Robert C. (Robert Cushing) Cumming.

The annotated corporation laws of all the states, generally applicable to stock corporations ... in three volumes online

. (page 85 of 92)
Online LibraryRobert C. (Robert Cushing) CummingThe annotated corporation laws of all the states, generally applicable to stock corporations ... in three volumes → online text (page 85 of 92)
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so that one-third shall hold their offices for
one year, one-third for two, and one-
third for three years; In which case all di-
rectors elected subsequent to the first shall
hold their offices for three years except
when elected or appointed to fill vacancies.

6. The principal duties of the several gen-
eral officers respectively.

6. The method and conditions upon which
members shall be accepted, discharged or
expelled; and, in stock corporations, persons
holding stock, according to the regulations
of the corporation, and they only, shall be
members.

7. Such other provisions or articles, if
any, not inconsistent with law, as they may
deem proper to be therein inserted for the in-
terests of such corporations or the accom^
plishment of the purposes thereof, including,
if desired, the duration of its existence. In
case the corporation Is formed without capi-
tal stock the articles shall fix the time and
place for the first meeting for the election
of officers, and the signers of such articles
shall give notice thereof to the members in
the manner provided In the next section.
Such original articles or a true copy
thereof, verified as such by the affidavits of
tTCo of the signers thereof, shall be recorded
by the register of deeds of the county in
which such corporation is located; and no
corporation shall, until such articles be so
left for record, have legal existence. A like



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Temporary control; first meeting — R. S., §| 1772a, 1773.



verified copy and a certificate of the regis-
ter showing the date when such articles were
left for record shall, within thirty days, be
filed with the secretary of State, and for a
failure so to do, each signer of any such
articles shall forfeit twenty-five dollars.
For filing the articles of incorporation of
corporations for the manufacture of beet
sugar, or of butter, cheese or other dairy
products there shall be paid the secretary
of State ten dollars, and for filing an amend-
ment to such articles five dollars; for filing
in his oflice the articles of any other cor-
poration, except as is otherwise specifically
provided In these statutes, the corporators
shall pay twenty-five dollars If the capitAl
stoclc of the corporation is fixed therein at
twenty-five thousand dollars or less, and one
dollar for each additional one thousand dol-
lars of capital stock; and every corporation
organized and doing business under the laws
of this State which may hereafter increase
its capital stocli, shall pay as a fee therefor,
fifty cents for each one thousand dollars of
increase, and, except as above provided, for
filing any amendment to its articles, other
than for the purpose of increasing its capi-
tal stock, shall pay ten dollars; provided,
that no fee shall be required from any cor-
poration organized without capital stock, or
organized exclusively for educational, benev-
olent, charitable or reformatory purposes,
the articles of which provide that no divi-
dend or pecuniary profits shall be declared
to the members thereof. (R. S. 1858. ch. 76,
S§ 1-3; ch. 68, §§ 2, 3; R. 8. 1878. § 1772,
amended by revisers of 1808.)

Register of deeds must keep book of record.
I 763. Articles, how amended. H 1774, 1700.
Principal office must be In the State. | 1750. De-
fect in articles, how cured. | 1791. Articles as
evidence, i 4181. Existence of corporation pre-
sumed. I 4199.

[The articles need not designate with particu-
larity all powers, but may designate In general
terms purposes for which the corporation Is or-
ganized, and wnen organised, such corporation
may exercise all such powers as aire usual and
necessary to accomplish Its purpose, not In con-
flict with the law of the State. Wendell v. State,
62 Wis. 800; s. c, 22 N. W. Rep. 485.

Above section and section 1774 must be con-
strued together. Wood v. Gospel Assn., 68 Wis. 0.

Provision of first clause of subdivision 6 has no
application to the articles of a stock corporation,
and their omission therefrom will not affect the
legality of its Incorporation. Mfg. Co. t. Groft, 68
Wis. 256; s. c. 84 N. W. Rep. 143.

Provision that articles shall state *' name and
location " of the corporation does not authorize
them to fix the place where its principal office
shall be. Steamship Co. t. Milwaukee, 88 Wis.
590: s. c. 53 N. w: Rep. 839.

Right of private person to a suit to enjoin a cor-
poration from carrying on business, on the ground
that Its Incorporation is illegal, determined. Su-
preme Court of I. O. F. of Canada v. Supreme
Court of U. O. of Foresters, 68 N. W. Rep. 1011.]

