prices as they may deem proper ; and parties purchasing such stock
will then receive the same free from any future liability for unpaid instalments
thereon, even though they have purchased such stock at considerably less than par.
The seal of the Company should be adopted at this meeting. It is not neces-
sary for the incorporators to be present in person at the meeting. They may all be
represented by proxy if desired. Immediately after adjournment of the incorpora-
tors' organization meeting, or later if more convenient, the Directors should meet
pursuant to a written waiver of notice signed by all of them fixing the time and place
of such meeting. (See Part III. p. 822.) The Board then proceeds to elect such
officers of the Company as are provided for in the By-Laws adopted at the incor-
porators' meeting. If the By-Laws provide for an Executive Committee, they should
be appointed at the same time the officers are elected. A form of stock certificate
should also be passed upon and approved, and the Secretary given authority to pro-
cure necessary stock certificates, corpoi'ate books, seal, etc. It will be found con-
venient at this meeting to pass a resolution authorizing the opening of a bank account
designating the bank therein and the officers of the corporation by whom checks
and drafts shall be signed. (See Part III. pp. 818-819.) Where it is necessary to
provide for the maintaining of the domiciliary office for the corporation or the
appointment of a registered asrent, this should be attended to at the first meeting
of the incorporators and Directors. The form for the proper resolutions relative to
this matter to be passed at the incorporators' meeting, will be found on page 775,
ante. Such resolutions should properly be followed by action taken at the directors'
meeting, to the following effect. The Board of Directors at their organization
meeting; should pass the following resolutions :
"RESOLVED, that in compliance with the laws of and the certificate
of incorporation of the Company, the principal (or registered) office of the Company
be established aud maintained at the office of , in the city of ,
and that a sign with the Company's name thereon be conspicuously displayed at the
entrance of said office ; and be it further (to be passed only w T here the incorpora-
tion act specificallv requires it).
" RESOLVED, that the President of the Company be and he hereby is authorized
and directed to execute in the name of and on behalf of said corporation the state-
ment required to be filed by domestic corporations under the provisions of the
statutes of the State of in such case made and provided and attach the seal
of the corporation thereto, and in such statement to designate , a resident
880
FORMS AXD PRECEDENTS.
of the State of , residing and having his office at No. , Street
in the City of , State of , as the person upon whom process against
the corporation may be served within the State of . and further to do all
acts and things necessary to comply with the statutes of said State in such case
made and provided."
The issuance of stock in exchange for property should be provided for bj reso-
lution in accordance with the terms of a similar resolution passed by the incorpo-
rators at their organization meeting. If the stock, is to be paid for in cash, a
resolution substantially in the following form should be passed by the Board, to wit :
"RESOLVED, that an assessment be, and the same hereby is. made of
dollars per share from the amount unpaid upon the shares of the capital stock of the
Company, and that the same be paid to the Treasurer of the Company on or before
the day of , 190 ."
881
ORGANIZATION* TAXES.
TABLE I.
TABLE OF ORGANIZATION TAXES PAYABLE CJPON
INCORPORATION.
Capitalization.
"8*
m
Alabama
Alaska
Arizona
Arkansas
rnia
Colorado
Connecticut
Delaware
Dist. of Col.
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
-Montana
Nebraska
Nevada
N. Hampshire 1
(Non-resident >
corporations )
New Jersey
New Mexico
New York
N. Carolina
North Dakota
Ohio
( iklahoma
Oregon
Pennsylvania
Philippines
Porto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
\V< -i \ ir^inia \
Resident [
Non-resident )
insin
Wyoming
S5.00 5.00 25.00
Merely filing fees.
Merely filing fees.
25.00 25.00 40.00
15.00
20.00
50.00 100.00 200.00 500.00 1,000.00 5,000.00
15.00
20.00
15.00
20.00
25.00
10.00
25.00
5.00
No organization tax
25.00 25.00 25.00
10.00
50.00
10.00
25.00 25.00
10.00 10.00
25.00 25.00
10.00 50.00
10.00
30.00
10.00
25,00
10.00
2.00
25.00
10.00
2.50
25.00
5.00
50.00 50.00
20.00 20.00
50.00 50.00
10.00
70.00
25.00
25.00 40.00
10.00 25.00
5.00
25.00
10.00
6.25
25.00
25.00
50.00
31.25
20.00 20.00
10.00
10.00
25.00 25.00
5.00 12.50
50.00
40.00
50.00
20.00
10.00 20.00
10.00 10.00
65.00
25.00
20.00
25.00
10.00
25.00
100.00
25.00
20.00
95.00
50.00
65.00
50.00
50.00
25.00
50.00
62.50
25.00
25.00
50.00
60.00
50.00
25.00
50.00
10.00
115.00 215.00
50.00 50.00
30.00 50.00
50.00 100.00
10.00 20.00
40.00 80.00
200.00 250.00
515.00 1,015.00
75.00 100.00
110.00
250.00
50.00
210.00
500.00
100.00
200.00 400.00
250.00 250.00
25.00
40.00
145.00
100.00
115.00
100.00
loo.oo
25.00
50.00
125.00
50.00
50.00
75.00
100.00
75.00
50.00
50.00
10.00
40.00
60.00
245.00
200.00
215.00
150.00
200.00
25.00
50.00
250.00
100.00
100.00
125.00
200.00
125.00
90.00
100.00
20.00
100.00
60.00
545.00
500.00
515.00
300.00
500.00
25.00
50.00
625.00
250.00
250.00
275.00
250.00
275.00
185.00
250.00
50.00
200.00
100.00
1,045.00
1,000.00
1,015.00
550.00
1,000.00
25.00
100.00
1,250.00
500. oo
500.00
5 25. OO
250.00
525.00
285.00
500.00
100.00
500.00
1,010.00
2,500.00
350.00
2,000.00
250.00
1,000.00
150.00
5,045.00
5,000.00
5,015.00
2.550.00
5,000.00
500.00
6,250.00
2,500.00
2,500.00
2,525.00
250.00
2,525.00
685.00
2,500.00
500.00
25.00
25.00
25.00
25.00
25.00
25.00
1.00
2.50
12.50
25.00
25.00
25.00
25.00
25.00
25.00
10.00
10.00
25.00
3.00
5.00
25.00
10.00
10.00
20.00
6.66
16.66
83.33
The organization tax is
25.00
25.00
25.00
100.00
100.00
100.01)
5.00
5.00
25. 00
10.00
10.00
10.00
2.00
5.00
25.00
50.00
50.00
70.00
.50
1.25
6.25
10.00
10.00
50.00
10.00
10.00
IO0O
25.00
25.00
25.00
25.00
25.00
25.00
25.00
50.00
25.00
25.00
50.00
25.00
75. oo
50.00 100.00
50.00 loo on
25.00 35.00
166.66 333.33
25 pesos. \n\
25.00 25.00
100.00 100.00
50.00 loooo
15.00 16.00
50.00 loooo
120 00 170. oo
12.50 26.00
50110 loooo
10.00
25.00
20 oo
25.00
40.00
25.00
100.00
40.00
125.00
200.00
200.00
45.00
666.66
capital
30.00
200.00
[50.00
20. oo
200.00
270.00
51 1.00
100.00
40.00
25.00
100.00
50.00
250.00
100.00
275.00
500.00
500 00
I
1,666.66
isation.
75 00
500.00
30 i
20.00
500.00
570.00
125.00
200.00
100.00
25.00
200.00
100.00
50 i
200.00
525.00
l.ooo no
l.(MMUM)
75.00
3,333.33
150.00
550 oo
30.00
1,00
l 071
250 110
31 I
600.00
25.00
l.ooo
51 ii i
2.500
1,000
2,525
5.000
5. ooo
875
16,666
5(H)
5,000
1 10
5. ooo
5 1 M I
600
>~ 3
3°
15.00
12.00
1 1.00
3.00
25.00
27.50
5.00
7.00
21.00
i
18.1 )
15.00
10.00 10.00 10.00 25.00 25.00 50.00 50.00 100.00 200.00 6.00
18.00
12 00
i ■
5.00
OON m inal
oo i I
OO i
3.00
10.00 10.00 20.00 25.00 50.00 75.00
15.00 15.00 20.00 -fooo 50.00 75.00
25.00 25.00 25.00 50.00 100.00 200(H)
5.00 5.00 10.00 10.00 looo 15.00
120.00 170.00 410.00
I" 27 i 00 72 ■ 00 38.00
500.00 l.ooo. ihi 5,000.00
30.00 55.00 265.00 15.1 i
INCORPORATION AND ORGANIZATION OF CORPORATIONS.
TABLE II.
TABLE OF ANNUAL FRANCHISE TAX UPON
DOMESTIC CORPORATIONS.
Capitalization.
Alabama
$10.00
25.00
50.00
75.00
125.00
175.00
275.00
525.00
1,525.00
Alaska
none
none
none
none
none
none
none
none
none
Arizona
none
none
none
none
none
none
none
none
none
Arkansas ]
5.00
12.50
25.00
50.00
100.00
150.00
250.00
500.00
2,500.00
California
10.00
20.00
20.00
25.00
50.00
75.00
75.00
100.00
200.00
Colorado
0.20
0.50
1.00
2.00
4.00
6.00
10.00
20.00
100.00
Connecticut
none
none
none
none
none
none
none
none
none
Delaware
5.00
5.00
10.00
10.00
20.00
20.00
25.00
50.00
150.00
Dis. of Col.
none
none
none
none
none
none
none
none
none
Florida
none
none
none
none
none
none
none
none
none
Georgia
5.00
10.00
15.00
15.00
25.00
25.00
50.00
75.00
100.00
Hawaii
2% upon net income of the corporation.
