legal exceptions to this rule15. One well established and sweeping exception to the proposition that a corporation can not acquire its own stock or the stock of another corporation, is this: a corporation, acting in good faith, may purchase any class of property not prohibited to it by statute, when such purchase becomes necessary for the purpose of avoiding impending loss16. But when inappropriate property is thus acquired, it should not be unreasonably retained. It seems that the State alone can object17.

In the absence of statutory restrictions, a corporation may pledge, mortgage, or otherwise transfer its property, like a natural person. Under the laws of Michigan, an individual may prefer one creditor over another, and corporations, in this respect, enjoy the same rights as private individuals18. This rule

15. Where, by unanimous consent of all stockholders, all of the assets of one corporation are exchanged for the stock of another corporation, for the purpose of enabling the convenient dissolution and distribution of the assets of the corporation acquiring the stock, the objection that the transaction was ultra vires can not be raised by a participating stockholder. Boynton v. Roe, 114 Mich. 401. But the objection of a single stockholder to such an exchange would be fatal. Emery v. Construction Co., 132 Mich. 560-572.

And if the stock were acquired, not for the purposes of dissolution, but to enable the transferee corporation to continue its business through the instrumentality of the other corporation, through control of its stock, the transaction would not, in general, be sustained.-Marshall's Corp. p. 254. So the purchase of stock by a corporation for the purpose of gaining a monopoly would be both ultra vires and an infraction of public policy. In Richardson v. Buhl, 77 Mich. 632-658. Chief Justice Sherwood said: "Monopoly in trade or in any kind of business in this country is odious to our form of government. It is sometimes permitted to aid the government in carrying on a great public enterprise, or public

work under government control, in the interest of the public. Its tendency is, however, destructive of free institutions, and repugnant to the instincts of a free people, and contrary to the whole scope and spirit of the Federal Constitution, and is not allowed to exist under express provision in several of our state constitutions." In this case the question of public policy was raised by the court. Marshall's Corp. p. 254; Erpelding v. McKearnan, 143 Mich. 409.

16. Thompson V. Waters, 25 Mich. 214: Marshall's Corp. pp. 184-252-258.

17. Pere Marquette Railroad Co. v. Graham, 136 Mich. 444-450. It is well settled that the State alone can raise the objection that real estate not used by the corporation is held beyond the constitutional period of ten years.-Id. Thomp. Corp. Sec. 5795.

18. Longley v. Hosiery Co., 128 Mich. 194-197; Bank of Montreal v. Salt & Lumber Co., 90 Mich. 345-349: Kock V. Bostwick, 113 Mich. 302: Turnbull v. Lumber Co., 55 Mich. 396: Kendall v. Bishop, 76 Mich. 634: Town v. Bank of River Raisin, 2 Doug. (Mich.) 530.

The foregoing authority establishes that this preference may be exercised, even after the corporation has become insolvent. Such

is carried to the length of permitting the directors to secure themselves, for bona fide indebtedness of the corporation, by way of mortgages upon the corporate property19. The right of corporations to transfer their special franchises by mortgage or by sale is well established in Michigan20.

§16. Power to Sue and to be Sued.

The power to sue, and the so-called "power to be sued" are ancient common law powers of all corporations. In this State, the power is made express by a general statute21. Suits by or against the corporation must be brought in the corporate name, and can not, in general, be in the name of a private individual, even though he may own all of the stock of the corporation22. Where a corporation is known by several different names, it may be sued in either or any of them23 and a plea of general

preference, to be valid, should be made by absolute pledge or mortgage. Neither a private individual nor a corporation, in this State,

can

create valid preferences by means of an instrument amounting in effect (regardless of what it may be called by the parties) to a common law assignment.-Kendall v. Bishop, 76 Mich. 634. Where the instrument creating the preference, although nominally a mortgage, by its own terms divests the corporation of its property and places the same in the hands of a trustee with full power to continue the business, and to manage, sell and distribute the assets, it amounts to a common law assignment and will be set aside at the instance of unsecured creditors. Conley v. Collins, 119 Mich. 519521; Hill v. Mallory, 112 Mich. 387; Pettibone v. Byrne, 97 Mich. 85; Burnham v. Haskin, 79 Mich. 35; Kendall v. Bishop, 76 Mich. 634.

