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MENT. The misnomer of a corporation in any written instru-
ment does not invalidate the instrument, if it can be reason-
ably ascertained from it what corporation is intended.
History: Enacted March 21, 1872.

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

93 C. 300, 314, 28 P. 1049, 1052 (applied); 138 C. 183, 194, 94
A. S. 28, 71 P. 93 (applied); 2 C. A. 436, 441, 83 P. 1077 (applied).

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

209



§ 358 CIVIL CODE. [Div.LPt.IV.

§358. CORPOKATIONS, TIME IN WHICH MUST BE
ORGANIZED, AND CONTINUANCE OF BUSINESS. If a cor-
poration does not organize and [1] commence the transaction
of its business, or [2] the construction of its works within
one year from the date of its incorporation, or if, after its
organization and commencement of its business, it [3] shall
lose or dispose of all its property, and [-I] shall fail for a
period of two years to elect officers and transact, in regular
order, the business of said corporation, its corporate powers
sliaH cease, and the said corporation may be dissolved at
the instance of any creditor of the said corporation, at the
suit of the state, on the information of the attorney-general,
but the resumption of Its business in good faith by such cor-
poration prior to the commencement thereof shall be a bar
to such suit.

[Collateral attack not allowed.] The due incorporation of
any company claiming in good faith to be a corporation under
this part, and doing business as such, or its right to exercise
corporate powers, shall not be inquired into collaterally in
any private suit to which such de facto corporation may be
a party; but such inquiry may be had at the suit of the state
on information of the attorney-general; provided, however,
as to any company claiming in good faith to be, and which
has been doing business for ten consecutive years as a cor-
poration, no such inquiry shall be made either by the state
or by any person whatsoever.

History: Enacted March 21, 1S72; amended March 23, 1901,
Stats, and Amdts. 1900-1, p. 632.

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

64 C. 69, 72, 28 P. 496, 497 (applied); 77 C. 360, 372, 18 P. 85,
86, 19 P. 693, 2 L. 92 (cited in discussion); 80 C. 181, 186, 22 P.
76 (applied); 82 C. 184, 186, 23 P. 45, 46 (applied); 97 C. 276, 277,
33 A. S. 172, 32 P. 236 (applied); 102 C. 55, 64, 65, 66 (construed
and applied), 67 (cited), 41 A. S. 151, 36 P. 368; 106 C. 302, 310,
39 P. 617 (applied); 109 C. 571, 601, 42 P. 225, 226 (referred to in
dis. op.); 126 C. 541, 545, 58 P. 1049 (applied); 131 C. 153, 154,
63 P. 163 (applied); 151 C. 504, 507, 508, 91 P. 258 (concluding
clause of section, as amended in 1901, construed and applied to

210



Tit.I,ch.III,art.I.] increasing capital. §359

a corporation which had been in existence for more than ten
years prior to such amendment).

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

§359. IXCEEASING AND DIMINISHING CAPITAL
STOCK. [FICTITIOUS INCREASE OF STOCK VOID.]
BONDED INDEBTEDNESS, HOW CREATED OR INCREASED.

No corporation shall issue stocks oi' bonds except for money
paid, labor done or property actually received, and all ficti-
tious increase of stock or indebtedness is void. Every corpo-
ration may increase or diminish its capital stock, and every
corporation, or two or more corporations, may create or
increase its or their bonded indebtedness, subject to the fol-
lowing provisions:

1. [How capital stock may be increased or diminished.] The
capital stock of a corporation may be increased or dimin-
ished at a meeting of the stockholders by a vote representing
at least two-thirds of the subscribed or issued capital stock,
or in the manner otherwise in this section provided; when by
meeting as aforesaid, then such meeting must be called by
the board of directors or trustees, and notice must be given
by publication in a newspaper published in the county or
city and county where the principal place of business of the
corporation is located, or if there be none published in said
county or city and county, then in a newspaper published in
an adjoining county, or city and county, such paper to be
designated by the board of directors or trustees in the order
calling for the meeting; provided, however, that where the
articles of incorporation provide for two or moi-e kinds of
capital stock, no increase or reduction of capital stock shall
be made without the assent of two-thirds of all the sub-
scribed stock, and in making such increase or reduction, the
assent shall identify the particular class or classes of stock
to be increased or reduced, and the amounts apportioned to
each.

