GENERAL PROVISIONS 31 formed or organized for the government of a portion of the state; all other corporations are private. 1887 R. S. Sec. 2575 Section 2086. Private Corporations, How Formed: Private corporations may be formed by the voluntary association of any five or more persons in the manner prescribed in this title. Provided one of such persons must be a bona fide resident of this state. 1887 R. S. Sec. 2576, amended 1899, 5th Ses. p. 404. FORMATION OF PRIVATE CORPORATION: In incorporating under general law, a strict compliance with all the requirements of the statutes in matters of detail is not essential, and the proceedings will not be held invalid for slight defects or omissions.-Smith Valley Waterworks v. San Francisco, 22 Cal. 434; People v. Stockton R. Co. 45 Cal. 306. But a substantial compliance with the forms of an act by the persons seeking to derive the benefits of an incorporation must be observed and the omission of essential steps will be fatal.-Mokelumne Hill Canal Co. v. Woodbury, 14 Cal. 424; Harris v. McGregor, 29 Cal. 124; People sover v. Selfridge, 52 Cal. 331. A corporation exists only in contemplation of law and by force of law, and can have no legal existence beyond the state or eignty by which it is created.-Rece v. Newport News M. B. Ry. Co. 32 W. Va. 134, 3 L. R. A. 572, 9 S. E. 212. And the right to be a corporation is a franchise, and to acquire a franchise under the general law, the statutory conditions must be complied with.-People v. Selfridge, 52 Cal. 331. A private corporation is not made a public institution by the fact that it is subject to visitation and inspection by public officials.-Wis. Keeley Institute Co. v. Milwaukee Co., 95 Wis. 153, 36 L. R. A. 55, 70 N. W. 68. Pri Section 2087. For What Purpose May Form: vate corporations may be formed for any purpose for which individuals may lawfully associate themselves. 1887 R. S. Sec. 2577. PURPOSE: A corporation for the purpose of dealing in real estate and carrying on any kind of real estate business cannot be organized under the section of the code providing for corporations organized for improvements on real property.-Vercoutere v. Golden State Land Co. 116 Cal. 410, 48 Pac. 375. Similarly, a corporation organized for the purpose of building a union depot for railroads and of owning, maintaining, etc., different lines therefrom within the city limits, is not an ordinary railway company.-People v. Cheeseman, 7 Colo. 376, 3 Pac. 716. In general, when a corporation is formed for a specific purpose, it has implied powers incidental to that purpose, but the exercise of a power not expressed which for could not reasonably be implied as incidental to the specific purpose which it was formed, is unlawful.-Id.: Stockton v. Central Ry. Co. 50 N. J. Eq. 52, 17 L. R. A. 97, 24 Atl. 964. conditions and limitations attach by So law, and the exercise of any given corporate purpose cannot be destroyed or subverted by combining such purposes with some other under one corporation. -International Fraternal Alliance v. State, 86 Md. 550, 40 L. R. A. 187, 39 Atl. 512. And where a corporation is organized under a general statute and the provision and declaration of its corporate purpose, the necessary effect of which is the creation of a monopoly, it is void as against public policy.People v. Chicago Trust Co. 130 Ill. 263, 8 L. R. A. 497, 22 N. E. 798. Section 2088. Articles of Incorporation: The instrument by which a private corporation is formed, is called "Articles of Incorporation." 1887 R. S. Sec. 2578. The articles of incorporation under which a company is organized under general laws have the effect of a charter for the purpose of determining the V. powers of the corporation.-North Articles Must Set Forth: Section 2089. What First. The name of the corporation; Second. The purpose for which it is formed; Third. The place where its principal business is to be transacted; Fourth. The term for which it is to exist, not exceeding fifty years; Fifth. The number of its directors or trustees; and the names. and residence of those who are appointed for the first year; Provided, At any time during the existence of the corporation, the number of the directors may be increased, in corporations for profit, by a majority of the stockholders of the corporation, to any number not exceeding eleven, who must be members of the corporation, whereupon a certificate, stating the number of directors, must be filed, as provided for the filing of original articles of incorporations; Sixth. The amount of the capital stock, and the number of shares into which it is divided; Seventh. If there is a capital stock, the amount actually subscribed, and by whom. 1887 R. S. Sec. 2579. LOCATION: A certificate which does not set forth the name of the city or town and county in which the principal place of business of a corporation is to be located, does not establish existence of a corporation.-Harris McGregor, 29 Cal. 124. V. DIRECTORS: If the articles of incorporation do not state that a majority of the members were present and voted at the election of directors, the certificate does not constitute the association a corporation.-People v. Selfridge, 52 Cal. 331. TERM: Where a statute provides that a corporation shall not exist to exceed twenty years, but the articles of incorporation provide for an existence of fifty years, held, that the corporation may exist for twenty years.