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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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certified copies thereof are required by law to be filed, a
certified copy of the decree of the court changing such name.

History: Enacted March 20, 1903, Stats, and Amdts. 1903, p.
256, in force March 20, 1903; amended April 16, 1909, Stats, and
Amdts. 1909, p. 973.

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



163



§ 301 CIVIL CODE. [Div.T,Pt.IV.

ARTICLE II.
BY-LAWS, DIRECTORS, ELECTORS, AND MEETINGS.

§ 301. By-laws — [Adoption of, when, how, and by whom].

§ 302. Directors, election of, etc. — [Notice].

§ 303. By-laws, for what may provide.

§ 304. By-laws recorded and how amended.

§ 305. Corporate powers and business exercised by board of
directors— Quorum.

§ 306. Election of directors and adoption of by-laws [repealed].

§ 307. Election of directors, how conducted — Cumulative voting
shall not be denied.

§ 308. Organization of board of directors, etc. — [Quorum].

§ 309. Dividends from surplus profits — Penalty for violation of
tliis section — Distribution of land, water, etc.

§ 310. Removal from office of directors, etc.

§ 311. Justice of peace may order meeting of corporation, when.

§ 312. Majority of stock must be represented at elections.

§ 312 [a]. [Same] — Corporations other than for profit.

§ 313. Stock, how represented.

§ 314. Election may be postponed.

§ 315. Complaints, quo warranto and proceedings tliereon,
regarding elections — [Notice].

§ 316. Damages for false entries, etc.

§ 317. Meeting by consent to be valid. [Written waiver.]

§ 318. Proceedings at meeting to be binding.

§ 319. Meetings, where held.

§ 320. When no provision in by-laws for regular meetings, spe-
cial meetings, how called — [Notice].

§ 321. Certain books to be open for inspection.

§ 321a. Cliange of principal place of business, procedure.

§ 321b. Stockholders' meeting, who may vote at — Proxies, void
when; maximum period of; revocable.

§301. BY-LAWS— [ADOPTION OF, WHEN, HOW, AND
BY WHOM]. 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 constitution and laws of this state. The assent of stock-
holders representing a majority of all the subscribed capital
stock, or of a majority of the members, if there be no capital
stock, is necessary to adopt by-laws, if they are adopted at a

164



h



Tit.I,ch.I,art.II.] ELECTIONS— NOTICE. § 302

meeting called for that purpose; and in the event of such
meeting being called, two weeks' notice of the same by adver-
tisement in some newspaper published in the county in which
the principal place of business of the corporation is located,
or if none is published therein, then in a paper published in
an adjoining county, must be given by order of the acting
president. The written assent of the holders of two-thirds
of the stock, 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.

History: Enacted March 21, 1872; amended March 30, 1874,
Code Amdts. 1873-4, pp. 200-201; amended by Code Commission,
Act March 16, 1901, Stats, and Amdts. 1900-1, p. 344^ held uncon-
stitutional; see history, § 4 ante.

See Kerr's Cyc. C. C. for 46 pars, annotation.

74 C. 571, 574, 16 P. 397, 398 (construed and applied); 109 C.
571, 588, 42 P. 225 (referred to with other sections); 116 C.
410, 414, 415, 48 P. 375, 376 (construed and applied); 117 C. 157,
162, 59 A. S. 162, 48 P. 1090, 37 L. 619 (construed and applied);
145 C. 696, 702, 79 P. 441 (restriction on adoption of by-laws).

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

As to power to adopt or make by-laws, see Kerr's Cyc. C. C.
§ 301, note pars. 37-42.

As to reasonableness and validity of municipal ordinances, see
16 A. D. 191-198; 34 A. D. 627-643; 35 A. R. 702-703; 69 A. S.
304; 32 N. T. 261 (Ann. Ed. N. Y. Rep.); 21 Encyc. L. 976-995.

As to what bj^-law may provide, see Kerr's Cyc. C. C. § 303
and note.

By-law — Distinguished from ordinance. — See Kerr's Cyc. C. C.
§ 301, note pars. 18-22.

§ 302. DIRECTORS, ELECTION OF, ETC. [NOTICE.] 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 one, unless
all of the stockholders waive such notice in writing.

Hi-story: Enacted March 21, 1872; amended by Code Commis-
sion, Act March 16, 1901, Stats, and Amdts. 1900-1, p. 345, act

165



§ 303 CIVIL CODE. [Div.I,Pt.IV.

held unconstitutional, see history, § 4 ante; amendment re-
enacted March 21, 1905, Stats, and Amdts. 1905, p. 557; amended
February 22, 1909, Stats, and Amdts. 1909, p. 48.

