by-laws may determine of directors, of a treasurer, of a clerk and of such other officers as the by-laws may prescribe. The temporary clerk shall make and attest a record of the proceedings until the clerk has been chosen and sworn, including a record of such choice and qualification.

SECTION 11. A majority of the directors who are elected at such first meeting shall forthwith make, sign and make oath to articles setting forth:

(a) A true copy of the agreement of association and the name of the subscribers thereto, or of the act of incorporation, as the case may be.

(b) The date of the first meeting and of the successive adjournments thereof, if any.

(c) The amount of capital stock then to be issued; the amount thereof to be paid for in full in cash; 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 any part of real estate, its location, area 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 stated. If any part of the capital stock is issued for services or expenses, the nature of such services or expenses and the amount of stock which is issued therefor shall be clearly stated.

(d) The name, residence and post office address of each of the officers of the corporation.

The directors who sign such articles shall be jointly and severally liable to any stockholder of the corporation for actual damages caused by any statement therein which is false and which they know to be false.

SECTION 12. The articles of organization and the record of the first meeting of the incorporators shall be submitted to the commissioner of corporations, who shall examine them and who may require such amendment thereof or such additional information as he may consider necessary. If he finds that the articles conform to the provisions of the preceding sections relative to the organization of the corporation, he shall so certify and indorse his approval thereon. Thereupon, the articles shall, upon payment of the fee hereinafter provided, be filed in the office of the secretary of the commonwealth, who shall cause them and the indorse ment thereon to be recorded, and, except in the case of a corporation created by special law, shall thereupon issue a certificate of incorporation in the following form:

[which need not be stated here]

The secretary shall sign the certificate of incorporation and cause the great seal of the commonwealth to be thereto affixed, and such certificate shall have the force and effect of a special charter. The existence of every corporation which is not created by special law shall begin upon the filing of the articles of organization in the office of the secretary of the commonwealth. The secretary of the commonwealth shall also cause a record of the certificate of incorporation to be made, and such certificate, or such record, or a certified copy thereof, shall be conclusive evidence of the existence of such corporation.

SECTION 17. The business of every corporation shall be managed and conducted by a president, a board of not less than three directors, a clerk, a treasurer and such other officers and such agents as the corporation by its by-laws shall authorize.

SECTION 18. The directors, the treasurer, the clerk and such other officers as the by-laws may prescribe shall be elected annually by and from the board of directors. Every director, unless the by-laws otherwise provide, shall be a stockholder.

SECTION 19. The board of directors may exercise all of the powers of the corporation, except such as are conferred by law, or by the by-laws of the corporation, upon the stockholders. A corporation may, by its by-laws, provide for an executive committee to be elected from and by its board of directors. To such committee may be delegated the management of the current and ordinary business of the corporation, and such other duties as the by-laws may prescribe.

SECTION 20. There shall be an annual meeting of the stockholders and the time and place of holding it, and the manner of conducting it, shall be fixed by the by-laws.

First Meeting. In Massachusetts, the "first meeting " is held previous to filing the articles of incorporation, in Connecticut after such filing. The detail of procedure also is different. In other States, the procedure, while similar to one or the other examples shown above, will nevertheless differ enough so that a critical examination of the statutes is necessary for any State in which incorporation is to be effected.

The minutes of the "first meeting" and the records of all later meetings of the corporation whether regular or special should show all formal and necessary acts, and in a form which will be legally conclusive.

Advance Preparation for Meeting. It is desirable that all the business necessary to the first meeting, or any formal meetings necessary to incorporation, shall be prepared in advance, including the making of all motions that are essential. Not only is time thus saved but greater certainty of action is secured. The lawyer, if any, who is attending to other details should attend and direct the meeting.

It has been held in some States that one of the incorporators may not act as notary and take the acknowledgment of the others. In other States this has been done without objection from the State officials.

Ordinarily printed blanks can be had which much facilitate the framing of the formal documents.

By-Laws. The preparation of the by-laws is of great importance, and a book of forms and the by-laws of similar corporations will be of great value, but should be supplemented by careful and thoughtful consideration as to the requirements of the corporation to be formed.

Form of Charter. In some States a formal charter is issued under the great seal of the State; in others the articles of incorporation are presented, certified, and filed, and constitute the charter; a duly certified copy is then evidence of the existence of the corporation.

Objects. The objects of the corporation must be set forth in the articles of incorporation. In some cases it is required, and in general it is

desirable, to specify the statute under which organization is sought. Sometimes there is a choice as to the statute under which organization shall be effected, and careful deliberation may sometimes be well worth while. The objects stated should be sufficiently comprehensive so that some later desired action on the part of the corporation will not be found to lie outside the scope of corporate powers as defined by the objects specified.

Two Policies as to Objects. There are two policies practiced in setting forth the objects. One is to state them in very general but comprehensive terms; implied powers are then added by law. Another is to be very specific; the danger in this is that the specifying of a large number of objects may have the effect of precluding any not specified. When general terms are used, a clause like the following is sometimes added:

In furtherance of, and not in limitation of, the objects and purposes hereinabove stated, and the general powers conferred by law, it is hereby expressly provided that this corporation shall have the following powers; that is to say:

Powers. The powers of the corporation rest not only upon the articles of incorporation, but upon such parts of the State Constitution and such parts of the statutes as are applicable both as to extent and limitations, together with such powers as the Common Law adds as implied and necessary.

