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The codes of California as amended and in force at the close of the thirty-eighth session of the Legislature, 1909 (Volume 2 Civil Code) online

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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

152



Tit.I,ch.I,art.I.] articles, etc. §290

any specified length 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. Corporations
formed for profit, pursuant to the provisions of this code,
may, by their articles of incorporation, provide for the classifi-
cation of their capital stock into preferred and common stock.
In the event that the articles of incorporation shall provide
for such classification the same must contain a statement of
the number of shares of stock to which preference is granted,
and the number of shares of stock to which no preference is
granted. The articles of incorporation shall also state, in
clear and succinct manner, the nature and extent of the
preference granted, and except as to the matters and things
so stated, no distinction shall exist between said classes of
stock or the owners thereof;

[Classes or stock — Distinctions.] Provided, however, that
no preference shall be granted nor shall any distinction be
made between the classes of stock either as to voting power
or as to the statutory or constitutional liability of the holders
thereof to the creditors of the corporation.

7. [Amount subscribed.] If there is a capital stock, the
amount actually subscribed, and by whom.

History: Enacted March 21, 1872; amended March 30, 1874,
Code Amdts. 1873-4, p. 199; April 1, 1876, Code Amdts. 1875-6, p.
70; April 16, 1880, Code Amdts. 1880 (C. C. pt.), p. 11; March 31,
1891, Stats, and Amdts. 1891, p. 285; March 20, 1905, Stats, and
Amdts. 1905, pp. 502-503; amended March 18, 1907, Stats, and
Amdts. 1907, p. 347, Kerr's Stats, and Amdts. 1906-7, p. 401.

See Kerr's Cyc. C. C. for 38 pars, annotation.

53 C. 123, 128 (applied to railroads); 64 C. 49, 52, 28 P. 495
(construed with §419 and applied to insurance companies);
65 C. 600, 601, 4 P. 641 (construed and applied); 89 C. 52, 54, 26
P. 605 (construed with other sections); 102 C. 55, 64, 41 A. S.
151, 36 P. 368 (construed and applied); 106 C. 302, 309, 39 P. 617
(giving history of section); 127 C. 261, 267, 268 (construed and
applied), 269 (construed with §305), 59 P. 563; 128 C. 257, 260
(construed), 261, 262 (applied to social corporations), 60 P. 865;
130 C. 27, 39, 62 P. 386 (referred to with other sections); 146
C. 219, 222, 79 P. 889 (subd. 5 of this section construed with
§ 302, as to exercise of powers by directors named in articles

153



§ 290a CIVIL CODE. [Div.I.Pt.IV.

of incorporation); 148 C. 313, 314, 328, 83 P. 54, 5 L. N. S. 174,
7 A. C. 511 (cited as to place of principal business); 2 C. A. 540,
542, 544, 84 P. 296 (cited, as to diminution of directors), 5 F.
403, 409 (articles of incorporation of railroad, telegraph, and
wagon-road associations must state what facts).

Amendment of 1874 did not require statement in articles of
number of shares subscribed, or by whom; but amendment of
1876 did (see People v. Leonard, 106 C. 302, 309, 39 P. 617); so
did amendments of 1880 and 1891. Code commissioner has need-
less'lj' bungled and confused by incorporating in paragraph 5
what is provided in better shape in § 305 post.

As to acknowledgment prerequisite to valid incorporation, see
Kerr's Cyc. C. C. § 292 and note.

Acknowledgment and verification are essential. — See 130 C.
27, 40, 62 P. 386.

As to articles of railroads, wagon-road, and telegraph com-
panies, see Kerr's Cyc. C. C. § 291 and note.

As to collateral attack, see 19 A. D. 67.

As to defective formation of corporations, see 33 A. S. 176-186.

As to many miscellaneous matters affecting corporations gen-
erally, see note § 283, ante.

Subscription, proper, requisite to a valid incorporation. — See
Kerr's Cyc. C. C. § 292 and note.

§290a. MINIMUM CAPITAL REQUIRED TO BE PAID IN.

