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Even this provision seems to have failed in its purpose; for in the session of 1823, being the first session of the legislature under op

three fifths of the members elected to each house to pass any charter for banks or moneyed corporations, and all such charters to be limited to a term not exceeding twenty years. The revised constitution of New York, in 1846, imposed further restraints upon the creation, and further responsibilities upon the duties of corporations. It declared that corporations might be formed under general laws, but should not be created by special act, except for municipal purposes, and in cases where, in the judgment of the legislature, general laws would not enable them to attain their object. The term corporation in the article was to be construed to include all asso ions and joint-stock companies, having any of the powers and privileges of corporations not possessed by individuals or partnerships. No Act was to be passed granting any special charter for banking purposes, but corporations may be formed for such purposes under general laws. The legislature may provide for the registry of all bills and notes issued as money, and require ample security for the redemption of them in specie. The stockholders in every corporation and joint-stock association for banking purposes, issuing notes of any kind to circulate as money, after the 1st of January, 1850, are to be individually responsible to the amount of their respective shares therein, for all its debts and liabilities contracted after that day. In case of insolvency of any bank or banking association, the bill-holders to have preference over all other creditors. Constitution of N. Y. of 1846, art. 8. The constitution makes it the duty of the legislature to provide for the organization of cities and incorporated villages, and to restrict their power of taxation, assessment, borrowing money, contracting debts, and loaning their credit, so as to prevent abuses thereof. So the legislature itself is prohibited from giving or loaning in any manner the credit of the state to, or in aid of, any individual, association, or corporation. Const. art. 7, sec. 9. There has been a constantly increasing prejudice in this country against civil, and especially moneyed corporations, ever since President Jackson, during his administration, commenced and carried on an unrelenting hostility to the Bank of the United States, and which terminated in the final extinction of that bank. The constitution of Wisconsin, established in 1846, went to the utmost extreme in its hostility to all banking institutions. It declares that there shall be no bank of issue within that state ; that the legislature shall not have power to authorize or incorporate any institution having any banking power or privilege, or confer any banking power or privilege on any institution or person; that no corporation or person within that state, under any pretence, shall make or issue any paper-money, note, bill, certificate, or other evidence of debt, intended to circulate as money; that no corporation within that state, under any pretence, shall exercise the business of receiving the de

organized under its provisions, in opposition to a previous decision upholding it by McLean J., in the Circuit Court of the United States. Green v. Graves, 1 Doug. (Mich.) 351. Falconer v. Campbell, 2 M. L. 195.

2 The discretion exercised by the legislature, in an act of special incorporation, cannot be questioned by the courts. Mosier v. Hilton, 15 Barb. (N. Y.) 655.

8 And the assignee of a stockholder, in an insolvent corporation, succeeds to the same rights and liabilities as attached to his assignor. James v. Woodruff, 2 Denio, 574. And the same rule applies to an assignee before insolvency. 2 Barb. (N. Y.) 294.

In Illinois, no bank can be incorporated unless the law has been submitted to the people and approved by them. Constitution of 1848. So, also, in Wisconsin, constitution of 1848.

eration of this check, there were thirty-nine new private companies incorporated, besides numerous other acts, amending or altering

posits of money, making discount, or buying or selling bills of exchange, or do any other banking business whatever ; that no bank, or any agency of any bank or banking institution in or without the United States, shall be established or maintained in that state ; that it shall not be lawful to circulate within the state, after 1847, any papermoney, note, bill, certificate, or other evidence of debt, less than the denomination of $10, and after 1819, less than $20; and the legislature is required forthwith to enact adequate penalties for the punishment of all violations and evasions of the provisions.

