Ordinarily this functions after the expiration of its charter. is a matter which concerns the State alone.1 Under such circumstances, in order to protect third parties, the courts recognize such corporations as corporations de facto on the ground that there is clearly authority for their attempting to act as corporations.2 Many courts of high authority have held that a . corporation is dissolved and ceases to exist when its charter expires. In many States there are statutes permitting corporations to exist as such for certain purposes after the expiration of their charter. The purpose of such statutes is to grant to the corporation time to close up its corporate affairs. It has been held that the object of such statutes is not to limit but to enlarge corporate privileges so that the corporation may continue active business throughout the whole charter period. 5 § 63. Date of Annual Meeting. In Alaska, Arizona, Delaware, Iowa, Minnesota, Nebraska, and Utah the corporation acts require that the date of the annual meeting of the corporation be inserted in the articles. Such provisions are to be regarded as directory rather than mandatory, and their legal effect is essentially the same as if such provision was merely made in a valid by-law of the corporation. In Arkansas, Louisiana, and Tennessee the date of the organization meeting must appear in the certificate of incorporation. Even when the statute requires that the directors shall be chosen at the annual meeting, this has no reference to the election of the first board at the organization meeting.7 6 In the absence § 64. Limitation upon Corporate Indebtedness. of constitutional or statutory provision, there are no limitations imposed upon corporations with respect to the amount of indebtedness which they may incur. The whole extent of corporate credit is measured and controlled by its capital. The laws of trade have placed more efficient barriers than the State 1 Bushnell v. Company, 138 Ill. 67; 27 N. E. 596. 5 Berwick v. Company, 39 Mich. 701. 2 Miller v. Company, 31 W. Va. 836; Beardsley v. Johnson, 121 N. Y. 224; 24 8 S. E. 600. 8 Bradley v. Reppell, 133 Mo. 545; 32 S. W. 645; Sturges v. Vanderbilt, 73 N. Y. 384. 4 See Part III. Table 17, page 587. N. E. 380. 7 B. A. M. Co. v. Moring, 15 Gray (Mass.), 211. 8 Barry v. Company, 1 San. Chan. (N. Y.) 280, 310. legislatures to the power of corporate borrowing. In Alaska, Arizona, Florida, Iowa, Minnesota, and Nebraska, the incorporation acts require that the maximum amount of indebtedness which the corporation may incur shall be set forth in the articles of incorporation. In twenty-two of the Commonwealths statutes, either expressly or by implication, prescribe the amount of indebtedness which corporations may incur.1 When the phrase "implied limitation upon corporate indebtedness" is used, reference is had to that not uncommon form of limitation where directors or stockholders are made liable for corporate debts in case the corporate indebtedness exceeds a certain definite amount.2 § 65. Exemption of Stockholders from Personal Liability. While there is no common-law liability imposed upon stockholders for corporate debts, nevertheless parties may lawfully contract to any extent they see fit as to their own personal liability for such indebtedness. 3 In order that stockholders may avoid personal liability for corporate debts it is necessary in Arizona, Delaware, Iowa, Kentucky, Louisiana, Mississippi, Nebraska, and Utah, to insert provisions in the certificates of incorporation expressly exempting stockholders from such liability. § 66. Adoption of By-Laws by Directors. In a large number of the States and Territories the incorporation acts expressly provide for delegation of power to directors to make, alter, or repeal by-laws. In many of the States in order that the corporation may have this power it is necessary to insert provision therefor in the charter. Unless the power to make, alter, or repeal by-laws is thus delegated to the board of directors, it can only be exercised by the stockholders." 1 See Part III, Table 12, page 582. See also Commonwealth v. Company, 129 Pa. St. 405; 18 Atl. 414; O. H. Mfg. Co. v. Canney, 54 N. H. 295; Thornton v. Balcom, 85 Ia. 198; 52 N. W. 190; Heuer v. Carmichael, 82 Ia. 288; 47 N. W. 1034. 2 See Tallmadge v. Company, 4 Barb. (N. Y.) 382; Allison r. Company, 87 Tenn. 60; 9 S. W. 226; Sweney v. Talcott, 85 Ia. 103; 52 N. W. 106; Gunther v. Company, 107 Ky. 44; 52 S. W. 931. 8 London, etc. Bank v. Parrott, 125 Cal. 472; 58 Pac. 164; Lillard v. Company, 14 Tex. Civ. Ap. 67; 36 S. W. 792; Tidioute Sav. Bank v. Libbey, 101 Wis. 193; 77 N. W. 182. 4 See Part III., Table 12, page 582. Cahill v. Company, 2 Doug. (Mich.) 128; Heintzelman v. Association, 38 Minn. 138; 36 N. W. 100; Bank of Holly Springs v. Pinson, 58 Miss. 421. 