CHAPTER I. DEFINITION AND CLASSIFICATION. THOMAS V. DAKIN.* SUPREME COURT OF NEW YORK, 1839. (22 Wend. 9.) Nature of a Corporation. Nelson, C. J.: This is an action brought by the plaintiff, as president of the bank of Central New York, an association formed under what is familiarly known as the General Banking Law, passed April 18, 1838, to recover several demands due the institution. The defendant has demurred to the declaration, and urges the unconstitutionality of the law, by way of defense; and it is insisted, in his behalf: 1. That the associations formed under this law are corporations; and 2. That a general law authorizing the creation of these bodies is inconsistent with the ninth section of the seventh article of the Constitution. On the part of the plaintiffs, it is urged in reply: 1. That the associations are not corporations: 2. That if they be, the act authorizing them may be passed by a majority bill; and 3. If within the ninth section, still the law may be passed by two-thirds of the members elected. I. Are these associations corporations? In order to determine this question, we must first ascertain the properties essential to constitute a corporate body, and compare them with those conferred upon the associations; for if they exist in common, or substantially correspond, the answer will be in the affirmative. A corporate body is known to the law by the powers and faculties bestowed upon it, expressly or impliedly, by the charter; the use of the term "corporation" in its creation is of itself unimportant, except as it will imply the possession of these. They may be expressly conferred, and then they denote this legal being See as to the nature of corporations, Warner v. Beers, 23 Wend (N. Y.) 103 (1840); The Conservators of the river Tone v. Ash, 10 Barn v. Cress, 349 (1829.) as unerringly as if created in general terms. It has been well said by learned expounders, that a corporation aggregate is an artificial body of men, composed of divers individuals, the ligaments of which body are the franchises and liberties bestowed upon it, which bind and unite all into one, and in which consists the whole frame and essence of the corporation. The "franchises and liberties," or, in modern language, and as more strictly applicable to private corporations, the powers and faculties, which are usually specified as creating corporate existence, are: 1. The capacity of perpetual succession; 2. The power to sue and be sued, and to grant and receive, in its corporate name; 3. To purchase and hold real and personal estate; 4. To have a common seal; and 5. To make by-laws. These indicia were given by judges and elementary writers at a very early day; since which time the institutions have greatly multiplied, their practical operation and use have been thoroughly tested, and their peculiar and essential properties much better understood. Any one comprehending the scope and purpose of them, at this day, will not fail to perceive that some of the powers above specified are of trifling importance, while others are wholly unessential. For instance, the power to purchase and hold real estate is not otherwise essential than to afford a place of business; and the right to use a common seal, or to make by-laws, may be dispensed with altogether. For as to the one, it is now well settled that corporations may contract by resolution, or through agents, without seal; and as to the other, the power is unnecessary in all cases where the charter sufficiently provides for the government of the body. The distinguishing feature, far above all others, is the capacity conferred, by which a perpetual succession of different persons shall be regarded in the law as one and the same body, and may at all times act, in fulfilment of the objects of the association, as a single individual. In this way, a legal existence, a body corporate, an artificial being, is constituted, the creation of which enables any number of persons to be concerned in accomplishing a particular object, as one man. While the aggregate means and influence of all are wielded in effecting it, the operation is conducted with the simplicity and individuality of a natural person. In this consists the essence and great value of these institutions. Hence it is apparent that the only properties that can be regarded strictly as essential, are those which are indispensible to mould the different persons into this artificial being, and thereby enable it to act in the way above stated. When once constituted, this legal being created, the powers and faculties that may be conferred are various,-limited or enlarged, at the discretion of the legislature, and will depend upon the nature and object of the institu tion, which is as competent as a natural person to receive and enjoy them. We may, in short, conclude by saying, with the most approved authorities at this day, that the essence of a corporation consists in a capacity: 1. To have a perpetual succession under a special name and in an artificial form; 2. To take and grant property, contract obligations, sue and be sued by its corporate name as an individual; and 3. To receive and enjoy in common, grants of privileges and immunities. We will now endeavor to ascertain with exactness, the powers and attributes conferred upon these associations by virtue of the statute. The first fourteen sections (1 to 14) prescribed the duties of the comptroller in furnishing notes for circulation, taking the required securities, etc. The 15th provides, that any number of persons may associate to establish offices of discount, deposit, and circulation. The 16th, that they shall make and file a certificate, specifying: 1. The name to be used in the business; 2. The place where the business shall be carried on; 3. The amount of capital stock, and number of shares into which divided; 4. The names of the shareholders; 5. The duration of the association. The 18th confers upon the persons thus associating, the most ample powers for carrying on banking operations, together with the right "to exercise such incidental powers as shall be necessary to carry on such business;" also to choose a president, vice-president, cashier, and such other officers and agents as may be necessary. By the 21st and 22d sections, contracts, notes, bills, etc., shall be signed by the president and cashier; and all suits, actions, etc., are to be brought in the name of, and also against the president for the time being; and not to abate by his death, resignation, or removal, but to be continued in the name of the successor. 