William M. Lacy James Kent.

Commentaries on American law, Volume 2 online

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The object of the institution is to enable the members to act
by one united will, and to continue their joint powers and pro-
perty 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 indi-
viduals composing a corporation, and their successors, are con-
sidered in law but as one moral person, capable, under an arti-
ficial 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 corpora-
tion do not determine, or vary, upon the death or change of any
of the individual members. They continue as long as the cor-
poration 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 so far
from being immortal, that it is well known, that most of
the private corporations recently created by statute *are [ * 268]
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 mem-
bers of the corporation remains, and can be kept up.

It was chiefly for the purpose of clothing bodies of mer *



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cessioD, with the qaalities and capacities of one single, artificial,
and fictitioas 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 indi-
vidual, without incurring any personal hazard or responsibility,
or exposing any other property than what belongs to the corpora-
tion in its legal capacity.

L Of the history of corporationa.

Corporations were well known to the Roman law, and they ex-
isted from the earliest periods of the Roman republic (a). It
would appear, from a passage in the Pandects (&), 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 indulg-
ent 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 or-
dained by a decree of the senate, or of the emperor (c). Collegia
licitay in the Roman law, were like our incorporated companies,
societies of men united for some useful business or purpose,
with power to act like a single individual; and if they abased
their right, or assembled for any other purpose than
[ * 269 ] that expressed in their charter, *they were deemed il-
licitae 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 (d). In the age of Augustus, as we
are informed by Suetonius («), certain corporations had become
nurseries of faction and disorder, and that emperor interposed, as
Julius GsBsar had done before him (g), and dissolved all but the
ancient and legal corporations —ctcncto collegia, prceter antiqui-
tu8 constituta diatraxit We find, also, in the younger Pliny {h)

(a) They were known to the twelve tables, for that early code allowed
private companies to make their own by-laws, provided they were not in-
consistent with the public law. Vide «ifpm, vol. i. p. 524, Table &th.

{b) Dig. 47, 22, 4. .

(e) Dig. 47. 22, 3, 1.

(d) Taylor^s Elemenla of the Civil Law, p. 667—570.

(e) Ad. Aug. 32.

{,g) Suet. J. Ctnar, 42.

(h) EpiHt. b. 10. Letters 42, 43.



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a singular instance of the extreme jealousy indalged by the
Roman government of these corporations. A destructive fire ia
Nicomedia, induced Pliny to recommend to the Emperor Trajan,
the institution, for that city, of a fire company of 150 men, {col-
legium fabrorum,) with an aasnranoe, that none but those «>f that
business should be admitted into it, and that the privileges granted
them should not be extended to any other purpose. But the em«
peror 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 be instituted, they would not fail to be mischievous.

The powers, capacities, and incapacities 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 corpora-
tions under the former, were borrowed chiefly from the Roman
law, and from the policy of the municipal corporations established
in Britain and the other Koman colonies, after the countries had
been conquered by the Romain arms. 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 alieiiate without
just cause. These restraints *bear a striking resem- [ * 270 ]
blance to the mortmain and disabling statutes in the Eng-
lish law. They could only act by attorney; and the act of the
majority bound the whole; jind they were dissolved by death, sur-
render, or forfeiture, as with ua (a). Corporations or colleges for
the advancement of learning, were entirely unknown to the an-
cients, and they are the fruits of modem 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 particu-
larly the schools at Rome, Constantinople, Alexandria, and Bery-
tns, began to assume the appearance of public institutions. Privi-
leges and honours were bestowed upon the professors and students,
and they were subjected to visitation and inspection by the civil
and ecclesiastical powers (6). It was not, however, until after

(a) 1 Brown's Civil and Adm. Law, 142—148. Wood's Inst, of the Ciml Law, p.
(h) 1 Bro, Civil Law, 151, 162, 163, 164.



