franchises so assessable, may be classified as creative and special. The creation of a corporation, the grant of power to exist and act as such is, in itself, a franchise distinctly held to be assessable as property. This creative franchise is, however, inseparable from the being or personality of the corporate body. But the right to collect water rates or compensation for water distributed or furnished is a franchise independent of the creative or corporate franchise; it is a separate entity or franchise, a special franchise distinct from the general franchise to be and act as a corporation. It is also a property right. So it is declared that a difference exists "between the general creative franchise to be, and the special franchises which, when accepted or purchased, vest privileges or franchises resting in special grant from governmental sources. * The mere fact that a corporation is organized for the specific purpose of acquiring, and is given power to acquire public uses or franchises, does not carry with it the idea that such franchises, when acquired, be they many or few, are merged in, and must be assessed as part and parcel of the general corporate franchise. * The distinction between the corporate or creative franchise, and other special franchises which the corporate entity may acquire and exercise, has long been recognized by our courts." 31 § 38. Franchises Belonging to Corporators and Those Belonging to Corporation Distinguished.-The franchise of being a corporation belongs to the corporators, while the powers, rights and privileges vested in and to be exercised by the corporate body as such constitute franchises of the corporation.32 So it is declared by Judge Baldwin that: "In the common case of the incorporation of a domestic company to build and operate a domestic railroad, the franchises granted are also distinct, and are held by different persons. The fran"San Joaquin & King's River 32 Memphis & Little Rock Rd. Canal & Irrig. Co. v. Merced County, Co. v. Commissioners, 112 U. S. 609, 2 Cal. App. 593, 595, 597, 599, 84 619, 28 L. ed. 837, 5 Sup. Ct. 299, Pac. 285, per McLaughlin, J. See per Matthews, J. See §§ 11, 28, 5, 11, 12, herein. herein. 11 33 chise to become and exist as an artificial person vests in the corporators; that to act, when incorporated, in such a way as to accomplish certain purposes, vests in the corporation.' But, a franchise granted by a city to an electric light company is, under an Indiana case, the property of the corporation and not of the owner of stock therein.34 $39. Franchise to Be and to Carry on Business Distinguished "Corporate Franchise or Business."-The franchise 33 Baldwin's Amer. Rd. Law (ed. 71; Pierce v. Emery, 32 N. H. 484– 1904), p. 26. 507. "Now it is clear from these definitions, and from the very nature of a corporation, that a franchise, or the right to be and act as an artificial body, vests in the individuals who compose the corporation and not in the corporation itself," although "It will be kept in mind that the corporate body, for most purposes, has a distinct identity from that of the individual corporators." Feitsam v. Hay, 122 Ill. 293, 295, 3 Am. St. Rep. 492, 13 N. E. 501, per Mulkey, J. * "The word 'franchise' is often used as a generic name, descriptive of all the rights, privileges and immunities contained in the charter, including the right of the corporation to become and continue to be a legal person; but in a narrower sense it includes only the rights, powers and privileges conferred by the legislature upon the corporation as such after it has come into existence as a legal person. The right to form a corporation is a franchise which may be said to belong to the corporators; while the right to take land for railroad purposes, to operate the railroad and to take tolls there, are properly called 'franchises' which belong to the corporation." Driscoll v. Norwich & Worcester Rd. Co., 65 Conn. 230, 256, 32 Atl. 354, per Torrance, J., in dissenting opinion. "It has been said, 'the essence of a corporation consists in the capacity (1) to have 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 Formation of corporation to acprivileges and immunities. * *complish fraud or other illegal act Under the two first is described cannot be based upon distinction what may be termed the franchise that corporation and corporators of the corporators, or individual have independent existence. First members of the corporation, and under the last what may be termed the franchises of the corporation."" Coe v. Columbus, Piqua & Indiana Rd. Co., 10 Ohio St. 372, 385, 75 Am. Dec. 518, per Gholson, J., citing Thomas v. Dakin, 22 Wend. (N. Y.) Nat. Bank v. J. C. Trebein Co., 59 34 Payne v. Goldbach, 14 Ind. App. 100, 42 N. E. 642. to be or exist is only one of the franchises of a corporation. The franchise to do, to carry on the business of the corporation, is an independent franchise, or rather, a combination of franchises, embracing all things which a corporation is given power to do, and this power, this authority, constitutes a thing of value and a part of the corporation's intangible property as much as does the franchise to be. Franchises to do, go wherever the work is done; for the transaction of its business the corporation may go into various States, and wherever it goes as a corporation it also carries with it the franchise to be, for although for the purposes of jurisdiction in the Federal courts, it is also true that a corporation is presumed to be a citizen of the State which created it, still it does not follow that its franchise to be is for all purposes to be regarded as confined to that State. Again, it would seem that these intangible properties, these franchises to do, exercised in connection with the tangible property which it holds, create a substantive matter of taxation to be asserted by every State in which that tangible property may be found.35 So in a Nebraska case a distinction is made