A corporation cannot defend itself in an action for a tort done by §1 it on the ground that the business in the prosecution of which the tort was done was ultra vires (N. Y., L. E. & W. R. R. Co. v. Haring, 47 N.

J. Law, 137).

A corporation may be sued on an implied contract (Worrell v. Ist Pres. Church, 23 N. J. Eq., 96, and cases cited).

As to what is personal service on a corporation (Laufman v. Hope Mfg. Co., 54 N. J. Law, 70).

III. Common Seal. The general rule is that a corporation need use its seal only in cases where it would be essential for an individual to use a seal. The old common law idea that a corporation can only act under its corporate seal no longer prevails. (Crawford v. Longstreet, 43 N. J. Law, 325; see also Bap. Church v. Mulford, 8 N. J. Law, 182; Mendham v. Losey, 2 N. J. Law, 327.)

It is not necessary to use wax or wafer. An impression of the seal on the paper is sufficient. (P. L. 1875, p. 56; P. L. 1898, p. 677, § 20.)

Primarily the corporate character of the seal must be proved.

It requires evidence to substantiate its character. (Manhattan Mfg. Co. v. N. J. Stock Yard Co., 23 N. J. Eq., 161; Leggett v. N. J. Mfg. Co., 1 N. J. Eq., 541; Vaughn v. Hankinson's Admr., 35 N. J. Law, 79; Den v. Vreelandt, 7 N. J. Law, 352.)

No presumption of authority arises from the use of a common paper seal not on its face appearing to be the corporate seal, although accompanied by the recitation "witness the corporate seal." (Raub v. Blairstown Creamery Assn., 56 N. J. Law, 262.) There are two essential elements in the proof of a corporate deed-that the seal is the seal of the company; that it was affixed by authority. (Osborne v. Tunis, 25 N. J. Law, 633.) For further cases relative to corporate seal and its proof, see Manhattan Mfg. Co. v. New Jersey Stock Yard Co., 23 N. J. Eq., 161; Parker v. Washoe Mfg. Co., 49 N. J. Law, 465; Whitehead v. Hamilton Rubber Co., 52 N. J. Eq., 78.

IV. Power to hold real estate. This section is a practical re-enactment of a similar provision of the Statute of 1846.

The practical point under this section of the statute is that it rests with the State, and with the State alone, to question the power of a corporation to hold real estate. (State v. Mansfield, 23 N. J. Law, 510.)

Except, perhaps, the case of a devise to a corporation of lands in excess of the amount expressly limited in the charter, where the court allowed the question to be raised by an heir-at-law by a suit in chancery. (DeCamp v. Dobbins, 29 N. J. Eq., 36; s. c., 31 N. J. Eq., 671.)

Under the Act of 1875 a corporation was not authorized to hold real property "exceeding the amount limited in its charter," but all such limitations, expressed or implied, were removed in the Revision of 1896.

§ 1 The English statutes of Mortmain have never been in force in this State. (State v. Mansfield, 23 N. J. Law, 510; State v. Newark, 25 N. J. Law, 315.)

A corporation may hold title to lands in fee simple, even though the period of the corporation's existence is limited. (State v. Brown, 27 N. J. Law, 13; State v. Haight, 35 N. J. Law, 178; s. c., 36 N. J. Law, 471.)

As to power to grant easements, see Benton v. City of Elizabeth, 61 N. J. Law, 411; aff'd 61 N. J. Law, 693.

Mortgages.-There is no prescribed statutory procedure for the creation of mortgages by corporations organized under this act. No consent of stockholders is required as in New York. While the power to create mortgages is undoubtedly vested in the directors (Section 12) it is the usual practice, in the absence of express authority to the directors in the certificate of incorporation, to obtain the sanction of the stockholders at a duly convened meeting.

Bonds. There is no statutory limitation on the power of a corporation organized under this Act to issue bonds or debentures, whether secured by mortgage or otherwise.

Stockholders owing money to the corporation upon their subscriptions for stock have the right to buy and pay for the company's bonds, and either hold them or pass them upon the market. (Bergen v. Porpoise Fishing Co., 42 N. J. Eq., 397.)