The construction of the restrictive clause in the constitution of New York, of 1821, received a learned discussion and great consideration in the cases of Warner v. Beers, president of the North American Trust and Banking Company, and of Bolander v. Stevens, president of the Bank of Commerce in New York; 23 Wendell, 103. Those institutions were voluntary associations of individuals, formed under the provisions of the Act of New York of April 18, 1838, entitled, “An Act to authorize the business of banking," and which Act allowed the voluntary creation of an indefinite number of such associations, at the pleasure of any persons who might associate for the purpose, upon the terms prescribed by the statute. The great question raised in those cases was, whether those institutions were corporations within the purview of the constitution, requiring the assent of two thirds of the members elected to each branch of the legislature, to every bill creating any bod tic or corporate; and the statute in that case did not appear to have been passed, and did not in fact pass by such an enlarged majority. The decision of the Court of Errors, on a writ of error from the Supreme Court, on the 7th of April, 1840, was, that the Banking Act was constitutionally passed, though it did not receive the assent of two thirds of the members elected to each branch of the legislature, and that the associations formed under the Act were not bodies politic or corporate, within the meaning of the constitution. It seemed to be admitted, in the opinion given, that the restrictive clause had not answered the policy which dictated it. It was considered that the spirit and meaning of the restrictive clause was to guard against the increase of joint-stock corporations, for banking and other purposes of trade and profit to the corporators, with exclusive privileges, not enjoyed by the citizens at large; that although those banking associations had many of the distinguishing characteristics of corporations, they did not come within the true legal interpretations, and still less within the spirit and design of the restrictive clause. The statute conferred the power of free banking, and did not create any monopoly, nor secure to any association privileges which might not be enjoyed in the same manner by all others, nor place them beyond the entire control of the legislature. The decision of the Court of Errors was received and confirmed on the principle of stare decisis, in a subsequent writ of error from the Supreme Court to that court, in December, 1845, in the case of Gifford v. Livingston, 2 Denio, 380. But though these associations are not corporations within the spirit and meaning of the restrictive clause in the constitution, requiring the assent of two thirds of the members of each branch of the legislature to pass a corporation, yet it is held that they are, to all other intents and purposes, corporations, and as such, liable to taxation on their capital, if deriving any income or profit from it, like other corporations. The Peo

4 The constitutional provision requiring two thirds, &c., no longer exists, and the new constitution of 1846, art. 8, sec. 1, provides that all general laws and special acts (creating corporations) may be altered from time to time, or repealed.

charters. The various acts of incorporation of private companies for banking, manufacturing, literary, charitable, and insurance purposes; for turnpikes, and railroads, and toll-bridges ; and for many other objects upon which private industry, skill, and speculation can be freely and advantageously employed, constitute a mighty mass of charters, which occupy a large part of the volumes of the statute law in almost every state. (b) All these incorpora

ple v. Assessors of Watertown, 1 Hill (N. Y.) 616. The People v. The Supervisors of Niagara, 4 Hill (N. Y.) 20. See, also, infra, vol. iii. p. 26, for a British statute founded on similar principles in the creation of joint-stock companies. The above decision, in 4 Hill, was affirmed on error in the same case in 7 Hill (N. Y.) 504.5

(6) The laws of Massachusetts give the greatest facility to the creation of bodies

5 The powers of joint stock banking companies, formed under the statute of New York, entitled “An Act to authorize the business of banking," passed April 18, 1838, have been considered in numerous cases, some of which are not mentioned in the preceding note.

1. The constitutionality of the banking law must be considered as finally settled, by the decisions cited in the note. It must also be remembered, that the question of the constitutionality of this law arose under the constitution of 1821. The new constitution of 1846 has not retained the provision which requires the assent of two-thirds of the members elected to each branch of the legislature, to every bill erecting a corporation; and, moreover, it expressly declares that “corporations may be formed under general laws.” Art. 8, sec. 1.

2. On the question whether these associations are subject to the provisions of the Revised Statutes as to moneyed corporations, (1 R. S. 589, art. 1,) and as to the dissolution of insolvent corporations, (2 R. S. 463, secs. 39, 42,) see Leavitt v. Tylee, 1 Sandf. Ch. 207. Gillett v. Moody, 3 Comst. 479. Boisgerard v. The New York Bank. Co. 2 Sandf. Ch. 23. Sagory v. Dubois, 3 Sandf. Ch. 485. Curtis v. Leavitt, 15 N. Y. 9. Leavitt v. Blatchford, 17 N. Y. 521. In the last two cases, the provisions of the Revised Statutes in respect to moneyed corporations were decided to be inapplicable to banks formed under the general banking law. In International Bank v. Bradley, 19 N. Y. 245, it was settled, that the provisions of the safety fund acts did not apply to such banks.

