TITLE III. THE BODY CORPORATE, ITS BIRTH AND ORGANIZATION.

CHAPTER 7.

ORGANIZATION AND COMPLIANCE WITH CONDITIONS.

ARTICLE I. SCHEMES OF ORGANIZATION.

Sec. 134. (1) Under the King's Charter: This usually provides the original organization in the charter itself. See supra, The Charter of Dartmouth College, p. 426, and infra, p. 711.

Sec. 135. (2) In special acts:

(a) The act itself provides the original organization: Illustration, Charter of Michigan Central R. Co.

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"Sec. 1. Be it enacted, etc., That William Sturgess (and twenty-five other persons named) and such other persons as shall associate with them for that purpose, are hereby made and constituted a body corporate and politic by the name and style of the Michigan Central Railroad Company, with perpetual succession, etc. (enumerating various powers conferred). "Sec. 22. The corporate stock * shall be $5,000,000 * divided into shares of $100 each. Provided, The company may commence business whenever $2,000,000 of stock shall have been subscribed. "Sec. 23. The nine persons first named in the first section the first directors of said company; and at their first meeting they shall elect by ballot one of their number to be president, a majority of whom shall be competent to manage the affairs of the company; such first meeting of the directors shall be held at a time and place to be fixed by a written agreement signed by all of said directors.

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shall be

"Sec. 24. Said directors, or a majority of them, may open books to receive subscriptions to the capital stock, at such times and places as they or a majority of them may appoint, etc.

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"Sec. 25. To continue the succession of president and directors, nine directors shall be chosen annually, on the second Monday in June, at such time and place as may be appointed by the directors.

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"Sec. 27. A general meeting of the stockholders of said company shall be

1See Angell & Ames, ch. 2 and 3; Beach, §§ 9-16, 159-162; Boone, §§ 2634; Clark, §§ 19-27, 41-45; Cook, §§ 5, 183-6, 231-5; Elliott, §§ 21-50; Field, § 29; 1 Kyd, ch. 3; Morawetz, ch. 2 and 9; Taylor, §§ 72-90; Thompson, ch. 1-18.

holden annually at the time and place appointed for the election of direct

"Sec. 31. The directors shall have full power to conduct the affairs of said company, and to exercise any powers which said company might exercise, except where provision is made by this act for the exercise of such powers by the stockholders at their annual or special meetings, or where the powers of the directors may be restrained by the by-laws of said company. *** See 6 Laws of Mich. (1846) No. 42, p. 37, et seq.

Sec. 136.

(b) The law provides for the organization to be made by the persons subscribing for the stock. See supra, the charter of the Baltimore and Ohio R. Co., p. 427.

Sec. 137. (3) Under general incorporation laws:

(a), By deed of settlement; this method, when used, provided the organization in the deed itself. See forms in 2 Coke's Inst. 720, and Wordsworth, Stock Companies, Part II.

Sec. 138. Same.

(b) License plan: Illustration,-The Illinois law.

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This provides that "whenever any number of persons, not less than three nor more than seven, shall propose to form a corporation they shall make a statement to that effect, under their hands, and duly acknowledged, setting forth name, object, capital stock," shares, location of office and duration, not exceeding ninety-nine years, which statement shall be filed with the secretary of state, "who shall issue to such persons a license as commissioners to open books for subscription to the capital stock of said corporation at such times and places as they may determine. As soon as the capital stock shall be fully subscribed, "the commissioners shall convene a meeting of subscribers for the purpose of electing directors or managers and the transaction of such other business as shall come before them." Certain notice of election is to be given, and voting may be by proxy or cumulative. "The commissioners shall make a full report of their proceedings, including therein a copy of the notice, a copy of the subscription list, the names of the directors or managers elected, and their respective terms of office, which report shall be sworn to by at least a majority of the commissioners, and shall be filed in the office of the secretary of state. The secretary of state shall thereupon issue a certificate of the complete organization of the corporation, making a part thereof a copy of all papers filed in his office in and about the organization of the corporation, and duly authenticated under his hand and seal of the state, and the same shall be recorded in a book for that purpose, in the office of the recorder of deeds of the county where the principal office of such company is located. Upon the recording of said copy, the corporation shall be deemed fully organized, and may proceed to business.' Revised Statutes of Illinois, 1895, act of April 18, 1872, in force July 1, 1872, §§ 2, 3 and 4.