Idaho
12.50
15.00
22.50
37.50
52.50
75.00
75.00
90.00
150.00
Illinois
none
none
none
none
none
none
none
none
none
Indiana
none
none
none
none
none
none
none
none
none
Iowa
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
Kansas
none
none
none
none
none
none
none
none
none
Kentucky
10.00
10.00
15.00
30.00
60.00
90.00
150.00
300.00
1,500.00
Louisiana
none
none
none
none
none
none
none
none
none
Maine
5.00
5.00
5.00
10.00
10.00
50.00
50.00
75.00
275.00
Maryland
none
none
none
none
none
none
none
none
none
Massachusetts
10.00
25.00
50.00
100.00
200.00
300.00
500.00
1,000.00
5,000.00
Michigan
none
none
none
none
none
none
none
none
none
Minnesota
none
none
none
none
none
none
none
none
none
Missisippi
none
none
none
none
none
none
none
none
none
Missouri
none
none
none
none
none
none
none
none
none
Montana
none
none
none
none
none
none
none
none
none
Nebraska
5.00
10.00
20.00
30.00
50.00
75.00
75.00
100.00
200.00
Nevada
none
.none
none
none
none
none
none
none
none
N. Hampshire
none
none
none
none
none
none
none
none
none
New Jersey
10.00
25.00
50.00
100.00
200.00
300.00
500.00
1,000.00
4,000.00
New Mexico
none
none
none
none
none
none
none
none
none
New York \
(On basis of (
6 per cent (
15.00
37.50
75.00
150.00
300.00
450.00
750.00
1,500.00
7,500.00
dividend) '
North Carolina
5.00
5.00
5.00
10.00
25.00
50.00
100.00
200.00
500.00
North Dakota
none
none
none
none
none
none
none
none
none
Ohio
10.00
25.00
50.00
100.00
200.00
300.00
500.00
1.000.00
5,000.00
Oklahoma
none
none
none
none
none
none
none
none
none
Oregon
15.00
20.00
30.00
50.00
70.00
100.00
100.00
125.00
200.00
Pennsylvania
50.00
125.00
250.00
500.00
1,000.00
1,500.00
2,500.00
5,000.00
25,000.00
Philippines
No annual license tax.
Porto Rico
No annual license tax.
Rhode Island (A)
4.00
10.00
20.00
40.00
80.00
120.00
200.00
400.00
2,000.00
South Carolina
5.00
12.50
25.00
50.00
100.00
150.00
250.00
500.00
2,500.00
South Dakota
none
none
none
none
none
none
none
none
none
Tennessee
5.00
5.00
10.00
20.00
30.00
50.00
100.00
150.00
150.00
Texas
10.00
12.50
25.00
50.00
100.00
150.00
250.00
500.00
1,500.00
Utah
5.00
10.00
15.00
25.00
40.00
50.00
50.00
50.00
50.00
Vermont
10.00
10.00
10.00
15.00
25.00
35.00
50.00
50.00
50.00
Virginia
15.00
20.00
30.00
55.00
80.00
80.00
125.00
225.00
625.00
Washington
15.00
15.00
15.00
15.00
15.00
15.00
15.00
15.00
15.00
W. Virginia 1
Resident >
15.00
20.00
25.00
50.00
75.00
90.00
120.00
170.00
410.00
Non-resident )
15.00
20.00
30.00
50.00
75.00
100.00
150.00
275.00
725.00
Wisconsin
none
none
none
none
none
none
none
none
none
Wyoming
none
none
none
none
none
none
none
none
none
Note A In Rhode Island the annual license tax is known as an excess tax. (See pages 530-533.)
884
>NS.
$1,000,000
$5,000,000
APPROXI-
M \ 1 1:
ORIG
AL
ORIGINAL
IWUAL
ORIGINAL
ANNUAL
SINDKT
LICE
8E
LICENSE
LIl 1
HI ,
LIi 1
ma
TA
TAX
T.AX
i a
1 A\
Alabama
$71
DO
$1009.00
$525.00
$5069.00
1 1 525.00
Nominal
Alaska
N..
Nominal
Arizona
N- •
$40.00
Arkansas
25P0
1015.00
500.00
5015.00
2500.00
1.00
California
15
)0
100.00
100.00
500.00
200.00
10.00
Colorado
30
X)
315.00
20.00
1515.00
100.00
12.00
Connecticut . . .
N
Delaware
T
N
Florida
5
250.00
250.66
5.00
Georgia
W
75.00
100.00
1.00
Hawaii
50
X)
50.00
250.00
50.00
1250.00
Nominal
Idaho
10
X)
100.00
1045.00
90.00
150.00
5045.00
150.00
10.00
Illinois
30 ■
7.00
Indiana
25
1015.00
5015.00
5.00
Iowa
25p0
10,.
10)0
1015.00
550.00
300.00
1.00
300.00
5015.00
2550.00
1500.00
1.00
1500.00
5.00
Kansas . . .
27.50
Kentucky
5.00
Louisiana
No rati
ons
Maine
10)0
25)0
20.00
25.00
20,00
375.00
20.00
25.00
10.00
1375.00
None
Maryland
Nominal
Massachusetts .
25)0
500.00
1000.00
2.500.00
5000.00
Nominal
Michigan
25,-
500.00
2500.00
5.00
Minnesota
50,.
525.00
2525.00
5.00
Mississippi
20,-
250.00
250.00
15.00
Missouri
60 •
535.00
2535.00
3.00
20te A
10)0
285.00
See Note A
685.00
See Note A
5.00
Nebraska
100.00
100.00
500.00
200.00
5.00
Nevada
10,.
100.00
500.00
10.00
N. Hampshire . .
No li ■
The , •
N. Mexico
25 •
100.00
500.00
22.00
N. York
L'.e B
1250.00
See Note B
6250.00
Sec Note B
11.00
N. Carolina . . .
10)0
100.00
200.00
100.00
500.00
5.00
No li •
25.00
Ohio
See N •
3,.
1000.00
5000.00
Nomina]
Oregon
50)0
50.00
125.66
50.00
200.00
5.00
Pennsylvania . .
6)0
3000.00
5000.00
15000.00
25000.00
1(175
Philippines
50 po •
NllllllIKll
Porto Rico
25JK>
25.00
25.00
25.00
25.00
Nominal
Rhode Island . .
SeeNW
400.00
2000.00
1.50
S. Carolina ....
....»<)
500.00
2500.00
15.00
No li •
Tennessee
50P0
750.00
150.00
1500.00
1 50.00
40.00
Texas
511.)')
L040.00
460.00
5040.00
860.00
Nominal
Utah
()»)
250.00
50.00
50.00
125.00
50.00
50.00
11.00
1 .01)
VlKI.I.NIA
30P0
600.00
225.00
LOOO.OO
625.00
Nominal
Washington . . . .
25P0
25.00
L5.00
25.00
15(10
5.1)0
W. Virginia
See V
Wisconsin
25, •
LOOO.OO
5001
Nominal
Wyoming
5 •
55.00
255.00
3 50
\'nl
\,,|i.s.
See ante, \
16 ;.
64.
N i . i
Noi
No
•
TABLE III.
STATEMENT OF ORGANIZATION TAXES IMPOSED UPON FOREIGN CORPORATIONS.
Capitalization.
$2,000
$5,000
$25,000
$50,000
$100,000
$200,000
$500,000
omonui. omui
$1,000,000
$5,000,000
"ES*
871.00 1 $2.00
$74.00
85.00
S94.O0
$25.00
S119.00
(5 1
S69.O0
$75.00
$261.00
8125.00
$569.00
$275.00
S10G9.00
$525.00
85069.00
* 1.52.5 .00
Nominal
No license tax imposed
Nominal
$40.00
1 IK)
Arizona
No license tax imposed
12.50
65.00
.'.-.on
115.00
;,li no
215.00
100.00
515.00
250.00
1015.00
500.00
.501.-, on
2511111111
California
20.00
25,00
20.1111
.-,o.i»i
25.00
50.00
511.00
75.00
30.00 | 0.04 | 30.00
0.10
30.00
0.50
30.00
1.00
45.00
2.00
4.00
165.00
10.00
Connecticut . . .
No license lax imposed
The retaliatory 6ystem of taxation is in
force in Delaware
No license tax imposed
100.00
200.66
250.00
250.00
250.00
250.00
5.00
fi.OO
150.00
10.00
1.00
15.00
25.00
50.00
S0.00
10.00
30.00
25.00
25.00
10.00
50.00
l
50.00
25.00
25.00
10.00
150.00
10.00
1.00
50.00
10.00
70.00
40.00
40.00
25.00
10.00
150.00
15.00
1.00
io.oo
50.00
20.110
95.00
65.00
65.00
50.00
15.00
150.00
22.50
1.00
15.00
50.00
40.00
145.00
115.00
115.00
100.00
30.00
150.00
37.50
1.00
30.00
50.00
60.00
245.1X1
215.00
215.00
150.00
00.00
50.00
52.50
1.00
60.00
50.00
60.00
545.00
575.00
515.00
300.00
150.00
150.00
75.00
1.00
150.00
50 00
100.00
nil.-, on
1015.00
1015.00
550.00
300.00
90.00
1.00
300.00
1.50.00
5iil."
