dorn^U ICaw ^rljnol ICibrarg Cornell University Library KFN5345.W58M2 1903 White's manual for business corporations 3 1924 021 908 300 The original of tliis book is in tlie Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924021908300 WHITE'S MANUAL Business Corporations CONTAINING The General Corporation Law; The Stock Corpora- tion Law; The Business Corporations Law; Provisions of the Tax Law, and Other Laws Concerning such Corporations in the State of New York Annotations and Forms. By frank white, Counselor-at-Law, CoTTiraBi. TO THB Secretart of State on Cokpokatioh Matters prom 1885 to 1899; Author of "White oh Corporations," Etc. FIFTH EDITION. Albany, N. Y. WHITE LAW BOOK COMPANY. 1903. ^v, .- I COPYRIGHT, 1895, Bv FRANK WHITB. COPYRIGHT, 1899, By frank white. COPYRIGHT, 1900, BY FRANK WHITS. COPYRIGHT, 1901, By frank WHITE. COPYRIGHT, 1903, By frank white. WBBD-PARSONS PRINTING CO., rRINTBUS, BINDERS AND BLICTKOTVPIKS, ALBANY, N. V. PREFACE. The necessity for a convenient hand-book embodying a com- plete and practical compilation of the laws of the State of New- York concerning the organization, powers, management, assess- ment and taxation of business corporations; the election, duties, and liabilities of directors and officers; the rights and liabilities of stockholders, and the many other important matters affecting such corporations, has induced the author to place this volume before the public. He has endeavored to arrange the book in such a manner as to make it a desirable acquisition to the library of the lawyer for use in connection with the class of corporations of which it treats, and, at the same time, to render it a service- able agency in assisting officers and directors in the performance of the statutory duties devolving upon them in their relations with corporate enterprises. It is not contemplated, however, that this book shall trespass upon the domain of or compete with " White on Corporations," a work of nearly a thousand pages, containing a complete exposi- tion of the statutes and decisions relative to all stock corporations, other than banking and insurance companies. This manual has a mission entirely separate and distinct from the larger book, and the author hopes it may merit the same generous treatment accorded the earlier editions. . FRANK WHITE. , Albany, N. X.,July, i igoi. TABLE OF CONTENTS. THE BUSINESS CORPORATIONS LAW. Page. Section i. Short title and limitation of chapter i 2. Incorporation 2 3. Restriction upon commencement of business 6 4. Reorganization of existing, corporations 7, 8 5. Payment of capital stock 9 6. Full liability corporations 9, 10 7. (Repealed) 11 8. Consolidation of corporations 11 9. Submission of consolidation agreement to stock- holders 12, 13 ID. Powers of consolidated corporations 14 11. Transfer of property of old corporations to con- solidated corporations 14 12. Rights of creditors of old corporations IS 13. District steam corporations IS, 16 14. Examination of meters by agent of district steam corporations 16, 17 15. Entry by agent of district steam corporation to cut off steam 17, 18 16. Water companies 18 17. Real estate corporations: condemnation iq Digest of provisions relative to incorporators, corporate name, objects, capital stock, shares of stock, principal business office, duration, directors, subscribers, additional powers, liability of stockholders, filing and recording certificates, and fees 3-6 Tax upon organization of corporations 20, 21 Organization tax table 22 License tax upon foreign corporations 23 Fees payable to Secretary of State 24 Fees payable to County Clerks 25 Transmission of papers and payments , , , , 23 vi Table of Contents. THE GENERAL CORPORATION LAW. Page. Section i. Short title 28 2. Classification of corporations 29 3. Definitions 30, 31 4. Qualifications of incorporators 32 5. Filing and recording certificates of incorpo- ration : 32, 33 6. Corporate names 34 7. Amended and supplemental certificates 41, 42 8. Lost or destroyed certificates 42 9. Certificate and other papers as evidence 43 ID. Limitation of powers 43 11. Grant of general powers 44 12. Enlargement of limitations upon the amount of property of non-stock corporations 47 13. Acquisition of additional real property 47 14. Acquisition of property in other States 47 15. Certificate of authority of a foreign corporation. . 48-55 16. Proof to be filed before granting certificate.... 55, 56 17. Acquisition of real property in this State by certain foreign corporations 59 18. Acquisition by foreign corporations of real property in this State 60 19. Prohibition of banking powers 61 20. Qualification of members as voters 62 21. Proxies 64 22. Challenges 65 23. Effect of failure to elect directors 66 24. Mode of calling special election of directors 67 25. Mode of conducting special election of directors. . . 67 26. Qualification of voters and canvass of votes at special elections 68 27. Powers of Supreme Court respecting elections 69 28. Stay of proceedings in actions collusively brought, 70 29. Quorum of directors and powers of majority 70 30. Directors as trustees in case of dissolution 73 31. Forfeiture for non-user 74 32. Extension of corporate existence 75 33. Conflicting corporate laws yg 34. Laws repealed 77 35. Saving clause 77 Table of Contents. vii Page. Section 36. Construction Tj 37. Law revived 78 38. When notice or lapse of time unnecessary 79 39. As to acts of directors 79 40. Alteration and repeal of charter 80 Schedule of laws repealed 81-89 Application and scope of the General Corporation Law 28 Change of corporate name 37-41 Code provisions relative to designations by foreign corpo- rations 57, s8 THE STOCK CORPORATION LAW. Article L General Powers; Reorganization. Section i. Short title, and application of chapter 90 2. Power to borrow money and mortgage property. . . 91 3. Reorganization upon sale of corporate property and franchises 95 4. Contents of plan or agreement 97 5. Sale of property; possession of receiver and suits against him 98 6. Assent of stockholders to plan of readjustment. ... 9^ ' 7. Combinations prohibited 99 8. Relative to corporate mortgages 100 Article IL Directors and OfUcers; Their Election, Duties and Liabilities. Section 20. Directors 104 21. Change of number of directors 106 22. When acts of directors void 107 23. Liability of directors for making unauthorized dividends -. 108 24. (Repealed by L. igoi, Chap. 354) log 25. Liability of directors for loans to stockholders 110 26. Transfers of stock by stockholders indebted to corporation no 27. Oflficers in 28. Inspectors and their oath 112 viii Table of Contents. Page. Section 39. Books to be kept ^'3 30. Annual report > • 1 14 31. Liability of officers for false certificates, reports or public notices II7 32. Alteration or extension of business 118 33. Sale of franchise and property 119 34. Liabilities of director, limitations Ilg Article IIL Slock; Stockholders, Their Rights and Liabilities. Section 40. Issue and transfers of stock 121 41. Subscriptions to stock 124 42. Consideration for issue of stock and bonds 125 43. Time of payment of subscriptions to stock 126 44. Increase or reduction of capital stock 127 45. Notice of meeting to increase or reduce capital stock 128 46. Conduct of such meeting; certificate of increase or reduction 129 47. Preferred and common stock 130 48. Prohibited transfers to officers or stockholders.... 131 49. (Repealed by L. iQor, chap. 354) 133 50. Application to court to order issue of new in place of lost certificate of stock 134 51. Order of court upon such application 135 52. Financial statement to stockholders 136 53. Stock books of foreign corporations 136 54. Liabilities of stockholders 137 55. Limitation of stockholder's liability 139 56. Increase or reduction of number of shares 140 57. Voluntary dissolution 140 58. Merger 142 59. Change of place of business 143 60. Liabilities of officers, directors and stockholders of foreign corporations 144 62. Partly paid stock 144a Application and scope of the Stock Corporation Law 91 Recording of corporation mortgages 92 Corporations prohibited from interposing the defense of usury, 94 Grace, days of, abolished 95 Table of Contents. ix TAXATION OF CORPORATIONS. State Taxation. P»ge. Section 182. Franchise tax on corporations 146 183. Certain corporations exempted from tax on capital stock 150 184. Additional franchise tax on transportation and transmission corporations and associations 153 185. Franchise tax on elevated railroads or surface rail- roads not operated by steam 153 186. Franchise tax on water-works companies, gas companies, electric or steam heating, lighting and power companies 154 189. Report of corporations 154 190. Value of stock to be appraised 156 191. Further requirements as to reports of corpora- tions 157 192. Powers of Comptroller to examine into affairs of corporations 157 193. Notice of statement of tax; interest '. . 158 194. Payment of tax and penalty for failure 158 195. Revision and readjustment of accounts by Comp- troller 159 196. Review of determination of Comptroller by certiorari 160 197. Regulations as to such writ of certiorari 161 198. Warrant for the collection of taxes 161 199. Information of delinquents 162 200. Action for recovery of taxes; forfeiture of charter of delinquent corporations 162 202. Exemption from other State taxation 163 203. Application of taxes 163 Organization tax 20, 21 Local Taxation. Section 7. When property of non-residents is taxable 164 11. Place of taxation of property of corporations 165 12. Taxation of corporate stock 167 27. Reports of corporations 168 28. Penalty for omission to make statement 170 31. Corporations, how assessed 170 X Table of Contents. MISCELLANEOUS. Page. Hours of labor in brickyards 172 Cash payment of wages 172 Weekly payment of wages 173 Penalty for violation 173 Factory inspectors may sue 174 Married women may vote I7S Penal Code provisions 176-182 Civil Code provisions 183-199 Forms 201-238 Index 239-259 Advantages of Incorporation UNDER THE Laws of the State of New York By FRANK WHITE, OF THE NEW YORK AND ALBANY BAR, COUNSEL TO THE SECRETARY OF STATE ON CORPORATION MATTERS FROM 1885 TO 1899, AND AUTHOR OF "WHITE ON CORPORATIONS." COPYRIGHT, igoi, BY FRANK WHITE. The corporate form for conducting business enterprises, both large and small, possesses so many inherent advantages over a partnership or joint-stock association that business men seem to be more interested in determining where to incorporate, than in ascertaining the desirability of incor- poration. The principal advantages of incorporation have become fairly well recognized, particularly in obtaining for the interested parties immunity from individual liability; in securing the element of perpetuity; the unimpaired preser- vation of the rights and interests of the survivors in the event of the death of any member of the concern, including the retention intact of the good will and prestige of the business, which is frequently one of its most valuable and remunerative assets; the ease with which the owner of shares of stock may dispose of them by will, s.ale or other- wise; the increased facilities afforded for borrowing money; the convenience with which the varied interests to be [xi] xii Advantages of Incorporation. taken into the company can be satisfactorily safeguarded; — these and numerous other advantages that are accorded to corporations when contrasted with the dangers and dis- advantages of transacting business under the rapidly disap- pearing partnership method have appealed so forcibly to men engaged in the activities of commercial and financial pursuits that the problem " Where to Incorporate," has assumed greater importance than ever. New York's new policy. — The writer of this article asserts most emphatically that this problem has been settled in favor of New York by recent legislation, and he proposes to submit what he deems adequate, convincing and incon- trovertible proof that the State of New York is the most desirable State in which to incorporate. The work of the legislature of the State of New York, during the session of 1901, in liberalizing, modifying and enlarging the corpora- tion laws by eliminating all objectionable features and reduc- ing the organization tax, and by inserting numerous new and desirable features, has placed New York beyond perad- venture clearly and unmistakably in the van as the most inviting State in which to incorporate not only enterprises located and carrying on business within the State, but also those located and having their property elsewhere. Money wasted by incorporation elsewhere. — Previ- ous to the recent liberalization of the corporation laws by New York State a great variety of misapprehensions and delusions respecting its corporate laws had found lodgment in the minds of both laymen and lawyers. In many cases in the past it has been very difficult, even for a person well versed on the subject, to account for the incorporation of New York enterprises in either Delaware, New Jersey or West Virginia, for in the majority of cases each of such companies was actually throwing away every dollar spent for the sake of having a charter from New Jersey or other States, for the reason that a company thus incorporated and having its business and property in New York State does not receive a single benefit in return for the expenditures Advantages of Incorporation. xiii made by it for a foreign charter. Why should such a com- pany subject itself to the laws of two sovereignties, file reports in two States, pay an organization tax and annual taxes in two States, pay a so-called " Trust " or registration company an annual fee for maintaining a nominal office in another State, when the entire business and capital of such company are located in the State of New York? There is no sound reason for it. There is no substantial argument that can sustain such an unbusinesslike proceeding. Such a company obtains no benefits or advantages that might not have been obtained under the statutes of New York, provided its incorporators so desired. It does not escape any of the taxes payable to this State, not even the one- eighth of one per cent, organization tax, for after its incor- poration in a foreign State, it must obtain a license, or certificate of authority, to transact business in the State of New York, and the cost of that license is one-eighth of one per cent, upon the amount of capital employed within the State. It must pay annual taxes in the State of its incor- poration, besides paying the same annual lax to the State of New York as though it were incorporated here. The pecuniary feature as thus indicated has heretofore been in favor of New York as the domicile of such corporations, but now, with a modernized and liberalized system of cor- poration statutes, New York becomes the most desirable State for all classes of corporations, whether carrying on business and having the capital, or any portion thereof, employed here or in other States. The Brackett bills which were passed by the legislature of 1901, and signed by the Governor, signalize a new departure in regard to the treat- ment of corporations by the State. Salient features of the liberalized laws. — This new system of laws has been enacted in recognition of the fact that the relation of corporations to the business transactions of the community have undergone a decided change in this country within the past decade, and that the demand for the use of corporate powers in combining the capital, the xiv Advantages of Incorporation. energy and the skill required to successfully conduct busi- ness transactions in competitive fields has become so imperative that the corporation acts have needed remodel- ing and amendment. The amendatory legislation of 1901, which contains provisions similar to the English companies Act of 1862, was enacted for the purpose of attracting incorporated capital to the State, and the results even at this early date are justifying the new policy of the State. The most important changes are as follows: The removal of objectionable liability features so that both directors and stockholders are now freed from any of the entanglements which heretofore existed. The incorporation tax has been reduced from one-eighth to one-twentieth of one per cent, on the authorized capital stock. This initial or organiza- tion tax, as it is termed in the statute, is payable but once, and that upon the formation of the company, and amounts to fifty cents on each $1,000 of capital stock. The duty of filing an annual report, the non-performance of which rendered every director individually liable for all the debts of the corporation, has been stricken from the statutes and in lieu thereof it is provided that in case a stockholder or a creditor makes a written request upon an officer for the filing of a report (the form of which is now very simple"), the officer so requested is required to file the same within ten days, and in case he fails to comply there is imposed the liability of a fine of $50 a day, and this provision applies to both domestic and foreign corporations. The power to borrow money has been enlarged, and the legal limitations are removed, both as to the issue of bonds and the sale thereof. Section 24 of the stock corporation law forbidding the contracting of any debts in excess of the amount of the capital stock is repealed, and a corporation is permitted to borrow as much as its credit and security will permit with- out reference to the amount of its capitalization. Stock may be issued for property, and stock so issued shall be regarded as full paid, and in the absence of fraud in the transaction the judgment of the directors as to the value APVANTAGES OF INCORPORATION. XV of the property purchased shall be conclusive. This is the same language as the New Jersey statute. The issue of preferred stock is permitted with the consent of the owners of two-thirds of the capital stock, instead of unanimous con- sent previously required. The certificate of incorporation may provide for the issue of partly paid stock, subject to calls, upon which the stockholders shall not be subject to any liability except the payment of the amount unpaid on the stock. Corporations are authorized to provide by certificate or in the by-laws that directors need not be stockholders. Stock books are required to be kept open daily during only three business hours. The new law does not require any percentage of the subscriptions for stock to be paid in cash. The proceedings for an increase or reduction of capital stock and for extension of corporate existence are simplified. Agreements are authorized for pooling stock or creating voting trusts, and the issue of certificates of beneficial interest in lieu of stock deposited with the trustee. The statute now provides that when a mortgage recites that it has been dtily authorized by the holders of the requisite amount of stock such recital shall be presumptive evidence that the law has been complied with, and if the mortgage has been recorded for one year and interest has been paid thereon, it: becomes valid, even though irregular in the method of its execution. This pro- vision prevents the security of underlying corporate bonds being invalidated and thereby protects the purchasers of such bonds. The foregoing are a few of the many liberal changes made. Broad charter powers. — In addition to these attrac- tive modifications it must be remembered that the New York corporation laws have, since 1892, been amended in several noteworthy respects. In the first place they offer simplicity of organization. The corporation is created by making and filing a certificate, and in this instrument the incorporators are given great latitude in setting forth the purposes, objects and powers of the company. A certifi- xvi Advantages of Incorporation". cate of incorporation of a business corporation may be drawn sufficiently broad, for example, to enable the pro- posed company to carry on a department store, a manufac- turing business, real estate business, general contracting, waretiousing, buying, owning and conducting hotels and other lines of business, if desired. The ceitificate may also provide for cumulative voting in the election of direc- tors. It may authorize the corporation to purchase, acquire hold and dispose of the stocks, bonds and other evidences of indebtedness of any corporation, domestic or foreign, and issue in exchange therefor its stock, bonds or other obligations. In fact the certificate may contain any other provision for the regulation of the business and the conduct of the affairs of the corporation and any limitation upon its powers and upon the powers of its directors and stock- holders which does not exempt them from any obligation or from the performance of any duty imposed by law. At any time after incorporation the purposes, objects and powers of the corporation may, by an amended certificate, be extended, enlarged, altered or diminished. Dissolution inexpensive. — The New York statutes not Only offer simplicity of organization and management and freedom from publicity in the private affairs of the com- pany, but also an easy and inexpensive method of dissolu- tion by the consent of the holders of two-thirds in amount of the stock of the corporation and without resorting to court proceedings. Limited liability. — To sum up the situation, the remod- eled corporation laws of the State of New York afford freedom from any dangers or ambiguities that might lead to jjersonal liability of stockholders, directors and officers, and grant them limited liability to the fullest extent, and even in regard to stock issued for property all questions of liability have been eliminated, except in cases where there is proof of actual fraud, this provision being identical with the New Jersey law, and, furthermore, a legal certifi- cate of incorporation can be drafted under the terms of the Advantages of Incorporation. xvii Business Corporations Law of the State of New York, fully as broad, liberal and comprehensive, for all practical pur- poses, as is permitted in New Jersey or Delaware. . Foreign corporations pay higher tax rate — After consideration of the attractive and desirable features of the laws of New York as above discussed, the question of expense becomes one of paramount importance, and in this connection the initial expense of incorporation and the annual tax payments must both receive a full measure of attention. While passing to this phase of the question it must be borne in mind that the tax for the privilege of organization of a corporation under the laws of New York has been reduced to one-twentieth of one per cent, upon the amount of capital stock authorized in the certificate of incor- poration (fifty cents on each one thousand dollars of capital- ization), and that a resident corporation, namely, one having its business and property within the State which seeks incorporation elsewhere, after paying the initial organiza- tion fees in the foreign state, must also pay to the State of New York a license fee or tax for the privilege of conduct- ing its business here, and such tax is at the rate of one- eighth of one per cent, computed upon the basis of the amount of capital employed within the State, being two and one-half times greater than the organization tax required to be paid by companies incorporated under the laws of New York. In regard to any concern, the property of which is located within the State of New York, there is no justifica- tion whatever, either from an economical point of view or otherwise, for incorporation in any other State. Its incor- poration elsewhere is a profligate, senseless waste of money. Whatever may be the. amount that companies of this character pay in the way of charges and taxes to other States, or fees to registration companies, is just so much money paid with- out any equivalent in benefits or privileges for the expendi- tures thus made. As has been already stated, such a company must not only make all the statutory payments required in the State of its incorporation, but it must also xviii Advantages of Incorporation. pay into the treasury of the State of New York two and one- half times as much as though it were organized under the laws of this State. Comparative tables of tax expenditures. — In ord?r to elucidate more clearly the loss sustained in seeking charters in other States here follows an illustration with a business corporation organized under the laws of New Jersey and capitalized at $1,000,000, its property and business being located in the State of New York: New Jersey corporation, capitalized at $1,000,000. Tax for incorporation in New Jersey $200 00 Fees of New Jersey registration company 50 00 Annual tax in New Jersey 1,000 00 Fees for filing copy of charter and designation in New York State 11 00 License tax in New York State 1.250 00 Annual tax in New York State (based on 6 per cent, dividends) 1,500 00 ■ New Jersey corporation, total expense, first year. . $4,01 1 00 New York corporation, capitalized at $1,000,000. If this company were incorporated under the laws of New York State, the bill of expenses would have been as follows: Tax for incorporation in New York $500 00 Filing and recording fees in offices of Secretary of State and County Clerk 13 00 Annual tax on capital employed in the State (based on 6 per cent, dividends) 1,500 00 New York Corporation, total expense, first year. . $2,013 °° By incorporating in New York State the company is not required to make any payment to New Jersey whatever, or to any registration company, and pays a lower license or Advantages of Incorporation. xix organization tax in New York State, and thereby in organiz. ing under the laws of New York, this company would have saved at the end of the first year the sum of $1,998. New Jersey $1,000,000 corporation, second year. The million dollar New Jersey corporation's second year's experience would read like this: Annual tax in New Jersey $1,000 00 Fee of a New Jersey registration company 50 00 Annual tax on capital employed in New York 1,500 00 New Jersey corporation, total expense, second year $2,550 00 New York $1,000,000 corporation, second year. As a New York State corporation its second year's pay- ment to the State would be one item, viz. : Annual tax on capital employed in State (based on 6 per cent, dividends) $i>5oo 00 Thus the saving the second year in favor of the New York corporation would be $1,050; or a total saving during the first two years of $3,048 in favor of New York State. At the end of the tenth year the saving would amount to $11,448. If a corporation capitalized at $2,000,000 were used as an example the sum saved by incorporation in New York State would be twice as much. To demonstrate what the result would be in the case of a smaller corporation, an illustration will be made with a com- pany capitalized at $100,000. The first year's experience of such a company, organized in New Jersey and doing busi- ness in New York State, would be as follows: XX Advantages of Incorporation. New Jersey corporation, capitalized at $ioo,ooo. Tax for incorporation in New Jersey $25 00 Fees of a registration company 50 00 Annual tax in New Jersey 100 00 License fee and tax in New York 136 00 Annual tax in New York State (based on 6 per cent, dividends) 150 00 New Jersey corporation, total expense, first year, $461 00 New York corporation, capitalized at $100,000. The first year's payment to the State of the same com- pany, if incorporated in the State of New York, would be as follows: Tax for incorporation in New York $50 00 Filing and recording fees to Secretary of State and County Clerk 13 00 Annual tax (based on 6 percent, dividends) 150 00 New York corporation, total expense, first year. . $213 00 Amount saved the first year by incorporating in New York State, $248 00. New Jersey $100,000 corporation, second year. During the second year this company, if a New Jersey corporation, would pay as follows: Annual tax in New Jersey $100 00 Fee of a New Jersey registration company 50 00 Annual tax in New York State 150 00 New Jersey corporation, total expense, second year $300 00 Advantages of Incorporation. xxi New York $100,000 corporation, second year. As a New York corporation its second year's payment to the State would be one item, viz. : Annual tax (based on 6 per cent, dividends) .... $150 00 Saving for the New York company the second year, $150, and at the end of the tenth year the saving to this $100,000 corporation would .aggregate the sum of $1,598, being equivalent to a dividend of more than one and, a half per cent, on the entire capital stock. In making the above figures the matter is not presented in as strong a light in favor of New York as might be, for the reason that in the illustrations the supposititious corpo- rations are placed upon a 6 per cent, dividend basis without making any allowances for the deductions and exemptions from State taxation to which certain domestic corporations are entitled. Uevr York state should be chosen as the domicile for corporations of other states. — Thus far the effort has been largely restricted to illustrations to prove that New York is the most economical and favorable State in which to incorporate an enterprise located within the State. Now it is proposed to make a statement along other lines and which in the opinion of the writer needs very little argument, as it is self-evident to any person who understands the system. of State taxation of corporations in New Jersey, Delaware and New York. The point to be made is that New York is a desirable state in which to incorporate com- panies which are operating and employing their capital in other States. In New Jersey a corporation is taxed annu- ally upon its entire capital stock issued and outstanding, no matter whether the capital is employed in that State or elsewhere. The same rule prevails in Delaware. In New York the tax is computed only upon the amount of capital employed within the State; therefore, if a corporation is organized under the laws of New York and emjiloys its capital elsewhere, the State Comptroller cannot collect any xxii Advantages of Incorporation. tax whatsoever from such corporation. On this account several of the large mining companies carrying on opera- tions in the Western states and territories have been organ- ized under the laws of New York State, and thus have no annual franchise tax to pay. If a $1,000,000 mining com- pany to operate in, say Arizona, were incorporated in the State of New Vork the incorporation expenses would be $513, a trifle higher than in New Jersey, where incorpora- tion expenses would be $250; but New York State would exact no annual franchise tax. On the other hand, if this mining company were organized in New Jersey, it would be obliged to pay into the treasury of that State $1,000 annu- ally, merely for the sake of being a New Jersey corporation, besides paying there $50 per year to a registration company, and these expenditures would bring no greater benefits or advantages than could be obtained by incorporation under the laws of the State of New York, where no annual tax would be imposed upon such corporation. Equitable state taxation. — A few weeks ago the writer of this article addressed several representatives of corpora- tions at the rooms of the Board of Trade and Transporta- tion in New York City during which he characterized the annual franchise tax of the State of New Jersey as abso- lutely unjust, for which he was criticised in the editorial columns of a New York newspaper. He adheres to the position then taken and desires to answer the argument touching the ease with which the annual franchise taxes in New Jersey may be computed in contradistinction to what is fallaciously termed the cumbersome system of the State of New York. To the person who has given the annual franchise tax law of the State of New York any fair amount of study it is not cumbersome or complicated. It certainly does provide for some exemptions, deductions and apprais- als, merely because it was desired to make the tax as fair and equitable as possible. The New York tax, like that of New Jersey, is a franchise tax, but it is based upon and measured by the amount of capital of the corporation employed within Advantages of Incorporation. xxiii the State, and in case the company is conducting an unprofit- able business, and, on that account unable to pay dividends, the capital of the company is appraised, and the amount of its indebtedness deducted, so that its franchise tax is measured by what it actually possesses within the State. Now, in regard to the New Jersey annual franchise tax. It is claimed that this tax being fixed at one-tenth of one per cent, on the issued and outstanding stock up to and includ- ing the sum of $3,000,000, regardless of the location of the property of the company, is a simple method. It certainly is a simple method. It is more than that, it is a combina- tion of simplicity and injustice. In New Jersey a corpora- tion pays a franchise tax annually into the State treasury, whether it has assets within the State or not. In striking contrast to such method a corporation organized under the laws of the State of New York and having its assets employed elsewhere pays no annual franchise tax whatever to the State, and in case a portion of its capital is employed within the State it is required to pay a tax only upon that portion of its capital thus employed. Possibly the annual franchise tax of New York State is not quite so simple in the method of its computation as that of New Jersey, because New York has aimed to measure the value of the franchise exercised by the corporation within the State upon the fair and equitable basis of the amount of capital actually employed therein, while New Jersey has made no attempt to measure the value of the franchise by using the amount of the property of the corporation within the State as a basis of measurement. It has established a fixed and arbitrary basis, and if a corporation has been organized under the laws of New Jersey with a capitalization of $1,000,000, all issued and outstanding, it is required to pay an annual tax of $1,000, even though it has no capital employed within the State. If all of its capital of $1,000,000 is employed within that State it pays the same annual tax of $1,000, and if only $100,000 of its capital is employed within that State it likewise pays the same annual tax of $1,000, but as here- xxiv Advantages of Incorporation. tofore stated, a corporation organized under the laws of the State of New York and having no capital employed within the State pays no annual tax whatsoeverj and if it has capital to the extent of $100,000, employed within the State it pays a tax only upon the $100,000, notwithstanding that it has an issued outstanding capital stock of $1,000,000. Even if it were to be conceded that the critics are correct in their claim that the annual tax law of the State of New York is not entirely free from ambiguity, why should that be considered sufficient reason for the organization of a corporation outside the State? If the corporation seeks its corporate rights in a foreign State it does not thereby escdpe any taxes imposed by the State of New York. It is subjected to precisely the same annual tax as a domestic corporation, provided it is carrying on business and has its capital employed within the State, and besides pays a license tax two and one-half times greater than the organization tax imposed on domestic corporations. On the other hand, if a corporation has its capital and business located in several different States there is every possible argument in favor of its incorporation in New York State, because here it is taxed upon a fair and equitable basis, as above set forth, while in New Jersey it is taxed upon its entire outstanding capital stock regardless of the location of the plant used in carrying on its business operations. Attachments against foreign corporations. — Cor- porations of other States carrying on business in this State are necessarily subjected to many inconveniences not incurred by domestic corporations. Under New York laws, as in other States, in the event of a suit being brought against a foreign corporation a warrant of attachment may be issued the moment the summons is served and a levy may be made on any property, claim or demand owned by such corporation in the State. The claim upon which the action is based may be unjust and easily disproved on a trial of the case, yet it is in the power of the person claim- ing to be a creditor to place the sheriff in charge of the Advantages ot Incorporation. xxv property of the corporation and thereby work irreparable injury to its credit and reputation. During the panic years the downfall of many solvent foreign corporations capitalized by citizens of New York State, and doing business wholly within the State, was precipitated by the facility with which attachments are obtainable against such corporations. The right to apply this remedy is a constant and dangerous threat to a foreign corporation of weak financial standing and a source of annoyance to a wealthy corporation suffi- cient in itself to be seriously weighed and considered. Public confidence. — Corporations organized under the laws of New York have always enjoyed a larger measure of public confidence than has been accorded those from other States. They have a higher standing and better credit in the commercial world. New York State occupies a pre-emi- nent position in the financial centers of the old world, and the bonds, stocks, and other securities of corporations organized under its laws find a better market both at home and abroad. There are numerous other matters pertaining to the State of New York as a vatitage-ground for the for- mation of corporations in preference to other States that might be commented upon for the purpose of sustaining the contention of the writer that New York is the most favor- able State in which to incorporate companies of all classes, whether the capitalization is in the millions or only expressed in thousands, but the limitations of this article will not permit. An effort has been made in the foregoing to briefly set forth in plain and non-technical language a few of the salient features of these laws. In conclusion the writer ventures the opinion that the next five years will prove to be a notable epoch in the history of corporations in this country, because of the fact that it will witness a re-organ- ization under the attractive laws of the State of New York of a vast number of corporations which are now existing under charters obtained in other states. XXVI Amendatory Legislation. The Amendments of 1901. The amendments of 1901 to the corporate laws of the State of New York are contained in this book in their proper places, but for the convenience of persons who may desire to ascertain at a glance the particular sections which have been amended, added or repealed in the plan of improving and liberalizing said laws, the following is submitted, which enumerates each amendment and indicates upon which page the amended or new section can be found: SECTION OF LAW. AMENDED IN X90X BV General Corporation Law 15 Chap. 96, 538 48 20. 22. . 29 ■ 32-. 39- • Stock Coiporation Law 2.. 3.. 4 • 6.. 8*. 20 . 23.. 24t- 29 . 30.. 32 . 33 • 42 . 44-. 45- • 46.. 47.. 48.. 49t- 54- ■ 56.. 62*. 2. . 8. Business Corporations Law. The Tax Law 180.. " " " 181.. 182.. " " " 183 . 194- • The Penal Code 594. " '* " 613.. ♦ New section. 355 62 355 65 214 70 355 74 355 79 354 91 354 95 354 97 354 90 354 100 354 104 354 108 354 109 354 113 354 .. .. 114 354 117 130 Ii8 354 125 354 127 354 128 354 129 354 131 354 131 354 133 354 137 354 140 354 144a 520 2 520 II 448 20 558 23 558 146 558 150 "8. 132, 558 158 588 178 588 180 t Repealed. Amendatory Legislation. xxvli Chapters 355 and 354, amending the sections of the General Corporation Law and of the Stock Corporation Law above mentioned, and repealing sections 24 and 49 of the latter law, took effect immediately (April 16, 1901), but it is pro- vided in both acts that they " shall not affect any action or proceeding pending in any court at the time it takes effect or any right of any creditor of any corporation or of any stockholder against any director under existing law, pro- vided action thereon be commenced within six months after this act takes effect,except as in this act otherwise provided." The other amendments also took effect immediately. THE BUSINESS CORPORATIONS LAW. Laws of 1890, Chapter 567, Entitled: "An Act in Relation to Business Corporations, Constituting Chapter Forty-one of the General Laws," as Amended to the Commencement of the Legislative Session of 1903. THE BUSINESS CORPORATIONS LAW.* Section i. Short title and limitation of chapter. 2. Incorporation. 3. Restriction upon commencement of business. 4. Reorganization of existing corporations. 5. Payment of capital stock. 6. Full liability corporations. 7. Extension of business. (Repealed by L. 1895, ch. 67i.)t 8. Consolidation of corporations. 9. Submission of consolidation agreement to stock- holders. 10. Powers of consolidated corporations. 11. Transfer of property of old corporations to con- solidated corporations. 12. Rights tjf creditors of old corporations. 13. District steam corporations. 14. Examination of meters by agent of district steam corporations. 15. Entry by agent of district steam corporation to cut off steam. 16. Water companies. 17. Real estate corporations; condemnation. § I. Short title and limitation of chapter. — This chap- ter shall be known as the business corporations law. (Former .section i, L. 1890, ch. 567, as amended by L. 1892, ch. Cgi and L. 1895, ch. 671.) * The BasineBS Corporations Law (L. 1890, ch, 567) was passed June 7, 1890, to take effect May 1, 1891. By the Laws of 1893, chapter 691, passed May 18, to take effect Immediately, said law was amended and entirely re-enacted, and has since been far- ther amended as indicated on the succeeding pages. t The provisions for alteration or extension of the purposes and powers of a busi- ness corporation are contained in section 33 of the Stock Corporation Law. 2 The Business Corporations Law. By the amendment of 1895, which took effect May 14, the pro- visions relative to the purposes for which corporations might be formed under this law were changed in phraseology and trans- ferred from this section to the next succeeding section. In addition to the provisions of this law, which are specially applicable to business corporations, other provisions applicable to such corporations are contained in the General Corporation Law and the Stock Corporation Law. See, also, the comments on pages 28 and 91, respectively. § 2. Incorporation. — Three or more persons may become a stock corporation for any lawful business purpose or pur- poses other than 'a moneyed corporation, or a corporation provided for by the banking, the insurance, the railroad and the transportation corporation laws, by making, signing, acknowledging and filing a certificate which shall contain : 1. The name of the proposed corporation. 2. The purpose or purposes for which it is to be formed. 3. The amount of the capital stock, and if any portion be preferred stock, the preferences thereof. 4. The number of shares of which the capital stock shall consist, each of which shall not be less than five nor more than one hundred dollars, and the amount of capital not less than five hundred dollars, with which said corooration will begin business. 5. The city, village or town in which its prmcipal busi- ness office is to be located. 6. Its duration. 7. The number of its directors, not less than three. 8. The names and post-office addresses of the directors for the first year. 9. The names and post-offices addresses of the sub- scribers of the certificate and a statement of the number of shares of stock which each agrees to take in the corporation. The certificate may contain any other provision for the regulation of the business and the conduct of the affairs of the corporation and any limitation upon its powers and upon the powers of its directors and stockholders which The Business Corporations Law. 3 does not exempt them from any obligation or from the per- formance of any duty imposed by law. (Former section 2, L. 1890, ch. 567, as amended by L. 1892, ch. 691; L. 1895, ch. 671; L. 1896, ch. 396; L. 1896, ch. 460; L. 1901, ch. 520.) For forms of certificates of incorporation under this law, see post, forms Nos. I and 2. The amendment of 1901 struck out the maximum limitation as to number of directors. Incorporators. — All the incorporators must be of full age, and at least tvrb thirds of them must be citizens of the United Stales, and at least one of them a resident of this State. Only natural persons can become incorporators. (General Corporation Law, § 4.) Corpora- tions, copartnerships and persons acting in a representative capacity are, therefore, excluded from acting as incorporators. Corporate NamE^ — The name of the corporation .must not conflict with that of any other domestic corporation, and it must not contain the word trust, bank, banking, insurance, assurance, indemnity, guar- antee, guaranty, savings, investment, loan or benefit. (General Cor- poration Law, § 6.) In selecting a corporate title, if desired, an individual name, or the name of a copartnership, to whose business the new corporation succeeds, may be used. At any time after incorporation the name may be changed by proper proceedings. (See Code Civil Procedure, §§ 2410-17, post, pages 37-41.) ' Objects. — A corporation may be formed under this law to carry on any one or more kinds of business that may be lawfully conducted by an individual, except as limited in the first paragraph of section 2. If found necessary, after organization, the business or powers may be extended qt altered. (See Stock Corporation Law, § 32.) Capital Stock. — Subdivision 3 of the foregoing section is complied with by stating the amount of the capital stock, if all the stock is to be of one class; but if any portion is to be preferred stock the amount thereof and the nature of the preferences must^be set forth. Corpora- tions are permitted to issue both preferred and common stock, and different classes of preferred slock, if the certificate of incorporation so provides, or to make preferred issues after incorporation. (See Stock Corporation Law, §47.) N6 limitations as to the amount of capital stock are prescribed, except that it Shall not be less than five hundred dollars; for it is to be noted, that the certif:cate of incorporation must state the amount of capital, (but not less than five hundred dollars), with which the corporation will begin business, and the amount so 4 The Business Corporations Law. stated must be paid in money or property before the corporation is per. mitted to incur debts. (See § 3, post.) One-half of the capital stock must be paid in within ona year. (See § 5, post, and notes there- under.) The ceitificate may provide for partly paid stock. (Stock Corporation Law, § 62.) Stock may be issued for property. (Stock Corporation Law, § 42.) Shares of Stock. — The par value of the shares of stock must not be less than five dollars nor more than one hundred dollars each. .The par value of the shares may be increased or reduced after incorpora- tion, if deemed desirable, without changing the amount of the capital stock. (See Stock Corporation Law, § 56.) Principal Office. — The name of the city, village or towri in which the principal office of the corporation is to be localed must be stated in the certificate. The location may be changed at any lime. (Stock Corporation Law, § 59.) Under the definition in section 3 of the Gen- eral Corporation Law the terms " principal office " and " principal place of business " are synonymous. (Peo. ex rel. Knickerbocker Press V. Barker, 87 Hun, 341, aff'd 147 N. Y. 715.) The location of the principal office in the certificate of incorporation is, as against the corporation, conclusive evidence of its residence, unless it has been legally changed. (Peo. ex rel. Knickerbocker Press v. Barker, 87 Hun, 341, aff'd 147 N. Y. 715; Peo. ex rel. Edison Electric Light Co. v. Barker, 91 Hun, 594.) Duration. — The period of existence must be stated, but there is no limitation as to the length of the term, and it may be perpetual if the certificate so states. Corporate existence fixed for a term of years may be extended at any time before the expiration thereof. (See Gen- eral Corporation Law, § 32.) Directors. — The minimum number of directors is three, but there is no maximum number fixed under the law as amended in igoi. At east one director must be a resident of the State. (General Corpora tion Law. § 29.) Each director is to be a stockholder unless otherwise provided in the certificate, or in a by-law adopted by a stockholders' Chapter 369, Laws of 1896, which became a law April 22, 1896, was enacted for the relief of certain business corporations, and reads as follows § 2. Any certificate of incorporation heretofore filed under said busi- ness corporations law, which shall contain the names and post-office addresses, either of the subscribers -to the stock or of the subscribers of the certificate, and a statement of the number of shares of stock which each agrees to take in the corporation, shall be deemed to have complied with the requirements of said subdivision as heretofore existing. The Business Corporations Law. 5 meeting. fStock Corporation Law, § 20.) The board of directors may be classified so that only one-fourth of the number need to be elected annually, thereby preventing any sudden change of management which might otherwise occur. (Slock Corporation Law, § 20.) Vacan- cies in the board are to be filled in the manner prescribed in the b)'- law. (Stock Corporation Law, § 20.) If desirable after incorporation the number of directors may be changed. (Stock Corporation Law, § 21.) The certificate may provide for cumulative voting it elections of directors. (General Corporation Law, § 20.) Any limitation upon the powers of directors may be inserted in the certificate which does not exempt them from obligations or duties imposed by law. (Busi- ness Cor-poration Law, § 2; General Corporation Law, § 10.) Subscribers. — The names and post-office addresses of the subscrib- ers to the certificate are required to be set forth and a definite state: ment of the niimber of shares of stock each agrees to lake in the cor- poration. There is no provision requiring any fixed proportion of the stock to be suhscribed for at the time of forming the corporation. Additional Powers. — The last provision of subdivision 9 in sec- tion 2, and the like provision in General Corporation Law, section 10, were added in 1892. It permits a corporation organizing under this law to insert in its certificate any limitation upon its powers, and upon the powers of its directors and stockholders which does not exempt them from obligations and duties imposed by law. If desired the cer- tificate may authorize the company to acquire, hold and dispose of the stocks and bonds of any other corporation. (Stock Corporation Law, §40); and authorize the issue of different classes of preferred stock. (Stock Corporation Law, § 47.) Liability of Stockholders. — The liability of a stockholder is lim- ited to the payment of the amount remaining unpaid, if any, upon his stock. (Stock Corporation Law, § 54.) It will thus be seen that such corporations aie what were formerly termed " limited liability compa- nies," without making any statement to that effect in the certificate, and without using the word " limited " as a part of the corporate title. A full liability corporation can be formed under this law only by stal- ing affirmatively that it is to be a full liability corporation. (See § 6 of Ihis law.) Stock issued for property necessary for the corporation is lull paid stock, and in the absence of fraud in the transaction, the judgment of the directors as to the value of the property purchased shall be conclusive. (Stock Corporation Law, § 42.) 6 The Business Corporations Law. Filing and Recording. — The certificate of incorporation must be filed and recorded in the office of the Secretary of State, and a copy of such certificate duly certified by the Secrelary of State, or a duplicate original certificate, must be filed and recorded in the office of the clerk of the county in which the office of the corporation is to be located- (General Corporation Law, § s, page 32.) If a certificate is to be recorded in a county olher than the one where it is executed, the county clerk's certificate should be attached, authenticating the act of the notary, justice of the peace, or commissioner of deeds taking the acknowledgment. The Secretary of Slate does not require such county clerk's certificate as to an acknowledgment taken within the State before a person duly authorized to take the same, but an acknowl- edgment or affidavit taken by a notary public in another State must be authenticated by the county clerk. Fees and Organization Tax. —The fees in the office of the Secre- tary of State are: Filing, $10; recording, 15 cents a folio; fees in the county clerk's office: Filing, six cents; recording, ten cents per folio. In addition to such payments an organization tax of one-twentieth of one per cent, upon the capital stock must De paid to the State Treas- urer before the certificates can be filed. For text of the statutes regu- lating these payments, and information relative to remittances, see pages 20-25. This tax equals 50 cents on each $1,000 of capital stock. Revenue Stamps. — During the recent session of Congress the War Revenue Tax Law was amended so that revenue stamps are not now required 10 be affixed to certificates of incorporation, or to any amended or supplemental certificates. The Secretary of State will not be compelled to file the certificate of incorporation of a company to be formed as a social organization when its purposes are in reality those of a business corporation. (People ex rel. Davenport v. Rice, 22 N. Y. Supp., 631; id., 68 Hun, 24.) § 3. Restrictions upon commencement of business. — No such corporation shall incur any debts until the amount of capital specified in its certificate of incorporation, as the The Business Corporations Law. 7 amount of capital with which it will begin business, shall have been paid in in money or property. (Former section 3, L. 1890, eh. 567, as amended by L. 1892, ch. 691, and L. 189S, ch. 671.) The last amendment took effect May 14, 1895. Prior thereto this section prohibited a corporation from transacting business until it had filed a certificate to the effect that half the capital stock had been subscribed. As now amended, there is no requirement in this section for the filing of a certificate in any office. The corporation may commence business whenever the amount 'of capital with which it intends to begin business, as stated in its certificate of mcorporation, shall have been paid in in money or property. By-laws of corporations now formed under this law are not required to be filed in any public office. § 4. Reorganization of existing corporations. — Any stock corporation heretofore organized, except a moneyed or transportation corporation, or a corporation the business of which partakes of the nature of banking or insurance, may reincorporate under this chapter in the following m.an- ner: The directors of the corporation shall call a meeting of the stockholders thereof by publishing a notice, stating the time, place and object of the meeting, signed by at least a majority of them, in a newspaper of the county in which its principal business olBce is situated, once a week, for, at least, three successive weeks, and by serving upon each stockholder, at least three weeks before the meeting, a copy of such notice either personally or by depositing it in the post-office, postage prepaid, addressed to him at his last- known post-office address. The stockholders shall meet at the time and place specified in the notice and organize by choosing one of the directors chairman, and a suitable secre- tary, and shall then take a vote of those present in person or by proxy upon the proposition to reincorporate under thJS chapter, and if votes representing a majority of all the stock of the corporation shall be cast in favor of the proposi- tion, the officers of the meeting shall execute and acknowl- edge a certificate of the proceedings, which certificate shall ^Iso contain the statements required by section two of this chapter, and shall be filed in the offices where certificates of 8 The Business Corporations Law. incorporation under this chapter are required to be filed. From the time of such fiHng such corporation shall be deemed to be a corporation organized under this chapter, and if originally organized or incorporated under a general law of this State it shall have and exercise all such rights and franchises as it has heretofore had and exercised under the laws pursuant to which it was originally incorporated, and such reorganization shall not in any way affect, change or diminish the existing liabilities of the corporation. (Former section s, L. 1890, ch. 567, as amended by L. 1892, ch. 691, and L. 1895, ch. 671.) Slight verbal changes were made in this section by the amend- ment of 189s, and a provision requiring the filing of by-laws was stricken out. The business corporation act of 1875, ch. 611, now repealed, con- tained provisions substantially the same as the foregoing. For the mode of procedure in reorganizing when the property and franchises of a domestic stock corporation have been sold by virtue of a mortgage or judgment, see the Stock Corporation Law, sections 3, 4, s, 6. A corporation reorganized under the provisions of this section is not required to pay an organization tax. (In re Consolidated Kansas City S. & R. Co., 13 App. Div., 50.) The foregoing case overrules the special term decision In re N. Y. & Sub. Inv. Co., 16 N. Y. Supp., 213; Id., 40 St. Rep., 139, in which latter case it was held that the tax is payable. It is difficult to conceive of a case where any advantage would accrue to any existing corporation by reorganization under this section. Corporations formed under laws now repealed are not com- pelled to reorganize, such corporations being governed by the new laws, into which the corporation laws repealed are merged. (Close v. Potter, 2 Misc. R., i.) The language of this section is merely permissive; it is, therefore, optional with the stockholders whether they will reorganize or not. (Id.) A corporation cannot accomplish an extension of the term of its existence, or an alteration or extension of its purposes or powers, or a change in the number of its shares of stock, by reincorpora- tion under the provision of this section. (People ex rel. Haber- man v. James, S App. Div., 412.) It was not the purpose of fUch section to give to a corporation, upon its reincorporation there- under, any rights or franchises other than those which it had, and which it had exercised, under the laws pursuant to which it was incorporated. (Id.) If a corporation desires to make any changes it must do so under and pursuant to the provisions of the General Corporation Law, and the Stock Corporation Law expressly pro- viding therefor. (Id.) The Business Corporations Law. 9 g 5. Paymentpf capital stock.— One-half of the capital stock. of every such corporation shall be paid in within one year from its incorporation, or the corporation shall be dis- solved, and the directors, within thirty days after such pay- ment shall make a certificate of the fact of such payment, which shall be signed and acknowledged by a majority of the directors, and verified by the president or vice-president and secretary or treasurer, and filed in the offices where the certificates of incorporation are filed. The dissolution of any such corporation for any cause shall not take away or impair any remedy against it, its stockholders or officers, for any liabilities incurred previous to its dissolution. (Former section 6, L. 1890, ch. 567, as amended by L. 1892, ch. 691.) For form of certificate, see post, form No. 3. This section provides that a certificate be filed- when one-half the capital stock has been paid in. The certificate of full payment of capital stock heretofore required is no longer necessary, and no time is now prescribed by statute within which the entire capital stock shall be paid in. (See Stock Corporation Law, section 54, and notes thereunder.) The board of directors may fix the time for the payment of subscriptions to the capital stock. (Stock Cor- poration Law, section 43.) The certificate of incorporation under section 2 of this law, and the certificate required by the foregoing section are frequently presented simultaneously at the office of the Secretary of State for filing and recording. In such cases the last mentioned certificate has always been rejected upon the ground that there could be no corporation, and consequently no president, vice-president, treasurer or secretary of a corporation, to properly execute said certificate until after the filing of the certificates of incorporation pursuant to said section 2. Failure to pay in half the capital stock within the statutory time merely creates a liability for a forfeiture of corporate rights. Pro- ceedings must be taken to accomplish an actual dissolution. (People V. Buffalo Stone & Cement Co., 131 N. Y., 140; Id., 42 St. Rep., 753; People v. U. & D. R. R. Co., 128 N. Y., 240; Denike v. N. Y., etc.. Lime Co., 80 N. Y., 599; Matter Brooklyn El. R. R. Co., 125 N. Y., 434.) The certificate must be sworn to as well as acknowledged. An acknowledgment without verification is not sufficient. (Hardman v. Sage, 124 N. Y., 25; Vedder v. Mudgett, 95 N. Y., 29s; Brown v. Smith, 13 Hun, 408; aflf'd 80 N. Y., 650.) § 6. Full liability corporations. — Every corporation formed under this chapter may be or become a full liability lo The Business Corporations Law. corporation by inserting a statement in the certificate of incorporation, that the corporation thereby formed is intended to be a full liability corporation ; and in case of an existing corporation, which is not a full liability corpora- tion, it may become such by filing in the offices where certifi- cates of incorporation are required to be filed, a supple- mental certificate stating that thereafter the corporation intends to be a full liability corporation, which certificate shall be executed and acknowledged by the president and treasurer of the corporation or by the board of directors, and shall have annexed thereto a copy of a resolution, adopted by a two-thirds vote of the board of directors, and the written consent of all the stockholders of the corpora- tion authorizing and consenting to the change of the cor- poration to a full liability corporation. If the corporation is formed as or becomes a full liability corporation all the stockholders of the corporation shall be severally individu- ally liable to its creditors for all its debts and liabilities, and may be joined as defendants in any action against it. No execution shall issue against any stockholder individually until execution has been issued against the corporation and returned unsatisfied, and all the stockholders shall contribute a proportionate share, according to the number of shares of stock owned by each, of the amount paid by any stock- holder on a judgment recovered against him individually for a debt of the corporation, and he may recover from the other stockholders in the corporation in a joint or several action the proper portion due by them and each of them, of the amount paid by him on any such judgment. (Former section 7, L. i8go, ch. 567, as amended by L. 1892, ch 691.) For form of certificate of incorporation of full liability corporation, see post, form No. 2. For form of supplemental certificate by an existing business corpora- tion to become, a full liability corporation, see post, form No. 4. It rarely happens that persons desire to enter into a corporate enterprise in which each .stockholder becomes personally liable for the indebtedness of the corporation, therefore, very few full liability companies have been incorporated in this State. The Business Corporations Law. ii § 7. Extension of business. Section 7 of this law, which contained provisions authorizing an extension of business, wis repealed by chapter 671, Laws of 1895, taking efifect May 14, 1895. The repeal of this section was deemed desirable, because provisions of like character are contained in section 32 of the Stock Corporation Law, and it was unnecessary to duplicate them in this law. §8. Consolidation of corporations. — Any two or more corporations organized under the laws of this State for the purpose of carrying on any kind of business of the same or of a similar nature, which a corporation organized under this chapter might carry on, may consolidate such corpora- tion's into a single corporation, as follows: The respective corporations may enter into and make an agreement signed by a majority of their respective boards of directors and under their respective corporate seals, for the consolidation of such corporations, prescribing the terms and conditions thereof, the mode of carrying the same into effect, the name of the new corporation, the number of directors who shall manage its a£fairs, not less than three, the names and post- office addresses of the directors for the first year, the term of its existence, not exceeding fifty years, the name of the town or towns, county or counties, in which its operations are to be carried on, the name of the town or city and county in this State in which its principal place of business is to be situated, the amount of its capital stock, which shall not be larger in amount than the fair aggregate value of the property, franchises and rights of such corporations, and the number of shares into which the same is to be divided, the manner of distributing such capital stock among the holders thereof, and if such corporations, or either of them, shall have been organized for the purpose of carrying on any part of its business in any place out of this State, the agreement shall so state, with such other particulars as they may deem necessary. (Former section 13, L. iSgo, ch. 567, as amended by L. 1892, ch. 6gl L. 1895, ch. 671, and L. 1901, ch. 520.) Upon consolidation of two or more corporations into a new 12 The Business Corporations Law. corporation an organization tax is payable only upon the capital stock in excess of the aggregate amount of capital stock of said corporations. (.Tax Law, § i8o, page 20.). Consolidations under these provisions can only be effected by corporations organized under the laws of this State for the purpose of carrying on business of the same or a similar nature, and suctt. business must be of a kind that corporations are authorized to carry on under the Business Corporations Law. (See Cameron v. N. Y. & Mt. Vernon Water Co., 133 N. Y., 336; 62 Hun, 269; Young v. Rondout & Kingston Gas Lt. Co., 129 N. Y., 57; Id., 39 St. Rep., 602; see, also. People v. North River Sugar Ref'g Co., 121 N. Y., 582; Cole V. Millerton I. Co., 133 N. Y., 164.) A contract between two corporations is not vitiated by the fact that some of the officers were directors in both corporations, in the absence of fraud or bad faith on their part. (Genesee Valley & Wyoming Ry. Co. v. Retsof Mining Co., 15 Misc., 187.) ■ § 9. Submission of consolidation agreement to stock- holders. — Such agreement shall be submitted to the stock- holders of each of such corporations, at a meeting thereof to be called upon notice of at least two weeks, specifying the time, place and object thereof, and addressed to each at his last known post-ofifice address, and deposited in the post- office, postage prepaid, and published for at least two successive weeks in one of the newspapers in each of the counties of this State in which either of such corporations shall have its place of business, and if such agreement shall be approved at each of such meetings of the respective stockholders separately, by the vote by ballot of the stock- holders owning at least two-thirds of the stock, the same shall be the agreement of such corporations, and a sworn copy of the proceedings of such meetings, made by the secretaries thereof, respectively, and attached thereto, shall be presumptive evidence of the holding and action of such meetings. Such agreement and verified copy of proceed- ings of such meetings shall be made in duplicate, one of which shall be filed in the office of the Secretary of State, and the other in the office of the clerk of the county where the principal business office of the new corporation is to be situated in this state, and thereupon such corporations shall be merged into the new corporation specified in such agree- The Business Corporations Law. 13 ments, to be known by the corporate name therein mentioned, and the provisions of such agreement shall be carried into effect as therein provided. If any stockholder, not voting in favor of such agreement to consolidate, shall at such meeting, or within twenty days thereafter, object to such consolidation and demand payment for his stock, such stockholder or sueh new corporation, if the consolidation takes effect at any time thereafter, may at any time within sixty days after such meet- ing apply to the supreme court at any special term thereof held in the district in which any county is situated in which such new corporation may have its place of business, upon at least eight days notice to the new corporation, for the appoint- ment of three persons to appraise the value of such stock, and the court shall appoint three such appraisers and desig- nate the time and place of their first meeting, with such direc- tions in regard to their proceedings as shall be deemed . proper, and also direct the manner in which payment for such stock shall be made to such stockholder. The court may fill any vacancy in the board of appt'^isers occurring by refusal or neglect to serve or otherwise. /The appraisers shall meet at the time and place designate'd, and they or any two of them, after being duly sworn honestly and faithfully to dis- charge their duties, shall estinjate and certify the value of such stock at the time of such 'dissent, and deliver one copy to such new corporation, and another to such stockholder if demanded; the charges and expenses of the appraisers shall be paid by the new corporation. When the new corporation shall have paid the amount of such appraisal, as directed by the court, such stockholder shall cease to have any interest in such stock and in the corporate property of such corpora- tion, and such stock may be held or disposed of by such new corporation. * Where any consolidation has been heretofore or shall be hereafter effected pursuant to the laws of this state, and the holders of ninety per centum of the capital stock of each of such corporations have voted in favor of such agreement to consolidate, if any stockholder not voting in favor of such consolidation shall fail to exchange his stock for stock of such new corporation within sixty days after this act shall go into effect, or, in case of a consolidation here- after effected, within sixty days after he shall have become entitled to make such exchange, such new corporation may, at any time thereafter, upon at least eight days' notice to such stockholder, to be given personally, within the state, if possible, and if not, then in such manner as the court shall The provisions following the asterisk (*) are new, having been added by the last amendment. 