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Richard Compton Harrison.

A manual of New York corporation law, containing the important statutes regulating business incorporations, a digest of these statutes and the principal forms used by corporations operating in the state of New York online

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BOOKS RELATING TO CORPORATIONS



CONYNGTON ON CORPORATE ORGANIZATION
352pp., 1905, Prepaid, Buckram $2.70; Sheep $3.20

Forms, directions and information relating to the
organization of corporations. Important points sus-
tained by citations. In general use among attorneys.



CONYNGTON ON CORPORATE MANAGEMENT
352pp., 1904, Prepaid, Buckram $2.70; Sheep $3.20

A handy work of reference for the use of lawyers and
corporation officials, containing forms, procedure and
practical directions for the mangement of corporations.
The standard work of its kind. Moie generally used
than any other work on corporations. Second Edition.

Both the above books, Prepaid, Buckram $5.25;
Sheep $6.25



OVERLAND'S CLASSIFIED CORPORATION LAWS
458pp-, 19061 Prepaid, Buckram $3.00; Sheep $3.50

A well-arranged statement of the business corporation
laws of every state and territory of the Union. Classi-
fied according to subject. Contains amendments up to
Dec. ist, 1905. Clear, comprehensive and convenient.

Published annually.



HARRISON'S NEW YORK CORPORATIONS

43ipp., 1906, Prepaid, Buckram Binding $3.50

A book for New York corporations, giving procedure,
forms and statutes. Well-arranged, accurate and ex-
ceptionally convenient for ready reference.

THE RONALD PRESS COMPANY
229 Broadway, New York



A MANUAL



OF



NEW YORK CORPORATION LAW

CONTAINING

The Important Statutes Regulating Business Incor-
porations, a Digest of these Statutes and the
Principal Forms Used by Corporations
Operating in the State of
New York



BY

RICHARD COMPTON HARRISON

I /

OF THE NEW YORK BAR



NEW YORK

THE RONALD PRESS

1906



COPYRIGHT 1906

BY
THE RONALD PRESS COMPANY




PREFACE.



The purpose of this work is to furnish in compact and
convenient form the usual law and procedure governing busi-
ness corporations in the State of New York. The statutes
of this state regulating corporations are a gradual growth
and as a result are often disconnected and complex. They
are also modified by the decisions of the courts and the
interpretations of state officials and are supplemented by the
rules of the common law. Hence, in order to determine what
the law governing corporations really is, a digest of the whole
is necessary. If this can be done in an orderly, lucid arrange-
ment, as has been attempted in this work, it should be helpful
to all who are interested in corporations.

The present volume includes a digest of the entire law
governing business corporations in New York as contained
in the statutes and decisions of the courts, the forms most
frequently used in corporate procedure, and a reprint of the
statutory law as amended to date. It is intended to supply
a concise manual of corporate organization and management
for the State of New York.

In the preparation of the work an attempt has been made
to present the law of corporations in clear, logical and con-
venient form. The latest and most authoritative cases and
citations have been selected, and the forms presented are of
approved excellence. The statutes include all the important
enactments which bear on the usual corporate practice.

The forms given are presented as precedents and without
the usual and sometimes very puzzling omissions where varia-
ble matter occurs. This variable matter is indicated in some

iii



IV PREFACE.

of the forms, as for instance the state and local reports re-
quired of New York corporations, by its different type face,
but in the majority of cases the forms are merely copies of
fully completed instruments. It is believed that this gives a
better idea of the form as a whole and that the changes
necessary to adapt it to any particular need are more easily
made from the completed instrument than from one disjointed,
and sometimes unintelligible, because of omitted matter.

Most of the forms presented have been obtained through
the courtesy of Mr. Thomas Conyngton, many not directly
supplied, having been taken or adapted from Mr. Conyngton's
very admirable works, " Corporate Organization " and " Cor-
porate Management." To him and to numerous friends the
author takes this opportunity of expressing his thanks for
many helpful suggestions and criticisms.

RICHARD C. HARRISON.
NEW YORK,

March ist, 1906.



TABLE OF CONTENTS.



PART I. PROCEDURE.

Chapter I. Corporation Laws.

i. Creation of Corporations.