.•,01.5 Illl
5015.00
2660.00
1500.00
1.511 00
1.00
1.- I
Nomina]
10.00
7.00
5.00
5.00
27.50
5.00
Indiana
No lice
10.00
2.5.1 10
25.00
25.00
50.00
20.00
60.00
20.00
10.00
10.00
ise tax imp
10.00
25.00
2.00
See Note A
5.00
sed. A 1
20.00
25.00
25.00
25.00
50.00
20.00
00.00
20.00
10.00
10.00
cense tax i
10.00
25.00
5.00
See Note A
5.00
imposed L
20.00
25.00
25.00
25.00
50.00
40.00
60.00
20.00
10.00
10.00
pon gross
10.00
25.00
25.00
See Not,. A
10.00
eceipts of r
20.00
25.00
25.00
25.00
50.00
60.00
60.00
25.00
10.00
10.00
lanutactui
10.00
25.00
50.00
SeeNoteA
20.00
ng corpor;
20.00
25.00
50.00
50.00
75.00
110.00
S5.00
50.00
10.00
10.00
tions and the gn»s annual >:ilcs ot mercant
10.00 20.00 10.00 20.00
50.00 25.00 100.00 25.00
100.00 100.00 200.00 250.00
100.00 250.00
125.00 275.00
210.00 250.00
135.00 2S5.00
■ie, Nntc A ' S,.„ .\„t,. .\ 1^500
30.00 20.00 50.00 50.00
20.00 50.00
le corporations
10.00 20.00
250.00 25.00
500.00 500.00
500.00
525.00
250.00
53.5.00
See Note A 2S.5.O0
75.00 10000
100.00
20,00
375.00
1000.00
100.00
20.00
25 011
2.500.OO
251 II inn
2.525,00
2.50.00
2.5:;.-. iiii
685.00
500.00
500.00
in no
175.00
5000.00
3ee \ \
200.00
None
Nomina]
.5.00
.5.00
15.00
3.00
5.00
5.00
10.00
Maryland
Massachusetts
Michigan
Minnesota ,
Mississippi
Missouri
Montana
No license taxes imposed
N.York
The retaliatory system of taxat
25.00 | 1 25.00
2. :.n jSeeNoteB 6.25
10.00 1 5.00 1 10.00
on is in for
SecNulelt
5.00
■e in New .,
25.00
31. 25
10.00
ersey
SeeNoteB
5.00
25.00
62.50
10.00
SeeNoteB
10.00
25.00
125.00
10.00
25.00
50.00
2000
See Note D
50.00
50.00
025.00
50.00
-
10O.IIII
100.00
12.50.00
100.00
BeeNote 1'
200.00
500.00
62,50 no
100.00
s,,,. Note 11
500.00
22.00
11.00
5.00
N. Dakota
No license taxes imposed
See Note CI . 1
3.00 5.00
50.00 10.00 50.00
6.00 1 10.00 1 15.110
10.00
50.00
' 25.00
50.00
75.011
20.00
125.00
' 50.00
.-.imiii
150.00
30.00
250.00
100.00
50.00
500.00
200.00
50.00
600.00
70.00
1000.00
500.00
60.00
1.5 II
100.00
2500.00
1000.00
.5111111
3000.00
125.00
5000.00
5000.00
50.00
15000 00
200.00
25000.00
Nomina]
5.00
10.75
Philippines . . .
Porto Rico . . .
Rhode Island .
S. Carolina . .
50 pesos original tax. No annu
25.00 1 25.00 1 25.UO
Sec Note E 0.80 ...
| 5.00 |
ll license t:
25.00
2.00
5.00
X
25.00
25.00
10.00
12.50
25.00
25.00
20.00
25.00
25.00
40.00
50.00
2.5 .(X)
25.00
80.00
loo.oo
25.00
25.00
200 00
250.00
25.00
25.00
400.00
500.00
25.00
25.00
2000.00
2500.00
Nomina]
1.50
15.00
S. Dakota
Tennessee ....
No license
6 1
50.00
0.50
30.00
25.00
taxes imp.
5.00
25.00
5.00
1 1
15.00
15.00
sed
50.00
50.00
1.25
30.00
25.00
5.00
25.00
10.00
10.00
15.00
15.00
' 50.66
70.00
6.25
30.00
25.00
5.00
25.00
10.00
10.00
20.00
15.00
' 50.66
12.50
30.00
25.00
10.00
50.
15.00
10.00
30 00
15.00
100.00
11
25.00
60.00
25.00
20.00
100.00
25.00
15.110
55.00
15.00
200.00
210.00
50.00
120.00
25.00
30.00
1
lHIIII
25.00
80.00
15.00
400.00
-.liiiiii
125.00
301
25.00
100.00
280.00
.50.00
50.00
12-5 011
1.5.00
750.00
11 10
250.00
66
2.5.00
150.00
160.00
50.00
50,00
22.5.00
15.00
1500.00
511111, HI
125.00
1000.00
25 no
150.00
800.00
50 0(1
50.00
625.00
15.00
40.00
Nominal
11 IK)
4.00
Nominal
5.00
Utah
Vermont
Virginia
Washington . . .
W. Virginia . . .
Wisconsin , ...
Wyoming ,
See Note D
26.00
5.00
25.00
5.00
25.00
10.00
50.00
10.00
1 i
10.00
200.00
1.5.00
500.00
30.00
1000.00
55.00
5i«ii
2.55110
Nominal
3.50
Note A. — Five dollars must be paid annually for filing annual reports.
Note B. — In New York foreign corporations pay an annual license tax imposed at the s
Note C. — For Ohio tax on forei-n corporations see p'ages 189-491.
Note D. — For West Virginia tax on foreign corporations see pages 597-599.
Note E. — In Rhode Island the annual license tax is known as au excess tax.
i basis as domestic corporations. See ante, pages I'M. !M
GENERAL INDEX.
[The references are to pages.]
A.
ABANDONMENT,
non-user of corporate franchise as a ground for forfeiture . . 158-159
of corporate powers 158-159
suspending ordinary business 159
ABSENT STOCKHOLDERS,
may vote by proxy 49, 1 ; 1 1
ACCEPTANCE,
by State of surrender of charter .155
necessity of acceptance of resignation of directors ... . 101
ACCEPTING BENEFIT,
in its relation to doctrine of estoppel . . 03
ACCOUNT BOOKS. (See Books of Account.)
ACKNOWLEDGMENT,
of certificate of incorporation . . 79-80
ACQUIESCENCE,
effect of 64
ACTIONS,
by creditors 142-148
by State to enforce forfeiture of charter 157-158
by stockholders 156 L57
for assessments 149
ADOPTION. (See Ratification.)
ADOPTION OF BY-LAWS 99-100
by directors 75
ADVANTAGES,
of corporate organization 4-5
AFFIDAVIT,
anti-trust M
as to amount of stock paid in 7 L' 7 ;
subscribed Bl
as to payment of stock
as to publication 80
AGENT,
appointment of 180
certificate of appointment of L80
service of process upon L8Q
GENERAL INDEX.
AGREEMENTS,
to consolidate 77
voting trust 103
ALIENATION,
of franchise of being a corporation not permitted 51-52
power of, by corporations 51-52
ALIENS,
may be directors 101
may become incorporators 13
ALTERATION,
of by-laws 100
of charter 46, 145-152
of name 41
of number of directors 46
of par value of shares 57
AMBIGUITIES,
in corporate grant is resolved in favor of public 77-7S
AMENDMENT,
change of capitalization 41
corporate agent 47
domiciliary office 42
duration of corporate existence 40-41
name 41
number of directors 46
par value of shares 57
place of business 47
powers 56-57
purposes 46, 145-152
decrease of capital stock 41
increase of capital stock 41
of charter by directors 146
stockholders 145-152
of charters 145-152
before organization 58
AMOTION,
of directors 60-61
of officers • 60-61
AMOUNT,
limitations upon amount of capital stock 69-70
of stock paid in 72
subscriptions 70-71
with which a corporation may begin business .... 73
ANNUAL LICENSE TAX,
upon foreign corporations 199-20-
ANNUAL MEETING,
date of 74
place for holding 4(J
ANNUAL REPORTS. (See Reports.)
ANTI-TRUST AFFIDAVIT 81
ANTI-TRUST LEGISLATION 167-168
890
GENERAL INDEX.
APPLICATION FOR CHARTERS,
form of 80
refusal of gfl
APPOINTMENT,
of executive committee 107-108
of resident agent [QO
APPRAISAL OF PROPERTY,
by directors L87-I38
by Stute officials 139-141
taken by a corporation in exchange for capital sluck . . . 137-13S
ARTICLES OF AGREEMENT,
purpose of 10
ARTICLES OF ASSOCIATION,
synonymous with charter \\
ARTICLES OR CERTIFICATE OF INCORPORATION,
acknowledgment of 79
amendment of 145-152
contents of 11
defects in -u
evidentiary effect of 26
riling, publishing, and recording of
miscellaneous provisions relative to contents of 76-77
publishing
recording 86 -7
remarks on '.i
signing 7!'
synonymous with charter 11
ASSENT OF STOCKHOLDERS,
to by-laws 100
to preferred stock 45
ASSESSMENTS,
forfeiture of shares for non-payment of stock 10S— 1 < ►:>
power to levy 48-49
ASSETS,
of corporations liable for their debts Ill
power of corporation to dispose of its entire 51-52
ATTORNEY-GENERAL,
approval of articles by 77
bringing of quo warranto proceedings by
B.
BENEFITS,
doctrine that the reception of benefits under an ultra virtB contract
cute off the right to set up its illegality
BEQUESTS,
power of corporation to accept . . 83
BOARD OF DIRECTORS. (See Directors.)
BOARD OF MANAGEMENT
BONA FIDE PURCHASERS OF SHARES,
liability of, to creditors 171-172
39]
GENERAL INDEX.
BONDED INDEBTEDNESS,
limitations upon (See Part II.)
