Page images
PDF
EPUB

stituted by statute), rectors, wardens of a parochial church, and some others; who by common law have ever been held (as far as our books can show us) to have been corporations virtute officii: and this incorporation is so inseparably

exist upon the subject, the organization of a corporation depends upon the acts of those individuals who are engaged in its formation. In all such enterprises it is essential to the validity of the proceedings that they are strictly in accordance with the statute authorizing them. Where a state constitution prohibits the creation of corporations except by general laws, the mere recognition of a corporate body, as an existing body, in acts of the legislature, cannot operate to give such organization validity. Oroville, etc., R. R. Co. v. Plumas County, 37 Cal. 354.

Although a state has power, by its constitution, to create corporations by special legislation, yet if the acts for the incorporation of a company are not completed until a new constitution is in force which prohibits such legislation, the corporation will not be valid if founded on such special act. State v. Dawson, 16 Ind. 40; Gillespie v. Fort Wayne, etc., R. R. Co., 18 id. 243. Where an act of incorporation is passed before such a constitution takes effect, but it is not accepted nor the incorporation perfected until thereafter, a bill in equity will not lie to set aside conveyances of land made for the purchase of stock, after that time, if such lands have been conveyed by the corporation to innocent third parties. Brown v. Phillips, 16 Iowa, 210; Snyder v. Studebaker, 19 Ind. 462. And, although a constitution prohibits such special incorporations, yet the act may operate as a legislative license for the acts authorized. Brent v. State, 43 Ala. 297.

Where corporations are organized under and by virtue of general statutes, the parties engaged in the organization must observe and follow the mode prescribed by the statutes. An illegally organized corporation has no valid existence. Commonwealth v. France, 3 Brews. (Penn.) 148.

If a corporation, so called, has no legal existence, because it has no legal organization, it is to be treated as a partnership. Hill v. Beach, 1 Beasley (N. J.), 31; Wells v. Gates, 18 Barb. 554.

The articles of incorporation, of a corporation organized under general statutes, must specify the objects of such corporation. West v. Bullskin Prairie Ditching Co., 32 Ind. 138; O'Reiley v. Kankakee Valley Draining Co., id. 169.

Where such general statutes declare that, when the certificate of the formation of the company shall have been filed as required by such statutes, the subscribers and their successors shall be a corporation, the filing of such certificate in the offices, and in substantially the manner prescribed, is essential to constitute the corporation. Childs v. Smith, 55 Barb. 45, 53; S. C., 38 How. Pr. 328; Baker v. Adm'r of Backus, 32 Ill. 79; Field v. Cooks, 16 La. An. 153; Tarbell v. Page, 24 Ill. 406.

But no one but the state can raise the question, as that cannot be done collaterally. Ib. A corporation will be estopped from setting up, in defense of an action against it, that the certificate of its incorporation is false. Dooley v. Cheshire Glass Co., 15 Gray, 494.

So a stockholder, when sued to enforce his individual liability, will not be permitted to allege defects in the proceedings to organize the corporation. Eaton v. Aspinwall, 19 N. Y. (5 Smith) 119.

Where the statute requires the certificate of incorporation to state the names of the city, or town and county in which the principal place of business is to be located, it will not be a compliance to state that the operations of the corporation are to be carried on in a specified county in the state. Harris v. McGregor, 29 Cal. 124.

When the provisions of such general statutes have been complied with, the corporators and their associates become a body corporate, and its existence does not depend upon the election of, or the right to elect, directors. Ashtabula, etc., R. R. Co. v. Smith, 15 Ohio St. 328.

No particular form of words is required to form a corporation. Commonwealth v. Westchester R. R. Co., 3 Grant (Penn.), 200.

A strict literal compliance with the requirements of the statute is not essential, and the proceedings will not be held invalid for slight defects or omissions. Spring Valley Waterworks v. San Francisco, 22 Cal. 434; West v. Crawfordville and Alamo Turnpike Co., 19 Ind. 242; Mokelumne, etc., Co. v. Woodbury, 14 Cal. 424; Tarbell v. Page, 24 Ill. 46; West Win

annexed to their respective offices, that we cannot frame a complete legal idea of any of these persons, unless we have at the same time the idea of a corporation, capable of transmitting rights to its successors. Another method of impli

sted Savings Bank, etc., v. Ford, 27 Conn. 282; Eakright v. Logansport, etc., R. R. Co., 13 Ind. 404.

