§ 67. Provisions for the Regulation of the Internal Affairs of the Corporation. In a number of the States statutory authority is to be found for inserting in the articles of incorporation any provisions that may be desired relative to the regulation of the business, and for the conduct of the affairs of the corporation, creating, defining, and limiting the powers of the corporation, the officers, and the stockholders. Under such authority the clauses which are usually inserted are the following: giving the directors power to sell all the business of the corporation as an entirety; the power to sell entire corporate property at the request of a majority of the stockholders; giving the right to directors to make and alter by-laws; giving the power to directors to borrow money upon bond and mortgage without authority therefor being first given by the stockholders; power to appoint additional vice-presidents and assistant secretaries and treasurers; to declare dividends; to reserve and fix working capital; to appoint an executive committee from the board of directors; giving stockholders power to remove directors; giving power to create a lien upon stock for indebtedness due company from stockholders; provision for the examination of books by the stockholders, and in connection therewith power to insert private publicity clause; to provide for cumulative voting and limiting the power to vote; reservation of power to change provisions in the articles of incorporation; power to create preferred stock. § 68. Miscellaneous Provisions Relative to Contents of Articles of Incorporation. It would be impossible to enumerate all the peculiar provisions under the several business corporation acts which exist in the various States. Among those not already referred to are the following: Statement of the amount of stock subscribed for by the incorporators; a list of all parties who have subscribed for stock as preliminary to incorporation.1 In setting forth the subscribers to the capital stock it is sufficient to use above the first name the words " names,' Ind. 4; N. M. T. S. Co. v. Bishop, 103 1 Chester Glass Co. v. Dewey, 16 Mass. 94; C. V. & P. Co. v. Secretary of State, 128 Mich. 62; 87 N. W. 901; J. N. Bank v. Company, 74 Tex. 421; 12 S. W. 110. "residences," "shares," and then immediately follow the same with the names of the subscribers to the capital stock.1 Among other provisions are those requiring the naming of an agent upon whom service of process upon the corporation may be served; 2 another, a statement of the manner of conducting the business of the corporation. A number of the States require the names and residences of the incorporators to be set forth in the articles. Sometimes it is necessary to secure the approval of the Attorney-General to the form and contents of the articles.5 § 69. Construction of Charter. Under the liberal provisions of the modern incorporation acts, the articles drawn thereunder necessarily assume, by the sole action of the incorporators, numerous powers, many of which have been heretofore of a public character, affecting the interests of the public very largely and very seriously. The Supreme Court of the United States has taken the view that, for the reasons just given, these articles do not commend themselves to the judicial mind as a class of instruments requiring or justifying any very liberal construction. That court has said in this connection, that where the question is whether they conform to the authority given by statute in regard to corporate organization, it is always to be determined upon a just construction of the power granted to them with a due regard for all other laws of the State upon that subject. In construing charters the following rules seem to govern the courts: First, the intention of the legislature must be given due weight. Second, due consideration must be given to the policy of the State with reference to such matters as evidenced by the character of legislation. Third, all ambiguities in the terms of the articles of incorporation must be construed against the corporation in favor of the public.8 Fourth, words should be given their ordinary meaning. Fifth, the construction given the charter must always be reasonable.1 Sixth, where the language of the certificate as to corporate purposes and powers permits of two constructions, that the more favorable to the State is to be adopted.2 1 Black v. Company, 22 N. J. Eq. 130; Wheeler, etc. Co. v. Company, 14 Wash. 221. 