for the transaction of business, and a majority of the quorum have power to bind the corporation by their votes.1 - § 94. Election of Corporate Officers. In nearly all of the States statutes exist designating certain officers that business corporations must have, and providing that such officers shall be elected by the board of directors duly convened for that purpose. Where, however, as is sometimes the case, this power is devolved upon the stockholders by statute, then directors have no power to elect such officers. In the absence of such statutes as are here referred to, giving the directors power to elect officers, it must be admitted that the current of authority is to the effect that the power then lies in the stockholders alone.3 The law implies that directors shall hold their office until their successors have been elected and qualified. Where vacancies occur in the board of directors they must be filled, in the absence of statute, charter provision, or by-law giving the power to the directors, by the stockholders only, and even where the power to fill vacancies is lawfully bestowed upon the remaining directors, vacancies can then be filled only by action of a majority of the authorized number of directors.5 Questions of policy, or management, or expediency of contract or action, or consideration of gross misappropriation or unlawful appropriation of corporate funds to the detriment of corporate interests, are left generally to the decision of the directors if their powers are without limitation and free from restraint. To hold otherwise would be to substitute the judgment and discretion of others in place of those determined on by the scheme of incorporation. § 95. Appointment of Executive Committee. The incorporation acts of Connecticut, Delaware, Massachusetts, Nevada, New Jersey, North Carolina, Virginia, and West Virginia all authorize the appointment by the board of directors from their own number of an executive committee to whom may be entrusted most of the ordinary duties that devolve upon the full board of directors. 1 Ten Eyck v. Company, 74 Mich. 226; 41 N. W. 905; see also Hoyt v. Thompson, 19 N. Y. 207. 2 See In re St. Helen Mill Co., 13 Saw. 92; Walsenberg Water Co. v. Moore, 5 Col. App. 144; 38 Pac. 60. 3 Beardsley v.Johnson, 121 N. Y.224; 24 N. E. 380; In re A. A. G. Iron Co., 63 N. J. Law, 168, 357; 41 Atl. 931; 46 Atl. 1097. 4 People v. Runkle, 9 Johnson (N. Y.), 147; Huguenot Nat. Bank v. Studwell, 6 Daly (N. Y.), 713. 5 Moses v. Tompkins, 84 Ala. 613; 4 Sou. 763. 6 Ellerman v. Ry. Co., 49 N. J. Eq. 217; 23 Atl. 287; Ulmer v. Company, 98 Me. 579; 57 Atl. 1001. It was at one time held that the performance of any duties by the board of directors involving the exercise of discretion and judgment could not be so delegated.1 The modern rule, even in the absence of statute, is that directors have the power to delegate to a part of their own number authority to perform any part of the ordinary business of the corporation, even though it involves the exercise of the broadest judgment and discretion.2 In any event, whenever a question is raised as to the validity of acts done by an executive committee, the ratification of their action. by the full board will undoubtedly correct all defects in the act complained of which would have been valid in the first instance if performed by the board itself.3 § 96, Stock Assessments. Where the capital stock of a corporation is not all issued in the first instance in exchange for property, it is customary for the board of directors to pass a resolution at their first meeting, making an assessment upon the stock of stockholders either for its entire par value or some fractional part thereof. Generally speaking, in order to sustain a right of action on stock subscriptions, it is necessary to show that a valid call or assessment has been made. An assessment is a rating or fixing of the proportion by the board of directors or by the stockholders, which every subscriber is to pay of his subscription, of which notice is given, which notice is referred to as a "call." 5 While it is doubtless true that a "call" may be made either by the directors or the stockholders, nevertheless it is usually made by the directors. This of course necessitates the organization of the corporation as a preliminary to the making of a valid assessment. The purpose of the "call" is to fix the time for payment where that is not provided for either by statute, charter provisions, or by-law.7 The better rule seems to be that the 1 Gillis v. Bailey, 21 N. H. 149. 2 Hoyt v. Thompson, etc., 19 N. Y. 207; Burden v. Burden, 159 N. Y. 187; 54 N. E. 17; Jones v. Williams, 139 Mo. 1; 40 S. W. 383; Davis v. Company, 2 Utah, 74; Tempel v. Dodge, 89 Texas, 69; 32 S. W. 514; 33 S. W. 222; Metropolitan Telephone Co. v. Company, 44 N. J. Eq. 568; 14 Atl. 907; Sheridan Electric Light Co. v. Bank, 127 N. Y. 517; 28 N. E. 467. 3 U. P. Ry. Co. v. Company, 163 U. S. 564; 16 S. Ct. 1173. 4 Chandler v. Siddle, 5 Fed. Cases No. 2594; 3 Dillon, 477. 5 Spangler v. Company, 21 Ill. 276. 6 Williams v. Taylor, 120 N. Y. 244; 24 N. E. 288; Williams v. Company, 153 Ind. 496; 55 N. E. 425. 