2. Constitutional Provisions.

3. Statutes.

4. The Business Corporations Law.

5. The Stock Corporation Law.

6. The General Corporation Law.

7. Relative Force of General and Special Statutes.

8. General Statutory Law.

9. Common Law.

Chapter II. Expenses of Incorporation.

10. Organization Expenses.

11. Organization Tax.

12. Fees to Secretary of State.

13. Fees to County Clerk.

14. Table of Organization Expenses.

Chapter III. Certificate of Incorporation.

15. Incorporators.

16. Certificate of Incorporation.

17. Contents of Certificate of Incorporation.

18. (i) Name.

19. (2) Corporate Purposes.

20. (3) Capital Stock.

21. (4) Shares. Initial Capital.

22. (5) Location.

23. (6) Duration.

24. (7) Number of Directors.
(8) Names.



VI TABLE OF CONTENTS.

25. (9) Subscribers.

26. (10) Special Provisions.

27. Execution of Certificate.

28. Filing and Recording. State.

29. " Local.

30. Allowance.

Chapter IV. By- Laws.

31. Preparation.

32. (i) Meetings and Elections.

33. (2) Directors.

34. (3) Officers.

35. (4) Capital Stock.

36. Adoption.

37. General.

38. Observance.

39. Repeal.

Chapter V. First Meetings.

40. First Meeting of Stockholders.

41. Notice of Stockholders' Meeting.

42. Minutes of Stockholders' Meeting.

43- Organization of Stockholders' Meeting.

44. Acceptance of Charter.

45. By-Laws. Stockholders'.

46. Exchange of Stock for Property. Stockholders' Action.

47. Other Business. Stockholders' Meeting.

48. First Meeting of Directors.

49. Organization of Directors' Meeting.

50. Issue of Stock for Property.

51. Miscellaneous Business. Directors' Meeting.

Chapter VI. Corporate Existence.

52. When Commenced.

53. Beginning Business.

54. Renewal.

55. Forfeiture of Charter.

56. Dissolution.

Chapter VII. Corporate Powers.

57. General.

58. (i) To Have Succession.

59. (2) To Appoint Officers and Agents.



TABLE OF CONTENTS. vii

60. (3) To Make By-Laws.

61. (4) To Have a Seal.

62. (5) To Acquire, Hold and Dispose of Property.

63. Power to Hold Property in Other States.

64. Power to Hold Its Own Stock.

65. Power to Hold Stock of Other Corporations.

66. Status of Holding Corporations.

67. Power to Borrow Money. Corporate Bonds. Mortgages.

68. Power to Guarantee Debts of Other Corporations.

69. Power to Do Business in Other States.

70. Consolidation of Corporations.

71. Merger.

72. Amendment of the Charter.

(a) To Secure New Purposes of Same General Character.

(b) Increase of Capital Stock.

(c) Decrease of Capital Stock.

(d) Increase or Decrease of Number of Shares.

(e) Change of Number of Directors.

(f) Change of Location of Principal Office.

(g) Classification of Stock.

(h) Extension of Corporate Existence.
(i) Change of Corporate Name.

73. Ultra Vires Acts.

Chapter VIII. Capital Stock.

74. Capital Stock. Statutory Requirements as to Payment.

75. Amount of Capitalization.

76. Classes of Stock. Common and Preferred.

77. Classification of Stock. After Organization.

78. Redemption of Preferred Stock.

79. Other Classifications.

80. Par Value of Shares.

81. Subscriptions.

82. Stock Certificates.

83. Lost and Destroyed Certificates.

84. Consideration for Issue.

85. Calls for Subscription Installments.

86. Increase or Decrease.

87. Transfer of Stock.

88. Dividends.

Chapter IX. Stockholders.

89. Creation of the Relation.

90. Rights of Stockholders. Collective.



Vlll TABLE OF CONTENTS.

(a) Mortgages.

(b) Conversion of Obligations into Stock.

(c) Sale of Property and Franchise.

(d) To Guarantee Stock.

(e) Consolidation.

(f) Renewal.

91. Rights of Stockholders. Individual.

(a) Right to Notice; Voting.

(b) Dividends.

