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The provision that the certificate of incorporation should be signed in § 8

person by all of the subscribers to the capital stock named therein is new. It is not proper, therefore, to sign by an attorney in fact.

The practice of inserting in the certificate of incorporation the names of a number of subscribers to the capital stock, but having the certificate signed only by a part, not less than three, is thus forbidden.

The certificate should not only be signed, but should also be sealed by all the incorporators and subscribers. This because Section 9 requires the certificate of incorporation to "be proved or acknowledged as required "for deeds of real estate." In the case of deeds of real estate the officers before whom the acknowledgments are taken shall certify that the party signed, sealed and delivered" the same. (P. L. 1898, p. 679.)

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Certificate of incorporation.-The certificate of incorporation is the charter of the company and is held to be equivalent to a special act of the Legislature. (Ellerman v. Chicago Junc. Ry., &c., Co., 49 N. J. Eq., 217; Oregon R. R. Co. v. Oregonian R R. Co., 130 U. S., 1.)

It is to a certain extent

(1) A contract between the corporation and the State. (Montclair
v. Greenwood Lake R. R. Co., 45 N. J. Eq., 436.)

(2) A contract between the individual stockholders and the corpo-
ration. (Kean v. Johnson, 9 N. J. Eq., 401; Loewenthal v. Rub-
ber Reclaiming Co., 52 N. J. Eq., 440.)

(3) A contract between the stockholders themselves. (In re elec-
tion of Directors of Newark Library Ass'n, decided by Supreme
Court, June Term, 1899.)

The courts of the State of New Jersey enunciate no rule or principle substantially different from the general principle governing corporations upon these three points.

In view of the fact that as between stockholders themselves the minority may prevent any practical diversion of the entire property of the company from the business for the purpose for which the company was organized, may prevent a sale of its entire property on the principle that this would work a practical dissolution of the company in a manner other than that prescribed by statute and without their consent, it may in some cases avoid the embarrassment which might arise from the objection of a minority of stockholders if there be inserted in the certificate itself a provision substantially as follows: "With the consent in "writing and pursuant to the vote of the holders of a majority of the stock "issued and outstanding, the directors shall have power and authority to "sell, assign, transfer or otherwise dispose of the whole property of this "corporation."

The insertion of this provision in the certificate of incorporation and the making this a part of the fundamental contract between the stock

§ 8 holders puts the minority in a less favorable position to unreasonably

object to the plans of a concurrent majority.

Charter cannot be attacked collaterally." It is further treated as settled by our cases, that the regularity of the organization of a corporation cannot be questioned collaterally in any court, at the instance of a private person, and that irregularities and omissions in such organization cannot be taken advantage of in a proceeding instituted by a private person, but only in a direct proceeding in behalf of the State, inquiring by what warrant the corporate grant is being used.” (Elizabethtown Gas Light Co. v. Green, 49 N. J. Eq., 329, 331, citing National Docks R. R. Co. v. Central R. R. Co., 32 N. J. Eq., 755; Stout v. Zulick, 48 N. J. Law, 599; West Jersey R. R. Co. v. Cape May, &c., 34 N. J. Eq., 164; Terhune v. Midland R. R. Co., 38 N. J. Eq., 423; Jersey City Gas Light Co. v. Consumers' Gas Co., 40 N. J. Eq., 427; New Jersey Southern R. R. Co. v. Long Branch, 39 N. J. Law, 28. See also Stockton v. American Tobacco Co., 55 N. J. Eq., 352.)

Quo warranto is the proper proceeding.

I. Corporate name. It is permissible for a corporation to assume the name used by the incorporators as a firm name, or an individual name may be used. The name must not contain the words "insurance," "safe deposit," "trust" or "bank" (p. 127, post).

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This subdivision was amended in 1898 by inserting the word “existing," so as to forbid the use of the name, another existing corporation." This was in accordance with the ruling of the Secretary of State's office that the name of a corporation which has been dissolved might be appropriated by another corporation.