14 The Business Corporations Law. direct, apply to the court, as hereinbefore provided, for the appointment of three persons to appraise the value of such stock at the time of the expiration of such sixty days. Upon the completion of the appraisal in the manner hereinbefore provided for, and the payment by such new corporation of the amount of such appraisal, as directed by the court, such stockholder shall cease to have any interest in such stock, and in the corporate property of such corporation, and such stock may be held or disposed of by such new corporation. (Former section 14, L. 1890, ch. 567. as amended by L. 1892, ch. 691; L. 1902, ch. 438.) § 10. Powers of consolidated corporations. — Such new corporation in addition to the general powers of corporations shall enjoy the rights, franchises and privileges possessed by each of the corporations so consolidated, subject to the restrictions, liabilities, duties and provisions contained in this chapter, so far as the same may be applicable to the pur- poses for which it shall have been organized and expressed in the agreement for consolidation, and may prosecute and carry on any kind of business which each of the consolidating corporations was authorized by law to conduct. (Former section 15, L. 1890, ch. 567, as amended by L. 1892, ch. 691.) § II. Transfer of property of old corporations to consolidated corporations. — Upon the consummation of such act of consolidation, all the rights, privileges, fran- chises and interests of each of the corporations, parties to the same, and all the property, real, personal and mixed, and all the debts due on whatever account to either of them, as well as all stock subscription and other things in action belonging to either of them, shall be taken and deemed to be transferred to and vested in such new corporation, with- out further act or deed; and all claims, demands, property and every other interest shall be as effectually the property of the new corporation as they were of the former corpor- ations, parties to such agreement and act; and the title to all real estate, taken by deed or otherwise, under the laws of this state, vested in either of such corporations, parties to such agreement and act, shall not be deemed to revert or be in any way impaired by reason of this act, or anything done by virtue thereof, but shall be vested in the new corporation by virtue of such act of consolidation; and all the rights, privileges, franchises and property of the corporations, parties to any consolidation heretofore made under this act, shall vest as fully in the new corporation thereby created as The Business Corporation Law. 15 they were vested in the corporations, parti'es to such con- solidations. (L. 1890, ch. 567, as amended by L. 1892, ch. 691; L. 1902, ch. 457.) By the last amendment it is provided that upon consolidation the properties of the constituent corporations are transferred and vested in the new corporation without being mentioned in the agreement of con- solidation, and the title of properties of corporations consolidated pre- vious to this amendment are also vested in the new corporation the same as though this provision were then in force. § 12. Rights of creditors of old corporations. — The rights of creditors of any corporation that shall so be con- solidated shall not in any manner be impaired, nor any liability or obligation for the payment of any money due or to become due to any person or persons, or any claim or demand for any cause existing against any such corpora- tion or against any stockholder thereof, be released or impaired by any such consolidation; but such new corpora- tion shall succeed to and be held liable to pay and discharge all such debts and liabilities of each of the corporations con- solidated in the same manner as if such new corporation had itself incurred the obligation or liability to pay such debt or damages, and the stockholders of the respective corporations consolidated shall continue, subject to all the liabilities, claims and demands existing against them as such, at or before the consolidation; and no action or pro- ceeding then pending before any court or tribunal in which any corporation that may be so consolidated is a party, or in which any such stockholder is a party, shall abate or be discontinued by reason of such consolidation, but may be prosecuted to final judgment, as though no consolidation had been entered into; or such new corporation may be substituted as a party in place of any corporation so con- solidated, by order of the court in which such action or pro- ceeding may be pending. (Former section 17, L. i8go, ch. 567, as amended by L. 1892, ch. 691.) §13. District steam corporations. — Any corporation now or hereafter incorporated for the purpose of supplying steam to consumers from a central station or stations through pipes laid in the public streets, shall be known as a district steam corporation, and upon the application, in writing, of the owner or occupant of any building or premises, within one hundred feet of any street main laid down by any such corporation, and payment by him of all money due from him to it, such corporation shall supply i6 The Business Corporations Law. steam as may be required for heating such building or premises, notwithstanding there may be rent or compensa- tion in arrears for steam suppHed, or for meter, pipe or fittings furnished to a former occupant thereof, unless such owner or occupant shall have undertaken or agreed with the former occupant to pay or to exonerate him from the pay- ment of such arrears, and shall refuse or neglect to pay the same; and if, for the space of twenty days after such appli- cation, and the deposit, if required, of a reasonable sum to cover the cost of connection and two months' steam supply, the corporation shall refuse or neglect to supply steam as required, it shall forfeit to such applicant the sum of ten dollars and the further sum of five dollars for every day thereafter during which such refusal or neglect shall con- tinue; but no such corporation shall be required to lay a service pipe for the purpose of supplying steam to any applicant where the ground in which such pipe is required to be laid shall be frozen, or otherwise present serious obstacles to laying the same, nor unless the applicant, if required, shall deposit in advance with the corporation a sum of money sufficient to pay for two months' steam supply and the cost of the necessary connections and of the erection of a meter and such other special apparatus as are required for use in connection with such steam supply, nor unless the applicant shall provide the space and right of way necessary for the erection, maintenance and use of such connections and apparatus, and signify his assent in writing to the reasonable regulations of the corporation with refer- ence to the supply of steam to consumers. (Former section i8, L. 1890, ch. 567, as amended by L. 1892, ch. 691.) The logical place for the provisions of sections 13, 14 and 15 would seem to be in the Transportation Corporations Law, where cor- porations similar in character are grouped. § 14. Examination of meters by agent of district steam corporations. — Any such corporation may make an agreement with any of its customers; by which any of The Business Corporations Law. 17 its officers or agents shall be authorized, at all reasonable times to enter any dwelling, store, building, room or place, supplied with steam by such corporation and occupied by such customer, for the purpose of inspecting and examining the meters, devices, pipes, fittings and appliances for supply- ing or regulating the supply of steam, and for ascertaining the quantity of steam consumed, or the quantity of water resulting from the condensation of steam consumed. Every such agreement shall further provide that such ofificer of agent shall exhibit his written authority if requested by the occupant of such dwelling, store, building, room or place. Any person who shall directly or indirectly prevent or hinder such ofificer or agent from entering such dwelling, store, building, room or place, or from making such inspec- tion or examination, in violation of such agreement, shall forfeit to the corporation the sum of twenty-five dollars fot each oflfense. (Former section 19, L. 1890, ch. 567, as amended by L. 1892, ch. 691.) § 15. Entry by agent of district steam corporation to cut off steam. — If any person or persons, corporation or association supplied with steam by any such corporation, shall neglect or refuse to pay the rent or remuneration for such steam, or for the meter, device, pipes, fittings or appli- ances, let by such corporation for supplying steam, or for ascertaining the quantity of steam consumed, or the quan-- tity of water resulting from the condensation of the steam consumed, agreed upon or due for the same, as required by his, their or its contract with such corporation, the latter may thereupon stop and prevent the steam from entering the premises of such person, persons, corporation or asso- ciation, so neglecting or refusing to pay such rent or remuneration, and may also in any case, in which a person is liable to pay a forfeiture, or to a fine or imprisonment, by reason of any act to or towards such corporation or its property for which such forfeiture, fine or penalty is imposed 2 i8 The Business Corporations Law. by law, stop and prevent, the steam from entering the premises of the person so Hable, or if such person be an officer or agent of any corporation or association, stop and prevent the steam from entering the premises of such cor- poration or association. In all cases in which such corpora- tion is authorized to stop and prevent the steam from enter- ing any premises, it may, by its officers, agents, or workmen, enter into or on such premises between the hours of eight o'clock in the forenoon and six o'clock in the afternoon and cut off, disconnect, separate and carry away any meter, device, pipe, fitting or other property of the corporation; and may cut ofif, disconnect and separate any meter, device, pipe or fitting, whether the property of the corporation or not, from the mains or pipes of such corporation. (Former section 20, L. 1890, ch. 567, as amended by L. 1892, ch. 691.) § 16. Water companies. — No corporation shall be formed under this chapter for the purpose of accumulating, storing, conducting, furnishing or supplying water for domestic, manufacturing or municipal purposes in the city of New York. Any corporation formed for the purpose of supplying any other city of the State with water, if unable to agree with the owners of any real property required for the purpose of the corporation for the purchase thereof, may acquire title thereto by condemnation. (New, added by L. 1892, ch. 691.) In the foregoing section implied authority appears to be given for forming corporations under this law " for the purpose of accumulating, storing, conducting, furnishing or supplying water for domestic, manufacturing or municipal purposes," except in the city of New York. It should be observed, ho\^ever, that the second section of this law, page 2, prohibits the formation under the Business Corporations Law of any kind of corporation that may be formed under any other general law of the State, and that this prohibition would apply to a certain class of water cor- porations specially provided for in the Transportation Corporations Law, section 80, to wit: Corporations " for the purpose of supply- ing water to any of the cities, towns or villages, and the inhabi- tants thereof, in this State." It would seem, therefore, that water The Business Corporations Law. 19 companies for other purposes may incorporate under the Business Corporations Law, provided their operations are not to be con- ducted in New York city. In the matter of the New York & White Plains Suburban Water Company, a certificate of incorpora- tion drawn under the Business Corporations Law, stated the objects 01 the proposed corporation to be' " to acquire water by purchase, development or otherwise; to construct reservoirs or water towers, erect pumping machinery, laying of water mains, pipes, gates, valves and hydrants; to furnish and sell water to manufactories, private corporations and individuals for fire protection, manufac- turing and domestic use, and collect payment or rentals for the same." The certificate was referred to the Attorney-General. In his opinion given April 17, 1893, that official held as follows: " * * * It (the Transportation Corporations Law) makes no provision for furnishing water for manufacturing or hydraulic pur- poses. I am of the opinion that under said Business Corporations Law, corporations may be formed for such purpose and the pur- poses set forth in this certificate. This opinion is strengthened by the implied authority given in section 16 of the Business Corpora- tions Law." § 1 7. Real estate corporations; condemnation. — Any corporation formed for the purpose of developing or improving real property, which lays out for public use roads, streets, avenues or highways, upon or through its lands, if unable to agree with the owners of any real prop- erty required for the purpose of extending, continuing or connecting such roads, streets, avenues or highways, for the purchase thereof, may acquire title thereto by condemna- tion in the manner prescribed by law; provided such cor- poration has the consents of the owners of not less than one-half of all of the land which adjoins or abuts upon, or which will adjoin or abut upon, such roads, streets, avenues or highways, or their extensions, continuations or connec- tions, when completed; and such corporation may lay out and establish such roads, streets, avenues or highways, and the extensions, continuations or connections thereof, and may construct drains or sewers, and such bridges or cul- verts as may be necessary to maintain the grades of, or for the extension, continuation or connection of, the roads, streets, avenues or highways, so laid out; and may connect such roads, streets, avenues or highways, with or across roads, streets, avenues or highways, belonging to any other corporation or person, but may not disturb the estab- lished grades thereof. All lands so taken by condemnation shall be deemed to be acquired for a public use. (New section, added by ,L. 1900, ch. 518.) 20 Tax Upon Organization. PROVISIONS OF THE TAX LAW IN RELATION TO THE PAY- MENT OF ORGANIZATION TAX BY CORPORATIONS, AS AMENDED IN. [The folIoninK is section i3o of chapter go8, Laws of i8g6, entitled "An act in relation to taxation, constituting chapter twenty-four of the general laws," and requires the payment of a tax of one-twentieth of one per cent, for the privilege of organization of corporations. The provisions of the revised tax laws regulating the annual taxation of corporations are published elsewhere in this volume. See the index under " Taxation."] « § 1 80. Organization tax. — Every stock corporation incorporated under any law of this state shall pay to the state treasurer a tax of one- twentieth of one per centum upon the amount of capital stock which the corporation is author- ized to have, and a like tax upon any subsequent increase. Provided, that in no case shall such tax be less than one dol- lar. Such tax shall be due and payable upon the incorporation of such corporation or upon the increase of its capital stock. Except in the case of a railroad corporation neither the secre- tary of state nor county clerk shall file any certificate of incorporation or article of association, or give any certifi- cate to any such corporation or association until he is fur- nished a receipt for such tax from the state treasurer, and no stock corporation shall have or exercise any corporate franchise or powers, or carry on business in this state until such tax shall have been paid. In case of the consolidation of existing corporations into a corporation, such new cor- poration shall be required to pay the tax hereinbefore pro- vided for only upon the amount of its capital stock in excess of the aggregate amount of capital stock of said corpora- tions. This section shall not apply to state and national banks or to building, mutud loan, accumulating fund and Tax Upon Organization. 21 co-operative associations. A railroad corporation need not pay such tax at the time of fihng its certificate of incorpora- tion, but shall pay the same before the railroad commmis- sioners shall grant a certificate, as required by the railroad law, authorizing- the construction of the road as proposed in its articles of association, and such certificate shall not be granted by the board of railroad commissioners until it is furnished with a receipt for such tax from the state treasurer. (L. i8g6, ch. go8, § io8', as amended by'L. 1897, ch. 369, and L. rgoi, ch.448.) By the amendment of 1897 the last sentence was added to this section, relieving railroad corporations from the payment of the organization tax at the time of filing the certificate of incorporation and making such tax payable when the railroad commissioners issue the certificate provided for by the provisions of section 59 of the Railroad Law. The foregoing section of the revised Tax Law supersedes the organization tax act of 1886, ch. 143, as amended by L. 1887, ch. 284 and L. 1892, ch. 668. The case of People ex rel. Eickemeyer Field Co. v. Rice, 138 N. Y., 614, in which it was held that two or more corporations might consolidate without paying an organization tax, except upon an increase of capital stock, arose under the act of 1886, ch. 143, as amended by L. 1892, ch. 668, and the provisions of the present law have been made to conform to that decision. When a new corporation is formed by the consolidation of a domestic corporation with a foreign corporation it is not required to pay an organization tax, even upon the capital stock in excess of the aggregate amount of capitalization of the constituent com- panies. • (People V. Chicago & St. L. R. R. Co., 129 N. Y., 474, revsg. 61 Hun, 66; People v. Fitchburg R. R. Co., 129 N. Y., 654.) An organization tax must be paid upon a reorganization of the corporation under L. 1874, ch. 430, as amended by L. 1876, ch. 446 (now repealed and superseded by sec. 3, Stock Corporation Law, post); Peo. ex rel. Schurz v. Cook, no N. Y., 443; Peo. ex rel, Mertens v. Cook (Id.). In such case the right to be a corporation, possessed by the old corporation, was not mortgaged nor sold, and so did not pass, to the purchasers. They obtain such right upon filing the certificate, and then only by direct grant of the State. (Id.) A corporation reorganized under the provisions of section 4 of the Business Corporations Law is not required to pay an organiza- tion tax. (In re Consolidated Kansas City S. & R. Co., 13 App. Div., so; overruling Matter of N. Y. & Suburban Investment Co., 16 N. Y. Supp., 213; 40 N. Y. St. Rep., 139) 22 Tax Upon Organization. ORGANIZATION TAX TABLE, SHOWING ONE-TWENTIETH OF ONE PER CENT ON VARIOUS AMOUNTS. Capital stock. Tax. $500. $1 00 dOO 1 00 70O 1 00 800 1 00 900 1 00 i.noo 100 1,500 100 1,800 1 00 2,000 1 00 2.500 1 25 2,800 1 40 3,000 1 50 3,500 1 75 4,000 2 00 4,600 2 25 5,000 2 60 5,500 , 2 75 6,000 3 00 6,500 3 25 7,000 3 60 7,600 8 75 8,.000 4 00 8,600 425 9,000 4 50 9,500 4 75 10,000 500 12,000 600 15,000 750 18,000 900 20,000 10 00 25,000 1250 ,30,000 1500 35,000 • 1750 40,000 20 00 45,000 2250 50,000 25 00 65,000 27 60 60,000 3000 ft5,000 32 .50 70,000 3500 75,000 37 50 80,000 40 00 85,000 4250 90,000 4500 95,000 47 50 100,000 5000 125,000 6250 150,000 7500 Capital stock. Tax. $175,000 J87 60 200,000 100 00 22.5,000 112 50 260,000 125 00 27.5,000 137 50 300,000 1.5000 325,000 163 50 350,000 176 00 375,000 187 50 400,000 200 00 425,000 212 50 450,000 225 00 475.000 237 50 500,000 250 00 625,000 263.50 550,000 275 00 575,000 287 50 600,000 300 00 625,000 312 50 660,000 32500 675,000 837 50 700,000 35000 725,000 362,60 750,000 375 00 775,000 387 60 800,000 400 00 825,000 41260 850,000 42500 875,000 437 60 900,000 450 00 925,000 462 60 950,000 475 00 975,000 487 60 1,000,000 500 00 1,250,000 625 00 1,500,000 750 00 1,750,000 87500 2,000,000 1,000 00 8.000,000 ■ 1,50000 5,000,000 2,.500 00 10,000,000 5,00000 15,000,000 7, .500 00 20,000,000 10,000 00 25,000,000 12,50000 50,000,000 2.1,01)0 00 75,000,000 37..50O00 100,000,000 50,000 00 600,000,000 250,00000 License Tax Upon Foreign Corporations. 23 LICENSE TAX UPON FOREIGN CORPORATIONS. LAWS OF 1896, CHAPTER 908, S5 181. § 181. License tax on foreign corporations. — Every foreign corporation, except banking corporations, fire, marine, casualty and life insurance companies, co-operative fraternal insurance companies and building and loan asso- ciations, authorized to do business under the general cor- poration law, shall pay to the state treasurer, for the use of the state, a license fee of one-eighth of one per centum for the privilege of exercising its corporate franchises or carrying on its business in such corporate or organized capacity in this state, to be computed upon the basis of the capital stock employed by it within this state, (furing the first year of carrying on its business in this state ; and if any year thereafter any such corporation shall employ an increased amount of its capital stock within this state, the same license fee shall be due and payable upon any such increase. The tax imposed by this section on a corpora- tion not heretofore subject to its provisions shall be paid on the first day of December, nineteen hundred and one, to be computed upon the basis of the amount of capital stock employed by it within the state during the year preceding such date, unless on such date such corporation shall not have employed capital within the state for a period of thir- teen months in which case it shall be paid within the time otherwise provided by this section. No action shall be maintained or recovery had in any of the courts in this state by suchi foreign corporation without obtaining a receipt for the license fee hereby imposed within thirteen months after beginning such business within the state, or if at the time this section takes effect such a corporation has been engaged in business within this state for more than twelve months, without obtaining such receipt within thirty days after such tax is due. (L. 1896, ch. go3, g 181, as amended by L. igoi, ch. 558 ) By Ihe amendmenl of 1901, chapter 558, the exemption theretofore existing in favor of foreign corporations " wholly engaged in carrying on manufactures in this State" was stricken out, and a provision inserted placing such corporations upon the same tax-paying basis as other foreign corporations. Another new provision is the requirement that when any corporation subject to this license tax shall employ an increased amount of capital stock within the State the same license tax shall be payable upon such increase. For the provisions of the tax laws regulating the annual taxation of foreign corporations transacting business within the State of New York, see page 145 et seq. 24 Filing and Recording Fees. FILING AND RECORDING FEES. FEES PAYABLE TO SECRETARY OF STATE AND COUNTY CLERKS. Secretary of State. — The fees to be collected by the Secretary of State, in connectioxi with corporation certificates, are regulated by the Exe.cutive Law (L. 1892, ch. 683), section 26, which provides as follows: 2. Searching the records in his office for any one year and for every other year in which such search is made, six cents ; 3. For a copy of any paper or record not required to be certified or otherwise authenticated by him, ten cents per folio; 4. For a certified or exemplified copy of any law, record or paper, fifteen cents per folio; 5. For a certificate under the great seal Of the State, one dollar; 6. For recording a certificate, notice or other paper required to be recorded, except as otherwise provided by this section, fifteen cents per folio ; 7. For a certificate of the official character of a com- missioner of deeds residing in another State or a foreign country, twenty-five cents, and for every other certificate, under the seal of his office, one dollar; 12. For filing and recording the original certificate of incorporation of a railroad corporation for the construction of a railroad in a foreign country, fifty dollars ; for filing the original certificates of every other railroad corporation. Filing and Recording Fees. 35 twenty-five dollars; for filing the original certificate of any other stock corporation, ten dollars; for filing any original certificate of incorporation drawn under article two of the membership corporations law, ten dollars. (Thus amended by L. 1897, ch. 411.) The amendment of 1897 added the last clause prescribing a filing fee of ten dollars for certificates of incorporation drawn under article two of the Membership Corporations Law (L. 1895, ch. 559). The Executive Law, above mentioned, repealed the fee bill of 1882, ch. 156, which previously, regulated the filing, recording and miscellaneous fees payable at the office of the Secretary of State. County Clerks. — The provisions as to fees payable to County Clerks are contained in the Code of Civil Procedure, section 3304, as amended by Laws of 1896, chap. 572, as follows: § 3304. Fees of county clerks generally. — A county clerk is entitled, for the services specified in this section, except where another fee is allowed therefor by special statu- tory provision, to the following fees to be paid in advance : *** ***** For a copy of an order, record, or other paper, entered or filed in his office, eight cents for each folio. *** ***** For recording any instrument, which must or may legally be recorded by him, ten cents for each folio. For filing any paper required by law to be filed in his office, other than as expressly provided for in this section, six cents. TRANSMISSION OF PAPERS AND PAYMENTS. When corporation papers are transmitted by mail for filing at Albany, the most satisfactory and expeditious results will be secured by observing the following suggestions, to wit: Tha tax of one-twentieth of one per cent, upon the capital stock for the privilege of organization of a stock corporation (or for an increase of capital stock) should be remitted directly to State Treas- urer, Albany, N. Y. All such tax payments exceeding in amount the sum of twenty-five dollars, are required, by a rule of the Treas- urer's office, to be made in cash or by certified check. New York draft, post-office money order or express order. 26 Filing and Recording Fees. All corporation certificates should be mailed in a separate enclos- use, addressed to Secretary of State, Albany, N. Y., together with the filing and recording fees of that office. Do not forward to the State Treasurer any certificate intended for filing in the office of the Secretary of State, as is often done. On the other hand, do not send the organization tax to the Secretai-y of State. The statute provides for its payment to the State Treas- urer, who will upon receiving such payment, if the same be in acceptable form, as above required, immediately notify the Secre- tary of State to that effect, and the latter official will simultaneously, if the certificate is unobjectionable, give notice to apply the tax and issue receipts therefor. THE GENERAL CORPORATION LAW. Laws of 1890, Chapter 563, Entitled: "An Act in Relation to Corporations, Constituting Chapter Thirty-five of the General Laws," as Amended to THE CoMMENCEMEI^T OF THE LEGISLATIVE SESSION OF 1903. THE GENERAL CORPORATION LAW* Section i. Short title. 2. Classification of corporations. 3. Definitions. 4. Qualifications of incorporators. 5. Filing and recording certificates of incorporation. 6. Corporations of the same name prohibited. 7. Amended and supplemental certificates. 8. Lost or destroyed certificates. 9. Certificates and other papers as evidence. 10. Prohibition of other than statutory powers. 11. Grant of general powers. 12. Limitation of amount of property of a non-stock cor- poration. 13. Acquisition of additional real property. 14. Acquisition of property in other states. 15. Certificate of authority of a foreign corporation. 16. Proof to be filed before granting certificate. 17. Acquisition of real property in this state by certain foreign corporations. 18. Acquisition by foreign corporations of real property in this state upon judicial sales. 19. Prohibition of banking powers. 20. Qualification of members as voters. 21. Proxies. 22. Challenges. 23. Effect of failure to elect directors. 24. Mode of calling special election of directors. 25. Mode of conducting special election of directors. • The General Corporation Law (L. 1890, ch. 563) was passed June 7, 1890, to take effect May 1, 1891. By tie Lawe of 1C92, chapter 687, passed May 18, to take effect Immediately, said law was amended and entirely re-enacted, and has since heen far tber amended, as appears on the succeeding pages. 28 The General Corporation Law. Section 26. Qualification of voters and canvass of rotes at special elections. 27. Powers of Supreme Court respecting elections. 28. Stay of proceedings in actions collusively brought. 29. Quorum of directors and power of majority. 30. Directors as trustees in case of dissolution. 31. Forfeiture for non-user. 32. Extension of corporate existence. 33. Conflicting corporate laws. 34. Lav/s repealed. 35. Saving clause. 36. Construction. 37. Law revived. 38. When notice or lapse of time unnecessary. 39. As to acts of directors. 40. Alteration and repeal of charter. Section i. Short title. — This chapter shall be known as the general corporation law. (Former section i, L. 1890, ch. 563, re-enacted by L. 1892, ch. 687.) Neither the General Corporation Law nor the Stock Corporation Law contains the provisions for the formation of corporations. The General Corporation Law embodies the general provisions which are applicable to corporations of every kind organized under the laws of the State of New York, whether stock or non-stock corpora- tions, unless specific exceptions are made, as, for instance, in section 5 of this law, in relation to religious, cemetery, monied, municipal or fire department corporations. The commissioners of statutory revision found in each of the numerous laws for the creation and regulation of different classes of corporations many provisions com- mon to all such laws, which, being almost identical in phraseology, served to make the statutes of which they werecomponentparts cum- bersome and unwieldly without apparently serving any good pur- pose. To illustrate: Each act authorizing the organization of new corporations provided the same method of filing and recording cer- tificates, an unvarying reproduction of the general powers contained in the Revised Statutes, and other matters in the line of uniform corporate legislation. Iherefore, pursuant to the plan of the revisers, these numerous provisions, so frequently re-enacted in dif- ferent corporation acts and applicable to all corporations, except as stated, were consolidated and grouped into one general act, entitled the General Corporation Law, the full text of which appears on these pages. The Stock Corporation Law, comprising the provis- ions common to stock corporations only, is the result of the same method of generalization, so that in the several laws authorizing the formation of various kinds of corporations having capital stock, to wit: The Railroad Law, the Banking Law, the Insurance Law, the Transportation Corporations Law (telegraph, gas and electric light, water-works, pipe-line, navigation, etc., corporations) and the Busi- ness Corporations Law, only those matters have been inserted which are peculiar to the particular class provided for, all other provisions applicable to corporations formed under either of said laws being The General Corporation Law. 29 found in the General Corporation Law and the Stock Corporation Law. The provisions of the General Corporation Law and the Stock Corporation Law are also applicable to corporations heretofore organized under either of the general laws for the formation of cor- porations which were repealed in 1890 and 1892, as well as to cor- porations organized under special acts. (Gen. Corp. Law, § 36.) §2, Classification of corporations. — A corporation shall be either, 1. A naunicipal corporation, 2. A stock corporation, 3. A non-stock corporation, or 4. A mixed corporation. A stock corporation shall be either, 1. A nionied corporation, 2. A transportation corporation, or 3. A business corporation. A non-stock corporation shall be either, 1. A religious corporation, or 2. A membership corporation. A mixed corporation shall be either,* 1. A cemetery corporation, 2. A library corporation, 3. A co-operative corporation, 4. A board of trade corporation, or 5. An agricultural and horticultural corporation. A transportation corporation shall be either, 1. A railroad corporation, or 2. A transportation corporation other than a railroad corporation. A membership corporation shall include benevolent orders and fire and soldiers' monument corporations. * After the foregoing section was enacted the plan of having a " mlxec^ corporation law " was abandoned by the Commissioners of Statutory Revision, and corporations which are here classified as " mixed corporations " have since been provided for in the Membership Corporations Law. (Ch. 559, L. 1895.) The plan of including benevolent orders under membership corporations was also abandoned, and such orders now come within the scope of the Benevolent Orders Law. (Ch. sh, L. 1896.) 30 The General Corporation Law. A reference in a general law to a class of corporations described in accordance with this classification shall include all corporations theretofore formed belonging to such class. (New provisions, added by L. 1892, ch. 687.) This section discloses the plan under which the corporation laws are revised. § 3. Definitions. — i. A municipal corporation includes a county, town, school district, village and city, and any other territorial division of the State established by law with powers of local government. 2. A stock corporation is a corporation having a capital stock divided into shares, and which is authorized by law to distribute to the holders thereof dividends or shares of the surplus profits of the corporation. A corporation is not a stock corporation because of having issued certificates called certificates of stock, but which are in fact merely cer- tificates of membership and which is not authorized by law to distribute to its members any dividends or share of profits arising from the operations of the corporation. 3. The term non-stock corporation includes every cor- poration other than a stock corporation. 4. A moneyed corporation is a corporation formed under or subject to the banking or the insurance law. 5. A domestic corporation is a corporation incorporated by or under the laws of the Slate or colony of New York. Every corporation which is not a domestic corporation is a foreign corporation, except as provided by the code of civil procedure for the purpose of construing such code. 6. The term directors, when used in relation to corpora- tions, shall include trustees or other persons, by whatever name known, duly appointed or designated to jnanage the affairs of the corporation. 7. The term, certificate of incorporation, shall include articles of association or any other written instruments required by law to be filed, to effect the incorporation of a The General Corporation Law. 31 corporation, including a certified copy of an original certifi- cate of incorporation filed for such purpose in pursuance of law. 8. The term, member of a corporation, shall include every person having a right to vote at a meeting of the cor- poration for the election of directors, other than a person having a right to vote only upon a proxy. 9. The term, office of a corporation, means its principal office within the State or principal place of business within the State, if it has no principal office therein. 10. The term, business of a corporation, when used with reference to a non-stock corporation, includes the operations for the conduct of which it is incorporated. 11. The term, corporate law or laws, when used in any law forming a part of the revision of the general laws of the State of which this chapter is a part, means the general laws of this State relating to corporations included in such revision. (Former section 2, L. 1890, ch. 563, as amended by L. 1892, ch. 687, and L. 1895, ch. 672.) Paragraph 6, in relation to directors and trustees, appears to be merely a definition of terms, and to make the word, directors, when used in these laws, applicable to corporations heretofore formed, in which the managing officers are designated as trustees. For general provisions applicable to all domestic stock corpora- tions, see the. Stock Corporation Law. For provisions applicable to foreign corporations reference should be had to the index under the heading " Foreign Corporations." Under the foregoing section the terms " principal office " and " principal place of business " are synonymous when used in respect to corporations organized under the laws of this State. (People ex rel. Knickerbocker Press v. Barker, 87 Hun, 341.) A corporation created by act of Congress, if it is located in the State of New York alone, is a domestic corporation, but it derives its powers and faculties from the sovereign creating it, and from no other source, and it is subjected to whatever limitations and dis- abilities grow out of the laws of the United States. (McLanahan V. Mott, 73 Hun, 131.) ■ . A corporation is deemed a resident of the county where its prin- cipal business office is located. (Conroe v. The Nat. Pro. Ins. Co., 10 How. Pr., 405; Rossie Iron Works v. Westbrook, 36 St. Rep., SSS-) A corporation is purely artificial, having no natural or inherent 32 The General Corporation Law. power, but only such as its charter confers. The charter of a cor- poration formed under general laws is the statute under which it was organized. Upon filing the certificate of incorporation it comes into existence with power to do only that which is expressly or impliedly authorized by the statute. (People v. Ballard, I34 N. Y., 269.) § 4. Qualifications of incorporators. — A certificate of incorporation must be executed by natural persons, who must be of full age, and at least two-thirds of them must be citizens of the United States and one of them a resident of this State. This section shall not apply to a corporation formed by the reincorporation or consolidation of existing corporations, or to the reorganization of a corporation upon the sale of the property and franchises of a previously exist- ing corporation or otherwise. (New provisions, added by L. 1892, ch. 687, as amended by L. 189s, ch. 672.) The terms of the foregoing section preclude corporations, co-part- nerships and minors from acting as incorporators. It also prevents the formation of corporations by persons acting in a representative capacity. Each member of a firm, engaged under the firm name in organiz- ing a corporation, is liable for the misrepresentations and conceal- ments of the others, committed in promoting the enterprise. (Walker v. Anglo-Am. M. & T. Co., 72 Hun, 334.) Persons engaged in organizing a corporation, who induce others to subscribe for stock, by issuing statements and prospectuses, are liable for damages if they make material misrepresentations, or con- ceal material f:icts, to the injury of those whom they induce to sub- scribe, and this liabiiity extends to all those who are induced by their agents to subscribe for shares. (Walker v. Anglo-Am. M. & T. (io., 72 Hun, 334; Brewster v. Hatch, 122 N. Y., 349; Morgan v. Skiddy, 62 N. Y., 319; Getty V. Devlin, 54 N. Y., 403, 70 N. Y., 504.) A purchaser of shares from a stockholder in an existing corpora- tion had no interest in the application of the money paid therefor, but it is different with one who agrees to subscribe for shares in a corporation to be created. (Walker v. Anglo-Am. M. & T. Co., 72 Hun, 334) After accepting the benefits under a plan adopted by its pro- moters, the corporation becomes subject to the terms of the plan. (Rogers v. New York and Texas Land Co., 134 N. Y., 197.) § 5. Filing and recording certificates of incorpor- ation. — Every certificate of incorporation including the corporate name or title and every amended or supplemental certificate, and every certificate which alters the provisions of any certificate of incorporation or any amended or sup- plemental certificate, hereafter executed shall be in the English language, and except of a relimnnc a rr» *:» f ^ »- 1 The General Corporation Law. 33 moneyed, municipal or fire department corporation, shall be filed in the oiifice of the Secretary of State, and shall be by him duly recorded and indexed in books specially provided therefor, and a certified copy of such certificate or amended or supplemental certificate with a certificate of the Secretary of State of such filing and record, or a duplicate original of such certificate or amended or supplemental certificate "shall be filed and similiarly recorded and indexed in the office of the clerk of the county in which the office of the corporation is to be located, or, if it be a non-stock corporation, and such county be not determined upon at the time of executing the certificate of incorporation, in such county clerk's office as the judge approving the certificate shall direct. All taxes required by lavvr to be paid before or upon incorporation and the fees for filing and recording such certificate must be paid before filing. No corporation shall exercise any corporate powers or privileges until such taxes and fees have been paid. (Former section 3. L. i8go, ch. 563, as amended by L. 1892, ch. 687; L. 1895, ch. 672; L. igo2, ch. 285J By the last amendment, which took effect May 14, 1895, the pro- vision was inserted requiring certificates to be in the English lan- guage, so that all the recitals including the corporate name must now be in English. Heretofore duplicate original certificates were required to be executed and filed. Under the above section an original certificate must be filed in the office of the Secretary of State, and either a certified copy thereof or a duplicate original in the office of the county clerk. The act relative to the tax payable to the State Treasurer for the privilege of organization and for increasing the capital stock of cor- porations, and the statutes prescribing the fees payable to the office of the Secretary of State and to county clerks appear, ante, pages 20-25. The Secretary of State does not require the certificate of a county clerk as to the authority of a notary public, commissioner of deeds, or of a justice of the peace of this State who takes the acknowledg- ment of the execution of a corporation certificate to be filed in his office, but if a duplicate of such paper is to be filed in the office of the clerk of a county other than the one in which such notary, com- missioner or justice is acting, the certificate of the county clerk should be obtained. The Secretary of State is not required to file a certificate unau- thorized by the act. The right to file with such officer a certificate. 3 34 The General Corporation Law. by which a body politic and corporate is to be ipso facto created, only exists in behalf of those who bring themselves within the terms of the act. (People ex rel. Blossom v. Nelson, 46 N. Y., 477; People ex rel. Davenport v. Rice, 22 N. Y. Supp., 631; id., 68 Hun, 24; id., 52 St. Rep., 50.) The Secretary of State will not be compelled to file the certificate of incorporation of a company to be formed as a social organiza- tion when its purposes are in reality those of a business corporation. (People ex rel. Davenport, supra.) In case the Secretary of State refuses to file a certificate and the party presenting the same feels aggrieved, the remedy is by man- damus under the Code of Civil Procedure. (People ex rel. N. Y. Phonograph Co. v. Rice, 128 N. Y., 591; affirming S7 Hun, 486; People ex rel. Eickemeyer Field Co. v. Rice, 138 N. Y., 614; id., 51 St. Rep., 93.) If it is desired to restrain the Secretary of State or county clerk from filing a certificate, the proceedings should be by injunction. An injunction order against the Secretary of State can only be granted by the Supreme Court at a term thereof, sitting in the third judicial department. (See Code of Civil Procedure, section 605, post.) Where a peremptory mandamus is applied for, which by its terms acts as a restraint upon State officers engaged in, or about to per- form a duty imposed by statute, and it is sought for to be used as a restraining order or injunction, the limitation upon the granting of such an injunction by section 60S of Code of Civil Procedure applies; that is, it " shall not be granted, except by the Supreme Court at a term thereof, sitting in the department in which the officer or board is located, or the duty required to be performed." (People ex rel. Derby v. Rice, 129 N. Y., 461.) An organization such as will create a corporation de jure, does not exist until the certificate of incorporation is filed in accordance with law. (Childs v. Smith, 46 N. Y., 34; id., 38 How Pr., 328.) § 6. Corporate names. — No certificate of incorporation of a proposed corporation having the same name as a corpo- ration authorized to do business under the laws of this state or a name so nearly resembling it as to be calculated to deceive shall be filed or recorded in any office for the purpose of effecting its incorporation, or of authorizing it to do business in this state. A corporation formed by the reincorporation, reorganization or consolidation of other corporations or upon the sale of the property or franchises of a corporation, may have the same name as the corporation or or.e of the corporations to whose franchises it has succeeded. No cor- poration shall be hereafter organized under the laws of this State with the word trust, bank, banking, insurance, assurance, indemnity, guarantee, guaranty, savings, invest- The General Corporation Law. 35 ment, loan or benefit as part of its name, except a corpoia- tion formed under the banking law or the insurance law. (Former section 4, L. 1890, ch. 563, as amended by L. 1892, ch. 687; L. 1895, ch. 672, and L. 1900, ch. 704.) When the term of existence of a corporation has expired by Hmitation there seems to be no reason why the same corporate name may not be used by a new corporation, unless such name has been continued in use by a co-partnership succeeding the defunct cor- poration and having a property interest in the name. A corporation cannot acquire the name of one of its incorpora- tors, and make use of it to deceive the pubhc, on the ground that such is the true name of one of its incorporators, or to defraud others who have built up a business under the same name. (De Long V. De Long Hook & Eye Co., 89 Hun, 399.) Although the law will restrain a corporation from using a word or name, alone or with other words, in any manner which might produce deception or confusion in the public mind, yet it will not restrain a person from conducting business in his own name. He has a right to advertise his good's in his own name, or to use the same upon his letter heads, or upon the cards containing goods manufactured by him. (De Long v. De Long Hook & Eye Co., 7 App. Div., 33.) A corporation existing under the laws of the State of New York cannot, in legal proceedings, be properly designated by two names, and cannot, except as authorized by law, change its own name, either directly or by user, nor can the public give it a name other than that of its creation, by which it can be recognized in judicial pro- ceedings. (Matter of U. S. Mortgage Co. for leave to change its name, 83 Hun, 572.) Upon an application by a corporation for a change of name, which is opposed by another corporation on the ground that the proposed new name will result in confusion, the absence of any element of fraud is not controlling, as the court will interfere where there is reasonable ground to conclude that the grantijig of the application, will result in injury to the complaining corporation, or in imposition or deceit upon the public, by destroy- ing the identity of such corporations. (Id.) The law protects the right of a man to use his own name in his own business, even if such use injures another who has established a prior business of the same kind and gained a reputation which goes with the name. (Chas. S. Higgins Company v. Higgins Soap Company, 144 N. Y., 462; reversing 71 Hun, loi.) An exclusive right may be acquired in the name in which a business, has been carried on, whether of a partnership or of an individual, and it will be protected against infringement by another who assumes it for the purposes of deception, or even if innocently used without right, to the detriment of another, and this right, which is in the nature of a right to a trade mark, may be sold or assigned. (Id.) The same rule applies respecting corporate names, and an injunction lies to restrain the simulation and use by one corporation of the name of a prior corporation which tends to create confusion and to enable the later corporation to obtain by reason of the similarity of names, the business of the prior one. (Id.) 36 The General Corporation Law. Every man has the absolute right to use his own name in his own business, even though he may thereby interfere with and injure the business of another bearing the same name, provided he does not resort to any artifice or contrivance to produce the impression that the establishments are identical. (Meneely v. Meneely, 62 N. Y., 467.) However, the right of one to use his own name in his own business is something very different and distinct from the lending or giving of his name to a corporation with a view of making it similar to that employed by other persons in the same kind of business. (Frank E. De Long v. The De Long Hook & Eye Co., 10 Misc., 577.) The Secretary of State must decide in the first instance vvhether the proposed name is. or is not, within the statutory prohibition. (State V. McGrath, s S. W. Rep., 29.) The right to the exclusive use of a name will be protected upon the same principle that persons are protected in the use of trade marki. (Id.) It is unnecessary to determine that there is intent to do wrong. The right to protection of name is based upon the proprietary right acquired by the use thereof. (American Grocer v. The Grocer, 25 Hun, 398. See, also, Commercial Union Assur. Co. v. Smith, 18 State Rep., 151, 2 N. Y. Supp., 296: Matter of U. S. Mer. R. & Col. Assn., 22 State Rep., 494, 115 N. Y., 176; Railway Age v. Garnett, 17 Weekly Dig., 250; Farmers' Loan and Trust Co. v. Farmers' Loan and Trust Co., of Kansas, 21 Abb. N. C, 104; Hygeia Water Ice Co. V. N. Y. Hygeia Ice Co.. 19 N. Y. Supp., 602; 47 State Rep., 71, affirmed 140 N. Y., 94; Employers' Liability Assurance Corpora- tion V. Employers' Liability Ins. Co., 61 Hun, 552; In re Bank of Attica, 12 N. Y. Supp., 648; 35 St. Rep., 708.) Provisions restricting the use by corporations of the name " university " or " college " are contained in the University Law (L. 1892, ch. 378), section 33, as follows: " No individual, associa- tion or corporation not holding university or college degree-con- ferring powers by special charter from the Legislature of this State or from the Regents, shall confer any degrees, nor after January, first, eighteen hundred and ninety-three, shall transact business under, or in any way assume the name university or college, till it shall have received from the Regents, under their seal, written per- mission to use such name, and no such permission shall be granted by the Regents, except on favorable report after personal inspection of the institution by an officer of the University. * * * Viola- tion of this section shall be a misdemeanor. * * * " In re Crown Bank, 44 Chancery Division, 634 (Great Britain), held, that the name of a corporation may be considered in constru- ing the objects stated in its memorandum of association (i. e., cer- tificate of incorporation). ""Change of Corporate Name. — The existing provisions regu- lating changes of corporate names are now contained in the Code of Civil Procedure, having been added thereto by an amendment passed April 13, 1893, chapter 366, which reads as follows : • Chapter 382, Laws of 1870. as amended by ch. 280, Laws of 1S76. and ch. 88, Laws of 1891, \>y the tenns of which corporations were heretofore authorized to change their nain'?8, was repealed ; see schedule of laws repealed, appended to this law, post. The General Corporation Law. 37 Petition by individual. — A petition for leave to assume another name may be made by a resident of the State to the county court of the county in which he resides, or, if he resides in the city of New York, either to the Supreme Court or to the city court of New York. The petition of an infant shall be made by his general guardian, or by the guardian of his person, or by his next friend. (Code of Civil Procedure, sec. 2410, as amended by L. 1895, ch. 946.) Petition by corporation. — A petition to assume another corporate name may be made by a domestic corporation, whether incorporated by a general or special law, to the supreme court at a special term thereof, held in the judicial district in which its principal business office shall be situated, or, if it be other than a stock corporation, at a special term held in the judicial district in which its certificate of incor- poration is filed and recorded, or in which its principal prop- erty is situated, or in which its principal operations are or theretofore have been conducted. If it be a banking, insur- ance or railroad corporation, the petition must be author- ized by a resolution of the directors of the corporation, and approved if a banking corporation, by the superintendent of banks ; if an insurance corporation, by the superintendent of insurance, and if a railroad corporation, by the board of railroad commissioners. The petition to change the name of any other corporation must hajse annexed thereto a cer- tificate of the Secretary of State, that the name which such corporation proposes to assume is not the name of any other domestic corporation or a name which he deems so nearly resembling it, as to be calculated to deceive. (Code of Civil Procedure, sec. 241 1.) Contents of petition. — The petition must be in writing, signed by the petitioner and verified in like manner as a pleading in a court of record, and must specify the g-rounds of the application, the name, age and residence of the individ- 38 The General Corporation Law. ual whose name is proposed to be changed, and the name which he proposes to assume, and if the petitioner be a cor- poration, its present name, and the name it proposes to as- sume, which must not be the name of any other corporation, or a name so nearly resembUng it as to be calculated to de- ceive; and if it be a railroad corporation, a corporation hav- ing banking powers or the power to make loans upon pledges or deposits, or to make insurances, that the petition has been duly authorized by a resolution of the directors of the corporation and approved by the proper officer. (Code of Civil Procedure, sec. 2412.) Notice of presentation of petition. —If the petition be to change the name of an infant, and is made by the infant's next friend, notice of the time and place at which the peti- tion will be presented must be served upon the father, or if he is dead or can not be found, upon the mother, or if both are dead or can not be found, upon the general guardian or guardian of the person of the infant, in like manner as a notice of a motion upon an attorney in an action, unless it appears to the satisfaction of the court that the infant has no father or mother, or that both reside without the state or can not be found, and that he has no guardian residing within this state, in which case the court may dispense with notice or require notice to be given to such persons and in such manner as the court thinks proper. If the petition be made by a corporation located elsewhere than in the city and county of New York, notice of the presentation thereof shall be pub- lished once in each week for six successive weeks in the State paper (at Albany in which notices by state officers are authorized by law to be published), and in a newspaper of every county in which such corporation shall have a busi- ness office, or if it has no business office, of the county in which its principal corporate property is situated or in which its operations are or theretofore have been principally con- ducted, which newspaper, if it be a banking corporation, The General Corporation Law. 39 shall be designated by the superintendent of banks, if any* insurance corporation, by the superintendent of insurance, or if a railroad corporation, by the railroad commissioners. In the city and county of New York such notice shall be published once in each week, for six successive weeks in two daily newspapers published in such county. (Code of Civil Procedure, sec. 2413, as amended by L. 1804, ch. 264.) Order. — If the court to which the petition is presented is satisfied thereby, or by the affidavit and certificate pre- sented therewith, that the petition is true, and that there is no reasonable objection to the change of name proposed, and if the petition be to change the name of an infant, that the interests of the infant will be substantially promoted by the change, and, if the petitioner be a corporation, that the petition has been-, duly authorized and that notice of the presentation of the petition, if required by law, has been made, the court shall make an order authorizing the peti- tioner to assume the name proposed on a day specified therein, not less than thirty days after the entry of the order. The order shall be directed to be entered and the papers on which it was granted, to be filed within ten days thereafter in the clerk's office of the county in which the petitioner resides, if he be an individual, or in the office of the clerk of the city court of New York if the order be made by that court, or if the petitioner be a corporation, in the office of the clerk of the county in which its certificate of incorpor- ation, if any, shall be filed, or if there be none filed in which its principal office shall be located, or if it has no business office, in the county in which its principal property is situated, or in which its operations are or theretofore have been prin- cipally conducted, or in the office of the clerk of the county in which the special term granting the order is held; and, if the petitioner be a corporation, that a certified copy of such order shall, within ten days after the entry * So in the original. 40 The General Corporation Law. thereof, be filed in the office of the secretary of State; and also, if it be a banking corporation, in the office of the superintendent of banks, or if it be an insurance corporation, in the office of the superintendent of insurance, or if it be a railroad corporation, in the office of the board of railroad commissioners. Such order shall also direct the publication, within ten days after the entry thereof of a copy thereof in a designated newspaper, in the county in which the order is directed to be entered, at least once if the petitioner be an individual, or if the petitioner be a corporation, once in each week for four successive weeks. The county clerk, in whose office an order changing the name of a corporation is entered, shall record the same at length in the book kept in his office for recording certificates of incorporation. (Code of Civil Procedure, sec. 2414, as amended by L. 189s. ch. 946.) When change to take effect. — If the order shall be fully complied with, and within forty days after the making of the order, an affidavit of the publication thereof shall be filed and recorded in the office in which the order is entered, and in each office in which certified copies thereof are required to be filed, if any, the petitioner shall, on and after the day specified for that purpose in the order, be known by the name which is thereby authorized to be assumed, and by no other name. No proceedings heretofore had under sections two thousand four hundred and fourteen and two thousand four hundred and fifteen of the code of civil procedure for the change of the name of a corpor- ation, shall be invalid by reason of the non-filing of an affi- davit of the publication of the order changing such name within twenty days from the date thereof. (Code of Civil Procedure, sec. 2415, as amended by L. 1894, ch. 264.) Substitution of new name in pending action or pro- ceeding. — An action or special proceeding, civil or criminal, commenced by or against a person whose name is The General Corporation Law. 41 so changed shall not abate, nor shall any relief, recovery or other proceeding therein be prevented, impeded or impaired in consequence of such change of name. The plaintiff in the action or the party instituting the special proceed- ing, or the people, as the case requires, may, at any time, obtain an order amending any of the papers or proceedings therein, by the substitution of the new name, without costs and without prejudice to the action or proceeding. (Code of Civil Procedure, sec. 2416.) Reports by clerks to state officers.— The clerk of each county and of each court, shall annually, in the month of December, report to the secretary of state all changes of names of individuals or of corporations, which have been made in pursuance of orders filed in their respective offices during the past year and since the last previous report, and and also report in like manner to the superintendent of banks all changes of names of banking corporations, and to the superintendent of insurance all changes of names of corporations authorized to make insurances. The secretary of state must cause to be published, in the next volume of the session laws a tabular statement showing the original name of each person and' corporation and the name which he or it has been authorized to assume. ■ (Code of Civil Procedure, sec. 2417.) § 7. Amended and supplemental certificates. — If in the original or amended certificate of incorporation of any corporation, or if in a supplemental certificate of any cor- poration any informality exists, or if any such certificate con- tain any matter not authorized by law to be stated therein, or if the proof or acknowledgment thereof shall be defective, the corporators or directors of the corporation may make and file an amended certificate correcting such informality or defect or striking out such unauthorized matter; and the certificate amended shall be deemed to be amended accord- iirigly as of the date such amended certificate was filed, and 42 The General Corporation Law. upon the filing of such an amended certificate of incorpor- ation, the corporation shall then for all purposes be deemed to be a corporation from the time of filing the original certificate. The supreme court may, upon due cayse shown, and proof made, and upon notice to the attorney-general, and to such other persons as the court may direct, and upon such terms and conditions as it may impose, amend any certificate of incorporation which fails to express the true object and purpose of the corporation, so as to truly set forth such object and purpose. When an amended or supplemental certificate is filed, an entry shall be made upon the margin of the index and record of the original certificate of the date and place of record of every such amended certificate. The amendment of a certificate under this section shall be without prejudice to any pending action or proceeding, or to any rights previously accrued. (Former section 5, L. 1890, ch. 563, as amended by L. 1892, ch. 687.) For forms of papers under the foregoing section, see post, forms Nos. S, 6, 7 and 8. Under chapter 135, Laws of 1870, n^ow repealed, it was held that the act was intended to enable corporations to remedy patent omissions; that is, the omission of things which are required to be stated, and which being omitted, make the certificate imper- fect upon its face. (Matter of N. Y., L. E. and W. R. R. Co., 25 Hun, 556.) Section 7 above, however, is much broader and more liberal in its "terms, and seems to permit the correction of the specified irregularities, whether they are patent upon the face of the certificate or not. § 8 Lost or destroyed certificates. — If either of the certificates of incorporation shall be lost or destroyed after filing, a certified copy of the other certificate may be filed in the place of the one so lost or destroyed and as of the date of its original filing, and such certified copy shall have the same force and effect as the original certificate had when filed. (Former section 6, L. 1890, ch. 563, as amended by L. 1802, ch. 687.) The General Corporation Law. 43 § 9. Certificate and other papers as evidence. — The certificate of incorporation of any corporation duly filed shall be presumptive evidence of its incorporation, and any amended certificate or other paper duly filed or recorded relating to the incorporation of any corporation, or its exist- ence or management, and containing facts required or au- thorized by law to be stated therein, shall be presumptive evidence of the existence of such facts. (Former section 7, L. 1890, ch. 563, as amended by L. 1892, ch. 687, and L. 189S, ch. 672.) This section is in addition to, and does not repeal or supersede section 933 of the Code of Civil Procedure, which provides that a duly certified copy of a paper filed in a public office is evidence as though the original were produced. . § 10. Limitation of powers. — No corporation shall possess or exercise any corporate powers not given by law,, or not necessary to the exercise of the powers so given. The certificate of incorporation of any corporation may contain any provision for the regulation of the business and the con- duct of the affairs of the corporation, and any limitation upon its powers, or upon the powers of its directors and stockholders, which does not exempt them from the per- formance of any obligation or the perfprrnance of any duty imposed by law. (Former section 9, L. 1890, ch. 563, as amended by L. 1892, ch. 687, and by L. 1895, ch. 672.) The amendment of 1895, which took effect May 14, changed the head note of this section and added the last sentence, which embraces the same provisions as those contained in section 2 of the Business Corporations Law. What a corporation may or may not do within its grant of powers is to be determined by the reasonable intendments of its charter as well as its clear expressions of authority. (Brooklyn Heights R. R. Co..v. City of Brooklyn, 152N. Y., 244.) An act which is lawful in itself and not otherwise prohibited, and which is done for the purpose of serving corporate ends, and is reasonably tributary to the promotion of those ends in a substan- tial, and not in a remote and fanciful sense, may fairly be con- sidered within the corporate powers. (Steinway v. Steinway & Sons, 17 Misc., 43.) A corporation, in order to attain its legitimate objects, may deal precisely as an individual may, who seeks to accomplish the same 44 The General Corporation Law. ends. (Barry v. Merchants' Exchange Co., i Sandf. Chan., 289; Saflford v. Wycoff, 4 Hill, 422.) , • • , , Unless restrained by law, every corporation has the incidental power to make any contract necessary to advance the objects for which it was created. (Legrand v. Manhattan Mer, Assn., 80 N. Y., 638-) . . . ^ A manufacturing corporation has no power to endorse accommo- dation notes. (Nat. Park Bank v. G. A. M. W. & S., 116 N. Y., 281.) Contracts of corporations are ultra vires when they involve adventures outside of and not within the scope or powers given by their charter. (Jennison et al. v. C. S. Bank, 122 N. Y., 135.) A person dealing with a corporation is chargeable with notice of its powers and the purposes for which it was formed, and when dealing with its agents or officers is bound to know the extent of their power and authority. A corporation necessarily carries its ■ charter wherever it goes, for that is the law of its existence. (Jennison v. The Citizens' Savings Bank, 122 N. Y., 140; Alexander v. Cauldwell, 83 N. Y., 480; see, also, Patterson v. Robinson et al., 116 N. Y., 193; Wilson v. Kings Co. E. R. R. Co., 114 N. Y., 491; Martin v. N. F. P. Co., 122 N. Y., 165; Wahlig v. S. P. M Co., 25 N. Y. State Rep., 864.) § 1 1. Grant of general powers. — Every corporation as such has power, though not specified in the law under which it is incorporated: 1. To have succession for the period specified in its cer- tificate of incorporation or by law, and perpetually when no period is specified. 2. To have a j;ommon seal, and alter the same at pleas- ure. 3. To acquire by grant, gift, purchase, devise or be- quest, to hold and to dispose of such property as the pur- poses of the corporation shall require, subject to such limita- tions as may be prescribed by law. 4. To appoint such officers and agents as its business shall require, and to fix their compensation, and 5. To make by-laws, not inconsistent with any existing law, for the management of its property, the regulation of its affairs, and the transfer of its stock, if it has any, and the calling of meetings of its members. Such by-laws may also fix the amount of stock, which must be represented at meet- ings of the stockholders in order to constitute a quorum, The General Corporation Law. 45 unless otherwise provided by law. By-laws duly adopted at a meeting of the members of the corporation shall con- trol the action of its directors. No by-law adopted by the board of directors regulating the election of directors or offi- cers shall be valid unless published for at least once a week for two successive weeks in a newspaper in the county where the election is to be held, and at least thirty days be- fore such election. Subdivisions four and five of this section shall not apply to municipal corporations. (Former section 8, L. 1890, ch. 563, as amended by L. 1892, ch. 687, and L. 1895, ch. 672.) For form of by-laws, see post, form No. 9. By the amendment of 1895, the words " and the calling of meetings of its members " were inserted in the first sentence of subdivision five, and also the words " adopted by the board of directors " in the last sentence but one. 1. The term of existence may be extended. (See sec. 32, post.) 2. The corporate seal is not always necessary in order to bind the corporation. It is of great value as showing the acts of the corporation. (Lienkauf v. Coleman, no N. Y., 50; Whitford v. . Laidler, 94 N. Y., 145.) 3. A maximum limit of property that may be held by a non- stock corporation is prescribed in the next succeeding section. No such limit is prescribed for stock corporations. 4. See section 29, post, and the Stock Corporation Law, sections 20, 27 and 28. 5. Directors may make necessary by-laws, subject, however, to the by-laws duly adopted by the members of the corporation. (See section 29, post.) The by-laws should fix the time and place of the election of directors. (See Stock Corporation Law, section 20, post, and section 22, post.) The by-laws should prescribe the manner of appointing inspectors of election (id,, section 28, post), and they should prescribe the manner of transferring stock. (Id., section 40, post.) By-laws of stock corporations are, as to third persons, private regulations binding as between the corporation and its members or third persons having knowledge of them, but of no force as limitations per se as to third persons of an authority which, except for the by-laws, would be construed as within the apparent scope of the agency. (Rathbun v. Snow, 123 N. Y., 349.) A by-law, enacted under express authority of an act of the Legis- lature, and in conformity with the power conferred, has the same force as if enacted by the Legislature. (Brick Church v. Mayor, etc., of N. Y., 5 Cow., 538; McDermott v. Board of Police, S Abb. Pr., 422.) A by-law must be reasonable, and adapted to the purposes of the corporation, or it is void. (People v. Medical Soc, 24 Barb. R., 46 The General Corporation Law. 570; see also Matthews v. Associated Press, 136 N. Y., 333; Comp- ton V. The Chelsea, 128 N. Y., 537; Kent v. Quicksilver Mining Co., ;8 N. Y., 159O In failing to comply with a by-law the corporation neglects to perform a duty which it owes to the public, and if its neglect results in injury, there is secured to the person injured the right to be indemnified by the corporation. (Knox v. Eden Musee, etc., 74 Hun, 483.) , , Lj- • • u J -I V Under the second paragraph of subdivision 5 above, a daily publication of the by-law is not intended. A publication once a week for two weeks is sufficient. (Wood v. Knapp, 100 N. Y., 109.) An action to have a by-law declared illegal and void is not main- tainable when enforcement of such by-law will not subject the party to irreparable injury. (Thomas v. Musical Pro. Union, 121 N. Y., 45.) J . ^ No provision relative to suing and being sued was enacted in the above section, because contained in the State Constitution, article 8, section 3, as follows: " All corporations shall have the right to sue and shall be subject to be sued in all courts in like cases as natural persons." A contract made by a treasurer of a corporation in disregard of a by-law restricting the execution of such a contract is not binding on the corporation. (Parmalee v. Associated Physicians & Surgeons, 9 Misc. R., 458; but see cases therein cited.) The unexplained presence of a corporate seal upon promissory notes of a corporation does not aflfect their apparent character and require them to be regarded as sealed instruments. (Weeks v.' Esler, 143 N. Y., 374.) A corporation possesses not only powers specifically granted in terms by its charter, but also such powers as shall be necessary to the exercise of the powers so enumerated and given; but powers merely convenient or useful are not implied if they are not essen- tial, having in view the nature and object of the incorporation. (People ex rel. Tiflfany v. Campbell, 144 N. Y., 166.) A corporation can only have an existence under the express law of the State by which it is created, and can exercise no power or authority which is not granted to it by the charter under which it exists, or by some other legislative act. (Oregon R. R. Co. v. Oregonian R. R. Co., 130 U. S., i.) When a corporation is organized under general laws the certificate of incorporation stands in the place of a legislative charter. (Id.) A corporation, although created only for a term of years, may pur- chase and hold lands in fee. (Nicoll v. N. Y. & Erie R. R. Co., 12 N. Y., 121; People v. O'Brien, in N. Y., 38.) When property or rights have been acquired or become vested, no amendment or alteration of the charter can take away the property or rights which have become vested under a legitimate exercise of the powers granted. (Albany R. R. Co. v. Brownell, 24 N. Y., 345; People v. O'Brien, in N. Y., i; Id., in N. Y., 52.) A corporation may take title to all kinds of property, even the stock of another corporation, in the payment of a debt. (H. & G Man. Co. v. H. & W. Metal Co., 38 State Rep., 157.) Where a corporation is authorized, under certain circumstances, to hold and convey real property, it will be presumed, in the The General Corporation Law. 47 absence of proof to the contrary, that real property conveyed by it was held and conveyed in pursuance of its powers. (Farmers' Loan & Trust Co. v. Curtiss, 7 N. Y., 466.) § 12. Enlargement of limitations upon the amount of the property of non-stock corporations. — If any general or special law heretofore passed, or any certificate of incor- poration, shall limit the amount of property a corporation other than a stock corporation may take or hold, such cor- poration may take and hold property of the value of three million dollars or less, or the yearly income derived from which shall be five hundred thousand dollars or less, not- withstanding any such limitations. In computing the value of such property, no increase in value arising otherwise than from improvements made thereon shall be taken into account. (New provisions, added by L. 1892, ch. 687, as amended by L. 1894, ch. 400.) The foregoing limitations do not affect stock corporations. As to what are classified as stock and non-stock corporations, respec-l tively, see sections 2 and 3, ante. § 13. Acquisition of additional real property. — When any corporation shall have sold or conveyed any part of its real property, the supreme court rnay, notwithstanding any restriction of a general or special law, authorize it to pur- chase and hold from time to time other real property, upon satisfactory proof that the value of the property so pur- chased does not exceed the value of the property so sold and. conveyed within the three years next preceding the application. (Former section 10. L. 1890, ch. 563, as amended by L. 1892, ch. 687.) It seems that this provision 'is to be read in connection with the preceding section only, and is not intended to apply to stock corporations. § 14. Acquisition of property in other states. — Any domestic corporation transacting business in other states or foreign countries may acquire and dispose of such prop- 48 The General Corporation Law. erty as shall be requisite for such corporation in the con- venient transaction of its business. (Former section ii, L. 1890, ch. 563, as amended by L. 1892, ch. 687.) Any corporation acquiring property in other States or foreign countries should also consult the statutes of the State or country in which the property is located. A corporation of this State can exercise no power in another State without the sanction of such State. (Runyan v. Lessee of Coster, 14 Peters (U. S.), 122; Demarest v. Flack, 128 N. Y., 205; Hickory Farm Oil Co. v. Buf., etc., R. R. Co., 2 Ry. & Corp. L. J., 470.) Every power which a corporation exercises in another State depends for its validity upon the laws of the sovereignty in which it is exercised, and a corporation can make no valid contract without the sanction, express or implied, of such sovereignty. (Runyan v. Lessee of Coster, 14 Peters (U. S.), 129; Briscoe v. Southern Kansas Ry. Co., 40 Fed. Rep., 280.) If such other State does not permit the corporation to acquire or hold real property, it must be expressed in some affirmative way. It can not be inferred. (Cowell v. Springs Co., 100 U. S., 55; Christian Union v. Yount, loi U. S., 352.) § 15. Certificate of authority of a foreign corpora- tion. — No foreign stock corporation other than a monied corporation, shall do business in this state without having first procured from the secretary of state a certificate that it has complied with all the requirements of law to authorize it to do business in this- state, and that the business of the corporation to be carried on in this state is such as may be lawfully carried on by a corporation incorporated under the laws of this state for such or similar business, or, if more than one kind of business, by two or more corporations so incorporated for such kinds of business respectively. The secretary of state shall deliver such certificate to every such corporation so complying with the requirements of law. No such corporation now doing business in this state shall do business herein after December 31, 1892, without having procured such certificate from the secretary of state, but any lawful contract previously made by the corporation may be performed and enforced within the state subsequent to such date. No foreign stock corporation doing business in The General Corporation Law. 49 this state shall maintain any action in this state upon any contract made by it in this state unless prior to the making of such contract it shall have procured such certificate. This prohibition shall also apply to any assignee of such foreign stock corporation and to any person claiming under such assignee or such foreign stock corporation or under either of them. No certificate of authority shall be granted to any foreign corporation having the same name as an ex- isting domestic corporation, or a name so nearly resembling it as to be calculated to deceive. (New provisions, added by L. 1892, ch. 687, as amended by L. igor, ch. 96 and ch. S38.) For fortns of papers under these provisions, see post, forms Nos. 10, II, 12 and 13. The last sentence relative to duplication of names was added by L. 1901, ch. 96, to take effect immediately. The provisions making the procuring of a certificate of authority a prerequisite to the making of an enforcible contract, and extending ihe inhibition to assignees were added by L. 1901, ch. 538, to take effect Sept. i, igoi. Foreign corporations, in addition to procuring the certificate, must also pay a license fee. (See § i8i of Tax Law, page. 23.) For definitions of " foreign," " stock " and" monied " corporations, respectively, see section 3, ante. In relation to the proof to be filed with the Secretary of Stale in order to obtain the certificate of authority above provided for, see sec- tion 16. For other provisions affecting foreign corporations see reference to the same in the index under the heading " Foreign Corporations." The provisions of the foregoing section of the law and of the next succeeding section, post, page 55, do not confer upon the Secretary of State supervisory power over corporations organized in other States and doing business here so as to enable him to enforce .a compliance with the terms of those sections. It rests entirely with the corpora- tion itself to elect whether or not it will bring itself under the protec- tion of the laws of this State, so as to be permitted to make enforcible contracts within the State. The foregoing section provides that no foreign stock corporation, other than a banking or insurance corpora- tion, shall do business in the State unless it has procured from the Secretary of State a certificate of authority, and the next section, entilled, " Proof to be filed before granting certificate," post, page 55, provides that, before the granting of such certificate, the corporation applying for the same must file a sworn copy of its charter or certifi- cate of incorporation, and a statement under its rorporate seal, setting forth the business or objects of the corporation which it is engaged in carrying on, or which it proposes to carry on, within the State, and a place within the State which is to be its principal place of business, and designating, in the manner prescribed in the Code of Civil Procedure, a person upon whom process against the cor- poration may "be served within the Sta^e. The statute requires 50 The General Corporation Law. every foreign stock corporation doing business in the State of New York, except banks and insurance companies, which are governed by other laws, to comply with these provisions. The statutory liability of stockholders in foreign corporations for debts of the corporation cannot be enforced except at the domicile of the corporation, when the law of the domicile provides the remedy. (Marshall v. Sherman, 148 N. Y., 9; reversing 84 Hun, 186.) The bringing of an action in this State by a foreign corporation is not evidence that the contract upon which the action is based was made in the State of New York. (Lukens Iroij & Steel Co. v. Payne, 13 App. Div., 11.) A contract made between two foreign corporations by a written order mailed within the State and accepted in another State, where one of the corporations is domiciled, is not a contract made within this State, as the contract was not completed until the acceptance of the order; therefore, a certificate authorizing the vendor corporation to do business here was not necessary. (Shelby Steel Tube Co. v. Burgess Gun Co., 8 App. Div., 444.) A cause of action based on a default in paying for goods delivered in this State on such contract arises here, and can be maintained under subdivision 3, section 1780 of the Code of Civil Procedure, which provides that an action may be maintained by one corporation against another " where the cause of action arose within the State." (Id.) Where a foreign corporation had no office or place of business in this State, the mere fact that its agent took orders here, which did not become binding until they were approved by the corpora- tion in the foreign State, does not place the corporation in the position of " doing business in this State." (Tallapoosa Lumber Co. V. Holbert, 5 App. Div., 559.) Where an order for goods was given to a foreign corporation outside the State, and a portion of such goods was shipped to the State of New York by such corporation, the corporation cannot be said by reason thereof to have been doing business in the State of New York. (Novelty Manfg. Co. v. Connell, ^ Hun, 254.) Orders for goods taken by a traveling salesman in the employ of a foreign corporation do not constitute the contract itself; it has only existence from the time of the confirmation of the orders by the corporation at its home office. (American Broom & Brush Co. v. Addickes, 19 Misc., 36.) The right of a foreign corporation to sue in this State is con- ferred by section 1779 of the Code, giving the same rights of maintaining actions as are possessed by domestic corporations, except as otherwise specially prescribed by law. (O'feeilly, Skelly & Fogarty Co. v. Greene, 18 Misc., 423.) Section 15 of the General Corporation Law only prohibits actions upon contracts made by corporations in this State after its passage until they shall have procured the necessary certificate of authority. Actions upon contracts made by other parties and assigned to the foreign corporation are not within the statute. (O'Reilly, Skelly & Fogarty Co. v. Greene, 18 Misc., 423; Same v. Same, 17 Misc., 302.) The complaint in an action brought by a foreign corporation The GENERAr Corporation Law. 51 need not allege the procurement of a certificate under section 15 of the General Corporation Law, but the want of such certificate is matter of defense to be pleaded in the answer. (The O'Reilly, Skelly & Fogarty Co. v. Greene, 18 Misc., 423.) Failure of the complaint in an action by a foreign corporation to allege payment of the license fee of one-eip'hth of one per cent, is not a demurrable defect. (Id.) Where the laws 01 the State unaer wftich a foreign corporation was organized provide for the continuance of its existence after the expiration of the term of its charter for the purpose of collecting debts or claims due to it, its continued existence for that purpose must be recognized by the courts of this State. (O'Reilly, Skelly & Fogarty Co. v. Greene, 17 Misc., 302.) In an action brought by a foreign corporation or its assignee upon a contract made within this State, it is not necessary to allege or prove that it has complied with this section, but its failure to comply therewith is a matter of defense. (O'Reilly, Skelly & Fogarty Co. v. Greene, 17 Misc., 302; Nicoll v. Clark, 13 Misc., 128.) The fact of incorporation cannot be proved by parol testi- mony. (13 Misc., 128, supra.) It has been held in the case of Neuchatel Asphalt Co., Limited, v. The Mayor, etc., of New York, 155 N. Y. 373, affirming 12 Misc. 26, that a contract made in this State hy a foreign corporation before it has obtained a certificate of authority to transact business within the State is nevertheless enforcible by action as soon as such ertificate is procured, but this decision is no longer applicable, having been super- seded ty the amendment of igoi, which requires the certificate of authority to be procured prior to the making ol contracts within the Slate. Where a foreign corporation had no place of business in this State, but took orders by means of" drummers; held, that it did not do business within this State within the meaning of the two preceding sections, and even if such business were within the meaning and intent of said provisions, that the statute is violative of the commerce clause, of the Federal Constitution and void in so far as it attempts to regulate the transactions in question. ^Murphy Varnish Co. v. Connell 10 Misc., SS3.) The Code of Civil Procedure provides in what cases attach- ments may be issued, and what is necessary to be shown by the plaintiff to entitle him to the attachment, but these provisions are not exclusive, and the Legislature may affix other conditions to the right of invoking such remedy. As a remedy by attachment is a step in an action the provisions of section 15 of the General Corpora- tion Law apply, and the papers upon which a foreign corporation doing business in the State, in relation to a transactioft within the State, must show, for the purposes of the attachment, that the cor- poration has complied with said section 15. (Sawyer Lumber Co. V. Bussell, 84 Hun, 114.) Resident stockholders of a foreign corporation may maintain an action to prevent waste, and to compel restitution for stock or property improperly diverted. (Nash v. Hall, 11 Misc. R., 468.) 