-People v. Cheeseman, 7 Colo. 376, 3 Pac. 716. Section 2090. Further Statement of Certain Corporation: The articles of incorporation of any railroad, wagon road or telegraph organization must also state: First. The kind of road or telegraph intended to be constructed; Second. The place from and to which it is intended to be run, and all the intermediate branches; Third. The estimated length of the road or telegraph line. 1887 R. S. Sec. 2580. Under provisions similar to this section and the preceding, in California, it was held that the articles of incorporation of a railroad company must fully set forth amounts subscribed and by whom. The liability of stockholders at the date of the filing is limited to those named in the articles and to the amounts therein mentioned.-Monterey and S. V. Ry. Co. v. Hildreth, 53 Cal. 123. Section 2091. Articles, How Executed: The articles of incorporation must be subscribed by five or more persons, one or more of whom must be resident freeholders of this state, and acknowledged by each before some officer authorized to take and certify acknowledgments of conveyances of real property. 1887 R. S. Sec. 2581, as modified by 1899, 5th Ses. p. 404. PLACE OF EXECUTION: Where the essential prerequisites to the formation of a corporation as prescribed by statute are a certificate of certain form, containing statements signed by the incorporators, an acknowledgment thereof before some officer competent to take acknowledgments of deeds, and its filing with the secretary of state and the recorder of deeds in the county wherein is situated its principal place of business, it is not necessary that such certificate be executed within the limits of the state.-Humphreys Mooney, 5 Colo. 282. Under similar provision, held that a complaint showing that the articles of incorporation were V. signed by five persons and acknowl- action.-People v. Montecito Water Co. edged by four only, stated a cause of 97 Cal. 276, 32 Pac. 236. Section 2092. Prerequisites of Certain Corporations in Filing Articles: Each intended railroad, wagon road or telegraph corporation, before filing articles of incorporation, must have actually subscribed to its capital stock for each mile of the contemplated work, the following amount, to-wit: First. One thousand dollars per mile of railroads; Second. One hundred dollars per mile of telegraph lines; Third. 1887 R. S. Sec. 2582. Section 2093. Affidavit of Subscription Before Certificate Issues: Before the secretary of state or the recorder of the county issues to any such corporation a certificate of the filing of articles of incorporation, there must be filed in his office an affidavit of the president, secretary or treasurer named in the articles that the amount of the capital stock thereof required by law has been actually subscribed. 1887 R. S. Sec. 2583. BIRTH OF CORPORATION: A corporation dates from the time of filing its charter and it is not prerequisite that all of its capital stock should be subscribed for it to transact business. -Chicago K. W. R. Co. v. Putnam (Kan.), 12 Pac. 593. Section 2094. Articles, Where Filed, Certificate, Term: Upon filing the articles of incorporation in the office of the county recorder of the county in which the principal business of the company is to be transacted, and a copy thereof, certified by the county recorder, with the secretary of state, and filing the affidavit mentioned in the last section, when such affidavit is required, the secretary of state or such county recorder must issue to the corporation. over his official seal, a certificate that a copy of the articles, containing the required statement of facts, has been filed in his office and thereupon the persons executing the articles and their associates and successors shall be a body politic and corporate, by the name stated in the articles, and for the term of fifty years, unless it is in the articles of incorporoation otherwise stated, or by law otherwise specially provided. 1887 R. S. Sec. 2584. Where the articles of incorporation state one county to be the principal place of business and instead of being filed in that county as required by the statute, are filed in another county, the corporation does not become one de jure.-Martin v. Deetz, 102 Cal. 55, 36 Pac. 368. Section 2095. Copy of Articles as Evidence: A copy of any articles of incorporation filed in pursuance of this Title and certified by the secretary of state, or the recorder of the proper county, must be received in all courts and other places as prima facie evidence of the facts therein stated. 1887 R. S. Sec. 2585. A copy of the articles of incorporation filed in the office of the county clerk of the county in which the principal business of the company is con ducted as required by statute. is prima facie evidence of corporate existence.-Fresno Canal and Irrigation Co, v, Warner, 72 Cal, 379, 14 Pac. 37. Section 2096. Stockholders and Members Defined: The owners of shares in a corporation which has a capital stock, are called stockholders. If a corporation has no capital stock, the corporators and their successors are called members. 1887 R. S. Sec. 2586. Section 2097. Prerequisite of Holding Property in Any County: No corporation formed under the provisions of this Title, shall purchase, locate, or hold, property in any county of this state, without filing a certified copy of its articles of incorporation in the office of the county recorder of the county in which such property is situated, within sixty days after such purchase or location is made. Any corporation failing to comply with the provisions of this section, must not, while so in default, maintain or defend any action or proceeding in relation to such property. 