a charter amendment endows a corporation with the power of achieving a given result by the action of a given agency, it may be permitted to change the method of employing that agency in the achievement of that result so as to keep pace with the advance of science and invention, and thus accomplish its purpose most advantageously. In such a case there is no fundamental change in the essential character, objects and purpose of the corporation, or its general plan or enterprise.13 It has also been held that an amendment to a charter 346, 124 Am. St. Rep. 228, 82 N. E. 782. An amendment of the charter of a corporation increasing its capital stock, whether common or preferred, is fundamental. Atlanta Steel Co. v. Mynahan, 138 Ga. 668, 75 S. E. 980; State v. Railroad Commission, 137 Wis. 80, 117 N. W. 846. Act of March 6, 1873 (Acts 1873, p. 162), which attempted to change a corporation of limited capital stock to one in which the whole matter of the extent of the capital stock was left to the stockholders, is unconstitutional as violating art. XI, § 13, providing that corporations shall not be created by special act. Marion Trust Co. v. Bennett, 169 Ind. 346, 124 Am. St. Rep. 228, 82 N. E. 782. Where a corporation, in order to avoid bankruptcy, amended its articles of incorporation and rearranged its stock under Minn. Gen. St. 1894, §§ 2803, 2807, 3415, so as "to enable the corporation to conduct its authorized business more beneficially," it appearing that the amendment was adopted in good faith and for the purpose of satisfying creditors by the giv ing of preferred stock, such amendment was valid notwithstanding the fact that all the existing stockholders did not assent to it. In re Sharood Shoe Corporation, 192 Fed. 945. 13 Perkins v. Coffin, 84 Conn. 275, Ann. Cas. 1912 C 1188, 79 Atl. 1070. Where an amendment to a corporate charter authorized it to use for the operation of mills and factories the latent energies in the fall of waters of a river, the construction of plants for generating and transmitting elec tricity would not be a fundamental or material change. The fact that the construction of such plants will require the expenditure of large sums of money and may result in the destruction of the present value of stock, is a consideration of policy, where the judgment of the majority must rule. Perkins v. Coffin, 84 Conn. 275, Ann. Cas. 1912 C 1188, 79 Atl. 1070. Where a corporation was originally chartered to improve the navigation of a river, and powers were conferred, such as the power to erect dams, build locks, construct canals, procure and possess boats and collect tolls, the privileges and franchises and the means of their enjoyment were within the main design of the charter. Perkins v. Coffin, 84 Conn. 275, Ann. Cas. 1912 C 1188, 79 Atl. 1070. The fact that a corporation, if it undertakes to engage in certain business, will be brought under the operation of a statute (Gen. St. § 3911), whereby the liability of stockholders will be increased, is a matter for consideration as bearing upon the business policy of the company, to be governed by a majority decision, and such fact will have no significance in determining whether or not the proposed new enterprise involves a change of corporate plan or purpose. Perkins v. Coffin, 84 Conn. 275, Ann. Cas. 1912 C 1188, 79 Atl. 1070. of a hotel company allowing it to provide for other buildings, so as not to confine the purpose of the corporation exclusively to a hotel enterprise, was not a radical change of the original charter but a mere enlargement of its purposes.14 § 4319. --Arbitrary and unreasonable amendments. The reserved power of amendment and alteration must also be exercised upon terms that are just and reasonable,15 and alterations must be made in good faith.16 § 4320. Contracts in contravention of reserved power to amend or repeal. The reserved power of the state to alter, amend or repeal, cannot be avoided by a corporation or its members by entering into contracts or incurring debts, since all persons are bound to take notice of the law reserving the power.17 And if a contract cannot be performed consistently with an alteration in a charter, performance, as thus hindered or obstructed, will be excused under the rule that the performance of contracts is excused when rendered impossible by an act of law.18 Pursuant to this rule, it has been held that an amendment to a charter of a railroad, giving