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589, 29 A. S. 158, 27 P. 674, 675, 30 P. 776 (construed and ap-
plied); 97 C. 93, 95, 33 A. S. 163, 31 P. 846, 847 (construed and
applied); 32 P. 756, 758 (stockholder's individual liability, under
the California statute, may be enforced by a common-law ac-
•tion in the courts of Oregon, when); 99 C. 89, 92, 37 A. S. 32,
33 P. 737 (construed and applied); 107 C. 378, 381, 40 P. 495
(construed); 107 C. 446, 447, 48 A. S. 145, 40 P. 557 (construed
and applied); 108 C. 1, 4, 5, 40 P. 1077 (construed and applied):
109 C. 571, 588, 42 P. 225 (referred to); 111 C. 57, 63 (referred
to), 66 (construed and applied), 52 A. S. 149, 43 P. 418; 113 C.
21, 25, 45 P. 12 (referred to); 115 C. 380, 381, 47 P. 108 (construed
and applied); 115 C. 584, 594, 56 A. S. 119, 47 P. 582, 35 L. 309
(referred to with other sections); 116 C. 382, 384, 48 P. 322
(quoted); 118 C. 274, 276, 50 P. 430 (construed and applied);
122 C. 669, 672, 673, 674, 55 P. 689, 691 (construed and applied);
124 C. 147, 150, 71 A. S. 36, 56 P. 787, 45 L. 863 (construed and
applied); 125 C. 6, 8, 73 A. S. 17, 57 P. 664 (construed and ap-
plied); 125 C. 407, 412, 58 P. 85 (construed); 127 C. 72, 82, 59
P. 319 (construed); 127 C. 669, 675, 60 P. 439, 49 L. 647 (con-
strued and applied); 130 C. 272, 274, 62 P. 510 (applied); 133 C.
506, 507, 65 P. 1039 (applied); 136 C. 510, 513, 69 P. 257 (ap-
plied); 140 C. 103, 104, 105-107, 98 A. S. 17, 73 P. 734 (construed
and applied to pledgees); 141 C. 221, 227, 74 P. 754 (applied to

186



«



Tit.I,ch.II,art.I.] certificates. § 323

expenses of water system); 142 C. 383, 384, 77 P. 939 (stock-
holder's individual liability is created by the constitution); 145
C. 696, 710, 79 P. 441 (what payments to creditors cannot be
considered as payments made upon capital stock); 147 C. 571,
575, 82 P. 248 (construed, who is liable as a stockholder, where
his name appears on the books as such); 2 C. A. 122, 131 (case
f distinguishable from that of statutory liability of stockholder),
134, 138, 139 (creditor's right to maintain action, both at law
and in equity), 83 P. 62, 2 C. A. 445, 447, 84 P. 329 (section deals
with what liability only); 4 C. A. 291, 293, 87 P. 630 (complaint
against stockholders is fatally defective when) ; 4 C. A. 690,
693, 88 P. 1098 (section has no application to action by corpo-
ration to recover assessments); 5 F. 403, 410, 412 (cited as to
limit of liability of stockholders — erroneously cited as C. C. P.);
37 F. 394, 404, 405 (construed with other sections, and with
§ 36 of the old constitution, as to personal liability of stock-
holders) ; 46 F. 357, affirmed in 50 F. 260 (applied to a bill of
exchange drawn by the corporation); 69 F. 25, 44 (has no ap-
plication to contracts made before its passage); 183 U. S. 144,
146, 46 L. ed. 125 (referred to).

As to amount claimed determining jurisdiction, see 1 Encyc. P.
703, tit. "Amount in controversy."

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

Limitations of actions. — See Kerr's Cyc. C. C. P. § 338 subd.
1, § 359 and notes.

Limitation of action to enforce stockholder's liability. — See
Kerr's Cyc. C. C. P. § 338 subd. 1, and § 359 and notes.

