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clusively presumed to be citizens of the state creating the corporation, and "no averment or evidence to the contrary is admissible," though the truth is otherwise, and though the suit of a corporation is to be considered as a suit by the individuals who compose it." This seems to be the theory yet.

In Muller v. Dows, 94 U. Ŝ. 444, 1876, it is said: "A suit may be brought in the federal courts by or against a corporation, but in such a case it is regarded as a suit brought by or against the stockholders of the corporation," all of whom are conclusively presumed to be citizens of the state creating the corporation.

(See further on this point, Shaw v. Quincy Mining Co., 145 U. S. 444, infra, p. 1066, and St. Louis & S. F. R. v. James, 161 U. S. 545, infra, p. 1099.)

Judge Story, in the Dartmouth College case, 1819 (4 Wheat. 667, infra, p. 727), while recognizing the artificial personality of the corporation, yet seemed to emphasize the collective or associate character more particularly. He says: "A corporation aggregate is a collection of individuals united into one collective body, under a special name, and possessing certain immunities, privileges and capacities in its collective character, which do not belong to the natural persons composing it."

Chief Justice Shaw, of Massachusetts, in Overseers of the Poor v. Sears, 22 Pick. (Mass.) 122 on 128, infra, p. 193, 1839, says; "A corporation aggregate consists of many persons united together into one society, and kept up by a perpetual succession of members so as to continue forever."

Lumpkin, J., in Hightower v. Thornton, 8 Ga. 492, 1850, says: "Corporations are but associations of individuals." So Baldwin, J., in Chater v. San Francisco, etc., Co., 19 Cal. 219, 1861 (supra, p. 80), says: "A corporation organized under general laws is scarcely more than a partnership, or an association of individuals." Similarly Law, J., in Gelpcke v. Blake, 19 Iowa 263, on 268, 1865, asks: "Who in law constitutes the company, if it be not the stockholders?"

Mr. Morawetz, in the preface to the second edition of his Treatise on the Law of Private Corporations, 1886, says the first edition (which appeared in 1882) was prepared according to a plan differing from that followed in any previous treatise on the same subject, and specifies particularly: "The author was of the opinion that the law relating to private business corporations could not be clearly understood, unless the fact were recognized that such a corporation is really an association formed by the agreement of its stockholders, and that the existence of a corporation as an entity, independently of its members, is a fiction; and that while the fiction of a corporate entity has important uses and can not be dispensed with, it is nevertheless essential to bear in mind distinctly that the rights and duties of an incorporated association are, in reality, the rights and duties of the persons who compose it, and not of an imaginary being." He retains the same view throughout the second edition. In section 227 he says: "A corporation is really an association of persons, and no judicial dictum or legislative enactment can alter this fact." And "In equity the conception of a corporate entity is used merely as a formula for working out the rights and equities of the real parties in interest, while at law this figurative conception takes the shape of a dogma, and is often applied rigorously without regard to its true purpose and meaning. In equity the relationship between the shareholders is recognized whenever this becomes necessary to the attainment of justice; at law this relationship is not recognized at all." He particularly enumerates that the unanimous actions of the members, within corporate powers, are the actions of the corporation; notice to all members is notice to the corporation; property of associations subject to debts can be followed, when vested in a corporation organized by their members; also in the questions relating to constitutionality of laws affecting corporations, and laws of consolidations and dissolutions of corporations, the rights of creditors and the rights of members as against the corporation, and in similar cases the fiction is necessarily overlooked or ignored. See sections 228, 229, 230 and 231.

