§ 22-23

22.

The directors of every corporation may, from time to time, make assessments upon the shares of stock subscribed for, not exceeding, in the whole, the par value thereof; and the sums so assessed shall be paid to the treasurer at such times and by such installments as the directors shall direct, said directors having given thirty days' notice of the assessment and of the time and place of payment either personally or by mail or by publication in a newspaper published in the county where the corporation is established.

P. L. 1846, p. 67; P. L. 1849, p. 303; Act of 1875, § 27; P. L. 1882, p. 252.

It is usual for subscribers for stock to sign a written waiver of the thirty days' notice of payment of assessments, agreeing to pay all or any part of their subscriptions to the treasurer on demand, at such times and in such amounts as the board of directors may determine.

A corporation must comply with all the conditions precedent to payment on the part of the subscribers before a suit can be maintained upon the subscription. Where a subscriber agreed to pay in certain installments, after certain calls, the Court held that there could be no recovery against him without proof that the calls had been duly made. The rule in New Jersey may be stated as follows: A subscriber is not bound to pay for his stock except in the manner prescribed by statute or defined in the charter, or by-laws, unless he waives these requirements. (Grosse Isle Hotel Co. v. L'Anson's Exrs., 42 N. J. Law, 10; aff'd 43 N. J. Law, 442.) In construing a similar section in the Railroad Act, the Court of Errors and Appeals held that a suit by the company will not lie on a subscription until a call has been duly made. (Braddock v. R.R. Co., 45 N. J. Law, 363, 364; see N. J. Midland Ry. Co. v. Strait, 35 N. J. Law, 322.) Where the company has become insolvent and a receiver has been appointed, the Court of Chancery may direct the receiver to make calls. (Hood v. McNaughton, 54 N. J. Law, 425; Barkalow v. Totten, 53 N. J. Eq., 573; Hebberd v. Southwestern Cattle Co., 55 N. J. Eq., 18.)

"A call is nothing more than an official declaration that the sums "subscribed are required to be paid." (Braddock v. R.R. Co., 45 N. J. Law, 363.)

The unpaid and uncalled subscriptions for stock cannot be mortgaged or sold by the corporation. Where the call has been duly made, but not collected, an assignment of the amount already called is legal and valid. (Cook on Corporations, Section 111; see N. J. Midland Ry. Co. v. Strait, 35 N. J. Law, 322.)

23. If the owner of any shares shall neglect to pay any sum assessed thereon for thirty days after the time appointed for payment, the treasurer, when ordered by the board of directors, shall sell, at public auction, such numbers of the shares of the

delinquent owner as will pay all assessments then due from him, § 24-26 with interest, and all necessary incidental charges, and shall transfer the shares sold to the purchaser, who shall be entitled to a certificate therefor.

P. L. 1846, p. 67; P. L. 1849, p. 304; Act of 1875, § 28.

24. The treasurer shall give notice of the time and place appointed for the sale, and of the sum due on each share, by advertising the same three weeks successively, once in each week, before the sale, in some newspaper published in the county where the corporation is established, and by mailing a notice thereof to the delinquent stockholder, if he knows his post office address.

P. L. 1846, p. 67; P. L. 1849, p. 304; Act of 1875, § 29.

Where stock has once been rightfully issued, even though nothing has been paid on it by the subscriber, it can only be forfeited in the mode prescribed by the statute, and the procedure prescribed by the statute must be strictly followed. (Downing v. Potts, 23 N. J. Law, 66.)

25. Certificate upon payment of capital.

The president and secretary, or treasurer, upon payment of each installment of capital stock, and of every increase thereof, shall make a certificate, stating the amount of the capital so paid, and whether paid in cash or by the purchase of property, stating also the total amount of capital stock, if any, previously paid and reported, which certificate shall be signed and sworn to by the president and secretary, or treasurer, and they shall, within ten days after such payment, cause the certificate to be filed in the office of the secretary of state.

P. L. 1846, p. 68; P. L. 1849, p. 304; Act of 1875, $$ 30, 31; P. L. 1893, P. 444.

No certificate of payment of capital stock is apparently required to be filed until the full amount of capital stock authorized by the certificate of incorporation has been paid in, and the words "every increase thereof" seem to contemplate an increase beyond that amount made by amendment in pursuance of Sections 27 and 28, post. The question has not been adjudicated, probably because the penalty attaches only after the officers have refused for thirty days to file the certificate after written request so to do. The common practice is to file a certificate upon payment of the amount with which the company commences business, as stated in the certificate of incorporation, and a further certificate upon payment in full of the total capital stock authorized.

26. If any of said officers shall neglect or refuse to perform the duties required of them in the preceding section for thirty days after written request so to do by a creditor or stockholder of the corporation, they shall be jointly and severally liable for all its debts contracted before the filing of such certificate.

P. L. 1846. p. 68; P. L. 1849, p. 304; Act of 1875, § 32.

No action can be maintained until thirty days after a written request

§26a-27 has been made by a creditor or stockholder of the officers to make a cer

tificate and their neglect or refusal so to do within that time. (Nassau Bank v. Brown, 30 N. J. Eq.. 478.)

The liability created by this section may be enforced by any creditor who has performed the necessary conditions, by an action of law, or by bill in equity, in the manner prescribed by Sections 92, 94, post. (Waters v. Quimby, 27 N. J. Law, 296; aff'd 28 Id., 533.)

26a. Incorporators may amend certificate of incorporation before payment of capital.

