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filed and recorded on the date of the filing and recording of the § 27 original certificate; provided, however, that nothing herein shall permit the insertion of any matter not in conformity with the act to which this is a supplement; and provided, however, that this act shall not in any manner affect any proceedings pending in any court; for filing said amended certificate of incorporation, the secretary of state shall charge a fee of twenty dollars; provided, that where the total authorized capital stock of the corporation is increased by said amended certificate the secretary of state shall charge an additional fee of twenty cents for each one thousand dollars of said increase.

(Supplement of April 19, 1898, § 1; P. L. 1898, p. 407.)

There was in the Revision of 1895 no provision for the amendment of a certificate of incorporation before the payment of the capital.

A mistake or omission could only be cured after full organization (see Section 27). This is a substantial re-enactment of Sections 183, 238, 250 and 251, Title "Corporations," General Statutes, all of which were repealed by the Revision of 1896.

27.

Amendments and changes after organization.

Every corporation organized under this act may change the nature of its business, change its name, increase its capital stock, decrease its capital stock, change the par value of the shares of its capital stock, change the location of its principal office in this state, extend its corporate existence, create one or more classes of preferred stock, and make such other amendment, change or alteration as may be desired, in manner following: the board of directors shall pass a resolution declaring that such change or alteration is advisable and calling a meeting of the stockholders to take action thereon; the meeting shall be held upon such notice as the by-laws provide, and in the absence of such provision, upon ten days' notice, given personally or by mail; if two-thirds in interest of each class of the stockholders having voting powers shall vote in favor of such amendment, change or alteration, a certificate thereof shall be signed by the president and secretary under the corporate seal, acknowledged or proved as in the case of deeds of real estate, and such certificate, together with the written assent, in person or by proxy, of twothirds in interest of each class of such stockholders, shall be filed in the office of the secretary of state, and upon the filing of the same, the certificate of incorporation shall be deemed to be amended accordingly; provided, that such certificate of

§ 27 amendment, change or alteration shall contain only such provision as it would be lawful and proper to insert in an original certificate of incorporation made at the time of making such amendment, and the certificate of the secretary of state that such certificate and assent have been filed in his office shall be taken and accepted as evidence of such change or alteration in all courts and places.

P. L. 1846, p. 67; P. L. 1846, p. 68; P. L. 1849, p. 303; P. L. 1849, p. 304; Act of 1875, § 33; P. L. 1876, p. 74; P. L. 1876, p. 235; P. L. 1877, p. 22; P. L. 1877, p. 179; P. L. 1878, p. 157; P. L. 1879, p. 88; P. L. 1880, p. 49; P. L. 1883, p. 240; P. L. 1886, p. 226; P. L. 1887, p. 137; P. L. 1887, p. 156; P. L. 1888, p. 224; P. L. 1889, p. 367; P. L. 1891, p. 87; P. L. 1891, p. 392; P. L. 1892, p. 287; P. L. 1892, p. 362; P. L. 1892, p. 12; P. L. 1893, p. 444; P. L. 1895, p. 607.

This section, so far as it relates to changing the location of the principal office of the company, has been practically amended by Chapter 85 of the Laws of 1897 (see Section 28a), so that the change may now be made by resolution of the board of directors alone, upon filing a certificate in the office of the Secretary of State.

An amendment of the certificate of incorporation before the payment of any part of the capital stock is authorized by Chapter 172 of the Laws of 1898 (see Section 26a, ante).

If provision therefor is made in the certificate of incorporation pursuant to Section 17 (as amended in 1901) any action of stockholders required by this section may be taken on the vote and assent in writing of the holders of two-thirds in interest who attend the meeting, provided, of course, a quorum be present as prescribed by the by-laws.

The certificate of incorporation is a contract between the shareholders which cannot be affected by any change made in it by virtue of a subsequent act of the Legislature, and it can only be effectually changed by virtue by some act of the Legislature in force at the time the certificate is filed, which should be read into the contract. (Meredith v. N. J. Zinc & Iron Co., 55 N. J. Eq., 211; aff'd 56 N. J. Eq., 454).

"The law administered in this State with regard to the inviolability of contracts was well settled many years before the passage of the Act of 1875. The leading case of Kean v. Johnson was decided in 1853. That was followed by Zabriskie v. Railroad Company in 1867; and again by Black v. Canal Company in 1873. And it is fairly inferable that the thirty-third section [Section 27 of the Act of 1896] was intended to prevent a few dissentient stockholders, as here, from setting up their wills against the will of a large majority, and the statute should be so construed as to further that object." (Meredith v. N. 7. Zinc & Iron Co., 44 Atl. Rep., 55, 62; see also Pronik v. Spirits Distributing Co., 42 Atl. Rep., 586.)

Increase of stock.-The Court of Errors and Appeals in the case of Donald v. American Smelting & Refining Co., 48 Atl. Rep., 771, held that an increase of corporate stock voted for by the board of directors and

by the requisite majority of stockholders in order to issue such stock for § 28-28a property worth less than the face value of the stock should be restrained at the instance of dissenting stockholders. The effect of this decision is that a dissenting stockholder may invoke the power of the Court of Chancery to determine whether the property for which it is proposed to issue the increased stock is of the fair value of the stock at par.

