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SUPPLEMENT

TO

CORPORATION LAWS

OF CALIFORNIA.

CONSTITUTION.

CORPORATIONS, WHERE TO BE SUED.

Sec. 16, Art. XII, Const.

Additional Annotation.

Place of Trial-Action Against Corporation.—Contract is deemed to have been made in county where offer of one party was accepted by another; and place of performance, where none is expressly named, of a contract of a corporation to repay money advanced to it by bank, is at bank where it can be found. (Bank of Yolo v. Sperry Flour Co., 141 Cal. 314, 74 Pac. 855.)

Libel, Circulation of Newspaper.-Action for libel may be maintained in county where plaintiff resides, against defendant corporation publishing newspaper in another county, which is its principal place of business, where paper in which libel was published was circulated in former county. (Tingley v. Times-Mirror Co., 144 Cal. 205, 77 Pac. 918.)

CIVIL CODE.

KINDS OF CORPORATION.

Sec. 284, C. C. Section Cited.

Merchants’ Bank v. Escondido Irr. Dist., 144 Cal. 334, 77 Pac. 937.

Additional Annotation.

Municipal Corporation Defined.—The term “municipal,” as commonly used, is appropriately applied to all corporations exercising

Supp. Corporation Laws-1

governmental functions, either general or special; and, indeed, this must be taken as the definition of a public or municipal corporation. (Merchants’ Bank v. Escondido Irr. Dist., 144 Cal. 334, 77 Pae. 337.)

CORPORATIONS, HOW FORMED.

Sec. 285, C. C. Private corporations may be formed by the voluntary association of any three or more persons in the manner prescribed in this article. A majority of such persons must be residents of this state. En. March 21, 1872. Amd. 187374, 197; 1905, 502.

Legislative History.

The change consists of the substitution of three for five as the number of incorporators.

FOR WHAT PURPOSES CORPORATIONS ARE FORMED.

Sec. 286, C. C. Section Cited.

Montecito Valley Co. v. Santa Barbara, 144 Cal. 594, 77 Pac. 1113.

Additional Annotation.

Prescriptive Title of Corporation-Power to Acquire.—Corporation may acquire prescriptive title to water appropriated by it for the beneficial use of rental and sale. Same evidence to prove title of a natural person acquired by prescription may be used to establish title of a corporation. (Montecito Valley Co. v. Santa Barbara, 144 Cal. 594, 77 Pac. 1113.)

Construction of Section.—Word “purchase” as employed in this section, when read in connection with section 354 of this code, and section 1007, Code of Civil Procedure, must be held to include the power to acquire a prescriptive title. (Montecito Valley Co. F. Santa Barbara, 144 Cal. 594, 77 Pac. 1113.)

ARTICLES MUST SET FORTH.

Sec. 290, C. C. Articles of incorporation must be prepared. setting forth:

1. Name. The name of the incorporation.
2. Purposes. The purpose for which it is formed.

3. Place of business. The place where its principal business is to be transacted.

4. Term of existence. The term for which it is to exist, not exceeding fifty years.

5. Number of directors. The number of its directors or trustees, which shall not be less than three, and the names and residence of those who are appointed for the first year; provided, that the corporate powers, business, and property of corporations formed, or to be formed for the purpose of erecting and managing halls and buildings for the meetings and accommodations of several lodges or societies of any benevolent or charitable order or organization, and in connection there with the leasing of stores and offices in such building or buildings for other purposes, may be conducted, exercised, and controlled by a board of not less than three or more than fifty directors, to be chosen from among the stockholders of such corporation, or among the members of such order or organization; and provided, also, that at any time during the existence of corporations for profit, other than those of the character last hereinabove provided for, the numbers of the directors may be increased or diminished, by a majority of the stockholders of the corporation, to any number not less than three, who. must be members of the corporation; whereupon a certificate stating the number of directors must be filed, as provided for in section two hundred and ninety-six for the filing of the original articles of incorporation; and provided, also, that the corporate powers, business and property of corporations formed or to be formed for social purposes, and not directly for profit, may be exercised, conducted, and controlled by a board, consisting of such number of directors as may be in the constitution or by-laws provided; and corporations so formed may, in their constitution or by-laws, provide for the length of time that the directors, or any number thereof, shall act, and may, in like manner provide that certain directors, or a certain number of the board of directors, to be selected by the corporation or the board of directors, in the mode and manner provided in the constitution or by-laws, shall act for any specified len::th of time, or otherwise, as shall be in the constitution or by-laws set forth.

