not be subject to any of the obligations or burdens imposed by section ten of said act upon said corporation and in favor of the makers of such notes. [Amendment approved April 26, 1880; Stats. 1880, 230 (Ban. ed. 523). Took effect from passage; affects only corporations formed before 1873.]

Sec. 10. Whenever, at any time, the capital of any corporation formed or existing under this act shall become impaired, it shall be the duty of the board of directors at once to levy such an assessment upon the capital stock, whether paid up or not, as may be necessary to make good such impairment; and such assessment, except as to the amount thereof, shall be levied and collected in the manner prescribed by sections three hundred and thirty-one to three hundred and forty-nine, inclusive, of the Civil Code of this state. Every such corporation may increase or diminish its capital stock in the mode and manner prescribed by section three hundred and fifty-nine of said Civil Code. [Amendment approved April 26, 1880; Stats. 1880, 230 (Ban. ed. 523). Took effect from passage; affects only corporations formed before 1873.]*

Sec. 11. It shall be lawful for the company to invest its capital in funds, as follows:

First-In loans upon unencumbered and improved real estate within the state of California which shall be worth at the time of the investment, fifty per cent more than the sum loaned.

Second-In the purchase of or loans upon interest bearing stocks, bonds, and other securities of the United States and of the states thereof.

Third-In the purchase of or loans upon interest bearing bonds of any incorporated city, or city and county, in the state of California.

Fourth-In the purchase of or loans upon any stocks of companies formed under the laws of this state, which shall have, at the time of such investment, a value in the city and county of San Francisco of not less than sixty per cent of their par value, and which shall be rated as first-class securities.

But no loans shall be made on any securities specified in subdivisions three and four in any amount beyond seventy-five per cent of their market value, except mining stocks. [Amendment approved March 30, 1868, 661, took effect from passage.]

Sec. 12. No company formed under this act shall purchase, hold, or convey real estate, except for the purposes, and as herein set forth, to wit:

First-Such as shall be requisite for its accommodation in the convenient transaction of its business.

Second-Such as shall have been conveyed to it or to any person for it by way of mortgage or in trust, or in any manner otherwise,

*The act of April 26, 1880, page 230, from which the above three amendments were taken, contained the following additional section: Sec. 4. Nothing in this act shall be construed to affect any corporation formed after twelve o'clock noon on the day upon which the Civil Code of California took effect, nor shall anything in this act be construed to revive or put in force any part of the act of which it is amendatory, beyond what was intended should be in force by the provisions of section two hundred and eighty-eight of the Civil Code of California.

The above act of April 2, 1866, was incorporated in the provisions of sections 437-452 of the Civil Code, ante, pages 319-330.

Corporation Laws-53

to secure or provide for the payment of loans previously contracted, or for moneys due.

Third-Such as shall have been purchased at sales upon deeds of trust, or judgments, decrees, or mortgages obtained or made for such loans or debts.

Fourth-Such as shall have been conveyed to it in satisfaction of debts previously contracted in the course of its dealings.

All such real estate as may be acquired as aforesaid, and which shall not be requisite for the accommodation of such company in the convenient transaction of its business, shall be sold and disposed of within five years after such company shall have acquired title to the same, and it shall not be lawful for such company to hold such real estate for a longer period than that above mentioned, unless the said company shall procure a certificate from the controller of state that the interest of the company will suffer materially by a foreed sale of such real estate, in which event the time for the sale may be extended to such time as the controller shall direct in said certificate.*

Sec. 13. The dividends payable to the stockholders of the company shall be deducted before any net earnings shall be deemed to have accrued. Such dividends shall consist of the interest or moneys earned by the investment or other use of the capital stock. No dividends shall be made by the company while its capital stock is impaired, or when the making of such dividends would have the effect of impairing its capital; and any dividend so made shall subject the directors voting for, and the stockholders having notice and receiving the same to a joint and several liability to the creditors of such company to the extent of such dividend.

[Section 14, as to annual statement of president and secretary, was repealed by act approved March 26, 1868, 330; took effect immediately.]