BONDHOLDERS,
right to participate in election of directors 57
BONDS,
power to issue 60
BONUS,
to be paid to the State upon creation of corporations . . . 84-85
BONUS STOCK, 143
BOOKS,
inspection of corporate 165-167
open to inspection of creditors 165-167
stockholders 165-167
■what books corporations required to keep (See Part II.)
where kept . 65-66
BOOKS OF ACCOUNT. (See Books.)
BORROW,
incidental power of corporations to 60
BREACHES of TRUST,
by directors 174-170
BURDEN OF PROOF,
when thrown upon creditors in attacking valuation of property
taken in exchange for stock 125-137
when thrown upon stockholders in attacking valuation of property
taken in exchange for stock 125-137
BUSINESS,
entire, may be transacted outside of domiciliary State .... 40
power to transact, outside of domiciliary State 38-40
principal place of .... 60
BUSINESS CORPORATION,
meaning of term 9
BY-LAWS,
adoption of 99-100
by directors 75
alteration of 99-100
book of 100
definition of 99
inherent power to make 33
mode of enacting 33
power of directors to adopt 55-56
of stockholders to adopt 99
to enact 33
to inflict penalties for violation of (See Part II.)
statutory provisions relative to .... 100
c.
CAPITAL,
liability of directors for declaring dividends out of 174
what is, when applied to corporations 67-68
GENERAL INDEX.
CAPITAL STOCK,
decrease of 41
definition of 67-0!)
increase of 41
issuance of 112-113
limitation upon amount of (See Part III. Table V.)
manner of payment of 69, 112-113
payment of , in cash 11;}
property 120-122
services lL'ti
CERTIFICATE OF CAPITAL STOCK,
when must issue 110-111
who entitled to 110-111
who must sign 110-111
CERTIFICATE OF INCORPORATION. (See Articles of Incor-
poration.)
CERTIFICATE OF ORGANIZATION,
synonymous with charter 11
CHANGE IN ARTICLES. (See Amendment to Articles.)
CHANGE OF CORPORATE NAME 41
CHARTERS,
construction of 77-78
creation of corporations under !'
definition of in
essentials of 11
form in which granted 86
nature of •. 10
(See also Articles of Incorporation.)
CITIZENS,
meaning of term in federal constitution 181
CITIZENSHIP OF CORPORATIONS 60
CLASSIFICATION,
of directors 57-58
of incorporation acts 7-8
COLLATERAL ATTACK,
upon corporate existence 21-28, 88-92
upon corporate powers 21-28
upon corporate purposes 21-28
COMBINATIONS,
in restraint of trade, unlawful trusts "for the control of corpora-
tions and the prevention of competition among them . . . 167-168
COMITY,
doctrine of Stat.- I s ' 190
COMMENCE BUSINESS,
time witliin which corporation must organize and . . . .109-110
when corporation <'ntitl< j <l to B2-94
COMMENCEMENT OF CORPORATE EXISTENCE .... 92 94
COMMENCEMENT OF OPERATIONS (See Commenoi Bosini
COMMERCE CLAUSE OF THE FEDERAL CONSTITUTION 202 210
GENERAL INDEX.
COMMERCIAL PAPER. (See Negotiable Instruments.)
COMMISSIONERS,
to take stock subscriptions 99
COMMITTEE,
executive 56, 107-108
COMMON LAW POWERS,
definition of 30-31
enumeration of 30-31
COMPANY,
does not imply incorporation 14
COMPETITION,
combinations or trusts among corporations for the prevention
of 167-168
CONCLUSIVE,
meaning of, in relation to evidentiary effect of documents ... 26
CONDITIONS,
imposed upon domestic corporations with reference to transaction
of business within State 145-179
imposed upon foreign coi-porations with reference to transaction
of business within State . 180-210
CONDITIONS PRECEDENT,
to coming into existence as a corporation 93
CONDITIONS SUBSEQUENT,
forfeiture of charters on the happening of 93
CONSOLIDATION,
meaning of 40
payment of taxes upon 85
regulation of right of 178-179
CONSOLIDATION OF CORPORATIONS,
when power exists 38
CONSTITUENT ACTS,
power to perforin outside of domiciliary State 40
CONSTITUTIONAL LAW 181, 202-210
CONSTITUTIONAL PROVISIONS,
creating individual liability of stockholders for corporate debts 169-174
CONSTITUTIONAL RESTRAINTS,
relative to impairing the obligations of contracts 153-151
upon the creation of corporations 9
CONSTRUCTION OF CHARTER 77-78
CONTRACTS,
impairing obligation of 77-78
power of corporations to make 60
CONTROL OF CORPORATIONS,
who entitled to 102
CORPORATE AGENTS,
power to appoint . . . ." 33
CORPORATE BOOKS. (See Books )
CORPORATE ELECTIONS. (See Elections.)
894
GENERAL INDEX.
CORPORATE EXISTENCE,
collateral attack upon 21-28,
duration of
extension of I ,
power to extend 40-41
proof of 24-26
right of State in direct proceedings to attack 90-92
when commences 92-94
CORPORATE NAME,
not alienable 32
power to change 41
right to 31
CORPORATE OFFICERS,
election of 1
power to appoint
CORPORATE POWERS,
at common law
classification of
collateral attack upon 21-28
consolidation of 29
definition of 30, 34, 59
enumeration of '.1 IS
express 30, 34, 36
financial 60
implied 30-31, 59
incidental 30, 59-60
power of amotion 60-6]
to give and accept evidences of debt CO
mortgage and pledge GO
purchase corporation's own stock 36
purchase stock in other corporations
CORPORATE PURPOSES,
collateral attack upon 1"> l!'
illegal 6-28
number of 19-20
CORP 'HI ATE SEAL,
right to adopt and use a 32
CORPORATIONS,
cannol 1"- created by voluntary agreement Ik
cannot become incorporators 18
citizenship of 68
c immon law powers of
i onsolidai ion of ;,,s . 1 1
created by special act 9-10
dp facto corporations
definition of
domicile of 68
express powers of . .
extension of corporate existence 10—41
for what purposes may be formed .19
GENERAL INDEX.
CORPORATION'S — continued.
incidental powers of . 59-60
name of 14
power of minority stockholders to compel purchase of holdings . 47
to amend articles before organization 58
appoint executive committee 56
authorize directors to adopt by-laws 55-56
authorize voting by proxy 49
bestow upon bondholder's right to vote at corporate
elections 57
borrow money 60
change corporate domicile 47
change corporate name 41
change corporate purposes 46
change number of directors 46
change par value of shares 57
change principal place of business 47
classify directors 57-58
diminish corporate powers 57
dispose of corporate assets as an entirety .... 51-52
enforce a lien upon stock to secure payment of corporate
debts 47-48
enlarge corporate powers 56
forfeit stock 48-49
increase or decrease capital stock 41
insert provision for regulation of internal affairs . . 53-55
issue preferred stock 41-45
issue stock in exchange for services or property . . 49-50
levy assessments 48-49
make contracts 60
perform constituent acts 40
permit cumulative voting 49
purchase its own stock 36-37
purchase stock in other corporations 37-38
surrender charter before organization 58
transact business outside of domiciliary State . . . 38-40
voluntarily dissolve the corporation 52-53
steps necessary to creation of 12
time within which corporation must organize 109-110
where can be created by special act 9
CORPORATOR 12
COUNTY OFFICES,
filing and recording in 86
CREDITORS,
directors' liability to 174—176
right of, to enforce stockholders' liability for corporate debts . 169-174r
inspect corporate books 165-167
stockholders' liability to 169-174
CUMULATIVE VOTING,
at corporate elections 49>
896
GENERAL INDEX.
I).
DARTMOUTH COLLEGE DECISION 158
DATE OE ANNUAL MEETING 74
DEBTS,
limitation upon account of corporate 71 75
power of corporations to incur 60,71-70
DECREASE OF CAPITAL STOCK 11
DE FACTO CORPORATIONS, 87-U0
DEFAULT,
in payment of annual tax, effect of 1G0
DEFINITIONS,
business corporation . , 9
capital stock 68
incorporation 9
incorporator 12
shares of stock 68
DE JURE CORPORATIONS 86-90
DELEGATION,
of powers of board of directors to executive committee . . . 107-108
DEVISES,
power of corporations to accept 33
DIMINISHMENT,
of corporate powers 53
DIRECTORS,
adoption of by-laws by 75
appraisal of property by 137-138
classification of 57-58
election of 100 104
first meeting of 105 107
named in certificate are directors de jure 67
power to adopt by-laws 55, 96
appoint executive committee 56
change number of 48
vote by proxy K'6
qualification of ■ 101-102
(See Board of Managkmknt.)
statutory liability of 171 L78
DIRECTORY PROVISIONS,
what are 91
DISQUALIFICATION,
for the ofhee of director 101
DISSENTING DD3ECT0RS,
provisions for the exoneration of, from statutory liability . . 154 157
DISSOLUTION,
involuntary '
voluntary
DISSOLUTION OF CORPORATIONS B2 58, L54 157
GENERAL INDEX.
DISTINCTION,
between de jure and de facto corporations ....... 87-88
DIVIDENDS 174
DOCTRINE OF ESTOPPEL 63-65
DOCTRINE OF STATE COMITY 184-190
DOCTRINE OF ULTRA VIRES 61-65
DOING BUSINESS,
what constitutes doing business by a foreign corporation . . 190-195
DOMESTICATION,
of foreign corporations .198
DOMESTIC CORPORATIONS 145-179
DOMICILE,
corporate 65-66
DOMICILE OF CORPORATIONS,
power to change corporate 47
DOMICILIARY OFFICE 65-66
DOUBLE LIABILITY,
of stockholders to creditors 173
DUMMY,
directors 1"*
incorporators * 14
DURATION,
of corporate existence 73-74
limitations upon 154-155
of office for directors 102
E.
