Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/56

 § 57.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. IV. referred to ; yet the latter are called " corporations," while, as to the former, the legislature, in the same breath in Compan- ...... . .. ... son. 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 uncer- tainty of mind, 2 held that joint-stock associations were not taxa- ble 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 con- tinual bestowal upon them of corporate attributes." The Court, however, recognized its duty to give effect to this legislative in- tent to preserve the distinction between the two classes of organ- izations, and at the close of the opinion the learned judge for- mulated 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 re- quires the substitution of a new, or retention of the old, liabil- ity by an affirmative enactment which avoids the inherent effect of the corporate creation ; in the other, the common law liabil- ity remains unchanged and unimpaired, and needing no statu- tory intervention to preserve or restore it ; the debt of the cor- poration 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 1 The Massachusetts courts hold courts hold them to he corporations, the New York joint-stock associa- tions not to be corporations, and that their members may be sued as part- ners. Boston & Albany R. R. Co. v. Pearson, 128 Mass. 445. New Jersey 36 Edgeworth v. Wood, 58 N. J. L. 4G3. See as to actions against them, Van Aernam v. Bleistein, 102 N. Y. 355. 2 See People v. Wemple, 117 N. Y. 136.