Mr. Taylor, Treaties on the Law of Private Corporations, in the preface to his first edition in 1884, says: "It is the opinion of the writer that the fic

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tion of the 'legal person' has outlived its usefulness, and is no longer adequate for the purposes of an accurate treatment of the legal relations arising through the prosecution of a corporate enterprise. By dismissing this fiction a clearer view may be had of the actual human beings interested, whose rights may then be determined without unnecessary mystification." In the preface to his third edition, 1894, he says: "When special rules cease to accord with the general rule once back of them,-if no further convenient rules can be drawn from the general rule,-it drops from the body of the law. Thus it is at present with the rule or fiction that a corporation is a legal person; it still represents a convenient phrase, nay, a convenient point of view; but it is dead as a principle because legal propositions are no longer deduced from it, nor is it in logical connection with the great mass of legal rules which have been called forth by controversies relating to railroad and other business corporations," citing People v. North Riv. Š. R. Co. (supra, p. 100), and State v.Standard Oil Co., 49 O. S. 137. In the text, section 36, he says: "A corporation, considered as a legal institution, is the sum of the legal relations resulting from the operation of rules of law, in its constitution upon the various persons, who, by fulfilling the prerequisite conditions, bring themselves within the operation of these rules." In section 48 he adds: "It is now necessary to determine who are the individuals composing the corporation regarded not as a mass of legal relations, but as a body of men. Can it be said that the corporation, or body corporate, is composed of all the persons between whom these legal relations subsist? This conception would embrace all persons in any way interested in the corporate enterprise, the state the shareholders and directors, and creditors." But, he says, section 49, "It is more in accordance with the ordinary use of terms, and a clearer and more serviceable conception, to regard the corporation as consisting of the shareholders, who may, with propriety, be said to constitute the body corporate, as it is through their acts, or the acts of their predecessors, that incorporation is caused." Section 50: "The shareholders, then, vested with the corporate powers, are the body corporate, corporation or company." Section 51: "Such, then, are the two meanings of the term corporation; the one, the sum of legal relations subsisting in respect to the corporate enterprise; the other, the organic body of shareholders, whose acts cause the operation of the rules of law in the constitution. These two conceptions include all that is really connoted by the term in whatever sense used. And, if so, what has become of the venerable 'legal person?' Is he still somewhere, as he has always been imagined? Or is he nowhere as he has always actually been? * *. Shall we say he is the combination, the mystic unification of our two conceptions? Better not; better forget him. For he is a conception, which, if it amounts to anything, is but a stumblingblock in the advance of corporation law towards the discrimination of the real rights of actual men and women. And then, after all, what has he ever been but an abstraction materialized in a name?" He says, also, note 1, § 51: "It is in respect of the doctrine of ultra vires, that the fiction of a legal person is most pernicious, as this fiction involves regarding a corporation as a unit, and retards the proper discrimination of the rights of different persons in regard to ultra vires acts." Compare the definition of Reese, supra, p. 79. Prof. Pomeroy, in reviewing Mr. Taylor's work, under the title, "Legal Idea of a Corporation," 19 Am. Law Rev., pp. 114-116 (1885), says: "The common law conception of the 'legal personality' of the metaphysical entity constituting the corporation entirely distinct from its individual members arose at a time when corporations were all created by special charters, generally granted by the crown; when very few were 'stock' corporaand were necessarily monopolies. * almost all private corporations for almost any business purpose. The assodiffer very little in their essential attributes Of late years parliament has enacted statutes similar in their scope and effect to our general laws for the formation of private corporations. The English courts have never treated the joint-stock

tions,

States general laws

ciations thus formed from partnerships.

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In the United are formed under

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companies with limited liability, formed under these statutes, as being identical with common law corporations, but have always carefully distinguished between them. In our opinion, the American courts must, in time, recognize and enforce the same distinction."

In Pembina Mining Co. v. Pennsylvania, 125 U. S. 181, on 189 (1888), Field, J., says: "A private corporation is merely an association of individuals united for a special purpose and permitted to do business under a particular name, and have a succession of members without dissolution.' He said the same in Baltimore, etc., R. Co. v. Fifth Baptist Church, 108 U. S. 317, 330 (1883). The Am. & Eng. Ency. (4 vol. 185) (1888), says: "A corporation is a body consisting of one or more persons, established by law for certain specific purposes, with the capacity of succession (either perpetual or for a limited period) and other special privileges not possessed by individuals, yet acting in many respects as an individual."

