the absence of particular requirements, are open for general inspection, or must be kept or filed in a special manner.3

cor

§ 2783. Duty to keep books and records-In general. The duty of corporations with regard to keeping books is one which must be ascertained by reference to the provisions of the creating statutes and the corporate charters. Generally, though not uniformly, the poration acts of the several states require that specified books of record be kept in the state. Even though the statutes are silent with regard to the keeping of books, it is unquestionably advisable as a measure of precaution, expediency and convenience, that books be kept, as providing the most accurate method of establishing the various corporate acts and transactions and of showing the ownership of the stock. This applies to the business records common every business organization as well as to those books peculiar to porate organization, such as books containing stock subscriptions and accounts, stock transfers, stock certificates, minutes meetings, and such other books as the particular form and business of the corporation render necessary or advisable. And it has been held that in the absence of evidence to the contrary a court will presume that a minute book has been kept and preserved.

cor

Recent legislation has also imposed upon public service corpora

ters and general laws, see § 428 et seq., infra.

3 Wilson v. United States, 221 U. S. 361, Ann. Cas. 1912 D 558, 55 L. Ed. 771.

4 Kirby's Dig. § 944, providing that the clerk or secretary of a corpora tion shall keep a fair record of proceedings in a book provided for that purpose applies to fraternal benefit associations. Beasely v. Mutual Aid Ass'n, 94 Ark. 499, 127 S. W. 974.

Cal. Civ. Code, § 377, requires private corporation to keep records such as minute book. Union Trust Co. v. Dickinson, 30 Cal. App. 91, 157 Pac. 615.

Montana Civ. Code, § 540, Rev. Codes, § 3902, requires all corporations for profit to keep record of their business transactions. Smith v. Moore, 199 Fed. 689.

What transpired at stockholders'

tions the duty of keeping a prescribed character of records as to operation, maintenance and the like which are considered in a subsequent chapter.7

§ 2784. Records and minute books. As a general rule a record of the corporate resolutions and acts is not essential to their validity,8 unless there are statutory or charter provisions requiring such record.10

The rights of third parties cannot be injuriously affected by the failure of the directors of a corporation to record properly resolutions of the board,11 and the corporation cannot vitiate a contract by failing to record it in the minute book.12

§ 2785. - Account books. In the general course of a corporation's business, it is necessary that proper books of account be kept. This is one of the duties of the officers. And it has been said that where a statute requires a record of the corporation's business transactions to be kept, it is incumbent upon a director, by virtue of his position as trustee with respect to the stockholders, to see that proper books of account are kept.13 In some states, statutes exist imposing the duty on directors to keep correct books of account.14

§ 2786. - Stock book. Usually corporations are required to keep a stock transfer book, wherein a record, is kept of the stockholders. 15 Statutes requiring the keeping of such book are intended for the benefit of the stockholders.16

the

§ 2787. Form and requisites Minutes. It is the duty of secretary of the corporation to prepare the minutes of the meetings and to enter them in the record.17 But they may be prepared and signed at any time, even after the meeting.18 And it is not necessary that the secretary should enter the minutes in the record book in his own hand.19

The minutes should show the date when the meetings were held and who were present,20 and if a resolution is adopted or some other action taken, it is the duty of the clerk or secretary to record it.21

Generally speaking, it is not necessary for the minutes to show the vote by which a matter coming before it was adopted. A recital that the matter was adopted is sufficient.22

The mere fact that the corporate minutes were made up informally,

15 See the statutes of the several states and Geneva Mineral Springs Co. v. Steele, 111 N. Y. App. Div. 706, 97 N. Y. Supp. 996; Fay v. Coughlin-Sandford Switch Co., 47 N. Y. Misc. 687, 94 N. Y. Supp. 628; State v. Silver Ring Consol. Min. Co. of Utah, 37 Utah 62, 106 Pac. 520.

See also the chapter on Stock and Stockholders, infra.

16 State v. Silver King Consol. Min. Co. of Utah, 37 Utah 62, 106 Pac. 520.

17 Howard v. Strode, 242 Mo. 210, Ann. Cas. 1913 C 1057, 146 S. W. 792.

18 Benbow v. Cook, 115 N. C. 324, 44 Am. St. Rep. 454, 20 S. E. 453; West London Ry. Co. v. Bernard, 3 Q. B. 873, 13 L. J. Q. B. 68; Miles v. Bough, 3 Q. B. 845, 3 Gale & D. 119.

19 United Growers Co. v. Eisner, 22 N. Y. App. Div. 1, 47 N. Y. Supp. 906.

20 Howard v. Strode, 242 Mo. 210, Ann. Cas. 1913 C 1057, 146 S. W. 792. 21 Lamkin v. Baldwin & Lamkin Mfg. Co., 72 Conn. 57, 44 L. R. A. 786, 43 Atl. 593.

Ed

22 Fraternal Relief Ass'n v. wards, 9 Ga. App. 43, 70 S. E. 265.

An entry in the minutes of a meeting of a corporation, or its board of directors, that a certain proposition was adopted, is prima facie evidence that it received the number of votes necessary to legally adopt it. Heintzelman v. Druids' Relief Ass'n, 38 Minn. 138, 36 N. W. 100.

