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whether such capital consists of money, property, or other valuable commodities. (Martin v. Zellerbach, 38 Cal. 300, 99 Am. Dec. 365. To same effect: S. F. v. S. V. W. W., 63 Cal. 531; Kohl v. Lilienthal, 81 Cal. 385, 20 Pac. 401, 22 Pac. 689.)
7. Amount Actually Subscribed. It is plain that the amounts subscribed, and by whom, must be fully set forth in the articles of incorporation. The requirement of the code is absolute and peremptory. Only those are bound as subscribers who are named in the articles as such, and to the amounts therein mentioned. (M. & $. V. R. R. v. Hildreth, 53 Cal. 128. Cited in San Joaquin etc. Water Co. v. Beecher, 101 Cal. 79, 35 Pac. 349; Marysville etc. Co. v. Johnson, 109 Cal. 195, 50 Am. St. Rep. 35, 41 Pac. 1016; Marysville etc. Co. v. Johnson, 93 Cal. 551, 27 Am. St. Rep. 221, 29 Pac. 126. Note citations: 43 Am. Dec. 697; 81 Am. Dec. 395.)
A failure to state the amount actually subscribed, and by whom, defeats the attempted incorporation. (People v. Flint, 64 Cal. 52, 28 Pac. 495.)
Articles of incorporation which omit to state the amount of stock subscribed, and by whom, are not admissible in evidence to prove existence of a corporation de jure, but may be received as preliminary to proof of existence of de facto corporation. (People v. Leonard, 106 Cal. 302, 39 Pac. 617.)
CERTAIN CORPORATIONS TO STATE FURTHER FACTS IN AR
TICLES. Sec. 291, C. C. The articles of incorporation of any railroad, wagon road, or telegraph organization must also state:
1. The kind of road or telegraph intended to be constructed:
2. The place from and to which it is intended to be run, and all the intermediate branches;
3. The estimated length of the road or telegraph line; 4. That at least ten per cent of the capital stock subscribed has been paid in to the treasurer of the intended corporation. En. March 21, 1872.
Statements in the articles of incorporation as to route and termini were required by section 2 of the railroad incorporation act of 1861 (Stats. 1861, p. 607), by section 1 of the wagon road companies' act of 1853 (Stats. 1853, p. 114), and by section 147 of the aet concerning corporations (telegraph companies) of 1850 (Stats. 1850, p. 347),
For prerequisites to the filing of the articles of incorporation of the corporations mentioned in this section, see sections 293, 294, 295, of the Civil Code.
Substantial Compliance.- While a total failure to comply with the provisions of this section will defeat incorporation of the corporations referred to therein, errors in matters of detail will not. A substantial compliance is all that is required. (See note to sec. 285, C. C., supra.)
FIVE CORPORATORS, THREE TO BE CITIZENS OF THE
STATE, TO SIGN ARTICLES AND ACKNOWLEDGE THE SAME.
Sec. 292, C. C. The articles of incorporation must be subscribed by five or more persons, a majority of whom must be residents of this state, and acknowledged by each before some officer authorized to take and certify acknowledgments of conveyances of real property. En. March 21, 1872. Amd. 1873-74, 199.
The original section, March 21, 1872, had the word “three” instead of the word “majority," and the word “grants" instead of the word “conveyances.” (See legislative history under section 285, C. C., supra.)
Hall v. Arnott, 80 Cal. 353, 22 Pac. 250; People v. Montecito Water Co., 97 Cal. 278-280, 33 Am. St. Rep. 172, 32 Pac. 236; People v. G. G. Lodge, 128 Cal. 257, 60 Pac. 865; Wall v. Mines, 130 Cal. 39, 62 Pac. 386.
Compliance With This Section Essential. — The right to be a corporation is in itself a franchise; and to acquire a franchise under a general law, the prescribed statutory conditions must be complied with. (People v. Selfridge, 52 Cal. 331.)
A failure to comply with all the terms of this section may be cured by subsequent legislation. (Larrabee v. Baldwin, 35 Cal. 155.)
The certificate so acknowledged secures the state and all concerned against the possibility of any fictitious names being subscribed to the articles, and furnishes proof of the genuineness of the signatures. It is a condition precedent to a valid incorporation, and a failure to do so renders the articles fatally defective as against the state. (People v. Montecito Water Co., 97 Cal, 276, 33 Am. St. Rep. 172, 176, 32 Pac. 236.)
An acknowledgment by any number of subscribers less than five is equally fatal in a direct attack by the state. (Idem.)
The requirements of this section are not inconsistent with sections 290, 593, and 594 of the Civil Code, and this section must be read as requiring articles of benevolent or social associations organized withcut profit under sections 593 and 594 of said code, to be subscribed and acknowledged by at least five persons in accordance with this section, in addition to the verification required by section 594. (People v. G. G. Lodge, 128 Cal. 257, 60 Pac. 865.)
In order to constitute a corporation de jure, the articles of in. corporation must be verified as required by section 292, Civil Code. The provisions of the section are mandatory, and there can be no sufficient verification otherwise than as provided by that section. (Wall v. Mines, 130 Cal. 27, 62 Pac. 386.)
But it is not necessary to the validity of a corporation, or to the subscribers becoming stockholders therein, that all the subscribers who agreed to its formation should sign the articles of incorporation. (San Joaquin etc. Co. v. Beecher, 101 Cal. 70, 35 Pac. 349.)