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the revival of letters, or, at least, not until the 18th centnry, that
colleges and aniversities began to confer degrees, and to attain
some portion of the anthoritj, influence, and solidity, which they
enjoy at the present day (a). The erection of civil or municipal
corporations, for political and commercial pnrposes^took place in the
early periods of the history of modern Europe. Nor were they un-
known to the ancient Romans, for their dominion was composed of
numerous cities or municipal corporations (b). 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 liberty as well as of monopoly,
and created 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 (c). By this means, order and seen-
[*271] rity, industry, *trade, and the arts, revived in Italy,

France, Spain, Germany, Flanders, and England; and
to the institution of civil corporations, with large charter privi-
leges, may be attributed, in some considerable degree, the intro-

Ibid, 151, 152, note.

I The history of the conquest of the world by Rome, says M. Gnizot, in
his History of CiviHzation in Europe, edit Oxford, p. 42, is the history of the
conquest and foundation of a vast number of cities. In the Komau world,
there was, as to Europe, an almast exclusive preponderance of cities, and an
absence of country populations and dwellings. It was a great coalition of
municipalities, once free and independent, and whose jwwers upon their con-
quest were transferred to the central government and municipal sovereignty
of Rome.

(c) ffallam on the Middle Ages, vol. i. p. 165 — 171, 303, 304. The corpora-
tion of the city of London had its privileges and the rights of its freemen,
secured by a provision in magna charta. It is stated in GlanviUe, b. 5, ch. 5,
that if a villein remained for a year and a day in any privileged town, which
had franchises by prescription or charter, he became thenceforward a free
member of the corporation. See, also, Bracton, lib. 1, ch. 10, sec. 3, fol. 6, b.
Oneof the laws of William the Conqueror was to the same effect^and this custom-
prevailed equally in France and Scotland, and boroughs every where became
the cradles of freedom. Lord Coke, (Co. Lilt, 137, b.,) says that manumis-
sion, among other significations, meant the incorporating of a man to be free
of a company or body politic, as a freeman of a city, or burgess of a borough.
Messrs. Merewether and Stephens, in their History of Boroughs and Municipal
Corporations in the United Kingdom, vol. i. Int., London, 1835, contend, that
there were no municipal incorporations until the reign of Henry IV., though
boroughs existed in England from the earliest period; and the burgesses were
the permanent, free, and privileged inhabitants and householders sworn
and enrolled at the court leet The terms corporation and body corporate first
appear in the reign of Henry IV. , in any public document The first charter
of incorporation to a municipal body, was granted under Henry VI. After-
wards, under Edw. IV., the doctrine was first advanced in the common pleas,
that the existence of corporations might be inferred from the nature of the
grant, without words of incorporation. IHd, Int. 34.




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docUoa of regalar government and stable protection, after Europe
had for many ages, been deprived by the inundation of the bar-
bariaofly of all the civilization and science which had accompanied
the Roman power (a).

Bat although corporations were found to be very beneficial in
the earlier periods of modem European history, in keeping alive
the spirit of liberty, and in sustaining and encouraging the ef-
forts for social and intellectual improvement, their exclusive
privileges have too frequently served as monopolies, checking
the free circulation of labour, and enhancing the price of the
fniits of industry. Dr. Smith (6) does not scruple to consider
them, throughout Europe, as generally injurious to the freedom
of trade, and the progress of improvement (c). The propensity,
in modem times, has, however,, been to multiply civil corpora-
tions, especially in these United States, where they have in-
creased in a rapid manner, and to a most astonishing extent.
The demand for charters of incorporation is not merely for mu-
nicipal purposes, but usually for the more private and special
object of assisting individuals in their joint stock operations and
enterprising efforts, directed to the business of commerce,
mannfactures, and the various details of internal improvement
This branch of jurisprudence becomes, therefore, an object of
cnrions as well as of deeply interesting research. The multipli-
cation of corporations, and the avidity with which they are
sought, have arisen in consequence of the power which a large

(a) Smithes Inquiry into the Wealth of Nations^ vol. i. p. 395—401. Sobert-
Mii'fl Charles F., vol. i. p. 31, 34. Hallam on the Middle Ages, vol. ii. p. 78 —
80. PreseoU's History of Ferdinand <fr Isabella, vol. i. Int. p. 14—18, 53—n56.
The Castilian cities in Spain anticipated the cities in Italy, France, England,
and Germany, in the acquisition of valuable privileges and jurisdictions. '

(h) Inquiry, vol. i. p. 62, 121. 130, 132, 139, 462.

