to under the law, in the way of expressed in the articles.

purposes and powers, should be

§ 38. POWERS COMMON TO ALL CORPORATIONS. There are certain powers inherent in every corporation whether they are mentioned in the charter or not. A corporation is a legal person separate from the stockholders, therefore it has the right to sue and be sued under its corporate name. This power saves the exhibition of the names of its members as parties to litigation. In order to forward the purposes of organization it is necessary that a corporation have the right to acquire, hold and convey property. Except, that sometimes the amount of property it can hold is limited; and sometimes corporations are excluded from the power of holding stock in other corporations, and again, to enjoy the power of holding stock, they are sometimes required to mention in the articles the intended use of the power. A corporation has the right to have officers, directors, or trustees, and agents, and to make bylaws. A charter is commonly expressed in general terms and comprehends the general rules governing the policy of the incorporation. The rules governing the action of the officers, directors, and managers, and other incidentals, are expressed in such detail as desired in the by-laws. The corporation may also use a seal and may "do all things necessary," an expression used to cover acts not expressed specifically which are not always inherent corporate rights, but which may, under the provision, become so in a particular case. By action of the stockholders, a corporation has the power to terminate its existence, or dissolve. These are powers all corporations have in common, without special provision in the articles. The special powers granted the corporations are such as the statutes provide and as are mentioned in the articles of incorporation as purposes and rights intended to be pursued by the company.

§ 39. ULTRA VIRES ACTS.

Whatever a corporation does that is beyond a judicial interpre

tation of its powers as provided in its charter is, in the language of the law, ultra vires (beyond power). A corporation guilty of ultra vires acts may forfeit its charter, or it may only be restrained from exercising the powers which it has assumed and to which it has no right. The former punishment is usually imposed only when the act is sufficiently important to affect the public interests, or when a statute specifically provides that certain acts shall be punished by forfeiture of the charter. If a corporation violates its charter, or does not perform its corporate duties in material and important particulars, it is subject merely to regulation by law. As a matter of fact corporations frequently do things which are not provided for in the charter, but the state does not act so long as private persons only are affected. The strict interpretation and enforcement of the ultra vires doctrine is adhered to in the federal courts, but state courts have contemplated it more liberally. The latter hold that an ultra vires contract is not illegal and void because of want of authority, and that if the contract is founded on a good consideration and is not void on account of statutory prohibition, it is voidable only, and may give rights of action. It has been held that "the plea of ultra vires should not as a general rule prevail, whether it is interposed for or against the corporation, when it would not advance justice, but on the contrary would accomplish a legal wrong." The doctrine of estoppel will be interposed against rights of action or of defense on the ground of ultra vires when corporations or persons have so acted that the defense on this ground would be inequitable. Owing to the wide scope of powers now permitted in charters and the liberal modification of the doctrine of ultra vires on the part of the state courts, the doctrine in its application to private corporations is not so important as it was formerly. Notwithstanding, those who manage corporations should consider all they wish to do, and in doing things of importance should be sure they have the authority of their charter to do them. When the articles do not provide for the performance of certain acts, and it is desirable that they should so provide, they may be amended to include the powers wanting, if the statutes will permit those acts.

840. AMENDMENT OF CHARTER AND ARTICLES.

Since the charter of a corporation is the law under which a corporation is organized, it follows that the right to amend, alter, or repeal a charter belongs only to the state. There is no such thing, strictly speaking, as amending a charter by action of the stockholders of a corporation. The stockholders, in changing their articles of incorporation, are merely making a variation in certain incidentals which they have a right to vary, add to, or subtract from the charter (the laws) already provided. When a corporation is organized according to law, it has the right to use the powers and privileges conferred upon it by the laws in force when it came into existence. The constitution of the United States protects it in this right by prohibiting all legislation which impairs the obligation of contracts. An amendment or alteration of a charter that cannot legally be imposed on a corporation by a state legislature, may be offered to the stockholders for acceptance or rejection, and their action is conclusive. If the proposed amendment will effect a radical change in the plan and purpose of a corporation, it can be accepted only by unanimous vote of the stockholders; if the change is merely incidental, a majority of the stockholders are empowered to accept it. If the state has a legal right to alter or amend a charter, a corporation has the alternative of accepting the change or of going out of existence. But, as said, the state cannot, on account of its reservation of a right to change a charter, cancel rights which have become vested in a corporation. The power of the state is used in controlling corporations in keeping them within the bounds of the powers and privileges conferrable and conferred by law. The state's power to repeal, suspend, alter, or amend does not extend either to taking away permanently or temporarily rights granted before, nor to the substitution of different rights. The nature and purpose of the corporation, as legally formed, must remain intact. A state may have many legislative acts under which corporations may be organized. The specification of powers granted by these acts imply the exclusion of powers not specified. So, a corporation for a given purpose