§323. CERTIFICATES OF STOCK, HOW ISSUED. All

corporations for profit must issue certificates for stock when
fully paid up, signed by the president and secretary, and may
provide, in their by-laws, for issuing certificates prior to full
payment, under such restrictions and for such purposes as
their by-laws may provide, but any certificate issued prior
to full payment must show on its face what amount has been
paid thereon. All certificates of stock issued by corporations
authorized by their articles of incorporation to issue stocks
of different classes, shall express upon their face the char-
acter of stock represented by said certificates. The said cer-
tificates shall also state the number of shares of stock of each
class which said corporation is authorized to issue, and the
said certificates shall also contain a statement of the nature
and extent of the preference granted to the preferred stock.

187



§ 324 CIVIL CODE. [Div.I.Pt.TV.

History: Enacted 1S72; amended by Code Commission, Act
March 16, 1901, Stats, and Amdts. 1900-1, p. 350, held unconstitu-
tional; see history, § 4 ante; amendment re-enacted March 20,
1905, Stats. Amdts. 1905, p. 397; amended March 18, 1907, Stats,
and Amdts. 1907, p. 348, Kerr's Stats, and Amdts. 1906-7, p. 403.

See Kerr's Cyc. C. C. for 10 pars, annotation.

82 C. 600, 602, 603, 23 P. 134, 135 (construed and applied); 9G
C. 322, 329, 330, 31 P. 100, 102 (construed and applied); 101 C.
70, 79, 35 P. 349 (construed and applied); 135 C. 579, 583, 87 A.
S. 143, 67 P. 1057, 56 L. 728 (cited in discussion); 2 C. A. 122,
130 (what agreement indicates tliat stock was issued as paid-
up stock), 131 (case distinguished from that of statutory lia-
bility of stockholder), 83 P. 62.

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



§324. SHAKES OF STOCK PERSONAL PROPERTY;
HOW TRANSFERRED. Whenever the capital stock of any
corporation is divided into shares, and certificates therefor
are issued, such shares of stock, except as liereiuafter pro-
vided, are personal property, and may be transferred by
indorsement by signature of the proprietor, his agent, attor-
ney, or legal representative, and the delivery of the certifi-
cate; but such transfer is not valid, except as to the parties
thereto, until the same is so entered upon the books of the
corporation as to show the names of the parties by whom
and to whom transferred, the number of the certificate, the
number or designation of the shares, and the date of the
transfer ;

[Water companies — Stock appurtenant to land.] Provided,
however, that any corporation organized for, or engaged in
the business of selling, distributing, supplying, or delivering
water for irrigation purposes or for domestic use, may in its
by-laws provide that water shall only be sold, distributed,
supplied, or delivered to owners of its capital stock, and that
such stock shall be appurtenant to certain lands when the
same are described in the certificate issued therefor; and
when such certificate shall be so issued, and a certified copy
of such by-law recorded in the office of the county recorder
in the county where such lands are situated, the shares of

188



Tit.I,Cll.II,art.I.] SHARES OF STOCK. § 324

stock so located on any land shall only be transferred with
said lands, and shall pass as an appurtenance thereto. When-
ever any officer of any corporation shall refuse to make
entries upon the books thereof, or to transfer stock therein,
or to issue a certificate or certificates therefor to the trans-
feree as provided by this and the next preceding section, such
officer shall be subject to a penalty of four hundred dollars,
to be recovered as liquidated damages, in an action brought
against him by the person aggrieved.

History: Enacted March 21, 1872; amended March 26, 1895,
Stats, and Amdts. 1895, p. 118; amended March 22, 1907, Stats,
and Amdts. 1907, p. 854, Kerr's Stats, and Amdts. 1906-7, p. 404.

This section traceable to Act April 22, 1850, § 12, (5 C. 186, 187,
63 A. D. 117; 53 C. 428, 431); the Act of 1853 did not substantially
alter § 12 (6 C. 425, 429); as to effect of amendatory act of 1854
(p. 84) see 9 C. 112, 114.

Wisconsin adopted their statute from tlais section of tlie code.
—See 51 Wis. 519, 8 N. W. 419, 420, 421.

See Kerr's Cyc. C. C. for 98 pars, annotation.