(f) The monopoly or restrictive system which protected the industry of
privileged individuals, by confining the exercise of business as traders, man-
ufiicturers and mechanics, to persons licensed, or had undergone apprentice-
ships and examinations, destroyed free competition and perfection in the
mechanic arts. The policy still prevails in many parts of continental £u- '
rope, and in considerable vigonr In Sweden. Laing^s TVavels in Sweden,
1838. In England, the Statute Concerning Monopolies of 21J. 1, c 3, which
was a magna charta for British industry, was a declaratory act, and declared
that all monopolies and all licenses, charters, grants, letters patents, &c.,
**U) any persons or bodies politic for the sole buying, selling, making, work-
ing, or using of any thing vnthin the realm,'' were unlawful and void, with
the exception ot patents for 21 years for inventions, &c., and of vested cor-
porate rights, relative to trade. This statute, said Mr. Hume, contained a
Doble principle, and secured to eveiy subject, unlimited freedom of action,
provided he did no injury to others, nor violated statute law.

23 VOL. II. KENT. 353


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and consolidated capital gives them over bnainess of every kind ;
and the facility which the incorporation gives to the management
of that capital, and the Beoority which it affords to the persons

of the members, and to their property not vested in the
[ * 272 ] corporate *stocL The convention of the people of New

York, when they amended their constitation, in 1821, en-
deavoured 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, al-
tering, or renewing, any body politic or corporate (a).^ Even this

(a) This provision only applies to private, apd doe» not apply to pnblic
or mnnicipal corporations. Nelson, Ch. J., in the case of the People r. Mor-
ris. 13 Wendell^ '3SilS. The constitution of Michigan, also requires the asbent
of two-thirds of the members of each house of the legislature to every act of

The construction of the restrictive clause, in the constitution of New York,
received a learned discussion and great consideration, in the cases of Wannfr
y. Beers, President of the North American Trual and Bankinq Cknnpany, and of
Bolander v. Stevens^ President of the Bank of Commerce in If no York. Those
institutions were voluntary associations of individuals formed under the
provisions of the act of New York, of April 18th, 1838, entitled **an act to
authorize the business of banking." and which act allowed the voluntary
creation of an indefinite number of such associations, at the pleasure of anj
persons who might associate for the purpose upon the terms prescribed bj
the statute. The great question raised in those cases was, whether these
institutions were corporations within the purview of the constitution, re-
quiring the assent of two-thirds of the members elected to each branch of
the legislature, to every bill creating any body politic or corporate ; and
the statute in that case did not appear to have been passed, and did not in
fact pass by such an enlarged majority. The decision of the court of crrora,
on a writ of error fVom the supreme court, on the 7th of April, 1840, was
that the banking act was constitutionally passed, though it did not receive
the assent of two-thirds of the members elected to each branch of the legis-
lature, and that the associations formed under the act were not bodies poli-
tic or corporate within the meaning of the constitution. It seemed to be
admitted, in the opinions given, that the restrictive clanse had not answered
the policy which dictated it. It was considered that the spirit and mean-
ing of the restrictive clause, was to guard against the inciease of joint stock
corporations for banking and other purposes of trade and profit to the cor-
porators, with exclusive privileges, not enjoyed by the citizens at large —
that although those banking associations had many of the distinguishing
characteristics of corporations, they did not come within the true legal in-
terpretation, and still less withfn the spirit and design of the restrictive
clause. The statute conferred .the power of free banking, and did not create
any monopoly, nor secure to any association, privileges which might not be
eigoyed in the same manner by all othe», nor place them beyond the entire
control of the legislature.

