hold stockholders' meetings outside the State; and where that is the case, provided the corporation has once been effectually organized, the meeting outside the State is valid; not it is true as a real corporate act, but as the act of individuals authorized by the law of the charter to act for the corporation and thus to affect its rights and liabilities.

It is often said that no corporate act can be done outside the State of charter.11 Properly understood, this is no doubt true. In a sense everything which a corporation does by means of its agents or otherwise is a corporate act-since it is the act of the principal, that is, the corporation. In this sense the expression of course is not true. But any act which must be performed by the shareholders themselves in their capacity as shareholders must be done within the limits of the State creating the corporation. Anything else, in the absence of prohibitory legislation, may be done outside as well as within.

§ 323. Statutory provisions for stockholders' meetings.

In several States it is expressly provided by statute that the stockholders' meetings shall be held within the State.12 In others, however, permission is given freely to hold the meetings outside the State.13 In a few States the statute even

11 Reichwald v. Com. Hotel Co., 106 Ill. 439; Aspinwall v. Ohio & Miss. R. R., 20 Ind. 492.

12 Cal. Civ. Code, § 319; Ida. Rev. Stat. § 2116; La. Rev. Stat. § 741; Mass. 1903, ch. 437, § 20; Mont. Civ. Code, § 448; N. J. Corp. Supp. § 44; N. Car. 1901, ch. 2, § 49; N. Dak. Civ. Code, § 2898. At least one meeting annually within the State: S. Car. Code, § 1846.

66

13 Alabama. Any mining or manufacturing corporation of the State, by so providing in the declaration of incorporation or afterwards by regulation of the stockholders, may "hold meetings of its stockholders and directors, one or both, and do and perform all kinds of corporate acts in any other State or States of the United States, as may be declared in such declaration or resolution, and at such time and place as the stockholders, as to their meeting, or the directors, as to their meeting, may deem it advisable. Provided, however, that when such meetings are provided for by resolution of the stockholders, all the stockholders who are residents of this State shall

gives permission to organize the corporation outside the State; 14 but this probably cannot be done, in spite of the statute. If meetings are held outside the State, it is usually provided that an office shall be kept within the State.

§ 324. Directors may meet outside the State of charter.

All acts not requiring the assent of the stockholders which may be done through agents may be done as well outside as inside the State of charter, unless the charter itself forbids it. Thus the directors, being merely the agents of the corporation, may meet outside the State of charter.15 So the Supreme

consent thereto in writing or by vote at the meeting provided therefor." Ala. 1901, No. 918, § 1.

Delaware. After organization, if the by-laws so provide. Del. 1901, ch. 167, § 32.

Michigan. Any meeting of stockholders may be held outside the State and within the United States. Mich. 1903, Act 232, § 20.

Minnesota. Gen. Stat. §§ 2833, 3407.

Nevada. If the by-laws so provide. Nev. 1903, ch. 121, § 14.

New Mexico. "Whenever a majority of the stock of any corporation is held or owned in any other State or Territory the principal office of such corporation may be in such other State or Territory; and the meetings of the stockholders and board of directors of such company may be held in such other State or Territory." N. Mex. Comp. L. § 456.

Pennsylvania. "In all cases where any company has been incorporated under the laws of this State, and a majority of the directors, corporators or stockholders thereof are citizens of any other State, said corporation may be organized and all the meetings of such corporators, directors or stockholders held in such place, whether in this State or elsewhere, as such majority may from time to time appoint; provided, however, that the annual election of officers of such corporation shall be held in the State of Pennsylvania." Pa. 1865, P. L. 1866, p. 1228, § 1.

West Virginia. "The stockholders may hold meetings for the transaction of the lawful business of the corporation, including the first general meeting for purposes of organization, and keep the principal office of such corporation either in or out of this state. But no meeting of stockholders shall be held at any other place than the principal office of the corporation unless the by-laws so provide, without the authority of the stockholders." W. Va. Code, ch. 54, § 23, as amended 1901, ch. 35.

14 Pa., W. Va., supra.

15 Wood H. M. Co. v. King, 45 Ga. 34; Smith v. Silver Valley Mining Co., 64 Md. 85 (semble); Missouri Lead M. &. S. Co. v. Reinhard, 114 Mo. 218, 21 S. W. 488, 35 A. S. R 74; Smith v. Alvord, 63 Barb. (N. Y.) 415;

Court of Vermont upheld a mortgage of a Vermont corporation, approved at a meeting of the directors in Massachusetts, saying: "This was no more a corporate act than any ordinary contract, which it is admitted can be done outside. They act in neither case as the corporation, but as the agents of and on behalf of the corporation." 16 So a conveyance voted by directors outside the State is not invalid on that account; 17 and the same is true of an issue of bonds ordered by the directors at a meeting outside the State.18 So an election of a secretary, made by the directors outside the State, is valid.19

If the directors do an act outside the State which they have power to do without the authority of a stockholders' vote, the fact that the corporation met outside the State and attempted to authorize the act would, of course, not affect its validity.20

A corporation may, of course, be required to hold all directors' meetings within the State; and in that case a vote of the directors outside the State is invalid.21 In such a case the act of the directors outside the State, though ultra vires, would, it seems, not be absolutely void, as a stockholders' meeting outside the State must be; and the corporation might therefore be estopped to deny the validity of the act.22 And

Wright v. Lee, 2 S. D. 596, 51 N. W. 706. But see McOrmsby v. Vermont Copper Mining Co., 56 N. Y. 623 (semble contra). See also Brockway v. Gadsden Min. Land Co., 102 Ala. 620, 15 So. 431 (semble), that there must be affirmative permission in the charter.

