Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/122

 § 132.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. 131. The general statement is often made, that a corpora- tion cannot transfer its franchises to another corpora- Power to transfer tion, or to an individual. 1 Especially, it is said, a franchises. ,• p •, p ■ • , i cor poration cann ot transfer its franchise to be a c or- po ration. 2 And this on the ground that a grant of franchises or privileges from the legislature to a body of men gives to that body no authority to transfer these franchises and privileges to others. In effect, such a transfer would be a conferring of the power to act as a corporation, 3 a power which, it is needless to say, only the legislature can confer. If a corporation is ex- pressly authorized to transfer its franchises, then its grantee receives them indirectly from the legislature by virtue of ex- press power conferred on the corporation to authorize another body of men to exercise its franchises or similar ones. 4 § 132. These statements are all correct enough. The trouble with them is that, except in regard to a single class of corpora- tions, they have little practical import. The class of corpora- tions referred to are railroad and other corporations charged with the performance of public duties, and receiving special franchises the better to enable them to fulfill these duties. And in regard to such corporations there is a further reason why it is incompetent for them to transfer their franchises, i. e., the general rule forbidding them to do any act that may put it out of their power to serve the public as they were intended to serve it. 5 But what do the franchises of an ordinary business 1 See Carpenter v. Black Hawk Gold Mg. Co., 65 N. Y. 43, 50; Branch v. Jessup, 106 U. S. 468, 484. 2 Meyer v. Johnston, 53 Ala. 237; Coe v. Columbus, etc., R. R. Co., 10 Ohio St. 372 ; Eklridge v. Smith, 34 Vt.484; Willamette Mfg. Co. v. Bank, 119 U. S. 191; Snell v. Chicago, 133 111. 413, 430; Pennison v. Railroad Co., 93 Wis. 344. Franchises to build, own, and manage a railroad are not necessary corporate rights, but may be enjoyed by natural per- sons; and mny be assigned by the corporation possessing them. Not so as to the franchise to be a cor- poration. Ragan v. Aiken, 9 Lea 102 (Tenn.), 609; State v. Ry. Co., 140 Mo. 539; State v. Water Co., 61 Kan. 547. 8 State of Ohio v. Sherman, 22 Ohio St. 411, 428; Memphis & L. R. R. R. Co. v. Railroad Commissioners, 112 U. S. 609, 622. 4 How far the first corporation could exercise its franchises after a trans- fer of them would depend on the con- struction of its constitution, and es- pecially on the construction of tlie power therein contained to transfer the corporate franchises. 6 See §§304, 305, 125, and §§490, 491, as to transferring special im- munities. As a matter of fact, ques-