* In Green v. Graves, 1 Dougl. 351 ; Farmers' Bank v. Troy City Bank,
Id, 457, so much of the Michigan statute to ** organize and regulate banking
associations'' (Sess. Laws, 18:n, p. 76), as purports to confer corporate
rights upon corporations organized under it, was held to be in violation of
the 2d section of the 12th art. of the constitution of the state, which declares
that, ** the legislature shall i»ass no act of incorporation unless with the as-
sent of at least two-thirds of each house ;" and is therefore void.



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Iasc XXXJII.] of tub RIGHT9 OF PERSONS. * 272

provision seems to have failed in its purpose, for in the session of
1823, being the first session of the legislature, under operation of
this check, there \rere thirty- nine new private companies incorpo-
rated, besides numerous other acts, amending or altering charters.
The various acts of incorporation of private companies, for bank-
ing, manufacturing, literary, charitable and insurance purposes ;
for turnpike and rail-roads and toll- bridges; and for many other ob-
jects, upon which private industry, skill, and speculation, can be
freely and advantageously employed, constitute a mighty mass of
charters, which occupy a large part of the volumes of the statute

law in almost every state (a).' All these incorporations are con-

(a) The laws of Massachusetts give the greatest facility to the creation of
bodies politic and corporate. *'When any lands, wharves, or other real es-
tate, are held in common by five or more proprietors, they may form them-
selves into a corporation." Revised Statutes of 1835, part ], tit. 13, ch. 43,
sec. 1. So, in New York, by statute in 1811, (and which is still in lorce,)
mannfactoring corporations may be create<l by the mere association of five
or more persons filing a certificate designating their name, capital, object
aod location. A similar law was passed in Michigan and in Connecticat in
1837. The increase of corporations, in aid of private industry and enter-
prise, has kept pace in every part of our country with the increase of wealth
and improvement. The Massachusetts legislature, for instance, in the ses-
sion of 183^, incorporated upwards of seventy manufacturing associations,
and made perhaps forty other corporations relating to insurance, roads,
bridges, academies, and religious objects. And in 1838, the legislature of
Indiana authorized any twenty or more citizens of any county, on three
weeks previous public notice, to organize themselves and 1)ecome an agricnl-
taral society with corporate and politic powers; and the inhabitants of any
and every town or village may incorporate themselves for the institution
and management of a public 1 i brary . In Pennsy 1 van i a, the courts of quarter
sessions, urilh ike concurrence of the grand Jury of the county , may incorporate
towns and villages. Purdon^s Dig. 130, and literary, charitable or religious
associations and fire companies, may be incorporated under the sanction of
the supreme court. /&. 168, 172.

' The constitution oi New York gives the legislature full discretion in
creating corporations, other than banks, by special charter, and the courts
cannot review this power. U. S. Trust Co. v. Brady, 20 Barb. 119. The
question, whether a special act is necessary for the irtcorporation of a com-
pany or not, rest with the legislature, and is in their discretion. People v.
fiowen, 21 N. Y. 617. Where the legislature have under the provisions of
the constitution created a corporation by special act, their discretion or judg-
ment cannot be reviewed by the Judicial iwwer and declared unconstitutional.
Mosier r. Hilton, 15 Barb. 657.

In Anderson r. Alexander, 7 Am. Law Reg. 173, it was decided that an
association of individuals for the purpose of banking not in pursuance of
any statute law is illegal, as under the constitution of Indiana no bank of
issue can be established except a state bank, and free and private institutions
under the general banking law of the state. The organization and conduct
of national banks is now mostly regulated by act of Confess of June 3d
1864. 13 U. 8. Stat at Large, 99.

