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§ 955. Inherent Power to Make. By the principles of the common law, every corporation aggregate possesses the inherent power to make all necessary rules and regulations for its government and operation, although such power may not be expressly conferred in its charter, in the statute of its creation, or in any other statute.' It is regarded as a power that is included in the grant of the capacity of being a corporation. It is generally said to be "an incident to a corporation." But if the charter or governing statute contains an express grant of power to enact by-laws, and the grant is by its terms limited to specified cases or specified purposes, the grant will operate as a restriction upon the power of legislation possessed by the corporation in this respect, and will exclude all other objects by implication, on the principle expressio unius exclusio alterius.3

1 Drake v. Hudson River R. Co., 7 Barb. (N. Y.) 508; Martin v. Nashville Building Asso., 2 Cold. (Tenn.) 418; People v. Medical Society, 24 Barb. (N. Y.) 574.

2 Rex v. Westwood, 2 Dow. & Cl. 21, 37 (House of Lords). "The power of making rules and regulations is necessarily incident to a corporation; and it is generally inserted in the act of incorporation, to define its nature and limit its extent." Mechanics &c. Bank v. Smith, 19 Johns. (N. Y.) 115, 124, per Woodworth, J. "The making of by-laws is incident to every

corporation aggregate; for that power is included in the incorporation." London City v. Vanacker, Carth. 480, per Lord Holt, C. J. Cases are found where the proposition is put forward that corporations must show their power to pass by-laws (Dunham v. Trustees of Rochester, 5 Cow. (N. Y.) 462), and bring themselves by proof within that power. Taylor v. Griswold, 14 N. J. L. 222.

3 Ang. & A. Corp., § 325; Child v. Hudson's Bay Co., 2 P. Williams, 207; State v. Ferguson, 33 N. H. 424, 430; State v. Mayor &c., 33 N. J. L. 57.

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§ 956. Must be Made by the Corporators, not by the Directors. Laws governing the internal operations and business of a corporation are necessarily matters of such a constituent character that, in the absence of a statute otherwise providing,1 they can only be made by the corporation at large, that is to say, by the members in their constituent character at a general meeting of the corporation. Without such statutory authorization, they can only be made by the most numerous body or constituency, and cannot be made by the directors, trustees or other managers.

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§ 957. Charters Conferring this Power on the Directors. Many charters and statutes no doubt exist, conferring this power upon the directors. In one case which has come under observation, the charter gave the board of directors express authority to adopt a by-law prohibiting the transfer of stock where the owner was in default. In another case, it was held

1 As hereafter seen such statutes exist in many States: 1 Rev. Stat. Mo. 1890, § 2506; post, § 978, et seq.

2 Rex v. Westwood, 2 Dow. & Cl. 21, 36; Morton Gravel Road Co. v. Wysong, 51 Ind. 4; Carroll v. Mullanphy Savings Bank, 8 Mo. App. 249; State Savings Asso. v. Nixon-Jones Printing Co., 25 Mo. App. 642; Union Bank v. Ridgely 1 Harr. & G. (Md.) 324; Salem Bank v. Gloucester Bank, 17 Mass. 1; Martin v. Nashville Building Asso., 2 Cold. (Tenn.) 418; Bank of Holly Springs v. Pinson, 58 Miss. 421; State v. Curtis, 9 Nev. 325. In Indiana it has been said that the power to make by-laws resides in the members of the corporation at large, where there is no law or valid usage to the contrary. Morton Gravel Road v. Wysong, 51 Ind. 4, 12. What the court meant by "valid usage "' in this passage is probably explained by the quotation which follows in the opinion from a work of reputation: "Unless by the charter or some general statute to which the charter is made subject, or by immemorial usage, this

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power is delegated to particular officers or members of the corporation, like every other incidental power, it resides in the members of the corporation at large, to be exercised by them in the same manner in which the charter may direct them to exercise other powers or transact their general business; and if the charter contain no such direction, to be exercised according to the rules of the common law," etc. Ang. & A. Corp., § 327; citing Union Bank v. Ridgely, 1 Harr. & G. (Md.) 324; Rex v. Westwood, 2 Dow. & Cl. 21. It is said in an English work: "In all corporations, to which the power of making by-laws is incident, it is to be exercised by the entire body of corporators, as distinguished from select bodies, unless the constitution of the corporation have vested the whole power of making by-laws in some particular part or body of the corporation." Grant Corp. 77; citing Rex v. Westwood, 2 Dow. & Cl. 21.

3 Mechanics Bank Bank, 45 Mo. 513.

v. Merchants'

that a provision of the charter, making the stock of the corporation personal property, and authorizing the board of directors to make rules and regulations concerning its transfer, subject to the general law of the State, authorized the board to adopt a rule prohibiting the transfer of such stock until all debts due by the owner thereof to the corporation should be paid, although such rule was inconsistent with the general law of the State governing the transfer of personal poperty.1

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§ 958. What Quorum of a Select Body may Adopt. - Where a statute authorizes a select body, e.g., directors of a corporation, to make by-laws, a majority of that body, at least, is necessary to constitute a quorum.2 Where the charter of a corporation authorizes the president and directors to adopt by-laws, it is held that by-laws may be adopted by a meeting at which the president and a quorum of the directors are present; and where the quorum consists of a majority the assent of a majority is sufficient in order to make the by-laws valid.

