in connection with their subsequent acts they were properly recog nized as stockholders, and hence, that one-half of the capital stock was represented at the organization of the company. The fact that Barnes and Pease had not been notified of the meeting could not furnish grounds for objection by those subscribers present and participating therein, they have not suffered by the omission, and are not in a position to object as to others: Schenectady R. Co. v. Thatcher, 1 N. Y. 102. See, also, Handley v. Stutz, 139 U. S. 422, 11 Sup. Ct. 530; Morawetz on Private Corporations, § 399. Thus we have an organization perfected by persons bound as subscribers, and representing fully one-half of the capital stock as fixed by the articles of incorporation, and all bound by its proceedings. We think the organization valid, although Barnes and Pease were not notified. As to how they would be affected by want of notice it is not for us to determine at this time; it is sufficient to say that those subscribers participating can not object on that account.

The defendants, if subscribers to the capital stock, became such after the organization, and the want of notice to Barnes and Pease could not affect them; so that they are in no better position to object to the regularity of the organization on that account than those participating in the first meeting. The result is that, in so far as they are concerned, the company was duly incorporated, and this result is reached, not because they are estopped by having dealt with it, but because it was legally organized prior to their subscription to the capital stock. For the purpose of estopping the plaintiff from asserting its due and legal organization, it is alleged in the answer in abatement that plaintiff had, theretofore, instituted an action in a justice's court against Guy Posson for assessments made by the company upon his alleged subscription to the capital stock; that a trial was had upon the sole issue whether Posson was a subscriber at the date of the attempted organization; and that it was determined by the judgment that he was not. It is claimed that, as the same question is necessarily involved in determining in this action whether the plaintiff was duly organized, the plaintiff is estopped to assert its truth, the judgment having gone against him in the justice's court. The plea is argumentative, and avers in effect that, as the judgment in the justice's court estops the plaintiff to now assert that Posson is a subscriber, therefore it can not be affirmed that the corporation is duly organized. That this is an action upon a different cause from the one against Posson can not be gainsaid; the inquiry, therefore, to which the estoppel is pertinent must be confined to the point or question actually determined in the Posson case. Cromwell v. County of Sac, 94 U. S. 353. Thus far, the plea is apparently within the rule. But a very important essential to the estoppel is wanting in that this cause and the one adjudicated in the justice's court are not between the same parties in the same right or capacity, or their privies claiming under them. This objection is fatal to the plea. 1 Freeman on Judgments, § 252. The judgment of the court below must, therefore be reversed, and the cause re

manded for such further proceedings as may be deemed proper not inconsistent with this opinion.

Reversed.

Note. See schemes of organization, infra, pp. 426, 560; In In re Lady Bryan Co., 1 Sawyer (U. S. C. C.) 349, 14 Fed. Cas. 926 (1870), it was said that "corporators" in the Bankrupt Act, meant the stockholders. But so far as organization is concerned "corporators exist before stockholders, and do not exist with them. When stockholders come in, corporators cease to be." Chase v. Lord, 77 N. Y. 1, 11 (1879). Corporators or incorporators need not become members of the corporation by subscribing for stock, unless the law expressly so provides: 1870, Densmore Oil Co. v. Densmore, 64 Pa. St. 43; 1890, Welch v. Importers', etc., Bank, 122 N. Y. 177; 1898, Bristol Bank & T. Co. v. Jonesboro B. & T. Co., 101 Tenn. 545, 48 S. W. 228.

TITLE II.

THE BODY CORPORATE: ITS FORMATION, OR ITS CON-
CEPTION AND INCUBATION.

CHAPTER 5.

THE CORPORATE CHARTER.'

ARTICLE I. NATURE AND PURPOSE OF THE CHARTER,

Sec. 81. In general. The conception of a corporation consists in the offer and acceptance of a charter, wherein are set forth the terms and conditions upon which the state will permit an individual or association of individuals to exercise a part of the sovereign franchises of the state. When the offer is made and accepted there results a contract between the state, the corporation, and those who accept it, authorizing them to convert themselves, or others, or an association of other persons, by organization, into a body corporate, having the powers and privileges set forth expressly, or necessarily implied from those set forth, in the charter.

Sec. 82. More particularly, the charter is both a law and a con

tract.

"A charter of incorporation is the written instrument by which the crown institutes the body politic, and conveys to it its peculiar constitution, its rights, privileges, powers or estates, etc., imposes a name upon the corporation, defines its objects and purposes, and assigns such conditions and limitations upon the exercise of the powers, privileges, etc., conferred, as to the crown seems fit." Grant, Corporation, *13 [Am. ed. p. 25, 1854].

"The charter of a corporation serves a twofold purpose; it operates as a law conferring upon the corporators the right or franchise of acting in a corporate capacity, and, furthermore, it contains the terms of the fundamental agreement between the corporators themselves. Morawetz, Private Corporations, § 316.

