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law is void, as to any creditor of a corporation, either prior or subsequent, who had no notice of the arrangement at the time of giving credit. (Martin v. Zellerbach, 38 Cal. 300, 99 Am. Dec. 365. To same effect: S. F. etc. Co. v. Bee, 48 Cal. 404; Kohl v. Lilienthal, 81 Cal. 385, 20 Pac, 401, 22 Pac. 689. Note citation: 57 Am. St. Rep. 72.)

Increase of Indebtedness. This section provides the method by which the bonded indebtedness of corporations is to be created or increased. (Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)

Stockholders may be represented by proxies at a meeting at which a bonded indebtedness is authorized, where the by-laws provide that the stockholders may vote by proxy at any meeting of the stockholders. (Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)

Section 456 of the Civil Code must be construed in connection with this section, and the bonds issued by a street railroad corporation in part payment for the construction of its road are for the creation of a bonded indebtedness, within the provisions of this section requiring the approval of two-thirds of the entire capital stock, and in default of such approval no liability is created upon such bonds against the stockholders. (Boyd v. Heron, 125 Cal. 453, 58 Pac. 64.)

CORPORATIONS MAY ACQUIRE REAL PROPERTY, AND HOW

MUCH. Sec. 360, C. C. No corporation shall acquire or hold any more real property than may be reasonably necessary for the transaction of its business, or the construction of its works, except as otherwise specially provided. A corporation may acquire real property, as provided in title VII, part III, Code of Civil Procedure, when needed for any of the uses and purposes mentioned in said title. En. March 21, 1872. Amd. 187374, 208.

Power of insurance corporations to acquire land: See post, sec. 415, C. C.

Power of railroad corporation to acquire land: See post, sec. 465, C. C.

Legislative History.

The original section has "absolutely necessary'' instead of “ reason. ably necessary.” The second sentence in the original is as follows: "A corporation organized for any purpose specified in subdivisions 3, 4, 5, 6, 7, 8, and 15, of section 286, may acquire real property

as provided in title VII, part III, Code of Civil Procedure, when needed for the uses and purposes therein mentioned."

Annotation.

Power to Acquire and Hold Real Property.-Every corporation is presumed to have power to purchase and hold land; anything abridging this power must be shown affirmatively. (People v. Larue, 67 Cal. 526, 8 Pac. 84; Stockton Savings Bank v. Staples, 98 Cal. 189, 32 Pac. 936.)

The acquisition of more land than the law allows is an abuse of power that can be inquired into only by the state, and not by a trespasser. (California etc. Co. v. Alta Telegraph Co., 22 Cal. 398; Union Water Co. v. Murphy's Flat etc. Co., 22 Cal. 620.)

A corporation can purchase neither a legal nor an equitable estate for an unauthorized purpose. (Coleman v. San Rafael etc. Co., 49 Cal. 517.)

CONSOLIDATION OF MINING CORPORATIONS OWNING AD

JOINING CLAIMS. Sec. 361, C. C. It shall be lawful for two or more corporations formed, or that may hereafter be formed, under the laws of this state, for mining purposes, which own or possess mining claims or lands adjoining each other, or lying in the same vicinity, to consolidate their capital stock, debts, property, assets and franchises, in such manner and upon such terms as may be agreed upon by the respective boards of directors or trustees of such companies so desiring to consolidate their interests; but no such consolidation shall take place without the written consent of the stockholders representing two-thirds of the capital stock of each company; and no such consolidation shall, in any way, relieve such companies, or the stockholders thereof, from any and all just liabilities; and in case of such consolidation, due notice of the same shall be given, by advertising, for one month, in at least one newspaper in the county and state where the said mining property is situated, if there be one published therein and also in

newspaper published in the county, or city and county, where the principal place of business of any of said companies shall be. And when the said consolidation is completed, a certificate thereof, containing the manner and terms of said consolidation, shall be filed in the office of the county clerk of the county in which the original

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certificate of incorporation of any of said companies shall be filed, and a copy thereof shall be filed in the office of the secretary of state. Such certificates shall be signed by a majority of each board of trustees or directors of the original companies; and it shall be their duty to call, within thirty days after the filing of such certificate, and after at least ten days' public notice, a meeting of the stockholders of all of said companies so consolidated, to elect a board of trustees or directors for the consolidated company, for the year thence next ensuing. The said certificate shall also contain all the requirements prescribed by section two hundred and ninety of said Civil Code.

This act shall apply to all corporations formed under the laws of this state, whether formed under the said Civil Code or prior thereto. En. Stats. 1875-76, 75.