6. Capital stock. The amount of its capital stock, and the number of shares into which it is divided.

7. Capital stock subscribed. If there is a capital stock, the amount actually subscribed, and by whom. En. March 21, 1872. Amd. 1873-74, 199; 1875-76, 70; 1880, 11; 1891, 285; 1900-01, 322; 1905, 502.

Legislative History.

The amendment of 1905 changed the number of directors or trustees from five to three.

Additional Annotation.

Goodwill of Corporate Business—Vendible Interest.Goodwill of business of corporation is property of corporation alone and can be transferred only by it. Defendant, whose surname was used as es. sential part of such goodwill and who was stockholder in such corporation, had no vendible interest in its goodwill and could not, up on ceasing to be stockholder, transfer such goodwill or any part thereof. (Dodge Stationery Co. v. Dodge, 145 Cal. 380, 78 Pac. 579.

Right of Trading Company--Goodwill.— Trading corporations mas, equally with private person, have well-founded expectation of con tinued public patronage, which constitutes goodwill of business under section 992, Civil Code. (Dodge Stationery Co. v. Dodge, 145 Cal. 380, 78 Pac. 879.)

Right to Use of Name in Forming Corporation.– Though individual has right to do business in his own name, he cannot confer upon nex corporation right to use his name for the purpose of enabling it to engage in business which had been conducted by prior corporation under a similar name, which he had caused prior corporation to use, where similarity of names would create confusion and enable net corporation to obtain business of prior corporation. (Dodge Stationery Co. v. Dodge, 145 Cal. 380, 78 Pac. 879.)

CORPORATIONS NOT TO USE THE WORD “TRUST" AS PART

OF CORPORATE NAME. Sec. 2904, C. C. No corporation hereafter formed shall use the word “trust” or “trustee” as a part of its corporate name, unless it shall be authorized by its articles of incorporation to act as executor, administrator, guardian, assignee, receiver, depositary or trustee, nor shall any corporation hereafter formed accept or execute any trust unless it shall have complied with all the provisions of "An act authorizing certain corporations to act as executor, and in other capacities,

and to provide for and regulate the administration of trusts by such corporation,” approved April 6th, 1891, and the amendment thereto approved, April 1st, 1897. En. Stats. 1905, 251.

CERTAIN CORPORATIONS TO STATE FURTHER FACTS IN ARTICLES.

Sec. 291, C. C. Section Cited.

San Francisco & S. M. v. Scott, 142 Cal. 227, 75 Pac. 575.

Additional Annotation.

Construction of Section.-Section is applicable to street railroads as well as commercial or steam railroads. (San Francisco & 8. M. Ry. v. Scott, 142 Cal. 227, 75 Pac. 575.)

ARTICLES SUBSCRIBED AND ACKNOWLEDGED.

Sec. 292, C. C. The articles of incorporation must be subscribed by three or more persons, a majority of whom must be residents of this state, and acknowledged by each before some officer authorized to take and certify acknowledgments or conveyances of real property. En. March 21, 1872.

.

Amd. 1873-74, 199; 1905, 503.

Legislative History.

Amendment of 1905 changed five to three.

FILING OF ARTICLES CERTIFICATE-TERM OF EXISTENCE.

Sec. 296, C. C. Section Cited.

Bank of California v. San Francisco, 142 Cal. 231, 100 Am. St. Rep. 130, 75 Pac. 832.

Additional Annotation.

What Constitutes the Corporation. The incorporators and their associates and suecessors are the body politic or corporate, by the name stated in the certificate," and, as such body politie or corporate, they hold the right to exist and transaet the business specified in the artieles. (Bank of California v. San Francisco, 142 Cal. 281, 100 Am. St. Pep. 130, 75 Pac. 832.)

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