A. PERTINENT DECISIONS DIGESTED The acceptance of promissory notes that are worth par for the issuance of corporate stock is not a violation of the South Dakota constitution (Schiller Company v. Hyde, 39 S. Dak. 74). The constitutional limitations do not apply to treasury stock but only to original issue (Osage Oil & Refining Company v. Haller, 280 Fed. 693). (45) TENNESSEE a. General corporation provisions.—* No corporation shall be created or its powers increased or diminished by special laws but the General Assembly shall provide by general laws for the organization of all corporations hereafter created which laws may at any time be altered or repealed; and no such alteration or repeal shall interfere with or divest rights which have become vested (constitution, art. XI, sec. 8). b. Domestic corporation provisions.-See above. c. Foreign corporation provisions.-None. A. PERTINENT DECISIONS DIGESTED Special law" is one that relates to particular persons and things of the class to which they legitimately belong as distinguished from a "general law" which applies to all persons or things of a class. A law becomes special in a constitutional sense when by force of no inherent limitation it arbitrarily separates or segregates some person or thing from those upon which, but for such separation, it would operate; and a "general law", within the meaning of this provision that corporations may be formed under general laws but shall not be created by special laws, is one by which all persons complying with those provisions may be entitled to exercise rights, powers, and privileges conferred, while a "special law" is one conferring on certain persons rights and powers or imposing liabilities not granted to or imposed upon others similarly situated (State v. Columbia, Godwin, etc., Tpk. Co., 133 Tenn. (6 Thompson) 446, 181 S. W. 682). The provision in the general corporation act for organization of a gas company and amendments thereof were enacted in accordance with this section (Knoxville Gas Company v. Knoxville, 261 Fed. 283). A corporation's application to the State for an amendment of its charter so as to increase its capital stock and to grant it the right to pay for it in surplus and undivided profits consisting of both tangible and intangible assets was illegal and void in view of the prohibition of this section against an increase of corporate powers by special act and various code provisions, the legislature not having granted it the right or power to pay for its stock in such a way (United Hosiery Mills Corporation v. Stevens, 146 Tenn. (19 Thompson) 531, 243 S. W. 656). (46) TEXAS a. General corporation provisions.-No private corporation shall be created except by general laws (constitution, art. XII, sec. 1). General laws shall be enacted providing for the creation of private corporations and shall therein provide fully for the adequate protection of the public and of the individual stockholders (id., sec. 2). No corporation shall issue stock or bonds except for money paid, labor done, or property actually received, and all fictitious increase of stock or indebtedness shall be void (id., sec. 6). b. Domestic corporation provisions.-See above. c. Foreign corporation provisions.-None. A. PERTINENT DECISIONS DIGESTED a. General corporation provisions.-The constitution provides that corporations shall be created only by general laws, and it would seem that one purpose of the provision was to prevent the legislature from granting any corporation special powers or special privileges. At all events the general law shall be construed as a general rule conferring upon each member of each particular class of corporations precisely the same powers (North Side Railway Company v. Worthington, 88 Tex. 562, 30 S. W. 1055). The legislative grant of a corporation charter by special act without its acceptance does not constitute a contract between the company and the State investing the company with legal existence (Davis v. Allison, 109 Tex. 440, 211 S. W. 980). b. Domestic corporation provisions.—Stock upon which nothing is paid may be called nonassessable and may be so treated; not legally, however, under the constitution. But paid-up nonassessable stock can only mean stock that is made nonassessable by reason of the fact that the amount for which it calls has been fully paid. The words "paid-up" have a meaning which is concise and are therefore not open for construction, their significance being more specific than that of the words "nonassessable", but by no rule of interpretation can they be expunged from the context, and in construing the provision in question they must be given effect (Street Railway v. Adams, 87 Tex. 125, 26 S. W. 1044). Under this section subscribers to the stock of a corporation who had not fully paid for stock received are guarantors of the balance due regardless of transfer (Rich v. Park, 177 S. W. 184). Under this section and the statutes it was held that stockholders who paid nothing for common stock issued to them are liable for an amount sufficient to pay the unsecured creditors of an insolvent corporation (Rowan v. Tezas Orchard Development Company, 181 S. W. 871). A sale of bonds by a corporation for cash at 95 percent of their par value is not prohibited by this section (North Side Railway Company v. Worthington, supra). Since a note given