Rights of stockholders on increase of stock.-It has been held that where the capital stock is increased, the original holders are first entitled to subscribe for the increased stock in proportion to their holdings. (Way v. American Grease Co., 47 Atl. Rep., 44.) Where the new stock is issued for property purchased, from which all stockholders will receive the same benefit, original holders cannot insist that new stock shall be issued to them in proportion to their holdings, it being held that Section 55 of the Act of 1875 (Section 48, post) became a part of the contract between the stockholders. In case the corporation deprives the stockholder of his rights in this behalf, the proper remedy is by an action at law for damages. (Meredith v. N. J. Zinc & Iron Co., 55 N. J. Eq., 211; aff'd 56 N. J. Eq., 454.)

28. Amendments by corporations formed under other acts. Any corporation of this state, whether organized under a special act of incorporation or under general laws, excepting railroad and canal corporations, and other corporations possessing the right of taking and condemning lands, may increase or decrease its capital stock, change its name, the par value of the shares of its capital stock, or the location of its principal office in or out of this state, and fix any method of altering its by-laws permitted by the act to which this is a supplement, in the manner prescribed in the foregoing section, and any corporation may in the same manner relinquish one or more branches of its business, or extend its business to such branches as might have been inserted in its original certificate of incorporation.

(As amended by Chap. 92, Laws of 1898, P. L. 1898, p, 149.)

This section with the amendments of 1898 is intended clearly to cover corporations organized under other acts than the Act of 1875, or the Revision of 1896.

See notes to § 17.

28a.* Change of location of office.

The board of directors of any corporation, organized under the laws of this state may change the location of the principal office of such corporation within this state to any other place

* Arbitrary number; section inserted here merely for convenience of reference.

§ 29-30 within this state by resolution adopted at a regular or special meeting of such board, by the votes of at least two-thirds of the members of such board; provided, that no certificate shall be required to be filed of the removal of any office from one point to another in the same town, township or city in this state.

Upon the adoption of a resolution as aforesaid, a copy thereof shall be filed in the office of the secretary of state, signed by the president and secretary of such corporation, and sealed with its corporate seal; for filing the said certificate, the secretary of state shall charge a fee of five dollars.

(Supplement of April 8, 1897, P. L. 1897, p. 175.)

The decrease of capital stock may be effected by retiring or reducing any class of the stock, or by drawing the necessary number of shares by lot for retirement, or by the surrender by every shareholder of his shares, and the issue to him in lieu thereof of a decreased number of shares, or by the purchase at not above par of certain shares for retirement, or by retiring shares owned by the corporation, or by reducing the par value of shares; and when any corporation shall decrease the amount of its capital stock hereinbefore provided, the certificate decreasing the same shall be published for three weeks successively, at least once in each week, in a newspaper published in the county in which the principal office of the corporation is located; the first publication to be made within fifteen days after the filing of such certificate, and in default thereof the directors of the corporation shall be jointly and severally liable for all debts of the corporation contracted before the filing of the said certificate, and the stockholders shall also be liable for such sums as they may respectively receive of the amount so reduced; provided, no such decrease of capital stock shall release the liability of any stockholder, whose shares have not been fully paid, for debts of the corporation theretofore contracted, nor effect any reduction of the taxes that may be required to be paid by the charters of corporations incorporated by special acts.

P. L. 1846, p. 68; P. L. 1849, p. 305; P. L. 1882, p. 139; P. L. 1885, p. 140.

30. Dividends.

No corporation shall make dividends, except from the surplus or net profits arising from its business, nor divide, withdraw. or in any way pay to the stockholders, or any of them,

To face p. 49, Dill on New Jersey Corporations, 3d cloth and 4th paper edition.

Decisions.

VOLUNTARY DISSOLUTION.

In Windmüller v. Standard Distilling & Distributing Company, and Distilling Company of America, United States Circuit Court, Third Circuit and District of New Jersey, Kirkpatrick, District Judge, held that there is no provision in the law which authorizes the Court to review the judgment of the Directors as to the advisability of dissolution. He further held that the fact that more than two-thirds of the stock of the Company to be dissolved was held and owned by another corporation to whose interest it was that such dissolution should take place did not prevent such corporation from exercising its right under the statute to vote on such stock. The facts briefly stated were that the Standard Distilling and Distributing Company had guaranteed the payment of certain dividends on the preferred stock of the Spirits Distributing Company during the existence of said Distributing Company. The Distilling Company of America was the owner of a large majority of the shares of both the Standard Company and the Distributing Company and it was to the interest of the Distilling Company that the contract between the Standard Company and the Distributing Company providing for such guarantee should be abrogated.

As stated above, however, the court held that this personal interest of the Distilling Company of America did not disqualify it from voting to dissolve the Distributing Company.

Subsequently Lacombe, Circuit Judge, in Windmuller v. Standard Distilling & Distributing Company et al., in the United States Circuit Court for the Southern District of New York, involving the same matters, concurred in Judge Kirkpatrick's decision saying, “This court is inclined to concur with Judge Kirkpatrick in the conclusion that a majority stockholder may vote to dissolve even if he had been influenced to that course by a wish to discharge a contract beneficial to the corporation but onerous to himself."

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