levied upon the capital stock of the corporation, payable on the..... ...day of.... ..., 191.., to the Secretary of said Willits State Bank, at his office in said bank in Willits, Mendocino County, State of California. Any stock upon which this assessment shall remain unpaid on the day of.... .., 191.., will be delinquent and advertised for sale at public auction, and, unless payment is made before, will be sold on the..

....day of

19.., to pay the delinquent assessment, together with costs of advertising and expenses of sale.

Secretary.

Office at Willits State Bank, Main Street,
Willits, California.

Section 830.-HOW ASSESSMENT MAY BE ENFORCED. The law provides two methods for the enforcement of the liabilities of stockholders to the corporation, by reason of assessment levied upon the capital stock-one by a sale of the stock, for the delinquent assessment; the other by a suit against the stockholder to recover from him the amount of the assessment. The Board of Directors has the option to adopt one or the other method of enforcing the payment of an assessment on stock lawfully levied.

Civil Code, Section 349.

Section 831.-NOTICE OF SALE.-If any portion of the assessment remains unpaid, on the day named in the notice for declaring the stock delinquent, the Secretary must, if the Directors elect to have the stock sold, publish a notice of sale in the same paper in which the delinquent notice was published. The notice, when published in a daily paper, must be published for ten days, excluding Sundays and holidays, previous to the day of sale. When published in a weekly paper, it must be published in each issue for two weeks previous to the day of sale. The first publication of all delinquent sales must be at least fifteen days prior to the day of sale. The notice must specify every certificate of stock, the number of shares it represents, and the amount due thereon, except where certificates may not have been

issued to parties entitled thereto, in which case the number of shares and amount due thereon, together with the fact that the certificates for such shares have not been issued, must be stated.

Civil Code, Sections 338, 339.

Section 832.-FORM OF NOTICE OF SALE.-The following is a form of the notice of sale mentioned in the preceding section:

NOTICE OF SALE OF STOCK FOR DELINQUENT ASSESSMENT.

WILLITS STATE BANK.-Location of principal place of business, Willits, Mendocino County, State of California. Notice is hereby given, that there is delinquent upon the following described stock of the corporation, on account of assessment levied on the..........day of....

191.., the several amounts set opposite the names of the respective shareholders, as follows: (Here insert names, number of certificate, number of shares, and amount.) And in accordance with law, and an order of the Board of Directors made on the..........day of..... 191.., so

many shares of each parcel of such stock as may be necessary will be sold, at public auction, at the office of the Secretary of said corporation, at the Willits State Bank, Main Street, Willits, Mendocino County, State of California, on the. . . . . . . . . day of............... 191.., at 10 o'clock A. M. of that day, to pay delinquent assessments thereon, together with costs of advertising and expenses of the sale.

Secretary. Office at Willits State Bank, Main Street, Willits, Mendocino County, State of California.

Section 833.-WHO ARE LIABLE ON ASSESSMENTS. For the purpose of ascertaining those who are liable to it for the amount of an assessment, a corporation can only look to the list of stockholders as their names are registered upon its books. Where an assignment of stock is made after the levy of an assessment, but no formal transfer is made on the books of the company, the assignor

is still liable on the assessment. Where stock has been assigned, and a transfer of the stock has been duly made on the books of the company, the assignee becomes liable on

assessments.

Section 834.-EXTENSION OF TIME FOR PAYMENT AND SALE. The dates fixed in any notice of assessment or notice of delinquent sale may be extended from time to time for not more than thirty days, by order of the Directors, entered on the records of the corporation ; but no order extending the time for the performance of any acts specified in any notice is effectual unless notice of such extension or postponement is appended to and published with the notice to which the order relates.

Civil Code, Section 345.

Section 835.-SALE OF STOCK FOR ASSESSMENT. By the publication of the notice, the corporation acquires jurisdiction to sell and convey a perfect title to all of the stock described in the notice of sale upon which any portion of the assessment or cost of advertising remains unpaid at the hour appointed for the sale, but must sell no more of such stock than is necessary to pay the assessments due and costs of sale. On the day, at the place, and at the time appointed in the notice of sale, the Secretary must, unless otherwise ordered by the Directors, sell or cause to be sold at public auction, to the highest bidder for cash, so many shares of each parcel of the described stock as may be necessary to pay the assessments and charges thereon, according to the terms of sale; if payment is made before the time fixed for sale, the party paying is only required to pay the actual cost of advertising, in addition to the assessments. The person offering at such sale to pay the assessment and costs for the smallest number of shares or fraction of a share is the highest bidder, and the stock purchased must be transferred to him on the stock books of the corporation, on payment of the assessment and costs.

Civil Code, Sections 340, 341, 342.

Section 836. PURCHASE OF

DELINQUENT STOCK BY THE CORPORATION.-If, at the sale of stock, no bidder offers the amount of the assessments and charges due, the same may be bid in and purchased by the corporation, through the Secretary, President, or any Director, at the amount of the assessments, costs, and charges due; and the amount of the assessments, costs, and charges must be credited as paid in full on the books of the corporation, and entry of the transfer of the stock of the corporation must be made on the books. While the stock remains the property of the corporation, it is not assessable, nor must any dividends be declared thereon; but all assessments and dividends must be apportioned upon the stock held by the stockholders of the corporation. All purchases of its own stock made by any corporation vest the legal title to the stock in the corporation; and the stock so purchased is held subject to the control of the stockholders, who may make such disposition of the same as they deem fit, in accordance with the by-laws of the corporation or the vote of a majority of all the remaining shares. Whenever any portion of the capital stock of a corporation is held by the corporation by purchase, a majority of the remaining shares is a majority of the stock, for all purposes of election, or voting on any question at a stockholders' meeting.

Civil Code, Sections 343, 344.

Section 837.-SUIT TO RECOVER AMOUNT OF ASSESSMENT.-On the day specified for declaring the stock delinquent, or at any subsequent time before the sale of the delinquent stock, the Board of Directors may order all such proceedings stopped, and may elect to sue the delinquent stockholders for their assessments. The stockholder is liable in the suit for the amount of the assessment, and for the costs and expenses incurred by the corporation in trying to collect it.

Civil Code, Section 349.

Section 838.-LIEN FOR ASSESSMENT.-After an assessment has been made, a corporation has a lien for the payment of the assessment, which is not affected by the issuance of a new certificate and a transfer of the shares. The lien is upon the shares, and not upon the certificate. When an old certificate is surrendered, and a new certificate is issued, the new certificate represents the same shares; but the shares themselves remain subject to any lien the corporation may have upon them, and the new owner takes subject to such lien. The identity of the stock is not affected by the transfer. The keeping of a stock book, in which the original issue and all subsequent transfers must be entered, enables the holder or purchaser to trace his shares back to the original issue by the numbers of the different certificates, and thus identify the shares upon which any assessment has been made, and enables him to ascertain with certainty, in connection with the other records of the corporation relating to assessments and delinquent sales, whether his shares are free from liens or liability in favor of the corporation; and in the same manner enables the corporation to enforce its delinquent assessment upon the shares liable therefor, no matter how many transfers have been made subsequent to the assessment; each transferee taking the legal title, but subject to the assessment, just as the grantee of the legal title to land takes it subject to all valid recorded liens. (Decided by the Supreme Court in the case of Craig vs. Hesperia Land and Water Company, which decision is printed in Volume 113 of the California Reports, page 7.)

Section 839. BY-LAWS OF CORPORATION. Every corporation formed under the laws of California must, within one month after filing Articles of Incorporation, adopt By-Laws for the government of the corporation. The ByLaws adopted must not be inconsistent with the Constitution and laws of the State.