are signed by the president and secretary or treasurer of the corporation and are sealed with the corporate seal.

Non-Stock Corporation. A non-stock corporation is one in which there is no stock to be transferred, and the membership of any individual depends upon the consent of the other members. Incorporated societies and mutual benefit societies are illustrations of this class.

Private Stock Corporations. The class of corporations most common in this country and to which we will direct our attention, is private stock corporations.

The following are the powers and attributes of practically all private stock corporations:

1. To have continuous succession of members or stockholders under a special name.

2. To buy, sell, and hold property.

3.

To enter into contracts, and to do all things necessary to

the furtherance of the corporate business.

4. To sue and be sued in the corporate name.

5. To have a common seal.

6. To make by-laws.

7. To appoint directors, officers, and agents.

8. To dissolve itself.

The attribute of con

Name and Continuous Succession. tinuous succession under a special name is essential to all corporations. The corporation is not subject to dissolution by the death or withdrawal of a member. A member may transfer his shares without the consent of his associates, and the transferee comes into the corporation as a member without in any way changing or affecting its existence. A necessary attribute of every corporation is a corporate name. This is essential, as the corporation, being distinct from its members, could not otherwise be known.

Real Estate. Most corporations have the power to hold real estate, but it is not an essential to a corporation's existence. So also the power to use a seal is ordinarily included in the privileges of a corporation, but it is not essential, as a corporation can contract without a seal.

By-laws. The right to make by-laws is a common incident

of a corporation's powers. It is unnecessary to make them when the charter is sufficiently full to provide for all contingencies, but usually matters of detail are not included in the charter, provision being made for them in the by-laws, and every private corporation has the implied power to make them. But the bylaws to be valid must be reasonable, consistent with the charter, and within the purposes of the corporation. They are generally adopted by a majority vote of the stockholders, and having once been adopted, bind all of the stockholders whether they have assented to them or not.

Limited Liability. One of the most important attributes of a corporation is that which exempts the stockholders from liability for the debts of the corporation. In a partnership, it will be remembered, a partner is personally liable for the debts of the firm, but this is not so in the case of a corporation except when by statute the personal liability of a stockholder is increased to a greater or less extent. In some corporations the law makes stockholders personally liable for an amount equal to the par value of their stock.

Incorporation. A corporation can be created only by the law of the state. This may be a special law which creates and gives power to one particular company, although the constitutions of most of the states prohibit the legislature from creating a corporation by a special law except in some particular cases. The great majority of corporations are formed under the general law, which does not of itself create the corporation but authorizes persons to form a corporation by taking certain prescribed steps. It generally requires that articles of incorporation be executed by the incorporators and filed in some public office. These articles must usually set forth the names and residence of the incorporators, the name by which the proposed corporation shall be known, its principal place of business, the objects and purposes of the association (which must be lawful), the period of time for which it is to exist, the amount of capital stock and the number of shares into which it is divided, the number of directors and the names of those who are to act as directors until an election is held. Any person who has the capacity to enter into a contract may be an incorporator. The statutes generally prescribe the number

of incorporators necessary to organize. The minimum number required in most states is three, though in a few states more are required.

In most of the states a certain number of the incorporators are required to be residents of the state in which the company is incorporated.

QUESTIONS

1. What are the three distinctive features of a corporation?

2. How is a corporation defined?

3. What makes this form of organization desirable?

4. What authority is necessary to create a corporation?

5. How are corporations classified?

6. What is a municipal corporation? What is a private corporation? 7. What is the difference between stock and non-stock corporations?

8. What are the powers of a private corporation?

9. What is the meaning of the term “continuous succession"?

10. What are the by-laws of a corporation?

II. What is the liability of a stockholder in a corporation?

12. How may a business be incorporated?

13. Who may be an incorporator?

14. What number of persons generally may organize a corporation? 15. What are articles of incorporation?

2. POWERS AND LIABILITIES OF CORPORATIONS Powers Limited. A corporation has only such powers as are conferred upon it by its charter or articles of incorporation These powers may be expressly conferred, or they may be implied, either because they are incidental to a corporate existence. as the right of succession and the right to have a corporate name, or because they are necessary in order to exercise the powers expressly conferred.

A charter which gave a corporation the authority to make and keep in repair a road to the top of Mt. Washington, to take toll of passengers and carriages, to build and own toll houses, and to take land for a road, was held not to authorize the corporation to establish a stage and transportation line, nor to buy carriages and horses for that purpose. Corporations have no powers except such as are given them by their charter, or such as are incidental and necessary to carry into effect the purposes for which they were established. Downing v. Mt. Washington Road Co., 40 N. H. 230.

