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have we been able to find any holding or even intimating that this is so. We find no such element of value in the least hinted at, by any one who has written on the subject, nor has any such been called to our attention. We can not recognize any such element as giving value to shares in a trading corporation. It would be strange to predicate good-will as pertaining to or extending to an abstraction, to an "artificial being, invisible, intangible, and existing only in contemplation of law."

Our conclusion is that the board of supervisors, in its capacity of a board of equalization, had jurisdiction of the person and subjectmatter in the matters involved in this cause, and the judgment of the court below is affirmed.

Ross, MYRICK, MCKINSTRY, MCKEE and SHARPSTEIN, JJ., concurred.

MORRISON, C. J., took no part in this decision.

The importance of viewing the corporation as a franchise becomes apparent in discussing the questions of taxation, alienation and mortgaging, all of which are treated in later parts of this collection. As applied to corporations which are purely private in their nature, no questions of serious import are raised. Exhaustive notes on this subject and an excellent selection of cases upon it will be found in Professor Wilgus' Collection Vol. I at p. 113.-Ed.

(d) The Essence of a Corporation.

"Now it is to be seen what things are of the essence of a corporation: “Ist. Lawfully the authority of incorporation.

"2d. Which is of the essence of incorporation,- persons to be incorporated. 3rd. A name. 4th. Of places. 5th. By words sufficient in law, but not restrained in any certain legal and prescribed form of words."

LIVERPOOL INSURANCE Co. v. MASSACHUSETTS.1

10 Wallace (77 U. S.) 566, (1870).

ERROR to the Supreme Judicial Court of Massachusetts; the case being this:

A statute of the state just named imposes upon "each fire, marine, and fire and marine insurance company, incorporated or associated under the laws of any government or state other than one of the United States, a tax of 4 per cent. upon all premiums charged or received on contracts made in this commonwealth for insurance of property." The same statute imposes a tax of but 2 per cent. upon such premiums when the company is incorporated 1 Facts omitted in part.

under the laws of any one of the United States other than Massachusetts; upon which premiums, where the company is incorporated by itself, it imposes but I per cent.; while no tax is imposed by the laws of the state upon the business of insurances transacted by any natural persons citizens of the same.

With the enactment just mentioned on its statute book, the state of Massachusetts, in 1868, filed a bill in its Supreme Judicial Court against the Liverpool and London Life and Fire Insurance Company (a company doing a large business in that state), to collect a tax of 4 per cent. on its premiums upon contracts made in Massachusetts for insurance of property, and to restrain the company from doing further business till the tax was paid. The company set up that it was not "incorporated" at all, but was an association under the laws of Great Britain, of natural persons, some of whom were citizens and residents of the country just named; and some citizens and residents of the state of New York; formed for the purpose of conducting the business of insurance under certain deeds of settlement, and having the legal character of a partnership; that accordingly it could not be taxed as a "company incorporated under the laws of any government or state other than one of the United States;" while, insofar as the discriminating tax of 4 per cent. was sought to be laid against it as a company associated simply and not incorporated, it violated, in regard to the members of the company who were subjects of Great Britain, a provision in the treaty of 1815, between that country and the United States, by which it is agreed that the merchants and traders of each nation respectively shall enjoy the most complete protection and security for their commerce; and in regard to the citizens of New York, that provision in section 2, article 4, of the Federal Constitution which secures to the citizens of each state all the privileges and immunities of citizens in the several states.

Of course, if the company was a corporation, the defence failed: and it not being denied that the persons composing the company were British subjects, with certain citizens of New York with rights like theirs, the first question-and the only one if it was resolved affirmatively was whether the company was a corporation or not. * * *

MILLER, J., delivered the opinion of the court.

The case of Paul v. Virginia,1 decided that the business of insurance, as ordinarily conducted, was not commerce, and that a corporation of one state, having an agency by which it conducted that 18 Wallace 168.

business in another state, was not engaged in commerce between the states.

It was also held in that case that a corporation was not a citizen within the meaning of that clause of the constitution, which declares that the citizens of each state shall be entitled to all the privileges and immunities of citizens in the several states, and that a corporation created by a state could exercise none of the functions or privileges conferred by its charter in any other state of the Union, except by the comity and consent of the latter.

These propositions dispose of the case before us, if plaintiff is a foreign corporation, and was, as such, conducting business in the state of Massachusetts, and we proceed to inquire into its character in this regard.

The institution now known as the Liverpool and London Life and Fire Insurance Company, doing an immense business in England and in this country, was first organized at Liverpool by what is there called a deed of settlement, and would here be called articles of association.