for the purchase price of corporate stock is neither "money paid" nor "property" within this section, the note given for corporate stock without anything of value being paid therefor was void and uncollectible (Mason v. First National Bank, 156 S. W. 366). An unpatented formula is not "property" within this section and parties receiving stock in return for such formula will be liable to creditors of the corporation for the face value of the stock (O'Barr-Nester Glass Co. v. Anti-Explo Co., 101 Tex. 431, 108 S. W. 967). While in a broad sense a note is "property" it is not such within this section, said section meaning property readily capable of being applied to the debts of the corporation (Washer v. Smyer, 109 Tex. 398, 211 S. W. 985). Patents may be accepted in payment for capital stock of a corporation (Atlas, etc. Inc. v. McCallum, 118 Tex. 173, 12 S. W. (2d), 957). Stock and bond issues were held merely voidable if property received in exchange was overvalued and stocks and bonds undervalued (Smith v. Ideal Laundry Co., 286 S. W. 285). Conveyance of land to a corporation for stock of value largely in excess of the actual value of the land does not constitute payment for such stock (Donoho v. Carwile, 214 S. W. 553). Securities may be used in payment for corporation stock and are not inhibited by this section or by the statutes, "securities" being property (Commonwealth Bonding & Casualty Insurance Co. v. Hallifield, 220 S. W. 322). While a corporation formed to supply light, ice, water, and power to the people of the town is within the class known as "private corporations ", its objects are such as to clothe it with a quasi-public character and subject it to certain rules governing public corporations (Gulf Pipe Line Co. v. Lasater, 193 S. W. 773). c. Foreign corporation provisions.-The State has the absolute right to exclude or permit a foreign corporation from doing business within its limits and may impose such conditions as it may see fit in the granting of a permit (Gaar, Scott & Co. v. Shannon, 115 S. W. 361; Continental Oil & Cotton Co. v. The Ginn & Machine Works, 131 S. W. 415; Pierce Oil Corporation v. Weinert, 106 Tex. 435). (47) UTAH a. General corporation provisions.-Corporations may be formed under the general laws but shall not be created by special acts. All laws relating to corporations may be altered, amended, or repealed by the legislature and all corporations doing business in this State may, as to such business, be regulated, limited, or restrained by law (constitution, art. XII, sec. 1). The term "corporation" as used in this article shall be construed to include all associations and joint-stock companies having any powers or privileges of corporations not possessed by individuals or partnerships (constitution, art. XII, Sec. 4). Corporations shall not issue stock except to bona fide subscribers thereof or their assignees, nor shall any corporation issue any joint or other obligation for the payment of money except for money or property received or labor done. The stock of corporations shall not be increased except in pursuance of general law, nor shall any law authorize the increase of stock without the consent of the person or persons holding the larger amount in value of the stock or without due notice of the proposed increase having previously been given in such manner as may be prescribed by law. All fictitious stock or indebtedness shall be void (constitution, art. XII, sec. 5). b. Domestic corporation provisions.-No law shall be passed granting the right to construct and operate street railroad, telegraph, or telephone or electric light plants within any city or incorporated town without the consent of the local authorities who have control of the street or highway proposed to be occupied for such purposes (id., sec. 8). No corporation shall do business in this State without having one or more places of business or authorized agent or agents upon whom processes may be served; nor without first filing a certified copy of its articles of incorporation with its secretary of state (id., sec. 9). No corporation shall engage in any business other than that expressly authorized in its charter or articles of incorporation (id., sec. 10). c. Foreign corporation provisions.-No corporations organized outside of this State shall be allowed to transact business within the State on conditions more favorable than those prescribed by law to similar corporations organized under the laws of this State (id., sec. 6). A. PERTINENT DECISIONS DIGESTED Provisions of this article are as much a part of the articles of incorporation as if expressly copied therein and the statutes control in case of conflict with the articles (Weede v. Emma Co., 58 U. 524, 200 P. 517). Nothing in this act prohibits corporations from issuing stock for either property or labor, or both (Union Pacific Railroad Co. v. Blair, 48 U. 38, 156 P. 948). Capital stock of corporations, except those created for mining and irrigation, must represent full actual value, either in money or property, and until so paid, stockholders are liable to creditors for any balance remaining unpaid on their subscriptions. To issue bonds as a bonus to subscribers is therefore prohibited (Rolapp v. Ogden & Northwest Railroad Co., 37 U. 540, 110 P. 364). Although no law may grant a street railway