William M. Lacy James Kent.

Commentaries on American law, Volume 2 online

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otherwise made. It is also a general principle of law, of which this statute
provision is partly declaratory, that in a case of a mere private authority
and confidence, unless provision be made to the contrary, the whole Ixnly
must meet and agree in the decision; but that in matters of public concern,
or in some respects oi a general nature, and all meet, the act of the majority
will bind. Vide infra ^ p. 633. On a reference to three arbiters, if all meet,
the award of two is valid. Meiklejohn v. Young, StuarVs Lower Canada R.
43.

(6) Hicks V. Town of Launceston, 1 Rol Abr. 513, 514. 8 East's Rep. 272.
n. S. C.

(c) 2 Kyd on Corp. 20—30. Though the charter gives to a select body the
power to make by-laws, it does not divest the body of corporations at largo
of the same right. King v. West wood, 4 Bamw. & Cress. 781; Lovell v.
Westwood, 2 Dow <St Clarke's P. C. Rep. 21. There is this distinction on tho
subject, that if the power of making by-laws be committed to the corporate
body at large, they may delegate that power to a select body representing

"See Jacobs v. Murray, 15 Cal. 221; Hughes r. Parker, 19 N. H. 181.
23 VOL. II. KENT. 385



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* 295 OF THE RIGHTS OF PERSONS. [Part IV.

It was decided, in the case of Newling v. Frances (a), that
when the mode of electing corporate officers was not regulated
by charter or prescription, the corporation might make by-laws
to regulate the elections, provided they did not infringe tlie
charter (6). And in the case of The Commonwealth of Pennsyl-
vania V. Woelper (c), it was held, that a corporation might, by a
by -law, give to the president the power of appointing inspectors
of the corporate elections, and also define by by-laws 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 law of the land
violated. It is settled, that a by-law cannot exclude an integral
part of the electors, nor impose upon them a qualification incon-
sistent with the charter, or unconnected with their corporate
character (d).^ Though in the case of elections in public and
municipal corporations, and in all other elections of a public
nature, every vote must be personally given (e); yet, in the case
of monied corporations instituted for private purposes,
[ *295 ] it has been held * that the right of voting by proxy
might be delegated by the by-laws of the institution,
when the charter was silent (g),

them ; but if the power be given to a select body, they cannot delegate that
power.

(o) 3 Term Rep. 189.

{b) See, also, Rex v. Spencer, 3 Burr, Rep. 1827. 2 Kyd on Corp. 26—31.
King V. Westwood, 7 Bingham's Rep. 1.

(c) 3 Scrg. & Rawle, 29.

(rf) Rex V. Spencer, 3 Burr. Rep. 1827. The general law on the subject of
valid by-laws, is well digested in 1 Woodd, Leo. 495 — 500 No director can
be excluded by the board of directors of a banking institution, from inspect-
ing the boolcs of the bank. The People r. Throop, 12 WendeWs Rep. 183.

{e) Case of the Dean and Chapter of Femes, Daviea^ Rep 129. Attorney
General v. Scott, 1 Veaey, 413.

(g) The State v. Tudor, 5 Day^s Rep. 329. In New York, (R. S. vol. i.
604,) at the election of corporate officers in corporations of a private nature,
except library, religious, and monied corporations, stockholders may vote by
proxy. In Phillips v. Wickham, 1 Paige's Rep. 598, the chancellor doubU
the validity of the right of voting by proxy, when the power is not given,
either expressly or impliedly, in the act creating the institution. And in
Taylor TJ. Griswold, (Feb. term, 1834,) in the supreme court of New Jersey,
after a full and learned discussion, it was held to be be a principle of the
common law, that w^here an election depended upon the exercise of jadg-

** They may make provision by by-law to conduct ^heir elections, and if
there be none the established usage will govern. Juker v. Commonwealth,
20 Pa. St 484. If by the charter each stockholder being a citizen is en-
titled to vote, an alien is excluded. In Re Barker, 6 Wend. 509. The
by-laws must not be unreasonable, against public policy or contrary to law.
People V. Medical School of Erie, 24 Barb. 570; Scrivener's Co. r. Brooking,
3 Ad. & £1. 95.

