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particular State. Pennsylvania has chartered one or two corporations of very broad powers, which have called for consideration from the courts. One was the "National Land Improvement Company of El Paso County, Colorado," with power to buy and sell land, construct buildings, manufacture, trade, colonize, "operate mineral and other lands and improve and work the same, provided such lands be located in Utah, Arizona, or adjoining States and Territories lying west of the Mississippi; and to do such acts as should be necessary to promote the success of the corporation and the public good." 12 Another, of a little narrower powers, was chartered as "The New York and California Vineyard Company," with power to change the name; and in exercise of the power, the name was changed to the "Land Grant Railway and Trust Company." The corporation was allowed to act anywhere in the United States, except in Pennsylvania. 13

A third sort of association, today very common, is formed by persons who wish to do business as a corporation in their own State, but prefer the powers or the protection from liability given to corporations in another State, and, therefore, obtain their charter from that other State. An instance of such a corporation was a corporation formed in West Virginia to carry on a toboggan slide in New York.14

The number of such corporations now in existence, the magnitude of the business done by them, and the difficulty of some of the legal questions to which their acts give rise, give to the subject of the law of foreign corporations an importance which a few years ago it did not have, and make it worthy of careful special treatment.

But in order thoroughly to understand the law of foreign corporations it is necessary also to have in mind certain portions of the general corporation law of each State in which corporations that form the subject of our enquiry may have

12 Cowell v. Springs Co., 100 U. S. 55, 25 L. ed. 547.

13 Land Grant Ry. v. Coffey County, 6 Kan. 245.

14 Demarest v. Flack, 128 N. Y. 205, 28 N. E. 645, 13 L. R. A. 854.

been created. It will be desirable at some length to examine the method of formation of corporations in the various States of the Union, in Canada, and in England; to study their powers, and the liability of their stockholders and officers, to investigate the ways in which they are taxed, and the causes for dissolution. This will involve a study of the statute law of the jurisdictions in question, with some investigation of the interpretation which has been put upon the statutes by the decisions of the courts. And since the rights and obligations of corporations in foreign States have been greatly affected by legislation, it will be necessary to state the law of foreign corporations not merely as a branch of the common law, but also in the light of the statutes of fifty jurisdictions.

The statutes have been examined to the end of the year 1903 (in a few States, 1904). It has been deemed best to bring the examination of decided cases down to the publication of some regular digest. In the United States the cases have been examined through the Am. Digest for 1904 (June, 1904); in England and the Colonies, through the Annual Digests for 1903.

CHAPTER I.

THE NATURE AND CREATION OF CORPORATIONS.

§ 1. The nature of a corporation.
2. The creation of a corporation.
3. The powers of a corporation.
4. The extent of powers conferred.
5. The limitation of powers con-
ferred.

§ 1. The nature of a corporation.

§ 6. The proof of powers.

7. Corporate action.

8. Power of the State of charter over the corporation.

A corporation is an artificial person, created by law as an entity independent of the natural person or persons composing it, and endowed by the law that creates it with the power of acting as such independent person. 'A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being a mere creature of the law, it possesses only those properties which the charters of its creation confers upon it, either expressly, or as incidental to its very existence." 1 The difference between a corporation and a partnership is that while the partnership is created by act of the partners and derives its powers from their association, the corporation is dependent for its existence and powers entirely upon the law. "Without ascribing to this body, which in its corporate capacity is the mere creature of the act to which it owes its existence, all the qualities and disabilities annexed by the common law to ancient institutions of this sort, it may correctly be said to be precisely what the incorporating act has made it ; to derive all its powers from that act, and to be capable of exerting its faculties only in the manner which that act au

1 Marshall, C. J., in Dartmouth College v. Woodward, 4 Wheat. 518, 636.

thorizes. To this source of its being, then, we must recur to ascertain its powers."

§ 2. The creation of a corporation.

