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With the exception of the rural cemetery act of 1859 there was, prior to the adoption of the Civil Code, no restriction as to the residence or citizenship of the incorporators. This section originally (March 21, 1872) prescribed that the incorporators should be citizens of the state, and not merely residents, and contained at its end the following: “Married women may become corporators, officers, and members of religious, benevolent, art, literary and educational corporations." This last provision was derived from the acts of March 12 and April 24, 1858 (Stats. 1858, pp. 57, 264).
The original section (March 21, 1872), after the words “five or more persons," had the words for the purposes and." The purposes were specified, and restricted to those specified, by section 286 of the Civil Code as originally adopted March 21, 1872. The original section was amended in 1874 to its present form (Amendments 1873-74, p. 197), and has not been amended since.
The section in its present form permits women to be incorporators in any private corporation. By act of March 12, 1858 (Stats. 1858, p. 57), women were authorized to be incorporators, officers, and members of the benevolent corporations therein provided for on the same footing as men.
While this section provides that corporations may be formed in the manner prescribed in this article, there are, beside the general provisions, applicable to all corporations, herein contained, particular provisions for specified corporations prescribed by titles II to XVI, inclusive, of part IV of the Civil Code and by general laws which supplement the code provisions and which are referred to under the sections to which they relate, and are to be found in full hereafter in the Appendix.
People ex rel. v. B. & P. O. of Elks, 128 Cal. 260, 60 Pac. 865.
Formation of Corporations.-A substantial compliance with the forms of law, by persons seeking to derive the benefits of incorporation, must be observed, and the omission of essential steps will invalidate the attempted incorporation. (Mokelumne etc. Woodbury, 14 Cal. 424, 73 Am. Dec. 658; S. V. W. W. v. S. F., 22 Cal. 440; Harris v. McGregor, 29 Cal. 127; People v. Stockton etc. R. R., 45 Cal. 413; McCallion v. Hibernia etc. Soc., 70 Cal. 168, 12 Pae. 114; Fresno etc. Co. v. Werner, 72 Cal. 384, 14 Pac. 37; People 1. Selfridge, 52 Cal. 331.)
And a substantial compliance with the statutory provision for incorporation constitutes a company claiming to be a corporation a corporation de jure. (Oroville etc. Co. v. Plumas Co., 37 Cal. 354.)
Mere technical errors or slight defects or omissions do not invali. date proceedings for incorporating under the general law, since & strict compliance with all the statutory requirements is not essential. (Ex parte Spring V. W. W., 17 Cal. 132. To same effect: Spring V. W. W. v. S. F., 22 Cal. 441; People v. Stockton etc. R. R. Co., 45 Cal. 313; People v. Montecito etc. Co., 97 Cal. 278, 33 Am. St. Rep. 174, 32 Pac. 236.)
Although the omission of the essential steps is fatal in a collateral proceeding, mere irregularities cannot be collaterally assailed, and for such irregularities the corporation is responsible only to the government in a direct action for forfeiture. (Mok. etc. Co. v. Woodbury, 14 Cal. 424, 73 Am. Dec. 658. To same effect: Spring V. W. W. v. S. F., 22 Cal. 440; People v. Frank, 28 Cal. 519; Harris v. McGregor, 29 Cal. 127; People v. Stockton etc. R. R. Co, 45 Cal. 413, 13 Am. Rep. 190; McCallion v. Hibernia S. & L. S., 70 Cal. 168, 12 Pac. 114; Fresno etc. Co. v. Warner, 72 Cal. 384, 14 Pac. 37; Oroville Co. v. Plumas Co., 37 Cal. 361. Note citations: 19 Am. Dec. 67; 78 Am. Dec. 732; 79 Am. Dec. 437; 73 Am. Dec. 661; 29 Am. St. Rep. 601; 33 Am. St. Rep. 177, 359; 41 Am. St. Rep. 162.)