52 The General Corporation Law Upon the application of stockholders of an insolvent foreign corporation, doing business and having assets in this State, but no officers empowered to hold such assets, the courts of this State have power to appoint a receiver of such corporation to preserve the assets within their jurisdiction for the protection of domestic creditors. (Hall v. Holland House Co., 12 Misc., 55.) Where the act of incorporation of a foreign corporation declares in terms that each stockholder shall be individually liable for the debts of the corporation the courts of this State are open to a creditor of such corporation to enforce the liability of the stock- holder for such debts according to the terms of the charter. (Mar- shall V. Sherman, 84 Hun, 186.) The provisions of this section apply to actions on contract only, and have no application to a judgment creditor's action brought to set aside alleged fraudulent transfers and conveyances. (Joseph Schlitz Brewing Co. v. Ester 86 Hun, 22.) An attachment may issue against the property of a foreign cor- poration within the limits of the State, however solvent it may be, and however great its ability to pay all claims against it on demand. It is powerless to prevent a creditor, or a fictitious claimant even, from, obtaining an attachment against its property in this State. (Robertson v. Ongley Electric Co., 82 Hun, 585.) An action to enforce the statutory liability of the stockholders ot an insolvent foreign corporation cannot be maintained in the courts of the State of New York when the statutes of the State in which such foreign corporation is located provide a special remedy, which is exclusive of all other remedies, and can only be adminis- tered in such State. Where the remedy is of such a character that it can only have effectual operation in one forum, a party interested should not be permitted to enforte it in another place. (Cleveland, Lorain & Wheeling Ry. Co. v. Kent, 87 Hun, 329.) Statutes relating to procedure have no extra territorial eflfect. (Id.) Where a foreign corporation consigns goods to persons in this State for sale, and sales are made by the factor in his own name, and the proceeds collected and accounted for by him, such corpora- tion does not do business in this State within the meaning of this provision, and no certificate is necessary to enable it to maintain an action to recover the net proceeds of such goods. (Bertha Zinc & Mineral Co. v. Clute, 7 Misc. R., 123.) Every foreign stock corporation that has. iiled the necessary papers and procured the certificate of the Secretary of State required by section 15, is accorded the same right to transact business here as domestic corporations. (Lancaster v. Amsterdam Improvement Co., 140 N. Y., 57.) This right, so far as it relates to dealing in lands, is not restricted by the provisions of sections 17 and 18. (Id.) Where such corporation is regularly organized under the laws or another State, the facts that its incorporators are citizens of this State, and that it has its principal office and conducts its business here do not affect the validity of its organization, or exclude it from recognition by the courts of this State. (Id.) Where it has filed a certificate of incornorntion required by the laws of its State, it is a corporation de facto, and any question affecting The General Corporation Law. 53 it because of alleged irregularities in organization, is a matter for the government of that State to inquire into. (Id.) A foreign stock corporation is not prevented from maintaining an action of replevin by the foregoing section, such action being purely ex delicto, and not ex contractu. (American Typefounders Co. v. Connor, 6 Misc. R., 391; 26 N. Y. Supp., 742.) This statute does not appear to be an interference with interstate commerce. (See Smith v. Alabama, 124 U. S., 465.) It provides for the proper carrying on of such commerce by foreign corporations. It is only when an action is brought upon a contract made in this State in defiance of the laws of the State which were in force when the contract was made, and when the foreign corporation still diso- beys these laws that the penalty of the act is incurred, and that the courts will deny their aid in the enforcement of a contract. (Lasher v. Stimson, 145 Pa., 30; Hagerman v. Empire Slate Co., 97 Pa., 536; People v. Formosa, 131 N. Y., 478; People v. Fire Assn., 92 N. Y., 311; Am. Ins. Co. v. Wellman, 69 Ind., 413; Cin. Mut., etc., Co. V. Rosenthal, 55 III., 85; Wood M. M. Co. v. Caldwell, 54 Ind., 273.) Corporations are not citizens within the meaning of the Consti- tution of the United States, article 4, section 2, clause i, declaring that "the citizens of each State shall be entitled to all privileges and immunities of citizens, in the several States." They are creatures of local law and have not an absolute right of recognition in other States, but depend for that and for the enforcement of their contracts upon the assent of those States, which may be given accordingly on such terms as they please. The privileges and immunities secured to citizens of each State in the several States by this clause of the Constitution are those privileges and immunities which are common to the citizens in the latter States under their Constitution and laws by virtue of their being citizens. Special privileges enjoyed by citizens in their own States are not secured by it in other States. (Paul v. Virginia, 8 Wallace (U. S.), 168. Same rule upheld in Pembrina Mining Co. v. Pennsylvania, 125 U. S., 181; Norfolk & W. R. R. v. Pennsylvania, 136 U. S., 114, and Horn Silver Mining Co. v. New York State, 143 U. S., 305.) The provisions in the fourteenth amendment to the United States Constitution, section i, that " no States shall deny to any person within its jurisdiction the equal protection of the laws," do not prohibit a State from requiring for the admission within its limits of a corporation such conditions as it chooses. (Pembrina Mining Co. V. Pennsylvania, 125 U. S., 181.) The only limitation upon the power of the State to exclude a foreign corporation from doing business within its limits, or hiring offices for that purpose, or to exact conditions for allowing it to do business or hire offices there, arises where the corporation is in the employ of the federal government, or where its business is commerce, interstate or foreign. (Pembrina Mining Co. v. Penn., supra: People ex rel. Southern Cotton Oil Co. v. Wemple, 131 N. Y., 64.) The right of a State to prescribe generally by its Constitution and laws, the terms upon which a foreign corporation shall carry 54 The General Corporation Law. on its business in the State, is well settled. (Bank of Augusta v. Earle, 13 Pet. (U. S.), 519; Cooper Mfg. Co. v. Ferguson, 113 U. S., 727; Phila. Fire Assn. v. New York, 119 U. S., no.) A foreign corporation cannot avail itself of the statute of limita- tions of the State of New York in an action brought in the New York courts. (Robeson v. Central R. R. Co. of N. J., 76 Hun, 444; Boardman v. Lake Shore and M. S. Ry. Co., 84 N. Y., 185; Rathbun v. Northern Central Ry. Co., 50 N. Y., 656; Olcott v. Tioga R. R. Co., 20 N. Y., 210; Mallory v. Tioga R. R. Co., 3 Keyes, 354.) A corporation formed by consolidation of a do'mestic and a foreign corporation, is a domestic corporation. (People ex rel. L. S. & M. S. Ry. Co., 70 N. Y., 220; People v. N. Y., Chicago and St. L. R. R. Co., 129 N. Y., 474.) Foreign corporations doing business in this State must conform to our laws relating to such corporations, and comply with the terms laid down by us as conditions of allowing them to transact business here. (Demarest v. Flack, 128 N. Y., 205.) The Legislature has exclusive power to say whether any, and if so, what terms shall be imposed as a condition of doing business here. (Id.) The doing of isolated acts of business within a State is not " doing business " within such a prohibition. (Cooper Mfg. Co. V. Ferguson, 113 U. S., 727.) A foreign corporation seeking to do business in this State must obey its laws and conform to its public policy. (People v. For- mosa, 131 N. Y., 478.) The Legislature may, as to them and as to domestic corporations, prescribe terms for doing business here, and may enact laws regulating their conduct and that of their agents, and enforce obedience to those laws by such penalties, for- feiture and punishments as it may within constitutional limits prescribe. (Id.) Public policy does not forbid the transaction of business in this State by a "corporation formed in another State by citizens of this State, for the purpose of transacting business here. (Demarest v. Flack, 128 N. Y., 205; Lancaster v. Amsterdam Improvement Co., 140 N. Y., 576.) Foreign corporations are permitted to exercise in this State the powers with which they are endowed, unless such exercise is repugnant to our policy or injurious to our interests. (Sherwood V. American Bible Soc'y, 4 Abb. Ct. App. Dec, 227; Bard v. Poole, 12 N. Y., 495; IMerrick v. Van Santvoord, 34 N. Y., 208; In re Estate of Prime, 136 N. Y., 347.) Under the provisions of the Code of Civil Procedure, in refer- ence to proceedings supplementary to execution (sees. 2435, 2452, 2458, 2463), such proceedings may be instituted against a foreign corporation having no agent and doing no business in this State, and a receiver of its property in this State may be appointed. (Logan V. McCall Pub'g Co., 140 N. Y., 447.) The policy of this State does not preclude a creditor of such a corporation from obtaining a preference upon assets here. (Id.) An assignment for the benefit of creditors, made in this State by an insolvent foreign corporation, valid under the law of its domicile, will be recognized as valid here. (Vanderpoel v. Gorman, 140 N. Y., 563.) Such an assignment is not violative of the pro- The General Corporation Law. 55 vision of the Stock Corporation Law, section 48, which prohibits a transfer or assignment by a corporation in contemplation of insolvency; that provision refers solely to domestic corporations. (Id.) In the absence of any statute or of a by-law of the corpora- t.on providing otherwise, such an assignment may be executed by the president and secretary under authority of its board of managers. (Id.) Under the provisions of the Code of Civil Procedure (sees. 2435, 2452, 2458, 2463), in reference to proceedings supplementary to execution, such proceedings may be instituted against a foreign corporation not doing business in this State, nor havingc any business or fiscal agency therein, or agency for the transfer of its stock, and a receiver of its property in this State may be appointed. (Logan v. McCall Publishing Co., 140 N. Y., 447.) The policy of this State does not preclude the creditor of such corporation from obtaining a preference upon assets here. (Id.) Where an attorney rendered professional services to a foreign corporation under a contract made in the State of New York, and part of such services were rendered in said State, the case is within section 1780 of the Code of Civil Procedure, and there is no merit in the contention that because the price of the services to be rendered under the contract was not fixed by it, there was no contract within the meaning of the section of the Code mentioned. (Robeson v. Central R. R. Co. of N. J., 76 Hun, 444.) For said section see Code provisions herein, post. A statute of this State granting powers and privileges to corpora- tions must, in the absence of plain indications to the contrary, be held to apply only to domestic corporations. (In re Estate of Prime, 136 N. Y., 347.) Corporations formed under Insurance Law and Banking Law are required to obtain similar certificates from the Superintendent of Insurance and Superintendent of Banks, respectively, before commencing business. (See Insurance Law, sees. 9, 31 ; Banking Law, sees. 31, 32.) § 16. Proof to be filed before granting certificate. — Before granting' such certificate the secretary of State shall require every such foreign corporation to file in his ofiRce a sworn copy in the English language of its charter of certi- ficate of incorporation and a statement under its corporate seal particularly setting forth the business or objects of the corporation which it is engaged in carrying on or which it proposes to carry on within the State, and a place within the State which is to be its principal place of business, and desig-. nating in the manner prescribed in the Code of Civil Pro- cedure a person upon whom process against the corporation may be served within the State. The person so designated must have an office or place of business at the place where 56 The General Corporation Law. such corporation is to have its principal place of business within the State. Such designation shall continue in force until revoked by an instrument in writing designating in like manner some other person upon whom process against the corporation may be served in this State. If the person so designated dies or removes from the place where the cor- poration has its principal place of business within the State, and the corporation does not within thirty days after such death or removal designate in like manner another person upon whom process against it may be served within the State, the secretary of state may revoke the authority of the corporation to do business within the State, and process against the corporation in an action upon any liability in- curred within this State before such revocation, may, after such death or removal, and before another designation is made, be served upon the secretary of state. At the time^ of such service the plaintiff shall pay to the secretary of state two dollars to be included in his taxable costs and dis- bursements, and the secretary of state shall forthwith mail a copy of such notice to such corporation if its address, or the address of any officer thereof, is known to him. (New provisions added by L. 1892, ch. 687, as amended by L. 1895, ch. 672.) For forms under this section, see post, forms Nos. 10, 11, 12 and 13. The Secretary of State has rejected many papers drawn under this section which in his opinion set forth objects not within the scope of the act, but in only one case has his action been contested in the courts. In this case a corporation organized under a special act of the Legislature of the State of New Hampshire was author- ized to carry on the business of a safe deposit and trust company, and to deal in money and securities. Said corporation desired authority to carry on in this State a portion of the business which it was organized to carry on, and presented for filing papers in which the business to be carried on here was stated to be the purchase and sale of the stock, bonds and other written evidences of indebtedness of public corporations, to wit, stock, bonds and other written evidences of indebtedness of States, cities, villages, towns, and other political subdivisions. The Secretary of State refused to file the papers or to issue a certificate for the reason that it being a banking corporation, invested with banking powers, could not do business by authority from the office of the Secretary of State. The corporation applied for a writ of mandamus to comoel the filing The General Corporation Law. 57; of the papers. The writ was denied. Decided March 18, 1893, in Supreme Court, Special Term, Third Department; Herrick, Justice. No appeal was taken. (People ex rel. E. H. Rollins & Sons v. Rice.) A foreign corporation applied to the Secretary of State for a certificate of authority to carry on the business of acting as trustee, and also to guarantee contracts. The certificate was refused. In this case the Attorney-General, in an opinion dated April 30, 1897, held that where a company proposed to act in the capacity of a trustee the business came within the provisions of subdivision 4 of section 156 of the Banking Law, and that the guarantee feature was a purpose provided for by subdivision 4, section 70, of the Insur- ance' Law; therefore, the purposes set forth were those of i monied corporation, and not within the scope of sections 15 and 16 of this law. The provisions of the Code of Civil Procedure, referred to in the foregoing section are as follows: Provisions of the Code of Civil Procedure, referred to in the foregoing section. Personal service of the summons, upon a defendant, being a foreign corporation, must be made by delivering a copy thereof within the State as follows : 1. To the president, treasurer, or secretary; or if the cor- poration lacks either of those officers, to the officer perform- ing corresponding functions under another name. 2. To a person designated for the purpose by a writing, under the seal of the corporation, and the signature of its president, vice-president, or other acting head, accompanied with the written consent of the person designated, and filed in the office of the secretary of state. The designation must specify a place, within the State, as the office or residence of the person designated; and if it is within the city, the street and street number, if any, or other suitable designation of the particular locality. It remains in force, until the filing in the same office of a written revocation thereof, or of the con- sent, executed in like manner; but the person designated may, from time to time, change the place specified as his office or residence to some other place within the state, by a writing executed by him, and filed in like manner. The secretary of state may require the execution of any instru- 58 The General Corporation Law. ment, specified in this section, to be authenticated as he deems proper, and he may refuse to file it without such an authentication. An exemplified copy of a designation so filed, accompanied with a certificate that it has not been revoked, is presumptive evidence of the execution thereof, and conclusive evidence of the authority of the officer executing it. 3. If such a designation is not in force, or if neither the person designated, nor an officer specified in subdivision first of this section, can be found with due diligence, and the corporation has property within the state, or the cause of action arose therein ; to the cashier, a director, or a manag- ing agent of the corporation, within the state. (Code of Civil Procedure, sec. 432.) The provisions of this article, relating to the mode of ser- vice of a summons, apply likewise to the service of any pro- cess or other paper, whereby a special proceeding is com- menced in a court, or before an officer, except a proceeding to punish for contempt, and except where special provisions for the service thereof is otherwise made by law. (Code of Civil Procedure, sec. 433.) Proof of service, as prescribed in this article, must be made by affidavit, except as follows: I. If the service was made by the sheriff, it may be proved by his certificate thereof. * * * (Code of Civil Procedure, sec. 434.) When no designation has been made, service upon a special agent is 'proper if it does not appear that he was not the president or secretary of the corporation or an officer performing corresponding functions, or its cashier, director or managing agent. (Silver v. Western Assurance Co., 3 App. Div., 572.) A designation, under section 30 of the Insurance Law, chapter 690, Laws of 1892, of the superintendent of insurance as the person upon whom service of process may be made in an action against a foreign insurance corporation does not preclude service of sum- mons pursuant to the foregoing section. (Silver v Western Assurance Co., 3 App. Div., 572; Howard v. Prudential Ins. Co i App. Div., 135.) In such a case a proper service may be made upon a foreign insurance corporation either under the provisions of the code or the Insurance Law. (3 App. Div., 572, supra ) The General Corporation Law. 59 An agent of a foreign newspaper corporation who signs as its " eastern representative," and conducts all its business transacted in the State, is the managing agent of the corporation within the meaning of subdivision 3 of the foregoing section. (Palmer v. Chicago Evening Post Co., 85 Hun, 403.) When the person designated by a foreign corporation cannot be found within the State, a delivery of the summons and complaint to the custodian of property attached and a delivery thereof by the latter to the managing agent of the corporation, who calls the attention of the board of directors of the corporation thereto, is a sufficient service to support the attachment, although the papers were not delivered to such agent with intent to effect a service, and were subsequently returned to said custodian. (Kieley v. Cen- tral Complete Combustion Mfg. Co., 13 Misc. R., 85.) Where it appears that a person has been managing agent for a corporation, the burden rests upon the corporation to show a termi- nation of such relation. (Id.) In determining what agents are managing agents under this SjCction of the code each case must necessarily depend upon its own facts. A reasonable requirement is that the person served should be of sufficient responsibility to render it probable that the company will receive notice of the service. (Coler v. Pittsburgh Bridge Company, 84 Hun, 285.) An agent who has general supervision of a business is a managing agent, although the district in which his powers are exercised may be limited. (MuUins v. Met. Life Ins. Co., 78 Hun, 297; Ives v. Same, 78 Hun, 32.) An agent who merely superintends certain soliciting agents and has no authority to employ or discharge them is not a managing agent. (Schryver v. Same, 29 N. Y., Supp., 1092.) The term " managing agent " includes any person holding some responsible and representative relation to the company. (Coler V. Pittsburg Bridge Co., 146 N. Y., 281.) The term " managing agent " imports some person invested by the corporation with general powers involving the exercise of judgment and discretion. Where the foreign corporation has not designated any person as prescribed, the service of a summons upon one having no other connection with the corporation than that of attorney of record in an action to which the corporation is a party gives the court no jurisdiction. (Taylor v. Granite State P. Assn., 136 N. Y., 343; Reddington v. Mariposa L. & M. Co.,. 19 Hun, 40s; Palmer v. Penn. Co., 35 Hun, 369; Tuchband v. C. & A. R. R. Co., IIS N. Y., 437. See, also, A. & P. Tel. Co. v. B. & O. R R Co., 87 N. Y., 3SS; Pope v. Terre Haute C. & M. Co., 87 N. Y., 137; Childs V. Harris Mfg. Co., 104 N. Y., 477.) Service of summons on the general superintendent of the work of operating the lines of a domestic telegraph company is sufificient as a service on the " managing agent." (Barrett v. Am. Telephone &^Teleg. Co., 138 N. Y., 491-) § 17. Acquisition of real property in this state by certain foreign corporations. — Any foreign corporation created under the laws of the United States, or of any state 6o The General Corporation Law. or territory thereof, and doing business in this state, may acquire such real property in this state as may be necessary for its corporate purposes in the transaction of its business in this state, and convey the same by deed or otherwise in the same manner as a domestic corporation. (Former section 12, L. 1890, ch. 563, as amended by L. 1892, ch. 687.) Public policy does not forbid transaction of business in this State by a corporation formed in another State by citizens of this State, for the purpose of transacting business here. (Demarest v. Flack, 128 N. Y., 205.) The courts of this State will not interfere with the internal administration of the affairs of a foreign corporation. (Fisher v. Charter Oak Life Ins. Co., 52 Super Ct., 179; Berford v. N. Y. Iron Mine, 56 Super. Ct., 236.) This section permits corporations organized under the laws of any State or territory of the' United States to acquire real estate here for its corporate purposes and convey the same in like manner as a domestic corporation. (See Chautauqua Co. Bk. v. Risley, 19 N. Y., 369; Moss V. Averill, 10 id., 449.) Whether a corporation holds real property in excess of the limit permitted by law is a question that can be raised only in a direct proceeding by the State against the corporation. (Barnes v. Suddard, 117 111., 237.) As to a foreign corporation which holds real estate contrary to law, see Fritts v. Palmer (132 U. S., 282), and the dissenting opinion therein. The power of corporations to take and hold property is a cor- porate power and depends upon their charters. The law of this State cannot enlarge or change the powers of a foreign corporation. They are solely those given by the law of domicile. Foreign cor- porations are permitted by comity to exercise their powers within this State, when not in contravention of our statutes or public policy. (In re Estate of Prime, 136 N. Y., 347.) § 18. Acquisition by foreign corporation of real property in this state. — Any foreign corporation may purchase at a sale upon the foreclosure of any mortgage held by it, or, upon any judgment or decree for debts due it, or, upon any settlement to secure such debts, any real property within this state covered by or subject to such mortgage, judgment, decree or settlement, and may take by devise any real property situated within this state and hold the same for not exceeding five years from the date of such purchase, or from the time when the right to the possession thereof vests in such devisee, and convey it by The General Corporation Law. 6i deed or otherwise in the same manner as a domestic corporation. (Former section 13, L. 1890, ch. 563, as amended by L. 1892, ch. 687, and L. 1894, ch. 136.) By the amendment of 1894 the provision was inserted extending to foreign corporations the right to acquire real property by devise. Sections 17 and _ 18 afiford no warrant for ignoring the broad and general authority contained in sections 15 and 16. Section 18 may still have an office to perform in limiting the period of time for which a foreign corporation without a certificate from the Secretary of State may hold land taken for a debt, or purchased at a sale under a judgmept or decree; while the necessity for retaining section 17 is not readily perceived. The foreign corpora- tion, which desires to acquire real property solely for use connected with the transaction of its business here, must, under section iS, procure the certificate of the Secretary of State as a condition of being permitted to carry on business and, having the certificate, its right to do business as freely as a domestic corporation, neces- sarily carries with it the recognition of the right to acquire and hold what real property may be necessary for that purpose. Both sections, possibly, were retained in the revision of the corporation laws out of abundant caution. Neither section is a new enact- ment; but merely the continuation of an existing law. Whatever the reason to be assigned for retaining sections 17 and 18, the provisions of sections 15 and 16 contain an authoritative declara- tion by the Legislature, and no attempt should be made to refine away their comprehensive meaning. It is not the policy of this State to prevent foreign corporations from acquiring and holding real property here, if desired, for the transaction of any lawful business. (Lancaster v. Amsterdam Improvement Co., 140 N. Y., 576.) § 19. Prohibition of banking powers. — IJo corporation except a corporation formed under or subject to the banking laws, shall by any implication or construction be deemed to possess the power of carrying on the business of discounting bills, notes or other evidences of debt, of receiving deposits, of buying gold or silver bullion or foreign coins, or buying and selling bills of exchange, or shall issue bills, notes or other evidences of debt for circulation as money. (Former section 14, L. 1890, ch. 563, as amended by L. 1892, ch. 687.) By the amendment the words "carry on the business of," in the fourth line, were inserted, and the beginning of the section was changed from " No corporation which is not a monied corpora- tion shall," etc., so as to read as above. 62 The General Corporation Law. It is the settled policy of the Legislature to prevent corporations not formed for banking purposes from carrying on, or in any way interfering with the same. (N. Y. Loan & Trust Co. v. Helmes, 77 N. Y., 64; see, also, N. Y. Life Ins. & Trust Co. v. Beebe, 7 N. Y., 364; Pralt V. Short, 79 N. Y., 443-444-) Certificates of deposit irredeemable within twenty years and bearing interest as loans are violations of this provision. (N. Y. Life. Ins. & Trust Co. v. Beebe, 7 N. Y., 364.) § 20. Qualification of members as voters. — Unless otherwise provided in the certificale of incorporation, every stockholder of record of a stock corporation shall be entitled at every meeting of the corporation to one vote for every share of stock standing in his name on the books of the corporation; and at every meeting of a non-stock cor- poration, every member, unless disqualified by the by-laws, shall be entitled to one vote. The stockholders of a stock corporation, by a by-law adopted by vole at any annual meeting, or at any special meeting duly called for such purpose, may prescribe a period, not exceeding forty days prior to meetings of the stockholders, during which no transfer of stock on-the books of the corporation may be made. Except in cases of express trust, or in which other provision shall have been made by written agreement between the parties, the record holder of stock which shall be held by him as security, or which shall actually belong to another, upon demand therefor and payment of necessary expenses thereof, shall issue to such pledger or to such actual owner of such stock, a proxy to vote thereon. The certificate of incorporation of any stock corporation may provide that at all elections of directors of such corpora- tion, each stockholder shall be entitled to as many votes as shall equal the number of his shares of stock multiplied by the number of directors to be elected, and that he may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them as he may see fit, which right, when exercised, shall be termed cumulative voting. The stockholders of a cor- poration heretofore formed, who, by the provisions of laws existing on April thirty, eighteen hundred and ninety-one, were entitled to the exercise of such right, may hereafter exercise such right according to the provision of this sec- tion. A stockholder may, by agreement in writing, transfer his stock to any person or persons for the purpose of vest- The General Corporation Law. 63 'ng in him or them the right to vote thereon for a time not exceeding f ve years upon terms and conditions stated, pur- suant to which such person or persons shall act; every other stockholder, upon his request therefor may, by a like agree- ment in writing also transfer his stock to the same person or persons and thereupon may participate in the terms, conditions and privileges of such agreement; the certifi- cates of stock so transferred shall be surrendered and can-' celled and certificates therefor issued to such transferee or transferees in which it shall appear that they are issued pur- suant to such agreement and in the entry of such transferee or transferees as owners of such stock in the proper books of said corporation that fact shall also be noted and there- upon he or they may vote upon the stock so transferred during the time in such agreement specified; a duplicate of every such agreement shall be filed in the office of the cor- poration where its principal business is transacted and be open to the inspection of any stockholder, daily, during business hours. No member' of a corporation shall sell his vote or issue a proxy to vote to any person for any sum of money or any thing of value. The books and papers con- taining the record of membership of the corporation shall be produced at any meeting of its members upon the request of any member. If the right to vote at any such meeting shall be challenged, the inspectors of election, or other per- sons presiding thereat, shall require such books, if they can be had, to be produced as evidence of the right of the per- son challenged to vote at such meeting, and all persons who may appear from such books to be members of the corpora- tion may vote at such meeting in person or by proxy, sub- ject to the provisions of this chapter. (Section 20, L. 1892, ch. 687, as amended by L. igoi, ch. 355.) This section, as amended in iqoi, aulhorizes a provision in the cer- tificate of incorporation to withhold, limit or amplify the voting power of different classes of stoclcholders. It empowers the stockholders by a by-law to prescribe the time for closing stock books for voting pur- poses, not exceeding forty days prior to meetings of stockholders, which is in lieu of the former provision entitling persons who became stockholders at least ten days prior to a stockholders' meeting to vote thereat. The amended section also permits the creation of voting trusts to continue for a period of five years. Married women who are stockholders have the same rights at cor- porate elections as other stockholders. (Laws of 1851, ch. 321.) A court of equity has no power to restrain a corporation which has legally purchased stock in another corporation from voting on the stock so purchased upon allegation or proof that it intends 10 cause a board of directors to be elected, who, by their action or 64 The General Corporation Law. non-action may injure the interests of the minority stockholders. (Oelbermann v. N. Y. & N. Ry. Co., ^^ Hun, 332; but see 150 N. Y., 410.) When the regular stock book of the corporation is not accessible to the directors present it is their duty to provide a new one to enable stockholders to exercise the rights given them by law. (In re The Argus Company v. Manning, 138 N. Y., 557.) An agreement between stockholders that neither of them will sell, assign or dispose of his stock, without having first given the other an opportunity to purchase, does not preclude the passing of a legal title to stock by a transfer made in violation of the agree- ment, although the transferee was cognizant of the agreement. Enforcement of specific performance of such agreement by a court of equity rests in the discretion of the court. (In re The Argus Co. V. Manning, 138 N. Y., 557.) No stockholder is bound to vote for a larger number of persons than he chooses. (Vandenburgh v. Broadway Ry Co., 29 Hun, 3S6.) A corporation acting in good faith, and without notice of rights of others, may treat registered shareholders, as actual owners of shares standing in their names, but the assignees of shares having possession of the certificates, though holding under unregistered transfers, are not bound by contracts between the registered share- holder, the corporation and all other shareholders which are not within the express or implied powers of corporations, or of their shareholders. (Campbell v. A. Z. Co., 122 N. Y., 455.) An election will not be set aside on account of a mere informality. (In re H. R. R. R. Co., 19 Wend., 135; Partridge v. Badger, 25 Barb., 146.) A shareholder has a legal right, at a meeting of the shareholders, to vote upon a measure even though he has a personal interest therein separate from other shareholders. In such a meeting each shareholder represents himself and his own interests solely, and he in no sense acts as a trustee or representative of others. (Gamble V. Queens County W. Co., 33 N. Y. St. Rep., 90; see Richardson v. Green, 133 U. S., 30.) If votes erroneously rejected would, if received, have elected a certain ticket, the election will be set aside. (In re L. I. R. R. Co., 19 Wend., 37; ex parte Murphy, 7 Cow., 153.) When the right of cumulative voting exists by statute it may be enforced by mandamus. (Cross v. W. Va. C. Ry Co., 12 So. E. Rep. 1071.) § 21. Proxies. — Every member of a corporation, except a religious corporation, entitled to vote at any meeting thereof may so vote by proxy. No officer, clerk, teller or bookkeeper of a corporation formed under or subject to the banking law shall act as proxy for any stockholder at any meeting of any such corporation. The General Corporation Law. 65 Every proxy must b,e executed in writing by the member himself, or by his duly authorized attorney. No proxy hereafter made shall be valid. after the expiration of eleven months from the date of its execution unless the member executing it shall have specified therein the length of time it is to continue in force, which shall be for some limited period. Every proxy shall be revocable at the pleasure of the person executing it; but a corporation having no capi- tal stock may prescribe in its by-laws the persons who may act as proxies for members, and the length of time for which proxies may be executed. (Thus amended by L. rSqa, ch. 687.) For form 0/ proxy see post, form No. 14. A proxy need no: be a stockholder. (In re Lighthall Mfg. Co., '47 Hun, 258.) The inspectors of election have no power to try and determine ^he genuineness of the proxies offered to be voted on. I£ they are appar- ently the acts of the -stockholders, and regular upon their face, that ends the matter, so far as the inspectors are concerned. (In re Cecil, 36 How. Pr. 477; see, also, In re White v. N. Y. Slate Agricultural Society, 45 Hun, 580.) A proxy which merely blates the year and month of the election, the day not having been determined when it was signed, is sufficient. (In re U. S. Cremation Co., 18 N. Y. Supp. go;; 46 State Rep., 135.) An irrevocable proxy given to secure a debt is invalid. (In re Germ- icide Co., 65 Hun, 606; 48 State Rep., 294.) § 22. Challenges. — Every member of a corporation offering to vote at any election or meeting of the corpora- tion shall, if required by an inspector of election or other officer presiding at such election or meeting, or by any other member present, take and subscribe the following oath:'- " Ido solemnly swear that in voting at this election I have not, either directly, indirectly or impliedly, received any promise or -any sum of money or anything of value to influence the giving of my vote or votes at thismeeting or as a consideration therefor." Any person offering to vote 5 66 The General Corporation Law. as proxy for any other person shall present his proxy and, if so required, take and subscribe the following oath: "I do solemnly swear that I have not, either directly, indirectly or impliedly, given any promise or any sum of money or anything of value to induce the giving of a proxy to me to vote at this election, or received any promise or any sum of money or anything of value to influence the giving of my vote at this meeting, or as a consideration therefor." The inspectors or persons presiding at the election may admin- ister such oath, and all such oaths and proxies shall be filed in the office of the corporation. (Thus amended by L. 1892, ch. 687; L. 1895, ch. 672, and L. 1901, ch. 355.) The amendment of igoi simplified the form of oath to be taken by a challenged stockholder or proxy. For forms under this section see post, forms Nos, 15 and 16. For form of oath of inspectors and certificate of result see post, forms Nos. 21 and 22. § 23. Effect of failure to elect directors. — If the direc- tors shall not be elected on the day designated in the by- laws, or by law, the corporation shall not for that reason be dissolved ; but every director shall continue to hold his office and discharge his duties until his successor has been elected. . (Former section 18, L. 1890, ch. 563, as amended by L. 1892. ch. 687.) Provisions in statutes and by-laws requiring the election of direct- ors to be had on a specified day are regarded as directory, and the election, if nol held on the regular day, may be held at a later day, and the directors then chosen will be directors de jure. (Beardsley v. Johnson, 121 N. Y., 224.) The fact that for a long period of time a corporation omitted to hold meetings of stockholders for the election of directors does not destroy its corporate existence, even though the omission continues for a period of eight years. (Geneva Mineral Springs Co., Limited v, Coursey, 45 App. Div., 268.) The General Corporation Law. 67 Officers holding over and continuing to act are directors de jure until their successors are chosen. (Phila. & Rdg C & I Co v Ilotchkiss, 82 N. Y., 474.) The continuous neglect of a corpbration for a number of years, to hold any election of officers, aflfords a proper case for the issue of a mandamus on the relation of a corporator without proof of a A^u^'^i ''^9S^^o% (People ex rel. Walker v. Albany Hospital, 11 i; J ^,- ^■)' 4; see, also, People v. Twaddell, 18 Hun, 427; In re Vandenburgh v. Broadway Ry. Co., 29 Hun, 348.) § 24. Mode of calling special election of directors. — If the election has not been held on the day so designated, the directors shall forthwith call a meeting of the members of the corporation for the purpose of electing directors, of which meeting notice shall be given in the same manner as of the annual meeting for the election of directors. If such meeting shall not be so called within one month, or, if held, shall result in a failure to elect directors, any member of the corporation may call a meeting for the pur- pose of electing directors by publishing a notice of the time and place of holding such meeting at least once in each week for two successive weeks immediately preceding the election, in a newspaper published in the county where the election is to be held and in such other manner as may be prescribed in the by-laws for the publication of notice of the annual meeting, and by serving upon each member, either personally or by mail, directed to him at his last known post- cfHce address, a copy of such notice at least two weeks before the meeting. (Thus amended by L. 1892, ch. 687.) Provisions somewhat similar to the above were formerly con- tained in the Stock Corporation Law of 1890, sections S3, 54 and 55. However, the right of a member to call a meeting in case of a month's delay or failure to elect directors is different from the old provision, while the provisions for calling a meeting forthwith by the directors was added by L. 1892, ch; 687. As to notice of annual meeting for election of directors of a stock corporation, see section 20 of the Stock Corporation Law, post; see, also, section 11 of this law, subdivision 5, second paragraph, ante. § 25. Mode of conducting special election of direc- tors. — Such meetings shall be held at the office of the corporation, or if it has none, at the place in this state 68 The General Corporation Law. where its principal business has been transacted, or if access to such office or place is denied or can not be had, at some other place in the city, village or town where such office or place is or was located. At such meeting the members attending shall constitute a quorum. They may elect inspectors of election and direc- tors and adopt by-laws providing for future annual meetings and election of directors, if the corporation has no such by-laws, and transact any other business which may be transacted at an annual meeting of the members of the corporation. (Thus amended by L. 1892, ch. 687.) As to inspectors, see, also, section 28 of the Stock Corporation Law, post. (See In re Lighthall Mfg. Co., 47 Hun, 258.) § 26. Qualification of voters and canvass of votes at special elections. — In the absence at such meeting of the books of the corporation showing who are members thereof, each person, before voting, shall present his sworn state- ment setting forth that he is a member of the corporation; and if a stock corporation, the number of shares of stock owned by him and standing in his name on the books of the corporation, and, if known to him, the whole number of shares of stock of the corporation outstanding. On filing such statement, he may vote as a member of the cor- poration; and if a stock corporation, he may vote on the shares of stock appearing in such statement to be owned bv him and standing in his name on the books of the corporation. The inspectors shall return and file such statements, with a certificate of the result of the election, verified by them, in the office of the clerk of the county in which such elec- tion is held, and the persons so elected shall be the directors of the corporation. (Thus amended by L. 1892, ch. 687.) For form of inspectors' certificate for filing in county clerk's oMce see Stock Corporation Law, section 28,- post. The General Corporation Law. 69 The right to vote is determined by the transfer books which are conclusive upon the inspectors. (See People v. Tuthill, 31 N. Y., § 27. Powers of supreme court respecting elections.— The supreme court shall, upon the application of any person or corporation aggrieved by or complaining of any election of any corporation, or any proceeding, act or matter touch- ing the same, upon notice thereof to the adverse party, or to those to be affected thereby, forthwith and in a summary way, hear the affidavits, proofs and allegations of the parties, or otherwise inquire into the matters or causes of complaint, and establish the election or order a new election, or make such order and give such relief as right and justice may require. (Former section 15, L. 1890, ch. 563, as amended by L. 1892, ch. 687.) A trustee of an estate who, despite the protests of his co-trustee, votes upon the estate stock in favor of himself as director, thereby disfranchising such stock is guilty of a breach of trust, and will riot be permitted to derive personal profit therefrom. (Matter of Elias, 17 Misc., 718.) Where one set of trustees claim to be de facto in office, and have possession of the corporate books and assets, and it appears that a rival board of trustees, claiming to be such trustees de jure, are seeking to obtain possession and control of the corporate assets, a court of equity will interfere, not to decide who are the legal trus- tees, but to prevent an unseemly struggle for possession between the rival boards of trustees. (Model Building arid Loan Ass'n v. Patterson, 12 Misc. R.,' 400.) But the granting of an injunction is not to be construed as in any manner passing upon the validity of the claim of either set of claimants to the trusteeship which they claim to hold. (Id.; Reis v. Rhode, 6 Civ. Proc. Rep., 406; Cianci- mino V. Man, i Misc. Rep., 121; 48 N. Y. St. Rep., 697, and cases cited.) Only some person whose rights have been infringed and who is justly entitled to complain may institute proceedings under this section. (In re Syracuse C. & N. Y. R. R. Co., 91 N. Y., i.) Upon an application under this section the court may go behind entries in the transfer book and determine whether a transfer appearing thereon was a sale or only a pledge. (Strong v. Smith, IS Hun, 222, aflf'd 80 N. Y., 637.) This proceeding and the one under the Code (sees. 1948-1956) are exclusive of all other methods of testing the legality of an election. (W. S. R. R. Co. V. Hay, 14 Abb. N. S., 191.) All the persons complaining should be named and the alleged irregularities set out. (In re Mohawk & H. R. R. R. Co., 19 Wend., 135.) The objections upon which the proceedings are based should be 70 The General Corporation Law. taken at the time of the election. (In re Lighthall Mfg. Co., 47 Hun, 258.) In determining who are stockholders the court will not be bound by the transfer book. (Strong v. Smith, 15 Hun, 222.) § 28. Stay of proceedings in actions coUusively brought. — If an action is brought against a corporation by the procurement or default of its directors, or any of them, to enforce any claim or obligation declared void by law, or to which the corporation has a valid defense, and such action is in the interest or for the benefit of any director, and the corporation has by his connivance made default in such action, or consented to the validity of such claim or obligation, any member of the corporation may apply to the supreme court, upon affidavit, setting forth the facts, for a stay of proceedings in such action, and on proof of the facts in such further manner and upon such notice as the court may direct, it may stay such proceedings or set aside and vacate the same, or grant such other relief as may seem proper, and which will not injuriously afifect an inno- cent party, who, without notice of such wrong-doing and for a valuable consideration, has acquired rights under such proceedings. (Former section 16, L. 1890, ch. 563, as amended by L. 1892, ch. 687.) § 29. Quorum of directors and powers of majority. — The affairs of every corporation shall be managed by its board of directors at least one of whom shall be a resident of this state. Unless otherwise provided by law a majority of the board of directors of a corporation at a meeting duly assembled shall be necessary to constitute a quorum for the transaction of business, and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. Subject to the by-laws, if any, adopted by the members of a corporation, the directors may make necessary by-laws of the corporation. (Thus amended by L. 1892, ch. 687, and L. IQOI, ch. 214.) By the amendmeni of igoi ihe requirement as to number of resident directors was changed from two to one. The General Corporation Law. 71 Prior to amendments of 1892, a majority of the directors were required to be residents of the State. (See note to sec. 20, Stock Corp. L,aw, post.) Section II, subdivision 5, ante, provides that by-laws adopted at a meeting of the members of the corporation, shall control the airectors; also that a by-law regulating election of directors or offi- cers must be published. The liability of directors of a corporation on the ground of negli- gence extends only to the damages sustained by the corporation as the natural and proximate result of their acts or omissions. (Bloom V. Natl. United Benefit Sav. & Loan Co., 152 N. Y., 114- aff'g 81 Hun, 120.) • When a trustee or the officer or director of a corporation deals with himself as an individual, or in the character of trustee, director or officer of another corporation, with respect to the funds or prop- erty of the corporation, the transaction is at least open to question by the corporation, or, in a proper case, by its stockholders, and the trustee is bound to explain the transaction and show that no undue advantage has been taken by him of his position for his own advantage or the advantage of some other corporation in which he has an interest. (Sage v. Culver, 147 N. Y., 241.) A contract pertaining to the ordinary business affairs of a cor- poration made by its directors with a third party cannot be revoked by the stockholders. (Genesee Valley & Wyoming Ry. Co. v. Eetsof Mining Co., 15 Misc., 187.) Where a person makes a promissory note in the name of a cor- poration he impliedly warrants that he has authority to do so, and, if he has no such authority, he is liable upon the implied warranty for the damages which have resulted from the breach. (Miller v. Reynolds, 92 Hun, 400.) Ordinarily the court will not interfere with the control of a cor- poration by its directors and a majority of its stockholders, although the directors may have acted unwisely and not for the best interest of the corporation they represent; it must be shown that the govern- ing body has acted so clearly against the interests of the minority stockholders as to amount to a wanton and fraudulent destruction of the rights of such minority. (Hart v. Ogdensburg & Lake Champlain R. R. Co., 89 Hun, 316.) When one corporation obtains control of the board of directors of another corporation, and, thereafter, without consideration, obtains the property of the latter corporation, and so arranges its affairs as to render all the shares of its stock, other than those held by the controlling corporation, valueless, a stockholder of the cor- poration which has been thus despoiled, may maintain an action to redress the wrong done to his company. (Pondir v. N. Y., L. E. & W. R. R. Co., 72 Hun, 38s; Farmers' Loan & Trust Co. v. N. Y. & Northern Ry. Co., 150 N. Y., 410; Sage v. Culver, 147 N. Y., 241; Barr v. N. Y., L. E. & W. R. R. Co., 96 N. Y., 444.) An officer and director sustains a trust relation toward the cor- poration, and is prohibited from dealing individually with himself in his trust capacity; such transactions are voidable at the option of the interested parties, whether fair or otherwise. (Steinway v. Steinway, 2 App. Div., 301; Davone v. Fanning, 2 Johns. Ch., 251; Munson v. S. G. & C. R. R. Co., 103 N. Y., 58.) If the contract is 72 The General Corporation Law. in all respects just as between the parties, and all of the shareholders . and directors are competent to assent, and with full knowledge of the terms of the contract, do assent and direct that it be made, it is binding on the corporation, and cannot be avoided by its share- holders. (Welch V. I. & T. N. Bank, 122 N. Y., 189; Hotel Com- pany V. Wade, 97 U. S., 23.) Where a corporation is wholly within the grasp of the trustees and its management is conducted for their pecuniary profit and advan- tage to the destruction of the interests of the stockholders, the court will intervene to afford such relief as" may be necessary. (Watkins V. Watkins & Turner Lumber Company, 17 Misc., 227.) A c5ntract made with a corporation by one of its directors is not void, but voidable at the suit of the corporation or of its stock- holders, if it refuses to sue. Such a contract will not be set aside, unless it appears that it is one which ought not to have been made, and by means of which the director has imposed upon the company, or taken advantage of his position to get from it a larger compensa- tion or greater profit than he ought. (Strobel v. Brownell, 16 Misc., 6s7;,Barr v. N. Y., L. E. & W. R. R. Co., 125 N. Y., 263.) Directors may select an executive committee and give it power to transact the business of the company during intervals between meetings of the board and such committee may delegate one of its number to do ministerial acts, indorsing checks, etc. (Sheridan El- Lt. Co. y. Chat. N. Bk., 127 N. Y., 517.) The directors are vested with no title to the corporate property; they have legal privity with the corporation only, and for the conse- quences of their malfeasance or want of due care their liability is to it, and it is only on the refusal of the corporation to sue that a stockholder, may do so on bshalf of the corporation for the ultimate benefit of himself and other stockholders. (Empire State Sav. Bk. V. Beard, 81 Hun, 184; and cases cited; Bloom v. Nat. United Bene- fit Sav. & Loan Co., 81 Hun, 120.) While it is the duty of courts to protect corporations from unau- thorized acts of its officers, yet when directors permit its officers to hold themselves out as clothed with full power to manage all its affairs for a long time, and thus lead innocent persons to contract with them, they cannot repudiate such contracts by invoking a by-law which they had allowed to fall into disuse. (Parmelee v. Associated Physicians & Surgeons, 11 Misc. R., 363.) Where a corporation consists of a small number of persons, it may transact business by conversation without the formality of resolu- tions. (Hall V. Herter Brothers, 83 Hun, 19.) The board may delegate its authority to agents or to a quorum composed of less than a majority of the number. (Hoyt v. Thomp- son's Executor, ig N. Y., 201.) All powers directly conferred by statute, or impliedly granted, of necessity, must be exercised by the directors who are constituted by the law as the agency for the doing of corporate acts. (Beveridge V. N. Y. E. R. Co., 112 N. Y., 22; Leslie v. Lorillard, no N. Y., 536; People's Bank v. St. Anthony R. C. Church, 109 N. Y., 512.) Corporate powers must be exercised by the directors, subject to the general law and the by-laws of the corporation. They have the fullest power to regulate the concerns of a corporation. (Beveridge V. N. Y. E. R. Co., 112 N. Y., 23.) The General Corporation Law. 73 No director can vote at a meeting of the board of directors by proxy. (The Craig Med. Co. v. The Merchants' Bank of Roches- ter, 59 Hun, s6i.) He can loan money to it and become its creditor, and he can receive by the act of the corporation security for his debt. (Id., 395.) He may foreclose a mortgage against the corporation, and may protect himself by bidding at the sale. (Id., 395.) A director can not, while serving as such, divest himself of the knowledge which he has acquired in confidence of corporate affairs or of the value of corporate property, nor be allowed to use it to his own advantage. (Hoyle v. Plattsburgh & Montreal R. R. Co., 54 N. Y., 329.) The relation existing between a director and the corporation is that of trustees. (Butts v. Wood, Z7 N. Y., 317.) The trustees (or directors) of a corporation have no separate or individual authority to bind the corporation, and this, although a- majority of the whole number acting singly and not collectively as a board should assent to the particular transaction, ^ch action must be taken at a formal meeting of the board duly assembled as such. (People's Bank v. St. Anthony's Church, 109 N. Y., 512; affirming, 39 Hun, 498.) \ § 30. Directors as trustees in case of dissolution. — Upon the dissolution of any corporation, its directors, unless other persons shall be appointed by the legislature, or by some court of competent jurisdiction, shall be the trustees of its creditors, stockholders or members, and shall have full power to settle its affairs, collect and pay outstanding debts, and divide among the persons entitled thereto the money and other property remainirig after payment of debts and necessary expenses. Such trustees shall have authority to sue for and recover the debts and property of the corporation, by their name as such trustees, and shall jointly and severally be personally liable to its creditors, stockholders or members, to the extent of its property and effects that shall come into their hands. (Thus amended by L. 1892, ch. 687.) This section consolidates former sections 19 and 20, and re-enacts their provisions unchanged. For new proceedings for the dissolution of corporations without making application to the court, see section 57 of the Stock Corpora- tion Law. For provisions as to judicial proceedings for voluntary and invol- untary dissolutions, see Code Civil Procedure, sections 1784-1813, 2419-2431. 74 The General Corporation Law. This section is not applicable to a foreign corporation. (Wamsley V. H. L. Horton & Co., Ltd., 12 App. Div., 312.) After the term for which a corporation was organized has expired, its assets, under the foregoing section, shall be held by the directors as trustees for its creditors and stockholders with full power to close up its affairs. (People ex rel. Haberman v. James, S App. Div., 412.) This provision intends that the corporate property should be held and administered upon by the directors, where other persons were not appointed, for the purpose of its distribution in the settlement of all existing claims upon it, whether the claimant was a creditor in the legal sense or not. (Marstaller v. Mills, 143 N. Y., 398.) When the term of existence of a corporation expires no dissolu- tion by the court is necessary. (Sturges v. Vanderbilt, Ti N. Y., 384; People v. Walker, 17 N. Y., 503.) Upon the expiration of the charter, the title to the corporate prop- erty vests in the directors then in office, in trust for the creditors and stockholders. (Central City Savings Bank v. Walker, 66 N. Y., 424; see London I. F. Co. v. Terbell, 48 N. Y., 427.) This section expressly limits the liability of the directors as trus- tees to the extent of the property and efiects that shall come into their hands. (Hoffman v. Van Nostrand, 42 Barb., 174.) § 31. Forfeiture for non-user. — If any corporation, except a railroad, turnpike, plank-road or -bridge corpora- tion, shall not organize and commence the transaction of its business or undertake the discharge of its corporate duties within two years from the date of its incorporation, its corporate powers shall cease. (Former section 21, L. 1890, ch. 563, as amended by L. 1802, ch. 687.) This section does not work a dissolution ipso facto. Judicial pro- ceedings are necessary to work an actual dissolution. (Matter of N. Y. & Long Island Bridge Co. «. Smith, 148 N. Y. 540; People v. Buf- falo Stone & Cement Co., 131 N. Y. 140.) § 32. Extension of corporate existence. — -\ny do- mestic corporation at any time before the expiration thereof may extend the term of its existence beyond the time speci- fied in its original certificate of incorporation, or by law, or in any certificate of extension of corporate. existence, by the consent of the stockholders owning two-thirds in amount of its capital stock, or if not a stock corporation, by the con- sent of two-thirds of its members, which consent shall be The General Corporation Law. 75 given either in writing or by vote at a special meeting of the stockholders called for that purpose, upon the same notice as that required for the annual meetings of the cor- poration; and a certificate under the seal of the corporation that such consent was given by the stockholders in writing, or that it was given by vote at a meeting as aforesaid, shall be subscribed and acknowledged by the president or a vice- president, an.d by the secretary or an assistant secretary of the corporation, and shall be filed in the office of the secre- tary of state, and shall by him be duly recorded and indexed in a book specially'provided therefor, and a certified copy of such certificate, with a certificate of the secretary of state of such filing and record, or a duplicate original of such certificate, shall be filed and similarly recorded and indexed in the office of the clerk of the county wherein the corpora- tion has its principal place of business, and shall be noted in the margin of the record of the original certificates of such corporation, if any, in such offices, and thereafter the term of the existence of such corporation shall be extended as designated in such certificate. If the terra of existence of any domestic corporation shall have expired and it shall be. made satisfactorily to appear to the supreme court that such corporation was legally organized, pursuant to any law of this state, and that it shall have issued its bonds pay- able at a date beyond the date fixed in its charter or certifi- cate of incorporation for the expiration of its corporate existence, and such bonds shall be unmatured and unpaid, the supreme court may, upon the application of any person interested and upon such notice to such other parties as the court may require, by order, authorize the filing and recording of a certificate reviving the existence of such cor- poration, upon such conditions and with such limitations as such order shall specify, and extending such corporate existence for a term not exceeding the term for which it was originally incorporated. Upon filing and recording such cer- tificate in the same manner as certificates of extension of cor- porate existence duly issued before the expiration of the existence of a domestic corporation is authorized by law to -jt The General Corporation Law. be filed and recorded, such corporate existence shall be re- vived and extended in pursuance of the terms of such order, but such revival and extension shall not affect any litigation commenced after such expiration and pending at the time of such revi val. If a corporation formed under or subject to the banking law, such certificate shall not be filed or recorded un- less it shall have indorsed thereon the written approval of the superintendent of banks; or, if an insurance corporation, unless it shall have indorsed thereon the written approval of the superintendent of insurance; and, if a turn-pike or bridge corporation, it shall not be filed unless it shall have indorsed thereon or annexed thereto a certified copy of a resolution of the board of supervisors of each county in which such turn-pike or bridge is located, approving of and authorizing such extension. If all the stock of a corpora- tion other than a corporation formed under or subject to the banking law, or an insurance corporation, or a turn-pike, plank-road or bridge corporation shall be lawfully owned by another stock corporation entitled by law to take a surrender and merger thereof, the cor- porate existence of such corporation whose stock is so owned may be extended at any time for the term of the corporate existence of the possessor corporation, by filing in the office or offices in which the original certificate or certificates of incorporation of the first-mentioned cor- poration were filed a certificate of such extension executed by its president and secretary and by such corporation own- ing all the shares of its capital stock. Every corporation extending its corporate existence under this chapter or under any general law of the state shall thereafter be sub- ject to the provisions of this chapter and of such general law, notwithstanding any special provisions in its charter, and shall thereafter be deemed to be incorporated under the general laws of the state relating to the incorporation of a corporation, for the purpose of carrying on .the business in which it is engaged, and shall be subject to the provisions of such law. (Former section 22, L. i8go, ch. 563, as amended by L. 1892, ch. 687; L. iqoo.ch. 177, and L. 1901, ch. 355.) As amended in 1901, this seclion now, provides that the extension of existence may be made at any lime before the expiration of the char- ter, and that the consent may be in writing, or may be given at a special meeting of the stockholders called for that purpose. These two alternative methods are in lieu of the formei provision whereby the extension could only be effected by the filing of a written consent, within three years before the expiration of the corporate existence. For form of certijicate of extension of exittuuA tdt Eai^m No. n. The General Corporation Law. tj § ii. Conflicting corporate laws. — If in any corporate law there is or shall be any provision in conflict with any provisions of this chapter or of the stock corporation law, the provisions so conflicting shall prevail, and the provision of this chapter or of the stock corporation law with which it conflicts shall not apply in'such a case. If in any such law there is or shall be a provision relating to a matter embraced in this chapter or in the stock corporation law, but not in conflict with it, such provision in such other law shall be deemed to be in addition to the provision in this chapter or in the stock corporation law relating to the same sub- ject matter, and both provisions shall, in such case, be applicable. (Added by L. 1892, ch. 687.) § 34. Laws repealed. — Of the laws enumerated in the schedule hereto annexed, that portion specified in the last column is repealed. Such repeal shall not revive a law repealed by any law hereby repealed, but shall include all laws amendatory of the laws hereby repealed. (Former section 23, L. i8go, ch. 563, as amended by L. 1892, ch. 687.) The schedule of laws repealed, above referred to, appears on pages 81-89. § 35. Saving clause. — ^The repeal of a law or any part of it specified in the annexed schedule shall not affect or impair any act done, or right accruing, accrued or acquired, or liability, penalty, forfeiture or punishment incurred prior to May I, 1891, under or by virtue of any law so repealed, but the same may be asserted, enforced, prosecuted or inflicted, as fully and to the same extent as if such law had not been repealed. All actions and proceedings, civil or criminal, commenced under or by virtue of the laws so repealed, and pending on April 30, 1891, may be prosecuted and defended to final effect in the same manner as they might under the laws then existing, unless it shall be other- wise specially provided by law. (Former section 24, L. 1890, ch. 563, as amended by L. 1892, ch. 687.) §36. Construction. — The provisions of this chapter, and of the stock corporation law, the railroad law, the transpor- tation corporations law, and the business corporations law. 78 The General Corporation Law. so far as they are substantially the same as those of laws existing on April 30, 1891, shall be construed as a con- tinuation of such laws modified or amended according to the language employed in this chapter, or in the stock corpora- tion law, the railroad law, the transportation corporations law, or the business corporations law, and not as new enactments. References in laws not repealed to provisions of laws incorporated into the general laws hereinbefore enumerated and repealed, shall be construed as applying to the pro- visions so incorporated. Nothing in this chapter or in the other general laws here- inbefore specified shall be construed to amend or repeal any provision of the Criminal or Penal Code or to impair any right or liability which any existing corporation, its officers, directors, stockholders or creditors may have or be subject to or which any such corporation, other than a railroad cor- poration, had or was subject to on April 30, 1891, by virtue of any special act of the legislature creating such corpora- tion or creating or defining any such right or liability, unless such special act is repealed by this chapter. (Former section 23, L. 1890, ch. 563, as amended by L. 1802, ch. 687.) The Legislature has power, without violating the Federal Con- stitution, to repeal or amend laws pertaining to business or stock corporations formed under the law of 1875, and to prescribe the lia- bility of stockholders in such corporations to its creditors for debts contracted after the act was repealed or amended. (Berwind- White Coal Mining Co. v. Ewart, 11 Misc., 490.) A later statute covering the same subject matter as a prior statute and embracing new provisions operates to repeal the prior act, although the two acts are not in express terms repugnant. (McDer- mott V. Nassau Electric R. R. Co., 85 Hun, 422; see also People v. Wilmerding, 136 N. Y., 363.) § 37. Law revived.. — Chapter three hundred of the laws of eighteen hundred and fifty-five, entitled " An act to incor- porate the Baptist Historical Society of the city of New York," which was inadvertently repealed by the trans- portation corporations law, is revived and re-enacted, and The General Corporation 'Law. 79 shall be of the same force and effect as if it had not been repealed. (Added by L. 1892, ch. 687.) This section is self-explanatory. § 38. 