959. Delegation of Power to Select Body does not Necessarily Divest Power of General Body.- A statutory delegation to a select body of the corporation, of the power to make by-laws, does not divest the inherent power of the general body, so to do, unless the statute so declares in express terms. Thus, although the power of making by-laws is vested in the managers of the corporation, and not in the stockholders, a bylaw passed at a meeting called as a stockholder's meeting will be valid, if the stockholders and managers were the same persons, and all were present and participated. This principle is also well illustrated by a leading English case, where a charter vested the right to elect burgesses in the general body of an ancient corporation, and gave a power to make by-laws to a select body. The general body made a by-law delegating the power to elect

1 Perpetual Ins. Co. v. Goodfellow, 9 Mo. 149. Compare Carroll v. Mullanphy Savings Bank, 8 Mo. App. 249, 253, where these two cases are distinguished.

2 Ex parte Willcocks, 7 Cow. (N. Y.) 402; ante, § 726.

3 Cahill v. Kalamazoo Mutual Ins. Co., 2 Doug. (Mich.) 124; s. c. 43 Am. Dec. 457, 461.

4 People v. Sterling Manf. Co., 82

Ill. 457.

burgesses to the select body. It was held by the House of Lords, that this was a good by-law; for the power given by the charter to the select body to make by-laws did not divest the general body of the right to make such laws, which was incident to it at common law.1

§ 960. Amendment and Repeal of By-Laws. It is scarcely necessary to say that a corporation which is authorized by its charter to make such by-laws as may be necessary to attain the objects for which it is created, has power to change such by-laws from time to time, when necessary to carry out such objects.2 But it is scarcely necessary to say that the power to amend or repeal by-laws, even when expressly conferred by the charter, cannot be so exercised as to impair any rights that have been given and vested by virtue of the by-law.3

SUBDIVISION II. Statutes Vesting Power in the Corporation or Members.

SECTION

962. General statutory power to make by-laws not inconsistent with law, etc.

963. For management of property and regulation of affairs.

964. For the regulation of its property, management of its affairs, and transfer of its stock.

965. And as to corporate meetings. 966. Corporate meetings and voting: forfeiture of shares: penalties, etc.

967. Concerning officers, meetings, elections, etc.

968. Management of property, regulation of affairs, transfer of stock, duties of officers.

SECTION

969. Same as preceding: also number of directors, penalties, liens upon shares, etc.

970. Provisions applicable to benevolent, religious, educational, literary, social, and other societies.

971. Provisions applicable to railroad
companies.

972. Provisions applicable to boom
and navigation companies.
973. Various other provisions.
974. As to forfeiting shares.

975. How enacted.

976. How amended, repealed, etc.

§ 962. General Statutory Power to make By-Laws not Inconsistent with Law, etc.- Incorporated bureaus of immigration

21,

1 Rex v. Westwood, 2 Dow. & Cl. 36.

2 Schrick v. St. Louis Mut. House Building Co., 34 Mo. 423.

3 Kent v. Quicksilver Mining Co.,

78 N. Y. 159; when a stockholder will not be estopped from objecting: Bergman v. St. Paul Mut. Bldg. Asso., 29 Minn. 275.

"shall make by-laws in accordance with their objects: Provided, that such by-laws be not in contravention of the laws of this State or the laws and constitution of the United States." 1 Incorporated institutions of learning have power "to make such laws for their own government as may deemed proper: Provided, that the same shall not conflict with the constitution and laws of the United States or the constitution and laws of the State of Arkansas." 2 "All cor

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porations have the right to make by-laws, binding on their own members, not inconsistent with the laws of this State and of the United States." 3 Each co-operative association " may make its own by-laws, provided they be not repugnant to this act, nor to the laws of the State." A copy of such by-laws must be filed in the clerk's office of the place where it transacts business.4 Corporations for the purpose of engaging in any species of trade, business, or commerce, may make by-laws not inconsistent with the constitution of this State or constitution of the United States."' 5 "Every corporation may adopt a code of regulations for its government, not inconsistent with the constitution and laws of the State." 6 Horticultural corporations "may adopt such by-laws for their protection and good order as it [they] may deem necessary, not inconsistent with the laws of this State."7 Certain associations, such as labor, agricultural, religious, charitable, fire, hook and ladder companies, academies, jockey, yacht, sporting and other clubs may be incorporated and when so organized "every such corporation, and its officers and stockholders, may make by-laws not repugnant to the laws of the State." 8

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Private business corporations "may establish by-laws for the government of their affairs and may alter or repeal the same.' "Savings banks and savings institutions may adopt by-laws for their government, not inconsistent with law." 10 Corporations

for literary, scientific, religious and charitable purposes have power "to make rules, by-laws and ordinances, and do every thing needful for their good government and support not repugnant to the constitution and laws of the United States, to the constitution and laws of this State, or to the instrument upon which the corporations respectively are formed and established."' 11 Corporations other than joint-stock companies "may make and adopt for their government, and to enable

1 Ark. Dig. Stat. (1884), § 1016. 'Ark. Dig. Stat. (1884), § 1006. 3 Ga. Code (1882), § 1679.

4 Rev. Stat. Minn. (1881), p. 402, § 158.

Gen. Stat. Nev. (1885), § 805.

6 Rev. Stat. Ohio (1890), § 3249.
7 Rev. Stat. Ind. (1888), § 3492.
8 Gen. Stat. S. C. (1881), § 1372.
• Rev. Laws Vt. (1880), § 3281.
10 Rev. Laws Vt. (1880), 3562.
11 Voor. Rev. Stat. La., p. 183, § 680.

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