The powers are then: 1. Those expressly given. 2. Impliedly as incidental to express powers. 3. Impliedly as necessary to corporate existence.

Implied Powers. The implied powers added by law are not merely those necessary and indispensable, but also those appropriate, convenient, and suitable for the purposes set forth. The corporation has thus powers to contract, grant, receive, sue and be sued; to purchase, hold, lease, or sell lands; to have a seal; to make by-laws and amend them; to borrow money; to execute a bond or a note, also to compromise claims, and submit disputes to arbitration; to endorse for another for accommodation; to draw, endorse, or accept bills of exchange; to make by-laws; to maintain continuous succession during its period of existence; as well as other powers not mentioned here. There is a presumption that contracts of a corporation are within its powers; if this is questioned, the burden of proof is on him who objects.

Powers from Statute. The statute often specifies many powers which the Common Law had already recognized; but the statute often confers others which the corporation would not have unless expressly granted. The following powers of business corporations are definitely specified in the statutes of Massachusetts:

Every corporation which is subject to the provisions of this act shall have the following powers and privileges and shall be subject to the following liabilities: (a) To have perpetual succession in its corporate name, unless a period for its duration is limited by special law.

(b) To sue or be sued in its corporate name, and to prosecute or defend to final judgment and execution or decree in any court of law or equity.

(c) To have a capital stock to such an amount as may be fixed in its agreement of association or articles of organization or of amendment as hereinafter provided. (d) To have a corporate seal, which it may alter at pleasure.

(e) To elect all necessary officers, fix their compensation and define their duties. (f) To hold, purchase, convey, mortgage or lease within or without this commonwealth such real or personal property as the purposes of the corporation may require.

(g) To make contracts, incur liabilities and borrow money on its credit and for its use.

(h) To make by-laws not inconsistent with the laws of this commonwealth for regulating its government and for the administration of its affairs as hereinafter provided.

(i) To be dissolved or to have its affairs wound up in the manner hereinafter provided.

Where to Incorporate. In what State shall the corporation be organized? With the ordinary mercantile corporation, the answer is to organize as a domestic corporation in the State where the business headquarters are and where most of the business is to be transacted. A corporation doing business in a State other than that in which it is incorporated, is called a foreign corporation, and the laws in one way or another are likely to be less favorable to a foreign corporation. A State may, although it seldom does, pass laws to shut out a foreign corporation altogether, or by drastic laws reach the same result by indirection.

Conditions Influencing Place. With railroad companies or with large corporations of various sorts doing much business in several States, the case is less simple. The fees for organization and for taxation are not alike in all States; other conditions of organization or of operation are more burdensome in some States than in others. On the other hand, the conservatism of the laws of certain States tends to give a high standing to a corporation organized therein, which has some effect towards making the financing easier. In the case of long lines of railroads, separate corporations are often organized in different States, and operated under a single management. For the larger matters of organization, the services of a lawyer are desirable or necessary, and in most cases are readily available.

Charter a Contract. The charter is recognized as a contract between the State and the corporation. A general statute may be considered an invitation; an offer is made when the articles of incorporation are filed, and when these are accepted by the proper State official in accordance

with the statute, there is a complete contract; neither the corporation nor the State may violate it, since the Constitution of the United States provides that "no State shall pass any law impairing the obligations of contracts."

Amendment of Charter. In older charters there are sometimes found provisions which later seem unsatisfactory to the State, but amendment would constitute an impairment of the contract. A remedy is sometimes found in such cases when a corporation asks for further legislation in its behalf; the State is then in position to "trade," and exact some desirable amendment as the price of the new legislation. Statutes or special charters nowadays commonly contain a provision reserving to the State the right to amend.

Securities; Bonds and Stock. A corporation has an inherent, an implied power to contract debts. This carries with it the power to give security and in this way to issue bonds. When a man builds a house he often pays for it only in part in cash and gives a mortgage for a part; sometimes he pays in cash all he can raise and gives a mortgage for the balance; sometimes he borrows all he can and pays cash only for the balance. A corporation is similarly financed, oftentimes in part from the sale of bonds, and in part from the money paid in to the capital stock of the corporation by the subscribers who thus become stockholders, or else paid by later stockholders who become such by purchasing treasury stock directly from the corporation.

Bonds. The bonds are frequently, but not always, mortgage bonds. The ordinary mercantile corporations seldom issue bonds, and some of the early railroads issued no bonds for many years. Manufacturing and railroad corporations, and the so called trusts, some of them mercantile, find it convenient to issue bonds. Whether to provide the money needed mostly from the sale of bonds or by subscription or sale of stock is a financial rather than a legal question.

Bondholders' Interest. Bonds, which constitute a first claim on the property of a corporation, give better security than stock, and can be sold to advantage while paying a low rate of interest. With good earnings the stockholders may thus receive a larger percentage of profit on the smaller amount of stock required. On the other hand, if the earnings are unsatisfactory, the interest on the bonds, as it becomes due, must necessarily be paid, and a failure to pay interest usually means a receivership and perhaps foreclosure of the mortgage, which may result in a total loss to the stockholders; whereas if there were no bonds, meagre earnings would result only in a loss of dividends on the stock, which need not be paid if unearned, and would not imperil the property so long as the earnings covered expenses of operation. It is a matter of good financial judg