Oklahoma, Pennsylvania, South Dakota, Tennessee, and Wisconsin they are liable for the wages of employees of the corporation. In New York, in what is known as full liability corporations, stockholders are liable for debts of the corporation in full. In Arkansas, Delaware, Iowa, Maine, Michigan, Minnesota, New Hampshire, New Jersey, North Carolina, Vermont, and West Virginia stockholders are individually liable to the extent of any part of the corporate assets refunded to them respectively. In Idaho, Minnesota, North Carolina, and South Carolina stockholders are individually liable for any fraud or misconduct on their part. In Arizona, Delaware, Iowa, and Nebraska stockholders are personally liable for the debts of the corporation, unless they limit this liability by provision therefor in the charter.1

§ 123. Statutory Liability of Directors. With the exception. of a very limited number of States, all of the Commonwealths have statutes, either civil or penal, imposing liability upon directors for certain designated acts of misfeasance or nonfeasance. These statutes are diverse both in scope and character. It will only be possible in this connection to enumerate without discussion the several liabilities thus imposed upon. directors.

(1) For illegal declaration of dividends.2

(2) For illegal withdrawal of capital stock.

(3) For making false reports, or keeping false books of account, or making false representations.1

1 Van Pelt v. Gardner, 54 Neb. 701; Pittsburg, etc. R. R. Co. v. Allegheny Co., 75 N. W. 974. 63 Pa. St. 126.

2 Such liability exists in Alaska, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. See Dykman v. Keeney, 160 N. Y. 677; 54 N. E. 1090; Chamberlain v. Company, 118 Mass. 552;

3 Such liability exists in Alaska, California, Connecticut, Georgia, Idaho, Iowa, Mississippi, Montana, Nevada, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, South Dakota, Washington, and West Virginia.

Such liability exists in Delaware, District of Columbia, Indiana, Kentucky, Montana, Nevada, New Hampshire, New York, Rhode Island, South Carolina, Tennessee, and Virginia. See Huntington v. Attrill, 118 N. Y. 365; 23 N. E. 544; Gidding v. Holter, 19 Mont. 263; 48 Pac. 8; Felker v. Company, 148 Mass. 226; 19 N. E. 225; Githers v. Clarke, 158 Pa. St. 616; 28 Atl. 232; Thompson Houston

(4) For failure to file annual reports.1

(5) For violation of express statutes.2

(6) For authorizing the contraction of debts in excess of the amount limited by law.3

(7) For contracting debts before statutory requirements, such as subscriptions for stock, either in whole or in part, publication. of articles, etc., have been complied with.1

(8) For failure to file certificates as to reduction of capital stock.

(9) For false oaths to articles of incorporation."

(10) For making loans to directors.7

(11) For making loans to stockholders.8,

(12) For loss of funds through negligence."

(13) For failure to display name or itemized accounts at domiciliary office.10

(14) For failure to allow inspection of books.11

Electric Co. v. Murray, 60 N. J. L. 20; 37 Atl. 443.

1 Such liability exists in Colorado, Michigan, Montana, New Hampshire, New York, and Oklahoma. See Garrison v. Howe, 17 N. Y. 458; Van Etten v. Eaton, 19 Mich. 187; Shanklin v. Gray, 111 Cal. 88; 43 Pac. 399; Cincinnati Cooperage Co. v. O'Keeffe, 120 N. Y. 603; 24 N. E. 993; Wallace v. Walsh, 125 N. Y. 26; 25 N. E. 1076; Glenn Falls Paper Co. v. White, 18 Hun (N. Y.), 214; Bolen v. Crosby, 49 N. Y. 183; Tabor v. Bank, 62 Fed. 383; 10 C. C. A. 429.

2 Such liability exists in Arkansas, Idaho, Indiana, Kentucky, Michigan, North Dakota, and South Dakota. See Patterson v. Stewart, 41 Minn. 84; 42 N. W. 926; Loverin v. McLaughlin, 161 Ill. 417; 44 N. E. 99; Clow v. Brown, 150 Ind. 185; 48 N. E. 1034; 49 N. E. 1057; Gunther v. Company, 21 Ky. L. Rep. 655;

52 S. W. 931.

Such liability exists in California, Illinois, Idaho, Mississippi, Montana, New Hampshire, New Mexico, North Dakota, Oklahoma, Rhode Island, Tennessee, Vermont, and Wyoming. See Tradesmen Pub. Co. v. Company, 95 Tenn. 634; 32 S. W. 1097; Lewis v. Montgomery, 145 Ill. 30; 33 N. E. 880; Horuor v. Henning, 93 U. S. 228.

