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LANSING, MICHIGAN
WYNKOOP HALLENBECK CRAWFORD COMPANY, STATE PRINTERS

1909

1691 1 4 7o.

LAW GOVERNING

MANUFACTURING AND MERCANTILE CORPORATIONS

AND

CORPORATIONS FOR OTHER LAWFUL BUSINESS.

[Act 232, P. A. 1903.)
AN ACT to revise and consolidate the laws providing for the

incorporation of manufacturing and mercantile companies
or any union of the two, and for the incorporation of com-
panies for carrying on any other lawful business, except
such as are precluded from organization under this act
by its express provisions, and to prescribe the powers and
fix the duties and liabilities of such corporations.

Reclass, 2-10-30 A,V.M.

The language of the title indicates an intention to include in the act control over the incorporation of the companies mentioned and the title indicates the purpose of the law. The object of the law is a single one which is consistent with its general purpose, and the act is not unconstitutional.Grimm v. Secretary of State, 137 / 134.

For prior legislation see Act 144 of 1851, Act 41 of 1853, Act 187 of 1875, Act 274 of 1881 (held unconstitutional because mercantile business was not included in the title), and Act 232 of 1885.

Act 42 of 1867 amended Act 41 of 1833 by providing for companies engaged in manufacture of salt. Such companies were excepted from Act 232 of 1885. But Act 41 was repealed by Act 252 of 1897.

The People of the State of Michigan enact: SECTION 1. Any three or more persons desiring to become who may inincorporated for the purpose of carrying on any manufactur- forporate, and ing or mercantile business, or any union of the two, or for buying, selling and breeding cattle, sheep and horses, or other live stock, or for engaging in maritime commerce or navigation, or for the purchasing, holding and dealing in real estate, or for conducting a warehouse and storage business, or for erecting and owning buildings to be occupied or leased for dwelling houses, halls, or business purposes, or for the production and supplying of gas and electricity for lighting, fuel or other purposes, or for printing, publishing and book-making, or for carrying on any other lawful business, except such as are excluded by section thirty-six of this act, may, by complying with the provisions of this act, with their successors and assigns, become a body politic and corporate.

The charter of a private corporation is a contract between the government and the corporators.--Mich. State Bank v. Hastings, 1 Doug., 224, 234; Flint & F. P. R. Co. y. Woodhull, 25 / 99.

29120

A corporation and its members are distinct persons, and not in any legal sense identical.—Talbot v. Scripps, 31268 ; Hanson v. Donkersly, 37 / 186. Rights of membership in a corporation can be obtained only in compliance with its charter or governing law, and if they prescribe any conditions or special methods of becoming a member, the law is imperative.-Carlisle v. S. V. & St. L. R. R. (0., 27 ; 315. The ownership of stock constitutes the holder a member of the corporation.-Dexter & M. P. R. Co. v. Millerd, 3 / 91. Mandamus will lie to compel the restoration of a member to rights of which he_has been unjustly deprived.--Roehler v. Mechanics' Aid Soc.. 22 / 86.

Private corporations can be formed only under general laws, and in strict conformity with the provisions regulating their organization.--Const., art. XV, sec. 1; Doyle v. Mizner, 42 / 332.

A corporation is an artificial being, created by law, with limited powers and for specified purposes, with a tacit condition annexed to its charter, that it will exercise its franchise in the manner and for the purposes specified therein, and not otherwise. --Atty. Gen. v. Oakland Co. Bank, Walk Ch., 90, 97; and that it shall act up to the end or design for which it was created.-People v. Bank of Pontiac, 12 / 537.

Corporations can exist only by force of express law.-Scheutzen Bund v. Agitations Verein. 44 / 313. Their legal existence, by force of obligatory law, is confined to the State creating them.—Thompson y. Waters, 25 / 214.

Articles of association, blanks for.

SEC. 2. The articles of association of every such corporation shall be made on suitable and uniform blanks which it is hereby made the duty of the Secretary of State to furnish on application free of charge, or upon blanks substantially uniform approved by the Secretary of State, which articles shall be signed by the persons associating in the first instance and acknowledged before some person authorized by the laws of this State to take acknowledgments of deeds, and shall state:

Proceedings to incorporate must be in strict conformity with the requirements of the statute. Articles of association are not valid, nor entitled to be filed in the office of the Secretary of State unless acknowledged.--Doyle v. Mizner, 42 / 332; Carmody v. Powers, 60 / 29.

For forms of acknowledgment, especially by attorney in fact, see Sec. 9020, C. L. 1897.

To state name.

First, The name assumed and by which the corporation Proviso as to shall be known in law: Provided, No name shall be assumed

already in use by any other existing corporation of this State, or corporation lawfully carrying on business in this State, or so nearly similar as to lead to uncertainty or confusion;

name.

The object of a corporate name is for the purposes of identification. But a corporation may be known by several names as well as a natural person.Walrath v. Campbell, 28 / 111, 122. As to when the identity may be shown by parol.-Ibid.

A corporate name is regarded as in the nature of a trade-mark, even though composed of individual names, and its simulation may be restrained. — Williams v. Farrand, 88 / 473.

