expressed in the certificate of incorporation or by any amendment to its charter or certificate which may be adopted in accordance with the provisions of this article. And by articles of amendment, any increased stock, and any unissued or reissued part of the original authorized issue, may be so classified. Such preferred stock may, if desired, be made subject to redemption at not less than par at a time and price to be expressed in the certificate of incorporation or articles of amendment; and it may be provided that the holders thereof shall receive and that the corporation shall be bound to pay a fixed annual dividend to be expressed in the said certificate or articles of amendment, payable, quarterly, half yearly or yearly before any dividend shall be set apart for or paid to the holders of the common stock; and such dividends may be made cumulative; and such stock may be preferred over the common stock as to its distributive share of the assets of the corporation upon dissolution; but in case of insolvency, the debts and other liabilities of the corporation shall be paid before the holders of such preferred stock shall receive anything. Nothing in the laws of this State shall be so construed as to limit the dividend on such preferred stock to six per cent. per annum if a greater or less dividend is provided to be paid on such stock." § 42. Voluntary dissolution. The life of a body corporate may expire by lapse of the time for which it was created; or because of its failure to comply with some selfexecuting condition of continued existence; or in the case of a corporation having no capital stock, by the loss of its members.1 For good cause, such as the abuse or non-user of its franchise, the state may institute judicial proceedings 1 See post, Chap. XXII, "Dissolution." for forfeiture of the charter. But a corporation has no inherent power to terminate its own existence; nor has a court of equity inherently the power to dissolve it.1 It may cease to do business, its assets may be taken by a receiver and distributed among the creditors, but the fictitious person is not thereby annihilated. In theory, the relationship between the state and the corporation created by the grant and acceptance of the charter can only be dissolved by mutual consent, unless the state has reserved the right of repeal or has given its assent to some other method of dissolution. Such assent is usually provided by general laws, and in this State, it takes two forms: This First. When the corporation has become insolvent, the power is vested in courts of equity to enter a decree of dissolution upon a bill filed by a creditor or shareholder. power and the method of proceeding under it will be discussed more fully hereafter; it is enough to say now that in the exercise of the jurisdiction the court goes no further than the statute requires.* Second. The holders of a majority of the shares (or of each class of shares, if there are several classes) of a stock corporation, other than a public service corporation, and a majority of the members of a non-stock corporation,-may authorize a bill to be filed for a voluntary dissolution." 1 Barton v. Fraternal Alliance, 85 Md. 14; Mason v. Equitable League, 77 Md. 483. 2 Swan Co. v. Frank, 148 U. S. 612. 3 Code 1911, Art. 23, sec. 78. Callaway v. Powhatan Co., 95 Md. 185; Steinberger v. Savings Inst., 84 Md. 635. The latter case defines insolvency as the inability to pay debts in the ordinary course of business. Code 1911, Art. 23, sec. 76. In Du Puy v. Transportation Co., 82 Md. 436, the directors passed a resolution for the winding up of § 43. Miscellaneous statutory powers and limitations. Special powers are conferred upon particular classes of corporations, such as the right of condemnation; and, conversely, there are special limitations. With certain exceptions, a corporation may not lend money to any stockholder or director;1 a bridge company may not erect its structures without consent of the county commissioners, and of the legislature, in the case of a navigable stream;2 no land company or homestead or building association may issue to any borrower, in lieu of money, any note, bill or obligation;3 no corporation may act as agent for the purpose of procuring a loan of money on the security of chattels ; no cemetery company may hold for the purposes of burial more than one hundred acres of land, or any ground within the limits of any city or town, without the consent of the municipal authorities; a railroad or mining company may not own, the corporation, and in pursuance thereof, executed an assignment for the benefit of creditors. The company was apparently not insolvent and the trustee under the deed reported to the court a fictitious sale of the assets. It was said that "if the real object of the deed of trust was to wind up the affairs of the corporation under a pretext of paying creditors, then the proceeding was illegal because a corporation can only be wound up in the manner prescribed by the Code." But this statement is too broad. A voluntary liquidation out of court is not illegal, but is recognized by sec. 80 of Article 23. 1 Code 1911, Art. 23, sec. 75. Art. 11, sec. 64, as amended by chap. 194, of the Acts of 1912, contains special provisions for banks and trust companies. 2 Code 1911, Art. 23, secs. 125 and 131. And see Railway Co. v. Smith, Governor, 97 Md. 180. * Code 1911, Art. 23, sec. 143. Davis v. Building Association, 32 Md. 285. 4 Code 1911, Art. 23, sec. 124. 5 Ibid, sec. 144. |