CORPORATIONS

HOLDING PROPERTY IN ANY COUNTY OTHER THAN WHERE ORIGINAL ARTICLES ARE FILED, MUST FILE CERTIFIED ARTICLES WITH COUNTY CLERK.

Sec. 299, C. C. No corporation hereafter formed must purchase, locate, or hold property, in any county in this state, other than the county in which its original articles of incorporation are filed, without filing a copy of the copy of its articles of incorporation filed in the office of the secretary of state, duly certified by such secretary of state, in the office of the county clerk of the county in which such property is situated, within sixty days after such purchase or location is made. Every corporation now in existence, whether formed under the provisions of this code or not, must, within ninety days after the passage of this section, file such certified copy of the copy of its articles of incorporation in the office of the county clerk of every county in this state in which it holds any property, except the county where the original articles of incorporation are filed; and if any corporation hereafter acquires any property in a county other than that in which it now holds property, it must, within ninety days thereafter, file with the clerk of such county such certified copy of the copy of its articles of incorporation. The copies filed with the several county clerks, and certified copies thereof, have the same force and effect in evidence as the originals. Any corporation failing to comply with the provisions of this section cannot maintain or defend any action or proceeding in relation to such property, its rents, issues, or profits. until such articles of incorporation, and such certified copy of its articles of incorporation, and such certified copy of the copy of its articles of incorporation, are filed at the places directed by the general law and this section; provided, that all corporations are liable in damages for any and all loss that may arise by the failure of such corporation to perform any of the foregoing duties within the time mentioned in this section; and provided further, that the said damages may be recovered in an action brought in any court of this state of competent jurisdiction, by any party or parties suffering the same. En. March 21, 1872. Rep. 1873-74, 200. En. Stats. 1875-76, 71. Amd. 1877-78, 76; 1880, 13; 1905, 556.

Legislative History.

The change consists in the insertion of the words "other than the county in which its original articles of incorporation are filed" after "state."-Code Commissioner's Note.

Additional Annotation.

Mortgage on Lands in Another County-Filing Copy of Articles of Incorporation-Code Provision Inapplicable. The taking of a mortgage by a corporation on lands situated in another county than that of its principal place of business is not a purchase, location, or holding of property therein within the meaning of section 299 of the Civil Code, requiring the filing of a certified copy of its articles of incorporation in such county, and a failure to comply with that section is immaterial, it being inapplicable to the circumstance of the case. (Anglo-Californian Bank, Limited, v. Field, 146 Cal. 644.)

Union Sav. Bank v. Leiter, 145 Cal. 702, 79 Pac. 441.

Additional Annotation.

Adoption of By-laws.-A corporation has no power to adopt a bylaw that is not consistent with the constitution and laws of the state. Any by-law so adopted is void. (Union Sav. Bank v. Leiter, 145 Cal. 702, 79 Pac. 441.)

ELECTION OF DIRECTORS; NOTICE OF.

Sec. 302, C. C. The directors of a corporation must be elected annually by the stockholders or members, and if no provision is made in the by-laws for the time of election, the election must be held on the first Tuesday in June. Notice of such election must be given as prescribed in section three hundred and one. En. March 21, 1872. Amd. 1905, 557.

Legislative History.

The change consists in the omission of the words "and the right to vote determined" after "given." The right to vote is controlled by section 307.-Code Commissioner's Note.

Powers of Secretary and Treasurer-Employment of Physician.Employment of physician by one who was secretary and treasurer and acting manager of corporation on its behalf, and that employment was sanctioned by majority of board of directors as its action, and that board did not as a body dissent from employment at any meeting thereof, was sufficient to sustain findings that corporation ratified action of officer in making employment, and corporation is liable for services. (Scott v. Superior etc. Oil Co., 144 Cal. 140, 77 Pae. 817.)

Sufficiency of Ratification.-Held, under evidence, not necessary that employment of physician should be made or ratified by action of board at regular meeting. Separate assent of majority sufficient. (Scott v. Superior etc. Oil Co., 144 Cal. 140, 77 Pac. 817.)

Ratification of Invalid Execution of Note and Mortgage.—Where note and mortgage of corporation were both invalid because not authorized by board of directors, duly assembled, the requirements of law for ratifying the note and the mortgage are different. The mortgage can only be authorized or ratified in writing in conformity with law; authority to execute note may be oral. An execution may be ratified by acts in pais. (Curtin v. Gold Mining Ditch Co., 141 Cal. 308, 99 Am. St. Rep. 75, 74 Pac. 851.)

