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Cal. 70, 22 Pac. 66; South Yuba Co. v. Rosa, 80 Cal. 336, 22 Pac, 222.)
Failure of corporation to file copy of copy of act of incorporation is pot ground of general demurrer when complaint is silent upon the subject, nor is it ground of motion for nonsuit that plaintiff has failed to prove such filing; such failure can be availed of only by specially pleading it in answer as matter of abatement. (South Yuba Water Co. v. Rosa, 80 Cal. 333, 22 Pac. 222. To same effect: California ete. Society v. Harris, 111 Cal. 136, 43 Pac. 525.)
A failure to raise the issue by plea in abatement is a waiver of the defense. (Ontario State Bank v. Tibbits, 80 Cal. 68, 22 Pac. 66. To same effect: Calif. etc. Soc. v. Harris, 111 Cal. 136, 43 Pac. 525.)
An objection that a corporation has not filed its articles of incor. poration as required must be taken at the trial or conclusion thereof, and cannot be first made on appeal. (Labory v. Los Angeles etc. Asylum, 97 Cal. 270, 32 Pac. 231. To same effect: Cal. etc. Society v. Harris, 111 Cal. 136, 43 Pac. 525. Distinguished: S. & L. Soc. v. McKoon, 120 Cal. 180, 52 Pac. 305.)
Prohibition against corporation suing in county where articles of incorporation have not been filed applies to such actions or proceedungs as are brought “in relation to such property, its rents, issues or profits." (Weeks v. Gold Mining Co., 73 Cal. 599, 15 Pac. 302. To same effect: Savings etc. Soc. v. McKoon, 120 Cal. 180, 52 Pac. 305.)
Evidence.- A certified copy of a certified copy of articles, filed in accordance with this section, in order to enable a corporation to maintain certain actions is not in any sense secondary evidence, but is by law made equal in all respects with the original, as evidence. (Boston Tunnel Co. v. McKenzie, 67 Cal. 487, 8 Pac. 22.)
BANKING CORPORATIONS MAY ELECT TO HAVE CAPITAL
STOCK. Sec. 300, C. C. Every corporation that has been or may be created under the general laws of this state, doing a banking business therein, and which has no capital stock, may elect to have a capital stock, and may issue certificates of stock therefor in the same manner as corporations formed under the provisions of chapter I, article I, of the Civil Code, relating to the formation of corporations : provided, that no such corporation shall use or convert any moneys or funds theretofore belonging to it or under its control into capital stock; but such funds or moneys must be held and managed only for the purposes and in the manner for which they were created. Before such change is made, a majority of the members of such corporation present at a meeting called for the purpose of considering the proposition whether it is best to have a capital stock, its amount, and the number of shares into which it shall be divided, must vote in favor of having a capital stock, fix the amount thereof, and the number of shares into which it shall be divided. Notice of the time and place of holding such meeting and its object must be given by the president of such corporation by publication in some newspaper printed and published in the county, or city and county, in which the principal place of business of the corporation is situated, at least once a week for three successive weeks prior to the holding of the meeting. A copy of the proceedings of this meeting, giving the number of persons present, the votes taken, the notice calling the meeting, the proof of its publication, the amount of capital actually subscribed, and by whom, all duly certified by the president and secretary of the corporation, must be filed in the offices of the Secretary of State and clerk of the county where the articles of incorporation are filed. Thereafter such corporation is possessed of all the rights and powers, and is subject to all the obligations, restrictions, and limitations, as if it had been originally created with a capital stock; and provided, further, that no bank in this state shall erer pay any dividend, upon so-called guaranty notes nor upon any stock except upon the amount actually paid in money into said capital upon such stock, and any payment made in violation of this provision shall render all officers and directors consenting to the same jointly and severally liable to the depositors, to the extent thereof. En. Stats. 1877-78, 77.
See section 287, Civil Code, ante, for provisions for change to code corporation.
People v. Perrin, 56 Cal. 349; Dallemand v. 0. F. Savings Bank, 74 Cal. 600, 602, 16 Pac. 497.