See Kerr's Cyc. C. C. for 6 pars, annotation.

93 C. 34, 36, 28 P. 792, 29 P. 51, 15 L. 106 (referred to with
other sections); 146 C. 219, 222, 79 P. 889 (construed with § 290).

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

As to validity, scope, effect, and construction of by-laws, see
Kerr's Cyc. C. G. § 304 note par. 2.

Mode of electing directors, and number of votes allowed each
stockholder. — See Kerr's Cyc. C. C. § 307 and note.

Postponing election. — See Kerr's Cyc. C. C. §§ 312. 314 and
notes.



§ 303. BY-LAWS, FOR WHAT MAY PROVIDE. A corpora-
tion may, bj^ its by-laws, where no otlier provision is spe-
cially made, provide for:

1. The time, place, and manner of calling and conducting
its meetings, and may dispense with notice of all regular
meetings of stockholders or directors.

2. The number of stockholders or members constituting a
quorum.

3. The mode of voting by proxy.

4. The qualifications and duties of directors, and also the
time of their annual election, and the mode and manner of
giving notice thereof.

5. The compensation and duties of officers.

6. The manner of election and tenure of office of all officers
other than the directors; and,

7. Suitable penalties for violations of by-laws, not exceed-
ing in any case one hundred dollars for any one offense.

8. The newspaper in which all notices of the meetings of
stockholders or board of directors, notice of which is required,
shall be published, which must be some newspaper published
in the county where the principal place of business of the
corporation is located, or if none is published therein, then
in a newspaper published in an adjoining county; provided,
that when the by-laws prescribe the newspaper in which
said publication shall be made, if from any cause at the time

166



Tit.I,ch.I,art.II.] BY-LAWS. § 303

any publication is desired to be made, the publication of such
newspaper shall have ceased, the board of directors may,
by an order entered on the records of the corporation, direct
the publication to be made in some other newspaper published
in the county, or if none is published therein, then in an
adjoining county.

History: Enacted March 21, 1872; amended March 30, 1874,
Code Amdts. 1873-4, p. 201; March 19, 1889, Stats, and Amdts.
1889, p. 365; amended by Code Commission, Act March 16, 1901,
Stats, and Amdts. 1900-1, p. 345, held unconstitutional; see his-
tory, § 4 ante.

See Kerr's Cyc. C. C. for 45 pars, annotation.

93 C. 34, 38, 39, 28 P. 792, 793, 29 P. 51, 15 L. 106 (construed
and applied to election of officers); 96 C. 73, 82, 30 P. 1024, 1026
(construed and applied to directors' meetings); 104 C. 649, 653,
654, 43 A. S. 147, 38 P. 452, 29 L. 844 (construed and applied to
voting- by proxy); 109 C. 571, 599, 42 P. 225, 226 (construed and
applied to vote by proxy); 121 C. 202, 208, 53 P. 634 (referred
to with other sections); 130 C. 345, 347, 80 A. S. 132, 62 P. 552
(referred to with other sections); 1 C. A. 189, 195, 196, 81 P.
1029 (power of corporation to enact by-laws).

As to adoption of by-laws, see Kerr's Cyc. C. C. § 301 and
note.

As to amendment of by-laws, see Kerr's Cyc. C. C. § 304 and
note.

As to by-laws of benevolent corporations, see Kerr's Cyc. C. C.
§ 599 and note.

As to lien of corporation on stock, see 11 A. D. 581; 40 A. S.
405; 43 A. S. 153; 57 A. S. 388, 25 L. 48.

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

As to mode of filling a vacancy in the board of directors, see
Kerr's Cyc. C. C. § 305 and note.

As to proxies, their form, provision, as to validity, and the
like, see 29 L. 844-849.

As to reasonableness of amendatory or repealing by-law, see
Kerr's Cyc. C. C. § 304 note par. 29.

As to recording by-laws, see Kerr's Cyc. C. C. § 304 and note.

As to repeal of by-laws, see Kerr's Cyc. C. C. § 304 and note.

As to right to provide for issuing' stock certificates prior to
their full payment, see Kerr's Cyc. C. C. § 323 and note.

As to right to provide for disposition of its own stock held
by the corporation, see Kerr's Cyc. C. C. § 344 and note.

As to validity, scope, effect, and construction of by-law, see
85 A. D. 617-622; 43 A. S. 152-158.

167



§ 304 CIVIL, CODE. [Div.I.Pt.IV.