between a franchise to be and a franchise consisting of a right to do business in a State, where the latter franchise is sought to be reached for the purpose of taxation, whether such right is derived through an act of Congress, or of the legislature, or by an ordinance of a municipality; that is, the thing which is so sought to be reached for taxation is the intangible right to transact or carry on business by means of the usual, visible and tangible agencies with which the operations of such business are carried on independent of the 35 Adams Express Co. v. Ohio it can be said to be valuable. The State Auditor, 166 U. S. 185, 224, wharf without a right to use it would 41 L. ed. 965, 17 Sup. Ct. 604, per be of no appreciable value. It is Brewer, J. Denying rehearing in 165 U. S. 194, 255, 17 Sup. Ct. 305, 41 L. ed. 683, 707. the combination of the two-the wharf and the franchise—that mutually impart to each other, when combined, an estimable value. * * * No franchise is of any value when considered without reference to its "The franchise or bare right to do a thing considered with reference to itself alone is of no value. It is only when it is considered relatively utility." Sullivan v. Lear, 23 Fla. and in connection with its use that 463, 2 So. 846, 11 Am. St. Rep. 388. instrumentalities themselves. It was also said in this case, that there was a clear distinction between "corporate franchise" and franchises or privileges which a corporation or individual might exercise. The term "corporate franchise or business" as used in the tax law of New York 37 providing for the taxation of corporations, means (not referring to corporations sole which are not usually created for commercial business) the right or privilege given by the State to two or more persons of being a corporation, that is, of doing business in a corporate capacity, and not the privilege or franchise which, when incorporated, the company may exercise.38 § 40. Franchise Distinguished from Means Employed in Exercising It.-A franchise is distinguished from the means employed in exercising it, as in case of a franchise of furnishing a city and its inhabitants water for public and private purposes and limited to the city. In such case, the fact that the water is pumped and stored without the city, constitutes only a means of exercising the franchise. The franchise does not consist in pumping the water or in maintaining the reservoirs.39 41. Charter and Franchise-To What Extent Distinguished.-In determining to what extent, if any, a charter and franchise may be distinguished, we will first consider the meaning of the word "charter," where definitions of the word have a bearing upon the question. The definitions of a fran 36 Western Union Teleg. Co. v. City of Omaha (Neb., 1905), 103 N. W. 84-86, per Lurton, C. point in People v. Miller, 83 N. Y. Supp. 184, 187, 85 App. Div. 211, which case is reversed, 177 N. Y. 51, 69 N. E. 124, which is cited in People v. Miller, 86 N. Y. Supp. 420, 422, 90 App. Div. 588. This last case is reversed, 179 N. Y. 49, 71 N. E. 463. " Act May 26, 1881, c. 361. 38 Home Insurance Co. v. New York, 134 U. S. 594, 599, 33 L. ed. 1025, 10 Sup. Ct. 593, per Field, J. Case affirms People v. Home Insurance Co., 92 N. Y. 328, also affirmed by divided court, 119 U. S. 129, 30 L. ed. 350, 8 Sup. Ct. 1385, restored to calendar, 122 U. S. 636 (Mem.). of taxation and apportionment of The principal case is cited to above tax). 39 Board of Councilmen of City of Frankfort v. Stone, 108 Ky. 400, 22 Ky. L. Rep. 25, 56 S. W. 679 (a case chise have been fully given elsewhere.40 A charter of incorporation is defined as the instrument evidencing the act of a legislature, governor, court, or other authorized department or person, by which a corporation is or was created.41 The word "charter" is also used to signify the agreement between the shareholders of the corporation, whether this agreement be contained in a special act of the legislature, or in articles of association, or in either of these taken in connection with the general laws of the State.42 So the general law under which corporations are formed, together with the articles of association adopted in pursuance thereof, sometimes called "constating instruments," constitute the charter of the corporation.43 § 42. Charter and Franchise Continued-How Extent of Powers Is Ascertained.-It may be stated, as pertinent to the question as to the distinction between a charter and a franchise, that resort must be had to the charter in connection with the general law in order to ascertain the extent of the powers, rights and privileges conferred, and where a private corporation is organized under the general incorporation law, the franchises conferred by the State, when it was organized, are to be ascertained or determined from the objects of the incorporation as stated and set forth in the articles of incorpo ❝ See Chap. I, herein. "Anderson's L. Dict., "Charter." See State Bank of Chicago v. Carr, 130 N. C. 479, 41 S. E. 876. Examine State v. Pittman, 32 Wash. 137, 72 Pac. 142. 42 Floyd v. National Loan & Investment Co., 49 W. Va. 327, 345, 87 Am. St. Rep. 805, 38 S. E. 653, 54 L. R. A. 536, per Poffenbarger, J., citing Morawetz on Corp. § 967. 43 Attorney Genl. v. Perkins (Mason v. Perkins), 73 Mich. 303, 319, 320, 41 N. W. 426, per Champlin, J. See also to same point Bent v. Underdown, 156 Ind. 516, 519, 60 N. E. 307, per Monks, J., citing 1 Cook on Stock and Stockholders, §§ 2, 9; People v. Chicago Gas Trust Co., 130 Ill. 268, 22 N. E. 798; 1 Morawetz on Corp. (2d. ed.) § 318; and cited in State v. Anderson, 31 Ind. App. 34, 67 N. E. 207. Examine Union Traction Co. v. Chicago, 199 Ill. 484, 59 L. R. A. 631, 65 N. E. 451; Bixler v. Summerfield, 195 Ill. 147, 62 N. E. 849; McLeod v. Lincoln Medical College, 69 Neb. 550, 96 N. W. 265. For other definitions, see Merrick v. Santvoord, 34 N. Y. 208, 214, per Porter, J.; Lehigh Water Co.'s Appeal, 102 Pa. 515, 517. |