53 C. 428, 431, 432 (applied and construed); 58 C. 426, 428
(construed and applied); 63 C. 359, 364 (construed and applied);
72 C. 5, 9, 1 A. S. 17, 12 P. 801, 802 (cited in discussion); 79 C.
323, 331, 12 A. S. 145, 21 P. 852, 855, 5 L. 233 (construed and ap-
plied); 82 C. 600, 603, 23 P. 134, 136 (referred to in discussion);
84 C. 131, 137, 18 A. S. 166, 24 P. 436, 437, 11 L. 125 (applied
and construed); 108 C. 490, 493, 41 P. 487 (erroneously referred
to instead of §334); 109 C. 630, 632, 42 P. 298 (applied); 113 C.
272, 273, 276, 277, 278, 54 A. S. 348, 45 P. 329, 33 L>. 459 (construed
and applied); 126 C. 531, 534, 59 P. 30 (construed and applied);
134 C. 408, 410, 411, 66 P. 494 (construed and applied); 136 C.
510, 513, 69 P. 257 (referred to with other sections); 141 C. 13,
16, 74 P. 299 (provision as to entry of transfer on books is not
applicable when); 147 C. 236, 240, 242, 81 P. 539 (construed
and applied to shares in a water company); 150 C. 106, 108, 109,
110, 88 P. 280 (construed and applied, showing that liability
is limited to registered owner); 2 C. A. 122, 131, S3 P. 62
(cited, directors thougli trustees, may act in double capacity
when); 37 F. 394, 407 (cited, as to wlio naust be deemed owner
of stock).

As to lost certificate and procediire to secure issuance of a
new one, see post § 328.

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

Bond may be required of non-resident stockholder by corpo-

189



§§ 325, 326 CIVIL CODE. [Div.I.Pt.IV.

ration before entering- transfer of shares on its books. — See
•Kei-r's Cyc. C. C. § 326 and note.

By-laws providing- for lien upon stock. — See Kerr's Cyc. C. C.
§ 354 and note.

Gift of corporate stock. — See Kerr's Cyc. C. C. § 1146 and
note.

§ 325. MARKIED WOMAN MAY TRANSFER STOCK; DIV-
IDENDS PAID TO HER; HER PROXY. Shares of stock in
corporations standing on the books of the corporation in the
name of a married woman may be transferred by her, her
agent or attorney, without the signature of her husband, and
in the same manner as if such married woman were a feme
sole. All dividends payable upon any of such shares of stock
may be paid to her, her agent or attorney, in the same man-
ner as if she were unmarried; and any proxy or power given
by her, touching any of such shares, is valid and binding, and
neither it nor any receipt for dividends need be signed by
her husband.

History: Enacted Marcli 21, 1S72; amended by Code Commis-
sion, Act. March 16, 1901, Stats, and Amdts. 1900-1, p. 350, held
unconstitutional; see history, § 4 ante; amendment re-enacted
March 20, 1905, Stats, and Amdts. 1905, p. 397.

As to contracts by married woman, see Kerr's Cyc. C. C. § 158
and note.

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

§326. AFFIDAVIT OR BOND MAY BE REQUIRED
BEFORE TRANSFER. When the shares of stock in a corpo-
ration are owned by parties residing- out of the state, the
president, secretary, or directors of the corporation, before
entering any transfer of the shares on its books, or issuing a
certificate therefor to the transferee, may require from the
attorney or agent of the non-resident owner, or from the
person claiming under the transfer, [1] an affidavit or other
evidence that the non-resident owner was alive at the date
of the transfer, and if such affidavit or other satisfactory evi-
dence be not furnished, may require from the attorney, agent,
or claimant, [2] a bond of indemnity, with two sureties, satis-

190



Tit.I,ch.II,art.I.] DIRECTORS' liability. §§327,328

factory to the officers of the corporation; or, if not so satis-
factory, then [3] one approved by a judge, of the superior
court of the county in which the principal office of the corpo-
ration is situated, conditioned to protect the corporation
against any liability to the legal representatives of the owner
of the shares, in case of his or her death before the transfer;
and if such

Affidavit or other evidence or bond be not furnished when
required as herein provided, neither the corporation nor any
officer thereof shall be liable for refusing to enter the trans-
fer on the books of the corporation.