A corporation was once created by the King's patent or charter; in modern times, however, all corporations are created either by direct act of the legislature or by authority of some statute. The legislature may act directly by voting a charter of incorporation; this is always within the bounds of legislative power unless restrained by some provision of the Constitution. In most States, however, the granting of charters of incorporation by special act of the legislature is forbidden by the Constitution. The only States in which a corporation

2 Marshall, C. J., in Head v. Providence Ins. Co., 2 Cranch. 127.

3 Ala. Const. (1902) Art. 12, § 229; Ark. Const. (1874) Art. 12, § 2 ("except for charitable, educational, penal or reformatory purposes, where the corporations created are to be and remain under the patronage and control of the State "); Cal. Const. (1879) Art. 12, § 1; Col. Const. (1876) Art. 15, § 2 (“except for such municipal, charitable, educational, penal or reformatory corporations as are or may be under the control of the State "); Del. Const. (1897) Art. 9, § 1 (excepting "municipal corporations, banks, or corporations for charitable, penal, reformatory, or educational purposes, sustained in whole or in part by the State "); Fla. Const. (1887) Art. 3, § 25 (“the legislature shall provide by general law for incorporating such ... associations as may be deemed necessary "); Ga. Const. (1877) Art. 3, § 7, cl. 18 (except banking, insurance, railroad, canal, navigation, express and telegraph companies); Ida. Const. (1889) Art. 3, § 19, cl. 31; Ill. Const. (1870) Art. 11, § 1 (with the same exception as in Arkansas); Ind. Const. (1851) § 212 (except banking corporations); Ia. Const. (1857) Art. 8, § 1; Kan. Const (1859) Art. 12, § 1; La. Const. (1898) Art. 48 (except municipal corporations); Me. Const. (1818) Art. 4, § 14 (“except for municipal purposes, and in cases where the objects of the corporation cannot otherwise be attained "); Md. Const. (1867) § 48 ("except for municipal purposes, and except in cases where no general laws exist providing for the creation of corporations of the same general character as the corporation proposed to be created "): Mich. Const. (1850) Art. 15, § 1 (except for municipal purposes); Minn. Const. (1858) Art. 4, § 33, cl. 7 (except to cities); Miss. Const. (1890) § 178; Mo. Const. (1875) Art. 4, § 53; Mont. Const. (1889) Art. 15, § 2 (same exception as in Colorado); Neb. Const. (1875) Art. 13, § 1 (same exception as in Arkansas); Nev. Const. (1864) Art. 8, § 1 (except for municipal purposes); N. J. Const. (1844) Art. 4, § 7, cl. 11; N. Y. Const. (1894) Art. 8, § 1 ("except for municipal purposes, and in

may now generally be created by special charter are the New England States (except Maine) and Kentucky; in cases where the objects of the corporation cannot be attained under general laws, in Maine, Maryland, New York, North Carolina, Wisconsin, and Wyoming; and by a two-thirds vote of each branch of the legislature in South Carolina.

In every State and organized Territory, in all the Provinces of Canada, and in Great Britain there are general laws under which a corporation (in Great Britain and the Dominion of Canada a joint stock company, which is regarded in this country as a corporation) may be formed by complying with the conditions prescribed. In most States the incorporators sign articles and file them with a State officer; in a few States they are filed with a court or with a local official. The details of the State laws on this subject will be found in the succeeding chapter.

5

In Rhode Island no corporation with power to exercise

cases where, in the judgment of the legislature, the objects of the corporation cannot be attained under general laws "); N. Car. Const. (1868) Art. 8, § 1 (same exceptions as in New York); N. Dak. Const (1890) Art. 7, 131 (same exception as in Colorado); Ohio Const. (1851) Art. 13, § 1; Or. Const. (1857) Art 11, § 2 (except for municipal purposes); Pa. Const. (1875) Art 3, § 7; S. Car. Const. (1895) Art. 9, § 2 (same exception as in Arkansas; "provided that the general assembly may by a two-thirds vote of each house on a concurrent resolution allow a bill for a special charter to be introduced, and when so introduced may pass the same as other bills "); S. Dak. Const. (1890) Art. 17, § 1 (same exception as in Arkansas); Tenn. Const. (1870) Art. 11, § 8; Tex. Const. (1875) Art. 12, § 1; Utah Const. (1895) Art. 12, § 1; Va. Const. (1902) Art. 4, § 63, cl. 17; Wash Const. (1889) Art. 12, § 1; W. Va. Const. (1872) Art. 11, § 1; Wis. Const. (1848) Art. 11, § 1 (same exceptions as in New York); Wy. Const. (1889) Art. 3, § 27, and Art. 10, § 1 (the legislature shall not pass a special law for chartering banks, insurance and loan and trust companies; "in all othes cases where a general law can be made applicable no special law shall be enacted; " "the legislature shall provide for the organization of corporations by general law").

Liverpool Ins. Co. v. Massachusetts, 10 Wall. 566, 19 L. ed. 1029; Edgeworth v. Wood, 58 N. J. L. 463, 33 Atl. 940.

Alabama, Georgia, Maryland, Virginia.

•District of Columbia.

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