Majority
Headnote
Corporations (§ 17[1] )—Application fob Incorporation—Sufficiency of Recitals.“A certificate of incorporation must be executed by natural persons, who must be of full age, and at least two-thirds of them must be citizens of the United States and one of them a resident of this state.” Embraced in this provision (General Corporation Law, § 4) are three essentials of age, citizenship and residence which are applicable to membership corporations. It is provided by section 41 of the membership corporations law that five or more persons may become a membership corporation by making, acknowledging, and filing a certificate stating the name, the object, the location, and the number and names of its directors, and “such certificate shall not be filed without the written approval * * * of a justice of the Supreme Court.”
It is plain that without such approval the incorporation is absolutely ineffective. What, then, should merit approval? Is the presentation of a certificate containing the bare formula prescribed by the statute sufficient, or should there be proof of compliance with the elemental substance of the law? Strictly speaking, the act of approval by the justice is not a judicial act. It was within the power of the Legislature to confer that authority on any ministerial officer; but, having conferred it on a judicial officer, it is a legitimate inference that it was so conferred with a purpose, and that is that the judicial officer, from his professional training and habit of thought, should apply those tests and rules to the certificate which are applied in judicial procedure in order to ascertain facts, as distinguished from mere assertion, and this inference is strengthened by the nature of the circumstances.
The Legislature has prescribed simple means by which an artificial entity may be created, and, when created, endowed with certain powers and privileges. What more reasonable than that, before imparting legal life, there should be judicial scrutiny of those qualifications which the law makes essential, and not a mere perfunctory passing on what may be presented. The very act of approval imports that the justice sanctions and accepts as satisfactory the instrument which is required by law to receive his approbation (Black, L. Diet.), and this sanction
Adopting this rule, the certificate presented, which is typical of many, recites the desire of the incorporators to form a corporation; they being of full age, and at least two-thirds being citizens, and one a resident of the state. These are not even conclusions of fact. They are bare assumptions, without proof to support them. An illustration of their inutility is furnished by the statement regarding citizenship. It is required that there be five incorporators. How can it be determined which of them constitute the two-thirds that are citizens and which the one-third that is alien? If the term “two-thirds of five men” be taken literally, it will lead to an absurdity. In case of false or erroneous statement, it would be impossible to fix responsibility upon the individuals. Their attached acknowledgment would not aid, for that merely certifies to the execution of the paper. This equally applies to the assumption of the residence of one of the signers within the state; which one? Where a number of individuals combine for the purpose of acquiring a corporate existence, each one should assume responsibility by submitting proof of the existence of the facts required by law. This should be done by affidavit containing averments, first, by all as to each being of full age; second, by each of them who is a citizen; and, third, by the one who is a resident. There should also be an averment as to whether any previous application for incorporation has been made.
It may be pointed out that it is improper to fix a definite date for the holding of the annual meeting, as that date may fall on Sunday, and the law discountenances the use of that day for such purposes.
Approval refused, with leave, however, to renew application upon certificate supported by averments as indicated.
Ordered accordingly.