CHAPTER IV. RESEMBLANCES BETWEEN CORPORATIONS AND CERTAIN OTHER LEGAL INSTITUTIONS. Object of the chapter, §52. What law applicable to corporations, § 53. New York "full liability corporations," §54. Points of difference remaining, §§ 60, 61. The element common to these various legal institutions, § 62. Material questions, § 63. New York joint-stock associations, Law applicable to corporations, how § 55. Comparison, §§ 56, 57. Limited partnerships, § 58. Partnerships: dissimilar from corporations at common law, §59. determinable, §§ 64, 65. Changes in corporation law, § 66. The application of general princi- the chapter. $52. THE object of this chapter is to point out some of the elements which corporations have in common with certain other legal institutions, and to determine some- Object of what more specifically than was attempted in the preceding chapter the rules of law which manifest themselves in the legal institutions called corporations. The danger of reasoning unguardedly as to questions of corporation law from the analogy of other legal institutions will be referred to incidently. What law to corporations. $53. The common law notion of a partnership was sharply differentiated from the common law notion of a corporation. Nowadays it would not be easy to find a applicable business corporation corresponding to the common law notion of a corporation. On the other hand, we find every where a great multitude of legal institutions, in great part the manifestations of statutory law, which resemble partnerships in some respects, while in other respects they resemble common law corporations. The law of these legal institutions, however, is not the law of partnership, nor is it altogether the common law of corporations. It is rather the statutory law under which they are organized, together with the later phases of the common law of corporations, construed and interpreted in accordance with the general rules of the law of contracts and of torts. To notice here a few of the statutory provisions applying to some of these institutions will give point to the remarks which will follow. New York "full liability cor 54. Under a statute at present in force in the state of New York, any "three or more persons may become a stock corporation for any lawful business purpose porations." [with certain important exceptions] by executing and filing a proper certificate. A corporation may be organized under this statute as a "full liability corporation," by inserting in its certificate a statement to that effect. In which case "all the stockholders of the corporation shall be severally individually liable to its creditors for all its debts and liabilities, and may be joined as defendants in any action against it. No execution shall issue against any stockholder individually until execution has been issued against the corporation and returned unsatisfied, and all the stockholders shall contribute a proportionate share, according to the number of shares of stock owned by each, of the amount paid by any stockholder on a judgment recovered against him individually for a debt of the corporation, and he may recover from the other stockholders in the corporation, in a joint or several action, the proper portion due by them and each of them of the amount paid by him on any such judgment." 2 New York jointstock associations." $55. A comparison of these " full liability" corporations with certain joint-stock companies, which are not called "corporations," will show the difficulty of using the term "corporation" in classifying legal institutions. Chapter 258 of the New York laws of 1849 provided : (1) that any joint-stock company or association of seven or more shareholders or associates may sue and be sued in the name of the president or treasurer for the time being of such joint-stock company or association; (2) that such suit shall not abate by reason of the death or removal of the president or treasurer; (3) that the president or treasurer shall not be personally liable for any such suit (though this provision is not to exempt him 1 Chap. 520, laws of 1901, amending safe to say that very few corporations prior statutes. under this act are organized as "full t 2 Laws of 1892, chap. 691, § 6. It is liability corporations," from any liability to which he is subject as a stockholder in the company); (4) that suits against the company shall be prosecuted in this manner in the first instance; but that, after judgment entered and return of execution thereon unsatisfied, suits may be brought against the stockholders individually. Chapter 245 of the laws of 1854 contained the following provisions: “1. Whenever, in pursuance of its articles of association, the property of any joint-stock association is represented by shares of stock, it shall be lawful for said association to provide by their articles of association that the death of any stockholder, or the assignment of his stock, shall not work a dissolution of the association, but it shall continue as before; nor shall such company be dissolved, except by judgment of a court for fraud in its management, or other good cause to such court shown, or in pursuance of its articles of association. 2. Said associations may, also, by said articles of association, provide that the shareholders may devolve upon any three or more of the partners the sole management of their business. 