[f] Where a plaintiff owned a certificate of purchase of state school lands, and the court found that plaintiff was a corporation, but there was no other proof, such certificate is admissible in evidence, as it will be presumed that the corporation had power to purchase and hold lands.-Diamond Coal Co. v. Cook, 129 Cal. xviii, 61 Pac. 578. FOR AUTHORITIES FROM OTHER STATES: Capacity of corporations to take title to real property: 94 Am. Dec. 381, note; 32 L. R. A. 293, note. See, also, 10 Cyc. 1122-1125, 1139; 12 Cent. Dig., cols. 1804-1815, §§ 1763-1773. [a] A corporation which has received a conveyance of property pursuant to an agreement of purchase made by promoters of the corporation, and which has paid a portion of the purchase money upon account, and given notes and mortgages as security for the residue of the purchase price, cannot maintain an action to have a judgment of foreclosure of the mortgages, and also the notes and mortgages, set aside, annulled, and canceled, on the ground of alleged fraud in their procurement, while retaining the conveyance to it of the property, and not paying or offering to pay the value of the property which it has received.-Buena Vista F. & V. Co. v. Tuohy, 107 Cal. 243, 40 Pac. 386. [b] Authority to execute mortgage of corporate property can only be conferred by resolution of board of directors duly assembled.-Alta S. M. Co. v. Alta P. M. Co., 78 Cal. 632, 21 Pac. 373. [c] Where the only authority upon which the president and secretary of a corporation acted in executing a note and mortgage in its name was a resolution passed at the preliminary meeting of stockholders before organization of the board of directors, such authorization is insufficient to support a finding of due and regular execution of the note and mortgage.-Blood v. La Serena Land etc. Co., 113 Cal. 221, 41 Pac. 1017. 45 Pac. 252. [d] Under Constitution, article 12, section 11, providing that no corporation shall issue stock or bonds, except for money labor, or property, a corporation has the right to pledge its bonds as collateral security for money or property procured by it.-Illinois Trust etc. Bank v. Pacific Ry. Co., 117 Cal. 332, 49 Pac. 197. [e] Stockholders cannot make mortgage or validate one that has not been previously authorized and executed by the board of directors.-Curtin v. Salmon etc. Co., 141 Cal. 310, 311, 99 Am. St. Rep. 75, 74 Pac. 851. FOR AUTHORITIES FROM OTHER STATES: How and by whom may be executed: 23 Am. Dec. 743, note. See, also, 10 Cyc. 1008-1016; 12 Cent. Dig., cols. 18231831, §§ 1778-1784. § 369. Who may Authorize Execution. [a] The stockholders of a corporation have no power, as such, to authorize the sale of the corporate property, or to sell the same, [c] If to a deed, purporting to be that of a corporation, a seal be affixed as that of the individual agent who signs it, such seal cannot be treated as that of the corporation. A declaration in the instrument that the seal is affixed as that of the agent is conclusive of its character and effect.-Richardson v. Scott River etc. Co., 22 Cal. 150. [d] If the grantor of a deed is in fact a corporation, and the corporation seal is affixed thereto, a statement in the deed that it is incorporated is not essential, and an objection upon appeal that a deed offered in evidence at the trial does not show upon its face that the grantor was a corporation, will not be considered where the only objection to its introduction taken at the trial was the general objection that the deed was incompetent, irrelevant, and immaterial, there being no proof that the grantor was not a corporation in fact, and no objection urged upon that ground in the court below. Colton Land and Water Co. v. Swartz, 99 Cal. 278, 33 Pac. 878. [a] Where officers of a corporation receive into its treasury money obtained from a sale of its property which is void for want of power in the corporation to make it, the purchaser cannot recover the money back from the corporation, without its having appropriated the same to its own use, but the officers alone are liable therefor.-Herzo v. City of San Francisco, 33 Cal. 134. [b] The conveyance of the real property of a corporation which is unauthorized and void cannot be validated by parol acts of ratification and acquiescence.