EFFECT,
of appraisal of property by directors 137-138
state officials 139-141
ELECTION,
of corporate officers 10'
ELECTIONS,
corporate 100-101
of directors 100-104
ELEEMOSYNARY CORPORATIONS 9
ELIGIBILITY,
as an incorporator 14
to office of director 100-104
ENLARGEMENT,
of corporate powers 56
EQUAL PROTECTION OF LAWS 181
ERROR OF JUDGMENT I 36
ESTOPPEL,
doctrine of, in pais 63-00
in case of ultra vires contracts 63-64
to deny corporate existence . . -so
898
GENERAL INDEX.
EVIDENCE,
meaning of conclusive og
prima facie 26
of corporate existence 24 26. 87 38
EXCESSIVE DEBTS 71 7,
EXECUTION,
of articles of incorporation 79-80
EXECUTIVE COMMITTEE,
appointment of ... 107-108
power of directors to appoint 56
powers of executive committee of directors 56
EXEMPTION,
of stockholders from personal liability 75
EXISTENCE OF CORPORATION. (See Corporatk Existence.)
EXPIRATION OF CHARTER 176
EXPRESS POWERS,
definition of 34-37
enumeration of 34-37
EXTENSION,
of corporate existence 176-177
payment of tax upon 85
EXTRA-TERRITORIAL POWERS 38-40, 184-190
F.
FALSE REPORT,
liability for directors making 174
FEDERAL COURTS,
right of foreign corporations to remove cases to 198
FEES,
organization 84-85, 177-1 7*
FICTITIOUS INCREASE,
of stock 128
FICTITIOUS STOCK 72,148
FILING CHARTER,
in local county offices 86-87
with State officials 82-84
FINANCIAL POWERS OF CORPORATIONS 60
FINES,
power to enforce by-laws by pecuniary fines 88
FIRST DIRECTORS' MEETING 105 l< '7
FIRST GENERAL INCORPORATION ACT,
reference to 1
FOREIGN CORPORATIONS,
annual license tax on 1:
license tax on ' ;,s ' i;l
penalty for transacting business without .permit 196 1
power to exclude
what constitutes doing business on the part of I' 1 ' 1 19 ■•
899
GENERAL INDEX.
FOREIGN LAWS,
extra-territorial force of statutes enforcing liability upon direc-
tors and stockholders 169-176
FORFEITURE OF CHARTERS,
for insolvency .....'. 160
for misuse or abuse of corporate powers 159
for non-payment of taxes 160
for non-performance of conditions precedent 160
subsequent 160
for non-user of corporate franchises 158-159
for violation of express statute 160
FORFEITURE OF SHARES 48-49
FORM,
in which charter is granted 86
FRANCHISES,
corporation 11
FRANCHISE TAX,
distinction between franchise tax and property tax .... 177-178
distinguished from organization tax 84-85
right to impose 178
FRAUD . 127-128
FRAUDULENT ISSUE OF SHARES 33
FULL LIABILITY CORPORATIONS 174
FULL-PAID STOCK 142-143
FUNDAMENTAL CHANGES IN CHARTER 145-152
a
GIFT OF SHARES,
effect of, on liability of stockholders 143-144
"GOOD FAITH RULE,"
for payment of shares in property other than money .... 123-125
statement of 123-125
GRADUATED ORGANIZATION TAX,
right to impose 178
validity of 85
GRANT,
power to 32-33
H.
HOLDING OVER BY DIRECTORS 102
I.
ILLEGAL PURPOSES 28-29
IMMUNITY,
from personal liability by publication of articles 80
IMPLIED POWERS 59
INCIDENTAL POWERS 59-61
INCORPORATION,
definition of 9
purposes for which corporations may be formed 17-19
900
GENERAL INDEX.
INCORPORATION ACTS,
classification of 7_S
INCORPORATORS,
aliens may be 18
corporations cannot be |3
definition of !•_>
dummy \ \
infants cannot be l:;
married women may be 13
may sign articles by mark 79
must be known persons 13
organization meeting 95-96
privileges of 11
qualifications of 12
synonymous with corporators 12
INCREASE,
in par value of shares 57
of capital stock « 41
INDEBTEDNESS,
limitation upon corporate 71-7.")
INDIVIDUAL LIABILITY OF STOCKHOLDERS . . . .169 17 1
INFANTS 13
INSOLVENCY,
forfeiture of charter for 100
INSPECTION OF BOOKS AND RECORDS,
by creditors 165-107
by stockholders 165 lti7
INSPECTION OF CORPORATE BOOKS 165-167
INSPECTORS OF ELECTION 103-104
INTERNAL AFFAIRS,
provisions for the regulation of 53-55, 76, 168-169
INTERPRETATION OF CHARTER 77 78
INTER-STATE COMMERCE,
clause of the Federal Constitution 202-210
INTRODUCTION 1
INVOLUNTARY DISSOLUTION 156-157
IPSO FACTO DISSOLUTION 154-157
IPSO FACTO FORFEITURE 157-160
ISSUANCE AND PAYMENT OF CAPITAL STOCK . . . 112-118
L.
LABOR DEBTS,
liability of stockholders for 17:> 171
LAND,
power of corporations to take and hold 82 88
LAW AND FACT.
questions of 125
90]
GENERAL INDEX.
LEADING INCORPORATING STATES,
enumeration of 3, 7
LEASES,
power of corporations to accept leases in exchange for stock . 50, 121
LEGISLATIVE AUTHORITY,
essential to creation of corporations 10
LEGISLATIVE CONTROL,
over domestic corporations 145-179
over foreign corporations 180-210
LEGISLATIVE INVESTIGATION,
into corporate affairs 164
LEGISLATIVE REGULATION,
of internal affairs 167-168
LEGISLATIVE REQUIREMENT,
of annual report 164-165
LEGISLATURE 145
LETTERS PATENT,
when conclusive as to fact of incorporation 24-28
LIABILITY,
of directors. (See Directors.)
of stockholders. (See Stockholders.)
LIABILITY OF STOCKHOLDERS,
exemption from » 74-75
LICENSE TAX,
upon foreign corporations 198-199
LIEN,
corporation's lien upon stock of its members to secure debts
due it 47-48
LIMITATIONS,
upon amount of capital stock 69-70
upon corporate existence 74-75, 154-155
upon power to hold real property 32-33
LIST OF SHAREHOLDERS,
failure to keep alphabetical list of stockholders not an ipso facto
dissolution 176
MAJORITY,
of directors rule in private corporations 102
of stockholders entitled to control in private corporations . . . 102
MANDAMUS,
right of 8*
MANDATORY PROVISIONS 91
MANNER OF PAYMENT OF CAPITAL STOCK . . 69, 113, 120
MANUFACTURING CORPORATIONS 173
MARRIED WOMEN,
may be incorporators 13
MAXIMUM AMOUNT,
of indebtedness - • 82
902
GENERAL INDEX.
MEETING,
date of annual 74
organization
MEETINGS,
of directors 105-107
for election of directors, where held 104
of stockholders 40,96-88,104
MERGER. See Consolidation'.
MINING COMPANIES 131-132
MINISTERIAL DUTIES 34
MINORITY STOCKHOLDERS,
power to compel purchase of their stock upon consolidation 58-59. 102
MISCELLANEOUS PROVISIONS,
relative to contents of articles of incorporation 76 77
MISCONDUCT OF DIRECTORS. (See Amotion.)
MISTAKES OF JUDGMENT,
in appraisal of property taken in exchange for stock .... 136
MISUSER,
a ground for forfeiting corporate charter 159
MONEY,
payment for stock in 11:5
"MONEY OR MONEY'S WORTH" RULE 113
MORTGAGE,
corporate 60
power to 60
MORTGAGE BONDS 60
N.
NAMES OF CORPORATIONS,
corporate name not alienable 81
purpose of 11. 31
power to change 11
protection of corporate 31
right to a corporate name 11,31
similarity in corporate name forbidden 11. 31
NEGLIGENCE,
liability of directors for 176
NEGOTIABLE INSTRUMENTS,
corporate powers relating to 60
NON-ASSESSABLE STOCK Ill 1 111
NONPAYMENT OF TAXES,
forfeiture of charter for 160
NON PERFORMANCE OP CONDITION'S PRECEDENT,
forfeiture of charter for 160
NON-PERFORMANCE OF CONDITIONS SUBSEQUENT,
forfeiture of charter for 180
903
GENERAL INDEX.
NON-USER,
dissolution of corporations for 158-159
NOTICE,
of directors' meetings , „ 106
of incorporators' meetings 96
0.
OATH,
of inspectors of election 103
of office 101
OFFICE 66
OFFICERS,
of corporations 107
ONE-MAN CORPORATIONS 13-14
ONUS PROBANDI. (See Burden of Proof.)
ORGANIZATION MEETING OF INCORPORATORS,
how called 96
where held 96-98
ORGANIZATION OF CORPORATIONS,
certificate of 109
steps necessary to complete 98-99
ORGANIZATION TAX 84-85
distinguished from franchise tax 85
graduated 85
right to impose 178
ORGANIZE,
time within which corporations must 109-110
OUSTER,
judgment of, in quo warranto proceedings . . . 112-113, 157, 198
OVERVALUATION,
of property delivered in exchange for stock 122-137
P.
PAID UP STOCK,
meaning of 142-144
PARTNERS,
liability of incorporators as 80, 173
PAR VALUE,
change in 57
of capital stock 70
PATENT RIGHTS 50, 121
PAYMENT OF CAPITAL STOCK 112-120
certificate of 109
in property 120-122
in services . 120
PENALTIES,
for violation of by-laws 33
904
GENERAL INDEX.