The act of incorporation, and evidence tending to show that the company had gone into operation, and showing acts of user of the powers conferred, is prima facie proof of its legal existence as a corporation. Merchants' Bank v. Harrison, 39 Mo. 433; Memphis, etc., Plank Road Co. v. Rives, 21 Ark. 302; Leonardsville Bank v. Willard, 25 N. Y. (11 Smith) 574; Wilmington, etc., R. R. Co. v. Thompson, 7 Jones' Law (N. C.), 387; President, Trustees, etc., v. Thompson, 20 Ill. 197; Came v. Brigham, 39 Me. 35; Eastern Plank Road Co. v. Vaughan, 20 Barb. 155; 14 N. Y. (4 Kern.) 546. Where corporations are organized under general statutes, a duly certified copy of the articles of association, which have been properly filed, with proof that the corporation has gone into operation, and of acts of user under the articles, is sufficient to prove the existence of the corporation. Ib.

The construction of a charter, or of articles of association under a statute, is to be similar to that of other written instruments, but strictly as against the corporation. Rice v. Minnesota & North Western R. R. Co.,1 Black (U. S.), 358; State v. Noyes, 47 Me. 189; Bank of Pennsylvania v. Commonwealth, 19 Penn. St. 144; Justices, etc., v. Griffin & West Point Plank Road Co.,9 Ga. 213; Perrine v. Chesapeake & Delaware Canal Co., 9 How. (U. S.) 172; Providence Bank v. Billings, 4 Pet. 514; Bradley v. N. Y. & N. H. R. R. Co., 21 Conn. 306; Reed v. Toledo, 18 Ohio, 161.

Under a statute providing for the incorporation of benevolent, charitable, literary, scientific, missionary or mission or other Sabbath schools, the secretary of state is not required to file a certificate for the organization of a corporation not authorized by the statute. People v. Nelson, 46 N. Y. (1 Sick.) 447.

Expressions in an act of incorporation must be construed in subordination to the declared purposes of the act, and in accordance with all its provisions. Bennett's Appeal, 65 Penn. St. 242.

Mere general words in a charter do not authorize the corporation to do acts which are prohibited by the general public law of the state; for such words will be construed in subordination to the general law. State v. Krebs, 64 N. C. 604; Babcock v. New Jersey Stock Yard Co., 20 N. J. Eq. (5 C. E. Green) 296; Jersey City v. Morris Canal Co., 1 Beasley (N. J.), 547.

A clause in the charter of a private corporation declaring it to be a public act will cause a supplement to the act to be construed as a public act. Stephens, etc., Transp. Co. v. Central R. R. Co., 33 N. J. L. (4 Vroom) 229.

A state is not included in the term "corporation," as used in the internal revenue acts of congress. Georgia v. Atkins, 35 Ga. 315.

A corporation is the creature of the law, and derives its powers from the act of incorporation; but it is not limited to the exercise of powers specifically granted, and it possesses all such powers as are either necessarily incident to those specified, or are essential to the purposes and objects of its corporate existence. Le Coteulx v. City of Buffalo, 33 N. Y. (6 Tiff.) 333; Baltimore v. Baltimore, etc., R. R. Co., 21 Md. 50; Western Bank v. Tallman, 17 Wis. 530; Perkins v. Portland, etc., R. R. Co., 47 Me. 573; Burtis v. Buffalo, etc., R. R. Co., 24 N. Y. (10 Smith) 269; Downing v. Mount Washington, etc., Co., 40 N. H. 230.

But the powers of all corporations are limited by the grants in their charters, and cannot be extended beyond them. Ib.; Petersburg v. Metzker, 21 Ill. 205; Madison, etc., Co. v. Watertown, etc., Co., 7 Wis. 59; City Council of Montgomery v. Plank Road Co., 31 Ala. 76 ; Smith v. Merse, 2 Cal. 524.