3. It has been held that the Supreme Court had not summary jurisdiction in relation to the election of directors of those associations. In the matter of Bank of Dansville, 6 Hill, 370. With regard to the extent and effect of the restriction of the Rev. Stat. (vol. i. 558, 591,) as to the assignment of assets over $1,000, without a resolution of the directors, see Gillett v. Campbell, 1 Denio, 520; Gillett v. Moody, 3 Comst. 479; Gillett v. Phillips, 3 Kernan, 114.

4. As to the effect of these associations of the law of May 14, 1840, prohibiting the issuing of bills or notes, not payable on demand, and without interest, see Smith v. Strong, 2 Hill, 241; Swift v. Beers, 3 Denio, 70; Hayden v. Davis, 3 McLean, 276; Tylee v. Yates, 3 Barb. (N. Y.) 222; Leavitt v. Blatchford, 5 Barb. (N. Y.) 10; S. C. 3 Comst. 19; 17 N. Y. 521; Ontario Bank v. Schermerhorn, 10 Paige, 110.

5. Suits may be brought by or against these associations, in the name of their presidents, or in the name of the association. Delafield v. Kinney, 24 Wendell, 345. Case v. The Mec. Banking Association, 1 Sandf. (N.Y.) 693.

See, on the general subject of these banking companies, Palmer v. Lawrence, 3 Sandf. S. C. 161; Palmer ». Yates, 3 Sandf. (N. Y.) 138; Talmage v. Pell, 3 Seld. 328. See Laws of 1854, ch. 242, further regulating them. Curtis v. Leavitt, 15 N. Y. (1 Smith) 9. International Bank v. Bradley, 19 N. Y. (5 Smith) 245.

tions are contracts between the government and the company, which cannot ordinarily be affected by legislative interference ; and it has accordingly been attempted to retain a control over these private corporations, by a clause, now usually inserted in the acts of incorporation, that“ it shall be lawful for the legislature, at any time hereafter, to alter, modify, or repeal the act." (c) With this general view of the rise and progress of corporations, I shall proceed to a more particular detail of the general principles of law applicable to the subject. (d)

politic and corporate. “When any lands, wharves, or other real estate, are held in common by five or more proprietors, they may form themselves into a corporation.” Revised Statutes of 1836, part 1, tit. 13, ch. 43, sec. 1. So, in New York, by statute in 1811, (and which is still in force,) manufacturing corporations may be created by the mere association of five or more persons filing a certificate designating their name, capital, object, and location. A similar law was passed in Michigan and Connecticut, in 1837. The increase of corporations, in aid of private industry and enterprise, has kept pace in every part of our country with the increase of wealth and improvement. The Massachusetts legislature, for instance, in the session of 1837, incorporated upwards of seventy manufacturing associations, and made perhaps forty other corporations relating to insurance, roads, bridges, academies, and religious objects. And in 1838, the legislature of Indiana authorized any twenty or more citizens of any county, on three weeks' previous public notice, to organize themselves, and become an agricultural society, with corporate and politic powers; and the inhabitants of any and every town or village may incorporate themselves for the institution and management of a public library. In Pennsylvania, the courts of quarter sessions, with the concurrence of the grand jury of the county, may incorporate towns and villages; Purdon's Dig. 130; and literary, charitable, or religious associations and fire companies may be incorporated under the sanction of the Supreme Court. Ibid. 168, 172.

(c) In Massachusetts, there is a standing statute provision, that every act of incorporation which should be thereafter passed, shall at all times be subject to amendment, alteration, or repeal, at the pleasure of the legislature, unless there should be in the same act an express provision to the contrary. Act of 1830. Revised Statutes of 1836.6 In North Carolina, all bodies corporate are limited to thirty years, unless otherwise specially declared. Revised Statutes of North Carolina, 1837.7 In New York, it is held, and very correctly, that though a charter of incorporation cannot pass without the assent of two-thirds of the members of each house, it cannot be altered without the like assent, notwithstanding the charter contains a reservation of a power in the legislature to alter, modify, or repeal the charter at pleasure; for that reservation conferred no new power, but was only to retain the power which the legislature then had over the subject. Com. Bank of Buffalo v. Sparrow, 2 Denio, 97.