PENALTY.
for failure to organize and commence business 110
upon foreign corporations for transacting business without
permit 1H5-198
PERPETUAL SUCCESSION,
right of
PERSONAL PROPERTY,
power to hold 82-89
PETITION FOR INCORPORATION,
synonymous with charter 11
PLACE OF BUSINESS 60
power to change 17
PLEDGE,
power to ill)
PLEDGEES,
liability of, for unpaid stock subscriptions 172
POLICE POWER 100-164
POWER,
to impose organization taxes 85
POWER OF ATTORNEY,
signing articles by 79
POWER OF STATE LEGISLATURES,
over foreign corporations 180-184
POWERS OF CORPORATIONS.
cannot be created by by-law 29
classification of 29-80
collateral attack upon 21,28
common law 80-3]
consolidation 33
express 80, 84, 88
incidental 80,
to acquire and hold property in trust 88
to acquire, hold, and dispose of real and personal property . . 82 8 I
to amend articles before organization 58
to appoint corporate officers and agents : >3
to appoint executive committee 88
to authorize directors to adopt by-laws 86-56
to authorize voting by proxy
to bestow upon bondholders right to vote at corporate elections ■ 57
to borrow money 50
to change corporate domicile *i
to change corporate Dame
to change corporate purposes 46, 145 L52
to change number of directors
to change par value <>f shares 6?
to change principal place of business
to classify directors 57-68
to diminish corporate powers
to dispose of corporate assets as an entirety
905
GENERAL INDEX.
POWERS OF CORPORATIONS — continued.
to enforce a lien upon stock to secure payment of corporate
debts 47-48
to enlarge corporate powers 56
to establish by-laws 33
to extend corporate existence 40-41
to forfeit stock . : 48-49
to hold meetings for election of directors without domiciliary State . 104
to increase or decrease capital stock 41
to insert provision for regulation of internal affairs .... 53-55
to issue preferred stock 41-45
to issue stock in exchange for services or property 49-50
to levy assessments 48-49
to make contracts 60
to organize subsidiary companies 37
to perform constituent acts 40
outside of domiciliary State .... 40
to permit cumulative voting 49
to purchase its own stock 36-37
to purchase stock in other corporations 37-38
to sue and be sued 34
to surrender charter before organization 58
to take property by devise 33
to transact business outside of domiciliary State 38-40
to voluntarily dissolve the corporation 52-53
PREFERRED STOCK,
included in amount of authorized capital 68
power to issue 41-45
PRINCIPAL PLACE OF BUSINESS 66, 82
PROMOTERS 120
PROMOTION STOCK .120
PROOF OF CORPORATE EXISTENCE 24-26, 87-88
PROPERTY 49, 50, 120-122
(See Payment for Shares.)
PROPORTIONATE LIABILITY 169-174
PROXY,
right to vote by 49, 104-105
directors cannot vote by, at board meetings 106
PUBLICATION,
of annual reports 164-165, 175
of articles of incorporation 80
purpose of 80
PUBLIC POLICY,
corporate purposes opposed to 29
PURPOSES,
collateral attack upon corporate 16-28
corporate 15-19
for which corporations may be formed 15-19
illegal 28-29
906
GENEKAL INDEX.
PURPOSES — continued.
more than one purpose 19-20
number of 19-20
power to change corporate 46, 145-152
Q.
QUALIFICATION SHARES 101
QUALIFICATIONS OF DIRECTORS 101
QUESTIONS OF LAW AND FACT 125
QUORUM,
at corporate elections 102
at stockholders' meetings 102
of directors 106
of incorporators . . , 96
QUO WARRANTO 157
R.
RATIFICATION 64
REAL ESTATE,
power to hold . 32-33
REASONABLENESS,
of corporate by-laws 100
RECORDATION,
of articles of incorporation 86-87
RECORDS,
corporate 165-167
REDUCTION OF CAPITAL,
corporate powers relative to 41
REGULATION,
of internal affairs 53-55, 168-169
provision for 76
of right of consolidation 178-179
REMOVAL OF DIRECTORS 60-61
RENEWAL OF CHARTER 153-154
REPEAL 99-100
of by-laws 153-154
of charters 153-154
REPORTS,
annual 164—1 <>.">
legislative requirement of annual 164-165
statutory liability of directors relative to 174—175
RESIDENCE OF CORPORATIONS 66
RESTRAINT OF TRADE,
combinations in 167-168
RETALIATORY TAXATION,
of foreign corporations 1!'!>
907
GENERAL INDEX.
RIGHT,
of perpetual succession 31-32
to impeach corporate existence 88-92
RULE,
good faith 123-125
speculative value 125-137
true value 122-123
RULES,
for construction of charter . 77-78
S.
SEAL,
affixed to certificate of incorporation 86
power to adopt and alter 32
use of, by incorporators 79
SECRETARY OF STATE,
effect of certificate of due incorporation 21-28, 88-92
mandamus against 84
SERVICE OF PROCESS,
appointment of agent upon whom process may be served . . . 180
SERVICES,
payment of stock in 49, 120
SIGNING ARTICLES OF INCORPORATION 79
SIMILARITY,
of corporate name forbidden 14, 31
SOLE STOCKHOLDERS 13-14
SPECIAL ACT,
incorporation by, forbidden 9-10
SPECIAL LIABILITY 173-174
SPECIAL REQUIREMENTS,
as to articles of incorporation 81-82
SPECULATIVE VALUE RULE 125-137
STATE,
police power of 160-164
powers of, in creation of corporations 10, 85
right of, to attack corporate existence 90-92
repeal charters 153-154
STATEMENT,
of good faith rule 123-125
of true value rule 122-123
of speculative value rule 125-137
STATE OFFICERS,
mandamus against S4
STATE OFFICIALS,
appraisal of property by 139-141
power to accept or reject articles 82-84
STATUTES OF MORTMAIN 32
908
GENERAL INDEX.
STATUTORY LIABILITY,
of directors 174-176
of stockholders 169-174
STATUTORY LIMIT,
of indebtedness 74-75
STOCK,
amount paid in 72-73
with which corporation may begin business 7:'.
assessments 108-109
capital 67-69
extinguishment of 37
full paid 142-143
issuance of, in exchange for services or property . . 49-50, 112-137
legislative authority necessary to issuance of 68
non-assessable 141-142
par value of 70
power of corporation to purchase its own 36-37
stock in other corporations . 37-3^
power to decrease 41
forfeit 48-49
increase 41
statement in articles as to manner in which same shall be paid for 69
STOCK CERTIFICATES 110-111
STOCKHOLDERS,
double liability 173
exemption in articles from personal liability 75
liability for debts of the corporation 169-174
labor claims 173-174
unpaid stock subscriptions 169-172
liability of pledgees 172
transferees 172
transferors 172
trustees 172
special liability 173-174
STOCK NOTES 121
STOCK SUBSCRIPTIONS,
affidavit as to 81
amount of 70-71
SUBORDINATE OFFICERS AND AGENTS,
appointment of 107
SUBSCRIPTIONS FOR STOCK,
affidavit as to 80
SUBSEQUENT CONDITIONS 93, 160
SUBSIDIARY COMPANIES,
power to organize 37
SUE,
power to 34
SURPLUSAGE, 65
909
GENERAL INDEX.
SURRENDER OF CHARTER,
before organization 58, 155
SUSPENSION OF BUSINESS 156, 158-159
T.
TAX,
organization 84-85
TAXATION,
of domestic corporations 177-178
TAXING POWER,
of the State as limited by the inter-state commerce clause of the
Federal Constitution 202-210
TENDENCY,
in favor of incorporation 9
TENURE OF OFFICE 102, 107
TERMINATION OF CHARTER 151-155
TIME,
of corporate existence 73-71
within which corporations must organize and commence busi-
ness 109-110
TRADE MARK,
name of corporatfon protected as a 15
TRADE NAME,
corporation protected in equity in use of its name 15
TRAMP CORPORATIONS 185
TRANSFER,
of entire corporate assets 51-52
of shares 171-172
TRANSFEREES,
liability of, for unpaid stock subscriptions 171-172
TRANSFERORS,
liability of, for unpaid stock subscriptions 171-172
TREASURY STOCK 121-122
TRUE VALUE RULE,
statement of 122-123
TRUST,
power to acquire and hold property in 33
voting 103, 105
TRUSTEE,
power of corporation to act as 33
TRUSTEES,
liability of, for unpaid stock subscriptions 172
TRUST FUND DOCTRINE Ill
TRUST LEGISLATION 167-168
910
GENERAL INDEX.
u.
ULTRA VIRES,
doctrine of « 61-65
UNIFORM TAXATION 85
UNLAWFUL CORPORATIONS 10
UNPAID STOCK 142-145
USER 88
V.
VACANCIES,
in board of directors, power to fill .... e 102
VALUATION,
of property taken in exchange for stock 137-141
VALUE, PAR . 70, 110-111
VERIFIED REPORTS 174
VIOLATION OF EXPRESS STATUTES,
forfeiture of charter for 160
VISITORIAL POWERS,
of State legislatures relative to corporations 164
VOLUNTARY DISSOLUTION 52-53, 155-156
VOLUNTARY SURRENDER OF CHARTER 58
VOTING,
cumulative 49
by proxy « . . . . . 49, 104-105
trusts 103, 105
w.
WHAT CONSTITUTES DOING BUSINESS,
on the part of foreign corporations 190-195
WINDING UP. (See Dissolution and Forfeiture.)
