evidence to establish prima facie the existence of the corporation of a national bank.14 14 § 32. When the life of bank corporation commences. A national bank becomes a corporation from the date of its organization certificate. 15 The certificate upon receipt thereof must be published according to requirements of section 5170, Revised Statutes of the United States. The proof of publication of said certificate should be promptly sent to the Comptroller of the Currency. The life of a corporation does not date from the time it begins to do business, but from the date of its organization.16 "Where the statute points out the manner in which the corporation shall be organized, and the direction of the statute is followed, this brings the corporation into existence so that it may enter upon the objects of its creation." 17 14 Mix Nat. Bank of Bloomington, 91 Ill. 20; Merchants' Nat. Bank v. Glenden, 120 Mass. 97. 15 U, S. Rev. Stat., §§ 5168, 5169. 16 Whetstone v. Ottawa Univer sity 13 Kan. 320; Hanna v. International Petroleum Co., 23 Ohio St. 622. 171 Thomp. on Corp. § 217, and author cited. CHAPTER VI. BY-LAWS. § 33. Power to make inherent, in corporations. The power of a corporation to make by-laws is inherent in it. One of the important features of a corporation is the power to make by-laws.1 § 34. By-law defined. "A by-law is a permanent rule of action in accordance with which the corporate affairs are to be conducted." A by-law is also said to be a rule or regulation established by a corporation for the government of its officers and members in the management of the affairs of the corporation as among themselves.2 § 35. Power delegated by statute. The power to make by-laws, as stated, exists at common law as an inherent right of, a corporation. The power may also be given by a statute or by the charter of the corporation.3 § 36. Who has power to make by-laws? The statute fixes and vests the authority usually in the stockholders. The directors have no power to make by-laws unless the statute expressly authorizes it.* The stockholders, however, may delegate their power to the board of directors.5 Where the charter confers the power, the directors are authorized to make by-laws. 6 Where the power is delegated by the charter to the directors, 1 Cook on Corporations, Vol. 1 (5th ed), § 4a. 21 Thomp. on Corp. § 935; Flint v. Pierce, 99 Mass. 68. 3 People v. Crossley, 69 Ill. 195; Kearney v. Andrews, 10 N. J. Eq. 70; Juker v. Commonwealth, 20 Penn. St. 484. 4 North Milwaukee, etc., Co. r. Bishop, 103 Wis. 492; Morton, etc., Co. r. Wysong, 51 Ind. 4. 5 Heintzelman v. Druids Relief Association, 38 Minn, 138. 6 Samuel r. Holladay, Woolw. 400 (1869); S. C. 21 Fed. Cases, 306. a by-law made by the stockholders, it is held, is binding as to past acts on participating stockholders." Where a charter confers the power upon the board of directors to make by-laws, the stockholders are bound by their action.8 37. Where statute provides purpose. Where the statute provides for what purpose by-laws may be passed, none others can be passed." Where the by-laws are in conflict with the charter, the latter will prevail.10 § 38. By-laws must be reasonable. The general rule is, that a by-law must be reasonable. It must not interfere with any vested right of the stockholders. It must not be contrary to public policy. It must not be contrary to the established law of the land. It has been held, in Burden v. Burden, 159 N. Y. 287, that where a bank by its by-laws places the management exclusively into the hands of a person "who may have the exclusive charge and management of the business of the Company," that the by-law is not void as a whole, and until the general manager illegally exercises power the courts will not interfere until such illegal acts are performed. But such a by-law does not divest the directors of a duty imposed upon them by law to perform. § 39. When a by-law becomes a law. A by-law, when enacted in accordance with the charter and statute of the State, is binding upon the individual members from the date of passage; and when required to be entered in a book of by-laws, it becomes a law when so entered. It has also been held that a by-law authorized by the charter or the statute and not in violation of any constitutional provision or law of the State, is equally binding upon third persons dealing with the corporation; providing they are made acquainted with the same and the business of the corporation.11 The contrary doctrine is found in the case of The State v. 7 People v. Sterling Mfg. Co., 82 Ill. 457. 