associates, and not to substitute for it that of corporators; and, preserving in continued operation that normal and distinctive difference, to evince a plain purpose not to merge the two organizations in one, or destroy the boundaries which separate them. That intent, once clearly ascertained, determines the construction to be adopted, and may be the only reliable test in view of the power of the state to clothe one organization with the attributes of the other. The drift of legislation has been to lessen and obscure the original and characteristic difference. On the one hand, corporations have been created with positive provisions retaining more or less the individual liability of the members, and on the other, the jointstock companies have been clothed with most of the corporate attributes; but enough of the original difference remains to show that our legislation not only carefully preserves the distinction of names, but sufficient, also, of the original difference of character and quality to disclose a clear intent not to merge the two. We may thus see upon what the legislative intent to preserve them as separate and distinct is founded, and what distinguishing characteristics remain. The formation of the one involves the merging and destruction of the common-law liability of the members for the debts, and requires the substitution of a new or retention of the old, liability by an affirmative enactment which avoids the inherent effect of the corporate creation; in the other the common-law liability remains unchanged and unimpaired, and needing no statutory intervention to preserve or restore it. The debt of the corporation is its debt, and not that of its members; the debt of the joint-stock company is the debt of the association, however enforced. The creation of the corporation merges and drowns the liability of its corporators; the creation of the stock company leaves unharmed and unchanged the liability of the associates. The one derives its existence from the contract of individuals, the other from the sovereignty of the state. The two are alike, but not the same. More or less they crowd upon and overlap each other, but without losing their identity; and so, while we cannot say that the jointstock company is a corporation, we can say, as we did say, in Van Aernam v. Bleistein, 102 N. Y. 360, 7 N. E. Rep. 537 that a jointstock company is a partnership, with some of the powers of a corporation. Beyond that we do not think it is our duty to go. The order should be affirmed, with costs. All concur.1

1See also Andrews Brothers Co. v. Youngstown Coke Co., Ltd., 86 Fed. Rep. 585; Edwards v. Warren, etc., Works, 168 Mass. 564; State v. Board of Assessors, 47 N. J. L. 36; Abbott v. Hapgood, 150 Mass. 248; Fifth Ave. Bank v. Colgate, 120 N. Y. 381; Tilge v. Brooks, 124 Pa. St. 178; Rouse, etc., Co. v. Detroit, etc., Co., 111 Mich. 251.- Ed.

(g) The Corporation Distinguished from a Partnership.

JOHN C. HOADLEY V. COUNTY COMMISSIONERS OF ESSEX.

105 Massachusetts Reports 519 (1870).

(The statement of facts and a portion of the opinion relating to the question of double taxation have been omitted.— ED.)

MORTON, J. The only question presented in this case is, whether the petitioner is liable to be taxed in Lawrence for the shares in the McKay Sewing Machine Association owned by him. This question must be decided by the construction of the statutes regulating taxation, and not upon any considerations of supposed policy or equity; and we are unable to find any provision of statute which makes such shares taxable.

The McKay Sewing Machine Association is not a corporation. It has never received an act of incorporation, nor been organized as a corporation under the general laws. A corporation can only be created and exist by sanction of the legislature. This is a voluntary association of individuals, and its articles of agreement, although they adopt some of the forms of managing the business usual in corporations, constitute a copartnership. It cannot sue and be sued as a corporation; its members are individually liable for its debts; and it has none of the special attributes which belong to a corporation duly organized under our laws. Oliver v. Liverpool and London Insurance Co., 100 Mass. 531; Tyrrell v. Washburn, 6 Allen, 466. The provision that each member may sell and transfer his interest, and thus introduce a new partner, though unusual, is not inconsistent with the contract of copartnership.

It is clear, therefore, that shares in this association could not be taxed under the General Statutes, c. II, § 4, as " stocks in a moneyed corporation," even if any such stocks could be taxed to the owners since the passage of the Statute of 1865, c. 283. Being a copartnership, the laws applicable to that relation must govern its rights and liabilities; and it follows that the personal property held by it was properly taxable in Boston, where its business is carried on, and not in Lawrence. General Statutes, c. 11, § 15; Little v. Cambridge, 9 Cush. 298. The petitioner, therefore, was not taxable in Lawrence for his interest in the personal property of the firm.

But the tax in question was assessed upon the market value of his shares, treating them as so many shares of corporate stock. No provisions of statute, or authorities, are cited, by which such a tax can be upheld. The property of each partner in a firm is an undivided interest in all the assets as a tenant in common. For that

interest, if the firm is established in this state, he is taxable in the town which is the business domicile of the firm; if it carries on business in another state, he is taxable at his place of residence. Bemis v. Aldermen of Boston, 14 Allen, 366. He has no other interest in the firm which is subject to taxation. The fact that, by agreement between the partners, in this case, the share or interest of each partner in the firm is transferable, does not make it taxable specifically. If such shares have a market value larger than the amount of property held by the firm, it is a speculative value, founded upon the expectation of future profits, and is not property which is taxable under our laws.

We are therefore of opinion that the tax assessed by the city of Lawrence upon the petitioner was illegal. We have not deemed it necessary to consider what is the effect of the fact that the legal title to the property of the association is by the articles of agreement vested in McKay as trustee. This fact cannot make the case more favorable for the respondents, because, if the property is to be regarded as property held in trust under the General Statutes, c. 11, § 12, cl. 5, it is clear that it is taxable to the trustee, and not to the petitioner.

