436. It is the legislative policy of some states to prolong the existence of the corporation after the expiration of its charter, for the purposes of winding up its affairs, though not for the purpose of continuing its business. Under such circumstances, whether any given legal proceeding should be instituted in the corporate name, or in the name of a receiver or of trustees appointed to wind up the corporate affairs, depends on the statutory provisions.2

§ 437. In regard to the substantial effects of a dissolution, clearly the common law rule that upon the dissolution of a corporation, its real estate reverts to the grantor, its personal property to the sovereign, and all debts due from and to it become extinguished, has no longer any application to stock corporations. And that it has no application is the combined

Ill. 32; Folger v. Chase, 18 Pick. 63; Herron v. Vance, 17 Ind. 595; Tuscaloosa Scientific, etc., Ass'n v. Green, 48 Ala. 346; Nelson v. Hubbard, 96 Ala. 238; Stiles v. Laurel Fork, etc., Co., 47 W. Va. 838. As to extraterritorial recognition of such a statute, see Rodgers v. Ins. Co., 148 N. Y. 34.

66 Ga. 177; Greely v. Smith, 3 Story, 657; Merrill v. Suffolk Bank, 31 Me. 57; Ingraham v. Terry, 11 Humph. (Tenn.) 572; Mumma v. Potomac Co., 8 Pet. 281; Farmers', etc., Bank v. Little, 8 W. & S. (Pa.) 207; Bank of Miss. v. Wrenn, 3 Sm. & M. (Miss.) 791; May v. State Bank, 2 Rob. (Va.) 56; Thornton v. Marginal Freight R'y Co., 123 Mass. 32; 2 See Mariners' Bank v. Sewall, 50 McCulloch v. Norwood, 58 N. Y. 566; | Me. 220; Blake v. Portsmouth, etc., Taylor v. Gray, 59 N. J. Eq. 621; Ins. | R. R. Co., 39 N. H. 435; Tuscaloosa, Com. v. U. S. Fire Ins. Co., 22 R. I. etc., Ass'n v. Green, 48 Ala. 346; Re 377; compare Shayne v. Evening Post Independent Ins. Co., 1 Holmes, 103; Pub. Co., 168 N. Y. 70; Platt v. Von Glahn v. De Rosset, 81 N. C. Archer, 9 Blatchf. 559; Fisk v. Union 467; Muscatine Turn Verein Pac. R. R. Co., 10 Blatchf. 518; Wil- Funck, 18 Iowa, 469; Pomeroy's Lescox v. Continental Life Ins. Co., 56 see v. State Bank, 1 Wall. 23; LoConn. 468; Life Ass'n v. Goode, 71 throp v. Stedman, 13 Blatchf. 134, Tex. 90; Shore Line R. R. Co. v. 143; Owen v. Smith, 31 Barb. 641; Maine Cen. Ry. Co., 92 Me. 476; Heath v. Barmore, 50 N. Y. 302; Morgan v. N. Y. Nat. Bldg. Assn., 73 Wright . Nostrand, 94 N. Y. 31; Conn. 151. Contra, Lindell v. Ben-State v. Bk. of Washington, 18 Ark. ton, 6 Mo. 361. So it is also held in 554; Cooper v. Oriental Sav. Asso., Missouri that consolidation-which 100 Pa. St. 402; Gray v. Lewis, 94 causes dissolution-does not abate a N. C. 392. pending suit. Evans v. Interstate R'y Co., 106 Mo. 594.

v.

8 See Ang. and Ames on Corp., § 779; Life Ass'n of America v. Fassett, 102 Ill. 315; Mott v. Danville Seminary, 129 Ill. 403; Danville Seminary v. Mott, 136 Ill. 289. See Seixas

1

result of statutes and equitable principles. On the dissolution of a stock corporation its assets become a trust fund for the discharge of its liabilities, including those not yet matured, and the surplus belongs to the shareholders. Equity will always furnish a means by which debts due a corporation can be collected after its dissolution, for the benefit of parties interested, creditors or shareholders, and in equity the general assignee of a defunct corporation can collect its claims."

4

t. New Orleans, 51 La. Ann. 1. But 751. When a mutual insurance com-
this rule was applied in Commercial pany, which has no shareholders, is
Bank v. Lockwood, 2 Harr. (Del.) 8. | dissolved, the assets remaining after
1See Owen v. Smith, 31 Barb. 641; the discharge of its liabilities, vest
Heath v. Barmore, 50 N. Y. 302; Mc- in the state. Titcomb v. Insurance
Coy v. Farmer, 65 Mo. 244.
Co., 79 Me. 315.

