THE NATURE OF A CORPORATION.—The nature of a corporation is perhaps best understood by an illustration. In the case of People\'s Pleasure Park Co. v. Rohleder, 109 Va. 439, the facts were as follows: There was a large tract of land divided up into a number of lots, and in each deed, when a lot was sold, there was a covenant providing that title to the real property should never vest in a person of African descent, or in a colored person. Later, after the lots had been sold, several of them were conveyed to a corporation composed exclusively of negroes. The corporation knew, when it purchased the tract of land, of this restriction in the deed, and the land was bought by it for the purpose of establishing an amusement park for colored people. Suit was brought in a court of equity to compel the cancellation of the deed to the corporation. Stated boldly, the decision of the Virginia court amounts to an assertion that a corporation has no color. In other words, the corporation is an entity separate and distinct from its members, and so, although all the stockholders in this corporation were colored, that did not make the corporation a colored person. Thus, if A, B, and C, as incorporators, organize the X Corporation, although they are the sole stockholders, there are four persons, A, B, C, and the X Corporation.[Pg 193]
THE ENTITY THEORY.—It may be doubted if any court would carry the entity theory to the extent that it would allow an individual who was the owner of a piece of real estate, which he was not permitted by the deed to sell to negroes, to deliberately go to a prospective negro purchaser and say: "I cannot sell my property to you because of a restriction in the deed, but I will pay the necessary expenses, if you, with two of your friends, will form a corporation to take title to this property, in which corporation each of your friends will own one share and you the balance, thus retaining control yourself. I will then deed the property to the corporation and will thereby get around the covenant in my deed preventing a transfer to negroes." We must not allow the entity theory to work a manifest injustice, as was said in Erickson v. Revere Elevator Co., 110 Minn. 443: "Where the corporate form is used by individuals for the purpose of evading the law, or for the perpetration of fraud, the courts will not permit the legal entity to be interposed so as to defeat justice."
RESULTS OF THE ENTITY THEORY.—Flowing from the entity theory is the result that the property of a corporation is owned by the corporation and not by the individual members. Therefore, all conveyances of such property, whether it is real property or personal property, must be made by the corporation, and cannot be made by the members or shareholders as individuals. It also follows that all suits against or by the corporation must be brought against the corporation or by the corporation as an[Pg 194] entity and not against the individual members. Again, a corporation may take property from one of its individual members, and it may make a contract with one of them, and it may sue them and be sued by them.
KINDS OF CORPORATIONS.—Corporations are divided into public, quasi-public, and private corporations. The private corporation is such as is created for private enterprises, such as manufacturing, banking, and trading corporations. Religious and eleemosynary corporations are also included in this classification. The public corporation is such as is created for the purposes of government, such as cities, towns, villages, and institutions founded by the State, and managed by it for governmental purposes. Quasi-public corporations are such as are engaged in a private business which is affected with a public interest, such as railroads, both steam and electric, gas companies, water companies, lighting companies, and the like. The public, and generally the quasi-public, corporations possess the right of eminent domain, that is, the right to take private property for public purposes upon payment of just compensation to the owner. It is the private corporation with which we are usually concerned in commercial law, and this chapter will be devoted largely to a discussion of that class.
THE CREATION OF A CORPORATION.—A corporation must be created by legislative authority. Formerly, a corporation was created by special act of the legislature, but in recent years the growth in the[Pg 195] number of corporations, and also the political wire-pulling necessary to get an incorporation bill through a legislature, have resulted in the almost universal practice of having the legislature pass a general corporation act, and then without further reference to the legislature, any group of persons, of the requisite number, may become incorporated by complying with the provisions of such an act. The formation of corporations under the laws of most States is a simple process, requiring in general the preparation of an official document sometimes termed the "certificate of incorporation" or the "charter," which paper sets forth the facts which are required under the laws of the State wherein the corporation is to be formed. These laws, while not uniform, generally require a statement as to the name to be used by the corporation, the names of the proposed directors and incorporators, a statement of the general purposes or objects of the corporation, the location of its principal office and place of business, how long it is to last, the amount of its authorized capital, the par value of its stock, as well as a statement in regard to any preferred stock which may be contemplated. Other details are sometimes required under the various State laws. This official document must generally be signed or executed by those persons who are the incorporators of the corporation. As a rule, three or more incorporators are required, although in some States five is the minimum. This official document, after it has been duly executed, is usually to be filed in the office of the Secretary of State, and usually also in that[Pg 196] of the county clerk of the county wherein its principal office is to be. This procedure, however, is subject to some variations and the statutes of the State involved must always be closely followed. As soon as the official document has been properly filed and the other necessary steps taken the incorporators hold the first meeting and effect an organization, after which time the corporation is generally in a position to transact business, although in some States it is provided in effect that corporations should not commence business until a certain share of the capital has been paid into the corporation in cash.