As to voting by proxy, see Kerr's Cyc. C. C. § 312 and note.
Newspapers for purpose of publishing notice of meeting to
adopt by-laws, see Kerr's Cyc. C. C. § 301 and note.

§ 304. BY-LAWS KECOKDED AND HOW AMENDED. All

by-laws adopted must be [1] certified by a majority of the
directors and secretary of the corporation, and [2] copied in
a legible hand, in some book kept in the office of the corpora-
tion, to be known as the "book of by-laws," and [3] 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, [1] at the annual meeting, or [2] 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 ^tock, or by two-thirds of the members. The
written assent of the holders of two-thirds 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 addi-
tional bj^-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 herein-
before 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.

History: Enacted March 21, 1872; amended March 30, 1874,
Code Amdts. 1873-4, p. 201; March 14, 1885, Stats, and Amdts.
1885, pp. 130-131; amended by Code Commission, Act March 16,
1901, Stats, and Amdts. 1900-1, p. 345, held unconstitutional; see
history, § 4 ante; amendment re-enacted March 21, 1905, Stats.
and Amdts. 1905, p. 557.

168



Tit.I,cli.I,art.II.] CORPORATE POWERS. §305

See Kerr's Cyc. C. C. for 34 pars, annotation.

89 C. 52, 54, 26 P. 605 (referred to with other sections); (C.
March 24, 1900), 60 P. 776, 777 (referred to with other sections).

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

As to preferred stock, see Kerr's Cj'c. C. C. § 323 note pars. 4-9.



§305. CORPORATE POWERS AND BUSINESS EXER-
CISED BY BOARD OF DIRECTORS— QUORUJffi. The corpo-
rate 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 maiiagiug halls and buildings for the meetings
and accommodation of several lodges or societies of any
benevolent or charitable order or organization, and in connec-
tion therewith, the leasing of stores and offices in such build-
ing or buildings for other purposes, the corporate powers,
business, and property thereof may be conducted, exercised,
and controlled by a board [of] not less than three or more
than fifty directors, to be chosen from among the stockhold-
ers 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 per-
formed or act done is valid as against the corporation. When-
ever 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.

History: Enacted March 21, 1872; amended January 20, 1876,
Code Arndts. 1875-6, p. 71; March 15, 1901, Stats, and Amdts.
1900-1, pp. 308-309; amended by Code Commission, Act March 20,
1905, Stats, and Amdts. 1905, p. 503, by changing number of
directors from five to three (and negligently omitting an "of").

169



§§ 306, 307 CIVIL CODE. [Div.T,Pt.TV.

See Kerr's Cyc. C. C. for 17 pars, annotation.

78 C. 629, 632, 21 P. 373, 374 (referred to with other sections);
81 C. 231, 234, 22 P. 654 (referred to in discussion); 93 C. 34, 36,
39, 28 P. 792, 793, 29 P. 51, 15 L. 106 (referred to with other
sections); 94 C. 546, 549, 29 P. 1105, 1106 (construed and ap-
plied); 111 C. 114, 116, 43 P. 585 (construed and applied); 118
C. 131, 138, 50 P. 269 (referred to with other sections); 121 C.
202, 208, 53 P. 634 (construed and applied); 126 C. 413, 417, 58
P. 914 (construed and applied): 127 C. 261, 267. 269, 270, 59 P.
563 (construed and applied); 127 C. 630, 636, 637 (construed and
applied— erroneously cited as C. C. P.); 60 P. 424, 426 (cor-
rectly cited); 130 C. 345, 347, 349, 351, 80 A. S. 132, 62 P. 552,
553 (construed and applied); 132 C. 637, 652, 61 P. 791, 64 P. 1082,
52 L. 611 (construed and applied in dis. op.); 146 C. 219, 222, 79
P. 889 (what construction would set at naught many pro-
visions of the code); 45 F. 518, 526 (referred to with other sec-
tions).

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

Code Commission has needlessly bungled and confused by
introducing in a very disjointed shape the main provisions in
this section into par. 5, § 290 ante.

§306. ELECTION OF IHKECTOKS AM) ADOPTION OF
BY-LAWS (repealed).

History: Enacted March 21, 1872; amended March 30, 1874,
Code Amdts. 1873-4, p. 202; repealed March 19, 1889, Stats, and
Amdts. 1889, p. 365.

