Page images



§ 377. Records-Of what, and how kept. § 378. Other records to be kept by corporations for profit, and



Sec. 377, C. C. All corporations for profit are required to keep a record of all their business transactions; a journal of all meetings of their directors, members or stockholders, with the time and place of holding the same, whether regular or special, and if special, its object, how authorized, and the notice thereof given. The record must embrace every act done or ordered to be done; who were present, and who absent; and, if requested by any director, member, or stockholder, the time shall be noted when he entered the meeting or obtained leave of absence therefrom. On a similar request the ayes and noes must be taken on any proposition, and a record thereof made. On similar request, the protest of any director, member or stockholder, to any action or proposed action, must be entered in full-all such records to be open to the inspection of any director, member, stockholder, or creditor of the corporation. En. March 21, 1872.

Refusal to permit inspection: See Pen. Code, sec. 565.

Legislative History.

The corporation act of 1853, page 90, and the railroad act of 1861, page 611, contain provisions which are the basis of this section.

Section Cited.

Burnham v. S. F. Fuse Mfg. Co., 76 Cal. 26, 17 Pac. 940; Alta Silver M. Co. v. Mining Co., 78 Cal. 633, 21 Pac. 373; Salfield v. Sutter Co. L. I. & R. Co., 94 Cal. 549, 29 Pac. 1105; Knowles v. Sandercock, 107 Cal. 637, 40 Pac. 1047; Johnson v. Langdon, 135 Cal. 624, 87 Am. St. Rep. 156, 67 Pac. 1050.


Records as Evidence.- Best evidence is duly authenticated record in books of corporation, and rough minutes are as much secondary as testimony of witnesses, and in absence of authenticated record any competent secondary evidence may be admitted to show acts of the board of directors. (Boggs v. Lakeport etc. Assn., 111 Cal. 354, 43 Pac. 1106.)

Parol testimony is admissible to show that minutes as recorded do not correctly express the proposition which was voted by the board. (Gilson Min. Co. v. Gilson, 51 Cal. 341.)

And acts of board of directors of corporation ordered to be entered of record, but which the secretary, by mistake or neglect, does not enter, may be proved by parol testimony. If corporation, for reasons deemed sufficient to it, postpones the formal entry of record of acts of its board of directors, they may be proved by parol testimony. (Bay View Assn. v. Williams, 50 Cal. 353.)

Where other formalities have been complied with, the mere fact that the resolution authorizing its execution do not appear in the proper book of the corporation is not sufficient to disprove their existence and invalidate the mortgage. (Schallard v. Eel River etc. Co., 70 Cal, 144, 11 Pac. 590.)

A certified copy of a resolution of a board of directors duly attested by signature of president and secretary, under corporate seal, showing a ratification of a mortgage in suit, is admissible in evidence as being presumptively the act of the corporation, and, in the absence of countervailing proof, the recitals in such certified copy are binding on the corporation. (McGowan v. McDonald, 111 Cal. 57, 52 Am. St. Rep. 149, 43 Pac. 418.)

A note executed by the president of a corporation without authority, to another corporation, of which he is also president, may be ratified by the corporation so as to bind it, and such ratification is shown, if the transaction in connection with which the note was given is fully entered in the books of the corporation, and thus imparted to it, and the corporation for seven months does not disaffirm the note, and retains the consideration, for which it was given. (Phillips v. Sanger Lumber Co., 130 Cal. 431, 62 Pac. 749.)

The fact that officers of a corporation were officers of a bank does not affect the admissibility in evidence of the books of the bank, or of notes as an admission of money furnished by bank in an action by receiver of bank against assignee of corporation. (Pauly v. Pauly, 107 Cal. 8, 48 Am. St. Rep. 98, 40 Pac. 29.)

A provision in a deed of trust that a copy of the resolution of the board of directors, certified by its secretary, should be conclusive evidence that substituted trustee had been duly appointed does not render such copy the exclusive mode of showing that a substitution Ład been made, and the resolution may be proved by the records of the corporation. (Investment Co. v. Woodworth, 124 Cal. 169, 56 Pac. 891.)

An offer of a corporation defendant, to disprove the meeting of the directors shown by its minutes, at which the note in suit was authorized, was properly rejected. The corporation, in the absence of an issue for that purpose, and of proper steps to correct the record, is estopped to show that its records, upon the faith of which plaintiff contracted with it, are false. (Barrell v. Land Co., 122 Cal. 129, 54 Pac. 594.)

Inspection of Books. - A stockholder in a corporation has the right to inspect the books, records and journals of the corporation; and mandamus will lie to compel the secretary of the corporation, who is their custodian, to allow his inspection thereof. And it is no defense to allege that the objects and purposes of the inspection are improper, and with a desire to injure the business of the corporation. (Johnson v. Langdon, 135 Cal. 624, 87 Am. St. Rep. 156, 67 Pac. 1050.)

A court has no power to order the production of books or papers by one party to be used as evidence for the other party, without an affirmative and substantial showing by affidavit or otherwise, that they contain evidence material to the cause of action or defense of the party requiring them. (Ex parte Clark, 126 Cal. 235, 77 Am. St. Rep. 176, 58 Pac. 546.)