History: Enacted March 21, 1872; amended March 30, 1874,
Code Amdts. 1873-4, p. 205; Feb. 16, 1883, Stats, and Amdts. 1883, ■
p. 4. In force Feb. 16, 1883.

58 C. 426, 428 (referred to).

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

As to whether bond must be demanded, see Kerr's Cyc. C. C.
§ 326, note.

§327. CONTRACTS TO RELIEVE DIRECTORS FROM
LIABILITIES FIXED BY COJVSTITUTIOIV YOID. Any con-
tract or contracts, verbal or written, hereafter made, whereby
it is sought directly or indirectly to relieve any director or
trustee of any corporation or joint stock association from
any liability imposed by section three, of article twelve, of
the constitution of California, are hereby declared to be and
shall be null and void.

History: Enacted April 12, 1880, Code Amdts. 1880, p. 9. In
force April 12, 1880.

84 C. 420, 422 (erroneously cited for §3275), 24 P. 316, 317
(correct citation).

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

§328. LOST, ETC., CERTIFICATE; ACTION FOR NEW
CERTIFICATE; PARTIES; PROCEDURE. Whenever a cer-
tificate of stock or of shares in a corporation organized under
the laws of this state has been lost, destroyed or wrongfully
withheld, the owner thereof may bring an action against such

191



§ 328 CIVIL CODE. [Div.I,Pt.IV.

corporation in the superior court of the county in Avhich is
located its principal place of business, for the purpose of
obtaining a new or duplicate certificate. If by the books of
the corporation the stock stands in the name of a person
other than the plaintiff, or if by such books it appears that
some other person claims or has some rights, title, or interest
in, or lien upon, such stock, all such persons must be made
parties defendant with the corporation.

[Summons and notice.] Summons must be issued and
served as in other civil actions, and in addition thereto, the
court must direct its clerk to issue and cause to be published,
at least once a week for four successive weeks, in some news-
paper published in the county, a notice setting forth the pend-
ency of the action, the names of the parties thereto, the court
in which it is pending, the name of the corporation issuing
the stock, the number of the certificate and the number of the
shares, the name of the person mentioned as stockholder in
the certificate, and notifying all persons claiming said shares,
or any of them, or any interest or lien therein or thereupon,
to be and appear before the court at a time and place to be
designated in the notice not less than thirty days from the
first publication thereof, then and there to show cause why
a new certificate should not be directed to be issued to the
plaintiff, and to set forth their rights in or claim to such
shares.

[Proceeding on answer — Judgment.] If any one appears
and answers or intervenes in the action, it must proceed to
trial as in other civil cases, and the court must enter judg-
ment as from the facts established may be proper; but if no
one appears within the time designated in such notice, nor
within the time allowed by law after the service of such
summons, the court must hear such evidence as may be
offered in support of the allegations of the complaint, and
make and file its decision thereon, and thereupon may enter
its judgment canceling the lost, destroyed or wrongfully with-
held certificate and directing the corporation, upon payment
to it of all costs incurred by it in the premises and without

192



Tit.I,ch.II,art.I.] BURNED bonds. §329

costs against the corporation, to issue to the plaintiff a new
or duplicate certificate.

After the issuing of a new certificate by the corporation
pursuant to any judgment in such action, no action can ever
be maintained by any person against the corporation in ref-
erence to said lost or destroyed certificate or the shares repre-
sented thereby, and thereafter any such action is forever
barred as against the corporation.

History: Enacted March 20, 1905, Stats, and Amdts. 1905, pp.
500, 501.

