cannot set up purchasing and holding real estate as one of its purposes, it clearly has power to purchase and hold such real estate as its purposes require. See Sec. 205, post.

When a corporation diverts its capital to purposes other than those mentioned in its articles of association, it may be ousted of its franchises by the State.-Butterworth & Lowe v. Milling Co., 115 Mich., 1-4. In this case, in interpreting a statute containing language identical with that of the act under consideration, referring to diversions of funds, Justice Montgomery said: "The purpose of the statute is the protection of the public and the stockholders." It follows that the statute does not of itself avoid contracts made in violation of the non-diversion provision. See also Cook's Corp., Sec. 3. Such contracts are governed by the rules of law applicable to ultra vires transactions.

$144. Contents of Articles-Place of Operation.

The place of operation is the place where the corporation's productive work is to be carried on, as distinguished from the business office, which may be in a wholly different place. In stating the place of operation, it is not sufficient to name merely the county or state. The city, village or township should also be mentioned. There may be more than one principal place of operation; they may be wholly within the state, or wholly outside it, or some of them may be in the state and some outside.

By the great weight of authority, a corporation may carry on its business outside the state of its creation. While it preserves its corporate character in the foreign jurisdiction, it cannot there exercise charter powers inconsistent with the laws or the policy of such foreign state. It is bound by such conditions as the foreign state imposes.-People v. Howard, 50 Mich., 239; Home Insurance Co. v. Davis, 29 Mich., 238.

$145. Contents of Articles-Capital Authorized.

Were the amount to be subscribed not fixed by the act, subscription of the entire capital stock would be required as a condition precedent to organization.—Association v. Walker, 88 Mich., 62-75. Under this act, at least fifty per cent. of the authorized capital stock must be subscribed, and this must appear by the articles of association.

If less than the lawful amount, or less than any amount agreed upon, has been in good faith subscribed, payment of subscription contracts cannot be enforced, unless the condition has been waived.—Swartwout v. Railroad Co., 24 Mich. 388; Monroe v. Railroad Co., 28 Mich., 271; Association v. Walker, 88 Mich., 62; Curry Hotel Co. v. Mullins, 93 Mich. 318.

§146. Contents of Articles-Classes of Stock.

The preferred stock cannot exceed two-thirds of the whole amount shown by the articles of association to have been actually paid in. Thus, a corporation having an authorization of $150,000 capital, of which $90,000

is shown by the articles of association to have been paid in, will be permitted to have preferred stock to an amount not exceeding $60,000, or twothirds its paid up capital.-Continental Paint Co. v. Secretary of State, 128 Mich., 621-624. The preferred stock must be subject to redemption at a date certain. When earlier redemption is not desirable, the date of redemption specified may be the date of expiration of corporate existence. Preferred stock created under this act cannot participate in the earnings of the corporation beyond the fixed preferential dividend, not exceeding eight per cent. In other words, the preferred stock may be given cumulative eight per cent. dividends, and no more. It is within the power of the incorporators to embody in the articles stipulations denying preferred shares the right to vote.-Marshall's Corp. p. 598. In the absence of such restriction, the preferred shares are in every way equal to the common shares in voting power.-Lockhart v. Van Alstyne, 31 Mich., 75; Cook's Corp. Sec. 269. Preferred stock is sometimes designated as "guaranteed stock," but the difference is in name only. The corporation cannot become liable to pay dividends unless they are earned.-Lockhart v. Van Alstyne, 31 Mich. 75-83.

The description of the preferred stock, embodied in the articles may be substantially as follows:

......

"Article IV. The capital stock of the corporation hereby organized is the sum of Dollars, of which Dollars shall be common stock, and Dollars shall be preferred stock. The preferred stock shall be subject to redemption at par, plus the accumulated declared dividends, if any, on the ...

day of 19...., and the holder shall be entitled to a per cent. per annum, payable annually, which shall be cumulative and payable before any dividend shall be set apart or paid on the common stock."

dividend of

A copy of this provison should be set forth in the certificates of preferred stock.

§147. Contents of Articles-Par Value of Shares.