Nor does section 474, Political Code, authorize attorney general to examine books of corporation for purpose of discovering escheated estates, independent of any judicial action, or at his own option. (People v. Hibernia S. & L. Soc., 72 Cal. 21, 13 Pac. 48; People v. German S. & L. Soc., 72 Cal. 28, 13 Pac. 51.)

And the facts that officers of corporation had refused to allow stockholder to inspect his account books, that it is carrying on a losing business, and that the directors had levied an assessment for the purpose of compelling the stockholder to dispose of his stock, are insufficient to entitle the stockholder to maintain an action for the dissolution of the corporation. (Burham v. San Francisco etc. Co., 76 Cal. 24, 17 Pac. 940. Note citation: Rothwell v. Robinson, 12 Am. St. Rep. 610.)

The fact that the records of a corporation defendant, in relation to allegations of facts within the knowledge of defendant, were open to the inspection of plaintiff, does not prevent such allegations being made on information and belief. Such records may be contradicted, on information and belief, if they do not speak the truth. (McDermont v. Water Co., 124 Cal. 112, 56 Pac. 779.)

Indictment for False Entries.—An indictment under section 563, Penal Code, for making false entries in books of corporation must specify particular entry complained of. (People v. Palmer, 53 Cal. 615. Approved: People v. Leonard, 103 Cal. 203, 37 Pac. 222.)


PROFIT, AND OTHERS. Sec. 378, c. c. In addition to the records required to be kept by the preceding section, corporations for profit must keep a book, to be known as the “Stock and Transfer Book," in which must be kept a record of all stock; the names of the stockholders or members, alphabetically arranged; installments paid or unpaid; assessments levied and paid or unpaid; a stateinent of every alienation, sale, or transfer of stock made, the date thereof, and by and to whom; and all such other records as the by-laws prescribe. Corporations for religious and benevolent purposes must provide in their by-laws for such records to be kept as may be necessary. Such stock and transfer book must be kept open to the inspection of any stockholder, member, or creditor. En. March 21, 1872.

Section Cited.

Pacific Fruit Co. v. Coon, 107 Cal. 453, 40 Pac. 542; Knowles v. Sandercock, 107 Cal. 636, 40 Pac. 1047,



Books as Evidence.— The amount of assessable stock of a pcration nray be proven by the certificate-book in the absence of a "stock and transfer book” required by the section. (Pacific Fruit Co. v. Coon, 107 Cal. 453, 40 Pac. 542.)

Books of corporation are competent evidence to prove number of shares of stock subscribed and issued, and who are the stockholders. (Evans v. Bailey, 66 Cal. 112, 4 Pac. 1089.)

A stoek ledger and stock journal is admissible in the absence of the book required by this section, when it appears to have been designed for a stock and transfer book, and its contents, so far as set out in the record, correspond with what is required by the code in respect of a stock and transfer book. The fact that the book is not named as the code requires is not material. (Knowles v. Sandercock, 107 Cal. 629, 40 Pac. 1047.)

The stock book of a corporation is not admissible in evidence in an action by a creditor of the corporation against one claiming to be a stockholder, for the purpose of proving that he is such stockholder. (Mudgett v. Horrell, 33 Cal. 25. Note citations: 8 Am. Dec. 640; 3 Am. St. Rep. 833, 867.)

The stock and transfer book of a corporation is but presumptive evidence a person named therein as a stockholder is such. (Mudgett v. Horrell, 33 Cal. 25.)

Parol evidence is competent to prove the fact that a certain individual is an officer and stockholder of the corporation. (Boston Tunnel Co. v. McKenzie, 67 Cal. 485, 8 Pac. 22.)

ARTICLE III. EXAMINATION OF CORPORATIONS, ETC. $ 382. Examination into affairs of corporation, how made by officers

of state. § 383. Examination made by the legislature. § 384. Chapter and article may be repealed.


BY OFFICERS OF STATE. Sec. 382, C. C. The attorney general or district attorney, whenever and as often as required by the governor, must examine into the affairs and conditions of any corporation in this state, and report such examination, in writing, together with a detailed statement of facts, to the governor, who must lay the same before the legislature; and for that purpose the attorney general or district attorney may administer all necessary oaths to the directors and officers of any corporation, and may examine them on oath in relation to the affairs and condition thereof, and may examine the books, papers and documents belonging to such corporation, or appertaining to its affairs and condition. En. March 21, 1872.

Permitting inspection of books: See Pen. Code, sec. 565.

Legislative History:

This article is derived from sections 29 and 30 of the corporation act of 1850 (Stats. 1850, p. 350).

Section Cited.

People v. Hibernia Sav. & L. Soc., 72 Cal. 23, 13 Pac. 48.


Examination of Books of Attorney General. - This section does not authorize the attorney general to examine the books of a corporation at his option, and independent of any judicial action. While the section may be free from ambiguity, it was intended to provide for a proceeding in court with authority in the court to require the corporation to render accounts and to submit its books

« PreviousContinue »