'When notice or lapse of time unnecessary. — Whenever under the provisions of any of the- corporate laws a corporation is authorized to take any action after notice to its members or after the lapse of a prescribed period of time, such action may be taken without notice and without the lapse of arty period of time, if such action be authorized or approved, and such requirements be waived in writing by every member of such corporation, or by his attorney there- unto authorized. (New provisions added by L. 189s, ch. 672.) It should be noted that the waiver above provided for applies only to matters affecting the members of the corporation. Where the interests or rights of creditors or others are concerned this section would not be applicable. A waiver under this section could not be used in a proceeding for a (voluntary dissolution of a corporation pursuant to seclion 57 of the Stock Corporation Law, as the interesis of others than members of the corporation would of course be involved in such a pro- ceedii g. ' § 39. As to acts of directors. — Whenever, under the pro- visions of any of the corporate laws, a corporation is author- ized to take any action by the agreement or action of its directors, managers or trustees, such agreement or action may be taken by such directors, regularly convened as a board, and acting by a. majority of a quorum, except when otherwise expressly required by law or the by-laws of the corporation and any such agreement shall be executed in behalf of the corporation by such officers as shall be desig- nated by the board of directors, managers or trustees. At any meeting at which every member of the board of directors shall be present, though held without notice, any business may be transacted which might have been transacted if the meeting had been duly called. Except when otherwise 8o The General Corporation Law. required by law or the by-laws of the corporation, special meetings of the members of the corporation may be called in the same manner as the annual meeting thereof. (New provisions, added by L. 1895, ch. 672, and amended by L. igoi, ch. 355.) The amendment of 1901 consisted of the addition of the last two sentences. § 4°- Alteration and repeal of charter. — The charter of every corporation shall be subject to alteration, suspen- sion and repeal, in the discretion of the legislature. (New, added by L. 1895, ch. 672.) Schedule of Laws Repealed. 8i SCHEDULE OF LAWS REPEALED. Revised Statutes Part i, chapter i8 All. Laws of Chapter Sections. 1811 67 All. 1815 47 All. 181S 202 All. 1816 S8 All. 1817 223 .■ All 1818 67 All. 1819 102 All. 1821 14 All. 1822 213 All. 1836 284 All. 1836 316 All. 1838 160 All. 1838 161 All. 1838 262 All. 1839 218 All. 1842 165 All. 1846 ISS All. 1846 21S 17, 18. 1847 100 3, 4. 1847 210 All. 1847 222 All. 1847 270 All. 1847 272 All. 1847 287 All. 1847 398 All. 1847 404 All. 1847 405 All. 1848 37 All. 1848. 40 All. 1848 45 All. 1848 259 All. 1848 26s All. 1848 360 All. ■ 1849 250 All. 1849. 362 All. 1850 71 All. 1850 140 All. 1851 14 All. 1851 19 All. 1851 98 All. 1851 107 All. 1851 487 • All. 1851 497 All. 1852 228 All. 1852 372 All. i8S3 S3 All. 82 Schedule of Laws Repealed. laws of Chapter Sections. 1853 117 All. i8s3 124 All. 1853 13s All. 1853 24s All. 1853 333 AH. i8S3 471 I. 2, 1853 481 All. l8S3 502 All. 1853 626 All. 1854 3 All. 1854 87 All. 1854 '. 140 All. 1854 201 All. 1854 232 All. 1854 269 All. 1854 282 All. 1854 312 All. 1855 301 All. 1855 302 All. . i8ss 390 All. 185s 478 All. 185s 48s All. 1855 49S All. I8SS 546 All. i8ss 559 All. 1856 65 All. 1857 29 All. i8S7 83 All. 1857 i8s All. 1857 202 All. 1857 262 All. 1857 444 All. 1857 546 All. i8s7 SS8 All. 1857 643 All. 1857 776 All. 1858 10 All. 1858 125 All. 1859 209 All. 1859 311 All. 1859 455 All. i860 116 All. i860 269 All. i860 523 All. 1861 149 All. 1861 170 All. 1861 215 All. 1861 238 All. 1862 205 All. 1862 248 All. 1862 42s All. 1862 438 All. 1862 449 All. Schedule of Laws Repealed. 83 Laws of Chapter Sections. l852* 472 All. 1863 63 All. 1863** 134... All 1863 346 All. 1864 8s All. 1864 337 All. 1864 -. S17 All. 1864 582 All. 1865 234 All. 1865 246 All. i86s 307 All. 186s 691 All. i86s 780 All. 1866 73 All. 1866 ; 239 All. 1866 322 All. 1866 371 All. 1866 697* All. 1S66 780 All. 1866 799 Ail. 1866 838 All. 1867 • 12 All. 1867 49 All. 1867 ; 248 All. 1867 ■ 254 All. 1867 419 All. 1867 480 All. 1867 509 All. 1867 775 All. 1867 906 ■ All. 1867 937 All. 1867 960 All. 1867 974 All. 1868 253 All. 1868 290 All. 1868 573 All. 1868 781 All. 1869 234 All. 1869 237 All. 1869 605 All. 1869 706 All. • 1869 844 • • ■ • All. 1869 •. 917 AH. 1870 124 All. 1870 13s All. 1870 322 All. 1870 443- All. 1870 568 All. * So in the original law, although erroneonsly printed as 1833 In the Session Laws of 1893, page 1817. ** So in the original law, although erroneously printed as 1866 in the Session Laws of 1893, pase 1817. 84 Schedule of Laws Repealed. Laws of Chapter Sections 1870 ^^z ah. 1871 95 All. 1871 481 All. 1871 535 All. 1871 560 All. 1871 657 All. 1871 669 All. 1871 697 All. 1871 883 All. 1872 81 All. 1872 128 All. 1872 146 All. 1872 248 All. 1872 283 All. 1872 350 All. 1872 374 All. 1872 426 All. 1872 609 AH. 1872 611 All. 1872 779 All. 1872 780 All. 1872 820 All, except 20. 1872 829 All. 1872 843 All. 1873 151 , All. 1873 352 All. 1873 432 All. 1873 440 All. 1873 469 All. 1873 616 All. 1873 710 All. 1873 izy All. 1873 814 All. 1874 76 All. 1874 143 All. 1874 149 All. 1874 240 All. 1874 288 All. 1874 430 All. 1875 4 All. 1875 58 All. 187s 88 All. 187s 108 All. 1875 113 All. 187s 119 All. 1875 120 All. 18,-5 159 All. 1875 193 All. 1875 256 All. 187s 319 All. 1875 36s All. i8''S 445 All. 1875 Sio All. Schedule of Laws Repealed. I*WBof _ Chapter Sections. 187s S^ AH. 187s 598 All. 187s 606 All. 187s 611 All. 1876 77 All. 1876 135 All. 1876 198 All. 1876 280 All. 1876 3S8 All. 1876 373 All. 1876 41S All. 1876 43S All. 1876 446 All. 1877 103 All. 1877 iS8 All. 1877 164 All. 1877 171 All. 1877 224.- All. 1877 266 All. 1877 374 All. 1878 61 All. 1878 121 All. 1878 163 All. 1878 203 All. 1878 210 All. 1878 261 All. 1878 264. All. 1878 316 All. 1878 334 All. 1878 394 All. 1879 214 All. 1879 253 All. 1879 290 All. 1879 293 All. 1879 ■ 350 All. 1879 377 All. 1879 393 All. 1879 395 All. 1879 413 All. 1879 41S All. 1879 441 All. 1879 S03 All. 1879 505 All. 1879 •• • 512 All. 1879 541- •• • All. 1880 5 All. 1880 ; 85 AH. 1880 90 All. 1880 94 All. 1880 113 AIL 1880 133 All. 1880 I5S All. i88o 182 All. 85 86 Schedule of Laws Repealed. Laws of Chapter Sections. 1880 187 -. All. 1880 223 All. 1880 225 All. 1880 241 All. 1880 254 All. 1880 263 All. 1880 267 All. 1880 349 All. 1880 41S All. 1880 417 All. 1880 484 All. 1880 510 All. 1880 575 All. 1880 582 All. 1880 583 All. 1880 585 All. 1881 22 All. 1881 58 All. 1881 77 All. 1881 117 All. 1881 148 All. 1881 213 All. 1881 232 All. 1881 29s All. 1881 296 All. 1881 311 All. 1881 313 All. 1881 321 All. 1881 337 All. 1881 338 All. 1881 3SI--. All. 1881 399 All. 1881 422 ; All. 1881 464 All. 1881 468 All. 1881 470 All. 1881 472 All. 1881 48s All. 1881 551 All. 1881 589 All. 1881 649 All. 1881 650 All. 1881 •. 674 All. 1881 685 All. 1882 73 All. 1882 82 All. 1882 140 AH. 1882 273 All. 1882 289 ;..... All. 1882 '. . 290 All. 1882 306 All. 1882 309 All. 1882 ; 340 All. Schedule of Laws Repealed. 87 Laws of Chapter Sections. 1882 353 All. 1882 393 All. 1882 40s AH. 1S83 46 All. 1883 71 All. 1883 102 All. 1883 2i6 All. 1883 232 All. 1883 237 All. X883 238 All. 1883 240 All. 1883 287 All. ; 1883 323 All. 1883 361 All. 1883 381 All. 1883 382 All. 1883 384 All. 1883 386 All. 1883 387 All. 1883 388 All. 1883 409 All. 1883 482 All. 1883 483 All. 1883 497 All. 1884 140 All. 1884 193 All. 1884 208 All. 1884 223 All. 1884 252 All. 1884 267 All. 1884 367 All. 1884 386 All. 1884 397 All. 188^ 421 All. 1884 422 All. 1884 439 All. 1884 441 All. 1884 444 All. 188s 84 ■ All. i88s 127 All. i88s 141 All. i88s 153 All. i88s 171 All. 1885 30s All. 188s 369 All. 1885 422 All. i88s 423 All. i88s 489 All. i88s 498 All. i88s 535 All. i88s 540 Al • 188s 549 All. 1886 65 All. 88 Schedule of Laws Repealed. Laws of 886... 886... 886... 886... 886*.. 886. 886. 886. 885. 886. 886. 8£6. 885. 885. 887. 887. 887. 887. 887. 887. 887. 888. 888. 889. 889. 889. 889. 889. 889. 889. 889. 889. 889. 890. 890. 890. Chapter .. 182.. . . 271. . . . 321.. . . 322. . . . 403. • .. 415- • . . 509- . .. 551.. .. 579.. .. 586.. .. 592.. . . 601 . . .. 60s.. .. 634. • . . 642.. .. 450.. .. 486.. .. 536.. .. 570.. .. 616.. . . 622. . .. 724- • .. 189.. . . 306.. .. 313.- ■• 359- • ■■ 394-. .. 447.. . . 462.. .. 513.. .. S14.. ■• 549- • . . 560.. .. 57.. .. 76.. .. 78.. .. 236.. . . 242. . . . 281.. ■• 332.. .. 369- • . . 426. . .. 519.- . . 524. • •■ 531.. •• 532.. .. 564.. . . 23. . 119. Sections. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . AIL : All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All. . All . All. . All. . All. . All. . All. * So in the original law, although erroneonsly printed as 1887 in the Session Laws of 1892, page 1838. Schedule of Laws Repealed. 89 I-awB of Chapter Sections. i8go 193 All. i8go 292 All. 1890 416 All. 1890 421 All. 1890 483 All. i8go 497 All. 1890 505 All. 1890 508 All. 1890 543 All. 1891 57 All. 1891 287 All. 1892 2 All. To each of the revised corporation laws passed in 1890, to wit, the General Corporation Law (ch. 563), the Stock Corporation Law (ch. 564), the Railroad Law (ch. 565), the Transportation Corpora- tiqtia Law (ch. 566), and the Business Corporations Law (ch. 567), there was appended a separate schedule of the laws repealed by each of said acts. The amendatory legislation of 1892, however, com- bined these sevei-al independent repealing schedules into the fore- going schedule of laws repealed, and annexed the same to the General Corporation Law. Chapter 971, Laws of 1867, as amended by chapter 85, Laws of 1878, entitled " An act for the incorporation of co-operative and industrial unions," was repealed by chapter 548, Laws of 1896. Cor- porations with the co-operative features may now be formed under the Business Corporations Law for any of the purposes within the scope of said law. THE STOCK CORPORATION LAW. Laws of 1890, Chapter 564, Entitled, "An Act in Relation to Stock Corporations, Constituting Chapter Thirty-six of the General Laws," as Amended to the Commencement of the Legislative Session of 1903. THE STOCK CORPORATION LAW* Article i. General powers; reorganization. (§§ 1-8.) 2. Directors and officers; their election, duties and liabilities. (i§ 20-34.) 3. Stock; stockholders, their rights and liabilities. (§§ 40-62.) ARTICLE I. GENERAL POWERS; REORGANIZATION. Section i. Short title and application of chapter. 2. Power to borrow money and mortgage property. 3. Reorganization upon sale of corporate property and franchises. 4. Contents of plan or agreement. 5. Sale of property; possession of receiver and suits against him. 6. Municipalities may asseni to plan of readjustment. 7. Combinations prohibited. S. Relative to corporate mortgages. Section i. Short title and application of chapter. — This chapter shall be known as the stock corporation law, ■ but article one shall not apply to monied corporations. (Former section i, L. 1890, ch. 564, as amended by L. 1892, ch. 688.) A monied corporation is a corporation formed under or subject •The Stock Corporation Law (L. 1890, ch. 584) was passed June 7, 1890, to take effect May 1, 1891. By the Laws of 189?, chapter 688, passed May 18, to take effect immediately, said law was amended and entirely re-enacted, and has since been further amended, as indicated on the sncceeding pages. The Stock Corporation Law. 91 to the banking or the insurance law. (Gen. Corp. Law, sec. 3, ante.) The Stock Corporation Law does not authorize the formation of corporations thereunder, except by the purchasers of corporate property and franchises, as provided in section 3, post. This law, however, cont;|ins the provisions which are speci^rlly applicable to all stock corporations; therefore, it applies to all business corpora- tions. For the law pertaining to the formation of business corpora- tions, reference should be had in this volume to the Business Cor- porations Law. As to the plan of the tomniissioners of statutory revision in drafting the Stock Corporation Law, see note, ante, page 28. \ § 2. Power to borrow money and mortgage prop- erty. — In addition to the powers conferred by the general corporation law, every stock corporation shall have the. I power to borrow money and contract debts, when necessary for the transaction of its business, or for the exercise of its I corporate rights, privileges or franchises, or for any other lawful purpose of its incorporation; and it may issue and dispose of its obligations for any amount so borrowed, and may mortgage its prbperty and franchises to secure the payment of such obligations, or of any debt contracted for said purposes. Every such mortgage, except purchase money mortgages and mortgages authorized by contracts made prior to May first, eighteen hundred and ninety-one, shall be consented to by the holders of not less than two-/ thirds of the capital stock of the corporation, which consent' shall be given either in writing or by vote at a special meeting of the stockholders called for that purpose, upon the same notice as that required for the annual meetings of the corporation; and a certificate under the seal of the cor- poration that such consent was given by the stockholders in writing, or that it was given by vote at a meeting as afore- said, shall be subscribed and acknowledged by the president or a vice-president and by the secretary or an assistant secretary, of the corporation, and shall be filed and recorded in the office of the clerk or register of the county wherein the corporation has its principal place of business. When authorized by such consent, the directors under such regu- lations as they may adopt, may confer on the holder of any 92 The Stock Corporation Law. debt or obligation secured by such mortgage the right to convert the principal thereof, after two and not more than twelve years from the date of the mortgage, into stock of the corporation; and if the capital stock shall not be suffi- cient to meet the conversion when made, the stockholders shall, in the manner herein provided, authorize an increase of capital stock sufficient for that purpose. (Former section 2, L. 1890, ch. 564, as amended by L. i8q2, ch. 688, ^nd L. 1901, ch. 354.) For forms of corporate promissory note and resolution, see post, forms Nos. 18 and 19. By the terms of this section, as above amended in igoi, the consent to mortgage may be given by the holders of at least two-lhirds of the capital stock of the corporation, either in nriting or by vo e, cast either in person or by proxy (see General Corporation Law, § 21) at a special meeting called for that purpose, upon the same notice as that required for the annual meetings, and in either event a certificate under the seal of the corporation must be executed setting forth that such con- sent was given by the stockholders in writing, or that it was given by vote at such special meeting, as the case ihay be, which certificate is to be signed by the president or a vice-president and by the secretary or an assistant secretary of the corporation and filed and recorded in the office of the clerk or register of the county wherein the principal place of business of the corporation is located. A further change, made by the amendment of 1901, is an enlargement of the power to borrow money secured by mortgage, the maximum limitation restrict- ing the amount of mortgage indebtedness having been stricken out, thereby enabling the corporation to incur a mortgage indebtedness for the lawful purposes of its business to any extent that its credit and security will permit, without reference to the amount of its capitaliza- tion. Heretofore provisions which were essentially a continuation of the former limitations of this section were contained in section 24 of The Lien Law (chapter 418, Laws of 1897), section 91 of which embodies the subject of mortgages creating a lien upon real and per- sonal property of corporations, reads as follows: § 91. Corporate mortgages against real and personal , property. — Mortgages creating a lien upon real and per- ' sonal property, executed by a corporation as security for the payment of bonds issued by such corporation, or by any telegraph, telephone or electric light corporation, and recorded as a mortgage of real property in each county where such property is located or through which the line The Stock Corporation Law. 93 this law, which prescribed as a penalty upon directors voting for an over-issue of bonds personal liability to the holders of the bonds ille- gally issued for the amount held by them, and to all persons sustain- ing damage by such illegal issues for any damage caused thereby, but said section 24 was repealed by chapter 354, Laws of iqoi, so as to leave nothing in conflict with the liberalized features of the foregoing section. In connection with the above section see also section 8 of this laiv, post, (added by chapter 354, Laws of 1901), which provides that when )a mortgage recites that it has been duly authorized by the holders of the requisite amount of stock such recital shall be presumptive evi- dence that the law has been complied with, and if the mortgage has been recorded for one year and interest has been paid thereon, it becomes palid, even though irregular in the method of its execution. This provision prevents the security of underlying corporate bonds being invalidated, and thereby protects the purchasers of such bonds. A mortgage given ty a business corporation, under' the act of 1875, upon its real and personal property, covers only personal property in existence when the mortgage was given. (Beebe v. Richmond Light, Heat & Power Co., 13 Misc.. 737-) Where two individuals sign a promissory note, and after their respective names attach the words " President " and " Treasurer," it is an individual Qbligalion of such persons and not the obligation of the corporation, if there is nothiag in the body of the note to indicate that it is a corporate obligation, even though the name of the corpora- tion be printed on the margin. (First Nat. Bk. of Bklyn. v. Wallis, 150 N. Y., 455, affirm'g Same v. Same, 84 Hun, 376, and Same v. Stuetzer, 80 Hun, 435; Casco Nat. Bk. v. Clark, 139 N. Y., 307; Mer- chants' Nat. Bk. v. Clark, 139 id., 341. A mortgage to secure the purchase price of property may be of such telegraph, telephone or electric light corporation ) runs, need not be filed or refiled as chattel mortgages. The operations of the acts superseded by the foregoing section were restricted to mortgages executed by railroad, telegraph, tele- phone or electric light companies, but the scope of the foregomg section of the Lien Law has been extended so as to mclude mort- gages executed by any corporation; therefore the decision to the efJect that ch. 779, Laws of 1868, as amended by ch. 529, Laws of iSo'? was limited in its operations to railroad corporations (State Trust Co V. The Casino Co., 5 App. Div., 381) does not apply, as the legislature of 1897 has clearly made the provisions of section 91 of the Lien Law, supra, sufficiently broad to apply to all corpora- tions That was doubtless the intention in enacting the amendatory act of 1895, ch. 529, but this purpose failed by reason of an omission to amend the title of the original act. / 94 The Stock Corporation Law. executed by a corporation without the consent of its stockholders. (Coman v. Lakey, 80 N. Y., 345; Farmers' Loan & Trust Co. Vi Equity Gas Light Co., 84 Hun, 3^3.) Under the former statute it has been held that the written con- sent of stockholders owning at least two-thirds of the stock of the corporation, duly obtained and filed, is an indispensable condition to a valid mortgage. (Vail v. Hamilton, 85 N. Y., 456.) But without such filing the mortgage is valid as against a subse- quent mortgagee or purchaser, with notice. (Roch. Sav. Bk. v. Averell, 96 N. Y., 467.) If pai^ of the stock is owned by the corporation it cannot give the assent itself to make up the requisite two-thirds. (Vail v. Hamil- ton, supra.) But an assent by two-thirds of the issued stock is sufficient. (Id.; Lyceum v. Ellis, 30 St. Rep., 242.) A mortgage executed without the assent is validated by a subse- quent assent if there are no intervening rights. (Rochester Sav. Bk. V. Averell, 96 N. Y., 467; Martin v. Niag. F. Paper Co., 122 N. Y., 165; Greenpoint S. Co. v. Whitin, 69 N. Y., 328.) A defective assent, in the absence of fraud, or of any objection by stockholders, must be of such a character that an intention to con- sent to mortgage cannot be inferred from the instrument. (Green- point S. Co. V. Whitin, 69 N. Y., 328.) The assent is valid though some of the shares have not been paid for, or only in services, and certificates have not- been issued to stockholders. (McComb v. Barcelona Ap. Assn., 31 N. E., 613; 4S St. Rep., 784; aflf'd 134 N. Y., 598.) The assent and mortgage may be filed and recorded simultane- ously. (Roch. Sav. Bk. v. Averell, 96 N. Y., 476; Everson v. Eddy, 36 N. Y., St. Rep., 764; Welch v. Imp. & T. Nat. Bk., 122 N. Y., 177.) Consent to mortgage the real and personal property does not include the corporate franchises vested in the corporation by virtue of its organization as such. (Lord v. Yonkers Fuel Gas Co., 10 1 N. Y., 614.) The right to assent I0 mortgaging property is collective, to be exercised in common with other shareholders, pursuant to the method prescribed by law. (Campbell v. American Zylonite Co., 122 N. Y., 4SS.) The proviso, in respect to the assent of shareholders, is for their protection. (Greenpoint Sugar Co. v. Whitin, supra; Rochester Sav. Bk. V. Averell, supra; Lord v. Yonkers Fuel Gas Co., 99 N. Y. S47-) If there are but two stockholders and both consent, it is sufficient, (Welch V. Importers' & Traders' Nat. Bk., 122 N. Y., 177; Castle V. Lewis, 78 N. Y., 131.) Usury Not a Defense. — Corporations are prohibited from interposing the defense of usury by Laws of 1850, chapter 172, the terms of which are as follows: " Section i. No corporation shall hereafter interpose the defense of usury in any action. § 2. The term corporation, as used in this act, shall be con- strued to include all associations and joint-stock companies having any of the powers and privileges of corporations not possessed by individuals or partnerships." The Stock Corporation Law. 95 The prohibition against setting up the defense of usury appHes to foreign as well as domestic corporations. (Life Ins. Co. v. Packer, 17 N. Y., 52.) (Neither the corporation maker of a note nor its indorsers can plead usury as a defense to the note. (Ludington v. Kirk, 17 Misc., 129.) Days of Grace Abolished. — The act of 1894, chapter 607, abolishing days of grace has been repealed by the Negotiable Instruments Law (chapter 612, Laws of 1897), section 145 of which supersedes said act of 1894 and reads as follows; I 145. Time of Maturity. — Every negotiaMe instrument is payable at the time fixed therein without grace. When the day of maturity falls upon Sunday, or a holiday, the instrument is payable on the next succeeding business day. Instruments falling due on Saturday are to be presented for payment on the next succeeding business day, except that instruments payable on demand may, at the option of the holder be presented for payment before twelve o'clock noon on Saturday when that entire day is not a holiday. A § 3. Reorganization upon sale of corporate property j and franchises. — When the property and franchises of any- domestic stock corporation shall be sold by virtue of a mort- gage or deed of trust, duly executed by it, or pursuant to the judgment or decree of a court' of competent jurisdiction, or by virtue of any execution issued thereon, and the purchaser, his assignee or grantee shall have aquired title to the same in the manner prescribed by law, he may associate with him any number of persons, not less than the number required by law for an incorporation for similar purposes at least two-thirds of whom shall be citizens of the United States and one shall be a resident of this state, and they may become a corporation and take and possess the property and franchises thus sold, and which were at the time of the sale possessed by the corporation whose property shall have been so sold, upon making and acknowledging and filing in the offices where certificates of incorporation' are required by law to be filed, a certificate in which they shall describe by name and reference to the law under which it was organ- ized, the corporation whose property and franchises they have acquired, and the court by whose authority the sale had been made, with the date of the judgment or decree authorizing or directing the same, and a brief description of the property sold, and also the following particulars: 96 The Stock Corporation Law. 1. The name of the new corporation intended to be formed by the filing of such certificate; and the place where its principal office is to be located. 2. The maximum amount of its capital stock and the number of shares into which it is to be divided, specifying the classes thereof, whether common or preferred, and the amount of, and rights pertaining to, each class. 3. The numBer of directors, not less nor more than the number required by law for the old corporation, who shall manage the affairs of the new corporation, and the names and post-office address of the directors for the first year. They may insert in such certificate any provisions relating to the new corporation, or its management, contained in any plan or agreement which may have been entered into as provided in section four of this chapter. Such corporation shall be vested with, and be entitled to exercise and enjoy, all the rights, privileges and franchises, which at the time of such sale belonged to, or were vested in the corporation, last owning the property sold, or its receiver, and shall be subject to all the provisions," duties and liabilities imposed by law on such corporations. Any proceedings heretofore taken in substantial compliance with this section as hereby amended and any and all incorporations based thereon are hereby ratified and confirmed. (Former section 3, L. iSgo, ch. 564, as amended by L. l8g2, ch. 688; L. 1901, ch, 354; L. ig02, ch. 80,) The words. " his assignee or grantee " in the fifth line, were inserted by the amendment of 1902, and the last sentence was also added, rati- fying and confirming incorporations theretofore based on proceedings under this section. By the amendment of 1901 no changes in substance were made in this section, except that the provision thai a majority of the persons re-organizing the corporation must be citizens of the United Slates and residents of the State of New York, was modified so as to provide that ' at least two thirds must be citizens of the United States and al least one a resident of the Stale, thus conforming these qualifications 10 those prescribed in regard to incorporation of companies de novo. The certificate above provided for must be filed and recorded in the office of the Secretary of State, and a duplicate original, or a copy cer^ tified by the Secretary of State, must also be filed and recorded in the office of the clerk of the county in which tlie office of the new corpora- tion is to be located. (Gen. Corp. Law, § 5, ante.^ The tax of one-twentieth of one per cent, for the privilege of organ- ization must be paid by the re-organized corporation, as it is a new corporation within the meaning of the organization tax law. (People ex rel. Schurz v. Cook, no N. Y. 443; People ex rel. Mertens v. Cook, id.) The Stock Coeporation Law. 97^ , Any number of persons ri^ay purchase the property for them- selves and organize a new corporation, which will possess all the powers, rights, privileges and franchises of the prior corporation. (Vatable v. N. Y., L. E. & W. R. R. Co., 96 N. Y., 49; see, also, Pratt V. Munson, 84 N. Y., 582; Thornton v. Wabash Ry. Co., 81 N. Y., 462.) The rights of each of the stockholders of the prior corpora- tion will be cut off by the foreclosure and sale. The only prop- erty interest left to him is in the surplus, if any, after satisfying the mortgage and other preferential claims. (Vatalile v. N. Y., L. E., etc., above.) If, however, the purchasers buy in pursuance of a plan for the adjustment of :he respective interests of the mortgage credi- tors and stockholders, then such plan must be embodied in the certificate to be filed. (Id.) In such case the statute secures to a stockholder the option to join the new company by a compliance with the terms of the plan. (Id.) r §4- Contents of plan or agreement. — At or previous I to the sale the purchasers thereat, or the persons for whom I the purchase is to be made, may enter into a plan or agree- / ment, for or in anticipation of the readjustment of the respective interests therein of any creditors, mortgagees and stockholders, or an.y of them, of the corporation owning such property and franchises at the time of sale, and for the representation of such interests in the bonds or stock of the new corporation to be formed, and may therein regulate voting by the holders of the preferred and common stock at any meeting of the stockholders, and may provide for, and regulate voting by the holders, and owners of any or all of the bonds of the corporation, foreclosed, or of the bonds issued or to be issued by the new corporation; and such right of voting by bondho]ders shall be exercised in such manner, for such period, and upon such conditions, as shall be therein described. Such plan or agreement must not be inconsistent with the laws of the state and shall be binding upon the corporation, until. changed as therein provided, or as otherwise provided by law. The new corporation when duly organized, pursuant to such plan or agreement and to the provisions of law, may issue its bonds and stock in con- formity with the provisions of such plan or agreement, and may at any time within six months after its organization, compromise, settle or assume the payment of any. debt, 98 The Stock Corporation Law. claim or liability of the former corporation upon such terms as may be lawfully approved by a majority of the agents or trustees intrusted with the carrying out of the plan or agreement of reorganization, and may establish preferences in favor of any portion of its capital stock and may divide its stock into classes; but the capital stock of the new cor- poration shall not exceed in the aggregate, the maximum amount of stock mentioned in the certificate of incorporation. (Former section 4, L. i8go, ch. 564, re-enacted by L, 1892, ch. 688, and amended by L. 1901, ch. 354.) The only change, except in phraseology, made in this section hy the amendment of iqoi, was the striking out of the maximum limila- tion as to the amount of bonded indebtedness permitted, so as to har- monize the section with the new provisions of section 2, ante. When the plan for le-adjustment of interests has been embodied in the certificate filed for the organization of the new corporation it constitutes notice to stockholders of the general features of such plan. (Vatable v. N. Y., L. E., etc., Co., 96 N. Y., 59.) §5. Sale of property, possession of receiver and suits against him.. — The supreme court may direct a sale of the whole of the property, rights and franchises covered by the mortgage or mortgages, or deeds of trust foreclosed at any one time and place to be named in the judgment or order, either in case of the non-payment of interest only, or of both the principal and interest due and unpaid and secured by any such mortgage or mortgages or deeds of trust. Neither the sale nor the formation of the new cor- poration shall interfere with the authority or possession of any receiver of such property and franchises, but he shall remain liable to be removed or discharged at such time as the court may deem proper. No suit or proceedings shall be commenced against such receiver unless founded on willful misconduct or fraud in his trust after the expiration of sixty days from the time of his discharge; but after the expiration of sixty days the new corporation shall be liable in any action that may be commenced against it, and The Stock Corporation Law. 99 founded on any act or omission of such receiver for which he may not be sued, and to the same extent as the receiver, hut for this section would be or remain liable, or to the same extent that the new corporation would be had it done or omitted the acts complained of. (Former section 5, L. 1890, ch. 564, re-enacted by L. 1892, ch. 688.) § 6. Municipalities may assent to plan of readjust- ment. — The commissioners, corporate authorities or proper officers of any city, town or village, who may hold stock in any corporation, the property and franchises whereof, shall be liable to be sold, may assent to any plan or agreement of reorganization which lawfully provides for the formation of a new corporation, and the issue of stock therein to the proper authorities or officers of such cities, towns or villages in exchange for the stock of the old or former corporation by them respectively held. And such commissioners, cor- porate authorities or other proper officers may assign, trans- fer or surrender the stock so held by them in the manner required by such plan, and accept in lieu thereof the stock issued by such new corporation in conformity therewith. (Former section 6, L. 1890, ch. 564., as amended by L. 1892, ch. 688, and L. rgoi, ch. 354.) The amendment of iqoi changed (he foregoing section by striking out a clause which read as follows:^ " Every stockholder in any cor- poration, the franchises and property whereof shall have been thus sold, may assent to the plan of readjustment and reorganization of interests pursuant to which such franchises and property shall have been purchased at any lime vrithin six months after the organization of the new corporation, and by complying with the terms and con- ditions of such plan become entitled to his pro rata benefits therein." § 7. Combinations abolished. — No domestic stock cor- poration and no foreign corporation doing business in this state shall combine with any other corporation or person loo The Stock Corporation Law. for the creation of a monopoly or the unlawful restraint of trade or for the prevention of competition in any necessary of life (Former section 7, L. 1890, ch. 564, as amended by L. 1892, ch. 688, and L, 1897, ch. 384.) By the amendment of 1897 the scope of this section was extended so as to include foreign corporations. For reference to other pro- visions affecting such coiporations, see the index under the head- ing " Foreign Corporations." It is not against pubHc policy for two corporations engaged in the same general line of business to consolidate. (Cameron v. N. Y. & Mt. V. Water Co., 62 Hun, 269; aff'd on other grounds, 133 N. Y., 336; Holmes & Griggs Mf'g Co. v. Holmes & W. M. Co., 127 N. Y., 252.) § 8. Relative to corporate mortgages. — Whenever any mortgage affecting property or franchises within this state heretofore or hereafter executed by authority of the board of directors in behalf of any stock corporation, domestic or foreign, of any description, recites or repre- sents in substance or effect that the execution of such mortgage has been duly consented to, or authorized by stock- holders, such recital or representation in any such mortgage, after public record thereof within this state, shall be pre- sumptive evidence that the execution of such mortgage has been duly and sufficiently consented to, and authorized by stockholders as required by any provision of law. After any such mortgage heretofore or hereafter shall have been publicly recorded for more than one year in one or more of the counties of this state containing the mortgaged premises or any part thereof, and the corporation shall have received value for bonds actually issued under and secured by such mortgage, and interest shall have been paid on any of such bonds according to the terms thereof, such recital or repre- sentation of such mortgage so recorded shall be conclusive evidence that the execution of such mortgage has been duly and sufficiently consented to, and authorized by stockhold- ers as required by any provision of law, and its validity shall not be impaired by reason of any defect or insufficiency of consent or authority of stockholders or in filing or record- ing such consent or authority, and such mortgage shall be The Stock Corporation Law. ioi valid and binding upon the corporation, and those claiming under it, as security for all valid bonds issued or to be issue thereunder, unless such mortgage shall be adjudged invalid in an action begun as hereinafter, in this section, provided. Notwithstanding the foregoing provisions of this section, the invalidity of any such mortgage heretofore recorded because of insufficiency of consent by stockholders may be adjudged in any action for such purpose begun before the first day of April, nineteen hundred and two, and the invalidity of any such mortgage hereafter recorded, because of insufficiency of consent by stockholders, may be adjudged in any action for such purpose begun, within one year after the earliest record of such mortgage in any county in this state, provided in either case that such action shall have been so begun by or in behalf of the corporation by direction of the board of directors acting in their own discretion, or upon the written request of the holders of not less than one-third of the capital stock of the corporation; and in any such action so begun by or in behalf of the cor- poration, the recitals or representations of the mortgage shall be presumptive evidence only as first above provided. Whenever hereafter, in compliance with any law of this state, the officers of any corporation shall have made and filed and recorded a certificate that the execution of a mort- gage hereafter made by the corporation has been duly con- sented to by stockholders, such certificate shall be conclusive evidence as to the truth thereof, in favor of any and all persons who in good faith shall receive or purchase, for value, any bond or obligation purporting to be secured by such mortgage, at any time when said certificate shall remain of record and uncancelled. Nothing in this section contained shall affect any right or any remedy in respect of any such right of any creditor accrued before this enact- ment nor shall it dispense with the necessity of obtaining the consent of the board of railroad commissioners to any mortgage by a railroad corporation. (New section, added by L. 1901, ch. 354.) The foregoing section applies to both foreign and domestic corpora- tions. For other proWsions in relation to foreign corporations, see the 102 The Stock Corporation Law. In explanation of the foregoing section the text of the memorandum supporting the same and filed with the legislative committee prior to the enactment of the section is given herewith, to wit: " This section undertakes to prescribe a period (not less than one year from the passage of this act) after the expiration of which il shall be conclusively presumed that any mortgage, executed by the authority of the board of directors of any domestic or any foreign stock corpora- tion, has been authorized by the stockholders, if such mortgage, hav- ing been publicly recorded for more than one year, contains a recital to that effect. In other words, the bill proceeds upon the theory that though the consent of stockholders is necessary to the execution of any mortgage heretofore or hereafter made by a stock corporation under section 2 of the Stock Corporation Law, or by a railroad cor- poration under sectiort 4, subdivision 10 of the Railroad Law, the acquiescence of stockholders for a long period after the publication of such a mortgage containing a recital of stockholders' assent, shall constitute a bar to their right to contest the mortgage purporting to secure bonds which have been negotiated and issued and upon which interest has been paid. " This is in exact accordance with the prevailing public policy of this State, recognizing and applying the doctrine of estoppel by acqui- escence. (Kent V. Quicksilver Mining Co., 78 N. Y , 159; New Britain Nat. Bk. V. A. B. Cleveland Co., 91 Hun, 447; 158 N. Y., 722; 159 N. Y., 528.) " It also accords with the long-established policy of this State, which from an early date has discountenanced technical defenses by corpo- rations to the enforcement of their obligations; as, for instance, the act prohibiting corporations from pleading usury (Laws of 1850, ch. 172), and the section of the Code denying to corporations in certain cases the right to interpose a demurrer except by the express leave of the court (Code of Civil Procedure, § 1778). " That acquiescence for a long period should estop stockholders from disputing the directors' publicly recorded declaration that stock- holders have duly assented to a mortgage upon the faith of which bonds have been sold to the public, is a proposition which for its sup- port seems to require no argument. " But to constitute an estoppel out of such acquiescence, legislative authority is necessary, if under the corporation laws the mortgage is void unless assented to by stockholders; for it is familiar law that as against a void instrument, no lapse of time constitutes an estoppel (see gS Fed. Rep., 666-671); and it is the declared law of this State that without stockholders' assent, as required by statute, a corporate mortgage is absolutely void. (Vail v. Hamilton, 85 N. Y., 456; The Vigilancia, 73 Fed. Rep., 452-457.) " Originally, the requirement of stockholders' assent was of limited application; for, at first, it prevailed only in respect of manufacturing corporations. Their financial transactions were small in comparison with those of the present time, when the bonds of industrial corpora- tions, both domestic and foreign, have become a familiar and exten- sive form of investment. * * * " When it is considered that an assent, perfect in form, fnay be sub- ject to vitiation because of some latent and undisclosed technical irreg- ularity, it is obvious that sound public policy, as well as the interest of the investing public, requires that at some time there should arise The Stock Corporation Law. 103 a statutory bar to the possibility of pleading or proriag any latent technical defect. " This is not less obvious when it is recalled that by recent legisla- tion, the savings banks — which are the favored institutions of the State — have been authorized to invest in the corporate bonds of rail- road companies. " The new section 8 provides, first that the directors' recital in a mortgage publicly recorded, shall constitute presumptive evidence; and, secondly, that alter the expiration of a year from the public record of a mortgage containing such n. recital, the valid assent of stock- holders shall be conclusively presumed, if bonds have been issued for money actually received by the corporation and interest paid thereon. " Inasmuch as very properly the amendment applies both to past and future mortgages, the concluding paragraphs of the section pro- tect existing rights by giving to the board of directors, or to one-third of the stockholdeis of a corporation, the opportunity at any time within a year after the public record of the mortgage, or within a year after this enactment, to contest the same for lack of stockholders' assent; and the existing rights of creditors also aie preserved. " The constitutionality of a retroactive statute providing that certain instruments shall constitute presumptive proof, is recognized in the case of Howard v. Moot, 64 N. Y., 262-268. " The constitution ility of legislation constituting a short statute of limitations, has been established by the Court of Appeals in the cases of People V. Turner, 117 N. Y., 227; 14.5 N. Y., 459, and Meigs v. Roberts, 162 N. Y., 371-378. " The section also provides that the certificate hereafter filed by the olBcers under section 2 shall be conclusive in favor of bona fide pur- chasers of bonds who become such while said certificate shall remain of record and uncancelled." Article i of the Stock Corporation Law terminates with section 8, supra, and the next article (II) begins with section 20, The revised corporation laws were enacted in this manner with intervals between the articles in the numerical order of sectioning, instead of maintain- ing a continuity of section numbers, so as to allow for internal ameqd- atory expansion of each law by the insertion of new sections in proper logical connection. ] 104 The Stock Corporation Law. ARTICLE II. DIRECTORS AND OFFICERS; THEIR ELECTION, DUTIES AND LIABILITIES. Section 20. Directors. 21. Change of number of directors. 22. When acts of directors void. 23. Liability of directors for making unauthorized dividends. 24. (Repealed by L. 1901, ch. 354.) 25. Liability of directors for loans to stockholders. 26. Transfers of stock by stockholders indebted to corpora- tion. 27. Officers. 28. Inspectors and their oath. 29. Books to be kept. 30. Annual report. 31. Liability of officers for false certificates, reports or pub- lic notices. 32. Alteration or extension of business. 33. Sale of franchise and property. 34. Liabililies of directors, limitations, I 20. Directors. — The directors of every stock corpora- tion shall be chosen at the time and place fixed by the by- laws of the corporation by a plurality of the votes at such election. Each director shall be a stockholder unless otherwise provided in the certificate, or in a by-law adopted by a stockholders' meeting. Vacancies in the board of directors shall be filled in the manner prescribed in the by- laws. Notice of the time and place of holding any election of directors shall be given by publication thereof, at least once in each week for two successive weeks immediately preceding such election, in a newspaper published in the county where such election is to be held, and in such other manner as may be prescribed in the by-laws. Policy hold- ers of an insurance corporation shall be eligible to election as directors. At least one-fourth in number of the directors of every stock corporation shall be elected annually. (Former section 20, L. i8go, ch. 564. as amended by L. 1892, ch. 688, and L. iqoi, ch. 354.) The amendment of igoi modifies this section by striking out the provisions that directors shall be chosen from the stockholders, and that if a director shall cease to be a stockholder his office shall become vacant, aiid substitutes in lieu thereof a new feature, permitting per- sons who are noi stockholders to be directors if the certificate of incor- poration or a by-law so provides. The Stock Corporation Law. 105 For form of notice of annual meeting, see post, form No. 20. For form of oath of inspectors of election and certificate of result, see post forms Nos, 21 and 22. I This section permits, of a classification of directors, so tliat one-half j of the board may be elected for one year and the other half for two I years, or the board maybe divided into thirds for the terms of one I year, two and three years, respectively, or classified so as to be chosen I for terms of one year, two, three and four years respectively. The term directors when used in these laws, includes trustees. (Gen- eral Corporation Law, § 3, ante.) This provision of said section 3 is, it seems, intended merely for a definition of terms and that the man- aging board of a corporation organized under Laws 1848, ch. 40 (now repealed), should still be called trustees. At least one of the directors of every corporation must be a resident of this State. (General Corporation Law, § 29, ante.) No liability for a dissolution arises from failure to elect directors on the day fixed in the by-laws. (General Corporation Law, § 23, ante.) But see the Stock Corporation Law, § 22, as to neglect or refusal of directors to adopt by-laws for holding annual election. Unless others are appointed by the court the directors shall be trustees of creditors, etc., in case of dissolution. (General Corporation Law, § 30, ante.) The number of directors may be changed. See next succeeding section. By-laws adopted at a meeting of members of the corporation control action of directors. (General Corporation Law, § ii, sub. 5, ante.) Any by-law regulating election of directors or officers must be pub- lished. (Id.) The directors may appoint officers of the corporation. (See § 27 of this law.) I The directors shall manage the affairs of every corporation and a i ma'jorityof the board of directors constitutes a quorum. (General I Corporation Law, § 2q,-ante.) And the act of a majority at a meeting I having a quorum is the act of the board. (Id.) ' At elections of directors each stockholder has one vote for every share of stock held by him, unless otherwise provided in the certificate of incorporation. (General Corporation Law, § 20. ante.) For liability of directors for unauthorized dividends; loans to stock- holders, etc., see §§ 23 and 25 of this law, post. Whenever, under the provisions of any of the corporate laws, a cor- poration is authorized to take any action by the agreement or action of its directors, managers or trustees, such agreement or action may be taken by such directors, regularly convened as a board, and acting by a majority of a quorum, except when otherwise expressly required by law or the by-laws of the corporation. (General Corporation Law, § 29-) At any meeting at which every member of the board of directors shall be present, though held without notice, any business may be transacted which might have been transacted if the meeting had been duly called. (General Corporation Law, § 39.) io6 The Stock Corporation Law. A special meeting for electing directors may be called. (Gen. Corp. Law, sees. 24, 25, 26, ante.) In certain cases any member of the corporation may call such meeting. (Id.) As to proceedings to compel directors to account for their official conduct; to transfer to the corporation property belonging to the same, etc., or for the removal of such director, see Code Civ. Pro., sees. 1781-83 and sees. 1811-12. As to inspectors of election and their election, see sec. 28 of this law, post. Directors cannot vote by proxy at meetings of the board. (Craig Medicine Co. v. Merch. Bk., 59 Hun, 561.) At a meeting held for the election of directors, any number of stockholders, however small their holding, provided they hold a plurality of the stock voted, may elect directors, notwithstanding a by-law to the contrary. (Matter of Rapid Transit Ferry Co., 15 App. Div., 530.) Neither stockholders nor directors can do a corporate act, out of the jurisdiction creating the corporation, which can bind those who do not participate in it. (Ormsby v. U. M. C. Co., 56 N. Y., 623.) The election of a disqualified person does not m:;ke him even a de facto director. (In re Newcomb, 42 St. Rep., 442.) Management of the affairs of the corporation is with the directors thereof. It is only where the statute or the by-laws require it that co-operation of stockholders is needed. (Beveridge v. N. Y. El. R. R. Co., 112 N. Y., i; Dabney v. Stevens, 40 How. Pr., 341; Sheri- dan Elcc. L. Co. V. Chatham Nat. Bk., 127 N. Y., 517; aff'g 52 Hun, 580.) But the board of directors or trustees may appoint an execu- tive committee of its members to transact the business of the cor- poration during the interval between the meetings of the board. (Sheridan E. L. Co. v. Chatham N. Bk., 127 N. Y., 517; Olcott v. Tioga R. R. Co., 27 N. Y., 546; see, also, Hoyt v. Thompson's Executors, ig N. Y., 207.) The directors may make any contract which the law permits the corporation to make. (Beveridge v. N. Y. El. R. R. Co., ii2 N. Y., I.) The collective authority of the directors acting as a board is necessary, in order to bind the corporation by the action of the directors. (Cammeyer v. Churches, 2 Sandf. Ch., 186; Constant v. Rector, 4 Daly, 305.) Directors are authorized to manage the business of the corpora- tion, audit and pay its debts, and make contracts within the ordinary scope and business of the corporation. (Kelsey v. Sargent, 40 Hun, ISO.) If officers or trustees do an unauthorized act or incur indebted- ness which would not create a corporate liability, the stockholders may subsequently ratify the acts and validate the originally unau- thorized transaction. (Martin v. Niagara F. P. Co., 122 N. Y., 172, aflf'g 44 Hun, 130.) § 21. Change of number of directors. — The number of directors of any stock corporation may be increased or The Stock Corporation Law. 107 reduced, but not above the maximum nor below the mini- mum number prescribed by law, when the stockholders owning a majority of the stock of the corporation shall so determine, at. a meeting to be held at the usual place of meeting of the directors, on two weeks', notice in writing to each stockholder of record. Such notice shall be served personally or by mail, directed to each stockholder at his last known post-office address. Proof of the service of such notice shall be filed in the office of the corporation at or before the time of such meeting. The proceedings of such meeting shall be entered in the minutes of the corporation and a transcript thereof, verified by the president and sec- retary of the meeting shall be filed in the offices where the original certificates of incorporation were filed. If a cor- poration formed under or subject to the banking law, the consent of the superintendent of banks, and if an insurance corporation, the consent of the superintendent of insurance, shall be first obtained to such increase or reduction of the number of directors. (Former section 21, L. .1890, ch. 564, as amended by L. 1892, ch. 688.) For form of certiHcale, see post, form No. 23. The verified transcript above provided for must be filed and recorded in the office of the Secretary of State and a duplicate original must also be filed and recorded in the county clerk's office in which the certificate of incorporation was filed. (Gen. Corp. Law, sec. 5.) § 22. 'When acts of directors void. — When the directors of any corporation for the first year of its corporate exist- ence shall hold over and continue to be directors after the first year, because of their neglect or refusal to adopt the by-laws required to enable the stockholders to hold the annual election for directors, all their acts and proceedings while so holding over, done for and in the name of the cor- poration, designed to charge upon it any liability or obli- gation for the services of any such director, or any officer, or attorney or counsel appointed by them, and every such io8 The Stock Corporation Law. liability or obligation shall be held to be fraudulent and void. (Former section 22, L. 1890, ch. 564, re-enacted without change by L. 1892, ch. 688.) No liability for a dissolution arises from failure to elect directors on the day fixed in the by-laws. (Gen. Corp. Law, sec. 23.) In certain cases any member of the corporation may call a meet- ing to elect directors. (Gen. Corp. Law, sec. 24.) § 23. Liability of directors for making unauthorized dividends. — Tjxe directors of a stock corporation shall not j make dividends, except from the surplus profits arising from / the business of such corporation, nor divide, withdraw or in any way pay to the stockholders or any of them, any part of the capital of such corporation, or reduce its capital stock, except as authorized by law. In case of any violation of the provisions of this section, the directors under whose administration the same may have happened, except those I who may have caused their dissent therefrom to be entered I at large upon the minutes of such directors at the time, or were not present when the same happened, shall jointly and severally be liable to such corporation and to the creditors i thereof to the full amount of any loss sustained by such I corporation or its creditors respectively by reason of such withdrawal, division or reduction. But this section shall not prevent a division and distribution of the assets of any such corporation remaining after the payment of all its debts and liabilities upon the dissolution of such corporation or the expiration of its charter; nor shall it prevent a corporation from accepting shares of its capital stock in complete or partial settlement of a debt owing to the corporation, which by the board of directors shall be deemed to be bad or doubtful. (Former section 23, L. i8go, ch. 564, as amended by L. i8g2, ch. 688, and L. 1901, ch. 354 ) Prior to the amendment of 1901 directors violating this section were liable to the corporation and its creditors for the full amount of the unauthorized dividend. The last clause permitting a corporation to accept shares of its capital stock in settlement of a debt is new. This sercion a,pplies 10 foreign as well as domestic corporations. (See §60 of this law.) The Stock Corporation Law. 109 Directors of a corporation have no right to pay dividends unless they leave the capital stock unimpaired. (BerwindWhite Coal Mining Co. V. Ewart, ii Misc. R., 490.) This section is intended to prevent the division, dislribution, with- drawal and reduction of the property of a corporation below the sum limited in its charter. (Williams v. W. U. T. Co., 93 N. Y., 187; Rorke V. Thomas, 56 N. Y., 559.) Dividends are payable to the person in whose name the stock stands on the books of the corporation or its legal representatives. Officers of a corporation are not required to demand production of the certifi- cate of stock before paying dividends thereon. (Brisbane v. D. L. & W. R. R. Co., 94 N. v., 204; Jermain v. L. S. & M. S. Ry. Co., 91 N. v., 483; Boardman v. Same, 84 N. Y., 157.) A stockholder cannot enforce the payment of a dividend and enjoin the accumulation of a surplus by the directors of his corporation, so long as they are acting honestly and wil hin their discretionary powers. (Burden v. Burden, 159 N. Y., 287; aflirming 8 App. Div., 160.) When a dividend has been declared, it is, in legal contemplation, severed from the assets of the corporation and is thereafter held by it as a trustee of the person who was the stockholder at the time when such dividend was declared. (McGill v. Holmes, Booth & Haydens, 22 Misc., 524; Hooper v. Sage, 21 St. Rep., 491.) Where the stockholders have taken valid action for the reduction of the capital stock, and the directors subsequently make provision for the issuance of debenture bofids payable in part by stock, the court will interfere with such reduction of sTock only so far as is an incident to or connected with the proposed issue of bonds. (Merz v. Interior Conduit & Insulation Co., 20 Misc., 378.) § 24. This section has been repealed by chapter 354, Laws of 1901. The' section thus stricken from the statute books prohibited any stock corporation, except a moneyed corporation, from creating any debt, if thereby its total indebtedness not secured by mortgage, shall exceed the amount of its paid-up capital slock, and it provided further that the directors consenting to the creation of any such debt shall be personally liable therefor to the creditors of the corporation. This section has alwavs been a vexatious one, and by its repeal a corpora- tion is allowed to borrow as much as its credit and security will per- mit without reference to the amount of its capital stock. Rights which arose under section 24, prior to April 16, igoi, upon which date the repeal look effect, are preserved by section 5, chapter 354, Laws of igoi, which reads as follows: " This act shall take effect immediately, but shall not affect any action or proceeding pending in any court at the time it takes effect or any right of any creditor of any corporation or of any stockholder against any director under existing law, providing action thereon be commenced within six months after this act takes effect, except as in this act otherwise provided." As to mortgages and bonds of a stock corporation, and the proceed- ings respecting the issue thereof, see section 2 of this law. no The Stock Corporation' Law. § 25. Liability of directors for loans to stockholders. — No loan of moneys shall be made by any stock corporation, except a monied corporation, or by any officer thereof out of its funds to any stockholder therein, nor shall any such corporation or officer discount any note or other evidence of debt, or receive the same in payment of any installment or any part thereof due or to become due on any stock in such corporation, or receive or discount any note, or other evidence of debt, to enable any stockholder to with- draw any part of the money paid in by him on his stock. In case of the violation of any provision of this section, the officers or directors making such loan, or assenting thereto, or receiving or discounting such notes or other evidences of debt, shall, jointly and severally, be personally liable to 1 the extent of such loan and interest, for all the debts of the corporation contracted before the repayment of the sum loaned, and to the full amount of the notes or other evi- dences of debt so received or discounted, with interest from the time such liability accrued. (Former section 25, L. 1890, ch. 564, as amended by L. 1892, ch. 688.) The principal object of this section is to prevent a reduction of the capital under cover of loans to stockholders. It is intended for the protection of creditors. (A. C. Nellis Co. v. Nellis, 62 Hun, 67; 41 St. Rep., 599.) The officers making or assenting to any loan of its money to stockholders are personally liable for all the debts of the corpora- tion contracted before paymient of such loan. (Boynton v. Hatch, 47 N. Y., 225.) § 26. Transfers of stock by stockholder indebted to corporation. — If a stockholder shall be indebted to the corporation, the directors may refuse to consent to a trans- fer of his stock until such indebtedness is paid, provided a copy of this section is written or printed upon the certificate of stock. (Former section 26, L. 1890, ch. 564, re-enacted by L. 1892, ch. 688.) J The Stock Corporation Law. hi When certificates of stock contain restrictions which were I originally unauthorized, the stockholders may, by lapse of time and / course of dealing, acquiesce in and ratify the restriction. (Reynolds V. Bank of Mt. Vernon, 6 App. Div., 62.) In the absence of above provision the corporation has no lien which it can enforce and no authority to make a by-law embodying a similar provision. (Driscoll v. West, B. & C. Mf'g Co., 59 N. Y., 96.) V §27. Officers. — The directors of a stock corporation may appoint from their number a president, and may appoint a secretary, treasurer, and other officers, agents and exhployes, who shall respectively have such powers and perfoi^m such duties in the management of the property and affairs of the corporation, subject to the control of the directors, as may be prescribed by them or in the by-laws. The directors may require any such officer, agent or employe to give security for the faithful performance of his duties, and may remove him at pleasure. The policy- holders of an insurance corporation shall be eligible to elec- tion or appointment as its officers. (Former section 27, L. 1890, ch. 564, as amended by L. 1892, ch. 688.) This section is permissive, but it is necessary that the corpora- tion should have a president and a secretary, or treasurer, as reports of certain stock corporations (see sec. 30, post) and stock certifi- cates must be signed by two officers. (See sec. 40, post.) It will probably be found convenient in order to secure a compliance with the law in the absence of an officer, to have a president, vice-presi- dent, a secretary, and a treasurer. The two last named are not required to be directors, but the president must be chosen from among the directors, and the vice-president should also be a director, if given authority in the by-laws to act in behalf of the president in the latter's absence. The statute permits one person to hold two offices. One person may be chosen to fill two different offices. (Novelty Mfg. Co., 88 Hun, 254.) The general rule is that an agreement made by an officer or agent of a corporation who assumes to act in its behalf can be enforced against the corporation where it has leceived the benefit of the agreement. (Davies v. Harvey Steel Co., 6 App. Div., 166; Patter- son, as Receiver, v. Robinson, 116 N. Y., 193; Cunningham v. M. S. & F. C. R. R. Co., 63 Hun, 439.) Where two individuals sign a promissory note, and after thelf respective names attach the words " Prest." and " Treas.," it is an individual obligation of such persons and not the obligation of the 112 The Stock Corporation Law. corporation, if there is nothing in the body of the note to indicate that it is a corporate obligation, even though the name of the cor- poration be printed on the margin. (First Nat. Bk. of Bklyn. v. Wallis, ISO N. Y., 455; aflfg. 84 Hun, 376.) The board of directors may appoint an executive committee of its members and authorize it to transact the business of the corpora- tion during the interval between the meetings of its board of directors. (Sheridan E. L. Co. v. Chatham Nat. Bk., 127 N. Y., 517.) A contract executed in the name of the corporation by its presi- dent and secretary and sealed with its corporate seal, is valid and binding upon the corporation until evidence to the contrary shall be produced. (Jourdan v. L. I. R. R. Co., 115 N. Y., 385.) Officers are not entitled to compensation unless the same has been provided for. (Mather v. Eureka N. Co., 118 N. Y., 629.) § 28. Inspectors and their oath. — The inspectors of election of every stock corporation shall be appointed in the manner prescribed in the by-laws, but the inspectors of the first election of directors and of all previous meetings of the stockholders shall be appointed by the board of direct- ors named in the certificate of incorporation. No director or officer of a monied corporation shall be eligible to elec- tion or appointment as inspector. Each inspector shall be entitled to a reasonable compensation for his services, to be paid by the corporation, and if any inspector shall refuse to serve, or neglect to attend at the election, or his office become vacant, the meeting may appoint an inspector in his place unless the by-laws otherwise provide. The inspect- ors appointed to act at any meeting of the stockholders shall, before entering upon the discharge of their duties, be sworn to faithfully execute the duties of inspector at such meeting with strict impartiality, and according to the best of their ability, and the oath so taken shall be subscribed by them, and immediately filed in the office of the clerk of the county in which such election or meeting shall be held, with a certificate of the result of the vote taken thereat. (Former section 28, L. 1890, ch. 564, as amended by L. 1892, chap. 688.) For form of certificate and oath of inspectors, see post, forms Nos. 21 and 22. The Stock Corporation Law. 113 Unless the by-laws of the company provide that the inspectors shall be stockholders, other persons may be chosen. The use of the word " inspectors '' requires that there shall be at , least two. (In re Lighthall Mfg. Co., 47 Hun, 258.) An election \ tmder the appointment and authority of one inspector is void. (Id. ; see, also. Matter Chenango Co. Mut. Ins. Co., 19 Wend., 635.) ' §29. Books to be kept. — Every stock corporation shall keep at its office, correct books of account o! all its business vand transactions, and a book to be known as the stock- Ibook, containing~the names, alphabetically arranged, of all [persons who are stockholders of the corporation, showing rtheir places of residence, the number of shares of stock held by them respectively, the time when they respectively became the owners thereof, and the amount paid thereon. The stock-book of every such corporation shall be open daily, during at least three business hours for the inspection of its stockholders and judgment creditors, who may make 'Extracts therefrom. No transfer of stock shall be valid as against the corporation, its stockholders and creditors for any purpose, except to render the transferee liable for the , debts of the corporation to the extent provided for in this I chapter, until it shall have been entered in such book as required by this section, by an entry showing from and to whom transferred. The stock book of every such corpora- / tion and the books of account of every bank shall be pre- I sumptive evidence of the facts therein so stated in favor of ' the plaintiff, in any action or proceeding against such cor- poration or any of its officers, directors or stockholders. Every corporation that shall neglect or refuse to keep or cause to be kept such books, or to keep any book open for inspection as herein required, shall forfeit to the people the sum of fifty dollars for every day it shall so neglect or refuse. If any officer or agent of any such corporation shall willfully neglect or refuse to make any proper entry in such book or books, or shall neglect or refuse to exhibit the same, or to allow them to be inspected and extracts taken therefrom as provided in this section, the corporation and such officer or 8 114 The Stock Corporation Law. agent shall each forfeit and pay to the party injured a penalty of fifty dollars for every such neglect or refusal, and all damages resulting to him therefrom. (Former section 2g, L. 1890, ch. 564, as amended by L. t8g2, cb. 688; L. 1900, ch. 128, and L. 1901, ch. 354.) For form of stock book, see post, form No. 24. By the amendment of iqoi the stock-book is required to be open for inspection during only three hours each day, leaving the rest of the day free for the use of the books in the proper work of the corporation. Where the stock-book and seal are withheld or concealed in order to prevent a transfer of stock in time to permit the new stock to be voted on at the annual meeting, it is lawful for the directors to adopt a new seal and stock-book to accomplish that purpose. (Socorro .Mountain Mining Co. v. Preston, 17 Misc., 220.) By virtue of the provisions of the foregoing section, a stockholder of a corporation has the tight to inspect the stock-book with his attor- ney, or other person having the requisite knowledge to obtain for him the information to which he was entitled. (People ex rel. Clason v. Nassau Ferry Co., 86 Hun, 128.) The board of directors may adopt a new stock-book if for any reason the existing transfer book is not available for use by them for the making of transfers of stock. (Argus Co. v. Manning, 138 N. Y., 557.) The custodian of the books, who submits them for inspection of a stockholder or creditor but refuses to permit extracts therefrom, sub- jects himself to the penalty prescribed. (Cortheal v. Bronner, 5 N. v., 562.) When the by-laws require the books to be kept by the secretary it is no defense to an application where the treasurer's refusal to permit inspection is unqualified, and not put on the ground of inability. (Matter of Martin, 41 St, Rep., 409.) If deprived of possession of the stock-book the directors may open a new one, making it so far as possible a copy of the old book, and, in such case, the inspectors of election may refer to the new book to ascertain who are voters, but if the old book is produced the record therein must govern as to transfers therein before the new book was opened. (Schoharie Valley R. R. Co., 12 Abb. N. S., 394.) \ § 30. Annual report. — Every domestic stock corpora- tion and every foreign stock corporation doing business within this state, except moneyed and railroad corporations, shall, annually, during the month of January, or, if doing business without the United States, before the first day of May, may make a report as of the first day of January, which will state: I. The amount of its capital stock, and the proportion actually issued. The Stock Corporation Law. 115 2. The amount of its debts or an amount which they do not exceed. 