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& 36. The failure to file a certificate of incorporation with the secretary of state can only be complained of by the state. Hyde v. Dve,* 4 Saw., 133.

$ 37. Acceptance of charter.– That a charter requires, as a condition precedent to its operation, a formal acceptance of its terms, implies that it is regarded as a binding contract when so accepted. New Jersey v. Yard, 5 Otto, 104.

$ 38. A charter is presumed to be accepted by those persons at whose instance it was granted, unless some act of acceptance is prescribed to be done to give validity or perfection to the act of incorporation. Newton v. Carbery, 5 Cr. C. C., 636.

$ 39. A private act of incorporation cannot affect the rights of individuals who do not assent to it; but such assent may be fairly presumed where rights have been protected and regulated under such act of incorporation. Persons participating in the benefits of a law cannot set up exemption from its penalties. Beaty v. Knowler, 4 Pet., 152 (85 862-866).

$ 40. Charter a public act.- The charter of a corporation, when re-enacted by a public act, becomes itself a public act. Bank of Alexandria v. Young, 1 Cr. C. C., 458.

S 41. Creation by special legislation.— A constitutional provision prohibiting the creation of corporations by special act is not infringed by a special act conferring new franchises on a corporation already existing. Southern Pac. R. Co. v. Orton, 6 Saw., 185. See $ 6.

$ 42. The giving of authority to change the line of its road to the Southern Pacific Railroad Company, a pre-existing corporation, by act of April 4, 1870, is not an act creating a new corporation. Even if it were, and were void for conflicting with a constitutional provision against creating companies by special legislation, the filing of amended articles of association pursuant to a general act passed March 1, 1870, in which the new line was shown, gave the company full authority to build its road thereon. Ibid.

S 43. The constitution of California, section 31 of article IV, provided that “Corporations may be formed under general laws, but shall not be created by special act except for municipal purposes.” The Southern Pacific Railroad Company was a corporation lawfully in exist

Held, that a subsequent special act of the legislature, consenting to its acceptance of a land grant from congress, and authorizing it to build a railway upon the line indicated in such grant, was not in contravention of the constitutional provision above quoted. Ibid.

§ 44. Articles to take effect on payment of fee.— A statute provided that “No act of incorporation hereafter granted for any other than for religious, literary, charitable or cemetery purposes, or for a military or fire company, shall take effect until the persons therein incorporated shall have paid to the general treasurer the sum of one hundred dollars, if the capital limited by such act of incorporation is the sum, or any less sum, than one hundred thousand dollars; and if the capital stock limited by such act of incorporation exceeds the sum of one hundred thousand dollars, one-tenth of one per cent. on the amount of the capital stock authorized by such act of incorporation. This act shall take effect immediately after the passage thereof. Provided, however, that nothing herein contained shall be construed to require any such payment before the taking effect of any bank charter, when provision is made for specific taxation upon the capital stock authorized by such act of incorporation.” A corporation known as the “Union Horse Shoe Works,” bringing suit in May, 1869, made the required payment after October, 1869. Held, that it was not a corporation at the commencement of the suit, such payment being a condition precedent to the existence of a business corporation. It is not even a corporation de facto. Union Horse Shoe Works v. Lewis,* 1 Abb., 518.

§ 45. Partners — Acts of, as a corporation.— Partners cannot erect themselves into a corporation without authority from the government; and the deed of one of them, made with the consent of the other, is binding, not as the deed of the corporation, but as that of the firm. Anthony v. Butler, 13 Pet., 434.

$ 46. Construction of charter.– Where an act contains something more than provisions to create a corporation and confer upon it franchises and grants, where it embodies both a charter and a compact, those provisions which bind the government to do something, which cast distinct obligations upon it, which carry it into the region of mercantile transactions, and make it take a financial part in the enterprise, are to be so construed as to carry out the liberal and just intent of the legislature. Union Pac. R. Co. v. United States, * 10 Ct. Cl., 548.

$ 47. Performance of conditions subsequent.- Where an act of incorporation contains conditions subsequent which the corporation is bound to perform, the corporation still continues to exist, after the failure to perform the conditions, until a judgment of ouster and dissolution. Davis v. Gray, 16 Wall., 222.

$ 48. A breach of a condition subsequent by a corporation is waived by a subsequent legislative act recognizing the existence of the corporation. Ibid.

