Corporations

A corporation is a franchise possessed by one or more individuals, who subsist as a body politic, under a special denomination, and are vested, by the policy of the law, with the capacity of perpetual succession, and of acting, in several respects, however numerous the association may he, as a single individual.

The object of the institution is to enable the members to act by one united will, and to continue their joint powers and property in the same body, undisturbed by the change of members, and without the necessity of perpetual conveyances, as the rights of members pass from one individual to another. All the individuals composing a corporation, and their successors, are considered in law but as one moral person, capable, under an artificial form, of taking and conveying property, contracting debts and duties, and of enjoying a variety of civil and political rights. One of the peculiar properties of a corporation, is the power of perpetual succession; for, in judgment of law, it is capable of indefinite duration. The rights and privileges of the corporation do not determine, or vary, upon the death or change of any of the individual members. They continue as long as the corporation endures. It is sometimes said, that a corporation is an immortal, as well as an invisible and intangible being. But the immortality of a corporation means only its capacity to take in perpetual succession so long as the corporation exists. It is too far from being immortal, that it is well known, that most of the private corporations recently created by statute, are limited in duration to a few years. There are many corporate bodies that are without limitation, and, consequently, capable of continuing so long as a succession of individual members of the corporation remains, and can be kept up.

It was chiefly for the purpose of clothing bodies of men in succession, with the qualities and capacities of one single, artificial, and fictitious being, that corporations were originally invented, and, for the same convenient purpose, they have been brought largely into use. By means of the corporation, many individuals are capable of acting in perpetual succession like one single individual, without incurring any personal hazard or responsibility, or exposing any other property than what belongs to the corporation in its legal capacity.

I. Of the History of Corporations.

Corporations were well known to the Roman law, and they existed from the earliest periods of the Roman republic. It would appear, from a passage in the Pandects,¹ that they were copied from the laws of Solon, who permitted private companies to institute themselves at pleasure, provided they did nothing contrary to the public law. But the Romans were not so indulgent as the Greeks. They were very jealous of such combinations of individuals, and they restrained those that were not specially authorized; and every corporation was illicit that was not ordained by a decree of the senate, or of the emperor.² A collegia licita, in the Roman law, was like our incorporated companies, a society of men united for some useful business or purpose, with power to act like a single individual; and if they abused their right, or assembled for any other purpose than that expressed in their charter, they were deemed illicita, and many laws, from the time of the twelve tables down to the times of the emperors, were passed against all illicit or unauthorized companies.³ In the age of Augustus as we are informed by Suetonius,⁴ certain corporations had become nurseries of faction and disorder, and that emperor interposed, as Julius Caesar had done before him;⁵ and dissolved all but the ancient and legal corporations — cuncta collegia, praeter antiquitus constituta, distraxit. We find, also, in the younger Pliny,⁶ a singular instance of the extreme jealousy indulged by the Roman government of these corporations. A destructive fire in Nicomedia, induced Pliny to recommend to the emperor Trajan the institution, for that city, of a fire company of 150 men, (collegium fabrorum,) with an assurance, that none but those of that business should be admitted into it, and that the privileges granted them should not be extended to any other purpose. But the emperor refused the grant, and observed, that societies of that sort had greatly disturbed the peace of the cities; and he observed, that whatever name he gave them, and for whatever purpose they might he instituted, they would not fail to be mischievous.

The powers, capacities, and incapacitates of corporations, under the English law, very much resemble those under the civil law; and it is evident, that the principles of law applicable to corporations under the former, were borrowed chiefly from the Roman law. Under the latter system, corporations were divided into ecclesiastical and lay, civil and eleemosynary. They could not purchase; or receive donations of land, without a license, nor could they alienate without just cause. These restraints bear at striking resemblance to the mortmain and disabling statutes in the English law. They could only act by attorney; and the act of the majority bound the whole, and they were dissolved by death, surrender, or forfeiture, as with us.⁷ Corporations or colleges for the advancement of learning, were entirely unknown to the ancients, and they are the fruits of modern invention. But, in the time of the latter emperors, the professors in the different sciences began to be allowed regular salaries from the government, and to become objects of public regulation and discipline. By the close of the third century, these literary establishments, and particularly the schools at Rome, Constantinople, Alexandria, and Berytus, began to assume the appearance of public institutions. Privileges and honors were bestowed upon the professors and students, and they were subjected to visitation and inspection by the civil and ecclesiastical powers.⁸ It was not, however, until after the revival of letters, or, at least, not until the 13th century, that colleges and universities began to confer degrees, and to attain some portion of the authority, influence, and solidity, which they enjoy at the present day.⁹ The erection of civil corporations, for political and commercial purposes, took place in the early periods of the history of modern Europe. Cities, towns and fraternities, were invested with corporate powers and privileges, and with a large civil and criminal jurisdiction. These immunities were sought after from a spirit of monopoly, and as barriers against feudal tyranny. They afforded protection to commerce and the mechanic arts, and formed some counterpoise to the exorbitant powers, and unchecked rapacity, of the feudal barons. By this means, order and security, industry, trade, and the arts, revived in Italy, France, Germany, Flanders, and England; and to the institution of corporations may be attributed, in some considerable degree, the introduction of regular government and stable protection, after Europe had, for many ages, been deprived, by the inundation of the barbarians, of all the civilization and science which had accompanied the Roman power.¹⁰