Mr. Beach, Commentaries on the Law of Private Corporations, vol. 1, § 1, 1891, after noting the conflicts in definitions given, says: "Although a corporation is, in a certain sense, something distinct from its members, having a life independent of theirs, the truth would seem to lie between these conflicting views of its nature. The effort of practical jurisdiction should be to regard it as a unit or as a collection of persons according to the relation in which it acts in a given instance. As has been aptly said to this point (quoting Professor Pomeroy, 19 Am. Law Rev. 114) 'the shield will be either white or red accordingly as it is viewed from the one side or the other.'"

Mr. Thompson, Commentaries on Corporations, 1895, § 1, says: "The most usual conception of a corporation is that it is a collection of natural persons, joined together by their voluntary action or by legal compulsion, by or under the authority of an act of the legislature, to accomplish some purpose, pecuniary, ideal, or governmental, authorized by the legislature, under a scheme of organization and by methods thereby prescribed or permitted: with the faculty of having a continuous succession during the period prescribed by the legislature for its existence, of having an individual name by which it may make and take contracts and sue and be sued, and of acting as a unit in respect of all matters within the scope of the purposes for which it was created."

Mr. Clark, Handbook of the Law of Private Corporations, 1897, §§ 1, 2, 3, says: "A corporation aggregate is a collection of individuals united, by authority of law, into one body, under a special denomination, with the capacity of perpetual succession. Every corporation aggregate consists of, (a) A collection of individuals. (b) A legal entity, which is, for many purposes, in contemplation of law, separate and distinct from the members who compose it. For the purpose of acquiring, holding, and conveying property, contracting obligations, incurring liabilities, suing and being sued, a corporation is regarded in law as a legal entity separate and distinct from the members who compose it. That a corporation is thus a legal entity, separate and distinct from the members who compose it, is a mere legal fiction introduced for the convenience of the corporation in transacting business, and of those who do business with it; and when urged to an intent and purpose not within its reason and policy, it will be disregarded, and the fact that the corporation is really a collection of individuals will be recognized, even at law. Courts of equity, in numerous instances, look behind the corporate entity, and recognize the individual members and will do so whenever justice requires."

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It seems from the foregoing, and still more from the further treatment of the subject by Mr. Beach, Mr. Thompson and Mr. Clark, that "the collection of individuals" is emphasized only by being placed first in their definitions as Mr. Kyd did, and is not made especially prominent as a principle from which to deduce theories of corporate rights and liabilities, as is the case with Mr. Morawetz and Mr. Taylor.

Mr. Trapnell in "The Logical Conception of a Corporation," a paper read before the West Virginia Bar Association in 1896, defines a corporation as "an association of individuals formed under the sanction of the state, for a distinct and definite purpose." He specifies particularly that the associa

tion originates in an agreement between individuals, which becomes effective only through a special charter or general enabling act, the provisions of which are accepted by the execution of the agreement; the peculiar mode of existence is perpetual, actual or potential; the distinct feature of its termination is the state's power to dissolve for violation of the law; the distinctive features as to membership are the effect of assignment of stock, and the confining of rights and liabilities strictly to the proper purposes of the corporation; as to the state's sanction, it must be an express legislative one, which operates both as a grant of powers forming a contract with the state, and as a law, prescribing certain forms and modes of action, and, as to the purpose, it must be a definite one, and no corporate power is to be exercised outside of this express or necessarily implied purpose, under penalty of forfeiture, and no corporate liability will arise therefrom except by way of estoppel; the corporate actions must be through the forms and by the parties or officers prescribed, and the funds must be applied only to the purposes indicated, without diversion or dissipation to the prejudice of members or creditors. The foregoing is the substance of what he submits "as a logical statement of all the elements essential to a modern business corporation, with such analysis of each as is necessary to differentiate a corporation from all other associations known to law, as regards that particular," in other words "to exhibit the anatomy of a healthy corporation." He says further: "It seems worth while to attempt to embody a clear conception of a corporation-immortality, 'corporate identity,' 'perpetual succession,' and all-without any aid from the artificial' person whom Coke and Blackstone regarded so lovingly, and who is such a bugbear to, at least, one modern text writer."

