but their shares are treated as personalty. They are usually evidenced by certificates, specifying the amount paid in, which is called their par value. Sometimes these certificates are made transferable by indorsement; but generally the transfer is made on the books of the company. Corporate property cannot be made liable for the individual debts of the stockholders; but their shares may be so subjected by taking the proper steps. Frequently, provision is made that in case of mismanagement, to the injury of third persons, the directors shall be personally liable for the consequences; and sometimes all the stockholders are made thus liable. The latter, however, is not accounted good policy, because few persons would become stockholders upon such a condition; though the personal liability of the directors for mismanagement furnishes an important security against corruption or abuse. But in this State, by the act of 1842, not only the directors of all corporations, but also the stockholders of all corporations not charitable, if they be of age, are made jointly and severally liable, in their individual capacity, for all the debts of the corporation; and any transfer of stock made by them, with intent to avoid such liability, is declared to be void. (a) Judgment and execution are first to be had against the corporation; and if not satisfied, they may be made parties by scire facias; and if one of them pays the debt, he may enforce contribution from the rest.

§ 94. Their Termination. A corporation may be terminated in the five following ways:

1. By Statute. This applies only to future private corporations, as before explained; for we have seen that the charters of pre-existing private corporations are contracts, which the legislature cannot alter or impair, without an express reservation of the right so to do. But public corporations, being under the exclusive direc

(a) By the constitution of 1852, the private liability of all corporators must be at least equal to the amount of stock they hold, and the statutes generally fix this minimum amount as their liability. And where an amendment imposes individual liability, neither the directors nor a majority of the stockholders can accept it so as to bind dissentients. We can only do this with reference to amendments which are reasonably within the original objects of the corporation and concern the corporate property. Ireland v. Palestine Turnpike Co., 19 Ohio St. 369. The personal liability of stockholders under the Ohio statutes is several, but is for the common benefit of all the creditors, and is not under the control of the corporation; but as between the stockholders it is to be proportioned to the amount of stock owned by each. Wright v. McCormack, 17 Ohio St. 86; Umstead v. Buskirk, 17 Ohio St. 113. When, however, the entire business carried on by persons in the name of a corporation is such as the corporation is prohibited by law from doing, those who take an active part in so doing cannot interpose the corporate shield, but will be liable individually. Merrill v. Collier, 16 Ohio St. 599. When an association of persons intending to become incorporated, fails to do so by reason of omitting to take some material step required by law, Fuller v. Rowe, 57 N. Y. 23; Fields v. Čooks et al., 16 La. An. 153; Bigelow v. Gregory, 83 Ill. 197; or fails because the law does not authorize a corporation for the proposed purpose, In re Mendenhall, 9 Nat. Bank. R. 497, U. S. Dist. Ct., Minn., such persons fail to relieve themselves from personal liability for the contracts of the association; and parties who deal with such association as a corporation, can hold the members personally liable. Contra, in Massachusetts, where the defect is, not an attempt to incorporate for an unauthorized purpose, but an omission of some material step required by law. Fay v. Noble, 7 Cush. 188.

tion of the legislature, are alterable or dissoluble at pleasure. Yet even here, if private rights have been legally acquired under these corporations, the legislature cannot impair them.

2. By Efflux of Time. Almost all charters are granted for a limited period; perpetual charters not being deemed expedient. When this period arrives, the corporation is of course dissolved, unless the legislature see fit to revive it; and no more of its original functions remain than are requisite for winding up its

concerns.

3. By Surrender. The acceptance of a charter does not involve a positive obligation to continue it until its natural expiration. Whenever, therefore, the members desire it, they may surrender their charter, and thus terminate their corporate existence. It is said, however, that there must be a formal acceptance of the surrender by the legislature; but unless some interests are to be affected, other than those of the corporators, it would seem as if there can be no good reason for requiring such acceptance. (a)

4. By Death. This does not apply to joint-stock corporations; because, if all the stockholders should die, the shares would pass to their personal representatives, and the corporation still continue; but with respect to charitable corporations the case is otherwise; these may be so constituted, for want of foresight in the charter, that the death of all the members would work a dissolution, for want of the means of keeping up the succession. Such a contingency should therefore be provided for in the charter.