6 Morton Gravel Road v. Wysong, 51 § 67. Provisions for the Regulation of the Internal Affairs of the Corporation. — In a number of the States statutory authority is to be found for inserting in the articles of incorporation any provisions that may be desired relative to the regulation of the business, and for the conduct of the affairs of the corporation, creating, defining, and limiting the powers of the corporation, the officers, and the stockholders. Under such authority the clauses which are usually inserted are the following: giving the directors power to sell all the business of the corporation as an entirety; the power to sell entire corporate property at the request of a majority of the stockholders; giving the right to directors to make and alter by-laws; giving the power to directors to borrow money upon bond and mortgage without authority therefor being first given by the stockholders; power to appoint additional vice-presidents and assistant secretaries and treasurers; to declare dividends; to reserve and fix working capital; to appoint an executive committee from the board of directors; giving stockholders power to remove directors; giving power to create a lien upon stock for indebtedness due company from stockholders; provision for the examination of books by the stockholders, and in connection therewith power to insert private publicity clause; to provide for cumulative voting and limiting the power to vote; reservation of power to change provisions in the articles of incorporation; power to create preferred stock. - § 68. Miscellaneous Provisions Relative to Contents of Articles of Incorporation. It would be impossible to enumerate all the peculiar provisions under the several business corporation acts which exist in the various States. Among those not already referred to are the following: Statement of the amount of stock subscribed for by the incorporators; a list of all parties who have subscribed for stock as preliminary to incorporation.2 In setting forth the subscribers to the capital stock it is sufficient to use above the first name the words names," Ind. 4; N. M. T. S. Co. v. Bishop, 103 1 See Part III. Table 10, page 580. 66 2 Chester Glass Co. v. Dewey, 16 Mass. 94; C. V. & P. Co. v. Secretary of State, 128 Mich. 62; 87 N. W. 901; J. N. Bank v. Company, 74 Tex. 421; 12 S. W. 110. "residences," "shares," and then immediately follow the same with the names of the subscribers to the capital stock.1 Among other provisions are those requiring the naming of an agent upon whom service of process upon the corporation may be served; 2 another, a statement of the manner of conducting the business of the corporation. A number of the States require the names and residences of the incorporators to be set forth in the articles. Sometimes it is necessary to secure the approval of the Attorney-General to the form and contents of the articles.5 § 69. Construction of Charter. Under the liberal provisions of the modern incorporation acts, the articles drawn thereunder necessarily assume, by the sole action of the incorporators, numerous powers, many of which have been heretofore of a public character, affecting the interests of the public very largely and very seriously. The Supreme Court of the United States has taken the view that, for the reasons just given, these articles do not commend themselves to the judicial mind as a class of instruments requiring or justifying any very liberal construction. That court has said in this connection, that where the question is whether they conform to the authority given by statute in regard to corporate organization, it is always to be determined upon a just construction of the power granted to them with a due regard for all other laws of the State upon that subject. 6 In construing charters the following rules seem to govern the courts: First, the intention of the legislature must be given due weight. Second, due consideration must be given to the policy of the State with reference to such matters as evidenced by the character of legislation. Third, all ambiguities in the terms of the articles of incorporation must be construed against the corporation in favor of the public. Fourth, words should be given their ordinary meaning. Fifth, the construction given 1 Vawter v. Franklin College, 53 Ind. 88. 2 Johnson v. Masons' Lodge, 21 Ky. L. R. 493; 51 S. W. 620. 3 State v. Association, 29 O. St. 399. Steinmetz v. Company, 57 Ind. 457; State v. Foulkes, 94 Ind. 493. Or. Ry. Co. v. Or. Ry. Co., 130 U. S. 1; 9 S. Ct. 409. 7 Union Nat. Bank v. Matthews, 98 U. S. 621. 8 A. L. & T. Co. v. Company, 157 Ill. 641; 42 N. E. 153. 5 See Field v. Cooks, 16 La. Ann. 598. 153. 9 Riker v. Leo, 133 N. Y. 519; 30 N. E. the charter must always be reasonable.1 Sixth, where the language of the certificate as to corporate purposes and powers permits of two constructions, that the more favorable to the State is to be adopted.2 1 Black v. Company, 22 N. J. Eq. 130; Wheeler, etc. Co. v. Company, 14 Wash. 630; 45 Pac. 316; Nat. Bank v. Company, 41 O. St. 1. 221. 2 Bridge Co. v. Ferry Co., 29 Conn. |