Before the secretary of state issues any certificate of incor-
poration or certificate of authority to transact business in this
state, to any corporation, authorized in its articles of incor-
poration to act as executor, administrator, guardian, assignee,
receiver, depositary or trustee, there must be filed in his
office the affidavit of the persons named in said articles as the
first directors of the corporation, that at least two hundred
thousand dollars of the capital stock, has actually been sub-
scribed, and paid in to a person named in such affidavit, for
the benefit of the corporation and before he issues any certifi-
cate of incorporation, or certificate of authority to transact
business in this state, to any corporation, authorized in its
articles of incorporation to engage in the business of bank-
ing, or of receiving the money of others on deposit, there
must in like manner be filed the affidavit provided herein that
at least twenty-five thousand dollars of the capital stock, has
actually been subscribed, and paid in to a person named in
such affidavit, for the benefit of the corporation.

154



Tit.I,ch.I,art.I.] FURTHER FACTS. §§ 290y2, 291

History: Enacted March 21, 1907, Stats, and Amdts. 1907, p.
482, Kerr's Stats, and Amdts. 1906-7, p. 402; amended March 13,
1909, Stats, and Amdts. 1909, p. 300.

§ 2905^. "TEUST" AND "TEUSTEE," WHEN MAI BE
PAET OF COEPOEATE NAME. 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 arti-
cles of incorporation to act as executor, administrator, guard-
ian, 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 '
sixth, eighteen hundred and ninety-one, and the amendment
thereto approved April first, eighteen hundred and ninety-
seven.

History: Enacted March IS, 1905, Stats, and Amdts. 1905, p.
251.

§291. CEETAIN COEPOEATIONS TO STATE FUETHEE
FACTS IN AETICLES. 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.

History: Enacted March 21, 1872.

See Kerr's Cyc. C. C. for 3 pars, annotation.

53 C. 123, 128 (erroneously cited as §191); 142 C. 222, 227, 75
P. 575 (cited in discussion); 2 C. A. 546, 553, 555, 557, 84 P. 298
(applied as to power of corporation to condemn rights of way
for lines of road not stated in its articles); 5 F. 403, 409 (articles
of incorporation of railroad, telegraph, and wagon-road asso-
ciations must state what facts).

155



§§ 292, 293 CIVIL CODE. [Div.I.Pt.IV.

As to many miscellaneous matters affecting corporations gen-
erally, see note § 283, ante.

§ 292. HOW EXECUTED — [SlBSt RIPTION AND AC-
KN()>VLED(t!3IENT]. 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 acknowledg-
ments or conveyances of real property.

History: Enacted March 21, 1872; amended March 30, 1874,
Code Amdts. 1873-4, p. 199; March 20, 1905, Stats, and Amdts.
1905, p. 503.

See Kerr's Cyc. C. C. for 11 pars, annotation.

80 C. 348, 353, 22 P. 200 (miscited for §2927 post); 97 C. 276,
278, 280, 33 A. S. 172, 32 P. 236 (construed and applied); 128 C.
257, 260, 261, 263, 60 P. 865 (construed and applied to benevolent
and social organizations); 130 C. 27, 39, 62 P. 386 (construed
and applied to benevolent associations); 5 F. 403, 409 (articles
of incorporation of railroad, telegraph, and wagon-road asso-
ciations must state wliat facts).

As to many miscellaneous matters affecting corporations gen-
erally, see note § 283, ante.

§ 2»3. PREREQUISITE TO FILING ARTICLES— AMOUNTS
TO BE Sl^BSCRIBED TO BE FIXED. Each intended corpo-
ration named in section two hundred and ninety-one, 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.

History: Enacted March 21, 1872.

See Kerr's Cyc. C. C. for 2 pars, annotation.

2 C. A. 546, 550; 84 P. 298 (erroneously cited by court as re-
quiring affidavit); 5 F. 403, 409 (articles of incorporation of
railroad, telegraph, and wagon-road associations must state
what facts).

As to many miscellaneous matters affecting corporations gen-
erally, see note § 283, ante.

Amount subscribed and by whom must be fully set forth In

156



Tit.I,ch.I,art.I.] piling articles. §§ 294-296

articles of incorporation of railroads. — Monterey & S. V. R. Co.
vs. Hildreth, 53 Cal. 123, 128, 129.

See Kerr's Cyc. C. C. § 290 note pars. 26, 27.