8 Cahill v. Kalamazoo Mutual Ins. Co., 2 Doug. (Mich.) 124. 9 Ireland v. Globe, etc., Co., 19 R. I. 180. 10 Republican Mountain Silver Mines, Ltd., et al. . Brown et al., 58 Fed. Rep. 644. 11 Cummings v. Webster, 43 Me. 192-197. Overton, 24 N. J. Law, 435, where the Court says "All regulations of the company affecting its business, which do not operate upon third persons nor in any way affect their rights, are properly denominated by-laws of the company,' and may come within the operation of the principal." The court further says: "The validity of the by-laws of a corporation is purely a question of law. Whether the by-law be in conflict with the law or with the charter of the company, or be in a legal sense unreasonable, is a question for the court and not for the jury." The rule may be correctly laid down as follows: Third persons are bound by the by-laws of a corporation only where they have knowledge of them and are brought into privity with them, and where they operate as a contract between the corporation and such persons. § 40. By-law must be proved. By-laws and ordinances of a corporation are not judicially noticed, but must be proved as facts. The courts will not take judicial notice of a code of by-laws.12 A by-law must be pleaded. The pleader may set it out in full or it may be stated in substance according to its legal effect. When the latter course is pursued, the by-law itself may be introduced as evidence under the pleading. § 41. Actions upon by-laws. In the case of Schrick v. St. Louis Mutual House Bldg. Co., 34 Mo. 423, it is held that an action cannot be maintained if the by-law had been repealed by substitution during the membership of plaintiff and before the bringing of his action. § 42. By-law void — which waives liability of stockholder. "The assets of a corporation being a trust fund for its creditors, and the indebtedness of shareholders to the corporation for their shares being a part of this trust fund, a bylaw which attempts to release shareholders from the obligation incurred by their contract of subscription or by their knowing acquisition of shares which have not been fully paid up, by allowing them to pay a percentage of what is due in respect sane Asylum, 13 N. H. 532, 38 Am. Dec. 512. 12 Lucas v. San Francisco, 7 Cal. 463; Haven v. New Hampshire In of their shares and to forfeit their shares and be discharged from the obligation of paying the remainder, is void as to creditors of the corporation." 13 In the case of Slee v. Bloom, 10 Am. Dec. 273, it is held, that a resolution discharging from future assessments any stockholder paying 50 per cent. on his shares, is valid as to consenting creditors, and will protect such stockholders as have complied with its terms, before the dissolution of the corporation. In the case of Wells v. Black, 117 Cal. 157, where the question of liability of stockholders to depositors in a savings bank is discussed, and where a by-law adopted was not consistent with the constitution and laws of the State, and by virtue of its terms attempted to release from liability the stockholders of the corporation: held to be void and of no binding force upon the depositors. 66 The court in this case, in defining a by-law, says that By-laws are the body of rules laid down by the government of a corporation, its officers and stockholders, in the conduct of its affairs." It is well settled that a by-law cannot be enacted by a banking corporation having capital stock, which would waive the liability of the stockholder to the depositor. However, the depositor can enter into an agreement with the shareholders, waiving the constitutional and statutory provisions of liability; but such an agreement when entered into between the parties must be thoroughly understood. Where a depositor enters into such an agreement, it would be binding upon the parties.14 § 43. Lien created upon shares of stock. A lien may be created upon the stock of the corporation for dues owing by the stockholder to the corporation, if provided for by the statute or by the charter of the corporation. Cook on Corporations says: "The weight of authority holds that it may be created by a by-law." The following States hold that a lien may be created by a by-law: Alabama,10 13 Cyclopedia of Law and Procedure, vol. 10, p. 361. 14 French v. Teschemacher, 24 Cal. 518; Wells v. Black, 117 Cal. 161; Sedgwick on Statutory and Constitutional Law, 111. 15 Planters' etc., Ins. Co. v. Selma Sav. Bank, 63 Ala. 585. |