"But this cannot be considered as doing business here any more than if the defendant had waived the matter of jurisdiction and come into this court to make a defense to the present suit. This also is only a single transaction within itself, and it has nothing to do with the ordinary business of the company. Such a transaction lacks all the features of what is legally denominated doing business with a view of carrying on the business for which the organization was organized and incorporated."

In another case,8 the court said:

"The question then remains, is the respondent doing business within this State? It seems clear to us that it is not. It is not easy to formulate a general rule by which it can be determined in all cases whether or not a corporation is doing business at a particular place; but it seems to be the consensus of opinion that a corporation, to be within the rule, must transact within the State some substantial part of its ordinary business, continuous in the sense that it is distinguished from merely casual or occasional transactions, and it must be of such a character as will give rise to some form of legal obligation. Merely advertising its business in a State is not doing business within such State."

The question is best illustrated by reference to some concrete cases. The courts have held that the following acts do not constitute doing business within the State by a foreign corporation; an isolated transaction without the intention of continuing business; the single purchase of an article of machinery; soliciting subscriptions to a newspaper published in a foreign state; the sale of goods by traveling salesmen; the frequent purchases of material within a state; the maintenance within a state of an office occupied by persons engaged in advertising and soliciting business for a foreign corporation.

8 Gaudie v. Northern Lumber Co., 74 Pac. Rep. 1008; see also North Wis. Cattle Co. v. Oregon Short Line R. R. Co., 105 Minn. 198.

CHAPTER XVII

DISSOLUTION AND INSOLVENCY

§ 138. Dissolution: How Effected. The dissolution of a corporation has been defined "as that condition of law and fact which ends the capacity of the body corporate to act as such and necessitates a final liquidation and extinguishment of all the legal relations subsisting in respect to the corporate enterprise." According to the common law and the older textbook writers, a dissolution could be effected in four ways: First, by an act of the legislature under a reserved power to repeal; second, by death of all its members; third, by a forfeiture of the charter; fourth, by the surrender of the charter. And to these may be added: fifth, by the expiration of the statutory period of its existence; and sixth, a compliance with statutory requirements providing for a voluntary dissolution. The manner of and conditions affecting a dissolution, under the circumstances above noted, may be briefly considered.

By Act of Legislature. A corporation may be dissolved by an act of the legislature for a misuse or nonuse of its charter or for any other good and sufficient reason if this power be reserved to the State in the original grant. Where the power to repeal does not exist, the doctrine of the Dartmouth College case obtains in all its force, and no action can be taken by a legislative body dissolving the corporation.

By Death of All Its Members. A dissolution of a corporation can be effected for this cause only in the case of non-stock corporations. It is impossible where a corporation has capital stock, for upon the death of a member his interest passes to his representative, as provided by law.

By Forfeiture of Charter. The grant of the corporate charter is always subject to the implied condition that the

powers and privileges therein granted will not be abused, but courts are generally reluctant to decree a forfeiture of a corporate charter. The act of the corporation upon which is based a proceeding brought by the State for this purpose must be one grave and serious in its character and which directly affects the rights and interests of the public. "The public must have an interest in the acts done or omitted to be done. If it is confined exclusively to the corporation and in no wise affects the community, it should not be considered as of those conditions upon which the grant is made." There must be a clear and wilful abuse or misuse of the powers and franchises of the corporation. The question cannot be raised except in a direct proceeding by the State, since it is the State alone which grants the corporate powers and franchises.

By Surrender of Charter. All the stockholders of the corporation, acting in their corporate capacity, can elect to voluntarily surrender the charter of the corporation and if accepted by the State a dissolution will take place. There must be a formal, solemn act of the corporation, before this can be done.

By Expiration of Corporate Life as Fixed in Charter. The corporation may be also dissolved by the expiration of the time fixed in its charter for its corporate existence. Many of the older corporations were organized with a perpetual charter in the true sense of that word, but for many years it has been customary for States, by statutory provision, to fix a definite period for which corporations could be organized, exist, and transact their business in a corporate capacity. Usually, the expiration of the charter period terminates ipso facto the life of the corporation, although in some States, by express provision of law, a de facto corporation exists for a designated time for the purpose of winding up the affairs of the corporation, liquidating its debts and distributing its property.

Statutory Methods for Dissolution. The different States now, quite generally, by statute, provide methods for the 9 Harris v. Ry. Co., 51 Miss. 602.

dissolution and winding up of corporations. This may be done either at the instance of the stockholders or of the State. To legally effect a dissolution in this manner, the parties must act as provided by law.

§ 139. Effect of Dissolution. Under the common law the effect of a dissolution was to put an end to the corporate existence for all purposes and destroy its power to act in a corporate capacity. Thereafter, it was held it could neither institute nor defend a suit; make nor take a contract. All its debts and claims were extinguished and all actions by or against it were abated. Under the present rulings of the courts, and by statutory provisions in many cases, the severity of the rule above stated has been materially modified for the purpose of protecting the property of the corporation and the rights of its creditors. While, after dissolution, in the absence of express statutory provisions, it cannot exercise corporate powers, yet its property and property rights are not destroyed. Its rights of action remain, but the remedies are merely changed. The property of the corporation and its rights will be taken in charge by a court of equity; or, if the statutes so provide, by the person therein designated, and managed as a trust fund for the benefit of creditors and of the stockholders. Under these circumstances the closing out of the affairs of the corporation must be as speedily accomplished as possible with the best interests of its creditors and stockholders in view. The obligations of contracts survive, except such as are incapable of specific performance, and the creditor may enforce his claims against the property of the corporation. Executory contracts, as a rule, cannot be carried out. In many cases it has been held that one contracting with a corporation acts upon the implied assumption, in all cases, that its corporate life may be terminated before the contract will be fully performed, and is, therefore, entitled to no further rights under it nor a claim for damages on account of the failure on the part of the corporation to fully perform. This rule, however, does not apply to the voluntary dissolution of a corporation,

for it cannot, by its own acts, relieve itself of its contracts and their obligations.

§ 140. Corporate Insolvency. The insolvency of a corporation does not affect its legal existence, as the possession of property is not necessary to corporate life. Statutory provisions exist in all States providing, in cases of insolvency, for the appointment of a receiver to take charge of the business and property of the corporation for the benefit of its creditors. These provisions are so numerous and involved that no special reference can be made to them that will be of assistance, but, on the contrary, might be confusing. The appointment of a receiver is one of the inherent original functions of a court of equity. The power to appoint a receiver is discretionary with the court, but when done, that officer is regarded as an arm of the court and considered as acting for and on behalf of the court. His possession of the property is held to be possession by the court and interference with it will not be tolerated.

§ 141. Receiver. Powers Of. The rights of a receiver of an insolvent corporation are generally limited by the order of appointment. Where this is general in its nature, the receiver is vested with ample authority to conduct the business of the corporation, having in view the speedy adjustment of its obligations. He can originate proceedings looking to the enforcement of the rights of the corporation; employ counsel; make contracts for a limited time in the conduct of the business; purchase property where necessary to carry on its business; compromise claims; and, in general, do all necessary acts in furtherance of the specific objects and purposes for which he was appointed. He is entitled, in the performance of his duties, to the protection of the court, and can, as a matter of right, apply to it for instructions when he deems it advisable.

Duties Of. The duties of a receiver are to obey the orders of the court; to exercise in good faith the powers vested in him by the order of appointment; to be impartial in the performance of those duties and to preserve the property of the corporation.