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cannot evade liability for failure to post monthly reports at the office of the company by failure to have an office for the transaction of its business. (Chapman v. Doray, 89 Cal. 52, 26 Pac. 605.)
Articles of incorporation must be filed in county of principal place of business named therein, and the filing of such articles in another county is not sufficient to make the intended corporation a corporation de jure. (Martin v. Deetz, 102 Cal. 55, 41 Am. St. Rep. 151, 36 Pac. 368.)
At the place named in the "articles" is the office of the corporation; its records are to be kept there; there are held the meetings of its directors and stockholders; from thence eminate directions for the conduct of its affairs. (Thomas v. Placerville etc. Min.
Co., 65 Cal. 600, 4 Pac. 641.)
The omission to state the place where its principal business is to be transacted is fatal, but the failure to describe the place of business of the corporation as the "principal place of business" is a mere technical error. (Ex parte S. V. W. W., 17 Cal. 132. To same effect generally: S. V. W. W. v. San Francisco, 22 Cal. 441; People v. Stockton etc. R. R., 45 Cal. 313, 13 Am. Rep. 178; People v. Montecito W. Co., 97 Cal. 278, 33 Am. St. Rep. 174, 32 Pac. 236. Note citation: 19 Am. Dec. 67.)
A corporation may have its principal place of business in one county and carry on its business operations in other counties. (Harris v. McGregor, 29 Cal. 124. To same effect: Thomas v. Placerville etc. Min. Co., 65 Cal. 600, 4 Pac. 641. Cited: Creditors v. Consumers' Co., 98 Cal. 319, 33 Pac. 196.)
Residence of Corporation-Domestic.-The holding in California etc. Co. v. S. P. R. R., 65 Cal. 409, 4 Pac. 344, that the residence of a corporation is not its principal place of business was overruled in Buck v. Eureka, 97 Cal. 139, 31 Pac. 845, where the court holds: "It is settled law in this state that a domestic trading corporation, within the meaning of this statute, resides in the county where it has its principal place of business. This was first decided in 1863, in the case of Jenkins v. California Stage Co., 22 Cal. 537, and remained unquestioned at the time our present Code of Procedure was adopted. It must therefore be assumed that the legislature, in adopting section 395, intended it to apply to corporations. One of the departments of this court, it is true, did criticise the doctrine of Jenkins v. California Stage Co., 22 Cal. 537, in two cases decided here in 1884, and seems to have intended to overrule it. (California Southern R. R. Co. v. Southern Pacific R. R. Co., 65 Cal. 394, 409, 4 Pac. 344.) In another case reported in the same volume (page 601), the other department also seemed to doubt the correctness of the decision in Jenkins v. California Stage Co., 22 Cal. 537 (Thomas v. Placerville etc. Min. Co., 65 Cal. 600, 4 Pac. 641). But in a later case, decided by the court in Bank, the doctrine of Jenkins v. California Stage Co., 22 Cal. 537, was distinctly reaffirmed,
as we think it ought to have been, and the question must be considered closed. (Cohn v. C. P. R. R., 71 Cal. 488, 12 Pac. 498.)"' In Jenkins v. California Stage Co., 22 Cal. 537, it is held: "The modern decisions very generally concur in giving corporations a local existence, like persons, and hold them to be properly included within the terms 'citizens,' 'inhabitants,' 'residents,' and the like. (Louisville R. R. Co. v. Letson, 2 How. (U. S.) 497; Angell and Ames on Corporations, 6, 265, 404-407, 440.) Every corporation has some locality where its principal office or place of business is established, and it may very properly be said to 'reside' at such locality." (Affirmed: Buck v. Eureka, 97 Cal. 139, 31 Pac. 845; Fresno Bank v. Superior Court, 83 Cal. 497, 24 Pac. 157; McSherry v. Pennsylvania etc. Co., 97 Cal. 643, 32 Pac. 711. Overruled: Cal. Southern Co. v. S. P. R. R., Distinguished: Thomas v. Placerville etc. 641. Citations: Creditors' & Consumers' L. Co., 98 Cal. 319, 33 Pac. 196; Trezevant v. Strong Co., 102 Cal. 48, 36 Pac. 395; Tobin v. Chester Co., 47 S. C. 389, 58 Am. St. Rep. 891, 25 S. E. 283. Note citation: 33 Am. Dec. 399.)
