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its control, issuing to each full-rate workman degree member of each subordinate lodge a certificate entitling the beneficiary named there. in to the sum of two thousand dollars upon the death of the insured, is not an insurance company, as contemplated by the general insur. ance laws. (Marshall v. Grand Lodge etc., 133 Cal. 691, 66 Pac. 25.)
POLICIES CONTINUED IN FORCE. (Repealed.)
Sec. 452, C. C. En. 1877-78, 83. Rep. 1880, 92.
This section provided for the determination of cho net value of policies, and the continuance of policies in force.
Chapter I. Officers and Corporate Stock, 88 454-459.
II. Enumeration of Powers, 88 465-478.
OFFICERS AND CORPORATE STOCK.
$ 454. Directors to be elected, when. $ 455. Additional provisions in assessment and transfer of stock. $ 456. Corporations may borrow money and issue bonds-Limitation
of amount. $ 457. To provide a sinking fund to pay bonds. $ 458. Capital stock to be fixed. $ 459. Certificate of payment of fixed capital stock.
DIRECTORS TO BE ELECTED, WHEN.
Sec. 454, C. C. Directors of railroad corporations may be elected at a meeting of the stockholders other than the annual meeting as a majority of the fixed capital stock may determine, or as the by-laws may provide; notice thereof to be given as provided for notices of meetings to adopt by-laws in article II, chapter I, title I, of this part. En. March 21, 1872.
For election of directors and notice: See secs. 301, 302, C. C., ante.
Railroad Commissioners v. Market Street Ry. Co., 132 Cal. 678, 64 Pac. 1065.
Construction of Section. The provisions of sections 454-491 of this code have reference to ste or commercial railroads as distinguished from street railroads. (Railroad Commissioners v. Market St. Ry. Co., 132 Cal. 678, 64 Pac. 1065.)
For provisions relating to street railroads, see secs. 497-511, C. C., post.
ADDITIONAL PROVISIONS IN ASSESSMENT AND TRANSFER
OF STOCK. Sec. 455, C. C. No stock in any railroad corporation is transferable until all the previous calls or installments thereon have been fully paid in; nor is any such transfer valid, except as between the parties thereto, unless at least twenty per cent has been paid thereon and certificates issued therefor, and the transfer approved by the board of directors. En. March 21, 1872,
CORPORATIONS MAY BORROW MONEY AND ISSUE BONDS
LIMITATION OF AMOUNT. Sec. 456, C. C. Railroad corporations may borrow, on the credit of the corporation, and under such regulations and restrictions as the board of directors thereof, by unanimous concurrence, may impose, such sums of money as may be necessary for constructing and completing their railroad, with its equipments, and for the purchase of all necessary rolling stock and all else relative thereto, and may issue promissory notes therefor, or may issue and dispose of bonds to raise moneys necessary to pay therefor, at a rate of interest not exceeding ten per cent per annum; and may also issue bonds, or promissory notes, at the same rate of interest in payment of any debts or contracts for constructing and completing their road, with its equipments and rolling stock, and all else relative thereto, and for the purchase of railroads and other property within the pure pose of the corporation. The amount of bonds, or promissory notes, issued for such purposes must not exceed in all the amount of their capital stock; and to secure the payment of such bonds, or notes, they may mortgage their corporate property and franchises, or may secure the payments of such bonds, or notes, by deed of trust of their corporate property and franchises. Any person or corporation formed under the laws of this state, or of any other state within the United States, that the directors of the railroad corporation may, by unanimous concurrence, select, may be trustees in such deed of trust. En. March 21, 1872. Amd. 1880, 10; 1897, 73; 1899, 57.
Debt exceeding available means, penalty: See Pen. Code, sec. 566.
The original section provided for the borrowing of money and issuance of bonds, and the limitation of the amount of such bonds, and the mortgaging of the corporate property and franchise. The amendment of 1880 provided for the making of deeds of trusts and for trustees. The amendment of 1897 enlarged the purposes for which money might be borrowed by the insertion of the words “with its equipment, and for the purchase of all necessary rolling stock, and all else relative thereto,” after the words “their railroad” in the first clause. The amendment of 1899 omitted the words "in denominations of not less than five hunıred dollars,” which were in the section prior to that time. This amendment makes possible the issuance of bonds of any denomination.
