Fourth-In addition to the notice by publication, when proceedings are to be had hereunder at a meeting of stockholders, the secretary of the corporation shall also address a notice to each of the stockholders whose names appear on the company's books as sufficiently addressed or identified, at his place of residence, if known, and if not known, then at the place in which the principal place of business of the corporation is situate, which notice shall be so mailed to such stockholders at least thirty days before the day appointed for such meeting.

Fifth-In lieu of such call for meeting of stockholders and of such notice and publication of the same and of a stockholders' meeting held in pursuance thereof and of said vote thereat representing at least 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 meeting 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 assents must be filed with the secretary of the corporation; but 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 residence, if known, and if not known, then at the place in which the principal place of business of the corporation is situate, which notice shall be so mailed to such stockholders at least thirty days before the certificate hereinafter provided is made and signed or file[d] as hereinafter provided, and within that time any stockholder may file with such secretary his dissent in writing; but it is further provided that if at any time within said thirty days such written assent or assents of the stockholders holding all of the subscribed or issued capital stock be so filed with said secretary, then and at once and without further delay the 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 corporation, and no increase of capital stock or bonded indebtedness can be made, except at a meeting of stockholders as in this section provided.

Sixth-Any two or more corporations may by a separate compliance by each corporation with the provisions of this section applicable in the premises in respect to creating or increasing bonded indebtedness, create or increase a consolidated bonded indebtedness of such corporations, to be binding jointly and severally on such corporations, and which may be secured by a consolidated mortgage or deed of trust executed by all such corporations, mortgaging or conveying in trust all or any of the properties of all such corporations, acquired or to be acquired.

Seventh-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, if proceedings are had under subdivisions first, second, third and fourth above, 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 corporation, or each corporation so acting, showing a compliance by such corporation, or each corporation so acting, with the requirements of said last-named 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 proceedings be had and taken under subdivision fifth of this section as to diminution of capital stock or original creation of bonded indebtedness a like certificate shall be made and sealed and signed, as aforesaid, showing a compliance by such corporation, and 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

and sealed and signed and verified and filed, as in this section provided, a separate certificate.

Eighth-In all cases the certificate shall state the total number of subscribed or issued shares of the capital stock of the corporation, or of each corporation respectively acting in the premises, and shall be verified by the oath of the said president and secretary, or of the said respective presidents and secretaries. Such 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 stocks of said two or more corporations, but shall not exceed such aggregate amount. In each and every case the certificate must be filed in the office of the clerk in the county or city and county where the original articles 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 created or increased accordingly, and such certificate or certificates so filed shall be, when said certified copy or copies are so filed, conclusive proof of such increase or diminution of capital stock or such creation or increase of bonded or consolidated bonded indebtedness and the validity of each thereof. When the by-laws of a corporation prescribe the paper in which notices of meetings of directors or trustees or stockholders are to be published the notices of publication herein provided for shall be published in such paper, unless publication thereof shall have ceased. En. March 21, 1872. Amd. 1873-74, 207; 1883, 31; 1885, 141; 1889, 364; 1893, 191; 1903, 347.

Legislative History.

See sec. 354, C. C., ante.

The original section reads as follows: "Every corporation may increase or diminish its capital stock as in this section provided:

"1. By a majority vote of the directors there may be called a meeting of the stockholders, to be convened for the purpose of increasing or of diminishing the capital stock;

"2. Personal notice of the time and place of such meeting, and the object thereof, must be served on each stockholder resident in this state; or, in lieu thereof, the notice must be published in every

issue of a newspaper published in the county where the principal place of business is located, for four weeks successively;

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 four-fifths of all the capital stock must be represented at such meeting, and 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 compliance with all the requirements of this section, the amount to which the capital stock has been increased or diminished, the amount of stock (and by whom held) represented at the meeting, the vote by which the object was accomplished, the amount of capital stock actually paid in, and the amount of all debts and liabilities of the corporation, and how secured.

