233 



CORPORATION. 



CORPORATION. 



231 



torn, ii., p. 368 ; the Italians ' Historic Patrise Monumenta,' Turin 

 1836; and ' Muratori Antiquit.' iv. pp. 5,159; German and Spanish 

 Corporations, Robertson's Works, vol. iii., pp. 227-229 ; French, Ray- 

 nouard, de Tocqueville ' France before Revolution of 1789,' p. 76, and 

 423 n. ; English, Merewether and Stephens ' History,' 3 vols. ; Hallam, 

 ' Supplementary Notes to History of Middle Ages.') Some Piedmon- 

 tese charters of incorporation date as far back as A.D. 707 ; and these 

 are believed to be the oldest authentic charters in existence. 



A charter, proceeding from the sovereign, was for long, the only 

 known mode of creating a corporate body either in this or any other 

 country of Europe. This consisted of a letter or rescript of the 

 sovereign sealed with his royal seal, in which he called into a corporate 

 existence the person or entity whom it was intended to establish, 

 endowed it with a right, and fixed upon it the obligation of keeping 

 up a perpetual succession of the members, gave it a name in which it 

 was to sue and be sued, to hold land and other property, and to do all 

 other acte, &c. It was also enabled to have a common seal, to be the 

 emblem of its will ; its concerns being in general managed by the 

 voice of the majority of its members, who in all things bound the 

 minority, and who signified the resolutions of the corporation, authen- 

 ticated its contracts, &c., executed its deeds, &c., by affixing thereto 

 the common seal. In this country the mode of incorporation by 

 charter is at present but seldom resorted to, having been nearly super- 

 seded by the more modern device dating only from the Revolution 

 of an act of parliament for each case, containing such regulations, 

 imposing such restrictions, and giving such powers, as it is competent 

 to parliament to appoint. Such is the nature and constitution of 

 corporations, bodies politic, bodies corporate (as they are indifferently 

 called), consisting of many members, or "aggregate of many," in the 

 technical language of the law. 



There is besides this another class of corporations called corporations 

 sole, to whii-h belong the king or queen regnant in his or her public 

 capacity, every archbishop or bishop, every parson of a parish, &c. ; but 

 by much the more important class, at the present day, is the former, 

 and to that therefore we shall chiefly direct our reader's attention in 

 the remaining part of this article. 



Corporations aggregate may be treated under the heads of Cor- 

 porations in general (which would include ecclesiastical, sanitary, 

 eleemosynary, educational, and other corporate bodies) ; municipal 

 corporations ; trading corporations. (See KBIT'S Blackst. ' Comment.,' 

 vol. i. cap. xviii.) The life and functions of every corporation aggregate 

 are the creation of its charter or constituting statute (as the case may 

 be) ; they do not exist for any other than the purpose therein specified; 

 for any other purpose the members are merely an unorganised number 

 of persons, not bound by the numerical majority, not a body, not a 

 partnership, wholly unrecognised as endowed with aggregate capacity 

 or collective powers. Hence it is idle to contend, as is sometimes done, 

 that the acts and deeds of corporations are to be received and treated 

 like the acts of natural persons or individuals ; for corporations are 

 artificial persons, and there is an essential difference between their acts 

 and those of individuals. An individual may do what he likes with 

 his own ; he may bind himself by deed disposing of his property, how- 

 ever capriciously, without equivalent passing to him, without the law 

 of England investing the courts with any power of interference, pro- 

 vided no fraud has been practised on him. But a corporation is fettered 

 in its volition by the terms of ita constitution : to them its course must 

 be conformed. Any act done, or agreed to be done, either in violation 

 of those terms or for purposes not comprised within those terms fairly 

 construed, is illegal at law and will be restrained in equity, such ille- 

 gality forming a defence at law for the corporation when sued for the 

 non-performance of its undertaking to do the act, or the ground of an 

 injunction in equity to prevent the corporation from applying its funds 

 for the purposes so unauthorised or prohibited. 



Among the powers and capacities which are common to all corpo- 

 rations aggregate, are, those of having a corporate name ; of suing and 

 being sued in that name ; of having a common seal, and doing all acts, 

 executing all contracts, deeds, grants, orders, notices, and generally all 

 formal documents by and under that common seal ; to take goods as 

 long as that body endures, and as incident thereto to lease, mortgage, 

 and charge the same ; to make and establish what are called " bye 

 laws " (in the language of the law), being regulations for the manage- 

 ment of the concerns of the corporation, the government of it mem- 

 bers, and in many cases of persons other than its members, who 

 may come within its sphere of action [Bv-LAw] : these, when once 

 duly passed, can only be abrogated by a counter vote of a majority of 

 the body duly assembled, or by a judgment of a court of justice over- 

 turning them as being contrary to some principle of the general law of 

 England. All the acts of the body are determined by the vote of the 

 majority of the members duly in corporate meeting assembled. 