The court of chancery will restrain a domestic corporation from using a name so similar to that of another domestic corporation as to lead to uncertainty or confusion. (Glucose Sugar Refining Co. v. American Glucose Sugar Refining Co., 22 N. J. Law Journal [May, 1899], p. 147.)

A contract is not void because the corporation with which it is made is misnamed therein. (Hoboken Bld'g Ass'n v. Martin, 13 N. J. Eq., 427; Woolwich v. Forrest, 2 N. J. Law, 107; Middletown v. McCormick, 3 N. J. Law, 92. See also (as to grants), Inhabitants, &c., Alloway's Creek v. String, 10 N. J. Law, 323; Den v. Hay, 21 N. J. Law, 174, and (as to bequests), Van Wagenen v. Baldwin, 7 N. J. Eq., 211; McBride v. Elmer, 6 N. J. Eq., 107; Goodell v. Union Assn., 29 N. J. Eq., 32; Lanning v. Sisters of St. Francis, 35 N. J. Eq., 392.)

It was held in Alexander v. Berney, 28 N. J. Eq., 90, that "a corpora"tion may assume a name by usage." (For a somewhat similar case see Den v. Helmes, 3 N. J. Law, 600.)

II. Registered office in the State.

The Act of 1875 required the place of business, both within and without the State of New Jersey, to be given; also the portion of the business of the company to be conducted outside of the State.

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In 1898 this section was amended in its present form. The object of the amendment was to require the certificate of incorporation to state the exact location of the principal office.

In addition, by Chap. 173 of the Laws of 1898 (see 43a, p. 59), it is required to state the name of the agent in the principal office, and in charge thereof, and upon whom process against the corporation may be served. It is usual to state it in this form: "The location of the principal office in street, in the City of "this State is at No.

"County of

The name of the agent therein and in "charge thereof, and upon whom process against the corporation may be "served, is

The policy of the State of New Jersey, as indicated by the Act of 1898, is first to compel all corporations to have a registered office in the State of New Jersey and with a known and published agent in charge thereof, authorized to transfer stock and to receive process against the corporation, and then to give corporations power to do business anywhere out of the State of New Jersey and in foreign countries without designatThe agent may be changed ing any place of business out of the State. from time to time by the directors.

So far as the laws of New Jersey are concerned, corporations have no They have the full principal office outside the State of New Jersey. right to do business anywhere out of the State, providing suitable provision is made in the charter. (Vide Section 7.)

III. Objects.-Companies may be formed under this act for any lawful purpose or purposes except such as are expressly prohibited by Section 6, ante, and probably others not recited in that section, for which separate acts have been provided.

Associations not for pecuniary profit are required to be organized under Chap. 181, Laws of 1898 (P. L. 1898, p. 422).

This

This section formerly read "the objects for which," etc. amendment and the amendment of Section 6 in 1899 were intended to answer affirmatively the question which has been frequently asked, whether a company may be formed under this act for more than one object or purpose.

This being the important part of the certificate of incorporation, great care should be taken that the objects and purposes of the company are stated in the fullest and clearest manner possible, because the company cannot undertake any business not authorized by its charter, and not even the fullest sanction given by the shareholders will make valid an act which is outside the powers of the company. Directors undertaking any such business may become personally liable for loss, and great It is inconvenience follows from companies having too limited powers. often questioned how far it is necessary to detail in extenso in the certifi The answer is plain. cate of incorporation the powers of the company.

The balance of disadvantage decidedly attaches to too narrowly defined objects.

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It is easier to compress, so to speak, the business of a company within the limits of large objects and broad powers than to develop business by extension in the face of narrowly defined objects. It is better to give latitude to the objects and powers as contained in the certificate of incorporation, and to limit the powers of directors by the by-laws, than to run the risk of the subsequent insertion in the by-laws or in the minutes of the board of directors of a provision intended to meet some pressing requirements of the business, which provision may be found absolutely worthless, because of variations from the terms of the certificate of incorporation.

