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and directors in a book to be kept for that purpose, and per- § 13 form such other duties as shall be assigned to him; the treasurer shall give bond in such sum, and with such surety or sureties, as shall be required by the by-laws, for the faithful discharge of his duty.

P. L. 1846, p. 66; P. L. 1849, p. 302; Act of 1875, §§ 17, 18.

Powers of officers.-The powers of the officers of a corporation over its business and property are strictly those of agents-powers either conferred by the charter, by-laws or delegated to them by the directors or managers. (Fifth Ward Savings Bank v. First Natl. Bank, 48 N. J. Law, 513, 525; Stokes v. N. J. Pottery Co., 46 N. J. Law, 237.)

Stokes v. N. J. Pottery Co., 46 N. J. Law, 237, held that the president is the chief executive officer, and by virtue of his office has authority to perform all acts of an ordinary nature which, by usage or necessity, are incident to his office, and may bind the corporation by contracts in the usual course of business. See also Beebe v. George H. Beebe Co., 64 N. J. Law, 497, holding that the president has power by virtue of his office to take all steps necessary for the defense of his company in litigation, including the appointment of an attorney for this purpose.

"The doctrine that a corporation may act only by a resolution of its board, and under its corporate seal, has long been abandoned. In the conduct of its ordinary business a corporation acts by its agents, who may be appointed without formal action of its board, and not even in writing. (American Insurance Co. v. Oakley, 9 Paige, 500.) Corporations may be bound by acceptance and ratification of previously unauthorized acts of its agents, even when in the course of his principal's business he perpetrates a fraud. (Garrison v. Technic Electric Co., 55 N. J. Eq., 708.)" (Flaherty v. Atlantic Lumber Co., 58 N. J. Eq., 467, 473); see also Bennett v. Millville Imp. Co., 51 Atl. Rep., 705.)

When an officer is clothed with apparent authority, although not inherent in his office, the general doctrine of agency applies, and the corporation may be liable for his acts. The authority of the officer does not depend so much on his title, or on the theoretical nature of his office, as on the duties he is in the habit of performing. (Fifth Ward Savings Bank v. First Natl. Bank, 48 N. J. Law, 513, 525; Taylor on Corporations, Sections 202, 236, 244; see also Blake v. Domestic Mfg. Co., 38 Atl. Rep., 241; Keen v. Maple Shade Land & Imp. Co., 50 Atl. Rep., 467.) Where a corporation repudiates unauthorized contract of officer it must put other party in statu quo. (Trenton Passenger Ry. Co. v. Wilson, 40 Atl. Rep., 597.)

As to acts of an extraordinary nature, an officer must have express authority from the board of directors. He cannot confess judgment against the company. (Stokes v. N. J. Pottery Co., 46 N. J. Law, 237.)

§ 13

Nor has he power to execute a cognovit. Blairstown (Raub v. Creamery Ass'n, 56 N. J. Law, 262.) The president and cashier of a bank, as such, have no inherent power to execute, in the name and behalf of the corporation, a mortgage or conveyance of real estate. (Leggett v. N. J. Mfg. & Bk'g Co., 1 N. J. Eq., 541; Bennett v. Keen, 59 N. J. Eq., 634.)

As to when the corporation is charged with notice from its agent's knowledge, see Willard v. Denise, 50 N. J. Eq., 482; Bank v. Christopher, 40 N. J. Law, 435; Canada Mfg. Co., v. Woodbridge, 58 N. J. Law,

134.

De facto officers.-Lord Ellenborough's definition (King v. Bedford Level, 6 East., 356, 368) of a de facto officer as "one who has the reputation of being the officer he assumes to be, and yet is not a good officer in point of law," is followed in Mechanics' National Bank v. Burnett Mfg. Co., 32 N. J. Eq., 236.)

The acts of a de facto officer of a corporation are valid—so far, at least as they create rights in favor of third persons. (Hackensack Water Co. v. De Kay, 36 N. J. Eq., 548.)