(c) Stock Certificates.

(d) Transfer of Stock.

(e) Inspection of Corporate Books and Records.

(f) Financial Statement.

(g) Dissolution.

92. Liability of Holders of Full Paid Stock.

(a) Liability to Employees.

(b) Full Liability Companies.

93. Liability of Holders of Stock Not Full Paid.

94. Personal and Representative Liability.

95. Relations of Stockholders to Each Other.

96. Relations of Stockholders to the State.

97. Powers of the Majority.

98. Voting Trusts.

Chapter X. Stockholders' Meeting.

(Annual Meeting.)

99. General.

100. Place.

101. Notice.

(a) Waiver of Notice.

(b) Notice of Annual Meeting.

(c) Notice Same as for Annual Meeting.

(d) Stockholders' Notice of Special Election of Directors.

(e) Notice of Meeting for Increase or Decrease of Capital

Stock.

(f) Notice of Meeting to Change Number of Directors.

(g) " " to Alter or Extend Business,
(h) " " for Dissolution.

(i) " " to Guarantee Bonds of Another Cor-

poration,
(j) Notice of Meeting Not Otherwise Provided.

102. Quorum.

103. Right to Vote.



TABLE OF CONTENTS. IX

104. Proxies.

105. Closing Stock Books.

106. Election of Directors.

107. Cumulative Voting.

108. Inspectors of Election.

109. Challenges.

no. Contested Elections.

in. Effect of Failure to Elect Directors.

112. Special Elections.

Chapter XI. Directors.

113. Number.

114. Election.

115. Classification.

116. Vacancies.

117. Qualifications of Directors.

118. Compensation of Directors.

119. Powers of Directors.

120. Powers of Directors in Case of Dissolution.

121. Relations of Directors to Corporation and Stockholders.

122. Directors' Liability for Negligence.

123. Statutory Liability of Directors.

124. Directors' Liability to Creditors.

125. Directors' Meetings.

(a) Place.

(b) Notice.

(c) Quorum.

(d) Voting.

126. Standing Committees.

Chapter XII. Officers.

127. The Corporate Officers.

128. Qualifications.

129. Security.

130. Powers.

131. Personal Liabilities of Officers.

(a) To the Corporation.

(b) To Third Persons.

(c) Penal Statutory Liability.

132. Tenure of Office.

133. Compensation.



X TABLE OF CONTENTS.

Chapter XIII. Principal Office. Corporate Books.

: - ".-''' s i; '-' -"
134. Location of Principal Office.

135. Corporate Books.

136. The Stock Book.

137. Right to Inspect Corporate Books.

Chapter XIV. State Taxation.

138. Franchise Tax.

139. "Capital Stock Employed Within the State."

140. Deduction of Debts.

141. United States Securities.

142. Patents and Copyrights.

143. Good Will.

144. Meaning of "Employed Within the State."

145. Classification of Corporations for Purposes of Franchise Tax-

ation.

146. (i) Corporations Paying Dividends Not Less Than Six Per

Cent.

147. (2) Corporations Paying Dividends Less Than Six Per Cent.

148. (3) Corporations Paying No Dividends.

149. Corporations Exempt from Franchise Tax.

150. What Are Manufacturing Companies?

151. Stock Transfer Tax.

152. " " " Rules of the State Comptroller's Office.

Chapter XV. Local Taxation.

153. Tax District.

154. Taxation of Realty.

155. Taxation of Personalty.

156. Place of Assessment of Personalty.

157. Manner of Assessing Personalty.

158. Deductions before Assessment of Personalty.

159. (i) Real Estate.

160. (2) Debts and Liabilities.

161. (3) Shares of Stock.

162. (4) Surplus or Reserve.

163. (5) Stock Held by State, etc.

164. (6) Property in Other States.

165. (7) United States Securities.

166. (8) Patents and Copyrights.
J 67. (9) Imported Goods.

168. (10) Good Will.



TABLE OF CONTENTS. XI

169. (n) Mortgages.

170. Date of Assessment.

171. New York City.

172. Special Franchises.

Chapter XVI. Reports.