A corporation organized to do a savings bank business without a capital stock, whether a de facto or a de jure corporation, and whether organized before or after the code, may avail itself of the provisions
of this section in securing a capital stock. (People v. Perrin, 56 Cal. 346.)
It is not a condition precedent to the incorporation of a bank, after it has elected to have a capital stock under this section, or to its right to commence business as such, that the entire amount of capital stock provided for should be subscribed. (Dallemand v. 0. F. Sav. Bank, 74 Cal. 598, 16 Pac. 497.)
CHANGE OF NAME-FILING COPY OF DECREE.
Sec. 300a, C. C. Every corporation which has changed its name under the provisions of sections 1275, 1276, 1277, 1278 and 1279, of the Code of Civil Procedure, must file in the office of the Secretary of State a certified copy of the decree of the court, changing such name. En. Stats. 1903, 256.
Articles of incorporation to be filed with Secretary of State: Sec. tion 296, Civil Code, ante. Sections 1275, 1276, 1278 and 1279 of the Code of Civil Procedure are to be found herein under sections from that code.
PROMOTION AND SUBSCRIPTION AGREEMENTS. There are no statutory or code provisions regulating the promotion of corporations and controlling the subscription or other contracts that are preliminary to incorporation. Therefore the decisions relating to the acts and contracts preliminary to actual incorporation are given here, as they properly come before a consideration of the next article. [Editors' Note.]
Promoters-Relation to Corporation.- A promoter of a corporation is a person who by his active endeavors assists in procuring the formation of the company and the subscription of its shares, whether he afterward becomes connected with the company or not. He is considered in law as occupying a fiduciary relation to the corporation and its stockholders who subscribe upon the trust that the promoters will control the enterprise for the benefit of the company. (Ex-Mission L. & W. Co. v. Flash, 97 Cal. 610, 32 Pac. 600.)
A promoter of a corporation who brings about its organization and aids in procuring subscriptions thereto is considered in law as occupying a fiduciary relationship toward the corporation and its stock. holders, and, while he may sell property to the corporation, he must make full disclosure of his interest and position with respect thereto, and must not make any false representations as to its cost price. (Burbank v. Dennis, 101 Cal. 90, 35 Pac. 444; Ex-Mission L. & W. Co. v. Flash, 97 Cal. 610, 32 Pac. 600.)
If a promoter acts honestly and faithfully discloses all facts relating to the property which would determine the judiciousness of the purchase, he can sell any property he may own or has an interest in to the corporation at any price the corporation or stockholders will pay, but cannot sell to the corporation property acquired by him as agent of the corporation, but if he is guilty of the misrepresentation of facts or the suppression of truth in relation to the character and value of the property, or his personal interest, the company can set aside the transaction or recover compensation for the loss it has suffered. (Ex-Mission L. & W. Co. v. Flash, 97 Cal. 610, 32 Pac. 600.)
Transactions in which the promoters of a corporation suppress or misrepresent material facts or otherwise deceive the corporation or corruptly control its action are fraudulent, and the corporation may elect either to set aside such transaction or to recover the promoter's secret profits. (Burbank v. Dennis, 101 Cal. 90, 35 Pac. 444. To same effect: Buena Vista Co. v. Tuohy, 107 Cal. 264, 40 Pac. 386; Blood v. La Serena etc. Co., 113 Cal. 236, 41 Pac. 1017, 45 Pac. 252.)
The statute of limitations does not begin to run against an action by a corporation to compel a conveyance from the promoters thereof, while remaining in possession of the property agreed to be conveyed hy such promoters to for a consideration which has been fully performed by the corporation. (Scadden Flat etc. Co. v. Scadden, 121 Cal. 33, 53 Pac. 440.)