1887 R. S. Sec. 2587. FOREIGN CORPORATIONS: In California, it is held that the section does not by its terms apply to or include foreign corporations, but applies only to domestic corporations, who have filed a copy of the articles of incorporation with the secretary of state of California.-South Yuba, etc., Min. Co. v. Rosa, 80 Cal. 333, 22 Pac. 222. PENALTY FOR NON-COMPLIANCE: Non-compliance with this requirement is a matter to be set up by defendant in an action for ejectment brought by the corporation for the property. A denial of the existence of the corporation does not raise the question.-Southern Pac. R. Co. V. McKoon Section 2098. By-Laws, When and How Adopted: Every corporation formed under this Title must, within one month after filing articles of incorporation, adopt a code of by-laws for its government not inconsistent with the laws of this state. The assent of stockholders representing a majority of all the subscribed capital stock, or a majority of the members, if there be no capital stock, is necessary to adopt by-laws. if they are adopted at a meeting called for that purpose; and if such meeting be called, two weeks' notice of the same by advertisement in some newspaper published in the county in which the principal place of business of the corporation is located, or, if none be published therein, then in a paper published at the capital of the state, must be given by order of the acting president. The written assent of the holders of two-thirds of the stock subscribed, or of two-thirds of the members, if there be no capital stock, shall be effectual to adopt a code of by-laws without a meeting for that purpose. 1887 R. S. Sec. 2588. TIME OF ADOPTION: A stockholder of a corporation is bound by its articles of incorporation and by its duly and regularly adopted by-laws whether he has signed them or not McFadden v. Board of Supervisors of Los Angeles Co. 74 Cal. 571, 16 Pac. 397, Under this section which provides for the adoption of by-laws after the organization of the corporation, a copy of the by-laws prepared and signed by the stockholders before organization is invalid.-Vercoutere V. Golden State Land Co. 116 Cal. 410, 48 Pac. 375. But if a course of action contrary to the GENERAL PROVISIONS by-laws is acquiesced in by the shareholders, the by-law is thereby waived and will not affect the rights of the persons dealing with the corporation in good faith, even though such persons may be shareholders, if they did not have actual notice of the by-law.-Underhill v. Santa Barbara, etc., Co. 93 Cal. 300, 28 Pac. 1049. 35 REPEAL: A by-law of a corpora tion is a creature of it, acting through and by its stockholders, and generally for their benefit alone and the same authority that enacted it may repeal it or waive its operation.-Underhill v. Santa Barbara, etc., Co. 93 Cal. 300, 28 ac. 1049. Section 2099. Directors, Election of: 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 the election, the election must be held on the first Tuesday in June. Notice of such election must be given, and the right to vote determined as prescribed in the last preceding section. 1887 R. S. Sec. 2589. Section 2100. By-Laws, for What May Provide: corporation may, by its by-laws, where no other provision is specially A made, provide, among other things: First. The time, place, and manner of calling and conducting its meetings; Second. The number of stockholders or members constituting a quorum; Third. The mode of voting by proxy; Fourth. The time of the annual elections of directors, and the mode and manner of giving notice thereof; Fifth. The duties and compensation of officers; Sixth. The manner of election, and the terms of office of all officers other than the directors; and Seventh. Suitable penalties for violation of by-laws, not exceeding, in any case, one hundred dollars for any one offense. 1887 R. S. Sec. 2590. TIME AND PLACE: Sufficient notice to stockholders is given by charter or by-law which fixes the time and place.-Morrill v. Little Falls Manufacturing Co. 53 Minn. 371, 20 L. R. A. 174, 55 N. W. 547. When there is no provision, see Sec. 2117. PROXIES: The regulation of a corporation that votes may be cast by proxy is a reasonable regulation, uniform in its application and works no wrong on any of the stockholders.Detwiler v. Commonwealth, 131 Pa. 614, 7 L. R. A. 357, 18 Atl. 990. made by the holder of stock while he A proxv was enjoined from voting it directly on the ground of public policy, cannot carry the right to vote it.-Clarke v. Central R. Co. 50 Fed. Rep. 338, 15 L. R. A. 683. This provision is construed as not intending to authorize a by-law forbidding all the stockholders from casting proxy votes.-People's Home Sav. Bank v. Superior Court, 104 Cal. 649, 38 Pac. 452. PROXY AGREEMENTS: A written agreement between purchasers stock that they will for five years "reof tain the power to vote the shares in one body and that the vote which shall be cast by said shares shall be determined by ballot between them or their survivors" is a proxy authorizing the vote of all the stock to be cast in accordance with the determination of the majority-Smith v. S. F. and N. P. R. Co. 115 Cal. 584, 47 Pac. 582, 35 L. R. A. 309. Section 2101. "Book of By-Laws," Public; Amendments—How Made: majority of the directors and the secretary of the corporation, and All by-laws adopted must be certified by a copied in a legible hand in some book kept in the principal office of the corporation in this state, to be known as the "Book of By-Laws," |