In Lamb-Knit-Goods Co. v. Lamb Glove & Mitten Co., 120 / 159, and in Penberthy Injector Co. v. Lee-Penberthy Manufacturing Co., 120 / 174, the defendants were enjoined from use of name. See also Myers v. Buggy Co., 54 / 215.

In Supreme Lodge Knights of Pythias r. Improved Order Knights of Pythias, 113 / 133, there was no evidence that any person had been misled, and while the case is near the line, the court held that the rights of the complainant had not been infringed.

Purpose.

Second, Distinctly and definitely, the purpose or purposes for which the corporation is formed, and it shall not be lawful for said corporation to divert its operations, or appropriate its funds to any other purpose, except as hereinafter provided;

The purposes of a corporation are to be determined by the statements contained in its articles of association.-Detroit Driving Club v. Fitzgerald, 109 / 670.

The provisions of 3 How. Stat., Sec. 4161a', that the articles of association of a manufacturing corporation shall state the purposes for which it is formed, and that it shall not be lawful for it to divert its operations or ap

to

propriate its funds to any other purpose, was incorporated for the protection ni ihe public, and does not operate on the contracts of the corporation so as to prevent it from foreclosing a mortgage given to secure it against liabil. ity under a contract of guaranty, which. although ultra vires, was entered into with the assent of all of its stockholders, and which it has fully performed by paying the obligations guaranteed.-Butterworth & Lowe v. Kritzer Milling Co., 115/1.

Where corporations are organized under general laws, the organic act, together with the articles of association made in pursuance of it, constitute the charter. --Van Etten v. Eaton, 19 / 194. See Dexter & M. P. R. Co. v. Millerd, 3 / 91. And the powers and privileges of the corporation depend upon the general law and articles, the same as they would upon the charter, if the incorporation were by special act.-Dewey v. Cent. Car. Mofg. Co., 42 / 399.

All their powers and the purposes for which they are formed must have the legislative assent and sanction, and the acts creating them cannot be extended by construction, cases not reasonably within their terms.Stewart v. Father Matthew Society, 41 / 74.

Where one of the purposes set forth in the article is beyond the scope of the statute, the articles ought to be rejected.-Attorney General's Report for 1891-2, 54.

If the articles do not state a purpose for which the statute authorizes a corporation to be formed. it would not be legally incorporated, and its articles would afford no warrant for the exercise of corporate action.--Attorney General v. Lorman, 59 / 157.

No corporation can exist except by force of express law. We have not been referred to any statute of this state under which the plaintiff had or could have organized as a corporation, nor do we know of any under which a corporation with such objects and aims could be formed.-Schuetzen Bund v. Agitations Verein, 44 / 313.

A corporation was 'organized under a law afterwards declared unconstitutional. The court says: “There was no law authorizing the parties to file their articles of association, or to become incorporated; and there could, under such circumstances, be no corporation de facto. There was no statute under which defendants could lawfully incorporate as a mercantile company, and their actions as such are wholly void.--Eaton v. Walker, 76 / 579.

It is undoubtedly well settled that a person who has entered into contract relations with a de facto corporation cannot, in an action thereon, deny its corporate character, or set up any informality in its organization, to defeat the action. But there is no law under which the powers they assume might lawfully be created : and the mere fact that they assumed to act as such, even in the full belief that they were legally incorporated, would not constitute them a corporation de facto.-10.

Third, The principal place or places at which its opera- Operations tions are to be conducted;

ducted.

It has been uniformly held in this State that corporations cannot remove from place to place, or establish branches for the transaction of their regular corporate business, unless authorized by law.--Chapman v. Colby. 47 / 46.

A private corporation must be held to reside in the town where its principal offices, as a local inhabitant.-Detroit F. & M. Ins. Co. v. Judge, etc., 23 / 492. And such location cannot be changed without legislative assent. People v. Aud. Gen., 17 / 161, 170. When a corporation is located by its charter in a particular place, the exercise of its franchise elsewhere is illegal and a cause of forfeiture. -People v. Oakland Co. Bank, 1 Doug., 282; Atty. Gen. v. Same, Walk, Ch. 90; Underwood v. Waldron, 12 / 73; Thompson v. Waters, 25 / 214, 241. But a distinction seems to be made between the place where the principal office is located and other places where much of the company's business may be done.- Van Etten v. Eaton, 19 / 187 ; 23 / 492-4.

A corporation must have a local habitation. It cannot fix a nominal domicile in the country while its actual domicile for business is in the city; and its local existence must be held_to be in some place in the State where its business is carried on.-Detroit Trans. Co. v. Board of Assessors, 91 / 382.

Fourth, The amount of the total authorized capital stock, Capital stock. which shall not be less than one thousand dollars, and not more than twenty-five million dollars; the amount of capital Fifty per cent stock subscribed, which shall not be less than fifty per cent scribed.

must be subof the authorized capital stock; the articles may provide for common and preferred stock subject to section thirty-five, and in that case shall contain an exact statement of the terms Common and upon which the common and preferred stocks are created, and preferred the amount of each subscribed, and the amount of each paid in ;

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