WORDS AND PHRASES (See passim.)
911
INDEX TO SYNOPSIS-DIGEST OF THE INCOR-
PORATION ACTS OF THE SEVERAL STATES,
TERRITORIES, ETC.
[The references are to pages.]
Alabama 211-220
Alaska 221-225
Arizona 226-232
Arkansas 233-241
California 242-252
Colorado 253-259
Connecticut 260-266
Delaware 267-274
District of Columbia . 275-279
Florida 280-285
Georgia 286-290
Hawaii 291-294
Idaho 295-301
Illinois 302-308
Indiana. ...... 309-321
Iowa 322-329
Kansas 330-336
Kentucky 337-342
Louisiana 343-347
Maine 348-354
Maryland 355-368
Massachusetts .... 369-376
Michigan 377-384
Minnesota 385-391
Mississippi 392-396
Missouri 397-403
Montana 404-410
Nebraska . .
Nevada . .
New Hampshire
New Jersey .
New Mexico .
New York
North Carolina
North Dakota
Ohio ....
Oklahoma . .
Oregon . . .
Pennsylvania
Philippines .
Porto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas .
Utah
Vermont
Virginia
Washington .
West Virginia
Wisconsin . .
Wyoming . .
411-416
417-125
42(5-429
430-438
439-446
447-469
470-475
476-483
484-491
492-497
498-503
504-513
514-519
520-524
525-533
534-538
539-545
546-550
551-559
560-565
566-570
571-582
5S3-5S8
589-599
600-606
607-612
913
INDEX TO FORMS AND PRECEDENTS.
[The references are to pages.)
A.
ACCEPTANCE,
of constitution 868-869
ACKNOWLEDGMENTS,
by attorney in fact 868
corporate form for — in the several States and Territories.
(See same indexed under name of State.)
of articles of incorporation for the several States and Terri-
tories 663-744
AFFIDAVIT,
as to mailing notices of stockholders' meeting 868
AGENT,
appointment of 746-747
AGREEMENT,
for sale of real or personal property in exchange for capital
stock 837-838
placing shares of stock in trust for corporation 838
to take stock in corporation to be formed 835-836
voting trust 847-848
underwriting 843-847
ALABAMA,
acknowledgment by corporations in 750
form for certificate of incorporation in 663-664
form for permit for foreign corporation in 749-750
ALASKA,
form for articles of incorporation in . . : 664-665
AMENDMENT OF CHARTER,
certificates relative to 802-810
notices of meeting relative to 802
AMENDMENTS,
resolution calling for meeting to vote upon 802
to charters, forms for 802-813
APPOINTMENT,
of agent 746-747
ARIZONA,
acknowledgment by corporations in 751
form for amendments of charter in 803-804
form for articles of ineorporat ion in (skeleton form) .... 665-666
form for permit for foreign corporation in 750
steamboat and transportation charter complete 874-877
915
INDEX TO FORMS AND PRECEDENTS.
ARKANSAS,
acknowledgment by corporations in 751
form for articles of agreement and incorporation 666-668
form for permit for foreign corporation in 751-752
ARTICLES OF INCORPORATION. (See Certificates of
Incorporation.)
ASSESSMENT,
of stock 881
ASSIGNMENT,
of subscription 817
ATTORNEY,
power of 840-842
ATTORNEY IN FACT,
acknowledgment by 868
AUDITING COMPANY,
charter of (under New Jersey laws) 869-871
B.
BANK,
certificate to be filed with, on opening account 840
BILL OF SALE 866
BOND,
form of 854-855
relative to lost stock certificates 866-867
special clause for insertion in issue of 865
trust deed and bond 851-865
BONDS,
directors authorized to issue 654, 815-816, 849-850
underwriters' agreement for 843-847
BROKERAGE COMPANY,
charter of (under New York laws) 718-720
BUSINESS,
appointing additional officers 659
borrow 658
classification of directors 654
clauses regulating business 654-661
common-law powers 660-661
contracts 660
cumulative voting 655
examination of books by stockholders 655
first meeting of incorporators 655
general business clause 659-660
guarantee dividends 659
holding stockholders' meeting without domiciliary State .... 655
issuing stock and bonds in exchange for real and personal property 655
lend money 659
limitation on dividends 656-657
limitation on liability of original subscribers 657
limitation on the right to mortgage and pledge 655
non-assessable stock 660
916
INDEX TO FORMS AND PRECEDENTS.
BUSINESS — continued.
partnership 659
placing stock in voting trust 656
placing titles in individuals 656
power of directors to appoint executive committee 655-656
power of directors to issue bonds 654
power of directors to make, alter, amend, or repeal by-laws . . . 654
powers of Board of Directors 659-660
preferred stock clause, long form 662
short form 667
special clause for cumulative dividends . . 662
removal of directors and officers 658
right of shareholders to participate in purchase of new stock
issue 657
safety clause 656
security for persons or corporations 659
transaction of business without domiciliary State 653
working capital 657
BY-LAWS,
directors authorized to make, alter, and repeal 654
form of 822-828
Maine form 693-697
of United States Steel Company 828-835
c.
CALIFORNIA,
acknowledgment by corporations in 752
form for articles of incorporation in 668-669
form for permit for foreign corporations in 752
CAPITAL CLAUSES,
from charters of
Auditing Co 869-871
Brokerage Co 718-720
Coal Co 877-878
Mining Co 872-873
Steamboat and Transportation Co 874-878
Trust and Investment Co 672-674
United States Steel Corporation 713-717
preferred stock 661-662
CAPITAL STOCK,
decrease of, resolution relative to 802
CERTIFICATE,
interim 657-658
relative to amendment of charter 802-810
CERTIFICATE OF AUTHORIZATION,
to countersign certificates of stock 842-843
CERTIFICATES OF INCORPORATION,
of Auditing Co 869-871
of Brokerage Co 718 720
of Coal Co 871-878
917
INDEX TO FORMS AND PRECEDENTS.
CERTIFICATES OF INCORPORATION — continued.
of Mining Co 872-879
of Steamboat and Transportation Co 874-878
of Trust and Investment Co 672-674
of United States Steel Corporation 713-717
skeleton forms for use in all States and Territories 663-744
CERTIFICATE OF INSPECTORS,
of election 817,839
CHARTER. (See Certificates of Incorporation.)
CLERK,
certificate of, certifying to his appointment 867
COAL COMPANY,
form for charter of (under West Virginia laws) 871-879
COLORADO,
acknowledgment by corporations in 753
form for certificate of incorporation 669-670
form for permit for foreign corporations in 753
COMPANIES,
objects for specific. (See Special Index, pages 613-615.)
CONNECTICUT,
acknowledgment by foreign corporation in 754
form for certificate of incorporation (skeleton form) .... 670-671
form for permit for foreign corporations in 754
form for voluntary dissolution in 811
CONSTITUTION,
acceptance of 868-869
CORPORATE SIGNATURE,
form for 867
COUNTERSIGNING OF STOCK
form for 842-843
CUMULATIVE VOTING 655
D.
DEED OF TRUST,
securing issue of bonds 851-865
special clause for insertion in 865
DELAWARE,
acknowledgment by corporation in 755
form for amendments of charter in . . 804-807
form for certificate of incorporation (skeleton form) .... 672-675
form for permit for foreign corporations in 755
form for voluntary dissolution in 812-813
Trust and Investment Co. charter complete 672-674
DIRECTORS,
classification of 654
election, resolution relative to 814
minutes of first meeting of 818-822
power to adopt and alter by-laws 654
power to appoint executive committee 655-656
power to contract specific debt, resolution granting power to . . 839
918
IXDEX TO FORMS AND PRECEDENTS.
DIRECTORS — continued.
power to dispose of all corporate property 653-654
power to issue bonds 655
powers of 659-660
removal of 658
waiver of notice of first meeting of 822
DISSOLUTION OF CORPORATIONS,
forms for 811-S13
DISTRICT OF COLUMBIA,
acknowledgment by corporations in 755
certificate of payment of capital stock 851
form for certificate of incorporation (skeleton form) 675
form for permit for foreign corporation in 7.").")
DIVIDEND,
resolution declaring 840
E.
EXECUTIVE COMMITTEE,
directors authorized to appoint 655-656
F.
FLORIDA,
acknowledgment by corporations in 756
form for notice of incorporation and charter of corporation in 676-677
form for permit for foreign corporation in 746-747, 756
FOREIGN CORPORATIONS,
appointment of agent by 746-7 17
general forms for securing permit to transact business by . . 745-749
G.
GENERAL MANAGER,
form for insertion in by-laws 868
power of attorney relative to acting as 840-842
GENERAL OBJECT CLAUSES 653-654
acquiring an established business 653
bond clause 653
conducting business in other States (i;, I
disposal of all corporate property 653-65 1
general merchandise clause (I.",;!
general object clause 653 654
general purpose clause 654
holding stock in other corporations 653
patent and trademark clause (if,.;
real estate clause 654
GEORGIA,
acknowledgment by corporation in 7;,i;
form of application for charier 677-li7S
form for permit for foreign corporation 7.~><»
919
INDEX TO FORMS AND PRECEDENTS.
H.
HAWAII,
form for permit for foreign corporation 756
I.
IDAHO,
acknowledgment by corporation in 758
form for articles of incorporation 67S-679
form for permit for foreign corporation in 757
ILLINOIS,
acknowledgment by corporation in 759
anti-trust affidavit 759
form for permit for foreign corporation in 758-759
form for statement of incorporation 679-680
INCORPORATORS' MEETING,
minutes of 813-817
proxy for 816-817
waiver of notice of 836
INDEX,
specific object clauses 613-615
INDIANA,
acknowledgment by corporation in 761
form for articles of incorporation 681
form for permit for foreign corporations in 760
INSPECTORS',
oaths and report 817
INTERIM CERTIFICATES,
clauses in charter relative to 607-608
IOWA,
acknowledgment by corporation in 761
form for articles of incorporation 682-685
form for permit for foreign corporations in 761
K.