CITIZENSHIP OF A CORPORATION.—Although a corporation is a separate entity, entirely distinct and apart from its members, such separate entity is not a citizen in the sense in which we use the term ordinarily. At a general election a corporation has no right to vote. Again, Article 4 Section 2, of the United States Constitution, provides that "citizens of each State shall be entitled to all of the privileges and immunities of citizens in the several States." A corporation is not a citizen in this sense. Hence a State may keep all insurance companies, incorporated outside of its area, from doing business in that State by discriminating legislation against foreign insurance corporations. Insurance is not looked upon as interstate commerce, about which the individual States may not legislate, and as a corporation is not a citizen within the meaning of Article 4, Section 2, such insurance companies have no redress. In one sense, however, a corporation is looked upon as a[Pg 197] citizen. Where a suit is between citizens of different States, and the amount involved is over the prescribed sum, either party may bring the action in the Federal courts, if he so desires, instead of in the State courts. In this sense, a corporation is to be regarded as if it were a citizen of the State in which it is created. If I live in New York and the American Tobacco Co. is incorporated in New Jersey, suit between us may be brought in the Federal courts on the ground of diversity of citizenship on the part of plaintiff and defendant.
POWERS OF CORPORATIONS.—A corporation is unable to do anything beyond such powers as are granted it by law. As to the extent of the powers possessed by a corporation, we may conveniently divide corporate powers into those which are express and those which are implied. Express powers may be considered as including those which are mentioned in the official documents used or granted upon the beginning of the existence of the corporation. These official documents are spoken of as "charters" or "certificates of incorporation." Whatever term may be applied to them there is generally in such documents a statement of the general purposes or objects for which the corporation is formed; in other words, of the general business in which it is to engage. There is also a statement of the general powers of the corporation which is to engage in the business mentioned. The powers so mentioned in such official documents may be termed, as we have stated, express powers of the corporation. Needless to say, however, it is[Pg 198] not usual or possible to attempt to indicate in any such official documents all the details of the operations of business. Therefore, it is necessary to imply that in addition to such express powers the corporation has power to do such acts as may be reasonably necessary or incidental to the carrying on of the business mentioned. Powers so implied, without words, are termed "implied powers." Therefore, the total powers of a corporation consist of the express powers, namely, such as are named in the official documents containing a statement of its purposes and the business in which it is to engage, and the powers which would be reasonably implied under the rule just mentioned, as necessary and incidental to the carrying out of the express powers. Such implied powers do not give the corporation any power to do acts which are not reasonably necessary and incidental in its regular business. To allow validity to acts not so reasonably necessary and incidental would be in reality allowing the corporation to engage in outside business, which, under its charter, it has no power to engage in. As an illustration of this let us assume that the X company was incorporated to build, run and operate a railroad between two towns named A and B. The official charter of the corporation may state further details of the corporation\'s powers or it may not. But, if such details are not stated, the corporation would, obviously, have as express powers, the power to build the road and to operate it between the towns mentioned. It would also have as implied powers the power to do any act reasonably necessary[Pg 199] or incidental to the operation of a railroad, such for example as the purchase of rails, ties or other railroad supplies, the hiring of employees, erection of stations and the power also to give negotiable paper in payment for such supplies or the raising of money by mortgaging its property or otherwise where necessary to carry on its business. In other words, the corporation may be said to have as implied powers all the powers which an individual would reasonably and usually exercise if he were operating the railroad. However, the corporation would have no power, express or implied, to do any act not reasonably necessary to the railroad business, such, for example, as the purchase of a stock farm or the operation of a steamer line or a grocery store, or the leasing of its line. If the corporation, then, should make any contract with relation to engaging in these outside matters—the corporation having no power to engage in them—a valid contract could not arise and therefore the corporation could not be held liable thereon.
