| First— | The power of perpetual succession. |
| Second— | The right to sue and be sued, and to receive and grant in their corporate name. |
| Third— | The right to purchase and hold real estate and personal property. |
| Fourth— | The right to have a common seal. |
| Fifth— | The right to make by-laws. |
It was long ago decided that a franchise given by the government to a corporation, cannot be revoked or changed by the government, unless such a reservation is made by the government at the time the franchise is granted. At present, such reservations are made in granting most franchises, either by express reservation in the franchise itself, by general statutory provision, or by constitutional limitations.
89. Creation of Corporations. A corporation cannot be organized merely by agreement of the members. It must obtain permission of the government, state or national, to operate as a corporation, before it can lawfully exercise any corporate rights.
Originally, the right to become a corporation was granted by express permission of the king. The franchise, or right granted, was called the corporate charter. In this country, charters originally were granted by special legislative grants. While the United States Constitution does not expressly provide for the formation of national corporations, Congress is deemed to have the right to create them for the purpose of carrying out the express functions of the government, expressly granted by the United States Constitution. For example, the Constitution expressly grants the United States Congress the power to coin money and regulate the value thereof, and to levy and collect taxes. It is given no express power to organize national banks, but under the provisions giving it power to make laws to carry into execution all of the powers expressly granted, it is held to have the power to provide for the organization of national banks.
Most corporations are organized under state laws. Originally, charters were granted by special acts of the state legislatures. These charters were decided to be contracts between the state and the corporation, which could not be changed or revoked at the desire of the legislature. At the present time, most states have general permissive statutes, under which corporations may be organized. These statutes generally reserve the right to the state, to revoke or change the charter at the will of the legislature. Many states have constitutional provisions limiting the power of the legislature to grant irrevocable charters. The statutes of the different states vary somewhat as to the things required of persons desiring to organize a corporation, but the primary requirements are similar. In general, the following are the statutory requirements of the states for the organization of a corporation. The persons desiring to organize a corporation, not less than three (some states require more), a majority of whom are citizens of the state, must sign a paper, called the articles of corporation, which contains the name of the proposed corporation, the place where it is to be located, the purpose for which it is to be formed, and the place where its principal business is to be transacted, the amount of its capital stock, and the number of shares into which it is to be divided. The articles of incorporation are sent to a designated state officer, usually the Secretary of State. Upon the filing of the articles of incorporation with the proper state officers, the incorporators may open the books of the company, for stock subscriptions. The time and place of opening the books is announced, usually by thirty days advertising in a newspaper. A portion of the stock, usually ten percent, must be paid at the time the subscription is made. When the required portion of the authorized capital stock is subscribed, by advertising notice, the stockholders may meet and elect a board of directors. The board usually consists of from five to fifteen directors. The directors are required to take an oath of office. Some of the governing rules of the corporation, usually called by-laws or regulations, are enacted by the stockholders. Some regulations may be enacted by the board of directors. The board of directors may elect the officers provided for by the regulations, and then proceed to transact the business of the corporation. Corporations not for profit may be organized. Such corporations are organized in the same manner as corporations for profit, except that there is no capital stock, and the directors are usually called trustees. Church and fraternal organizations are common examples of corporations not for profit.
90. Names of Corporations. A corporation must of necessity have a name by which it may be designated, and under which it can transact business. The statutes of the different states generally provide that the incorporators must designate the name which the corporation is to use. One corporation is not permitted to use a name already appropriated by another corporation. A corporation has no right to use a name other than the one given it by its charter. A corporation may prevent by injunction another organization from using a name which interferes with its corporate name. This is subject to the limitations that a corporation is not permitted to appropriate a name descriptive of an article or place. For example, a storage company was incorporated under the name of the "Fireproof Storage Co." An individual with a fireproof building adopted the trade name "The Allen Fireproof Storage Co." The former company was not permitted to enjoin the latter from using the word Fireproof, in the name of his company, since the word, fireproof, is descriptive of the kind of building used in the business, and cannot be appropriated by any one company or person. The states generally, by statute, provide a means by which a corporation may change its name.
91. Kinds of Corporations. Corporations are usually classified as public and private. Public corporations include those corporations organized for the purpose of exercising public functions, and for carrying out government purposes. An incorporated city or village is a common example.
A private corporation is one organized for the private benefit of its members. Private corporations are either corporations for profit or corporations not for profit. Corporations for profit have a capital stock, and are organized for the financial benefit of the members. Ordinary trading or manufacturing corporations are examples. Corporations not for profit have no capital stock, and are organized for charitable or social purposes. Clubs, educational institutions, and churches are common examples.
Corporations organized for private gain, and which serve some public purpose, are sometimes classified as quasi-public corporations. Express companies and telegraph and railway companies are common examples of the class. These companies are strictly private corporations.