RAH ILL S

Corporation AccoAND

CORPORAT ION LAWA COMPLETE EXPOSITION OF THE SCIENCE OF CORPORAT ION ACCOUNT ING ,

BOTH IN THEORY AND PRACTICE , WITH A DIGEST OF

THE CORPORATION LAWS OF ALL THE STATES

AND A VALUABLE TREAT ISE ON

STOCK EX CHANGES

Containing the rules of theNewYorkStockExchange, theSan Francisco

Stock and Exchange Board, The California Oil Exchange

and The Producers Oil Exchange.

ALSO THE COST AND MANNER OF LISTING STOCKS, THE METHODS OF OPERATINGAND A DICTIONARY OF ALL THE TERMSUSED BY BROKERS ON EXCHANGE .

It a lso conta ins every form of book used by corpora tions and elucid a tes the manner o f keeping them . Illustra tes five forms of Stock Ledger, how to

Open and close corpora tion books , how to change partnershipsto corpora tions and how to consolida te corpora t ions, &c.

It defines every form of Stock and Bond known to the Commercia l and Financialworld . It omi ts nothing perta ining to Corpora t ions. It is complete ,

concise , prac tica l and inva luable to the accountant .

PUBLISHED BY

J J RA H I L LC a sh ier and Hea d Book - keeper fo r iresno Repub l i ca n P ub l i sh ing Compa ny

F R E SN O , C AL .

1 899

En tered a ccord ing to Act of Congress , in th e yea r 1 899 .

B Y J . J . KAH ILL,in the offi ce of the Libra rian of Cong ress , a t Wa sh ing ton .

P RE FAC E .

Talking with a friend a l ittle over four month s ago , on t he mul ti

pl ici ty of corporations , I expressed t he opinion that a book devoted

exclusively to Corporation Account ing and Corporation Law should

find favor among accountant s and others interested in corporations .

He shared my convi ction and strongly advi sed me t o set about the publ ica t ion o f such a book . This l ittle vo l ume i s t he resu lt o f my labors

,

performed ch iefly at night .

There are hundreds of books devoted to book - keeping in genera l ,but none th at I know of devoted ent irely to th is important. branch o f

the science of book - keeping . That th i s i s not complete I own. that i t

ha s it s short comings I confess , but I trust i t wi l l not be j udged by its

shortcomings but rather by such meri t a s ma y be found in i t . I have

endeavored t o make th i s work more than interesting . M y aim has

been to make i t instruct ive and usefu l t o the large number o f good

book - keepers who have not had practi ca l training in th i s branch o f a c

counting . No one man knows a l l there i s to be known o f any science

and I do not cla im to be a master of thi s , therefore I invite. and wi l l

appreciate friendly crit i c i sm and endeavor to profit by it in the future .

Sto ck E xchanges are so interwoven with Stock Companies that

they necessari ly form a part of thi s work and constitute one o f its most

interesting features . A digest o f the l aws o f a l l the sta tes is a l so a

unique and very val uable appendi x .

That thi s work wi l l meet with the approva l o f those for whom it

i s intended and prove o f some va lue t o the pro fession. i s the sincere

wish o f

THE AUTHOR .

28 5373

PRINTED BYFRESNO REPUBLICAN P UBLISHING Co .

(Pub l ishers, Bookbinders and Printers)FRE SNO , CAL.

CORPORATIONS .

1 . A corporat ion i s a body pol it i c and corporate,formed and au

t horized by law t o act a s an ind ividua l or single person ; in other words ,a corporation i s an artificia l person created by law and endowed with

t he capacity of succession and t he further capacity o f transacting busi

ness a s an indi vidual,without regard t o the number of its members .

2 . A corporation can be ei ther aggregate or so le . The former

consi st s of any number above one, and i s preserved by a succession

o f i ts members indefini tely,or for a l imited number of years usual ly

fifty as stated in i ts charter .

3 . A corporation so le consi sts o f one person legal ly made a body

po l iti c and corporate. in order to give him some legal capacities which

as an individua l he cou ld not haveg especia l ly t he righ t o f succession.

4 . Corporations are c lassified under two headings, public and

prira te. M unic ipa l corporations, state universi ties and al l corporations

operated in the interest o f the publ i c come under the first heading ; a l l

others a re private .