-Fudickar v. East Riverside Irr. Dist., 109 Cal. 29, 41 Pac. 1024. FOR AUTHORITIES FROM OTHER STATES: Withdrawal of assets of corporation: 57 D. CONTRACTS AND INDEBTEDNESS. CAPACITY TO CONTRACT IN GENERAL, § 374. CONTRACTS OF PROMOTERS BEFORE INCORPORATION, § 375. IMPLIED CONTRACTS, § 376. FORM AND REQUISITES-MODE OF CONTRACT- MISNOMER OF CORPORATION, § 378. AUTHORITY TO PLEDGE, § 386. PLACE OF PERFORMANCE OF CONTRACTS, 387. IMPUTED NOTICE OF CORPORATION'S CON. TRACT TO OFFICER, § 388. § 374. Capacity to Contract in General. [a] A corporation, unless expressly prohibited by law or provisions of its charter, has power to make all contracts that are necessary and usual in the course of the business it transacts as means to enable it to effect the object of its creation.-Union Water Co. v. Murphy's Flat Fluming Co., 22 Cal. 620. [b] Where the agreement made on behalf all reasonable of the corporation to pay charges of the physicians contains the words: "We reserve to ourselves the right to determine what is reasonable," such reservation is one which the company, under the circumstances shown, had a right to make, and the physician is entitled to recover only the amount offered him by the corporation, and a jury cannot award him any greater amount. Fraser V. San Francisco Bridge Co., 103 Cal. 79, 36 Pac. 1037. [c] A contract making a water company the exclusive agent of a flume company for the sale and distribution of water within the corporate limits of a city to consumers of water, all sales of water being subject to the approval of the flume company, is not illegal, nor beyond the powers of either of nor is such contract the corporations; against public policy, as being a combination between the corporations for the purpose of creating a monopoly for the sale of water to the city and its inhabitants, nor as injuriously affecting the interests of the city or its inhabitants.-San Diego Water Co. v. San Diego Flume Co., 108 Cal. 549, 41 Pac. 495. § 375. 1099; 12 Cent. Dig., cols. 1834-1838, § 1786. Contracts of Promoters Before Incorporation. [a] An agreement among parties owning a mine, and who expected to incorporate themselves but did not then do so, that a person was entitled to two thousand five hundred shares of the stock of the company, held not to be the agreement of the corporation.— Morrison v. Gold Mountain Gold Min. Co., 52 Cal. 307; Hawkins v. Mansfield Gold Min. Co., 52 Cal. 307, 513. [b] Corporation may acquire right to enforce contract made by its promoters in advance of its existence by other party's acceptance of performance by it.-Scadden etc. Co. v. Scadden 121 Cal. 38, 53 Pac. 440. [c] Corporation may adopt contract made for it by its promoters in advance of its existence.-Scadden etc. Co. v. Scadden, 121 Cal. 38, 53 Pac. 440. FOR AUTHORITIES FROM OTHER STATES: When corporation is bound by contracts members: 13 Am. of promoters or St. Rep. 28, note. See, also, 10 Cyc. 1072, 1201; 12 Cent. Dig., cols. 18431854, §§ 1789-1792. § 376. Implied Contracts. [a] Where a contract with a corporation has been executed and the corporation has enjoyed the benefits of the consideration, an obligation to pay for the benefits so received will be implied.-San Francisco Gas Co. v. City of San Francisco, 9 Cal. 453. [b] Under act of 1861, section 10, concerning railroad corporations, which provides that no contract shall be binding upon the company unless made in writing, an action for personal services rendered such company, where there was no contract in writing, must be brought upon an implied promise, and the recovery must be limited to the value of the actual benefit received.-Foulke v. San Diego S. E. R. Co., 51 Cal. 365. [c] Corporation may be bound by implied contracts within the scope of their authority.-Brown v. Board of Education of the City of Pomona, 103 Cal. 531, 37 Pac. 503. [d] Where money is obtained by and disbursed through the proper financial officer of a corporation through the agency of a bank, and is applied to the proper use of the corporation, there arises from such use an implied promise of the corporation to repay the money to the bank.