2. [What notice must specify.] The notice must specify
the object of the meeting and the amount to which it is pro-
posed to increase or diminish the capital stock, the time and

211



§359 CIVIL CODE. [Div.I.PtlV.

place of holding the meeting, which latter must be at the
principal place of business of the corporation and at the
building where the board of directors or trustees usually
meet. The notice herein provided must be published once a
week for at least sixty days. The capital stock cannot be
diminished to an amount less than the indebtedness of the
corpoiation.

3. [How bonded indebtedness may be created or increased.]
The bonded indebtedness of a corporation may be created or
increased by a vote of the stockholders representing at least
two-thirds of the subscribed or issued capital stock at a
meeting called by the board of directors or trustees, and after
notice of the time and place of the meeting published in the
same manner and for the time prescribed, which notice shall
state the amount of the bonded indebtedness which it is pro-
posed to create, or the amount to which it is proposed to
increase such indebtedness, and shall in all other respects
contain the same matters as are above provided and set forth
in the notice of meeting to increase or diminish the capital
stock; or such original creation of bonded indebtedness may
be made as otherwise in this section provided.

4. [Notification to stockholders.] In addition to the notice
by publication, when proceedings are to be had hereunder at
a meeting of stockholders, the secretary of the corporation
shall also address a notice to each of the stockholders whose
names appear on the company's books as sufficiently
addressed or identified, at his place of residence, if known,
and if not known, then at the place in which the principal
place of business of the corporation is situate, which notice
shall be so mailed to such stockholders at least thirty days
before the day appointed for such meeting.

5. [Directors may diminish stock and create indebted-
ness.] In lieu of such call for meeting of stockholders and
of such notice and publication of the same and of a stock-
holders' meeting held in pursuance thereof and of said vote
thereat representing at least two-thirds of the subscribed
capital stock, any corporation may diminish its capital stock
and also originally create its bonded indebtedness by a reso-

212



Tit.I,ch.III,art.I.] increasing capital. §359

lution adopted by the unanimous vote of its board of direc-
tors or trustees at a regular meeting or at a special meeting
called for that purpose and approved by the written assent
or assents of the stockholders holding two-thirds of the sub-
scribed or issued capital stock, which assent or assents must
be filed with the secretary of the corporation; but the secre-
tary of the corporation must address by mail, postage fully
prepaid, a copy of such resolution to each of the stockholders
whose names appear upon the company's books as sufficiently
addressed or identified, at his place of residence, if known,
and if not known, then at the place in which the principal
place of business of the corporation is situate, which notice
shall be so mailed to such stockholders at least thirty days
before the certificate hereinafter provided is made and signed
or filed, as hereinafter provided, and within that time any
stockholder may file with such secretary his dissent in writ-
ing; but it is further provided, that if at any time within
said thirty days such written assent or assents of the stock-
holders holding all of the subscribed or issued capital stock
be so filed with said secretary, then and at once and without
further delay the certificate hereinafter provided for may be
so made, signed and filed as hereinafter provided and with
the same effect.

[Limit of diminution.] But such capital stock cannot be
diminished to an amount less than the indebtedness of the
corporation, and no increase of capital stock or bonded
indebtedness can be made, except at a meeting of stockholders
as in this section provided.

6. [Consolidated indebtedness.] Any two or more corpora-
tions may by a separate compliance by each corporation with
the provisions of this section applicable in the premises in
respect to creating or increasing bonded indebtedness, create
or increase a consolidated bonded indebtedness of such cor-
porations, to be binding jointly and severally on such corpo-
rations, and which may be secured by a consolidated mort-
gage or deed of trust executed by all such corporations,
mortgaging or conveying in trust all or any of the properties
of all such corporations, acquired or to be acquired.

213



§ 359 CIVIL CODE. [Div.I,Pt.IV.