Curative provision.

i 1772a. Whenever In the organization of
corporations under chapter 146 of the laws
of 1872 there may have been a failure to



verify a copy of the articles recorded in the
office of the register of deeds of the proper
county, such failure shall not afTect the
validity of the corporation, but the same
shall be a body corporate from and after
the recording of such copy the same as
though the copy had been duly verified. In
any controversy as to the validity of such
corporation It shall be presumed that the
copy tiius recorded Is a true copy of the
original articles, and such copy, or a cer-
tified copy of the record thereof, shall be
prima facie evidence In all courts and places
of the organization of such corporation.
(1893, ch. 800

Temporary control; first meeting; liability
of promoters.

I 1773. Until the directors or trustees shall
be elected the signers of the articles of or-
ganization shall have direction of the affairs
of the corporation, and make such rules
as may be necessary for perfecting its or-
ganization, accepting members or regulating
the subscription to the capital stock. In
stock corporations the first meeting may be
held at any time after one-half of the capital
stock shall have been subscribed; and may
be called by any two signers of the articles,
at such time and place as they shall appoint,
by giving ten days' personal notice thereof,
in writing, to each subscriber of stock, or
by publishing notice thereof for at least two
weeks before such meeting in some news-
paper published at or nearest to the desig-
nated place of location of the corporation;
or such meeting may be held without pre-
vious notice if all the subscribers for stock
be present In person or by duly authorized
attorney. No such corporation shall trans-
act business with any others than its mem-
bers, until at least one-half of Its capital
shall have been duly subscribed and at least
twenty per centum thereof actually paid in;
and If any obligation shall be contracted in
violation hereof the corporation offending
shall have no right of action thereon; but
the signer or signers of the articles and the
subscriber or subscribers for stock trans-
acting such business or authorizing the
same, or having knowledge thereof, consent-
ing to the incurring of any debt or liability,
as well as the stockholders then existing;
shall be personally liable upon the same*
The signers of the articles of organlzatloa
may abandon the organization and revoke
the articles at any time before fifty per
centum of the stock has been subscribed
and twenty per centum thereof paid in by
signing and acknowledging a written agree-
ment revoking the original articles of or-
ganization and recording the same or a copy
thereof, verified In the manner prescribed
by subdivision 7 of section 1772, in the office
of the register of deeds and filing a like ver-
ified copy in the office of the secretary of
State; provided, that the abandonment of
the organization or the revocation of th€(



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23



Amendment of articles — R. S., § 1774.



articles in pursuance hereof shall not relieve
such corporation or any signer or subscriber
for stock or any stoclLholder then existing
from any liability hereby created. (R. S.
1858, ch. 78, § 3; amended by revisers of
1898.)

Consent to meetings not regularly called.
I 1761. Record of proceedlngt, how kept. | 1758.
Quorum of stockholders. { 1749.

[Where board of directors, in Issuing new stoclc
to shareholders generally, refuse to issue to par-
ticular stockholaer his proportion thereof, he
may compel its issue to him by suit in equity
against the corporation, though he might nave
maintained an action at law against it for dam-
ages. Dousman v. M. & S. Co., 40 Wis. 418.

r«o call or assessment, subsequent to the prelim-
inary one, upon such subscription to stock of a
corporation can be made unless, in compliance
with above section, at least one-half of the stock
has been subscribed, and at least 20 per cent,
thereof actually paid in. And this is so even
though subscriber agreed to pay the .balance of
such shares at such times and in such install-
ments as the same shall be called for by said
corporation. Mining Co. y. Sherman, 74 Wis. 226;
8. c, 42 N. W. Rep. 226.

In an action to recover a call or assessment the
complaint must aver compliance with above sec-
tion. Id.

In an action to enforce a personal liability upon
such a contract under above section, it is not com-

fetent for plaintiff to prove that agent acted for
he stockholders individually or that they ratified
the contract. Bufflngton v. Bardon, 80 Wis. 635;
8. c. 50 N. W. Rep. 776.

Under sections 1772, 1778, a corporation becomes
such when its articles are filed for record. Bad-
ger Paper Co. v. Rose. 70 N. W. Rep. 302.

After articles are filed for record, but before
organisation, the signers of the articles may con-
tract for materials to carry on the business. Id.]

Who are stockholders.