173. Required Reports.

174. Annual Report. V

175. Report to State Comptroller. Franchise Tax.

176. Local Tax Report.

Chapter XVII. Foreign Corporations.

177. Status of Foreign Corporations.

178. What Constitutes "Doing Business in the State."

179. Foreign Corporations with Resident Incorporators.

180. Procedure to Secure Admission to State.

181. Fees.

182. Status of Foreign Corporations when Licensed.

183. Penalties for Non-Compliance.

184. Principal Office.

185. State Taxation. License Tax.

186. " Annual Privilege Tax.

187. Local Taxation.

188. Books Required to be Kept by Foreign Corporations.

189. Reports.

190. Attachment Against.

PART II. FORMS AND PRECEDENTS.
Chapter XVIII. Organization. Forms.

Form.

1. Subscription List.

2. " " Trustee's.

3. Subscription Blank. Individual.

4. After Organization.

5. Certificate of Incorporation.

(a) Usual Form.

(b) Extended Purposes.

(c) Preferred Stock.

(d) Special Provisions.

6. By-Laws. Short Set.

7. Extended Form.

8. Certification of By-Laws.



Xll TABLE OF CONTENTS.

Chapter XIX. Forms for First Meetings.

Form.

9. Proxy.

10. Call and Waiver. Stockholders'.

11. " " Directors'.

12. Exchange of Property for Stock. Proposal.

13. Stockholders' Resolution.

14. Directors'

15. Minutes. Stockholders'.

16. " Directors'.

Chapter XX. Meetings. Forms.

Form.

17. Notice of Annual Meeting.

18. " " Publication.

19. Oath. Inspectors of Election.

20. Certificate. Inspectors of Election.

21. Call. Special Meeting of Stockholders.

22. Notice. " "

23. " Regular Meeting of Directors.

24. Call. Special

25. Notice. "

26. Proxy. Simple.

27. Formal Proxy. Annual Meeting.

28. Revocation of Proxy.

Chapter XXI. Stock Certificates and Stock Books.
Form.

29. Stock Certificate. Common.

30. " Preferred.

31. Assignment of Stock Certificate. In Blank.

32. Complete.

33. Indemnity Bond. Reissue of Lost Certificate.

34. Transfer Book.

35. Stock Book and Stock Ledger.

Chapter XXII. Signatures and Certificates.

Form.

36. Official Signatures.

(a) Informal.

(b) Formal.

37- Corporate Signatures.

(a) Incomplete.

(b) Complete.

(c) Attestation of Seal.

(d) Testimonium.



TABLE OF CONTENTS. Xlll

38. Corporate Endorsements.

(a) Simple.

(b) For Deposit.

39. Corporate Acknowledgment.

40. Treasurer's Affidavit.

41. Certification. Extract from Minutes.

42. Certified Resolution for Bank.

43. Certificate. Payment of One-half of Capital Stock.

Chapter XXIII. Forms of Reports.
Form.

44. Annual Report.

45. Report to Comptroller. Domestic Corporation.

46. " " Appraisement of Stock.

47. " " Foreign Corporation.

48. Statement to Comptroller. To Secure Exemption as Manufac-

turing Corporation.

49. Local Tax Report.

(a) General Form.

(b) New York City.

(c) Rochester.

(d) Syracuse.

Chapter XXIV. Sundry Instruments.

Form.

50. Application for Admission to State by Foreign Corporation.

(a) Statement and Designation of Agent.

(b) Consent of Agent.

(c) Affidavit to Certificate of Incorporation.

51. Agency Changes. Foreign Corporation.

(a) Revocation and New Designation of Agent.

(b) Certificate of Change of Office.

52. Charter Amendment. Change of Name.

(a) Resolution of Directors Authorizing Change.

(b) Publication Notice.

(c) Petition.

(d) Order.

53. Charter Amendment. Change of Principal Office.

(a) Written Consent of Stockholders.

(b) Certificate of Removal.

(c) Vote of Stockholders.

54. Charter Amendment. Classification of Stock.

(a) Publication Notice.

(b) Certificate.



XIV TABLE OF CONTENTS.

55. Charter Amendment. Increase of Stock.

(a) By Unanimous Consent.

(b) " Vote of Stockholders.