But although corporations were found to be very beneficial in the earlier periods of modern European history, their exclusive privileges have too frequently served as monopolies, checking the free circulation of labor, and enhancing the price of the fruits of industry. Dr. Smith¹¹ does not scruple to consider them, throughout Europe, as generally injurious to the freedom of trade, and the progress of improvement. The propensity in modern times has, however, been to multiply civil corporations, especially in the United States, where they have increased in a rapid manner, and to a most astonishing extent. This branch of jurisprudence becomes, therefore, an object of curious as well as of deeply interesting research. The multiplication of corporations, and the avidity with which they are sought, have arisen in consequence of the power which a large and consolidated capital gives them over business of every kind; and the facility which the incorporation gives to the management of that capital, and the security which it affords to the persons of the members, and to their property not vested in the corporate stock. The convention of the people of this state, when they amended the constitution, in 1821, endeavored to check the improvident increase of corporations, by requiring the assent of two thirds of the members elected to each branch of the legislature, to every bill, for creating, continuing, altering, or renewing, any body politic or corporate. Even this provision seems to have failed to mitigate the evil, for in the session of 1823, for instance, being the first session of the legislature, under the operation of this check, there were thirty-nine new private companies incorporated, besides numerous other acts, amending or altering charters. The various acts of incorporation of private companies, for banking, manufacturing, and insurance purposes; for turnpike roads and toll bridges; and for many other objects, upon which private industry, skill, and speculation, can be employed, constitute a mighty mass of charters, which occupy by far the largest part of the volumes of the statute law. The demand for acts of incorporation is continually increasing, and the propensity is the more striking, as it appears to be incurable; and we seem to have no moral means to resist it, as was done at Rome, by the unshaken determination of the Emperor Trajan. All these incorporations are contracts between the government and the company, which cannot ordinarily he affected by legislative interference; and it has, accordingly, been attempted to retain a control over these private incorporations, by a clause, now usually inserted in the acts of incorporation, that “it shall be lawful for the legislature, at any time thereafter, to alter, modify, or repeal the act.” The value and effect of this provision, we may hereafter consider; and with this general view of the rise and progress of corporations, I shall proceed to a more particular detail of the general principles of law, applicable to the subject.

II. Of the various kinds of Corporations.

Corporations are divided into aggregate and sole.¹² A corporation sole consists of a single person, who is made a body corporate and politic, in order to give him some legal capacities and advantages, and especially that of perpetuity, which, as a natural person, he could not have. A bishop, dean, parson, and vicar, are given in the English books as instances of sole corporations; and they and their successors in perpetuity, take the corporate property and privileges; and the word successors is generally as necessary for the succession of property in a corporation sole, as the word heirs is to create an estate of inheritance in a private individual.¹³ A fee will pass to a corporation aggregate, without the word successors in the grant, because it is a body, which, in its nature, is perpetual; but, as a general rule, a fee will not pass to a corporation sole, without the word successors, and it will continue for the life only of the individual clothed with the corporate character.¹⁴ There are very few points of corporation law applicable to a corporation sole. They cannot take personal property in succession, and their corporate capacity, in that respect, is confined to real property.¹⁵ Nor do I know of any person in this state, to whom this term may be strictly applicable. The corporations in use with us, may be considered as aggregate, or the union of two or more individuals in one body politic, with a capacity of succession and perpetuity. Besides the proper aggregate corporations, the inhabitants of any district, as counties, or towns, incorporated by statute, with particular powers, are sometimes called quasi corporations. No private action, unless given by statute, lies against them.¹⁶ Having no corporate fund, each inhabitant is liable to satisfy the judgment, if the statute gives a suit against such a community.¹⁷

Another division of corporations, by the English law, is into ecclesiastical and lay. The former are those of which the members arc spiritual persons, and the object of the institution is also spiritual. With us, they are called religious corporations. This is the description given to them in the act of this state, providing generally for the incorporation of religious societies,¹⁸ in an easy and popular manner, and for the purpose of managing with more facility and advantage, the temporalities belonging to the church or congregation. Lay corporations are again divided into eleemosynary and civil. An eleemosynary corporation, is a private charity, constituted for the perpetual distribution of the alms and bounty of the founder. In this class are ranked, hospitals, for the relief of poor, sick and impotent persons, and colleges and academies established for the promotion of learning and piety, and endowed with property, by public and private donations.¹⁹ Civil corporations are established for a variety of purposes, and they are either public or private. Public corporations, are such as exist for public political purposes only, such as counties, cities, towns, and villages. They are founded by the government, for public purposes, and the whole interest in them belongs to the public. But if the foundation be private, the corporation is private, however extensive the uses may be to which it is devoted by the founder, or by the nature of the institution. A bank, created by the government, for its own uses, and where the stock is exclusively owned by the government, is a public corporation. So a hospital created and endowed by the government, for general purposes, is a public, and not a private charity. But a bank, whose stock is owned by private persons, is a private corporation, though its objects and operations partake of a public nature. The same thing may be said of insurance, canal, bridge and turnpike companies. The uses may, in a certain sense, be called public, but the corporations are private, equally as if the franchises were vested in a single person. A hospital, founded by a private benefactor, is, in point of law, a private corporation, though dedicated by its charter to general charity. A college, founded and endowed in the same manner, is a private charity, though from its general and beneficent objects, it may acquire the character of a public institution. Though the uses of an eleemosynary corporation be for general charity, that alone will not constitute it a public corporation. Every charity, which is extensive in its, object, may, in a certain sense, be called a public charity. Nor will a mere act of incorporation change a charity from a private, to be a public one. The charter of the crown, said Lord Hardwicke,²⁰ cannot make a charity more or less public, but only more permanent. It is the extensiveness of the object that constitutes it a public charity. A charity may be public, though administered by a private corporation. A devise to the poor of a parish, is a public charity. The charity of almost every hospital and college, is public, while the corporations are private. To hold a corporation to be public, because the charity was public, would be to confound the popular with the strictly legal sense of terms, and to jar with the whole current of decisions since the time of Lord Coke.²¹

In England, corporations are created, and exist, by prescription, by royal charter, and by act of Parliament. With us they are created by authority of the legislature, and not otherwise. There are, however, several of the corporations now existing in this country, civil, religious, and eleemosynary, which owed their origin to the crown, under the colony administration. Those charters granted prior to the revolution, were upheld either by express provision in the constitutions of the states, or by general principles of public and common law of universal reception; and they were preserved from forfeiture, by reason of any nonuser or misuser of their powers, during the disorders which necessarily attended the revolution.

III. Of the Powers and Capacities of Corporations.

When a corporation is duly created, and a name given to it, (for that is an indispensable part of its constitution, and if no name be expressly given, one may be assumed by implication,)²² many powers rights, and capacities, are annexed to it. Some of them are deemed to be necessarily and inseparably incident to a corporation by tacit operation, without any express provision, though it is now very generally the practice, to specify, in the act or charter of incorporation, the powers and capacities with which it is intended to endow the corporation.

The ordinary incidents to a corporation are, 1. To have perpetual succession, and, of course, the power of electing members in the room of those removed by death or otherwise; 2. To sue and to be sued, and to grant and to receive, by their corporate name; 3. To purchase and hold lands and chattels; 4. To have a common seal; 5. To make bylaws for the government of the corporation; 6. The power of amotion, or removal of members. Some of these powers are to be taken, in many instances with much modification and restriction, and the essence of a corporation consists only of a capacity to have perpetual succession, under a special denomination, and art artificial form, and to take and grant property, contract obligations, and sue and be sued, by its corporate name, and to receive and enjoy, in common, grants of privileges and immunities.²³ According to the doctrine of Lord Holt²⁴ neither the actual possession of property, nor the actual enjoyment of franchises, are of the essence of a corporation.