3. The amouht of its assets or an amount which its assets at least equal. Such report shall be made by the president or a vice-presi- dent or the treasurer or a secretary of the corporation and shall be filed in the office of the secretary of state. If such I report be not so made and filed, any such officer who shall thereafter neglect or refuse to make and to file such report, within ten days after written request so to do shall have been made by a creditor or by a stockholder of the cor- poration, shall forfeit to the people the sum of fifty dollars for every day he shall so neglect or refuse. (Former section 30, L. iSgo, ch. 564, as amended by L. 1892, ch. 2 and ch. 688; L. 1897, ch. 384, and L. igdi, ch. 354.) For form of report, see post, form No. 25. In addiiion to the foregoing requirements the report should state the amount of stock, if any, issued for property, as required by section 42 of this law. The provisions of this section have been greatly modified by the amendments of 1901. The report is not required to be strorn to, nor to be filed with the county clerk, and the duty of making and filing it in the office of ihe Secretary of State has been transferred from direct- ors to the executive officers of the corporation. The unreasonable penalies imposed upon directors for failure or neglect on their part to file the perfunctory annual report have been stricken from the statute. The old law has been the cause of much anxiety to innocent and well- meaning directors, and the necessity for this change had become imperative. A failure or neglect on the part of the officers of a com- pany to perform this duty of filing a report no longer renders every director individually liable for the debts of the corporation, but in lieu thereof imposes the liability to a fine of $50 a day upon the officer who thus fails to file a report, but only after he has been requested in writ- ing by a stockholder or a creditor to file it. This is modeled upon the requirement of the New Jersey statute. Rights which arose under the above section, prior to April 16. igoi, upon which date the amendment took effect, are preserved by section 5, chapter 354, Laws of 1901, which reads as follows: " This act shall take effect immediately, but shall not affect any action or proceeding pending in any court at the time it takes effect or any right of any creditor of any corporation or of any stockholder against any director under existing law, providing action thereon be commenced within six months after this act lakes effect, except as in this act otherwise provided." This section applies to both foreign and domestic corporations. For other provisions affecting foreign corporations see index unde* " Foreign Corporations." The term " directors " as used in this section includes trustees or other persons by whatever name known, duly appointed to manage the affairs of the corporation. (General Corporation Law, ^ 3 ) / ii6 The Stock Corporation Law. § 31. Liability of officers for false certificates, reports or public notices. — If any certificate or report made or public notice given by the officers or directors of a stock corporation shall be false in any material representation, the officers and directors signing the same shall jointly and severally be personally liable to any person who has become a creditor or stockholder of the corporation upon the faith of any such certificate, report, notice or any material repre- sentation therein to the amount of the debt contracted upon the faith thereof if not paid when due, or of the damage sus- tained by any purchaser of or subscriber to its stock upon the faith thereof. The liability imposed by this section shall exist in all cases where the contents of any such certifi- cate, report or notice or of any material representation therein shall have been communicated either directly or indirectly to the person so becoming a creditor or stock- holder and he became such creditor or stockholder upon the faith thereof. No action can be maintained for a cause of action created by this section unless brought within two years from the time the certificate, report or public notice shall have been made or given by the officers or directors of such corporation. (Former section 31, L. i8go, ch. 564, as amended by L. 1892, ch. 688.) As enacted in 1890 this section provided relief only to creditors for injury caused by reliance upon false certificates and reports. The section as above amended, however, extends the remedy to stockholders, defines the cases in which liability under the section exists and fixes a short statute of limitations within which the action must be brought. The term " directors," as used in this section, includes trustees or other persons by whatever name known, duly appointed to manage the afifairs of the corporation. (Gen. Corp. L., sec. 3.) Officers signing a false report are liable only for debts contracted after the report was filed. (Torbett v. Godwin, 42 St. Rep., 323; 62 Hun, 407.) It is not necessary to show that the officers knew the certificate or report to be false. (Huntington v. Attrill, 118 N. Y., 365; Tor- bett v. Eaton, 113 N. Y., 623; 49 Hun, 209.) Only those who make the false report are liable. (Bonnell v. Griswold, 68 N. Y., 294; Torbett v. Godwin, 62 Hun, 407.) The Stock Corporation Law. 117 § 32. Alterations or extension of business. — Any stock corporation heretofore or hereafter organized under any general or special law of this state may alter its certifi- cate of incorporation so as to include therein any purposes, powers or provisions which at the time of such alteration may apply to corporations engaged in a business of the same general character, or which might be included in the certificate of incorporation of a corporation organized under any general law of this state for a business of the same gen- eral character, by filing in the manner provided for the original certificate of incorporation an amended certificate, executed by a majority of its directors, stating the altera- tion proposed, and that the same has been duly authorized by a vote of stockholders representing at least three-fifths of the capital stock, at a meeting of the stockholders called for the purpose in the manner provided in section forty-five of this chapter, and a copy of the proceedings of such meet- ing, verified by the affidavit of one of the directors present thereat, shall be filed with such amended certificate. (New, added by L. i8g2, ch. 688, and amended by L. igoi, c"h. 354.) For form of certificate of extension of purposes or powers, see " White on Corporations" page 790. Prior to the amendment of the above section in 1901 it authorized a corporation only to " extend or alter its business and powers " although the general laws provide for inserting in the certificate of incorporation various matters in addition to the specification of the business and powers of the corporation, and there are various provi- sions of law authorizing the filing of amended 01 supplemental certifi- cates specifying other matters than those provided for by this section. Therefore, the section, as amended in igoi, now provides that a cor- poration by filing an amended or supplemental certificate may alter its certificate of incorporation so as to include therein any purposes, powers or provisions which at the time of such alteration may apply to corporations engaged in business of the same general character or which might be included in the certificate of incorporation of a cor- poration organized under any general law for a business of the same general character. § 2>i. Sale of franchise and property. — A stock cor- poration, except a railroad corporation and except as other- wise provided by law, with the consent of two-thirds of its stock, may sell and convey its property, rights, privileges ii8 The Stock Corporation Law. and franchises, or any interest therein or any part thereof to / a domestic corporation, engaged in a business of the same ,' , general character, or which might be included in the certifi- cate of incorporation of a corporation organizing under any general law of this state for a business of the same general character, and a domestic corporation the principal business of which is carried on in, and the principal tangible prop- erty of which is located within a state adjoining the state of New York, may with the consent of the holders of ninety- five per centum of its capital stock, sell and convey its prop- erty situate without the state of New York, not including its franchises, to a corporation organized under the laws of such adjoining state, and such sale and conveyance shall, in case of a sale to a domestic corporation, vest the rights, property and franchises thereby transferred, and in case of a sale to a foreign corporation the property sold in the cor- poration to which they are conveyed for the term of its cor- porate existence, subject to the provisions and restrictions applicable to the corporation conveying them. Before such sale or conveyance shall be made such consent shall be obtained at a. meeting of the stockholders called upon like notice as that required for an annual meeting. If any stock- holder not voting in favor of such proposed sale or convey- ance shall at such meeting, or within twenty days thereafter object to such sale, and demand payment for his stock, he may, within sixty days after such meeting, apply to the supreme court at any special term thereof held in the district in which the principal place of business of such corporation is situated, upon eight days' notice to the corporation, for the appointment of three persons to appraise the value of such stock, and the court shall appoint three such appraisers, and designate the time and place of their proceedings as shall be deemed proper, and also direct the manner in which payment for such stock shall be made to such stockholders. The court may fill any vacancy in the board of appraisers occurring by refusal or neglect to serve or otherwise. The appraisers shall meet at the time and place designated, and The Stock Corporation Law. 119 they or any two of them, after being duly sworn honestly and faithfully to discharge their duties, shall estimate and certify the value of such stock at the time of such dissent, and deliver one copy to such corporation, and another to such stockholder, if demanded; the charges and expenses of the appraisers shall be laid by the corporation. When the corporation shall, have paid the amount of such appraisal, as directed by the court, such stockholders shall cease to have .any interest in such stock and in the corporate property of such corporation and such stock may be held or disposed of by such corporation. (New section, added by L. 1893, ch. 638, as amended by L. 1901, ch. 130.) The amendmenl of 1901 added the provision permitting a domestic corporation owning property in an adjoining State to sell such prop- erty to a corporation organized in such adjoining State. This new feature was undoubtedly inserted to meet a special case. § 34. Liabilities of directors, limitations. — No director or officer of any stock corporation shall be liable to any creditor of the corporation, because of the creation of any excessive indebtedness, or because of any failure to make or to file an annual report, whether heretofore or hereafter occurring; (i) In case of any debt, as to which personal liability of directors or officers may be or shall have been waived by such creditor, or by anyone under whom he claims; or by any provision of 'any instrument creating or securing such debt; or (2) Unless within three years after the occurrence of the act or the default in respect of which it shall be sought to charge the director or officer, such creditor shall have served upon such director or officer written notice of his intention to hold him personally liable for his claim; pro- vided, nevertheless, that any such liability, because of any such default now existing and not waived as above provided, may be enforced by action begun at any time within the year eighteen hundred and ninety-nine or by action begun I20 The Stock Corporation Law. thereafter, if within such year written notice of intention to enforce such liability shall have been given as above provided. Any director or officer, who, because of any such existing or future liability, shall pay any debt of the corporation, shall be subrogated to all rights of the creditor in respect thereof against the corporate property, but not against the stockholders of the corporation; and also shall be entitled to contribution from all other directors and officers of the corporation similarly liable for the same debt, and the per- sonal representatives of any such director or officer who shall have died before making such contribution. (New section, added o)' L. iSgg, ch. 354.) Under section 30 of the Stock Corporation Law as amended in igoi, directors are relieved hereafter from the duty of filing reports and their personal liability in connection therewith has been abolished, and in addition as section 24 of this law has been repealed by Laws of igoi, chapter 354, there can be no such thing as excessive indebled- ness nor liability of directors for the cieation thereof, therefore the foregoing seclion is no longer applicable, except as to matters arising prior to April 16, iqoi, when chapter 354 took effect, but existing pro- ceedings and rights were preserved by section 5 of said acl, which reads as follows: " This act shall take effect immediately, but shall not affect any action or proceeding pending in any court at the time it takes effect or any right of any creditor of any corporation or of any stockholder against any director under existing law, providing action thereon be commenced within six months after this act takes effect, except as in this act otherwise provided." For explanation of interval in numbering between seclion 34, supra, and section 40, infra, see the note immediately preceding article 2 of this law. The STot:K Corporation Law. 121 ARTICLE in. STOCK; STOCKHOLDERS, THEIR RIGHTS AND LIA- BILITIES. Section 40. Issue and transfer of stock. 41. Subscriptions to stock. ^ 42. Consideration for issue of stoclc and bo^ds, 43. Time of payment of subscriptions to stock. 44. Increase or reduction of capital stock. 45. Notice of meeting to increase or reduce capital stock. 46. Conduct of such meeting; certificate of increase or reduction. 47. Preferred and common stock. 48. Prohibited transfers to officers or stockholders. 49. (Repealed by Laws of igoi, ch. 354.) 50. Application to court to order issue of new in place of lost certificate of stock. 51. Order of court upon such application. 52. Financial statement to stockholders. 53. Stock books of foreign corporations. 54. Liabilities of stockholders. 55. Limitation of stockholder's liability. 56. Increase or reduction of number of shares. 57. Voluntary dissolution. ' 58. Merger. 59. Change of place of business. 60. Liabilities of officers, directors and stockholders of foreign corporations. 61. (No § 61 enacted; see note page 144a.) 62. Partly paid stock. § 40. Issue and transfers of stock. — The stock of every stock corporation shall be represented by certificates ' pre- pared by the directors and signed by the president or vice- president and secretary or treasurer and sealed with the seal of the corporation, and shall be transferable in the manner prescribed in this chapter and in the by-laws. No share shall be transferable until all previous calls thereon shall have been fully paid in. Any stock corporation, domestic or foreign, now existing or hereafter organized, except monied corporations, may purchase, acquire, hold and dispose of the stocks, bonds and other evidences of indebtedness of any corporation, domes- tic or foreign, and issue in exchange therefor its stock, 122 The Stock Corporation Law. bonds or other obligations if authorized so to do by a pro- vision in the certificate of incorporation of such stock corporation, or in any certificate amendatory thereof or sup- plementary thereto, filed in pursuance of law, or if the cor- poration whose stock is so purchased, acquired, held or disposed of, is engaged in a business similar to that of such stock corporation, or engaged in the manufacture, use or sale of the property, or in the construction or operation of works necessary or useful in the business of such stock cor- poration, or in which or in connection with which the manufactured articles, product or property of such stock corporation are or may be used, or is a corporation with which such stock corporation is or may be authorized to con- solidate. When any such corporation shall be a stockholder in any other corporation, as herein provided, its president or other officers shall be eligible to the office of director of such corporation, the same as if they were individually stock- holders therein and the corporation holding such stock shall possess and exercise in respect thereof, all the rights, powers and privileges of individual owners or holders of such stock. Any stock corporation may, in pursuance of a unanimous vote of its stockholders voting at a special meeting called for that purpose by notice in writing signed by a majority of the directors of such corporation stating the time and place and object of the meeting, and served upon each stock- holder appearing as such upon the books of the corporation, personally or by mail at his last-known post-office address at least sixty days prior to such meeting, guarantee the bonds of any other domestic corporation engaged in the same gen- eral line of business; and any stoCk corporation owning the entire capital stock of any other domestic stock corporation engaged in the same general line of business may in pursu- ance of a two-thirds vote of its stockholders voting at a special meeting called for that purpose by notice in writing signed by a majority of the directors of such corporation, stating the time and place and object of the meeting and served upon each stockholder appearing as such upon the books of the corporation personally, or by mail, at his last- known post-office, at least sixty days prior to such meeting, guarantee the bonds of such other corporation. (Former section 40, L. iSgo, ch. 564, as amendsd by L. 1892, ch. 688; L. 1902, ch. 601.) For form of certificate of stock, see post, form No. sy. For method of transferring stock, see section 29, ante. This section now extends to corporations greater privileges in regard to holding bonds and stocks of other corporations than have heretofore been conferred by any law of this State. The pro- The Stock Corporation Law. 123 vision making an officer of one corporation eligible as a director in another is also a new one, likewise the last clause in the above section conferring authority to guarantee the -bonds of any other domestic corporation engaged in the same general line of business. A corporation cannot acquire the majority of the stock of another corporation, obtain control of its affairs, divert the income of its business, refuse business which would have enabled it to pay interest on its bonds and avoid default, and then institute an action in equity to enforce defaulted obligations against such corporation, with the avowed purpose of obtaining entire control of its property to the injury of the minority stockholders. (Farmers' Loan & Trust Co. v. N. Y. & Northern Ry. Co., 150 N. Y., 410; see, also, cases therein cited.) A corporation may acquire by purchase all the stock of another corporation, and yet the latter may continue a distinct and existing organization, with its own officers and board of directors. (Einstein V. Rochester Gas & Electric Co., 146 N. Y., 46.) Persons who are merely stockholders and hold no office in a cor- poration do not hold positions of trust or confidence toward each other, and one in accepting an ofifer to purchase his stock by another is under no obligation to volunteer the information that the com- pany is insolvent. (Rothmiller v. Stein, 143 N. Y., 581.) The owner of shares of stock may transfer his title by delivery of the certificate with a blank power of attorney indorsed thereon, signed by the owner of the shares named in the certificate, and such a delivery transfers the legal title to the shares as between the parties to the transfer. (Knox v. Eden Musee Co., 148 N. Y., 441; reversing 74 Hun, 483.) The transferee, in good faith and for value, holds his title free from latent equities between prior parties in the line of transmission. But the title of the true owner of a lost or stolen certificate may be asserted against any one subsequently obtaining its possession, although the holder may be a bona fide purchaser. (Knox v. Eden Musee Co., 148 N. Y., 441; revers'g 74 Hun, 483; dist'g McNeil v. Tenth Nat. Bk., 46 N. Y., 325; N. Y. & N. H. R. R. Co. v. Schuyler, 34 N. Y., 30, and citing Anderson v. Nicholas, 28 N. Y., 600; Bangor Elec. Lt. Co. V. Robinson, 52 Fed. Rep., 520; Biddle v. Boyard, 13 Pa. St., 150; Barstow v. Savage M. Co., 64 Cal., 388; Shaw v. R. R. Co., loi U. S., 557) The capital stock of a corporation is personal property; it has not, not has the certificate or other evidence of title or ownership, any of the qualities of commercial or negotiable paper. (Weaver v. Barden, 49 N. Y., 286.) While certificates of stock do not possess, in full, the qualities of commercial paper, yet when the transfer indorsed thereon is signed in blank by the shareholder named therein, they become, in eflfect, so far as the public is concerned, as if they had been issued to bearer. (Fifth Ave. Bank v. Forty-second St. & Grand St. Ferry R. R. Co., 137 N. Y., 231.) An agreement between the stockholders of a corporation that no one of them will sell, assign or dispose of his stock, without having first given the other parties an opportunity to purchase, does not preclude a party from transferring alegal title to his stock without the consent of the others, and in violation of the agreement, and 124 The Stock Corporation Law. this although the transferee was cognizant of the agreement, at the time of the transfer. (In re Argus Co. v. Manning, 138 N. Y., 557.) A provision on the face of a certificate of stock that the shares therein referred to are held " subject to the condition^ and stipula- tions contained in the articles of association above mentioned," is sufficient notice to put a purchaser of the shares upon inquiry to ascertain what the conditions and stipulations are. (Gibbs v. Long Island Bank, 83 Hun, 92.) When the officers of a corporation, authorized to issue stock cer- tificates, fraudulently issue certificates for shares in excess of the number the corporation is authorized to issue, the corporation is liable to an innocent holder in damages for such over-issue to the extent of the value of the shares. (Archer v. Dunham, 89 Hun, 387.) When certificates of stock are transferable without restriction the corporation cannot discriminate and refuse to transfer certificates to a person who is hostile to it. (Rice v. Rockefeller, 134 N. Y., 174.) A subscription to the certificate of incorporation with a statement of the number of shares opposite the name, is a sufficient and bind- ing subscription for the stock, and takes effect upon the filing of the certificate. (Phoenix W. Co. v. Badger, 67 N. Y., 294.) The relation of stockholder is established by the subscription and \ payment, and does not depend upon the issue of a certificate or other evidence of such right by the corporation. (Rutter v. Kil- patrick, 63 N. Y., 604.) A transfer of stock, valid as between the parties, but not entered upon the books of the corporation, does not exempt the transferrer fi'om liability as a stockholder to the creditors of the corporation. (Shellington v. Howland, 53 N. Y., 371.) The certificate of stock is the muniment of the shareholder's title, and evidence of his right. (Kent v. Quicksilver M. Co., 78 N. Y., 180.) A stockholder may proceed against a corporation if it negligently cancels his stock and issues certificates therefor to another. (St. Romes v. Levee Cotton Co., 127 U. S., 614.) The capital stock is the money contributed to the capital and is usually represented by shares issued to the subscribers to the stock on the initiation of the corporate enterprise. (Christensen v. Eno, 106 N. Y., 97; Burrall v. Bushwick R. R. Co., 75 N. Y., 211.) '§41. Subscriptions to stock. — If the whole capital stock shall not have been subscribed at the time of filing the certificate of incorporation, the directors named in the cer- tificate may open books of subscription to fill up the capital stock in such places, and after giving such notices as they may deem expedient, and may continue to receive sub-' scriptions until the whole capital stock is siibscribed. At the time of subscribing, every subscriber, whose subscrip- I tion is payable in money, shall pay to the directors ten per ' centum upon the amount subscribed by him in cash, and no The Stock Corporation Law. 125 such subscription shall be received or taken without such payment. (Former section 41, L. 1890, ch. 564, as amended by L. 1892, ch. 688.) This section does not prescribe how or where books of subscrip- tion shall be opened, or what kinds of books shall be used. There may be one book or many. (B. & J. R. R. Co. v. Giflford, 87 N. Y., 294.) Subscriptions for stock may be made before the organization of. the corporation, provided the ten per cent thereon is paid on a proper call thereafter. (Id.) An action cannot be maintained to recover the amount of stock subscribed unless ten per cent thereof is paid in cash at the time of the subscription. (Excelsior Grain Binder Co. v. Stayner, 25 Hun, 91; Perry v. Hoadley, 19 Abb. N. C, 76.) A check given in payment of the subscription, which check was counterinanded is not sufficient. The payment must be in cash, or its actual equivalent. (Excelsior G. B. Co. v. Stayner, above; see, also, Durant v. Abendroth, 69 N. Y., 148.) A subscription after incorporation is not binding until at least ten per cent has been paid. (N. Y. & O. M. R. R. Co. v. Van Horn, 57 N. Y., 473; South Buffalo Natural Gas Co. v. Bain, 9 Misc. R., 425, and cases therein cited.) Actual payment of such percentage after subscription, with intent to complete the same, satisfies the statute. (Beach v. Smith, 30 N. Y., 116; B. R. & U. R. R. Co. V. Clarke, 25 N. Y., 208.) Such payment may be made in services rendered the corporation. (Id.; Veeder v. Mudgett, 95 N. Y., 295.) Notes given for the ten per cent, upon which payment was after- nards enforced, satisfies the statute. (O. C. & R. R. R. Co. v. Wooley, I Keyes, 118.) § 42. Consideration for issue of stock and bonds. — No corporation shall issue either stock or bonds except for money, labor done or property actually received for the use and lawful purposes of such corporation. Any corporation may purchase any property authorized by its certificate of incorporation, or necessary for the use and lawful purposes of such corporation, and may issue stock to the amount of the value thereof in payment therefor, and the stock so issued shall be full paid stock- and not liable to any further call, neither shall the holder thereof be liable for any fur- ther payment under any of the provisions of this act; and in the absence of fraud in the transaction the judgment of the directors as to the value of the property purchased 126 The Stock Corporation Law. shall be conclusive; and in all statements and reports of the corporation, by law required to be published or filed, this stock shall not be stated or reported as being issued for cash paid to the corporation, but shall be reported as issued for property purchased. (Former section 42, L. i8go, ch. 564, as amended by L. i8;2, ch. 688, and L. igoi, ch. 354.) This section formerly provided that no slock shall be issued for less than its par value and no bonds for less than the fair market value thereof, but by the' amendment of igoi, chapter ss.-j., these restrictions were abolished and the additional provisions inserted, permitting a corporation to purchase any property auinorized by its certificate of inco poralion, and in the absence of such authorization permitting it to purchase any property necessary for the use and lawful pui poses of the corporation and to issue stock to the amount of the value thereof in payment therefor, and declaring stock so issued to be full paid Slock and not liable to any further call. Said amendment also added the proi'ision that " in the absence of fraud in the transaction the judgment of the directors as to ihe value of the property purchased shall be conclusive." These new features are upon the lines of Ihe English Companies Act and the New Jersey statute upon the same subject. The foregoing important modificatious will preclude the seri- ous questions which occasionally occurred under the former practice as to the legality and validity of the issue of slock of a carporaiion in payment for properties not having a determinable market value. § 43. Time of payment of subscriptions to stock. — Subscriptions to the capital stock of a corporation shall be paid at such times, and in such installments as the board of directors may by resolution require. If default, shall be made in the payment of any installment as required by such resolution, the board may declare the stock and all previous payments thereon forfeited for the use of the corporation, after the expiration of sixty days from the service on the defaulting stockholder, personally or by mail directed to him at his last-known post-office address, of a written notice, requiring him to make payment within sixty days from the service of the notice at a place specified therein, and stating that, in case of failure to do so, his stock and all previous payments thereon will be forfeited for the use of the cor- poration. Such stock, if forfeited, may be reissued or subscriptions therefor may be received as in the case of stock not issued or subscribed for. If not sold for its par value or sub- The Stock Corporation Law. 127 scribed for within six months after such forfeiture, it shall be canceled and- deducted^ from the amounf of the capital stock. If by such cancellation, the amount of the capital stock is reduced below the minimum required by law, the capital stock shall be increased to the required amount within three months thereafter or an action may be brought or proceedings instituted to close up the business of the corporation as in the case of an insolvent corporation. If a receiver of the assets of the corporation has been appointed, all unpaid subscriptions to the stock shall be paid at such times and in such installments as the receiver or the court may direct. (Former section 43, L. 1890, ch. 564, as amended by L. 1892, ch. 688.) A corporation, when formed, may enforce payment of the sub- scriptions to its capital stock against persons who subscribed its articles of association before the corporate body had a legal exist- ence. (Dorris v. French, 4 Hun, 292; Buffalo & N. Y. C. R. R. Co. V. Dudley, 14 N. Y., 336; Troy & Boston R. R. Co. v. Tibbitts, 18 Barb., 297.) When stock is declared forfeited, the liability of the holder thereof to the corporation for further payment thereon ceases. (Mills v. Stewart, 41 N. Y., 389; Small v. Herkimer Mfg. Co., 2 N. Y., 330.) The remedy by forfeiture is merely cumulative, and does not pre- vent an action for the installments until the forfeiture is resorted to. (Troy & Boston R. R. Co. v. Tibbitts, 18 Barb., 297; Northern R. R. Co. v. Miller, 10 Barb., 260; O., R. & C. R. R. Co. v. Frost, 21 Barb., S4i; B. & N. Y. C. R. R. Co. v. Dudley, 14 N. Y., 336: Mann v. Currie, 2 Barb., 294.) After a forfeiture, the holder is divested of his title in the shares, which is then vested in the corporation and remaining stockholders. (Weeks v. Silver Islet C. M. & L. Co., 54 J. & S., i ; afFd, 120 N. Y., 620.) One who has made an absolute transfer of stock, in good faith, to another, is thereby released from further liability upon calls for payment of the stock. (Billings v. Robinson, 94 N. Y., 415; Cutting V. Damerel, 88 N. Y., 410.) § 44- Increase or reduction of capital stock. — Any domestic corporation may increase or reduce its capital stock in the manner herein provided, but not above the maximum or below the minimum, if any, prescribed by general law governing corporations formed for similar pur- poses. If increased, the holders of the additional stock 128 The Stock Corporation Law. issued shall be subject to the same liabilities with respect thereto as are provided by law in relation to the original capital; if reduced, the amount of its debts and liabilities shall not exceed the amount of its reduced capital, unless an insurance corporation, in which case the amount of its debts and liabilities shall not exceed the amount of its reduced capital and other assets. The owner of any stock shall not be relieved from any liability existing prior to the reduction of the capital stock of any stock corporation. If a banking corporation, whether the capital be increased or reduced, its assets shall at least be equal to its debts and liabilities and the capital stock, as increased or reduced. A domestic railroad corporation may increase or reduce its capital stock in the manner herein provided, notwithstand- ing any provision contained herein, or in any general or special law fixing or limiting the amount of capital stock which may be issued by it. (Former section 44, L. i8go, ch. 564, as amended by L. 1892, ch. 688; L. 1894, ch. 346; L. 1899, ch. 696, and L. 1901, ch. 354.) For form of certificate of increase or reduction of capital stock, see post, form No. 28. In 1899 this section was amended so as to permit a railroad com- pany incorporated by special act to increase or reduce its capital stock in conformity with this law notwithstanding any restriction in such special act fixing or limiting its capitalization. By the amendment of 1901 the same privilege is extended to other stock corporations created by special act. Upon an increase of capital stock a tax of one-twentieth of one per cent, is payable. (Tax Law, § 180, ante, page 20.) § 45. Notice of meeting to increase or reduce capital stock. — Every such increase or reduction must be author- ized either by the unanimous consent of the stockholders, expressed in writing and filed in the office of the secretary of state and in the office of the clerk of the county in which the principal business office of the corporation is located, or by a vote of the stockholders owning at least a majority of the stock of the corporation, taken at a meeting of the stockholders specially called for that purpose in the manner provided by law or by the by-laws. Notice of the meeting, stating the time, place and object, and the amount of the The Stock Corporation Law. 129 increase or reduction proposed, signed by the president or a vice-president and the secretary, shall be published once a week, for at least two successive w.eeks, in a newspaper in the county where its principal business office is located, if any is published therein, and a copy of such notice shall be duly niailed to each stockholder or member at his last- known post-office address at least two weeks before the meeting or shall be personally served on him at least five days before the meeting. (Former section 45. L. i8go, ch. 564, as amended by L. 1892, ch. 638; L. 1893, ch. 700, and L. 1901, ch. 354.) For form of notice, see post, form No. 29. By the amendment of 1901 the following changes were made in this section: The notice of meeting is to be signed by an executii^e officer instead of a majority of the directors; the notice is 10 be published two weeks instead of three, and in lieu of mailing a personal service of the notice at least five days before the meeting is permitted; changes in capital stock are also authorized without a meeting by unanimous (consent of stockholders. § 46. Conduct of such meeting ; certificate of in- crease or reduction.— If, at the time and place specified in the notice, the stockholders shall appear in person or by proxy in numbers representing at least a majority of all the shares of stock, they shall organize by choosing from their number a chairman and secretary, and take a vote of those present in person or by proxy, and if a sufficient number of votes shall be given in favor of such increase or reduction, or if the same shall have been authorized by the unanimous consent of stockholders expressed in writing signed by them or their duly authorized proxies, a certificate of the proceedings showing a compliance with the provisions of this chapter, the amount of capital theretofore authorized, and the proportion thereof actually issued, and the amount of the increased or reduced capital stock, and in case of the reduction of capital stock the whole amount of the ascer- tained debts and liabilities of the corporation shall be made, signed^ verified and acknowledged by the chairman and sec- retary of the meeting, and filed in the office of the clerk of the county where its principal place of business shall be located, and a duplicate thereof in the office of the secretary T30 The Stock Corporation Law. of state. In case of a reduction of the capital stock, except of a railroad corporation or a moneyed corporation,, such certificate shall have indorsed thereon the approval of the comptroller, to the effect that the reduced capital is suffi- cient for the proper purposes of the corporation, and is in excess of its ascertained debts and liabilities; and in case of the increase or reduction of the capital stock of a rail- road corporation oi" a moneyed corporation, the certificate shall have indorsed thereon the approval of the board of railroad commissioners, if a railroad corporation j of the superintendent of banks, if a corporation formed under or subject to the banking law, and of the superintendent of insurance, if an insurance corporation. When the certifi- cate herein provided for has been filed, the capital stock of such corporation shall be increased or reduced, as the case may be, to the amount specified in such certificate. The proceedings of the meeting at which such increase or reduc- tion is voted, or, if such increase or reduction shall have been authorized by unanimous consent without a meeting, then a copy of such consent shall be entered upon the min- utes of the corporation. If the capital stock is reduced, the amount of capital over and above the amount of the reduced capital shall, if the meeting or consents so deter- 'mine or provide, be returned to the stockholders pro rata, at such times and in such manner as the directors shall determine, except in the case of the reduction of the capital stock of an insurance corporation, as an alternative to make good an existing impairment. (Former section 46, L. iSgo, ch. 564, as amended by L. 1892, ch. 688; L. 1893, ch. 700; L. 1901, ch. 354; L. igo2, ch. 286.) J^or forms under this section^ see post, forms Nos, 28, 29 and 30. As amended in igor this section authorizes an increase or reduction of capital stock to be made without the formality of a meeting, in cases where every stockholder, shall express his consent thereto in writing, and a certificate thereof is filed in the same manner as a cer- tificate based upon the proceedings of a meeting. The amendments further provide that the certificate to be filed by the chairman and secretary of the meeting shall state the amount of " capital there- tofore authorized and the proportion thereof actually issued," and, in case of a reduction of the capital stock, the " amount of the ascer- tained debts and liabilities of the corporation." Prior to the change the section required a statement of the amount of capital "actually paid in," and of the " whole amount of debts and liabilities of the corporation." The Stock Corporation Law. 131 § 47- Preferred and common stock. — Every domestic stock corporation may issue' preferred stock and common stock and different classes of preferred stock, if tiie certifi- cate of incorporation so provides, or by the consent of tiie holders of record of two-thirds of the capital stock, given at a meeting called for that purpose upon notice such as is required for the annual meeting of the corporation. A cer- tificate of the proceedings of such meeting, signed and sworn to by the president or a vice-president, and by the secretary or assistant secretary, of the corporation, shall be filed and recorded in the offices where the original certificate of incorporation of such corporation was filed and recorded; and the corporation may, upon the written request of the holders of any preferred stock, by a two-thirds vote of its directors, exchange the same for compion stock, and issue certificates for common stock therefor, upon such valuation as may hav&been agreed upon in the certificate of organiza- tion of such corporation, or the issue of such preferred stock, or share for share but the total amount of such capi- tal stock shall not be increased thereby. (Former section 47, L. i8go, ch. 564, as amended by L. 1892, ch. 688, and L. igoi, ch. 354.) As amended in 1901 ihis section authorizes the classification of stock itito common and preferred, and into different classes of preferred stock by a vote of the holders of two-thirds of the capital stock of the corporation, instead of by unanimous consent which was required prior to this amendment. This change harmonizes the section with the statutes of nearly all the other States. * § 48 Prohibited transfers to officers or stockhold- ers. — No corporation which shall have refused to pay any of its notes or other obligations when due, in lawful money of the United States, nor any of its officers or directors, shall transfer any of its property to any of its officers, directors or stockholders, directly or indirectly, for the payment of any debt, or upon any other consideration than the full value of the property paid in cash. No conveyance, assignment or transfer of any property of any such corporation by it or by any officer, director or stockholder thereof, nor any pay- ment made, judgment suffered, lien created or security 132 The Stock Corporation Law. given by it or by any officer, director or stockholder when the corporation is insolvent or its insolvency is imminent, with the intent of giving a preference to any particular creditor over other creditors of the corporation shall be valid, except that hborers' wages for services shall be pre- ferred claims and be entitled to payment before any other creditors out of the corporation assets in excess of valid prior liens or incumbrances. No corporation formed under or subject to the banking, insurance or railroad law shall make any assignment in contemplation of insolvency. Every person receiving by means of any such prohibited act or deed any property of the corporation shall be bound to account therefor to its creditors or stockholders or other trustees. No stockholder of any such corporation shall make any transfer or assignment of his stock therein to any person in contemplation of its insolvency. Every trans- fer or assignment or other act done in violation of the foregoing provisions of this section shall be void. No con- veyance, assignment or transfer of any property of a corpora- tion formed under or subject to the banking law, exceeding in value one thousand dollars, shall be made by such cor- poration, or by any officer or director thereof, unless author- ized by previous resolution of its board of directors, except promissory notes or other evidences of debt issued or received by the officers of the corporation in the transaction of its ordinary business and except payments in specie or other current money or in bank bills made by such officers. No such conveyance, assignment or transfer shall be void in the hands of a purchaser for a valuable consideration without notice. Every director or officer of a corporation ' who shall violate or be concerned in violating any provisions of this section, shall be personally liable to the creditors and stockholders of the corporation of which he shall be director or an officer to the full extent of any loss they may respectively sustain by such violation. (Former section 48, L. 1890, ch. 564, as amended by L. 1892, ch. 688, and L. 1901, ch. 354.) The amendment of 1901 added the provisions for the protection of laborers, and to prevent assignments by moneyed or railroad corpora- The Stock Corporation Law. 133 The provision forbidding a stockholder of a corporation from malting' " any transfer or assignment of his stock to any person in contempla- tion of its insolvency," and declaring such " transfer, or assignment or other act done in violation ot the foregoing provision to be void," renders a transfer by a shareholder of his shares, in contemplation of the insolvency of the corporation, void as to the persons injured by the transfer; but where there wras no fraud as between the transferrer and the transferee, nor as against the corporation assenting to the transfer, the transfer must be deemed to be valid. (Sinclair v. Dwigbt, 9 App. Div., 297.) Where a corporation suffers a judgment at the instance of a creditor who, although not a director, substantially controls the company, the judgment is void. (Olney v. Baird, 7 App. Div., 95, affirming 15 Misc., 385.) The payment by an insolvent corporation of a debt a few days before it became due constitutes an intent to make a preference when it is shown, ihat at the time of such payment, debts to other persons were due and unpaid, and that the corporation did not have available assets from which to pay the other debts, although the managers of the cor- poration expected to get help through other persons. (Baker, as Receiver of Ft. Ann Woolen Co. v. Emerson, 4 App Div.. 348.) The statute is meant to apply to cases in which it is apparent, to those assigning or transferring its property, that the corporation is in a condition of insolvency; the word insolvency as use^ in ihe statute, means a general inability to pay obligations as they become due in the regular course of business. (French v. Andrews, 8r Hun, 272, affirmed 145 N. Y., 441; Olney v. Baird, 7 App. Div., 95, affirming 15 Misc., 385.) The first part of section 48 absolutely prohibits the transfer of any corporate property to an officer, director or stockholder of a corpora- tion, which shall have refused to pay any of its obligations when due, upon any other consideration than the full value of the property paid in crsh. (Milbank v. De Riesthal, 82 Hun, 537.) A bill of sale in contemplation of insolvency is void. (Keiley v. M. & T. Bk., 39 St. Rep., 438: 15 N. Y. Supp., 173.) This section is intended to secure equality among creditors, and for- bids all transfers that are intended to give preference or which have that effect in reality. (Kingsley v. First N. Bk., 31 Hun, 329; Brow- ver V. Harbeck, 9 N. Y., 589; Robinson v. Bk. of Attica, 21 N. Y.,406.) An act done by a corporation in^the ordinary course of its business, uninfluenced by the state of its affairs, cannot be said to have been done in contemplation of insolvency. (Dutcher v. I. & T. Nat. Bk., 59 N. Y.; see, also, Binns v. Williams, 88 N. Y., 660.) § 49. This section has been repealed by Laws of 1901, Chapter 354. The section thus siricken from the statute books enabled any stock- holder during the pendency of mortgage foreclosure proceedings 134 The Stock Corporation Law. against his corporation to pay a portion of the mortgage debt and to that extent to become subrogated to the rights of the mortgage credit- ors. The repeal of this section does not disturb the equitable right of subrogation which has been recognized by the courts irrespective of statutory provisions. § SO. Application to court to order issue of new in place of lost certificate of stock. — The owner of a lost or destroyed certificate of stock, if the corporation shall refuse to issue a new certificate in place thereof, may apply to the supreme court, at any special term held in the district where he resides, or in which the principal business office of the corporation is located, for an order requiring the corpora- tion to show cause why it should not be required to issue a new certificate in place of the one lost or destroyed. The application shall be by petition, duly verified by the owner, stating the name of the corporation, the number and date of the certificate, if known, or if it can be ascertained by the petitioner; the number of shares named therein, to whom issued, and as particular a statement of the circumstances attending such loss or destruction as the petitioner can give. Upon the presentation of the petition the court shall make an order requiring the corporation to show cause, at a time and place therein mentioned, why it should not issue a new certificate of stock in place of the one described in the peti- tion. A copy of the petition and order shall be served on the president or other head of the corporation, or on the secretary or treasurer thereof, personally, at least ten days before the time for showing cause. (Former section 50, L. 1890, ch. 564, as amended by L. 1802, ch. 688.) The title of the true owner of a lost or stolen certificate of stock may be asserted against anyone subsequently obtaining its posses- sion, although the holder may be a bona fide purchaser. (Knox v Eden Musee Co.. 148 N. Y., 441.) One who has lost his stock certificate, and finds the company unwilling to replace it. may apply at a special term of the supreme court for an order to show cause why a new certificate should The Stock Corporation Law. 135 not be given. (Kinnan v. 42d St., M. & St. Nicholas Ave. R. Co., 140 N. Y., 183.) A corporation which has permitted a transfer of stock upon a forged power of attorney, and has canceled the original certificates, r.iay be compelled to issue new certificates; and, if it has no shares which it can so issue, to pay the value thereof. (Pollock v. National Bank, 7 N. Y., 274.) « §51. Order of court upon such application. — Upon the return of the order, with proof of due service thereof, the court shall, in a summary manner, and in such mode as it may deem advisable, inquire into the truth of the facts stated in the petition, and hear the proofs and allegations of tlie parties in regard thereto, and if satisfied that the peti- tioner is the lawful owner of the number of shares, or any part thereof, described in the petition, and that the certifi- cate therefor has been lost or destroyed, and cannot after due diligence be found, and that no sufificient cause has been shown why a new certificate should not be issued, it shall make an order reqtiiring the corporation, within such time as shall be therein designated, to issue and deliver to the petitioner a new certificate for the number of shares speci- fied in the order, upon depositing such security, or filing a bond in such form and with such sureties as to the court shall appear sufificient to indemnify any person other than the petitioner who shall thereafter be found to be the lawful owner of the certificate lost or destroyed ; and the court may direct the publication of such notice, either before or after making such order as it shall deem proper. Any person claiming any rights under the certificates alleged to have been lost or destroyed shall have recourse to such indem- nity, and the corporation shall be discharged from all liabil- ity to such person upon compliance with such order; and obedience to the order may be enforced by attachment against the officer or officers of the corporation on proof of his or their refusal to comply with it. (Former section 51, L. 1890, ch. 564, re-enacted without change by L. 1892, ch. 688.) 136 The Stock Corporation Law. §52. Financial statement to stockholders. — Stock- / holders owning five per centum of the capital stock of any corporation other than a monied corporation, not exceeding one hundred thousand dollars, or three per centum where it exceeds one hundred thousand dollars, may make a written request to the treasurer or chief fiscal officer thereof, for a statement of its affairs, under oath, embracing a particular account of all its assets and liabilities, and the treasurer shall make such statement and deliver it to the person presenting the request within thirty days thereafter, and keep on file for twelve months thereafter a copy of such statement, which shall at all times during business hours be exhibited to any stockholder demanding an examination thereof; but the treasurer or such chief fiscal officer shall not be required to deliver more than one such statement in any one year. The supreme court, or any justice thereof, may upon application, for good cause shown, extend the time for making and delivering such certificate. For every lieglect or refusal of the treasurer or other chief fiscal officer thereof to comply with the provisions of this section he shall forfeit and pay to the person making such request the sum of fifty dollars, and the further sum of ten dollars for every twenty-four hours thereafter until such statement shall be furnished. (Former section 52, L. 1890, ch. 56, as amended by L. 1802. ch. 688.) A detailed statement of the assets and liabilities of the corpora- tion is sufficient; the business transactions of the corporation are not required to be stated. (French v. McMillan, 43 Hun, 188.) Omission to demand sworn statement merely waives verification (McCrea v. Bedell, 9 Misc. R., 372.) § 53- Stock books of foreign corporations. — Every foreign stock corporation having an office for the transac- tion of business in this state, except moneyed and railroad corporations, shall keep therein a book to be known as a stock-book, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, the number of shares of The Stock Corporation Law. 137 stock held by them respectively, the time when they respec- tively became the owners thereof, and the amount paid thereon. Such stock-book shall be open daily, during busi- ness hours, for the inspection of its stockholders and judg- ment creditors, and any officer of the state authorized by law to investigate the affairs of any such corporation. If any such foreign stock corporation has in this state a trans- fer agent, whether such agent shall be a corporation or a natural person, such stock-book may be deposited ih the office of such agent and shall be open to inspection at all times during the usual hours of transacting business, to any stockholder, judgment creditor or officer of the state author- ized by law to investigate the affairs of such corporation. For any refusal to allow such book to be inspected, such corporation and the officer or agent so refusing shall each forfeit the sum of two hundred and fifty dollars to be recov- ered by the person to whom such refusal was made. (Former section 56, L. i8go, ch. 564, re-enacted as section 53 by L. 1892, ch. 688, and thus amended by L. 1897, ch. 384.) For other provisions affecting foreign corporations-, see the index. It is the absolute duty of a transfer agent in this State to exhibit at all reasonable times during the usual business hours, to any stockholder, when required, the transfer book and a Hst of the stockholders, if in his power so to do. (Kennedy v. Chicago, Rock Isl. & Pacific R. R. Co., 14 Abb. N. C, 326.) A demand for the exhibition of the stock-book is not sufficient as a demand for the transfer book. (Id.) The duties imposed by this section are put specifically upon the transfer agents, and not upon the corporations or the officers of the corporations which they represent. (Peo. ex rel. Hatch v. Lake Shore & M. S. Ry. Co., 11 Hun, i; Peo. ex rel. Field v. No. Pac. R. R. Co., SO Super. Ct., 4S6) A mandamus to compel exhibition of transfer books should be directed to the transfer agents only. (Peo. ex rel. Hatch v. L. S., etc., above.) In a proceeding under this section, it is immaterial whether the transfer of stock to the relator was merely colorable or whether any consideration was paid therefor. (Peo. ex rel. Harriman v. Paton, 20 Abb. N. C, 172.) An objection to exhibit the transfer books, on the ground that the applicant's motives are hostile to the corporation, is not a valid one. (Id.) § 54. Liabilities of stockholders.— Every holder of capital stock not fully paid, in any stock corporation, shall 138 The Stock Corporation Law. be personally liable to its creditors, to an amount equal to the amount unpaid on the stock held by him for debts of the corporation contracted while such stock was held by him. As to existing corporations the liability imposed by this section shall be in lieu of the liability imposed upon stockholders of any existing corporation, under any general or special law, (excepting laws relating to moneyed corpora- tions, and corporations and associations for banking pur- poses;) on account of any indebtedness hereafter contracted or any stock hereafter issued; but nothing in this section contained shall create or increase any liability of stockhold- ers of any existing corporation under any generE.1 or special law. The stockholders of every stock corporation shall jointly and severally be personally liable for all debts due and owing to any of its laborers, servants or employes other than contractors, for services performed by them for such corporation. Before such laborer, servant or employe shall charge such stockholder for such services, he shall give him notice in writing, within thirty days after the ter- mination of such services, that he intends to hold him liable, and shall commence an action therefor within thirty days after the return of an execution unsatisfied against the corporation upon a judgment recovered against it for serv- ices. No person holding stock in any corporation as col- lateral security, or as executor, administrator, guardian or trustee, unless he shall have voluntarily invested the trust funds in such stock, shall be personally subject to liability as a stockholder; but the person pledging such stock shall be considered the holder thereof and shall be liable as stock- holder, and the estates and funds in the hands of such executor, administrator, guardian or trustee shall be liable in the like manner and to the same extent as the testator or intestate, or the ward or person interested in such trust fund would have been, if he had been living and competent to act and held the same stock in his own name, unless it appears that such executor, administrator, guardian or trustee voluntarily invested the trust funds in such stocks, in which case he shall be personally liable as a stockholder. The Stock Corporation Law. 139 (Former section 57, L. i8go, ch. 564, as amended by L. 1892, ch. 688, and L, 1901, ch. 354). The foregoing section, prior to the amendment made by Laws of 1901, provided thai " the stockholders of every stock corporation shall, jointly and severally, be personally liable to its creditors, to an amouni equal to the amount of the stock held by them respectively, for every debt of the corporation, until the whole amouni of its capital stock issued and outstanding at the time such debt was incurred shall have been fully paid in." In the amended section this burdensome liability is abolished, so that now each stockholder's liability is limited to the amount, if any, remaining unpaid upon his stock. As to certificate of payment of one-half of capita! stock by a corpora- tion organized under the Business Corporations Law, see that law, section 5. For acts relative to payment of wages weekly and in cash and preference in payment thereof, see miscellaneous statutes post, § 55. Limitation of stockholder's liability. — No action shall be brought against a stockholder for any debt of the corporation until judgment therefor has been recovered against the corporation, and an execution thereon has been returned unsatisfied in whole or in part, and the amount due on such execution shall be the amount recoverable, with costs against the stockholder. . No stockholder shall be per- sonally liable for any debt of the corporation not payable within two years from the time it is contracted, nor unless an action for its collection Shall be brought against the cor- poration within two years after the debt becomes due; and no action shall be brought against a stockholder after he shall have ceased to be a stockholder, for any debt of the corporation, unless brought within two years from the time he shall have ceased to be a stockholder. (Former section 58, L. i8go, ch. 564, re-enacted with only the number changed, by L. 1892, ch. 688.) In order to be entitled to a recovery from a stockholder, the issu- ance and return unsatisfied of an execution on the judgment which is the fcundat/on of iWe^ suit, must be shown. (Terry v. Roths- ch'ild, 83 Hun, 486.) ~"> This section treats the corporation as the primary debtor and the liability of the stockholder as ultimate and subsidiary. (Handy v. Draper, 89 N. Y., 337.) The time within which an action must be commenced begins to I40 iHE Stock Corporation Law. run on the day when the debt first became due. (Hardman v. Sage, 124 N. Y., 25; Jagger Iron Co. v. Walker, 76 N. Y., 522.) The statuie docs not begin to run in favor of a stockholder until after the return of execution against the corporation. (Handy v. Draper, 89 N. Y., 334.) § 56. Increase or reduction of number of shares. — The number of shares into which the capital stock of any stock corporation is divided may be increased or reduced by a two-thirds vote of all stock duly represented at a meet- ing held and conducted in like manner, and upon filing a like certificate, as required for the increase or reduction of its capital stock. If such increase or reduction of the num- ber of shares be so authorized, the corporation shall issue to each stockholder certificates for as many shares of the new stock as equal in par value the shares of the old stock held by him, upon surrender and cancellation of such old stock. This section does not authorize the increase or reduction of the capital stock of such corporation. (New section, added by L. 1893. ch. 196, and amended by L. igoi, ch. 354.) For form of certificatt, see post, form No. 31. §57- Voluntary dissolution. — Any stock corporation, except a moneyed or a railroad corporation, may be dis- solved before the expiration of the time limited in its certifi- cate of incorporation or in its charter as follows: The board of directors of any such corporation may at a meeting called for that purpose upon, at least, three days' notice to each director, by a vote of a majority of the whole board, adopt a resolution that it is in their opinion advisable to dissolve such corporation forthwith, and thereupon shall call a meeting of the stockholders for the purpose of voting upon a proposition that such corporation be forthwith dis- solved. Such meeting of the stockholders shall be held, not less than thirty nor more than sixty days after the adoption of such resolution, and the notice of the time and place of such meeting so called by the directors shall be published in one or more newspapers published and circulating in the county wherein such corporation has its principal office, at The Stocic Corporation Law. 141 least once a week for three weeks successively next preced- ing the time appointed for holding such meeting, and on or before the day of the first publication of such notice, a copy thereof shall be served personally on each stockholder, or mailed to him at his last-known post-office address. Such meeting shall be held in the city, town or village in which • the last preceding annual meeting of* the corporation was held, and said meeting may, on the day so appointed, by the consent of a majority in interest of the stockholders present, be adjourned frota time to time, and notice of such adjourn- ment shall be published in the newspapers in which the notice of the meeting was published. If at any such meet- ing the holders of two-thirds in amount of the stock of the corporation, then outstanding, shall, in person or by attor- ney, consent that such dissolution shall take place and sig- nify such consent, in writing, then, such corporation shall file such consent, attested by its secretary or treasurer, and its president or vice-president, together with the powers of attorney signed by such stockholders' executing such con- sent by attorney, with a statement of the names and resi- dences of the then existing board of directors of said cor- poration, and the names and residences of its officers duly verified by the secretary or treasurer or president of said corporation, in the . office of the secretary of state. The secretary of state shall thereupon issue to such corporation, in duplicate, a certificate of the filing of such papers and that it appears therefrom that such corporation has com- plied with this section in order to be dissolved, and one of such duplicate certificates shall be filed by such corporation in the office of the clerk of the county in which such corpora- tion has its principal office; and thereupon such corporation shall be dissolved and shall cease to carry on business, except for the purpose of adjusting and winding up its busi- ness. The board of directors shall cause a copy of such certificate to be published at least once a week for two weeks in one or more newspapers published and circulating 142 The Stock Corporation Law. in the county in which the principal office of such corpora- tion is located, and at the expiration of such publication, the said corporation by its board of directors shall proceed to adjust and wind up its business and affairs with power to carry out its contracts and to sell its assets at public or private sale, and to apply the same in discharge of debts and obligations of such corporation, and, after paying and adequately providing for the payment of such debts and obligations, to distribute the balance of assets among the stockholders of said corporation, according to their respec- tive rights and interests. Said corporation shall neverthe- less continue in existence for the purpose of paying, satisfy- ing and discharging any existing debts or obligations, collecting and distributing its assets and doing all other acts required in order to adjust and wind up its business and affairs, and may sue and be sued for the purpose of enforc- ing such debts or obligations, until its business and affairs are fully adjusted and wound up. After paying or ade- quately providing for the debts and obligations of the corporation the directors may, with the written consent of the holders of two-thirds in amount of the capital stock, sell the remaining assets or any part thereof to a corpora- tion organized under the laws of this or any other state, and engaged in a business of the same general character, and take in payment therefor the stock or bonds or both of such corporation and distribute them among the stock- holders, in lieu of money, in proportion to their interest therein, but no such sale shall be valid as against any stock- holder, who, within sixty days after the mailing of notice to him of such sale shall apply to the supreme court in the manner provided by section thirty-three of this act, for an appraisal of the value of his interest in the assets so sold; unless within thirty days after such appraisal the stock- holders consenting to such sale, or some of them, shall pay to such objecting stockholder or deposit for his account, in the manner directed by the court, the amount of such appraisal and upon such payment or deposit the interest of such objecting stockholder shall vest in the person or persons making such payment or deposit. (New section, added by L. 1896, ch. 932, as amended by L. 1900, ch. 760.) The Stock Corporation Law. 143 § 58. Merger. — Any domestic stock corporation. and any foreign stock corporation authorized to do business in this state lawfully owning all the stock of any other stock corpora- tion organized for, or engaged in business similar or incidental to that of the possessor corporation may file in the office of the secretary of state under its common seal, a certificate of such ownership, and of the fesolution of its board of directors to merge such other corporation, and thereupon it shall acquire and become, and be possessed of all the estate, property, rights, privileges and franchises of such other coporation, and they shall vest in and be held and enjoyed by it as fully and entirely and without change or diminution as the same were before held and enjoyed by such other corporation, and be managed and controlled by the board of directors of such possessor corporation, and in its name, but without preju- dice to any liabilities of such other corporation or the rights of any erectors thereof. Any bridge corporation may be merged under this section with any railroad corporation which shall have acquired the right by contract to run its cars over the bridge of such bridge corporation. (New section, added by L. 1896, ch. 932, as amended by L. iqoo, ch. 476; L. 1902, ch, 98.) § 59. Change of place of business. — Any stock corpo- ration now existing or hereafter organized under the laws of this state, except monied corporations, may at any time change its principal office and place of business from the city, town or county named in its certificate of incorpora- tion, or to which it may have been changed under the pro- visions of this section, to any other city, town or county in this state, in which it may desire to actually transact and carry on its regular business from day to day, provided, and such change has been authorized by a vote of the stock- holders of said corporation at a special meeting of stock- holders called for that purpose. When such change shall be authorized by the stockholders as herein provided, the president and secretary and a majority of the directors of such corporation shall sign a certificate stating the name of said Corporation, the city, town and county where its prin- cipal office and place of business was originally located, and to which it may have been subsequently changed, and the city, town and county to which it is desired to change its said principal office and place of business, and that it is the purpose of said ' corporation to actually transact and carry on its regular business from day to day at such place, 144 The Stock Corporation Law. and that such change has been authorized as herein pro- vided, and the names of the directors of said corporation and their respective places of residence which certificate shall be verified by the oaths of all the persons signing the same, and when so signed and verified, shall be filed in the office of the secretary of state and a duplicate thereof in the ofSce of the clerk of the county from which said princi- pal office and place of business is about to be removed or changed, and another in the office of the clerk of the county to which said removal or change is to be made, and there- upon the principal office and place of business of such corporation shall be changed as stated in said certificate. (New section, added by L. 1896, ch. 929.) § 60. Liabilities of officers, directors and stockhold- ers of foreign corporations. — Except as otherwise pro- vided in this chapter the officers, directors and stockholders of a foreign stock corporation transacting business in this state, except moneyed and railroad corporations, shall be liable under the provisions of this chapter, in the same man- ner and to the same extent as the officers, directors .and stockholders of a domestic corporation, for: 1. The making of unauthorized dividends; 2. The creation of unauthorized and excessive indebted- ness ; 3. Unlawful loans to stockholders; 4. Making false certificates, reports or public notices; 5. An illegal transfer of the stock and property of such corporation, when it is insolvent or its insolvency is threatened; 6. The failure to file an annual report. . Such liabilities may be enforced in the courts of this state, in the same manner as similar liabilities imposed by law upon the officers, directors and stockholders of domestic corporations. (New section, added by L. 1897, ch. 384.) For other provisions affecting foreign corporations see references thereto in the index under the heading " Foreign Corporations." The foregoing section subjects foreign corporations to the pro- visions of sections 23, 25, 30, 31 and 48 of the Stock Corporation Law. Such corporations are also required to comply with the pro- visions of sections 15 and 16 of the General Corporation Law. The Stock Corporation Law. 144a It will be noticed here that there is no section 6i of this law, the next section having been inadvertently numbered 62 instead of 61. § 62. Partly paid stock. — The original or the amended certificate of incorporation of any stock corporation may contain a provision expressly authorizing the issue of the whole or_ of any part of the capital stock as partly paid stock, subject to calls thereon until the whole thereof shall have been paid in. In such case, if in or upon the certificate issued to represent such stock, the amount paid thereon shall be specified, the holder thereof shall not be subject to any liability except for the payment to the corporation of the amount remaining unpaid upon such stock, and for the payment of indebtedness to employes pursuant to sections fifty-four and fifty-five of this chapter; and in any such case, the corporation may declare and may pay dividends upon the basis of the amount actually paid upon the respec- tive shares of stock instead of upon the par value thereof. (New section, added by L. 1901, ch. 354.) This new section provides a desirable method for the issue of partly paid stock subject to assessment, with a right to dividends upon the amount actually paid thereon. In case a curporation intends to issue this species of stock a provision to that effect must be inserted in the certificate of incorporation, or in the event that an existing corporation proposes to issue such stock it must make and file an amended certifi- cate, pursuant to section 32 of the Stock Corporation Law, authorizing the same. TAXATION OF CORPORATIONS. The Provisions of the Revised Tax Laws, Chapter 908, Laws of 1896, Regulating the Payment of Annual Taxes by Corporations, are as Follows: STATE TAXATION. ARTICLE IX. CORPORATION TAX. Section 182. Franchise tax on corporations. 183. Certain corporations exempted from tax on capital stock tax. 184. Additional franchise tax on transportation and trans- mission corporations and associations. 185. Francliise tax on elevated railroads or surface rail- roads not operated by steam'. 186. Franchise tax on water-works companies, gas com- panies, electric or steam heating, lighting and power companies. 189. Report of corporations. 190. Value of stock to be appraised. 191. Further requirerhents as to reports of corporations. 192. Powers of comptroller to examine into affairs of corporations. 193. Notice of' statement of tax ; interest. 194. Payment of tax and penalty for failure. 195. Revision and readjustment of accounts by comp- troller. 196. Review of determination of comptroller by certio- rari. 197. Regulations as to such writ of certiorari. 198. Warrant for the collection of taxes. 199. Information of delinquents. 200. Actron for recovery of taxes; forfeiture of charter of delinquent corporations. 202. Exefriptions from other State taxation. 203. Application of tax. 10 146 The Tax Law. STATE TAXATION.