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ARTICLE IV. THE CORPORATION AS A FRANCHISE.1

Sec. 22. In its relation to the state a corporation is considered as a primary franchise held by the members in their individual capacity, enabling them in their collective or corporate capacity to have and exercise other or secondary franchises, rights or privileges.

(1) General nature of a franchise.

THE PEOPLE, ETC., Ex REL. THE ATTORNEY-GENERAL, V. THE UTICA INSURANCE COMPANY.2

1818. IN THE SUPREME COURT OF NEW YORK. 15 Johnson (N. Y.) *358-*395.

[Information in the nature of quo warranto against the Utica Insurance Company,-a company authorized to do all kinds of insurance business, and "in general of doing and performing, in these operations, all the business generally performed by insurance companies, excepting therefrom that this corporation shall not engage in loaning any money upon bottomry and respondentia nor in making any insurance upon any life or lives," for using without any warrant, 1 See note at end of this article, p 157.

* Statement of facts condensed, parts of arguments, and parts of opinion omitted.

8-WIL. CASES.

charter or grant the following liberties, privileges and franchises to wit, that of becoming proprietors of a bank or fund for the purpose of issuing notes, receiving deposits, making discounts, and transacting other business which incorporated banks may and do transact by virtue of their respective acts of recorporation, all of which liberties, privileges and franchises the said company have usurped and still do usurp upon the people of the state. The bank pleaded authority under their act of incorporation and the people demurred.]

Attorneys [Harrison and T. A. Emmet] for the insurance company maintained: 1. The acts charged against the defendants are not the exercise of franchises; and therefore an information in the nature of a writ of quo warranto will not lie against them. Franchise or not is a question of law and is not admitted by the demurrer. A franchise is a royal privilege, or branch of the royal prerogative, subsisting in the hands of the subject, by grant from the crown. A writ of quo warranto is the king's writ of right and' and issues where a franchise is usurped, or forfeited by misuser. (2 Bl. Com. 37, Finch's Law 38, 164, 166; 3 Cruises' Dig. 278, tit. 27, § 1.) The word "franchises" is often used, in common parlance, in a very broad sense, for all liberties, but its legal or technical signification is more confined. A franchise was, always, in England, a gem in the royal diadem. It was inherent in the crown from the first institution of monarchy. But the right of banking was never a franchise or branch of the royal prerogative. The bank of England was established in 1694, pursuant to an act of parliament (5 W. & M., cap. 20), which authorized their majesties, William and Mary, to grant a commission to take subscriptions from individuals, and to incorporate them. Had the power of banking been a royal franchise, this special authority from parliament would not have been necessary. In 1697 (8 & 9 W. & M., ch. 20, § 28) it was enacted that during the continuance of the bank of England, no other bank, or any other corporation, society, fellowship, company or constitution, in the nature of a bank, should be erected or established, etc., by act of parlia

ment.

This still left individuals and ancient corporations free to bank. But in 1708 (7 Anne, ch. 7, § 61), it was enacted, that during the continuance of the bank of England, it should not be lawful for any corpora tion erected, or to be erected (other than said bank), or for any other persons in partnership, exceeding the number of six persons, to take up money on their bills or notes, etc. It is clear, then, that if parliament had not interfered, all corporations might lawfully have carried on banking business; the act of 7 Anne, restraining them, does not declare it unlawful, but merely prohibits the exercise of the power while the bank of England continued. It is manifest, therefore, that in England, banking was not considered as a royal franchise; and private banking is now carried on in that country by associations of partnership of not more than six persons.

If we look to the acts of our legislature, we shall find that they

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