There are some persons who have a corporate capacity only for one particular specified end. Thus, the loan officers of each county of this state, created under the act of 18th of April, 1786, were declared to be bodies politic and corporate, with powers necessary for the due execution of the loan office act. The overseers of the poor in each town, are invested, by law,²⁵ with the right of succession, in respect to the matters of their trust, for they have a capacity to take obligations to them and their successors, and a capacity for them and their successors to sue in the name of the overseers of the poor of the town for the time being. The same thing may be observed of the board of supervisors in each county, for they are authorized to take a bond from the county treasurer in the name of the supervisors generally, and to sue under that general description.²⁶ Several towns in this state are incorporated so far as to be enabled to hold lands to a certain extent; and all the towns may make orders and regulations touching several purposes of a local and common nature, and are to be considered as bodies politic for certain purposes.²⁷ At common law every parish or town was a corporation for local necessities.²⁸ Our laws afford numerous examples of persons hawing corporate powers sub modo, and for a few specified purposes only.²⁹

There is no particular form of words requisite to create a corporation. A grant to a body of men to hold mercantile meetings, has been held to confer a corporate capacity.³⁰ A grant of lands to the inhabitants of a county, or hundred, rendering rent, would create them a corporation for that single intent, without saying, to them and their successors.³¹

But, a corporation being merely a political institution, it has no other capacities or powers than those which are necessary to carry into effect the purposes for which it was established. A corporation is incapable of a personal act in its collective capacity.³² It cannot be considered as a moral agent, and, therefore, it cannot commit a crime, or become the subject of punishment, or take an oath, or appear in person, or be arrested or outlawed.³³ It is said, likewise, that a corporation cannot be seized of lands to the use of another, and that it is incapable of any use or trust.³⁴ We may say, at least, that a corporation cannot be seized of land in trust, for purposes foreign to its institution.³⁵ But equity will, at this day, compel corporations to execute any lawful trust which may be reposed in them. Many corporations are made trustees for charitable purposes, and are compelled, in equity, to perform their trusts.³⁶ Corporations appear to be deemed competent to perform the duties of trustees, and to be proper and safe depositories of trusts; and among the almost infinite variety of purposes for which corporations are created at the present day, we find them³⁷ authorized to receive, and take by deed or devise, in their corporate capacity, any property, real and personal, in trust, and to assume and execute any trust so created and declared. The Court of Chancery is vested with the same jurisdiction over these corporate trusts, which it ordinarily possesses and exercises over other trust estates. Corporations are also created with trust powers of another kind; as for the purpose of loaning money on a deposit of goods and chattels, by way of pledge or security.³⁸ It will soon become difficult to trace the numerous and complicated modifications which corporations are made to assume, and the much greater diversity of objects for which they are created. We are multiplying in this country, to an unparalleled extent, the institution of corporations, and giving them a flexibility and variety of purpose, unknown to the Roman or the English law. The study of this title is becoming every year more and more interesting and important.

It was incident, at common law, to every corporation, to have a capacity to purchase and alien lands and chattels, unless they were specially restrained by their charters, or by statute.³⁹ Independent of positive law, all corporations have the absolute jus disponendi, neither limited as to objects, nor circumscribed as to quantity. This was so understood by the bar and court, in the modern case of The Mayor and Commonalty of Colchester v. Lowten;⁴⁰ and this common law right of disposition continued in England until it was taken away, as to religious corporations, by several restraining statutes, in the reign of Elizabeth. We have not reenacted those disabling acts; but the better opinion upon the construction of the statute in this state, for the incorporation of religious societies,⁴¹ is, that no religious corporation can sell any real estate without the Chancellor’s order. The powers given to the trustees of religious societies incorporated under that act, are limited to purchase and hold real estate, and then to demise, lease and improve the same for the use of the congregation. This limitation of the corporate power to sell, is confined to religious corporations; and all others can buy and sell at pleasure, except so far as they pray be specially restricted by their charters, or by statute.

In England, corporations are rendered incapable of purchasing lands without the king’s license; and this restriction extends equally to ecclesiastical and lay corporations, and is founded upon a succession of statutes front Magna Carta, 9 Hen. 111. to 9 Geo. II, which took away entirely the capacity which was vested in corporations by the common law. These statutes are known by the name of the statutes of mortmain; and they were introduced during the establishment and grandeur of the Roman church, to check the ecclesiastics from absorbing in perpetuity, in hands that never die, all the lands of the Kingdom, and thereby withdrawing them from public and feudal charges. The earlier statutes of mortmain were originally leveled at the religious houses; but the statute of 15 R. II. c. 5. declared, that civil or lay corporations were equally within the mischief, and within the prohibition; and this statute made lands conveyed to any third person, for the use of a corporation, liable to forfeiture, in like manner as if conveyed directly in mortmain.⁴² We have not reenacted the statutes of mortmain in this state; and the only legal check to the acquisition of lands by corporations, consists in those special restrictions contained in the acts by which they are incorporated, and which usually confine the capacity to purchase real estate to specified and necessary objects; and to the force to be given to the exception, of corporations out of the statute of wills,⁴³ which declares, that all persons other than bodies politic and corporate, may be devisees of real estate.

