action. (Martin v. Deetz, 102 Cal. 55, 41 Am. St. Rep. 151, 36 Pac. 368.)

Where there is no meeting of trustees or members, no election of officers, no by-laws adopted, no certificates of shares or membership issued, no seal adopted or used, no records or minutes kept, and no corporate acts of any character performed, and the institution was managed the same as before the attempt to incorporate, no corporation de facto exists. (Wall v. Mines, 130 Cal. 27, 62 Pac. 386.)

Individual as.-An individual cannot become a corporation de facto by assuming the name of a tollroad company, where there are no directors or officers, and no acts in corporate form. (People v. Volcano Canyon Toll Road Co., 100 Cal. 87, 34 Pac. 522.)

If a corporation effects a preliminary organization and adopts bylaws, and thereafter in good faith acts as a corporation, it becomes a corporation de facto, although a final organization is not effected, and its right to a franchise and to hold property cannot be inquired into by a mere trespasser on the property. (Stockton etc. Co. v. Stockton etc. R. R. Co., 45 Cal. 680. To same effect: Bakersfield etc. Assn. v. Chester, 55 Cal. 101. Note citation: 19 Am. Dec. 67.)

Where persons associate themselves into a corporation, and for upward of sixteen years carry on the business for which it was organized or attempted to be organized, they constitute a corporation de facto notwithstanding there were defects in the incorporation proceeding, and the validity of the corporation cannot be attacked in a collateral proceeding. (Holiness Band v. Spires, 126 Cal. 541,

58 Pac. 1049.)

Rights and Powers of.-A de facto corporation has all the rights of a de jure corporation until called into question by direct proceedings to arrest its usurpation of power. (B. T. H. Assn. V. Chester, 55 Cal. 98. To same effect: First Baptist Church v. Branham, 90 Cal. 24, 27 Pac. 60. Note citations: Hildreth v. McEntire, 19 Am. Dec. 67, 68; People v. Montecito Water Co., 33 Am. St. Rep. 184.)

Corporation de facto may legally do and perform every act and thing which the same entity could do or 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 power, its acts are binding. (People v. La Rue, 67 Cal. 526, 8 Pac. 84. To same effect: First etc. Church v. Branham, 90 Cal. 23; People v. Water Co., 97 Cal. 277, 33 Am. St. Rep. 173, 32 Pac. 236.)

Power of Trustees.-The trustees of a corporation de facto may sue in its corporate name, until its existence is called in question Corporation Laws-18

by a direct proceeding upon information of the attorney general. (First Baptist Church v. Branham, 90 Cal. 22, 27 Pac. 60. Cited to the same effect: People v. Water Co., 97 Cal. 277, 33 Am. St. Rep. 173, 32 Pac. 236.)

Individual Rights and Liabilities.-No valid trust can be created in favor of third parties as members of an unincorporated society in a corporation which has no legal existence de facto or de jure; third parties cannot have an interest in property as members of an alleged corporation which has no interest in such property. (Wall v. Mines, 130 Cal. 27, 62 Pac. 386.)

Where persons knowingly and fraudulently assume or pretend to have a corporate existence, they may be held liable as individuals; but where they are acting in good faith, supposing that they are members in a valid corporation, and where the corporation assumes to transact business for a number of years, and the assumed incorporation is not challenged by the state, they cannot be held liable as individuals. The same is true as between the members themselves. (Perkins v. Fish, 121 Cal. 317, 53 Pac. 901.)

Evidence of Existence.-Articles of incorporation are evidence of the right to act as such, although they be not acknowledged by all the incorporators, and its right to exist as a de facto corporation cannot be collaterally attacked. (Dannebroge etc. Co. v. Allment, 26 Cal. 286. To same effect: People v. Frank, 28 Cal. 519; Oroville etc. Co. v. Plumas Co., 37 Cal. 361; Bakersfield etc. Co. v. Chester, 55 Cal. 101; Pacific Bank v. De Ro, 37 Cal. 541. Note citation: 19 Am. Dec. 67.)