5. By Forfeiture. (b) A forfeiture of the charter can only be enforced by judicial proceedings. The causes of forfeiture may be included under two heads, misuser and non-user; that is, an abuse of corporate powers, or a neglect to use them. Without any express provision in the charter, either of these, when judicially ascertained, will authorize a court to adjudge the charter forfeited. But the prudent course is to specify in the charter what causes shall create a forfeiture, and how their existence shall be ascer

(a) Lanman v. Lebanon Valley R. R. Co., 30 Penn. State, 42. A majority of the stockholders of a corporation may dissolve it, but they cannot dispose of the interest of any stockholder in its assets without his consent. McCurdy v. Myers, 44 Penn. State, 535; contra, Currien v. Santini, 16 La. An. 27; Polar Star Lodge v. Polar Star Lodge, 16 La. An. 53.

(b) The State v. Seneca Co. Bank, 5 Ohio State, 171. The power of courts of chancery to direct the appropriation of the corporate property upon a forfeiture being declared, so as to secure the rights of creditors and stockholders, is affirmed in Bacon v. Robertson, 18 How. 480. The power to repeal a charter may be reserved absolutely to the legislature, and can then be exercised without any judicial proceeding. If reserved conditionally, as to be exercised upon some default or abuse of corporate powers, it is not yet settled whether the decision of the legislature upon the question of such default or abuse is conclusive on the courts; but it is at least to be presumed by them to be right. McLaren v. Pennington, 1 Paige, 102; De Camp v. Eveland, 19 Barb. 81; Crease v. Babcock, 23 Pick. 334; Miners' Bank v. U. S., 1 Greene (Lowa), 561; Erie & N. E. R. R. Co. v. Casey, 26 Penn. State, 287; Mobile & Ohio R. R. Co. v. The State, 29 Ala. 573. It has been lately held that under a provision to a charter that the legislature might, in case of misuser, resume the franchise of a corporation, that the misuser must be first judicially ascertained. Baltimore v. Connellsville & S. P. R. R. Co., Am. Law. R. for October, 1865. And see article on subject, 5 Am. Law R. (N. s.) 578.

tained. In this State, however, it is provided by the act of 1842, that any corporation, other than a bank, shall be considered as having forfeited its charter, if it shall become insolvent, or wrongfully refuse to pay its debts, or suspend its ordinary business for one year, or put in circulation any paper calculated to circulate as currency, or wilfully violate any provision of its charter or other law of the State. And in such a case, any creditor or stockholder, or the prosecuting attorney of the county, may apply to either of the courts sitting in chancery for an injunction to restrain such corporation from further exercising its functions; and receivers will be appointed to wind up its concerns.

When a corporation is dissolved in either of these ways, its debts are to be first paid; and the residue of its property being converted into money, is to be refunded to the stockholders; and to avoid all difficulty or doubt as to the power of thus winding up affairs, it is prudent to make special provision in the charter for such winding up. But in this State, by the act of 1842, there is a general provision, that on the dissolution of any corporation, unless other special provision be made, the directors or managers acting last before the dissolution shall be trustees with full power to wind up the concerns of such corporation. (a)

The view now presented of corporations, meagre and imperfect as its brevity has compelled it to be, exhibits, for your more detailed examination, an admirable invention of the law, for the concentration and perpetuation of human energies and interests. The most successful projects of personal enterprise are daily and hourly hable to interruption by death; and the more persons are concerned together, the greater is this liability; for when one of the association dies, the association itself is dissolved; the agents provided by law come in to settle up the concerns of the deceased, and the survivors wind up the concerns of the association. Thus the grandest projects may be stayed or frustrated in mid career. But to prevent this inconvenience; to take away the power of death and change; to give the association a more close, and stable, and permanent union, than the natural condition of man allows, the law steps in, with its salutary power, and bids the body corporate persevere in its operations, undisturbed by such chances and changes; and the artificial persons thus formed out of many, instead of being incumbered by its numbers, conduct operations with the same energy, simplicity, and unity, as a single individual. (b)