24th section: The association may purchase and hold real estate, etc., the conveyance to be made to the president, or such other officer as shall be designated, who may sell and convey the same free from any claim against shareholders. 19th section: The shares of capital stock to be deemed personal property, transferable on the books of the association; and every person becoming a shareholder by such transfer, shall succeed to all the rights and liabilities of the prior holder. 23d section: No shareholder to be personally liable; and the association is not to be dissolved by the death or insanity of any shareholder. 1. Upon a perusal of these provisions, it will appear that the association acquires the power to raise and hold for common use any given amount of capital stock for banking purposes, which, when subscribed, is made personal property, and the several shares transferable the same and with like effect as in case of corporate stock; to assume a common name under which to manage all the affairs of the association; to choose all officers and agents that may be necessary for the purpose, and remove and appoint them at pleasure. It will hence be seen, that although the association may be composed of a number of different persons, holding an interest in the capital stock, its operations are so arranged that they do not appear in conducting its affairs; all are so bound together, so moulded into one, as to constitute but a single body, represented by a common name, or names (the knot of the combination), and in which all the business of the institution is conducted by common agents. In this way it purchases and holds real and personal property, contracts obligations, discounts bills, notes, and other evidences of debt, receives deposits, buys gold and silver bullion, bills of exchange, etc., loans money, sues and is sued, etc. It is true, some portion of the business is conducted in the assumed name, and some in the name of the president for the time being; but this in no manner changes the character of the body. A corporation may have more than one name; it may have one in which to contract, grant, etc., and another in which to sue and be sued; so it may be known by two different names, and may sue and be sued in either; and the name of the president, his official name, or any other, will answer every purpose (2 Bacon's Abr. 5; 2 Salk. 451; 2 id. 257; Ld. Raym. 153, 680). The only material circumstance is a name, or names, of some kind, in which all the affairs of the company may be conducted. So much, and no more, is essential to give simplicity and effect to the operation. An artificial being is thus plainly created, capable of receiving all the ample powers and privileges conferred upon the associations, and of managing their diversified concerns in an individual capacity. All business is to be conducted in a common or proper name. 2. This artificial being possesses the powers of perpetual succession. Neither sale or shares, nor death of shareholders, affects it; if one should sell his interest or die, the purchaser or representative, by operation of law, immediately takes his place. § 19. Nor can the insanity of a member work a dissolution. Id. Officers and agents for conducting the business of the association are secure. In case of vacancy, by death or otherwise, the place may at once be filled. § 18. For the entire duration, therefore, of the association, and which may be without limit, § 16, sub. 5, the whole body of shareholders, though perpetually shifting, constitute the same uniform, artificial being which is to be engaged through the instrumentality of officers and agents in conducting the business of the concern, and no member is personally liable. § 23. Then, as to the powers conferred, without again specially recurring to them, it will be seen at once that the associations possess all that are deemed essential according to the most approved authorities, to constitute a corporate body. They have a capacity: 1. To have perpetual succession under a common name and in an artificial form; 2. To take and grant property, contract obligations, to sue and be sued by its corporate name, in the same manner as an individual; 3. To receive grants of privileges and immunities, and to enjoy them in common. All these are expressly granted, and many more, besides the general sweeping clause, "to exercise such incidental powers as shall be necessary to carry on such business" (meaning the business of banking), under which even the seal and right to make by-laws are clearly embraced, if essential in conducting the affairs of the institution. * Upon the whole, I am of the opinion, 1. That these associations are corporations; 2. That the legislature possesses no power to pass a general law like the one under consideration, by a majority bill; and 3. That they may pass it by two-thirds of the members elected. The plaintiff is, therefore, entitled to judgment on the demurrer, with leave to amend on the usual terms. STATE V. STANDARD OIL CO. SUPREME COURT OF OHIO, 1892. (49 Ohio St, 137.) Nature of a Corporation. This is an application by the state for a writ of quo warranto against the Standard Oil Company, a corporation organized under the laws of the State of Ohio to oust it of the right to be a corporation on the ground that it has abused its corporate franchises by becoming a party to an agreement that is against public policy. Demurrer to the answer. Minshall, J.: *** It will be observed on reading the answer that while the defendant denies that it "entered into or become a party to either or both of the agreements in said petition set forth" and also "denies that it has at any time or in any manner acquiesced therein or observed, performed, or carried out either or both of said agreements," it does not deny the averment of the petition that "all of the owners and holders of its capital stock, including all the officers and directors of said company, signed said agreements." Nor could it have been the intention to do so, |