may have reference to action taken by the State with a view to forfeiture of corporate charters on any one of the following grounds: failure to organize the corporation within the time prescribed by statute; failure to carry on the business enumerated in its articles; 2 failure to elect officers; 3 failure to maintain domiciliary office within the State; failure to commence business within the time designated by statute.5

(2) Forfeiture for misuse or abuse of corporate powers. "To work a forfeiture on the ground of misuser or abuse of corporate powers, there should not only be a wrong, but one arising from wilful abuse or improper neglect. The corporate default must be something more than accidental negligence or mere mistaken excess of power, or mistake in the mode of exercising an acknowledged power. There must be an abuse of trust, of such a nature as would render a trustee liable to forfeit his station on the complaint of his cestui que trust if the question stood on the relation between them. Corporations are political trustees. Have they fulfilled the purposes of their trust or acted in good faith with a view to fulfilment? is the question to be asked when they are called upon to forfeit their charter, either for acts of commission or omission." 6

"It appears to be settled," observed the New York Court of Appeals, "that the State as prosecutor must show on the part of the corporation accused some act against the law of its being which has produced or tends to produce injury to the public. The transgression must not be merely formal or accidental, but material and serious, and such as to harm or menace the public welfare. For the State does not concern itself with the quarrels of private litigants. It furnishes for them sufficient courts and remedies, but interferes only where some public interest requires its action. Corporations may and often do exceed their authority where only private rights are affected. But when the transgression has a wider scope and threatens the welfare of the people, they may summon the offender to answer for the abuse of its franchises or the violation of its corporate duty."7

1 State v. Simonton, 78 N. C. 57. 2 W. C. M. Co. v. Burns, 114 N. C. 353; 19 S. E. 238.

8 State v. Barron, 58 N. H. 370.

4 State v. Company, 58 Minn. 330; 59 N. W. 1048; State v. Company, 59 Kan. 151; 52 Pac. 422; State v. Company, 45 Wis. 579.

5 W. F. C. F. Co. v. Kittridge, 5 Saw. 44; People v. Bank, 129 Ill. 618; 22 N. E. 288. 6 People v. B. & R. T. Road, 23 Wend.

222.

7 People v. Company, 121 N. Y. 582; 24 N. E. 834; see also M. O. & R. R. Co. v. Cross, 20 Ark. 443.

(3) Forfeiture for non-performance of conditions precedent. Even a corporation defectively organized may have what is termed a "de facto existence," so that it cannot ordinarily be impeached by parties other than the State. Nevertheless the right to bring proceedings to forfeit the charter of such corporation vests with the State which may bring proceedings to forfeit the same and oust it from the exercise of corporate powers.1

(4) Forfeiture for non-performance of conditions subsequent. It has been well settled that charters of corporations may be forfeited by proper action brought by the State for failure to comply with conditions subsequent which are clearly mandatory and not merely directory in their nature.2

(5) Forfeiture for violation of express statute. This is one of the clearest grounds for the exercise by the State of its right to forfeit charters. The most common ground for the exercise thereof is in connection with anti-trust legislation.3

(6) Forfeiture for non-payment of taxes. Several of the States authorize forfeiture of charters for non-payment of organization and annual franchise taxes. This right has been exercised with great frequency, and constitutes unquestionably a valid exercise of the power of such legislature over corporations.*

(7) Forfeiture for insolvency. In the absence of statutory provision to that effect, insolvency alone will not authorize the State to forfeit corporate charters. However, it is unquestionably valid for a State to prescribe that if a corporation be insolvent for a certain length of time it shall constitute a forfeiture of its charter. § 116. The Police Power of the State. The police power of the State comprehends all those general laws of internal regulation which are necessary to secure the peace, good order, health, and

1 Holman v. State, 105 Ind. 569; People v. City Bank, 7 Col. 226; 3 Pac. 214.

2 State v. Company, 1 Tenn. Cases, 511; People v. Company, 131 N. Y. 140; Hammond v. Strauss, 53 Md. 1.

8 Simmons v. Company, 113 N. C. 147; State v. Company, 24 Texas, 80; Huyler v. Company, 40 N. J. Eq. 392; People v. Company, 60 How. Pr. 82; People v. Company, 130 Ill. 268; State v. Standard Oil Co., 49 O. St. 137; People v. Company, 121 N. Y. 582; see also People v. Cham

bers, 42 Cal. 201; People v. Bank, 129 Ill. 618; 22 N. E. 288; 24 N. E. 834.

4 Hughesdale Mfg. Co. v. Vanner, 12 R. I. 491; Bank v. Company, 17 Ap. Div. (N. Y.) 524.

5 People v. Bank, 6 Cowen (N. Y.), 211; A. & L. T. Co. v. Holthouse, 7 Ind. 59; State v. Bank, 13 Smeads & M. (Miss.) 569; Chicago Life Ins. Co. v. Needles, 113 U. S. 574.

People v. Bank, 12 Mich. 526; C. M. L. & I. Ass'n v. Hunt, 127 Ill. 257; Denike v. Company, 80 N. Y. 599.

comfort of society, but the proper limit in its bearing upon charter rights and privileges of private corporations for public uses would seem to be this: That the legislature may at all times regulate the exercise of the corporate franchises by general laws passed in good faith for the legitimate ends contemplated by State police power; that is, for peace, good order, health, comfort, and welfare of society; but it cannot under the color of such laws destroy or impair the franchises itself, or any of the rights or powers which are essential to the exercise of it.1

After the decision of the United States Supreme Court in Dartmouth College v. Woodward,2 that court proceeded to enunciate the doctrine that in the exercise of what is termed "police power,' the several States might pass laws as a valid exercise of such powers when otherwise they would be forbidden to do so under Section 10, Article 1, of the Constitution of the United States, which forbids the impairing of the obligations of contracts by means of laws enacted by them.