Whilst the majority is acting for the objects and within the scope of 

 the constitution of the body, they are never liable at common law, in 

 their own persons, for the consequences of what they determine to do 

 as a corporation ; such act is the act of the corporation, and if any one 

 is aggrieved by that act, the corporation is the proper person, to be 

 sued, not the aggregate or the majority, or any other part of the mem- 

 bers ; and if judgment goes against the corporation it pays the damages 

 or the penalty out of its corporate funds. If, however, the majority 

 take upon them to use the. corporation powers and apply its funds to 



other purposes than those for which the body politic was called into 

 existence, there are various cases in which the individual members of 

 the majority may be made liable to answer, with their own property, the 

 injury that their conduct may have done to others, whether strangers or 

 members of the same body. There are means also by which projected 

 applications of the powers and funds of the corporation, to purposes and 

 objects for which the body was not constituted, and the funds were not 

 devoted, will be prevented in the courts of equity. 



As a corporate body is thus incapable of doing anything which i.s 

 beyond the objects for which it was established (for it has not been 

 given a perpetual existence and endowed with powers except for the 

 accomplishment of the particular ends for which it was created), to do 

 anything not comprised in them is ultra lires, and the attempt to effect 

 it is void. So, as a matter of course, the body cannot put a period, by 

 any act of its own simply, to its own corporate existence ; although, in 

 cases where the corporation has been established by a charter, the 

 majority, with the consent of the crown, may resign or surrender the 

 charter, which being accepted, the corporation is extinct. A corpo- 

 ration may also pass out of existence by reason of all the members 

 dying out, care not having been taken to keep up the number of the 

 members, by fresh elections, as vacancies occurred. Or a corporation 

 | may be dissolved or abolished by statute, though this has only been 

 done, against the will of the bodies concerned, in the case of the Knights 

 Templars, and of the convents and priories in the reign of Henry VIII. 

 But the crown cannot, of its own will, abolish a corporation. 



Corporations for ecclesiastical, eleemosynary, and educational pur- 

 poses differ chiefly from municipal and trading corporations in this, 

 that they have appointed to them by the terms of their foundations 

 visitors, whose duty and right it is to see that these bodies perform the 

 duties with which their institutions are charged, and who, for that 

 purpose, are armed with unique summary powers, for from their deci- 

 sions there is no appeal. It is to this class of corporations chiefly 

 (though not exclusively) that the statutes of Mortmain apply, restrain- 

 ing corporations from holding land without a licence from the crown, 

 and the statutes of Charitable Uses, preventing corporations from 

 holding land devised or granted to them for charitable purposes, except 

 the grantor, &c., have first complied with certain requirements. 

 [MORTMAIN.] 



Municipal corporations are those by and under which the cities, and 

 nearly all the principal towns, of this country are governed. Having 

 originated, some by prescription and others by charter, and having 

 therefore constitutions originally of very great variety, as well as a 

 number of customs prevalent within them, chiefly in restraint of trade, 

 they were all reduced to a common model by a statute of William IV., 

 which, with some additions and modifications from subsequent statutes, 

 has remained the governing statute since 1835. All the above-mentioned 

 customs of trading were at the same time abolished, the statute apply- 

 ing to the municipal corporations of England and Wales except that 

 of London, the customs of which have repeatedly been confirmed by 

 parliament ; and as yet (1859) London is left nearly untouched by 

 municipal reform. 



Trading Corporativns. A partnership is a company of persons asso- 

 ciated together for the purpose of making profits by trade, each of the 

 partners being entitled to such a share of the net profits, at the end of 

 the year, as may be agreed upon and settled by the deed or other in- 

 strument, or by the terms of the partnership, and each bearing lessen, 

 where any occur, and being liable to the whole extent of his fortune. A 

 trading corporation, however, is an incorporated association, having a 

 joint or common stock of money, mostly divided into equal shares, the 

 possession (by purchase for the most part) of one or more of which 

 constitutes membership : the business is conducted for the common 

 profits, the net returns of it being thrown into a common fund, out of 

 which a rateable proportion is divided periodically, according to his 

 number of shares, to each member, such proportion being called the 

 dividend. Thus, then, the business is worked, in the legal sense, by 

 the corporation, for its profits in the first instance ; all outgoings are 

 paid and all contracts made by the corporation, which is responsible, in 

 its common stock, for all claims, whether in the nature of debts, or 

 for compensation in damages for negligence or misfeasance, and the, 

 dividends are made out of the surplus remaining of the profit fund 

 after defraying these and all other charges. In these bodies, like as 

 in other corporations, no member has any individual right to any por- 

 tion of the property, real or personal, of the company except so far as 

 a declaration of dividend entitles him to his proper portion of the 

 profits, on any periodical division ; but unlike what takes place in com- 

 mon law corporations, the members of joint stock trading corporations, 

 are, by statute, liable personally to the debts of the corporation after 

 the common fund has been exhausted, and even those who are no 

 longer members, may, in certain cases, remain liable for a period of three 

 years after they have ceased to hold shares. Most classes of trading 

 corporations may be dissolved by virtue of statutory enactments, 

 applying to those classes, by means of what is called "winding up," 

 under which system an account is taken of their debts, liabilities, and 

 assets, and if necessary the members are called upon to contribute 

 rateably, according to their shares, such sums as in the aggregate suffice 

 to balance the accounts of the company. (See Kerr's Blackstone's 

 'Cornm.' vol i. chap. 18.) The modern trading corporations bear little 

 or no resemblance to the incorporated trades or guilds of the middle 