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

§329. BURNED BONDS, PEOCEDURE TO OBTAIN
DUPLICATES. Whenever a bond or bonds of a corporation
organized under the laws of this state or of any other state,
or any territory of the United States has or have been lost
or destroyed in this state by fire, earthquake, or other calam-
ity, the owner thereof may bring an action against such cor-
poration and the trustee or mortgagee of such bonded indebt-
edness in the superior court of the county in which such bond
or bonds were lost or destroyed, or in which owner resides,
or in which is located the principal place of business of such
corporation for the purpose of obtaining a new or duplicate
bond or bonds. If said bond or bonds stand in the name of,
or are registered in the name of a person other than the
plaintiff, or if it appears by the books of the corporation that
any other person claims or has some right, title, interest in,
or lien upon such bond or bonds, all such persons must be
made parties defendant with the corporation and the trustee
and mortgagee.

[Form of summons.] Summons must be issued and served
as in other civil actions and in addition thereto the court
must direct its clerk to issue and cause to be published at
least once a week, for four successive weeks, in some news-
paper published in the county a notice setting forth the pend-
ency of the action, the names of the parties thereto, the court
in which it is pending, the name of the corporation which had
Kerr's C. C— 7 193



§ 329 CIVIL CODE. [Div.I.Pt.IV.

issued the bond or bonds, the number of said bond or bonds,
if any, and the amount thereof, and the person in whose name
the same stands or is registered, and notifying all persons
claiming said bond or bonds, or any of them or any interest
or lien therein or thereupon, to be and appear before the
court at a time and place to be designated in the notice, not
less than thirty days from the first publication thereof, then
and there to show cause why a new bond or bonds should
not be directed to be issued to the plaintiff and to set forth
their rights in, or claims to such bond or bonds. If any one
appears and answers or intervenes in the action it must pro-
ceed to trial as in other civil cases and the court must enter
judgment as from the facts established may be proper; but
if no one appears within the time designated in said notice,
nor within the time allowed by law after the service of such
summons, the court must hear such evidence as may be
offered in support of the allegations of the complaint and
make and file its decision thereon.

[Entry of judgment — Indemnity.] And thereupon may
enter its judgment canceling the lost or destroyed bond or
bonds and directing such corporation, upon payment to it
of all costs incurred by it in the premises, and upon payment
to it of the money required and necessary to re-issue new
bond or bonds and without costs against the corporation or
other defendant, mortgagee or trustee; to issue to the plain-
tiff a new or duplicate bond or bonds upon the said plaintiff
giving proper indemnity to the said corporation and the said
mortgagee or trustee.

Hl-Htory: Enacted March 6, 1907, Stats, and Amdts. 1907, p.
116, Kerr's Stats, and Amdts. 1906-7, p. 404.

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



194



Tit.I,ch.II,art.II.] ASSESSMENT OF STOCK. §331

ARTICLE II.

ASSESSMENT -OF STOCK.

§ 331. Assessments, how levied.

§ 332. Limitation — How levied.

§ 333. Levy of assessment — Old assessment remaining- unpaid.

§ 334. Wliat order sliall contain.

§ 335. Notice of Assessment — ^Form.

§ 336. Publication and service of notice.

§ 337. Delinquent notice — Form.

§ 338. Contents of notice.

§ 339. How published.

§ 340. Jurisdiction acquired, how.

§ 341. Sale to be by public auction.

§ 342. Highest bidder to be purchaser.

§ 343. In default of bidders, corporation may purchase.

§ 344. Disposition of stock purchased by corporation.

§ 345. Extension of time of delinquent sale [notice].

§ 346. Assessments shall not be invalidated.

§ 347. Action for recovery of stock, and limitation thereof.

§ 348. Proofs of publication and sale.

§ 349. Waiver of sale — Action to recover assessment.

§331. ASSESSMENTS, HOW LEVIED. The directors of
any corporation formed or existing under the laws of this
state, after one-fourth of its capital stock has been subscribed,
may, for the purpose [1] of paying expenses, [2] conducting
business, or [3] paying debts, levj' and collect assessments
upon the subscribed capital stock thereof, in the manner and
form and to the extent provided herein.

History: Enacted March 21, 1872; amended March 30, 1874,
Code Amdts. 1873-4, p. 206.

See Kerr's Cyc. C. C. for 73 pars, annotation.