7 West v. Crawford, 80 Cal. 19; 21 Pac. 1123; W. S. Bank v. Bank, 107 Mo. 133; 17 S. W. 644; Champion Fire Kindler Co. v. Rischert, 74 Mo. Ap. 537. directors have implied power by virtue of their office to make assessments.1 In any event, shareholders may delegate such power to the directors when the same is given to them by statute or by-law.2 It is questionable, however, whether the directors have power in their turn to delegate the power of making assessments to some ministerial officer. In the making of assessments the utmost care should be observed to see that all the statutory requirements relative to the same are complied with. § 97. Certificates required to be made by Officers or Directors after Organization. In Maine, Massachusetts, Arkansas, and Indiana the statutes require that the board of directors together with certain of the corporate officers shall file a certificate of organization with certain officers. Ordinarily the failure to file such certificate would not affect the legal character of the corporation unless there was a statutory provision to that effect.* In Illinois, Missouri, Tennessee, and Utah a certificate of due organization is issued to the corporation by State officials.5 In New York, New Jersey, District of Columbia, Nevada, Indiana, Massachusetts, North Carolina, and Colorado the law requires that after the payment, either in whole or in part, of the capital stock a certificate shall be made and filed in the proper State office setting forth the facts relative to such payment.6 In some of the States, notably New Jersey, failure to file such certificate renders the officers neglecting or refusing to make such certificate for thirty days after written request so to do, jointly and severally liable for all debts contracted before the filing of such certificate.7 Unless there is a penalty provided, such provisions are merely directory.8 1 Budd v. Company, 15 Ore. 413; 15 Pac. 659; Smith . Company, 1 How. (Miss.) 479. 2 Rives v. Company, 30 Ala. 92. 6 Also in Delaware upon request of a creditor or stockholder. 7 Nassau Bank v. Brown, 30 N. J. Eq. 478; Waters v. Quinby, 27 N. J. L. 296. 3 Pike v. Company, 68 Me. 445; S. H. See S. F. N. Bank v. Almy, 117 Mass. 476; Road v. Green, 12 R. I. 164. ▲ In re Shakopee, etc. Co., 37 Minn. 91; 33 N. W. 219; Franklin Bridge Co. v. Wood, 14 Ga. 80; In re Philadelphia Artisans Institute, 8 Phila. 229; A. S. A. & G. Co. v. Whittier, 117 Mass. 451. 6 See Boston Acid Mfg. Co. v. Moring, 15 Gray (Mass.), 251. Chase's Pat. El. Co. v. Company, 152 Mass. 428; 28 N. E. 300; Chase v. Lord, 77 N. Y. 1; Block v. Womer, 100 Ill. 328; Hardman v. Sage, 124 N. Y. 25; 26 N. E. 354; Flash v. Conn, 16 Fla. 428; Austin v. Berlin, 13 Col. 200; 22 Pac. 433. 8 Veeder v. Undgett, 95 N. Y. 295. CHAPTER IV. ISSUANCE AND PAYMENT OF CAPITAL STOCK. § 100. General Remarks as to the Issuance and Payment of Capital Stock upon the Organization of a Corporation. — In connection with the issuance and payment of capital stock following the organization of a corporation, several important matters should be considered, such, for example, as the time within which the capital must be paid in; the question as to how the capital must be paid in with reference to whether in cash, in property, or in services; and, finally, consideration of the safest and most convenient method to be adopted by the corporation so that it can sell a portion of its capital stock at less than par, if necessary, for the procuring of working capital for the corporation; and this, too, without subjecting the purchasers of such stock to any liability to creditors for alleged unpaid stock subscriptions thereon. It appears that in certain of the States, notably South Dakota and Tennessee, it is not necessary that any of the capital stock be either subscribed or paid in, in order that the corporation may transact business.1 In the several States provisions of the several incorporation acts in force therein differ greatly in regard to the matter of the time within which capital stock must be paid in. New York requires that half of the authorized capital be paid in within one year; Missouri, fifty per cent thereof immediately; Maryland, one-fourth of the capital must be paid in each year; in Indiana, manufacturing corporations must pay in all their capital within eighteen months. Twenty of the States require a certain percentage of the capital to be paid in, in order to commence business; while in twenty-five a certain percentage of the authorized capital must be subscribed.2 As a general rule the effect of the provisions of law here referred to when they are not complied with has been held not to affect the existence of a corporation as a corporation de jure, but merely afford ground for a 1 See ante, § 2. 2 See Part III. Table 6, page 576. questionable whether the courts would sustain the issuance of stock certificates of more than one designated par value.1 In the absence of statute prohibiting the same, corporations may insert in stock certificates such stipulations as they choose relative to the rights of the holders of such certificates, and these constitute valid contracts between the stockholders and the corporation.2 1 See In re Cressona Building Ass'n, 1 Legal Register (Pa.), 177. As to meaning of par value, see Commonwealth v. Com pany, 129 (Pa.) St. 405; 18 Atl. 414; Dela- |