4 Such liability exists in Illinois, Ohio, Vermont, and Wisconsin. See Kent v. Clark, 181 Ill. 237; 54 N. E. 967; Clow v. Brown, 150 Ind. 185; 48 N. E. 1034; 49 N. E. 1057; Hequembourg v. Edwards, 155 Mo. 514; 55 S. W. 490; Loverin v. McLaughlin, 161 Ill. 417; 44 N. E. 99.

5 Such liability exists in Indiana, New Jersey, and North Carolina.

6 Such liability exists in Massachusetts. 7 Such liability exists in Massachusetts and New York. See Thacher v. King, 156 Mass. 490; 31 N. E. 648; Connecticut River Bank v. Fiske, 62 N. H. 178; Witters v. Sowles, 31 Fed. 1.

8 Such liability exists in District of Columbia, Mississippi, Missouri, New Hampshire, New York, Oklahoma, Rhode Island, and Tennessee. See Workingmen's Banking Co. v. Rautenberg, 103 Ill. 460; Bank Commissioners v. Bank of Buffalo, 6 Paige (N. Y.), 497.

9 Such liability exists in Minnesota. See Horn Silver Mining Co. v. Ryan, 42 Minn. 196; 44 N. W. 56; M. F. N. Bank v. Harper, 61 Minn. 375; 63 N. W. 1079.

10 Such liability exists in California and New Jersey. See Eyre v. Harmon, 92 Cal. 580; 28 Pac. 779; Ball v. Toman, 119 Cal. 35; 51 Pac. 546.

11 Such liability exists in New Jersey.

(15) For embezzlement of officers.1

(16) For failure to make certificate of payment of capital stock.2

(17) For making false appraisal as to value of property taken in exchange for corporate stock.3

(18) For not producing list of stockholders at the annual election of directors.4

(19) For permitting an illegal issue of stock or bonds.5

(20) For making prohibited transfers of property."

(21) For issuing stock as full paid when less than its par value is paid thereon."

§ 124. Extension of Corporate Existence. In order to extend corporate existence special legislative action is necessary. In nearly all of the States statutes exist providing that for a period of three years after the term of existence limited by its charter has expired, the corporation shall continue to exist for the purpose of winding up its affairs. Express power to extend corporate existence is granted in twenty-five of the Commonwealths.

Where corporations are permitted under their charter to make their term of existence perpetual, this right to extend corporate existence is of very little practical importance. As, however, perpetual existence is permitted in only twenty-seven of the States, it is a question of much practical importance in the remainder. It has been held by at least one court of excellent repute that where the power of amendment of the charter is unlimited, even though it does not refer specifically to the right to extend corporate existence, it may nevertheless be used for that purpose.

10

When so extended, it must pay

1 Such liability exists in Colorado, New Mexico, and Pennsylvania. See Scott v. Depeyster, 1 Edw. Ch. (N. Y.) 513; Wallace v. Bank, 89 Tenn. 630; 13 S. W. 48; Ouderkirk v. Bank, 119 N. Y. 263; 23 N. E. 875.

2 Such liability exists in Colorado, Delaware, Maryland, New Hampshire, North Carolina, and Rhode Island.

3 Such liability exists in Connecticut. See Hequembourg v. Edwards, 155 Mo. 514; 56 S. W. 490; F. C. T. Co. v. Floyd, 47 O. St. 525; 26 N. E. 110.

4 Such liability exists in Delaware and New Jersey.

an organization tax if the law

5 Such liability exists in North Dakota and New York. See Clow v. Brown, 150 Ind. 185; 48 N. E. 1034.

Such liability exists in New York. 7 Such liability exists in North Dakota. See Schley v. Dixon, 24 Ga. 273.

8 People v. Pfister, 57 Cal. 532; Attorney-General v. Perkin, 73 Mich. 303; Smith v. Company, 58 N. J. Eq. 331; 43 Atl. 567; People v. Greene, 116 Mich. 505; 74 N. W. 714; Frostberg Mining Co. v. Company, 81 Md. 28; 31 Atl. 698.

