§ 24. Amendment of charter or certificate. Some important structural changes that formerly required an amendment may, since the Act of 1908, be accomplished by the adoption or alteration of a by-law. And the provisions for amending any charter or certificate are now so broad as to eliminate practically any necessity for resorting to the legislature for such purpose. Nevertheless, it seems that

was a fixed limit (not less than four nor more than twelve) to the number of directors; all had to be citizens of the United States and a majority citizens of this State. The former law, with a few exceptions, limited the existence of the corporation to forty years. The present provisions (sec. 100) is: "Every corporation formed under this article shall have, until forfeiture, the right of perpetual succession; and all provisions in the charter or certificate of any existing corporation imposed upon it by any act in force at the time of its creation or formation, limiting its duration, are hereby annulled and repealed." In the Act of 1910 (Code 1911, art II, sec. 21), which provides for the incorporation of banks and trust companies, there is a needless reproduction of the old limitation. It is there provided that the certificate of incorporation shall contain, among other statements, "the period for which such bank is organized, not exceeding forty years"; and as to trust companies (sec. 42), "the term of its existence, not exceeding forty years."

1 E. g. changing the number and classification of directors (Code 1911, art. 23, sec. 12): providing for cumulative voting (ibid, sec. 20).

2 Code 1911, art. 23, sec. 24, provides: "Every corporation of this State now existing or hereafter formed may, from time to time, at any meeting duly warned as provided for by sections 15 or 16 of this article, by the affirmative vote of a majority of all its members or a majority of all its stock (or if two or more classes of stock have been issued of a majority of each class) outstanding and entitled to vote, amend its charter or certificate of incorporation, and thereby accomplish any one or more of the following objects: The addition to or diminution of the corporate powers and purposes, or the substitution of other powers and purposes in whole

a special act embodying the same amendment that could have been effected under the provisions of the general law, would not be void.1

§ 25. Federal corporations. The Constitution nowhere expressly confers upon Congress the power to create corporations, but such power may be lawfully exercised in aid of the expressed powers. For example, to facilitate the carrying on of the government's fiscal operations, Congress

or in part for those prescribed by any charter or certificate; proIvided that such additional or substituted powers are such as are authorized by this article; the changing of the corporate name; the changing of the corporate business; the increasing or decreasing of the capital stock and the classification of any increase; the reduction of the number of outstanding shares; the classification of any unissued part of the authorized capital stock; and the changing of the location of the principal office." And sec. 25 provides: "Articles of amendment signed and acknowledged in the same manner as an original certificate. by the president and a majority of the directors, managers or trustees shall within thirty days after such meeting be prepared, setting forth such amendment and the particulars thereof and stating that it has been duly adopted by the stockholders or members; but no amendment shall take effect until the articles have been duly executed and delivered to the State Tax Commissioner with the recording fees (to be charged at the same rates, and by said Commissioner divided, accounted for, and paid over, as in the case of an original certificate). Articles of amendment shall be promptly recorded by the State Tax Commissioner, and when recorded the original or a certified copy shall be sent by him for recording to the clerk of the circuit or superior court as is hereinabove provided for the case of an original certificate; and a duly certified copy of such articles of amendment from the records of the State Tax Commissioner or of the Circuit or Superior Court shall be prima facie evidence of the rights and powers of the corporation as amended."

1 Hodges v. Railway Co., 58 Md. 620; and see Jones v. Habersham, 107 U. S. 174; Wallace v. Loomis, 97 U. S. 146.

may charter banks;1 and under its power to regulate commerce and to establish post offices and post roads, it may charter interstate railroads. Furthermore, acting as the legislature of the District of Columbia, Congress has made general provisions for the formation of corporations therein. All of these are corporations of the United States and may, where the jurisdictional amount is involved, sue and be sued in the federal courts and remove there suits brought against them in the state courts, on the ground that such suits arise under the laws of the United States.2 Those Federal corporations which are in fact governmental agencies may exercise the right of eminent domain within the states, and the latter can neither exclude them nor by taxation impair their franchises. 3

1 McCulloch v. Maryland, 4 Wheat. 316; Osborn v. U. S. Bank, 9 Wheat. 738.

2 Railroad Co. v. Myers, 115 U. S. 1; Knights of Pythias v. Kalinski, 163 U. S. 289; Supreme Lodge v. Hill, 76 Fed. 469; Railroad Co. v. Cody, 166 U. S. 606; Railroad Co. v. Coeur d'Alene Co., 160 U. S. 93. By the terms of the national banking act, a different rule applies to national banks.

3 Luxton v. North River Bridge Co., 153 U. S. 525; Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U. S. 1; City of Richmond v. Southern Bell Telephone Co., 174 U. S. 761. State taxation of shares in national banks is permitted by the Act of Congress.

CHAPTER IV.

WHEN CORPORATE LIFE BEGINS.

§ 26. Scope of the chapter. Corporate status does not rest upon agreement merely; and it is important, therefore, to understand the antecedent conditions upon which the status depends: and the rights and liabilities of the parties. where there have been dealings with an apparent but not a real corporation. The subject has developed a mass of irreconcilable decisions.

§ 27. Conditions precedent in Maryland law. The attempt to acquire corporate status may fail because of the failure to comply with requirements which the law declares to be precedent to corporate existence.

First. A special charter is merely an offer by the state to the incorporators; and unless and until this offer is accepted there is no corporation. Moreover, such acceptance to be valid must be the act of a majority of the incorporators, done within the limits of the creating state (Smith v. Silver Valley Mining Co., 64 Md. 93); and the acceptance must be consistent with the terms of the offer (Lyons v. Railroad Co., 32 Md. 30). In the case of corporations formed under general law, acceptance is conclusively pre

1 See, however, Handley v. Stutz, 139 U. S. 417.

sumed (Glymont Co. v. Toler, 80 Md. 278). And even in the case of special charters it may be inferred from the exercise of corporate powers (Lyons v. Railroad Co., 32 Md. 30; Hammond v. Straus, 53 Md. 12; Jackson v. Walsh, 75 Md. 315; Regents v. Williams, 9 G. & J. 235); but where there is direct proof of a refusal or neglect to accept, no such inference can be drawn (Smith v. Silver Valley Mining Co., supra).

Second. Accepting the charter, formally or by user, is not enough. All things which, by fair construction, the incorporators are to do before and as a foundation of the right to act corporately, are conditions precedent to corporate existence. In practice, there is difficulty in determining whether a particular condition is precedent or subsequent; but where the premise is granted the conclusion is. inevitable. "Whenever any act is essentially necessary to bedone before a corporation can be regarded as in esse, that must be established or the corporation cannot be held to be a legal entity" (Bonaparte v. Railroad Co., 75 Md. 350).

Third. If the corporation is formed under the general law, there must be a substantial compliance with the formalities of that law. "The statute law of the State expressly requiring certain prescribed acts to be done to constitute a corporation, to permit parties indirectly or upon the principle of estoppel to create a corporation, would be in manifest opposition to the statute law, clearly against its policy and justified upon no sound principle in the administration of justice" (Boyce v. Trustees, 46 Md. 374). But merely formal defects are harmless (Code 1911, Art. 23.

1 Doctrine affirmed: Maryland Tube Works . West End Improvement Co., 87 Md. 208; Shutter Bar Co. v. Zimmerman, 110 Md. 317.