56. Charter Amendment. Increase of Number of Directors.

(a) Notice of Meeting.

(b) Proof of Service.

(c) Transcript of Proceedings.

(d) Unanimous Consent.

57. Voluntary Dissolution.

(a) Certificate.

(b) Consent of Stockholders.

(c) Statement of Secretary.

(d) Affidavit of Secretary.

58. Voting Trust Agreement.

59. Underwriting Agreement.

60. Resolution Declaring Dividend.

61. Notice of Dividend.

62. Treasurer's Bond.

63. Corporate Calendar.

Chapter XXV. Bond Issues.

Form.

64. Stockholders' Resolution Authorizing Mortgage.

65. Written Consent to Mortgage.

66. Certificate of Consent to Mortgage.

67. Directors' Resolution Authorizing Bond Issue.

68. Deed of Trust, Including Forms of Bond and Coupon.

PART III. STATUTES.

1. The Business Corporations Law.

2. The Stock Corporation Law.

3. The General Corporation Law.

4. The Transportation Corporations Law.

5. Filing and Recording Fees.

(a) Fees to Secretary of State.

(b) " " County Clerks.

(c) Table of Fees.

6. The Tax Law.

(a) Local Tax.

(b) State Tax.

(c) Stock Transfer Tax.

7. Code of Civil Procedure.

8. Penal Code.

9. Miscellaneous Statutory Provisions Affecting Corporations.



NEW YORK CORPORATIONS.



PART I. PROCEDURE.



CHAPTER I.
CORPORATION LAWS.



i. Creation of Corporations.

Corporations are the creatures of the legislature and de-
rive their right to exist and their privileges entirely from legis-
lative grant. Thomas v. West Jersey Ry., 101 U. S. 71
(1879). The power of the legislature to create corporations
is absolute except where limited by the state or national con-
stitutions. Louisville Gas Co. v. Citizens' Gas Light Co.,
115 U. S. 683 (1885).

2. Constitutional Provisions.

The New York Constitution provides as follows :
"Corporations may be formed under general laws; but
shall not be created by special act, except for municipal pur-
poses, and in cases where, in the judgment of the Legislature,
the objects of the corporation can not be attained under gen-
eral laws." (Art. VIII, i.)

IS



1 6 NEW YORK CORPORATIONS.

It is settled that this section leaves the necessity for in-
corporation by special act entirely to the judgment of the
legislature and that the existence of a general law under
which a corporation might be created, does not render a special
act of incorporation unconstitutional or open to judicial re-
view. Met. Bank v. Van Dyck, 27 N. Y. 400, 448 (1863).
A charter obtained under a general law may be amended by
special act. In re Prospect Park & C. I. Ry., 67 N. Y. 371
(1876).

The Constitution, however, prohibits any private or local
bill (Matter of N. Y. El. Ry., 70 N. Y. 327, 345 [1877]) :

(1) "Granting to any corporation, association or
individual the right to lay down railroad tracks. (Held
not to apply to a municipality. Sun v. Mayor of N. Y.,
152 N. Y. 257 [1897].)

(2) "Granting to any private corporation, asso-
ciation or individual any exclusive privilege, immunity
or franchise whatever. In re Union Ferry Co., 98 N. Y.
139, 151 (1885).

(3) "Providing for public bridges and chartering
companies for such purposes, except on the Hudson River
below Waterford and on the East River, or over the
waters forming a part of the boundaries of the State."
(Art. Ill, 1 8.)

State or municipal aid to private corporations is prohib-
ited. (Art. VIII, 9, 10.) It is also provided that all cor-
porations shall have the right to sue and shall be subject to
be sued in all courts in like cases as natural persons. (Art.
VIII, 3.)

3. Statutes.

In accordance with the provisions of Art. VIII of the
Constitution, the legislature has enacted general statutes which



CORPORATION LAWS. 17

provide for and control the organization and management of
business corporations. Prior to 1890 these laws existed as
far as then enacted only as disconnected session laws. In
that year, however, the legislature in accord with the policy
of substituting general statutes for scattered session laws, col-
lected, classified and grouped most of these corporation laws
under distinctive titles.