The lien of the holders of mortgage bonds relates to the time when the mortgage was recorded, and is superior to a mechanic's lien, although the bonds themselves were not issued until after the erection of the building had been commenced. (Central Trust Co., Trustee v. Continental Iron Works, 51 N. J. Eq., 605.)

One who has accepted bonds of a corporation and sold them, and has afterwards bought all the company's property at a receiver's sale, subject to all encumbrances, is estopped to deny the validity of the bonds. (De Kay v. Voorhis, 36 N. J. Eq., 37; aff'd 36 N. J. Eq., 548.)

Coupon bonds are negotiable securities. (Boyd v. Kennedy, 38 N. J Law, 146; Copper v. Jersey City, 44 N. J. Law, 634.)

As to the distinction between current corporate bonds and bonds that are overdue, as affecting the rights of holders thereof, see Midland R. R. Co. v. Hitchcock, 37 N. J. Eq., 549.

As to the power of one corporation to guarantee the bonds of another corporation, see Ellerman v. Chicago Junction Rys., &c., Co., 49 N. J. Eq.,

217, 247.

No statutory limitation as to amount of mortgage indebtedness.-The question is frequently asked whether there is any limitation under the laws of New Jersey on the amount of bonds or other indebtedness which a cor

peration may create. As to ordinary business corporations the statutes are § 1 silent, although railroad companies are limited in the amount of such indebtedness. This question is doubtless suggested by the provisions of the laws of some of the other States limiting the amount of bonded indebtedness to the amount of the paid-up capital stock. The general rule is stated in Barry v. Merchants' Exchange Co., 1 Sanford Ch. Rep. (N. Y.), 280, 310, where it was said

"It is in vain to look in our laws for any express restriction of corporations, to the amount of their capital in the use of their credit. The history of those institutions in this country shows that no such restriction exists. The Legislature has sometimes interposed its authority by expressly limiting the use of the corporate credit, thus showing that unless so restricted it was unlimited."

V. To appoint agents. The power to appoint officers and agents is ordinarily in the directors, but it may be delegated. It is not necessary that the appointment of an agent should be made under the corporate seal. (Mendham v. Losey, 2 N. J. Law, 327.)

The manner of appointing agents is usually prescribed by the by-laws. A trading or manufacturing corporation, until its charter is annulled by a proper proceeding at law, has the same authority as an individual trader or manufacturer to sell or consign its goods, to select its selling agents, and to impose conditions as to whom they shall sell, and the terms upon which they shall sell. (Stockton v. American Tobacco Com

pany, 55 N. J. Eq., 352.)

See further as to officers and agents and de facto officers, notes to $13.

VI. By-Laws. As to where the power to make and alter by-laws lies, see Sec. II, post.

By-laws are binding upon and confer rights upon members of the corporation and not upon third persons without notice. (State v. Overton, 24 N. J. Law, 435, 440.)

Where a by-law is adopted as a part of the original organization of the company, and the subscriptions of stock are made and money paid thereon upon the strength of it, it becomes a fundamental contract between the stockholders, and cannot afterwards be altered, even though a general power be reserved in the by-laws to make alterations therein. Rights under such a by-law are vested in the stockholders and pass to each new holder of stock by transfer. (Loewenthal v. Rubber Reclaiming Co., 52 N. J. Eq., 440.)

For early cases declaratory of general principles relating to by-laws see Taylor v. Griswold, 14 N. J. Law, 222; Paxson v. Sweet, 13 N. J Law, 196; State v. Overton, 24 N. J. Law, 435, 440.)

VII. To wind up and dissolve. This subject will be treated more fully in discussing Section 31; see also Section 69. Generally speaking,

§ 2 aside from the inherent power of the State to forfeit a charter for misuser or nonuser, the statutes alone provide the means by which a private corporation may be dissolved, and any other method may be enjoined. (Hunt v. American Grocery Co., 81 Fed. Rep., 532.) In Hoboken Building Association v. Martin (13 N. J. Eq., 427) it was contended that a failure to elect officers according to the requirements of the constitution worked a dissolution. But the Chancellor held that it did not. This matter is now settled by statute. (Sec. 41, post.)