(a) See Allen v. Montgomery R. R. Co., 11 Ala. 437; Nevitt v. Bank of Port Gibson, 6 Sm. & Mar. 513; Macon & Western R. R. Co. v. Parker, 9 id. 377. In a suit against a defunct corporation, service of process upon the members of its last acting board of directors is sufficient under the statute to give the court jurisdiction. Warner v. Callender, 20 Ohio St. 190.

(b) In the great growth of corporations in this country, many corporations do business in States other than those from which they derive their charter; and these powers and rights in such cases are becoming pretty well defined and settled. In the first place, courts of one State will recognize foreign corporations by what is called comity; and will permit them to hold property, and transact business in other States,

LECTURE XIII.

PARTNERSHIPS. (a)

§ 95. The Nature of Partnerships. It is usual to treat of partnerships under the head of Contracts, because a partnership is created by contract. But I have thought the subject properly classed among personal relations. The relation between partners, like that between corporators, is a highly important business relation; and the strong analogy between these two relations suggests the propriety of discussing them consecutively. On the subject of partnerships, we have no local provisions. The common law of the commercial world is our law; and the subject is one of vast compass and great practical importance. I shall present only a very general outline, and refer you for details to the authors mentioned in the note. Upon the general object of partnerships, I need only remark, that it is much the same as that of corporations; that is, the association of several persons for the prosecution so far at least as is not inconsistent with the policy and laws of their own State. But when the State of Pennsylvania undertook to create a corporation and to endue it with great and varied powers, but denied it the right to do any act or hold any property within the State of Pennsylvania, the court of Kansas refused to recognize it as a corporation, declaring that the rules of comity could not extend to such a case. Land Grant Railway Co. v. Coffee Co., 6 Kansas, 245.

So, too, it is settled that a corporation is a citizen of the State creating it, within the meaning of the act conferring jurisdiction on the courts of the United States in suits between citizens of different States. Railway Co. v. Whitton, 13 Wall. 270. But it is not such a citizen within the meaning of the clause which declares that the citizens of each State shall be entitled to all the privileges and immunities of citizens of the several States; and therefore the legislature of a State may impose upon foreign corporations, doing business within its limits, conditions and taxes more burdensome than are imposed on its own corporations of a similar class, though it could not do so in the case of individuals. Ducat v. Chicago, 48 Ill. 172. The court there say that the right of a corporation created in one State to do business and make contracts in the full enjoyment of its powers in another State, is a right based upon the comity between the States, and is a voluntary act of the sovereign power, but when contrary to good policy or prejudicial to the interest of the State, the comity ceases to be obligatory. See also the same case affirmed in the supreme court of the United States, 10 Wall. 410. But its powers and the validity of its acts must be tested by its charter and the laws of its domicil. Baltimore, &c. R. R. Co. v. Glenn, 28 Md. 287; Talmadge v. N. A. C. Co., 3 Head, 327.

Many questions also grow out of the consolidation of companies, or the purchase of the rights of one by another. As to these cases, i has been held that the consolidated corporation possesses all the rights and is subject to all the duties of the other corporations, each as to the property acquired from it. Thus the consolidated corporation may use a patent axle box, the right to use which had been acquired by both the old corporations. Lightner v. Boston, &c. R. R., 1 Lowell, 338. But where the charter of one of the old roads exempted the property from taxation, and of the other did not, the new corporation held the property of each road just in the same way and with the same exemptions as the old road held it. Tomlinson v. Branch, 15 Wall. 460. When a corporation having no limit on the rate of fare it could charge, bought a road that was limited, it could not in running over the purchased road exceed the charter limit. Campbell v. M. & C. R. R. Co., 23 Ohio St. 168. See also Black v. Delaware, &c. Canal Co., 22 N. J. Eq. 130.