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Lee. XXXIII.] OP THE RIGHTS OF PERSONS. * 295

It is a qnestion not definitively settled, whether the officers of
a corporation, who are directed to be annually elected, can con-
tinue in office after the year, and until others are duly elected,
in cases where the time of election under the charter has elapsed,
either through mistake, accident, or misfortune, and there be no
provision in the charter for the case. In the case of public
officers who are such de facto^ acting under color of office by an
election or appointment not strictly legal, or without having
qualified themselves by the requisite tests, or by holding over
after the period prescribed for a new appointment, as in the case
of sheriffs, constables, &c. ; their acts are held valid as respects
the rights of third persons who have an interest in them, and as
concerns the public, in order to prevent a failure of justice (a).**
This general principle has been applied to the officers of a private
monied corporation, so far as concerns the rights of others (6);
and the sounder and better doctrine, I apprehend to be, 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
annnal day had, by some means, free from design or fraud, been
passed by (c)."

ment, the right could not be deputed; and that it required legislative sanc-
tion, before any corporate body conld make a valid by-law authorizing
members to vote by proxy. The authority of the case of the State v. Tudor,
Aiay, therefore, be considered as essentially shaken.

(a) The King v. Lisle, AndrevPs Rep. 163. The People v. Collins, 7 Johna.
Bep. 549. Jones v. Gibson, 1 K H. Rep, 266. Johnston v. Wilson, 2 Ibid,
202. Anon., 12 Mod, Rep, 256. In the matter of the M. and H. Railroad
Co., 19 Wendell, 135, 145. It is a usual and wise provision in public char-
ters, that the officers directed to be annually appointed, shall "continue in
office until other fit persons shall be appointed and sworn in their places.
This was the casein the charter granted to the city of New York, in 1686,
and again in 1730. By the English statute of 1 Victoria, ch. 78, /or (lie regu-
lation of municipal corporations, it was declared that the election of persons to
corporate offices should not be questioned for want of title in the persons
presiding at such elections, provided such persons were in actual possession
of, and bad taken upon themselves the execution of the duties of such office.

(ft)Baird v. Bank of Washington, 11 Serg. d' Rawle, 411. Bank of U. S. v.
Dandridge, 12 Wkeaion^ 64. I^high Bridge Company v, Lehigh Canal Com-
pany, 4 RaiuHe, 1.

(c) Hicks 9. Town of Launceston, 1 Rol. Ahr. 513. Foot v. Prowse, Mayor
olTrnro, Sir. Rep, 625. 3Bro. P. C. 167, S. C. The Queen v. Corporation
of.Dnrham, 10 Mod. Rep. 146. The People v. Runkel, 9 Johns. Rep. 147.

* The clerk of a corporation remains in office until another is chosen, unless
the contrary appears in the state law or by-laws. South Bay Meadow
Dam Co. v. Gray, 30 Me. 547. See, also, Nashville Bank v. Petway, 3
Humph. 522; Scoville v. City of Cleveland, 1 Ohio St. 126.

"See, also, Vincennes University v. Indiana, 14 How. 268; Hoboken
Building Society v. Martin, 2 Beasl. 427; Knowlton t;. Ackley, 8 Cush. 93.

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* 296 OF THE RIGHTS OF PERSONS. [Part IV.

[ * 296 ] * The statute of 11 Geo. L c. 4, was made expressly
to prevent the hazard and evils of a dissolation 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 de-
claratory, (for so it has been called,) and introduced to remoTe
doubts and difficulty (a). The election, when it does take place,
must be had, and the assent of a majority of the corporation to
any transaction concerning the corporation must be given when
the members of the corporation are duly assembled collegialiter;
and they n^ust act simul et semel, and not scatteringly, and at
several times and places (&).^

The power to make by-laws is given to corporate bodies to
enable them to fulfil the purposes of their institution; and when
the objects of the power and the persons who are to elercise it,
are not specially defined in the charter, it is necessarily limited
in its exercise to those purposes, and resides in the body politic
at large. These corporate powers of legislation must be exercised
reasonably, and in sound discretion, and strictly within the
limits of the charter, and in perfect subordination to the consti-

Trustees of Vernon Society v. Hill, 6 Cowen^n Rep. 23. M*Call r. Byram
Manufacturing Co., 6 Conn. Rep. 428. But see Rex v. Poole, 7 Med. Rep. 195,
Cases temp. Hardw. 20. 2 Barnard Rep. K. B. 447, S. C. Contra; and the
opinion of the chancellor, in Phillipa v. Wickham, 1 Paige* h Rep. 590, seems
also to be contra. In the case of Rex v. Poole, (Cases temp. Hardw. 20,) Lord
Hardwicke speaks doubtfully of the common law on this point; though he
refers to the case of Landsdown, in HoWs Abridgment^ where an election eight
days after the charter day was held good, for that the day was only directory.
But he admitted, that the mention of hours on the election days was merely
directory, and not restrictive.