§ 307. ELECTIONS OF DIRECTORS, HOW CONDUCTED—
CUMULATIVE VOTING SHALL NOT BE DENIED. All elec-
tions must be by ballot, and every stockholder shall have the
right to vote in person or by proxy the number of shares
standing in his name, as provided in section three hundred
and twelve of this code, for as many persons as there are
directors to be elected, or to cumulate said shares and give
one candidate as many votes as the number of directors mul-
tiplied by the number of his shares of stock shall equal, or
to distribute them on the same principle among as many
candidates as he shall think fit. The provisions of this sec-
tion, so far as it relates to cumulative voting, shall apply to
all corporations and associations doing business in this state,
having a capital stock or shares of stock, and electing direc-

170



Tit.I,ch.I,art.II.] ORGANIZING BOARD. §308

tors by a meeting of stockholders held in this state, whether
such corporations or associations are organized under the
laws of this state or not, and no election for directors of any
corporation or association, doing business in this state, and
electing directors in this state, shall be valid, if the right of
a stockholder to cumulate his shares as herein provided shall
be denied.

In corporations having no capital stock, each member of
the corporation may cast as many votes for one director as
there are directors to be elected, or may distribute the same
among any or all the candidates. In any case the director
receiving the highest number of votes shall be declared
elected.

[Cumulative voting not applicable, when.] The provisions
of this section, so far as it relates to cumulative voting, shall
not apply to literary, religious, scientific, social or benevolent
societies, having no capital stock or shares unless it shall
be so provided in their by-laws or rules.

History: Enacted March 21, 1872; amended March 30, 1874,
Code Amdts. 1873-4, p. 202; Feb. 1, 1878, Code Amdts. 1877-8, p.
78; March 10, 1887, Stats, and Amdts. 1887, p. 95; March 20, 1903,
Stats, and Amdts. 1903, p. 253.

See Kerr's Cyc. C. C. for 14 pars, annotation.

93 C. 34, 36, 37, 28 P. 792, 29 P. 51, 15 L. 106 (construing- term
"election"); 103 C. 357, 363, 35 P. 1045, 37 P. 207 (construed and
applied); 109 C. 571, 589, 42 P. 225 (construed and applied), 597
(has no application to vote, under § 359, for creation of bonded
indebtedness); 115 C. 584, 590, 609 (construed with §312), 609
(construed in dissenting- opinion), 56 A. S. 119, 47 P. 582, 35 L.
309; 127 C. 681, 683, 60 P. 438 (construed with §312).

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

Voting trust. — See Kerr's Cyc. C. C. § 312 and note par. 16.

§308. ORGAMZATION OF BOARD OF DIRECTORS, etc.—
[QUORUM.] Immediately after their election, the directors
must organize by the election of a president, who must be
one of their number, a secretary, and treasurer. They must
perform the duties enjoined on them by law and the by-laws
of the corporation.

171



§ 309 CIVIL CODE. [Div.I.Pt.IV.

[Quorum.] A majority of the directors is a sufficient num-
ber to form a board for the transaction of business, and every
decision of a majority of the directors forming such board,
made when duly assembled, is valid as a corporate act.

History: Enacted March 21, 1872.

See Kerr's Cyc. C. C. for 12 pars, annotation.

78 C, 289, 292, 12 A. S. 53, 20 P. 677 (construed and applied):
78 C. 629, 632, 21 P. 373 (construed); 93 C. 34, 38 (construed).
39 (referred to with other sections), 28 P. 792, 793, 29 P. 51, 15
L. 106; 94 C. 546, 549, 29 P. 1105, 1106 (construed); 96 C. 73, 82,
30 P. 1024, 1026 (construed); 103 C. 357, 363, 35 P. 1045, 37 P.
207 (referred to with other sections); 121 C. 202, 208, 53 P. 634
(construed and applied to president); 127 C. 261, 267, 268, 59 P.
563 (construed and applied); 127 C. 630, 631, 637 (applied — erro-
neously cited as C. C. P. § 305, concerning the filling of vacan-
cies in board of directors), 60 P. 424, 426 (correct citation); 60
P. 776, 778, Cal., March 24, 1900 (construed and applied); 61 P.
791, 795, Cal., July 2, 1900 (vote essential to adoption of reso-
lution); 130 C. 345, 348, 349, 80 A. S. 132, 62 P. 552 (construction
of this section and §305, how limited); 131 C. 656, 659, 63 P.
1011 (referred to with other sections); 145 C. 352, 364, 104 A. S.
42, 78 P. 550 (president of corporation is necessarily a director
thereof); 45 F. 526.

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

Authority of officers. — See Kerr's Cyc. C. C. § 305 and note.