It appears, however, that a de facto corporation may be created notwithstanding defective acknowledgments of articles. (People v. Montecito Water Co., 97 Cal. 280, 33 Am. St. Rep. 172, 32 Pac. 236.)
PREREQUISITE TO FILING ARTICLES-AMOUNTS TO BE SUB
SCRIBED TO BE FIXED. Sec. 293, C. C. Each intended corporation named in section 291, before filing articles of incorporation, must have actually subscribed to its capital stock, for each mile of the contemplated work, the following amounts, to wit:
1. One thousand dollars per mile of railroads ;
3. Three hundred dollars per mile of wagon roads. En. March 21, 1872.
The same requirement for railroad corporations is found in section one of the railroad act of 1861 (Stats. 1861, p. 607), post, Appendix, and for wagon-road companies, in section two of the wagonroad act of 1853 (Stats. 1853, p. 114), post, Appendix.
M. & S. V. R. R. Co. v. Hildreth, 53 Cal. 128.
Mandatory Section. This requirement of the code is absolute and peremptory. The articles must set forth the amount subscribed, and by whom. The instrument from which the corporation derives its being must be held to limit the power of the corporation, so that it can bind as stockholders as of the date of its filing only those. named in the articles, and to the amounts therein mentioned. (M. & S. V. R. R. v. Hildreth, 53 Cal. 128. To same effect generally: San Joaquin etc. Co. v. Beecher, 101 Cal. 79, 35 Pac. 349; Marysville etc. Co. v. Johnson, 109 Cal. 195, 50 Am. St. Rep. 35, 41 Pac. 1016; Marysville etc. Co. v. Johnson, 93 Cal. 551, 27 Am. St. Rep. 221, 29 Pac. 126. Note citations: 43 Am. Dec. 697; 81 Am. Dec. 395.)
[This section should be read and construed in connection with sections 291, 294, 295, and titles III, IV, V, and VII of the Civil Code, relating to such corporations. See, also, notes under such sections and titles.-Eds.)
PREREQUISITE TO FILING ARTICLES OF CORPORATIONS FOR.
PROFIT. Sec. 294, C. C. Before the articles of incorporation of any corporation referred to in the preceding section are filed, there must be paid for the benefit of the corporation, to a treasurer elected by the subscribers, ten per cent of the amount subscribed. En. March 21, 1872.
This requirement is based on section 1 of the railroad act of 1861 (Stats. 1861, p. 607), and section 11 of the plank-road and turnpike act of 1853 (Stats. 1853, p. 160).
Section 157 of the corporation act of 1850, relating to bridge companies, contained a similar requirement.
The requirement of the railroad act of 1861 was that stock to the amount of at least one thousand dollars per mile of the proposed road shall be subscribed, and ten per cent in cash so required to be subscribed shall be actually and in good faith paid to a treasurer to be named and appointed by said subscribers from their number.
Payment of Subscription.-The requirement that ten per cent of the amount to be subscribed per mile be paid in cash is not merely directory, but is a condition precedent, without which subscribers to a company have no power to incorporate, and an attempted in. corporation without such payment is invalid, and should be sa declared in quo warranto. (People v. Chambers, 42 Cal. 201.)
And under similar requirements of section 1 of the railroad act of 1861, that subscriptions be paid in cash, it is held a check on a bank does not constitute a payment in cash. (People v. Chambers, 42 Cal. 201.)
But People v. Chambers, supra, has been distinguished, and it is held that the treasurer of a company about to form a railroad cor. poration may receive from subscribers payment of the ten per cent, required by law to be paid to him, in bank checks drawn by subscriber, and payable in praesenti, provided they are drawn against a sufficient fund, and the banks will pay the checks on presentation, and the same were drawn in good faith, and with no intention to evade the law. (People v. Stockton etc. R. R. Co., 45 Cal. 306, 13 Am. Rep. 178. Note citation: 81 Am. Dec. 398; 25 Am. Rep. 162.)
“Without a substantial compliance with this provision, the subseribers acquire no jurisdiction to organize themselves into a corporate body, and this view of the law is supported by the following authorities: Eaton v. Aspinwall, 19 N. Y. 119; People v. Troy House Co., 44 Barb. 634; Haviland v. Chase, 39 Barb. 283; Taggart v. Western etc. Co., 24 Md. 588, 89 Am. Dec. 760; People v. Insurance Co., 38 Barb. 323; Patterson v. Arnold, 45 Pa. St. 415." (People v. Chambers, 42 Cal. 209.)
OATH OF OFFICER TO SUBSCRIPTION OF STOCK AND PAY
MENT OF TEN PER CENT. Sec. 295, C. C. Before the Secretary of State issues to any such corporation a certificate of the filing of articles of incorporation, there must be filed in his office an affidavit of the president, secretary, or treasurer named in the articles, that the required amount of the capital stock thereof has been actually subscribed, and ten per cent thereof actually paid to a treasurer for the benefit of the corporation. En. March 21, 1872.
Signing fictitious name: Pen. Code, sec. 557.
A similar requirement was prescribed by railroad corporations by section 2 of the railroad act of 1861 (Stats. 1861, p. 607), post, Appendix.
The Affidavit must be read in connection with the articles of incorporation; and unsubstantial defects in the affidavit may be cured