The statutes of mortmain are in force in the state of Pennsylvania. It has been there held and declared, by the judges of the Supreme Court of that state,⁴⁴ that the English statutes of mortmain have been received, and considered the law of that state, so far as they were applicable to their political condition; and that they were so far applicable that all conveyances by deed or will, of lands, tenements, or hereditaments, made to a body corporate, or for the use of a body corporate, were void, unless sanctioned by charter or act of assembly.” In the other states, it is understood, that the statutes of mortmain have not been reenacted, or practiced upon; and the inference from the statutes creating corporations, and not authorizing them to hold real estate to a certain limited extent, is, that our statute corporations cannot take and hold real estate for purposes foreign to their institution.⁴⁵

As we have no general statutes of mortmain, perhaps a legally constituted corporation in another state, can purchase and hold lands ad libitum in this state, provided their charter gave then the competent power. They can sue in our courts by their corporate name, and that, too, even upon a mortgage taken upon lands in this state as security for a debt.⁴⁶ The same rule, allowing corporations of one state to sue in another, was declared in Louisiana,⁴⁷ but doubted in South Carolina.⁴⁸

It has been a question of grave import, and difficult solution, whether a corporation instituted as a charity, could be permitted to become the cestui que trust of lands devised for charitable uses. Corporations are excepted out of the statute of wills, and it has been decided, that they cannot be directly devisees at law.⁴⁹ But, in England, by the statute of 43 Eliz. c. 4, commonly called the statute of charitable uses, lands may be devised to a corporation for a charitable use, and the Court of Chancery will support and enforce the charitable donation. The various charitable purposes which will be sustained, are enumerated in the statute, and the administration of justice in this, or in any other country, would be extremely defective, if there was no power to uphold such dispositions. The statute of Elizabeth has not been reenacted in this state; and the inquiry then is, whether a court of equity has power to execute and enforce such trusts as charities, independent of any statute, and when no statute declares them unlawful. The statute of wills merely excepts corporations from the description of competent devisees, and there is nothing in the act declaring it unlawful for a corporation to take for a charitable use. They are left in the same state as if the statute of wills had not been passed, and the question is, whether a court of equity may not sustain and enforce a devise to or for the use of a corporation, provided the object be a charity in itself lawful and commendable.

The case of The Baptist Association v. Hart,⁵⁰ has thrown embarrassment over this question. It was there said, that the statute of Elizabeth did give validity to some devises to charitable uses, which were not valid without the aid of the statute; and the opinion of the Chief Justice seemed rather to be, (for there was no authoritative decision of the court on the point,) that the original interference of chancery on the subject of charities, where the cestui que trust had not a vested equitable interest, was founded on the statute of Elizabeth, and that, independent of the statute, a court of equity would not sustain a charitable bequest, where no legal interest was vested. The accuracy of this conclusion remains yet to be established by judicial sanction; and there is a recent and direct authority against it, in the case of The Orphan Asylum Society v. McCartee, in which it was decided, in this state, by Chancellor Jones, after a very elaborate discussion and consideration, that a devise of lands to executors, in trust for a charitable corporation, for charitable purposes, was a legal and valid trust, to be enforced in equity. Lord Northington, in the case of The Attorney General v. Tancred,⁵¹ affirmed, that devises to corporations, though void under the statute of wills, were always considered as good in equity if given to charitable uses, and that the uniform rule of the Court of Chancery before, as well as at and after the statute of Elizabeth, was, that where the uses were charitable, and the grantor competent to convey, the court would aid even a defective conveyance to uses. This same principle has been advanced in other cases, and by very high authority.⁵² The weight of opinion and argument would seem to be in favor of an original and necessary jurisdiction in chancery, in respect to bequests, and devises in trust, to persons competent to take for charitable purposes, when the general object of the charity was specific and certain, and not contrary to any positive rule of law.

The elements of the doctrine of the English chancery relating to charitable uses, are to be found in the civil laws⁵³ And it is questionable whether the English system of charities is to be referred exclusively to the statute of Elizabeth. That statute has been resorted to as a guide, be. cause it contained the largest enumeration of just and meritorious charitable uses; and it may, perhaps, be considered rather as a declaratory law of previously recognized charities, than as creating, as some cases have intimated,⁵⁴ the objects of chancery jurisdiction over charities. If the whole jurisdiction of equity over charitable uses and devises, was grounded on the statute of Elizabeth, then we are driven to the conclusion, that as the statute has never been reenacted, our courts of equity in this country are cut off from a large field of jurisdiction, over some of the most interesting and meritorious trusts that can possibly be created, and confided to the integrity of men. It would appear, from the preamble to the statute of Elizabeth, that it did not intend to give any new validity to charitable donations, but rather to provide a new and more effectual remedy for breaches of those trusts.⁵⁵

It was an ancient and technical rule of the common law, that a corporation could not manifest its intentions by any personal act or oral discourse, and that it spoke and acted only by its common seal.⁵⁶ Afterwards, the rule was relaxed, and, for the sake of convenience, corporations were permitted to act, in ordinary matters, without deed, as to retain a servant, cook, or butler.⁵⁷ The case in 12 Hen. VII. 25⁵⁸ was, that a bailiff, as a servant to a corporation, could justify without being authorized by deed, but that no interest could depart from a corporation as a lease for years, a license to take fees, and a power of attorney to make livery, without deed. So, in Manby v. Long,⁵⁹ it was held, that a bailiff to a corporation, for the purpose of distress, did not require an appointment in writing. In Rex v. Bigg,⁶⁰ the old rule was still further relaxed; and it seems to have been established, that though a corporation could not contract directly, except under their corporate seal, yet they might, by mere vote, or other corporate act, not under their corporate seal, appoint an agent, whose acts and contracts, within the limit of his authority, would be binding on the corporation. In a case as late as 1783,⁶¹ it was held, that the agreement of a major part of a corporation, entered in the corporation books, though not under the corporate seal, would be decreed in equity. In Yarborough v. The Bank of England,⁶² it was admitted, that a corporation might be bound by the acts of their servants, though not authorized under their seal, if done within the scope of their employment. At last, after a full review of all the authorities, the old technical rule was condemned as impolitic, and essentially discarded; for it was decided by the Supreme Court of the United States, in the case of The Bank of Columbia v. Patterson,⁶³ that whenever a corporation aggregate was acting within the range of the legitimate purpose of its institution, all parol contracts made by its authorized agents, were express and binding promises of the corporation; and all duties imposed upon them by law, and all benefits conferred at their request, raised implied promises, for the enforcement of which an action lay. The adjudged cases in England, and in Massachusetts, were considered as fully supporting this reasonable doctrine; and that the technical rule, that a corporation could not make a promise except under its seal, would be productive of great mischiefs. As soon as it was established, that the regularly appointed agent of the corporation could contract in their name without seal, it was impossible to support the other position. Afterwards, in Fleckner v. U. S. Bank,⁶⁴ it was decided, by the same court, that a bank, and other commercial corporations, might bind themselves by the acts of their authorized officers and agents, without the corporate seal. Whatever might be the original correctness of the ancient, doctrine, that a corporation could only act through the instrumentality of its common seal, when that doctrine was applied to corporations existing by the common law; it bad no application to corporations created by statute, whose charters contemplate the business of the corporation to be transacted exclusively by a board of directors. The rule has even been broken in upon in modern times, in respect to common law corporations. The acts of the board of directors, evidenced by a written vote, are as completely binding upon the corporation, and as complete authority to their agents, as the most solemn acts done under the corporate seal. With respect to banks, from the very nature of their operations in discounting notes, receiving deposits, paying checks, and other ordinary contracts, it would be impracticable to affix the corporate seal as a confirmation of each individual act. Where corporations have no specific mode of acting proscribed, the common law mode of acting may be properly inferred; but every corporation created by statute, may act as the statute prescribes, and it is settled doctrine, that a corporation may be bound by contracts not under its corporate seal, and by contracts made in the ordinary discharge of the official ditties of its agents and officers. Lastly, in the case of Osborn v. United States Bank,⁶⁵ it was declared, that though a corporation could only appear by attorney, the authority of that attorney need not be under seal; and the actual production of any warrant of attorney to appear in court, is not necessary in the case of a corporation more than in the case of an individual.