The police power arises primarily from the nature of the social contract, just as when each person upon becoming a member of a society must of necessity relinquish some of the rights and privileges which, as an individual and considered alone, he might retain. The Supreme Court of Massachusetts in Commonwealth v. Alger says: "All property is subject to such reasonable restrictions and regulations established by law as the legislature under the governing and controlling power vested in them by the Constitution may think necessary and expedient."

In Gibbons v. Ogden the United States Supreme Court held that the police power is lodged with the several States. In Providence Bank v. Billings the court took another step forward, and held that the abandonment on the part of the State of its power of regulation in this regard ought never to be presumed in any case where the purpose of the State to abandon it does not clearly appear. In the License Cases the court held that, in the exercise of its police power, a State may pass quarantine and sanitary laws damaging and even destroying property in some cases. In Bartemeyer v. Iowa the court held that a State law prohibiting the manufac

ture and sale of intoxicating liquors was a valid exercise of the police power. In Beer Company v. Massachusetts1 the court held that as a measure of police regulation, looking to the preservation of public morals, a State law prohibiting the manufacture and sale of intoxicating liquors is not repugnant to any clause of the Constitution of the United States.

In Mugler v. Kansas 2 it was held that a State may absolutely prohibit the manufacture and sale of intoxicating liquors as a beverage, and may declare places where such liquors are manufactured or sold to be nuisances, and may authorize the destruction of such liquors found therein, and of all property used in keeping and manufacturing such nuisances. Such a statute is valid as to such liquors lawfully manufactured before the enactment of the statute, and although it greatly deteriorates the value of the property lawfully used in such manufacture before the enactment of the statute.

In Munn v. Illinois it was held that when the owner of property devotes it to a use in which the public has an interest, he in effect grants to the public an interest in such use, and must to the extent of that interest submit to be controlled by the public for the common good as long as he maintains the use.

In Fertilizing Company v. Hyde Park the right of State authorities to compel the removal of a bone fertilizing business from a location near the village to a point farther removed, was held to be valid as an exercise of the police power.

In the Slaughter House Cases the court held that the power of State legislatures to make a contract of such a character that under the provisions of the Constitution it cannot be modified or abrogated does not extend to subjects affecting public health and public morals, so as to limit the further exercise of legislative power over those subjects, to the prejudice of the general welfare.

To summarize briefly the general doctrine of the federal Supreme Court on this subject, the same may be done by presenting the following abstract propositions:

(1) Laws for the welfare and safety of a community being essential to the existence of every State, it cannot be supposed to have been within the intention of the original thirteen States to limit this power by assenting to the Federal Constitution.

(2) Generally speaking, the extent to which a State can regulate the business or affairs of a corporation depends upon the nature of the business whether it affects the public closely or remotely. If it is of such a character or magnitude that the public are directly interested in its proper management, then it falls within the proper sphere of legislative control.1

(3) Being an inherent right as well as a duty, the legislature may pass enactments looking towards the safety of life and property, and general laws of this nature are a legitimate exercise of the "police power." Thus it may compel railroads to fence tracks, maintain cattle guards, put up signboards at crossings, construct viaducts, require all trains to stop at intersections of railroads, etc.2 (4) Laws intended to prevent or remove nuisances are clearly within the "police power" of the State.3

(5) A State may pass laws for the protection of its inhabitants against the evils of intemperance, even though existing contracts be affected thereby.4

(6) Laws regulating the employment of persons of a certain age in manufactories are a valid exercise of the general power of the State to enact laws to secure the health and education of the community.5

(7) A State may by statute protect the interest of employees when the common law affords no protection; as for example, a law providing that all railroad companies shall be liable for wages due to day laborers employed by contractors engaged to construct the company's railroad and works was held to be valid.6

(8) A State may by general laws regulate the use and disposition of property within its jurisdiction, although existing incorporated companies be thereby affected.7

(9) A State may pass laws for the protection of the morals

1 Munn v. Illinois, 94 U. S. 113; 24 L. E. 77; Pearsall v. Company, 161 U. S. 646; 40 L. E. 838.

2 Reid v. Colorado, 187 U. S. 137; 47 L. E. 108; Smith v. Company, 181 U. S. 248; 45 L. E. 847.

28 L. E. 629; Mugler v. Kansas, 123 U. S. 623.

5 Knoxville Iron Co. v. Harbison, 183 U. S. 13; 46 L. E. 55.

6 Knoxville Iron Co. v. Harbison, 183 U. S. 13; 46 L. E. 55; Butchers' Union,

3 Slaughter House Cases, 16 Wall. 36; etc. v. Company, 111 U. S. 746; 28 L. E. 21 L. E. 394.

4 Reymann Brewing Co. v. Brister, 179 U. S. 445; 45 L. E. 269; Rhodes v. State of Iowa, 170 U. S. 412; 42 L. E. 1088; Foster v. Kansas, 112 U. S. 201;

585; Dent v. West Virginia, 129 U. S. 114; 32 L. E. 623; Holden r. Hardy, 169 U. S. 366; 42 L. E. 780.

7 Budd v. New York, 143 U. S. 517; 36 L. E. 247.