Source: https://eminutes.com/do-i-need-a-corporate-seal
Timestamp: 2020-06-05 12:21:01
Document Index: 311465312

Matched Legal Cases: ['§ 1', '§ 1', '§ 6', '§ 44', '§ 1628', '§ 207', '§ 202', '§ 207', '§ 1629', '§ 1932', '§ 2203', '§ 2', '§ 44', '§ 107', '§ 45', '§ 44']

State corporation statutes continue to authorize corporations to adopt and use corporate seals. But do you really need one for your company? In California and New York, the answer is pretty clearly “no.”
Historically, documents were commonly authenticated by the use of a seal, due to widespread illiteracy.[1] Traditionally, a seal consisted of a piece of wax, a wafer, or some other substance affixed to the document, or an impression made on the document by mechanical means.[2] However, a seal could also take other forms, such as the word “seal” placed between brackets after a signature, or the letters “L.S.” (short for locus sigilli, meaning in “the place of the seal”) adjacent to the contracting parties’ signatures.[3] Modern corporate seals are stamps that emboss or imprint company information, such as the corporate name and state and date of formation on a document.[4] They may be purchased from a stationary or office supply vendor.
State corporation statutes continue to authorize corporations to adopt and use corporate seals.[5] But do you really need one for your company? In California and New York, the answer is pretty clearly “no.”
In California, the same statute that gives corporations the power to “[a]dopt, use, and at will alter a corporate seal” also states that “the failure to affix a seal does not affect the validity of any instrument.”[6] Elsewhere, the California Civil Code is even more direct in declaring that “[a]ll distinctions between sealed and unsealed instruments are abolished.”[7] If that was not enough, the California Code of Civil Procedure also states, in a provision first enacted in 1872, that “[t]here shall be no difference hereafter, in this State, between sealed and unsealed writings.”[8] These provisions are clear enough in stating that seals have no legal effect in California that the state even chose to omit from its version of Article 2 of the Uniform Commercial Code—a uniform statute enacted in all 50 states to deal with contracts for the sale of goods—the provision declaring seals inoperative with respect to such contracts.[9]
At one time, there was some evidentiary value in California to affixing a corporate seal to an agreement, even though it was not essential to the validity of the agreement, because the seal created a rebuttable presumption that the officer signing the agreement had the authority to bind the corporation.[10] But the statute having that effect was repealed and replaced with another statute creating a conclusive (rather than merely rebuttable) presumption of authority to enter into the agreement on the part of specified corporate officers, whether or not the instrument is sealed.[11] As a result, a corporate seal is a permissible but unnecessary relic in California.
The same is true in New York.[12] New York, like California and most other states, has explicitly declared that “the presence or absence of a seal upon a written instrument . . . shall be without legal effect.”[13] That is true “[e]xcept as otherwise expressly provided by statute” in New York.[14] Unlike California, New York continues to expressly provide by statute that a corporate seal does have some evidentiary value as to the authority of the officer signing the instrument on behalf of the corporation.[15] But the same effect can be obtained simply by having the officer use his own “private seal” in signing the instrument on behalf of a corporation that does not have a corporate seal.[16] In New York, a “private seal” may consist of something traditional like a wafer or wax or some other adhesive substance affixed to the document, but it can also be nothing more than the word “seal” or the letters “L.S.” opposite the individual’s signature.[17] As such, any evidentiary benefit of placing a corporate seal on a document can be obtained just by having the officer sign next to the word “seal” or the letters “L.S.” without going to the expense of buying a corporate seal.[18]
In short, your company can obtain a corporate seal, but in California and New York there is no legal or practical reason to do so.
[1]See generally 68 Am. Jur. 2d Seals § 1 (Westlaw database updated Aug. 2015).
[2]Id. §§ 1, 6.
[3]Id. § 6; see also N.Y. Gen. Constr. Law § 44 (“The private seal of a person, other than a corporation, to any instrument or writing shall consist of a wafer, wax or other similar adhesive substance affixed thereto, or of paper or other similar substance affixed thereto, by mucilage or other adhesive substance, or of the word ‘seal,’ or the letters ‘L.S.,’ opposite the signature.”).
[4]See Cal. Civ. Code § 1628 (“A corporate . . . seal may be affixed to an instrument by a mere impression upon the paper or other material on which such instrument is written.”).
[5]See, e.g., Cal. Corp. Code § 207(a); N.Y. Bus. Corp. Law § 202(a)(3).
[6]Cal. Corp. Code § 207(a).
[7]Cal. Civ. Code § 1629.
[8]Cal. Civ. Proc. Code § 1932.
[9]See Cal. Com. Code § 2203 cmt. 1 (explaining that the omitted section is the same in substance as Civil Code section 1629 and Code of Civil Procedure section 1932, “which abolished the distinction between sealed and unsealed writings in California”). New York, by contrast, has retained this provision of the Uniform Commercial Code. See N.Y. U.C.C. Law § 2-203 (“The affixing of a seal to a writing evidencing a contract for sale or an offer to buy or sell goods does not constitute the writing a sealed instrument and the law with respect to sealed instruments does not apply to such a contract or offer.”).
[10]Snukal v. Flightways Mfg., 23 Cal. 4th 754, 781, 3 P.3d 286, 306 (2000).
[11]See id. at 782, 3 P.3d at 307 (discussing California Corporations Code section 313 (documents signed by certain designated corporate officers are “not invalidated as to the corporation by any lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the” documents)).
[12]See Glickfeld v. Epstein, 39 N.Y.S.2d 903, 905 (City Ct. 1943) (noting, based on the 1941 New York statute declaring seals to be without legal effect, that “the seal long venerated in the temple of the law is slowly slipping into that limbo to which a fetish now so indefensible should fall”).
[13]N.Y. Gen. Constr. Law § 44-a. The statute was originally enacted in 1941 and applied only to written instruments executed after August 31, 1941.
[15]See N.Y. Bus. Corp. Law § 107 (“The presence of the corporate seal on a written instrument purporting to be executed by authority of a domestic or foreign corporation shall be prima facie evidence that the instrument was so executed.”).
[16]See N.Y. Gen. Constr. Law § 45 (“An instrument or writing duly executed, in the corporate name of a corporation, which shall not have adopted a corporate seal, by the proper officers of the corporation under their private seals, shall be deemed to have been executed under the corporate seal.”).
[17]Id. § 44.
[18]In other words, the signature line would look something like this:
John Smith, President [seal]