It will be seen by reference to the powers of the association, as organized under the deed of settlement, legalized and enlarged by the acts of Parliament, that it possesses many if not all, the attributes generally found in corporations for pecuniary profit which are deemed essential to their corporate character.

1. It has a distinctive and artificial name by which it can make contracts.

2. It has a statutory provision by which it can sue and be sued in the name of one of its officers as the representative of the whole body, which is bound by the judgment rendered in such suit.

3. It has provision for perpetual succession by the transfer and transmission of the shares of its capital stock, whereby new members are introduced in place of those who die or sell out.

4. Its existence as an entity apart from the shareholders is recognized by the act of Parliament which enables it to sue its shareholders and be sued by them.

The subject of the powers, duties, rights, and liabilities of corporations, their essential nature and character, and their relation to the business transactions of the community, have undergone a change in this country within the last half century, the importance of which can hardly be over-estimated.

They have entered so extensively into the business of the country, the most important part of which is carried on by them, as banking companies, railroad companies, express companies, telegraph companies, insurance companies, etc., and the demand for the use of

corporate powers in combining the capital and the energy required to conduct these large operations is so imperative, that both by statute, and by the tendency of the courts to meet the requirements of these public necessities, the law of corporations has been so modified, liberalized and enlarged, as to constitute a branch of jurisprudence with a code of its own, due mainly to very recent times. To attempt, therefore, to define a corporation, or limit its powers by the rules which prevailed when they were rarely created for any other than municipal purposes, and generally by royal charter, is impossible in this country and at this time.

Most of the states of the Union have general laws by which persons associating themselves together, as the shareholders in this company have done, become a corporation.

The banking business of the states of the Union is now conducted chiefly by corporations organized under a general law of Congress, and it is believed that in all the states the articles of association of this company would, if adopted with the usual formalities, constitute it a corporation under their general laws, or it would become so by such legislative ratification as is given by the acts of Parliament we have mentioned.

To this view it is objected that the association is nothing but a partnership, because its members are liable individually for the debts of the company. But however the law on this subject may be held in England, it is quite certain that the principle of personal liability of the shareholders attaches to a very large proportion of the corporations of this country, and it is a principle which has warm advocates for its universal application when the organization is for pecuniary gain.

So also it is said that the fact that there is no provision either in the deed of settlement or the act of Parliament for the company suing or being sued in its artificial name forbids the corporate idea. But we see no real distinction in this respect between an act of Parliament, which authorized suits in the name of the Liverpool and London Fire and Life Insurance Company, and that which authorized suit against that company in the name of its principal officer. If it can contract in the artificial name and sue and be sued in the name of its officers on those contracts, it is in effect the same, for process would have to be served on some such officer even if the suit were in the artificial name.

It is also urged that the several acts of Parliament we have mentioned expressly declare that they shall not be held to constitute the body a corporation.

But whatever may be the effect of such a declaration in the courts of that country, it cannot alter the essential nature of a corporation or prevent the courts of another jurisdiction from inquiring into its true character, whenever that may come in issue. It appears to have been the policy of the English law to attach certain consequences to incorporated bodies, which rendered it desirable that such associations as these should not become technically corporations. Among these, it would seem from the provisions of these acts, is the exemption from individual liability of the shareholder for the contracts of the corporation. Such local policy can have no place here in determining whether an association, whose powers are ascertained and its privileges conferred by law, is an incorporated body.

The question before us is whether an association, such as the one we are considering, in attempting to carry on its business in a manner which requires corporate powers under legislative sanction, can claim, in a jurisdiction foreign to the one which gave those powers, that it is only a partnership of individuals.

We have no hesitation in holding that, as the law of corporations is understood in this country, the association is a corporation, and that the law of Massachusetts, which only permits it to exercise its corporate function in that state on the condition of payment of a specific tax, is no violation of the Federal Constitution or of any treaty protected by said Constitution.

Judgment affirmed.

*

THOMAS 2. DAKIN.1

22 Wendell's (N. Y.) Reports 9 (1839).

The facts appear in the opinion.

Chief Justice NELSON: 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

'This case is one of several “Banking Cases," wherein the existence of the banks as corporations was attacked on constitutional grounds. In Warner and Ray v. Beers, 23 Wendell, 103, the court decided they were corporations in that there was a distinct entity or merging of individuals into one artificial unity. See also The People v. Assessors of Watertown, I Hill, 620. The test as to whether they are corporations was: "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."

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