Page:The New International Encyclopædia 1st ed. v. 05.djvu/510

* CORPORATION. 438 CORPORATION. code (1896) declares that "societies which are not incorporated are governed by the rules relating to partnership." As regards the theorv of the 'juristic person,' luoderu civilians generally regard corjjorations and foundations as persons only by virtue of a legal tk-tion. This legal fiction is generally re- garded as useful and indeed necessary; but a few yriters regard it as unnecessary and harm- ful. These assert that a corporation is nothing but a plurality of natural persons acting luider special rules as regards presentation ( i.e. agency) and governed by special rules as regards succession; and they assert that harm is done by obscuring the fact that the private cor])oration is simply a particular method in which natural persons hold property and do business. Still another school maintains that permanent asso- ciations, public and private, have a character and a will which are not the sum or the resultant of the characters and wills of the individuals who compose them; and that such associations have thus a true personality which the law does not create, but merely recognizes. This is sometimes described as the anthropomorphic theory. English Common Laic. — Three distinct fac- tors are to be recognized as essential to the existence of a corporation : ( 1 ) One or more natural persons, who are the incorporators, or so-called members; (2) one or more trustees, managers, or directors, who have the general control of its affairs, and may or may not include all, and be coincident with, the in- corporators; and (3) the corporation, or arti- ficial person, created by the fiat of the law, and always separate and distinct from both its members and its trustees or managers. It is this separate existence, as a legal entity, which distinguishes it from a partnership and from a joint-stock company. Classification. — Corporations are classified as to either the number of members, or the objects for which they are formed, or the fullness and completeness of their powers. With regard to the number of members, they are either «f/(/rp(/a?c or sole. An aggregate corporation has more mem- bers than one, and is the more common form. A .sole corporation consists of a single member and his successors, who are by law invested with the same capacities as an aggregate corporation. Thus the King of England, or a bishop, is a sole corporation. A very few sole corporations exist in the United States. In Xew York, for example, a Joint - stock company composed of seven or more members may sue and be sued in the name of its president, and the president is for this purpose a sole corporation. With respect to the purposes of their exist- ence, corporations ai'e classified as ecclesiasti<^al and lay, and the lay are subdivided into civil and eleemosynary. Ecclesiastical corporations are concerned wholly with religious matters, includ- ing the management of ecclesiastical property, and are composed wholly of spiritual persons, as distinguished from laymen. There are none such, properly so-called, in the United States, An eleemosynary corporation is one formed for purposes of charity, in the legal sense of that word, i.e., general public benefit and utility. Examples are found in schools, colleges, and hospitals. Civil corporations are those that are formed for temporal purposes. They are either (1) public, or municipal, i.e. created for governmental purposes, such as cities and vil- lages; or (2) private, including others of a civil nature, such as railroad companies and manufac- turing and general business corporations. Since municipal corporations are part of the machinery of government, they may be dissolved, restricted, or moditied at the will of the legislature; but an act which creates a private corporation has in the United States been deemed to be in the nature of a contract, arid (because of that provision of the United States Constitution which forbids the States to pass any laws impairing the obliga- tion of contracts) cannot be repealed or materially altered or impaired against the will of the cor- poration. The operation of this rule is obviated in some States by constitutional provisions, or liy special clauses in the acts creating corpora- tions, to the efl'eet that the legislature shall have jiower to abrogate or modify such acts. The divisions of corporations with reference to their powers is into complete and quasi. Those are ijtiasi which possess some, but not all, of the ordinary powers of a corporation. Counties, school districts, and in some States, as New York, towns, afford examples of quasi corporations. The methods of creating corporations are by charter or letters patent from the Crown, by legislative act. and by prescription. Some cor- porations which trace their origin to royal charter exist in the United States; while others may be found which derive their franchise from immemorial usage or prescription; but the most common mode of forming them is b}' act of the legislature. This latter method is either by special act or charter, or by a general law which enables persons so desiring, by conforming to ]irescribed conditions and formalities, to become ipso facto a corporation. The formation under a general law is most favored, and is made manda- tory by the Constitution of some of the States. Corporate Powers. — The powers of a corpora- tion are those given by its charter, or the general law under which it is organized, or fixed and determined by usage when it exists by prescrip- tion, together with those which are implied by law as reasonably necessary or proper to enable it to exercise its express powers, and to realize the objects for which it exists. They include the power to make contracts ; to sue and be sued ; to hold property ; to have a corporate seal ; to make by-la s : and to elect and remove members and officers. If it exceed its proper functions, it is said to act ultra vires. A con- tract ultra vires is, according to the weight of authority, void; but money ]iaid, or the value of property given, to a corpfjration under an ultra vires contract may be recovered under theory of quasi contract (q.v.). In a few jurisdictions, New York, for example, if the person dealing with a corporation has performed on his part an ultra vires contract, the corporation is held to be estopped from setting up its want of power. (See Estoppel.) Corporations have been held liable for torts resulting from their negligent per- formance of an act. Avhether authorized or un- authorized, and it is now generally held that a corporation may be liable for any tort, the malice or negligence of the agent being imputed to the corporation. It was formerly held that a corporation could legally perform no act except under its corporate seal ; but it may now act without a seal where natural persons may do so. The quantity of land which 3 corporation may