65 C. 193, 194 (construed), 195, 196 (construed with §§ 332, 333),
200 (applied), 209 (referred to in dis. op.), 210 (construed in
dis. op.), 3 P. 661, 662, 666, 802; 80 C. 375, 377, 22 P. 189, 190
(construed and applied); 82 C. 600, 602 (erroneously cited), and
in 23 P. 134, 135 is erroneously cited to take place of § 537. A
corporation may give credit for its stock as well as for any
other property sold by it, but there is no lien, in this state, in
favor of a corporation, for unpaid instalments of subscriptions

195



§ 331 CIVIL CODE. [Div.I.Pt.IV.

for stock; 92 C. 47, 50, 27 A. S. 91, 28 P. 54, 55 (construed with
§5 art. 6 constitution); 101 C. 70, 80, 35 P. 349, 350 (construed);
108 C. 490, 492, 41 P. 487 (construed and applied); 109 C. 571,
588, 42 P. 225 (construed with other sections); 116 C. 260, 263,
48 P. 65 (construed and applied); 126 C. 582, 586, 59 P. 136
(applied); 127 C. 72, 82, 59 P. 319 (referred to); 129 C. 293, 296,
61 P. 939 (referred to in discussion); 133 C. 64, 66, 65 P. 143
(construed); 135 C. 628, 632, 67 P. 1084 (applied); 141 C. 221,
227, 74 P. 754 (applied to expenses of water system); 145 C.
696, 700, 701, 702, 79 P. 441 (applied to assessment levied by
directors of a savings bank); 146 C. 699, 706, 81 P. 17 (provision
that one fourth of the capital stock must be subscribed, how
satisfied); 2 C. A. 122, 136, 83 P. 62 (construed with other sec-
tions as constituting- terms of contract); 4 C. A. 505, 507, 88
P. 506 (what is essential to recovery of judgment for assess-
ment); 5 F. 403, 410 (cited).

As to assessments on paid-up stock, see 26 Encyc. L. 923;
also 45 L. 647; 76 A. S. 132-135.

As to assessment of stock Issued as paid up, see 76 A. S.
134-136.

As to assessments to pay instalments on subscription to cor-
poration stock, see 81 A. D. 393-395.

As to assessments under statute on paid-up stock and the
construction of such statutes, see 26 Encyc. L. 923.

As to definition of assessment of stock, see 76 A. S. 126.

As to difference between assessments of stock and calls upon
stock, see 76 A. S. 127.

As to effect of assessment on stockholders made under order
of the court in another state, see 34 L. 694.

As to effect of nominal payment for shares on bonus stock,
see 38 L. 490.

As to enforcement of assessment by action against stock-
holder, see Kerr's Cyc. C. C. § 349 and note.

As to enforcement of assessment by means of sale, see Kerr's
Cyc. C. C. § 334 and note.

As to existence of lien as restraint upon alienation, see 57
A. S. 393-396.

As to liability of stockholders to assessments, see 4 L. 232.

As to lien, see Kerr's Cyc. C. C. § 331, note pars. 67-73 this
note.

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

As to power of corporations to assess their stockholders, see
76 A. S. 126-136.

As to power of courts to compel levy of assessments for pay-
ment of subscriptions, see 100 A. D. 552-557.

As to power to sell stock to procure payment of assessment,
see Kerr's Cyc. C. C. § 334 and note.

196



.Tit.I,ch.II,art.II.] limitation. §332

As to right of action to enforce collection of assessment, see
Kerr's Cyc. C. C. § 349 and note.

As to sole right of director to make assessments of stock,
see 76 A. S. 127, 128.

As to validity of agreement not to levy for assessment of un-
paid subscription, see 57 A. S. 67.

§332. LIMITATION— HOW LEVIED. No one assessment
must exceed ten per cent of the amount of the capital stock
named in the articles of incorporation, except in the cases
in this section otherwise provided for, as follows:

1. If the whole capital of a corporation has not been paid
up, and the corporation is unable to meet its liabilities or to
satisfy the claims of its creditors, the assessment may be for



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