Writ of certiorari to issue.

GIBBS' ESTATE,

157 Pennsylvania State Reports 59 (1893).

Exceptions to report of auditor on exceptions to administrator's account. Before METZGER, P. J., 29th Judicial District, specially presiding.

The case was referred to Stanley W. Little, Esq., as auditor.

Before the auditor, W. F. Hallstead, guardian of Mary E. Clapp et al., claimed to recover from the estate of decedent, Henry Gibbs, the sum of $2,900.46, the amount of a deposit in the Home Savings Bank, of which decedent was a stockholder. The claim was made on the ground that the bank was a general partnership, and that its stockholders were liable as partners for its debts.

WILLIAMS, J., October 2, 1893. This case involves substantially the same question that was heard and determined in Hallstead v. Coleman, 143 Pa. 354. The appellant seeks to charge the estate of Henry Gibbs with money deposited by him, as guardian, in the Home Savings Bank, located at South Waverly, on the theory that

the bank was a general partnership and that the decedent was one of the partners. The appellees deny that the Home Savings Bank was a partnership, and assert that the decedent purchased shares of stock in the bank, as and for the shares of stock in an incorporated bank, and not otherwise. At this point it seems desirable to define the words over which this contest extends.

First. What is a corporation? The several answers given by text writers may be reduced to the following formula: A corporation is an artificial person created by law as the representative of those persons, natural or artificial, who contribute to, or become holders of shares in, the property entrusted to it for a common purpose. The creation of a corporation is not within the power of the individuals who subscribe to its stock. It is exclusively the work of the law; and the best evidence of the existence of a corporation is the grant of corporate powers by the commonwealth.

Second. What is a corporation de facto? It is an apparent corporate organization, asserted to be a corporation by its members and actually acting as such, but lacking the creative fiat of the law. In Taylor on Private Corporations, 145, it is said that a de facto corporation may exist "when a body of men are acting as a corporation under color of apparent organization, in pursuance of some charter or enabling act." Their organization may be imperfect, so that upon a quo warranto they could not show a sufficient compliance with the law to justify the exercise of corporate powers, but, as to parties dealing with them, and as to each other, they are estopped to deny that they are what they hold themselves out to be. In a recent case in Minnesota, Finnegan v. The Knights of Labor Building Association, it was held that a de facto corporation exists when these three things concur- namely, a law under which the alleged corporation might be created; an attempt to organize under the law an assumption and exercise of corporate powers under such attempted organization. In Church v. Pickett, 19 N. Y. 482, only two things were held necessary — namely, "the existence of a charter or law under which a corporation with the powers assumed might be lawfully created; and a user by the party to the suit of the rights claimed to be conferred by such charter or law." Where there has been a substantial compliance with the law the corporation is, of course, de jure. Where there has been no substantial compliance, but there has been nevertheless an assumption and exercise of corporate powers in pursuance of an attempted organization, the alleged corporation is such de facto only. The Minnesota courts hold the correct rule, and three things are necessary to create the liability: a law or charter under which an organization de jure might be effected; an attempt to organize which falls so far short

of the requirements of the law or charter as to be ineffectual; an assumption and exercise of corporate powers notwithstanding the failure to comply with the law or charter.

* * *

Third. What is a partnership? Perhaps the best definition is that given by Story: a relation created by a contract between two or more persons to place their money, effects, labor, or skill, or some or all of them, in lawful commerce and divide the profits between them." Its foundation is a contract express or implied. It results from the act of the parties, not from the act of the law. But as to third parties one may be held liable as a partner by implication of law arising upon his own acts contrary even to his own intention. Thus the officers and acting members of a corporation de facto may be liable as partners if their conduct has led others to trust the concern upon that basis. 47 Conn. 443. But without a contract of partnership, or such acts and declarations as lead others to infer its existence and to extend credit on that basis, there is no foundation on which liability as a partner can rest. The best evidence of the existence of a partnership is the contract creating it. If proof of the contract is not within reach, its existence may be inferred from proof of contribution to the partnership stock. If direct proof of contribution cannot be had it may be inferred from participation in profits. In the absence of all this the acts and declarations of the parties sought to be charged may be resorted to. Participation in profits is not conclusive proof of the existence of the partnership relation (Edwards v. Tracy, 62 Pa. 374), but both in England and in this country it is cogent evidence upon the question. It puts the defendant upon his proofs explanatory of the fact. If he is able to show that such participation was referable to some other reason, such as compensation for services rendered by him as agent, broker, salesman or otherwise, the prima facies is overcome. So if the participation in the profits is referable to some other relation than that of partnership between the participants, such as membership in a joint-stock association, or a corporation, the effect of proof of participation will be overcome.

In the light of these well-settled rules, let us consider briefly the position of the parties and the important findings of fact made by the learned auditor in this case. The claimant's right to share in the fund in court rested on the theory that the Home Savings Bank in which the money of his wards had been deposited was a partnership, and that the decedent was a partner. The burden of proving the fact that the bank was a partnership was on him; and as was said in Hallstead v. Coleman, 143 Pa. 364, "until that proof was given, the defendants were not called upon to enter upon their defence." The proof made upon this subject showed the organiza