The par value-or "face value" of shares is fixed by the statute at $10 or $100. Which of these values shall be adopted is optional with the incorporators, but it must be the one or the other.

$148. Contents of Articles-Amount Paid In.

Until the required ten per cent. has been paid in, no de jure corporation exists.-C. H. Little Co. v. Cemetery Association, 135 Mich. 248-253. Under the act, as amended in 1907, payment must be made either in cash, or in property subject to seizure under judicial process. This excludes such intangible property as secret formulas, unpatented inventions, good will and common law trade marks. It includes patents granted or applied for, copyrights, unprinted manuscript, registered formulas and registered trade marks. See Act. 146 of 1907, p. 186.

That patent rights and copyrights, while not subject to seizure and sale upon execution, may be subjected in equity to judicial sale for the benefit of judgment creditors, see Ager v. Murray, 105 U. S. 126, 26 L. ed. 942; Stephens v. Cady, 14 How. 528, 14 L. ed. 528; Rehfuss v. Moore, 134 Pa. 426, 7 L. R. A. 663-664; Brandenburg on Bankruptcy, Sec. 1177.

As to trade marks, the practice of the Michigan Department of State is to allow them to be included if registered, but to reject them if unregistered. Yet it cannot be doubted that an unregistered trade-mark is property-sometimes very valuable property.-Smith v. Walker, 57 Mich. 456. The only question is, whether a common law trade mark can be seized and sold upon judicial process. This point has not been decided by our Supreme Court, nor does the question appear to be well settled anywhere.-Falk v. American West Indies Co., 180 N. Y. App. 445, 1 L. R. A. (N. S.) 704-717, and cases there collected. See also Williams v. Farrand, 88 Mich. 473. The better opinion is, that an unregistered trade-mark is merely an emblem of good will, and that it has no existence apart from the business in which it is employed. Standing alone, it has no value. It is incapable of supporting a distinct and separate valuation. Where a going concern is transferred in entirety to a corporation, the trade-mark may be listed in the articles of association as a part of the general assets. The corporators may add its estimated value to the sum representing merchandise or other tangible property. For example, they may say, "Stock of hardware transferred to said corporation, together with the established business, trade-mark, trade name and good' will of B. & Co. as a going concern, valued at $10,000." But the trade-mark must not be listed and valued separately.

$149. Contents of Articles-Affidavit of Valuation.

The amendment of 1907 provides, that at least three incorporators shall make affidavit that (a) they know the property described in the articles, (b) that the same has been actually transferred to the corporation, and (c) that the property is of the actual value stated in the articles. This provision serves a useful purpose. In case of false swearing, it is believed that the language of the act, although somewhat loose, would support an action for perjury, under the provisions of C. L. 1897, Sec. 11306.

§150. Contents of Articles-Location of Business Office.

The articles are required to state the location of the corporation's business office for the purpose of establishing a corporate residence, thus fixing the place where the notice of the first stockholders' meeting shall be published, where process may be served, where taxes shall be assessed, and where the secretary and treasurer shall transact corporate business. The corporation is estopped from denying that its residence is as stated in the articles, but the state, at least, may go behind this allegation of domicile and may show the corporation's real residence.-Detroit Transportation Co. v.

Assessors, 91 Mich. 382; Milwaukee Steamship Co. v. Milwaukee, 18 L. R. A. 353; Teagan Transp. Co. v. Detroit, 139 Mich. 1; Detroit v. Lothrop Estate, 136 Mich. 265; Detroit, Ypsilanti, A. A. & J. Ry. v. Detroit, 141 Mich. 3.

$151. Contents of Articles-Duration.

All corporations organized under this act are limited to a duration not exceeding thirty years. Mich. Const. 1908, Art. XII, Sec. 3. But renewals for further periods of not more than thirty years each, are authorized by constitution (Id.) and are enabled by statute.-Act. 328 Pub. Acts 1905, p. 506. After expiration, the corporation has three years additional in which to close up its affairs.-C. L. 1897, Sec. 8534; Bewick v. Alpena Harbor Co., 39 Mich. 700-709. As to exclusive right to use its corporate name during the three-year period of liquidation, see People v. Grand Rapids Sticky Fly Paper Co., 144 Mich. 221.