The power of counties, towns or municipal corporations to issue bonds in aid of railroad corporations, when authorized by statute to issue them, is settled in many cases. Gelpcke v. City of Dubuque, 1 Wall. (U. S.) 175; Ex parte Selma, etc., R. R. Co., 45 Ala. 696, 724; Gibson v. Mason, 5 Nev. 283; Lee County v. Rogers, 7 Wall. (U. S.) 181; Beloit v. Morgan, id. 619; Supervisors of Mercer County v. Hubbard, 45 Ill. 139; Campbell v. Kenosha, 5 Wall. (U. S.) 194; Armstrong v. Brinton, 47 Penn. St. 367; Seybert v. Pittsburg, 1 Wall. (U. S.) 272; Commonwealth v. Perkins, 43 Penn. St. 400; Curtis v. Butler, 24 How. (U. S.) 435. The VOL. I.-50

cation, whereby the crown's consent is presumed, is in the case of a corporation by prescription, such as the city of London; and many other corBy prescription. porations(x) have existed as such, time whereof the memory of man runneth not to the contrary, and therefore are looked upon in law to be

(x) 2 Inst. 330. The two universities claim to be corporations by prescription (see R. v. Chancellor of Cambridge, 1 Stra. 557), though

they were incorporated anew, and their ancient privileges confirmed by stat. 13 Eliz. c. 29.

power has also been denied. See Hansen v. Hannon, 27 Iowa, 28; 1 Am. Rep. 215; Whiting v. Sheboygan Railway Co., 25 Wis. 167; 3 Am. Rep. 310; People v. Township Board of Salem, 20 Mich. 452; 3 Am. Rep. 400, and see also article in 8 Albany Law Jour. 195. But towns, etc., cannot be compelled by statute to subscribe for stock, or to give bonds in exchange for stock in aid of such roads without the consent of such towns, etc. People ex rel. Dunkirk, etc., Railroad Co. v. Batcheller, 8 Albany Law Jour. 120.

Defects in the charter, or in the mode of incorporation, may be cured by subsequent legislation for that express purpose, or by acts of legislation recognizing the validity of the corporation. Kanawha Coal Co. v. Kanawha, etc., Coal Co., 7 Blatchf. 391; Goodrich v. Reynolds, 31 Ill. 490; Black River, etc., R. R. Co. v. Barnard, 3 Barb. 258; Danbury & Norwalk R. R. Co. v. Wilson, 22 Conn. 435; White v. Ross, 15 Abb. Pr. 66; Illinois, etc., R. R. Co. v. Cook, 29 Ill. 237.

Until a charter passed by special act has been duly accepted, there will be no valid corporation; nor will the corporators named in it be bound by it before such acceptance, either expressly, or by acts done under such charter. State v. Dawson, 16 Ind. 40; Illinois River R. R. Co. v. Zimmer, 20 Ill. 654; Haslett v. Wotherspoon, 1 Strobh. Eq. 209; Goddard v. Pratt, 16 Pick. 412; Ellis v. Marshall, 2 Mass. 269; Lincoln & Ken. Bank v. Richardson, 1 Greenl. 79; Bailey v. Mayor, etc., of N. Y., 3 Hill, 531; Talledaga Ins. Co. v. Sanders, 43 Ala. 115. Where an act amendatory of a charter contains no provision requiring a formal acceptance of it, acceptance may be implied from corporate acts. Bangor, etc., R. R. Co. v. Smith, 47 Me. 34; Smead v. Indianapolis, etc., R. R. Co., 11 Ind. 104; Taylor v. Newberne, 2 Jones' Eq. (N. C.) 141; Blandford v. Gibles, 2 Cush. 39; Commonwealth v. Cullen, 13 Penn. St. 133; Goodin v. Evans, 18 Ohio St. 150.

Where a corporation is organized under a general law, no acceptance of the charter is required. Spring Valley Water Works v. San Francisco, 22 Cal. 434.