That corporations can now be bound by contracts made by themselves or their agents, though not under seal, and also on implied contracts to be deduced by inference from corporate acts, without either a vote, or deed, or writing, is a doctrine generally established in the courts of the several states, with great clearness and solidity of argument:⁶⁶ and the technical rule of the common law may now be considered as being, in a very great degree, done away in the jurisprudence of the United States.

It is a general rule, that corporations must take and grant, as well as sue and be sued, by their corporate name. Without a name, they could not perform their corporate functions.⁶⁷ A misnomer in a grant by statute, or by devise, to a corporation, does not avoid the grant, though the right name of the corporation be not used, provided the corporation really intended, be made apparent.⁶⁸ So an immaterial variation in the name of the corporation, does not avoid its grant, though it is not settled with the requisite precision, what variations in the name are, or are not deemed substantial. The general rule to be collected from the cases is,⁶⁹ that a variation from the precise name. of the corporation, when the true name is necessarily to be collected from the instrument, will not invalidate a grant, by or to a corporation; and the modern cases show an increased liberality on this subject. For a corporation to attempt to set aside its own grant,⁷⁰ by reason of misnomer in its own, name, was severely censured, and in a great measure repressed, as early as the time of Lord Coke; and from their inability to be arrested, corporations must be sued by original writ or summons; and at common law, they, might be compelled to appear by distress, or seizure of their property. But the statute law of this state,⁷¹ has simplified the proceeding, by directing that the writ, or first process, against a body corporate, may be served on the president, presiding officer, cashier, secretary, or treasurer; and if the process be returned served, that the plaintiff, instead of being driven to compulsory and vexatious steps to compel an appearance, may enter an appearance for the defendants of course, and proceed, as its cases of personal actions against natural persons.

The same principle prevails in these incorporated societies, as in the community at large, that the acts of the majority, in cases within the charter powers, bind the whole. The majority, here, means the major part of those who are present at a regular corporate meeting, whether the number present be a majority of the whole body, or not. This is the general rule on the subject; and if any corporation has a different modification of the expression of the binding will of the corporation, it arises from the special provisions of the act or charter of incorporation.⁷² The power of election, or the supplying of members in the room of such as are removed by death, or otherwise, is said to be a power incident to, and necessarily implied in every aggregate corporation, from the principle of self preservation.⁷³ But it seldom happens that an opportunity is afforded for the application of this principle, because the power of election, must be exercised under the modifications of the charter or statute, of which the corporation is the mere creature, and which usually prescribes the time and manner of corporate elections, and defines the qualifications of the electors. U this be not done to the requisite extent in the act or charter creating the corporation, it is in the power of the corporation itself by its bylaws, to regulate the manner of election, and the requisite proof of the qualifications of the electors, in conformity with the principles of the charter.⁷⁴ It was decided in the case of Newling v. Francis,⁷⁵ that whet: the mode of electing corporate officers was not regulated by charter or prescription, the corporation might make bylaws to regulate the election, provided they did not infringe the charter.⁷⁶ And in the case of The Commonwealth of Pennsylvania v. Woelper,⁷⁷ it was held, that a corporation might, by a bylaw, give to the president the power of appointing inspectors of the corporate elections and also define by bylaws the nature of the tickets to be used, and the manner of voting. All such regulations rest in the discretion of the corporation, provided no chartered right or privilege be infringed, or the low of the land violated. It is settled, that a bylaw cannot exclude an integral part of the electors, nor impose upon them a qualification, inconsistent with the charter, or unconnected with their corporate character.⁷⁸

It is also understood to be the better opinion, that though the officers of a corporation be required by the charter to be annually elected, yet if the time of election under the charter slips, the old corporate officers continue in office after the year, and until others are duly elected. The general principle is,⁷⁹ that where the members of a corporation are directed to be annually elected, the words are only directory, and do not take away the power incident to the corporation to elect afterwards, when the annual clay had, by some means, free from design or fraud, been passed by.

The statute of 11 Geo. 1. c. 4, was made expressly to prevent the hazard and evils of a dissolution of the corporation, from the omission to elect on the day; and it seems to admit of a question, whether the statute was not rather declaratory, (for so it has been called,) and introduced to remove doubts and difficulty.⁸⁰

The election, when it does take place, must be when the members of the corporation are duly assembled collegialiter, and they must act simul et semel, and not shatteringly, and at several times and places.⁸¹

The power of amotion, or removal of a member for a reasonable cause, is a power necessarily incident to every corporation. It was, however, the doctrine formerly, that no member of a corporation could be disfranchised by the act of the corporation itself, unless the charter expressly conferred the power.⁸² But Lord Ch. B. Hale held,⁸³ that every corporation might remove a member, for good cause; and in Lord Bruce’s case,⁸⁴ the K. B. declared the modern opinion to be, that a power of amotion was incident to a corporation. At last, in the case of The King v. Richardson,⁸⁵ the question was fully and at large discussed in. the K. B., and the court decided, that the power of amotion was incident, and necessary for the good order and government of corporate bodies, as much as the power of making bylaws. But this power of amotion, as the court held in that case, must be exercised for good cause, and it must be for some offense that has an immediate relation to the duties of the party as a corporator; for as to offenses which have no immediate relation to his corporate trust, but which render a party infamous and unfit for any office, they must be established by indictment and trial at law, before the corporation can expel for such a cause. If there be no special provision on the subject in the charter, the power of removal of a member for just cause, resides in the whole body.⁸⁶ But a select body of the corporation may possess the power, not only when given by charter, but in consequence of a bylaw made by the body at large; for the body at large may delegate their powers to a select body, as the representative of the whole community.⁸⁷