$ 49. Judicial notice.- A private charter, declared to be a public act, need not be pleaded in order to secure judicial notice. Beaty v. Knowler, 4 Pet., 152 (SS 862-866).

$ 50. Creation by reference to an act.- An act creating a corporation and conferring upon it all the rights and advantages which in preceding portions of the act were conferred upon another corporation named, and further declaring that all the provisions, sections and clauses in the charter of the first company, not inconsistent with the particular provisions of the charter of the second company, should be fully extended to the president and directors of the latter corporation, is a sufficient charter for such company. It not unusual or objectionable to grant vast corporate powers in a short act by referring to and adopting provisions of other incorporating acts. Binghamton Bridge Case, 3 Wall., 78. See SS 1, 3, 4.

$ 51. Number of corporators.- An action of ejectment was brought by the heirs of Frost to recover a tract of land conveyed to the Frostburg Coal Company by Frost, on the ground that the company was not capable of taking and holding real estate, at the date of the deed, by reason of a failure to organize in conformity with the requirements of the charter. The first section of the charter incorporated “Meshock Frost, Isaiah Frost, Thomas McKaig, and William W. McKaig, and such other persons as may be associated with them,” as the Frostburg Coal Company. Held, that the words, “and such other persons as may be associated,” did not import that other persons must be associated with the four named, before the charter could take effect, or the company could take real estate by deed, especially as a subsequent section of the charter provided that, “until the first election of directors shall be held, the said " four persons named above “shall have full power and authority to exercise all the corporate powers of the said company." The true meaning of the words, “and such other persons as may be associated," was merely that a privilege was intended to be given the company of uniting other associates with the four in the enterprise, if they so elected. Frost v. Frostburg Coal Co., 24 How., 278.

$ 52. Second incorporation.- Where an incorporation took place under one act, but was abandoned, and a new incorporation made under a prior act, and all business was transacted by the company under such second incorporation, held, that the validity of the transactions must be determined by the prior act, even though the company did not formally disincorporate before being organized the second time, and although it organized for business before filing the certificate with the secretary of state. Hyde v. Doe,* 4 Saw., 133.

$ 53. Proof of corporate existence.-Under evidence showing that articles of incorporation were signed and acknowledged and filed in the office of the county clerk, but not filed in the office of the secretary of state; that the company took steps to consolidate itself with three other companies; that the consolidated company adopted a name and finally became itself consolidated with the Western Union Telegraph Company, held, that while more complete evidence of the corporate existence of the first company and of the transfer of its powers to the Western Union Telegraph Company might be required on final hearing, yet enough was shown to warrant a refusal to dissolve an injunction, when the result of such dissolution would be to compel the Western Union Telegraph Company to cease doing business over many hundred miles of telegraph wires, under rights claimed to have been acquired under the charter of the imperfectly organized company and transferred to it. Western Union Telezraph Co. v. Union Pac. R’y Co., 1 McC., 581 (SS 893–900).

$ 54. Corporations may have the same remedies at law or in equity as natural persons. If the defendant pleads the general issue in a suit brought by a corporation he admits the corporate existence of the plaintiff. Dental Vulcanite Co. v. Wetherbee, 2 Cliff., 555.

$ 55. A verbal variance between the name of the company as given in its charter and the name set forth in the declaration will not render the act of incorporation inadmissible as evidence. Turnbull v. Payson, 5 Otto, 418 (SS 172–178).

$ 56. Regularity of organization - Danial of corporate existence.- Where a section of a charter provides that a corporation shall be subject to all the restrictions imposed by a previous general act, regulative of corporations, by which it is provided that, when over fourfifths of the capital stock of the company shall become concentrated by purchase or otherwise in the hands of less than five persons, all the corporate powers and privileges shall cease and determine, and the stock of the corporation in question, at the time of its organization, was held by four named persons, upon whom all the corporate powers had been expressly conferred, it was held that such holding of the stock of the company by those persons named was not a violation of the above provision of the general act. That although one section of the charter subjected the company to the general act, yet that act was to be construell as applicable only when not inconsistent with the express provisions of the later charter, in which view the four-fifths' provision did not apply; and conceding even that it did apply, a private party could not take advantage of the forfeiture. And held, finally, that the defendants were made a corporation by the charter, the four persons named in it constituting a corporate body, clothed with the powers and privileges conferred upon it, and capable of taking and holuing real estate; that even if it were otherwise, and some irregularities occurred in the organization of the company, inasmuch as no act made a condition precedent to the existence of the corporation was omitted, or its non-performance shown, a party dealing with the company cannot set up the irregularity, the courts being bound to regard it as a corporation, so far as third persons are concerned, until it is dissolved by judicial proceedings on behalf of the government that created it. Frost v. Frostburg Coal Cs., 21 How., 278.