Quorum of directors. — See Kerr's Cyc. C. C. § 305 and note.

§309. DIVIDENDS FROM SURPLUS PROFITS— PEN-
ALTY FOR VIOLATION OF THIS SECTION— DISTRIBU-
TION OF LAND, WATER, ETC. The directors of corpora-
tions [1] must not make dividends, except from the surplus
profits arising from the business thereof; [2] nor must they
create any debts beyond their subscribed capital stock; [3]
nor must they divide, withdraw, or pay to the stockholders,
or any of them, any part of the capital stock, except as here-
inafter provided, [4] nor reduce or increase the capital stock,
except as herein specially provided.

For a Tiolatioii of the provisions of this section, the direc-
tors under whose administration the same may have hap-
pened (except those who may have caused their dissent there-
from to be entered at large on the minutes of the directors at

172



i Tit.I,ch.I,art.II.] dividends from surplus. § 309

the time, or were not present when the same did happen) are,
in their individual or private capacity, jointly and severally
liable to the corporation, and to the creditors thereof, to the
full amount of the capital stock so divided, withdrawn, paid
out, or reduced, or debt contracted; and no statute of limita-
tion is a bar to any suit against such directors for any sums
for which they are liable by this section;

[Land and water companies.] Provided, however, that
where a corporation has been heretofore or may hereafter be
formed for the purpose, among other things, of acquiring,
holding, and selling real estate, water, and water rights, the
directors of such corporation may, with the consent of stock-
holders representing two-thirds of the capital stock thereof,
given at a meeting called for that purpose, divide among,
the stockholders the land, water, or water rights so by such
corporation held, in the proportions to which their holdings
of such stock at the time of such division entitle them. All
conveyances made by the corporation in pursuance of this
section must be made and received subject to the debts of
such corporation existing at the date of the conveyance
thereof. Nothing herein prohibits a division and distribution
of the capital stock of any corporation which remains after
the payment of all its debts, upon its dissolution, or the expi-
ration of its term of existence.

History: Enacted March 21, 1872; amended March 31, 1891,
Stats, and Amdts. 1891, p. 468; amended by Code Commission,
Act March 16, 1901, Stats, and Amdts. 1900-1, p. 346, held uncon-
stitutional; see history, § 4 ante; re-enacted March 21, 1905,
Stats, and Amdts. 1905, p. 558.

See Kerr's Cyc. C. C. for 27 pars, annotation.

57 C. 594, 602 (referred to with other sections); 81 C. 378,
384, 387, 396, 397 (construed), 389 (referred to), 390 (construed
in dis. op.), 20 P. 401, 403, 22 P. 689. 693, 6 L. 520; 90 C. 131, 135,
136, 139, 140 (construed and applied to surplus), 141, 142 (ap-
plied to mines), 27 P. 44, 46; 93 C. 300, 309, 310, 311, 28 P. 1049,
1051 (construed and applied); 109 C. 571, 596, 42 P. 225 (con-
strued and applied); 116 C. 410, 415, 48 P. 375, 376 (construed
and applied); 51 P. 710, 714 (validity of bonds issued in viola-
tion of section), 723, 724, in opinion for reversal (proper use
of phrase, "subscribed capital stock"); 124 C. 147, 149, 71 A. S.

173



§ 310 CIVIL CODE. [Div.I.Pt.IV.

36, 56 P; 787, 788, 45 L. 863 (construed); 125 C. 407, 412, 58 P.
85 (construed with otlier sections); 127 C. 669, 674, 60 P. 439,
49 L. 647 (referred to with other sections); 135 C. 472, 482, 63 P.
1025, 67 P. 759 (construed and applied); 151 C. 118, 122, 90 P.
521 (corporation may make a sale to a stockholder); 152 C.
454, 462, 92 P. 1030 (application of section to the making of
dividends).

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

Definition of phrase "create debts," within moaning of tliis
section, is discussed, Kerr's Cyc. C. C. § 579 and note, also, 2
W. & P. 1708.

§310. REMOVAL FROM OFFICE OF DIRE( TORS, ETC.

The board of directors may be removed from office by a vote
of two-thirds of the members, or of stockholders holding two-
thirds of the capital stock, at a general meeting held after
previous notice of the time and place, and of the intention to
propose such removal. Meetings of stockholders for this pur-
pose may be called by the president, or by a majority of the
directors, or by members or stockholders holding at least one-
half of the votes. Such calls must be in writing, and
addressed to the secretary, who must thereupon give notice
of the time, place, and object of the meeting, and by whose



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