A corporation is not liable on contracts made in its behalf by promoters unless it ratifies such contracts expressly or impliedly. If the corporation recognizes the contract or accepts any benefit under it, or, knowing of its existence, does any act which is not consistent with a disavowal of it, it will be held to have ratified it.

In a Wisconsin case it appeared that certain persons had a right to purchase a mining option for $20,000 and formed a corporation to proceed with the mining enterprise. They formed such corporation and represented to the persons subscribing for stock in the corporation that such option would cost $90,000. When $100,000 of capital stock has been paid in, they, as officers of the corporation, bought the mining option for the corporation for the apparent price of $90,000, but in fact paid only $20,000 and appropriated the $70,000 to their own use. The corporation thereupon sued such officers for fraud, and it was decided that it could recover the secret profit made by the promoters and officers.

"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."

"The liability of promoters of corporations is predicated on fraud, an essential element of which is deceit. It is not enough that the corporation receives property at a higher price than it cost the promoters, or at a price above its fair market value, to give to the corporation a right to rescind or recover back profits made. It must have been deceived and misled into paying such price. But the corporation as an entity cannot be deceived, save as some of the individuals composing it are. True, the acts and conduct which may constitute actionable fraud in promoters differ from that which would be necessary in other relations; for they owe the utmost good faith to the corporation they create, and will of

ten be held bound to speak under circumstances which would permit another to be silent. There must, however, be actual misleading of some of their associates, either by their affirmative words or acts or by their silence, and if the latter, under such circumstances that they may reasonably apprehend that such associates may otherwise act upon a wrong assumption or understanding. The rule is stringent that, in dealing with a corporation which they organize, promoters must make full disclosure and the transaction must be open and free from misleading concealments; but mere silence cannot be misleading to one otherwise fully informed."

SECTION VII.

DISSOLUTION OF CORPORATIONS.

Generally. A corporation may be dissolved in several ways. Being a creature of law, it follows that a repeal of the law on which it is dependent for existence, will dissolve the corporation. In Wisconsin, by a constitutional clause, the right to repeal all corporate charters is expressly reserved. Under an early decision of the supreme court of the United States a corporate charter was held to be in many respects a contract within the clause of the Federal Constitution preventing any state from passing a law interfering with the obligation of contracts, and it was to obviate the effect of this decision that the above clause was inserted in the Wisconsin Constitution. Sometimes the life of a corporation is limited to a certain length of time, or is made dependent upon the happening of some condition. In such case the expiration of the time mentioned or the happening of the condition will effect a dissolution of the corporation. In Wisconsin, the articles of incorporation may provide that corporate existence shall be perpetual or for a certain time.

A corporation may surrender its charter to the state, or may even in some cases lose its charter and right to be a corporation by failing to exercise corporate functions for a length of time. A corporation may by an abuse of its corporate powers forfeit its charter. Such forfeiture can be brought about only by a judicial proceeding, instituted for that purpose by authority of the state. Such forfeiture will not be declared by the courts except for some serious abuse of the corporate franchise, affecting the public at large. A private citizen, unless he is a stockholder of the corpo

ration in question cannot complain in the courts against a corporation for a forfeiture of its charter. A court has no authority to dissolve a corporation upon complaint of a stockholder or creditor. A court may, however, upon a proper showing made by a creditor, sequestrate the property of a corporation and appoint a receiver to wind up its business when the corporation is insolvent, which, for practical purposes, is the same as a dissolution.

Statutes.--"Whenever any corporation shall have remained insolvent, or shall have neglected or refused to pay and discharge its notes or other evidences of debt, or shall have suspended its ordinary and lawful business for one whole year, it shall be deemed to have surrendered the rights, privileges and franchises granted or acquired under any law and shall be adjudged to be dissolved." It should be noted that a violation of this statute does not ipso facto dissolve the corporation, but that it is only made ground for dissolution, to be brought about by suit against it in the name of the state.