ULTRA VIRES ACTS.—Where a corporation attempts to do an act which is clearly beyond its express or implied powers, such act is generally termed an "ultra vires" act, and it may frequently consist in an attempted contract by a corporation. Hence we must consider with some care contracts of corporations which may be termed ultra vires. As the corporation lacks power it is generally said that the contract does not arise and hence neither the corporation nor the person with whom it attempted to contract would theoretically be bound thereon. Yet, in[Pg 200] many States, a special rule has been adopted whereby a corporation may be held upon such contract in certain cases even though it had no power to make it. This may be termed the "doctrine of estoppel," and generally includes cases where the corporation has assumed to make a contract which was ultra vires or beyond its powers but which would appear to an outsider as incidental to the corporate business and therefore as within its corporate powers. In such circumstances, if the outsider with whom the corporation assumed to make the contract does in fact rely reasonably upon the corporate power to make it, having been deceived by appearances and having no warning that the corporation actually lacked power, and having paid over money or delivered goods or performed services or parted with other value under the contract, he may generally enforce the contract against the corporation. In other words, under such circumstances, the corporation is estopped or forbidden to evade its obligation by asserting the point that it had no power to make such contract. However, this is strictly limited to cases where the corporation appeared to have the power to make the contract and where the person dealing with it had no reason to suspect or doubt its power in that regard, and where the person dealing with the corporation had parted with some value of the kind mentioned, in his reliance that the contract was within the corporate powers of and therefore binding upon the corporation. Thus, where such person has done nothing toward carrying out his duty under the contract he would[Pg 201] have no claim or right to enforce the same as a binding obligation of the corporation. Many courts also treat him somewhat differently and take the attitude that an outsider who has dealt with the corporation is entitled not to enforce the attempted contract, but is entitled only to recover from the corporation the reasonable value of such goods or service as it has voluntarily accepted from him.
DE FACTO AND DE JURE CORPORATIONS.—It sometimes happens that a group of persons may attempt to organize a corporation and fail to comply with all the provisions of the law in the State in which they attempt to organize. The question arises then: What have we? Of course, we do not have a full completed organization, which we would call a corporation de jure (by right of law). We may have what is called a corporation de facto (in fact). In order to constitute a corporation de facto, it is generally held that the following requisites must exist: There must be a valid law which authorizes the formation of such a corporation; a colorable attempt to organize under the provision of such law; and an assumption of corporate power, or, as is sometimes called, a user. If these facts exist, we then have a corporation de facto, and persons dealing with such a corporation are usually held to the same responsibilities as though it was an actual de jure corporation. The State, ordinarily, is the only person which can question the existence of such a body, and this is usually done in a suit by the attorney-general. If the parties have not even complied with the requisites of[Pg 202] a de facto corporation, the authorities are divided as to what kind of an organization it is, although, perhaps, the best decisions would hold the parties liable as partners. They must have contemplated some kind of liability and failing to create even a corporation de facto, a partnership liability is all that is left, except individual liability, and that is apparently just what they did not intend.
PROMOTERS.—A promoter is a very common person in the modern industrial world. He is a person who brings about the organization of corporations, gets the people together who are interested in the enterprise, aids in procuring subscriptions, and takes general charge of all the matters incident to the formation of the corporation. In other ways, he is governed by the rules of agency and his position is that of a fiduciary. The majority of the courts hold that there is no liability on the part of the corporation to pay for his expenses and his services, in promoting the organization, unless the corporation as an organization expressly promises to pay or otherwise clearly recognizes the obligation. Because of the fiduciary relationship, which a promoter occupies, he is not permitted to make any secret profits at the expense of the corporation. If he secures property for $1,000,000, he may not turn it over to the corporation for $1,500,000 and pocket the profit himself. A corporation cannot be liable for the acts of a promoter before the corporation came into existence. It may, however, after coming into existence adopt the acts of the promoter and thereby render itself liable. If, knowing the terms of[Pg 203] an agreement made by a promoter, the corporation takes advantage of the agreement or recognizes it, it thereby in effect itself becomes a party to the agreement. Unless the terms of a promoter\'s agreement expressly state the contrary, the promoter is personally liable upon it as a contractor.