The same is true of those acts which are not made prerequisites to the exercise of corporate powers. (S. V. W. W. v. S. F., 22 Cal. 434. To the same effect: People v. Frank, 28 Cal. 519; Oroville Co. v. Plumas Co., 37 Cal. 361. Note citations: 19 Am. Dec, 67; 73 Am. Dec. 661.)
All this upon the theory that the right to be a corporation is a franchise, and to acquire a franchise under a general law the required statutory conditions must be complied with. (People v. Selfridge, 52 Cal. 331.)
So it is held the right to be a corporation is a franchise to acquire which the prescribed statutory conditions for the formation of corporations must be substantially complied with, without the omission of any requirement, though a substantial rather than a literal compliance will suffice. (People v. Montecito Water Co., 97 Cal. 276, 33 Am. St. Rep. 172, 176, 32 Pac. 236. Note citation: Jones y.
Aspen Hardware Co., 52 Am. St. Rep. 227.) A substantial compliance with the law in the organization of a corporation cannot be dispensed with as against an attack upon its validity in an action of quo warranto. (People ex rel. v. B. and P. O. of Elks, 128 Cal. 257, 60 Pac. $65.)
Scope of Section. This section applies to all corporations incorporated in this state, unless provision is otherwise made by special statute. (People ex rel. v. B. & P. O. of Elks, 128 Cal. 260, 60 Pac. 865.)
Substantial Defects.- A failure to name the place of business in the certificate of incorporation renders it insufficient. (Harris v. McGregor, 29 Cal. 124. To same effect: McCallion v. Hibernia S. & L. Soc., 70 Cal. 168, 12 Pac. 114. Distinguished: Pacific Bank v. De Roe, 37 Cal. 542; Fresno etc. Co. v. Warner, 72 Cal. 384, 14 Pac. 37. Note citations: 73 Am. Dec. 661; 33 Am. St. Rep. 177.)
And a certificate 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. See note: People v. Water Co., 33 Am. St. Rep. 177.)
And the fact that a company is designated as “the Pacific Mutual Life Insurance Company of California” raises no presumption that it is a corporation or that it is incorporated under the laws of California. (Briggs v. McCullough, 36 Cal. 542.)
Filing of articles of incorporation in the clerk's office of the county of the principal place of business is a necessary prerequisite to the formation of a de jure corporation and the defect is not remedied by the articles being filed in another county, or a copy of the certificate of incorporation being filed in the proper county. (Martin v. Deetz, 102 Cal. 55, 41 Am. St. Rep. 15, 36 Pae. 368.)
The rule that an incorporation is incomplete until the charter is accepted has no application to corporations formed under general laws. (S. V. W. W. v. S. F., 22 Cal. 434.)
Formation Only Under General Laws: Cal. Const. 1879, art. XII, sec. 1, ante.
FOR WHAT PURPOSE PRIVATE CORPORATIONS ARE FORMED.
Sec. 286, C. C. Private corporations may be formed for any purpose for which individuals may lawfully associate themselves. En. March 21, 1872. Amd. 1873-74, 198.
The original section (approved March 21, 1872) provided that private corporations might be formed for certain specified purposes and none other. It then designated these purposes in twentyseven subdivisions which embraced every purpose for which corporations had been authorized by prior legislation. These prior statutes are referred to under section 288, Civil Code, herein and are to be found in full hereafter in the Appendix. While this section now authorizes the formation of corporations for any purpose for which individuals may lawfully associate themselves, and while the Civil Code contains general provisions applicable to all corporations, the purposes for which corporations are formed usually are specified and considered in detail in titles II to XVI, inclusive, of part IV of the Civil Code. These provisions of the Civil Code have been supplemented by general laws which are referred to un. der the sections to which they relate, and are to be found in full in the Appendix. Corporations for the following purposes are provided for by general laws passed subsequent to the adoption of the Civil Code: Agricultural district societies, bond and surety corporations, boards of trade, chambers of commerce, mechanics' insti. tutes and like associations, bridge companies, co-operative associa. tions, corporations as executors, insurance companies on the assessment plan, county fire insurance companies, mutual benefit societies, societies for prevention of cruelty to animals, societies for prevention of cruelty to children.