“If a body of men acting as a corporation permit certain persons to act openly as corporate officers, or if it is permitted by the directors, assuming them to have had the power to appoint the officer in question, the corporation will not, to the detriment of persons who in good faith have acted on the assumption that the persons acting as officers were the officers they assumed to be, be permitted to impeach the validity of their acts and contracts on the ground that such persons were not legally corporate officers." (Taylor on Corporations, Section 189.)

Ratification of acts of officers.-See Kountze v. Morris Aqueduct Co., 58 N. J. Law, 303, 695; In re West Jersey Traction Co., 59 N. J. Eq., 63.

Contracts signed by officers. The proper way to sign corporate contracts is: The Company,

by

President (or other officer as the case may be), and not merely the name of the officer followed by his official title. Such titles are sometimes held to be mere words of description. In New York where a bank discounted for a third party a negotiable promissory note reading "We promise to pay," etc., and signed by the individual names of the parties, with the addition of the words "President" and "Secretary," it was held to be the note of the individuals signing.

The Court held that nothing short of notice, express or implied, brought home to the bank at the time of discounting it that the note was issued as the note of the corporation of which the signers were officers, and was not intended to bind the signers personally, could defeat, on the ground that it was a corporate obligation, the remedy of the bank against the individuals signing. Not only was the note in that case signed by the

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defendants with the addition of the words "President" and "Secretary," but the name of the company was printed across the end of the note. (First Natl. Bank v. Wallis, 150 N. Y., 455.)

In this State, however, the Court of Errors and Appeals held the rule to be that such a note is prima facie the note of the individual and not of the corporation, but that parol evidence may be introduced to show whether it really was the personal note of the officer or was the note of the corporation. (Kean v. Davis, 21 N. J. Law, 683; Reeve v. 1st Natl. Bk., 54 N. J. Law, 208; see also Dayton v. Warne, 43 N. J. Law, 659; Sheldon v. Dunlap, 16 N. J. Law, 245; Den v. Hay, 21 N. J. Law, 174; Brown ads. Combs, 29 N. J. Law, 36; Simanton v. Vliet, 61 N. J. Law, 595; Shotwell v. M'Kown, 5 N. J. Law, 973.)

Secretary. It is the duty of the secretary to keep the minute book of the company. The minutes of a corporation need not be entered up in the handwriting of the secretary; it is sufficient if they are entered under his direction and approved by him. (Wells v. Rahway White Rubber Co., 19 N. J. Eq., 402.)

Liability of treasurer for corporate funds.-Where a treasurer, with the company's consent, deposited funds in a bank to his credit, he was held entitled to allowance for deposits lost by failure of the bank. It was also held that he was not liable for interest on funds of the company in his hands, unless he had used them so as to earn interest, or for his own purposes. (Laurel Springs Land Co. v. Fougeray, 57 N. J. Eq., 318.)

Removal of officers.-"If there be a fixed term of office removal must be for cause; but otherwise, unless limited by statute or by-law, the power to remove ministerial officers is absolute in the body that elects, subject only to a right of action if there be a breach of contract of employment. (Thompson on Corporations, Sections 804, 805, 820.) The president of a corporation has no securer tenure than any other ministerial officer. (Ibid, Section 4611.) Our statute (Section 13) simply provides that every corporation organized thereunder shall have a president, secretary and treasurer, who shall be chosen either by the directors or stockholders as the by-laws may direct, and shall hold their offices until others are chosen and qualified in their stead. The by-laws of the Griffing Company directed that the directors shall choose these officers, but fixed no term of office, and at the meeting of November 23d were amended so as to give express power of removal. Such an amendment has been judicially upheld in this State. Weinburgh v. Union, &c., Advertising Co., 55 N. J. Eq., 640. The stockholders ratified the removal made under this authority." (In re A. A. Griffing Iron Co., 63 N. J. Law, 168.)