A statute which grants a new franchise to an existing corporation, upon specified conditions, is inoperative until accepted. Lynn v. Orange, etc., R. R. Co., 32 Md. 18.

A corporation having organized under a charter containing a disadvantageous provision will be estopped from denying its validity. Durye v. Horicon, etc., Co., 22 Wis. 417.

Every corporation must be regarded as having some place of organization, existence and business. A corporation established under the laws of one state has its domicile there exclusively, although the offices of its treasurer and general superintendent are in another state, and a part of its business transacted there. Baltimore, etc., R. R. Co., v. Glenn, 28 Md. 287; Fish v. Rock Island, Chicago & Pacific R. R. Co., 53 Barb. 472; 3 Abb. N. S. 453; Camden, etc., Co. v. Swede Iron Co., 3 Vroom (N. J.), 15; Talmadge v. North American Coal, etc., Co., 3 Head (Tenn.), 337; Union Branch R. R. Co. v. East Tennessee and Georgia R. R. Co., 14 Ga. 327; Day v. Newark India Rubber Manuf. Co., 1 Blatchf. 628; Merrick v. Van Santvoord, 34 N. Y. (7 Tiff.) 208.

A corporation formed in California, for mining purposes, may hold land in Nevada. Whitman, etc., Mining Co. v. Baker, 3 Nev. 386. See State v. Boston, etc., R. R. Co., 25 Vt. 433; Lumbard v. Aldrich, 8 N. H. 31.

A steamboat company, incorporated in one state, may take a lease of an office in another state. Steamboat Co. v. McCutcheon, 13 Penn. St. 13.

A corporation organized in one state does not become a corporation of another state, merely by being authorized by the latter state to hold lands, and lease property, and transact business there. State v. Delaware, etc., R. R. Co., 1 Vroom (N. J.), 473.

Corporations created in one state may transact business in another state, if not inconsistent with the laws and policy of the latter, nor in violation of its charter. Connecticut, etc., Ins. Co. v. Cross, 18 Wis. 109; Bard v. Poole, 12 N. Y. (2 Kern.) 495.

They may loan money and take securities, and enforce them in another state. New York

well created. For though the members thereof can show no legal charter of incorporation, yet in cases of such high antiquity, the law presumes there once was one; and that by the various accidents which length of time may produce,

Dry Dock v. Hicks, 5 McLean, 111; Farmers' Loan and Trust Co. of N. Y. v. McKinney, 6 McLean, 1; American Ins. Co. v. Owen, 15 Gray, 491. But where a corporation of one state exercises its corporate franchises in another state, it is only done by the comity of the latter. Liverpool Ins. Co. v. Massachusetts, 10 Wall. 566.

The failure to describe in a charter the place of business of the corporation cipal place of business," is a technical omission and does not avoid the charter. Valley, etc., Works, 17 Cal. 132.

[ocr errors]

as the prin In re Spring

A corporation cannot exist under charters from two separate states; in contemplation of law, each charter creates a legal entity to be recognized within its own state, though the same corporators may compose both entities. Ohio, etc., R. R. Co. v. Wheeler, 1 Black (U. S), 286. But if incorporated in that manner, it may sue or be sued as an inhabitant of that state where its principal place of business is situated, and its records kept. Culbertson v. Wabash Navigation Co., 4 McLean, 544. See Minot v. Philadelphia, etc., R. R. Co., 2 Abb. (U. S.) 323. And a valid corporation may be created by the concurrent action of two or more states. Bishop v. Brainard, 28 Conn. 289; Commonwealth v. Pillsbury, etc., R. R. Co., 58 Penn. St. 26. A corporation is regarded as a citizen of the state where it was created, for the purpose of suing or being sued in the United States courts, or for the removal of a cause from the state courts to the courts of the United States. Hatch v. Chicago, etc., R. R. Co., 6 Blatchf. 105; Stevens v. Phenix Ins. Co., 41 N. Y. (2 Hand) 149; Marshall v. Baltimore & Ohio R. R. Co., 16 How. (U. S.) 314; Covington Bridge Co. v. Shepherd, 20 id. 227, 232.