36-WIL. CASES.

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Sec. 139. Same.

The new Kansas law (Laws of 1898, ch. 10, approved January 7, 1899) creates a charter board, composed of the attorney-general, the secretary of state and the state bank commissioner, to whom application (on blanks to be furnished) shall be made. "The board shall make a careful investigation of each application with reference to the character of the business in which the proposed corporation is to engage, and if the board shall determine that the business is one for which a corporation may lawfully be formed, and that applicants are acting in good faith, the application shall be granted, and the secretary of the board (the secretary of state) shall issue a certificate setting forth the fact that the persons named in the application have been authorized by the charter board to form a private corporation, as set forth in the application, reciting the proposed name and character thereof." §§ 3a-3j. A charter must be prepared stating name, purpose, place of business, term of existence, number of its directors or trustees and the names and residences of those who are appointed for the first year, amount of capital stock, number of shares, names and addresses of shareholders and number of shares held by each. Ib. Charter must be subscribed and acknowledged by five persons, three to be citizens of the state, and shall then be filed with the secretary of state, and be recorded by him. See, also, Alabama Civil Code, §§ 1139-42.

Sec. 140. Same.

(c) Organization completed before application made: Illustration, Massachussets law.

Any number of persons may associate by an agreement "which shall set forth the fact that the subscribers thereto associate with the intention of forming a corporation," name, purpose, location, capital stock, and number of shares. The first meeting shall be called by a notice signed by one or more of the subscribers, stating time, place and purpose, served seven days before time fixed for meeting. At such meeting "an organization shall be effected by the choice by ballot of a temporary clerk, who shall be sworn, and by the adoption of by-laws and the election (by ballot for one year) of directors, treasurer, clerk and such other officers as the by-laws may provide; but at such first meeting no person shall be eligible as a director who has not subscribed the agreement of association. The temporary clerk shall make and attest a record of the proceedings until the clerk has been chosen and sworn, including a record of such choice and qualification." "The president, treasurer and a majority of the directors, shall forthwith make, sign and swear to a certificate setting forth a true copy of the agreement of association with the names of the subscribers thereto, the date of the first meeting and shall submit such certificate and also the records of the corporation to the commissioner of corporations, who shall examine the same, and who may require such other evidence as to the facts of the case as he may judge necessary. The commissioner, if it appears that the requirements have been complied with, shall certify that fact and his approval of the certificate by indorsement thereon. Such certificate shall thereupon be filed by said officers in the office of the secretary of the commonwealth, who shall issue a certificate," in a form prescribed, under his signature and the seal of the commonwealth, and "such certificate shall have the force and effect of a special charter, and shall be conclusive evidence of the existence of such corporation. He shall also cause a record of such certificate to be made, and a certified copy of such record may be given in evidence with like effect as the original certificate." Public Stat. of Mass. 1882, ch. 106, §§ 16-21.

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In many of the states it is required or customary for the organization for the first year, or at least the first directorate, to be provided for in the articles of association, when they are filed with the required officer.

See forms in American Corp. Legal Manual for 1899, Arkansas, California, Colorado, Connecticut, District of Columbia, Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Michigan (Mining Companies), Minnesota, Missouri, Montana, Nevada, New Mexico, New York, North Dakota, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, Virginia, Washington, Wyoming, Dominion of Canada, Prince Edward's Island.

Sec. 141. Same.

(d) Organization by subscribers to stock after the articles of incorporation are filed.

See note to State v. Fidelity, etc., Ins. Co., 49 Ohio St. 440, supra, p. 406. In the following states, it seems from the approved forms in use that the organization is to take place after the stock is subscribed, and is to be determined by the subscribers: Arizona, Delaware, Florida, Hawaii (§ 2028, Civil Code), Louisiana, Nebraska, New Hampshire, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, West Virginia, Wisconsin. See forms in the American Corporation Legal Manual for 1899; Appendix, infra, Charter of U. S. Steel Corp.

ARTICLE II. PROOF OF ORGANIZATION.

Sec. 142. General presumption of regularity.

PACKARD ET AL. v. OLD COLONY RAILROAD COMPANY.1

1897. IN THE SUPREME JUDICIAL COURT OF Massachusetts.

Mass. Rep. 92-99.