(a) The Kingr. Pasmore, 3 Term Rep. 238, 245, 24G. By the N. Y. Rf^
Statutes, if any corporation shall not organize and commence the transaction
of its business within one year from the date of its incorporation, its cor-
porate powers shall cease.

(b) The Dean and Chapter of Femes, Danes' Rep. 130—132. Pierce f.
New Orleans Building Co., 9 Lou. Rep. 397. When a corporate election has
been irregularly or illegally conducted, the regular and established com-
mon low remedy is by motion, for leave to file an information in nature ot
a quo vHirrantOy as was done in the cane Elx parte Murphy, 7 Cowen^ 153; ^^^
in New York by statute (sess. 48, ch. 325, sect. 9, and which provision xf^
afterwards incorporated in the N. Y. R. S., vol. i. 603, sect. 5,) a more sum-
mary and easy remedy was provided. Any person aggrieved by a°y ^"^
corporate election may, on giving reasonable notice, apply to the suprem*
court, who are to proceed forthwith, and in a summary way, to bear the ai-
fidavits, proofs and allegations of the parties, and to establish the clcctj<Wi
or order a new election, or make such order and give such relief ®*JJ^Lj
and justice may require. See the case Ex parte Holmes, 5 Coioen^ 426, to
that eflect. , .

"^ The neglect of a ministerial act by an officer will not defeat ^^^Jf[
tion where there is actual notice without fraud. Gorham v. Campbell, "^ '
135; Jn re Wheeler, 2 Abb. Pr. N. S, 361.

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Lee. XXXIIL] OF THE RIGHTS OP PERSOKS. * 297

tntioa and general law of the land, and the rights dependent
thereon. Subject to these limitations, the power to make by-laws
may be sastained and enforced by just and competent pecuniary
penalties (a)."

*(9.) Of the power of removal [*297]

The power of amotion, or disfranchisement of a member
for a reasonable canse, is a power necessarily incident to every
corporation.^" It was, however, the doctrine formerly, that no free-
man of a corporation could be disfranchised by the act of the cor-
poration itself, unless the charter expressly conferred the power,
or it existed by prescription (6). But Lord Ch. B. Hale held (c),
that every corporation might remove a member, for good cause:
and in Lord Bruce^s case (d), the E. B. declared the modern opin-
ion to be, that a power of amotion was incident to a corporation.
At last, in the case of The King v. Richardson (e), the question

\a) See the opinions of the judges in the case of the King v. Westwood,
7 Bing. Rep. 1 ; and see Angell dc Ames on Corporations, ch. 9, 177 — 206, where
this branch of the snbject is treated, and with great and exhausting re-
search. Every corporate body has a right at common law, and without
statute, to make by-laws needful for the management of the business and
property of the corporation, and to regulate the duties and conduct of its
officers and agents. Savage, Ch. J. , in The People o. Throop, 12 WendelVs
Rep. 183. Child r. Hudson Bay Company, 2 P. Wms, 2()9. But a corpora-
tion cannot by a hg-law snbject to forfeiture, shares of stockholders for non-
payment of instalments, unless the power be expressly granted by the
charter. Corporations cannot impose penalties and take redress into their
own bands. Kirk v. Norvill, 1 Term R. 118. In the matter of the Long
Island R. R., 19 Wendell, 37.

A certificate of corporate stock, is transferable by a blank endorsement,
which may be filled up by the holder, by writing an assignment and power
of attorney over the signature endorsed. Kortwriccht v. Buffalo Commer-
cial Bank, 20 Wendell, 91.

(b) Bagg's case, 11 Co. 99, a, 2d resolution. See, also, Sty. Rep. 477, 480,

1 Lord Raym. 392. 2 Ibid. 1566.

(c) Tidderley's case, 1 Sid. Rep. 14.
Id) 2Slr.Rep.&d\.

(e) 1 Burr. Rep. 517.

