But all the authorities substantially agree that until the subscription paper has been presented to the corporation and assented to by it, the signers are not stockholders. . .

It was decided therefore that such persons were not liable under this section.

"The law is that a corporation is liable for its own acts only after it has a legal existence. Until that time no one, whether a promoter or not, can sustain to the corporation the relation of agent. Were this not so, we would have an agent without a principal, which is an absurdity. But if one assumes to act as agent for a prospective corporation, and in form enters into a contract in its behalf, it is competent for such corporation, when organized, to ratify such contract. If, with full knowledge of all the facts, but not otherwise, the corporation assumes the contract and agrees to pay the consideration, or accepts the benefit of the contract, it will be bound thereby." Upon a contract so made but not ratified, the stockholders cannot be held personally liable under the above section.

Amendment to articles.-The statutes provide: "Any corporation organized under this chapter, may at any meeting of its members by a vote of at least the owners of two-thirds of all the stock then out standing, in case of stock corporations, or at least one-half of the members of corporations without stock, unless a greater vote shall be required in its articles, amend its articles of organization so as to modify or enlarge its business or purposes, change its name or location, increase or diminish its capital stock, change its officers or its directors or provide anything which might have been originally provided in such articles; but no corporation without stock shall change substantially the original purposes of its organization. Such amendments shall be adopted only in accordance with the articles of organization, if a mode of amending the same shall have been therein prescribed. When adopted, a copy of such amendment, with a certificate thereto affixed, signed by the president and secretary, or if none, the correspondent officers, and sealed with the corporate seal, if there be any, stating the fact and date of adoption of such amendment and that such copy is a true copy of the original, shall be filed in the office of the secretary of state and within thirty days after such filing by the secretary of state a like copy shall be recorded in the office of the register of deeds where said cor

poration is located, and in case of failure so to do, such officers shall forfeit twenty-five dollars and the register of deeds shall note on the margin of the record of the original articles the volume and page where such amendment is recorded, and no amendment shall be of effect until so recorded, and such amendment shall be void until so filed and recorded. Whenever the corporate name shall be changed, the secretary shall publish a notice thereof in a newspaper published at or nearest to the place of location of such corporation for three weeks, and if he shall fail for two months to do so, he shall forfeit twenty-five dollars. No change of location of any such corporation, if beyond the limits of the county, shall be valid until the articles of organization and all amendments shall have been recorded in the office of the register of deeds of the county to which the same shall be changed."

De facto corporation.-It sometimes occurs that persons who desire to incorporate fail to comply with some provision required by law, but proceed after an attempted incorporation to exercise corporate powers. Such incorporation is valid for all practical purposes, and can only be questioned by the state itself. A corporation which is thus defectively organized is known as a de facto corporation. In order that there may be a de facto corporation, however, it is necessary that the corporation in order to exist and act as such might be legally incorporated; there can be no de facto corporation where there can be no corporation de jure, that is, a perfectly legally organized corporation. In order that there may be a de facto corporation, there must be a law under which a valid corporation might be organized, and there must be an attempt, in good faith, to comply with the law, and the powers delegated to corporations legally organized must be exercised. The Supreme Court says: "It is elementary and supported by numerous adjudications, that defects or irregularities in the organization of a corporation can be taken advantage of only by the state upon quo warranto to test its right de jure to be and act as a corporation. If there is a charter or law under which such an association might lawfully be incorporated, and there has been a colorable compliance with the charter or law and an exercise of the rights claimed under it, then the existence of the corporation de facto is established, and its existence de jure cannot be inquired into collaterally. . . . And the rule is applicable to corporations organized under general

...

laws A court of equity, in the absence of statute authority, has no jurisdiction, at the suit of a private party, to try and determine the question whether a corporation de facto is a corporation de jure, or to decree a forfeiture of its franchises, or its dissolution, or to exclude it from the exercise of its corporate franchises. The remedy in all such cases is at law, and exists only in favor of the state..... Aside from a few exceptions . . . . no private person is allowed to assert, as a party litigant, that the corporation is illegal, that its franchises have been forfeited, or that the corporation is dissolved, or its incorporation is illegal, until after it has been adjudged by a court in proceedings instituted for that purpose by the state." "Wherever there is a valid law under which a corporation with the powers assumed might have been lawfully incorporated, and there is an attempt, apparently in good faith, to comply with the requirements of such law, and the corporation thus attempted to be created is organized and enters upon the transaction of business, its existence as a de facto corporation is established, even though it has failed to comply with the law in some particular which prevents it from being a corporation de jure. ... But where there is no law authorizing a particular corporation de jure there can be no such corporation de facto. . . . . So there are cases holding, in effect, that where there is, apparently, no attempt in good faith to comply with certain substantial requirements of the law authorizing such corporations--nothing sufficient to give color to the incorporation--the body attempted to be incorporated will not be regarded as a corporation de facto....