§152. Contents of Articles-Names, Residences and Shares Subscribed.

The names of the incorporators should be written in the body of the instrument by the draftsman. The autographic signatures of the incorporators appearing at the end of the articles should exactly conform in number, spelling and use of initials, to the names as written in the body of the instrument. Every person whose name appears in the articles as a stockholder must subscribe and acknowledge the articles.

An agent or attorney acting under a written power may subscribe in the name of a natural person, his principal. In such case, the power of attorney duly signed and acknowledged by the principal, must be filed and recorded with the articles.

The place of residence to be named is the township, village or city, and the State, where the subscriber resides. The insertion of this item is for the benefit of the public and creditors, to the end that the identity and whereabouts of the subscribers may be readily ascertained. It is immaterial whether they reside within this state or elsewhere. No residential qualification is imposed by the statute.

When there is more than one class of stock, the number of shares of each class taken by each subscriber should be clearly specified. The articles of association form a subscription contact between the corporation and the subscriber, and the subscriber becomes at once a stockholder.Dexter v. Millard, 3 Mich. 91; Carson v. Arctic Mining Co., 5 Mich., 288292; Valentine v. Water Power Co., 128 Mich. 280-294. Creditors of the corporation are entitled to full benefit of the stockholder's subscription as he has made it by signing the articles.-Moore v. Universal Elevator Co, 122 Mich. 48-58.

$153. Acknowledgment.

There is no corporation, even de facto, until articles of association, prepared under a valid law, and stating at least some purpose authorized

by that law, have been duly signed and acknowledged.-Carmody v. Powers, 6 Mich. 26-29.

Under this act, corporate existence as against everyone, except the State, begins when lawful articles of association have been in good faith properly signed and acknowledged. The first meeting of stockholders and directors may then be held. The act contemplates that these meetings shall occur before the articles are recorded. It expressly requires the president of the corporation to cause the recording of the articles, and, obviously, prior to these meetings there can be no president.

$154. Amendment-Increase and Decrease of Capital Stock.

A two-thirds vote of the capital stock subscribed and outstanding is required to authorize an increase or decrease of the authorized capital. A two-thirds vote of a mere quorum of stockholders would be insufficient. Unsubscribed stock, and shares held as treasury stock by the company, as well as retired preferred shares, would not enter into the computation in determining the vote required. While the language of the statute is not precise, the expression, "a vote of two-thirds of the capital stock," means shares entitled to vote. Any other construction leads to absurdities. Unsubscribed stock is not "capital stock."-Continental Paint Co. v. Secretary of State, 128 Mich. 621-625. It is merely stock authorized. Treasury stock, whether held by the corporation, or by a trustee in its behalf, has no voting power.-Marshall's Corp. p. 905. Preferred shares redeemed by the corporation are extinguished.-Thomp. Corp. Sec. 3665.

The right of a stockholder to subscribe to his pro rata share of the increase is a property right. It may be transferred to, and exercised by, another. Issuance of such pro rata shares may be compelled by mandamus. Sale to outsiders in preference over stockholders may be restrained by injunction. These rights exist independently of statute provisions, and are sustained by an unbroken line of authorities.-Hammond v. Edison Illuminating Co., 131 Mich. 79.

The statute expressly provides that the increase shall be sold at "not less than par." Violation of this provision would render the sale ultra vires. After payment, the corporation would be estopped to urge the objection, but non-participating stockholders, creditors, and the State could take advantage of the illegal sale.

By unanimous assent of the stockholders, a bonus might lawfully be paid, from surplus profits, to subscribers taking the increase shares at par.

The stockholders may fix the price of the increase shares at any figure they may agree upon, at or above par. Should neither the stockholders nor others subscribe for the shares at the price fixed, a less price may he established in like manner. All stockholders, including subscribers to the new issue, if any, must be given a reasonable opportunity to subscribe at the reduced price before the stock may be offered to others.

Under the authorization of this act, capital stock may be reduced by eliminating authorized, unsubscribed shares, or by a voluntary surrender of