Market St. Ry. Co. v. Hellman, 109 Cal. 595, 42 Pac. 225; Bishop v. McKillican, 124 Cal. 328, 329, 71 Am. St. Rep. 68, 57 Pac. 76.
Bonded Indebtedness.-A corporation may create a bonded indebt. eness not in excess of its capital stock, and a proposition to issue seventeen million five hundred thousand dollars in bonds of a consolidated company whose capital stock is eighteen million seven hundred and fifty thousand dollars, is not in violation of the statute, where there are strictly no other outstanding bonds of the constituent companies; but where the consolidated corporation has agreed with the constituent corporations to assume and pay all of their bonded indebtedness, it may treat the outstanding bonded indebtedness as its own, and provide for the payment and retirement thereof out of the issuance of its bonds. (Market St. Ry Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)
This section does not prescribe the mode of execution of mortgages upon the property of the corporation, but the mode and manner of the execution of mortgages of real and personal property by such corporations is that prescribed by the Civil Code for the execution of such mortgages in general, without exception in favor of any person or corporation. (Bishop v. McKillican, 124 Cal. 321, 71 Am. St. Rep. 68, 57 Pac. 76.)
The renowal of a note given by a corporation under this section to secure an overdraft does not create a new indebtedness or extend the term of the statute of limitations against a stockholder's liability therefor. (Santa Rosa Nat. Bank v. Barnett, 125 Cal. 407, 58 Pac. 85.)
This section is to be construed in connection with the general pryvisions of section 359 of the Civil Code, requiring all corporations to give the stockholders a voice in saying whether or not a bonded indebtedness shall be created or increased. Section 359 provides the method by which the bonded indebtedness of all corporations is to be created or increased, while section 456 confers upon railroad corporations the power to create such indebtedness. (Boyd v. Heron, 125 Cal. 453, 58 Pac. 64. To same effect: Market Street Ry. Co. v. Hellman, 109 Cal. 594, 42 Pac. 225.)
Held, accordingly, that bonds issued by a street railroad corporation in part payment for the construction of its railroad are for the creation of a bonded indebtedness, within the provisions of section 359, Civil Code, requiring the creation of the bonded indebtedness of any corporation to be approved by the vote 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 r. Heron, 125 Cal. 453, 58 Pac. 64.)
The right of a corporation to pledge its bonds as collateral security is included in the right to sell them; and a constitutional provision that no railroad corporation shall issue stock or bonds except for money, labor, or other property actually received by the corporation does not prevent such pledge, where money or other property is actually received by the corporation in consequence of such use of them. (Illinois etc. Co. v. Pacific Ry. Co., 117 Cal. 332, 49 Pae. 197.)
And bonds are not rendered ultra vires or invalid, by reason of its being ultra vires for the company issuing them to mortgage the property of another company to secure them, it being within its power to borrow money and issue evidences of indebtedness, and its bonds are not affected by want of power to make the mortgage by which they were in terms secured. (Illinois etc. Co. v. Pacific Ry. Co., 117 Cal. 332, 49 Pac. 197.)
For there is nothing criminal nor against good morals in an attempt ultra vires by one railway company to acquire the property and franchises of another, which is forbidden by public policy, and the vice of illegality affects only the contract between the corporations, and does not affect the validity of bonds issued to third persons by the grantee company. Such bonds constitute a series of transactions, resting on a new consideration; and connected only indirectly with the contract between the corporations. (Illinois etc. Co. v. Pacific Ry. Co., 117 Cal. 332, 49 Pac. 197.)
Engraved bonds, substituted for lithographic bonds of correspond. ing numbers, are to be regarded as mere duplicates or reissues of the lithographic bonds for which they were exchanged. (Illinois etc. Co. v. Pacific Ry. Co., 117 Cal. 332, 49 Pac. 197.)
TO PROVIDE A SINKING FUND TO PAY BONDS.
Sec. 457, C. C. The directors must provide a sinking fund, to be specially applied to the redemption of such bonds on or