Sec. 15. Upon the expiration of the period of existence specified in the certificate provided for in section three, the company may extend its term of existence for another period of not more than seventy-five years, if the same shall be desired by a majority of the stockholders and others qualified to vote for directors, and approved of by the board of directors in office for the last year of such unexpired term. Such desire of the stockholders and others qualified to vote for directors of the company may be declared either by a vote in favor of such extension, at a meeting of them called specially for the purpose by the president or any five stockholders of the company, at the office of the company, upon a notice published in some newspaper, or by a statement in writing, declaring themselves in favor of such extension, signed by such majority of the stockholders and others qualified to vote for directors, or their attorneys in fact duly authorized. Such resolution or statement shall be submitted to the board of directors, and if approved by them, they or a majority of them shall sign a certificate in writing, declaring the desire of the company for a renewal for such further period not exceeding seventy-five years. Such certificate shall be duly acknowledged before some officer competent to take acknowledgment of deeds, and the original and a copy thereof shall be filed before the expiration of the current term of the company's existence in the same manner as is provided in section three with respect to the original certificate

*The duties of controller of state herein have been imposed upon the insurance commission, by act approved March 26, 1868, 341. See Political Code provisions, ante.

of incorporation. Thereupon the company shall be deemed, from and after the expiration of its current term of existence named in the certificate of incorporation, to have renewed its term of existence for the period mentioned in said certificate of renewal, in all respects as though its previous term of existence had not expired. Other renewals may be made from time to time thereafter in the like manner and with the like force and effect; but no renewal shall ever be made for a period exceeding seventy-five years.

Sec. 16. All premiums shall be payable wholly in cash, or onehalf or a greater proportion in cash, and the remainder in promissory notes bearing interest as may be provided by the by-laws. Agreements and policies of insurance made by the company may be upon the basis of full or partial participation in the profits, or without any participation therein, as may be provided by the by-laws and agreed between the parties.

Sec. 17. Each stockholder of the company shall be individually and personally liable for such proportion of all its debts and liabilities as the amount of its capital stock owned by him bears to the whole of such capital stock.

Sec. 18. It shall be lawful for any married woman, by herself and in her name or in the name of any third person, with his assent as her trustee, to cause to be insured for her sole use the life of her husband for any definite period or for the term of his natural life; and in the event of her surviving her husband, the sum or net amount of the insurance becoming due and payable by the terms of the insurance shall be payable to her, and for her own use, free from the claims of the representatives of the husband or of any of his creditors, or of any parties claiming by, through, or under, him. But when the premium or any part thereof paid in each year out of the funds or property of the husband shall exceed five hundred dollars, such exemption from such claims shall not apply to so much of said insurance as shall be in proportion to said excess over five hundred dollars. In case of the death of the wife before the decease of her husband, the amount of insurance may be made payable after her death to her children, for their use, or if under age, to their guardian, Sec. 19. So much of an act entitled an act to provide for the incorporation of mutual insurance companies, passed April twentysixth, one thousand eight hundred and fifty-one, and any act amendatory thereof or supplementary thereto, as relates to insurance upon lives, is hereby repealed; but this repeal shall not affect the validity of any incorporation formed, or contract made, or rights existing under said act or acts, and the same shall be and remain, in all respects, as though this act had not been passed. An act entitled, an act in respect to insurance for lives for the benefit of married women, passed May eleventh, one thousand eight hundred and fiftyfour, is also repealed. All acts and parts of acts, so far as they affect incorporations formed under this act, are hereby repealed. Sec. 20. This act shall take effect immediately.

Act Cited.

Morrow v. Superior Court, 64 Cal. 384, 1 Pac. 354; Meale v. Head, 133 Cal. 43, 47, 48, 50, 65 Pac. 131, 576.

ARTICLE IV.

RAILROAD AND STREET RAILROAD COMPANIES.

[The earliest act on the subject of the incorporation of railroad companies consisted of "Chapter III, Railroad Companies," of "An act concerning corporations," passed April 22, 1850, 347. The abovementioned act was repealed by "An act to provide for the incorporation of railroad companies, passed April 28, 1851, 433, to which there was a supplemental act, approved March 22, 1852, 172. The last-mentioned acts were repealed by "An act to provide for the incorporation of railroad companies" approved April 22, 1853, 99, to which there were amendatory or supplemental acts of the following dates: May 15, 1854, 170; April 10, 1855, 100; April 14, 1856, 89; April 11, 1857, 197; April 26, 1858, 317; April 26, 1858, 326. All these acts were repealed by section 59 of the following act.]