But a corporation aggregate is not considered as a citizen, or entitled to the privileges of one, for any other purpose Tatem v. Wright, 3 Zabr. 66. A corporation is not a "citizen " within the meaning of the United States constitution, which declares that "the citizens of each state shall be entitled to all the privileges and immunities of citizens in the several states." Paul v. Virginia, 8 Wall. (U. S.) 168 ; Liverpool Ins. Co. v. Massachusetts, 10 id. 566. It is the creation of local law, and has no absolute right of recognition in another state, which may permit them to act upon such terms as they choose to prescribe. Ib.

The right to question the validity of the charter or organization of a corporation belongs exclusively to the state, and such validity cannot be questioned collaterally. Cochran v. Arnold, 58 Penn. St. 399; Tisdale v. Miononk, 46 Ill. 9; Chamberlain v. Painesville, etc., R. R. Co., 15 Ohio St. 225; Taggart v. Western, etc., R. R. Co., 24 Md. 563; Bank of Missouri v. Snelling, 35 Mo. 190; Goodrich v. Reynolds, 31 Ill. 490; Mokelumne, etc., Co. v. Woodbury, 14 Cal. 424; Wright v. Shelby R. R. Co., 16 B. Monr. 4; Union Branch R. R. Co. v. East Tenn. & Ga. R. R. Co., 14 Ga. 327; Rondell v. Fay, 32 Cal. 354.

Where there are no rights involved under the act of incorporation, and such incorporation is specified in a contract as the event upon which a sum of money is to become due, the question of incorporation may be raised for the purpose of determining whether the money is due; and in such litigation the regularity and validity of the incorporation may be contested. Childs v. Smith, 55 Barb. 45; 38 How. Pr. 328; S. C. reversed on other grounds, 46 N. Y. (1 Sick.) 34.

It is a general rule that a party who contracts with a corporation, or what purports to be such, will afterward be estopped from questioning the existence or the validity of such corporation. McBroom v. Lebanon, 31 Ind. 268; Camp v. Byrne, 41 Mo. 525; Smith v. Davis, 2 Duval (Ky.), 17; Cochran v. Arnold, 58 Penn. St. 399; Franz v. Teutonia Building Association, 24 Md. 259; Wood v. Coosa, etc., R. R. Co., 32 Ga. 273; Hyatt v. Whipple, 37 Barb. 595; Eppes v. Mississippi R. R. Co., 35 Ala. 33; Tarbell v. Page, 24 III. 46.

So, on the other hand, it is a general rule that an alleged corporation which enters into a contract as a corporation, will not be permitted to deny the existence or the validity of the corporation, nor its power to make such contract. Callender v. Hudson, etc., R. R. Co., 11 Ohio St. 516; Carey v. Cincinnati, etc., R. R. Co., 5 Clarke (Iowa), 357.

But it has been held that a corporation may avail itself of its want of authority to make the contract sought to be enforced against it, though it has received and enjoyed the consideration on which it was made. Albert v. Savings Bank of Baltimore, 1 Md. Ch. Dec. 407 Abbott v. Balt. & Rapp. Steam Packet Co., id. 542.

the charter has been lost or destroyed. The royal consent is expressly given, By act of parlia- either by act of parliament or by charter. By act of parliament, of which the royal assent is a necessary ingredient, corporations may undoubtedly be created (y); but it is observable, that (till of late years)

ment.

(y) 1 Roll. Abr. 512.

Two or more corporations may be consolidated, and form a new corporation. Blatchford v. Ross, 54 Barb. 42; 37 How. Pr. 110; 5 Abb. (N. S.) Pr. 434; McVicker v. Ross, 55 Barb. 247; Commonwealth v. Atlantic, etc., R. R. Co., 53 Penn. St. 9; State v. Bailey, 16 Ind. 46. But the rights of the old stockholders who do not enter into the new corporation must be provided for and protected. Ib.

