poration were enjoined from conveying land and other property in Illinois to an illegal trust.69

§ 312. Recent tendency to take jurisdiction.

In other cases where the contest is without question one regarding the internal management of the corporation there has appeared a tendency to assume jurisdiction over a foreign corporation where the business is carried on within the State and all parties to the dispute are within its boundaries. Thus in the Illinois case just cited the directors of the American Glucose Company were enjoined from illegally making a contract in restraint of trade, at the suit of a minority stockholder.70 In Massachusetts, also, ultra vires acts of directors were enjoined, all parties being resident within the State and the business there carried on, 71 Judge Knowlton saying: "The corporation is doing business under our statutes in this Commonwealth. The plaintiff's rights are affected and his property is imperilled by the unlawful action of the defendants within our jurisdiction. The parties are all subject to the process of our courts. The plaintiff should have relief in a court of equity against the continuance of this violation of our law." And in Ernst v. Rutherford & B. S. Gas Co.72 the court spoke thus: "The learned judge, however, was of opinion that this action was more than for a restoration and accounting; that it was, in effect, an action to control the internal management of the corporation itself. Of an action of the last character he was of opinion that the corporation could only be called to account in the tribunals of the state which created it. We are not prepared to admit the correctness of the proposition as broadly as stated by the learned justice. If the illegal acts of the directors or of the corpora

69 Harding v. American Glucose Co., 182 Ill. 551, 55 N. E. 577, 74 A. S. R. 189.

70 Harding v. American Glucose Co., 182 Ill. 551, 55 N. E. 577, 74 A. S. R. 189.

71 Richardson v. Clinton Wall Trunk Mfg. Co., 181 Mass. 580, 64 N. E. 400. 72 56 N. Y. S. 403, 405, 38 App. Div. 388, 392.

tion offended solely against the majesty of the state to which it owed its life,-in other words, constituted only public wrongs, the proposition is probably correct; for we are not compelled, nor should we, entertain actions simply to redress the outraged dignity of foreign governments. But, if such illegal acts also cause injury to the property rights of individual stockholders who are citizens of this state, we cannot see why they are not entitled to obtain full relief in our courts, so far as such relief can be accomplished by acting directly on the persons of the defendants. A contrary rule would, in our judgment, be unfortunate at this time, when, for some reason, the majority of corporate enterprises in this state (those of a quasi-public nature, such as railroads, etc., excepted) are carried on under incorporations effected under the laws of other states. We are of opinion, however, that this action is strictly for restoration and an accounting, and therefore that the court had jurisdiction of the subject-matter."

CHAPTER XIV.

MEETINGS.

§ 321. The corporation must organ-§ 323. Statutory provisions for

ize in the State of charter.

322. Stockholders' meetings must

be held within the State of
charter.

stockholders' meetings.

324. Directors may meet outside the State of charter.

325. Statutory provisions for directors' meetings.

321. The corporation must organize in the State of charter. The mere grant of a charter is not sufficient to create a corporation. The charter must be accepted and the organization perfected before the corporation is in existence. And these acts must be performed within the limits of the jurisdiction granting the charter. A corporation can act outside the state of its creation only by means of agents. These agents could not organize the corporation, for until after organization it could have no agents.1

Confusion has sometimes arisen where the charter declares that certain persons shall be a corporation, and also designates them to act as the first board of directors. In such a case the Supreme Court of Missouri said: "The charter created a corporation in presenti, and appointed a board of directors without the necessity of any action on the part of the corporators; and if any assent was necessary to infuse life into

1 Duke v. Taylor, 37 Fla. 64, 19 So. 172, 31 L. R. A. 484; Freeman v. Machias Water Power Co., 38 Me. 343; Smith v. Silver Valley Mining Co., 64 Md. 85. Contra, Copp v. Lamb, 12 Me. 312.

