It will thus be seen that previous to the dissolution of a corporation, none of the subdivisions of this section authorize the appointment of a general receiver for a corporation; that is, a receiver who has power to assume the control and direction of its corporate property and business. Actions with respect to specific property allow of the appointment of a receiver during the litigation to preserve the "res;" this is the meaning of subdivision 2 (supra), but that is a far different thing from the appointment of a general receiver. As this section is the only one providing for the appointment of receivers before dissolution, no receiver can ever be appointed to take possession of the corporate property before the corporation has been judicially declared dissolved. [Havemeyer v. Sup. Ct., 84 Cal. 327, 24 Pac. 121.] Nor is there anything in the bank commissioner's act [Stats. 1877-8, p. 744; 1887, p. 90] which changes this rule with respect to banks. People's etc. Bank v. Sup. Ct., 103 Cal. 27, 36 Pac. 1015; Murry v. Am. Surety Co., 59 Fed. 345.

SECTION 77-RECEIVERS AND DISSOLUTION.

After dissolution, the code provides that on the application of any creditor or stockholder a receiver may be appointed for the purposes of collecting and distributing the corporate assets. [C. C. P. 565; State Ins. Co. v. Sup. Ct., 101 Cal. 135, 35 Pac. 549.] This applica

1 May" means "must." Cal 327, 24 Pac. 121.

Havemeyer v. Superior Court, 84

3

tion by the creditor or stockholder is a new action brought after judgment of ouster in the quo warranto proceedings, and only upon this new application can the receiver here authorized be appointed.1 In quo warranto, therefore, no receiver can ever be appointed.2 Bringing that action does not per se dissolve the corporation, therefore section 564 C. C. P. does not apply, and after dissolution section 565 only allows a receiver on the application of a creditor or stockholder. The point was raised in a recent case that if the judgment in the quo warranto proceeding—which judgment can only be an injunction (ouster) and a fine-imposes a fine the state is then a creditor to the extent of that fine and should therefore be allowed to ask for a receiver, but the court did not pass upon the question thus raised.

Summarizing, no general receiver of a corporation can ever be appointed before its dissolution, whether the application be made by a private party or the state; after its dissolution the state cannot have a receiver appointed, but a stockholder or creditor can.6 Truly it was said "that it is not the rule to

1 Havemeyer v. Superior Court, 84 Cal. 327, 24 Pac. 121; Yore v. Superior Court, 108 Cal. 431, 41 Pac. 477.

2 Same cases, and State Investment Co. v. Superior Court, 101 Cal. 135, 35 Pac. 549.

3 See Chap. V supra, Yore v. Superior Court, 108 Cal. 431, 41 Pac. 477.

4 Yore v. Superior Court, 108 Col. 431, 41 Pac. 477.

5 Havemeyer v. Superior Court, 84 Cal. 327, 24 Pac. 121.

6 People's, etc., Bank v. Superior Court, 103 Cal. 27, 36 Pac. 1015. This case says the law still stands as in the French bank case, 53 Cal. 495.

appoint receivers in California." People v. Union Bldg., etc., Assn., 127 Cal. 400, 59 Pac. 592.

SECTION 78-EFFECT OF APPOINTMENT.

"When a receiver is appointed the corporation's property is in the hands of the law. * * * His possession is the possession of the court, for the benefit of all the persons interested, whether named in the action or not, and such possession cannot be disturbed without the consent of the court. No one claiming a right paramount to that of the receiver can assert it in any action, without the permission of the court. No sale can be made, debt paid or contract made without the court's consent. With the permission of the court the receiver can do anything the corporation might have done to make the most of the assets in his hands." Pac. Ry. Co. v. Wade, 91 Cal. 449, 27 Pac. 768.

CHAPTER X.

STOCK AND STOCKHOLDERS.

SEC. 79-CAPITAL STOCK DEFINED.

SEC. 80-SHARES OF STOCK.

SEC. 81-SAME-CONVERSION OF.

SEC. 82-POWER OF CORPORATION TO TAKE AND HOLD ITS OWN SHARES.

SEC. 83-SHARES-ATTACHMENT OF.

SEC. 84-SAME-SPECIFIC PERFORMANCE.

SEC. 85-CLASSIFICATION OF SHARES.

SEC. 86-RELATION BETWEEN HOLDER AND CORPORATION.

SEC. 87-SAME-CHARTER A CONTRACT,

SEC. 88-INCREASE AND DECREASE OF STOCK.

1

SEC. 89-DECREASING

NOTICE.

WITHOUT PREVIOUS

PUBLIC

SECTION 79-CAPITAL STOCK DEFINED.

The phrase "capital stock" as employed in acts of incorporation is used to designate the amount of capital to be contributed by the stockholders for the purposes of the corporation. The amount thus contributed constitutes the "stock" or "capital stock" of the corporation. It is not used to indicate the value of the property of the corporation. To prove that the corporation's property is valueless is not to prove its stock valueless; it may still have a paid up capital. [Gifford v. Carvill, 29 Cal, 589.] The value of the stock may be

greatly increased by surplus profits or be diminished by losses, but the amount of the capital stock remains the same. The funds of the corporation may fluctuate. Its capital stock remains invariable, save by legislative This distinction between the

enactment.

value of a corporation's property and its capital stock is perfectly familiar. Selling any or all of its property is therefore not within the prohibition [C. C. 309] against dividing or paying to the stockholders any part of the capital stock. [Miner's Ditch Co. v. Zellerbach, 37 Cal. 543.] But by this is not meant that a corporation can give to its stockholders any part of its property. (Capital stock, as used in this prohibition [C. C. 309] is intended to mean all the capital of the corporation on which it transacts its business, whether such capital consists of money, property or other valuable commodities. [Martin v. Zellerbach, 38 Cal. 300; Moore v. Lent, 81 Cal. 502, 22 Pac. 875.]) What is meant is that a corporation can sell its property for a consideration to be received by the corporation, but cannot give its property to its stockholders directly, or indirectly by a sale, the consideration of which is to be received by them and not by it. [Martin v. Zellerbach, 38 Cal. 300; Kohl v. Lilienthal, 81 Cal. 378, 22 Pac. 689.] "Capital stock" therefore has two meanings under this section; one, as applied to sales, another when applied to gifts. In the latter case it refers to all the assets of the corporation, and the meaning is that they are vested in