It is customary to insert some general words, such as "in general to "carry on any other business whether manufacturing or otherwise." But it must be understood that the courts will limit such words to cover only operations of a nature similar to the business previously mentioned, and will not include any wholly fresh business.

It is often sought to broaden the powers by inserting such words as, "to do any other business which the company from time to time deter"mine." But it is doubtful whether they add anything to the powers of the company.

IV. Stock. There is no limit as to the amount of capital stock which a corporation formed under this act may have. It is necessary that the total amount should be not less than $2,000, and it is necessary that $1,000 of stock should be subscribed by the incorporators, this constituting the amount of capital stock with which the company will commence business. The par value of the shares may be fixed at any amount.

This section, before it was amended, required "the amount" with which the company would commence business to be stated. It was thought by many that this required that the company should have at least $1,000 paid into its treasury before it could commence the business for which it was incorporated. The company may commence business at once and may call the subscriptions to its capital stock at such time as it finds convenient. The law does not require that this $1,000 shall be paid in cash. It may be paid in property if the directors so decide. One of the subscribers may pay the subscriptions of the others, in cash or property. (Vail v. Phillips, 14 N. J. L. J., 45.) The capital stock subscribed by the incorporators should not be more than two-thirds preferred stock. There is no liability for any part of the capital stock by the stockholders until subscribed, and the stock is not taxable until issued. In view of the fact that the cost of filing the certificate of incorporation is the same (z. e., $25) for any amount of total authorized capital not exceeding $125,000, it is customary in anticipation of extension and growth of corporate business to insert in the certificate power to issue stock to the amount of not less than $100,000 or $125,000. The company may then issue stock up to the amount limited without filing a certificate of

increase of capital stock, as is required by Section 27 where the total § 8 authorized capital is increased.

Where there is more than one kind of stock the certificate of incorporation should contain the designation and description of each class and state the terms on which each class is to be issued. Preferred stocks may, if desired, be made subject to redemption at not less than par at a fixed time and price (Sec. 18). Dividends on preferred stock may be fixed at any rate not exceeding 8 per cent. Special voting powers may be given to the holders of any class of stock. For a description of some of the kinds of preferred stock which may be created see notes to Section 18, post.

V. Names and post office addresses of incorporators.-There must be at least three incorporators, who must be natural persons. It is not necessary that any of them should be a resident of the State of New Jersey. (Central R. R. of N. J. v. Penn. R. R. Co., 31 N. J. Eq., 475.)

This section formerly required the residence of each incorporator to be given. This was changed to post office address in the section as amended and, therefore, this section is subject to the operation of Chapter 173 of the Laws of 1898 (Section 43a, post), by which it is provided that the post office address of the principal office of the company may be given instead of the post office address of the stockholder in any certificate filed. By this means incorporators residing in other States are not required to make public their addresses for the benefit of the tax authorities of those States.

This subdivision also requires that the aggregate of the subscriptions of the incorporators shall be the amount of capital stock with which the company will commence business, which is required to be stated under the preceding subdivision.

VI. Duration.-Formerly the maximum period of duration was fifty years, but by the Revision of 1896 this limitation was stricken out and the existence, if not limited in the certificate of incorporation, is perpetual. This section before the amendment required the certificate of incorporation to state "the date on which the existence of the corporation shall "begin." Inasmuch as Section 10, however, provides that the corporate existence begins on filing the certificate in the office of the Secretary of State it was deemed wise to strike out these words and avoid confusion. The fixing of any other date in the certificate would be inconsistent with Section 10 and therefore of no effect.

VII. Additional powers.-This is one of the most important provisions of the Corporation Act and around it centres the skill of counsel for corporations in drawing charters and in effectively laying the foundation of the corporate structure. It will be noted that under this section as amended incorporators may insert provisions "creating, defining, limiting

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