COPY OF ARTICLES PRIMA FACIE EVIDENCE.

Sec. 297, C. C. A copy of any articles of incorporation filed in pursuance of this chapter, and certified by the Secretary of State, or by the county clerk of the county where the original articles shall have been filed, must be received in all the courts of this state, and other places, as prima facie evidence of the facts therein stated. En. March 21, 1872. Amd. 1873-74, 200; 1895, 30.

Legislative History.

The original section had the word "primary" instead of "prima facie." The words "or by the county clerk of the county where the original articles shall have been filed" were added by the amendment of 1895.

Similar provisions are found in section 158 of the incorporation act of 1850 (Stats. 1850, p. 370); in section 3 of the incorporation act of 1853 (Stats. 1853, p. 87); in section 11 of the homestead act of 1861 (Stats. 1861, p. 571); and in section 3 of the savings and loan corporation act of 1862 (Stats. 1862, p. 199).

Section Cited.

Boston Tunnel Co. v. McKenzie, 67 Cal. 488, 8 Pac. 22; Fresne Canal etc. Co. v. Warner, 72 Cal. 382, 14 Pac. 37.

Articles as Evidence.-It was held prior to the code that the existence of a corporation is proved by its articles of incorporation. (S. V. W. W. v. S. F., 22 Cal. 434. Note citations: 19 Am. Dec. 67; 73 Am. Dec 661.)

In an action involving the issue of corporate existence, a copy of the certified copies of the articles of incorporation on file in the office of the Secretary of State is admissible in evidence in proof of such existence. (Fresno Canal etc. Co. v. Warner, 72 Cal. 379, 14 Pac. 37.)

And such certified copy of the certified copy of the articles on file in the office of the Secretary of State, is admissible in such action in the county where the original articles were filed. A certified copy of the original articles is not required. (Boston Tunnel Co. v. McKenzie, 67 Cal. 485, 8 Pac. 22.)

Such certified copy, however, to be admissible, must be a certified copy of the original articles as filed with the county clerk, or of the certified copy filed with the Secretary of State. A second certificate merely reciting that articles of incorporation were filed on a certain date, on which a certificate of incorporation was issued, is not admissible as proof of the first certificate, and fails to prove a compliance with the law. (Wall v. Mines, 130 Cal. 27, 62 Pac. 386.)

Corporation Laws-8

So, also, a document, purporting to be a certificate of incorporation, which is legally defective for want of conformity to the statutory requirements, is not proof of a corporation in esse. (McCallion v. Hibernia S. & L. Soc., 70 Cal. 163, 12 Pac. 114. Note citation: People v. Water Co., 33 Am. St. Rep. 177.)

Nevertheless, certified copies of articles are admissible to prove the existence of a corporation de facto, where there are no substantial defects in their compliance with statutory requirements. (Mining Co. v. Allment, 26 Cal. 286.)

Proof of Consolidation.—Certified copies from office of Secretary of State of articles consolidating two or more railroads are admissible in evidence to prove such consolidation. (Vance v. Kohlberg, 50 Cal. 346.)

WHO ARE MEMBERS AND WHO STOCKHOLDERS OF A CORPORATION.

Sec. 298, C. C. The owners of shares in a corporation which has a capital stock are called stockholders. If a corporation has no capital stock, the corporators and their successors are called members. En. March 21, 1872.

Section Cited.

Market St. Ry. Co. v. Hellman, 109 Cal. 588, 42 Pac. 225; Smith v. S. F. & N. P. Ry. Co., 115 Cal. 593, 56 Am. St. Rep. 119, 47 Pac. 582.

Annotation.

Stockholders.-This section does not need or admit of the construction that only those are stockholders who are owners of stock. It does not purport to be a definition of the term "stockholder," or to limit its extent, as would have been the case if it had said that stockholders are those who own shares of stock in a corporation; but others may be stockholders than merely those who are the owners of the stock. For the purpose of avoiding such a construction section 312 of the same code requires the voter at an election to be a bona fide stockholder. (Smith v. S. F. & N. P. Ry., 115 Cal. 593, 56 Am. St. Rep. 119, 47 Pac. 582.)

