national bank stock in case of failure, however, is liable for twice the par value of his stock.

Stock may be transferred by an assignment in the manner prescribed by the by-laws of the corporation.

321. QUESTIONS

Define a corporation. Discuss the duration of corporate life. Give some illustrations of corporate franchises.

Give the different classes of corporations. Define and illustrate a private corporation; a public corporation; a quasi-public. In what three ways may corporations come into existence? Describe corporate existence by prescription.

Define a charter, and describe corporate organization thereunder. What can you tell about corporate organization by special statute? State requirements as to corporate name.

Of what does capital stock consist? How is it paid for?

Define subscriber; common stock; preferred stock; watered stock. Discuss the liabilities of stockholders; of the holder of national bank stock. How are shares of stock transferred? How is the business of a corporation conducted?

Discuss the rights of stockholders: as to a certificate; to sell his stock; to vote; to inspect books.

What difference is there in a stockholder's liability who is a subscriber and who receives his stock at a discount, and a subsequent holder who bought at a discount after stock had been issued fully paid?

322. Perpetual Succession. The principal advantage of incorporation is that the affairs of the concern can be definitely planned and carried out over a period of many years, notwithstanding the original members may die or transfer their interests. The life of a corporation is usually regulated by the legislative body granting the incorporative authority, and it has been very aptly compared to a river. "Although changes may take place along its shores, portions of the banks may be washed away,

and new portions may be formed, islands may sink and new ones appear, the stream may have rolled on for ages, and a thousand times its waters may have been emptied into the ocean, yet it is the same identical stream through all the changes of time. We still call it the St. Lawrence, the Rhine, or the Jordan. So with a corporation. Of all the original corporators of the Banks of England and Amsterdam, not one remains on earth among the living. Generation after generation of the corporators have passed away, and yet they are the Banks of England and Amsterdam still."

323. To Elect Officers. The power to elect officers is vested in the stockholders who are generally called together by due notice at least once a year. A detailed report of the business is usually submitted for their consideration. At that time all vacancies in the board of directors are filled by ballot, each stockholder being entitled to one vote for each share owned. If several members are to be elected at the meeting, the stockholder may, if authorized by by-law, multiply the number of shares he holds by the number to be elected and vote the whole number for one director. This is known as cumulative voting. By this method of combining votes in favor of one person, a small minority may succeed in having a representative on the board.

The stock of a corporation capitalized at $100,000 is held by two factions, one holding fifty-one per cent. and the other fortynine per cent. The former are majority holders and the latter minority. They are, say, to elect seven directors. The by-laws and the laws of the state permit cumulative voting. If the majority should attempt to elect all seven directors from their members, they would cast 3,570 votes, or 510 votes for each candidate for a directorship. If the minority decided to nominate but four directors they would cast 3,430 votes, or 8571⁄2 votes for each candidate and would be in control of the directors' meeting. Evidently the majority attempted to elect more than their bare majority warranted. They should have attempted to elect but four members, which would have given them a majority of the directors.

The

UNITED STATES GYPSUM

COMPANY

REGISTERED

WITH

THE CORPORATION TRUST COMPANY,

JERSEY CITY, NEW JERSEY.

Proxy.-Stockholders' Meeting.

know All Men by These Presents,

That I, the undersigned, being the owner of ♬

fifty.

my true and

shares of the capital stock of the corporation above named, do hereby constitute and appoin............. S. Q. Fulton or C. G. Root lawful attorney in my name, place and stead, to vote upon the stock owned by me or standing in my name, as my proxy, at the...... .....meeting of the stockholders of the said company, to be held at the company's office, 15 Exchange Place, Jersey City, N. J., on the...

- annual

21st

day of January 191..3..., and on such other day as the meeting may be thereafter held by adjournment or otherwise, according to the number of votes I am now or may then be entitled to cast, hereby granting the said attorney full power and authority to act for me and in my name at the said meeting or meetings, in voting for the directors of the said company or otherwise, and in the transaction of such other business as may come before the meeting, as fully as I....could do if personally present, with full power of substitution and revocation, hereby ratifying and confirming all that my said attorney or substitute may do in my place, name and stead.

In Witness Whereof, I have hereunto set my hand and seal the....21st

If stockholders do not personally attend the meetings of the corporation, they may, through power of attorney, direct someone to vote in their stead. This is called voting by proxy. The board thus elected, organizes and elects such officers as president, vice-president, secretary, and treasurer from among their own members. In some instances the minor offices are filled by persons who are not directors. They may also fill such vacancies as may occur before the next meeting of stockholders; but of course, only for an unexpired term. These officers are the accredited agents of and for the company, and as such transact the regular business of the company, and while doing so are not personally liable unless otherwise provided by statute. The power to remove an officer for reasonable cause may be expressly provided for, or may be at times established by implication.

324. To Make By-Laws. This legislative right is conferred on the directors or stockholders by the general law, or is established by implication. The by-laws must not be in conflict with the state laws. They are for the purpose of furnishing the members rules and regulations for the conduct of corporate affairs.

325. To Sue and Be Sued. All suits at law are brought in the name of the corporation either for or against. Service of process in actions against corporations is made as required by law, but is usually upon certain officers of the corporation. A corporation is liable for injuries inflicted by its agents.

326. To Make Contracts. The old common law recognized the right to contract, but maintained that such contracts must be evidenced by the seal of the corporation. This rule has been changed so that a seal is no longer necessary except upon contracts legally requiring a seal, although formal contracts are usually so witnessed. Contracts ultra vires are void. This scope cannot be enlarged by the individual members or officers. It is settled law that, within the scope of the business, all parol undertakings are enforceable against the corporation as well as sealed