One does not become a stockholder by signing
a nancr which binds him to take stock in a cor-
poration to be formed, though that paper be in
the form of a present subscription for stock.
** Then existing " means when the debt Is In-
curred. Badger Paper Co. v. Rose, 95 Wis. 145;
8. c. 70 N. W. Rep. 302. But when such a pro-
posal is presented to the corporation and ac-
cepted by it, each subscriber thereto becomes a
stockholder, and his contract of subscription can-
not be rescinded for any fraud by the promoters
of the corporation to which it was not a party.
Franeyv. Warner, 71 N. W. Rep. 81, 84; •. c, 96

Liability of promoters for fraud.

For sale of option to corporation for an excess-
ive amount Pittsburg Co. v. Spooner, 74 Wis.
807. See also Yale Gas Stove Co. v. Wilcox, 25
L. R. A. 90-97, note.

A promoter may sell property to the corporation
for any price he can get If there Is no fraud.
Promoters are fiduciaries of the corporation, and
owe it the duty to faithfully state the facts as to

gropertv which would influence It In acquiring it.
onntaln Spring Park Co. v. Roberts, 92 wis.
845; s. c, 66 N. W. Rep. 399.

The promoters of a corporation fraudulently
represented that a certain price was to be paid
for land to be conveyed to It, and procured sub-
scriptions on that basis, but purchased the land
at a much lower price, appropriating the profit
to themselves. The officers had knowledge of the
plan. It was held that an innocent subscriber
might elect to remain a subscriber and sue the
promoters at law for damages, or tender back
what he may have received and sue In equity for
a rescission of the contract of subscription and a
return of the money paid thereon. If the pro-
posal was made to and accepted by the corpora-
tion, each subscriber became a stockholder, and
there could be no rescission for any fraud to



which the corporation was not a party; but a blU
against both corporation and promoters would be
maintained for relief against the latter. Franey
V. Warner, 96 Wis. 222; 71 N. W. Kep. 81.

The same rule was laid down in Hebgen v.
Koeffler. 97 Wis. 313; s. c, 72 N. W. Rep.
745, in which stockholders sued pro'moters
to rescind a sale of real estate to the cor-
poration and to recover profltH fraudulently
made by the promoters on the sale. The
payment by the plaintiffs of an assessment on
their stock was held not to be a ratification of
the sale^lnce they did not then know of the
fraud, where a purchaser of real estate, after
paying part of the price, and assuming obliga-
tions for the balance, organized a corporation,
which was not thought of when he made the pur-
chase, but for the purpose of taking the property
off his hands at a price which was known to the
other subscribers for stock, such corporation can-
not complain that it was charged more for the
f property than the cost to the original purchaser,
n the absence of false representations as to the
value thereof. A prospectus for a corporation
which states, " cost of ground, $40,000,'* Is not a
representation that that was the cost to a stock-
holder who proposed to turn the property over to
the corporation. The fact that a promoter of a
corporation personally pays a commission to In-
duce another to subscribe, or to procure other
subscribers, who would likely be valuable patrons
of the business to be carried on. does not consti-
tute a fraud upon the corporation, or the other
subscribers to its capital stock. Milwaukee Cold
Storage Co. v. Dexter, 99 Wis. 214; 74 N. W. Rep.
976.

One purchasing land in his own name and pay-
ing therefor, and afterwards organizing a corpo-
ration, to which he offers to sell the property,
does not become an agent or trustee of the cor-
poration. Id.

Where several persons unite to promote a cor-
poration and defaud It of Its assets for their
benefit, and for that purpose some become offi-
cers and obtain control, and the scheme Is con-
summated, one of the conspirators being the cor-
poration, all are equally liable without regard to
the division of profits, and an action will lie by
the injured corporation to compel an accounting.
Zinc Carbonate Co. v. First Nat. Bank, 79 N. W.
Rep. 229.

Defendant had obtained the right to sell land
and retain as commissions all he received on a
certain price. He engaged others to aid him, and
the parties with others formed a corporation of
which they were elected the officers. They then
Induced the corporation to buy the land at an
advance over the price fixed by the vendor, se-
cretly keeping the difference. It was held that the
corporation might compel an accounting. First
An. Land Co. v. Hildebrand, 79 N. W. Rep. 753.1