It has, however, been held in Wisconsin that a corporation which accepts its charter and attempts to perfect its organization in another State than the one which chartered it, may be estopped to deny the validity of its organization if it has assumed to act as a corporation. Heath v. Mining Co., 39 Wis. 146.

this body politic, the proceedings of these directors, although had beyond the bounds and limits of Illinois were a sufficient expression of that assent." 2 It seems clear that the court confounded the acts of these men as corporators with their acts as directors. In accepting the charter they were acting as corporators, not as directors, and they could so act only in Illinois.

§ 322. Stockholders' meetings must be held within the State of charter.

Not only the first meeting for organization but all other meetings of the shareholders must, at common law, be held within the State. The case commonly cited for this proposition is Miller v. Ewer. The controversy was over the title to certain land, the plaintiff claiming under a deed from a Maine corporation authorized by directors who had been elected by the shareholders at a meeting held in Boston. It was held that the conveyance passed no title, for the stockholders had no power to act as such outside the State of Maine. The court said: "As the corporate faculty cannot accompany the natural persons beyond the bounds of the sovereignty which confers it, and they cannot possess or exercise it there, they can have no more power there to make the artificial being act, than other persons not named or associated as corporators. Any attempt to exercise such a faculty there, is merely an usurpation of authority by persons destitute of it, and acting without any legal capacity to act in that manner. It follows that all votes and proceedings of persons professing to act in the capacity of corporators, when assembled without the bounds of the sovereignty granting the charter are wholly void." This case is law in every jurisdiction. The Supreme Court

2 Ohio & M. R. R. v. McPherson, 35 Mo. 13.

3 27 Me. 509.

4 Wood Hydraulic H. M. Co. v. King, 45 Ga. 34; Reichwald v. Com. Hotel Co., 106 Ill. 439; Harding v. Am. Glucose Co., 182 Ill. 551, 55 N. E. 577, 74 A. S. R. 189; Aspinwall v. Ohio & Miss. R. R., 20 Ind. 492; Freeman v. Machias Water Power Co., 38 Me. 343; Thompson v. Natchez Water Co.,

of Missouri has indeed expressed a contrary opinion. Admitting that the meeting for organization must be held within the charter State, the court said that after they had created a full-fledged corporation the stockholders might as well elect directors as the directors a treasurer in another State. This opinion, however, has not been adopted elsewhere, and even seems to have been disregarded in Missouri. The reason for a distinction between stockholders and directors will appear below.

Even where a clause in the charter of a corporation authorizes it "to do business" outside, this does not give the corporation power to hold meetings of the shareholders outside."

8

It may be that although officers elected at a stockholders' meeting outside the State of charter are illegally elected, yet if the corporation is actually in existence it will be estopped to deny that they act for it. So it was held by the Supreme Court of the United States that all stockholders who took part in a meeting outside the State were bound by a vote to increase the stock passed at the meeting. And it would seem to be true that the legality of such election could not be questioned by a creditor who had dealt with the corporation, knowing the facts. It is open only to the State.10

In a few States express statutory permission is given to

68 Miss. 423 (semble); McOrmsby v. Vermont Copper Min. Co., 56 N. Y. 623.

5 Ohio & M. R. R. v. McPherson, 35 Mo. 13. See Filli v. Delaware, L. & W. Ry., 37 Fed. 65, where it would appear that a corporation was in the habit of holding its annual elections in a foreign State.

Camp v. Byrne, 41 Mo. 525.

7 Franco-Texas Land Co. v. Laigle, 59 Tex. 339.

Heath v. Silverthorn L. M. & S. Co., 39 Wis. 146. The court cited in support of its decision a dictum in Miller v. Ewer, 27 Me. 509, 524; and also cases in which a corporation was estopped to deny its liability upon a contract ultra vires, a principle which is evidently not analogous. Acc. Camp

v. Byrne, 41 Mo. 525 (semble).

Handley v. Stutz, 139 U. S. 417, 35 L. ed. 227. 10 Wright v. Lee, 2 S. D. 596, 51 N. W. 706.