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CHAPTER I.

FORMATION OF CORPORATIONS. Article I. Corporations Defined and how Organized, 88 283-300a.

Promotion and Subscription Agreements-[Editors' Note,

pp. 120-126.] II. By-laws, Directors, Electors, and Meetings, $8 301-321a.

ARTICLE I.

CORPORATIONS DEFINED AND HOW ORGANIZED.

$ 283. Corporation defined. § 284. Kinds of. $285. Private, how formed. $ 286. For what purpose private corporations are formed. § 287. How corporations may continue their existence under this

code. § 288. Existing corporations not affected. § 289. Name of instrument creating corporation. § 290. Articles of incorporation, what to contain. $ 291.

Certain corporations to state further facts in articles. § 292. Five corporators, three to be citizens of the state, to sign

articles and acknowledge the same. § 293. Prerequisite to filing articles- Amounts to be subscribea in

be fixed. $ 294. Prerequisite to filing articles of corporations for profit. $ 295. Oath of officer to subscription of stock and payment of ten

per cent. $ 296. To file articles with county clerk and Secretary of State,

and receive certificate-- Term of existence. § 297. Copy of articles prima facie evidence. $ 298. Who are members and who stockholders of a corporation. $ 299. Filing articles of incorporation. § 300. Banking corporations may elect to have capital stock. § 300a. Change of name-Filing copy of decree.

CORPORATION DEFINED.

Sec. 283, C. C. A corporation is a creature of the law, having certain powers and duties of a natural person. Being created by the law, it may continue for any length of time which the law prescribes. En. March 21, 1872. Powers of corporations: See post, sec. 354, C. C. et seq.

Existence of corporations limited to fifty years: Secs. 290, 401, C. C., post.

Homestead corporations limited to ten years: Sec. 557, C. C., post. Legislative History.

The term "corporation” had not been previously defined by the legislature. Section 33 of article IV of the Constitution of 1849, and section 4 of article XII of the Constitution of 1879, both contain this provision: "The term corporations,' as used in this article, shall be construed to include all associations and joint stock companies having any of the powers or privileges of corporations not possessed by individuals or partnerships." The powers of corporations in general are prescribel in sections 354-393 of the Civil Code. The powers of particular classes of corporations will be found under their respective titles.

The existence of a corporation is limited to fifty years by sections 290 and 401 of the Civil Code. Prior to the adoption of the Civil Code, there was no law fixing the period of existence for all corporations. The term of existence of particular corporations was preseribed in the particular act relating to such corporations, and varied from ten to fifty years.

Section 401 of the Civil Code provides for the extension of the existence of corporations formel for a period of less than fifty years to a period not exceeding fifty years from its formation. Section 402 of the Civil Code (repealed March 30, 1874, Amendments 1873-74, p. 209, in effect July 1, 1874), provided that all corporations might continue their corporate existence for an additional period of fifty years. There is now no law providing for a continuance of corporate existence for more than fifty years. Section 7 of article XII of the Constitution of 1879 provides that "the legislature shall not extenil any franchise or charter, nor remit the forfeiture of any franchise or charter of any corporation now existing, or which shall here. after exist under the laws of this state."

Section Cited.

Dean v. Davis, 51 Cal. 410; San Luis Water Co. v. Estrada, 117 Cal. 177, 48 Pac. 1075.

Annotation.

Definitions.— A corporation is little more under our laws than a joint stock company under the English law, in its true nature more nearly resembling a limited partnership under special articles than a corporation at common law, the corporation being the mere agency of the associates created for convenience in carrying out the agreement. (Chatter v. S. F. Sugar Co., 19 Cal. 220. To same effect: Robinson v. Bidwell, 22 Cal. 388; Shorb v. Baudry, 56 Cal. 450; Clute v. Loveland, 68 Cal. 254, 9 Pac. 133.)

Joint-stock Companies.- Plank and turnpike road companies are corporations, though denominated joint-stock companies. (Blanchard v. Kaull, 44 Cal. 440.)

Under the broad definition of this section, a levee district has the attributes of a corporation. It is "a creature of the law, and has certain powers and duties of a natural person." (Dean v. Davis, 51 Cal. 410.)

Under the act of May 20, 1861, railroad corporations possessed all the powers and privileges for the purpose of carrying on the business of the corporation that private individuals and natural persons had. (Pixley v. R. R. Co., 33 Cal. 183, 91 Am. Dec. 623.)

Corporation is a "Person."' – The word “person" in its legal signification is a generic term, and was intended to include artificial, as well as natural, persons. (Douglass v. Steamship Company, 4 Cal. 304.)

The word “corporation” in the act of 1897 (Stats. 1897, p. 231), means an artificial person created and existing under the laws of the place of its creation; but, as applied to its rights as a defendant, is to be treated as including all the persons who are members thereof. It is to be deemed a “person” within the meaning of the fourteenth amendment, which forbids a state to “deny to any person within its jurisdiction the equal protection of the law.” (Johnson v. Mining Co., 127 Cal. 4, 78 Am. St. Rep. 17, 59 Pac. 304.)

By section 14 of the Civil Code, section 17 of the Code of Civil Procedure, section 7 of the Penal Code, and section 17 of the Political Code, the word “person” is defined to include a corporation as well as a natural person.

A Corporation De Jure is an artificial body created by operation of law upon the execution, filing, and certification of certain written instruments by persons desirous of incorporating, and certain public officers, in accordance with the provisions of the general laws. (Martin v. Deetz, 102 Cal. 55, 41 Am. St. Rep. 151, 36 Pac. 368.)

A Corporation De Facto is one acting as a corporation in good faith. (Lakeside Ditch Co. v. Crane, 80 Cal. 181, 22 Pac. 76.) A corporation de facto exists where a number of persons have organized and acted as a corporation. (Martin v. Deetz, 102 Cal. 55, 41 Am. St. Rep. 151, 36 Pac. 368. See section 358, C. C., post.