The minute-book of the corporation, and testimony relating to the resolutions, meetings, adoption of by-laws, and as to who were the stockholders of each, are competent evidence to show that the cor poration was organized and doing business, and to show the good faith of the corporation. (People v. Rosenstein-Cohn Cigar Co., 131

Cal. 153, 63 Pac. 163.)

It is erroneous to permit parol proof as to the corporate character of a bank; though it is competent and sufficient to prove by parol evidence of reputation, and not by direct statement, that the bank was a de facto corporation. (People v. Dole, 122 Cal. 486, 68 Am. St. Rep. 50, 55 Pac. 581.)

It is sufficient to sustain a finding that the plaintiff is a corporation to show that it is acting as such, and doing business as a corporation de facto. (Lakeside Ditch Co. v. Crane, 80 Cal. 181, 22 Pac. 76.)

In action of ejectment evidence that the plaintiff is a corporation de facto is admissible to establish the existence of a corporation as against the defendant. (Oakland Gaslight Co. v. Dameron, 67 Cal. 663, 8 Pac. 595. To same effect: People v. Leonard, 106 Cal. 310, 39 Pac. 617.)

Collateral Attack on.-The organization and existence of a corporation must be shown by at least a substantial compliance with statute, and the omission of the essential steps is fatal in a collateral proceeding, although mere irregularities cannot be collaterally assailed, and for such irregularities the corporation is responsible only to the government in a direct action for forfeiture. (Mok. etc. Co. v. Woodbury, 14 Cal. 424, 73 Am. Dec. 658; Spring V. W. W. v. S. F., 22 Cal. 440; Harris v. McGregor, 29 Cal. 127; People v. Stockton etc. R. R. Co., 45 Cal. 413, 13 Am. Rep. 190; McCallon v. Hibernia S. & L. S., 70 Cal. 168, 12 Pac. 114; Fresno etc. Co. v. Warner, 72 Cal. 384, 14 Pac. 37. Note citation: 19 Am. Dec. 67; 78 Am. Dec. 732; 79 Am. Dec. 437; 29 Am. St. Rep. 607; 33 Am. St. Rep. 177, 359; 41 Am. St. Rep. 162.)

A substantial compliance with the statute is all that is required in the formation of a corporation. Irregular or defective performance of acts relating to organization can only be investigated on direct proceedings by the state, and the existence cannot be collaterally attacked on such grounds. The same is true of those acts which are not made prerequisites to the exercise of corporate powers. (S. V. W. W. v. S. F., 22 Cal. 434; People v. Frank, 28 Cal. 519; Oroville Co. v. Plumas Co., 37 Cal. 361. Note citations: 19 Am. Dec. 67; 73 Am. Dec. 661.)

If a corporation claims in good faith to be a corporation under the laws of this state, and to be doing business as such, its existence cannot be questioned in a private action. (Pacific Bank v. De Ro, 37 Cal. 538. Note citations: 24 Am. Dec. 59; 33 Am. St. Rep. 185.) The existence de jure or de facto may be denied in a private suit, and the company claiming to be such must show that it claims in good faith to be a corporation under the laws of this state, and is doing business as such corporation. (Oroville etc. Co. v. Plumas Co., 37 Cal. 354; Fresno Canal Co. v. Warner, 72 Cal. 384, 14 Pac. 37; Martin v. Deetz, 102 Cal. 64, 41 Am. St. Rep. 158, 36 Pac. 368.) A de facto corporation can only be deprived of a franchise or property in a direct proceeding on behalf of the state. (Holiness Band v. Spires, 126 Cal. 541, 58 Pac. 1049.)

Proof that a corporation is a de facto corporation dispenses with strict proof of its corporate character and precludes party from disputing company's right to act as a corporation. (Randell v. Fay, 32 Cal. 354.)

In action by corporation de facto, claiming in good faith to exist, defendant, who is mere trespasser, cannot question corporate existence of plaintiff or its capacity to take and hold property. (Golden Gate etc. Co. v. Joshua Hendy etc. Co., 82 Cal. 184, 23 Pac. 45.)