Implied Powers.

The powers that are incidental to a corporate existence and that will always be implied, are these: to have

continuous succession during the life of the corporation, to have a corporate name by which to contract and to sue and be sued, to purchase and hold real and personal property, to have a common seal, and to make by-laws.

A corporation has also the implied powers that are reasonably necessary for the execution of the powers expressly granted and not expressly or impliedly excluded. A corporation generally has the implied power to borrow money whenever the nature of its business renders it necessary or expedient to do so.

The general power of doing business granted to a corporation carries with it the power to borrow money for the legitimate objects of the corporation. - Wright v. Hughes, 119 Ind. 324.

A corporation formed for the purpose of encouraging athletic exercises has the power to borrow money for building a clubhouse upon lands leased by it, under the provisions of the statute that such a corporation may hold real and personal estate and may purchase or erect suitable buildings for its accommodation. · · Bradbury v. Boston Canoe Club, 153 Mass. 77.

It also has the implied power to make, indorse, or accept bills of exchange and promissory notes, if such is the usual or proper means of accomplishing the results for which it was created.

Every corporation has, as a necessary incident of the powers expressly granted by its charter, the power of incurring debts in the course of its business, and of making and indorsing negotiable instruments in payment thereof. - State v. Passaic Turnpike Co., 27 N. J. Law 217.

To sell or mortgage real property owned by it is another implied power of a corporation.

A corporation chartered with power to purchase and hold water power, created by the erection of dams, and to hold real estate may, when its water privileges can no longer be profitably used, sell its land.

Dupee v. Boston Water Power Co., 114 Mass. 37. A corporation, without special authority in its charter, may dispose of lands, goods, and chattels as it deems expedient.

White Water Va. Canal Co. v. Vallette, 21 How. (U.S.) 414.

But a corporation has no implied power to enter into a contract of partnership or suretyship.

The Central Railroad & Banking Co. of Georgia, which was authorized by its charter to construct and operate a railroad between the cities of Savannah and Macon and to organize and carry on a banking business, has no power, express, implied, or incidental, to purchase and run a steamboat on the Chattahoochee River, which is no part of its route, nor to form a partnership with a natural person for carrying on that business.

Central Railroad Co, v, Smith, 76 Aia. 572.

As a general rule it may be said that when a corporation is given general authority to engage in business, it takes the powers of a natural person to make all the necessary and proper contracts to enable it to attain its legitimate objects.

A corporation organized as a life insurance company has power to borrow money and, secure its payment by mortgaging its real estate. When general authority is given a corporation to engage in business, it takes the power, in the absence of charter restraint, just as a natural person enjoys it with all of its incidents, and may borrow money to attain its legitimate objects the same as an individual. Wright v. Hughes, 119 Ind. 324.

Acts Ultra Vires. When a corporation performs acts not within its power to perform, the acts are said to be ultra vires. An ultra vires contract, if executory, cannot be enforced; but most courts hold that if the defense of ultra vires will work an injustice, it will not be allowed, and this is also true if the party seeking to enforce the contract has performed his part.

The Nassau Bank, which had subscribed for stock in a railroad corporation, sued for its share of the profits. Held, that the plaintiff was not authorized to make such a contract, and the courts would not enforce it.

– Nassau Bank v. Jones, 95 N. Y. 115.

Where a corporation has guaranteed the payment of other persons' notes without consideration, an act not authorized by its charter, it may plead the defense of ultra vires and the contract will not be enforced. -Deaton Grocery Co. v. International Harvester Co., 47 Tex. Civil Appeal, 267.

Liability for Acts of Agents. A corporation is liable to the same extent as a natural person for the frauds and wrongs of its agents and servants, committed in the course of their employment.

Goodspeed brought an action against a banking corporation for damages for maliciously bringing vexatious and unjust lawsuits against him. The defense was that a corporation was not liable for such a wrong, but the court held that a suit of this nature may be maintained against a corporation. Goodspeed v. Bank, 22 Conn. 530.

QUESTIONS

I. What powers has a corporation?

2. What is meant by implied powers?

3. Mention some of the implied powers of a corporation.

4. Has a corporation implied power to enter into a contract of partnership or suretyship?

5. What general rule may be laid down as to a corporation's powers?

6. What are "ultra vires acts"? Give an example.

7. What is the liability of a corporation for acts of its agents?