POWER OF THE STATE OVER A CORPORATION.—It must follow, that if a State creates a corporation, then it should have certain control over it. The United States Supreme Court has recognized the right of visitation as residing in the State. Visitation is, in law, the act of a superior or superintendent officer who visits a corporation to examine into its manner of conducting business and its observance of the laws. The visitation of National banks by the Comptroller of the Currency is a common example of the exercise of this authority. One of the most famous cases in the United States Supreme Court is the Dartmouth College case. In 1769, the King of England granted a charter to twelve people under the name of "The Trustees of Dartmouth College." They were authorized to conduct a college and they founded Dartmouth College in Hanover, New Hampshire. In 1816, the legislature in the State of New Hampshire undertook to amend the charter in many ways, among other things, increasing the number of trustees to twenty-one. A furious conflict ensued between the State and the trustees. The State finally brought suit to recover the corporate seal and records which were held by a Mr. Woodward, who held them under the amendatory act to which we have referred. The case[Pg 204] is known as Dartmouth College v. Woodward, 4 Wheaton 518. The Dartmouth College trustees were represented by Daniel Webster, and this is one of his famous cases before the Supreme Court. He took the position that the charter granted by the King of England and afterwards recognized by the State of New Hampshire, was a contract between the State and the trustees. This being so, it was protected by the provision in the United States Constitution which provides that no State shall pass any law impairing the obligation of contracts. The United States Supreme Court upheld this position. The act of the legislature of New Hampshire was held invalid. We then found ourselves in the position of having States creating corporations and then not being able to control them. Whatever may be said in regard to the law as laid down by the United States Supreme Court, this situation was unfortunate. Shortly thereafter in the various State legislatures, a method to meet the situation was devised, and this is what was done: When a general corporation law is passed, the State inserts in it a clause to this effect: "The State hereby reserves the right to alter, amend, or repeal the charter of any corporation organized under this act." This, then, makes this clause a part of the contract when a new corporation is organized. It knows that it is subject to having its charter amended or repealed without its consent. The effects, therefore, of the Dartmouth College decision have been practically nullified by such clauses inserted in the various incorporation laws. Such incorporation acts do not relate[Pg 205] to corporations organized before such act was passed. Under this method of procedure, the legislature today surely has an efficacious method of controlling the corporations which it creates.
LIABILITY FOR TORTS AND CRIMES.—A corporation is ordinarily liable, the same as an individual, for all torts committed by its agents in the scope of their authority. A corporation may even be liable for acts which are beyond its authority. For example, in the case of Hannon v. Siegel-Cooper Co., 167 N. Y. 244, it was held that the department store of the Siegel-Cooper Company, a corporation, was liable for mal-practice in dentistry. The charter of the company did not give the company the right to practice dentistry, but space in the store was rented to a dentist who conducted a dental parlor. Because of his negligent treatment of a patient, the court held that the corporation was liable for the negligent acts of its agent. Corporations may also be held liable for such torts as involve a mental element, like fraud and libel. A corporation may be criminally responsible for failure to perform a duty imposed upon it by law, and in many States there are statutes which make it a criminal offense for a corporation to do or fail to do certain acts. It is generally held, however, that a corporation cannot commit a crime which involves a mental operation, as for example, murder. Murder involves a mental operation; it is "killing with malice aforethought." Then again, it would be difficult to punish a corporation for the crime of murder, because under our State constitutions, the punishment for murder[Pg 206] is either death or life imprisonment. Although a corporation is a separate person, there is no way to kill it or imprison it for life. You surely would not do so by inflicting this penalty on all the stockholders. It is generally provided, then, by statute that such crimes that a corporation can commit are to be punished either by a fine or by imprisonment of the directors.
SHERMAN ANTI-TRUST ACT.—On July 2, 1890, the Sherman Anti-Trust Act was passed by Congress. The first section of this act reads: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract, or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by a fine not exceeding $5,000, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court." The second section of this act reads: "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a misdemeanor, and on conviction thereof shall be punished by a fine not exceeding $5,000, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court."
It would be impossible, in a small amount of space, to call attention, except in a general way, to[Pg 207] the importance of this act and the difficulty of understanding it, without carefully reading the various conflicting decisions of the United States Supreme Court handed down since the passage of the act. The act, being a Federal act, relates only to interstate commerce. That kind of business, conducted by corporations, which is intrastate, if controlled at all by similar legislation, would be by virtue of a State act. Perhaps the most famous of the Sherman Anti-Trust Act cases decided by the United States Supreme Court is that of the United States v. Standard Oil Co., 221 U. S. 1, where the majority opinion was written by the late Chief Justice White, and in which he enunciated the so-called "rule of reason" which brings the interpretation of that act very much in harmony with the rules of the common law in regard to illegal contracts and monopolies.