FILING ARTICLES OF INCORPORATION.

Sec. 299, C. C. No corporation hereafter formed shall purchase, locate, or hold property in any county in this state, without filing a copy of the copy of its articles of incorporation filed in the office of the Secretary of State, duly certified by such

Secretary of State, in the office of the county clerk of the county in which such property is situated, within sixty days after such purchase or location is made. Every corporation now in existence, whether formed under the provisions of this code or not, must, within ninety days after the passage of this section, file such certified copy of the copy of its articles of incorporation in the office of the county clerk of every county in this state in which it holds any property (except the county where the original articles of incorporation are filed); and if any corporation hereafter acquire any property in any county other than that in which it now holds property, it must, within ninety days thereafter, file with the clerk of such county such certified copy of the copy of its articles of incorporation. The copies so filed with the several county clerks and certified copies thereof shall have the same force and effect in evidence as would the originals. Any corporation failing to comply with the provisions of this section shall not maintain or defend any action or proceeding in relation to such property, its rents, issues, or profits, until such articles of incorporation, and such certified copy of its articles of incorporation, and such certified copy of the copy of its articles of incorporation shall be filed at the places directed by the general law and this section; provided, that all corporations shall be liable in damages for any and all loss that may arise by the failure of such corporation to perform any of the foregoing duties within the time mentioned in this section; and provided further, that the said damages may be recovered in an action brought in any court of this state of competent jurisdiction, by any party or parties suffering the same. En. March 21, 1872. Rep. 1873-74, 200. En. Stats. 1875-76, 71. Amd. 1877-78, 76; 1880, 13.

Right to purchase estate: See post, sec. 354, C. C.

Legislative History.

There was originally a section 299 as follows: "If a member of a corporation dies, resigns, or is removed, a majority of the remaining members may elect another in his place. This section was repealed in 1873-74, and a new section enacted in 1875-76, which read as follows:

"299. No corporation hereafter formed under the provisions of this chapter shall purchase, locate, or hold property in any county

of this state, without filing a certified copy of the certificate of its articles of incorporation in the office of the county clerk of the county in which such property is situated, within sixty days after such purchase or location is made, and every corporation now in existence must, within ninety days after the passage of this act, file a certified copy of the certificate of its articles of incorporation as provided in this section and a certified copy of such copy shall, as evidence, have the same force and effect as a certified copy of the orig inal. Any corporation failing to comply with the provisions of this section shall not maintain or defend any action or proceeding in relation to such property."

This section, as amended in 1875-76, read as at present through the words "rents, issues and profits," except that it did not contain the words inclosed in parentheses above. The last part of the section as amended in 1875 from the words "rents, issues and profits" was as follows: "Any corporation which has not heretofore filed a certified copy of the certificate of its articles of incorporation may avail itself of the provisions of this act, with the same effect as if it had filed such certified copy of such certificate; provided, that this act shall not affect any pending litigation, or any suit now pending in court.'

Section Cited.

Boston Tunnel Co. v. McKenzie, 67 Cal. 487, 8 Pac. 22; Weeks v. Gold Mining Co., 73 Cal. 601, 602, 15 Pac. 302; S. P. R. R. Co. v. Purcell, 77 Cal. 72, 18 Pac. 886; Ontario State Bank v. Tibbits, 80 Cal. 69, 71, 22 Pac. 66; South Yuba Water etc. Co. v. Rosa, 80 Cal. 335, 336, 22 Pac. 222; Mora v. Murphy, 83 Cal. 17, 23 Pac. 63; Labory v. Orphan Asylum, 97 Cal. 274, 32 Pac. 231; Emigrant Ditch Co. v. Webber, 108 Cal. 90, 91, 40 Pac. 1061; Calif. S. & L. Society v. Harris, 111 Cal. 135, 137, 138, 43 Pac. 525; Savings and Loan Society v. McKoon, 120 Cal. 178-181, 52 Pac. 305.

