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Liability of Sureties on Official Bonds.—Liability of corporate officer for loss of moneys while in his possession depends on his contract and exercise of due diligence. (Odd Fellows' Assn. v. James, 63 Cal. 598, 49 Am. Rep. 107. Note citations: 95 Am. Dec. 125; 56 Am. Rep. 66.)

Violation of duty on part of officer in failing to pay moneys over constitutes breach of bond conditioned for faithful performance of his duties. (Odd Fellows' etc. v. James, 63 Cal. 598, 49 Am. Rep. 107.)

Liability for Money Lost or Stolen.-Secretary of corporation Frbose duty it is to receive all money due the corporation, and pay the same over to the treasurer, must exercise reasonable diligence in paying over any money received by him, or if he fails to do so, and the moneys are stolen from him, he is liable therefor. Sureties on bond of such secretary conditioned for faithful performance of his daties, are also liable for moneys so stolen. (Odd Fellows' etc. Assn. v. James, 63 Cal. 598, 49 Am. Rep. 107.)

Misappropriations.-Sureties upon bond of secretary of savings bank are not liable for misappropriation by him of moneys belong. ing to borrowers from the bank, which have been secured by note and mortgage to the bank, and placed upon special deposit in bags marked with borrowers' names, and subject to their call. (Humboldt Savings & Loan Society v. Wennerhold, 81 Cal. 528, 22 Pac. 920.)

Duration of Bond.— When bond of secretary is expressly condi. tioned that he shall faithfully perform the duties of his office so long as he shall continue in office as secretary, the fact that he was appointed by a board of directors which was elected for only one year, will not limit the liability of the sureties to that year, but will continue during actual holding, if no duration of term is fixed in appointment or by statute, or by by-law of corporation. (Humboldt Savings & Loan Society v. Wennerhold, 81 Cal. 528, 22 Pac. 920. See note to Bank v. Yard, 24 Am. St. Rep. 526.)

Compensation of Officers.-Salaries of executive officers of a corporation need not be fixed by resolution of the board of directors. (Smith v. Woodville etc. Co., 66 Cal. 399, 5 Pac. 688. To same effect: Greig v. Riordan, 99 Cal. 322, 33 Pac. 913.)

On the other hand a resolution of the board of directors of a corporation, reciting that the salary of the president was fixed at a certain sum for preceding year, is an admission that the salary was 80 fixed for that time, but not for a prior year. (Smith v. Woodville etc. Min. Co., 66 Cal. 398, 5 Pac. 688.)

The presumption that directors of corporations render their services gratuitously, in the absence of an express contract, does not apply to onerous services, not pertaining to the office of director, which could not reasonably be expected to be performed for noth:

Corporation Laws-10

ing. In such cases, there is an implied agreement to pay what the services are reasonably worth. (Bassett v. Fairchild, 132 Cal. 637, 64 Pac. 1082, Harrison, J., Temple, J., and Beatty, C. J., dissenting.)

A contract between a corporation and its superintendent, that his personal supervision was to be given to the business of the com. pany in consideration of the purchase of certain shares of its stock by a third person, is to be construed as precluding any other consideration for the services. (Wetmore v. Wetmore Co., 113 Cal. 321, 45 Pac. 679.)

In absence of a prior agreement, a director is not entitled to compensation for his services, nor can they vote a salary to a director as president when he takes part in the proceeding, or his vote is necessary for the adoption of the resolution. (Wickersham v. Crittenden, 93 Cal. 17, 28 Pac. 788.)

Secretary of a corporation, though entitled to compensation for services, is 'chargeable with knowledge of usage to the contrary. (Fraylor v. Sonora Min. Co., 17 Cal. 594. To same effect: Rosbor. ough v. Shasta R. C. Co., 22 Cal. 561; Burns v. Sennett, 99 Cal. 372, 33 Pac. 916; McCarthy v. Mt. Tecarte etc. Co., 111 Cal. 338, 43 Pac. 956.)

The president of a corporation, in the absence of usage to contrary, is entitled to compensation for his services, and if the rate is not fixed by special contract, he is entitled to what his services are reasonably worth. (Rosborough v. Shasta etc. Co., 22 Cal. 556.)

When, after serving two years, with an understanding that he was to be paid, a president was re-elected, and an order was passed establishing his compensation at fifty dollars per month, the order was an agreement to pay for the past as well as future services, and was a contract in writing to pay for past services which was not barred until four years from date of order. (Rosborough v. Shasta etc. Co., 22 Cal. 556.)

Where officer is elected for one year with monthly salary, statute of limitations does not begin to run against claim for salary until end of year. (Rosborough v. Shasta etc. Co., 22 Cal. 556.)

Superintendent and general manager of corporation, who is also a stockholder and director thereof, is not entitled to compensation for services rendered in the absence of a contract, express or implied, for such compensation. In action on such implied contract, evidence is admissible to prove any fact which would throw any light upon the relation of the parties, or tend to show their intention. (McCarthy v. Water Co., 111 Cal. 328, 43 Pac. 956.)

In absence of written contract to pay compensation for services rendered by superintendent and manager of corporation, who is also a stockholder and director thereof, action to recover for such ser: vices is barred in two years, if based upon a mere resolution of the directors appointing to those positions. Such an employment is not

founded on a written instrument. (McCarthy v. Water Co., 111 Cal. 328, 43 Pac. 956.)

Extra Compensation. It will be presumed from a resolution awarding extra compensation that the secretary performed extra services and received only a reasonable compensation therefor in the absence of proof that he did not perform the extra services or that he was overpaid therefor. (Zellerback v. Allenberg, 99 Cal. 57, 33 Pae. 786.)