4 See Hightower v. Thornton, 8 Ga. 486; Curran v. State of Arkansas, 15 How. 304, 311; Von Glahn v. De Rosset, 81 N. C. 467.

5 Lenox v. Roberts, 2 Wheat. 373; Lum v. Robertson, 6 Wall. 277. See Bacon v. Cohea, 12 Sm. & M. (Miss.) 516. Compare Fox v. Horah, 1 Ired. Eq. (N. C.) 358; Asheville Division v. Aston, 92 N. C. 578. See, also, §504.

419

CHAPTER VIII.

RELATIONS BETWEEN THE STATE AND THE CORPORATION, INCLUDING RELATIONS BETWEEN THE STATE AND (a) SHAREHOLDERS, (b) OFFICERS, AND (c) CREDITORS OF THE CORPORATION.

Dual nature of the constitution of a | Railroads, § 455.

The constitution of a corporation, in Grounds of forfeiture not to be taken

Enabling acts and special charters, Restrictions in state constitutions on § 451.

1 Relations, that is to say, between rate enterprise, and representing all the state and the organic body of persons in any way interested in it. shareholders controlling the corpo

Relations between the state and the corporation other than legal rela tions occasioned by contract, §§ 469-4696.

Eminent domain.

470.

Restrictions, §

"Due process of law," §§ 471, 472. Just compensation, § 473.

Police power, § 474.

Police power.

Commerce clause, §§

474a-474d.

Police power.

Its limits.

Property

in which the public have interest,

Elevator cases.

Chartered exemptions from taxation, §§ 487, 488.

Never arise by implication, § 489. Immunity from taxation not transferable, § 490.

Effect of consolidation, § 491. Taxation, due process of law, §§ 492, 492a.

Jurisdiction of equity to restrain the collection of a tax, § 492b.

Distinction between " rights" and "remedies," §§ 493-495.

The power reserved to alter and repeal, § 496.

Railroad charges, §§ No vested right in a rule of law,

§§ 475, 476.

Power of states. Restrictions, §§ Limits of the reserved power, § 499.

479, 480.

Restrictions on the power of the states to tax arising from the exigencies of the Federal government, § 481.

Federal agencies, § 482.

State taxation of national banks, §§ 483, 484.

Restrictions on state taxation arising from the power of Congress to regulate commerce, § 485. Telegraph companies, § 486.

Illustration. Relations between shareholders and creditors, §§ 500,

501.

Further limits on the reserve power,
§ 502.

When a judicial proceeding prerequi-
site to the repeal, § 503.
Effect of a repeal, § 504.
Relations between the state and the
individuals interested in the corpo-
rate enterprise, §§ 505-507.

Dual nature

stitution of a corpora

$438. 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 of the conit embodies a contract the obligation of which is the self-same constitution regarded as law. The tion. 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. On account of the dual nature of the constitu

1"A charter is a law, but it is also something more than 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

tion of a corporation it will be necessary, in order to analyze the relations between the state and the corporation, to determine in what respect this constitution, besides being law, is to be regarded as a contract. To this determination accurate notions of law and contract are prerequisite.

Austin's

a law.

$439. "Every law," says Austin 1 "or rule is a command. Or rather laws or rules properly so called are analysis of a species of commands." Analyzing the nature of a command, he proceeds: "If you express or intimate a wish that I shall do or forbear to do some act, and if you will visit me with some evil in case I comply not with your wish, the expression or intimation of your wish is a command. . . . The ideas then comprehended by the term command are the following: 1. A wish or desire conceived by a rational being that another rational being shall do or forbear; 2. An evil to proceed from the former and to be incurred by the latter, in case the latter comply not with the wish; 3. An expression or intimation of the wish by words or other signs." Then, continues Austin, when a command "obliges generally to acts or forbearances of a class, a command is a law or rule. A law properly so called is therefore a command which obliges a person or persons, and as distinguished from a particular or occasional command, obliges generally to acts or forbearances of a class. Laws and other commands are said

to proceed from superiors, and to bind or oblige inferiors, the term superiority here signifies might."

In another part of the same work, Austin, analyzing the nature of sovereignty, says: "Every positive law, or every law simply and strictly so called, is set by a sovereign person or a sovereign body of persons, to the member or members of the independent political society wherein that person or body is sovereign or supreme.. . . The superiority which is styled sovereignty, and the independent political society which sovereignty implies, is distinguished from other superiority, and from other society by the following marks or characters: 1. The bulk of the given society are in the habit of obedience or sub

modifying and controlling power of legislation as would be the contracts of private parties." Flint, etc., Plank

Road Co. v. Woodhull, 25 Mich. 99, 101, per Cooley, J.

1 Province of Jurisprudence. Lecture I.