$ 57. A majority of the persons namel as corporators in the certificate filed in the office of the secretary of state published a notice that books would be opened on a designated day for su bscriptions to the stock of the company. Such books were accordingly opened, subscriptions to the capital stock were made, a meeting of shareholders ensued, and directors, president, vice-president, secretary and treasurer were chosen. Thereafter corporate meetings were regularly held, and the company built and operated a railroa l. Held, that it was a de facto if not a de jure corporation, and that its corporate existence or ability to contract could not be called in question in a suit brought upon evidences of debt given to it. Commissioners v. Bolles, 4 Otto, 105.

$ 59. Where a bank was duly organized under an act of a territorial legislature, but could not legally exercise its powers until the charter creating it was approved by congress, held, that it was, notwithstanding, a body corporate de facto, and a party making a sale of real estate to it was not in a position to question its capacity to take title, after it has paid the consideration for the purchase. Smith v. Sheeley, 12 Wall., 361.

$ 59. One who contracts with an acting corporation cannot defend himself against a claim on such contract, in a suit by the corporation, by alleging the irregularity of its organization. (Dutchess Collar Manuf'g Co. v. Davis, 14 Johns., 237; Sanger v. Upton, 91 U. S., 56; Upton v. Tribilcock, 91 U. S., 45; Buffalo, etc., R. Co. v. Cary, 25 N. Y., 75.) Chubb v. Upton,* 5 Otto, 665.

$ 60. The existence of a corporation is admitted by a plea of non assumpsit. Pullman v. Upton, 6 Otto, 323 (SS 500, 501).

$ 61. Where a corporation de facto acts under a law which gives power to do the act in question, a person dealing with it so as to recognize its existence is estopped from alleging any irregularity in its organization with a view of showing that such act is illegal. In re Comstock, 3 Saw., 218 (SS 1150-54).

$ 62. Where a railroad corporation has been a corporation de facto since the date of its organization, its corporate existence and its ability to contract cannot be called in question in a suit on evidences of debt given to it. Commissioners v. Bolles, 4 Otto, 104.

$ 63. An averment that a defendant corporation is duly chartered under the laws of a particular state can only be denied by plea in abatement to the jurisdiction. Blackburn v. Selma, etc., R. Co., 2 Flip., 525 (S$ 1179–86).

$ 64. Where papers having color of compliance with the statutes relating to the organization of companies have been filed with the proper state officers and meet their approval, but are in fact so defective as to be incapable of supporting the corporation as against the state, they are as against a subscriber to its capital stock held sufficient, and constitute a corporation de facto, if supported by proof of user. Where a company has attempted to increase its capital, and filed papers for that purpose, received subscriptions, and sold its capital stock under such increase, received payments thereon, and incurred large liability upon policies of insurance issued by it, bearing upon their face evidence of such increase of its capital stock, this was held sufficient to constitute the company a corporation de facto so that neither it nor its shareholders could object that it is not a corporation de jure. Upton v. Hansbrough,* 3 Biss., 417.

$ 63. Defects in proceedings to organize a corporation are cured by subsequent legislation recognizing and continuing its existence. Kanawha Coal Co. v. Kanawha & Ohio Coal Co., 7 Blatch., 406.

$ 66. A corporation, contracting as such, when sued on the contract is estopped to deny its corporate existence or the regularity of its organization. Blackburn v. Selma, etc., R. Co., 2 Flip., 525 (SS 1179–86).

$ 67. Estoppel to deny corporate existence applies in favor of jurisdiction as well as in favor of a contract sued upon. Ibid.

$ 6S. Expiration of charter.— The expiration of the charter of a corporation by its own limitation abates all suits then pending having been brought in the name of the corporation, Bank of United States v. McLaughlin, 2 Cr. C. C., 20.

$ 69. The expiration of the time fixed by the charter for constructing a railroad does not end a company's existence. Branch 1. Jesup, 16 Otto, 468 ($$ 1580-86).