7. [Certificate of increase or (liminution.] Upon such
increase or diminution of the capital stock or creation or
increase of the bonded indebtedness being made in accord-
ance with the provisions of this section there shall be made,
if proceedings are had under subdivisions first, second, third
and fourth above, a certificate under the corporate seal and
signed by the president and secretary of the corporation or
of each corporation acting in the premises and a majority
of the directors or trustees of such corporation, or each cor-
poration so acting, showing a compliance by such corpora-
tion, or each corporation so acting, with the requirements of
said last-named subdivisions and the amount to which the
capital stock has been increased or diminished or tlie amount
of the bonded indebtedness created, or to which the bonded
indebtedness may liave been increased, and the amount of
stock represented at the meeting and the total vote in the
affirmative by which the same was accomplished and the
total vote in the negative; or if such proceedings be had and
taken under subdivision fifth of this section as to diminution
of capital stock or original creation of bonded indebtedness
a like certificate shall be made and sealed and signed, as
aforesaid, showing a compliance by such corporation, and
by each corporation acting in the premises, with the require-
ments of said subdivision fifth, and the amount to which
the capital stock has been diminished or the amount of
bonded indebtedness so originally created, and the total
amount of the stock represented by the said written assent
or assents so filed with the secretary and the total amount
of stock represented by the said written dissent or dissents
so filed. In case of a consolidated bond of indebtedness each
corporation which is a party thereto shall cause to be made
and signed and sealed and verified and filed, as in this sec-
tion provided, a separate certificate.

8. [What certificate shall state.] In all cases the certifi-
cates shall state the total number of subscribed or issued
shares of the capital stock of the corporation, or of each
corporation respectively acting in the premises, and shall

214



Tit.I,cli.III,art.I.] INCREASING CAPITAL. § 359

be verified by the oath of the said president and secretary,
or of the said respective presidents and secretaries. Such
consolidated bonded indebtedness may be created or increased
to an amount equal to the par or face value of the aggre-
gate amount of the subscribed or issued capital stock of said
two or more corporations, but shall not exceed such aggre-
gate amount.

[Where filed.] In each and every case the certificate must
be filed in the office of the clerk in the county or city and
county where the original articles of incorporation of the
corporation or corporations acting hereunder are filed and
a certified copy thereof, certified by such clerk, shall be filed
in the office of the secretary of state; and thereupon the
capital stock shall be so increased or diminished, or the.
bonded indebtedness or consolidated bonded indebtedness
shall be created or increased accordingly, and such certifi-
cate or certificates so filed shall be, when said certified copy
or copies are so filed, conclusive proof of such increase or
diminution of capital stock or such creation or increase of
bonded or consolidated bonded indebtedness and the validity
of each thereof.

[Publication of notices.] When the by-laws of a corpora-
tion prescribe the paper in which notices of meetings of
directors or trustees or stockholders are to be published the
notices of publication herein provided for shall be published
in such paper, unless publication thereof shall have ceased.

History: Enacted March 21, 1872; amended March 30, 1874,
Code Amdts. 1873-4, p. 207; March 3, 1883, Stats, and Amdts. 1883,
p. 31; March 18. 1885, Stats, and Amdts. 1885, p. 141; March 19,
1889. Stats, and Amdts. 1889, p. 364; March 23, 1893, Stats, and
Amdts. 1893, p. 191; March 21, 1903, Stats, and Amdts. 1903, p.
347; amended March 18, 1907, Stats, and Amdts. 1907, pp. 439-
452, Kerr's Stats, and Amdts. 1906-7, pp. 405-408.

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

56 C. 649, 651, 653, 655 (held unconstitutional); 65 C. 616, 617,
4 P. 662, 663 (applied); 96 C. 160, 161, 31 P. 14 (referred to); 103
C 624 630, 37 P. 638 (construed); 109 C. 571, 594 (construed),
597, 600 (referred to), 42 P. 225; 112 C. 208, 213, 44 P. 476 (re-
ferred to); 116 C. 416, 424, 48 P. 377 (construed and applied);
125 C. 453, 454, 455, 58 P. 64 (construed and applied); (C. Dec.

215



§ 360 CIVIL CODE. [Div.I,Pt.IV.

19, 1900) 63 P. 74, 77 (construed); 135 C. 579, 583, 87 A. S. 143,
67 P. 1057, 56 L. 728 (referred to); 147 C. 581, 582, 109 A. S. 176,
82 P. 247 (proceedings for increase of capital stock are invalid
unless the public notice required by statute was given); 2 C. A.
122, 130, 83 P. 62 (what agreement indicates that stock was
issued as paid-up stock); 45 F. 518, 528 (construed as to in-
debtedness for which bonds may be issued); 79 F. 842, 846
(neither this section nor art. XII, § 11, of the constitution, says
anytliiiitf about the "sale" or "pledge" of stocks or bonds. A
corporation is not prohibited from pledging its bonds as col-
lateral security).

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

Limitations on power to increase capital stock. — See Kerr's
Cyc. C. C. § 309 and note.

Limitations on power to reduce capital stock, see Kerr's
Cyc. C. C. § 309 and note.