* Franchise tax on corporations. § 182. Every corporation, joint stock company or asso- ciation incorporated, organized or formed under, by or pur- suant to law in this state, shall pay to the state treasurer annually, an annual tax to be computed upon the basis of the amount of its capital stock employed within this state and upon each dollar of such amount, at the rate of one- quarter of a mill for each one per centum of dividends made and declared upon its capital stock during each year ending with the thirty-first day of October, if the dividends amount to six or more than six per centum upon the par value of such capital stock. If such dividend or dividends amount to less than six per centum on the par value of the capital stock, the tax shall be at the rate of one and one-half mills upon such portion of the capital stock at par as the amount of capital employed within this state bears to the entire capi- tal of the corporation. If no dividend is made or declared, the tax shall be at the rate of one and one-half mills upon each dollar of the appraised capital employed within the state. If such corporation, joint stock company or associa- tion shall have more than one kind of capital stock, and upon one of such kinds of stock a dividend or dividends amounting to six, or more than six per centum, upon the par value thereof, has been made or declared, and upon the other no dividend has been made or declared, or the dividend or * For provisions regulating local taxation, see page 164, et seq. For the sections relative to taxation of special franchises, see page x/ia, et seq. The Tax Law. 147 dividends made or declared thereon amount to less than six per centum upon the par value thereof, then the tax shall be at the rate of one-quarter of a mill for each one per centum of dividends made or declared upon the capital stock upon the par value of which the dividend or dividends made or declared amount to six or more than six per centum, and in addition thereto a tax shall be charged at the rate of one and one-half mills upon every dollar of the valuation made in accordance with the provisions of this act of the capital stock upon which no dividend was made or declared, or upon the par value of which the dividend or dividends made or declared did not amount to six per centum; provided, however, that a street surface railroad corporation or a steam railroad corporation, or an elevated railroad corpora- tion owning in a city a street surface railroad or an elevated railroad not operated by steam, in cases where the street surface roads or elevated roads of said owning corporations are operated by another street surface railroad corporation under a lease or otherwise, in so far as the dividends made and declared upon the capital stock of the said owning cor- porations shall be paid from the gross earnings of the said operating corporation in the form of rent or otherwise, shall only be required under this section to pay a tax of three per centum upon the dividends declared and paid from the moneys received in the form of rent or otherwise from the operating company in excess of four per centum upon the amount of its capital stock, provided, however, that nothing in this section shall relieve the said operating company of any of the liabilities imposed by section one hundred and eighty-five of this chapter. Every corporation, joint stock company or association organized, incorporated 148 The Tax Law. or formed under the laws of any other state or country shall pay a like tax for the privilege of exercising its corporate franchises or carrying on its business in such cocporate or organized capacity in this state, to be computed upon the basis of the capital employed by it within this state. (L. i8g6, ch. 908, § 1S2, as amended by L. igoi, ch. 558.) The only change in this section made by the amendment of 1901 was the insertion of the provisions relative to leased railroads. The terras " corporate franchises," as applied to foreign corpora- tions, means the right or privilege of doing business in a corporate capacity within the State. (Home Ins. Co. v. New York, 134 U. S., 594.) As to domestic corporations, the legislative power to tax their busi- ness and franchises is general; but as to foreign corporations, the jurisdiction is gained from the business which they do in this State, and the tax is upon that business. (People ex rel. American Contract- ing & Dredging Co., 129 N. Y., 558, affirming 60 Hun, 225.) The State authorities are not obliged to deduct the capital which corporations hold in United States bonds, and compute the tax from the remainder of such capital. (People v. Home Ins. Co.. 92 N. Y., 328; Home Ins. Co. v. People, 134 U. S. 594.) A foreign corporation, whose whole capital is invested in stock and bonds of another foreign corporation doing business wholly out of this Slate, and which merely maintains an office in this State, where it receives and distributes the dividends derived from said investment, is not taxable here. (People ex rel. Chicago Junction Ry. & U. S. Co. v. Roberts, 154 N. Y., i, reversing go Hun, 474.) A foreign corporation which establishes a place for the sale of its goods within the State of New York, pays rent for the premises, employs agents and employes to conduct its business, and sells its product from such place of business, transacts business within this State. (People ex rel. Parke, Davis & Co. v. Roberts, 91 Hun, 158, affirmed 149 N. Y., 6o3.) Surplus earnings of a foreign manufacturing corporation carrying on a portion of its business in this State, invested in real estate in this Stale leaseJ by it to third parties, and not occupied by the corporation or uiied by it in transacting its ordinary business, do- not constitute capital stock; and, while such investment influences the amount of the corporation tax by increasing the dividends or the valuation of the capital stock, it is not taxable as *' capital stock employed within this Stale." (People ex rel. Singer 'Vlfg. Co. v. Wemple, 150 N. Y., 46, affiruiing 78 Hun, 63.) The Tax Law. 149 The good- will of a foreign corporation, acquirer] and built up in this State and having a market value here, where its business is carried on, is taxable. (People ex rel. A. J. Johnson Co. v. Roberts, 159 N. Y., 70, reversing 35 App. Div., 624; People ex rel. Journeay & Burn- ham Co. V. Roberts, 37 App. Div., i.) Where a foreign corporation rented part of a building in New York city, in which its selling agent kept an office for the distribution of samples, the payment of (raveling agents and for ihe purpose of tak- ing orders for goods, which orders were sent for approval to the treas- urer in Massachusetts, from which State all goods were shipped, it was held that ihe corporation was not taxable, as doing business within this State. (People ex rel. Washington Mills Co. v. Roberts, 8 App. Div., 201, aflBrraed 151 N. Y., 619.) The basis for assessing the tax upon the capital stock employed in this State of a corporation which has paid no dividends, and of whose stock there have been no sales during the year, is to be determined by ascertaining the actual cash value of the capital stock employed within the State. This value is to be measured by the value of its assets, and after deducting its liabilities, and adding to the remaining sum the value of the good will of the business, including its right to conduct it under its franchises. (People ex rel. Wiebusch & Hilger Co., Ltd., V. Roberts, 154 N. Y., loi, affirming 19 App. Div., 574.) Portions of the capital stock of a domestic corporation, organ- ized for guaranteeing bonds, etc., invested in real estate in another State and in United States bonds deposited under a deed of trust in a third State and with the Minister of Finance in Canada, to enable the corporation to do business in such States and Canada, are not to be deemed " capital stock employed within this State '* for purposes of taxation, although the investments are subject to claims of creditors of the corporation, and the income therefrom is received at its home office in this State, and is there used in its business. (People ex rel. American Surety Co. v. Campbell, 74 Hun, loi.) Whether a foreign corporation is doing business in this State is a question that must be determined from the character of the busi- ness carried on, not from the existence of any unexercised powers reserved to it by its contracts. (Peo. v. Am. Bell Tele. Co., 117 N. Y., 241; Peo. V. Horn Silver Mining Co., 105 N. Y., 76; 143 U. S., 305.) The tax upon foreign corporations is only upon the business done in this State. (Peo. v. Equitable Trust Co., 96 N. Y., 387.) A foreign manufacturing corporation whose business is con- ducted in another State, and which transacts none of its corporate business In this State, but has an office therein as a convenient meeting place for its patrons in discussing contracts, the contracts themselves being executed at the home office, cannot, for the pur- poses of taxation, be regarded as doing business in this State. (Peo. ex re!. Harlan & Hollingsworth Co. v. Campbell, 139 N. Y., 68.) The basis of taxation of a foreign corporation under said act is the portion of its capital employed within the ' State. (People ex rel. Seth Thomas Clock Co. v. Wemple, 133 N. Y., 323; People ex ISO The Tax Law. rel. Southern Cotton Oil Co. v. Wemple, 131 id., 65; People ex rel. Am. C. & D. Co. V. Wemple, 129 id., 558.) The value of goods kept on hand by a foreign corporation within this State in the transaction of its business and from which it made shipments or sales represented capital stock, and money on deposit here and used in business here also could be made basis for the tax, but sales made by sample, followed by a delivery from the factory, could not. (People ex rel. Seth Thomas Clock Co. v. Wemple, 133 N. Y., 323 .) The taxes imposed upon corporations are for the exclusive benefit of the State, and the statute does not interfere vjith the power of the local authorities to tax for municipal and county purposes. (People ex rel. Eastern Trans. Co. v. Comrs. of Taxes, 26 Hun, 446.) Certain corporations exempt from tax on capital stock. § 183. Banks, savings banks, institutions for savings, title guaranty, insurance or surety corporations, every trust company incorporated, organized or formed, under, by or pursuant to a law of this state, and any company authorized to do a trust company business solely or in connection with any other business, under a general or special law of this state, laundry corporations, manufacturing corporations to the extent only of the capital actually employed in this state in manufacturing, and in the sale of the product of such manufacturing, mining corporations, wholly engaged in mining ores within this state, agricultural and horticultu- ral societitES or associations, and corporations, joint-stock companies or associations operating elevated railroads or sur- face railroads not operated by steam, or formed for supply- ing water or gas for electric or steam heating, lighting or power purposes, and liable to a tax under sections one hun- dred and eighty-five and one hundred and eighty-six of this chapter, shall be exempt from the payment of the taxes pre- scribed by section one hundred and eighty-two of this chap- ter. But such a laundrying, manufacturing or mining corporation shall not be exempted from the payment of such tax, unless at least forty per centum of the capital stock of such corporation is invested in property in this state and used by it in its laundrying, manufacturing or mining busi- ness in this state. (L. 1896, ch. 908, as amended by L. 1897, ch. 785, and L. 1901, ch. 558.) The Tax Law. 151 The exemptions from annual State taxation heretofore granted to laundry and mining corporations and to manufacturing corporations to the extent of the capital actually employed in this State in manu- facturing have been retained in Ihe foregoing section, as amended, but upon modified terms, for a new conditibn restricting the exemp> tioa was prescribed in the amendment of 1901, by the addition of the provision to the effect that " such a laundrying, manufacturing or mining corporation shall not be entitled to the exemption unless at least forty per centum of the capital stock of such corporation is invested in properly in this State and used by it in its laundrying, manufacturing or mining business in this State." Purchasing and slaughtering sheep, pulling the wool from the hides, selling it and the hides, converting the offal into fertilizer does not constitute manufacturing. (People ex rel. N. E. Dressed Meat & Wool Co. V. Roberts, 155 N. Y., 408, reversing 20 App. Div. 521.) A manufacturer is " a person engaged in the business of working raw materials into wares suitable for use." (Webster's Dictionary.) The collection, storage, preparation for market, and transporta- tion of ice is not a manufacture, but the production of ice by artifi- cial means is. (People v. Knickerbocker Ice Co., gg N. Y., 181.) '.' Manufacture " is defined as " anything made from raw materials by the hand, by machinery, or by art, as cloths, iron utensils, shoes, machinery, saddlery, etc." (Webster's Dictionary.) The process of manufacture is supposed to produce some new article by the application of skill and labor to the raw material. (People ex rel. Union Pacific Tea Co. v. Roberts, 145 N. Y., 375.) The business of refining crude petroleum is manufacturing. (Commonwealth v. Atlantic Refining Co., 2 Pennsylv. Co. Ct. Rep., 62.) A company engaged in finishing and shaping material so as to make bridges, and selling and erecting the same; held to be manu- facturing. (Commonwealth v. Keystone Bridge Co., 156 Pennsylv. . St. Rep., 500.) Dyeing and finishing woolen and cotton goods is manufacturing. (Commonwealth v. Quaker City Dye Works, S Pennsylv. Co. Ct. Rep., 94.) The United States Circuit Court has held that cutting grass, con- verting it into hay, pressing it in bales and transporting it to market did not result in the production of a manufactured article. (Frazee V. Moffitt, 20 Blatch. [U. S.] Cir. Ct. Rep., z^St.) The Supreme Court of the United States held that shells cleaned by acid and then ground on an emery wheel, and some of them afterwards etched by acid, and all of them intended to be sold as ornameiits, as shells, were not dutiable as manufactures of shells. (Hartranft v. Wiegman, 121 U. S., 609.) A cooper who makes barrels, hogsheads, and similar articles of ■wood, such as coopers Usually make, is a manufacturer. (New- Orleans V. Le Blanc, 34 Louisiana Annual Reports, 596.) In the District of Columbia it was held that a corporation engaged in the business of printing and publishing a newspaper is not a manufacturer within the meaning of the bankrupt law. (In re Capi- 152 The Tax Law. tal Publishing Co., 3 McArthur's Reports [Dist. of Columbia], 40s) The mere appropriation of an article which is furnished by nature is not a manufacture. Thus, the liberation of natural gas or oil from the earth, and its transportation to consumers, is not a manu- facture. (Commonwealth v. Northern Elec. Lt. & Power Co., 145 Pennsylv. St. Rep., 117.) In a case relative to the payment of excise duties in Great Britain it was held that a printer of calicoes was not a manufacturer. (The King V. Tregoning, 3 Younge & Jervis, 132.) The printing, publishing and selling of books, and job printing, constitute a manufacturing business. (People ex rel. Frederick A. Stokes Co. V. Roberts, go Hun, 533; Press Printing Co. v. State B'd of Assessors, 51 N. J. Law Repts., 75; Evening Journal Ass'n v. State B'd of Assessors, 47 N. J. L. Repts., 36.) Printing and publishing a newspaper is not manufacturing. (Press Printing Co. v. State B'd of Assessors, 51 N. J. Law Repts., 75; Evening Journal Ass'n, 47 id., 36.) A domestic corporation engaged in slaughtering cattle, preparing the same and the various products thereof for market, a portion of which business is carried on in this State and a portion else- where, is not wholly engaged in manufacturing in New York State. (People ex rel. Schwarzschild & Sulzberger Co. v. Roberts, 11 App. Div., 449.) A manufacturing corporation employed in other business, is liable to taxation upon so much of its capital stock only, as is not employed in strictly manufacturing operations. (Commonwealth v. Lackawanna Iron & Coal Co., 129 Pennsylv. St. Rep., 346.) A corporation engaged in the sale of spices, baking powder, coffee and tea, purchased these articles in bulk. The spices and baking powder were merely put up in packages and sold. Various kinds of tea were mixed and sold as " combination tea." The cofTee was roasted and ground. Held, that this was not manufacture, and the corporation was not exempt from taxation as a manufacturing cor- poration. (People ex rel. Union Pacific Tea Co. v. Roberts, 14s N. Y., 375.) The courts have decided that the exemption in favor of manu- facturing corporations applies only to such corporations as create some new and artificial product within the State. (Peo. ex rel. Brush El. Mfg. Co. v. Wemple, 129 N. Y., 543; People ex rel. Edi- son El. III. Co. V. Wemple, 129 N. Y., 664; Peo. v. Horn Silver Mining Co., 105 N. Y., 76; Peo. v. Knickerbocker Ice Co., 99 N. Y., 181; Peo. v. N. Y. F. Dock Co., 92 N. Y., 487.) A foreign corporation claiming exemption as a manufacturing corporation must show that some substantial portion of its manu- facturing is carried on in this State. (People ex rel. Roebling's Sons Co. V. Wemple, 63 Hun, 452; aflf'd 138 N. Y., 582.) A manufacturing corporation of another State cannot bring its products here, and by putting the several parts together and adjust- ing them to each other, or by performing upon the article some slight operation though it may involve labor that may be neces- sary before using it or exposing it for sale, and thereby obtain exemption from taxation on the ground that it is carrying on manu- The Tax Law. 153 facturing within this State. (People ex rel. Seth Thomas Clock Co. V. Wemple, 133 N. Y., 323.) Additional franchise tax on transportation and transmission corporations and associations. § 184. Every corporation and joint-stock association formed for steam surface railroad, canal, steamboat, ferry, express, navigation, pipe-line, transfer, baggage express, telegraph, telephone, palace' car or sleeping car purposes, and all other transportation corpo'rations not liable to taxes under sections one hundred arid eighty-five or one hundred and eighty-six of this chapter, shall pay for the privilege of exercising its corporate franchises or carrying on its busi- • ness in such corporate or organized capacity in this state, an annual excise tax or license fee which shall be equal to five- tenths of one per centum upon its gross earnings within the state, which shall include its gross earnings from its trans- portation or transmission business originating and termin- ating within this state, but shall not include earnings derived from business of an interstate character. All settlements for such taxes heretofore based by the comptroller upon gross earnings excluding earnings from interstate business, have been ratified and confirmed, except that the accounts for taxation under section six of chapter three hundred and sixty-one, of the laws of eighteen hundred and eighty-one, for the years eighteen hundred artd ninety-two and eighteen hundred and ninety-three, shall' be settled and adjusted by the comptroller by excluding the earnings of an interstate character as provided by this section. Franchise tax on elevated railroads or surface railroads not operated by steam. § 185. Every corporation, joint-stock company or asso- ciation operating any elevated railroad or surface railroad not operated by steam shall pay to the state for the privilege of exercising its corporate franchise or carrying on its busi- ness in such corporate or organized capacity within this 154 The Tax Law. state, an annual tax which shall be one per centum upon its gross earnings from all sources within this state, and three per centum upon the amount of dividends declared or paid in excess of four per centum upon the actual amount of paid-up capital employed by such corporation, joint-stock company or association. Any corporation, joint-stock company or association taxed under this section which has paid a tax to the state for the year ending November first, eighteen hundred and ninety-five, under section three of chapter five hundred and forty-two of the laws of eighteen hundred and eighty, as amended by chapter five hundred • and twenty-two of the laws of eighteen hundred and ninety, shall be credited by the comptroller with one-third of the amount so paid in computing the taxes to be paid for the year ending June thirtieth, eighteen hundred and ninety-six. Franchise tax on water- works companies; gas companies, electric or steam heating, lighting and power companies. § i86. Every corporation, joint-stock company or asso- ciation formed for supplying water or gas, or for electric or steam heating, lighting or power purposes, shall pay to the state for the privilege of exercising its corporate franchises or carrying on its business in such corporate or organized capacity in this state, an annual tax which shall be five- tenths of one per centum .upon its gross earnings from all sources within this state, and three per centum upon the amount of dividends declared or paid in excess of four per centum upon the actual amount of paid-up capital employed by such corporation, joint-stock company or association. ' §§ 187, 188. These sections relate to tax on insurance corporations and bankers, respectively, and, therefore, are not inserted in this work. Reports of corporations. § 189. Corporations liable to pay a tax under this article shall report as follows: I. Corporations paying franchise tax. — Every cor- The Tax Law. 155 poration, association or joint-stock company liable to pay a tax under section one hundred and eighty-two of this chap- ter shall, on or before November fifteenth in each year, make a written report to the comptroller of its condition at the close of its business on October thirty-first preceding, stating the amount of its authorized capital stock, the amount of stock paid in, the date and rate per centum of each dividend declared by it during the year ending with such day, the entire amount of the capital of such corpora- tion, and the capital employed by it in this state during such year. 2. Transportation and transmission corporations. — Every transportation or transmission corporation, joint- stock company or association liable to pay an additional tax under section one hundred and eighty-four of this chapter, shall also, on or before August first in each year, make a written report to the comptroller of its condition at the close of its business on June thirtieth preceding, stating the amount of its gross earnings from all sources and the amount of its gross earnings from its transportation or transmission business originating and terminating within this state. 3. Elevated and surface railroad corporations.— Every corporation, joint-stock company or association liable to pay a tax under section one hundred and eighty- five of this chapter, shall, on or before August first of each year, make a written report to the comptroller of its condi- tion at the close of its business on June thirtieth preceding, stating the amount of its gross earnings from business done in this state, the amount of dividends of every nature declared or paid during the year ending June thirtieth, the authorized capital of the company and the amount of capital stock actually issued and outstanding. 4. Water-works, gas, electric, steam heating, lighting and power corporations. — Every corporation, 156 The Tax Law. joint-stock company or association liable to pa)' a tax under section one hundred and eighty-six of this chapter, shall, on or before December first of each year, make a written report to the comptroller of its condition at the close of its business on October thirty-first preceding, stating the amount of its gross earnings from business done in this state, the amount of dividends of every nature declared or paid during the year ending with October thirty-first, the authorized capital of the company and the amount of capital stock actually issued and outstanding. 5. Insurance corporations. — (Omitted.) 6. Foreign bankers. — (Omitted.) [Revisers' Note. — L. 1181, ch. 361, §§ i, 5, 7; L. 1895, ch. 425; L. 1882, ch. 409, § 322; L. 1894, ch. 196; L. 1886, ch. 679, § 2, with- out change of substance, as originally reported.] Value of stock to be appraised. § 190. In case no dividend has been declared, by a cor- poration, association or joint-stock company liable to pay a tax under section one hundred and eighty-two of this chapter, the treasurer or secretary of the company, shall, under oath, between the first and fifteenth day of November in each year, estimate and appraise the capital stock of such company upon which no dividend has been declared, or upon which the dividend amounted to less than six per centum at its actual value in cash, not less, however, than the average price which said stock sold for during said year, and shall forward the same to the comptroller with the report provided for in the last section. If the comptroller is not satisfied with the valuation so made and returned he is authorized and empowered to make a valuation thereof, and settle an account upon the valuation so made by him, and the taxes, penalties and interest to be paid to the state. [L. 1881, ch. 361, § I.] The Tax Law. 157 Further requirements as to report of corporations. § 191. Every report required by this article shall have annexed thereto, the affidavit of the president, vice-presi- dent, secretary or treasurer of the corporation, association or joint-stock company or of the person or one of the per- sons, or the members of the partnership making the same, to the effect that the statements contained therein are true. Such reports shall contain any other data, information or matter which the comptroller may require to be included therein, and he may prescribe the form in which such reports shall be made and the form of oath thereto. When so prescribed such form shall be used in making the report. The comptroller may require at any time a further or supple- mental report under this article, which shall contain infor- mation and data upon such matters as the comptroller may specify. Powers of comptroller to examine into affairs of corporation. § 192. In case any report required by any of the preced- ing sections of this article shall be unsatisfactory to the comptroller, or if any such report is not made as herein required, the comptroller is authorized to make an estimate of the dividends paid by such corporation and the value of the capital stock employed by it, from any such report or from any other data, and to order and state an account according to the estimate and value so made by him for the taxes, percentage and interest due the state from such cor- poration, association, joint-stock company, person or part- nership. The comptroller shall also have power to examine or cause to be examined in case of a failure to report or in case the report is unsatisfactory to him, the books and records of any such corporation, joint-stock association, company, foreign banker, person or partnership, and may hear testimony and take proofs material for his information, either personally or he may appoint a commissioner by a written appointment under his hand and official seal for that 158 The Tax Law. purpose. Every commissioner so appointed shall be authorized to make such examination and take such testi- mony and hear such proofs and report the proofs and testi- mony so taken and the resuh of his examination so made and the facts found by him to the comptroller. The comp- troller ghall, therefrom, or from any other data which shall be satisfactory to him, order and state an account for the tax due the state, together with the expenses of such exam- ination and the taking of such testimony and proofs. Such expenses shall be fixed and adjusted by the comptroller. Notice of statement of tax; interest. § 193. Upon auditing and stating every account for taxes or other charges under this article, the comptroller shall forthwith send notice thereof in writing to tlie person, partnership, company, association or corporation against whom the same is made, \vliich notice may be mailed to the post-office address of such person, partnership, association, company or corporation. All accounts so audited and stated shall bear interest upon the total amount found due thereon to the state, for taxes, percentage, interest and other charges, from the expiration of thirty days after send- ing such notice until payment thereof shall be made. Payment of tax and penalty for failure. § 194. A tax imposed by section one hundred and eighty- two or one hundred and eighty-six of this chapter, shall be due and payable into the state treasury on or before the fifteenth day of January in each year. A tax imposed by section one hundred and eighty-four of this chapter on a transportation or transmission corporation, or by section one hundred and eighty-five, on elevated railroads or sur- face railroads not operated by steam shall be due and pay- able into the state treasury on or before the first day of August in each year. A tax imposed by section one hun- dred and eighty-seven of this chapter on an insurance cor- poration shall be due and payable into the state treasury on or before the first day of June in each year. A tax imposed The Tax Law. 159 by section one hundred and eighty-seven-a or one hundred and eighty-seven-b shall be due and payable into the state treasury on or before the first day of September in each year. A tax imposed by section one hundred and eighty- eight of this chapter on a foreign banker shall be due and payable into the state treasury on or before February first in each year. If such tax in any case is not paid within thirty days after the same becomes due, or if the report of any such corporation is not made within the time required by this article, the corporation, association, joint stock company, person or partnership, liable to pay the tax, shall pay into the state treasury in addition to the amount of such tax, a sum equal to five per centum thereof, and one per centum additional for each month the tax remains unpaid, which sum shall be added to the tax and paid or collected therewith. Every corporation, association, joint stock company, person or partnership failing to make the annual report required by this article, or failing to make any special report required by the comptroller, within any reasonable time to be specified by him, shall forfeit to the people of the state the sum of one hundred dollars for every such fail- ure, and the additional sum of ten dollars for each day that such failure continues. Such tax shall be a lien upon and bind all the real and personal property of the corporation, joint stock company or association liable to pay the same from the time when it is payable until the same is paid in full. {Thus amended by L. igoi, chs. Il8, 132 and 558.) Bevislon and readjustment of accounts by comptroller. § 195. The comptroller may, at any time within one year from the time any such account shall have been audited and stated, and notice thereof sent to the person, partnership, company, association or corporation against whom it is stated, revise and readjust such account upon application therefor by the party against whom the account is stated or by the attorney-general, and if it shall be made to appear upon any such application by evidence submitted to him or i6o The Tax Law. otherwise, that any such account included taxes or other charges which could not have been lawfully demanded, or that payment has been legally made or exacted of any such account, he shall resettle the same according to law and the facts, and charge or credit, as the case may require, the dif- ference, if any, resulting from such revision or resettlement upon the accounts for taxes of or against any such person, partnership, company, association or corporation. The comptroller shall forthwith send written notice of jts deter- mination upon such application to the applicant, which notice may be sent by mail to his post-office address. Taxes once paid into the treasury under this law cannot be paid back without an appropriation by the Legislature. All the Comp- troller may do is to resettle the account and credit or charge the difference, if any, " upon the current account." (People ex rel. Edi- son El. 111. Co. V. Wemple, 133 N. Y., 617.) This section contemplates but one revision by the Comptroller. (Peo. ex rel. Am. Surety Co. v. Campbell, 64 Hun, 417.) Beview of determination of comptroller by certiorari. § 196. The determination of the comptroller upon any application made to him by any person, partnership, com- pany, association or corporation for a revision and resettle- ment of any account, as prescribed in this article, may be reviewed both upon the law and the facts, upon certiorari by the supreme court at the instance of any person, partner- ship, company, association or corporation affected thereby, and in the name and on behalf of the people of the state. For the purpose of such review the comptroller shall return, on such certiorari, the accounts and all the evidence before him on such application, and all the papers and proofs upon the original statement of such account and all proceedings thereon. If the original or resettled accounts shall be found erroneous or illegal, either in point of law or of fact, by the supreme court, upon any such review, the accounts reviewed shall then be corrected and restated, and from any deter- mination of the supreme court upon any such review, an appeal to the court of appeals may be taken by either party. The Tax Law. i6i Regulations as to such, writ of certiorari. § 197. No certiorari to review any audit and statement of an account or any determination by the comptroller under this article, shall be granted unless notice of application therefor is made within thirty days after the service of the notice of such determina:tion. Eight days' notice shall be given to the comptroller of the application for such writ. The full amount of the taxes, percentage, interest and other charges, audited and stated in such account, must be depos- ited with the state treasurer before making the application and an undertaking filed with the comptroller in such amount and with such sureties as a justice of the supreme court shall approve, to the effect that if sucb writ is dis- missed or the determination of the comptroller affirmed, the applicant for the writ will pay all costs and charges which may accrue against him, or it in the prosecution of the writ, including costs of all appeals. Warrant for th.e collection of taxes. § 198. After the expiration of thirty days from the send- ing by the comptroller of a notice of a statement of an account as provided in this article, unless the amount of such account shall have been paid or deposited with the state treasurer, if an appeal or other proceeding have been taken to review the same, and the undertaking given as pro- vided in this article, the comptroller may issue a warrant under his hand and official seal, directed to the sheriff of any county of the state, commanding him to levy upon and sell the real and personal property of the person, partnership, company, association or corporation against which such account is stated, found' within his county for the payment of the amount thereof with interest thereon and costs of executing the warrant, and to return such warrant to the comptroller and pay to the state treasurer the money col- lected by virtue thereof, by a time to be therein specified, not less than sixty days from the date of the warrant. Such 11 i62 The Tax Law. warrant shall be a lien upon and shall bind the real and personal property of the person, partnership, company, asso- ciation or corporation against which it is issued, from the time an actual levy shall be made by virtue thereof. The sheriff to whom any such warrant shall be directed shall pro- ceed upon the same in all respects, with like effect, and in the same manner as prescribed by law in respect to executions issued against property upon judgments of a court of record, and shall be entitled to the same fees for his services in exe- cuting the warrant, to be collected in the same manner. Information of delinquents. § 199. It shall be the duty of any person having knowl- edge of the evasion of taxation under this article by any corporation, association, joint-stock company, partnership or person liable to taxation thereunder, for any omission on their part to make the reports required by this article, to make a written report thereof to the comptroller of the state, with such information as may be in his possession as may lead to the recovery of any taxes due the state there- from. If, in his opinion, the interests of the state require it, the comptroller may employ such person to assist in the collection and preparation of evidence and in the prosecu- tion and trial of actions for such taxes, and so much of the same, not exceeding ten per centum thereof, as may be col- lected from any such delinquent corporation, association, company, partnership or person, by reason of such reports and such services, as shall have been agreed upon between such person and the comptroller or attorney-general as a compensation therefor, shall be paid to such person, and nothing shall be paidto such person for such report or services unless there shall be a recovery of taxes by reason thereof. Action for recovery of taxes; forfeiture of charter of delinquent corporation. § 200. An action may be brought by the attorney-gen- eral, at the instance of the comptroller, in the name of the The Tax Law. 163 state, to recover the amount of any account audited and stated by the comptroller under the provisions of this article. If any suph account shall remain unpaid at the expiration of one year after notice of the statement thereof has been sent as required by this article, and the comp- troller is satisfied that the failure to pay the same is inten- tional, he shall so report to the attorney-g'eneral, who shall immediately bring an action, in the name of the people of the state, for the forfeiture of the franchise of any corpora- tion, joint-stock company or association failing to make such payment, and if it is found that such failure was inten- tional, judgment shall be rendered in such action for the forfeiture of its franchise and for its dissolution, and there- after such franchise shall be annulled. Exemption from other state taxation. § 202. The personal property of every corporation, com- pany, association or partnership, taxable under this article, other than for an organization tax, shall be exempt from assessment and taxation upon its personal property for state purposes, and the personal property of every corporation taxable under section one hundred and eight3'-seven-a of this article, other than for an organization tax, and as provided in chapter thirty-seven of the general laws, shall be exempt from assessment and taxation for all other purposes, if all taxes due and payable under this article have been paid there- by. The personal. property of a private or individual banker, actually employed in his business as such banker, shall be exempt from taxation for state purposes, if such private or individual banker shall have paid all taxes due and payable under this article. Such corporation and private or individ- ual banker shall in no other respect .be relieved from' assess- ment and taxation by reason of the provisions of this article. The owner and holder of stock in an incorporated trust com- pany liable to taxation under the provisions of this act shall not be taxed as an individual for such stock. (Thus amended by L. 1902, ch. 172.) Application of taxes. § 203. The taxes imposed by this article and the rev- enues thereof shall be applicable to the general fund of the treasury and to the payment of all claims and demands which are a lawful charge thereon. LOCAL TAXATION OF CORPORATIONS. Taxable Property and Place of Taxation. When property of nonresidents is taxable. § 7. Nonresidents of the state doing business in the state, either as principals or partners, shall be taxed' on the capital invested in such business, as personal property, at the place where such business is carried on, to the same extent as if they were residents of the state. [L. 185s, ch. 37-] The foregoing section applies to foreign corporations. When a foreign corporation doing business in this State pur- chases property here for its business, and pays cash for a portion of it, and incurs an indebtedness for the balance, the amount unpaid is to be deducted from the value of the property to ascertain the sums invested in this State. (People ex rel. Hecker-Jones-Jewell Milling Co. V. Barker, 147 N. Y., 31; limiting People ex rel. Thurber-Why- land Co. V. Barker, 141 N. Y., 118, and reversing 86 Hun, 148.) In order that a non-resident owner of personal property invested in business in this State may obtain exemption from such tax, he n.ust show that his indebtedness to citizens of the State of New York (such indebtedness not having been incurred in the purchase of the taxable property) is in excess of all the other personal prop- erty owned by him taxable under our laws. (People ex rel. Barney v. Barker, 16 App. Div., 266; distg. People ex rel. Milling Co. v. Barker, 147 N. Y., 34.) The fact that the State of his domicile does not permit him to deduct the amount of his indebtedness from the property there taxed, is immaterial where it does not appear that he has not other property subject to taxation sufficient to pay his indfebtedness. (Id.) Goods owned by a foreign corporation on sale in the State of New York the proceeds of which are at once remitted to the home office, are not taxable. (People ex rel. Sherwin-Williams Co. v. Barker, S App. Div., 246; overruling People ex rel. Martin Bros. Mfg. Co. V. Barker, 14 Misc., 382.) Foreign corporations are included within the terms of the act subjecting non-residents doing business in this State to assessment and taxation on all sums invested in such business. A person or corporation liable to assessment and taxation under the act is not entitled to a deduction of debts. (People ex rel. Thurber, Whyland & Co., 141 N. Y., 118.) The Tax Law. 165 The assessment of a domestic corporation is made after a deduc- tion for debts, because its capital and surplus are to be assessed at their actual value, which cannot be arrived at without consider- ing and deducting debts. A foreign corporation is not thus taxed, and no inquiry is made as to the actual value of such capital or sur- plus, and as such vdue is not to be assessed or taxed, the debts should not be deducted from specific property here. (People ex rel. Thurber, Whyland & Co., 141 N. Y., 118.) A foreign corporation, having property in this State, can claim no exemption from taxation on account of the laws of its own State. (People ex rel. Savings Bk. of New London v. Coleman, 135 N. Y., The proofs submitted by a foreign corporation to be used for the purpose of assessing the valuation of their personal estate within the State are conclusive upon such corporation, and even if shown to be false, cannot be corrected by proof on a reference to reduce or cancel the assessment. (People ex rel. Hecker-Jones-Jewell Milling Co. v. Barker, 86 Hun, 148; citing People ex rel. German Looking Glass Plate Co. v. Barker, 75 Hun, 6.) The act was intended to reach the capital of non-residents employed within this State in continuous trade, and not property sent here only to market for sale; so where a foreign corporation engaged in manufacturing in another State transmitted to its agent here its manufactured product for sale, the proceeds being remitted at once, with the securities received for sales on credit, to the home office, it was not doing business in this State within the meaning of the act. (People ex rel. Parker Mills Co. v. Comrs. of Taxes, 23 N. Y., 242.) This provision applies only to the personalty of foreign corpora- tions, and not to their real estate. (People ex rel. Keystone Gas Co. V. Assessors of Olean, 15 St. Rep., 462.) Where at the time of making the assessment-roll, the agent of a non-resident has moneys of his principal in bank, it is liable to taxa- tion, though before the time for correcting the roll it has been withdrawn and used. (People ex rel. Westbrook v. Village of Ogdensburgh, 48 N. Y., 390.) A foreign corporation doing business in this S'tate, and having a principal office here, is taxable for moneys invested in sucTi. busi- ness, as the personal estate of a domestic corporation is taxed, in the town or ward of such office, and the assessment at such place must be exclusive, embracing all its personal property liable to taxation within this State. Assessment of personal property of a foreign corporation in the possession of an agent in a town, other than that of such office, by the assessors of that town, is void. (People ex rel. Bay State, etc., Co. v. McLean, 80 N. Y., 254; affirm- ing 17 Hun, 204; S Abb. N. C., 137) Place of taxation of property of corporations. § II. The real estate of all incorporated companies liable to taxation, shall be assessed in the tax district in which the same shall lie, in the same manner as the real i66 The Tax Law. estate of individuals. All the personal estate of every incor- porated company liable to taxation on its capital shall be assessed in the tax district where the principal office or place for transacting the financial concerns of the company shall be, or if such company have no principal office, or place for transacting its financial concerns, then in the tax district where the operations of such company shall be car- ried on. In the case of toll bridges, the company owning such bridge shall be assessed in the tax district in which the tolls are collected ; and where the tolls of any bridge, turn- pike, or canal company are collected in several tax districts, the company shall be assessed in the tax district in which the treasurer or other officer authorized to pay the last preceding dividend resides. [R. S., pt. 1, ch. 13, tit. 2, § 6, without change.] Stock corporations which pay an annual tax to the Comptroller of the State as a franchise or license tax, are exempt from the pay- ment of State taxes assessed by local authorities. (See section 202, ante.) The statement of location of its principal office is a condition, precedent to the organization of a business corporation, and, should it appear that the location was willfully misstated in the certificate, or in case the corporation should change its principal place of busi- ness, without effecting a legal change of residence, for the purpose of evading taxation, it might present a case under section lygiS of the Code of Civil Procedure for the attention of the Attorney- General. (People ex rel. Knickerbocker Press v. Barker, 87 Hun, 34I-) Where a certificate of incorporation definitely states the loca- tion of -the principal office of the company and adds a clause, " or at such other place as the stockholders of the company might determine," the additional clause has no force, touching the resi- dence of the corporation for the purposes of taxation, and must be treated as surplusage. (People ex rel. Edison Electric Light Co. v. Barker, 91 Hun, 594.) Residence of a corporation for the purposes of taxation cannot be inferred from the mere place of filing its certificate of incorpora- tion. When the law under which it was formed does not fix its resi- dence or require the location of its principal office to be stated in the certificate, its residence is deemed to be where its principal place of business is actually situated. (Austen v. Hudson River Telephone Co., 7Z Hun, 96; Austen v. Westchester Telephone Co., 8 Misc. R., II; Oswego Starch Factory v. Dolloway, 21 N. Y., 4S4; Conroe V. Natl. Protection Ins. Co., 10 How. Pr., 403; HubWd v. Same, II id., 149.) When a law under which a corporation is organized requires the The Tax Law. 167 certificate of incorporation to state the location of the principal office, and such_ location is stated in the certificate, the statement is conclusive evidence of the residence of the corporation for the purposes of taxation under this section. (Austen v. Hudson Riv. Telephone Co., 73 Hun, g6; Western Transportation Co. v. Scheu, 19 N. Y., 408;. Oswego Starch Factory v. Dolloway, 21 id., 449; Chesebrough Mfg. Co. v. Coleman, 44 Hun, 545; Union Stearpboat Co. V. Buflfalo, 82 N. Y., 351.) Taxation of corporate stock. § 12. The capital stock of every company liable to taxa- tion, except such part of it as shall have been excepted in the assessment-roll or shall be exempt by law, together with its surplus profits or reserve funds exceeding ten per centum of its capital, after deducting the assessed value of its real estate, and all shares of stock in other corporations actually owned by such company which are taxable upon their capital stock under the laws of this state, shall be assessed at its actual value. [L. 1857, ch. 456, § 3, without change.] In assessing the capital stock of a corporation under this act the actual value of its capital stock, not the market value of its share stock, is to be considered; in other words, its actual tangible personal property and not its franchises. (People ex rel. Manhattan Ry. Co. V. Barker, 146 N. Y., 304.) In determining the value of the real estate the assessors are not bound by the assessed valuation. This does not necessarily show the full value and the assessors may legally disregard it, and esti- mate the real estate at its actual value, even ■ if it exceeds the assessed valuation. (Equitable Gas Light Co. v. Barker, 143 N. Y., 94, and cases therein cited.) The market value of the shares of a corporation is an erroneous basis for determining the amount of the capital of the corpora- tion liable to taxation. It is the corporate assets constituting the capital that is the subject of taxation. (People ex rel. Bleecker St. and Fulton Ferry R. R. Co. v. Barker, 85 Hun, 210.) In estimating the amount of personalty for purposes of taxation, just debts of the corporation must be deducted. Realty and per- sonalty are to be separately assessed, and if the personalty be over- valued and the realty undervalued, the valuation of the personalty cannot be sustained on the theory that the undervaluation of the realty equals or exceeds the overvaluation of the personalty. (People ex rel. Equitable Gas Light Co. v. Barker, 81 Hun, 22.) The remedy prescribed by Laws of 1880, ch. 269, applies to assess- ments made in the city of New York, notwithstanding section 821 of the Consolidation Act. (Id.) Under the foregoing section, the assessed value of real estate owned by the corporation in this State must be deducted from the 1 68 The Tax Law. amount of taxable capital. (People ex rel. Butchers' Hide & M. Co. V. Asten, loo N. Y., 597; People ex rel. Twenty-third St. R. R. Co. V. Comrs. of Taxes, 95 N. Y., 554; see, also, People ex rel. Central Park, etc., R. R. Co. v. Comrs. of Taxes, 21 St. Rep., 350.) When the real estate is situated in another State or country the measure of the deduction is the actual value of such real estate. (People ex rel. Panama R. R. Co. v. Comrs. of Taxes, 104 N. Y., 240; People ex rel. Fairfield Chemical Co. v. Coleman, 115 N. Y., I79-) Capital invested in United States bonds and shares of stock owned in such other corporations as are taxed in this State may be deducted from the amount of taxable capital. (People ex rel. Com- monwealth Ins. Co. V. Coleman, 112 N. Y., 565; People ex rel. Pacific Mail Steamship Co. v. Comrs. of Taxes, 64 N. Y., 541; People ex rel. Bk. of Commerce v. Same, 23 id., 192; International Life Assur. Soc. v. Same, 28 Barb., 318.) The phrase " capital stock " in the foregoing act means not the share stock, but the capital owned by the corporation, the fund required to be paid in and kept intact as the basis of the business enterprise. In taxing corporations, therefore, under said act the subject of valuation and assessment is never the share stock, but always the company's capital and surplus which should be assessed at its actual value when that is known or ascertainable. (United States Trust Co. v. New York City, ^^ Hun, 182; People ex rel. Union Trust Co. v. Coleman, 126 N. Y., 433.) In the assessment of taxes upon a corporation under Laws of 1857, chapter 456, section 3, it is entitled to have its indebtednes.> deducted from the value of its corporate assets. (People ex rel. Second Av. R. R. Co. v. Barker, 141 N. Y., 196; People ex rel. Edison Elec. Illuminating Co. v. Same, 139 N. Y., 55; People ex rel. Union Trust Co. v. Coleman, 126 N. Y., 433.) This indebtedness must be taken into consideration in arriving at the value of the capital of a corporation. And when it is seen that the indebtedness of a corporation is double the amount of all its assets, it follows upon the system adopted by the State for the assessment of corporations that the actual value of the capital of such a corporation is zero. (People ex rel. Edison Elec. Illuminat- ing Co. V. Barker, 139 N. Y., 55; reversing 68 Hun, 513.) The assessment of a domestic corporation is made after a deduc- tion for debts, because its capital and surplus are to be assessed at their actual value, which cannot be arrived at without considering .-■nd deducting debts. (People ex rel. Thurber, Whyland & Co., 141 N. Y., 118.) Mode of Assessment. Beports of corporations. § 27. The president or other proper officer of every moneyed or stock corporation deriving an income or profit from its capital or otherwise shall, on or before June fif- teenth, deliver to one of the assessors of the tax district in which the company is liable to be taxed and, if such tax dis- The Tax Law. 169 trict is in a county embracing a portion of the forest pre- serve, to the comptroller of the state, a written statement specifying: 1. The real property, if any, owned by such company, the tax district in which the same is situated and, unless a railroad corporation, the sums actually paid therefor. 2. The capital stock actually paid in and secured to be paid in excepting therefrom the sums paid for real prop- erty and the amount of such capital stock held by the state and by any incorporated literary or charitable institution, and 3. The tax district in which, the principal office of the company is situated or in case it has no principal office, the tax district in which its operations are carried on. Such statement shall be verified by the officer making the same to the effect that it is in all respects just and true. If such statement is not made within twenty days after the fifteenth day of June, or is insufficient, evasive or defective, the assessors may compel the corporation to make a proper statement by mandamus. [Revisers' Note. — R. S., pt. i, ch. 13, tit. 4, §§ 1-3. The date of making the report is changed from July i, to June 15. From sub- division 3 is omitted the statement of the tax district in which it is liable to be taxed, for § 11 of the chapter provides if the corporation has no principal office, it is liable to be taxed in the district in which the operations of the company are carried on.] For form of report, see post, form No. 2i- The valuation of the capital stock made by the secretary of a company iff the statement to the assessors, is sufficient evidence of value upon which to base the assessment, notwithstanding the com- pany sought by certiorari to correct the assessment by deducting the amount of debts owed by it from the sum indicated in the state- ment, since the value of the franchises might make up the differ- ence. (People ex rel. Buffalo Mut. Gas Light Go. v. Steele, i Buff. Super. Ct., 34S.) Gorporations may be assessed though no statement is made by them to the assessors as required by law, and such a statement when made is not conclusive upon the assessors; it is the judg- ment of the assessors that the law requires. (People ex rel. Man- hattan Fire Ins. Co. v. Comrs. of Taxes, 76 N. Y., 64.) Assessors have jurisdiction to assess a corporation that omits to make a statement of its financial condition. If such a corporation 170 The Tax Law. omits to appear and demand a correction of the preliminary assess- ment, it can obtain no relief from overvaluation by certiorari. (People ex rel. The Mutual Union Tel. Co. v. Comrs. of Taxes, 99 N. Y., 254.) Nor does the failure to file such a statement prevent a party aggrieved from appearing before the assessors. (Id.) Penalty for omission to make statement. § 28. In case of neglect to furnish such statements within thirty clays after the time above provided, the com- pany so neglecting shall forfeit to the people of this state for each statement so omitted to be furnished, the sum of two hundred and fifty dollars, and it shall be the duty of the cttorney-general to prosecute for such penalty upon information which shall be furnished him by the comp- troller. Upon such statement being furnished and the costs of the suit being paid, the comptroller, if he shall be satis- fied that such omission was not willful, may, in his discre- tion, discontinue such suit. [R. S., pt. I, ch. 13, tit. 4, §§ 4-5, without change.] Corporations, how assessed. § 31. The assessors shall assess corporations liable to taxation in their respective tax districts upon their assess- ment-rolls in the following manner: 1. In the first column the name of each corporation, and under its name the amount of its capital stock paid in and secured to be paid in; the amount paid by it for real prop- erty then owned by it wherever situated ; the amount of all surplus profits or reserve funds exceeding ten per centum of their capital, after deducting therefrom the amount of said real property and the amount of its stock, if any, belonging to the state and to incorporated literary and charitable institutions. 2. In the second column the quantity of real property owned by such corporation and situated within their tax district. 3. In the third column the actual value ■ of such real property. The Tax Law. 171 4. In the fourth column the amount of the capital stock paid in and secured to be paid in and of all such surplus profits or reserve funds as aforesaid after deducting the sums paid out for all the real estate of the company wherever the same may be situated and then belonging to it, and the amount of stock, if any, belonging to the people of the state and to incorporated literary and charitable institutions. [R. S., pt. I, ch. 13, tit. 4, § 6, without change in substance.] See the late decisions cited under section 12, ante. No deduction is to be made for losses of capital, and no increase for accumulations, in the course of business of the company, but the amount paid and secured to be paid is taken as the true sum to be inserted in the assessment rolls. (Farmers' Loan & Trust Co. V. Mayor, etc., of N. Y., 7 Hill, 261.) The word " profits " generally means the' gain which is made upon any business or investment when both receipts and expendi- tures are taken into account. (Id.) To enable a corporation to have its name stricken from the assess- ment roll the affidavit must show that the company is not in receipt of any profits or income; an affidavit that it is not in receipt of any tiet profits or income is insufficient. (People ex rel. McMaster v. Supervisors of Niagara, 4 Hill, 20.) An accumulation of surplus profits of a gas-light company, invested in mains and upon which certificates bearing interest had been issued to its stockholders, redeemable in money or in stock, are liable to taxation as the property of, the company; held also that the issue of such certificates did not create an indebtedness to be deducted, since the company had the option to exchange stock for them. (People ex rel. Williamsburgh Gas-Light Co. v. Assessors of Brooklyn, 76 N. Y., 202.) The rule of taxation as to corporations, when based upon the amount of capital paid in, is, after deducting the amount paid out for real estate from the capital, to assess the remaining capital at its actual value, leaving the real estate to be assessed like that of indi- viduals in the town or ward where it is situated. (People ex rel. Citizens' Gas Light Co. v. Assessors of Brooklyn, 39 N. Y., 81; People ex rel. Am. Linen Thread Co. v. Assessors of Mechanicville, 6 Lans., 105.) The indebtedness of a corporation is to be considered in estimat- ing the value of its capital stock. (People ex rel. Pacific Mail S. S. Co. v. Comrs. of Taxes, 46 How. Pr., 315; i Thomp. & C, 611.) In assessing the capital of a corporation under L. 1657, ch. 456, § 3, the actual value of the stock is the basis, and where it is of no -value, because of its indebtedness exceeding its assets, it should not be assessed. (People ex rel. West Side & Yonkers Ry. Co. v. Comrs. of Taxes, 31 Hun, 32.) The capital stock of a corporation is properly assessed at its actual and not its par value. (People ex rel. Panama R. R. Co. v. Comrs. of Taxes, 64 How. Pr., 405.) FRANCHISE TAX LAW. An Act to Amend the Tax Law, in Relation to the Taxation of Public Franchises as Real Property. This act, known as the Franchise Tax Law, being chapter 712, Laws of 1899, as amended by chapter 254, Laws of . 1900, which included franchises in the definition of real estate, and provided a method for their assessment and taxation, reads as follows: 3. The terms " land," '' real estate," and " real prop- erty," as used in this chapter, include the land itself above and under water, all buildings and other articles and struc- tures, substructures and superstructures, erected upon, under or above, or affixed to the same; all wharves and piers, including the value of the right to collect wharfage, cranage or dockage thereon; all bridges, all telegraph lines, wires, poles and appurtenances; all supports and inclosures for electrical conductors and other appurtenances upon, above and under ground; all surface, under ground or ele- vated railroads, including the value of all franchises, rights or permission to construct, maintain or operate the same in, under, above, on or through, streets, highways, or pub- lic places; all railroad structures, substructures and super- structures, tracks and the iron thereon ; branches, switches and other fixtures permitted or authorized to be made, laid or placed in, upon, above or under any public or private road, street or ground; all mains, pipes and tanks laid or placed in, upon, above or under any public or private street or place for conducting steam, heat, water, oil, electricity or any property, substance or product capable of transpor- tation or conveyance therein or that is protected thereby, including the value of all franchises, rights, authority or Franchise Tax Law. ' 171b permission to construct, maintain or operate, in, under, above, upon, or through, any streets, highways, or public places, any mains, pipes, tanks, conduits, or wires, with their appurtenances, for conducting water, steam, heat, light, power, gas, oil, or other substance, or electricity for telegraphic, telephonic or other purposes; all trees and underwood growing upon land, and all mines, minerals, quarries and fossils in and under the same, except_ mines belonging to the state. A franchise, right, authority or permission specified in this subdivision shall for the purpose of taxation be known as a " special franchise." A special franchise shall be deemed to include the value of the tan- gible property of a person, copartnership, association or corporation situated in, upon, under or above any street, highway, public place or public waters in connection with the speciail franchise. The tangible property so included shall be taxed as a part of the special franchise. No prop- erty of a municipal corporation shall be subject to a special franchise tax. (Thus amended by L. 1899, ch. 713.) §42. Assessment of special franchises. — The state board of tax commissioners shall annually fix and deter- mine the valuation of each special franchise subject to assessment in each city, town, or tax district. After the time fixed for hearing complaints the tax commissioners shall finally determine the valuation of the special fran- chises, and shall file with the clerk of the city or town in which said special franchise is assessed a written statement duly certified by the secretary of the board of the valuation of each special franchise assessed therein as finally fixed and determined by said board; such statement of valuation shall be filed with the town clerk of the respective towns within thirty days next preceding the first day of July in each year; and with the clerks of cities of the state within thirty days before the date set opposite the name of each city in the I7IC Franchise Tax Law. following schedule. In the city of New York such state- ment shall be filed with the department of taxes and assessments. SCHEDULE OF DATES FOR FILING OF ASSESSMENTS OF SPECIAL FRANCHISES. Name of city. Date. Name of city. Date ). Rochester. April 1st. Jame_stown. April 1st. Ithaca.^ April I St. Buffalo. April 1st. Gloversville. April 1st. Auburn. May 1st. New York City. April 1st. Schenectady. June 1st. Corning. June 1st. Hornellsville. June 1st. Oswego. June 1st. North Tonawanda. July 1st. Olean. July I St. Syracuse. July 1st. Cohoes. July I St. Ogdensburgh. July 1st. Dunkirk. July I St. Troy. July ist. Rome. July I St. Watertown. July 1st. Elmira. July 1st. Lockport. July 1st Utica. July ist. Poughkeepsie. July 1st. Little Falls. July 1st. Watervliet. July 1st. Niagara Falls. July 1st. Kingston. July 1st. Newburgh. July 1st. Hudson. July ist. Amsterdam. July ist. Binghamton. July 1st. Geneva. July 1st. Middletown. July 1st. Johnstown. July 1st. Yonkers. Oct. 1st. New Rochelle. Oct. ist. Albany. Oct. 1st. Mt. Vernon. Oct. rst. Rensselaer. July 1st. Oneida Oct. 1st. Cortland. Oct. 1st. Each city or town clerk shall, within five days after the receipt by him of the statement of assessment of a special franchise by the state board, deliver a copy of such state- ment certified by him to the assessors or other officers charged with the duty of making local assessments in each tax district in said city or town and to the assessors of villages and commissioners of highways within their respec- tive towns and villages. Tbe valuations of every special franchise as so fixed by the state board shall be entered by the assessors or other officers in the proper colunm of the assessment roll before the final revision and certifica- tion of such roll by them, and become part thereof with Franchise Tax Law. lyid the same force and effect as if such assessment had been originally made by such assessor or other officer. If a special franchise assessed in a town is wholly within a vil-' lage, the valuation fixed by the state board for the town shall also be the valuation for the village. If a part only of such special franchise is in a village, or is in a village situated in more than one tax district, it shall be the duty of the village assessors to ascertain and determine what portion of the valuation of such franchise, as the same has been fixed by the state board, shall be placed upon the tax roll for village purposes. The valuation apportioned to the town shall be the assessed valuation for highway pur- poses, and in case part of such special franchise shall be assessed in a village and part thereof in a town outside a village, the commissioners of highways of the town and vil- lage shall meet on the third Tuesday in August in each year and apportion the valuation of such special franchises between such town outside the village and such village for highway purposes. In case of disagreement between them the decision of the supervisor of the town shall be final. The town assessors shall make an apportionment among school districts at the time and in the manner required by section thirty-nine of this chapter. The valuation so fixed by the state board shall be the assessed valuation on which all taxes based on such special franchise in the city, town or village for state, municipal, school or highway purposes shall be levied during the next ensuing year. It shall not be necessary for the state board of tax commis- sioners to give notice to any person, co-partnership, asso- ciation or corporation of the valuation of a special franchise located in any village for village purposes except in a case where such valuation is required to be made for such village purposes by the state board of tax commissioners. The assessors or other taxing officer, or other local officer in any city, town or village, or any state or county officer, 171 e Franchise Tax Law. shall on demand furnish to the state board of tax commis- sioners any information required by such board for the purpose of determining the value of a special franchise. (Thus arn'd by L. iSgg, ch. 712; L. igoo, ch. 254; L. 1902, ch. 112.) § 43. Report to state board of tax commissioners. — Every person, co-partnership, association or corporation subject to taxation on a special franchise, shall, within thirty days after this section takes effect, or within thirty days after such special franchise is acquired, make a written report to the state board of tax commissioners containing a full description of every special franchise possessed or enjoyed by such person, co-partnership, association or cor-, poration, a copy of the special law, grant, ordinance, or contract under which the same is held, or if possessed or enjoyed under a general law, a reference to such law, a statement of any condition, obligation or burden imposed upon such special franchise, or under which the same is enjoyed, together with any other information relating to the value of such special franchise, required by the state board. The state board of tax commissioners may from time to time require a further or supplemental report from any such person, co-partnership, association or corpora- tion, containing information and data upon such matters as it may specify. Every report required by this section shall have annexed thereto the affidavit of the president, vice-president, secretary or treasurer of the association or corporation, or one of the persons or one of the members of the co-partnership making the same, to the effect that the statements contained therein are true. Such bo'*ri2.) § 45. Certiorari to review assessment. — An assessment of a special franchise by the state board of tax commis- sioners may be reviewed in the manner prescribed by article eleven of this chapter, and that article applies so far as prac- ticable to such an assessment, in the same manner and with the same force and efifect as if the assessment had been made by local assessors; a petition for a writ of certiorari to review the assessment must be presented within fifteen 12 lyig Franchise Tax Law. days after the completion and filing of the assessment roll, and the first posting or publication of the notice thereof as required by law. Such writ must run to and be answered by said state board of tax commissioners and no writ of certiorari to renew any assessment of a special franchise shall run to any other board or officer unless otherwise directed by the court or judge granting the writ. An adjudication made in the proceeding instituted by such writ of certiorari shall be binding upon the local assessors and any ministerial officer who performs any duty in the collection of said assessment in the same manner as though said local assessors or officers had been parties to the pro- ceeding. The state board of tax commissioners on filing with the city, town or village clerk a statement of the valuation of a special franchise, shall give to the person, co-partnership, association or corporation affected written notice that such statement has been filed, and such notice may be served on a co-partnership, association or corpora- tion by mailing a copy thereof to it at its principal office or place of business, and on a person either personally or by mailing it to him at his place of business or last known place of residence. (Thus amended by L. 1899, ch. 712, and L. 1900, ch. 254.) § 46. Deduction from special franchise tax for local purposes. — If, when the tax assessed on any special fran- chise is due and payable under the provisions of law appli- cable to the city, town or -village in which the tangible property is located, it shall appear that the person, co-part- nership, association or corporation afifected has paid to such city, town or village for its exclusive use within the next preceding year, under any agreement therefor, or under any statute requiring the same, any sum based upon a per- centage of gross earnings, or any other income, or any license fee, or any sum of money on account of such special franchise, granted to or possessed by such person, co-part- nership, association, or corporation, which payment was in the nature of a tax, all amounts so paid for the exclusive Franchise Tax Law. lyih use of such city, town or village except money paid or expended for paving or repairing of pavement of any street, highway or public place, shall be deducted from any tax based on the assessment made by the state board of tax commissioners for city, town or village purposes, but not otherwise; and the remainder shall be the tax on such special franchise payable for city, town or village purposes. The chamberlain or treasurer of a city, the treasurer of a village, the supervisor of a town, or other ofHcer to whom any sum is paid for which a person, co-partnership, associa- tion, or corporation is entitled to credit as provided in this section, shall, not less than five nor more than twenty days before a tax on a special franchise is payable, make and deliver to the collector or receiver of taxes or other officer authorized to receive taxes for such city, town or village, his certificate showing the several amounts which have been paid during the year ending on the day of the date of the certificate. On the receipt of such certificate the collector, receiver or other, officer shall immediately credit on the tax roll to the person, copartnership, association or cor- poration affected the amount stated in such certificate, on any tax levied against such person, copartnership, associa- tion or corporation on an assessment of a special franchise for city, town or village purposes only, but no credit shall be given on account of such payment or certificate in any other year, nor for a greater sum than the amount of the special franchise tax for city, town or. village purposes, for the current year; and he shall collect and receive the bal- ance, if any, of such tax as required by law. (Thus amended by L. 1899, ch. 712.) 1 47. Special franchise tax not to affect other tax. — The imposition or payment of a special franchise tax as provided in this chapter shall not relieve any association, copartnership or corporation from the payment of any organization tax or franchise tax or any other tax other- wise imposed by article nine of this chapter, or by any other provision of law; but tangible property subject to a special franchise tax situated in, upon, under or above any street, highway, public place or public waters, as described in subdivision three of section two shall not be taxable except upon the assessment made as herein provided by the state board of tax commissioners. (Thus amended by L. 1899, ch. 712.) 1711 Franchise Tax Law. § 21. Preparation of assessment roll. — They shall pre- pare an assessment roll containing six separate columns and shall, according to the best information in their power, set down: 1. In the first column the names of all the taxable per- sons in the tax district. 2. In the second column the quantity of real property taxable to each person, with a statement thereof in such form as the commissioner of taxes shall prescribe. 3. In the third column the full value of such real property. 4. In the fourth column the full value of all the taxable personal property owned by each person, respectively, after deducting the just debts owing by him. 5. In the fifth column the value of taxable rents reserved and chargeable upon lands within the tax district, esti- mated at a principal sum, the interest of which, at the legal rate per annum, shall produce a sum equal to such annual rents and if payable in any other thing except money the value of the rents in money to be ascertained by them and the value of each rent assessed separately, and if the name of the person entitled to receive'the rent assessed cannot be ascertained by the assessors, it shall be assessed against the tenant in possession of the real property upon which the rents are chargeable. 6. In the sixth column the value of the special franchise as fixed by the state board of tax commissioners. (Thus amended by L. 1899, ch. 712.) §31. Corporations how assessed. — The assessors shair assess corporations liable to taxation in their respect- ive tax districts upon their assessment rolls in the following manner: I. In the first column the name of each corporation, and under its name the amount of its capital stock paid in and secured to be paid in; the amount paid by it for real prop- erty then owned by it wherever situated; the amount of all surplus profits or reserve funds exceeding ten per centum of their capital, after deducting therefrom the amount of said real property and the amount of its stock, if any, belonging to the state and to incorporated literary and charitable institutions. Franchise Tax Law. lyij 2. In the second column the quantity of real property except special franchises owned by such corporation and situated within their tax district. 3. In the third column the actual value of such real property, except special franchises. 4. In the fourth column the amount of the capital stock paid in and secured to be paid in, and of all of such surplus profits or reserve funds as aforesaid, after deducting the sums paid out for all the real estate of the company, wherever the same may be situated, and then belonging to it, and the amount of stock, if any, belonging to the people of the state and to incorporated literary and charitable institutions. 