19. Bank of Montreal v. Salt & Lumber Co., 90 Mich. 345; Brown v. Grand Rapids Parlor Furniture Co., 58 Fed. Rep. 286, 22 L. R. A. 817; Schufeldt v. Smith, 131 Mo. 280, 29 L. R A. 830; Nappannec Canning Co. v. Reid, Murdock & Co., 159 Ind. 614.

20. City of Kalamazoo v. Power

Co., 124 Mich. 74-83; Michigan
Telephone Co. v. St. Joseph, 121
Mich 502-509; Detroit v. Mutual
Gas-Light Co., 43 Mich. 594-599;
Joy v. Jackson & Mich. P. R. Co.,
11 Mich. 155-163.

21. By C. L. 1897, Sec. 8527, the general law of Michigan provides, that, "All corporations shall, when no other provision is specially made, be capable, in their corporate name, to sue and be sued, appear, prosecute and defend all actions and causes to final judgment and execution, in any courts or elsewhere."

23. In an action against the Detroit Musicians' Benevolent & Protective Association, the defendant showed that it was incorporated as Detroit Musical Benevolent & Protective Association. It was known by both names. The variance was held immaterial. Meurer v. Detroit etc. Protective Ass'n, 95 Mich. 451-454. The West River National Bank of Jamaica, Vermont, was presumed identical with the West River National Bank of Jamaica, under a plea of general issue, in the case of Thatcher v. West River National Bank, 19 Mich. 196-198.

issue waives the objection that the suit has not been brought in the legal name of the company24. Proof of the use of a corporate name is prima facie proof of due incorporation25. It is not necessary to set up, in the process or pleadings, that the concern is incorporated26, or that it is a domestic or a foreign corporation. When corporate existence is shown to have begun, it will be presumed to continue28. It is therefore generally sufficient to characterize the company, as "a corporation organized under the laws of the State of Michigan," or as the case may be, without averring the company's continued existence29.

When a corporation appears in a court of record by an attorney-at-law, his authority from the corporation to so appear will be presumed, until a showing is made to the contrary30.

In matters of litigation, corporations are dealt with, as nearly as may be, like natural persons. The fact that they are constrained to act and speak through agents is regarded in the construction of rules and statutes. For the purpose of administering justice, the courts will, upon occasion, regard the agent as the corporation. Thus, within the scope of his employment, the knowledge of the agent is the knowledge of the corporation31;

24.

Under C. L. 1897, Sec. 10471, a plea of general issue, without denial of corporate existence thereunder, forecloses the defendant's right to deny the corporate existence of the plaintiff. Ludington Water Supply Co. v. Ludington, 119 Mich. 480-487; Grand Rapids & Ind. R. Co. v. Southwick, 30 Mich. 444-445. The plea of general issue by a defendant corporation admits that it has been sued by the right name. Lake Superior Bldg. Co. v. Thompson, 32 Mich. 293294.

25. C. L. 1897, Sec. 10194; Act 162 of 1893; p. 263; Canal Street Gravel R. Co. v. Paas, 95 Mich. 376; Wilson Sewing Machine Co. v. Spears, 50 Mich. 534-537; Lake Superior Bldg. Co. v. Thompson, 32 Mich. 293: Garton v. Unity City National Bank, 34 Mich. 279.

26. A corporation may be sued in its corporate name without describing it as a corporation. Courts

will not presume that such a name refers to an unincorporated company or partnership, but will presume that it refers to a corporation. Prussian Ins. Co. v. Eisenhardt, 153 Mich. 198-202.