168

[In 1848 the ancestor of plaintiff executed a deed conveying the land, for the taking of which damages were asked, to Perkins and constituting "a committee of and in behalf of Village Cemetery, a corporation," for the use and behoof of said corporation, "except that the ground shall never be used for other purposes than as a cemetery." Respondent introduced the corporation record book showing that in 1848 eleven persons desirous of forming a cemetery corporation under the act of 1841, had a meeting called according to the statute, at which a secretary, president and treasurer were chosen and a committee appointed to draft a constitution and by-laws; the record did not show how many were present. In 1848 the name was chosen, and sixteen meetings in all were held prior to 1854, when the corporation seemed to become dormant. In 18S3 a meeting of the proprietors was called ⚫ to elect officers and adopt by-laws, and several meetings followed, at 1Statement of facts abridged. Only part of opinion relating to the one point given.

one of which it was suggested that the original corporation was illegal because the records did not show the number present at the organization meeting, and at a subsequent meeting it was suggested that the legislature be petitioned to re-establish the corporation, but nothing was done. Records showed that twenty-nine burial lots had been deeded between 1849 and 1854. The act of 1841 provided that: "Any ten or more may organize a corporation for the purpose," etc., and, "When such persons are organized, etc., they shall become a corporation." Plaintiff claimed there had been no valid corporate organization.]

ALLEN, J. It will be seen that there is no provision in the statute requiring the presence of any particular number of persons at the first meeting. Eleven persons signed the application, and thus expressed their wish and intention to be members of the corporation. This was a proceeding analogous to the signing of the articles of agreement, which was deemed essential mostly relied on by the petitioners. Utley v. Union Tool Co., 11 Gray 139. Having done this, it was not necessary that all should attend the first meeting.

Moreover, even if it were necessary for ten to be present, there would be a presumption that this requirement had been complied with. The presumption of regularity extends to the proceedings in the organization of corporations. In Narragansett Bank v. Atlantic Silk Co.,3 Met. 282, 287, it was said: "The maxim of law is, that all things shall be presumed to have been rightly and correctly done, until the contrary is proved. This maxim is stated and explained, and many instances given of its application to corporations, and to acts and doings of their members, officers and agents, in Bank of United States v. Dandridge, 12 Wheat. 64, 70. As the corporation could not proceed lawfully until duly organized, and as they did proceed to act as a corporation, this presumption has its effect." This doctrine is often applied, and it is to be assumed that ten persons were present at the first meeting, if that number was necessary. Wallace v. First Parish in Townsend, 109 Mass. 263; Platt v. Grover, 136 Mass. 115; Commonwealth v. Carr, 143 Mass. 84; Commonwealth v. Woelper, 3 S. & R. 29; Graves v. Lynchburg & Salem Turnpike Co., 4 Rand. 378; Lauderdale Peerage, 10 App. Cas. 692.

Petition dismissed.

Note. 1827, United States Bank v. Dandridge, 25 U. S. (12 Wheat.) 64, 70, infra, p.854;1841, Wescott v. Silk Co., 3 Metcalf (Mass.) 282, 287; 1844, Sasser v. State, 13 Ohio 453 (criminal suit); 1858, President and Trustees, etc., v. Thompson, 20 Ill. 197 (charter and user); 1864, Holmes v. Gilliland, 41 Barb. (N. Y.) 568 (general reputation); 1872, Wallace v. First Parish, 109 Mass. 263; 1883, Platt v. Grover, 136 Mass. 115; 1886, Commonwealth v. Carr, 143 Mass. 84; 1888, Braintree Water Supply Co. v. Inhabitants of Braintree, 146 Mass. 482, on 488; 1891, Jeffries Neck Pasture Propr's v. Ipswich, 153 Mass. 42; 1900, Fish v. Smith, 73 Conn. 377, 84 Am. St. R. 161.

See, also, Angell & Ames, §§ 238-241, 284; Beach, §§ 873-4; Boone, § 34; Clark, pp. 34, 36, 51, 129; Cook, §§ 606-7; Elliott, §§ 49-50, Morawetz, §§ 25, 36. 324, 775; Taylor, §§ 128, 203–6, 251, 263; I Thompson, §§ 495-500; III Thompson, $3927; IV Thompson, § 5029; VI Thompson, §§ 7689-7713; VII Thompson, § 8214.