permission to operate within a city without the city's consent, a contract by way of ordinance between a street railway and a city must yield to the rate-fixing power of the public utilities commission. This section does not impliedly give cities the exclusive right to determine and fix rates (Salt Lake City v. Utah Light & Traction Co., 52 U. 210, 173 P. 556). A foreign corporation failing to comply with the laws of this State has no power to engage in its business nor to acquire water rights under this State (R. G. W. Railroad Co. v. Telluride Power Co., 23 U. 22, 63 P. 995, 187 U. S. 569). By complying with the State law, foreign corporations are accorded the same and no other or greater rights than domestic corporations and are governed by the same rules (Hiskey v. Pacific States L. & B. Co., 27 U. 409, 76 P. 20). (48) VERMONT a. General Corporation Provisions.-The General Assembly of the State of Vermont shall have power to grant charters of incorporations (con stitution, art. II, sec. 6). No charter of incorporation shall be granted, extended, changed, or amended by special law except for such municipal, charitable, educational, penal, or reformatory corporations as are to be and remain under the patronage or control of the State; but the general assembly shall provide by general laws for the organization of all corporations hereafter to be created. All general laws passed pursuant to this section may be altered from time to time or repealed (Constitution, ch. II, sec. 65). b. Domestic Corporation Provisions.-See above. c. Foreign Corporation Provisions.-None. (49) VIRGINIA a. General corporation provisions.-The creation of corporations and the extension and amendment of charters (whether heretofore or hereafter granted) shall be provided for by general laws, and no charter shall be granted, amended, or extended by special act, nor shall authority in such matters be conferred upon any tribunal or officer except to ascertain whether the applicants have, by complying with the requirements of law, entitled themselves to the charter, amendment, or extension applied for and to issue or refuse the same accordingly. Such general laws may be amended or repealed by the general assembly, and all charters and amendments of charters now existing and revocable or hereafter granted or extended may be repealed at any time by special act. Provision shall be made by general laws for the voluntary surrender of its charter by any corporation and for the forfeiture thereof for nonuser or misuser. The general assembly shall not by special act regulate the affairs of any corporation, nor by such act give it any rights, powers, or privileges (constitution, sec. 154). Subject to the provisions of this constitution and to such requirements, rules, and regulations as may be prescribed by law, the State corporation commission shall be the department of government through which shall be issued all charters and amendments or extensions thereof for domestic corporations and all licenses to do business in this State to foreign corporations, and through which shall be carried out all the provisions of this constitution and of the laws made in pursuance thereof for the creation, visitation, regulation, and control of corporations chartered or doing business in this State. The commission shall prescribe the form of all reports which may be required of such corporations by this constitution or by law; it shall collect, receive, and preserve such reports and annually tabulate and publish them in statistical form; and shall have all the rights and powers of and perform all the duties devolving upon the railroad commissioner and the board of public works at the time this constitution goes into effect, except so far as they are inconsistent with this constitution and may be hereafter abolished or changed by law (constitution, sec. 156a). Provision shall be made by general laws for the payment of a fee to the Commonwealth by every domestic corporation on the granting, amendment, or extension of its charter and by every foreign corporation upon obtaining a license to do business in this State as specified in this section; and also for the payment by every domestic corporation and foreign corporation doing business in this State of an annual registration fee of not less than $5 or more than $25, which shall be irrespective of any such license or other tax imposed by law upon such company for the privilege of carrying on its business in this State or upon its franchise or property; and for the making by every such corporation (at the time of paying such annual registration fee) of such report to the State corporation commission of the status, business, or condition of such corporation as the general assembly may prescribe. No foreign corporation shall have authority to do business in this State until it shall have first obtained from the commission a license to do business in this State upon such terms and conditions as may be prescribed by law. The failure by any corporation for 2 successive years to pay its annual registration fee or to make its said annual reports shall, when such failure shall be continued for 90 days after the expiration of such 2 years, operate as a revocation and annulment of the charter of such corporation, if it be a domestic company or of its license to do business in this State