16 Arms v. Conant, 36 Vt. 744. Acc. Reichwald v. Com. Hotel Co., 106 Ill. 439; Wright v. Bundy, 11 Ind. 398; Saltmarsh v. Spalding, 147 Mass. 224, 17 N. E. 316.

17 Bellows v. Todd, 39 Ia. 209; Miller v. Ewer, 27 Me. 509 (semble); Missouri L. M. & S. Co. v. Reinhard, 114 Mo. 218, 21 S. W. 488, 35 A. S. R. 74.

18 Galveston R. R. v. Cowdrey, 11 Wall. 459, 20 L. ed. 199; Thompson v. Natchez W. & S. Co., 68 Miss. 423, 9 So. 821; Bassett v. Monte Christo Mining Co., 15 Nev. 293; Smith v. Alvord, 63 Barb. (N. Y.) 415.

19 McCall v. Byram Mfg. Co., 6 Conn. 428.

20 Thompson v. Natchez W. & S. Co., 68 Miss. 423, 9 So. 821.

21 Hilles v. Parrish, 14 N. J. Eq. 380, 383.

22 Galveston R. R. v. Cowdrey, 11 Wall. 459, 476, 20 L. ed. 199; and see Wheelwright v. St. Louis, N. O. & O. C. T. Co., 56 Fed. 164.

if the directors did actually go into the charter State to act, though the majority went there only for that purpose and staid only long enough to hold the meeting, their act is valid.23

§ 325. Statutory provisions for directors' meetings.

Though it seems clear at common law that it is permitted to hold directors' meetings in any State if not forbidden by statute, nevertheless, in several States express statutory permission has been given for that purpose.24

A few States, on the other hand, provide that the meetings of the directors must be held within the State.25

23 Wheelwright v. St. Louis, N. O. & O. C. T. Co., 56 Fed. 164.

24 Mass. 1903, ch. 437, § 25 (of business corporations); Mich. 1903, Act 232, § 20; Minn. Gen. Stat. § 3407; N. Car. 1901, ch. 2, § 49.

If the by-laws so provide: Del. 1901, ch. 167, § 32; Ill. Rev. Stat. ch. 32, 20; Mont. Civ. Code, § 448; Nev. 1903, ch. 121, § 14; N. J. Corp. Sup. § 44. Unless the by-laws provide otherwise: W. Va. Code, ch. 53, § 51.

If so provided in the declaration of incorporation or by regulation of the stockholders: Ala. 1901, No. 918, § 1.

If the by-laws so provide, except the meetings for election of officers: N. Dak. Civ. Code, § 2898; but if there is a resident director or agent, any meeting may be held out of the State: N. Dak. Civ. Code, § 2899.

If a majority of the stock is owned in another State: N. Mex. Comp. L. § 456.

If a majority of the directors, corporators or stockholders are citizens of any other State: Pa. 1865, P. L. 1866, p. 1228, § 1.

If it shall be stated in the certificate of incorporation that meetings of the directors or trustees may be held beyond the limits of this State, or such meeting was authorized or its acts ratified by a vote of a majority of the stockholders at a regular meeting. Colo. Stat. § 493.

25 Cal. Civ. Code, § 319; Ida. Rev. Stat. § 2116; La. Rev. Stat. § 741.

CHAPTER XV.

OFFICERS, OFFICE, AND BOOKS OF THE CORPORATION.

331. Election of directors by 8 336. Principal office of the corpo

§ 331. Election of directors by classes.

In several States permission is given to provide in the bylaws for the election of directors in classes, a certain portion of the board being elected each year to serve for several years.1 In some States there must be three classes, one class to be elected each year for three years; 2 in others, no class shall be elected for a shorter period than one year or for a longer period than five years, and the term of office of at least one class shall expire in each year. In New York at least one-fourth of the directors shall be elected annually.1

8332. Cumulative voting.

Cumulative voting for directors is permitted in several States. One form of statute is permissive, such as that of

1 Conn. 1903, ch. 194, § 10; Del. 1899, ch. 273, § 20; Ky. Stat. § 551; Mass. 1903, ch. 437, § 18 (business corporations); Minn. Gen. Stat. § 3407; N. Y. 1901, ch. 354; N. Car. 1901, ch. 2, § 14; Pa. 1887, P. L. 165, § 1; P. L. 411, § 1; Va. Corp. Supp. ch. 5, § 12; Wis. Stat. § 1771.

2 Del. ubi supra; Ky. ubi supra.

3 Conn. ubi supra; Mass. ubi supra; N. Car. ubi supra.

4 N. Y. ubi supra.

5 Cal. Const. Art. 15, § 12, Civ. Code, § 307; Colo. Ann. Stat. § 481 (as amended 1895); Ida. Const. Art. 11, § 4; Kan. Stat. ch. 66, § 27; Ky. Stat.