Amendment of articles; notice of change
of name.
S 1774. Any corporation organized under
this chapter may, at any meeting of Its mem-
bers, by a vote of at least the owners of two-
thirds of all the stock then outstanding, in
case of stock corporations, or at least one-
half of the members of corporations without
stock, unless a greater vote shall be required
in its articles, amend Its articles of organiza-
tion so as to modify or enlarge its business
or purposes, change Its name or location,
increase or diminish its capital stock, change
its officers or the number of directors or
provide anything which might have been
originally provided in such articles; but no
corporation without stock shall change sub-
stantially the original purposes of its organ-
ization. Such amendment shall be adopted
only in accordance with the articles of or-
ganization, if a mode of amending the same



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General powers; stock in other corporations — R. S., | 1775.



shall have been therein prescribed. When
adopted a copy of such amendment with a
certificate thereto aflSxed, sij^ned by the
president and secretary, or if none, the cor-
respondent officers, and sealed with the cor-
porate seal, if there be any, stating the fact
and date of the adoption of such amend-
ment and that such copy is a true copy of
the original, shall be recorded in the office
where the original articles are recorded; and
the register shall note on the margin of the
record of such original, the volume and page
where every such amendment is recorded;
and no amendment shall be of effect until
80 recorded. Within thirty days such offi-
cers shall file a like certified copy with the
secretary of State, and in case of failure so
to do, shall each forfeit twenty-five dollars.
Whenever the corporate name shall be
changed, the secretary shall publish a notice
thereof in a newspaper published at or near-
est to the place of location of such corpora-
tion for three weeks, and if he shall fall
for two months so to do, shall forfeit twenty-
five dollars. No change of location of any
such corporation, if beyond the limits of
the county, shall be valid until the articles
of organization and all amendments shall
have been recorded in the office of the regis-
ter of deeds of the county to which the
same shall be changed (1853, ch. 68, S§ 15,
18; 1872, ch. 144, S§ 19, 21; 1872, ch. 146, S 4;
1874, ch. 113, § 6; 1874, ch. 307.)

Articles to contain what | 1772. Amendment
of. i 1790. Defect in, how cured. | 1791.
Amended articles as evidence. | 4181.

[An amendment of articles is Inoperative until
a certificate thereof Is recorded with refrister of
deeds. Wood v. Building Assn., 63 Wis. 11; s. c,
22 N. W. Rep. 766.

An allegation in complaint that no certificate of
an amendment to articles has been filed in office
of register of deeds, is equivalent to an averment
that no such certificate has been left for record.
Id.

Above section and section 1772 are In pari ma-
teria, and must be construed together. Id.

If the name of a corporation be changed. It
must sue and be sued, In respect to Its prior
rights and liabilities, by its new name. Dousman
V. Milwaukee, 1 Pin. 81.

Although an attempt to change the name of a
corporation by amendment of Its articles was
Ineffectual because such an amendment was not
recorded as required by section 1774, a voluntary
assignment by the corporation under the new
name for benefit of creditors was valid at law
and In equity. W. ft H. Co. v. Wltte, 89 Wis. 637;
62 N. W. Rep. 6ia

A corporation organised under a special statute
may change its name under this and the following
sections. Merrill v. Wisconsin F. College, 74 Wis.
416.]

General powers; stock in other corpora-
tions.

§ 1775. Every such corporation, when
so organized, shall be a body corporate
by the name designated in its articles,
and shall have the powers of a corpo-
ration conferred by these statutes nec-
essary or proper to conduct the busi-
ness or accomplish the purposes prescril)ed
by its articles, but no other or greater;