if it be a foreign company, and the general assembly shall provide additional and suitable penalties for the failure of any corporation to comply promptly with the requirements of this section or of any laws passed in pursuance thereof. The commission shall compel all corporations to comply promptly with such requirements by enforcing in the manner hereinbefore authorized such fines and penalties against the delinquent company as may be provided for or authorized by this article, but the general assembly may relieve from the payment of the said registra tion fee any purely charitable institution or institutions (constitution, sec. 157). Every corporation heretofore chartered in this State, which shall hereafter accept or effect any amendment or extension of its charter, shall be conclusively presumed to have thereby surrendered every exemption from taxation and every known repealable feature of its charter and of the amendments thereof, and also all exclusive rights or privileges theretofore granted to it by the general assembly and not enjoyed by other corporations of a similar general character; and to have thereby agreed to thereafter hold its charter and franchise and all amendments thereof under the provisions and subject to all the requirements, terms, and conditions of this constitution and of any laws passed in pursuance thereof so far as the same may be applicable to such corporation (constitution, sec. 158). The right of the Commonwealth, through such instrumentalities as it may select, to prescribe and define the public duties of all common carriers and public-service corporations, to regulate and control them in the performance of their public duties, and to fix and limit their charges therefor shall never be surrendered or abridged (constitution, sec. 164). * gas The rights of no city or town in and to its * * * and electric works shall be sold except by an ordinance or resolution passed by a record affirmative vote of three-fourths of all the members elected to the council or to each branch thereof where there are two * * and in case of the veto by the mayor of such an ordinance or resolution, it shall require a record affirmative vote of three-fourths of all the members elected to the council or to each branch thereof where there are two, had in the manner heretofore provided for in this article to pass the same over the veto. No franchise, lease, or right of any kind to use any such public property or any other public property or easement of any description in a manner not permitted to the general public shall be granted for a longer period than 30 years. Before granting any such franchise or privilege for a term of years, except for a trunk railway, the municipality shall, first, after due advertisement, receive bids therefor publicly in such manner as may be provided by law and shall then act as may be required by law. Such grant and any contract in pursuance thereof may provide upon the termination of the grant the plant as well as the property, if any, of the grantee, in the streets, avenues, and other public places shall thereupon, without compensation to the grantee or upon the payment of a fair valuation therefor, be and become the property of the said city or town, but the grantee shall be entitled to no payment by reason of the value of the franchise; and any such plant or property acquired by city or town may be sold or leased or, if authorized by law, maintained, controlled, and operated by such city or town. Every such grant shall specify the mode of determining any valuation therein provided for and shall make adequate provision by way of forfeiture of the grant or otherwise to secure efficiency of public service at reasonable rates and the maintenance of the property in good order throughout the term of the grant. Nothing herein contained shall be construed as preventing the general assembly from prescribing additional restrictions on the powers of cities and towns in granting franchises or in selling or leasing any of their property or as repealing any additional restriction now required in relation thereto in any existing municipal charter (constitution, sec. 125). b. Domestic corporation provisions.-See above. c. Foreign corporation provisions.—No foreign corporations shall be authorized to carry on in this State the business or to exercise any of the powers or functions of a public-service corporation or be permitted to do anything which domestic corporations are prohibited from doing, or be relieved from compliance with any of the requirements made of similar domestic corporations by the constitution and laws of this State where the same can be made applicable to foreign corporations without discriminating against it, but this section shall not affect any public-service corporation whose line or route extends across the boundary of this Commonwealth, nor prevent any foreign corporation from continuing in such lawful business as it may be actually engaged in within this State when this constitution goes into effect; but any such foreign public-service corporation so engaged shall not, without first becoming incorporated under the laws of this State, be authorized to acquire, lease, use, or operate within this State any public or municipal franchise or franchises in addition to such as it may own, lease, use, or operate when |