BY-LAWS.—A by-law is a permanent rule for the government of a corporation and its officers. The purpose of a by-law is to regulate and define the duties of the members of the corporation toward the corporation and between themselves. The power to make the by-laws is vested in the stockholders. There are certain qualifications which all by-laws must possess. They must be reasonable and not inconsistent with law or any rule of public policy. It would not be possible for a majority of the stockholders at a regular stockholders\' meeting to pass by-laws which would deliberately deprive the minority stockholders of rights which belong to them. The by-laws are, of course, always subject to the provisions of the charter[Pg 208] of the corporation, and if a corporation is authorized to operate a railroad, it could not, by passing a by-law, to the effect that it was deemed wise to enter into the steel manufacturing business, change the nature of the corporation in that manner.
STOCKHOLDERS\' MEETING.—In order that the acts of the majority of stockholders shall be valid, they must be authorized at a regular stockholders\' meeting. This must be held in the principal office of the company, and the notice required by the by-laws must be given to all of the stockholders. After this is done, the majority of the stockholders may transact business and bind the corporation. Of course, in a large corporation with a hundred thousand shareholders, as is the case with some of our bigger corporations like the United States Steel Corporation and the Pennsylvania Railroad, very few of the stockholders actually attend the meetings. The directors usually send out with the notice of the meeting, a proxy, and the stockholders who are not able to be present send in their proxy authorizing certain persons to vote for them. In this way, a majority of the stockholders are present at the meeting, either in person or by proxy. In certain cases stockholders may interfere with the action of directors in connection with the general management of a corporation, or may even oust the directors from their positions. These cases are extremely rare, since the power of directors is supreme as to all corporate matters as to which the statutes or by-laws do not provide for concurrence or other action by the stockholders. Where proof is offered, however,[Pg 209] of fraud, violation of law or gross negligence of the directors whereby loss has been caused or is threatened, stockholders may in some cases obtain the ousting of directors. This sometimes results in placing a receiver in temporary charge of the corporation or in the holding of a special election of new directors. No complaint, however, will generally be entertained against directors merely because their judgment does not agree with that of the stockholders even if some action of the directors may not have resulted favorably to the corporation, provided such action was taken honestly and with all due care and regard to law. As an illustration, the directors of the X Company made a certain contract on behalf of the corporation whereby it was agreed with Y that property of the corporation should be transferred to the latter for much less than its evident actual value. This operation would usually indicate fraud on the part of the directors, or at least such gross negligence as would in many cases justify stockholders in asking a legal inquiry into the action of the directors, which would result, if sufficient facts were proved, in their removal and an injunction against the performance of the contract. However, if the value of the property were doubtful and the directors had used all due care and effort to ascertain its true value and to obtain the best available price, no complaint could usually be made although it should later develop that a better price might have been obtained.
FOREIGN CORPORATIONS.—A foreign corporation is one which is organized under the laws of[Pg 210] some foreign country or some other State. Foreign corporations are not necessarily confined to doing business in their own State; they may enter other States. As for example, a company organized in New Jersey may enter the State of New York and do business. If, however, the New Jersey corporation comes to New York and makes a regular practice of doing business, it must comply with the provisions of the corporation law of New York, and secure a license to do business in New York. It is not uncommon to enforce this provision in an indirect method by providing that if a foreign corporation does not take out this license, it shall not be allowed to sue in the courts of the State where it is doing business.