The charter of a company is not extinguished by a transfer of all its real and personal property. (Zinc Co. v. Franklinite Co., 13 N. J. Eq.. 322; Sewell v. East Cape May Beach Co., 50 N. J. Eq., 717.)

The ways by which a corporation may be wound up and dissolved, as provided in the statutes, are:

1. By limitation in the certificate of incorporation. The corporate existence is continued, however, for the purpose of settling up and closing the affairs of the company. (Sec. 53.)

2. By surrender of the corporate franchises. (Sec. 32.)

3. Voluntary dissolution by the directors and stockholders, or by unanimous consent of the stockholders. (Sec. 31.)

4. By the Legislature. (Sec. 4.)

5.

By decree of the Court of Chancery in insolvency proceedings. (Sec. 69.)

6. The Court of Chancery or Supreme Court may declare charter of company forfeited for failure to obey order to bring books into the State. (Sec. 44.)

7. By proclamation of the Governor for failure to pay taxes. (Sec. 156.)

2. Powers additional.

In addition to the powers enumerated in the first section of this act and the powers specified in its charter or in the act or certificate under which it was incorporated, every corporation, its officers, directors and stockholders, shall possess and exercise all the powers and privileges contained in this act, so far as the same are necessary or convenient to the attainment of the objects set forth in such charter or certificate of incorporation; and shall be governed by the provisions and be subject to the restrictions and liabilities in this act contained, so far as the same are appropriate to and not inconsistent with such charter or the act under which such corporation was formed; and no corporation shall possess or exercise any other corporate powers,

except such incidental powers as shall be necessary to the exercise § 2 of the powers so given.

P. L. 1846, p. 16, Act of 1875, §§ 2, 3, 9.

This section is an important provision of the corporation law, involving the question as to what corporate powers are granted by the statutes of New Jersey.

In 1846 the act entitled "An Act concerning corporations," approved February 14, 1846 (P. L. 1846, p. 16), was passed, giving all corporations substantially the same general powers as are contained in paragraphs I to 5 of this act.

In the same year "An Act to authorize the establishment and prescribe the duties of manufacturing companies," approved February 25, 1846 (P. L. 1846, p. 64), was passed.

This was the first general enabling act of New Jersey. During the next three years recourse was had to the Legislature by way of special charters for specific powers and objects, until it became apparent from the multiplicity of special charters that an extension of the general enabling act (P. L. 1846, p. 64) was necessary so as to include corporations other than manufacturing. Accordingly in 1849 the general enabling act was broadened to include companies for manufacturing and other purposes by the passage of an act entitled "An Act to authorize the establishment, and to prescribe the duties of companies for manufacturing and other purposes," approved March 2, 1849 (P. L., 1840, p. 300).

The "Act concerning corporations," approved February 14, 1846 (P. L. 1846, p. 16), which prescribed the powers of corporations in general, remained practically unchanged down to the Revision of 1875.

Meanwhile the general enabling act of 1849 (P. L. 1849, p. 300) was supplemented by various acts of the Legislature from time to time.

In 1875 the Constitution of New Jersey, as then amended, provided that the "Legislature shall pass no special act conferring corporate powers, but shall pass general laws under which corporations may be crganized and corporate powers of every nature obtained.”

In obedience to the provision of the Constitution the Corporation Act of 1875 was passed, and in that act the fundamental powers of corporations as defined under "An Act concerning corporations," approved February 14, 1846 (P. L., 1846, p. 16), were substantially reiterated.

The Revision of 1896 consolidated Sections 2 and 3 of the Act of 1875 into Section 2 of the Act of 1896.

Before proceeding to analyze this section it should be borne in mind that the act is applicable to domestic corporations generally, including (1) corporations under special charters granted by the Legislature, or under the general corporation act prior to 1875; (2) corporations created under general acts of the Legislature applicable to different classes of corporations, such as banking, insurance, etc., as well as (3) to corporations