An act to provide for the incorporation of railroad companies, and the management of the affairs thereof, and other matters relating thereto..

[Approved May 20, 1861; Stats. 1860-61, p. 607.]

Section 1.* Any number of persons not less than ten, either in this state or through any portion of the territories of the United States, contiguous to this state, being subscribers to the stock of any contemplated railroad, may be formed into a corporation for the purpose of constructing, owning, and maintaining such railroad, by con plying with the following requirements: Whenever stock to the amount of at least one thousand dollars for each and every mile of the proposed railroad shall have been so subscribed, and ten per cent in cash, of the amount so required to be subscribed, shall be actually and in good faith paid to a treasurer, to be named and appointed by said subscribers from among their number, then the said subscribers, either in person or by written proxy, after having received at least five days' notice from said treasurer of a meeting of said subscribers for that purpose, may adopt articles of association, and may elect, from among the subscribers to said articles, not less than five, nor more than thirteen directors.

Sec. 2.* The said articles of association shall set forth the name of the incorporation, the number of years the same is to continue in existence, which shall not exceed fifty years, the amount of the capital stock of the company, which shall be divided into shares of one hundred dollars each, and which shall be the actual contemplated cost of constructing the road, together with the cost of the right of way, motive power, and every other appurtenance and thing, for the completion and running of said road, as nearly as can be estimated by competent engineers, the names and number of the directors to manage the affairs of the company, who shall hold their office until others are elected, as shall be provided by the by-laws of the company; the place from, and to which, the proposed road is to be constructed, and the counties into and through which it is intended to pass, and its length, as near as may be. Each subscriber to such articles of association shall personally subscribe thereto his name, place

*Applicable to street railroads.

of residence, and the number of shares taken by him in such company; provided, that in case a person desirous of becoming a subscriber, but compelled to be absent from the state at the time of subscribing to such articles of association, he having duly paid the ten per cent required by law upon his subscription, may sign the same by written proxy, or power of attorney, to that effect; and there shall be indorsed, or attached, to the said articles so subscribed, an affidavit, made by any three of the directors named therein, setting forth in substance that said amount of stock has been subscribed, and that ten per cent in cash thereon, has actually and in good faith been paid in as aforesaid, and that the subscribers te said articles are all known by one, or the other, of the said three directors, to be subscribers thereto, and to be the persons so represented.

Sec. 3.* Articles of association formed in pursuance of the provisions of the foregoing sections, shall be filed in the office of the Secretary of State, and thereupon the persons who have, or may, subscribe the same, and all persons who may, from time to time, become stockholders in such company, shall be a body politic and corporate, by the name stated in such articles of association, and shall be capable in law to make all contracts, acquire real and personal property, purchase, hold, convey, any and all real and personal property whatever necessary for the construction, completion, and maintenance, of such railroad, and for the erection of all necessary buildings and yards, or places and appurtenances, for the use of the same, and le capable of suing and being sued, and have a common, or corporate, scal, and make and alter the same at pleasure, and generally to possess all the powers and privileges for the purpose of carrying on the business of the corporation, that private individuals and natural persons now enjoy. A copy of any articles of association filed in pursuance of this act, and certified to be a copy by the Secretary of State, or his deputy, shall, in all courts and places, be presumptive evidence of the incorporation of such company, and of the facts stated therein; and such a copy, so certified, shall be kept in the office of the secretary of the corporation, subject to examination during office hours by any person.

Sec. 4.* The directors named in the articles of association shall meet and organize as a board immediately after their election, or within five days after, having received notice of such election given by the treasurer, named and designated in the first section of this act; and at the first meeting of the board, after each annual election o directors, they shall elect from among their number a president and a treasurer; they shall also elect a secretary, who, and their successors in office, shall be officers of the company, and shall hold their respective offices until their successors have been duly elected and qualified. The secretary and treasurer, before they enter upon the discharge of their duties, shall each give a bond with sufficient surety for the faithful performance of their respective duties to be approved by the board of directors. The temporary treasurer, required by the first section of this act, shall pay over all moneys received by him, as such treasurer, to the treasurer elected by the board of directors, so soon as the latter has been qualified. The said board of directors, and every succeeding board, when deemed necessary, shall open books of subscription to the capital stock of the company, at such times, and in such places, upon such terms, and authorize such persons to receive and superintend the taking of such subscriptions, *Applicable to street railroads.