MANAGEMENT OF CORPORATIONS.—The management of any corporation rests directly with the board of directors and they may be considered as the agents of the corporation to direct its business affairs. The directors, however, are subject in their action to any limitation upon their power which may have been included in the charter or certificate of incorporation or which may have been adopted in the by-laws. The directors are also subject to any provisions in the statutes of the State, which frequently provide that they shall not take certain important actions, such as the mortgaging of corporate property, etc., without special procedure involving a meeting and vote of the stockholders. Where, however, the directors\' authority is not limited by the statutes or the charter or by-laws, they may be considered as having full power to manage the affairs[Pg 211] of the corporation. In connection with that power they may elect a president and other corporate officers and may appoint any other agents or employees at their discretion. They may also define the powers to be exercised by the president and the other officers and employees. This would give them power to limit the authority of the president or any other officer. However, where a person deals with the president or any other officer of a corporation in behalf of the corporation, he may usually rely reasonably upon the president or other officer having similar power to that generally possessed by such an officer, and in many cases the corporation would be held bound by the acts of such officer even though he actually violated some limits placed upon him by the directors. This may be illustrated by assuming that the X Company was in the business of manufacturing furniture, and A, the president thereof, had made a contract with B, an outsider, for the purchase from the latter of certain wood to be used in the corporate business. As a matter of fact, however, A, the president, had no power to make such contract, since the directors had passed a resolution forbidding him to purchase any raw materials without first having the proposed purchase approved by the board of directors. Therefore, A, as a matter of fact, would have no power to make the contract with B, on behalf of the corporation. Yet, B had not in any way been warned of this limitation upon A\'s power, and as the purchase of materials would be a usual one for the president or executive head of such a corporation to make, B might reasonably[Pg 212] assume that A had power to make the contract. Therefore, B would be able to hold the corporation to the contract under the principle of apparent authority, considered in connection with the law of agency. Naturally, in turn, the directors would have a claim against the president for any loss sustained, as he had not only violated his duty but had also disobeyed and disregarded explicit instructions. The by-laws of a corporation are generally adopted by the stockholders and provide for all matters relating to the corporate management which are not provided for in the charter or certificate of incorporation. Such by-laws are binding upon all persons who know of them, or reasonably should know of them, provided they are not in violation of law and are reasonable. It is the general rule that meetings called to adopt new by-laws or to alter previous by-laws should be announced in some special way so that all interested parties may receive due notice and thus have an opportunity to arrange to be present and vote on the matters to be taken up at such meeting.
ELECTION OF DIRECTORS.—The directors of a corporation are elected by the stockholders and the election generally takes place at the regular annual meeting of stockholders of the corporation. Either the entire board of directors is elected at that time for the ensuing year, or a portion of them. In this connection it is provided by the statutes of many States that at least a certain proportion of the total number of directors shall be elected annually. The method of electing such directors at the annual meeting[Pg 213] is usually provided for by the statutes of the various States, but it is commonly the rule that each stockholder shall have one vote for each share of stock owned by him, although in some States they also allow what is termed "cumulative voting." This method of voting generally allows each stockholder to have as many votes as he owns shares of stock multiplied by the number of directors to be elected at the meeting and he may cast all of his votes for one or more of the candidates. In other words if five directors are to be elected he may concentrate all his votes upon one or more of the candidates and is not compelled to vote for each one. This cumulative voting is authorized for the purpose of allowing the minority stockholders to concentrate their votes upon one or two of the candidates and thus have some representation upon the board of directors. As an illustration of this, let us assume that the X Company had an authorized capital stock of $100,000, composed of 1,000 shares at the par value of $100 per share, and that all these 1,000 shares are issued and fully paid up. Let us further assume that six individuals each own 100 shares of stock and act in unison, thereby constituting a majority, the other 400 shares of stock being held by the minority stockholders. Each stockholder would usually have one vote for each share of stock owned by him, and therefore, if five directors were to be elected under the usual method of voting, those individuals composing the majority of the stockholders would succeed in casting a majority of votes for each of the five directors. This would leave the[Pg 214] minority without representation upon the board. If, however, cumulative voting were used, the minority having a total of 2,000 votes (400 multiplied by 5, the number of directors to be elected) could concentrate 2,000 votes upon one or two of their candidates and this would probably insure the election of such candidates to the board, thus giving the minority representation. In the case of a non-stock or membership corporation, each member has simply one vote for directors or for other purposes. It may be noted that the directors themselves, in their meetings, have also one vote each and this is entirely independent of the amount of stock which they may own in the corporation. It should also be noted that the directors in their meetings may not vote by proxy, but sometimes the members of a membership corporation may vote in this way. Voting by proxy is a usual practice in stock corporations. A proxy is merely a power of attorney or agency given in writing by one stockholder whereby he authorizes another person as his proxy to vote, at a corporate meeting, his shares of stock in his place. A proxy should be in writing and in a form in accordance with the statut............