it the power to issue bonds to construct a bridge which should be open for use by other The fact that an amendment operates to expose a company to taxation on property acquired for the conduct of new business to be entered into, whereas it was originally exempt from taxation, furnishes no obstacle to acceptance by the majority. Perkins v. Coffin, 84 Conn. 275, Ann. Cas. 1912 C 1188, 79 Atl. 1070. Unlawful and unauthorized expenditures of money in procuring an amendment of a charter, and legislation in aid of it, and threatened future expenditures, will not invalidate the proceedings and prevent any legal result from the acceptance of the amendment, since the majority having power to accept would also have power to ratify expenditures. Perkins v. Coffin, 84 Conn. 275, Ann. Cas. 1912 C 1188, 79 Atl. 1070. 14 Casanas v. Audubon Hotel Co., 124 La. 786, 50 So. 714. 15 Chicago, M. & St. P. R. Co. v. State of Wisconsin, 238 U. S. 491, 59 L. Ed. 1423, L. R. A. 1916 A 1133; Fair Haven & W. R. Co. v. New Haven, 203 U. S. 379, 51 L. Ed. 237; Shields v. Ohio, 95 U. S. 319, 24 L. Ed. 357; Larabee v. Dolley, 175 Fed. 365; Arkansas Stave Co. v. State, 94 Ark. 27, 27 L. R. A. (N. S.) 255, 140 Am. St. Rep. 103, 125 S. W. 1001; Ozan Lumber Co. v. Biddie, 87 Ark. 587, 113 S. W. 796; Leep v. St. Louis, I. M. & S. Ry. Co., 58 Ark. 407, 23 L. R. A. 264, 41 Am. St. Rep. 109, 25 S. W. 75. 16 Fair Haven & W. R. Co. v. New Haven, 203 U. S. 379, 51 L. Ed. 237; Arkansas Stave Co. v. State, 94 Ark. 27, 27 L. R. A. (N. S.) 255, 140 Am. St. Rep. 103, 125 S. W. 1001. 17 Calder v. Michigan, 218 U. S. 591, 54 L. Ed. 1163; Macon & B. R. Co. v. Gibson, 85 Ga. 1, 21 Am. St. Rep. 135, 11 S. E. 442. 18 Macon & B. R. Co. v. Gibson, 85 Ga. 1, 21 Am. St. Rep. 135, 11 S. E. 442. railroads, was not defeated by the mortgage foreclosure sale of such railroad, although it appeared that the amendment was enacted after the execution of the mortgage under which the foreclosure sale was had 19 IV. PARTICULAR ALTERATIONS, AMENDMENTS AND REPEALS 23 § 4321. Banks. Under its reserved power of alteration the state may provide for the merger of banking corporations, so that such merger may be effected in spite of the protest of minority stockholders, 21 and it has also been held that an act assessing stockholders of national banks did not impair the obligations of contracts.22 A statute imposing double liability to creditors on stockholders whose stock was paid in full has been held unconstitutional in one state,2 but in another state it was held that a statute which imposed a greater liability upon stockholders of banks than was imposed prior to its enactment, did not impair the obligations of contracts.24 A bank guaranty law by which banks were authorized to use their property to reimburse depositors has been held unconstitutional in that the corporate funds might be used for a private purpose, whereby the stockholders would be deprived of their property without due process and their contracts impaired.25 § 4322. Building and loan associations. In one state a statute was passed regulating building and loan associations and the amount of interest which such corporations might charge. The contracts of members were not changed, but it was provided that if the act was not complied with before a certain time, the authority of such com paid in full, and sec. 1772 providing that the articles of incorporation of such companies may contain provisions not inconsistent with the law, but proper for the interests of the corporation and the accomplishment of its purposes, does not authorize such an amendment. Central Wisconsin Trust Co. v. Barter, 194 Fed. 835, aff'g Harris v. Northern Blue Grass Land Co., 185 Fed. 192. 24 Barth v. Pock, 51 Mont. 418, 155 Pac. 282. See § 4326, infra. 