(a) See the 43d lecture of Kent; the treatises on partnership by Story, Watson, Gow, Collyer, Cary, and Montague; and Smith on Joint Interests. Parsons on Partnership; Lindley on Partnerships.

of any enterprise or business. The reason why a partnership is not so efficient for this purpose as a corporation, will appear in the sequel.

A partnership may be said to exist when two or more persons (a) contribute their property or services, to be employed jointly in some enterprise or business, the profit or loss of which is to be shared among them in some fixed proportion. This definition suggests five points to be noticed: First, a partnership is always the result of a contract, but the contract need not necessarily be in writing. The law will always imply a contract where the persons act as partners. Secondly, there may be any number of persons in the partnership; but in proportion as the number is increased, the operations become more unwieldy and inconvenient; which is not the case with corporations, on account of their entire legal unity. On the other hand, we sometimes see a single person doing business under a corporate name, to give greater consequence to his concern; but this is a mere deception. Thirdly, each partner must contribute something valuable to the partnership means; but this contribution may consist either of money, other property, credit, labor, or skill. Any thing valuable, so as to found a claim to a share of the profits, will be sufficient to satisfy the legal requisition. (b) Fourthly, a partnership may be formed either for a single project or enterprise, or for an entire and continuous branch of business, or for business in general, including all the operations of the parties. And whether a given partnership is general or special, must be ascertained from the contract, or the facts from which the contract is implied. Fifthly, each partner must share in the profit or loss, in some stipulated ratio. But if no ratio be agreed upon, the law implies an equal ratio, however unequal the contributions may be; (c) it being against the policy of the law to go into an estimate of the values contributed, in order to make for the parties a bargain, when they have omitted to make one for themselves. But in all cases there must be a sharing of profit or loss. A mere salary, though it should vary according to the profits, would not make the receiver a partner. (d) Such, then,

(a) A corporation cannot form a partnership with an individual. Whittenton Mills v. Upton, 10 Gray, 582; Marine Bank v. Ogden, 29 Ill. 248; Van Kuren v. Trenton, &c. Co., 2 Beasley, 302.

(b) Ward v. Thompson, 22 How. 330.

(c) Turnipseed v. Goodwin, 9 Ala. 372; Stein v. Robertson, 30 Ala. 286. Farr t. Johnson, 25 Ill. 522; Moore v. Bare, 11 Iowa, 198; Griggs v. Clark, 23 Cal. 427; Murray v. Johnson, 1 Head, 353.

(d) Denny v. Cabot, 6 Met. 82; Bradley v. White, 10 id. 303; Vanderburgh v. Hull, 20 Wend. 70; Miller ». Bartlett, 15 S. & R. 137; Burckle v. Eckhart, 1 Denio, 337; s. c. 3 Comst. 133; Choteau v. Raitt, 20 Ohio, 132. Gill v. Geyer, 15 Ohio State, 399; Berthold v. Goldsmith, 24 How. 536; Wheatcraft v. Hickman, 9 C. B. (N. s.) 47; Conklin v. Barton, 43 Barb. 435. But an agent, who shares in the net profits, becomes a partner as to third persons. Wood v. Vallette, 7 Ohio State, 172. The later English cases hold the true test to be, that the business is really carried on on behalf of the party sought to be charged, and that participation in the profits, though a strong circumstance to show that fact, is not conclusive. Cox v. Hickman, 8 H. L. C. 268; Kilshaw v. Jukes, 3 B. & S. 847; Bullen v. Sharp, L. R. 1 C. P. 86, Holme v. Hammond, 7 Ex. 218; Parker v. Canfield, 87 Conn. 250; Morgan v.