People v. Selfridge

California Supreme Court Jul 1, 1877 No. No. 5470Published

Before: Couet

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Holding. The court held that the defendants failed to form a valid corporation because their certificate of incorporation omitted a mandatory statutory requirement, and this defect could not be cured by subsequent averments.

Issues

Whether the defendants' certificate of incorporation sufficiently complied with statutory requirements to establish corporate status.
Whether an omission in a certificate of incorporation can be cured by an averment in the answer.

Disposition. Affirmed

Quotations verified verbatim against the opinion

“The certificate in this case altogether omits any statement in this respect, and is, therefore, insufficient to constitute the association a corporation.”

“The defect appearing upon the face of the certificate is not aided by the averment found in the answer, that in point of fact a majority of the members of the association did vote at the election mentioned in the certificate.”

Synopsis

Eight to be a Cobpobatioh.—The right to he a corporation is a franchise, and to acquire a franchise under a general law the required statutory conditions must he complied with.

Abticles op Incobpobation.—If the articles of incorporation do not state that a majority of the members of the association were present and voted at the election of directors, the certificate does not constitute the association a corporation.

Idem.—If such articles of incorporation omit such statement, proof cannot he admitted that a majority were present and voted.

All that is required is a substantial compliance with the statute. (People v. 8. & V. P. P. Co. 45 Cal. 313; Spring Valley W. TV. v. San Francisco, 22 Cal. 440.)

The certificate of the Secretary of State (fol. 5) is conclusive upon the plaintiff. Until that has been vacated by proper proceedings the defendants cannot be charged with any usurpation of a “ franchise.”

A mere “ claim ” to have a “ franchise,” or an “ intention ” to exercise corporate powers, will not warrant the proceedings taken in this case. There must be a “ user ” and exercise of the franchise, or some. “ act”, by the defendants which is an infringement upon the rights of the public. (Angelí & Ames, sec. 744; People v. Thompson, 16 Wend. 655; King v. TVhitwell, 5 Term Hep. 85; Green v. Pepper, 7 Ad. & E. 745.)

Cowdery & Preston, for Bespondents.

In order to secure title to a corporate franchise under a general law, each and every condition prescribed by the Legislature must be substantially complied with; and the non-compliance [333]with any condition, no matter what it may he, will prevent the title from resting as against the State. (Harris v. Me Gregor, 20 Cal. 127; Moh. Hill Co. v. Woodbury, 14 Cal. 424; Car-lisle v. C. & M. R. R. Co. 4 Ala. 70; Field v. Cooks, 16 La. 154; Williams v. Franklin, 26 Ind. 316 ; Becket v. Harris, 4 Minn. 405; /S2. Louis & O.R.R. Co. v. Sullivan, 5 Ohio, 279; Ferrona v. Voncelo, 23 111. 459; Walker v. Deveroux, p. 4, Ch. 229; FoZ/s v. Crandall, 1 Lond. Ch. 179; Com. v. (rera. Pass. R. R. Co. 52 Pa. 512; Peora v. King, 23 Wend. 193.)

People v. Chambers is to the point that a slight and immaterial omission is not fatal. (42 Cal. 209.)

By the Couet : 1. The right to be a corporation is in itself a franchise; and to acquire a franchise under a general law, the prescribed statutory conditions must be complied with. The Civil Code (sec. 594) requires that the articles of incorporation shall, among, other matters, “ set forth * * * that a majority of the members of such association * * * voted at such election,” etc. The certificate in this case altogether omits any statement in this respect, and is, therefore, insufficient to constitute the association a corporation.

2. The information avers that the claim of the defendants to be a corporation is based upon the certificate just referred to, and sets out the certificate as constituting the title of the defendants—which, as we have seen, is insufficient.

People v. Selfridge

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