(49) VIRGINIA Every domestic corporation upon organization and every foreign corporation upon domestication in the State shall file in the office of the State corporation commission a report authenticated by the signature of the president or one of the vice presidents or the secretary of the corporation giving designated information, including the amount of its authorized capital stock, if any, and the amount actually issued and outstanding, showing classes expressly if more than one class (Code, sec. 3820). The State corporation commission may require every domestic and foreign corporation in the month of January of each year, and within such time as it may prescribe, to make to the commission on forms prescribed by it such report of the status, business, and condition such corporation as the commission may call for. Every corporation incorporated under the laws of the State shall, after each annual meeting of its stockholders, certify to the clerk of the court wherein its charter is recorded a list of the officers and directors elected at its annual meeting, which shall be kept open to public inspection (Code, sec. 3854). (50) WASHINGTON Every corporation heretofore organized under the laws of the territory or State of Washington, and every corporation which may hereafter be organized under the laws of this State, shall, on or before the second Tuesday of January of each year, and at such other times as such corporation may elect so to do, file with the county auditor of the county in which such corporation has its principal place of business a statement sworn to by its president and attested by its secretary and sealed with its corporate seal, containing a list of all its officers and their respective titles of office, names, and addresses, and the term of office for which they have been chosen. If any corporation shall fail to comply with the provisions of this section, service of process against such corporation during the period of such failure may be made by serving duplicate copies upon the secretary of state. Upon such service being made, the secretary of state shall forthwith mail one of such duplicate copies of such process to such corporation at its last known address, as shown by the records of his office (Pierces' Code, sec. 4506, as amended by L. 1923, ch. 39, sec. 1; Lushington v. Seattle Auto & Driving Club, 60 Wash, 546, 111 Pac. 785). (51) WEST VIRGINIA The directors and officers of every corporation of this State shall keep accurate accounts of the corporate transactions. The president of every such corporation shall annually prepare a full and true statement of the affairs of the corporation which shall be submitted at the annual meeting of the stockholders and filed within 20 days thereafter at the principal office of the corporation in this State, where it shall, during the usual business hours of each secular day be open for inspection by any stockholder of the corporation. (Code, ch. 31, art. 1, sec. 74). (52) WISCONSIN (1) Every corporation organized for profit under this chapter shall annually, between the 1st days of January and of April, file with the secretary of state a report sworn to by the president, secretary, treasurer, or general manager, or if the corporation is in the hands of an assignee or receiver, by such assignee or receiver, as of January 1 preceding. Such report shall set forth, among other things, the amount of authorized capital stock and the amount thereof actually paid in. (St., 1931, sec. 180.08). * * ** Every corporation authorized to transact business in Wisconsin shall, on the written request of the railroad commission and within 20 days, furnish a complete list of its stockholders and a statement of the amount of stock held in the corporation by each such stockholder, duly verified by the president or secretary of such corporation. * * (St., sec. 182-25). (53) WYOMING None. A-1. PERTINENT DECISIONS DIGESTED a. Stock ownership by corporations The following are decisions by courts of certain of the jurisdictions studied relative to the subjects covered by the statutory titles set forth in the foregoing pages, treated in the same sequence, and under the same several alphabetical letters employed in connection with the statutory titles: (9) DISTRICT OF COLUMBIA A District of Columbia corporation cannot purchase stock of another corporation with funds arising from the sale of its own shares, nor can it exchange its own shares for the stock of other