25 Bank Guaranty Law (Kan. 1909, c. 61); Larabee v. Dolley, 175 Fed. 365. panies to do business should cease, and their business be wound up. It was held that such a statute was not unconstitutional as impairing the obligations of contracts, and corporations which complied with the statute and amended their articles, could not subsequently contend that the act was invalid. Also in such case there was an implied acceptance of the statute so that members were estopped from denying such acceptance.26 It has been held also that the public interest is involved in every usury law, and in consequence such interest is involved in the repeal of a charter of a building and loan. association exempting it from usury statutes and allowing it to charge excessive interest. As a result such a charter is subject to amendment, alteration or repeal.27 § 4323. Change of name. A change in the name of a railroad company or other corporation is authorized under a reservation of power to amend or alter its charter.28 § 4324. Consolidation and reorganization. The state, under its reserved power, may authorize the consolidation of corporations, so that such action may be affected by a majority of the stockholders,29 and in a like manner such a charter power which is not executed may be taken away by an amendment to the charter.30 In fact, it has 26 St. John v. Iowa Business Men's Building & Loan Ass'n, 136 Iowa 448, 15 L. R. A. (N. S.) 503, 113 N. W. 863. 27 Mississippi Ass'n v. McElveen, 100 Miss. 16, 56 So. 187. Building & Loan 28 Buffalo & N. Y. City R. Co. v. Dudley, 14 N. Y. 336, holding that the change does not destroy the corporate identity and therefore release subscribers to the stock from liability on their subscriptions. Where the name of a corporation, the Orphans' Home, was changed to the Protestant Orphans' Home, the charter being extended, the same corporation with a slightly different name continued in existence. Palfrey v. Association for Relief of Jewish Widows & Orphans, 110 La. 452, 34 So. 600. 29 As to the consolidation of cor porations, see generally the chapter on Consolidation, infra. Where a corporation was incorporated under a statute (Code 1873, c. 57, §§ 59, 60), whereby the power to alter or amend the charter was reserved to the state, the state may subsequently authorize the consolidation of such company with another corporation, by a majority vote of stockholders, although a unanimous vote was required prior to that time. Winfree v. Riverside Cotton Mills, 113 Va. 717, 75 S. E. 309. 30 Pearsall v. Great Northern R. Co., 161 U. S. 646, 40 L. Ed. 838, holding that where the charter of a railroad company, or the general law, reserves the right to alter or amend, the legislature may take away from the company a general power given by its charter to consolidate with other corporations, so long as the power is been held that the power of consolidation may be taken away by a general statute enacted in the exercise of the police power when there is no reservation of the power of amendment.31 A consolidation agreement which operates to dissolve the constituent companies, and to form a new corporation, is in no sense an amendment of the charters of the constituent companies,32 and statutes authorizing amendments to increase capital stock, or to provide for preferred stock, have been held not to apply to such a consolidation agreement entered into in pursuance of other statutes.33 A statute providing for the reorganization of a mutual insurance company and the distribution of its assets or the bestowal thereof upon another, has been held unconstitutional. In such case the consent of all the members is necessary.34 The reorganization of a mutual reserve fund association, by which its business was broadened from Co-operative and assessment life insurance to life insurance of every kind, was held not to impair contract obligations or deprive policyholders of vested rights and property without due process of law.35 § 4325. Contracts of corporations. Under the reserved power to alter, amend or repeal, the legislature may regulate a corporation's power to contract when such regulation is for the public good, and is not subversive of any vested right or of the object of the charter,3 36 of capital stock, and Acts 1903, p. 349, Burns' Ann. St. 1914, § 5663, authorizing such companies to provide for preferred stock, have been held not to apply to a consolidation agreement entered into under Acts 1899, p. 378, Burns' Ann. St. 1901, § 5468n, and Acts 1903, p. 181, Burns' Ann. St. 1914, § 5690, authorizing consolidation of stock of constituent companies upon such terms as might be mutually agreed upon. Norton v. Union Traction Co., 183 Ind. 666, 110 N. E. 113. 34 Huber v. Martin, 127 Wis. 412, 3 L. R. A. (N. S.) 653, 115 Am. St. Rep. 1023, 7 Ann. Cas. 400, 105 N. W. 1031, 1035. 35 Polk v. Mutual Reserve Fund Life Ass'n, 207 U. S. 310, 52 L. Ed. 222. 36 Arkansas Stave Co. v. State, 94 Ark. 27, 27 L. R. A. (N. S.) 255, 140 Am. St. Rep. 103, 125 6. W. 1001; Leep v. St. Louis, I. M. & S. Ry. Co., 58 |