65 Cal. 394, 4 Pac. 344. Co., 65 Cal. 600, 4 Pac.
See section 16, Art. XII, Const., ante, for place of trial.
Foreign. As domestic corporations do not reside in a foreign country, within the meaning of section 395 of the Code of Civil Procedure, so foreign corporations do not reside in this state, within the meaning of the same section. A foreign corporation may be sued here, not because it resides here, but because it has chosen to do business here. No statute of the state has given a residence in this state to any foreign corporation. (Thomas v. Placerville etc. Co., 65 Cal. 600, 4 Pac. 641. Note citations: 74 Am. Dec. 242; 22 Am. St. Rep. 24.)
4. Term of Existence.-Held in Colorado that a statement in the articles of incorporation of a term of existence greater than that limited by law is not fatal to incorporation. (People v. Cheeseman, 2 West. Coast Rep. 270. See sec. 354, subd. 1, C. C., and notes.) Homestead corporations, ten years. (Sec. 557, C. C.) Continuance of existence under code. (Sec. 287, C. C., and notes.) 5. Designation of Number of Directors.-All the provisions of the statute mean this, and nothing more, that each corporation must have a fixed and definite number of directors of whom a majority shall constitute a quorum for the transaction of business. Held, accordingly, that corporate business may be transacted by remaining members of the board during vacancy therein, even when the remaining number is less than the minimum named in this section. (Porter v. Lassen etc. Co., 127 Cal. 261, 59 Pac. 563.)
Directors to be stockholders: Sec. 305, C. C., post.
6. Amount of Stock and Number of Shares.-By capital stock is meant the capital of the corporation on which it transacts business,
whether such capital consists of money, property, or other valuable commodities. (Martin v. Zellerbach, 38 Cal. 300, 99 Am. Dec. 365. To same effect: S. F. v. S. V. W. W., 63 Cal. 531; Kohl v. Lilienthal, 81 Cal. 385, 20 Pac. 401, 22 Pac. 689.)
7. Amount Actually Subscribed. It is plain that the amounts subscribed, and by whom, must be fully set forth in the articles of incorporation. The requirement of the code is absolute and peremptory. Only those are bound as subscribers who are named in the articles as such, and to the amounts therein mentioned. (M. & S. V. R. R. v. Hildreth, 53 Cal. 128. Cited in San Joaquin etc. Water Co. v. Beecher, 101 Cal. 79, 35 Pac. 349; Marysville etc. Co. v. Johnson, 109 Cal. 195, 50 Am. St. Rep. 35, 41 Pac. 1016; Marysville etc. Co. v. Johnson, 93 Cal. 551, 27 Am. St. Rep. 221, 29 Pac. 126. Note citations: 43 Am. Dec. 697; 81 Am. Dec. 395.)
A failure to state the amount actually subscribed, and by whom, defeats the attempted incorporation. (People v. Flint, 64 Cal. 52, 28 Pac. 495.)
Articles of incorporation which omit to state the amount of stock subscribed, and by whom, are not admissible in evidence to prove existence of a corporation de jure, but may be received as preliminary to proof of existence of de facto corporation. (People v. Leonard, 106 Cal. 302, 39 Pac. 617.)
CERTAIN CORPORATIONS TO STATE FURTHER FACTS IN ARTICLES.
Sec. 291, C. C. The articles of incorporation of any railroad, wagon road, or telegraph organization must also state: 1. The kind of road or telegraph intended to be constructed; 2. The place from and to which it is intended to be run, and all the intermediate branches;
3. The estimated length of the road or telegraph line;
4. That at least ten per cent of the capital stock subscribed has been paid in to the treasurer of the intended corporation. En. March 21, 1872.