and may take by gift, devise, purchase
or otherwise, and manage and hold, and
may, by a vote of a majority of the
stock given at any regular meeting, or at
any special meeting duly called for the pur-
pose, sell and convey or authorize to be con-
veyed, all or any portion of the property
owned by It, whether real, personal or
mixed; and may, by a similar vote, mortgage
or lease any such property whenever it
shall be necessary for its business purposes
or the protection or benefit of its property
held or used by the corporate business, how-
ever the same may have been acquired. But
no such corporation shall take or hold stock
in any other corporation except upon and
with the assent of the holders of three-
fourths of the capital stock of both the cor-
poration proposing to take such stock and
the corporation In which it is proposed to
be taken; provided, that any corporation here-
tofore or which may be formed or organized,
under or in pursuance of any general or spe-
cial law of this State for the purpose of carry-
ing on a logging or lumbering' business, or
for engaging in the manufacture of lumber,
or of the improvement of the navigation of
any river or stream, for log-driving or lum-
bering purposes, or the running, driving,
booming, sorting, brailing or rafting of logs,
timber, lumber or other materials upon or
down any river or stream; and any foreign
corporation, formed or organized for similar
or kindred purposes, may upon the as-
sent of the holders of three-fourths of the
capital stock thereof, shaU have authority
to purchase, take and hold stock in, and in
its corporate capacity become a subscriber
to, the capital stock of any other corpora-
tion or corporations, foreign or domestic,
created or formed for any one or more of
the same or similar purposes; provided,
also, that any corporation formed or
organized, or which may be formed or
organized under or in pursuance of any
general or special law of this State, for the
purpose of mining, smelting, quarrying, or
any mechanical or manufacturing purpose,
upon and with the assent of three-fourths of
its capital stock, may in its corporate
capacity, subscribe for, purchase, take
and hold stock in any corporation, for-
eign or domestic, formed for the pur-
pose of manufacturing, creating or gen-
erating any kind of power or light, to be
used as a mechanical agency, when such
power or light is to be used wholly, or in
part, in facilitating the operations of such
mining, smelting, quarrying or other me-
chanical or manufacturing company, or the
transaction of its business. Provided, also,
that any street railway corporation, organ-
ized under or in pursuance of any law of
this State, or any other State, and which
owns or controls a street railway, operated
by electric power, or which shalfmake the
purchase hereinafter described, for the pur-
pose of being so operated, may purchase,
take and hold all or any part of the real and



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25



General powers; stock in other corporations — R. S., S 1775.



personal property, rights, privileges, ordi-
nances and franchises of any other street
railway company, foreign or domestic, ope-
rating or to operate a street railway by elec-
tric power or of any corporations, foreign or
domestic, now or hereafter existing, formed
for the purpose of manufacturing, creating
or generating electricity for power, light
or heat, or any other purpose, and may
purchase, take and hold stock in, and in Its
corporate capacity, become a eubscriber to
the capital stock of any other similar street
railway or any electrical corporation or cor-
porations, foreign or domestic, now or here-
after existing; the terms of such purchase
to be assented to by the holders of three-
fourths of the capital stock of each company
buying or selling as aforesaid at any general
or special meeting of such stockholders; the
consideration for such purchase may be paid
in the stock or bonds, or both, of the pur-
chasing company; the conveyance of prop-
erty to be by deed or bill of sale, or both, In
the usual form; the transfers of stock to be
by indorsement, in the usual form. The elec^
trie power so acquired may be sold or leased
by the purchasing company, for power or
light or heat, or other purpose, to all persons
and corporations for cash, or for the stock,
or bonds, or both, of any corporation to
which the same is furnished; and provided,
also, that all electric-light companies, for-
eign or domestic, now or hereafter existing,
shall have all the rights, powers and privi-
leges conferred by this section on street rail-
way corporations. Provided, further, that
any corporation organized for the purpose of
locating, building, encouraging and establish-
ing manufactories and manufacturing estab-
lishments in this State, upon the assent of
the holders of three-fourths of the capital
stock thereof, may purchase, take and hold
stock in, and in its corporate capacity be-
come a subscriber to the capital stock of
any corporation so aided or encouraged, to
the amount of the actual cash paid or other
property contributed to any such manufact-
uring corporation. (1853, ch. 68, 8 7; 1872,
ch. 144, $S 4, 5, 12; 1877, ch. 168; 1872, ch.
146, S 1; 1874, ch. 113, §| 2, 5; 1876, ch. 189,
§S 5, 7; 1891, ch. 283; 1891, ch. 403; 1897, ch.
341.)

General powers. | 1748. Of corporations hith-
erto formed. | 1701.



[Gorporatlon can exercise only those powers ex-
pressly conferred, and those necessarily incident
to purposes of Its creation. Madlson^tc, Boad



Oo. T. Watertown, etc., Boad Co., 7 wis. 60.

And In exercising the powers conferred upon a
corporation, it may adopt any proper and con-
venient means directly to their accomplishment,
not amounting to the transaction of a separate
nnanthorized business. Id.; Clark v. Farrington,

u Wis. see.

A boom company may make contracts for stor-
ing logs in any legal manner, and not merely as
it is expressly authorized. Boom Co. v. Plumer,
86 Wis. 274.

A corporation is not only incapable of making a
contract which is forbidden by its charter, but in
general it can make only such as are necessary.



Online LibraryRobert C. (Robert Cushing) CummingThe annotated corporation laws of all the states, generally applicable to stock corporations ... in three volumes → online text (page 85 of 92)