*» In Cahill r. Kalamazoo Mutual Ins. Co., 2 Dongl. 124, it was held that
where the president and directors are empowered to make by-laws, the
president and a majority have the power. See, also, Jeffrey's case, 5 Co.
66. As to by-laws in restraint, of trade being both reasonable and bene-
ficial, see Bosworth v. Heme, Cas. Temp. Hardw. 405; Dodwell v. Oxford,

2 Ventr. 33. For instance where held void. Gunmaker's Co. v. Fell, Willes
384; Sayre v. Lcmisville Union Benevolent Assoc., 1 Duv. 143. See, how-
ever, Adley t). Whitstable Co., 17 Ves. 316. That a by-law may be Koml
in part and visa versa, see Rogers v. Jones, 1 Wend. 237; Harris v. Wake-
mau, Say. 254; see, however, Clarke r. Tuckett, 2 Ventr. 182. See, also,
note 25, ante.

^ See Smith v. Smith, 3 Desaus. 557; Evans v, Philadelphia Club, 50 Pa.
St^ 107,

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* 298 OF THE RIGHTS OF PERSONS. [Part IV.

was fnllj and at large disenased in the E. B. ; and the court de-
cided, that the power of amotion was incident, and necessary for
the good order and goTemment of corporate bodies, as much as
the power of making by-laws. But this power of amotion, as the
ooort held in that case, mnst be exercised for good cause; andit
mast be for some offence that has an immediate relation to the
duties of the party as a corporator; for as to offences which hare
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. In the case of The Commonwealth v. St. Pai-
rick's Society (a), while it was admitted to be a tacit condition
annexed to the corporate franchise that the members would not
oppose or injure the interests of the corporate body; and that ex-
pulsion might follow a breach of the condition; yet it was ad-
judged, that without an express power in the charter, no
[ * 298 ] member could be disfranchised, unless he * had been
guilty of some offence which either affected the interests
or good government of the corporation, or was indictable by the
law of the land, and of which he had been convicted. If there be
no special provision on the subject in the charter, the power of re-
moval of a member for just cause, resides in the whole body (6).
But a select body of the corporation may possess the power, not
only when given by charter, but in consequence of a by-law 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 com-
munity (c).'*

The cases do not distinguish clearly between disfraHchiaement
and amotion. The former applies to members, and the litter
only to officers; and if an officer be removed for good cause, he
may still continue to be a member of the corporation (d). Dis-
franchisement is the greater power, and more formidable in its
application; and in joint stock or monied corporations, no stock-
fa) 2 Binney'8 Rep, 441.
ib) The King v. Lyme Regis, Doug. Rep. 149.

(c) Ibid., and 3 Burr. Rep. 1837.

(d) Angell & Ames on Corporations^ 237.

'^ A benevolent association whose articles do not fix any religiooe quali-
fication cannot expel on the ground of religious belief. People ex re/ Schmidt v.
St. Franciscus Benevolent Soc., 24 How. Pr. 216. See, further, Comnjon-
wealth v. Germain Society, 15 Pa. St. 251, where the ground of helping to
defraud and defaming and injuring the society in public taverns were held
insuflBlcient grounds.

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Lee XXXIII.] OF THE RIGHTS OF PERSONS. * 2t9

holder can be disfranchised, and thereby deprived of his property
or interest in the general fund, by any act of the corporators,
^thoat at least an express anthority for that purpose (a); and
unless an officer be electe<l and declared to hold during pleasure,
the power of amotion, as well as of disfranchisement, ought to be
exercised in a just and reasonable manner, and upon due notice
and opportunity to be heard (6)."

(10.) Corporate powers strictly construed.

The modern doctrine is, to consider corporations as having 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 [ * 299 ]
other. The Supreme Court of the United States de-
clared this obvious doctrine (c), and it has been re^ieated in the
decisions of the state courts (d). No rule of law comes with a more
reasonable application, considering how lavishly charter privileges
have been granted. As corporations are the mere 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 be obliged strictly to show their authority for the

(a) Ihid. 23a

(6) The Commonwealth r. Penn. Beneficial Society, 2 Serg. & Rowley 141.
The acceptance of another incompatible office does not operate as an abso-
Inte avoidance of the former, in any case where the party could not divest
himself of that oflSce by his own act, without the concurrence of another.
King V. Patleson, 4 Bamw. & Aid. 1.

(c) Head & Amory r. The Providence Insurance Company, 2 Cranch. 127.
Marshall, Ch. J., 4 Wheaton, 636. Beatty r. Lessee of Knowler, 4 Peters' U.
8. Rep. 152.