§360. CORPOEATIONS MAY ACQUIRE REAL PROP-
ERTY, AND HOW MUCH. No corporation shall acquire or
hold any more real property than may be reasonably neces-
sary [1] for the transaction of its business, or [2] the con-
struction of its works, [3] except as otherwise specially pro-
vided. A corporation may acquire real property, as pro-
vided in title seven, part tliree, of the Code ot Civil Procedure,
when needed for any of the uses and purposes mentioned in
said title. By a unanimous vote of all the directors at any
regular meeting, any corporation existing, or hereafter to
be formed under the laws of this state, may [1] acquire and
hold the land and building on and in which its business is
carried on, and may [2] improve the same to any extent
required for the convenient transaction of its business.

History: Enacted March 21, 1872; amended March 30, 1874,
Code Amdts. 1873-4, p. 208; amended by Code Commission, Act
March 16, 1901, Stats, and Amdts. 1900-1, p. 351, held unconstitu-
tional, see history, § 4 ante; amendment re-enacted March 22,
1905, Stats, and Amdts. 1905, p. 774.

See Kerr's Cyc. C. C. for 32 pars, annotation.

144 C. 578, 594, 77 P. 1113 (construed with § 286, as to power
of corporation to acquire title by prescription).

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

216



Tit.T,ch.III,art.I.] TRANSFER OF FRANCHISE. §§ 361, 361a

Equitable interest cannot be acquired by corporation when it
cannot hold in its own name.-See Kerr's Cyc. C. C. § 354 and

""TnsTrlnTe companies-Power to hold land.-See Kerr's Cyc.

C C. § 415 and note. r^ n

Presumption as to power to hold land.— See Kerr s Cyc. C. C.

§ 354 and note par. 39. t.-^,.^'., c^m

Turnpike companies-Power to hold land.-See Kerr s Cyc.

C. C. § 354 and note pars. 62, 63.

§ 361. CONSOLIDATION OF MINING COMPANIES OWN-
ING ADJOINING CLAIMS (repealed).

History: Enacted March 21, 1872; amended March 20. 1876,
Code Amdts. 1875-6, p. 75; repealed by Code Commission, Act
March 18, 1901, Stats, and Amdts. 1900-1, p. 351, \\eld unconsti-
tutional, see history, § 4 ante; re-repealed March 22, 1905, Stats,
and Amdts. 1905, p. 775.

147 C. 663, 666. 82 P. 319 (effect of consolidation of mining
corporations).

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

§ 361a. TRANSFER OF FRANCHISE OF CORPORATION
NOT YALID WITHOUT CONSENT OF STOCKHOLDERS.

No sale, lease, assignment, transfer or conveyance of the
business, franchise and property, as a whole, of any corpora-
tion now existing, or hereafter to be formed in this state,
shall be valid without the consent of stockholders thereof,
holding of record at least two-thirds of the issued capital
stock of such corporation; such consent to be either expressed
in [1] writing, executed and acknowledged by such stock-
holders, and attached to such sale, lease, assignment, trans-
fer or conveyance, or [2] by a vote at a stockholders' meet-
ing of such corporation called for that purpose; but with
such assent, so expressed, such sale, lease, assignment, trans-
fer or conveyance shall be valid; provided, however, that
nothing herein contained shall be construed to limit the
power of the directors of such corporation to make sales,
leases, assignments, transfers or conveyances of corporate
property other than those hereinabove set forth.

217



§ 362 CIVIL CODE. [Div.I,Pt.TV.

History: Enacted March 24, 1903, Stats, and Amdts. 1903,
p. 396.

152 C. 579, 584, 586, 587, 588, 93 P. 490 (construed and applied).
As to many miscellaneous matters affecting- corporations gen-
erally, see note § 283, ante.

§362. AMENDMENT OF ARTICLES OR CERTIFICATE
OF INCORPORATION— FILING}, PENALTY. Any corporation
may amend its articles of incorporation [1] by a majority
vote of its board of directors or trustees, and [2] by a vote
or written assent of the stockholders representing at least
two-thirds of the subscribed capital stock of such corpora-
tion, or [3] the written assent of the majority of the mem-
bers if there is no capital stock; and a copy of the said
articles of incorporation, as thus amended, duly certified to
be correct by the president and secretary of the board of
directors or trustees of such corporation, [4] shall be filed
in the office where the original articles of incorporation are
filed, and [5] a certified copy thereof, duly certified by such
county clerk, [shall be filed] in the office of the secretary
of state.