§ 294. PREREQUISITE TO FILING ARTICLES OF IXCOR-
PORATIONS FOR PROFIT. Before the articles of incorpora-
tion of any corporation referred to in the preceding" section
are filed, there must be paid for the benefit of the corpora-
tion, to a treasurer elected by the subscribers, ten per cent
of the amount subscribed.

History: Enacted March 21, 1872.

See Kerr's Cyc. C. C. for 5 pars, annotation.

2 C. A. 546, 550; 84 P. 298 (erroneously cited by court as re-
quiring- afRdavit); 5 P. 403, 409 (articles of incorporation of
railroad, telegraph, and wagon-road associations must state ■
what facts).

As to many miscellaneous matters affecting corporations gen-
erally, see note § 283, ante.

§ 295. OATH OF OFFICER TO SUBSCRIPTION OF STOCK
AND PAYMENT OF TEN PER CENT. Before the secretary
of state 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 required amount of the capital
stock thereof has been actually subscribed, and ten per cent
thereof actually paid to a treasurer for the benefit of the
corporation.

Hi.story: Enacted March 21, 1872.

See Kerr's Cyc. C. C. for 3 pars, annotation.

2 C. A. 546, 550; 84 P. 298 (cited as to requirement of affi-
davit).

As to many miscellaneous matters affecting corporations gen-
erally, see note § 283, ante.

§296. ARTICLES OF INCORPORATION — CORPORATE
NAMES ]»IUST NOT BE DUPLICATED NOR CLOSELY IMI-
TATED. Upon filing [1] the articles of incorporation in the
office of the county clerk of the county in which the principal
business of the company is to be transacted, and [2] a copy

157



§ 297 CIVIL CODE. [Div.I,Pt.IV.

thereof certified by the county clerk with the secretary of
state, and [3] the affidavit mentioned in the last section where
such affidavit is required, the secretary of state must issue
to the corporation, over the great seal of the state, a certificate
that a copy of the articles containing the required statement
of facts has been filed in his office, and thereupon the persons
signing the articles and their associates and successors shall
be a body politic and corporate by the name stated in the
certificate, and for the term of fifty years, unless it is, in the
articles of incorporation, otherwise stated, or in this code
otherwise specially provided;

[When certificate not to issue — Keseinblauce in name.]
Provided, however, that the secretary of state shall not file
any copy of the copy of any articles, or issue any certificate
of incorporation to any corporation, which articles set forth
the corporate name of any corporation heretofore organized
in this state, or file any copy of any articles, or issue any
certificate of incorporation to any corporation existing at the
time of filing said articles, which articles set forth a name
so closely resembling the name of such corporation as will
tend to deceive.

History: Enacted March 21, 1872; amended March 30, 1874,
.Code Amdts. 1873-4, pp. 199-200; March 23, 1901, Stats, and
Amdts. 1900-1, p. 629. In effect March 23, 1901.

See Kerr's Cyc. C. C. for 11 pars, annotation.

72 C. 379, 382, 14 P. 37, 39 (referred to in construing §297);
93 C. 34, 39, 28 P. 792, 793, 15 L. R. A. 106 (referred to with
other sections); 102 C. 55, 62, 41 A. S. 151, 33 P. 368 (construed);
111 C. 133, 135, 136, 43 P. 525 (construed); 128 C. 257, 262, 60 P.
865 (construed with other sections); 130 C. 27, 38, 62 P. 386
(construed); 142 C. 276, 281, 100 A. S. 130, 75 P. 832 (referred to
in discussion); 146 C. 219, 222; 79 P. 889 (cited, as to how cor-
poration is brought into existence); 2 C. A. 546, 550; 84 P. 298
(cited as to necessity of certificate of secretary of state).

As to fees for filing, see Kerr's Pocket Pol. C, § 416.

As to many miscellaneous matters affecting corporations gen-
erally, see note § 283, ante.

§ 297. €Ori OF ARTICLES PRIMA FACIE EVIDENCE. A

copy of any articles of incorporation filed in pursuance of this

158



Tit.I,ch.I,art.I.] lost articles. §§ 297a, 298

chapter, and certified by the secretary of state, or by the
county clerk of the county where the original articles shall
have been filed, must be received in all the courts of this
state, and other places, as prima facie evidence of the facts
therein stated.

History: , Enacted March 21, 1S72; amended March 30, 1874,
Code Amdts. 1873-4, p. 200; March 8, 1895, Stats, and Amdts.
1895, p. 30. In effect March 8, 1895.