(d) The Pfeople w. Utica Insurance Company, 15 Johns. Rep. 358. The N.
Y. Fire Insurance Company v. Ely, 5 Conn. Rep. 560. N. Y. Firemen's In-
sarance Company v. Sturges, 2 Cimen's Rep. 664. First Parish in Sutton f».
Cole, 3 Pick. Rep. 232. The State r. Stebbins. 1 SteirarVs Ala. Rip. 299.
Berlin v. New Britain, 9 Conn. Rep. 180. The New York Revised Statutes, vol.
i. p. 600, sec. 3, have declared, that no corporation shall possess or exercise
any corporate powers not expressly given by statute, or by its charter, ex-
cept such as shall be necessary to the exercise of the powers so enumerated
and given.

'* Upon the question of notice see Southern Plank Koad v. Hixon, 5 Ind.
166; People v. St. Franciscus Benevolent Society, 24 How. Pr. 216. And as
to recovery of dama^ses for want of notice. Washington Beneficial Society v.
Bacher, 20 Pa. St. 425. And the member may be restored by mandamus if the
expulsion A invalid. Commonwealth v. German Society, 15 Pa. 251. But
where the proceedings and cause are regular it cannot be enquired into col-
laterally nor its merits examined by mandamus or notions. Society, <&c., v.
Commonwealth, 52 Pa. St. 125 j Commonwealth t;. Pike Beneficial Society, 8
Watts & S, 247.

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*>300 OP THE RIGHTS OP PERSONS. [Part IV.

basiness they assume, and be confined in 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
recent case (a), it was observed, that a corporation could not bind
themselves for purposes foreign to those for which they were es-
tablished. 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 pur-
poses of trade, but for other purposes, as, for instance, to supply
water, the nature of their business does not raise a necessary im-
plication that they should have power to make notes, and issue
bills; and there must be express authority to enable them to doii
The acts of corporation agents are construed with equal strict-
ness; and it is the doctrine, that though a deed be signed by the
president and cashier of a corporation, and be sealed with its
corporate seal; yet the courts may look beyond the seal,
[ * 300 ] *and if it be affixed without the authority of the di-
rectors, and that fact be made affirmatively to appear,
the instrument is null and void (6).

IV. Of the visitation of corporations,

I proceed next to consider the power and discipline of visita-
tion to which corporations are subject It is a power applicable
only to ecclesiastical and eleemosynary corporations (c) ; and it
is understood, that no other corporations go under the name of
eleemosynary, but colleges, schools, and hospitals (d). The visita-
tion of civil corporations is by the government itself, through the
medium of the courts of justice. And in the cas^of the failure or
want of a visiter over a private eleemosynary foundation, the
duties of visitation devolve, in England, upon the crown, and is
exercised at the present day, not by the K. B., but by the lord
chancellor in his visitatorial capacity (e). As it has been deter-

(a) Broiighton v. The Manchester Water Works Company, 3 Barme. £
Ald.'l.

(b) The Mayor and Commonalty of Colchester r. I^owten, 1 Ves. ABeamt^
Rep. 245. Tilghman, Ch. J., in the case of St. Mary^s Church. 7 Serg. ^
Rawle, 530. Leggett v. N. J. Man. and Banking Co., in New Jersey Ckancertf,
April term, 1832. \

(c) 1 Bfacks, Com. 480, 2 Kyd on Corp, 174.

(d) 1 Woodd. Lee. 474.

(c) The Attorney General v. Dixie, 13 Ves. 519. The Same v. Clarendon,
17 Ibid. 491.

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liCC XXXIIL] OF THE RIGHTS OF PERSONS. * 301

mined in New York (a), that the chancellor cannot act in a visita-
torial character, the jurisdiction in such a case would revert to
the courts of law, according to the ancient English practice, to
be exercised under common law process (6).

To eleemosynary corporations, a visitatorial 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 (c). If the corporation be
public, in the strict sense, the government * has the sole [ * 301 ]
right, as trustee of the public interest, to inspect, regu-
late, control, and direct the corporation, and its funds and fran-
chises, because the whole interest and franchises are given for the
public use and advantage. Such corporation s are to be governed ac-
cording 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 be 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 visiter appointed by the founder, the law appoints
the founder himself, and his heirs, to Be the visiters. This visit-
atorial power arises from the property which the founder as-
signed to support the charity; and as he is the author of the
charity, the law gives him and his heirs a visitatorial power; that
is an authority to inspect the actions, and regulate the behaviour
of the members that partake of the charity. This power is judi-
cial, and supreme; but not legislative. 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 J (and which opinion was sustained and affirmed in the house
of lords,) that the decision of the visiter (whoever he might be)



Online LibraryWilliam M. Lacy James KentCommentaries on American law, Volume 2 → online text (page 49 of 108)