Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/123

 PART I.] CONSTRUCTION OF CORPORATE POWERS. [§ 133. or manufacturing corporation amount to ? To nothing but a legal competency to act in a certain manner, which they have acquired by complying with certain formalities. There is nothing special or extraordinary about their franchises. In truth, their franchises are hardly worth transferring. Persons acquiring their property by purchase or under foreclosure may readily form themselves also into a corporation, if corporate or- ganization is desired. Unquestionably the particular competency which a body of men by complying with certain statutory pro- visions have acquired is not transferable to another body who have not complied with those provisions ; any more than may be transferred the competency to act as a limited partnership, which persons may have acquired through compliance with the statute authorizing limited partnerships. Just as in regard to limited partnerships, so in regard to corporations, the general intention of enabling statutes is that persons who have com- plied with certain formalities may act as a corporation ; that others may not. 1 § 133. When the capital stock is fixed in amount by the con- stitution of the corporation, as is ordinarily the case, the cor- tions regarding the validity of a transfer or mortgage of franchises almost always arise in relation to corporations of this class. "The franchise of becoming and being a corporation, in its nature, is incommunicable by the act of the parties and incapable of passing by assignment." Memphis & L. R. R. R. Co. v. Railroad Commissioners, 112 U. S. 609, 619, Opin. of Court per Matthews, J. See §131. Validly mortgaging the charter, property, and franchises of a railroad corpo- ration does not transfer the right or capacity to be that identical corpora- tion; though it would transfer such franchises as are more appropriate to the construction, maintenance, and operation of the railroad as a public highway and the right to make profit therefrom. The only right of cor- porate existence that could pass would be the right to organize under the then laws of the state. " The franchise to be a corporation re- mained in and was exercised by the old corporation, notwithstanding the mortgage of its charter, until the new corporation was formed and organ- ized; it was then surrendered to the state, and by a new grant then made, passed to the corporators of the new corporation, it was held and exer- cised by them under the constitu- tional restrictions then in being." lb. p. 623. See, with above, El- dridge v. Smith, 34 Vt. 484; State v. Irrigating Co., 40 Kan. 96. Indirectly a transfer of the fran- chises of a corporation can be ac- complished by a purchase of all the stock by the would-be transferees. 103
 * See Fietsam v. Hay, 122 111. 293.