"7. This certificate must be subscribed by a majority of the directors and duplicates made, one to be filed in the office of the county clerk, and one in the office of the Secretary of State, as provided for original articles of incorporation, and thereupon the capital stock is so increase or diminished."'

For amendments of 1873-74, 1883, 1885, 1889, and 1893, see Appendix.

Section Cited.

Ewing v. Oroville Min. Co., 56 Cal. 651, 653; Stein v. Howard, 65 Cal. 617, 4 Pac. 662; Harvey v. Dale, 96 Cal. 161, 31 Pac. 14; Jefferson v. Hewitt, 103 Cal. 630, 37 Pac. 638; Market St. Ry. Co. v. Hellman, 109 Cal. 594, 597, 600, 42 Pac. 225; Ralston v. Bank of California, 112 Cal. 213, 44 Pac. 476; Kellerman v. Maier, 116 Cal. 424, 48 Pac. 377; Boyd v. Hewn, 125 Cal. 45, 58 Pac. 64; Vermont etc. Co. v. Declez etc. Co., 135 Cal. 583, 87 Am. St. Rep. 143, 67 Pac. 1057.

Annotation.

Original Section.-Section 359 conflicts with section 11, article XII of the Constitution of 1879, and is annulled. First clause of section 11, article XII of the Constitution, providing that no corporation shall issue stock, except for certain purposes, is prohibitory. The last clause providing for increase of capital stock of corporation is not self-executing. (Ewing v. Oroville M. Co., 56 Cal. 649.)

Issuance of Stock.-Agreement to perform services in return for stock vests title to stock at once and prior to the rendition of the services. (Chatter v. S. F. Sugar Co., 19 Cal. 219.)

Section 359 of the Civil Code renders void a certificate of stock issued upon credit, but does not render void a condition as to the payment of a non-negotiable note given therefor. (Jefferson v. Hewitt, 103 Cal. 624, 37 Pac. 638.)

Where market value of stock sold fails, the issuance of an additional number of shares, without consideration, merely to equalize the price to that at which it was sold so that the stock already purchased should cost no more than that to be purchased at the reduced price, is in violation of section 359, Civil Code, providing that "No corporation shall issue stock or bonds except for money paid, labor done, or property actually received," and the certificates for such additional number of shares issued to present stockholders, without any new consideration, are void, and the parties receiving them do not thereby become stockholders, nor make themselves liable to creditors of the corporation for an unpaid subscription. (Kellerman v. Maier, 116 Cal. 416, 48 Pac. 377.)

Fictitious Increase. -Increase of capital stock of corporation, and the issuance of additional shares to be sold at a price less than nominal par value of the stock, to supply a fund actually required for the use of the corporation, is not a "fictitious increase of the stock," within the meaning of article XII, section 2, of the Constitution. (Stein v. Howard, 65 Cal. 616, 4 Pac. 662.)

Purchase and Reissuance by Corporation.-The purchase of stock by a corporation reduces the amount of subscribed capital stock, and though ultra vires, does not extinguish the stock, and the corporation has power to reissue stock to the same amount. (Bank etc. v. Wickersham, 99 Cal. 655, 34 Pac. 444.)

The fact that a bank becomes the owner of shares of stock converted by it, where a recovery is had for the conversion, is no ground for refusing the remedy for such recovery, as the authorized capital is not reduced by such ownership, and the shares are not extinguished and may be reissued by the bank. (Ralston v. Bank of Cal., 112 Cal. 208, 44 Pac. 476.)

Definition of Capital Stock.-By capital stock is meant the capital of the corporation on which it transacts business, whether such capital consists of money, property, or other valuable commodities. (Martin v. Zellerbach, 38 Cal. 300, 99 Am. Dec. 365. To same effect; S. F. v. S. V. W. W., 63 Cal. 531; Kohl v. Lilienthal, 81 Cal. 385, 20 Pac. 401, 22 Pac. 689.)

Withdrawal of Capital Stock.—Any arrangement which will have the effect to withdraw the capital of an incorporated company, and turn it over to the stockholders, except in the manner provided by