PART II. Corporate Management, Powers, Finances, Etc. CHAPTER 1. Corporate Powers and Management. powers, etc. (49) SECTION 1. Every corporation shall have power to Corporate have succession; to sue and be sued in any court of law or equity, or to be a party to any necessary proceedings before any board or commission of this or any other state or government, with the same rights and obligations as a natural person; to make and use a common seal and alter the same at pleasure; to ordain and establish by-laws for the government and regulation of its affairs, and to alter and repeal the same; to elect all necessary officers and to appoint and employ such agents and employes as the business may require, and to fix the compensation in all cases. Every corporation shall possess and may exercise all such rights and powers as are necessarily incidental to the exercise of the powers expressly granted thereto. The charter defines the grant of power to the corporation with its restrictions and limitations; and unless some other statute enlarges or restricts those powers, it has no other or different rights.-Bank of Mich. v. Niles, 1 Doug., 401. Corporations possess only such properties and powers as are specifically granted by their charters, or as are incident to their existence, and necessary to carry into effect the powers expressly given.-Orr v. Lacey, 2 Doug., 253. As incident to their powers, corporations may appoint servants and agents for the transaction of their business.-Town v. Bank of River Raisin, 2 Doug., 549. Such appointments may be made and proved by parol. So, the authority of an agent may be inferred from the recognition and adoption of his acts, or acquiescence therein by the corporation.-Peninsular Bank v. Hanmer, 14/208. Any limitations on the usual powers of a general agent of a corporation will not bind those dealing with him without notice of the restrictions.-Adams Mining Co. v. Senter, 26/73. The same person may be the general agent of two companies, and act for both in their dealings with each other.-Ibid. An association or body, exercising corporate powers and having contracted as a corporation, will not be allowed to evade its obligations by denying its corporate character.-Empire Mnfg. Co. v. Stuart, 46/482. But it seems that a corporation will not be estopped from denying its power to make a contract previously entered into by it.-Dermont v. Mayor, 4/435, 445. A person associating with others in forming a pretended corporation and in claiming existence for it, will be estopped from denying the validity of its organization.-Swartwout v. Mich. A. L. R. R. Co., 24/389; Monroe v. Fort Wayne, I. & S. R. R. Co., 28/272; Jhons v. People, 25/499. But there will be no estoppel where such recognition has been fraudulently procured.-Doyle v. Mizner, 42/332. See Republic Motor Truck Co. v. The Buda Co., 212/64. may hold, (50) SEC. 2. Every corporation shall have power, unless Real estate, expressly prohibited by law, to purchase, hold and convey etc. all such real and personal estate as the purposes of the corporation may require, and all other real and personal estate which shall have been, bona fide, conveyed or mortgaged to said corporation by way of security or in satisfaction of debts. Schedule of, where filed. Any stock corporation may issue its authorized capital stock in payment for any real estate or personal property so purchased, to the amount of the value thereof, and the capital stock so issued shall be deemed full-paid stock, and not liable to any further call, neither shall the holder thereof be liable for any further payment except the liability imposed by section ten of chapter three of part two hereof; and in the absence of actual fraud in the transaction the judgment of the directors of the corporation as to the value of the property shall be conclusive. Within ten days after any corporation shall issue any of its capital stock in payment for property it shall file a sworn schedule of such property with the secretary of state similar to that required by section two of the Proviso, part- next succeeding chapter hereof: Provided, however, That any corporation may issue part-paid stock in payment of property conveyed to it, in which case the articles, and any certificate or statement required by this act to be filed with the secretary of state with reference to the value of the property so conveyed, shall clearly state the number of shares so issued and the amounts credited upon such shares as partial payments thereon, in addition to the other statements with respect to such property's cash value; and such shares, so issued, shall be subject to such further call for the balance due thereon, as may become necessary to the corporation or to its creditors as in other cases. paid stock. Directors, number, etc. to A corporation can make no contract forbidden by its charter, or which is not necessary either directly or indirectly for the accomplishment of the purpose for which it was formed.-Dermont v. Mayor, 4/435, 445. Contracts in violation of the charter are void.-Ibid; Smith v. Barstow, 2 Doug., 155. The acknowledgment (of conveyances) should be made by the person representing the corporation in the act. The officer having charge of the seal is the proper person to affix it and to acknowledge, etc.-Merrill v. Montgomery, 25/73. The seal is evidence that it was affixed by proper authority. Benedict v. Denton, Walk., Ch. 336. Possession of property by an officer of a corporation is not the company's possession unless taken or held for that purpose.-Doyle v. Mizner, 40/160. The power to take, hold and convey real and personal estate is incident to every corporation, unless expressly prohibited, or the power be clearly repugnant to the purposes of its creation.-Regents, etc. v. Detroit Y. M. Soc., 12/138, 160. Except as restricted by statute, a corporation has the same power as an individual sell and convey its corporate property, rights and franchises.