As to the power of a railroad company to issue its entire stock to a construction company for the building of the road, see In re Delaware River & Atlantic Ry. Co., 76 N. J. Law, 163.

The requisites of an information under this section are discussed in McCarter v. Pitman, etc., Gas Co., supra.

51. Any Corporation May Hold Stock and Bonds of Other Corporations.

Any corporation may purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of the shares of the capital stock of, or any bonds, securities or evidences of indebtedness created by any other corporation or corporations of this or any other state, and while owner of such stock may exercise all the rights, powers and privileges of ownership, including the right to vote thereon.

P. L. 1888, p. 385; P. L. 1888, p. 445; P. L. 1891, p. 329; P. L. 1893, p. 301.

Under the General Corporation Law of 1875, corporations had no express power to purchase or hold stock of other corporations or to vote thereon. Neither was there any implied power to make such purchases. Elkins v. Camden & Atlantic R. R. Co., 36 N. J. Eq., 5, 233; 37 Id., 273.

Section 10 of the Revision of 1875 expressed the numerous purposes for which corporations might be formed and at the end added the general clause, or any lawful business or purpose whatever.” But under this general clause there was doubt as to the right of a company to purchase and hold stock in other corporations. Willoughby v. Chicago Junction Ry. Co., 50 N. J. Eq., 656.

In 1889, by an amendment to section 55 of the Revision of 1875 (section 49, ante), the directors of any company organized under that act were authorized to purchase "the stock of any company or companies owning, mining, manufacturing or producing materials, or other property necessary for their business," and to issue stock in payment therefor.

In 1893 the act was again amended and corporations were authorized to purchase and hold stock of other companies and to exercise all the powers incidental to ownership. P. L. 1893, p. 301.

This section was included in the Revision of 1896, as Section 51. Legislature has thus expressly conferred the power and it is beyond the jurisdiction of the courts to question the exercise of the

power. Dittman v. Distilling Co. of America, 64 N. J. Eq., 537; Trenton Potteries Co. v. Oliphant, 58 N. J. Eq., 507.

The power of a corporation under common law to acquire and hold the stock of other corporations as property was doubtful. Under the old scheme of special charters and narrow statutes such an act was generally held to be ultra vires, unless the stock was taken honestly for the protection of capital of the corporation or for a debt. As soon as the corporation act was amended to permit the organization of corporations for "any lawful business whatever," it seems clear that a corporation could be created for the express purpose of acquiring stock in other companies. If the word "lawful" is construed in the sense of "authorized,'' such power is apparently granted in Section 6 of the General Corporation Act. But because of the conflict of authorities on the question, Section 51 was passed as a declaratory statute and not for the purpose of affecting the charters in existence at the time or extending the objects and powers of corporations organized under special charters or under the corporation act itself. Sections 2 and 51 merely swept away any doubts as to the power of corporations to hold stock. Robotham v. Prudential Ins. Co., 64 N. J. Eq., 673, 697.

The power to purchase stock and bonds of other corporations is to be exercised subject to the limitation of section 2 (ante, p. 7). The power exists as a primary power only when the purpose to exercise it as such is expressed in the certificate of incorporation. It exists as an incidental power only so far as necessary for the attainment of the objects of incorporation. A railroad company incorporated under P. L. 1903, p. 645, for the purpose of constructing, maintaining and operating a line of railway, with definite termini, is without power to hold the stock and bonds of a street railway company operating beyond these termini, and thereby to control the operations of the street railway. State v. Atlantic City & Shore Ry. Co., 77 N. J. Law, 465.

Where a monopoly arises from the lawful exercise of the powers conferred by this section, the right to question such monopoly belongs to the state alone in quo warranto proceedings brought to oust the corporation. Dittman v. Distilling Co., 64 N. J. Eq., 537.

It would seem that the case of Coler v. Tacoma Ry. Co., 65 N. J. Eq., 347, limits the power of New Jersey companies to hold stock of corporations of other states to the stock in companies organized in states whose laws authorize their own domestic corporations to hold stock in other companies, and to exercise all the powers incident to ownership. P. L. 1893, p. 301.

As to the power of a corporation to guarantee securities of another corporation when disposed of in payment of debt, see Ellerman v. Chicago Junction Rys., etc., Co., 49 N. J. Eq., 217 (1891).

A corporation may vote shares in another corporation in which it is a stockholder by a proxy duly authorized. State v. Rohlffs, 19 Atl. Rep., 1099.

A declaration alleging that a corporation is the holder of shares of stock issued in the name of its treasurer sufficiently alleges that such corporation is a stockholder of the defendant corporation. Edwards v. Nat'l Window Glass Jobbers' Ass'n, 68 Atl. Rep., 800.

The rule followed by the federal courts is stated in Vandagrift v. Rich Hill Bank, 163 Fed. Rep., 823.

Holding companies.

The fact that the directors in two companies may be appointed by a holding company does not necessarily subject the two companies to a common control. An injunction will not issue to prevent the constituent companies from entering into a contract on the sole ground that a minority of the directors of one of the companies, owns stock in the holding company. Such a contract must appear to be inequitable and unfair to justify the interference of a court. Pierce v. Old Dominion Copper Co., 67 N. J. Eq., 399; 72 Id., 595; aff'd 70 Atl. Rep., 1101.