The statutes relating to corporations enacted prior to the adoption of the Civil Code and continued in force by section 288 of the Civil Code are referred to under that section.
Law v. C. P. R. R. Co., 52 Cal. 60, 28 Am. Rep. 629; Market St. Ry. Co. v. Hellman, 109. Cal. 190, 42 Pac. 225; Christie v. Sherwood, 113 Cal. 531, 45 Pac. 820.
Corporate Purposes. - Where a corporation has received by statute all the powers and privileges, for the purpose of carrying on its business, that natural persons enjoy, and “may be formed for any purpose for which individuals may lawfully associate themselves,” the question of the exercise of such enlarged powers is beyond the reach of the courts. (Low v. C. P. R. R. Co., 52 Cal. 53, 28 Am. Rep. 629.)
It is beyond controversy that individuals may lawfully associate themselves for the purpose of purchasing, selling and dealing in all kinds of public and private stocks, bonds and securities. The Pacific Improvement Company having been organized for exactly that purpose, it is infra vires to purchase, hold and sell stock in other corporations. (Market Street Ry. Co. v. Hellman, 109 Cal. 590, 42 Pac. 225.)
Under this section a bank may incorporate “to act as an agent in the investment of funds,” and “to transact any business that may properly be done by a financial agent," and such powers constitute ample authority for the bank to act as agent in negotiating a loan for a client. (Christie v. Sherwood, 113 Cal. 531, 45 Pac. 820.)
So a land and improvement company organized for the purpose of acquiring and dealing in real property and developing lands, stands upon the same basis as banking, railroad, insurance and like commercial corporations, having a subscribed capital stock. (Potter v. Dear, 95 Cal. 578, 30 Pac. 777.)
Under the act of May 20, 1861, railroad corporations possessed all the powers and privileges for the purpose of carrying on the business of the corporations that private individuals and natural persons had. (Pixley v. R. R. Co., 33 Cal. 183, 91 Am. Dec. 623.)
Specific Powers: See post, sec. 354, C. C., and notes.
For extension of corporate existence to fifty years, see section 401, C. C., post.
HOW CORPORATIONS MAY CONTINUE THEIR EXISTENCE
UNDER THIS CODE.
Sec. 287, C. C. Any corporation existing on the first day of January, one thousand eight hundred and seventy-three, formed under the laws of this state, and still existing, which has not already elected to continue its existence, under the provisions of this code applicable thereto, may, at any time · hereafter, make such election by the unanimous vote of all its directors, or such election may be made at any annual meeting of the stockholders, or members, or at any meeting called by the directors expressly for considering the subject, if voted by stock holders representing a majority of the capital stock, or by a majority of the members, or may be made by the directors upon the written consent of that number of such stockholders or members. A certificate of the action of the directors, signed by them and their secretary, when the election is made by their unanimous vote, or upon the written consent of the stockholders or members, or a certificate of the proceedings of the meeting of the stockholders or members, when such election is made at any such meeting, signed by the chairman and secretary of the meeting, and a majority of the directors, must be filed in the office of the clerk of the county where the original articles of corporation are filed, and a certified copy thereof must be filed in the office of the Secretary of State; and thereafter the corporation shall continue its existence under the provisions of this code which are applicable thereto, and shall possess all the rights and powers, and be subject to all the obligations, restrictions, and limitations prescribed thereby. En. March 21, 1872. Amd. 1873-74, 198.
For extension of corporate existence to fifty years, see section 401, C. C., post.
The original section as approved March 21, 1872, read as follows: "Sec. 287. Any existing corporation formed under any law of this state, for any purpose designated in any subdivision of the preeeding section, may, at a meeting of its members or stockholders, called for that purpose, continue its existence, under title I of this part, or under the provisions of any subsequent title particularly applicable thereto, as follows: