18. Deferred Stock. - Every such corporation may provide for the issue of deferred stock in payment for such real or personal estate or mineral rights, and if so provided, it shall be expressly stated in the charter filed, or in a certificate to be made and recorded, or in the acceptance of this statute, to be filed by any corporation accepting its provisions, with the amount of such deferred stock, and the consideration of the same, and the terms on which the same shall be issued; and the said stock may be made to await payments of dividends thereon, until out of the net earnings at least five per centum has been declared and paid upon the other full paid stock of the corporation. 19. Increase of Capital Stock or Indebtedness.2--The capital stock or indebtedness of any corporation to be created under the provisions of this statute or accepting its provisions, may be increased, from time to time, by the consent of the persons or bodies corporate holding the larger amount in value of the stock of such company, to such amount as such corporation is by this act authorized to increase its capital stock or indebtedness, but such increase shall only be made for money, labor done, or money or property actually received." MEETING OF STOCKHOLDERS THEREFOR." - Any such corporation desirous of increasing its capital stock or indebtedness as provided by this act, shall, by a resolution of its board of directors, call a meeting of its stockholders therefor, which meeting shall be held at its chief office or place of business in this commonwealth; and 1 Act 29 April, 1874, § 17, as amended by Act 17 April, 1876, § 4; P. L. 32. 2 * Act 29 April, 1874, § 18; P. L. 81; Constitution of Pennsylvania, Art. XVI, Sect. 7. The corporation cannot create a fixed indebtedness by its charter: Re Hempfield Coal Co., O. A. G., 2 Chester Co. Rep. 181. 3 A mortgage to secure an existing debt is not an increase of indebtedness: Ahl ข. Rhoads, 84 Pa. 319. 4 The board of directors have no such power: Railway Co. v. Allerton, 18 Wallace, 233; Eidman v. Bowman, 58 Ill. 444; Cass v. Iron and Steel Co., 9 Fed. Rep. 640. 5 The right to issue the stock is a franchise held by the corporation in trust for all the corporators, and cannot be disposed of unequally: Montgomery Bank v. Reese, 26 Pa. 143; 31 Pa. 78; Scott v. Curry, 54 Pa. 270; Gray v. Portland Bank, 3 Mass. 365. The constitution provides [Art. XVI, 27:] "No corporation shall issue stocks or bonds except for money, labor done, or money or property actually received; and all fictitious increase of stock or indebtedness shall be void. The stock and indebtedness of corporations shall not be increased except in pursuance of general law, nor without the consent of the persons holding the larger amount in value of the stock, first obtained at a meeting to be held after sixty days' notice given in pursuance of law." Bonds which show upon their face that they were issued in violation of this provision are void: Maas v. Penna., etc., R. R. Co., 1 Monaghan, 497. 'Act 29 April, 1874, § 19; P. L. 82. notice of the time, place and object of said meeting, shall be published once a week for sixty days prior to such meeting, in at least one newspaper published in the county, city or borough wherein such office or place of business is situate.1 ELECTION TO INCREASE CAPITAL OR INDEBTEDNESS.2 - At the meeting called, pursuant to the nineteenth section of this act, an election of the stockholders of such corporation shall be taken for or against such increase, which shall be conducted by three judges, stockholders of said corporation, appointed by the board of directors to hold said election, and if one or more of said judges be absent, the judge or judges present shall appoint a judge or judges, who shall act in the place of the judge or judges absent, and who shall respectively take and subscribe an oath or affirmation, before an officer authorized by law to administer the same, well and truly, and according to law, to conduct such election to the best of their ability; and the said judges shall decide upon the qualification of voters, and when the election is closed count the number of shares voted for and against such increase, and declare whether the persons or bodies corporate holding the larger amount of the stock of such corporation have consented to such increase, or refused to consent thereto, and shall make out duplicate returns of said election, stating the number of shares of stock that voted for such increase, and the number that voted against such increase, and subscribe and deliver the same to one of the chief officers of said company. VOTING THEREON. Each ballot shall have indorsed thereon the number of shares thereby represented, and be signed by the holder thereof, or by the person holding a proxy therefor; but no share or shares transferred within sixty days shall entitle the holder or holders thereof to vote at such election or meeting, nor shall any proxy be received, or entitle the holder to vote, unless the same shall bear date and have been executed within three months next preceding such election or meeting; and it shall be the duty of such corporation to furnish the judges at said meeting with a statement of the amount of its capital stock, with the names of persons or bodies corporate holding the same, and number of shares by each respectively held, which statement shall be signed by one of the chief officers of such corporation, with an affidavit thereto annexed, that the same is true and correct to the best of his knowledge and belief. 1 This preliminary notice can be waived by the unanimous consent of all the stockholders and their consent can be evidenced by their signatures to the proceedings: Re Bellefonte, etc., R. R. Co., O. A. G., 2 Chester Co. Rep., 128 [the decision was under the Act of April 18, 1874], and if the stockholders have knowledge of the intention to increase the stock the failure to give this statutory notice cannot be taken advantage by one not injured by such want of notice: Columbia Bank's Ap., 16 Weekly Notes Cas. 357; 42 Leg. Int. 226. Under instructions of the Secretary of the Commonwealth, issued December 12, 1888, "Waivers of notice of publication should be accompanied by the affidavit of the proper officer, showing that the persons subscribing the waiver are the owners of all the capital stock of the corporation." 2 Act 29 April, 1874, § 20; P. L. 82. 3 See supra, p. 30, as to oath of officer holding election. * Act 29 April, 1874, § 21; P. L. 82. 5 And under section 11 of the Act of 1874 [supra, p. 34], "no stockholder shall be entitled to vote at any election or at any meeting of stockholders, on whose share or shares any instalments or arrearages may have been due and unpaid for the period of thirty days immediately preceding such election or meeting." RETURN OF ELECTION THEREOF.1-It shall be the duty of such corporation, if consent is given to such increase, to file in the office of the secretary of the commonwealth, within thirty days after such election or meeting, one of the copies of the return of such election provided for by the twentieth section of this act, with a copy of the resolution and notice calling same thereto annexed; 2 and upon the increase of the capital stock or indebtedness of such corporation made pursuant thereto, it shall be the duty of the president or treasurer of such corporation, within thirty days thereafter, to make a return to the secretary of the commonwealth, under oath, of the amount of such increase and terms of the same, that is to say, the terms on which additional stock is issued ; and in case of neglect or omission so to do, the corporation shall be subject to a penalty of five thousand dollars, which penalty shall be collected on an account settled by the auditor general and state treasurer, as accounts for taxes due the commonwealth are settled and collected; and the secretary of the commonwealth shall cause said returns to be recorded in a book to be kept for that purpose, and furnish a certified copy of the same to the auditor general, and the corporation shall have the right to recover the same from the officer neglecting or omitting to file the return as aforesaid.4 1 Act 29 April, 1874, § 22; P. L. 83. 2 Under instructions of the Secretary of the Commonwealth, issued December 12, 1888, it is provided: "Returns of election upon increase or decrease of capital stock should not be combined with the returns of election upon increase or decrease of indebtedness. The return of the president or treasurer as to the actual making of the authorized increase or decrease should be made separately from the election return and not attached thereto, and is required by law to be made within thirty days after the actual increase or decrease. "In case of increase the return should specify the terms thereof, whether for cash, for materials, labor or property. "Waivers of notice of publication should be accompanied by the affidavit of the proper officer, showing that the persons subscribing the waiver are the owners of all the capital stock of the corporation." 3 Unpaid subscriptions to additional stock constitute such increase: O. A. G., 4 December, 1874. The fees of the secretary of the commonwealth upon such return are twenty-five dollars, under Act of 28 March, 1873 [P. L. 53]: Re Alliance Coal Mining Co., O. A. G, 19 July, 1877 A bonus of one-quarter of one per cent. upon the authorized increase must be paid to the state treasurer: Act 7 January, 1889; P. L. 115. 4 The holders of the increased stock have no standing to question the regularity of the proceedings whereby the increase is made: Columbia Bank's Ap., 16 Weekly Notes Cas. 357; 42 Leg. Int. 226. 2 REDUCTION OF CAPITAL STоск. - Any corporation created under the provisions of this act, and any corporation of the classes named in the second section hereof, that is now in existence by virtue of any law of this commonwealth, may reduce its capital stock or alter and change the par value of the shares thereof, by a vote of the stockholders taken in the manner and under the regulations prescribed in the eighteenth, nineteenth, twentieth, twenty-first and twenty-second sections of this act.3 20. May Sell Franchises and Property. It shall be lawful for any corporation in the same manner to sell, assign, dispose of and convey to any corporation created under or accepting the provisions of this act its franchises, and all its property, real, personal and mixed, and thereafter such corporation shall cease to exist, and the said property and franchises not inconsistent with this act, shall thereafter be vested in the corporation so purchasing as aforesaid. 