contract of Moore, Moore & Handley, are denied by the answer, and hence cannot be considered in passing on the decree overruling the motion to dissolve the injunction. Those allegations of the bill which are not denied were not sufficient to authorize a continuance of the injunction, and the decree on that point was erroneous, and is reversed.

The contract relied on here is such a one as the respondent corporation could have made under its charter. It is, therefore, one which, being already in existence between complainant and the individuals composing the defendant company, the corporation had the power to ratify and adopt. The bill, in our judgment, sufficiently avers such ratification or adoption. The allegations give equity to the bill, and the decree overruling the demurrer is affirmed. The cause will be remanded, with instructions to the chancellor to dissolve the injunction, unless the complainant amends its bills so as to entitle it to a continuance of the writ, under the principles we have announced.

Reversed and remanded.

Conversion of Corporate Property.- Stockholders cannot maintain an action, in their individual names, for the alleged wrongful conversion of the corporate money or property, but the right of action therefor is in the corporation. Tomlinson v. Bricklayers' Union, 87 Ind. 308.

Title of Corporate Property.—A stockholder of a solvent corporation, who becomes the owner of all the shares of stock of said corporation, does not thereby acquire any estate or title in the real estate of the corporation. It continues the property of the corporation, and the corporation alone can convey or transfer it. Parker v. Bethel Hotel Co., 96 Tenn. 252.

Intent to Defraud.― Intent to defraud creditors by using corporate capacity as a cloak must clearly appear, or be conclusively shown. First National Bank v. Wood, 86 Hun (N. Y.) 491. See also Moore, etc., Co. v. Handley, etc., Co., above reported.

Stockholders interest is distinct from that of the Corporation.—The owner of stock in a corporation organized for pecuniary profit, has by reason of such ownership, an insurable interest in the corporate property. Warren v. The Davenport Fire Ins. Co., 31 Iowa, 464; see also Riggs. v. Insurance Co., 125 N. Y. 7, and Seaman v. Enterprise Ins. Co., 18 Fed. Rep. 250.- ED.

(f) The Corporation as Distinguished from a Joint Stock

Company.

PEOPLE ex rel. WINCHESTER, TREASURER, ETC. v. COLEMAN, et al., TAX COMMISSIONERS.

133 New York Reports 279 (1902).

Appeal from Supreme Court, General Term, First Department. Proceedings on the relation of Locke W. Winchester, as treasurer of the National Express Company, to review the action of the tax commissioners in taxing the company on its capital stock as a corporation. From a judgment of the General Term, affirming a judgment of the Special Term vacating the assessment, the commissioners appeal. Affirmed.

FINCH, J. The relator was taxed upon its capital, on the ground that it had become a corporation, within the meaning of the provision of the Revised Statutes which enacts that all moneyed or stock corporations deriving an income or profit from their capital, or otherwise, shall be liable to taxation on their capital in the manner hereinafter prescribed." I Rev. St. p. 1, c. 13, tit. 4. § 1. The company was formed as a joint-stock company or association, in 1853, by a written agreement of eight individuals with each other, the whole force and effect of which, in constituting and creating the organization, rested upon the common-law rights of the individuals and their power to contract with each other. The relation they assumed was wholly the product of their mutual agreement and dependent in no respect upon the grant or authority of the state. It was entered into under no statutory license or permission, neither accepting nor designed to accept any franchise from the sovereign, but founded wholly upon the individual rights of the associates to join their capital and enterprise in a relation similar to that of a partnership. A few years earlier the legislature had explicitly recognized the existence and validity of such organizations, founded upon contract, and evolved from the common-law rights of the citizens. Laws 1849, c. 258. That act provided that any joint-stock company or association which consisted of seven or more members might sue or be sued in the name of its president or treasurer, and with the same force and effect, so far as the joint property and rights are concerned, as if the suit should be prosecuted in the names of the associates; but the act explicitly disclaimed any purpose of converting the joint-stock associations recognized as existing into corporations by a section. prohibiting any such construction. Section 5. In 1851 the act was

amended in its form and application, but in no respect material to the present inquiry. There is no doubt, therefore, that when the company was formed and went into operation, the law recognized a distinct and substantial difference between joint-stock companies and corporations, and never confused one with the other; and that the existing statute which taxed the capital of corporations had no reference to or operation upon joint-stock companies or associations. But two things have since occurred. The legislature, while steadily preserving the distinction of names, has, with equal persistence, confused the things by obliterating substantial and characteristic marks of difference, until it is now claimed that the joint-stock associations have grown into and become corporations by force of the continual bestowal upon them of corporate attributes. It is said, and very probably correctly said, that the legislature may create a corporation without explicitly declaring it to be such, by the bestowal of a corporate franchise or corporate attributes, and the cases of banking associations are referred to as instances of actual occurrence. Thomas v. Dakin, 22 Wend. 9; Bank v. Watertown, 25 Wend. 686; People v. Niagara, 4 Hill. 20. It is added that such result may happen even without the legislative intent, and because the gift of corporate powers and attributes is tantamount to a corporate creation. It is then asserted that a series of statutes, beginning with the act of 1849, has ended in the gift to joint-stock associations of every essential attribute possessed by and characteristic of corporations (Laws of 1853, c. 53; Laws 1854, c. 245; Laws 1867, c. 289), that the lines of distinction between the two, however far apart in the beginning, have steadily converged, until they have melted into each other and become identical; that every distinguishing mark and characteristic has been obliterated, and no reason remains why joint-stock associations should not be, in all respects, treated and regarded as corporations. Some of this contention is true. The case of People v. Wemple, 117 N. Y. 77, 22 N. E. Rep. 1046, shows very forcibly how almost the full measure of corporate attributes has, by legislative enactment, been bestowed upon jointstock associations, until the difference, if there be one, is obscure, elusive and difficult to see and describe. And yet the truth remains that all along the line of legislation the distinctive names have been retained as indicative and representative of a difference in the organizations themselves. As recently as the acts of 1880 and 1881, which formed the subject of consideration in the Wemple case, the legislature, dealing with the subject of taxation, and desiring to tax business and franchises, imposed the liability upon "every corporation, joint-stock company, or association whatever, now or hereafter incorporated or organized under any law of this state." It is