All profits made by a promoter out of property bought by him belong to the corporation. (Ex-Mission L. & W. Co. v. Flash, 97 Cal. 610, 32 Pac. 600.) All property acquired by promoters, or agreements made with them for the benefit of the corporation, inure to the cor. poration upon its creation. (San Joaquin etc. Co. v. West, 94 Cal. 399, 29 Pac. 785. To same effect: Marysville etc. Co. v. Johnson, 109 Cal. 195, 50 Am. St. Rep. 35.) A franchise granted to incorporators prior to the formation of a corporation passes by operation of law to the corporation upon its creation. (S. V. W. W. v. S. F., 22 Cal. 434; S. F. v. S. V. W. W., 48 Cal. 493.)
An agency created by an agreement for the organization of a cor. poration becomes, upon the formation of the corporation, the agency of the corporation and ceases to be the agency of the subscribers, and the agents are removable by the corporation at any time if their agency is not coupled with an interest. (San Joaquin etc. Co. v. West, 94 Cal. 399, 29 Pac. 785.) A corporation formed in accordance with an organization agreement is entitled to the custody of money collected by agents from subscribers under the organization agreement, and mray sue to recover the same from the collecting agent. (San Joaquin etc. Co. v. West, 94 Cal. 399, 29 Pac. 785.)
Knowledge by directors of fraud of promoters is not knowledge by the stockholders, and the fraud practiced upon the stockholders cannot be ratified or waived by the directors, and an action will lie by a stockholder, if the corporation refuses to sue to recover the amount fraudulently withheld by the promoters. (Burbank v. Dennis, 101
Cal. 90, 35 Pac. 444. Note citation: Christian etc. Assn. v. Walton, 59 Am. St. Rep. 640.)
The promoters of a corporation are not the corporation, and their contracts cannot be its contracts, though the promoters become its only stockholders, directors and officers, but after it comes into eristence it may, after adopting arrangemrents made for it in advance, make them its contract, and may thereby become bound to fulfill a contract made in its behalf, in anticipation of its existence, and may acquire a right to enforce such a contract against the other party hy its acceptance or performance by the corporation. (Scadden Flat etc. Co. v. Scadden, 121 Cal. 33, 53 Pac. 440. To same effect: Vorrison v. Gold M. etc. Co., 52 Cal. 306; Hawkins v. Mansfield ete. Co., 52 Cal. 513.)
When the promoter of a corporation subscribed to sufficient number of shares to make the entire subscription complete as an assumed agent for stockholders thereafter subscribing or taking shares of stock, whose subscriptions were deducted from his in the original issuance of the stock, with the acquiescence of all parties concerned and without any intended fraud, the promoter must be deemed the agent of such subsequent subscribers or shareholders, and the stock received by them cannot be deemed as overissue. (Tulare etc. Bank v. Talbot, 131 Cal. 45, 63 Pac. 172.)
An agreement among parties expecting to incorporate that a promoter is entitled to so many shares of stock in the company is not the agreement of the corporation and cannot be enforced against it. (Morrison v. Gold Mt, etc. Co., 52 Cal. 306.)
A corporation is not bound by a transfer made by a promoter before incorporation of share of stock to be issued as soon as the corporation was created, and cannot be compelled to issue the stock. (Hawkins v. Mansfield etc. Co., 52 Cal. 513.)
A corporation is not liable for torts committed by its promoters be. fore it is actually created. (Berry v. S. F. & N. P. R. R. Co., 50 Cal. 135.)
Subscriptions to Capital Stock may be enforced by corporation after its organization. (Marysville etc. Co. v. Johnson, 93 Cal. 538, 27 Am. St. Rep. 215, 220, 29 Pac. 126. To same effect: Kohler v. Agassiz, 99 Cal. 15, 33 Pac. 741; San Joaquin etc. Co. v. Beecher, 101 Cal. 70, 35 Pac. 349; Marysville etc. Co. v. Johnson, 109 Cal. 192,50 Am. St. Rep. 34, 41 Pac. 1016; Ventura etc. Co. v. Hartman, 116 Cal. 260, 48 Pac. 65. Note citations: 32 Am. St. Rep. 436; 42 Am. St. Rep. 384; 33 Am. St. Rep. 247; 39 Am. St. Rep. 401.)
See sec. 332, C. C., post.