-Pauly v. Pauly, 107 Cal. 8, 48 Am. St. Rep. 98, 40 Pac. 29. FOR AUTHORITIES FROM OTHER STATES: 10 Cyc. 1034-1036; 12 Cent. Dig., cols. 1838-1842, § 1787. § 377. Form and Requisites-Mode of Contracting in General. [a] It is not essential to the validity of a contract, executed by a corporation, that it be signed with the corporate name, but the corporation may bind itself by an instrument signed only by its president and secretary, with their names and the description of their offices.-Rowe v. Table Mountain Water Co., 10 Cal. 441. [b] Where the act creating a corporation prescribes to it a mode of contracting, it must observe such mode or the instrument will be void. (Cal. 1860) McCracken v. City of San Francisco, 16 Cal. 591. [c] Where power to contract exists, it may be exercised by corporation or its agent in the same way a natural person can contract, unless restrained by its charter to some particular mode of contracting.-McKiernan v. Lenzen, 56 Cal. 61. [a] Corporation may contract without seal. Smith v. Eureka Flour Mills, 6 Cal. 1; McKiernan v. Lenzen, 56 Cal. 64. [b] Old doctrine that a corporation can contract only under its corporate seal is now repudiated.-Crowley v. Genesee Min. Co., 55 Cal. 273. [c] Corporation may make contracts within the scope of their general powers, without the use of the corporate seal.-McKiernan v. Lenzen, 56 Cal. 61. FOR AUTHORITIES FROM OTHER STATES: Contracts from which seal may be omitted: 13 Am. Dec. 561, note. See, also, 10 Cyc. 1004-1022, 1043-1048; 12 Cent. Dig., cols. 1868-1875, §§ 1801-1803. § 380. Contracts of Employment. [a] A mining corporation is not liable for services in watching the mine, performed on behalf of stockholders chiefly interested therein.-Brown v. Valley View Min. Co., 127 Cal. 630, 60 Pac. 424. [b] A corporation, by its president, contracted with plaintiff to advertise and sell certain lands for a certain salary and commission. Below the signatures of the parties was a writing to the effect that a certain other company thereby agreed to plaintiff's employment, and would pay him half the salary mentioned. Plaintiff objected to the writing, but the president said that it was none of his affair. Thereafter such other company notified the president that it would not sign the writing, but the president had plaintiff assist him in selling the lands. Held, that the corporation intended to be bound in any event, and the company's failure to sign the writing did not render the contract incomplete.-Pettibone v. Lake View Town Co., 134 Cal. 227, 66 Pac. 218. FOR AUTHORITIES FROM OTHER STATES: 49 L. R. A. 471, note. See, also, 12 Cent. Dig., cols. 1879-1881, § 1806. § 381. Guaranty and Suretyship. [a] Corporation cannot become a surety, nor ratify a note to secure debt of another. Hall v. Auburn T. Co., 27 Cal. 256, 87 Am. Dec. 66. [b] A corporation may, for a valid consideration, guarantee the payment of a debt which it may directly contract to pay.-Low v. Central Pac. R. Co., 52 Cal. 53, 28 Am. Rep. 629. FOR AUTHORITIES FROM OTHER STATES: 10 Cyc. 568, 1109, 1111; 12 Cent. Dig., cols. 1889-1891, § 1815. § 382. Loans and Investments. [a] A loan of money upon mortgage security by corporation organized for purpose of constructing ditches for conveyance and sale of water is not necessarily an act exceeding its corporate powers. Such contract, if necessary to attain its general objects, and made as an incident to the exercise of its granted powers, is valid. In the absence of proof, its validity will be presumed.-Union Water Co. v. Murphy's Flat Fluming Co., 22 Cal. 620. [b] The payment by the corporation of an assessment for the construction of a tunnel run for the purpose of working the mines of another mining company, of which the corporation was a stockholder, is an investment of capital, and not a current expense.Excelsior Water etc. Co. v. Pierce, 90 Cal. 131, 27 Pac. 44. § 384. Negotiable Instruments. [a] Where note executed by officers provides that only assets of corporation, and none of the property of stockholders, shall be liable, the corporation cannot raise the objection as affecting its own liability.— Smith v. Eureka Flour Mills, 6 Cal. 1. [b] A superintendent of a mining corporation cannot bind the corporation by a promissory note, unless he has authority from the corporation to make it.