The most important and generally applicable of these
groups are the "General Corporation Law," the "Business
Corporations Law," and the "Stock Corporation Law." In
addition to these, there are various special statutes as the
"Transportation Corporations Law," the "Railroad Law," the
"Banking Law," etc., etc.

4. The Business Corporations Law.

The statutes relating to the creation of stock corporations
"for any lawful business purpose or purposes other than a
moneyed corporation, or a corporation provided for by the
banking, the insurance, the railroad and the transportation
corporation laws" (B. C. L., 2), are grouped and entitled
the "Business Corporations Law." This law relates to busi-
ness corporations only, the term including trading, mining
and manufacturing companies and containing detailed direc-
tions for their formation, consolidation and reorganization.
( See page 294, et seq. for the Business Corporations Law. )

5. The Stock Corporation Law.

The statutory details relating to the management, rights
and powers of stock corporations of every kind, and the rights,
powers and duties of their officers, directors and stockholders,
are brought together under the title the "Stock Corporation
Law." This law applies to all corporations having a capital
stock, including those formed under the Business Corporations



1 8 NEW YORK CORPORATIONS.

Law. It supplies general provisions and details of procedure
which are not found in the Business Corporations Law. (See
page 302, et seq. for the Stock Corporation Law. )

6. The General Corporation Law.

All those laws which apply to both stock and non-stock
corporations and which could not therefore properly be in-
cluded in either the Business Corporations Law or the Stock
Corporation Law are collected under the title of the "General
Corporation Law." Business corporations fall under this law
also and are therefore subject to the provisions of all three
groups of statutes. This necessitates reference to each group
to determine the mode of creation, the powers, privileges and
obligations of corporations of this nature. (See page 324,
et seq. for the General Corporation Law.)

7. Relative Force of General and Special Statutes.

The character of the General and Stock Corporation
Laws is very sweeping and this has led the legislature to
provide that if other corporate laws conflict, the provisions of
the latter shall prevail. (G. C. L., 33.) If, however, an-
other act covers a subject provided for by either law, but is
not in conflict therewith, the former is supplemented by the
provisions of the latter.

In the present volume under each heading are included
the provisions of all general laws bearing upon the subject of
the particular heading and also of any special statutes in
point.

8. General Statutory Law.

Additional acts, affecting corporations, considered in
whole or in part in the present volume, are as follows :

The "Transportation Corporations Law," which covers



CORPORATION LAWS. 1 9

the incorporation and regulation of all transportation corpora-
tions except railroads, and includes navigation, gas, electric
light, telegraph and telephone corporations. (See page 337,
et. seq.}

The important provisions of the "Tax Law" applying to
corporations. (See page 349, et seq.) Also the "Tax Law on
Transfers of Stock." (See page 360, et seq.}

The important provisions of the "Code of Civil Pro-
cedure" and of the "Penal Code" applicable to corporations
are given. (See page 363, et seq.)

The statutory provisions as to fees to public officials
with table of fees are also given. (See page 346, et seq.}

The important miscellaneous statutory provisions affect-
ing corporations are also included. (See page 387, et seq.)

Important acts, affecting corporations, which are not con-
sidered in the present volume because they apply only to
classes of corporations outside its scope, are as follows:

The "Banking Law," which applies to state banks, sav-
ings banks, trust companies, building and mutual loan cor-
porations, co-operative loan associations, mortgage loan and
investment corporations and safe deposit companies, all of
which are referred to as "moneyed corporations."

The "Membership Corporation Law," which applies to
corporations not formed for pecuniary profit. This law con-
tains provisions for the incorporation and management of
cemetery and fire corporations, corporations for the preven-
tion of cruelty, hospitals, Christian, bar and veteran associa-
tions, soldiers monument corporations, boards of trade and
agricultural corporations. A special law, known as the
"Benevolent Orders Law," applies to societies which include
benefit insurance to members. (L. 1895, Ch. 559.)

The "Insurance Law," which regulates insurance com-



Online LibraryRichard Compton HarrisonA manual of New York corporation law, containing the important statutes regulating business incorporations, a digest of these statutes and the principal forms used by corporations operating in the state of New York → online text (page 1 of 37)