27. Grinnell V. Niagara Fire Ins. Co., 127 Mich. 19-22.

28. Attorney General v. Mich. State Bank, 2 Doug. (Mich.) 358363.

29. Palmiter v. Pere Marquette Lumber Co., 31 Mich. 182-183.

30. Norberg V. Heineman, 59 Mich. 210.

31. A corporation is charged with notice of facts which come to the notice of its officers or agents in relation to portions of the corporate business over which such officers or agents exercise total or partial control. Zeigler v. Valley Coal Co., 150 Mich. 82-85; Humphrey v. Eddy Transportation Co., 115 Mich. 420-424: Columbus Sewer Pipe Co. v. Ganser, 58 Mich. 385.

his statements are its statements32; his excuse is its excuse33.

§17. Power to have Perpetual Succession.

Under modern legislation, the succession of a corporation is perpetual in the same sense that a contract for permanent employment is "permanent"34. In other words, the succession is continuous while the corporation exists. Under the reserved power of repeal, the State may bring the corporation to an end at any time. By constitutional provision in Michigan, the duration of general business corporations is limited to thirty years3. Yet, in a very true sense, the advantages of continuous succession are preserved. The death or withdrawal of members, or the failure to elect officers, or the sale or assignment of all the corporate property, or the discontinuance of the corporation as a going concern, or appointment of a receiver, or insolvency, or bankruptcy, or all of these causes combined, work no ipso facto dissolution of the corporate entity36. Moreover, it is provided

32. Statements of agents made in the course of the corporate business and within the scope of the agents' authority are treated as declarations of the corporation itself. Kimball & Austin Mfg. Co. v. Vroman, 35 Mich. 309-315.

33. In Braastad v. A. H. Dey Iron Mining Co., 54 Mich. 258-260, it was held that the delay of a corporation in taking an appeal was excused by reason of the fact that the sole agent of the corporation in charge of the matter was, on account of the illness of his wife, prevented from performing his duties.

34. A contract for "permanent employment" is not an employment for life, nor until the employee shall become incapacitated. Such a contract is satisfied by employment for any period. The word "permanent" in this relation is construed to mean "permanent while the employment continues." Sullivan v. Detroit Y. & A. A. R. Co., 135 Mich. 661-670.

35. Mich. Const. 1908, Art XII, Sec. 3, and Beecher's notes, provides that: "No corporation shali be created for a longer period than

thirty years, except for municipal, railroad, insurance, canal or sanitary purposes, or corporations organized without any capital stock for religious, benevolent, social or fraternal purposes." Were it not for this inhibition, perpetual charters might be granted. Green v. Graves, 1 Doug. (Mich.) 351-357. In Kent County Agricultural Society v. Houseman, 81 Mich. 609614, Justice Grant spoke of this constitutional provision as follows: "The evident intent of this section was to prevent the perpetuation of corporate power and corporate wealth so as to place it practically beyond the reach of the people or the legislature. It was intended to apply to corporations of a private character, organized for profit and the accumulation of wealth, and not to those which were public in their character, and designed solely for the purposes of education and improvement."

36. Cahill v. Kalamazoo Mut. Ins. Co., 2 Doug. (Mich.) 124-140; People v. Bank of Pontiac, 12 Mich. 526-537; Marshall's Corp. P:

423.

by the State Constitution that, through legislative assent, corporate existence may be renewed. This assent has been expressed by general statute37 as well as in enabling acts, hence, at the will of the stockholders, all Michigan corporations organized under general laws may be made practically perpetual.

§18. Power to have a Corporate Seal.

Formerly a corporation could execute instruments only by the use of its seal. This is no longer the law38. A corporation is not required to have a seal39. Where the use of a seal is necessary, the corporation may affix a "scroll or other device," and this will be sufficient40. In practice, where a scroll or other device is used, it should be placed after the name of the corporation, and not after the name of the executing officer; otherwise it may be held to be the personal seal of the officer, and