It is also provided that "all corporations whose term of existence shall expire by their own limitation, or which shall be voluntarily dissolved in the manner provided by law or by its articles of association, or shall be annulled by forfeiture or otherwise, shall nevertheless continue to be bodies corporate for three years thereafter for the purpose of prosecuting and defending actions and of enabling them to settle and close up their business, dispose of and convey their property and divide their capital stock, and for no other purpose; and when any corporation shall become so dissolved, the directors or managers of the affairs of such corporation at the time of its dissolution, by whatever name they may be known, shall, subject to the power of any court of competent jurisdiction to make, in any case, a different provision, continue to act as such during said term and shall be deemed the legal administrators of such corporation with full power to settle its affairs, sell or dispose of and convey all its property, both real and personal, collect the outstanding debts, and after paying the debts due and owning by such corporation at the time of its dissolution and the cost of such administration, divide the residue of the money and other property among the stockholders or members thereof."

Dissolution by vote.--"Any corporation organized under any law may, when no other mode is specially provided, dissolve by the adoption of a written resolution to that effect, at a meeting of its members specially called for that purpose, by a vote of the owners of at least two-thirds of the stock in the case of stock corporations and of one-half the members in other corporations; but when a mode or process of dissolution shall have been provided in the articles of organization it shall be conducted accordingly. One copy of such resolution, 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 the adoption of such resolution, that such is a true copy of the original, the whole number of shares of stock, and of members of such corporation and the number of members who, or of the shares of stock whose owners, voted for its adoption, shall be recorded as an amendment to its articles is required to be recorded.... and a like copy filed with the secretary of state. Thereupon such corporation shall cease to exist except for winding up its affairs. Whenever the articles of organization shall provide a term to the duration of a corporation, it shall cease to exist at the time so fixed except as aforesaid."

There is considerable conflict in the decisions of courts as to the exact effect to a dissolution upon the status of a corporation, and those who have dealings with it, but a discussion of these would not be appropriate in a work of this kind.

Action to annual charter.-"An action may be brought by the attorney-general in the name of the state, whenever the legislature shall direct, against a corporation created by or under the laws of this state for the purpose of vacating or annulling the act of incorporation or an act renewing its corporate existence, on the ground that such act or renewal was procured upon some fraudulent suggestion or concealment of a material fact by the persons incorporated by some of them, or with their knowledge and consent."

"An action may be brought by the attorney-general or by any private party in the name of the state, on leave granted therefor by the supreme court upon cause shown, for the purpose of vacating the charter or annulling the existence of any corporation created by or under the laws of this state, except a municipal corporation, whenever such corporation shall:

1. Offend against any of the provisions of any law by or under which it shall have been created, altered or renewed; or 2. Violate the provisions of any law by which such corporation shall have forfeited its charter by abuse of its pow

ers; or

3. Whenever it shall have forfeited its privileges or franchises by failure to exercise its powers; or

4. Whenever it shall have done or omitted any act which amouts to a surrender of its corporate rights, privileges or franchises; or

5. Whenever it shall exercise franchises or privileges not conferred upon it by law."

Decisions--The following are some supreme court decisions touching the dissolutin of corporations: A railroad obtained a charter from the state in 1870 and thereafter did a small amount of grading, but never operated any part of its proposed road; no meeting except the first meeting was held by the stockholders until 1880, when officers were elected, and such officers held their offices until 1895, when another stockholders' meeting was held. In 1895 the legislature passed a law given the company certain additional powers. In 1896 the attorney-general started a proceeding against the company to annual its franchise on account of non-user. The court say: "It is settled in this state as well as in others in which a similar statute exists, that the suspension by a corporation of its ordinary and lawful business for one whole year, as the language of the statute itself imports, does not ipso facto dissolve the corporation, but furnishes a cause for its dissolution by the judgment of a competent court. As the authority of the state is essential to the creation of a corporation, and its charter is considered a contract between the corporation and the state, in all cases where the consideration for the grant of corporate privileges, rights, and franchises is the performance of certain functions and the rendition of services of a public character, as in the case of a railroad corporation or the like, the consent of the state in some form is essential to its dissolution, and an acceptance by the state of the surrender of its privileges, rights and franchises is necessary in order to terminate the corporate existence by surrender; and very many cases hold that it is essential in all cases of dissolution by surrender by private companies. . . . A mere omission to exercise a corporate franchise is not a forfeiture per