21. Construction of Grant of Power-Future Modification of Act. The incorporation of any association of persons for the purposes named in this act, or accepting the same, shall be held and taken to be of the same force and effect as if the powers and privileges conferred, and the duties enjoined, had been conferred and enjoined by special act of the legislature, and the franchises granted shall be construed according to the same rules of law and equity as if it had been created by special charter, and no modification or repeal of this act shall affect any franchise obtained under the provisions of the same. 6 1 Act 29 April, 1874, § 23, as amended by Act 17 April, 1876, 85; P. L. 33. 2 But such corporation must first accept the provisions of the constitution and of this act: O. A. G., 21 August, 1877. 3 Supra, p. 41-43. These regulations must be strictly pursued, any departure therefrom rendering the reduction invalid: O. A. G., 20 August, 1877. * Act 29 April, 1874, 8 23, as amended by Act 17 April 1876, § 5; P. L. 33. 5 Act 29 April, 1874, § 25; P. L. 83. Such franchises may, however, be taken by the exercise of the right of eminent domain under the constitution of Pennsylvania, Art. XVI, 3, which provides: "The exercise of the right of eminent domain shall never be abridged or so construed as to prevent the General Assembly from taking the property and franchises of incorporated companies, and subjecting them to public use the same as the property of individuals; and the exercise of the police power of the state shall never be abridged or so construed as to permit corporations to conduct their business in such manner as to infringe the equal rights of individuals or the general well-being of the state." "A franchise is property, and as such may be taken by a corporation having the right of eminent domain, but in favor of such right there can be no implication unless it arises from a necessity so absolute that without it the grant itself 22. When Work to be Commenced and Completed. - If any company incorporated under this act, or any of its supplements, shall not proceed in good faith to carry on its work and construct or acquire its necessary buildings, structures, property or improvements within the space of two years from the date of its letters-patent, and shall not within the space of five years thereafter complete the same, the rights and privileges thereby granted to said corporation shall revert to the commonwealth: Provided, however, That it shall be lawful for any such corporation who shall have proceeded in good faith as aforesaid, at any time before the expiration of the said period of five years, or of any extension thereof, to apply to the Court of Common Pleas in and for the county in which said corporation shall have its principal office for an extension of such time as herein provided. Such application shall be made upon a petition, under the common seal of such corporation and verified by its president or other presiding officer, setting out the grounds of the application, and that the same is made pursuant to a resolution of the board of directors of said company at a meeting called for that purpose, a duly certified copy of which resolution shall be annexed to said petition. Thereupon it shall be the duty of such court to set down said petition for hearing before it upon some day to be fixed by said court, and to direct that notice of said petition shall be given by publication or otherwise as the court shall direct. Upon the day so fixed, or upon such subsequent day or days as the matter may be adjourned to, said court shall proceed to a hearing of said petition, and it being made to appear to said court that the order of notice herein provided for has been complied with, said court may, by order, adjudge and direct that the time of such corporation to complete its necessary buildings, structures, property or improvements shall be extended for a period not exceeding five years beyond the time fixed by law for the completion thereof, and thereupon, upon filing a duly certified copy of such order in the office of the secretary of the commonwealth, the time of such corporation to complete its necessary buildings, structures, property or improvements shall be extended as provided in such order: Provided further, That when said buildings, structures, property or improvements are wholly within one county, said application shall be made to the Court of Common Pleas in and for said county. will be defeated. It must also be a necessity that arises from the very nature of things over which the corporation has no control; it must not be a necessity created by the company itself for its own convenience or for the sake of economy:" Penna. R. R. Co's Ap., 93 Ра. 150. 1 Act 17 April, 1876, § 11, as amended by Act 16 May, 1889, § 2; P. L. 242. 2 Individual action to complete this forfeiture is not necessary, and the commonwealth can, therefore, re-grant these privileges to another company: Com. v. Lykens Water Co., 110 Pa. 391. |