Montana Attorney General Opinion 15-185

Opinion No. 185 COI')}Orations-Powers-Articles of In- cOl')}OI'ation-Sale of Assets-Board of Directors. HELD: A corporation may not pro- ,;de in its articles for an absolute grant of power to its board of direc- tors to sell all the corporate assets at the pleasure of the board. April 28, 1933. You request an opinion from this of- fice on the articles of incorporation submitted of "William L. Butler, Inc. of Montana." Paragraph numbered 6 on pages 2 and 3, and paragraph numbered !) on pages 3 and 4, are as follows: "6. To purchase or otherwise ac- quire, own, hold, m0rtgage, pledge, sell, assign, trunsfer or otherwise dispose of the whole or any part of the prop- erty, shares of capital stock of, or any bonds, securities, or other evi- dence of indebtedness created by, as- sets, business, good will and rights, and to undertake or assume the whole or any part of the bonds, mortgages, franchises, leases, contracts, indebted- ness, guarantees, liabilities and obli- gations of any person, firm. associa- tion, corporation or organization, and to pay for the same or any part or combination thereof in cash, shares of the capital stock, bonds, debentures, stocks, notes, or other obligations of the corporation or otherwise, or by undertaking and assuming the whole or any part of the liabilities or obli- gations of the transferor; and to hold or in any manner dispose of the whole 01' IIny part of the property and as- sets so acquired, and to conduct in any lawful manner the whole or any part of the business so acquired and to exercise all the powers necessary or com'enient in and about the con- duct. management and carrying on of such business." 134 OPPINlO~S OF THE ATTOR.:\EY GENERAL "9. To purchase, subscribe for, ac- quire, own, hold, sell, exchange, as- sign, transfer, mortgage, pledge, or otherwise dispose of sha res or voting trust certificates for shares of the capital stock, or any honds, notes. securities or evidence of indehtedness created by any other cOI1){)ration, or corporations organized under the laws of this state or any other state or dis- trict or county, nation or government, and also bonds or evidence of in- debtedness of the United States or of any state, district, territory, depend- ency, or county or subdivision or mu- nicipality thereof; to issue in exchange therefor shares of the capital stock. honds, notes or other obligations of the cOl'l){)ratioll aIHI, while the owner thereof, to exercise all the rights, powers, and privilege;; of ownership including the right to vote on any sha res of stock or voting trust cer- tificates so owncd; to promote. lend mone~' to and guarantee the diddends, stocks. bonds, notes, e,idences of in- debtedness, contracts or other ohliga- tions of and otherwise aid in any man- ner which shall be lawful any corpora- tion or association of which any bonds, stocks, voting trust certificates. or other securities or evidences of in- debtedness shall he held by or for this corpora tion, or in which, or in the ,velfare of which, this corporation shall have any intcrest, and to do any acts and things llermitted by law and designed to protect, preserve, improve or enhance the value of anv such bonds, stocks. or other securities or evidences of indebtedness or the prop- erty of this corporation." It appears to us that these two para- graphs might he construed to authorize this proposed corporation to engage in investment banking, and also perform the functions of a surety corporation. It is true that corporations engaging in investment banking must be incor- porated unde)' the special act relating to such business, but to avoid confusion it would be well to have these two sec- tions revised and restricted, or add a pro,iso about as follows: "Pro"ided tha t these articles of in· corporation shall not be construed to authorize the corporation created hereby to engage in nor attempt to carryon any business described in or authorized by Chapter 89 of the Law:'! of U)27, or to engage in or carryon a surety Imsiness." Paragraph "Ninth" on sheet 7 of the articles submitted is as follows: "Ninth: The directors shall have the power to make such prudential b~'­ la ws as they may deem proper for the management of the I)ffairs of this com- pany, according to the statutes in "uch case made and provided, and shall ha vc the power and general authority to sell. lease, mortgage, exchange, or otherwise dispose of the whole or any part of the property of said corpora- tion by vote of a majority of the board of directors without heing required to obtain a vote or the consent of the stockholders of the compan~', hefore so doing." Section 6004, R. C. ;'If. 1921, as amended by Chapter 42, Laws of 1931. provides a specific mode by which a corpora tion may sell all its assets. Sec- tion 5905 R. C. M. 1921. as amended hy eha p. 35, La "'s of 1931, specifies "'hat articles of incorporation shall contain. ;\'othing in this last named section con- templates such a provision as para- graph "Ninth," authorizing the sale of all the corporation's IH'operty by the hoard of directors. It is our opinion that section 6004 controls. In Newton Y. "Teiler, 87 Mont. 164, the Supreme Court said: "Where gen- eral and special provisions are repug- nant. the latter control over the former." The rule is also applicable to constitu· tional provision. Special statutory pro- visions control those that are general. (34 Montana and Pacific Digest, Stat- utes, Key 194.) When a statute limits a thing to be done in a particular mode. it includes the negath'e of any other mode. Botany Mills Y. United States, 278 U. S. 283; Paso Robles ;'IIer. Co. v. Com'r. Int. Revenue, 33 Fed. (2) 653; In re Barnett Est., 97 Cal. App. 138; Brown v. City Council, 258 Pac. 6n:~; Pf'rkins v. Thornburgh, 10 Cal. 189; Johnston Y. Baker, 167 Cal. 260; I<'an· cher v. Board of Commissioners, 210 Pal:. 237.) In Dosen Y. East Butte Cop- per Mining Co., 78 )Iont. 579, the Su- lJreme Court said: "Every word, pbrase, sentence and section of a stat- ute must he given meaning, if possible, and no vart declared inoperath'e if reasonably avoidable." OPIXIO~S OF THE ATTORNEY GENERAL 135 If a corporation were authorized . to pro\'ide in its articles an absolute grant of power to its board of dire(,~ tors to sell all the corporate assets, at the pleasure of tl)e board, such corpora- tion would be empowered to ahsolutely nullify section 6004, supra, We are therefore of the opinion that paragraph "Xint'h" on sheet 7 is re- pugnant to section 6004, as amended. and must be eliminated.