The modern doctrine is, to consider corporations as baying such powers as are specifically granted by the act of incorporation, or as are necessary for the purpose of carrying into effect the powers expressly granted, and as not having any other. The Supreme Court of the United States declared this obvious doctrine in 1804,⁸⁸ and it has been repeated in the decisions of the state courts.⁸⁹ No rule of law comes with a more seasonable application, considering how lavishly charter privileges have beet granted. As corporations are the were creatures of law, established for special purposes, and derive all their powers from the acts creating them, it is perfectly just and proper that they should he obliged strictly to show their authority for the business they assume, and be confined to their operations to the mode, and manner, and subject matter prescribed. The modern language of the English courts is to the same effect; and, in a very recent case,⁹⁰ it was observed, that a corporation could not bind themselves for purposes foreign to those for which they were established. Where a corporation was created for purposes of trade, it resulted, necessarily, that they must have power to accept bills, and issue notes. But if a company be formed, not for the purposes of trade, but for other purposes, as, for instance, to supply water, the nature of their business does not raise a necessary implication that they should have power to make notes, and issue bills; and there must be express authority to enable them to do it.

IV. Of the Visitation of Corporations.

I proceed next to consider the power and discipline of visitation to which corporations are subject. It is a power applicable only to ecclesiastical and eleemosynary corporations;⁹¹ and it is understood, that no other corporations go under the name of eleemosynary, but colleges, schools, and hospitals.⁹² The visitation of civil corporations is by the government itself, through the medium of the courts of justice.

To eleemosynary corporations, a visitorial power is attached as a necessary incident. The nature and extent of this power were well explained by Lord Holt, in his celebrated judgment in the case of Philips v. Bury.⁹³ If the corporation be public, in the strict sense, the government have the sole right, as the trustees of the public interest, to inspect, regulate, control, and direct the corporation, and;’its funds and franchises, because the whole interest and franchises are given for the public use and advantage. They are to be governed according to the laws of the land. The validity and justice of their private laws are examinable in the courts of justice, and if there be no provision in the charter how the succession shall continue, the law supplies the omission, and says it shall he by election. But private and particular corporations, founded and endowed by individuals, for charitable purposes, are subject to the private government of those who are the efficient patrons and founders. If there be no visitor appointed by the founder, the law appoints the founder himself, and his heirs, to be the visitors. This visitorial power arises from the property which the founder assigned to support the charily; and as he is the author of the charity, the law gives him and his heirs a visitorial power, that is, ran authority to inspect the actions, and regulate the behavior of the members that partake of the charity. He is to judge according to the statutes and rules of the college or hospital; and it was settled, by the opinion of Lord Holt, in the case of Philips v. Bury, (and which opinion was sustained and affirmed in the House of Lords,) that the decision of the visitor (whoever he might be) was final, and without appeal, because the doctrine is, that the founder reposes in him entire confidence that he will act justly. In most cases of eleemosynary establishments, the founders do not retain this visitorial power in themselves, but assign or vest it in favor of some certain specified trustees or governors of the institution. It may even be inferred, from the nature of the duties to be performed, by the corporation or trustees, for the persons interested in the bounty, that the founders or donors of the charity meant to vest the power of visitation in such trustees. This was the case with Dartmouth College, according to the opinion of the Supreme Court of the United States, in the case of Dartmouth College v. Woodward.⁹⁴ Where governors or trustees are appointed by a charter, according to the will of the founder, to manage a charity, (as is usually the case in colleges and hospitals) the visitorial power is denoted to belong to the trustees; in their corporate character.⁹⁵

The visitors of an incorporated institution are a domestic tribunal, possessing a jurisdiction from which there is no appeal. It is an ancient, and immemorial right given by the common law to the private founders of charitable corporations, or to those whom they have nominated and appointed, to visit the charities they called into existence. The jurisdiction is to be exercised within the bosom of the corporation, and at the place of its corporate existence. Assuming, then, (as is almost universally the fact in this country,) that the power of visitation of all our public charitable corporations, is vested by the founders and donors of the charity, and by the acts of incorporation, in the governors or trustees, who are the assignees of the rights of the founders, and stand in their places; it follows, that the trustees of a college may exercise their visitorial power in their sound discretion, and without being liable to any supervision or control, so far as respects the government and discipline of the institution, and so far as they exercise their powers in good faith, and within the limits of the charter. They may amend and repeal the bylaws and ordinances of the corporation, remove its officers, correct abuses, and generally superintend the management of the trusts.

This power of visitation, Lord Hardwicke admits to be a power salutary to literary institutions, and it arose from the right which every donor has to dispose, direct, and regulate his own property as he pleases; cujus est dare, ejus est disponere. Though the king, or the state, be the incipient founder, (fundator incipiens,) by means of the charter or act of incorporation, yet the donor or endower of the institution, with funds, is justly termed the perficient founder; (fundator perficiens,) and it was deemed equitable and just at common law, that he should exercise a private jurisdiction as founder in his forum domesticum, over the future management of the trust.⁹⁶ But as this visitorial power was, in its nature summary and final, and therefore liable to abuse, Lord Hardwicke was not disposed to extend it in equity. It is now settled, that the trustees or governors of a literary or charitable institution, to whom the visitorial power is deemed to vest by the incorporation, are not placed beyond the reach of the law. As managers of the revenues of the corporation, they are subject to the general superintending power of the Court of Chancery, not as itself possessing a visitorial power, or a right to control the charity, but as possessing a general jurisdiction in all cases of an abuse of trust, to redress grievances, and suppress frauds. Where a corporation is a mere trustee of a charity, a court of equity will yet go farther; and though it cannot appoint or remove a corporator, it will, in a case of gross fraud, or abuse of trust, take away the trust from the corporation, and vest it in other hands.⁹⁷