In an action to enforce an assessment levied by a reclamation district, if its organization is denied, the question is not whether the district has so acted as to become a corporation de facto, but

whether there has been in fact a substantial compliance with the law in its organization. (Reclamation Dist. v. Burger, 122 Cal. 442, 55 Pac. 156.)

In action by corporation in which issue is raised as to corporate existence of plaintiff, court may direct jury to find specially upon such issue in addition to their general verdict. (Fresno etc. Co. v. Warner, 72 Cal. 379, 14 Pac. 37.)

A levee district formed under an unconstitutional act has no rights, and is not entitled to protection from collateral attacks as a corporation de facto. (Brandenstein v. Hoke, 101 Cal. 131, 35 Pac. 362.)

Where articles of incorporation were delivered to a county clerk, who was ex-officio recorder, and who erroneously marked them as filed in the recorder's office, and upon the filing of a duplicate thereof with the Secretary of State a certificate of incorporation was issued by him, the law was substantially complied with, and the legality of its organization cannot be collaterally attacked. Diego Gas Co. v. Frame, 137 Cal. 441, 70 Pac. 295.)

(San

The ownership of a wagon road in the possession of a corporation cannot be inquired into by a board of supervisors on an application to fix rates of toll, or in a proceeding by mandamus to compel the board to fix rates. (Weaverville W. R. Co. v. Board of Supervisors, 64 Cal. 69, 28 Pac. 496.)

Existence-Estoppel to Question.-One who has dealt with a corporation as such cannot question its existence. (Fresno etc. Co. v. Warner, 72 Cal. 379, 14 Pac. 37. To same effect: Camp v. Land, 122 Cal. 169, 54 Pac. 839. Note citations: Schloss v. Trade Co., 13 Am. St. Rep. 55; People v. Water Co., 33 Am. St. Rep. 185.)

In an action by corporation to foreclose mortgage given by defendant for money loaned him by corporation, defendant is estopped to deny regularity of organization of corporation, and its power to enter into the contract. (Grangers' etc. Assn. v. Clark, 67 Cal. 634, 8 Pac. 445. To same effect: Bank v. Boyd, 99 Cal. 605, 34 Pac. 337; Camp v. Land, 122 Cal. 169, 54 Pac. 839.)

Contract With Apparent Corporation-Estoppel.-One who has contracted with an apparent corporation as such is estopped, in an action on the contract, from denying the existence of the corporation. (Fresno Canal etc. Co. v. Warner, 72 Cal. 379, 14 Pac. 37.)

INCREASING AND DIMINISHING CAPITAL STOCK, HOW.

Sec. 359, C. C. No corporation shall issue stocks or bonds except for money paid, labor done or property actually received, and all fictitious increase of stock or indebtedness is void. ery corporation may increase or diminish its capital stock, and

Ev.

every corporation or two or more corporations, may create or increase its or their bonded indebtedness, subject to the following provisions:

First-The capital stock of a corporation may be increased. or diminished at a meeting of the stockholders by a vote representing at least two-thirds of the subscribed or issued capital stock, or in the manner otherwise in this section provided; when by meeting as aforesaid, then such meeting must be called by the board of directors or trustees and notice must be given by publication in a newspaper published in the county or city and county where the principal place of business of such corporation is located, or if there be none published in said county or city and county, then in a newspaper published in an adjoining county, or city and county, such paper to be designated by the board of directors or trustees in the order calling for the meeting.

Second-The notice must specify the object of the meeting and the amount to which it is proposed to increase or diminish the capital stock, 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 or trustees usually meet. The notice herein provided must be published once a week for at least sixty days. The capital stock cannot be diminished to an amount less than the indebtedness of the corporation.

Third-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 or issued capital stock at a meeting called by the board of directors or trustees, and after notice of the time and place of the meeting published in the same manner and for the time prescribed, which notice shall state the amount of the bonded indebtedness which it is proposed to create, or the amount to which it is proposed to increase such indebtedness, and shall in all other respects contain the same matters as are above provided and set forth in the notice of meeting to increase or diminish the capital stock; or such original creation of bonded indebtedness may be made as otherwise in this section provided.