3. This act shall in no court be construed to give said associations rights and privileges as corporations." Chapter 289 of the laws of 1867 provided that it should be lawful for any joint-stock association to purchase, hold, and convey such real estate (1) as shall be necessary for its immediate accommodation in its business; (2) as shall be mortgaged to it in good faith; (3) as it shall purchase at sales under judgments, decrees, or mortgages held by it. "The said joint-stock company shall not purchase, hold, or convey real estate for any other purpose; and all conveyances of such real estate shall be made to the president of such jointstock company, as such president, and who, and his successors, from time to time, may sell, assign, and convey the same, free from any claim thereon against any of the shareholders, or any person claiming under them.” 2 $56. It appears at a glance how closely these joint-stock associations resemble the "full liability corporations" above These provisions, modified in language by various amendments, still substantially constitute §§ 1919 1922 of the New York Code of Civil Procedure. 1867; chap. 290, laws of 1868, chap. 599, laws of 1881, and chap. 235, laws of 1894. The last repeals chapter 245 of the laws of 1854, and chapter 289 of the laws of 1867, which are cited 2 See, also, chap. 937 of laws of above merely for illustration. Compari son. referred to; yet the latter are called "corporations," while, as to the former, the legislature, in the same breath in which it gives them similar privileges and capacities, declares that in no court shall the statutory provisions regulating these associations "be construed to give them rights and privileges as corporations."1 § 57. The New York Court of Appeals, after some uncertainty of mind, held that joint-stock associations were not taxable under certain statutes taxing "monied or stock corporations." Referring to the statutes authorizing joint-stock associations, Judge Finch, who gave the opinion of the Court, remarked that since their passage "the legislature, while steadily preserving the distinction of names, has with equal persistence confused the things by obliterating substantial and characteristic marks of difference, until it is now claimed that joint-stock associations have grown into and become corporations by force of the continual bestowal upon them of corporate attributes." The Court, however, recognized its duty to give effect to this legislative intent to preserve the distinction between the two classes of organizations, and at the close of the opinion the learned judge formulated their distinguishing characteristics as follows: "The formation of the one involves the merging and destruction of the common law liability of the members for the debts, and requires the substitution of a new, or retention of the old, liability by an affirmative enactment which avoids the inherent effect of the corporate creation; in the other, the common law liability remains unchanged and unimpaired, and needing no statutory intervention to preserve or restore it; the debt of the corporation is its debt and not that of its members; the debt of the joint-stock company is the debt of the associates however enforced; the creation of the corporation merges and drowns the liability of its corporators, the creation of the joint-stock company leaves unharmed and unchanged the liability of the associates; the one derives its existence from the contract of The Massachusetts courts hold the New York joint-stock associations not to be corporations, and that their members may be sued as partners. Boston & Albany R. R. Co. v. Pearson, 128 Mass. 445. New Jersey courts hold them to be corporations. individuals, the other from the sovereignty of the state. The two are alike, but not the same. More or less, they crowd upon and overlap each other, but without losing their identity, and so, while we cannot say that the joint-stock company is a corporation, we can say, as we did say in Van Aernam v. Bleistein, (102 N. Y. 360), that a joint-stock company is a partnership with some of the powers of a corporation." 1 1 ships. § 58. Limited partnerships afford another illustration of the difficulty of saying what constitutes a corporation. Limited Such a partnership exists where one or more of the partnerpartners are liable individually for the firm debts, and one or more, provided the requirements of the statute are complied with, incur no personal liability for such debts beyond the amount contributed by them to the capital of the firm. Thus in limited partnerships exists a liability restricted to certain funds, as is the case with most corporations. There are, moreover, corporations in which there is no restricted liability; and so a limited partnership, which is not called a corporation, possesses an ordinary corporate attribute which some corporations lack." 1 People ex rel. Winchester v. Cole- | case, after the greatest deliberation, man, 133 N. Y. 279, 286. Compare it was held that these same banking Barndollar v. Dubois, 142 Pa. St. 565, institutions were not corporations. 569; Willis v. Chapman, 68 Vt. 459. The difficulty of saying, more than As to the principles of agency appli- forty years ago, what constitutes a cable to members of a joint-stock as corporation is shown by the argusociation, see McCabe v. Goodfellow, ments and decisions in these two 133 N. Y. 89. 2 A limited partnership has been called a quasi-corporation; see Angell and Ames on Corp., § 45. In Thomas v. Dakin, 22 Wend. 9, 112 (1839), it was decided by the Supreme Court of the state of New York, whose chief justice at the time was the venerated Nelson, that certain banking institutions, formed under "an act to authorize the business of banking," passed April eighteenth, 1838, were corporations. The year following this decision, the case of Warren v. Beers, 23 Wend. 103, 196, was decided in the Court for the Correction of Errors in the same state. In this cases. Likewise, in respect of public corporations, it is hard to say what constitutes them corporations. A city with a special charter has more extensive powers of corporate action than a town, or a county, or "dock commissioners." In Downing v. Indiana State Board, 129 Ind. 443, the "Indiana State Board of Agriculture" was held to be a private corporation, it having a specifically granted right of perpetual succession. Perhaps the following extracts will show what a quasi-corporation is. "There may be also private corpora |