obvious. In a partnership, whenever a partner dies or sells his interest the partnership is dissolved. Where many persons are involved in a great undertaking covering a long period of time this would materially impair efficiency and hinder progress. These considerations have brought the corporation into being and explain its remarkable growth. The purpose of the law is to conserve the benefits of this form of business organization and at the same time to guard against certain inevitable abuses growing out of the nature of the organization.

§ 515. Powers of corporations.-The powers of a corporation are restricted to the limits prescribed by the law under or by which it is created. (1) A corporation should have a name by which to make contracts, to take, hold and dispose of property, and by which to sue and be sued. (2) It should have a corporate seal. (3) It should have a fixed place of business for the general management of its affairs. (4) It may make its own bylaws, and appoint and remove its agents and officers. (5) It should have power to hold such property as is necessary for the achievement of its corporate purpose. (6) It should have authority to make all such contracts and agreements as are reasonably necessary to carry out the purposes of the organization.

§ 516. Organization of corporations.-The power to create corporations is vested in the legislative department of the government. The practice and power of creating corporations by special legislative enactments has fallen into disuse, or been abolished in most of the states. General laws are passed, under which corporations are organized by the voluntary agreement of individuals. The manner in which corporations are organized is determined by the statutes of each state. Ordinarily articles of in

corporation signed and acknowledged by the requisite number of persons are filed in some public office. These articles give the name of the corporation, state the object of its formation, designate the place where it proposes to carry on its business, fix the amount of capital stock and the denomination of the shares of stock, the names and residences of the stockholders, and the names of the directors who are to manage the affairs of the corporation for the first year. When these articles, so prepared, signed and acknowledged, are lodged in the proper office, the corporation begins its existence. If any of its members assume to contract or act as a corporation before these requisite formalities have been complied with, such acts are not corporate acts, though they may bind the individuals who have so acted. A corporation is considered to be a person in the state under whose laws it is created, and if it wishes to exercise corporate powers in another state, it must submit to and obey such laws and restrictions as may be imposed by the laws of that

state.

A state may refuse to recognize a corporation organized under the laws of another state and refuse to permit it to do intrastate business within its borders, and consequently it may impose any conditions it sees fit upon any foreign corporations entering the state regardless of how unreasonable and arbitrary the conditions may be. It can not, however, prevent or hinder a foreign corporation from engaging in interstate business within its territory.

§ 517. The charter.-The charter, or law under which a corporation is organized, is the measure of its powers. In construing such charters and laws the courts have extended the powers of corporations to all such matters as are essential to preserve their existence and 21-Elem. Law.

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to accomplish the purposes of their creation. enumeration of specific powers implies the exclusion of others. A corporation can not engage in any business which it has not been authorized to do by its charter. Should the officers of the corporation attempt to engage in such a business they could be enjoined by the stockholders. Such acts are said to be ultra vires and contracts made in support of them would not be binding on the corporation. Thus a corporation organized and chartered for the purpose of engaging in manufacturing could not engage in the banking business. Any attempt to do so would be ultra vires.

§ 518. Contracts of corporations.-The power of a corporation to make contracts is limited by the charter. creating it, or, where it is organized under a general law, by the terms of that law. A contract entered into by a corporation beyond the power so conferred is void, it being ultra vires. It is manifest that a corporation, being an artificial person, can only contract by and through its agents, and the powers of these agents are determined by the laws of the state, or the articles and by-laws of the corporation, or they may be implied from the nature and functions of the officer or agent .who acts for the corporation. It was an old rule of law that a corporation could only contract under its corporate seal, but the necessities of commerce have led to an abrogation of the rule, so now it may be said that within its powers to make contracts it may make them in any manner that a partnership or natural person may. It has been said that a contract of a corporation not within its charter or lawful powers is void, but this must be understood with the equitable qualification that where such contract has been executed so that the corporation has received the consideration, and is unwilling or unable to return it, it

will not be heard to deny the validity of the contract. If it would rescind, it must first do equity.

§ 519. Rights of stockholders.-The control of the corporate business is generally vested in the board of directors who, in turn, are usually elected by the stockholders, each stockholder having as many votes as he owns shares of stock. In operating the business of the corporation the majority rules in cases of disagreement, but the majority must abide by the terms of the charter and by-laws and must act in good faith and without fraud, else the minority stockholders may obtain relief in equity. To secure the individual stockholder in the enjoyment of his rights, the law generally provides that he shall receive a certificate of stock from the corporation representing his interest therein, that he shall have the right to vote and participate in the stockholders' meetings, that he be permitted to inspect the books of the company when he desires to do so in good faith and for a proper purpose, and that he share in the dividends when they are declared. The law will see to it that he is not denied these rights.

§ 520. Dissolution. The existence of a corporation may be determined: (1) By the expiration of the time limited for its duration. (2) By valid laws repealing the laws under which it was organized. (3) By voluntary dissolution or the abandonment of the purpose for which it was organized. (4) By a decree of forfeiture at the suit of the state for misuser or nonuser of its powers and privileges.

§ 521. Vested rights. It is a settled rule of law that when a private corporation is once formed according to law, it has the right to the free use of all the fran

chises, powers and privileges conferred upon it by the laws in force when it came into existence, and that the provisions of the Constitution of the United States prohibiting all legislation which impairs the obligation of contracts protects it in the enjoyment of these rights. The assertion and enforcement of this rule, which imposed severe restrictions upon the legislative power, has led to a radical change in the legislation of the various states, and now it is the practice to insert in all laws authorizing the formation of corporations a clause reserving the right of the legislature to amend, alter or repeal such laws. Where a corporation charter is repealed, however, the right of the stockholders to the property must be preserved, else it will be void as a taking of property without due process of law.

§ 522. Deeds of corporations.-Corporations, if by their charters they may hold real estate, may convey the same, under the corporate seal and by the officer designated in the laws of the corporation to sign the deed in its name.

§ 523. Fraud by officers of the corporation.-Officers of corporations occupy the relation of trustees and agents to both the corporation itself and to the individual stockholders, and they are held to discharge their duties with the fidelity and integrity required of other trustees or agents. Wherever a fraud is committed by them, the right of action to redress the same is in the corporation, if the wrong affects the corporate body as a whole, or in individual stockholders if the wrong is to individual interests. In equity the suit for a corporate wrong may be brought by individual stockholders for the benefit of all, if the wrongdoers are the governing officers