Annotation.

Construction. This is a penal statute. Penalties are never favored by the courts of law or equity, and statutes imposing penalties or creating forfeitures must be strictly construed. (Askew v. Ebberts, 22 Cal. 263; Schallert-Ganahl L. Co. v. Neal, 91 Cal. 362, 27 Pac. 743; Eyre v. Harmon, 92 Cal. 580, 28 Pac. 779.) Every intendment and presumption is against the person seeking to enforce the penalty or forfeiture.

179, 52 Pac. 305.)

(Savings and Loan Soc. v. McKoon, 120 Cal.

Application of Section.-This section applies only to corporations a copy of whose articles were required by statute to be filed with Secretary of State, and does not apply to a religious corporation established before the code, under a statute requiring only the filing of its articles with the county clerk. (Mora v. Murphy, 83 Cal. 12, 23 Pac. 63.)

Held, accordingly, this section does not apply to foreign corporations, but applies only to domestic corporations who have filed a copy of their act of incorporation in office of Secretary of State of California. There is no provision or authority in the statute by which foreign corporations are to file a copy of their act of incorporation with the Secretary of State of this state. (South Yuba etc. Co. v. Rosa, 80 Cal. 333, 22 Pac. 222; Ontario State Bank v. Tibbits, 80 Cal. 68, 22 Pac. 66.)

This section does not forbid corporations failing to comply with its provisions from acquiring property, either by condemnation or otherwise, but it does inhibit the maintenance or defense by them of any action in relation to property acquired. (Emigrant Ditch Co. v. Webber, 108 Cal. 88, 40 Pac. 1061. To same effect: Savings etc. Society v. McKoon, 120 Cal. 180, 52 Pac. 305.)

Nor does the failure of corporation to file copy of its articles of incorporation in office of clerk of county in which it owns property prevent the corporation from defending an action brought against it to recover for work and labor alleged to have been performed on such property. (Weeks v. Garibaldi etc. Co., 73 Cal. 599, 15 Pac. 302. To same effect: Savings etc. Society v. Moon, 120 Cal. 180, 52 Pac, 305.)

So, also, the section does not apply to an action by a corporation to foreclose a mortgage in another county, which is simply and only an action for the collection of a debt, and to enforce a lien for its payment. The corporation does not "hold" the mortgaged property, within the meaning of that section. (Savings & L. Soc. v. McKoon, 120 Cal. 177, 52 Pac. 305.)

Pleading Under the Section.-Noncompliance with section 299, Civil Code, does not impose upon corporation a loss or forfeiture of its property; nor is such compliance essential to a cause of action, or a jurisdictional element in the suit; but a failure to comply is merely ground for plea in abatement, which may be and is waived unless it is affirmatively pleaded. (Cal. S. & L. Society v. Harris, 111 Cal. 133, 43 Pac. 525. To same effect: Savings etc. Society v. McKoon, 120 Cal. 180, 52 Pac. 305.)

But a certified copy of a copy of articles of incorporation may be filed at any time before the filing of a plea in abatement, and such plea thereafter interposed is unavailing to prevent a further maintenance of the action. (California S. & L. Society v. Harris, 111

Cal. 133, 43 Pac. 525.)

An averment denying plaintiff's existence as a corporation and alleging that it has no legal capacity to sue does not set up the defense that a copy of the copy of the act of incorporation has not been filed with county clerk of county where property is situated. (Ontario State Bank v. Tibbits, 80 Cal. 68, 22 Pac. 66. Distinguished: S. & L. Soc. v. McKoon, 120 Cal. 180, 52 Pac. 305. To same effect: S. P. R. R. v. Purcell, 77 Cal. 69, 18 Pac. 886; Bank v. Tibbits, 80