$ 70. Under the charter of a bank which authorizes “the use of the corporate name, style and capacity for the purpose of suits, for the final settlement and liquidation of the affairs and accounts of the corporation, and for the sale of their estate, real, personal and mixed; but not for any other purpose or in any other manner whatsoever, nor for a period exceeding two years after the expiration of said term of incorporation,” a note given after the expiration of the term of incorporation, to the agent of the bank, in renewal of one given before that date, is not void. Smith v. Frye, 5 Cr. C. C., 515.

$ 71. Members bound by acts of majority.— All members of a company are bound by the acts of the majority so far as those acts do not impair contract or vested rights. Korn 2. Mutual Assurance Society, 6 Cr., 199.

$ 72. Obligation of a member, how divested.- No member of a corporation can divest himself of bis obligations as such except in the method prescribed by the rules and constitution of such corporation. Ibid.

$ 73. Vincennes University.-In October, 1806, the secretary of the treasury, in conformity with an act of congress, in 1804, located a certain township in the Vincennes district for the use of a seminary of learning. In November, 1806, the territorial government of Indiana incorporated the Vincennes University by the name of “The Board of Trustees of the Vincennes University.” Held, (1) That the grant of 1804 attached to the board, although they were not named in the act, and had no corporate existence for two years afterward. (2) That, under the ordinance of 1787, by virtue of an act of congress, the territorial government of Indiana had power to incorporate the university. (3) That the act of congress admitting Indiana into the Union did not vest the said township in the state legislature. (4) That there was nothing in the trust confided to the board which, by construction, could make it a public corporation. Vincennes University v. Indiana, 14 How., 263.

II. SUBSCRIPTIONS AND STOCK.

SUMMARY Increasing capital stock, SS 74–77.— Irregularities; stockholder estopped, S 78.

Subscriptions and stock a trust, $$ 79–82. Liability for debts, SS 83–85.— Proof that a person is a stockholder, SS 86, 87. — Certificate of stock not necessary, $ 88.– Conditional subscription, $ 89. Estoppel to object to transfer of charter, S 90.- Released by alteration of charter, $$ 91, 92. - Cannot set up ignorance of terms of charter, S 93. – Assessment, & 94. – Forfeiture for non-payment, $ 95.- Subscriptions procured by fraud, $$ 96-105.— Nonassessable stock, ss 106–112. — Stock issued in excess of amount authorized, § 113.- Issue at less than par value, $5 114, 116–119, 120, 123, 124, 126.— Sale on execution; liability of purchaser, $ 115. — Subscription necessary to creation of stock, SS 119, 121.- Power to sell capital stock, $ 122.- Set-off against subscription, $3 125, 129, 132. — Accepting property

in payment, șs 127, 128, 133.— No liability on void stock, Ss 130, 131. $ 74. A change so organic and fundamental as that of increasing the capital stock of a corporation beyond the limit tixed by the charter cannot be made by the directors alone unless expressly authorized thereto. 'Railway Co. v. Allerton, S 134. See § 291.

$ 75. The directors and stockholders of a corporation instituted proceedings to increase its capital, and a subscription agreement was prepared and executed in furtherance of that object. These proceedings were in contravention of the statute under which the company was organized. The plaintiff, a shareholder and trustee of the company, participated actively in these proceedings, and subscribed for some of the stock under an agreement that he should pay for the new shares in instalments as called for by the directors, and upon failure to pay any call for sixty days should forfeit the sums he had paid upon the subscriptions. He paid $13,950 upon the first call under the subscription, but failed to respond to subsequent calls for more than sixty days, and a resolution was passed by the directors forfeiting his rights for delinquency. Before, however, any scrip was issued for the new stock, and while the proceedings were inchoate, the stockholders resolved to abandon the project to increase the stock, and adjusted with parties who held receipts for payments under the subscriptions, and whose rights had not been forfeited, by giving them the bonds of the company issued for that purpose. No bonds being tendered to plaintiff he sued for repayment of the money paid upon his subscription. Held, that, the whole project being illegal, a recovery could be had of the money paid, the contract not being executed. In such a case there is a locus poenitentiæ, the delictum iz incomplete, and the contract may be rescinded by either party. Knowlton v. Congress & Empire Spring Co., SS 135, 136.

$ 76. Where a company had a capital stock of $100,000, which the law authorized to be doubled, and it was increased to $200,000, and subsequently, by doubling a second time, increased to $100,000, held, that the second increase was ultra vires and void.

Scovill v. Thayer, $$ 158–166.