Torts committed by agents.—It is now thoroughly settled here as elsewhere that corporations are liable for torts which they may commit by

§ 14-16 agents, and that the pertinent inquiry when such liability is charged is (1) whether the act in question is one within the scope of the corporate powers, and (2) whether it was done by a person who was the agent of the corporation in doing it. (W. J. & Seashore R. R. Co. v. Welsh, 62 N. J. L., 655, 658, citing McDermott v. Evening Journal, etc., 43 N. J. Law, 488; s. c., 44 Id., 430; Hoboken, etc., Co., v. Kahn, 59 N. J. Law, 218; Dock v. Elizabethtown Steam, etc., Co., 43 N. J. Law, 312.

Compensation of Employees.--A corporation may lawfully agree to pay an employee a specified proportion of its net profits as part compensation. (Bennett v. Millville Imp. Co., 51 Atl. Rep., 706.) See further on this point, notes to Section 47, post, respecting dividends.

14. The corporation may have such other officers, agents and factors, who shall be chosen in such manner and hold their office for such terms as may be prescribed by the by-laws.

P. L. 1846, p. 66; P. L. 1849, p. 302; Act of 1875, § 19.

15. Any vacancy occurring among the directors or in the office of president, secretary or treasurer by death, resignation, removal or otherwise, shall be filled in the manner provided for in the by-laws; in the absence of such provision such vacancies shall be filled by the board of directors.

P. L. 1846, p. 66; P. L. 1849, p. 302; Act of 1875, § 20.

If the number of directors is increased the directorships thus created are not vacancies within the meaning of this section. (In re A. A. Griffing Iron Co., 63 N. J. Law, 168.)

The validity of a provision in the certificate of incorporation that newly created directorships shall be construed as vacancies and filled by the directors has yet to be established by authority. Compare Section 12, which provides that directors shall be chosen annually by the stockholders. It is better to have the stockholders elect such additional directors.

As to the power to fill vacancies at common law see Kearney v. Andrews, 10 N. J. Eq., 70.

16. The first meeting of every corporation shall be called by a notice, signed by a majority of the incorporators, designating the time, place and purpose of the meeting, which notice shall be published at least two weeks before the meeting in some newspaper of the county where the corporation is established; or said first meeting may be called without publi

cation if two days' notice be personally served on all the incor- § 17 porators; or if all the incorporators shall in writing waive notice and fix a time and place of meeting, no notice or publication shall be required; whenever under any of the provisions of this act, or any amendment thereto, a corporation is authorized to take any action after notice to its members or stockholders, or after the lapse of a prescribed period of time, such action may be taken without notice and without the lapse of any period of time, if such action be authorized or approved and such requirements be waived, in writing, by every member or stockholder of such corporation or by his attorney thereunto authorized.

(As amended by Chap. 58, Laws of 1902; P. L. 1902, p. 217.)

P. L. 1846, p. 66; P. L. 1849, p. 303; Act of 1875, § 22; P. L. 1891, p. 113.

Generally the incorporators sign a written waiver of notice of meeting. Where all the incorporators but one were present at the first meeting, and he afterwards assented to what was done, the incorporation was held to be valid, although no notice was given. (Babbitt v. East Jersey Iron Co., I Stew., Dig., p. 208, § 13, not otherwise officially reported.)

The meeting must be held at the place designated in the certificate of incorporation as the principal office (§ 44, p. 81).

This section was amended in 1902 by adding the matter printed in bold-faced type. The language is not free from ambiguity, and its effect may be open to question until construed by the courts. The provision is taken without substantial change from Section 38 of the General Corporation Law of New York, which does not appear to have been passed upon by the courts of that state. The amendment is apparently intended to authorize expressly the waiving of notice by stockholders, a right which undoubtedly they had prior to this enactment. It might be construed to permit any corporate action to be taken on the assent in writing of all the stockholders at once without intermediary statutory formalities, and without a meeting of the stockholders.

17. Stockholders may vote by proxy ; quorum, &c.

Absent stockholders may vote at all meetings by proxy in writing; and every corporation may determine by its certificate of incorporation or by-laws the manner of calling and conducting all meetings, what number of shares shall entitle the stockholders to one or more votes, what number of stockholders shall attend, either in person or by proxy, or what number of

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