See Kerr's Cyc. C. C. for 7 pars, annotation.

67 C. 485, 488, 8 P. 22, 24 (construed and applied); 72 C. 379,
382, 14 P. 37, 38 (construed and applied); 2 C. A. 546, 555, 84 P.
298 (articles of incorporation as evidence).

As to many miscellaneous matters affecting corporations
generally, see note § 283, ante.

Company in good faith doing business as a corporation. — See.
Kerr's Cyc. C. C. §290 note pars. 33, 34; §358 and note.

§297a. RESTORATIOX OF LOST ORItllXAL ARTICLES
OF IIVCORPORATION. Whenever the articles of incorpora-
tion of any corporation have been, or may hereafter be,
destroyed by conflagration or other public calamity, a copy
of the certified copy of the articles of incorporation of such
corporation filed in the office of the secretary of state pursu-
ant to the provisions of section two hundred ninety-six of this
code, duly certified by such secretary of state, may be filed
in the office of the county clerk of the county where such
articles of incorporation were on file at the time of their loss
or destruction. Any such copy filed pursuant to this section
shall have the same force and effect as the document so lost
or destroyed.

History: Enacted June 16, 1906, Stats, and Amdts. 1906, p. 83,
Kerr's Stats, and Amdts. 1906-7, p. 403. In effect immediately.

§ 298. >VHO ARE MEMBERS AND WHO STOCKHOLDERS
OF A CORPORATION. The owners of shares in a corporation
which has a capital stock are called stockholders. If a cor-
poration has no capital stock, the corporators and their suc-
cessors are called members.

History: Enacted March 21, 1872.
159



§§299, 299[a] CIVIL CODE. [Div.I.Pt.IV.

See Kerr's Cyc. C. C. for 19 pars, annotation.

109 C. 571, 588, 590, 42 P. 225 (referred to with other sections);
115 C. 584, 593, 56 A. S. 119, 47 P. 582, 35 L. 309 (construed and
applied).

As to becoming stockholders by subscription, see 26 A. S. 658,
49 A. D. 604.

As to many miscellaneous matters affecting corporations gen-
erally, see note § 283, ante.

As to voting trust, see Kerr's Cyc. C. C. §§ 307, 312 and notes.

§299. WHEN MEMKEKS DIE SUCCESSORS TO BE
ELECTED (repealed).

History: Enacted March 21, 1872; repealed March 30, 1874,
Code Amdts. 1873-4, p. 200.

§299 [a]. COPIES OF ARTICLES MUST BE FILED IPf
EVERY COUNTY WHEREIN THE CORPORATION AC-
QUIRED PROPERTY, ETC. 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 secre-
tary 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 cori>oration fail-
ing to comply >vith the provisions of this section cannot

160



Tit.I,ch.I,art.I.] filing COPIES. §299 [a]

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 corpora-
tions 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 sec-
tion; 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.

History: Enacted April 3, 1876, Code Amdts. 1875-6, p. 71;-
amended March 23, 1878, Code Amdts. 1877-8, p. 76; April 23,
18.80, Code Amdts. 1880 (C. C. pt.), p. 13; amended by Code Com-
mission, Act March 16, 1901, Stats, and Amdts. 1900-1, p. 344,
held unconstitutional; see history, § 4 ante; amendment re-en-
acted March 21, 1905, Stats, and Amdts. 1905, pp. 556-557.

See Kerr's Cyc. C. C. for 21 pars, annotation.

