§ 8 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 addresses 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 conpany;

VII. The certificate of incorporation may also contain any provision which the incorporators may choose 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, page 80.)

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 to prevent the use of unauthorized names as subscribers to capital stock.

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." The officer before whom the acknowledgments are taken shall certify that the "party signed, sealed and delivered" the same. (P. L. 1898, p. 679.)

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

8

Legislature. (Ellerman v. Chicago Junction Rys., &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. (Mont-
clair v. N. Y. & Greenwood Lake R. R. Co., 45 N. J. Eq.,
436.)

(2) A contract between the individual stockholders and the cor-
poration. (Kean v. Johnson, 9 N. J. Eq., 401; Loewenthal v.
Rubber Reclaiming Co., 52 N. J. Eq., 440.)

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

Modification of stockholders' rights. The rights of stockholders, if established without reservation by the certificate of incorporation, are sometimes difficult to modify by a majority if minority stockholders object.

The right to amend a certificate of incorporation which provided only for common stock, by making an issue of preferred stock; the power of a majority to change the rate of dividends on the preferred stock, or to change a cumulative dividend on preferred stock to a non-cumulative, and similar questions have been litigated. Pronick v. Spirits Distributing Co., 58 N. J. Eq., 97; Smith v. Eastwood Wire Mfg. Co., 58 N. J. Eq., 331; Berger v. United States Steel Corporation, Court of Errors and Appeals, October, 1902; Willcox v. Trenton Potteries Co. (Stevens, V. C.), November, 1902. See Clark & Marshall on Private Corporations, Vol. III, p. 1916 and cases cited. See note p. 13, ante, and p. 55, supra.

Certain changes and amendments are provided for by statute, and the stockholders' rights are in such respects subject to amendment in the statutory manner. See Sec. 27, p. 54 and notes.

Other changes require the consent of every stockholder unless the right of the majority to amend is incorporated in the certificate of incorporation.

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.

§ 8

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. L. 1897, p. 274.)

This subdivision was amended in 1898 by inserting the word "existing," so as to forbid the use of the name of "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 Bldg 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 corporation 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.

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. By Chap. 173 of the Laws of 1898 (Sec. 43a, post) 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 this State is at No.

County of

street, in the city 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 designat

ing any place of business out of the State. The agent may be changed from time to time by the directors.

So far as the laws of New Jersey are concerned, corporations have no principal office outside the state of New Jersey. They have the right to do business anywhere out of the State, if suitable provision is made in the charter. (See 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 section formerly read "the objects for which," etc. This 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 inconvenience follows from companies having too limited powers. It is often questioned how far it is necessary to detail in extenso in the certificate of incorporation the powers of the company. The answer is plain.

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

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 in the face of narrowly defined objects.

The powers of the corporation cannot be enlarged by the by-laws. (Stewart v. Odd Fellows' Mut. Life Ins. Co., 12 N. J. L. J., 110.)

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

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

8

at least $1,000 of stock should be subscribed by the incorporators, this con§ 8 stituting the amount of capital stock with which the company will commence business.

The par value of the shares may be fixed at any amount. The question has been asked whether the par value of the shares could be expressed in foreign standards of value, as English pounds sterling. It would seem, however, from the language used, that the monetary standard of the United States is intended. There could be no objection, however, it is apprehended, to the issuing of shares with an exchange value in foreign money, in order that certificates issued in foreign countries might be issued bearing both the United States value and its equivalent in the money of the foreign country.

This section, before it was amended, required "the amount" with which the company would commence business to be stated. It was thought that this required the company to have at least $1,000 paid into its treasury before it could commence business. It seems clear now, however, that the company may commence business at once and may call the subscriptions to its capital stock at such time as the directors find 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. (See Section 18, post.)

In view of the fact that the cost of filing the certificate of incorporation is the same (i. e., $25) for any amount of total authorized capital not exceeding $125,000, it is customary to insert in the certificate power to issue stock to the amount of $100,000 or $125,000. The company may then at such times as the business requires issue stock up to the amount limited without filing a certificate of increase of capital stock under Section 27.

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 any time after three years from the issue thereof at not less than par (Sec. 18). Dividends on preferred stock may be fixed at any rate not exceeding 8 per cent. per annum. 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.

It would appear at first sight that there is no express language in this section or in Section 18 which requires the certificate of incorporation to fix the authorized amount of preferred capital as distinguished from the common stock. Nevertheless, the office of the Secretary of State of New Jersey has made a ruling, based upon the opin