10 People v. Greene, 116 Mich. 505; 74 N. W. 714.

so provides, even though existence is extended under guise of an amendment.1

§ 125. Taxation of Domestic Corporations. - Legislative control over domestic corporations is exercised by means of the unquestioned right of such legislatures to impose a tax upon their organization and annually thereafter in the form of a franchise tax. The latter may be defined to be a tax levied by the State upon the capital of a corporation in return for the privilege of exercising its corporate powers within the limits of the State levying such tax. On the general subject of franchise tax the New York Court of Appeals in a recent case2 spoke as follows:

"The system of taxation in this State is so complicated as to invite mistakes on the part of those who are called upon to enforce the law. In some instances the tax is laid upon property and in others upon rights and privileges connected with the property. There is direct taxation of real estate and of some personal property, indirect taxation of other personal property, taxation of the capital stock of corporations and of their franchises, taxation upon the right of succession to the property left by decedents, and the like.

"There is, first, an organization tax, payable to the State, which is imposed but once, and is exacted for the privilege of becoming a corporation. Next, there is a tax upon the real estate owned by the corporation in this State, which is assessed the same as if it were owned by an individual. The personal property of the corporation is not directly taxed, but its capital stock and surplus after deducting the assessed value of its real estate and making some other deductions, is assessed at its actual value. Finally, there is a franchise tax on corporations which is payable annually to the State, 'computed upon the basis of the amount of its capital stock employed within this State.' This is not a tax upon property, although it is measured by the value of property, but upon the right of a corpora tion to exist and exercise the powers granted by its charter. These forms of taxation do not all rest upon the same principle. The organization tax is in the nature of a license fee for the right to become a corporation. The tax upon real estate is a direct tax upon real property, while the franchise tax is not laid upon property at all, but is imposed upon the corporation for the privilege of carrying on business in this State and exercising the corporate franchises granted by the State. The distinction between a tax upon the prop

1 NI. Lead Co. v. Dickinson (N. J.), 57 Atl. 138.

2 People ex rel. etc. v. Knight, 174 N. Y. 475; 67 N. E. 65.

erty of a corporation and a franchise tax, although well established and of great importance, is easily overlooked, as we find from our own experience."

With reference to organization taxes there can be no question raised as to the constitutionality of such taxation.1

The constitutionality of franchise taxes being imposed upon the franchise as a species of property is clearly within the constitutional powers of State legislatures. In all of the States and Territories, with the exception of Alaska, Arkansas, District of Columbia, Georgia, Indian Territory, and Oklahoma, graduated organization taxes are imposed upon domestic corporations.

With respect to annual franchise taxes these are imposed only in the States of Alabama, Colorado, Delaware, Maine, Massachusetts, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Texas, Vermont, Washington, and West Virginia. In Alabama, Colorado, Maine, North Carolina, Oregon, South Carolina, Texas, Vermont, Virginia, Washington, and West Virginia the tax is levied upon the total amount of authorized capital stock, irrespective of the amount that may have been issued and outstanding.

In Delaware, Massachusetts, New Jersey, and Ohio the tax is graded according to the amount of capital stock issued and outstanding. In New York the tax is determined largely by the dividends on the par value of the amount of capital stock authorized. It is also graded on the amount of capital stock employed within the State.

§ 126. Regulation of the Right of Consolidation.-To accomplish a valid consolidation of two corporations that are organized under the laws of the same or of different States, legislative authority is necessary. It is not over-stating the matter to say that legislative authority is as necessary for the accomplishment of a valid consolidation of existing corporations as it is to the creation of a corporation in the first instance.3 Any attempt, therefore, on the

1 United Horseshoe Works v. Lewis, 1 Abb. (U. S.) 518; Fed. Cas. No. 14365; Combined Saw & Planer Co. v. Flournoy, 88 Va. 1029; 14 S. E. 976; State v. Rotwitt, 17 Mont. 41; 41 Pac. 1004; Hughesdale Mfg. Co. v. Vanner, 12 R. I. 491; Jones v. Company, 21 Col. 263; 40 Pac.

457.

2 Society for Savings v. Coit, 6 Wall. (U. S.) 594; Tidewater Pipe Line Co. v. Berry, 53 N. J. L. 212; 21 Atl. 490; Attorney-General v. Bay State Mining Co., 99 Mass. 148.

3 Pearce v. Company, 22 How. (U. S.) 441; A. L. & T. Co. v. Company, 157 Ill. 641; 42 N. E. 153; Cole v. Company, 133 N. Y. 164; 30 N. E. 847.