-Detroit v. Mutual Gas Light Co., 43/594. The mere right of a corporation to purchase and sell property is not strictly a franchise. But it is a right held in common with individuals, without grant. Thompson v. Waters, 25/214, 224. A common law incident to every corporation, without special mention in its charter, is the power, unless restrained, to take, hold and convey lands.Bank of Mich. v. Niles, 1 Doug., 401; Town v. Bank of River Raisin, 2 Doug., 548. And if there is any legal purpose for which lands conveyed to a corporation can be held by it, the presumption will be that the conveyance was for that purpose. Thompson v. Waters, 25/227, 231. But when a corporation is especially authorized to hold lands for certain purposes, or to a specified amount or value, or such as are acquired in a particular manner, it can hold only in accordance with such provisions. Bank of Mich. v. Niles, 1 Doug., 401. The rights of a corporation to its property are not affected by any change in its organization which does not destroy its corporate character and identity. Board of Health, etc., v. East Saginaw, 45/261. See Dodge v. Ford Motor Co., 204/462. (51) SEC. 3. The stock, property and business affairs of every corporation shall be managed by not less than three directors, who shall be chosen by the stockholders or members, excepting in the case of trustee corporations where such trustees shall have been named in the trust instrument in holders, etc. which case the trustees named in such instrument shall be the trustees of such corporation and shall have such specific powers as shall have been granted in such instrument in addition to the general powers, duties and responsibilities prescribed in this act; and such elections shall be held and conducted at such time and place and in such manner as shall be provided by the by-laws of said corporation made pursuant to the provisions of this act. All such directors shall be To be stockstockholders or members of said corporations and shall have such further qualifications as may be prescribed by law or by the articles or the by-laws of such corporations. The di- Term of rectors, excepting in such particular cases as are hereinafter provided for, shall hold office for one year, and until their successors shall be chosen in their stead. The directors of any corporation may require bonds of such of its officers or employes and in such amount as may be fixed and determined by such board. The majority of the directors, when assembled in legal meeting, constitute the board. Cahill v. K. M. Ins. Co., 2 Doug., 124. A person named as director in the articles of association, and who has acted as such, cannot be removed by parol. Proceedings by the board, without notice, to declare the office vacant, are invalid. Copland v. Minong Mining Co., 33/2. Agreements made by the stockholders severally, on behalf of the corporation, will not bind it.-Finley S. & L. Co. v. Kurtz, 34/89. Individual directors cannot bind the company by contracts. Lockwood v. Thunder Bay, etc., Co., 42/536. Corporate management is, in general, confided to the directors. But stockholders may act in directing investigations of the management and superintendence of the directors.-Star Line v. VanVliet, 43/364. The directors or other board of management having general authority to manage the company concerns, are vested with the only discretionary powers that can exist in any one to carry on corporate business; and such management cannot be assumed by a court of chancery, or vested in a receiver, and cannot be taken from the board except under proceedings to wind up the affairs of the corporation under the statute.-Port Huron & G. Ry. Co. v. Judge of St. Clair, 31/456; La Grange v. State Treasurer, 24/468, 471. The directors of a corporation are required to act in the utmost good faith, and in accepting the office they impliedly undertake to give to the enterprise the benefit of their best care and judgment, and exercise the powers conferred solely in the interest of the corporation.Ten Eyck v. Railroad Co., 74/227. Courts of equity will not interfere in the management by the directors of the affairs of a corporation unless it is clearly made to appear that they are guilty of fraud or misappropriation of the corporate funds, or refuse to declare a dividend when the corporation has a surplus of net profits which it can, without detriment to its business, divide among its stockholders, and when a refusal to do so would amount to such an abuse of discretion as would constitute a fraud, or breach of that good faith which they are bound to exercise towards the stockholders.Hunter v. Roberts, Throp & Co., 83/63. The statutory requirement that a majority of the shares of stock constitutes a quorum of stockholders for the transaction of business is mandatory.-Hill v. Town, 172/508. office. directors. (52) SEC. 4. If an election of directors or trustees in any Election of corporation shall not take place at the annual meeting thereof, in any year, such corporation shall not thereby be dissolved, but an election may be had at any time to be fixed upon, notice whereof to be given by the directors: Provided, Proviso. That in case the directors shall refuse or neglect so to do, any three of the stockholders may call a meeting of the stockholders for the election of directors or trustees by giving the notice prescribed in section twelve of this chapter. (53) SEC. 5. Unless otherwise prescribed in the articles, Officers, etc. the directors shall elect one of their number to be president or chairman of the corporation and board, and one or more of their number to be vice-president or vice-chairman, and Executive committee. Quorum. shall also choose a secretary and a treasurer, and assistants if deemed necessary. The secretary and treasurer shall reside at the place where the corporation transacts its business within this state, unless the articles provide for the location of the principal office without this state. The directors shall appoint such other officers and agents as the articles or the by-laws of the corporation shall prescribe. If the stockholders so direct, the same person may hold any two offices excepting those of president and vice-president. Unless otherwise prescribed in the articles, the directors shall have authority to enact and enforce the by-laws of the corporation, and such directors, if more than five in number, may appoint an executive committee of such board, to have the active management of the business affairs of such corporation in the interim between full board meetings, subject to such restrictions and limitations as the board may impose upon such executive committee. Failure to elect officers does not dissolve the corporation.