(Case Plow Works v. Montgomery, 115 Cal. 380, 47 Pac. 108.)

A creditor is not bound to exhaust the remedies against the corporation before proceeding against the stockholder. (Morrow v. Superior Court, 64 Cal. 383, 1 Pac. 354.)

The provisions of this section do not oust a court of equity of jurisdiction to compel stockholders to pay for the benefit of creditors the amount of the capital stock subscribed for by them. (Harmon v. Page, 62 Cal. 448.)

Although the liability of the stockholder is that of an original debtor, it is proper to plead the debt as that of the corporation. (Knowles v. Sandercock, 107 Cal. 629, 40 Pac. 1047.)

Where one stockholder pays a note of the corporation, and sues the other stockholders for contribution, the superior court has no jurisdiction, if the several amounts asked against each stockholder are less than three hundred dollars. (Myers v. Sierra Valley etc. Co., 122 Cal. 669, 55 Pac. 689.)

LIABILITY OF DIRECTORS.-This provision only applies to such misappropriations of moneys as are similar to embezzlement, consisting of the misappropriations of funds intrusted to an officer for a particular purpose, by devoting them to some unauthorized purpose, and does not apply to the payment of an extravagant price for services or materials properly appertaining to the business of the corporation. (Fox v. Hale & Norcross etc. Min. Co., 108 Cal. 369, 41 Pac: 308.)

An action at law on behalf of one or more of the creditors of a corporation cannot be sustained under the provision as to the liability of directors, but the only proper remedy is a bill in equity where all the creditors are parties, or are represented, and in which there can be an accounting after ascertainment of facts. (Winchester v. Mabury, 122 Cal. 522, 55 Pac. 393.)

Sec. 4. The term corporations, as used in this article, shall be construed to include all associa

tions and joint-stock companies having any of the powers or privileges of corporations not possessed by individuals or partnerships; and all corporations shall have the right to sue and shall be subject to be sued, in all courts, in like cases as natural persons.

Sec. 5. The legislature shall have no power to pass any act granting any charter for banking purposes, but corporations or associations may be formed for such purposes under general laws. No corporation, association, or individual shall issue or put in circulation, as money, anything but the lawful money of the United States.

BANKING CORPORATIONS.-A corporation may be formed for the purpose of receiving deposits and loaning money, and if it does not issue paper to circulate as money, it is not a bank, although it is called such. (Bank of Sonoma v. Fairbanks, 52 Cal. 196.)

Sections 34 and 35, article 4, of the constitution of 1849 did not prohibit the formation of banking corporations for the purpose of deposit and loan, which do not issue paper to circulate as money. (Bank of Martinez v. Hemme etc. Land Co., 105 Cal. 376, 38 Pac. 963.)

Sec. 6. All existing charters, grants, franchises, special or exclusive privileges, under which an actual and bona fide organization shall not have. taken place, and business been commenced in good faith, at the time of the adoption of this constitution, shall thereafter have no validity.

Sec. 7. The legislature shall not extend any franchise or charter, nor remit the forfeiture of

any franchise or charter of any corporation now existing, or which shall hereafter exist under the laws of this state.

CORPORATE FRANCHISES.-An act waiving a right to enforce a forfeiture does not "remit the forfeiture," since there is no forfeiture until the sovereignty which created the franchise, by proper proceeding in a proper court, procure an adjudication of forfeiture, and enforce it. (People v. Los Angeles

etc. Ry. Co., 91 Cal. 338, 27 Pac. 673.)

Sec. 8. The exercise of the right of eminent domain shall never be so abridged or construed as to prevent the legislature 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 so abridged or construed as to permit corporations to conduct their business in such manner ato infringe the rights of individuals the general well-being

of the state.

Se 9. 9. No corporation shall engage in any usiness other than that expressly authorized in its charter, or the law under which it may have been or may hereafter be organized; nor shall it hold for a longer period than five years any real estate except such as may be necessary for carry ing on its business.

CORPORATE PURPOSES.-A corporation is forbidden to engage in any business other than is expressly authorized in its charter or the law under which it is organized. To hold stock in another cor

poration is to engage in the business of such corporation. (Knowles v. Sandercock, 107 Cal. 629, 643, 40 Pac. 1047.)

This section does not cause property held in violation of it to escheat to the state. (People v. Stockton Sav. etc. Soc., 22 Cal. Dec. 265.)

Sec. 10. The legislature shall not pass any laws permitting the leasing or alienation of any franchise, so as to relieve the franchise or property held thereunder from the liabilities of the lessor or grantor, lessee or grantee, contracted or incurred in the operation, use, or enjoyment of such franchise, or any of its privileges.

ALIENATION OF FRANCHISES.-This section does not give a personal action against the corporation which owned property for an injury which has resulted to an employee of a lessee of the owner in the use of the property in the hands of the lessee, but is designed to subject the franchise and property to liability incurred in its occupation, whether the franchise heext, "nised or the property be used y the original owner of lessee or grantee. (Lee v. Southern Pac. R. R. Co., 116 Ca. 97, 47 Pac. 932.)

Sec. 11. No corporation shall issue stock or bonds, except for money paid, labor done, or pr erty actually received, and all fictitious increase of stock or indebtedness shall be void. The stock and bonded 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, at a meeting called for that purpose, giving sixty days' public notice, as may be provided by law.

CORPORATE STOCK.-An increase of the capital stock of a corp oration and the issuing of additional shares, to be sold at a price less than the nominal par value of the stock, to supply a fund actually required for the use of the corporation, is not a fictitious issuarace. (Stein v. Howard, 65 Cal. 616, 4 Pac. 662.)

Non-negotiable notes secured by mortgages executed by a corporation do not constitute "bonded indebteruness" within the meaning of this section. (Under rhill v. Santa Barbara etc. Imp. Co., 93 Cal. 300, 228 Pac. 1049.)

j

Sec. 12. In all elections for directors or managers of corporations every stockholder shall have the right to vote, in person or by proxy, the number of shares of stock owned by him for as many persons as there are directors or managers to be clected, or to cumulate said shares and give one candidate as many votes as the number of directors multiplied by the number of his shares of stock shall equal, or to distribute them, on the same principle, among as many candidates as he shall think fit; and such directors or managers shall not be elected in any other manner, except that members of co-operative societies formed for agricultural, mercantile, and manufacturing purposes, may vote on all questions affecting such societies in manner prescribed by law.

DIRECTORS.-Under this section all the directors. must be elected on one ballot. (Wright v. Central etc. Water Co., 67 Cal. 532, 8 Pac. 70.)

Sec. 13. The state shall not in any manner loan its credit, nor shall it subscribe to, or be