52. Penalty for false certificates.

If any certificate made, or any public notice given by the officers of any corporation, in pursuance of the provisions of this act, shall be false in any material representation, all the officers who shall have signed the same, knowing it to be false, shall be jointly and severally liable for all the debts of the corporation contracted while they were stockholders or officers thereof, as a penalty enforceable in the courts of this state only.

P. L. 1846, p. 70; P. L. 1849, p. 307; Act of 1875, $56.

The Revision of 1896 makes a knowledge of the falsity of the certificate or notice of prerequisite to a recovery under this section and provides that the liability created is a penalty enforceable in the courts of this State only. Such knowledge was not necessary under either

the Act of 1846 or the Revision of 1875.

This personal liability may be enforced by any creditor whose contract arose while such officers were stockholders or officers of the company, by an action at law, and it is not necessary to proceed by general creditors' bill, as under Section 21. Wetherbee v. Baker, 35 N. J. Eq., 501. Sections 93 and 94 apply, and no sale can be had under the execution against the officer or director, until after judgment has been obtained against the corporation and execution thereon returned unsatis

fied. The case of Quimby v. Waters, 27 N. J. Law, 296, 28 Id., 533, is a precedent for such an action.

This section relates to "officers," and does not include incorporators who signed the certificate of organization. Thompson-Houston Elec. Co. v. Murray, 60 N. J. Law, 20.

New York decisions.

Under the New York statute which corresponds in most respects with the foregoing section, the cases have held as follows:

Untruthful representations which would have no effect upon the judgment of persons dealing with the corporation could not be held material. Walton v. Godwin, 33 St. Repr., 889; Id., 58 Hun., 87.

The burden rests upon the plaintiff of establishing that the certificate filed was in point of fact false. Ferguson v. Gill, 74 Hun., 566.

V.-Winding Up.*

53. Corporate existence continues.

All corporations, whether they expire by their own limitation or be annulled by the legislature or otherwise dissolved, shall be continued bodies corporate for the purpose of prosecuting and defending suits by or against them, and of enabling them to settle and close their affairs, to dispose of and convey their property and to divide their capital, but not for the purpose of continuing the business for which they were established.

P. L. 1846, p. 72; P. L. 1849, p. 308; Act of 1875, §59.

The provisions of this section apply to all suits whether in contract or in tort and whether suit is begun before or after dissolution. Hould v. Squire & Co., 79 Atl. Rep., 282.

In a suit by stockholders of a dissolved corporation against the directors for mismanagement of its affairs, the corporation should be made a party, by virtue of this section. Creditors should likewise be made parties. Camp. v. Taylor, 19 Atl. Rep., 968.

On the expiration of the charter of a corporation, the corporate

* A company whose charter has been proclaimed by the Governor to be void for non-payment of taxes is within the provisions of §§53-60 as to winding up. American Surety Co. v. Great White Spirit Co., 58 N. J. Eq., 526.

existence is continued by this section for the purposes therein mentioned. Grey v. Newark Plank Road Co., 65 N. J. Law, 603.

See Atlas R. R. Supply Co. v. Lake & River R. R. Co., 134 Fed. Rep., 503; Metropolitan Rubber Co. v. Place, 147 Fed. Rep., 90.

A company whose charter has been proclaimed by the Governor to be void for non-payment of taxes is within the provisions of §§53-60 as to winding up. American Surety Co. v. Great White Spirit Co., 58 N. J. Eq., 526. Such a corporation may be adjudicated a bankrupt. In re Munger Vehicle Tire Co., 159 Fed. Rep., 901.

Chapter 24, Laws 94 (P. L. 1904, p. 44), relating to building and loan associations, does not provide a substitute method of winding up the affairs of an insolvent corporation. Fitzgerald v. State Mutual Building & Loan Ass'n, 69 Atl. Rep., 564. For a review of authorities, see Michigan Law Review, Vol. 7, p. 53.

A sale of all the corporate property and all of the franchises except the franchise of being a corporation, amounts to a dissolution of the corporation and the procedure prescribed by Section 31 must be followed. Coler v. Tacoma Ry. & Power Co., 65 N. J. Eq., 347.

As to the effect of dissolution on outstanding stock and the rights of a stockholder, see Bijur v. Standard Distilling, etc., Co., 70 Atl. Rep., 934.

Effect on contracts.

In this state the courts have not adopted the doctrine that the mere dissolution of the contracting company dissolves its continuing contracts, and under our law the claim for damages for breach of the contract is chargeable to the assets. Bijur v. Standard Distilling and Distributing Co., 70 Atl. Rep., 934; Spader v. Mural Dec. Co., 47 N. J. Eq., 18; Bolles v. Crescent Drug Co., 53 N. J. Eq., 614; Rosenbaum v. Credit System Co., 65 N. J. Law, 255.

54. Directors; trustees on dissolution.

Upon the dissolution in any manner of any corporation, the directors shall be trustees thereof, with full power to settle the affairs, collect the outstanding debts, sell and convey the property and divide the moneys and other property among the stockholders, after paying its debts, as far as such moneys and property shall enable them. They shall have power to meet and act under the by-laws of the corporation, and, under regulations to be made by a majority of said trustees, to prescribe the terms and conditions of the sale of such property, and may sell all or any