might be organized under any one of several different acts which provide for that purpose. The choice of the act under which the corporation shall be organized will depend upon provisions conforming most nearly with the main purpose of this particular organization, taken in connection with the auxiliary purposes that pertain to its business. The wording of articles to fit the act under which they are made is an important matter. The act may specify certain purposes and powers either disjunctively or inclusively, the powers conferrable under the act being conferrable only severally, so that no one corporation may have all the powers, or they may be conferrable jointly so that one corporation may exercise all the powers. Remembering the state's right to interfere with the corporation if it is not organized legally, the necessity of employing a lawyer to draft the articles is evident as a business precaution. From the standpoint of changes in the articles by stockholders, after the corporation has been created, the alterations consist usually in changing the corporate name, changing the amount and kind of capital stock, the limitation or extension of the business purposes, changing the number of directors, etc., within the limitation of rights which the act has provided. But the essential character and purpose of the corporation is not changed thereby. A corporation may sometimes change its character and purpose almost entirely by taking advantage of legislative acts which the states sometimes provide, whereby the state offers the corporation certain powers not conferred in the act under which the corporation was organized. This is, in effect, an offer by the state of an optional amendment to the charter already conferred, which the corporation may accept by complying with the requirements of the statute offering the amendment. Of course, a corporation may dissolve and the same business and people may reorganize under another statute, but such procedure destroys the old corporation entirely and makes a new one, so far as the law is concerned. The steps necessary to change the articles of incorporation by action of the stockholders vary in the different states. For instance, New York laws provide that a corporation may change its name by publishing for six weeks a notice of intention to change and

by application to the supreme court for an order authorizing the change; that the purposes and powers of the corporation may be altered by a vote of three-fifths of the capital stock; that the number of shares into which the capital stock is divided may be increased or decreased by vote of two-thirds of the capital stock; that the amount of the capital stock may be increased or reduced by concurring vote of the stockholders holding a majority of the stock. Arizona laws provide that any proper amendment may be made by the concurring vote of a majority of the stock. The amendment of the articles by stockholders usually requires as much formality as preparing and filing the original articles, and should be attended to by a competent lawyer. Certificates and documents in evidence of authorized changes, made by the proper officers of the corporation, or other authorities, must be filed with the same state or local officers that were legal custodians of the original articles, and, perhaps, must be given publicity by publication. The formalities may vary with the nature of the amendment, and they may vary in different states with the same kind of amendment. Small state fees are usually charged when amendments to articles are filed. The action of directors is sometimes an amendment of the articles. Though the location of the principal office be specified in the articles, the New Jersey law provides that a concurring vote of two-thirds of the directors shall be sufficient to move the office from a town, township, or city to some other such location. A properly certified copy of the resolution must be filed with the secretary of state and a fee of $5.00 must be paid. Amendments may originate with the state as shown, or, in connection with more common business routine, with the directors or stockholders. Amendments may be considered at a regular meeting of directors or stockholders, the time of which is specified in the by-laws, or the by-laws of a corporation may provide that a special meeting may be called; in the case of a directors' meeting, by a call of the president of the corporation or a certain number of the directors, or, in case of a stockholders' meeting, on call, usually, of stockholders holding a majority of stock. Amendments may be proposed and carried or

MOD. BUS. CORP.-6