companies (Ambler v. Archer, 1 App. D. C. 94). (14) ILLINOIS A corporation cannot become a stockholder in another corporation, especially when the object to be attained is the control of the latter corporation (Martin v. Ohio Stove Co., 78 Ill. App. 105). A corporation may, if it acts in good faith, buy and sell shares of its own stock (First National Bank v. Peoria Watch Co., 191 Ill. 128; Republic Life Insurance Co. v. Swigert, 135 Ill. 150; Roush v. Illinois Oil Co., 180 Ill. App. 348; Kelly V. McCormic Murray Manufacturing Co., 201 Ill. 308). (16) IOWA A corporation may become a stockholder in another corporation so as to be liable as stockholder to the creditors of the latter to the extent of unpaid installments of stock (White v. Marquardt, 105 Iowa 145, 74 N. W. 930). (19) LOUISIANA A corporation cannot subscribe for stock in another company foreign to the object of its own charter (N. O., etc., Steamship Co. v. Ocean Dry Dock Co., 28 La. Ann. 173). For one corporation to take possession and manage the affairs of another corporation is in effect equivalent to engaging in a business other than that authorized by its charter; and this is in contravention of the public policy of the State as established in its fundamental law and is void (State v Newman, 51 La. Ann. 833, 25 So. 408). (22) MASSACHUSETTS State courts may properly refuse a controversy involving the internal management of a foreign corporation (Wright v. Post, 268 Mass. 126, 167 N. E. 278). (24) MINNESOTA In some Minnesota cases it has been assumed to be a general rule that one corporation is not authorized to hold stock in another (Hunt v. Hauser Malting Co., 90 Minn. 282, 96 N. W. 85). (Malt manufacturing corporation purchased bank stock for investments; held ultra vires.) (See Olson v. Warroad Merch. Co., 136 Minn. 310, 161 N. W. 713). However, in State v. Great Northern Ry. Co. (160 Minn. 515, 200 N. W. 834), it was held that one corporation may control another through stock ownership, or by the same means become the agent thereof. (25) MISSISSIPPI The stock of a domestic corporation held by foreign corporation cannot be voted except in this State (So. Electric Security Co. v. State, 91 M. 195, 44 So. 785). (27) MONTANA One corporation cannot hold or vote stock in another unless expressly authorized so to do by the terms of its charter or by statute (MacGinniss V. B. and M. C. C. and S. Min. Co., 29 Mont. 428, 75 Pac. 89). (31) NEW JERSEY Under the section quoted, a corporation created for the purpose of holding stock and controlling the operations of other corporations was organized for "a lawful purpose and was entitled to purchase and hold such stock (Dittman v. Distilling Co., 64 N. J. E. 537, 54 Atl. 570). Under the express terms of this section every domestic corporation, no matter under what law it may have been organized, may acquire and hold the stock and bonds of any other corporation, domestic or foreign, even to the extent of acquiring their controlling interest; and hence a corporation organized under the general corporation railroad law may acquire the bonds of and the controlling interest in the stock of a corporation organized under the street railway law (State v. Railroad Co., 76 N. J. L. 15, 69 Atl. 468). (34) NORTH CAROLINA A corporation, unless restrained by some provision of its organic law, may purchase its own stock from holders thereof and the latter are entitled to all rights of other creditors of the corporation for protection and enforcement of the demand for payment (Blalock v. Kernersville Manufacturing Co., 110 N. C. 99, 14 S. E. 501). A corporation was held to be authorized by statute and by the provisions of its own charter to purchase the stock of another company and to pay therefor with cash and its own stock (Citizens Lumber Co. v. Elias, 199 N. C. 103, 154 S. E. 54). (35) NORTH DAKOTA Where a stockholder made an agreement with other stockholders who were officers and directors of a corporation to surrender the stock to the corporation upon their agreement to do likewise, the stockholder who has surrendered his stock has no cause of action against the corporation for the recovery of his stock, on the theory that the officers and directors failed to carry out their part of the agreement (Shores v. Dakota-Montana Oil Co., 237 N. W. 172). (36) OHIO Foreign railways may acquire and hold stock of domestic railways provided their rates are noncompetitive and no restraint of trade results (Mannington