5. In the fifth column the value of any special franchise owned by it as fixed by the state board of tax commissioners. (Thus amended by L. 1899, ch. 712.) § 37. Correction and verification of tax-roll. — When the assessors or a majority of them, shall have, completed their roll, they shall severally appear before any officer of their county authorized by law to administer oaths and shall severally make and subscribe before such officer an oath in the following form : " We, the undersigned, do sev- erally depose and swear that we have set down in the fore- going assessment-roll all the real estate situated in the tax district in which we are assessors, according to our best information ; and that, with the exception of those cases in . which the value of the said real estate has been changed by reason of proof produced before us, and with the exception of those cases in which the value of any special franchise has been fixed by the state board of tax commissioners, we have estimated the value of the said real estate at the sums which a majority of the assessors have decided to be the full value thereof; and, also, that the said assessment-roll contains a true statement of the aggregate amount of the taxable personal estate of each and every person named in such roll over and above the amount of debts due from such persons, respectively, and excluding such stocks as are otherwise taxable, and such other property as is exempt by law from taxation, at the full value thereof, according to our best judgment and belief," which oath shall be written or printed on said roll, signed by the assessors and certified by the officer. (Thus amended by L. 1899, ch. 712.) MISCELLANEOUS STATUTES Affecting Business Corporations. Hours of labor in brickyards. § 6. Ten hours, exclusive of the necessary time for meals, shall constitute a legal day's work in the making of brick in brickyards owned or operated by corporations. No corporation owning or operating such brickyards shall require employes to work more than ten hours in any one day, or to commence work before seven o'clock in the morning. But overwork and work prior to seven o'clock in the morning for extra compensation may be performed by agreement between employer i:nd employe. (Labor Law, § 6, ch. 415, L. 1897.) A corporation does not forfeit its charter by requiring employes to work more than ten hours per day in violation of this act. (People V, Atlantic Ave. R. R. Co., 125 N. Y., 513.) Cash payment of wages. § 9. Every manufacturing, mining, quarrying, mercan- tile, railroad, street railway, canal, steamboat, telegraph and telephone company, every express company, and every water company, not municipal, shall pay to each employe engaged in its business the wages earned by him in ca^h. Xo such company or corporation shall pay its employes in scrip, commonly known as store money orders. (Labor Law, § 9, ch. 415, L. 1897.) This section supersedes Laws of 1889, chapter 381, section i, an act entitled " An act to provide for the cash payment of wages by corporations." The provisions of section 2 of said act, pre- scribing the penalty, are embodied in section 11 of the Labor Law, page 173, post. Miscellaneous Statutes. 173 When wages are to be paid. § 10. Every corporation or joint stock association, or person carrying on the business thereof by lease or other- wise, shall pay weekly to each employe the wages earned by him to a day not more than six days prior to the date of such payment. But every person or corporation operating a steam sur- face railroad shall, on of before the twentieth day of each month, pay the employes thereof the wages earned by them during the preceding calendar month. (Labor Law, § 10, ch. 415, L. 1897.) The foregoing section supersedes section i of chapter 388, Laws of 1890, repealed by the Labor Law (L. 1897, ch. 415). Penalty for violation of preceding sections. § II. If a corporation or joint-stock association, its lessee or other person carrying on the business thereof, shall fail to pay the wages of an employe as provided in this arti- cle, it shall forfeit to the people of the state the sjum of fifty dollars for each such failure, to be recovered by the factory inspector in his name of office in a civil action; but an action shall not be maintained therefor, unless the factory inspector shall have given to the employer at least ten days' written notice, that such an action will be brought if the wages due are not sooner paid as provided in this article. On the trial of such action, such corporation or associa- tion shall not be allowed to set up any defense, other than a valid assignment of such wages, a valid set-off against the same, or the absence of such employe from his regular place of labor at the time of payment, or an actual tender to such employe at the time of the payment of the wages so earned by him, or a breach of contract by such employe or a denial of the employment. (Labor Law, § 11, ch. 415, L. 1897.) This section of the Labor Law embodies the provisions of L. 1889, chapter 381, section 2, but seems also to be in addition to section 2, chapter 388, Laws of 1890, which has not been repealed, and reads as follows: 174 Miscellaneous Statutes. Penalty; factory inspectors may n3.aintain action; charges for goods not to be an offset. § 2. Any joint-stock company or corporation violating any of the provisions of this act shall be liable to a penalty not exceeding fifty dollars and not less than ten dollars for each violation, to be paid to the people of the State, and which may be recovered in a civil action; provided notice in writing shall have been given such company or corpora- tion that such an action will be brought if such company or corporation, after service of such notice, shall at any time fail to comply with the provisions of this act. The factory inspector of this State, his assistant or deputies, may bring an action in the name of the people of the State as plaintiffs against any joint-stock company or corporation which neglects to comply with the provisions of this act within two weeks, after having been notified in writing by such inspector, assistant or deputies, that such action will be brought. On the trial of such action such joint-stock corn- pany or corporation shall not be allowed to set up any defense for a failure to pay weekly, or monthly, if a steam surface railway company, any employe engaged in its .busi- ness, the wages earned by such employe to within six days of the date of such payment, or for the preceding calendar month, if a steam surface railway company, other than a valid assignment of such wages or a valid set-off against the same, or in the absence of such employe from his regular place of labor at the time of payment, or an actual tender to such employe at the time of payment of the wages so earned by him, or a breach of contract by such employe, or a denial of the employment. No assignment of future wages, pay- able weekly or monthly, if a steam surface railway com- pany, under the provisions of this act shall be valid if made to the corporation or joint-stock company from which such wages are to become due, or to any person on behalf of such joint-stock company or corporation, or if made or procured to be made to any person for the purpose of relieving such Miscellaneous Statutes. 175 joint-stock company or corporation from the obligation to pay weekly or monthly, if a steam surface railway company, under the provisions of this act. Charges for groceries, pro- visions, or clothing shall not be made a valid offset for wages, nor shall any such corporation or joint-stock com- pany require as a condition of employment any agreement from any employe to accept wages at other periods than as provided in section one of this act. Any person, acting as the agent or lessee of the corporation or joint-stock com- pany, and operating its plant, works or business, and dis- posing of the products thereof chiefly or solely to such cor- poration or joint-stock company, who shall violate the pro- visions of this act, shall be guilty of a misdemeanor, and on conviction thereof shall be fined not less than ten dollars or more than fifty dollars. (L. 1890, ch. 388, as amended by L. 1893, ch. 717; L. 1895, ch. 791.) L. 1851, Ch. 321. An Act authorizing married women who may be members or stockholders of any incorporated company, to vote at elections of directors and trustees. Section i. It shall be lawful for any married woman, being a stockholder or member of any bank, insurance com- pany (other than mutual fire insurance companies), manu- facturing company or other institution incorporated under the laws of this state, to vote at any election for directors or trustees, by proxy or otherwise, in such company of which she may be a stockholder or member. PROVISIONS OF THE PENAL CODE. Refusal to permit employes to attend election. § 4if. A person or corporation who refuses to an employe entitled to vote at an election or town meeting, the privilege of attending thereat, as provided by the elec- tion law, or subjects such employe to a penalty or reduction of wages because of the exercise of such privilege, is guilty of a misdemeanor. (Thus amended by ch. 693, L. 1892.) Payment of wages. § 384i. A corporation or joint-stock association or a person carrying on the business thereof, by lease or other- wise, who does not pay the wages of its employes in cash, weekly or monthly as provided in article one of the labor law, is guilty of a misdemeanor, and upon conviction there- for, shall be fined not less than twenty-five nor more than fifty dollars for each offense. (New, added by L. 1897, ch. 416.) Frauds in the organization of corporations. § 590. A person who: I. Without authority subscribes the name of another to or inserts the name of another in any prospectus, circular or other advertisement or announcement of any corpora- tion or joint-stock association existing or intended to be formed, with intent to permit the same to be published, and thereby to lead persons to believe that the person whose name is so subscribed is an officer, agent, member or pro- moter of such corporation or association; or, Provisions of the Penal Code. 177 2. Signs the name of a fictitious person to any subscrip- tion for, or agreement to take stock in any corporation, existing or proposed; or, 3. Signs to any such subscription or agreement the name of any person, knowing that such person does not intend in good faith to comply with the terms thereof, or under any understanding or agreement, that the terms of such subscription or agreement are not to be compHed with or enforced; Is guilty of a misdemeanor. (Thus amended by L. 1892, ch. 692.) Fraudulent issue of stock, etc. § 591. An officer, agent or other person in the service of any joint-stock company or corporation formed or exist- ing under the laws of this state, or of the United States or of any state or territory thereof, or of any foreign govern- ment or country, who willfully and knowingly, with intent to defraud, either: 1. Sells, pledges or issues, or causes to be sold, jjledged or issued, or signs or executes, or causes to be signed or executed with intent to sell, pledges or issues or causes to be sold, pledged or issued, any certificate or instrument pur- porting to be a certificate or evidence of the ownership of any share or shares of such company or corporation, or any bond or evidence of debt, or writing purporting to be a bond or evidence of debt of such company or corporation, without being first thereto duly authorized by such company or corporation, or contrary to the charter or laws under which such corporation or company exists, or in excess of the power of such company or corporation or of the limit imposed by law or otherwise upon its power to create or issue stock or evidences of debt; or 2. Reissues, sells, pledges or disposes of, or causes to be reissued, sold, pledged or disposed of, any surrendered or canceled certificates, or other evidence of the transfer or 178 Provisions of the Penal Code. ownership of any such share or shares, is punishable by imprisonment for a term not exceeding seven years, or by a fine not exceeding three thousand dollars, or by both. (Thus amended by L. 1892, ch. 692.) Fraud in organizing corporation, etc. § 592. An officer, agent or clerk of a corporation, or of persons proposing to organize a corporation, or to increase the capital stock of a corporation, who knowingly exhibits a false, forged or altered book, paper, voucher, security or other instrument ol evidence to any public officer or board authorized by law to examine the organization of such cor- poration, or to investigate its affairs, or to allow an increase of its capital, with intent to deceive such officer or board in respect thereto, is punishable by imprisonment in a state prison not exceeding ten years. (Thus amended by L. 1892, ch. 662.) Misconduct of directors of stock corporations. § 594. A director of a stock corporation, who concurs in any vote or act of the directors of such corporation, or any of them, by which it is intended, 1. To make a dividend, except from the surplus profits arising from the business of the corporation, and in the cases and manner allowed by law; or 2. To divide, withdraw, or in any manner pay to the stockholders, or any of them, any part of the capital stock of the corporation ; or to reduce such capital stock without the consent of the legislature ; or 3. To discount or receive any note or other evidence of debt in payment of an installment of capital stock actually called in, and required to be paid, or with intent to provide the means of making such payment; or 4. To receive or discount any note or other evidence of debt with intent to enable any stockholder to withdraw any part of the money paid in by him on his stock ; or Provisions of the Penal Code. 179 5. To apply any portion of the funds of such corporation, except surplus profits, directly or indirectly, to the purchase of shares of its own stock; Is guilty of a misdemeanor y (Thus amended by L. 1892, ch. 692, and L. igoi, ch. 588 ) The amendment of 1901 consisted in the suiking oat of provisions from this section, the retention of which would have contiicted .vith the Slocic Corporation Law, as amended in igoi. Hisconduct of officers and directors of stock corporations. § 610. An officer or director of a stock corporation who: 1. Issues, participates in issuing, or concurs in a vote to issue any increase of its capital stock beyond the amount of the capital stock thereof, duly authorized by or in pursuance of law ; or 2. Sells, or agrees to sell, or is directly or indirectly interested in the sale of any share of stock of such corpora- tion, or in any agreement to sell the same, unless at the time of such sale or agreement he is an actual owner of such share; is guilty of a misdemeanor, punishable by imprison- ment for not less than six months, or by a fine not exceed- ing five thousand dollars, or by both. (Thus amended by L. 1892, ch. 692.) Misconduct of officers and employes of corporations. § 611. A director, officer, agent or employe of any cor- poration or joint-stock association who : 1. Knowingly receives or possesses himself of any of its property otherwise than in payment for a just demand, and with intent to defraud, omits to make or to cause or direct to be made, a full and true entry thereof in its books and accounts;. or 2. Concurs in omitting to make any material entry thereof; or i8o Provisions of the Penal Code. 3. Knowingly concurs in making or publishing any written report, exhibit or statement of its affairs or pecuniary condition, containing any material statement which is false; or, 4. Having the custody or control of its books, willfully refuses or neglects to make any proper entry in the stock book of such corporation as required by law, or to exhibit or allow the same to be inspected and extracts to be taken therefrom by any person entitled by law to inspect the same or to take extracts therefrom ; or, 5. If a notice of an application for an injunction affecting the property or business of such joint-stock association or corporation is served upon him, omits to disclose the fact of such service and the time and place of such application to the other directors, officers and managers thereof; or, 6. Refuses or neglects to make any report or statement lawfully required by a public officer; is guilty of a misde- meanor. (Thus amended by L. 1892, ch. 692; L. -1893, ch. 692.) Misconduct at corporate elections. § 613. Any person who: 2. Being entitled to vote at any meeting of the stockhold ers or bondholders or both of a stock corporation, sells his vote, or who issues a proxy to vote to any person for any sum of money or thing of value, except as expressly author- ized by law; or, 3, Acts as an inspector of election at any such meeting, and violates an oath taken by him, in pursuance of law as such inspector, or violates the provisions of an oath required by law to be taken by him as such inspector, or is guilty of any dishonest or corrupt conduct as such inspector; Is guilty of a misdemeanor. (Thus amended by L. 1892, ch. 692, and L. 1901, ch. 588.) PROVISIONS OF THE PENAL CODE. l8l The changes made in the foregoing section by the amendment of Igor consisted of an extension of the provisions of subdivision two so as to include bondholders and the striking out from said section of subdivision one, which reads as follows: " i. Voles or issues a proxy to vote at any meeting of the stockholders or bondholders, or both, of a stock corporation, upon any stock or bond, if the person in whose behalf such vole is given shall not then have the title to the stock represenled by such certificate or to such bond, and shall not have it in his possession and control, notwithsianding such stock or bond shall then stand on the books of such corporation in the name of the person in whose behalf such vote is given." Presumption of knowledge of corporate condition and busi- ness and of assent thereto by directors; definitions. § 614. It is no defense to a prosecution for a violation of the provisions of this chapter, that the corporation is a foreign corporation, if it carries on business or keeps an office therefor in this state. Thfe term " director " as used in this chapter includes any of the persons having, by law, the direction or management of the affairs of a corporation, by whatever name described. A director of a corporation or joint-stock association is deemed to have such a knowledge of the affairs of the corpo- ration or association as to enable him to determine whether any act, proceeding or omission of its directors is a violation of this chapter. If present at a meeting of the directors at which any act, proceeding or omission of such directors in violation of this chapter occurs, he must be deemed to have concurred therein, unless he at the time causes or in writing requires his dissent therefrom to be entered on the minutes of the directors. If absent from such meeting, he must be deemed to have concurred in any such violation, if the facts constituting such violation appear on the record or minutes of the proceedings of the board of directors, and he remains a director of the corporation for six months thereafter with- out causing or in writing requiring his dissent from such violation to be entered on such record or minutes. (Thus amended by L. 1892, ch. 692.) i82 Provisions of the Penal Code. Officer of corporation selling, etc., shares. § 518. An officer, agent or other persot) employed by any company or corporation existing under the laws of this state, or of any other state or territory of the United States, or of any foreign government, who wilfully and with a design to defraud, sells, pledges or issues, or causes to be sold, pledged or issued, or signs or procures to be signed with intent to sell, pledge or issue, or to be sold, pledged or issued, a false, forged or fraudulent paper, writ- ing or instrument, being or purporting to be a scrip, certifi- cate or other evidence of the ownership or transfer of any share or shares of the capital stock of such company or cor- poration, or a bond or other evidence of debt of such com- pany or corporation, or a certificate or other evidence of the ownership or of the transfer of any such bond or other evidence of debt, is guilty of forgery in the third degree, and upon conviction, in addition to the punishment pre- scribed in this title for that offense, may also be sentenced to pay a fine not exceeding three thousand dollars. Falsely indicating person as a corporate officer. § 519. The false making or forging of an instrument or writing, purporting to have been issued by or in behalf of a corporation or association, state or government, and bear- ing the pretended signature of any person, therein falsely indicated as an agent or officer of such corporation, is forgery in the same degree, as if that person were in truth such officer or agent of the corporation or association, state or government. PROVISIONS OF THE CODE OF CIVIL PROCEDURE. Summons, personal service of iipon a domestic corporation. § 431. Personal service of the summons upon a defend- ant, being a domestic corporation, must be made by deliver- ing a copy thereof, within the State, as follows : 1. If the action is against the mayor, alderman, [alder- men] and commonalty of the city of New York, to the mayor, comptroller, or counsel to the corporation. 2. If the action is against any other city, to the mayor, treasurer, counsel, attorney, or clerk; or, if the city lacks either of those officers, to the officer performing correspond- ing functions, under another name. 3. In any other case, to the president or other head of the corporation, the secretary or clerk to the corporation, the cashier, the treasurer, or a director or managing agent. For provisions relative to service of process upon foreign corpora- tions, see pages 48-57, ante- On a motion to set aside the service of summons on a domestic telegraph corporation, it appeared that such service was upon the general superintendent of the work of operating the lines of tlie company, and it was held that the person served was the " man- aging agent " of the company within the meaning of this section. (Barrett v. American Telephone & Telegraph Co., 138 N. Y., 491 ; aflf'g s6 Hun, 430.) The Legislature intended to facilitate such service, and only required that the person to be served should sustain such respon- sible and representative relations to the corporation as would secure notice to it of the commencement of the action. (Barrett v. Ameri- can Telephone & Telegraph Co., 138 N. Y., 491.) Service of summons upon the vice-president of a domestic cor- poration or upon one who performs corresponding duties under a different appellation, is a sufficient service upon the corporation. (Balmford v. Grand Lodge A. O. U. W., 16 Misc., 4; see, also, cases therein cited.) Service of summons on the president de facto of a defendant cor- poration gives the court jurisdiction of such corporation. (Still- man v. Associated Lace Makers' Co., 14 Misc., 503.) 13 184 Provisions of the Code of Civil Procedure. Service upon one who was known to be the president of a corpora- tion, but who had, in fact, previously resigned his office, and at the time of service had no connection with the company, is not service upon such corporation. (Buchanan v. Prospect Park Hotel Co., 14 Misc., 435.) A managing agent of a corporation, upon whom service of pro- cess may be made, does not cease to be such by the appointment of temporary receivers of the company and his retention in office by them, so long as his original appointment is not revoked by the company. (Faltiska v. N. Y., L. E, &' W. R. R. Co., 12 Misc., 478.) Verification of pleadings by corporations. § 525. The verification must be made by the affidavit of the party, or, if there are two or more parties united in interest, and pleading together, by at least one of them, who is acquainted with the facts, except as follows: I. Where the party is a domestic corporation, the verifi- cation must be made by an officer thereof. 3. Where the party is a foreign corporation; or where the party is not within the county where the attorney resides, or if the latter is not a resident of the State, the county where he has his office, and capable of making the affidavit; or, if there are two or more parties united in interest, and pleading together, where neither of them, acquainted with the facts, is within that county and capable of making the affidavit; or where the action or defense is founded upon a written instrument for the payment of money only, which is in the possession of the agent or the attorney ; or where all the material allegations of the pleading are within the per- sonal knowledge of the agent or the attorney ; in either case, the verification may be made by the agent of or the attorney for the party. Injunction against corporations, service of. § 6io. The injunction order must briefly recite the grounds for the injunction. Where it is granted by the court, it must be served by delivering a certified copy thereof; where it is granted by a judge, it must be served by Provisions of the Code of Civil Procedure. 185 showing the original order, and delivering a copy thereof. Service of the order, upon a corporation, may be made as prescribed in this act, for making personal service of a sum- mons upon a corporation. Copies of the papers, upon which the order was granted, must be delivered with the copy of the order. Injunction, damages. § 624. Where the defendant enjoined was an officer of a corporation, or joint-stock association, or a bailee, agent, trustee, or other representative of another, and the damages sustained by him, are less than the sum specified in the undertaking, the court or the referee may also separately ascertain and determine the damages sustained, by reason of the injunction, by the corporation, association, or person, whom the defendant represents, to an amount not exceeding the surplus of the sum specified in the undertaking; and those damages may be recovered in a separate action, brought as prescribed in the next section. Injunction; action on undertaking. v § 625. Where the damages have been ascertained by the decision of the court, or the confirmation of a referee's report, as prescribed in the last two sections, any person, entitled to the benefit of an undertaking, executed pursuant to the provisions of this title, may bring an action thereon, without further leave of the court. Attachments; in what actions. § 635. A warrant of attachment against the property of one or more defendants in an action, may be granted upon the application of the plaintiff, as specified in the next sec- tion, where the action is to recover a sum of money only, as damages for one or more of the following causes: I. Breach of contract, express, or implied, other than a contract to marry. i86 Provisions of the Code of Civil Procedure. 2. Wrongful conversion of personal property. 3. An injury to property in consequence of negligence, fraud or other wrongful act. (Thus amended by L. 1894, ch. 738.) Foreign corporation; attachment. § 636. To entitle the plaintiff to such a warrant he must show, by affidavit, to the satisfaction of the judge granting the same, as follows: 1. That one of the causes of action specified in the last section exists against the defendant. If the action is to recover damages for breach of a contract, the affidavit must show that the plaintiff is entitled to recover a sum stated therein, over and above all counterclaims known to him. 2. That the defendant is either a foreign corporation or not a resident of the state ; or, if he is a natural person and a resident of the state, that he has departed therefrom, with intent to defraud his creditors, or to avoid the service of a summons, or keeps himself concealed therein with the like intent; or, if the defendant is a natural person, or a domestic corporation, that he or it has removed, or is about to remove, property from the state, with intent to defraud his or its creditors ; or has assigned, disposed of, or secreted, or is about to assign, dispose of, or secrete property, with the like intent; or where, for the purpose of procuring credit, or the extension of credit, the defendant has made a false statement in writing, under his own hand or signature, or under the hand or signature of a duly authorized agent, made with his knowledge and acquiescence as to his finan- cial responsibility or standing. (Thus amended by L. 1894, ch. 736.) A debt due from a foreign corporation to a non-resident debtor cannot be attached at the instance of a resident creditor of the latter. (Wood V. Furtick, 17 Misc., S6i.) An attachment proceding is dependent for its validity upon the presence of the res, the debt, within the jurisdiction of the court; and the situs of a -debt is at the place of residence of the creditor; such residence of a corpora- Provisions of the Code of Civil Procedure. 187 tion is within the domain of the sovereignty which created it. (Id., Douglas V. Phenix Ins. Co., 138 N. Y., 209.) AlthQugh the Code of Civil Procedure provides in what cases attachments may be issued, and what must be shown by the plaintiff to entitle him thereto, yet such provisions are not exclusive, and it IS entirely within the province of the Legislature to affix other con- ditions to the right of persons in the State of New York to invoke such remedies. (Sawyer Lumber Co. v. Bussell, 84 Hun, 114.) As a remedy by attachment is a step in an action the provisions of section 15 of the General Corporation Law apply. (Id.) The papers upon which a foreign corporation doing business in the State of New York, in relation to a transaction arising in such State, procures an attachment, must show, for the purposes of the attachment, that the corporation has complied with section 15 of the General Corporation Law, and if such fact does not appear in the papers upon which the warrant of attachment was granted, the omission of such allegation is legal cause for vacating the attachment. (Sawyer Lumber Co. v. Bussell, 84 Hun, 114.) The power of the court to reach by its process the property of a foreign corporation within the limits of this State, depends entirely upon statutory enactment, and does not proceed from any inherent or general jurisdiction which the court possesses. Therefore, where such right is created bv statute, the conditions therein attached to its exercise must be fulfilled, and they must appear before the court obtains jurisdiction. (Oliver v. Walter Heywood Mfg. Co., 10 N. Y. Supp., 771; Sawyer Lumber Co. v. Bussell, 84 Hun, 114.) Where the plaintiff in an action procures an attachment for a cause of action which arises in the State of New York, it is necessary, in order that the court shall acquire jurisdiction, that it shall appear that the plaintiff is a resident of the State. (Sawyer Lumber Co. v. Bussell, 84 Hun, 114; Smith v. Union Milk Co., 70 Hun, 348.) To maintain an attachment, issued with the complaint in an action brought against a foreign corporation (which has neither been served with process in the State nor has appeared in the action) to recover damages for breach of contract, as against a motion by a subsequent attaching creditor, whose writ is in a.11 respects regular, to vacate the attachment upon the papers on which it was granted, such papers, if they do not show that the plaintiff is a resident of the State, must show either that the contract in suit was made within this State, or that the cause of action arose therein. (Smith v. Union Milk Co., 70 Hun, 348.) . Unless the jurisdictional ifacts appear in the papers upon which a warrant of attachment is granted against a foreign corporation the attachment must be set aside. The plain meaning of the Code is that it must' appear by affidavit that a cause of action of which the court has jurisdiction exists to the satisfaction of the judge granting the warrant. (Ladenburg v. Commercial Bk. of New- foundland, 87 Hun, 269.) The provisions of the Code regarding actions against foreign corporations is not restrictive of the juris- diction of the Sujpreme Court, but an enlargement thereof and does not infringe upon the constitutional provisions as to the jurisdiction of said court. (Id.) In an action brought against a foreign corporation commenced by attachment where the cause of i88 Provisions of the Code of Civil Procedure. action arose without the State the Supreme Court has no jurisdic- tion unless the plaintiffs are residents of the State of New York. (Id.) An attachment against a corporation will not be justified because of fraudulent acts of the president in disposing of his individual property. (Central Nat. Bk. v. Fort Ann Woolen Co., 57 St. Rep., 316.) Poreign corporation; attachment of unpaid subscription to. § 646. Under a warrant of attachment against a foreign corporation, other than a corporation created by or under the laws of the United States, the sheriff may levy upon the sum remaining unpaid upon a subscription to the capital stock of the corporation, made by a person within the county; or upon one or more shares of stock therein, held by such a person, or transferred by him, for the purpose of avoiding payment thereof. Attaclunent of interest in corporation. § 647. The rights or shares which the defendant has in the stock of an association or corporation, together with the interests and profits thereon, may be levied upon, and the sherifif's certificate of the sale thereof entitles the pur- chaser to the same rights and privileges, with respect thereto, which the defendant had, when they were so attached. Attachment of corporation bonds, notes, etc. § 648. The attachment may also be levied upon a cause of action arising upon contract; including a bond, promis- sor)' note, or other instrument for the payment of money only, negotiable or otherwise, whether past due, or yet to become due, executed by a foreign or domestic government, state, county, public officer, association, municipal or other corporation, or by a private person, either within or without the state, which belongs to the defendant, and is found within the county. The levy of the attachment thereupon is deemed a levy upon, and a seizure and attachment of, the debt represented thereby. Frovisions of the Code of Civil Procedure. 189 Shares of stock; how attached. § 649. A levy under a warrant of attachment must be made as follows : 3. Upon other personal property, by leaving a certified copy of the warrant, and a notice showing the property attached with the person holding the same; or, if it consists of a demand, other than as specified in the last subdivision, with the person against whom it exists; or, if it consists of right or share in the stock of an association or corporation, or interests or profits thereon, with the president, or other head of the association or corporation, or the secretary, cashier, or managing agent thereof. The receiver of a corporation, appointed in proceedings for a voluntary dissolution, is vested with title to the assets of the corpora- tion upon the making of the order appointing him, and no superior lien is obtained by the levy of an attachment thereon between the making of "such order and the taking of possession by the receiver. (Dickey v. Bates, 13 Misc., 489.) Shares of stock attached; certificate by the corporation. § 650. Upon the application of a sherifif, holding a war- rant of attachment, the president or other head of an asso- ciation or corporation, or the secretary, cashier, or manag- ing agent thereof, or a debtor of the defendant, or a person holding property, including a bond, promissory note, or other instrument for the payment of money, belonging to the defendant, must furnish to the sheriff a certificate, under his hand, specifying the rights or number of shares of the defendant, in the stock of the association or corporation, with all dividends declared, or incumbrances thereon ; or the amount, nature, and description of the property, held for the benefit of the defendant, or of the defendant's interest in property so held, or of the debt or demand owing to the defendant, as the case requires. Befusal of corporation to give information. § 651. If a person to whom application is made, as pre- scribed in the last section, refuses to give such a certificate ; 190 Provisions of the Code of Civil Procedure. or if it is made to appear, by afi&davit, to the satisfaction of the court, or a judge thereof, or the county judge of the county to which the warrant is issued, that there is reason to suspect that a certificate given by him is untrue, or that it fails fully to set forth the facts, required to be shown thereby; the court or judge may make an order, directing him to attend, at a specified time, and at a place within the county, to which the warrant is issued, and submit to an examination under oath, concerning the same. The order may, in the discretion of the court or judge, direct an appear- ance before a referee named therein. Foreign corporation; judgment enforceable only against attached property. § 707. Where a defendant, who has not appeared, is a non-resident of the State, or a foreign corporation, and the summons was served without the State, or by publication, pursuant to an order obtained for that purpose, as prescribed in chapter fifth of this act, the judgment can be enforced only against the property which has been levied upon, by virtue of the warrant of attachment, at the time when the judgment is entered. But this section does not declare the effect of such a judgment, with respect to the application of any statute of limitation. Certain actions against corporations entitled to preference. § 791. Civil causes are entitled to preference among themselves, in the trial or hearing thereof, in the following order, next after the causes specified in the last section but one: ^ S|C Jp 3|C sfc ^: ^ 7. An action against a corporation or joint-stock associa- tion, issuing bank notes or any kind of paper credits to cir- culate as money, or by or against the receiver of such cor- poration or association. An action in which a county or town is sole plaintiff or defendant. Provisions of the Code of Civil Procedure. 191 8. An action against a corporation founded upon a note or other evidence of debt, for the absolute payment of money. An action upon an undertaking given upon an appeal to the court of appeals or to stay the execution on an appeal to the court of appeals. Xember of corporation, admission by, as evidence. § 839. The admission of a member of an aggregate cor- poration, who is not a party, shall not be received as evi- dence against the corporation, unless it was made concern- ing and while engaged in a transaction in which he was the authorized agent of the corporation. Books as evidence. § 929. Where a party wishes to prove an act or transac- tion of a foreign corporation, the book or books of the cor- poration may be used for that purpose, as presumptive evi- dence, whether any or all of the parties are or are not mem- bers of tMe corporation. Copies as evidence. § 930. If an original book is not produced at the trial, as prescribed in the last section, a copy thereof, or an entry therein, verified as prescribed in the next section, may be used, with like efiect as the original book; provided that the party, intending to use the copy, gives the adverse party at least ten days' notice of his intention, specifying briefly the nature of the evidence to be given. But this and the next section do not apply, where the foreign corporation is a party to the action, and seeks to prove its own act or transaction, in its own behalf. Verification of copy. § 931. The copy must be verified by the deposition, taken as prescribed by law, or the oral testimony, taken at the trial, of the person who made it, or of a person who has examined and compared it with the original book, or ihc 192 Provisions of the Code of Civil Procedure. entry therein. The witness must testify that the copy pro- duced is correct; that he made it, or compared it with the original; and that he then knew that the original book so copied, or containing the entry, was the book of the cor- poration; or that it was then acknowledged to him to be such, by an officer or receiver of the corporation, or a person having the custody thereof, naming the person who made the acknowledgment; and he must specify where, and in whose custody, the original was then kept. § 1650. An action may be maintained, as prescribed in this article, by or against a corporation, or by or against an unincorporated association, as if it was a natural person, or such an action may be maintained by or against the receiver or other successor of any such corporation or asso- ciation. Complaint in action by or against a corporation. § 1775. In an action brought by or against a corpora- tion, the complaint must aver that the plaintiff, or the defendant, as the case may be, is a corporation ; must state whether it is a domestic corporation or a foreign corpora- tion ; and, if the latter, the state, country or government, by or under whose laws it was created. But the plaintifif need not set forth, or specially refer to, any act or proceeding, by or under which the corporation was created. When proof of corporate existence unnecessary. § 1776. In an action, brought by or against a corpora- tion, the plaintifif need not prove, upon the trial, the exist- ence of the corporation, unless the answer is verified, and contains an affirmative allegation that the plaintifif, or the defendant, as the case may be, is not a corporation. A party who has entered into a contract with another, in which the latter assumes to be and contracts as a corporation, is estopped from denying the corporate existence. (U. S. Vinegar Co. v. Schlegel, 143 N. Y., 537.) The corporate existence of a plaintiff is not put in issue by a mere allegation in an answer that " defendant has no knowledge or Provisions of the Code of Civil Procedure. 193 information sufficient to form a belief " as to the allegations of the complaint in respect thereto; to raise such an issue there must be affirmative allegations that plaintiff is not a corporation. (Snow, Church & Co. v. Hall, 19 Misc., 655.) In an action for goods sold to a corporation, the latter cannot show, under a general denial, that it was not incorporated at the time of the sale alleged; to authorize such proof the answer must affirmatively allege the fact that the defendant was not a corpora- tion. (Schmidt V. Nelke Art Lithographic Co., 17 Misc., 124; rcvs:i. 16 Misc., 300.) Misnomer, when waived. § 1777. In an action or special proceeding brought by or against a corporation, the defendant is deemed to have Avaived any mistake in the statement of the corporate name, unless the misnomer is pleaded in the answer, or other pleading in the defendant's behalf. The fact that a writ of certiorari is directed to " The Board of Trustees of the New York and Brooklyn Bridge " instead of " The Trustees of the New York and Brooklyn Bridge " is not such a misnomer, where the corporate name is correctly stated in the body of the petition, as will defeat the proceeding, and the addition of the words "The Board of" may be regarded as immaterial. (People ex rel. Fitzgibbons v. N. Y. & Brooklyn Bridge, 1 App. Div., 186.) Where a corporation, plaintiff in an action has misnamed itself in the summons and complaint, it is no effectual ground of demurrer; the error is merely formal and is amendable upon motion. (Empire State Sav. Bk. v. Beard, 81 Hun, 184.) Action, against a corporation upon a note, etc. § 1778. In an action against a foreign or domestic cor- poration, to recover damages for the non-payment of a promissory note, or other evidence of debt, for the absolute payment of money, upon demand, or at a particular time, an order, extending the time to answer or demur, shall not be granted, except by the court, upon notice to the plaintiiT's attorney. In such an action, unless the defendant serves, with a copy of his answer, or demurrer, a copy of an order of a judge, directing that the issues presented by the plead- ings be tried, the plaintifif may take judgment, as iti case of default in pleading, at the expiration of twenty days after service of a copy of the complaint, either personally with the summons, or upon the defendant's attorney, pursuant 194 Provisioxs of the Code of Civil Procedure. to his demand' therefor; or, if the service of the summons was otherwise than personal, at the expiration of twenty days after the service is complete. Where a corporation defendant in an action upon a promissory note fails to serve with its answer a copy of an order directing that the issues be tried, the plaintiff may take judgment by default with- out returning the answer with a notice calling attention to the failure to serve said copy of order. (Watertown Nat. Bk. v. Westchester County Water Works Co., 19 Misc., 685.) When foreign corporation may sue. § 1779. An action may be maintained by a foreign cor- poration, in like manner, and subject to the same regula- tions, as where the action is brought by a domestic corpora- tion, except as otherwise specially prescribed by law. But a foreign corporation cannot maintain an action, founded upon an act, or upon a liability or obligation, express or implied, arising out of, or made and entered into in consideration of, an act, which the laws of the State forbid a corporation or association of individuals to do, without express authority of law. This section does not afifect the validity of a meet- ing of the stockholders or directors of a foreign corpora- tion, held within the State, where such a meeting is author- ized by the laws of the State, country, or government, by or under which the corporation is created, or of an act, done at such a meeting, which is not in conflict with the same laws, or the laws of the State. The right of a foreign corporation to sue in this State is not dependent upon section 15, chapter 687 of the Laws of 1892. It is conferred by section 1779 of the Code, giving the same rights of maintaining actions as are possessed by domestic corporations, except as otherwise specially prescribed by law. Section 15 of the General Corporation Law only prohibits actions upon contracts made by corporations in this State after its passage until they shall have procured the necessary certificate of authority. Actions upon contracts made by other parties and assigned to the foreign corpora- tion are not within the statute. (The O'Reilly, Skelly & Fogarty Co. V. Greene, 18 Misc., 423.) The complaint in an action brought by a foreign corporation need not allege the procurement of a certi- ficate of authority under section 15 of the General Corporation Law^ but the want of such certificate is matter of defense to be pleaded in the answer. (Id.) Failure of the complaint in an action by a Provisions of the Code of Civil Procedure. 195 foreign corporation to allege payment of the license fee of one- eighth of one per cent, is not a demurrable defect. (Id.) When foreign corporation may be sued. § 1780. An action against a foreign corporation may be maintained by a resident of the State, or by a domestic cor- poration, for any cause of action. An action against a foreign corporation may be maintained by another foreign corporation, or by a non-resident, in one of the following cases only: 1. Where the action is brought to recover damages for the breach of a contract, made within the State, or relating to property situated within the State, at the time of the making thereof. 2. Where it is brought to recover real property situated within the State, or a chattel, \vhich is replevied' within the State. 3. Where the cause of action arose within the State, except where the object of the action is to affect the title to real property situated without the State. A contract made between two foreign corporations by a written order mailed within the State and accepted in another State where one of the corporations is domiciled is not a contract made within this State, as the contract was not completed until the acceptance of the order; therefore, a certificate, under section 15 of the General Corporation Law, authorizing the vendor corporation to do busi- ness here was not necessary. A cause of action based on a default in paying for goods delivered in this State on such contract arises here and can be maintained under subdivision 3 of the foregoing section. (Shelby Steel Tube Co. v. Burgess Gun Co., 8 App. Div., 444.) Where a contract was made in the city of New York for work to be done in Illinois and payment was to be made in bonds without specifying the place of delivery of such bonds, the presumption is that the bonds were to be delivered in New York, therefore the cause of action for their non-delivery would be one coming under the third subdivision of the foregoing section. (O'Brien v. Peoria Water Co., S App. Div., 229.) The City Court of New York has jurisdiction in an action where the plaintiff resides within this State and the cause of action arises therein, although the defendant is a foreign corporation, service upon it having been made within the State. (Mas3 v. Cunard S. S. Co., 18 Misc., 379.) 196 Provisions of the Code of Civil Procedure. The courts of this State may decline to exercise jurisdiction in an action to enforce a contract between foreign railroad corpora- tions for transportation to be performed in the State of their com- mon domicile, and an injunction pendente lite, restraining violations of such contract, and thus restricting the defendant to that extent in the exercise in that State of its full corporate rights, should not be granted. (D., L. & W. R. R. Co. v. N. Y., S. & W. R. R. Co.,' 12 Misc. R., 231, and cases cited.) When, in an action against a foreign corporation, the status of the plaintiff as a foreign corporation or non-resident is conceded or otherwise ascertained, and the case is not one of class enumerated in section 1780, the court must dismiss the action. (Gundlin v. Hamburg-American Packet Co., 8 Misc., 291.) When the non- residence of the plaintiff in an action against a foreign corporation does not affirmatively appear, and the evidence in relation thereto is conflicting, the court may properly submit that question to the jury. (Id.) Where a contract between foreign corporations was not made in this State, or the cause of action did not arise here, the voluntary appearance of the defendant in an action on such contract does not confer jurisdiction on the court. (Seiser Bros.' Co. v. Potter Produce Co., 62 St. Rep., 69; 23 Civ, Pro. Rep., 348.) See Waton v. Boston Woven Cordage Co., 75 Hun, 115; and Robeson v. Cent. R. R. Co. of N. J., 76 Hun, 444. Action by attorney-general. § 1948. The attorney-general may maintain an action, upon his own information, or upon the complaint of a pri- vate person in either of the following cases : I. Against a person who usurps, intrudes into, or unlaw- fully holds or exercises, within the state, a franchise, or a public office, civil or military, or an office in a domestic corporation. 3. Against one or more persons who act as a corpora- tion within the state, without being duly incorporated; or exercise within the state, any corporate rights, privileges, or franchises, not granted to them by the law of the state. 4. Against a foreign corporation which exercises within the state any corporate rights, privileges or franchises, not granted to it by the law of this state; or which within the state, has violated any provision of law, or, contrary to law, has done or omitted any act, or has exercised a privilege or Provisions of the Code of Civil Procedure. 197 franchise, not conferred upon it by the law of this state, where, in a similar case, a domestic corporation would, in accordance with section seventeen hundred and ninety-eight of this act, be liable to an action to vacate its charter and to annul its existence ; or which exercises within the state any corporate rights, privileges or franchises in a manner con- trary to the public policy of the state. Subdivision 4 is new, added by L. 1896, ch. 962. This section contemplates an action against individuals and not against corporations. (People v. Equity Gas Light Co., 141 N. Y., 232; People ex rel. Halierman v. James, S App. Div., 412.) An action may be brought under the third subdivision of this section for a perpetual injunction restraining persons from trans- acting the business of a corporation after the term for which the corporation was organized had expired, but in such action the corporation is not a proper party. (People ex rel. Haberman v. James, S App. Div., 412.) Under the foregoing section an action cannot be maintained in the name of the people to close up the afifairs of the corporation or to distribute its assets, as section 30 of the General Corporation Law provides that when the existence of a corporation terminates its assets shall be held by the directors as trustees for its creditors and stockholders with full power to close up its afifairs. (People ex rel. Haberman v. James, 5 App. Div., 412.) If such an action becomes necessary it should be brought by a creditor or stock- holder. (Id.) An extension of the term of existence of a corporation cannot be accomplished by reincorporation under the provisions of section 4 of the Business Corporations Law. (People ex rel. Haberman v. James, 5 App. Div., 412.) It was not the purpose of said section to give to a corporation, upon its reincorporation thereunder, any rights or franchises, other than those which it had, and which it had exercised, under the laws pursuant to which it was incor- porated. (Id.) The attorney-general cannot maintain an action in the name of the people against a corporation, either under the foregoing section or as a matter of common law, to restrain the commission of a nuisance in a city street, where local officials have authority to pro- tect the street. (People v. Equity Gas Light Co., 141 N. Y., 232.) The jurisdiction of a court of equity to abate an existing or prevent a threatened nuisance upon application of the attorney-general,' is limited to those public nuisances which affect or endanger the public safety or convenience, and require immediate judicial interposi- tion, and where the relief sought may not with equal facility be obtained by other constituted authorities and public officers. (Id.) This section was intended as a substitute for the writ of quo warranto, which would lie in every case where a franchise was unlawfully asserted and used. (People v. Loew, 19 Misc., 248.) 198 Provisions of the Code of Civil Procedure. Justices' courts, actions in. § 2865. An action . cognizable by a justice of the peace, may be brought by or against a corporation ; by or against a natural person in his own right; by or against a town or county officer in his official character; or by an executor, administrator, trustee of an express trust, or a receiver in supplementary proceedings. Justices' courts; summons, service upon corporations generally. § 2879. Where the defendant to be served is a corpora- tion, the summons may be personally served upon it, by delivering a copy thereof to an officer or person, to whom a copy of the summons in an action, brought against the cor- poration in the supreme court, might be delivered, as pre- scribed in sections four hundred and thirty-one and four hundred and thirty-two of this act; or, to any director or trustee of the corporation, by whatever official title he is called. In action by foreign corporations security for costs may be required. § 3268. The defendant, in an action brought in a court of record, may require security for costs to be given, as pre- scribed in this title, where the plaintiff was, when the action was commenced, either 1. A person residing without the state; or if the action is brought in a county court, or in the city court of the city of New York, the city court of Yonkers, or the justices' court of the city of Albany, residmg without the city or county, as the case may be, wherein the court is located; or 2. A foreign corporation. * * * Corporation defined. § 3343. In construing this act, the following rules must be observed, except where a contrary intent is expressly Provisions of the Code of Civil Procedure. 199 declared in the provision to be construed, or plainly apparent from the context thereof: 18. A " domestic corporation " is a corporation created by or under the laws of the State; or located in the State, and created by or under the laws of the United States, or by or pursuant to the laws, in force in the colony of New York, before the 19th day of April, in the year 1775. Every other corporation is a " foreign corporation." See, also, the definition of a domestic corporation in the General Corporation Law, § 3, subd. S, ante. L. 1900, CH. 2l6. An Act amending the penal code by inserting therein a new section to be known as section 363-b, relating to the use_of assumed names in business. § 363-b. No person or persons shall hereafter carry on or conduct or transact business in this state under any assumed name or under any designation, name or style, cor- porate or otherwise, other than the real name or names of the individual or individuals conducting or transacting such business, unless such person or persons shall file in the office of the clerk of the coutity or counties in which such person or persons conduct, or transact, or intend to conduct or transact such business, a certificate setting forth the name under which such business is, or is to be, con- ducted or transacted, and t' e true or real full name or names of the perton or persons conducting or transacting the same, with the post-office address or addresses of said person or persons. Said certificate shall be executed and duly acknowledged by the person or persons so conducting or intending to conduct said business. 2. Persons now conducting such business under an assumed name, or under any such designation referred to 200 Provisions of the Code of Civil Procedure. in subdivision one, shall file such certificate as hereinbefore prescribed, within thirty days after this act shall take effect and persons hereafter conducting or transacting business as aforesaid shall, before commencing said business, file such certificate in the manner hereinbefore prescribed. 3 The several county clerks of this state shall keep an alphabetical index of all persons filing certificates, provided for herein and for the indexing and filing of such certificates they shall receive a fee of twenty-five cents. A copy of such certificate duly certified to by the county clerk in whose office the same shall be filed shall be presumptive evidence in all courts of law in this state of the facts therein contained. 4. This act shall in no way affect or apply to any cor- poration duly organized under the laws of this state, or to any corporation organized under the laws of any other state and lawfully doing business in this state, nor shall this act be deemed or construed to prevent the lawful use of a partnership, name or designation, provided that such part- nership, name or designation shall include the true or real name of at least one of such persons transacting such business. 5. Any person or persons carry on, conducting or trans- acting business as aforesaid, who shall fail to comply with the provisions of this act, shall be guilty of a misdemeanor. § 2. This act shall take effect on the first day of September, nineteen hundred. FORMS. No. I. ^ . \ Certificate iof , Incorporation [of a Business Corporation. See the Business Corporations Law, § 2. We, the undersigned, all being persons of full age, and at least two-thirds being citizens of the United States, and at least one of us a resident of the State of New York, desiring to form a stock corporation, pursuant to the provisions of the Business Corporations Law of the State of N,ew York, do hereby make, sign, acknowledge and file this certificate for that purpose, as follows: First. The name of the proposed corporation is [insert corporate name.] Second. The purposes for which it is to be formed are [insert statement of objects.] Third. The amount of the capital stock is [insert the amount] dollars. [If any portion be preferred stock state the preferences.] Fourth. The number of shares o£ which the capital stock shall consist is [the number fixed must be such thai the par value shall not be less than five dollars nor more than one hundred dollars each] , and the amount of capital with which said corporation will begin business is [state a definite amount, but not less than five hundred dollars.] Fifth. Its principal business office is to be located in the [city, village or town] of , in the county of , State of New York. ' Sixth. Its' daralion is to be [insert number of years or say perpetual, if desired.] Seventh. The number of its directors is to be [insert a definite num. ber, but not less than three.] * Eighth. The names and posl-office addresses of the directors for the first year are as follows; Names. Post-office addresses. * At least one director must be a resident of the State of New York. 202 Forms. Ninth. The names and post-oflBce addresses of the subscribers of the certificate and a statement of the number of shares of stock which each agrees to take in the corporation are as follows: Names. Foat-offlce addreeses. Number of Bbare. In Witness Whereof, we have made, signed, acknowledged and filed this certificate in duplicate. Dated, this day of , 189 . [Signatures of incorporators, not less than three in number.] State of New York, ) County of , ) ' On this day of 189 , before me personally came [insert names of subscribers to certificate], to me personally known to be the persons described in and who made and signed the foregoing certificate and severally duly acknowledged to me that they had made, signed and executed the same for the uses and purposes therein set forth. [Signature of Notary.] Upon filing and recording the certificate of incorporation in the ofifice of the Secretary of State, the fees to be paid are: Filing, ten dollars; recording, fifteen cents per folio. Upon filing and recording ;i certified copy or duplicate original thereof in the ofifice of the county clerk, the fees to be paid are: Filing, six cents; recording, ten cents per folio. In addition to such payments an organization tax of one-twentieth of one per cent, upon the amount of the capital Slock must be paid to the Slate Treasurer. See the statutes regulating stich payments and further information relative thereto, ante, pages 20-22. No. 2. Certificate of Incorporation of a Full Liability Business Corporation. See the Business Corporations Law, § 6. We, the undersigned, all being persons of full age at least two- thirds of whom are citizens of the United States and one of us a Forms. 203 resident of the State of New York, desiring to form a full liability- corporation, pursuant to the provisions of the Business Corpora- tions Law of the State of New York, do hereby make, sign^ acknowledge and file this certificate for that purpose, as follows: First. The name of the proposed corporation is to be [insert corporate name] Company. [Here insert remaining recitals in form No. i.] As to fees payable upon filing and recording the certificates of .incorporation, see notes to Form No. i. No. 3. Certificate of Payment of One-half Capital Stock of a Business Corporation. See the Business Corporations Law, § 5. We, the undersigned, being a majority of the directors of the [insert corporate name], a corporation formed under the provisions of the Business Corporations Law of the State of New York, do hereby certify: That the amount of the capital stock of said corporation is [insert amount"] dollars, and that one-half thereof has been paid in, $ having been paid in cash, and $ in property. In Witness Whereof, we have made, signed and acknowledged this certificate in duplicate, and have hereunto set our hands this day of , 189 . [Signatures of majority of directors.] State of Nevit York, ) „„ V ss. : County of , j On this day of , 189 , before me personally came [name directors signing certificate] to me personally known and known to me to be the persons described in and who executed the foregoing certificate, and severally acknowledged to me that they executed the same. [Signature of Notary.] State of New York, ) _ County of , J " [Insert names of president (or vice-president) and secretary {or treasurer)], being; severally duly sworn, each for himself, deposes and says, that he, the said is the president [or vice- president] of the [insert corporate name], and that he, the said ^P4 • Form*. is the secretary [or treasurer] thereof, and that the statements contained in the foregoing certificate are true. [Signature of President, or Vice-President.] [Signature of Secretary, or Treasurer.] Sworn to before me, this ) day of , 189 \ [Signature of Notary.] Upon filing and recording the foregoing certificate the fees are as follows: Office of Secretary of State, a recording fee only of fifteen cents per folio. At the county clerk's office, six cents for filing and ten cents per folio for recording. No. 4. Supplemental Certificate by a Business Corporation to Become a Full Liability Corporation. See the Business Corporations Laws, § 6. We, the undersigned, the president and treasurer, respectively, of the [insert name of corporation], a corporation formed under the Business Corporations Law of the State of New York, do hereby certify, pursuant to the provisions of said law, in order that said corporation may become a full liability corporation, as follows: That hereafter said corporation intends to be a full liability corporation. That, pursuant to said law, we have annexed hereto a copy of a resolution, adopted by a two-thirds vote of the board of directors of said corporation, and the written consent of all the stockholders of said corporation, authorizing and consenting to the change of said corporation to a full liability corporation, marked, respectively, " Exhibit A " and " Exhibit B." In Witness Whereof, we have made, executed and acknowl- edged this certificate in duplicate, and have hereunto set our hands this day of , 189 . , President. Treasurer. State of New York, ) County of , ) ' On this day of , 189 , before me personally came [names of president and treasurer], to me known and known Forms. 205 to me to be the persons described in and who executed the fore- going certificate and severally acknowledged to me that they executed the same for the uses and purposes therein mentioned. [Signature of Notary.] Exhibit A. " Resolved, That this board does hereby authorize and consent to the change of the [insert corporate name] to a full liability corporation." I hereby certify and declare the foregoing to be a true and correct copy of a resolution duly adopted by a two-thirds vote of the board of directors of the [insert corporate name] at a meeting of said board, held at on the day of , 189 . Secretary. Exhibit B. We, the undersigned, stockholders of the [insert corporate name], do hereby, severally, give our written consent, authorizing and consenting to the change of said corporation to a full liability corporation. In Witness Whereof, we have hereunto set our hands to this consent in duplicate, and the number of shares of stock owned by each of us in said corporation. Dated, the day of , 189 . A.B., shares. CD., shares. E. P., shares. State of New York, ) _ County of , ) " On this day of , 189 , before me personally came [insert names], to me known to be the persons described in and who executed the foregoing consent and severally acknowl- edged to me that they executed the same. [Signature of Notary.] State of New York, 1 . County of , ) A. B. being duly sworn, deposes and says, that he is the treasurer [or secretary] of the [insert corporate name], the corpora- tion referred to in the foregoing consent, and that he is the cus- todian of the stock-book of said corporation; that the persons 2o6 Forms. who have subscribed the foregoing consert are all the stockholders of said corporation, and owners of the entire capital stock thereof. A. B. Sworn to before me, this ■ day of , 189 . j [Signature of Notary.] Upon filing and recording the above certificate the fees payable are as noted under form No. 3. No. 5. Amended Certificate to Correct Informality or Defect. See the General Corporation Law, § 7. Amended Certificate of the Company. We, the undersigned directors [or corporators] of [insert name of corporation] for the purpose of correcting an informality in the original certificate of incorporation of said corporation consisting of [e. g., an omission to stale in said certificate the term of corporate existence of such corporation.] ^^ [Or for the purpose of striking out matter not authorised by law to be stated in the original certificate of incorporation of said corporation, as follows, to wit: State unauthorised matter.] [Or for the purpose of correcting a defect in the proof or acknowl- edgment appended to the original certificate of incorporation of said corporation], do hereby make and file this amended certificate, pur- suant to the General Corporation Law of the State of New York, section 7, and for such purpose, do certify and declare as follows: [Here insert all the recitals contained in the original certificate, adding also the one for the supplying or correction of which the amended certifi- cate is made; or omitting the matter unauthorized by law to be stated; or by making the desired correction.] In Witness Whereof, we have made and filed this amended certificate in duplicate, and have hereunto subscribed our names. Dated this day of 189 . [Signatures.] State of New York, ) L eg • County of , S " On this day of , 189 , before me personally came [insert names], known to me to be the individuals described Forms, 207 in and who executed the foregoing amended certificate, and they severally acknowledged to me that they executed the same for the uses and purposes therein mentioned. [Signature of notary.] The fees upon filing this certificate are: Office of Secretary of State, fifteen cents a folio for recording; office of County Clerk, filing, six cents; recording, ten cents a folio. No. 6. Amended Supplemental Certificate to Correct Informality or Defect See the General Corporation Law, § 7. Amended Supplemental Certificate of the Company. We, the undersigned, directors of [insert corporate name] Com- pany, do hereby certify that in the certificate of reduction of capital I I stock of such corporation from $150,000 to $100,000, filed in the office of the Secretary of State on the day of , 189 , and in the office of the clerk of the county of on the day of , 189 , an informality exists, as follows, to wit: [Example given: That such informality consists of an erroneous state- ment of the amount of debts and liabilities of the corporation.] Therefore we, the undersigned directors of the [insert corporate name] Company aforesaid, do hereby make and file this amended certificate for the purpose of correcting such informality or defect, pursuant to the provisions of the General Corporation law, section 7, and for such purpose do certify and declare as follows: [Here set forth the certificate as amended.] In Witness Whereof, we have made and acknowledged this amended certificate in duplicate, and have hereunto set our hands this day , 189 . , [Signatures of directors.] State of New York, ) . County of , ) ' On this day of , 189 , before me personally came [insert names of the directors], known to me to be the individuals described in and who executed the foregoing amended certificate, 2o8 Forms. and they severally acknowledged to me that they executed the same for the uses and purposes therein mentioned. Notary Public, County, N. Y. (As to fees see note to preceding form.) No. 7. Petition to Court to Amend Certificate of Incorporation which Fails to State True Objects of Corporation. See the General Corporation Law, § 7. Supreme Court, County. In the Matter of the Petition OF the [insert corporate name] Company, to Amend ITS Certificate of Incorporation. To the Supreme Court of the State of New York: The petition of the [insert corporate name], the above-named petitioner, respectfully shows to this court that it is a corporation, duly incorporated, organized and existing under and by virtue of the laws of the State of New York. That annexed hereto and marked " Exhibit A " is a copy of the original certificate of incorporation of said corporation, which, as your petitioner is informed and verily believes, was duly filed and recorded in the office of the Secretary of State of the State of New York, on the day of 189 , and a duplicate original [or a certified copy] thereof was also on the day of 189 , duly filed and recorded in the office of the clerk of county. That such certificate of incorporation, so filed as aforesaid, fails to express the true object and purpose of the corporation, so as to truly set forth such object and purpose. That it is and has been ever since the filing of said certificate of incorporation the intention and purpose of the incorporators to, and the true object and pur- pose of said corporation is, to [state same]. Forms. 209 That annexed hereto and marked "Exhibit B," is a proposed amended certificate of incorporation duly signed and acknowledged by the directors of said corporation for the first year as named in the original certificate of incorporation. That said proposed amended certificate expresses the true object and purpose of said corporation as hereinbefore set forth, and the petitioner prays for an order of this, court amending said original certificate so as to truly set forth such object and purpose, and permit your petitioner to file for record with said Secretary of State and County Clerk of county, said certificate so amended. rCorponUe] "^^^ [insert corporate name] Company, L secU. J By [signature] President. State of New York, ) . County of , ) [Name of president], being duly sworn, says that he is the president of the [insert corporate name] , the petitioner named in the foregoing petition; that the foregoing petition is true of his own knowledge, except as to the matters therein stated to be alleged upon information and belief, and that as to those matters he believes it to be true; that he affixed the corporate seal of said corporation to said petition and signed the same on behalf of said corporation by the authority of its board of directors. [Signature of president.] Sworn to before me, this ) day of , 189 . f [Signature of Notary.] No. 8. Notice of Application to Court, for Correction of Objects, See the General Corporation Law, § 7. State of New York, Sufeeme Court. In the Matter of the Petition OF THE [insert corporate name] to Amend its Certifi- cate OF Incorporation. Sir:— Please take notice, that upon the petition, with a copy of which you are herewith served, a motion will be made at the next Special 2IO Forms. Term of this court, appointed to be held at the in the city [or village] of in and for the county of , on the day of 189 , at the opening of the court on that day, or as soon thereafter as counsel can be heard, for a rule or order in this proceeding, amending the original certificate of incorporation of the [insert corporate name], filed and recorded in the office of the Secretary of State, and also in the office of the clerk of county, on or about the day of , 189 , so as to truly set forth the true object and purpose of said corporation as stated in said petition, and permitting the petitioner to file said amended certificate and to have the same recorded in the office of the Secretary of State, and also in the office of said clerk of county, in the manner required by law, or for such other or further order of relief in the premises as shall be just. Dated the day of , 189 Yours, etc.. Attorney for the Petitioner. Office address : To Hon Attorney-General. No. 9. By-Laws for Stock Corporations. See the General Corporation Law, §11. BY-LAWS OF THE COMPANY. Article L — Meetings of Stockholders. I Section i. The annual meeting of the stockholders of this com- pany shall be held at the office of the corporation, in the of , on the [e. g., Second Monday in January] of each and every year, at 12 o'clock, noon, for the election of directors and such other business as may properly come before said meeting. Notice of the time, place and object of such meeting shall be given by publication thereof, at least once in each week for two success- ive weeks immediately preceding such meeting, in the manner required by the Stock Corporation Law, section 20, and by mailing, at least I days previous to such meeting^ postage prepaid, a copy of such notice, addressed to each stockholder at his residence or place of business, as the same shall appear on the books of the corporation. No business, other than that stated in such notice. Forms. 