There is a marked and very essential difference between civil and eleemosynary corporations on this point of visitation. The power of visitors, strictly speaking, extends only to the latter; for though in England, it is said that ecclesiastical corporations are under the jurisdiction of the bishop as visitor, yet this is not that visitorial power of which we have been speaking, and which is discretionary, final and conclusive. It is a part of the ecclesiastical polity of England, and does not apply to our religious corporations. The visitorial power, therefore, with us, applies only to eleemosynary corporations. Civil corporations, whether public, as the corporations of towns and cities; or private, as bank, insurance, manufacturing, and other companies of the like nature, are not subject to this species of visitation. They are subject to the general law of the land, and amenable to the judicial tribunals for the exercise and the abuse of their powers.⁹⁸ The way in which the courts exercise common law jurisdiction over all civil corporations, whether public or private, is by writ of mandamus and by information in the nature of quo warranto.⁹⁹ It is also well understood, that the Court of Chancery has a jurisdiction over charitable corporations for breaches of trust. It has been much questioned, whether it had any such jurisdiction over any other corporations, than,,welt as held to charitable uses. The better opinion seems, however, to be, that any corporation chargeable with trusts, may be inspected, controlled, and held accountable in chancery, for an abuse of such trusts. With that exception, the rule seems to be, that all corporations are amenable to the courts of law, and there only according to the course of the common law, for nonuser or misuser of their franchises.¹⁰⁰

V. Of the dissolution of Corporations.

A corporation may he dissolved, it is said, by statute; by the natural death of all the members; by surrender of its franchises; and by forfeiture of its charter, through negligence, or abuse of its franchises.¹⁰¹

This branch of the subject affords matter for various and very interesting inquiries.

In respect to public corporations, which exist only for public purposes, as counties, cities, and towns, the legislature, under proper limitations, have a right to change, modify, enlarge, or restrain them, securing, however, the property for the use of those for whom it was purchased. A public corporation, instituted for purposes connected with the administration of the government, may be controlled by the legislature, because such a corporation is not a contract within the purview of the constitution of the United States. In those public. corporations, there is in reality but one party, and the trustees or governors of the corporation are merely trustees for the public. But a private corporation, whether civil or eleemosynary, is a contract between the government and the corporators, and the legislature cannot repeal, impair, or alter the rights and privileges conferred by the charter, against the consent, and without the default of the corporation, judicially ascertained and declared. This great principle of constitutional law was settled in the case of Dartmouth College v. Woodward;¹⁰² and it had been asserted and declared by the Supreme Court of the United States, in several other cases, antecedent to hat decision.¹⁰³ But it has become quite the practice, in all the recent acts of incorporations for private purposes, for the legislature to reserve to themselves a lower to alter, modify, or repeal the charter, at pleasure; and though the validity of the alteration, or repeal of a charter, in consequence of such a reservation, may not he legally questionable,¹⁰⁴ yet it may be come a matter of serious consideration in many cases, how far the exercise of such a power could he consistent with justice or policy. If the charter be considered as a compact between the government and the individual corporators, such a reservation is of no force, unless it be made part and parcel of the contract. If a charter be granted, and accepted, with that reservation. there seems to be no ground to question the validity and efficiency of the reservation; and yet it is easy to perceive, that if such a clause, inserted asst formula in every charter and grant of the government, be sufficient to give the state an unlimited control, at its mere pleasure, of all its grants,however valuable the consideration upon which they may be founded, the great and salutary provisions in the constitution of the United States, so far as concerned all grants from state governments, will become of no moment. These legislative reservations of a right of repeal, ought to be under the guidance of extreme moderation and discretion. An absolute and unqualified repeal, at once, of a charter of incorporation of a money or trading institution, would be attended with most injurious and distressing consequences. According to the settled law of the land, upon the civil death of a corporation, all its real estate, remaining unsold, reverts back to the original grantor and his heirs. The debts due to and from the corporation are all extinguished. Neither the stockholders, nor the directors or trustees of the corporation, can recover those debts, or be charged with them, in their natural capacity. All the personal estate of the corporation vests in the people, as succeeding to this right and prerogative of the crown, at common law.¹⁰⁵ A very guarded and moderate example of these legislative reservations annexed to a charter, is that contained m the act of the legislature of this state, of February 28th, 1822, ch. 50. where it is declared, by way of express proviso, that the legislature may, after the expiration of five years, alter and modify and expunge the act, upon condition, nevertheless, that no alteration or modification shall annul or invalidate the contracts made by or with the corporation, and that the corporation may still continue a corporation, so far as to collect, and recover, and dispose of their estate, real and personal, and pay their debts, and divide the surplus.

But there is a check upon this power of repeal in the constitution of this state, which requires the assent of two thirds of the members elected to each branch of the legislature, to every bill altering any body politic or corporate.¹⁰⁶ I think there can be no just ground to doubt of the application of this provision to a bill repealing a charter. To alter is to make a thing otherwise than it would be, and it means every degree and species of change. To curtail or cut down corporate powers, is to alter them, equally as to enlarge them would be to alter them. That construction of the constitution would be very inadmissible, which would prohibit the legislature, without the assent of two thirds, to interfere, and alter, in any degree short of annihilation, the charter of a company, and yet would allow it to be destroyed by a bare majority. Upon such a construction, the legislature could destroy by the will of a majority, because that is not to alter the charter; but they could not reduce the capital to a nominal sum, and deprive the company of a capacity to move, without the assent of two thirds, because that would be to alter. The constitution is susceptible of a more liberal and reasonable construction; and no charter, under any reservation, can be dissolved by a legislative act, without the constitutional majority of two thirds of each house.

A corporation may, also, be dissolved, when an integral part of the corporation is gone, without whose existence the functions of the corporation cannot be exercised, and when the corporation has no means of supplying that integral part, and has become incapable of acting. The corporation becomes then virtually dead or extinguished.¹⁰⁷ But in the case of The King v. Pasmore,¹⁰⁸ in which this subject was most extensively and learnedly discussed, the K. B. seemed to consider such a dissolution not entirely absolute, but only a dissolution to certain purposes. The king could interfere and grant a new charter, and he could renovate the corporation, either with the old, or with new corporators. If renovated in the sense of that case, all the former rights would revive and attach on the new corporation, and, among others, a right to sue on a bond given to the old corporation. But if not renovated, then the dissolution becomes absolute, because the corporation has become incapable of acting. In the case of a new incorporation, upon the dissolution of an old one, the title to the lands belonging to the old corporation does not revive in the new corporation, except as against the state. In England, it would require an act of Parliament to revive the title as against the original grantor, or his heirs;¹⁰⁹ but it would be at least questionable whether any statute with us could work such an entire renovation, because vested rights cannot be divested by statute. When a corporation has completely ceased to exist, there is no ground for the theory of a continuance of the former corporation under a new name or capacity. It becomes altogether a new institution, with newly created rights and privileges.