630; 45 Pac. 316; Nat. Bank v. Com pany, 41 O. St. 1. Bridge Co. v. Ferry Co., 29 Conn. The laws of § 73. Affidavit as to Stock Subscriptions. Florida, Georgia, Illinois, Kansas, Michigan, Missouri, Ohio, Oregon, Pennsylvania, South Carolina, Texas, Utah, Vermont, and West Virginia require in addition to the ordinary acknowledgment of the execution of the articles, that the same be accompanied by an affidavit showing that the amount of stock required by law as a preliminary to doing business as a corporation has been duly subscribed.1 The same matter appears in the certificate of organization required in Arkansas, Connecticut, Indian Territory, Maine, and Virginia. On the other hand, the incorporation acts of Alabama, California, Delaware, Idaho, Kentucky, Nevada, New Jersey, New York, North Carolina, Ohio, Virginia, and Washington merely require that the amount of stock subscriptions be set forth in the articles. As to the content of the affidavits as to stock subscriptions, it is sufficient if they serve to show clearly that the statute relative to the same has been substantially complied with.2 Unless the statute designates some officer before whom such affidavit be sworn to, it may be made before any officer authorized to administer oaths and to certify to the same. 8 § 74. Anti-Trust Affidavit. Some few of the States - such, for example, as South Dakota, Missouri, and Illinois - require either of the incorporators before organization or of certain designated officers of the corporation after organization that they certify and make oath to the effect that the corporation is organized for the transaction of a lawful business and not for the purpose of enabling the corporation to violate the provision of the anti-trust act in force in that particular Commonwealth. Just what practical purpose the requirements here referred to serve, it would be difficult to say. In its practical operation it is usually a mere formality, and has, so far as observation goes, seldom served any useful purpose.* § 75. Special Requirements in Particular States. Owing to the varied requirements existing in the several States and Territories relative to the steps necessary to procure charters under B. 1 People v. Company, 45 Cal. 306. 2 People v. Company, 45 Cal. 306; & P. Ry. Co. v. Hatch, 20 N. Y. 157. 3 Wood v. Bank, 9 Cowen, 194. See Ohio St. Ry. Co. v. State, 49 O. St. 668; 32 N. E. 933; People v. Company, 121 N. Y. 582; 24 N. E. 834; State v. Standard Oil Co., 49 O. St. 137; 30 N. E. 279. the laws thereof, it will be impossible to do more than merely refer to a few of these requirements not already discussed. Under the statutes of some of the States it is necessary before a charter can issue that the capital stock either be subscribed for in whole or in part. In others it is necessary that all or part of the authorized capital stock be actually paid in.2 However, in many of the States it is not necessary that the capital stock be subscribed for as a condition precedent to corporate existence.3 Some of the States require that the certificate shall show the amount of the capital stock, the amount actually paid in, and that it shall give the names and residences of the shareholders, and the amount of stock which each has subscribed. Where such provisions exist substantial compliance therewith is essential to the creation of a de jure corporation.* Sometimes incorporation acts require that the certificate shall state the maximum amount of indebtedness which the corporation is authorized to incur.5 In Indiana the articles must contain an impression or description of the seal. In Georgia charters are issued by the courts upon petition therefor. Here as well as in other cases the statute governing the matter must be substantially complied with." In some States the law requires that the certificate shall set forth the name and location of the principal place of business of the corporation. Such provision must be substantially complied with.8 In Pennsylvania, where the incorporation act required the application for a charter to show the place of business of the proposed corporation, and the application merely stated location. of its office, it was held insufficient. This for the reason that a corporation may have its office in one place and its place of business in another.9 § 76. Powers of State Officials Relative to Accepting or Rejecting Articles. Where the statute either expressly or by implica 1 J. C. G. Company v. Dwight, 29 N. J. Eq. 246; Boyd v. Company, 90 l'a. St. 169. 2 People v. Chambers, 42 Cal. 201. 3 See ante, sec. 2. 4 Hendrix v. Academy, 73 Ga. 437; Bolling v. Le Grand, 87 Ala. 482; 6 Sou. 332. 5 Sweney v. Talcott, 85 Ia. 103; 52 N. W. 106. See Vawter v. Franklin College, 53 Ind. 88. 7 Van Pelt v. Association, 79 Ga. 439; 4 S. E. 501; In re Deveaux, 54 Ga. 637. 8 Montgomery v. Forbes, 148 Mass. 249; 19 N. E. 342; Ex parte Spring Valley Works, 17 Cal. 132. 9 In re Enterprise Mutual Benefit Ass'n, 10 Pa. 380. |