Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-05-07
incorporation LAW
How the Recent act Of Con-
gress is Operating.
FEES FOR RECORDING
COURT DECISIONS RELATIVE TO
RECORDERS RULINGS.
District Of Columbia Has Ceased to Be
a Center for the Wholesale In
corporation of Concerns.

Recorder of Deeds Dancy, since the pas
sage of the act of February 4, 1905, amend
ing the District code in the matter of fees
to be collected by him from parties filing
certificates of incorporation, has had many
inquiries as to the effect of that law, ana
has prepared printed circular to be mailed
or handed to inquirers. The act, it will be
recalled, was the result of the publicity
given the District incorporation laws, espe-
cially the provisions of sub-chapter t. OF
chapter IS, of the code, by the recorders
office and the law was designed to prevent
a continuance of the veritable wholesale in
corporation business conducted under the
provisions of the CODE
The act provides that, in addition to the
regular filing and recording fees, the re-
corder of deeds shall collect 40 cents on
each thousand dollars of the amount of
capital stock of every company thereafter
incorporated. 1t also provides that In no
case shall this additional fee be less than
SIS, and prohibits the recorder from filing
or recording any certificate of incorpOra-
ton until he has been satisfied that all OF
the capital stock of the concern has been
subscribed for in good faith. and that not
less than 10 per cent of the par value of
said stock has been actually paid In cash
and the money derived therefrom is at the
time of Offering the certificate for record in
the possession of the persons named as the
first board of trustees of the company.
The requirement of the new law that the
recorder must be satisfied that all of the
capital stock of the company desiring to
be incorporated has been fully subscribed
for before he accepts the certificate for
record has been the occasion of consider
able complaint on the part of would-be in
corporators, it being pointed out by them
that companies are thereby deprived of the
right to retain what is generally known
as treasury Stock" they contending that
such law means the utter abandonment
OF the District as place for the fncorpora-
ton of business concerns. Much COM
plant has been lodged against the pro-
vision of the act of February that 10 per
cent of the capital stock must be in the
hands of the trustees, in money before
accepting the certificate of incorporation
for record.
Must Submit Sworn Statement.
Recorder Dancy referred to his deputy,
Mr.. Robert w. Dutton, all such complaints,
who advised that, before accepting for rec
ord any certificate of incorporation of a
concern having capital stock, the proposed
incorporators should be required to submit
a sworn statement that all of the stock
has been subscribed for in good faith and
that not less than 10 per cent of its par
value, in cash, has been derived therefrom
and is at the time of presenting the GER
tificate for record In the hands of the first
board of trustees of the proposed company;
and second, that certificate of the proper
officer of some reputable bank or trust COM
pany should also be required, showing that
the amount of cash referred to is on deposit
in said bank or trust company to the credit
of the trustees. Mr.. buttons suggestions
were adopted and are embraced in the
printed circular now furnished inquirers.
This ruling, however, was questioned by
number of persons desiring to incorporate
here, it being contended by them that the
act of February i, 1865, does not mean cash
where it provides that "the money derived
G nf hn oil ctr cl1nn he
in the possession of the trustees of the
proposed company when the certificate is
presented for record They insisted that
real and personal property possessed by
the company should be considered as
money. Mr.. Dutton, however, advised the
recorder that to adopt such view would
place him in the position of an appraiser of
the property in question, and, more than
tfat, would require him TO also pass upon
the title of the parties to said property,
Recorder Dancy applied through the
President for a ruling by the Attorney
General on the questions, and in decision
by that officer 1t held that the words
1.-The money" in the act of February 4, 1905,
mean cash. After calling attention to the
fact that, prior to this act, such pay
ment as prerequisite 10 filing articles of
incorporation was required, it pointed
out that section 6l3 of the District code re-
CURED that before a company should
transact any business there should have
been paid in at least 10 per centum of the
capital stock, either in money or in prop
ertY at its actual value" Quoting the act
of February 4, 1905, the Department of
Justice advised Recorder Dancy as follows:
1T is unnecessary to state that Congress,
in increasing the fees for filing articles of
Incorporation and IN requiring bona fde
subscriptions to the stock and the actual
payment in cash of 10 per centum of the
par value thereof, did SO for the purpose
of putting a stop to the gross abuses of the
law by reason of it's weaknesses. The eff
feet of this provision is to amend sec
tons G05 and Glib of the code. The pro-
vision is plain and explicit. Before you
are authorized to receive and file any al
ticle of Incorporation, it must be shown
to your satisfaction that all the stock of
the corporation has been subscribed for in
good faith, and that at least 10 per cent of
paid in cash, and the money derived there
from is then in the hands of the persons
named as the first board of trustees
Changing Name Of Company.
These questions disposed of, another arose
when certificate of change of name of
company previously Incorporated here was
presented for record. The Court of Ap-
peals. in the case of Dancy against Clark
ct al, decided January A. 1905, having sus-
tanned the recorders contention that he is
authorized to exercise certain discretion
in the matter of papers presented to him
for record, Deputy Recorder Dutton refused
to accept the certificate of change of name
ana the opinion Oh the Attorney General
was sought the recorder being advised In
the matter as follows:
Il find no provision in the code of the
District authorizing corporation to change
its name, and, consequently, no method is
pointed out whereby that may be DONE
The department understands the law to be
that corporation has only such rights and
powers as are expressly granted, or as are
| necessary to carry into effect the rights
and powers so granted; that the power to
change the name of a corporation Is not
| necessary to the exercise Of the powers
granted, and, therefore such power, not be-
ing expressly given, does not exist You
nse therefore advised that, under existing
law company organized under sub-chap-
ter Chapter 49, of the code of the
District of Columbia has no authority to
charge Its name This can only be done
by the Incorporation of a new company
which will be subject to the provisions and
liable for the fees prescribed by the act
of February 4, 1905, amending section $50
of the code for the District"
More than year ago Recorder Dancy
was advised by the Department Of Justice
that he was authorized in sustaining the
contention of Deputy Dutton that sub
chapter of chapter 10 of the District code
restricts corpora tons organized Hereunder
| to one class of business, and, although in
| mandamus proceedings the lower court
4 h1I1 H.~r