any of the corporation's real property, to sell all its assets, to amend its charter, to accept a proposition to consolidate with another corporation or to dissolve.

434. Corporate powers.-A corporation has the power expressly conferred upon it by the statute under which it was formed and by its certificate of incorporation, and also all incidental powers necessary to carry out the purposes for which it was formed. There are certain incidental powers which attach to a corporation inherently. These are the right of succession, the right to have a corporate seal, the right to appoint and remove officers and agents, the right to make by-laws, and the right to make contracts to carry out the purposes for which it was created.

Corporations unless specifically prohibited by local statutes may purchase and hold real and personal property necessary in the transaction of the corporate business. It may even take unnecessary property, where it is advantageous to do so for self-protection. Thus, where a corporation has accepted real property as security for a debt and it becomes necessary to take the property in payment of the debt, it may do so, but under the law of many jurisdictions it will be compelled to dispose of the property as soon as it can do so without loss. A corporation may borrow money and incur indebtedness when necessary, but in many states the amount of indebtedness to be contracted by the corporation is limited. The power to borrow money implies the power to give security and unless there is an express prohibition a corporation may mortgage its property. A corporation may issue, accept, and indorse a negotiable paper, but not for accommodation.

A corporation may not enter into a partnership with any individual or individuals or with any other corpora

tion, but may enter into a joint contract. In some of the United States a corporation may acquire and deal in its own stock unless prohibited by charter. In most of the states, however, a corporation cannot purchase any of its own stock except out of surplus funds and in some states a purchase of its own stock is entirely prohibited.

In most of the United States a corporation may not acquire stock in another company unless the statutes or the charter expressly permit such holding. This permission is often given by statute and in several jurisdictions the courts have held that the power is inherent. One restriction is sometimes placed on this power, namely, that the corporation whose stock is acquired must be engaged in some similar business. Under the federal statutes, however, and the anti-trust laws of many states this power cannot be exercised for the purpose of controlling or defeating competition.

435. Ultra vires acts.-When a corporation assumes to do an act which is in excess of its powers, such act is said to be ultra vires. If neither party has performed its side of an ultra vires contract, it is wholly unenforcible in the courts. When an ultra vires contract has been partly performed by one or both parties two rules prevail. The United States rule, which is followed in Massachusetts, is that an ultra vires contract is illegal, whether partly performed or not, but where one party has performed its side of the contract in whole or in part by parting with money or property it may recover the reasonable value thereof; in England it has been held that the property or money may be recovered.1

1 Pullman Palace Car Co. v. Central Transportation Co., 171 U. S. 138. In most jurisdictions, including New Jersey, New York, Pennsylvania, Michigan and Minnesota, if either party has performed, he may compel performance by the other side. This rule is founded on the argument that

436. Capital stock.-The capital stock of a corporation must be distinguished from its capital. Capital stock cannot be changed except by an amendment of the certificate of incorporation. The term is used to designate the amount of capital to be contributed by the stockholders for the purpose of the corporation. The net value of the property of a company is its capital and this varies with the good or ill fortune of the company.

437. Forms of corporate stock.-Common stock is the ordinary stock of a corporation which has neither special privileges nor special restrictions. Unless some form of special stock is issued by a company all of its stock is common stock.

Stock may be preferred in many ways. There may be several classes of preferred stock in one corporation, each to receive in succession a certain percentage of the net profits. The preferred stock may have a preference up to a certain amount and all the rest of the profits may then go to the common stock, or the common stock may receive a certain percentage of the profits after the preferred stock has been paid and then both classes may divide equally, or both classes may divide equally after the preferred stock has received its percentage.

Cumulative preferred stock is that in which the preferred percentage is to be paid whenever possible not only for the current year, but for past years for which it was impossible to pay it. In other words, cumulative preferred stock must receive all dividends in arrears before the common stock can share in the net profits. Sometimes it is provided that preferred stock shall have the defense of ultra vires, if allowed, would produce an inequitable result, while the United States rule is based on the proposition that an ultra vires contract is contrary to public policy. Public or municipal corporations in all jurisdictions follow the United States rule.

preference in the distribution of the assets upon the dissolution of the corporation. In some states preferred stock may with it the voting power. not carry Guaranteed stock is that upon which the payment of dividends is guaranteed by another corporation. Many railroad corporations guarantee the payment of dividends on the stock of their subsidiaries. Cumulative preferred stock is sometimes erroneously called guaranteed stock.

Paid up or full paid stock is stock the par value of which has been fully paid to the company in cash, property or services. Where the payment is made in property or services, when the statutes specifically prohibit that form of payment, the stock cannot be said to be paid-up. Certificates of full paid stock usually bear the words "full paid and non-assessable" printed upon

their face.

The stock which has not been delivered to subscribers and is absolutely without value is called unissued stock. Issued and outstanding stock is that which has been bought or which has properly been exchanged for property or services of full value. Where a subscription has been accepted by the corporation it is treated as representing issued and outstanding stock. Treasury stock consists of those shares issued and outstanding which have been acquired by the corporation through purchase, bequest or otherwise; it may usually be reissued at any price the corporation may be able to get for it.

438. Subscribers to capital stock.-An agreement to subscribe for capital stock made before the corporation is organized is not binding because of lack of consideration. The corporation not being in existence cannot make a promise in exchange for the promise of the subscriber, but if the promoter takes the subscription and

binds himself to do something in connection with the formation of the company there will be a valid consideration for the subscription; and the company, after it is formed, may sue on the contract of subscription. Where, however, subscriptions are made by incorporators who set opposite their signatures, on the certificate of incorporation, the number of shares they intend to take, they become bound when the certificate is filed. So, ordinary subscriptions made before organization are looked upon as continuing offers and if not withdrawn may be accepted by the company when organized. Subscriptions for capital stock of organized companies are, of course, binding, for the corporation promises to do something to issue its shares-in exchange for the subscriber's promise to take the shares. These rules may be varied by local statutes.

439. Rights and powers of stockholders.-The three important rights of the individual stockholder are: (1) the right to vote, (2) the right to inspect the corporate books and (3) the right to dividends. The right of a stockholder to vote has been discussed under the heading of corporate meetings. (See sections 430-2.)

440. Stockholder's right to inspect the corporate books. This right is well set forth in the opinion of a New York case.1

We think that according to the decided weight of authority, the stockholder has the right at common law to inspect the books of his corporation at a proper time and place, and for a proper purpose, and that if this right is refused by the officers in charge, a writ of mandamus may issue in the sound discretion of the court, with suitable safeguards to protect the interests of all. It should not be issued to aid a blackmailer, nor withheld simply because the interest of the stockholder is 1 In re Steinway, 159 N. Y. 250.