Where, by statute, it is required that a record of all votes be kept and it is also provided by statute that a vote of three-fourths of the general stockholders shall be necessary to authorize an issue of special stock, no presumption arises that such number voted in favor of an issue of special stock where such fact does not appear on the record, even though the record shows that more than that number of stockholders were present at the meeting and that a vote was passed in faAmerican Tube Works v. Boston Mach. Co., 139 Mass.

vor of the issue.

5, 29 N. E. 63.

where admittedly correct, does not destroy their force.23 And irregularities which may occur in the keeping of the minutes of a corporation cannot be taken advantage of by the corporation as against a third person who enters into a contract with the corporation, without notice or knowledge of the irregularity. If such third person has acted in good faith, and has parted with something of value, the doctrine of estoppel will apply. 24

When necessary, records may be amended, so as to cause them to show what actually happened at a meeting.2

25

§ 2788. -Stock book. The keeping of a stock certificate book is not a compliance with a provision requiring a transfer book to be kept.26 And it has been held that a stock book which did not contain the addresses of the stockholders did not comply with the statute.27

§ 2789.- -By-laws. As has been seen in a previous chapter, unless required by statute, it is not necessary that the by-laws of a private corporation should be in writing, but they may even be adopted through the acts and conduct of the corporation and its officers, as. well as by an express vote.2 28

§ 2790. Custody of books and records-Proper place. In many of the states statutes have been enacted requiring the corporate books to be kept within the state.29 The object of. such statutes is to protect the rights of stockholders, so that the books may be open to examina

23 Morisette v. IIoward, 62 Kan. 463, 63 Pac. 756.

24 Wyss-Thalman v. Beaver Valley Brewing Co., 219 Pa. 189, 68 Atl. 187.

As to books as evidence in actions between corporation or members and strangers, see § 2804, infra.

25 Dupage County V. Highway Com'rs Town of Winfield, 142 Ill. 607, 32 N. E. 269, aff'g 39 Ill. App. 293; Vandalia Mut. County Fire Ins. Co. v. Peasley, 84 Ill. App. 138; Village of Gilberts v. Rabe, 49 Ill. App. 418.

26 A stock certificate book cannot be regarded as the transfer book required to be kept by statute and which is competent evidence in an action against a stockholder (L. 1875, c. 611,

p. 759, § 17). Geneva Mineral Springs Co. v. Steele, 111 N. Y. App. Div. 706, 97 N. Y. Supp. 996.

27 Under Stock Corp. L. 53, as to books of foreign corporations and their inspection, the statute is not complied with where the stock book is kept, but does not contain the addresses of the stockholders, and has the word "unknown" inserted in the column as to the amount paid on stock. Fay V. Coughlin-Sandford Switch Co., 47 N. Y. Misc. 687, 94 N. Y. Supp. 628.

28 See $487.

29 Crown Coal & Tow Co. v. Thomas, 60 Ill. App. 234.

See generally the statutes of the several states.

cor

tion, to aid the state in exercising its visitorial power over the poration, and perhaps to enable the creditors to examine the books, also,30 and the law should be enforced though it may necessitate additional expense or cause some inconvenience in the management of the affairs of the corporation.31

Under such a statute it has been held that either original or duplicate books of account must be kept within the state.32

are

re

If the corporate books, though kept just across the state line, brought within the state to the principal office whenever they are quired by any stockholder or person entitled and desiring to see them, and there is nothing to show the slightest indisposition the part of the corporation to have its books at the principal office when needed for any lawful purpose, a dissolution of the corporation because of the violation of the statute will not be decreed.33

on

§ 2791.- Custodian. The proper custodian of the minutes and official records of a corporation is usually the secretary or some other person performing his duties.34

In

§ 2792. Filing or public record of corporation's by-laws. Various statutory provisions exist as to the filing of various corporate records. And in some states statutes require by-laws to be filed. the absence of a specific rule as to the time of filing, an election of corporate officers is not rendered invalid because a by-law affecting such election is not filed until after the election is held.35

30 North & South Rolling-Stock Co. v. People, 147 Ill. 234, 24 L. R. A. 462, 35 N. E. 608.

As to the right to inspect corporate books and records, see Chap. 45.

31 Crown Coal & Tow Co. v. Thomas, 60 Ill. App. 234.

32 Crown Coal & Tow Co. v. Thomas, 60 Ill. App. 234, distinguishing North & South-Rolling Stock Co. v. People, 147 III. 234, 24 L. R. A. 462, 35 N. E. 608.

33 North & South-Rolling Stock Co. v. People, 147 Ill. 234, 24 L. R. A. 462, 35 N. E. 608.

34 Bridges v. Southern Bell Telephone & Telegraph Co., 15 Ga. App. 291, 82 S. E. 925; Fraternal Relief Ass'n v. Edwards, 9 Ga. App. 43, 70 S.

E. 265. See also Howard v. Strode, 242 Mo. 210, Ann. Cas. 1913 C 1057, 146 S. W. 792.

35 Under St. 1895, p. 221, amended by Laws of 1905 (Civ. Code § 653e) requiring associations to file codes of by-laws, an election of directors and by-laws as to such election differing from the original articles were invalidated because of failure to file the by-laws until after the election, there being no time prescribed for filing the by-laws. Willis v. Laurid

son, 161 Cal. 106, 118 Pac. 530.

not

As to posting and filing by-laws,

see also § 487.

As to the filing and recording incorporation papers, see § 215.

of