-Cahill v. K. M. Ins. Co., 2 Doug., 140. Old officers hold over until new ones are elected.Ibid. The acts of officers de facto bind the corporation.-Jhons v. People, 25/499. Except in proceedings to try title to office, the official character of persons acting as officers may be proved by parol.-Scott v. Detroit Y. M. Soc., 1 Doug., 119; Facey v. Fuller, 13/527; Druse v. Wheeler, 22/439. Proceedings against officers after the expiration of their terms, for money misappropriated, or withheld, should be at law and not in chancery.-Bay City Bridge Co. v. Van Etten, 36/210. (54) SEC. 6. A majority of the directors of every corporation convened according to the by-laws, shall constitute a quorum for the transaction of business; and the stockholders holding a majority of stock, or a majority of the members of a non-stock corporation, shall be capable of transacting the business of a stockholders' or members' meeting, except as herein otherwise provided; and at all such meetings of stockholders each share shall be entitled to one vote, and at all meetings of non-stock corporations each member shall be entitled to one vote, unless otherwise provided in the articles. Excepting as hereinafter otherwise provided, stockholders and members of non-stock corporations may appear and vote in person or by proxy duly made and filed, under such rules and regulations as may be provided in the by-laws. Any nonstock corporation may declare in its articles or by-laws what number of members less than a majority of all the membership present at a regularly called meeting, may transact the business of such meeting. Directors holding over have the same power as during their regular term. -Preston National Bank V. Purifier Co., 84/364; Kimball V. Goodburn, 32/10. Whatever a corporation may authorize to be done by its officers, it may ratify and adopt when done without authority.-McLaughlin v. D. & M. Ry. Co., 8/100. But the act ratified must be one which the company could have legally performed.-Taymouth v. Koehler, 35/22. The acts of a corporation may be proved by its records. Such records are the best evidence, etc.-Koehler v. Mechanics' Aid Soc., 22/86. But the discussion of the directors upon the subject of a resolution prior to its adoption are not provable as the expressions of the corporate body.-Kalamazoo, etc., Co. v. Macalister, 40/84. Nor as evidence of their final action upon it.-Peek V. Detroit Novelty Works, 29/313. Nor are the statements of individual directors made when the board was not in session, and not accompanying any official act, competent evidence of corporate action.-Ibid. Though parol In evidence is not admissible to contradict a record, it may be introduced to (55) SEC. 7. The directors shall have power to fill any Vacancies, vacancy which may happen in their board by death, resigna- how filled. tion, or otherwise, and such appointees shall hold office until their successors are appointed at the next succeeding election. Vacancies in the trustees of any trustee corporation shall be filled as hereinafter provided. A resolution of appointment to office is not a contract until accepted; but may be shown as tending to prove the officer's claim for salary, etc.-Kalamazoo, etc., Co. v. Macalister, 40/84. proxy. elected (56) SEC. S. In all elections for directors of stock corpor- May vote in ations, including corporations under the jurisdiction of the person or by Michigan public utilities commission, every stockholder holding voting stock shall have the right to vote in person or by proxy the number of shares of stock owned by him for as many persons as there may be directors to be elected, or to cumulate said shares and give one candidate as may votes as will equal the number of directors multiplied by the number of shares of his stock; or to distribute them on the same principle among as many candidates as he shall think fit. All Directors such corporations shall elect their directors annually, and annually. the entire number of directors shall be balloted for at one and the same time and not separately: Provided, That the Proviso. articles and by-laws of any such corporation shall not be so amended as to reduce the number of directors of such corporation in case the votes of a sufficient number of shares are recorded against such proposed amendment, which if cumulatively voted as herein provided would elect one or more directors, where the same number of shares if cumulatively voted would not be sufficient to elect the same number of directors of the reduced board: Provided further, That Further proany non-profit or co-operative corporation may elect its di- profit corporrectors for a longer term than one year as hereinafter pro- ations. vided. viso, non articles. (57) SEC. 9. Every corporation may at any annual meet- May amend ing or at any special meeting called for that purpose, by a resolution adopted by a vote of a majority in interest of its outstanding capital stock, or by a majority vote of the members in non-stock corporations, amend its articles, including a change in name and location of its principal office, and as to any other matter for which a different vote is not required by law. Any corporation, for pecuniary profit, formed under any law of this state, may, unless prohibited by law, amend its articles to provide for the enlarging of its corporate purposes to include the carrying on of any other lawful busi |