The first section of the New York constitution of 1846, art. 8, provides
for the formation of corporations under general laws, and for the altering or
repealing thereof from time to time. For fhrther information respecting



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tracts between the governmeDt and the company, which cannot
oixiinarilj be affected by legislative interference; and it has ac-
cordingly been attempted to retain a control over these private

the statutes relating to the constitution of corporations, see Abbott's Digest
of the Law of Corporations, title Constitution.

It has been held in Wisconsin that the banking laws of that state cannot
be changed except by the vote of the people. Van Steenwyck r. Sackett, 17
Wis. 645; Brower v, Haight, 18 Wis. 102. In the matter of the Bank of
Dansville, 6 Hill, 370, it was held that the court had no power to set aside
an election of trustees or directors of a New York banking association. They
may be removed at the pleasure of the associates.

In Gillett v. Campbell, 1 Den. 520, it was held that section 8, 1 N. Y. Rev.
Stat. 591 (which affects the assignment of the assets exceeding $1000), only
extends to moneyed corporations which are by their charters subject to the
management of a board ot directors, trustees or other officers. See further
Gillett t?. Moody, 3.Const. 479.

By the act of 1840, no banker can issue or put in circulation a bill or note
unless the same be payable on demand, and without interest. In Safford r.
WyckofT, 1 Hill, 11, it was decided that banking associations are by impli-
cation forbidden to issue negotiable drafts, and no action lies against an en-
dorser of such paper. In Smith v. Strong, 2 Hill, 241. it was decided that
negotiable paper in whatever form issued by institutions under the general
banking law, except with the sanction of the comptroller, is a fraud upon
the statute and the public. See act of 1840, N. Y. Laws, 1840, 30f', ch. 363,
'i 4. See further Root v. Wallace, 4 McLean, 8; Root v. Goddard, 3 Jd. 103:
Weed V. Snow, 3 Jd, 265; Piatt r. Little Auth. N. P., 2d ed. 358; Bank of
Chillicothe v. Dodge, 8 Barb. 233; Bank of Commissioners v. St. Lawrence
Bank, 7 N. Y. (3 Seld.) 513; Swilt v. Beers, 3 Den. 70; Leavitt v. Blatch-
ford, 17 N. Y. 521 ; Hayden r. Davis, 3 McLean, 276; Tyley r. Yates, 3 Barb.
222; Ontario Bank v. Shermerhom, 10 Paige, 109.

In American Ins. Co. r. Oakley, 9 Paige, 496, it is said to be presumed
that the president of a bank has power to sue for the collection of its funds, and
to appoint an attorney. See, also, Mumford r. Hawkins, 5 Den. 355. If or-
ganized under the act of 1838 (N. Y.), it may be sued in its president's name.
Delafield v. Kinney, 24 Wend. 345, and s*^ Odgensburgh Bank r. Van Rens-
selear, 6 Hill, 240, and compare Hunt v. Van Alstan, 25 Wend. 605. As to
what is a bank see Bank for Savings r. The Collector. 3 Wall. 495; Selden r.
Equitable Trust Co., 94 U. S. 419; O. & W. T. I. Qo. v. Rathbum, 4 L. & E.
Rep. 650; Grerman Savings and Loan Association v. Oulton, 14 Int. Rev.
Rec. 138. Act of Congress of July 13, 1869, { 9, 14 U. S. Stat, at Laige, 115, and
Abbott's National Digest, title Banking, page 325 (1884 ed.), as to the sta-
tutory provisions for t)ieir formation and regulation.

Whether solvent stockholders are liable to pay more on account of the in-
solvency of others, or because the corporation owned part of the stock, see
Crease v, Ribcock, 10 Mete. 525; Erickson v, Nesmith, 46 N. H. 371. The
corporation is a necessary party to a suit to enforce individual liability.
Bogardus v. Rosendale Manufacturing Co., 7 N. Y. (3 Seld.) 147. In Knowl-

Online LibraryWilliam M. Lacy James KentCommentaries on American law, Volume 2 → online text (page 44 of 108)