And where transaction of note and mortgage were entered upor books of corporation, notice of note was imparted to it; and where it received and returned the benefits of the loan evidenced by note, and with knowledge and by silence acquiesced in contract and never attempted or offered to rescind it, nor to restore consideration, it ratified note, and estoppel in pais is raised to dispute enforcement of note against it. (Curtin v. Gold Min. Ditch Co., 141 Cal. 308, 99 Am. St. Rep. 75, 74 Pac. 851.)

Power of Secretary. Secretary of corporation has no power to release or transfer its property in absence of authority, express or im plied, and with no authorization or ratification by its board of direetors. (Cal. Wine-Makers' Corporation v. Sciaroni, 139 Cal. 227, 72 Pac. 990.)

Secretary. Sale of Leases for Shares of Stock by one who, while secretary of the corporation, acted personally at his own expense in securing valuable oil leases, which he sold in good faith to the corporation in consideration of stock to be issued to himself, and which were purchased by the directors openly and in good faith, is guilty of no fraud, actual or constructive. (Garretson v. Pacifie Crude Oil Co., 146 Cal. 184.)

BY-LAWS.

Sec. 304. C. C. All by-laws adopted must be certified by a majority of the directors and secretary of the corporation, and copied in a legible hand, in some book kept in the office of the corporation, to be known as the "book of by-laws," and the book must then be open to the inspection of the public during office hours each day except holidays. The by-laws may be repealed or amended, or new by-laws may be adopted, at the annual meeting, or at any other meeting of the stockholders or members, called for that purpose by the directors, by a vote representing two-thirds of the subscribed stock, or by two-thirds of the members. The written assent of the holders of twothirds of the stock, or two-thirds of the members if there is no capital stock, is effectual to repeal or amend any by-law, or to adopt additional by-laws. The power to repeal and amend the by-laws, and adopt new by-laws, may, by a similar vote at any such meeting, or similar written assent, be delegated to the board of directors. The power, when delegated, may be revoked by a similar vote, at any regular meeting of the stockholders or members. Whenever any amendment or new by-law is adopted, it must be copied in the book of by-laws with the original by-laws, and immediately after them. If any by-law is repealed, the fact of repeal, with the date of the meeting at which the repeal was enacted, or written assent was filed, must be stated in said book. Until copied or stated as hereinbefore required, no by-law, nor any amendment or repeal thereof, can be enforced against any person, other than the corporation, not having actual notice thereof. En. March 21, 1872. Amd. 1873-74, 201; 1885, 130; 1905, 557.

Legislative History.

The provisions of the present section, declaring that no by-law or any amendment thereof shall take effect until copied in the book of by-laws, is amended so as to permit by-laws and amendments thereof, which have been duly passed, to be treated as valid and enforceable against the corporation and persons having notice thereof, regardless of whether or not they have been copied into the proper book. It has often happened that by-laws have been published and generally acted upon by the corporation, and by others, and then their effect has been sought to be avoided on account of the failure of the proper officer to perform his duty of copying them as the code directs. The change consists in the addition of the last sentence.Code Commissioner's Note.

CORPORATE POWERS TO BE EXERCISED BY BOARD OF DI RECTORS; DIRECTORS, QUALIFICATIONS OF; QUORUM; VACANCIES.

Sec. 305, C. C. The corporate powers, business and property of all corporations formed under this title must be exercised, conducted, and controlled by a board of not less than three directors, to be elected from among the holders of stock; or where there is no capital stock, then from the members of such corporations; except that corporations formed or to be formed for the purpose of erecting and managing halls and buildings for the meetings and accommodation of several lodges or societies of any benevolent or charitable order or organization, and in connection therewith, the leasing of stores and offices in such building or buildings for other purposes, the corporate powers, business, and property thereof may be conducted, exercised, and controlled by a board not less than three or more than fifty directors, to be chosen from among the stockholders of such corporation or from among the members of such order or organization. A majority of the directors must be in all cases residents of this state. Directors of corporations for profit must be holders of stock therein to an amount to be fixed by the by-laws of the corporation. Directors of all other corporations must be members thereof. Unless a quorum is present and acting no business performed or act done is valid as against the corporation. Whenever a vacancy occurs in the office of director, unless the by-laws of the corporation otherwise provide, such vacancy must be filled by an appointee of the board. En. March 21, 1872. Amd. 1875-76, 71; 1900-01, 308; 1905, 503.

Legislative History.

The change consists of the substitution of three for five.

Additional Annotation.

Mortgages to Directors.-Director of corporation is not precluded from dealing directly with corporation, and may become its creditor and take from it mortgage or other security, and may enforce same like any other creditor, subject always to severe scrutiny; violation of his duty as trustee may render transaction voidable, but it is not ipso facto void. Mere evidence that creditor was director of corpo ration does not render transaction fraudulent. (Schnittager Con. Min. Co. v. Con. Min. Co., 144 Cal. 603, 78 Pac. 9.)