5 . Pri vate corporations are genera l ly formed for the purpose of

carrying on commerc ial enterprises,in the interest and for the financia l

benefit o f their members . These are cal led corporations for profit .

Others are formed for rel i gious , educat ional and chari tab le purposes

such a s churches,school s and orphanages . By incorporating , these

inst itutions acquire the ri ght to own and ho ld rea l estate and persona l

property,t o buy

,sel l and mortgage the same under authori ty of t he

courts : to accept donations , deeds and bequests ; and t o do such other

and further thing s a s their charter authorizes . U sual ly they have no

capita l stock , and their management i s vested in a board of trustees .

G. A close corporation i s merely one of very l imited membership .

7. Corporations may be formed under a genera l l aw of the State

governing corporations , which law becomes operative in thei r behal f

a s soon as t he members o f such corpora t ions organi ze under its provis

ions . Railroad companies must obtain a franchi se from every city and

county in whi ch they operate,and must fi le in each county a copy o f

thei r art i cles of incorpora t ion.

8 . In private corporations , corporate power cannot be forced on

members against their wi l l . It i s necessary that they accept the

charter ; however, i f they act under i t , the presumption i s, that . they

a ccept it .

9 . The laws of t he various states differ in regard to corporations .

Further on in thi s work wi l l be found an epitome of the corpora tion

l aws of al l the sta tes,and i t might be wel l for those who may think of

organi z ing a stock company to read them careful ly . No other work

of thi s kind known t o t he wri ter embraces th is feature. Some states

offer excepti onal advantages to corpora t ions, whi le others offer oh

sta cles,and a knowledge of these advantages , or these obstac les , as the

case may be, may prove very valuable.

1 0. A corporation must have a name by which i t sha l l be known

in law and in i ts business transa ctions . The name must be adhered to .

a lthough a corpora tion may be l i ab le for debts contracted under ah

other name for instance,t he Fresno Republ ican Publ ish ing Company

i s l iab le for ob l igations incurred in the name of one of its publ ications

The Fresno M orning Republ i can.

The necessity for using the corporate name i s,that in i ts business

affairs it i s known to the law as an individual .

1 1 . The use of the seal is not as general nor as necessa ry as was

formerly supposed . It i s only.

in the execution of lega l inst ruments

and on the face of its own stock that it i s necessary .

ADVANTAGE S OF CORPORATIONS .

1 2. 1 . Unl imited membersh ip wit h l imi ted agency of directors .

Partnersh ips are necessarily l imited in membership,for the. reason that

partners may d o a l l sorts of contrary th ings for which al l members of

t he partnership are severa l ly l iable,and no agreement between the

part ners can bind outsiders . The usual powers of partnersh ip are

supposed t o be vested in each member, and t he common assumption

i s tha t they are unless noti ce i s given t o the contrary ; Hence,a

partner may incur ob l igations whi le he i s inso l vent,that are binding

on the other members not so in a corporation. No mere stockholdernor person other than its manager or other person thereunto duly authorized

,can incur debts or obl igations in the name of t he company .

As a further safeguard , t he by- laws of some companies provide tha tno agent (not even the president or manager) can obl igate the companyin any sum exceeding a certain amount . sometimes $1 00, without

the previous approval or subsequent ratification of the board of d irec

tors . The directors themselves a re agents o f the corporat ion, deriving

thei r o ffi ces from t he stockholders and thei r powers from the by- l aws

o f the company . Their duties are defined and thei r powers c ircum

scribed by the regulations of the company, and they a re l i ab le to t he

stockho lders for any ex cess o f their authori ty . A director can also be

removed from offi ce by a vote of t he stockho lders ho ld ing two - th irds

o f t he capita l stock , at a genera l meet ing held for that purpose . Due

noti ce of the time and pla ce and intention o f the meet ing must be

given.

13 . 2 . In corpora tions there i s a union of capital,without a

union of service on the part o f i ts members . The directors represent

the interest of a l l the stockholders,whi le the stockho lders are free to

engage in any other business .

1 4 . 3 . Better fac i l it ies for borrowing i s a fforded .since a corpora

t ion can ra ise money on an i ssue o f bonds or stock .

1 5 . 4 . Neither death nor change of members a ffects the cont inu

ance o f a corporation.

1 6 . 5 . The t it le of property held in partn