the state and the location of its principal office or place of business out of the state were stated in the certificate of incorporation. An act of 1892 permitted any corporation to carry on and conduct its business outside of the state, though not so empowered in the certificate of incorporation. (P. L. 1892, p. 90.) The question arose whether a manufacturing corporation, incorporated under the Act of 1875, which stated in its certificate that the business to be carried on in the state was manufacturing, and that the portion of its business outside the state was the selling of its manufactured products in the cities of New York and Brooklyn, could under the Act of 1892 remove its manufacturing plant to another state. It was held by the Court of Chancery that such a removal was a material change in the object of the company which could not take place without the consent of every stockholder. The Court held, however, that a removal to another part of the state was not a material change. Stickle v. Liberty Cycle Co., 32 Atl. Rep., 708.

Section 7 of the present act was apparently drafted for the purpose of meeting this case, and where the certificate of incorporation is properly drawn the power can be put in the directors to carry on the business of the company wherever from time to time they deem will be best suited to the objects of the company.

Where the corporation is to conduct its operations in another state it is important to ascertain what laws of that state are applicable to foreign corporations. Such laws are, in some instances, in express terms applicable to foreign corporations, and other laws, applicable to corporations generally, have been construed by the courts to apply to foreign as well as domestic corporations. For an example of the latter, see Williams v. Gaylor, 186 U. S., 157, where it was held that a statute of California prohibiting the directors of a mining corporation from selling or encumbering its mining ground unless ratified by the stockholders, applied to foreign corporations, having been so held by the Supreme Court of California, and that such a requirement was not a regulation of the internal affairs of the corporation, but had reference to the conduct by it of its business.

"The power of a state to impose conditions upon foreign corporations is certainly as extensive as the power over domestic corporations." Dayton Coal & Iron Co. v. Barton, 183 U. S., 23.

Liability of stockholders under laws of other states.

The laws of some of the states with respect to the liability of stockholders are in express terms made applicable to foreign corporations. Thus it has been held by the United States Supreme Court construing a California statute to that effect, that where a corporation was chartered in Colorado for the express purpose of carrying on part of its operations in the State of California, the stockholders were liable to

creditors according to the provisions of the California statute. Pinney v. Nelson, 183 U. S., 144.

This section is limited where the laws of a foreign state provide that no corporation organized outside of the state shall be allowed to transact business within the state on more favorable conditions than are prescribed by law to similar corporations in the state. Under such provisions a foreign corporation is not entitled to more favorable conditions than a domestic corporation. Coler v. Tacoma Ry. & Power Co., 65 N. J. Eq., 347.

As to the legality of a contract made in a foreign state without first having procured the authority of such state to transact business, see Allegheny Co. v. Allen, 69 N. J. Law, 270; see also s. c 196 U. S., 458.

A foreign corporation cannot legally do what is prohibited a domestic corporation, thereby securing the right to transact business on more favorable terms than are prescribed for domestic corporations. Coler v. Tacoma Ry. & Power Co., 65 N. J. Eq., 347.

When a contract of sale of tangible chattels situated in another state is made between a citizen of that state and a New Jersey corporation, and is to be performed in the foreign state, the law of that state governs. Cooper v. Philadelphia Worsted Co., 68 N. J. Eq., 622.

State comity.

By the general comity which, in the absence of express provisions to the contrary, prevails through the states and territories of the United States, corporations created in one state or territory are permitted to carry on any lawful business in another, and to acquire, hold and transfer property there equally as individuals. If such other state does not permit the foreign corporation to do business in its limits, or to acquire or hold real property there, it must be expressed in some affirmative way. Cowell v. Springs Co., 100 U. S., 55; Christian Union v. Yount, 101 U. S., 352.

Certificate of Incorporation.

8. The certificate of incorporation shall be signed in person by all the subscribers to the capital stock named therein, and shall set forth:

I. The name of the corporation; no name shall be assumed already in use by another existing corporation of this state, or so nearly similar thereto as to lead to uncertainty or confusion;

II. The location (town or city, street and number, if number there be) of its principal office in the state; III. The object or objects for which the corporation is formed;

IV. The amount of the total authorized capital stock of the corporation, which shall not be less than two thousand dollars, the number of shares into which the same is divided and the par value of each share; the amount of capital stock with which it will commence business, which shall not be less than one thousand dollars; and, if there be more than one class of stock created by the certificate of incorporation, a description of the different classes, with the terms on which the respective classes of stock are created;

V. The names and post-office address of the incorporators and the number of shares subscribed for by each; the aggregate of such subscriptions shall be the amount of capital stock with which the company will commence business, and shall be at least one thousand dollars;

VI. The period, if any, limited for the duration of the company;

VII. The certificate of incorporation may also contain any provision which the incorporators may chose to insert, for the regulation of the business and for the conduct of the affairs of the corporation, and any provision creating, defining, limiting and regulating the powers of the corporation, the directors and the stockholders, or any class or classes of stockholders; provided, such provision be not inconsistent with this act.

