CORPORATION
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CORPORATION
[Corporations which had existed so long a time that
'the memory of man ran not to the contrary" were
iaid to exist by prescription; but that considerate
ioctrine was based upon the theory that the corpora-
tion had at one time received a charter, which, in
- ourse of time and by reason of the vicissitudes of
luman affairs, had been lost. When the religious •evolution of the sixteenth century occurred, most of
- he religious houses of England were corporations by
prescription, because they were so ancient that their >riginal charters, if there were any, had disappeared, rhe rights of a corporation by prescription, however, ire quite as valid at common law as are the rights of hose which can exhibit a charter. Instances of ■orporations interesting to American people are those •reated by letters patent from the King of England to he London Company, under which the original settle- nents of the New England coast were made; and the •harter to the Virginia Company, under which the ihores of Virginia were first colonized by Englishmen.
Name. — Under the Roman law as well as under the English common law a corporation must, necessarily, lave a name, and by that name alone it must appear n court an<l must conduct all of its transactions. Such a name is said by Blackstone to be for a corpora- ion, " the verj- being of its constitution". The name if incorporation is said by Sir Edward Coke to be its jroper name or name of baptism.
ErrLE.si.\.STicAL CoRPORATioN.s, as such, are not ecognized by the laws of the United States or of the leveral States constituting the Union. Under the American system of law, corporations arc either public )r jirivate, public corporations being those that are 'reeled for the purposes of local government, such as nunicipal corporations for the government of cities, rhe term private corporations includes all others, eligious, literary, charitable, manufacturing, insur- mce. banking, and railroad corporations. In the various States of the l^nion corporations were formerly Teated by charter granted by the legislature. In the ^eater number of the States at the iiresent time jrivate corporations are created by the voluntary act )f individuals who associate themselves together and nake a public declaration of their intention to become I body corporate and take such action in conformity ivith general rviles laid down by legislation. Charters >f incorporation granted by the legislatures of the 5tat('s to private corporations are considered as exe- nited contracts within the protection of Article 1, >ection 10, of the Constitution of the United States, jy which it is declared that " no State shall pass any aw impairing the obligation of contracts". This was lecided by the Supreme Court of the United States in ,he case entitled "The Trustees of Dartmouth College re. Woodward" (Wheaton's Reports, Vol. 4, p. 518). In many States the right to amend, modify, or repeal I charter was usually reserved in the charter itself. iuch a provision is now incorporated into the consti- tutions of many of the States.
Power of Corporations. — The principal charac- teristic of a corporation at common law was that it was vested with the privilege of perpet\iity, that is, it was said to have perpetual succession. At the present time in the greater number of American States the general legLslation providing for the creation of rorporations expressly designates a fixed term during which a corporation may exist. The second of the •Jriginal powers of corporations which is still main- tained, is to sue or to be sued, implead, or to be impleaded, grant or receive, by its corporate name ind to do all other acts as natural persons may. The ■hird privilege was to purchase lands and to hold them or till' benefit of the members of the corjioration and
- lieir successors. This right w.as largely nioilifittl by
- he statutes of mortmain (q. v.) in England and lias
>een strictly regulated and greatly limited by Ameri- -■an legislation. The fourth original power possessed
by corporations was that of having a common seal.
As was said by the ancient law writers of England, a
corporation, being an invisible body, cannot manifest
its intentions by any personal act or by speech, and
therefore can act and speak only by its common seal.
In modern times many corporations are expressly
authorized by legislation to act without using a seal,
and the decisions of the courts have generally held,
at least in modern times, that a corporation was bound
by implication in many cases where its acts had not
been attested by the corporate seal. The fifth privi-
lege of a corporation, which has existed from time
immemorial and still exists, is that of making by-laws
or providing statutes for the regulation of its own
affairs; and these are binding upon the corporation
and its members luiless contrary to the law of the
land. This right was allowed by the Law of the
Tn'elve Tables at Rome.
Privileges and Disabilities. — A corporation must always appear by attorney or agent (the actor or syndicvs of the Roman law) for it cannot appear in person; being, as Sir Edward Coke says, invisible and existing only in contemplation of the law. LTnder the strict construction of its legal quality the courts of England originally held that a corporation could not be held liable for any action based upon tortious conduct; that is, a corporation could not be held liable for personal injuries inflicted by the wrongful act or culpable neglect of its agents. It is now held however, both in England and America, that a cor- poration is liable in damages for any wrong com- mitted by its servants or agents when acting within the scope of the duties which properly devolve upon them. The doctrine designated by the term ultra vires is that which governs the courts in limiting the liability of a corporation to acts which are expressly authorized by its charter, or acts which are defined by its original articles of institution to be within the scope of its corporate operations. This doctrine is sound because it would be contrary to public policy to hold that a corijoration had the right to do any act or to undertake any course of transactions which was not within the scope of the powers which it orig- inally declared itself as possessing. However, the application of this doctrine is so restricted by the courts as not to allow corporate officers to use the doctrine as a cloak for deeds not equitable in their nature. It is construed strictly by the courts as a shield and is not allowed to operate as a sword.
Visitation. — The necessity of supervision over corporate acts being generally acknowledged, it was held at common law that every corporation had, necessarily, a visitor. As Blackstone well says, "Corporations, being composed of individuals, subject to human frailties, arc liable as well as private persons, to deviate from the end of their institution. And for that reason the law has provided proper persons to visit, inquire into and correct all irregularities that arise in such coqiorations, cither sole or aggregate, and whether ecclesiastical, civil or eleemosynary". Prior to the religious revolution of the sixteenth century the pope was the visitor of the archbishops and metropolitans. In respect to all lay corpora- tions, the founder, his heirs, or assigns arc the visitors under the English system. In the various States of the American Union visitors of coriiorations are prac- tically unknown: the supervision of private corpora- tions being vested in courts of equity. In England the king is considered as the visitor for all civil cor- porations, and this jurisdiction is exercised through the Court of King's Bench.
DissoLfTioN. — Any member of a corporation may be disfranchised, th.at is, he may lose his membership ill the corporation by acting in .such manner as to forfeit his rights under a provision of the by-laws; or he may resign from the corporation by his own volun- tary act. A resignation by parole, if entered upon