It shall be lawful for the incorporators of any corporation, before the payment of any part of its capital, to record with the clerk of the county in which its original certificate of incorporation was recorded, and file with the secretary of state, an amended certificate, duly signed, by the incorporators named in the original certificate of incorporation, and duly acknowledged or proved as required for certificates of incorporation under the act to which this is a supplement, modifying, changing or altering its original certificate of incorporation, in whole or in part, which amended certificate shall take the place of the original certificate of incorporation, and shall be deemed to have been filed and recorded on the date of the filing and recording of the original certificate; provided, however, that nothing herein shall permit the insertion of any matter not in conformity with the act to which this is a supplement; and provided, however, that this act shall not in any manner affect any proceedings pending in any court; for filing said amended certificate of incorporation, the secretary of state shall charge a fee of twenty dollars; provided, that where the total authorized capital stock of the corporation is increased by said amended certificate the secretary of state shall charge an additional fee of twenty cents for each one thousand. dollars of said increase.

(Supplement of April 20, 1898, § 1., P. L. 1898, p. 407.)

There was in the Revision of 1896 no provision for the amendment of a certificate of incorporation before the payment of the capital.

A mistake or omission could only be cured after full organization (see Section 27). This is a substantial re-enactment of Sections 183, 238, 250 and 251, Title "Corporations," General Statutes, all of which were repealed by the Revision of 1896.

27. Amendments and changes after organization.

Every corporation organized under this act may change the nature of its business, change its name, increase its capital stock, decrease its capital stock, change the par value of the shares of its capital stock, change the location of its principal office in this

state, extend its corporate existence, create one or more classes of preferred stock, and make such other amendment, change or alteration as may be desired, in manner following: the board of directors shall pass a resolution declaring that such change or alteration is advisable and calling a meeting of the stockholders to take action thereon; the meeting shall be held upon such notice. as the by-laws provide, and in the absence of such provision, upon ten days' notice, given personally or by mail; if two-thirds in interest of each class of the stockholders having voting powers shall vote in favor of such amendment, change or alteration, a certificate thereof shall be signed by the president and secretary under the corporate seal, acknowledged or proved as in the case of deeds of real estate, and such certificate, together with the written assent, in person or by proxy, of two-thirds in interest of each class of such stockholders, shall be filed in the office of the secretary of state, and upon the filing of the same, the certificate of incorporation shall be deemed to be amended accordingly; provided, that such certificate of amendment, change or alteration shall contain only such provision as it would be lawful and proper to insert in an original certificate of incorporation made at the time of making such amendment, and the certificate of the secretary of state that such certificate and assent have been filed in his office shall be taken and accepted as evidence of such change or alteration in all courts and places.

P. L. 1846, p. 67; P. L. 1846, p. 68; P. L. 1849, p. 303; P. L. 1849, p. 304; Act of 1875, § 33; P. L. 1876, p. 74; P. L. 1876, p. 235; P. L. 1877, p. 22; P. L. 1877, p. 179; P. L. 1878, p. 157; P. L. 1879, p. 88; P. L. 1880, p. 49: P. L. 1883, p. 240; P. L. 1886, p. 226; P. L. 1887, p. 137; P. L. 1887, p. 156; P. L. 1888, p. 224; P. L. 1889, p. 367; P. L. 1891, p. 87; P. L. 1891, p. 392; P. L. 1892, p. 287; P. L. 1892, p. 362; P. L. 1892, p. 12; P. L. 1893, P 444; P. L. 1895, p. 607.

This section, so far as it relates to changing the location of the principal office of the company, has been practically amended by Chapter 85 of the Laws of 1897 (see Section 28a), so that the change may now be made by resolution of the board of directors alone, upon filing a certificate in the office of the Secretary of State.

An amendment of the certificate of incorporation before the payment of any part of the capital stock is authorized by Chapter 172 of the Laws of 1893 (see Section 26a, p. 42, ante).

As to the power of a corporation to make changes in its certificate of incorporation whereby the rights of shareholders are affected, see Meredith v. N. J. Zinc & Iron Co., 55 N. J. Eq., 211; 6 N. J. Eq., 454; Pronik v. Spirits Distributing Co., 42 Atl. Rep., 586.

27

§ 28-28a

Increase of stock. It has been held that where the capital stock is increased, the original holders are first entitled to subscribe for the increased stock in proportion to their holdings. (Thompson on Corporations, 2094.) Where the new stock is issued for property purchased, from which all stockholders will receive the same benefit, original holders cannot insist that new stock shall be issued to them in proportion to their holdings, it being held that Section 55 of the Act of 1875 (Section 48, p. 71, post) became a part of the contract between the stockholders. In case the corporation deprives the stockholder of his rights in this behalf, the proper remedy is by an action at law for damages. (Meredith v. N. J. Zinc & Iron Co., 55 N. J. Eq., 211; aff'd 56 N. J. Eq., 454.)

28. Amendments by corporations under other acts.

Any corporation of this state, whether organized under a special act of incorporation or under general laws, excepting railroad and canal corporations, and other corporations possessing the right of taking and condemning lands, may increase or decrease its capital stock, change its name, the par value of the shares of its capital stock, or the location of its principal office in or out of this state, and fix any method of altering its by-laws permitted by the act to which this is a supplement, in the manner prescribed in the foregoing section, and any corporation may in the same manner relinquish one or more branches of its business, or extend its business to such branches as might have been in serted in its original certificate of incorporation.

(As amended by Chap. 92, Laws of 1898, P. L. 1898, p. 149.)

This section with the amendments of 1898 is intended clearly to cover corporations organized under other acts than the Act of 1875, or the Revision of 1896.

The board of directors of any corporation, organized under the laws of this state, may change the location of the principal office of such corporation within this state to any other place within this state by resolution adopted at a regular or special meeting of such board, by the votes of at least two-thirds of the members of such board; provided, that no certificate shall be required to be filed of the removal of any office from one point to another in the same town, township or city in this state.

Upon the adoption of a resolution as aforesaid, a copy thereof shall be filed in the office of the secretary of state, signed by the