Statements in the articles of incorporation as to route and termini were required by section 2 of the railroad incorporation act of 1861 (Stats. 1861, p. 607), by section 1 of the wagon road companies' act of 1853 (Stats. 1853, p. 114), and by section 147 of the aet concerning corporations (telegraph companies) of 1850 (Stats. 1850, p. 347),
For prerequisites to the filing of the articles of incorporation of
the corporations mentioned in this section, see sections 293, 294, 295, of the Civil Code.
Substantial Compliance.-While a total failure to comply with the provisions of this section will defeat incorporation of the corporations referred to therein, errors in matters of detail will not. A substantial compliance is all that is required. (See note to sec. 285, C. C., supra.)
FIVE CORPORATORS, THREE TO BE CITIZENS OF THE STATE, TO SIGN ARTICLES AND ACKNOWLEDGE THE SAME.
Sec. 292, C. C. The articles of incorporation must be subscribed by five 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 of conveyances of real property. En. March 21, 1872. Amd. 1873-74,
The original section, March 21, 1872, had the word "three" instead of the word "majority," and the word "grants" instead of the word "conveyances." (See legislative history under section
285, C. C., supra.)
Hall v. Arnott, 80 Cal. 353, 22 Pac. 250; People v. Montecito Water Co., 97 Cal. 278-280, 33 Am. St. Rep. 172, 32 Pac. 236; People v. G. G. Lodge, 128 Cal. 257, 60 Pac. 865; Wall v. Mines, 130 Cal. 39, 62 Pac. 386.
Compliance With This Section Essential.-The right to be a corporation is in itself a franchise; and to acquire a franchise under a general law, the prescribed statutory conditions must be complied with. (People v. Selfridge, 52 Cal. 331.)
A failure to comply with all the terms of this section may be cured by subsequent legislation. (Larrabee v. Baldwin, 35 Cal. 155.) The certificate so acknowledged secures the state and all concerned against the possibility of any fictitious names being subscribed to the articles, and furnishes proof of the genuineness of the signatures. It is a condition precedent to a valid incorporation, and a failure to do so renders the articles fatally defective as against the state. (People v. Montecito Water Co., 97 Cal. 276, 33 Am. St. Rep. 172, 176, 32 Pac. 236.)
An acknowledgment by any number of subscribers less than five is equally fatal in a direct attack by the state.
The requirements of this section are not inconsistent with sections 290, 593, and 594 of the Civil Code, and this section must be read as requiring articles of benevolent or social associations organized withcut profit under sections 593 and 594 of said code, to be subscribed and acknowledged by at least five persons in accordance with this section, in addition to the verification required by section 594. (People v. G. G. Lodge, 128 Cal. 257, 60 Pac. 865.)
In order to constitute a corporation de jure, the articles of incorporation must be verified as required by section 292, Civil Code. The provisions of the section are mandatory, and there can be no sufficient verification otherwise than as provided by that section. (Wall v. Mines, 130 Cal. 27, 62 Pac. 386.)
But it is not necessary to the validity of a corporation, or to the subscribers becoming stockholders therein, that all the subscribers who agreed to its formation should sign the articles of incorporation. (San Joaquin etc. Co. v. Beecher, 101 Cal. 70, 35 Pac. 349.) It appears, however, that a de facto corporation may be created notwithstanding defective acknowledgments of articles. (People v. Montecito Water Co., 97 Cal. 280, 33 Am. St. Rep. 172, 32 Pac. 236.)
PREREQUISITE TO FILING ARTICLES-AMOUNTS TO BE SUBSCRIBED TO BE FIXED.
Sec. 293, C. C. Each intended corporation named in section. 291, before filing articles of incorporation, must have actually subscribed to its capital stock, for each mile of the contemplated work, the following amounts, to wit:
1. One thousand dollars per mile of railroads;
2. One hundred dollars per mile of telegraph lines;
3. Three hundred dollars per mile of wagon roads. En. March 21, 1872.
The same requirement for railroad corporations is found in section one of the railroad act of 1861 (Stats. 1861, p. 607), post, Appendix, and for wagon-road companies, in section two of the wagonroad act of 1853 (Stats. 1853, p. 114), post, Appendix.
M. & S. V. R. R. Co. v. Hildreth, 53 Cal. 128.