It is said, that a corporation may be dissolved by a voluntary surrender of its franchises into the hands of government, as well as by an involuntary forfeiture of them, through a total neglect of using them, or using theca illegally and unjustly.¹¹⁰ But in the case of The King v. The City of London, Sir George Treby (afterwards Lord Ch. J.) very forcibly contended, that a corporation could not be dissolved by a voluntary surrender of its property, because a corporation might exist without property; and upon that argument he shook, if not destroyed, the authenticity of the note at the end of the case in Dyer, of the Archbishop of Dublin v. Bruerton,¹¹¹ in which it was stated, that a religious corporation might be legally dissolved and determined by a surrender of the dean and chapter, even without the consent of the archbishop. So, also, in the case of The Corporation of Colchester v. Seaber,¹¹² the corporation consisted of a mayor, eleven aldermen, eighteen assistants, and eighteen common council; and though the mayor and aldermen were judicially ousted in 1740, and those offices continued vacant until 1763, when a new charter was granted and accepted, it was held by the K. B., that the corporation was not dissolved by all these proceedings, including the natural death of the mayor and aldermen, subsequent to their ouster. This case shows, that a corporation possesses a strong and tenacious principle of vitality, and that a judgment of ouster against the mayor and aldermen, notwithstanding they were integral parts of the corporation, was not an ouster, though a judgment against the corporation itself might be. It was held in argument in that case, that a corporation could, not be dissolved but in three ways; 1. By abuse or misuser, and a consequent judicial forfeiture; 2. By surrender accepted on record; 3. By the death of all the members. It was admitted, on the other side, that the corporation in that case was not dissolved, though it had become incapable of enjoying and exercising its franchises; and the court held, that the loss of the magistracy did not dissolve the corporation. The better opinion would seem to be, that a corporation aggregate may, surrender, and in that way dissolve itself; but then the surrender must be accepted by t government, and be made by some solemn act, to render it complete. This is the general doctrine; but, in respect to the private corporations in this state, which contain a provision rendering the individual members liable for corporate debts due at the time of dissolution, a more lax rule has been indulged. It was held, in the Court of Errors of this state, in Slee v. Bloom,¹¹³ that the trustees of a private corporation may do what would be equivalent to a surrender of their trust, by an intentional abandonment of their franchises, so as to warrant a court of justice to consider the corporation as in fact dissolved. But that case is not to be carried beyond the precise facts on which it rested. It ought only to be applied to a case where the debts due at the time of the dissolution are chargeable on the individual members, end then it becomes a safe precedent. It amounts only to this, that if a private corporation suffer all their property to be sacrificed, and the trustees actually relinquish their trust, and omit the annual election, and do no one act manifesting an intention to resume their corporate functions, the courts of justice may, for the sake of the remedy, and in favor of creditors, who, in such case, have their remedy against the individual members, presume a virtual surrender of the corporate rights, and a dissolution of the corporation. This is the utmost extent to which such a doctrine has been carried, and in such a case it is a safe and reasonable doctrine. The old and well established principle of law remains good as a general rule, that a corporation is not to be deemed dissolved by reason of any misuser or nonuser of its franchises, until the default has been judicially ascertained and declared It was adjudged, in South Carolina,¹¹⁴ that the officers of a corporation could not dissolve it without the assent of the great body of the society.

The subject of the forfeiture of corporate franchises by nonuser or misuser, was fully discussed in the case of The King v. Amery,¹¹⁵ and it was held, that though a corporation may be dissolved, and its franchises lost, by nonuser or neglect, yet it was assumed as an undeniable proposition, that the default was to be judicially determined in a suit instituted for the purpose. The ancient doubt was, whether a corporation could be dissolved at all for breach of trust. It is now well settled that it may, but then it must be first called upon to answer.¹¹⁶ In the great case of The Quo Warranto against the City of London, in the 34th Charles II, it was a point incidentally mooted, whether a corporation could surrender and dissolve itself by deed; and it was conceded, that it might be dissolved by refusal to act, so as not to have any members requisite to preserve its being. There are two modes of proceeding judicially to ascertain and enforce the forfeiture of a charter for default or abuse of power. The one is by scire facias, and that process is proper where there is a legal existing body, capable of acting, but who have abused their power. The other mode is by information in the nature of a quo warranto, and that proceeding applies where there is a body corporate de facto only, but who take upon themselves to act, though, from some defect in their constitution, they cannot legally exercise their powers.¹¹⁷ Both these modes of proceeding against corporations, are at the instance, and on behalf of the government. The state must be a party to the prosecution, for the judgment is, that the parties be ousted, and the franchises seized into the hands of the government.¹¹⁸ This remedy must be pursued at law, and there only; and by a statute of New York, the mode of prosecution by scire facias,¹¹⁹ or information, is directed, where there has been a misuser of the charter, or the franchises of the company surrendered; and the manner of proceeding by action, or information, is prescribed. A Court of Chancery never deals with the question of forfeiture. It may old trustees of a corporation accountable for abuse of trust, but the court cannot, without special statute authority, divest corporations of their corporate character and capacity. It has no ordinary jurisdiction in regard to the legality or regularity of the election or amotion of corporators. These are subjects exclusively of common law jurisdiction.¹²⁰

The mode of redress in this state, when incorporated companies abuse their powers, or become insolvent, has been the subject of several recent statute regulations, which have committed the cognizance of such cases to the Court of Chancery. The acts of 1817 and 1821,¹²¹ provided for the dissolution of incorporated insurance companies, by order of the Chancellor, upon application of the directors, and for good cause shown; and the Court of Chancery, when it decreed a dissolution of the corporation, was to direct a due distribution of the funds, and to appoint trustees for that purpose. The act of 1825¹²² was much broader in its provisions. It contained many directions calculated to check abuses in the management of all moneyed incorporations, and to facilitate the recovery of debts against them. All transfers, by incorporated companies, in contemplation .of bankruptcy, were declared void; and if any incorporated bank should become insolvent, or violate its charter, the Chancellor was authorized by process of injunction, to restrain the exercise of its powers, and to appoint a receiver, and cause. the effects of the company to be distributed among the creditors. This was a statute of bankruptcy, in relation to incorporated banks.