"The charter of a private business corporation or incorporated company operates primarily as a law repealing the common law prohibi

1

1 See, generally, 1 Abbott's Digest, 146; 4 Am. & Eng. Enc., 193-4; Angell & Ames, ch. ii, iii; Beach, §§ 11, 13, 15, 17-36; Boone, ch. ii; Clark, ch. ii; Cook, §§ 2, 3, 492–503, 640; Elliott, §§ 21-50, 89-120; Field, §§ 9-36; Grant, pp. *9-*47; Morawetz, §§ 8-27, 38, 39, 318-759, 760, 1046–1050; Taylor, §§ 118, 147, 195, 227, 264, 438, 448, 496-504; 1 Thompson, §§ 35-218.

tion against the formation of corporate associations, and enabling the members of the company legally to accomplish the purposes for which they have associated. After the corporation has been formed pursuant to such a charter or incorporation law, it fulfills a second equally important function. It contains, in whole, or in part, the terms of the contract, or articles of agreement, by which the shareholders or members of the corporation are bound together, and indicates the purposes for which they have contributed or agreed to contribute the company's capital." Morawetz, Private Corporations, § 1046.

"The constitution of a corporation is of a dual nature; it is law in that it consists of rules for conduct set by a political superior to political inferiors, and it embodies a contract the obligation of which is the selfsame constitution regarded as law. The contract embodied in the constitution always subsists among the corporators as parties thereto, and it may subsist between the corporation and the state, for the state is sometimes a party to it." Taylor, Private Corporations, § 438.

Sec. 83. Same. The charter as a law and as a contract.

FLINT AND FENTONVILLE PLANK-ROAD v. WOODHULL. 1872. IN THE SUPREME COURT OF MICHIGAN. 25 Mich. Rep. 99–113.

COOLEY, J. The legislature of 1848 passed an act incorporating the Flint and Fentonville Plank-road Company, with power to lay out, establish and construct a plank-road, and all necessary buildings, from the village of Flint to the village of Fentonville. The act was to remain in force sixty years from and after its passage, but the fourth section provided that "the legislature may at any time alter, amend, or repeal this act by a vote of two-thirds of each branch thereof; but such alteration, amendment, or repeal shall not be made within thirty years of the passage of this act, unless it shall be made to appear to the legislature that there has been a violation by the company of some of the provisions of this act." The fifth section made the general plank-road act of 1848 a part of this special charter. Laws 1848, p. 404.

The corporators appear to have organized under their charter, and to have constructed the road provided for by it, a part of which they now keep up and maintain. In 1871, the legislature passed an act to repeal this charter. This act is very brief, has no preamble, contains no recitals, and simply declares that the act first above named "be and the same is hereby repealed." Sess. L. 1871, vol. iii, p. 167. No notice was given to the company or to any of its officers, of the intention to adopt or to propose any such repeal, or to enter upon any investigation of a violation by the company of any of the provisions

of its charter; neither the journals of the legislature, nor the files or records in the office of the secretary of state, show that any investigation was ever had, nor is it claimed or suggested that there is evidence anywhere that any tribunal, legislative or judicial, has passed upon the question of such a violation, and adjudged it to have taken place, unless the repealing act itself affords such evidence. The company denies the validity of this act, and the defendant, having treated it as valid, and acted upon it adversely to their interests, an issue has been made, which is now before us for decision.

It is not disputed on the part of the defendant that the charter of a private corporation is to be regarded as a contract, whose provisions are binding upon the state, and can not be set aside at the will of the legislature. Such a charter is a law, but it is also something more than a law, in that it contains stipulations which are terms of compact between the state as the one party, and the corporators as the other, which neither party is at liberty to disregard or repudiate, and which are as much removed from the modifying and controlling power of legislation as would be the contracts of private parties. But the defendant insists that the repealing act in this case is one contemplated and justified by the contract itself; and no attempt is made to defend it, except upon what the defendant regards as a just con-struction of the original charter. The positions taken by the defendant may be succinctly stated as follows:

1. The legislature had a right to repeal the charter whenever the fact should be made to appear that a violation of the charter had taken place.

2. The inquiry into the fact of violation would be an inquiry for the purpose of enabling the legislature to exercise its legitimate powers, and would, therefore, be legislative in character, and might be entered upon in any manner and through any channels the legislative wisdom might devise or see fit to employ, untrammeled by any of the rules which govern the action of judicial tribunals.

3. The repealing act is not only of itself a determination that the violation of charter has taken place, but it is evidence, also, that the legislature has first informed itself of the facts; and no court or other authority is at liberty to assume that it has acted improvidently or without due inquiry.

4. But, although all presumptions favor the legislative action, it is conceded that the parties concerned are entitled to a judicial investigation afterwards, and, upon an issue properly framed for that purpose, may show the act invalid by establishing the fact that no violation of the charter has taken place, and that the legislature must have acted under mistake or in misapprehension of the facts.

The first of these positions must be conceded. The right of the legislature to repeal, when it was properly made to appear that a breach of the charter had taken place, can not be questioned.

The second will be equally indisputable, if the main point be established, that the inquiry to determine the violation of the charter is legislative in character. The legislature will not only choose its own.