Where two corporations are merged in a new one, by authority of law, the new company stands in the place of the old companies, and may enforce their rights and is subject to their liabilities. Miller v. Lancaster, 5 Cold. (Tenn.) 514; Indianapolis, etc., R. R. Co. v. Jones, 29 Ind. 465; Baltimore, etc., R. R. Co. v. Musselman, 2 Grant's Cas. (Penn.) 348; McCray v. Junction R. R. Co., 9 Ind. 358.

Subscriptions for shares of stock are founded upon a sufficient consideration in the right to such shares, and an action will lie for the recovery of the amount subscribed. Merrimac Mining Co. v. Levy, 54 Penn. St. 227; Richmondville Seminary v. McDonald, 34 N. Y. (7 Tiff.) 379; Smith v. Davis, 2 Duval (Ky.), 17; East Tennessee & Va. R. R. Co. v. Gammon, 5 Sneed (Tenn.), 567.

Conditional subscriptions have been held to be binding upon the corporation, and unless the conditions are complied with or performed, no action lies upon the subscription. Nashville, etc., R. R. Co. v. Jones, 2 Cold. (Tenn.) 574; Chase v. Sycamore, etc., R. R. Co., 38 Ill. 215; Beloit, etc., R. R. Co. v. Palmer, 19 Wis. 574; Pittsburg, etc., R. R. Co. v. Stewart, 41 Penn. St. 54; Burrows v. Smith, 10 N. Y. (6 Seld.) 550; Martin v. Pensacola, etc., R. R. Co.,8 Fla. 370; Rives v. Plank Road Co., 30 Ala. 92; Oldtown, etc., R. R. Co. v. Veazie, 39 Me. 571; Junction R. R. Co. v. Reeve, 15 Ind. 236.

But upon the performance of the condition the subscription becomes absolute, and may be enforced. Chamberlain v. Painesville, etc., R. R. Co., 15 Ohio St. 225; Smith v. Allison, 23 Ind. 366; Miller v. Pittsburg, etc., R. R. Co., 40 Penn. St. 237; North Missouri, etc., R. R. Co. v. Miller, 31 Mo. 19; Spartanburg, etc., R. R. Co. v. De Graffenreid, 12 Rich. Law (S. C.), 675.

So a party may waive the condition. Parks v. Evansville, etc., R. R. Co., 23 Ind. 567; Evansville, etc., R. R. Co. v. Dunn, 17 id. 603. See Parker v. Thomas, 19 Ind. 213.

Conditional subscriptions have been held to be entirely void. Fort Edward, etc., Plank Road Co. v. Payne, 15 N. Y. (1 Smith) 583; Butternuts, etc., Turnp. Co. v. North, 1 Hill, 518. The cases on this question may perhaps be harmonized, if the conditional subscription before organization is held void, while those made after that time are valid.

Conditional subscriptions have also been held to be of no effect, and the subscription was enforced as though it had been absolute or unconditional. Bedford, etc., R. R. Co. v. Bowser, 48 Penn. St. 29; Bacington v. Pittsburg, etc., R. R. Co., 34 id. 358. If made before the corporation is organized. Pittsburg, etc., R. R. Co. v. Stewart, 41 id. 54. Where the payment of

a specified percentage at the time of the subscription is required by law or the articles of association, but there is no payment made at that time, a subsequent payment of the full amount will render the subscription binding. Black River, etc., R. R. Co. v. Clarke, 25 N. Y. (11 Smith) 208; Barrington v. Mississippi Central R. R. Co., 32 Miss. 370; Klein v. Alton, etc., R. R. Co., 13 Ill. 514.

So if the payment is made by a stranger and his act is ratified by the subscriber. Mississippi, etc., R. R. Co. v. Harris, 36 Miss. 17.

So if he acts as a member in the meetings of the company, and in the regulation of its affairs, he will be bound. Heywood, etc., Plank Road Co. v. Beyan, 6 Jones' Law (N. C.), 82. See Piscataqua Ferry Co. v. Jones, 39 N. H. 491.

But where the charter provided that no subscription should be received and allowed without the payment of a specified sum on each share at the time of subscription, it was held that a subscription without such payment did not invest the subscriber with any of the privileges of a corporator, nor render him liable as a subscriber, stockholder or otherwise.

« PreviousContinue »