A copy of such articles of incorporation, so amended, duly
certified by the secretary of state, must be filed in the office
of the county clerk of every county in which such corpora-
tion has or holds property, except only the county in which
the original amended articles of incorporation have been
filed. Any corporation which shall amend its articles of
incorporation and shall fail to file copies of its amended arti-
cles, as required by the preceding sentence, shall be subject
to the penalties and liabilities provided in section two hun-
dred and ninety-nine for a failure of corporations to file
copies of their articles of incorporation in the offices of the
county clerks of the counties in which they shall purchase,
hold, or locate property, and from the time of so filing such
copy of the amended articles of incorporation, such corpora-
tion shall have the same powers, and the stockholders thereof
shall thereafter be subject to the same liabilities, as if such
amendment, had been embraced in the original articles of
incorporation.

218



Tit.I,ch.III,art.I.] AMENDING ARTICLES. §363

Such original and amended articles of incorporation shall
together contain all the matters and things required by the
laws under which the original articles of incorporation were
executed and filed. Nothing contained in this section must
be construed to cure or amend any defect existing in the
original articles of incorporation heretofore filed, in that such
articles did not set forth the matters required to make the
same valid at the time of filing.

If the assent of two-thirds of said stocliholders, or of the
majority of members where there is no capital stock, to such
amendment has not been obtained, a notice of the intention
to make such amendment must first be advertised for thirty
days in some newspaper published in the town, city, county,
or city and county in which the principal place of business'
of the corporation is located, before the filing of the proposed
amendment. Nothing in this section shall be construed to
authorize any corporation to increase or diminish its capital
stock, change its name, extend its corporate existence, or
Increase or diminish the number of its directors, without
complying with the special provisions of this code applicable
thereto.

History: Enacted March 21, 1872; amended March 12, 1885,
Stats, and Amdts. 1885, p. 91; March 11, 1893, Stats, and Amdts.
1893, p. 131; amended by Code Commission, Act March 16, 1901,
Stats, and Amdts. 1900-1, p. 351, held unconstitutional, see his-
tory, § 4 ante; March 25, 1903, Stats, and Amdts. 1903, p. 411;
March 22, 1905, p. 775.

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

99 C. 392, 396, 34 P. 103 (construed); 124 C. 112, 115, 56 P. 779
(applied); 2 C. A. 546, 552, 84 P. 298 (notice of intention to make
am.endment is required only when).

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

§363. CORPORATIONS TO OWN THEIR OWN LOTS
AND BUILDINGS (repealed).

History: Enacted March 5, 1889, Stats, and Amdts. 1S89, p.
67. At the same session another section numbered § 363 was
enacted by the same legislature on March 19 (Stats, and Amdts.
1889, p. 332). The Act of March 5 was repealed by Code Com-

219



§363[a] CIVIL CODE. [Div.I,Pt.IV.

mission, Act of March 16, 1901, Stats, and Amdts. 1900-1, p. 352,
held unconstitutional, see history, § 4 ante, and the act was
re-repealed March 22, 1905, Stats, and Amdts. 1905, p. 776.

See Kerr's Cyc. C. C. § 360 and note.

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

§363[a]. CORRECTION OF ERRONEOUS FILING OF
INCORPORATION— PETITION, NATURE OF— ACTION OF
COURT. When articles of incorporation have been prepared,
subscribed, and executed in accordance with the provisions
of section two hundred and ninety and two hundred and
ninety-two of the civil code, and such original articles filed
by error or inadvertence with the clerk of a county other
than that named in the articles of incorporation as the
county in which the principal place of business is to be trans-
acted, and the secretary of state shall have issued a certifi-
cate of incorporation based on a certified copy of such origi-
nal articles of incorporation, any stockholder or director of
such corporation may petition the superior court of the
county in which said original articles of incorporation were
filed for an order to withdraw such original articles of incor-
poration, and file in place thereof a certified copy of the copy
thereof on file in the office of the secretary of state. Such
petition must [1] be verified, and must [2] state clearly the
facts, showing that such articles of incorporation were filed
by inadvertence and mistake; and [3] notice of the hearing
of said petition must be given for at least ten days before
the day of hearing, [4] by publication in a newspaper pub-
lished in the county where such petition is filed.

[Hearing and proceedings on order.] Upon the day set for
hearing the petition the superior court may [1] grant an



Online LibraryCaliforniaThe 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 text (page 20 of 156)