Estoppel.-Persons who attempt to organize a corporation and claim that they have done so and proceed to exercise corporate powers cannot thereafter deny the existence of the corporation. This is so whether a corporation de facto has been formed or not. For instance, persons may claim to act as a corporation and exercise corporate powers without ever having incorporated; such persons cannot deny the corporate existence. The estoppel also applies to persons who deal with it as such an alleged corporation. After they have dealt with it and recognized it, they cannot deny that the party dealt with is a corporation. Where, however, the conduct of third parties does not show a recognition of such corporation, they are not estopped.

The following decisions will illustrate the law in regard to this kind of estoppel: Defendant was sued by a corporation and in his answer set up a counter-claim against the corporation. On the trial of the case he attempted to attack the validity of the plaintiff's organization. It was held that by presenting such counter-claim he recognized the validity of its existence, and was estopped from denying it. In another case a person gave a deed of land to an alleged corporation and afterwards sought to recover the property, claiming that the alleged corporation was not such in fact. It was held that by making the deed to the corporation he recognized it, and could not question the legality of its organization.

"It is recognized as a rule of law which is sanctioned by numerous authorities, and which is certainly in accord with the principles of natural justice, that when a corporation has held certain persons out to the public as its directors or officers, those dealing with them as such, and ignorant of their want of legal power, will be entitled to consider their acts as binding upon the corporation; and when there has been an informal or irregular exercise of an existing power of election, the officers so elected, until removed, are regarded as officers de facto, and their acts are obligatory upon the corporation..... The company ought not to be permitted to say, in defense of an action upon its contract entered into under such circumstances, that it had no legal existence when the contracts were executed, or that its officers were not duly elected or appointed."

Defendant in a case made a contract with the board of trustees of a church. When sued on the contract he set up as a defense that the church was not legally incorporated, and that the trustees had no authority to make the contract. It was decided that by making the contract he estopped himself from questioning the authority of the church or the trustees.

SECTION III.

CORPORATE POWERS AND LIABILITIES.

Generally.-A corporation, being a creature of the law, has only such powers as are granted to it by law. Such powers are derived from its charter, and the general laws of the state relating to corporations. A corporation also has certain incidental and implied powers. Those powers

which are incidental to corporate existence, such as to have perpetual succession, the power of suing and being sued, to have a common seal, to make by-laws, to take and dispose of property necessary for the conduct of the corporation's business, to elect directors and officers, may be exercised by every corporation without special grant of authority. Most of the powers of corporations may be said to be implied from the main or primary powers granted to it by law. Such implied powers are those which it is necessary for the corporation to exercise to carry into effect the main powers granted. No more specific rule as to what the implied powers of a corporation are can be laid down than to say that a corporation has power to do whatever is reasonably necessary to carry out the purposes of its creation. The statutes provide that "the property of any corporation organized under any special or general law shall be used only for the purposes prescribed by such law or by its articles of organization in pursuance thereof. The legislature may at any time limit or restrict the powers of any corporation organized under any law, and, for just cause, annul the same and prescribe such mode as may be necessary for the settlement of its affairs."

Statutes. It is provided by statute that every corporation shall have certain powers, but it should be understood that the following section of the statutes does not attempt to state or limit the powers of a corporation, but only to state certain incidental powers:

"Every corporation organized under any general or special law, when no other provision is made by law or by its articles of organization, shall have the following powers:

1. To make all contracts necessary and proper to effect its purposes and conduct its business.

2. To sue and be sued, to appear and defend in all actions and proceedings in its corporate name to the same extent as a natural person.

3. To have a common seal and alter the same at pleasure.

4. To elect or appoint, in such manner as shall be fixed by its by-laws, all necessary officers, agents and servants, define their duties and obligations, fix their compensation and fill vacancies therein; and to establish branch offices or places of business in this state or elsewhere.