Subd 6. Election and Tenure of Officers.— The authority conferred by this provision has reference, technically, to the appointment of officers rather than to an election of them in the mode provided by statute for the election of directors. (Wickersham v. Brittan, 93 Cal. 38, 28 Pac. 792, 29 Pac. 51.)

A verbal agreement among stockholders of a corporation to the effect that a stockholder was to be elected president for two years, there being no agreement that the stockholder should be elected a director, and no means provided for carrying out the agreement, is void and cannot be specifically enforced. (Dulin v. Pacific etc. Co., 103 Cal, 357, 35 Pac. 1045, 37 Pac. 207.)

Removal of Officers. Proceedings under act of March 21, 1872, for removal of officers of corporations, are special and to invest the superior court with jurisdiction, requirements of the act must be complied with, and it must so appear on the face of the record; otherwise the court has no jurisdiction to proceed. (Chollar Mining Co. v. Wil. son, 66 Cal. 374, 5 Pac. 670. Note citation: Gunn v. Howell, 62 Am. Dec. 792.)

BY-LAWS TO BE COPIED AND OPEN TO INSPECTION

AMENDMENT OF. Sec. 304, C. C. All by-laws adopted must be certified by a majority of the directors and secretary of the corporation, and copied in a legible hand, in some book kept in the office of the corporation, to be known as the "Book of By-laws,” and no bylaw shall take effect until so copied, and the book shall then be opened to the inspection of the public during office hours of each day except holidays. The by-laws may be repealed or amended, or new by-laws may be adopted, at the annual meeting, or at any other meeting of the stockholders or members, called for that purpose by the directors, by a vote representing two-thirds of the subscribed stock, or by two-thirds of the members. The written assent of the holders of two-thirds of the stock, or two-thirds of the members if there be no capital stock, shall be effectual to repeal or amend any by-law, or to adopt additional by-laws. The power to repeal and amend the bylaws, and adopt new by-laws, may, by a similar vote at any such meeting, or similar written assent, be delegated to the board of directors. The power, when delegated, may be revoked by a similar vote, at any regular meeting of the stockholders or members. Whenever any amendment or new by-law is adopted, it shall be copied in the book of by-laws with the original by. laws, and immediately after them, and shall not take effect until so copied. If any by-law be repealed, the fact of repeal, with the date of the meeting at which the repeal was enacted, or written assent was filed, shall be stated in said book, and until so stated the repeal shall not take effect. En. March 21, 1872. Amd. 1873-74, 201; 1885, 130.

Legislative History.

This section, as amended in 1873-74, was like the above, except that it did not contain the provision for the repeal, amendment or adoption of by-laws by the "written assent of the holders of twothirds of the stock or two-thirds of the members, if there be no capital stock''; or for the delegation of power to the directors by such written assent. The original section, as enacted in 1872, read as follows:

304. All by-laws adopted must be certified by the officers of the corporation, and filed and recorded in the recorder's office of the county where the principal place of business of the corporation is located. The by-laws thus adopted must not be altered or amended, except at a special meeting of the stockholders or members, to be called by the directors for that purpose, specifying in the order the proposed amendments; and a two-third vote of all the subscribed stock, or of the members, is necessary to adopt the same. And the amendments thus adopted must be certified and recorded in the same manner as the original by-laws."

Section Cited.

Chapman v. Doray, 89 Cal. 54, 26 Pac. 605.

Annotation.

Section Mandatory.-Under a similar provision in the act of 1853 (Stats. 1853, p. 173), it was held that a failure to comply therewith in the adoption of by-laws deprived the board of directors of any power to act. (Hall v. Crandall, 29 Cal. 572, 89 Am. Dec. 64.)

Waiver.- A corporation may repeal or waive a by-law, and an acquiescence by shareholders in a course of action contrary to a by-law is a waiver of a by-law, so as not to affect the rights of persons dealing with the corporation in good faith, if they had no actual notice of the by-law, even though they be stockholders. (Underhill v. Santa Barbara Co., 93 Cal. 300,28 Pac. 1049. To same effect: San Diego v. Pacific etc. Co., 112 Cal. 62, 44 Pac. 333; Lady Washington etc. Co. v. Wood, 113 Cal. 189, 45 Pac. 809; Illinois etc. Bank v. Railway Co., 117 Cal. 346, 347, 45 Pac. 197; Pacific Bank v. Stone, 121 Cal. 206, 53 Pac. 634. Note citation: 28 Am. St. Rep. 413.)

Repeal by Implication.–Old by-laws not mentioned or referred to in amended by-laws are not continued in force. (Murphy v. Pacific Bank, 130 Cal. 542, 62 Pac. 1059. See title “By-laws,” sec. 301, note.)

POWERS OF DIRECTORS OF CORPORATIONS.

Sec. 305, C. C. The corporate powers, business, and property of all corporations formed under this title must be exercised, conducted, and controlled by a board of not less than five directors, to be elected from among the holders of stock; or where there is no capital stock, then from the members of such corporations; except that corporations formed or to be formed for the purpose of erecting and managing halls and buildings for the meetings and accommodation of several lodges or societies of any benevolent or charitable order or organization, and in connection therewith the leasing of stores and offices in such building or buildings for other purposes, the corporate powers, business, and property thereof may be conducted, exercised, and controlled by a board of not less than five or more than fifty directors, to be chosen from among the stockholders of such corporation or from among the members of such order or organization. A majority of the directors must be in all cases citizens of this state. Directors of corporations for profit must be holders of stock therein to an amount to be fixed by the by-laws of the corporation. Directors of all other corporations must be members thereof. Unless a quorum is present and acting, no business performed or act done is valid as against the corporation. Whenever a vacancy occurs in the office of director, unless the by-laws of the corporation otherwise provide, such vacancy must be filled by an appointee of the board. En. March 21, 1872. Amd. 1875-76, 71; 1901, 308.

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