significant that the words "or organized" were inserted by amendment, and evidently for the understood reason that joint-stock companies could not properly be said to be "incorporated," but might be correctly described as "organized" under the laws of the state. This persistent distinction in the language of the statutes I should not be inclined to disregard or treat as of no practical consequence, when seeking to arrive at the true intent and proper construction of the statute, even if I were unable to discover any practical or substantial difference between the two classes of organizations upon which it could rest or out of which it grew; for the distinction so sedulously and persistently observed would strongly indicate the legislative intent, and so the correct construction.

But I think there was an original and inherent difference between the corporate and joint-stock companies, known to our law, which legislation has somewhat obscured, but has not destroyed, and that difference is the one pointed out by the learned counsel for the respondent, and which impresses me as logical and well supported by authority. It is that the creation of the corporation merges in the artificial body and drowns in it the individual rights and liabilities of the members, while the organization of a joint-stock company leaves the individual rights and liabilities unimpaired and in full force. The idea was expressed in Supervisors of Niagara v. People, 7 Hill, 512, and in Gifford v. Livingston, 2 Denio, 380, by the statement that the corporators lost their individuality and merged their individual characters into one artificial existence; and upon these authorities a corporation is defined, on behalf of the respondents, to be "an artificial person created by the sovereign from natural persons, and in which artificial person the natural persons of which it is composed become merged and non-existent." I am conscious that legal definitions invite and provoke criticism, because the instances are rare in which they prove to be perfectly accurate; and yet this one offered to us may be accepted, if it successfully bears some sufficient test. In putting it on trial, we may take the nature of the individual liability of the corporators on the one hand, and of the associates on the other, for the debts contracted by their respective organizations, as a sufficient test of the difference between them, and contrast their nature and character. It is an essential and inherent characteristic of a corporation that it alone is primarily liable for its debts, because it alone contracts them, except as that natural and necessary consequence of its creation is modified in the act of its creation by some explicit command of the statute which either imposes an express liability upon the corporators in the nature of a penalty, or affirmatively retains and preserves what would have been the common law liability of the members

from the destruction involved in the corporate creation. In other words, the individual liability of the members, as it would have existed at common law, is lost by their creation into a corporation, and exists thereafter only by force of the statute, upon some new and modifying conditions, to some partial or changed extent, and so far preventing by the intervention of an express command the total destruction of individual liabilities which otherwise would flow from the inherent effect of the corporate creation. The penalties sometimes imposed are of course new statutory liabilities which never, at common law, rested upon the individual members. The retained liability occasionally established is in the nature and a parcel of such original liability, as we had occasion to show in Rogers v. Decker, 131 N. Y. 490, 30 N. E. Rep. 571, but is retained by force of the express command of the statute, and in that manner saved from the destruction which otherwise would follow the simple creation of the corporation. Ordinarily these individual liabilities exist upon other than common law conditions, and make the corporators rather sureties or guarantors of the corporation than original debtors, since in general their liability arises after the usual remedies against the corporation have been exhausted. But, where that is not so, the invariable truth is that the creation of the corporation necessarily destroys the common-law liability of the individual members for its debts, and requires at the hands of the creating power an affirmative imposition of new personal liabilities, or a specific retention of old ones from the destruction which would otherwise follow. Exactly the opposite is true of joint-stock companies. The formation destroys no part or portion of their common-law liability for the debts contracted. Those debts are their debts for which they must answer. Permission to sue their president or treasurer is only a convenient mode of enforcing that liability, but in no manner creates or saves it. The statute of 1853 did interfere with it. That act required, in the first instance, a suit against the president or treasurer, and so a preliminary exhaustion of the joint property. But that act was modal, and determined the procedure. It suspended the common-law right, but recognized its existence. We so held in Witherhead v. Allen, 4 Abb. Dec. 628, and at the same time said that the associations were not corporations, but mere partnership concerns. Even that mode of procedure has been modified by the Code (sections 1922, 1923), so that the creditor, at his option, may sue the associates without bringing his action against the president or treasurer. These last and quite. recent enactments show that the legislative intent is still to preserve and not destroy the original difference between the two classes of organizations; to maintain in full force the common-law liability of