et al v. Railway, 8 P. L. R. 451). (45) TENNESSEE In the absence of statutory authority, one bank has no right to buy the controlling interest in another bank, the reason being that such control by one corporation of another would tend to monopoly (Wood v. Green, 131 Tenn. (4 Thompson) 583, 175 S. W. 1139). Even where there was authority for a corporation to purchase its own shares outstanding the directors occupying a trust relation to stockholders cannot dispose of the same after purchase for the purpose of acquiring a majority or control of the corporation. Ordinarily a corporation may dispose in due course of its treasury stock (Petre v. Bruce, 157 Tenn. (4 Smith) 131, 7 S. W. (2d) 43). (52) WISCONSIN In the absence of any statute to the contrary, a solvent corporation may purchase its own stock, provided such purchase is made in good faith and without intent to injure creditors thereof; and creditors whose debts were incurred thereafter will not be prejudiced by the transaction (Shoemaker v. Washburn Lumber Co., 97 Wis. 585, 73 N. W. 333; Calteaux v. Mueller, 102 Wis. 525, 78 N. W. 1082). So long as a corporation is a going concern and has assets sufficient at a fair value to pay all its liabilities, exclusive of capital stock, it has power to deal with its property as it sees fit, and may also buy in its own stock (Marvin v. Anderson, 111 Wis. 387; Gilchrist v. Highfield, 140 Wis. 476, 123 N. W. 102). Except as authorized in Wisconsin statutes, 1923, section 108.11, no corporation is authorized to acquire stock in another corporation, and then only on full compliance with the conditions therein prescribed, including the last clause of subsection 3 thereof, requiring the assent of three-fourths of the stockholders of the corporations concerned, evidenced by action duly taken at a regularly called and conducted corporate meeting (Kappers v. Cast Stone Construction Co., 184 Wis. 627, 200 N. W. 376). d. Surplus (18) KENTUCKY Surplus" constitutes excess in value of assets treated by corporation as part of permanent capital (Peake v. Thomas, 222 Ky. 405, 300 S. W. 885). (20) MAINE Unfair discrimination by the preferred- and common-stock holders will be prevented in equity, but unless contract otherwise provides, directors may create surplus, even against preferred-stock holders, unless discretion is abused or charter or contract violated (Spear v. Rockland-Rockport Lime Co., 113 Maine 285). (34) NORTH CAROLINA Surplus or net profits is what remains after deducting from the present value of all the assets of a corporation the amount of all the liabilities, including capital stock (Cannon v. Wiscassit Mills Co., 195 N. C. 119, 125, 141 S. E. 344). (36) Оно When the board of directors of a corporation declares a dividend payable from the surplus of the company, it is to be presumed that such board of directors determines that the conditions at that time existed which would comply with the provisions of General Code, sections 8623-8638 (supra), and the mere fact that at a later date the board of directors decided that certain assets of the company were carried on the books at a figure so excessive that the dividend could not have been legally declared by reason of the requirements of sections 8623-8638, is not sufficient to rebut the presumption of good faith on the part of the directors, and does not change the nature of such distribution from dividends to liquidating dividends to such an extent as to change the manner of assessing the tax on the capital shares of such corporation in the hands of its shareholders from productive investments to unproductive investments ((1933) Opinions of the Attorney General, 1564). (48) VERMONT The surplus of a corporation is a part of the stock until separated from the capital by the declaration of a dividend, and while undivided will pass with the stock in a transfer thereof (Lafountain & Woolson Co. v. Brown, 91 Vt. 340, 101 A. 36). e. Dividends-Permissible source (4) ARKANSAS We see no necessity for a formal declaration of dividends for distribution of corporate earnings-if creditors are not shown to be affected or injured (Freeman v. Rogers White Lime Co., 138 Ark. 312, 211 S. W. 146). (6) COLORADO Courts of equity are loath to interfere with the discretion which the directors of a private corporation organized for profit have in declaring dividends, and a strong case must be made for their interposition (Rollins v. Denver Club, 43 Colo. 345, 96 Pac. 188). |