211 shall be transacted at such meeting without the unanimous consent of all the stockholders present thereat, in person or by proxy. Section 2. Special meetings of stockholders, other than those regulated by statute, may be called at any time by a majority of the directors. It shall also be the duty of the president to call such meetings whenever requested in writing, so to do, by stockholders owning iT of the capital stock. A notice of every special meeting, stating the time, place and object thereof, shall be given by mailing, postage prepaid, at least . . 1 days before such meeting, a copy of such notice addressed to each stockholder at his post- office address as the same appears on the books of the corporation. Section 3. At all meetings of stockholders there shall be present, either in person or by proxy, stockholders owning ^J of the capital stock of the corporation in order to constitute a quorum, except at special elections of directors pursuant to section 25 of the General Corporation Law. Section 4. At all annual meetings of stockholders the right of any stockholder to vote shall be governed and determined as pre- scribed in the General Corporation Law, sections 20, 21 and 22. /^ Section 5. If, for any reason, the annual meeting of stockholders shall not be held as hereinbefore provided, such annual meeting • shall be called and conducted as prescribed in the General Corpo- ration Law, sections 24, 25 and 26. Section 6. At all meetings of stockholders, only such persons shall be entitled to vote in person and by proxy who appear as stockholders upon the transfer books of the corporation for ten ■days immediately preceding such meeting. Section 7. At the annual meetings of stockholders the follow- ing shall be the order of business, viz. : 1. Calling the roll. 2. Proof of proper notice of meeting. 3. Report of president. 4. Report of treasurer. 5. Report of secretary. 6. Report of committees. , 7. Election of directors ^nd inspectors of election. 8. Miscellaneous business. Section 8. At all meetings of stockholders all questions, except the question of an amendment to the by-laws, and the election of directors and inspectors of election, and all such other questions, the manner of deciding which is specially regulated by statute, shall be determined by a majority vote of the stockholders present 212 Forms. in person or by proxy; provided, however, that any qualified voter may demand a stock vote, and in that case, such stock vote shall immediately be taken, and each stockholder present, in person or by proxy, shall be entitled to one vote for each share of stock owned by him. All voting shall be viva voce, except that a stock vote shall be by ballot, each of which shall state the name of the stockholder voting and the number of shares owned by him, and, in addition, if such ballot be cast by a proxy, it shall also state the name of such proxy. Section 9. At special meetings of stockholders the provisions of sections 20, 21, 22, 25 and 26 of the General Corporation Law shall apply to the casting of all votes. Article II. — Directors. Section 1. The directors of this corporation shall be elected by ballot,- for the term of one year, at the annual meeting of stock- holdjers, except as hereinafter otherwise provided for filling vacan- cies. The directors shall be chosen by a plurality of the votes of the stockholders, voting either in person or by proxy, at such annual election as provided by section 20 of the Stock Corporation Law. Section 2. Vacancies in the board of directors, occurring during the year, shall be filled for the unexpired term, by a majority vote of the remaining directors at any special meeting called for that purpose, or at any regular meeting of the board. Section 3. In case the entire board of directors shall die or resign, any stockholder may call a special meeting in the same manner that the president may call such meetings, and directors for the unex- pired term may be elected at such special meeting in the manner provided for their election at annual meetings. Section 4. The board of directors may adopt such rules and regu- lations for the conduct of their meetings and management of the affairs of the corporation as they may deem proper, not inconsistent with the laws of the State of New York, or these by-laws. Section 5. The board of directors shall meet on the [e. g., second Monday} of every month, and whenever called together by the president upon due notice given to each director. On the written request of any director the secretary shall call a special meeting of the board. Section 6. All committees shall be appointed by the board of directors. Article III. — Officers. Section i. The board of directors, immediately after the annual meeting, shall choose one of their number by a majority vote to be Forms. 213 president, and they shall also appoint a vice-president, secretary and treasurer. Each of such officers shall serve for the term of one year, or until the next annual election. Section 2. The president shall preside at all meetings of the board of directors, and shall act as temporary chairman at, and call to order all meetings of the stockholders. He shall sign certificates of stock, sign and' execute all contracts in the name of the Ceompany, when authorized so to do by the board of directors; countersign all checks drawn by the Ireasurei'^j^ appoint and' dis- charge agents and employes, subject to the approval of the board of directors, and he shall have the general management of the aflfairs of the corporation and perform all the duties incidental to his office. Section 3. The vice-president shall, in the absence or incapacity of the president, perform the duties of that officer. Section 4. The treasurer shall'nave the care and custody of all the funds and securities of the corporation, and deposit the same in the name of the corporation in such bank exJuJiks as the directors may elect; he shall sign all checks, diaite^notes and orders ^for the payment of money which shall be countersigned by the president, and he shall pay out and dispose of the same under the direction of the president; he shall at all reasonable times exhibit his books and accounts to any director or stockholder of the company upon appli- cation at the office of the company during business hours; he shall sign all certificates of stock signed by the president; he shall give such bonds for the faithful performance of his duties as the board of directors may determine. '(\-f\r-^. Section 5. The secretary shall keep the minutes of the board of directors, and also the minutes of the meetings of stockholders; he shall attend to the giving and serving of all notices of the coKitjany^ .aiid shall affix the seal of the company to all certificates of stock, when signed by the president and treasurer; he shall have charge of the certificate book and such other, bopks and papers as the board /■ may direct; he shall attend to stich correspondence as may be assigned to him, and perform all the duties incidental to his office. He shall also keep a stock-book, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, the number of shares of stock held by them respectively, the time when they respectively became the owners thereof, and the amount paid thereon-, and such book shall be open for inspection as prescribed by section 29 of the Stock Corporation Law. 214 Forms. Article IV. — Capital Stock. Section i. Subscriptions to the capital stock must be paid to the treasurer at such time or times, and in such installments, as the board of directors may by resolution require. Any failure to pay an installment when required to be paid by the board of directors shall work a forfeiture of such shares of stock in arrears, pursuant to section 43 of the Stock Corporation Law. Section 2. Certificates of stock shall be numbered and registered in the order they are issued and shall be signed by the president or vice-president and by the secretary or treasurer, and the seal of the corporation shall be affixed thereto. All certificates shall be bound in a book, and shall be issued in consecutive order there- from, and in the margin thereof shall be entered the name of the person owning the shares therein represented, the number of shares, and the date thereof. All certificates exchanged or returned to the corporation shall be marked canceled, with the date of cancel- lation, by the secretary, and shall be immediately pasted in the certificate book opposite the memorandum of its issue. Section 3. Transfers of shares shall only be made upon the books of the corporation by the holder in person or by power of attorney duly executed and acknowledged and filed with the secretary of the corporation, and on the surrender of the certificate or certifi- cates of such shares. Section 4. Whenever the capital stock of the corporation is increased, each bona fide owner of its stock shall be entitled to purchase, at the par value thereof, an amount of stock in propor- tion to the number of shares of stock he owns in the corporation at the time of such increase. Article V. — Dividends. Section i. Dividends shall be declared and paid out of the sur- plus profits of the corporation as often and at such times as the board of directors may determine, and in accordance with section 23 of the Stock Corporation Law. Aeticle VI. — Inspectoes. Section i. Two inspectors of election shall be elected at each annual meeting of stockholders to serve for one year, and if any inspector shall refuse to serve or shall not be present, the meeting may appoint an inspector in his place. Forms. 215 Article VII. — Seal. Section i. The seal of the corporation sliall be in the form of a circle, and shall bear the name of the corporation and the year of its incorporation. Article VIII. — ^Amendments. Section i. These by-laws may be amended at any stockholders' meeting by a vote of the stockholders owning a majority of the stock, represented either in person or by proxy, provided the pro- posed amendment is inserted in the notice of such meeting. A copy of such amended by-law shall be sent to each stockholder within ten days after the adoption of the same. By-laws are not required to be filed in any public office. After adoption they should be entered in the book of minutes of the corporation. No. 10. Statement and Designation by a Foreign Stock Corporation under the General Corporation Law, section i6, and the Code of Civil Procedure, section 433. See the General Corporation Law, ante. Pursuant to the provisions of section i6 of the General Corpora- tion Law of the State of New York, and section 432 of the Code of Civil Procedure of said State, the [insert corporate name] Company a stock corporation, organized and existing under and by virtue of the laws of the State of [or Kingdom of, as the case may be] does hereby make a statement and designa- tion under its corporate seal, to be filed with the annexed sworn copy of its charter or certificate of incorporation, as follows, to wit: First. That the business or objects of the said corporation which it is engaged in carrying on (or which it proposes to carry on), within the State of New York, is (or are) as follows: [Stale business or objects.] Second. That the place within the State of New York which is to be its principal place of business is [insert location]. Third. That said corporation hereby designates [insert name of person] as a person uppn whom a summons may be served within the State of New York, or any process or other paper, whereby a special proceeding is commenced in a court, or before an officer, 15 2i6 Forms. except a proceeding to punish • for contempt, and except where special provisions for the service thereof is otherwise made by law. Fourth. That said [insert name of person], so designated, has an office or place of business at No. street, in the city [or village] of ,* the place where said corporation is to have its principal place of business within the State of New York.t Fifth. That the written consent of said [insert name] to such designation, duly signed and acknowledged is hereunto annexed. Sixth. That a sworn copy of the charter [or certificate of incor- poration] of said incorporation is hereunto annexed. In Witness Whereof, the [insert corporate name] Company, the corporation hereinbefore mentioned and described, has caused this instrument to be executed by its president [or vice-president, or other 'acting head], and has caused its corporate seal to be here- unto affixed this day of , 189 . THE [insert corporate name] COMPANY, [Co^JJ^""*] By [signature] President [or vice- president, or title of other acting head of corporation.] . ■} State of County of On the day of in the year , before me personally came , to me known, who, being duly sworn, did depose and say that he resided in ; that he is the [president or other ofHcer] of the [name of corporation], the corporation described in and which executed the above instrument; that he knew the seal of said corporation; that the seal affixed to said instrument was such corporate seal; that it was so affixed by order of the board of directors of said corporation, and that he signed his name thereto by like order. [Signature and oKce of officer taking acknowledgment.] If such corporation have no seal, that fact must be stated in place of the statements required respecting the seal. (L. 1896, ch. S47> i 258.) *If it is within the city, the street and etreet number, if any, or other suitable designation of the partlcalar locality shonld be stated. t The person so desig^iated mnst have an office or place of business at the place %7here snch corporation is to have its principal place of business within the State. Forms. 217 Consent to be Attached to Foregoing Certificate, I, [insert name], the person designated in the foregoing instru- ment as a person upon whom a summons or any process, as therein mentioned, against the [insert name of corporation] may be served within the State of New York, do hereby consent to such designation. In Witness Whereof, I have hereunto set my hand this day of , 189 . [Signature.] State of New York, ) County of , ) On this day of , 189 , before me personally came , to me known to be the person described in and who signed the foregoing consent, and he acknowledged' to me that he signed and executed the same for the uses and purposes therein mentioned. Notary Public, County, N. Y. Sworn Copy of Charter or Certificate of Incorporation to be Attached to Foregoing Certificate. [Here append copy of the charter or certificate of incorporation.] Oath to be Annexed to Copy of Charter or Certificate of Incorporation. State of . ] . ■ County of , ) [Insert name], being duly sworn, deposes and says, that he is the secretary [or other officer] of [insert name of corporation] Com- pany, a corporation organized under the laws- of the State of ; that the foregoing" is a true copy of the charter [or certificate of incorporation] of said corporation, and of the whole thereof. [Signature.] Sworn to before me, this 1 day of , 189 . j [Signature of Notary.] The foregoing papers should be attached so as to constitute one complete instrument, and filed with the Secretary of State, who will thereupon issue the certificate -of authority. 2i8 Forms. The fees at the office of* the Secretary of State are eleven dollars. (Executive Law, L. 1892, ch. 683, § 26, subds. 7 and 13.) A cerdAed copy of the certificate of incorporation will not suffice. The act requires a sworn copy. In case an acknowledgment or affidavit is taken before a notary public or justice of the peace in another state, the act of such person should be authenticated by the certificate of the county clerk. No certificate of a county clerk is necessary when such acknowledgment or affidavit is taken in another state by a com- missioner of deeds acting under appointment from the Governor of the State of New York. No. II. Resolution of Board of Directors of a Foreign Corporation. Resolved, That the president [or vice-president, or as the case may be,\ of the [insert corporate name} be and he is hereby author- ized and directed to execute in the name and on behalf of said corporation the statement required to be filed by foreign corpora- tions under the provisions of the General Corporation Law of the State of New York, to attach the seal of the corporation thereto, and in said statement to designate [insert name of person] in the manner prescribed by the Code of Civil Procedure as the person upon whom process against the corporation may be served within the State of New York, and further to do all acts and things neces- sary to comply with the provisions of law in said State. No. 12. Revocation and New Designation by a Foreign Corporation. Pursuant to 'the provisions of section 16 of General Corporation Law of the State of New Ybrk, and section 432 of the Code of Civil Procedure of said State, the [insert corporate name] Company, a stock corporation organized and existing under and by virtue of the laws of the State of , does hereby certify as follows: That said corporation hereby revokes the designation by it hereto- fore made of [insert name of person'], as the person upon whom process against the said corporation may be served within the State of New York. That in the place and stead of said designation, hereby revoked, Forms. 219 the said [insert corporate name] Company hereby designates [insert name of person] as the person upon whom a summons against said corporation may be served within the State of New York or any process or other paper, whereby a special proceeding is commenced in a court, or before an officer, except a proceeding to punish for contempt, and except where special provision for tlie service' thereof is otherwise made by law. That the said [insert name], hereby designated, has an office or place of business at No. street, in the city [or village] of , the place where said corporation is to have its principal place of business within the State of New York. That the written consent of said [insert name] to such designa- tion, duly signed and acknowledged, is hereto annexed. In Witness Whereof, the [insert corporate name] Company, the corporation hereinbefore .mentioned and described, has caused this instrument to be executed by its president [or vice-president, or other acting head], and has caused its corporate seal to be here- unto affixed this day of , 189 . THE [insert corporate name] COMPANY, ['^"scoT'"*! ^^ [signature] President, [or vice- president, or title of other ading head of corporation.] [Attach proof of execution, consent of person designated and acknowledgment as in form No. 10.] This certificate, when properly executed, is to be filed in the office of the Secretafry of State. No fee is payable. No. 13. Certificate of Removal of Office of Designee. See the General Corporation Law, §^ 16. This is to certify. That I, , the person designated by the Company, a stock corporation organized and existing under the laws of the State of , by a certain certificate filed in the office of the Secretary of State of New York on , 18 , as the person upon whom process against said corporation may be served within the State of New York, have removed iny office and place of business within the State of New York from No. street in the city [or village] 220 Forms. of , to No. street, in said city [or village] and that from and after the of i8 , my office and place of business will be at said No. street in the city [or village] of In Witness Whereof, I have hereto set my hand at , this day of 18 . [Signature.] State of New York, ) County of , ( " On this day of 18 , before me personally appeared , to me known to be the person described in and who executed the foregoing certificate and acknowledged to me that he executed the same for the uses and purposes therein set forth. [Signature of Notary Public] The foregoing is to be filed in the office of the Secretary of State. No fee is payable. No. 14. Form of Proxy from a Stockholder, See the General Corporation Law, § 21. Know all men by these presents. That I, , do hereby constitute and appoint C. D. to be my lawful attorney, substitute and proxy for me, and in my name to vote upon all the stock held by me in [insert name of corporation] at the annual meet- ing of stockholders of such corporation [or at a special meeting of such corporation, as the case may be,] to be held on the day of i8g , and at any adjourned meeting thereof, as fully and with the same effect as I might or could do were I personally present at such meeting; and I hereby revoke any proxy or proxies heretofore giveiuby me to any person or persons whatsoever. In Witness Whereof, I have hereunto set my hand and seal this day of , 189 . [Signature.] [l. s.] In presence of All proxies must be filed in the office of the corporation. Forms. 221 No. 15. Oath of Challenged Voter. See the General Corporation Law, § 22. State of New York, | County of , f ' " I do solemnly swear that in voting at this election I have not, either directly, indirectly or impliedly, received any promise or any sum of money, or anything of value to influence the giving of niy vote or votes at this meeting, or as a consideration therefor. [Signature of voter.] Subscribed and sworn to before me this day of ,190 } Inspector of Election. The oath taken as above must be filed in the office of the corporation. No. 16. Oath of Challenged Proxy. See the General Corporation Law, § 22. State of New York, ) County of , J I do solemnly swear that I have not, either directly, indirectly or impliedly, given any promise or any sum of money or anything of value to induce the giving of a proxy to me to vote at this election, or received any promise or any sum of money or anything of value to influence the giving of my vote at this meeting, or as a considera- tion therefor. [Signature of proxy.] Subscribed and sworn to before me ) this day of , 190 • f Inspector of Election. The oath taken as above must be filed in the office of the corporation. 222 Forms. No. 17. Certificate of Extension of Corporate Existence. See th'e General Corporation Law, § 32. We, the undersigned, being stockholders of the [insert corporate name], a domestic stock corporation, and each owning the number of shares of stock in such corporation set opposite our respective signatures hereto and together owning at least two-thirds of the capital stock of such corporation, to wit, shares of the total of shares into which such capital stock is divided, do hereby certify, pursuant to the General Corporation Law of the State of New York, that we severally consent that the corporate existence ol such corporation be, and the same hereby is, extended for the term of years beyond the time specified in its original certificate of incorporation [or for a further term of years beyond the time specified in a certificate of extension of corporate existence heretofore filed.] In Witness Whereof, We have hereunto set our hands ,to this consent in duplicate, and the number of shares of stock owned by us, respectively, in such company, this day of , 189 . A. B., 40 shares. C. D., 30 shares. E. F., 30 shares. G. H., 40 shares. We, the undersigned, {insert name). President (or a -uice-presidenC) and {insert name). Secretary {or an assistant secretary) of the (name of corporation), a domestic stock corporation, do hereby certify, under ihe seal of said corporation, as follows, to- wit: That the consent of the stockholders of said corporation owning at least two-thirds in amount of its capital stock has been given in writ- ing (or by vote at a special meeting of the stockholders called for that purpose, upon the same notice as that required for the annual meetings of the corporation) to extend the existence of said corporation for a term of years beyond the time specified in its original certificate of incorporation (or for a further term of years beyond the time specified in a certificate of extension of corporate existence heretofore filed). That such written consent (or that a copy of such written consent, if desired) of said stockholders is hereto annexed. (Or, in case of a vote, that a copy of the resolution adopted at said meeting ef stockholders is hereto annexed^ In Witness Whereof, this certificate under the seal of said corpora- tion has been subscribed by us, this day of , igo . ( Corporate \ President (or a vice-president), \ seal ) Secretary ( or an assistant secretary). Forms. 223 State of New York, ) County of j **• • On this day of , igo , before me personally came and , to me known and known to me to be the individuals described in and who executed the foiegoing certificate, and they severally acknowledged to me that they executed the same. Notary Public, County, N. Y. The fee at the office of the Secretary of State upon above certifi- cate is fifteen cents for each folio of 100 words contained therein. At the county clerk's office the fee is six cents for filing and ten cents per folio for recording. No. 18. Resolution Authorizing Corporation Note. Resolved, That the president be and hereby is authorized to make a contract for the purchase of for the use of this corpora- tion, and is hereby authorized in carrying out such purchase to give notes of this corporation to the amount of dollars. No. 19. Promissory Note of Corporation. $ Albany, N. Y., , 189 . Four months after date, the [insert name of corporation] promises to pay to the order of [insert name of payee], dollars at the Bank, Albany, N. Y. Value received. I THE [insert corporate name] COMPANY, I By [signature], President, i Attest: I [Signature], Secretary. 224 Forms. No. 20. Form of Notice of Election of Directors. See the Stock Corporation Law, § 20. Notice is hereby given that a meeting of the stockholders of [insert name of company] will be held at the office of the com- pany [state location of office] on the day of 189 , at o'clock A. M. [or p. m.] for the purpose of electing [insert number] directors for the ensuing year,) and [insert number] inspectors of election to serve at the next annual meeting, I and for the transaction of such other business as may properly come before said meeting. Polls- wrlixemain" open [state length of time] Transfer books will be closed from , 189 , to , 189 . Albany, N. Y., 189 . Secretary. No. 21. Certificate of Inspectors of Election. See the Stock Corporation Law, §§ 20 and 28. We, the undersigned, inspectors of election of [insert name of corporation], a stock corporation, duly chosen as such inspectors, do hereby certify as follows: That a meeting of the stockholders of said corporation was held at , on the day of , 189 , at o'clock, . M., pursuant to due notice. That before entering upon the discharge of our duties, we were severally sworn to faithfully execute the duties of inspectors at such meeting with strict impartiality, and according to the best of our ability, and the oath so taken has been subscribed by us and is hereto annexed. That the result of the vote taken at such meeting for the election of directors of said corporation for the ensuing year was as follows: A. B Votes. CD ; Votes. E. F , Votes. That said A. B., C. D. and E. F. having received a plurality of the votes of the stockholders voting at such election for directors, were declared by us duly elected directors of said corporation for the ensuing year. Forms. 225 That the result of the vote taken at such meeting for the election of inspectors of election of said corporation was as follows: L. M ■ Votes. N. O Votes. R- S Votes. That said L. M., N. O. and R. S. having received a majority [or plurality, as by-laws provide] of all the votes cast for inspectors of election of said corporation, were declared by us duly elected as such. In Witness Whereof, We h^ve made and signed this certificate this day of , 189 .' [Signatures of inspectors.] State of New York, County of , On this day of , 189 , before me personally came [ntfmes of inspectors], to me known to be the individuals described in and who executed the foregoing certificate and severally acknowledged to me that they executed the same. [Signature of Notary.] y ss. : No. 22. Oath of Inspectors to be Annexed to the Foregoing Certificate. See the Stock Corporation Law, § 28. State of New York, ) County of , ) " We, the undersigned inspectors of election, duly appointed to act at the meeting of the stockholders of the [insert name of corpora- tion], to be held at , on the day of , 189 , being severally duly sworn, do depose and say, and each for himself deposes and says, that he will faithfully execute the duties of inspector at such meeting with strict impartiality, and according to the best of his ability. Inspectors. Severally sworn to before me ) this day of 189 . j Notary, etc. 226 Forms. The foregoing certificate, with the oath annexed thereto, must be filed in the office of the clerk of the county in which the election was held. No. 23. Certificate to Increase (or Reduce) Number of Directors. See the Stock Co/poration Law, § 21. Certificate to Increase (or Reduce) the Number of Directors OF [insert corporate name] Company. We, the undersigned, do hereby certify that the following is a correct transcript of the minutes of proceedings of a meeting of stockholders of the '[insert name of corporation], held pursuant to "the Stock Corporation Law," article 2, section 21, to wit: N. Y 189.... A special meeting of the stockholders of [insert name of corpora- tion], a stock corporation, was held this day at o'clock A. M. [or P. M.], to determine whether the number of directors shall be increased [or reduced]. Such meeting was held at the office of the company, the usual place of meeting of its directors, on two 'weeks' notice in writing to each stockholder of record; such notice having been served per- sonally, or by mail, postage prepaid, directed to each stockholder at his last known post-office address. Pursuant to such notice the meeting was held at the time and place mentioned, stockholders owning more than a majority of the stock of the corporation being present in person or by proxy. Such meeting was duly organized by choosing C. D. as president and A. B. as secretary thereof. The notice of the meeting and proof of the due service and pub- lication thereof were read and filed in the office of the corporation at the time of such meeting. On motion of E. F., duly seconded, the following resolution was offered for adoption: " Resolved, That the number of directors of [insert name of com- pany] be increased [or reduced] from , the present number, to " Forms. 227 Upon a canvass of the votes cast uppn said resolution, it was found that stockholders owning shares of the stock of the corpora- tion, being more than a majority of the stock thereof, voted in favor of said resolution, and stockholders owning shares of stock of the corporation, voted against its adoption. [Or, No stochjiolder voted against its adoption, as the case may be.] Such resolution was thereupon declared duly adopted, and the meeting adjourned. In Witness Whereof, We have made, signed and verified this certificate in duplicate, this day of , 189 . C. p.. President. A. B., Secretary. State of New York, 1 County of , ) " C. D. and A. B., being severally duly sworn, depose and say, and each for himself deposes and says, that he, the said C. D., was the president, and that he, the said A. B., was the secretary of the meeting of stockholders of [insert name of corporation], held to determine whether the number of directors thereof shall be increased [or reduced] ; and that the foregoing is a correct tran- script of the proceedings of such meeting entered in the minutes of the corporation. C. D., President. A. B., Secretary. Sworn to before me this ) day of , 189 . J G. H., Notary Public, County, N. Y. The fees upon filing and recording the above certificate are as follows : Office of Secretary of State — recording, fifteen cents per folio; county clerk — filing, six cents; recording, ten cents per folio. 228 Forms. No. 24. Stock-Book of Stock Corporation. See the Stock Corporation Law, § 29. Stock-Book of the [insert corporate name], Pursuant to the Stock Corporation Law of the State of New York. Names of etockbolden. Places of residence. Number of shares of stock held. Time each became owner of shares. Amount paid thereon. Section 29, above referred to, requires the names to be " alpha- betically arranged," hence the pages of the stock-book should bear the letters of the alphabet in successive order, and each entry should be made upon the page bearing the appropriate letter, thus: " John Anderson" on page "A;" "John Brown" on page " B," etc. No. 25. Annual Report of Stock Corporations, other than Monied or Railroad Corporations. See the Stock Corporation Law, § 30. Annual Report* of The [insert corporate name] Company. Pursuant to the provisions of Section 30 of the Stock Corporation Law of the State of New York, I, the undersigned, , President (or a vice-president, or the treasurer, or a secretary) of the {insert name of corporation), a domestic {or a foreign) stock corpora- tion, do hereby make a report as of the first day of January, igo , as follows, to-nit: I. The amount of its capital stock is (insert amount) dollars, and the proportion actually issued ^s (insert amount) dollars. Forms. 229 3, The amount of its debts does not exceed the sum of {insert amounf) dollars. 3. The amount of its assets is at least the sum of {insert amount) dollars. 4. The amount of its stock issued for property purchased is (insert amount) dollars. , In Witness Whereof, I have signed this report this day of 190 . President. (or a vice-president, or the treasurer or a secretary, as the case may be.) Under the practice prevailing prior to the amendment of igoi, it iras necessary to file the repoit during the month of January each year. It was also necessary to make such report in duplicate, one of which was to be filed in the oflSce of the secretary of state, and the other in the office of the clerk of the county in which the principal business office of the corporation was located. It was also required to be signed by a majority of the directors of the corporation and to be verified by the oath of the president or vice-president and treas- urer or secretary. Under the law as now modified the execution and filing of one 'report is sufficient, duplicate reports being unnecessary because the report is required, pursuant to the amended law, to be filed only in the office of the secretary of state. It is to be signed by only one of the executive officers, either the president or a vice-president or the treasurer or a secretary. The report is not required to be sworn to, and need not be made or filed until an officer of the corporation has beeii requested in writing so to do by a creditor or by a stockholder of the corporation. No fee is payable at the office of the secretary of state for filing the report. By a ruling of the commissioners of internal revenue no revenue stamp is necessary on annual reports. For statutes governing reports to the comptroller by all corpora- tions liable to direct state taxation, see page 146 et seq. 330 Forms. No. 26. Certificate of P»rtly Paid stock. See the Stock Corporation Law, § 62. No No. of Shares The.i .Company. (Incorporatecjl under the L^ivs of, (jie State of New York.) Authorized Capital Stock $ Shares, $ each. This certifies that is the owner of shares of the partly paid capital stock of The Company, transferable only on the books of the Company in person or by atlor- ney on surrender of this certificate. Ten per cent, of the par value has been paid in cash on the shares of stock named in this certificate. The above named holder of this certificate accepts the same subject to lia- bility for the payment upon said shares of all instalments, not noted as paid upon the face or reverse of thi$ certificate, which shall be called by the board of directors, prior to the transfer of this certificate upon the books of the company. In Witness Whereof, The said company has caused its corporate seal to be affixed hereto and this certificate to be signed {^"ual?j ^y ''^ president or vice-president and secretary or treas- urer, this. . . day of 190. . , President [ar Vice-Presidfn(\, , Secretary [or Treasurer], . On the reverse of the certificate should be printed blank instalment receipts and a blank transfer as follows: 2d. Instalment % Paid 3d. Instalment % Paid 4th. Instalment % Paid 5th. Instalment % Paid 6th. Instalment % Paid 7th. Instalment % Paid 1 8th. Instalment % Paid gth. Instalment % Paid... lOth. Instalment % Paid For value received. hereby sell, assign and transfer unto shares of the capital stock represented |}y the within certificate, and do hereby irrevocably constitute and appoint attorney to transfer the said stock on the books of the within named Company with full power of substitution in the premises. Dated 19.... In presence of Forms. 231 No. 27, Certificate of Stock. See the Stock Corporation Law, § 40. No No. of shares Par value of each $. . . . ^ The Company. (Incorporated under the Laws of the State of New York.) This is to certify that is the owner of shares of the capital stock of The Company, transferable only on the books of the company by the holder .thereof, in person or by attorney, on the surrender of this certificate. In Witness Whereof, The said company has caused its cor- porate seal to be affixed hereto and this certificate to [''"sen?™''] ^^ signed by its president or vice-president and secretary or treasurer. Albany, N. Y., , 189 . , President [or Vice-President] . Secretary [or Treasurer]. On every original issue of stock a revenue tax stamp of five cents is required for each $ioo of face value or fraction thereof. The stamp should be affixed on the face of the certificate of stock. No. 28. Certificate of Increase [or R,eduction] of Capital Stock- . See the Stock Corporation Law, §§ 44, 45, 46. We, the undersigned, A. B., chairman, and C. D., secretary, respectively, of a special meeting of the stockholders of [insert ■ corporate name] , a domestic stock corporation, held for the pur- pose of increasing [or reducing] its capital stock, do hereby certify: That prior to such meeting a notice, stating the time, place and object thereof, and the amount of the increase [or reduction] pro- posed, signed by the president [or a vice-president'] and the secretary, was published once a. week, for at least two successive weeks, in [insert name of paper], a newspaper in the county where the principal business office of such corporation is located. 16 232 Forms. That the following is a true copy of such notice: [Insert here copy of notice as given in Form No. 2g,] That a copy of such notice was also duly mailed, postage prepaid, to each stockholder of such corporation, at his last known post-ofE(fe address, ai least two weeks before the meeting (or was personally served at least five days before the meeting). That at the time and place specified in such notice, stockholders appeared in person or by proxy, in numbers representing at least a majority of all the shares of stock of such corporation, and organized said meeting by choosing from their number the undersigned, A. 6., as chairman, and C. D., as secretary thereof. That the notice of the meeting and proof of the proper publishing and mailing (or service) thereof was presented. ■. That, upon motion, a vote was then taken of those present in person or by proxy upon the following resolution: Resolved, That the capital stock of \inseri name of company], be increased [or reduced] from the present amount thereof, to wit: [insert amount] dollars, consisting of [insert number] shares of the par value of [insert par value] dollars each, to [insert amount to which stock is increased or reduced] dollars, to consist of [insert number] shares of the par value of [insert par value] dollars each. That stockholders owning [insert number] shares of stock, being at least a majority of all the stock of the corporation, voted in favor of such resolution; and stockholders owning [insert number] shares of stock voted against its adoption. [Or, " and no stock- holder voted against its adoption,"if such be the case.] That a sufficient number of votes having been cast in favor of such increase [or reduction], such resolution was declared duly adopted. That the amount of capital of said corporation heretofore authorized is [insert amount] dollars and the proportion thereof actually issued is [insert amount] dollars; and that the amount of the increased [or reduced] capital stock is [insert amount] dollars. * [ That the whole amount of the ascertained debts and liabilities of the corporation is% ] In Witness Whereof, We have made, signed, verified and acknowl. edged this certificate in duplicate. Dated, this day of 190 . A. B., Chairman, C. D., Secretary. • This paragraph is to be inserted only in cases of reduction of capital stock. Forms. 233 State of New York, ) County of , p®' A. B., chairman, and C. D., secretary, respectively, of the afore- said meeting, being severally duly sworn, do depose and say, and each for himself deposes and says, that he has read the foregoing certificate subscribed by him, and knows its contents, and that the same is true. A. B., Chairman. C. D., Secretary. Sworn to before nie this ) day of , 189 . J E. F., Notary Public, County, N. Y. State of New York, ) County of , \ " On this day of 189 , before me personally came A. B. and C. D., to me personally known to be the persons described in and who made, signed and verified the foregoing certificate and severally duly acknowledged to me that they made, signed and verified the same for the uses and purposes therein set forth. E.F., Notary Public, County, N. Y. At the office of the Secretary of State the fee upon the foregoing certificate is fifteen cents for each folio of' 100 words contained therein. At the county clerk's office the fees are: Filing, six cents; recording, ten cents per folio. In addition to such fees, in case of an increase of capital stock, there must be forwarded to the State Treasurer (not to the Secretary of State) one twentieth of one per cent upon the amount of such increase, simultaneously with the transmission of the certificate to the Secretary of State. Certificates of reduction of capital stock of other corporations than railroads must have endorsed thereon the approval of the State Comptroller, and such certificates should be sent to the Comptroller's office for approval prior to their presentation for filing in the office of the Secretary of State, or of any county clerk. Proper information in the form of an affidavit must be furnished the Comptroller to enable him to endorse upon the certificate the statutory approval. For such purpose a form of affidavit, designed 234 Forms. to contain the essential proof and to meet the requirements of the Comptroller's office has been prepared. See form No. 30. No. 29. Notice of Meeting to Increase or Reduce Capital Stock, See the Stock Corporation Law, § 45. Notice to Stockholders. N. Y., , 189.. A special meeting of the stockholders of [insert name of company] will be held on the day of , 189 , at o'clock p. M. [or A. M.] at the office of such company, at No. street, in the city [or village] of , for the purpose of voting upon a pVoposition to increase [or reduce] its capital stock from [insert amount of present capital stock], con- sisting of [insert number of shares] shares of the par value of [insert par value] dollars each, to [insert amount to which stock is proposed to be increased or reduced] dollars, to consist of [insert number of shares] shares of the par value of [insert par value] dollars each. [ President. [or Vice-president.] [ Secretary. No. 30. Proof for the State Comptroller's Information upon an Application for Approval of a Reduction of Capital Stock. See the Stock Corporation Law, § 46. State of New York, ) ^ County of , P*" A. B. and C. D., treasurer and secretary, respectively, of [insert name of company], being severally duly sworn, do depose and say, and each for himself deposes and says: That the said A. B. is the treasurer of [insert name of company], and the said C. D. is the secretary thereof; that such company is a domestic stock corpora- Forms. 235 -tion other than a railroad corporation, or a monied corporation; that a capital of [insert amount to vHhich the capital stock is ridticUd] dollars is sufficient for the proper purposes of the corporation, an'd is in excess of its debts and liabilities. A. B., Treasurer. C. D., Secretary. Sworn to before me this ) day of i 189 . \ E. R, Notary PMlic, County, N. Y. No. 31. Certificate Increasing [or Reducing] Numbier of Shares. See the Stock Corporation Law, § 56. We, the undersigned, chairman and secretary, respectively, of a special meeting of the stockholders of [insert corporate name], a domestic stock corporation, held for the purpose of increasing [or reducing] the number of shades into which its capital stock is divided, without increasing [or reduciwg] the amount of capital stock of such corporation, do hereby certify: That prior to such meeting a notice stating the time, place and object thereof, and the increase [or reduction] of the number of shares proposed, signed by a majority ot the directors, was pub- lished once a week, for at least two successive weeks, in [insert name of paper] , a newspaper in the county where the principal busi- ness ofifice of such corporation is located. That the following is a true copy of such notice : Notice to stockholders: A special meeting of the stockholders of the [insert corporate name] Company, will be held at the ofifice of the Company at No. strefet, in the city [or ■Oilldge] of , on the day of , 18 , at o'clock, m., for the purpose of considering and voting upon a proposition to increase [or reduce] the number of shares into which the capital stock shall be divided, without increasing [or reducing] the amount of such capital stock, so that hereafter such capital stock shall be divided into shares of the par value of dollars each. Dated Albany, N. Y., 19 President. [or Viee-p'^estdeht ] Secretary. 236 Forms. That a copy of such notice was also personally served upon or duly mailed, postage prepaid, to each stockholder of such corpora- tion at his last known post-office address, at least three weeks before the meeting. That at the time and place, specified in such notice, stockholders appeared in person or by proxy, in numbers representing at least two-thirds of all the shares of stock of the corporation, and organ- ized by choosing from their number the undersigned A. B., as chairman, and C. D., as secretary thereof. That the notice of the meeting and proof of the proper publishing and mailing thereof was presented. That, upon motion, a vote was then taken of those present in person or by proxy upon the following resolution: Resolved, That the number of shares into which the capital stock of the [insert corporate name] Company is divided be increased [or reduced] from the present number, to wit: shares of the par value of dollars each, to the following number, to wit: shares of the par value of dollars each. That stockholders owning [insert number] shares of stock, being at least two-thirds of all the stock of the corporation, voted in favor of such resolution; and stockholders owning [insert number] shares of stock voted against its adoption. [Or, '' and no stockholder voted against its adoption," as the case may be.] That a sufficient number of votes having been cast in favor of such resolution, the same was declared duly adopted, and the meeting adjourned. In Witness Whereof, We have made, signed, verified and acknowledged this certificate in duplicate. Dated this day of 18 A. B., Chairman. C. D., Secretary. State of New York, ) County of , ) A. B., chairman, and C. D., secretary, respectively, of the afore- said meeting, being severally duly sworn, do depose and say, each for himself, that he has read the foregoing certificate subscribed by him, and knows its contents, and that the same is true. [Signatures of oMcers.] Sworn to before me this ) day of , 189 . \ [Signature of Notary.] Forms. 237 State of New York, ) County of , p^"' On this day of 18 , before me personally came A. B. and C. D., to me personally known to be the persons described in and who made, signed and verified the foregoing certificate and severally duly acknowledged to me that they made, signed and verified the same. [Signature of Notary.] No. 32. Proof of Execution of an Instrument by a. Corporation. See the Real Property Law (L. 1896, ch. $47), § 258. State of > ) . County of , ) ' On the day of in the year , before me personally came , to me known, who, being duly sworn, did depose and say that he resided in ; that he is the [president or other officer] of the [name of corporation], the corporation described in and which executed the above instrument; that he knew the seal of said corporation; that the seal affixed to said instrument was such corporate seal; that it was so affixed by order of the board of directors of said corporation, and that he signed his name thereto by like order. [Signature and office of oMcer taking acknowledgment.] If such corporation have no seal, that fact must be stated in place of the statements required respecting the seal. (L. 1896, ch. 547, § 258.) No. 33. Report of Corporation to Assessors. See the Tax Law, § 27. I, , president [or other proper officer] of the Company, do hereby, pursuant to section 27 of the Tax Law, make this statement as follows -- I. The real property owned by said company consists of [describe same], situated in the town of [or as the case may be], and the sum actually paid therefor was $ 238 Forms. 2. The capital stock actually paid and secured to be paid in is $ ; the sums paid for real property amount to $ , and the amount of such capital stock held by any incorporated literary or charitable institution [if any] is $ 3. The principal office of the company is situated in [specify the town or ward]. [Signature of officer.] State of New York, ) County of , j ' [Insert name], being duly sworn, deposes and says that he is the president of the Company, the corporation mentioned in the foregoing statement; that he made such state- ment as such officer, and that the same is in all respects just and true. [Signature of oMcer.] Sworn to before me this ] day of , 189 . J [Signature of Notary.] INDEX Accrued Rights: Page. amended certificate does not prejudice 41, 42 assertion of, not affected by revision laws ^^ Acknowledgment: defective, how cured 41, 42 proof of execution by corporation 237 Actions : collusrvely brought, stay in 47 foreign corporations, when maintainable by 48 against, service of process SS-38 designation by, of person to receive process S5 SS pending, not aflfected by amended certificate 41, 42 effect of repeals upon y-j Stock book presumptive evidence 113 Acquisition of Property: domestic corporations, acquiring in other States 47 foreign countries, acquiring in •. 47 foreign corporations, may acquire in this State 59 judicial sales, may purchase at 60 Administrator: liability, when subject to 138 Alteration or Extension of Business: proceedings for 117 Amended Certificates: accrued rights not prejudiced by 41, 42 defects, cured by 41, 42 forms for 206, 207 Annual Meeting (see Elections). Annual Report r contents of, how executed and filed 114, 115 false report, liability for making 116 forms for 228-230 penalty for nol filing 115 240 Index. Assets: Page. statement of, stockholders may require 136 Assignments: preferential, forbidden 131 Banking Powers: granted only to corporations under the banking laws 61 Bonds: acquisition of, by corporations 121 authority for issuing 91 convertible into stock, when 91 consideration for issue for 125 guaranty of, by another corporation 122 market value, at least, to be issued for 125 mortgage, to secure 91 reorganized corporation may issue 97 Books: account, to be kept 113 stock book to be kept 113 evidence, presumptive, to be taken as 113 extracts may be made from 113 penalty for refusing to allow 113 inspection of, to be permitted 113 penalty in case of refusal 113 transfers of stock to be entered in 113 transfer agent of foreign corporation to exhibit. .. . 136, 137 Borrowing money: authorized 91 mortgage, as security 91 Business: extension of 117 Business Corporations: additional powers 5 capital stock - 3 payment of one-half of 9 shares of 4 certificate for formation of, contents 2 certificate of incorporation, filing, fees 6 form for 201 filing and recording 32 classified as stock corporations 29 commencement of business, restriction upon 6 Index. 241 Business Corporations — Continued: Page. consolidation, proceedings for 1 1-14 corporate name 3 directors 5 duration 4 extension of business 117 formation of 2 full liability companies, formation of 9 general corporation law, provisions of, applicable 2, 28 incorporators, qualifications of 3 objects ■ 3 payment of one-half capital stock 9 reorganization ; 7 restriction upon commencement 6 steam corporations 15-18 stockholders, liability of 6 stock corporation law, provisions of, applicable 2, go subscribers 5 water companies 18 Business Corporation Act of 1875, chapter 611: eflfect of repeal y7 repeal of 85 Business Corporations Law (see also Business Corporations) : business, certain kinds not authorized under 3 general corporation law, provisions of, applicable 2, 28 stock corporation law, provisions of, applicable 2, go By-Laws ; directors, may be made by. 70 election of, time and place, fixing of 104 duties of officers prescribed in iii form for 210-215 inspectors of election, regulating appointment of 112 neglect of directors to adopt for annual election 107 publication in certain cases 44, 45 quorum at stockholders' meetings, prescribing 44 directors, at meetings of 70 stockholders, power to make 44, 45 transfers of stock, regulating 44, 121 Capital Stock (see also Stock) : classification of, as common and preferred 130 certificate of 201 division of, as dividends, prohibited 108 242 Index. Capital Stock — Continued: Pagt. increase or reduction 127-I30 liabilities oi holder of increase 127, 128 payment of, in money, property or labor 125 certificate of half payment 203 preferred, exchange of, for common 131 subscriptions to, payment of 126, 127 forfeiture for non-payment 126, 127 unlawful dividends upon 108 withdrawal of, by stockholders 108 Certificate of Incorporation: amended certificate to correct informality 41, 42 business corporations, incorporation 2 certified copy, application of term 30 filing of, may be used in county clerk's office 32, 33 citizens of the United States, two-thirds who execute must be 32 cumulative voting, may provide for 62 definition of 30 duplicate original, use of, for filing 32, 33 English language must be used in 32, 33 fees, statutes regulating 24, 25 forms for 201-203 lost certificate, how supplied 42 persons of full age must execute certificates 32 preferred stock, certificate may provide for 2, 130 qualifications of incorporators 32 tax for the privilege of organization 20-22 payment of, how to be made 25 table showing amounts payable 22 Certificate of Stock (see also Stock): consideration for issue of 125 par value, to be issued for not less than 125 form for 231 issue of, regulated 121 lost certificate, how replaced 134 transfer of certificate 121 Challenges (see Directors, Election of). Change of Business (see Business). Change of Name (see Corjiorate Name). Change of Number of Directors (see Directors). Change of Number of Shares (see Shares). Index. 243 Citizens of United States: Page. incorporators, tvyp-thir^s of, must be , 32 qualifications generally 32 exceptions in certain cases 32 Classification: directors, terms of 104 stock, common and preferred 130 Classification of Corporations: stock corporations 29 business corporations 29 monied corporations 29 transportation corporations 29 Combinations: prohibitions under State laws 99 Conflicting Corporate Laws: eftect of , 76 general corporation law yields to 76 stock corporation law yields to 76 Corporators (see Incorporators). Consolidation : business corporations , 11 merger 142 Construction of Laws: conflicting j)rovisions, eflfect of 76 general provisions 77 Corporate Existence: extension of 75 form for 222 Corporate Laws: application of • ; 76 conflicting, eflfect of 76 construction of 77 definition 3° Corporate Name: change of, proceedings for 37-41 similarity of, not permitted 34 Corporate Powers (see also Powers) : grant of general powers 44 prohibited untir payment of fees and tax 32, 33 statutory powers, other than prohibited 43 244 Index. Creditors: Page. accounting to, for prohibited transfer 131 preference of, prohibited 131 protection against unlawful property transfer 131 remedy of, for unauthorized dividends 108 bonds, for over-issue 109 debts, for unauthorized 109 loans, if made to stockholders 110 report, if false one be made 117 Cumulative Voting (see Voter). Debts: amount, limitation 109 contracting, power of 91 mortgage may be given as security 91 stockholders, when liable for 137 limitation 1.39 unauthorized debts, liability of directors for 109 Defective Certificate: amenjjed certificate to cure 41, 42 form for 206 Definitions: certificate of incorporation 30 corporate law or laws 31 directors 30, 182 domestic corporation ^. 30 foreign corporation 30 monied corporation 30 non-stock corporation 30 office of a corporation 31 principal office 31 stock corporation , 30 Designation (see Foreign Corporations). Directors: acts of majority binding 70 actions collusively brought by, stayed 70 authority of, on dissolution y^ board of, manages affairs of corporation 70 by-laws, when to be made by 70 neglect to adopt for annual election, effect 107 definition 30, 182 dissolution, trustees, in case of 73 Index. 245 Directors — Continued: Page. election of 104 books, evidence at 62, 63 by-law regulating, publication of 44, 45 certificate of inspectors, filing of II2 challenge of voter 65 oath may be required • 65 form for 65 proxy, form of oath 65, 66 inspectors may administer 65 cumulative voting at, provisions for 62 court may order new election 69 date, by-laws may fix 66, 104 grievance at, redress by court 69 inspectors, appointment of 112 oaths, may administer 65, 66 oath to be taken by , 112 misconduct at 181, 182 neglect to choose at, effect 66 dissolution not effected by 66 special election to be called: 67 by-laws may be adopted at 68 call for, members may issue (fj certificate of result 68 special elections regulated 67 inspectors and directors, election of €fj notice of, to be given 67 office of corporation, to be held at 67 elsewhere if access denied , . 67 procedure at (>y quorum at 67, 68 ■ notice of, publication 104 one-fourth, at lea^t, to be chosen annually J04 proxy, voting by, authorized 64 filing of 6s, 66 place of holding, by-laws to fix 104 right to vote at, how determined 62 pledgor of stock qualified 62 time of, by-laws to fix 104 voter at, qualifications 104 increase of number of 106 liability of 108-110 246 Index. Directors — Continued : liability of — Continued: Page. dividends, for unauthorized 108, 178 false report, for making 117, 179 loans to stockholders i lO, 178 prohibited transfers of property 131 trustees on dissolution 73 majority, powers of 70 acts of, are acts of board 70 managers, term applies to 30 meetings of board 70 quorum, majority constitutes 70 majority of quorum may act 70 number of 2 change of 106 form for 226 officers, appointment by Ill qualifications of 70 residents of State, one, at least, must be 70 stockholdjers, when not required to be 104 quorum majority of board constitutes 70 residents of St»te. at least one must be 70 security from officers, may require Ill term, right to hold over 66 classification of terms of office 104' transfers of property to, when prohibited 131 transfers of stock, may refuse, when no trustees, when term applies to 30 vacancies, filling of 104 by-laws to provide for 104 Dissolution: directors, to act as trustees in certain cases 73 authority of, on dissolution 73 failure to elect, corporation not dissolved 66 special election to be called (>■; liability of, in such case 73 proceedings for ' , 140-142 Dividends: unauthorized, except from surplus profits 108, 178 liability of directors for making 108, 178 dissenting directors, how relieved 108 Index. 247 Domestic Corporations: Page. definition 30 Duplicate Original Certificates (see Certificate of Incorporation). Duration of Corporation: extension of 75 form for 222 Election (see Directors"). Errors : amended certificate to correct 41, 42 Evidence: certificate, presumptive evidence of incorporation 43 certified copy, use of 42 stock book, to be 113 Executor: liability, when subject to 137, 138 Existence : corporate, presumptive evidence of 43 extension of 75 form for 222 Expiration of Corporation: renewal after 75, 76 court may order, in certain cases 75 Extension of Business: corporations generally 117 Extension of Existence: proceedings for 75 False Certificates, etc.: liability for issuing 116 Fees: acts regulating 24, 25 corporate powers prohibited until paid 32, ^3 Filing and Recording: amended certificates 32, 33 certificates of incorporation 32, 33 Financial Statement: / stockholders may require 136 refusal to make, penalty 136 time to make, how extended 136 Foreclosure (see Mortgage and Reorganization). 17 248 Index. Foreign Corporations: Pag^e. actions, when maintainable by 48, 49 averment in complaint 192 regulations concerning 194, 195 time to answer, how extended 193 application of penal code provisions 182 attachments against 186 shares of stock, how attached 189 upon unpaid subscriptions 188 certificate as to interests of stockholder. . : 189 upon other property , 188 refusal to give information 189 authority to do business 48 procedure to obtain 55-57 forms for 215-219 books of, transfer agent to exhibit 136 definition .' 30 designation of person to receive process 55-57 form for .' 215 revocation of 55-57 form for 218 directors, liability for unauthorized dividends 108 loans to stockholders 110 evidence, books, when to be 191 exceptions 191 fraudulent issue of stock 177 judgment against, enforcement 190 liabilities of officers, directors and stockholders 144 local taxation 164-171 mortgage, foreclosure by 60 sale under, may buy at 6p office, removal of 21Q pleidings, verification by 184 process against, service of 55-57 prohibited transfers of property 131 property, real, may acquire 59 judicial sales, purchase at .' 60 stock and bonds, may hold in other corporations 121, 122 tax, annual to the State 146, 147 exemption 150 Index. 249 Foreign Corporations — Continued: Page. tax for privilege of doing business 23 usurpation of corporate rights 196 Forfeiture: corporate powers, for non-user 74 Forms : acknowledgment by corporation 237 annual report 228 by-laws 210-215 capital stock, increase or reduction 231-234 certificate of incorporation ■. 201 full liability company 202 certificate of stock 231 certificaie of partly-paid stock , 230 directors, change of number 226 existence, extension of 222 foreign corporations 215 designation and statement 215-218 new designation and revocation 218 removal of ofifice 219 full liability company, change to , 204 inspectors of election, certificate of 224 informality, correction of 206, 207 note of corporation 223 resolution authorizing 223 notice of annual meeting 224 oath of challenged voter 221 oath of challenged proxy 221 oath of inspectors of election 225 objects, correction of 208-210 par value of shares, change of 235 payment one-half capital stock 203 proxy of stockholder 220 stock book 228 tax report to assessors 237 Franchise and Property: sale of 118 General Corporation Law, The: application of, to existing corporations J 76-78 conflicting provisions of other laws, effect 76 corporate laws, is one of the 31 provisions of, applicable to other corporate laws 28 250 ' Index. Grace: Page. days of, abolished 95 Guaranty : bonds of another corporation 121, 122 Guardian : liabiHty, when subject to , 137, 138 Incorporators: qualifications of 32 Increase of Capital Stock: bonds, upon conversion into stock 91, 92 liabilities of holder upon 127,- 128 proceedings for 127-130 Increase of Number of Directors (see Directors). Individual Liability of Directors (see Directors). Individual Liability of Officers (see Officers). Individual Liability of Stockholders (see Stockholders). Informality: amended certificate, to correct 41, 42 Inspectors of Election: appointment of, by-laws prescribe 112 certificate by, of result of special election 68 form for 224 compensation of 112 oath, to be taken by 112 oath of voter, may be required by 65, 66 administered by inspectors 65, 66 proxy, may be required to swear 6$, 66 special election, may be chosen at 67 statements filed by 68 transfer books, may require, production of 62, 63 vacancy, how filled 112 Liability: administrators, how incurred by 137, 138 dividends, if unauthorized 108 foreign corporatioas 144 loans to stockholders 110 propel ty, prohibited transfer of 131 Index. 251 Liability — Continued : Page. executors, how incurred by 137, 138 guardians, hdw incurred by 137, 138 oificers, for making false report 117 prohibited transfers of property, for making 131 pledgor of stock 137, 138 reorganization, corporation formed by 95 stockholders, unpaid subscriptions 137, 138 full liability business corporations 9 wages of employes 137, 138 trustee of estate, how incurred by 137, 138 Lost Certificates: stock, replacing, procedure 134 incorporation, certified copy may be filed 42 Majority: directors, powers of 70 Manufacturing Corporation Act of 1848, Chapter 40: act repealed < 81 manufacturing corporations now form under business act. . . 2 Meetings (see also Directors and Elections) : directors, by board of 70 quorum at 70 majority of, may act 70 qualifications of voters 62 stockholders' meetings, to elect directors 62, 104 cumulative voting, how authorized 62 proxy, voting by, authorized 64 qualifications of voters at 62 quorum at, by-laws may regulate 44 voting at, regulated 62 Member of Corporation: definition _. 30 Merger: proceedings for 142 Monjed Corporations: definition 3° Monopolies: prohibitions against 99-i03 Mortgage : amount, limitation removed 9^ authority for , *d»~. 91 252 Index. Mortgage — Continued : Page. bonds, under, when convertible into stock 91, 92 foreclosure under 98 payment of portion, by stockholder 133 reorganization by purchasers under 95 rights of stockholder on foreclosure 133 Name of Corporation: duplication of, prohibited 34 change of 37-41 Non-User: forfeiture of corporate powers 74 Notices : false, penalty for making II7 forms of 224, 234 waiver of .,. 79 Number of Directors (see Directors). Number of Shares (see Stock). Note: form for 223 Oath: elections, may be required at 65 filing of, with certificate of election 112 inspectors of election to take 112 form of 22s Obligations: mortgage, to secure 91 Objects: correction of, form 208 extensions or alterations of 118 Officers: appointment and removal of, by directors iii bonds, may be required from." Ill books, entries in, refusal to make, penalty 113 exhibition of, refusal to permit, penalty 113 compensation of, power to fix 44 election of (see, also, directors) lii by-law regulating, to be published 44, 45 false report, penalty for making 116 power to appoint 44 powers and duties of Ill prohibited transfers of property, liability for 131 Index. 253 Office of Corporation: Page. definition i 30 location, principal place of business, to be at 30 change of 143 special elections to be held at 67 elsewhere if access denied 67 Organization Tax: act regulating 20 corporate powers prohibited until paid. 32, 33 State treasurer, payable to 20-25 table of amounts payable 22 transmission of, regulations concerning 25 Par Value of Shares (see Stock). Payment: capital stock, half of 9 mortgage debt, by stockholder •. . . 133 payment of subscriptions 126 Penalty: false report, for making , 116 financial statement, refusal to make 136 stock book, refusal to keep, or exhibit 113 extracts from, refusing to permit 113 foreign corporations to keep 136 Pledgees : stockholders, not liable as 137, 138 Pledgor of Stock: liability as stockholder 137. 138 vote, right to 62 Powers: banking prohibited, except by banks , 62 bonds and stocks of other corporations, owning 121 corporate, prohibited until payment of organization fees, 32, 33 debts, contracting 91 directors, majority, powers of 70 extension of 117 foreign corporations (see Foreign Corporations). actions by, when maintainable , 48, 49 forfeiture for non-user 74 general powers, grant of 44, 45 by-laws, may make 44 officers and agents, power to appoint 44 property, may hold 44 other States, acquiring in 47 254 Index. Powers — Continued : Page. mortgage of prt>perty and franchises. 91 seal, to have and alter 44 statutory, other than prohibited 43 Preferred Stock: classification of, permitted 131 exchange of, for common, how authorized 131 President of Corporation (see Officers). Principal Office (see Office of Corporation). Privileges (see Powers). Process: foreign corpo^tion, service upon 55-57 Property: acquiring, power of 44 foreign corporation, may acquire 59 other States, acquisition in 47 mortgaging, regulations concerning 91 transfers of, when prohibited 131 Proxy: authority for 64 challenge of 65 oath, form of 66 duration 64, 65 forms for 220 revocation of 64, 65 stockholders, right to hold not restricted to 31 Qualifications: directors, at least one must be resident of State 70 stockholders, must be ' 104 incorporators 32 president must be a director iii voters at meetings (see Voter). Quorum: by-laws, when to fix 44 directors, majority of, constitutes 70 special elections, what constitutes at 68 Reduction of Number of Directors (see Directors). Reduction of Capital Stock (see Capital Stock). Reincorporation of Existing Corporations: business corporations, proceedings for 7 qualifications of mcorporators, exceptions in such cases 32 Index. 255 Reorganization : Page. business corporations, proceedings for 7 corporation formed after foreclosure. . , !*. 9S proceedings for organization 95-98 Repeal of Laws: effect of 77 schedule of 81-89 Reports (see Annual Reports). Residents of State: directors, at least one must be 70 incorporators, one must be 32 qualifications generally 32 Revival of Corporation: court may order 75, 76 Rights Accrued: amended certificate does not prejudice 41, 42 repeal of laws does not affect "jy Salaries (see Officers). Sale of Franchise and Property: authority for 118 consent of two-thirds of stock requiredi 118 dissenting stockholders, remedy of 118 Saving Clause: repeals, effect of 77 Seal: power to have and alter 44 Secretary of Corporation (see Officers). Secretary of State: certificates filed and recorded in office of 32, 33 copy certified by, filable in county clerk's office 32 33 evidence in court, may be used for 43 fees, payable to, in advance 32, ZT, transmission of, information relative to 25 Shares (see Stock). Special Elections (see Elections). Statement to Stockholders: account of assets and liabilities 136 treasurer of corporation, when to furnish 136 refusal by, penalty 136 256 Index. State Taxation (see Taxation). Statutes Repealed: ^ Page. schedules of 81-89 Steam Corporations (see Business Corporations). Stock (see also Capital Stock) : acquisition of, in other corporations 121 bonds, convertible into, when to be • 91. 92 certificates, to represent ownership 121 form of 231 loss of, issue of new certificate 134, 13S classification of common and preferred, how provided for. . 130 consideration for issue of 125 increase or reduction of, proceedings for 127-129 forms for 231-234 number of shares, change of 4. 106 par value of 4 form for 235 ownership of, in other corporation I2t partly-paid stock 144a payment, when made, liability to cease 137, 138 exception in case of full liability corporation 9 exception as to wages of employes 137, 138 quorum, amount tO constitute 44 by-laws may regulate 44 subscriptions for, time of payment 126 transfer of, regulations concerning 121 entry to be made in stock book 113 insolvency, transfer in contemplation of, prohibited... 131 stockholder indebted to corporation, transfer restricted, no Stock Book: corporations to keep 113 entries to be made in 1 13 extracts from, to be permitted 113 penalty for refusing 113 form of 228 Stock Certificates (see Stock). Stock Corporations: classification of 29 definition 30 oflfice of, where to be located 30 Index. 257 Stock Corporation Law: Page. construing, rule relative to ^^ application of, to other laws 91 Stockholders: administrators, etc., not liable as 137, 138 accounting to, for prohibited transfers of property 131 by-laws, power to make 44, "o directors to be 104 financial statement, when entitled to 136 liability, when to cease 137, 138 exception in favor of employes ; 137, 138 exception in full liability business corporations 9 limitations upon 139 loans to, prohibited no names of, to be entered on stock book 113 inspection of, by stockholders and judgment creditors, 113 pledgors of stock, liable as stockholders 137, 138 preference of, over other creditors, prohibited 131 property transfers to, prohibition of certain 131 quorum, number to constitute 44 by-laws may regulate. . ; 44 remedy, for false report 117 transfer of stock by, when indebted to corporation no voting by (see Voter). voting Crusts authorized • 62 Subscribers (see Certificate of Incorporation). Subscriptions to Stock: additional subscriptions, after incorporation 124 'ten per cent payable in cash in certain cases 124 ■forfeiture for non-payment 126 payments upon, time of, general provisions relative to 126 money, labor or property may be received for 125 Supplemental Certificates (see Certificate of Incorporation). Taxation : annual, to the State 146 payable by certain domestic and foreign corpo- rations 146, 147 exemption of manufacturing and mining companies, 150 other exemptions 163 consolidation of corporation, tax upon , 20 increase of capital Stock, payable only in cases of 20 foreign corporations, tax for privilege of doing business 23 2S8 Index. Taxation ^ — Continued: Page. increase of capital stock, tax for privilege 20 local tax upon domestic corporations. 164-171 foreign corporations subject to 164 report to assessors, form of 237 organization of corporations, tax upon 20 reorganization of corporations, tax upon 20 table of amounts payable for organization 22 Tax upon Organization (see also Taxation) : act for, provisions of 20 corporate powers prohibited until paid 32, 33 payment thereof to be made to State Treasurer 20 table showing amounts payable 22-25 transmission, regulations 25 Term of Existence: extension of 75 Transfer Agent: foreign corporation, books to be exhibited by 136 penalty for refusal 137 Transfer of Stock (see Stock). Treasurer (see also Officers) : appointment of, by directors ill financial statement, when to be made by 136 refusal to make, penalty 1 36 powers and duties of iii removal of 1 1 1 Trustees: application to, of the words directors 30 definition 30 Trustees of Estate: liability, when subject to 137, 138 Trusts: prohibitions by State laws 99-103 Usury: defense of, corporations prohibited from interposing 94 Vacancies : directors, filling of 104 by-laws to provide for 104 created, if director ceases to be a stockholder 104 inspectors of election, how filled 112 Index. 259 Voter: Page. books, evidence of right of 62, 63 challenge of 65 cumulative system, number regulated 62 existing corporations, restored to, certain 62 oath, may be required 65 pledgor of stock, voting -by 62 special elections 68 proxy, voting by 64 revocation 64, 65 qualifications at special elections 68 sale of, forbidden 62, 63 stockholders, one for each share, exceptions 62 cumulative voting, when permitted 62 voting trusts authorized .... 62 Waiver of Notice: authorized in certain cases 79