TRANSFER OF FRANCHISE NOT VALID WITHOUT CONSENT

OF STOCKHOLDERS. Sec. 361a, C. C. No sale, lease, assignment, transfer or conveyance of the business, franchise and property, as a whole, of any corporation now existing, or hereafter to be formed in this state, shall be valid without the consent of stockholders thereof, holding of record at least two-thirds of the issued capi. tal stock of such corporation; such consent to be either expressed in writing, executed and acknowledged by such stock. holders, and attached to such sale, lease, assignment, transfer or conveyance, or by vote at a stockholders' meeting of such corporation called for that purpose, but with such assent, so expressed, such sale, lease, assignment, transfer or conveyance shall be valid; provided, however, that nothing herein contained shall be construed to limit the power of the directors of such corporation to make sales, leases, assignments, transfers or conveyances of corporate property other than those hereinabove set forth. En. Stats. 1903, 396.

AMENDMENT OF ARTICLES OR CERTIFICATE OF INCORPO

RATION. Sec. 362, C. C. Any corporation may amend its articles of incorporation by a majority vote of its board of directors or trustees, and by a vote or written assent of the stockholders repre senting at least two-thirds of the subscribed capital stock of such corporation; and a copy of the said articles of incorporation, as thus amended, duly certified to be correct by the president and secretary of the board of directors or trustees of such corporation, shall be filed in each office where the original articles of incorporation are, or any copy thereof is, required by this code to be filed; and from the time of so filing such copy of the amended articles of incorporation, such corporation shall have the same powers, and it and the stockholders thereof shall thereafter be subject to the same liabilities, as if such amendment had been embraced in the original articles of incorporation; provided, that the time of the existence of such corporation shall not be by such amendment extended beyond the time fixed in the original articles of incorporation; provided further, that such original and amended articles of incorporation shall together contain all the matters and things required by the laws under which the original articles of incorporation were executed and filed; and, also provided, that if the assent of two-thirds of the said stockholders to such amendment has not been obtained, a notice of the intention to make the amendment shall first be advertised for thirty (30) days in some newspaper published in the town, city, or county, or city and county, in which the principal place of business of the corpo ration is located before the filing of the proposed amendment; and provided also, that nothing in this section shall be construed to authorize any corporation to diminish its capital stock. En. Stats. 1885, 91. Amd. 1893, 131; 1903, 411.

Legislative History.

The section, as originally enacted, is as follows: “Sec. 362. Any corporation may amend its articles of association or certificate of incorporation by a majority vote of its board of directors or trustees, and by a vote or written assent of the stockholders, representing at least two-thirds of the capital stock of such corporation; and a copy of the said articles of association or certificate of incorporation, as thus amended, duly certified to be correct by the president and secretary of the board of directors or trustees of such incorporation, shall be filed in the office or offices where the original or certificates of incorporation are required by this code to be filed; and from the time of so filing such copy of the amended articles of association or certificate of incorporation, such corporation shall have the same powers, and it and the stockholders thereof shall thereafter be subject to the same liabilities as if such amendment had been embraced in the original articles or certificate of incorporation; provided, that the time of the existence of such corporation shall not be by such amendment extended beyond the time fixed in the original articles or certificate of incorporation; provided further, that such original and amended articles or certificate of incorporation shall together contain all the matters and things required under which the original articles of association or certificate of incorporation were executed and filed; and, provided further, that nothing herein contained shall be construed to cure or amend any defect existing in any original certificate of incorporation heretofore filed, by reason that such certificate does not set forth the matters required to make the same valid as a certificate of incorporation at the time of its filing; and also provided, that if the assent of two-thirds of the stockholders to such amendment has not been obtained, that a notice of the intention to make the amendment shall first be advertised for thirty (30) days in some newspaper published in the town or county, or city and county, in which the principal place of business of the association or corporation is located, before the filing of the proposed amendment; and, provided also, that nothing in this section shall be construed to authorize any corporation to diminish its capital stock.

The amendment of 1893 inserted the word "subscribed” before the words “capital stock” in the first sentence.

Section Cited.

Bowie v. Grand Lodge S. W., 99 Cal. 396, 34 Pac. 103; McDermont 5. Anaheim etc. Water Co., 124 Cal. 115, 56 Pac. 779.)

Annotation.

Amendment of Articles.-Injunction will issue at the instance of stockholders to restrain a company from supplying water for the irrigation of the lands of new stockholders, made defendants, to whom stock was issued under a void amendment of the articles of incorporation, including additional lands, when such amendment was adopted and filed by the directors, without the consent of twothirds of the subscribed stock, and without notice of intention to amend the articles, and when the supplying of water to the new stockholders will deprive the plaintiffs of a portion of the water which is necessary to irrigate their lands and for their domestic use. (McDermont v. Water Co., 124 Cal. 112, 56 Pac. 779.)

In a proceeding to declare an attempted amendment of articles of incorporation null and void for noncompliance with the law, it reed not be averred that an offer of restitution of the money paid by

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