Corporate Franchise.—The right to be a corporation is a franchise, and to acquire a franchise under a general law, the required statutory conditions must be complied with. (People v. Selfridge, 52 Cal. 331. To same effect: S. V. W. W. v. Schottler, 62 Cal. 110; People v. Montecito etc. Co., 97 Cal. 278, 33 Am. St. Rep. 172, 32 Pac. 236; McCallion v. Hibernia S. & L. Soc., 70 Cal. 168, 12 Pac. 114.)

The charter is the statute or statutes granting and defining the powers of the corporation, under which it is constituted and exists, together with the instruments required to be executed by the provisions of such statute or statutes. These are sometimes called the constating instruments. Such franchises are legal estates, not mere naked powers, and are powers coupled with an interest, which vest in the corporation by virtue of its charter or constating instrument. (S. V. W. W. v. Schottler, 62 Cal. 73.)

A franchise granted to certain parties vests by operation of law in corporation which they form, and no assignment is necessary. (S. V. W. W. v. S. F., 22 Cal. 434. See S. F. v. S. V. W. W., 48 Cal. 520.)

The right to be a corporation is a franchise, to acquire which the prescribed statutory conditions for the formation of corporations must be substantially complied with. (People v. Montecito Water Co., 97 Cal. 276, 33 Am. St. Rep. 172-176, 36 Pac. 236. Note citation: Jones v. Hardware Co., 52 Am. St. Rep. 227.)

KINDS OF.

Sec. 284, C. C. Corporations are either public or private. Public corporations are formed or organized for the government of a portion of the state; all other corporations are private. [En. March 21, 1872; Amd. 1873-74, p. 197.] Legislative History.

The original section, instead of "all other corporations are private," had the words “private corporations are formed for the purpose of religion, benevolence, education, art, literature, or profit.” The original definition of private corporations restricted private to those formed for the purposes mentioned, and had the effect to exclude any corporation not expressly mentioned; as, for instance, a cemetery corporation, or a mutual benefit society, or a society for the prevention of cruelty to animals. The present definition is sufficiently comprehensive to include all purposes for which private corporations may be formed.

Section Cited.

Dean v. Davis, 51 Cal. 406; People v. Reclamation District, 117 Cal. 121, 48 Pac. 1016; Reclamation District v. Sacramento, 134 Cal. 478, 66 Pac. 668.)

Annotation.

Classification of Corporations. There are several classes of corporations, such as public, municipal corporations, the leading object of which is to promote the public interest; corporations technically private, but yet of a quasi public character, having in view some great public enterprise, in which the public interests are directly involved to such an extent as to justify conferring upon them important governmental powers, such as the exercise of the power of eminent domain; and corporations strictly private, the direct object of which is to promote private interests, and in which the

Corporation Laws-6

reason to

public has no concern, except the indirect benefits resulting from the promotion of trade, and the development of the general resources of the country. (Miners' Ditch Co. v. Zellerbach, 37 Cal. 577.)

Corporations cannot be made the basis of classification for pur. poses of legislation, unless such classification is founded upon some constitutional or natural distinction, which suggests a justify the diversity of legislation respecting them. No such basis exists for the classification of the act of 1897. (Johnson v. Mining Co., 127 Cal. 4, 78 Am. St. Rep. 17, 59 Pac. 304.)

Public Corporations.— Public corporations are instrumentalities of the state, incorporated by the state, and invested with a corporate character, the better to perform within and for a certain locality governmental functions. (Dean v. Davis, 51 Cal. 411.)

School districts, road districts, levee districts, irrigation districts, and sanitary districts are public corporations. (Dean v. Davis, 51 Cal. 411; People v. Reclamation District, 53 Cal. 348; People v. Williams, 56 Cal. 647; Swamp Land District v. Haggin, 64 Cal. 204, 30 Pac. 631; People v. La Rue, 67 Cal. 528, 8 Pac. 84; Turlock Irrigation District v. Williams, 76 Cal. 368, 18 Pac. 379; Central Irr. District v. De Lappe, 79 Cal. 353, 21 Pac. 825; Quint v. Hoffman, 103 Cal. 506, 37 Pac. 514; People v. Irrigation Dist., 98 Cal. 206, 32 Pac. 1047; Reclamation Dist. v. Gray, 95 Cal. 601.)

But reclamation districts formed under the provisions of section 3446 et seq. of the Political Code do not come within the class of corporations defined by section 284 of the Civil Code. They are special organizations, formed to perform certain work, which the policy of the state requires or permits to be done, and to which the state has given a certain degree of discretion in making the improvements contemplated. (Reclamation District v. Sacramento, 134 Cal. 477, 66 Pac. 668.)

The conditions under which it can be said the legislature intended the creation of a corporation for the performance of some local governmental function considered, and held that question whether a corporation is such or not must come to depend upon the character of the powers enumerated in the creative statute. (Reclamation District v. Sacramento County, 134 Cal. 477, 66 Pac. 668; Hensley v. Reclamation District, 121 Cal. 96, 53 Pac. 401; Dean v. Davis, 51 Cal. 410.)

Corporations which fail of sufficient corporate powers to constitute them perfect corporations are sometinres termed quasi corporations, because many of the presumptions and rules which apply to corporations have been made applicable to them. (People v. Reclamation District, 117 Cal. 121, 48 Pac. 1016; Reclamation Dist. v. Sacramento, 134 Cal. 477, 66 Pac. 668.) Municipal corporations are designed to regulate the internal affairs of the places in which they are locatedpolice, health, streets, lawns, alleys, and the like, are the appropriate

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