-Beeman v. Lovett, 46 Cal. 387. [c] A promissory note of a turnpike company is not void because made before it has filed a copy of its by-laws with the county recorder. Forbes v. San Rafael etc. Co., 50 Cal. 340. [d] Note executed by president is invalid unless authorized or ratified by directors.Smith v. Los Angeles etc. Assn., 78 Cal. 292, 12 Am. St. Rep. 53, 20 Pac. 677. [e] The giving of a note by a corporation for the purpose of increasing its legitimate business is not ultra vires.-Temple St. Cable Ry. Co. v. Hellman, 103 Cal. 634, 37 Pac. 530. [f] Promissory notes executed in the name of a corporation, by its secretary, who does not appear to have been authorized to execute them by any resolution of the board of directors, or to have been clothed with general power to execute promissory notes or other obligations on its behalf, do not bind the corporation, and are not admissible in evidence in support of causes of action based thereon.-Pauly v. Pauly, 107 Cal. 8, 48 Am. St. Rep. 98, 40 Pac. 29. [g] Where corporation requires its notes executed in certain manner, it may, by acquiescence, become liable if executed in some other manner.-Illinois etc. Sav. Bank v. Pacific Ry. Co., 117 Cal. 347, 49 Pac. 197. [h] Note irregularly issued by corporation may be validated by acts in pais such as retaining benefits with notice and failure to rescind.-Curtin v. Salmon etc. Co., 141 Cal. 311, 99 Am. St. Rep. 75, 74 Pac. 851. [i] Suit may be maintained on note originally invalid but made valid by conduct of company.-Curtin v. Salmon etc. Co., 141 Cal. 312, 99 Am. St. Rep. 75, 74 Pac. 851. FOR AUTHORITIES FROM OTHER STATES: 10 Cyc. 1045-1048, 1111-1122; 12 Cent. Dig., cols. 1895-1903, §§ 1820-1831. § 385. Corporate Bonds. [a] A bond containing no mention of a corporation as party to it, and signed by four persons, with nothing to designate them as agents of the corporation, is the individual obligation of those signing it; and extrinsic evidence is not admissible to change the character of the instrument, although given for the debt of the corporation.-Richardson v. Scott River etc. Min. Co., 22 Cal. 150. [b] Corporation has a common-law right to issue a bond to pay a debt.-McLane v. Placerville etc. R. R. Co., 66 Cal. 612. [c] There is nothing criminal or against good morals in an attempt ultra vires of one corporation to acquire property and franchise of another, such as would affect validity of bonds issued by grantee.-Illinois etc. Sav. Bank v. Pacific Ry. Co., 117 Cal. 343, 49 Pac. 197. mere [d] Engraved bonds substituted for lithographed bonds are regarded as duplicates or reissues of lithographed bonds for which they are exchanged.-Illinois etc. Sav. Bank v. Pacific Ry. Co., 117 Cal. 348, 49 Pac. 197. [e] Bonds issued by a corporation having authority to borrow money and issue evidences of indebtedness are not invalidated by the want of power to make the mortgage by which they were in terms secured.-Illinois etc. Savings Bank v. Pacific Ry. Co., 117 Cal. 332, 49 Pac. 197. [f] Bonds issued by a street railroad corporation in part payment for the construction of its railroad are for the creation of a bonded indebtedness within the provision of section 359 of the Civil Code requiring the creation of the bonded indebtedness of any corporation to be approved by the vote of two-thirds of the entire capital stock; and in default of such approval no liability is created upon such bonds against the stockholders.— Boyd v. Heron, 125 Cal. 453, 58 Pac. 64. [g] A stockholder claiming that bonds issued by the directors were void, because issued without notice to the stockholders, must allege that the stockholders did not consent to the meeting at which the indebtedness was created, as Civil Code, section 317, provides that such consent abrogates the necessity of notice. Smith v. Ferries etc. Ry. Co., 51 Pac. 710. [h] A stockholder of a corporation, which purchased a street railroad of another corporation and agreed to assume bonds issued by it, cannot raise the question of fraud in constructing the road, or attack the validity of the bonds. By divided court.-Smith v. Ferries etc. Ry. Co., 51 Pac. 710. |