67 C. 485, 487, 8 P. 22, 24 (certified copy of certified copy of
articles of incorporation as evidence); 73 C. 599, 601, 602, 15
P. 302, 303 (pleading', by defendant corporation, that articles
of incorporation have been filed, is unnecessary); 77 C. 69, 72,
18 P. 886, 888 (construed with § 2468 as to necessity of pleading-
that articles of incorporation have not been filed by plaintiff
corporation); 80 C. 68, 69, 71, 22 P. 66, 67 (complaint may state
a cause of action, though it fails to show that plaintiff corpo-
ration has complied with this section); 80 C. 333, 335, 336, 22 P.
222, 223 (failure by plaintiff corporation to coinply with section
must be specially pleaded in answer); 83 C. 12, 17, 23 P. 63, 64
(section does not apply to what religioiis corporations); 97 C.
270, 274, 32 P. 231 (objection that corporation has not filed copy
of its articles is waived if not objected to at trial); 108 C. 88,
90, 91, 40 P. 1061 (effect on corporation of its failure to comply
with this section); 111 C. 133, 135, 137, 138, 43 P. 525 (effect
of compliance, or non-compliance, with section); 120 C. 177, 178,
179, 180, 181, 52 P. 305 (failure to comply with section affects
actions by or against corporation, but does not forbid them
from acquiring property); 146 C. 644, 649, 651, 652, 80 P. 1080
(section is inapplicable to what corporate transaction); 147 C.
747, 753, 82 P. 426 (cited as making a distinction between the
commencement of an action and its maintenance) ; 148 C. 252,
Kerr's C. C. — 6 161



§ 300 CIVIL CODE. [Div.I.Pt.IV.

253, 82 P. 1049 (not applicable to corporation whose original
certificate of incorporation was filed prior to enactment of
section); 2 A. 546, 556; 84 P. 298 (cases arising under this sec-
tion distinguished. Provisions of section may be waived how).

As to compliance with requirements of statute, see Kerr's
Cyc. C. C. § 290 and note pars. 3-32.

As to many miscellaneous iriatters affecting corporations gen-
erally, see note § 283, ante.

§300. CAPITAL STOCK OF BA>KING} CORPORATIONS
— DIVIDENDS. Every corporation that has been or may be
created under the general laws of this state, doing a banking
business therein, and which has no capital stock, may elect
to have a capital stock, and may issue certificates of stock
therefor, in the same manner as corporations formed under
the provisions of chapter one, article one, of the civil code,
relating to the formation of corporations; provided, that no
such corporation shall use or convert any moneys or funds
theretofore belonging to it, or under its control, into capital
stock; but such funds or moneys must be held and managed
only for the purposes and in the manner for which they were
created. Before such change is made, a majority of the
members of such corporation present at a meeting called for
the purpose of considering the proposition whether it is
best to have a capital stock, its amount, and the number of
shares into which it shall be divided, must [1] vote in favor
of having a capital stock, [2] fix the amount thereof, and
[3] the number of shares into which it shall be divided.

Notice [a] of the time and place of holding such meeting,
and [b] its object, must be given by the president of such
corporation, by publication in some newspaper printed and
published in the county, or city and county, in which the
principal place of business of the corporation is situated, at
least once a week for three successive weeks prior to the
holding of the meeting.

A copy of the proceedings of this meeting, giving the num-
ber of persons present, the votes taken, the notice calling
the meeting, the proof of its publication, the amount of capi-
tal actually subscribed, and by whom, all duly certified by
the president and secretary of the corporation, must be filed

162



Tit.I,ch.I,art.I.] COPY OF DECREE. § 300a

in the offices of the secretary of state and clerk of the
county where the articles of incorporation are filed. There-
after such corporation is possessed of all the rights and
powers, and is subject to all the obligations, restrictions, and
limitations, as if it had been originally created with a capital
stock; and provided further, that no bank in this state shall
ever pay any dividend upon so-called guaranty notes, nor
upon any stock, except upon the amount actually paid in
money into said capital upon such stock, and any payment
made in violation of this provision shall render all officers
and directors consenting to the same jointly and severally
liable to the depositors to the extent thereof.

History: Enacted March 29, 1878, Code Amdts. 1877-8, pp.
77-78.

See Kerr's Cyc. C. C. for 3 pars, annotation.

56 C. 345, 349 (referred to); 74 C. 598, 600, 602, 16 P. 497, 499
(construed and applied).

As to many miscellaneous matters affecting corporations gen-
erally, see note § 283, ante.

§ 300a. COPY OF DECREE TO BE FILED WITH SECRE-
TARY OF STATE. Every corporation which has changed its
name under the provisions of sections one thousand two hun-
dred and seventy-five, one thousand two hundred and seventy-
six, one thousand two hundred and seventy-seven, one thou-
sand two hundred seventy-eight, and one thousand two hun-
dred and seventy-nine of the Code of Civil Procedure, must
file in the office of secretary of state and in the office of the
county clerk of each county in which the original articles or



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