shall it have power to make any gift, or authorize the making of any gift, of any public money or thing of value, to any individual, municipal or other corporation whatever; provided, that nothing in this section shall prevent the legislature granting aid pursuant to section 22 of this article; and it shall not have power to authorize the state, or any political subdivision thereof, to subscribe for stock, or to become a stockholder in any corporation whatever.

Article 12, section 13, of the constitution is as follows:

The state shall not, in any manner, loan its credit, nor shall it subscribe to or be interested in the stock of any company, association or corporation.

STATE MAY REGULATE CHARGES OF PUBLIC SERVICE
CORPORATIONS

Article 4, section 33, of the constitution empowers the legislature to regulate the charges for services of telegraph, gas and other public service corporations, and reads as follows:

The legislature shall pass laws for the regulation and limitation of the charges for services performed and commodities furnished by telegraph and gas corporations, and the charges by corporations or individuals for storage and wharfage, in which there is a public use; and where laws shall provide for the selection of any person or officer to regulate and limit such rates, no such person or officer shall be selected by any corporation or individual interested in the business to be regulated, and no person shall be selected who is an officer or stockholder in any such corporation.

USE OF STREETS FOR SUPPLYING LIGHT AND WATER

The provisions of article II, old section 19, of the constitution granted the right, where there are no such public works owned or controlled by a city, to any

individual or corporation to supply water or light to a city or its inhabitants, upon condition that the city shall have the right to regulate the charges therefor.18

The supreme court of the United States has rendered a decision in which it is declared that the amendment of this section in 1911 is ineffective and unconstitutional, as to corporations formed and which had begun the construction of works for and laying pipes in the streets of a city for the purpose of supplying the inhabitants with light, before the adoption of this amendment, and that such a corporation can not be restrained or limited in extending its pipes in streets not previously used by it except upon a franchise therefor, by purchase from the city.19 This section was amended in 1911 and now reads as follows:

Any municipal corporation may establish and operate public works for supplying its inhabitants with light, water, power, heat, transportation, telephone service or other means of communication. Such works may

be acquired by original construction or by the purchase of existing works, including their franchises, or both. Persons or corporations may establish and operate works for supplying the inhabitants with such services upon such conditions and under such regulations as the municipality may prescribe under its organic law, on condition that the municipal government shall have the right to regulate the charges thereof. A municipal corporation may furnish such services to inhabitants outside its boundaries; provided that it shall not furnish any service to the inhabitants of any other municipality owning or operating works supplying the same service to such inhabitants, without the consent of such other municipality, expressed by ordinance. (Amendment October 10, 1911.)

18 Spring Valley etc. Co. v. San Francisco, 61 Cal. 18.

19 Russell v. Sebastian, 233 U. S. 195, Ann. Cas. 1914C, 1282, 58 L. Ed. 912, 34 Sup. Ct. 517.

CORPORATE PROPERTY SUBJECT TO EMINENT DOMAIN

Article 12, section 8, of the constitution is as follows:

The exercise of the right of eminent domain shall never be so abridged or construed as to prevent the legislature from taking the property and franchises of incorporated companies and subjecting them to public use the same as the property of individuals; and the exercise of the police power of the state shall never be so abridged or construed as to permit corporations to conduct their business in such manner as to infringe the rights of individuals or the general well-being of the state.20

CHINESE, EMPLOYMENT OF

The constitutional and statutory prohibitions of corporations employing Chinese have been held to be in conflict with the Federal Constitution and the treaty with China and void,21 and while the constitutional provision has never been repealed it is now obsolete.

CORPORATIONS-DEFINITION

Section 283 of the Civil Code is as follows:

§ 283. A corporation is a creature of the law, having certain powers and duties of a natural person. Being created by law, it may continue for any length of time which the law prescribes.

PRIVATE CORPORATIONS, HOW FORMED Section 285 of the Civil Code is as follows:

§ 285. Private corporations may be formed by the voluntary associations of any three or more persons in the manner prescribed in this article. A majority of such persons must be residents of this state.

20 For an elaborate discussion of evidence and purposes, see Vallejo etc. Co. v. Reed etc. Co., 169 Cal. 545, 147 Pac. 238.

21 In re Parrott, 5 Pacific Coast Law Journal 161; Ex parte Kuback, 85 Cal. 274, 20 Am. St. Rep. 226, 9 L. R. A. 482, 24 Pac. 737.

FOR WHAT PURPOSES

Section 286 of the Civil Code is as follows:

§ 286. Private corporations may be formed for any purpose for which individuals may lawfully associate themselves.

These sections apply to the organization of all corporations; it was not necessary in 1887 to organize a water company under the act of 1872-it could be done under this act also.22

WHAT ARE PUBLIC AND PRIVATE CORPORATIONS Section 284 of the Civil Code is as follows:

§ 284. Corporations are either public or private. Public corporations are formed or organized for the government of a portion of the state; all other corporations are private.

Cities and towns, school districts, etc., are public corporations. A county is not a public corporation, but a subdivision of the state. Reclamation districts and levee districts are neither public nor private corporations, but public agencies,23 as is also a district agricultural society.24 Irrigation districts are public corporations as to some of their functions, and private as to others.25 Sanitary districts are public corporations.26

QUASI-PUBLIC CORPORATIONS

Gas, water, electric light companies supplying the inhabitants of cities and towns with their products, and

22 West v. Crawford, 80 Cal. 19-30, 21 Pac. 1123.

23 Reclamation Dist. v. Sacramento, 134 Cal. 477, 66 Pac. 668; People v. Reclamation Dist., 117 Cal. 114, 121, 48 Pac. 1016; Dean v. Davis, 51 Cal. 406.

24 People v. San Joaquin etc. Assn., 151 Cal. 797, 91 Pac. 740.

25 Merchants etc. Bank v. Escondido etc. Dist., 144 Cal. 329, 77 Pac.

26 In re Werner, 129 Cal. 567, 62 Pac. 97.

street railroads, in some respects are quasi-public corporations, as will be seen hereafter. The term quasipublic corporation has never been satisfactorily defined, but it may be said generally that it is one which performs some service or obligation to some portion of the public, but has a capital stock and in the capital and profits of which private individuals have an interest. All other corporations are private.

HOW FORMED AND PURPOSES

Private corporations may be formed by the voluntary association of any three or more persons, a majority of whom must be residents of California, and for any purpose for which individuals may associate themselves.27

The language of these sections being so simply and clearly expressed, almost no controversy has arisen over their meaning. The purposes for which a corporation is formed must, however, be fully and clearly set forth in its Articles of Incorporation, for under sections 354 and 355 of the Civil Code its powers are limited to those given by statute and such as are essential for its purposes. The most frequent error in preparing the Articles is omission of purposes, rather than including too many. Generally speaking, the doctrine of ultra vires has been given a very wide scope in this state, and it is a safe rule to consider every purpose excluded which is not expressly stated in the Articles. Often, in Articles, the purposes are stated in the form of powers, but that is without objection if it is clear that the language really describes a purpose. It should be borne in mind that the powers of a corporation can not be extended beyond those enumerated in the statutes, and "such as are necessary to the exercise of the 27 Civil Code, secs. 285 and 286, supra.

Cal. Corp.-2