As amended by Chap. 172, § 2, Laws of 1898; P. L. 1898, p. 408. P. L. 1846, p. 64; P. L. 1849, p. 300; Act of 1875, § 11; P. L. 1876, p. 103; P. L. 1884, p. 82; P. L. 1888, p. 152.

The certificate of incorporation must also contain the name of the registered agent. (See Section 43a.)

The certificate of incorporation should be signed in person. It is not proper to sign by an attorney in fact.

Every person named in the certificate of incorporation as a subscriber to the capital stock must sign the certificate. This is to prevent the use of unauthorized names as subscribers to capital stock.

The

The certificate should also be sealed by all the subscribing incorporators. Section 9 requires the certificate of incorporation to "be proved or acknowledged as required for deeds of real estate." officer before whom the acknowledgments are taken shall certify that the "party signed, sealed and delivered" the same. P. L. 1898, p. 679. Section 8 construed in connection with sections 18 and 86. Lloyd v. Penn. Electric Vehicle Co., 72 Atl. Rep., 16.

Public grants, whether of lands or of franchises, are strictly construed. American Dock Improvement Co. v. Trustees, 39 N. J. Eq., 409. 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 Junction Rys., &c., Co., 49 N. J. Eq., 217; Oregon Ry. Co. v. Oregonian Ry. Co., 130 U. S., 1.

It is to a certain extent

(1) A contract between the corporation and the state. Montclair v. N. Y. & Greenwood Lake Ry. Co., 45 N. J. Eq., 436.

(2) A contract between the individual stockholders and the corporation. Kean v. Johnson, 9 N. J. Eq., 401; Loewenthal v. Rubber Reclaiming Co., 52 N. J. Eq., 440; Einstein v. Raritan Woolen Mills, 74 N. J. Eq., 624.

(3) A contract between the stockholders themselves. Id.

A provision in the certificate that stockholders of record on the books of the company when an assessment is made shall be liable therefor, is not inconsistent with the statute. And this provision is binding upon a person who became a stockholder after the company was organized. Brown v. Morton, 71 N. J. Law, 26.

Modification of stockholders' rights.

Since the certificates of shares constitute a contract between the stockholders and the company, the contract cannot be altered without the stockholders' consent unless the right to do so has been expressly reserved. An alteration of the rate of dividends on preferred stock cannot be made without the stockholders' consent. Pronick v. Spirits Distributing Co., 58 N. J. Eq., 97.

Existing laws are read into the contract of incorporation and constitute a part of that contract. The power to extend corporate exist

ence, to increase capital stock, to change nature of business and to purchase property with stock is thus granted. Smith v. Eastward Wire Mfg. Co., 58 N. J. Eq., 331.

But when the change in preferred stock affects only those who assent to the agreement and when the rights of non-assenting stockholders are not impaired, a change may be made provided the statutory requirements are followed. Non-cumulative preferred stock may be substituted for cumulative dividend paying stock, but the right of any preferred stockholder to participate in dividends cannot be taken away without his consent. Willcox v. Trenton Potteries Co., 64 N. J. Eq., 173. Even if an agreement changing the status of preferred stock should be construed as varying the rights of non-assenting stockholders, it does not follow that an injunction should issue restraining the carrying out of the scheme. Id.

Stockholders of a corporation have a right to have the corporate property applied and used exclusively for purposes specified in the charter and any attempt of the managers to apply it to other purposes is a usurpation of power. But laches on the part of a stockholder will bar his right to question corporate acts which are merely in excess of power and not prohibited by law. Rabe v. Dunlap, 51 N. J. Eq., 40.

The stockholder's right to participate pro rata in a new issue of stock cannot be abridged. Wall v. Utah Copper Co., 70 N. J. Eq., 17.

A dissenting stockholder may question the validity of a sale when the condition of subscription for stock in the new company makes him liable for additional payments and requires his participation in another company. Mitchell v. United Box, Board & Paper Co., 72 N. J. Eq., 580.

Under a contract made by the directors of a corporation by which a purchaser of the corporate property agrees to pay all debts and the par value of the stock to the stockholders, the purchaser becomes liable to each stockholder when the deed is accepted, under P. L. 1903, p. 541, Sec. 48. Fleming v. Reed, 77 N. J. Law, 563.

In New York State it has been held that upon an increase of capital stock a stockholder has an inherent right to a proportionate share of new stock, provided that such stock is issued for money only and not for the purchase of property for corporate purposes or to affect a consolidation. Stokes v. Continental Trust Co., 186 N. Y., 285.

Charter cannot be attacked collaterally.

The regularity of the organization of a corporation cannot be questioned collaterally in any court at the instance of a private person, and 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. Attorney General v. Stevens, 1 N. J. Eq., 369; Elizabethtown Gas Light Co. v. Green, 49 N. J. Eq.,