KANSAS,
acknowledgment by corporations in 763-764
form for application for charter and form of charter .... 685-686
form for permit for foreign corporations in 761-763
KENTUCKY,
acknowledgment by corporations in 764
form for articles of incorporation 687
form for permit for foreign corporations in 764
LETTER,
offering to transfer property in exchange for stock 836-837
920
INDEX TO FORMS AND PRECEDENTS.
LOUISIANA,
acknowledgment by corporations in 766
form for certificate of incorporation 687-689
form for permit for foreign corporations in 764-766
M.
MAINE,
acknowledgment by corporation in 766
Finance & Construction Co. charter complete 690-698
form for amendment of charters in 807-809
form for articles of association and certificate of organization 690-698
form of by-laws for 693-697
MANAGING AGENT,
power of attorney to act as 840-842
MANAGING DIRECTORS,
appointment of 868
MARYLAND,
acknowledgment by corporation in 766-767
form for certificate of incorporation 699
form for permit for foreign corporation in 766, 747
MASSACHUSETTS,
acknowledgment by corporation in 706
form for articles of association and certificate of organization 699-704
form for permit for foreign corporation in 767-769
Investment Co., charter complete 699-704
MEETINGS,
minutes of first directors' 818-822
minutes of incorporators' meeting 813-817
proxy for incorporators' meeting 816-817
waiver of notice of first directors' meeting 822
waiver of notice of incorporators' meeting 836
waiver of notice of stockholders' meeting 836
MICHIGAN,
acknowledgment by corporation in 770
form for articles of association 704-706
form for permit for foreign corporations in 769-770
MINING COMPANY,
form for charter of (under South Dakota laws) S72-873
MINNESOTA,
acknowledgment by corporation in 771-772
form for articles of incorporation 70(5-707
form for permit for foreign corporation 770-771
MINUTES,
of first meeting of directors 818 822
of incorporators' meeting 813 817
of meetings authorizing bond issue 849 850
MISSISSIPPI,
acknowledgment by corporation in 772
form for charter 707-70S
form for permit for foreign corporation in 77'J, 7 17
921
INDEX TO FORMS AND PRECEDENTS.
MISSOURI,
acknowledgment by corporation in 774
form for agreement of incorporation 708-709
form for permit for foreign corporation in 772, 747
MONTANA,
acknowledgment by corporation in 774
form for articles of incorporation 709-710
form for permit for foreign corporation in 774-747
MORTGAGE,
directors authorized to create 654
securing issue of bonds 851-S65
N.
NEBRASKA,
acknowledgment by corporation in 775
form for articles of incorporation 710-712
form for permit for foreign corporation 774-775
NEVADA,
acknowledgment by corporation in 776
form for articles of incorporation 712
form for permit for foreign corporation 775
NEW HAMPSHIRE,
acknowledgment by corporation in 776
form for articles of agreement 712-713
form for permit for foreign corporation 776
NEW JERSEY,
acknowledgment by corporation in . 775
Auditing Co. charter complete 869-871
form for permit for foreign corporations in 776-775
NEW MEXICO,
acknowledgment by corporation in 779
form for articles of incorporation 717-718
form for permit for foreign corporation in 779, 747
NEW YORK,
Brokerage Co. charter complete 718-720
NORTH CAROLINA, . .
acknowledgment by corporation in 778-779
form for certificate of incorporation 721
form for permit for foreign corporation in 778
NORTH DAKOTA,
acknowledgment by corporation in 7S0
form for articles of incorporation 721-722
form for permit for foreign corporation in 779
NOTICE,
meeting to amend charter 802-803
waiver of notice of directors' meeting 822
of incorporators' meeting 836
o.
OATH,
of inspectors 813
922
IXDEX TO FORMS AND PRECEDENTS.
OBJECT CLAUSES. (See General Object Clauses) 653-65 \
(See Specific Object Clauses) 613-652
OFFICERS,
removal of 658
OHIO,
acknowledgment by corporation in 783
form for articles of incorporation 722 723
form for permit for foreign corporation in 780-783
OKLAHOMA,
form for articles of incorporation 723-724
OREGON,
acknowledgment by corporation in 786
form for articles of incorporation 724
form for permit for foreign corporation in 784-786
ORGANIZATION, ....
subscription agreement before 835-836
ORGANIZATION MEETING,
minutes of 813-817
ORGANIZING,
the corporation 878-883
P.
PATENT RIGHTS 653
PENNSYLVANIA,
acknowledgment by corporation in 787-7S9
form for notice of application for charter, etc 725-726
form for permit for foreign corporation in 786-788
PHILIPPINES,
form for certificate of incorporation in 726-728
form for permit for foreign corporation in '88
PORTO RICO,
form for certificate of incorporation in '28
form for permit for foreign corporation in 728
POWER OF ATTORNEY, 788,747
PREFERRED STOCK CLAUSE,
long form °o_#
short clause 661
special clause for cumulative dividends 662
PRINCIPAL OFFICE,
without the State 654
PROMOTERS,
safety clause for 606
PROPERTY,
directors empowered to sell 653 654
resolution empowering directors to purchase s,,t>
for incorporators' meeting 816 oli
and waiver of notice combined 83"
PUBLICATION OK NOTICE,
waiver of 839
923
INDEX TO FORMS AND PRECEDENTS.
R.
REGISTRATION OF STOCK,
form for 842-843
REGULATION OF BUSINESS,
clauses for. (See Business Clauses.)
REMOVAL,
of directors . . 658
of officers 658
RESOLUTIONS,
adopting corporate seal 818
appointing agent in charge of principal office 815
appointing principal place of business in domiciliary State . . . 815
approving stock certificates 818
authorizing Issuance of capital stock 815
authorizing issuance of capital stock in exchange for property 819-820
contraction of specific debt 839
decreasing capital stock 802
designating bank as depository of corporate funds 840
election of directors 814, 822
land, holding of, in West Virginia 802
of directors taking over assets of a copartnership 865-866
of stockholders taking over assets of a copartnership .... 865-866
payment of subscription for stock 820-821
RHODE ISLAND,
acknowledgment by corporation in 789
form for articles of association 729
form for permit for foreign corporation in 788-789
s.
SALE,
bill of ' 866
SIGNATURE,
corporate 867
SOUTH CAROLINA,
acknowledgment by corporation in 790
form for amendment to charters in 809-810
form for declaration and petition for charter, etc 729-730
form for permit for foreign corporation in 789
SOUTH DAKOTA,
acknowledgment by corporation in 790
form for amendment to charters in 810
form for articles of incorporation (skeleton form) 730-732
form for permit for foreign corporation in 790
" mining charter complete . . . 872—873
SPECIAL STOCKHOLDERS' MEETING,
waiver of notice, etc 836
SPECIFIC OBJECT CLAUSES. (See Special Index, pages 613-652.)
924
INDEX TO FORMS AXD PRECEDENTS.
STOCK,
clauses in charter for preferred 661-662
holding stock in other corporations 653
STOCKHOLDERS,
organization meeting of, minutes of 813-817
SUBSCRIPTION,
agreement before organization S35-836
transfer of 817
SUGGESTIONS,
relative to the preparation of charters, etc 878-881
T.
TABLE OF ANNUAL FRANCHISE TAXES 884
TABLE OF ORGANIZATION TAXES 883
TABLE OF TAXES AND FEES,
imposed upon foreign corporations 885-886
TENNESSEE, .
acknowledgment by corporation in 791
form for charter of incorporation 732-734
form for permit for foreign corporation in 790, 747
TEXAS,
acknowledgment by corporation in 792
form for charter 734
form for permit for foreign corporations 791-792
TRANSFER OF SUBSCRIPTION 817
TRUST AND INVESTMENT CO.
charter of (under Delaware laws) 672-674
TRUST DEED,
securing issue of bonds (form for) 851-865
u.
UNDERWRITERS' AGREEMENT 843-847
UNITED STATES STEEL CORPORATION,
by-laws of 828-835
charter of 713-777
UTAH,
acknowledgment by corporation in 79B
form for articles of incorporation 735-737
form for permit for foreign corporations in 793
V.
VERMONT,
acknowledgment by corporation in 795
form for articles of association ~ ;{ '
form for permit for foreign corporation in 7 ( .U 795
VIRGINIA,
acknowledgment by corporation in 794
925
INDEX TO FORMS AND PRECEDENTS.
VIRGINIA — continued.
form for certificate of incorporation, etc 737-738
form for permit for foreign corporation in 793-794
VOTING TRUST AGREEMENT 847-848
w.
WAIVER,
of first meeting of directors 822
of first meeting of incorporators 836
of general stockholders' meeting 836
of organization meeting 836
of special stockholders' meeting 836
WASHINGTON,
form for articles of incorporation 738-740
form for permit for foreign corporation in 795-796
WEST VIRGINIA,
acknowledgment by corporation in 799
coal company, charter complete 871-878
form for certificate of incorporation 740-741
form for permit for foreign corporation in 796-799
WISCONSIN,
acknowledgment by corporation in 800
form for articles of organization 742-743
form for permit for foreign corporation in 799-800
WYOMING,
acknowledgment by corporation in 801
form for certificate of incorporation 743-747
form for permit for foreign corporation in 801, 744
926
LOS ANGE^| F0BNU
UC SOUTHERN RF
AA 000 729 623