(d) There has been a disposition in some of the states to change, in an essential degree, the character of private incorporated companies, by making the members per

6 There is a similar provision in the Rev. Stat. of Conn. tit. 3, ch. 12, sec. 164, (1849,) and in the Laws of Vermont, 1851, ch. 45.

? In Louisiana, the duration of corporations is limited to twenty five years. There was a general law for the formation of corporations, passed in this state in 1848, and it is con

II. * Of the various kinds of corporations, and how created. * 273

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sonally responsible in certain events, and to a qualified extent, for the debts of the company. This is intended as a check to improvident conduct and abuse, and to add to the general security of creditors; and the policy has been pursued to a moderate and reasonable degree only, in Rhode Island, New York, Maryland, and South Carolina. 8 But in Massachusetts, by a series of statutes, passed in 1808, 1818, 1821, and 1827, an unlimited personal responsibility was imposed upon the members of manufacturing corporations, equally as in the case of commercial partnerships. The wisdom of the policy has been strongly questioned; (Amer. Jurist, vol. ii. p. 92, art. 6; Id. vol. iv. p. 307 ;) and, on the other hand, it has been supported by high authority; (Parker C. J., 17 Mass. 334;) and whether it be well or ill founded, it is admirably well calculated to cure all undue avidity for charters of incorporations. This unlimited personal responsibility was restrained by statute in 1828 and 1830, and the responsibility applied only, in the case of banks, to the stockholders at the time of loss, by mismanagement of the directors, or for outstanding bills at the time the charter expires. They are made liable in their individual capacities only to the extent of the stock they may hold in the bank at the time of the abuse, or at the time of the expiration of the charter. This provision was continued by the Massachusetts Revised Statutes of 1836, p. 312, sec. 30, 31, and has been essentially adopted by statute in New Hampshire, in 1837, in respect to manufacturing corporations. Persons holding stock in corporations as trustees for others, are especially exempted from personal responsibility. Act of Mass. 1838. The personal liability of the stockholders does not enable the creditors to sue them. It is the business and duty of the corporation, enforced by bill in equity in its name, to compel payments from individual stockholders.9 Baker v. Atlas Bank, 9 Metcalf, 182. In

spicuous for clear and comprehensive provisions. Laws, 1848, Act 100. R. S. p. 115, sec. 8, (1856.)

8 By the laws of Rhode Island, of 1847, members of manufacturing corporations are liable for the corporate debts until the capital stock be paid; and the note or obligation of the stockholder is not payment. There is a similar law in Georgia. Acts of 1847. See, also, Louisiana R. S. (1856,) p. 116, sec. 14; Laws of Vt. (1851,) No. 60; Mass. R. S. p. 330, sec. 16, 17; Laws of N. Hamp. (1856,) ch. 1852. R. R. stockholders are liable, in N. Y., to the extent of their unpaid subscriptions, to all creditors; and for thirty days' personal service of laborers if an execution against a corporation shall be returned unsatisfied. Laws of 1854, ch. 282. In some recent statutes the stock of the corporation is made liable for its debts in the absence of corporate property, and the individuals whose stock is taken have a claim against the corporation. R. S. of Maine, (1857,) p. 328, ch. 46, sec. 24 and seq. Laws of Vermont, (1852,) No. 22.

9 This applies only to that section of the Act by which stockholders are liable for the deficiencies in the capital stock caused by the misconduct of directors. They are liable to the suit of the billholders on the dissolution of the bank for the whole of the bills. See, on the adjustment of their liabilities, Crease v. Babcock, 10 Metcalf, 525. All the billholders should be plaintiffs, and all the stockholders defendants. See, also, Bogardus v. Manufacturing Co. 3 Seld. 147. No action at law lies against stockholders. Knowlton v. Ackley, 8 Cush. 93.

An Act, under which the property of a manufacturing company, including its right to call assessments and the liability of stockholders for its debts, is vested in trustees for distribution among the creditors, is a bar to a suit by a creditor against a stockholder under an Act making members of manufacturing companies liable for their debts. Walker v. Crain, 17 Barb. (N. Y.) 119. VOL. II.

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