$ 77. Where the charter of a corporation authorizes its capital stock to be increased to a given sum at the discretion of stockholders, a subscriber is not released by subsequent statutes authorizing the increase of stock at the discretion of the board of directors. Payson v. Withers, SS 215-219.

$ 78. A stockholder who has drawn his dividends and enjoyed all his advantages as a shareholder is estopped from repudiating his contract for subscriptions on the ground of irregularity in the issue of the capital stock. Ibid.

$ 79. Unpaid subscriptions are a trust fund for corporate creditors. Sawyer v. Hoag, SS 150–156.

$ 80. The trust in favor of creditors, of unpaid subscriptions of stock, cannot be defeated save by actual payment. Ibid.

S 81. The capital stock of an insurance or other corporation, including the portion unpaid, is a trust fund for creditors of such corporation. Ogilvie v. Knox Ins. Co., SS 189–191.

& 82. As respects creditors the stockholders are special partners incorporated to carry on the business of the company, and the stock subscribed and secured by the several stockholders or partners constitutes the capital or funds publicly pledged to all who deal with them, and stockholders are debtors to the company for their unpaid stock. Upton v. Englehart, $3 197–209.

& 83. If a person becomes a partner in a joint stock company already formed, with assets and liabilities, and has a full knowledge thereof, such person is as responsible for the debts of the company as those who were originally parties to the articles of association. National Park Bank v. Nichols, SS 210-214.

$ 84. Persons who become partners in a joint stock company and reap the benefit of an advance of money to it are estopped from asserting that they are not liable to contribute to the repayment of such advances. Ibid.

$ 85. Persons sued as members of a joint stock association are liable as partners for all the debts of the company. Ibid.

§ 86. Books of a corporation in which the name of a person is entered as the owner of shares; a stock book of the company with a duplicate of the stock certificate issued to such person, showing that he was the owner of such shares of the capital stock; testimony to show that the certificate of stock was sent to agents of the company to be delivered to such person when he paid twenty per cent. of such shares, and that he made the required payment, and a receipt signed by such person, showing that the company had paid him a dividend upon his stock,- held, sufficient proof to establish the fact that such person was a stockholder, as alleged. Turnbull v. Payson, SS 172-178.

S 87. Where a person is approached by an agent of a company to secure him as a subscriber, concludes to become one, and signs a paper acknowledging the receipt of ten shares of its stock, and agreeing to pay $200, or ten per cent. of its par value to the company, which agreement is accepted by the company, and his name entered on its books as a stockholder, held, that he is a stockholder, and liable as such. Hawley v. Upton, ss 179–181.

$ 88. The issuance of a certificate of stock is not essential to validate a subscription, so far as creditors are concerned. Ibid.

& 89. Where subscribers to the capital stock of a corporation subscribed upon condition * that in case the city of New Albany should afterwards take a certain quantity of the stock, they, being residents in said city, should have the privilege of transferring a specified portion of their subscription to it, held, that this was a valid agreement, and that when the city agreed to subscribe its amount, these subscribers could transfer their stock to it, and they would be released from liability as shareholders upon doing so. Burke v. Smith, SS 182–186.

$ 90. Although the transfer of a charter by directors be unauthorized and void, yet if it be shown that certain shareholders, objecting thereto, acted as stockholders subsequently in meetings held under the reorganization or new management, that some of them held office, purchased of an increase of stock, and participated in various ways in the business of the company, or remained silent, allowing the proceedings to go forward and the scheme to be foisted upon the public without objection, permitting the reorganized company to be held out as authorized to issue insurance policies, increase its capital, and deal with the public, such acts or silence amount to a ratification of the transfer of the charter and the reorganization of the company, which they are estopped from denying; and also from denying the validity of the reorganization, including the validity of a new issue of stock. Upton v. Jackson, SS 137–141.

$ 91. Where a charitable corporation is created in one state with visitorial powers vested in like associations in other states, which associations were to contribute funds to the corporation, a material alteration in its charter, abridging the visitorial powers of the associations, absolves them from their obligation to contribute funds; and this without reference to the general doctrine as to the control of a court of chancery over charities. Printing House v. Trustees, Ss 187, 188.

$ $2. Where the charter of a corporation declares that a certain notice shall be given of the election of officers to each stockholder by public advertisement or by personal notice, that such election shall be by ballot by a majority of the stockholders, allowing one vote for every

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