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Thomas v. Dakin. the security of its debts. Conveyances shall be made to the president or his successors, who may sell and convey the same for the association, free from all claim of the stockholders upon the same; and it shall hold no real estate, except for the purposes specified. § 19 provides that the association shall not be dissolved by the insanity of any shareholder. $ 23 provides, that all suits, actions or proceedings by or against such association, may be brought in the name of the president or against him, and shall not abate by his death, resignation or removal; and that all judgments and decrees against the president shall take effect only upon the property of the association ; it provides, also, that no shareholder shall be personally liable, unless declared so by the articles. Here are found every essential and every ordinary attribute of a corporation, conferred upon these associations: 1. They may exist under the name assumed by them for any period, and, in the case of this bank, the period of its termination is fixed at some 4000 years hence. 2. They may sue and be sued, complain and defend in any court of law or equity, by and in the name of the president or other officer, and no individual is liable. 3. They may make and use a common seal. Under the 18th S, they may exercise such incidental powers as are necessary to carry on their business, and under this may make a seal, as has been done and is in daily use by the bank now in question. 4. They may purchase, hold and convey real and personal estate-$ 18 and 24 expressly authorizing this—though in the case of real estate, the conveyance is made to the association through the channel of the president. 5. They may appoint officers and agents, as they have appointed president, cashier, &c. 6. They may make by-laws. This is an indispensable power, and is fully authorized by the general clause before quoted from $18. They have all the qualifications given by the revised statutes to corporations. R. S. 600.
Beyond all question, they have, l. Succession or existence under a special or artificial name for the period limited by their charters or articles of association ; 2. Power to take property, contract obligations, sue and be sued under Thomas v. Dakin. a special denomination, i. e. 'under an appellation different from that which would belong to the associates if they were all sued or contracted, &c. in their individual names; 3. Power to receive and enjoy in common, (i. e. as a body,) grants, privileges and immunities. The counsel submitted that he had established the proposition that the institutions authorized by the general banking law of 1833, possess not only the necessary, but all the ordinary powers of corporations, and may sasely be written down corporalions. He instanced the Oneida Bank, one of the last banks incorporated by the legislature, and said it would be found to possess no one power or capacity, either by its charter or by the general law, that the institution suing in this case did not possess to an equal extent. If, then, no particular words are necessary to create a corporation, and if a corporation is known by and consists of its qualities and attributes, he said it would seem to follow that these institutions are corporations.
The next question discussed by the counsel was the following: Can the legislature pass a law authorizing the creation of an indefinite number of corporations, at the pleasure of individuals, and without any direct action of the legislature upon the particular corporations to be created ? The provision of the constitution of this state affecting this question is found in Art. vii, $ 9, and is in the following words: “ The assent of two thirds of the members elected to each branch of the legislature, shall be requisite to every bill appropriating public moneys to local or private purposes, or creating, continuing, altering or renewing any body politic or corporate.” The clause in question, he insisted, extended to and restrained the creation of corporations authorized, as well as those directly created by the legislature. An opposite construction would preserve perhaps the letter, but violate the whole spirit of the article. What was the object of this provision ? clearly to impose a restraint upon the multiplication of corporations. What an absurdity, then, to apply it to a case where one corporation is to be brought into existence, and reject it in another, whereby thousands may spring into life. Again : no bill does or can do more than authorize a corporation. The bill creates it after
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Thomas v. Dakin.
certain acts of organization have taken place, but not until then : and if these are omitted, no corporation comes into existence. The provision, therefore, applies equally to a law authorizing corporations and to a law professing to create them.
To prevent the excessive increase of corporations, and particularly of monied incorporations, the convention of 1821 imposed new and unusual restrictions upon the power of the legislature to pass laws producing that result. They declared that the ordinary legislative power, to wit, a majority, should not be competent to bring into existence a corporate being. It was intended that the application for : corporate powers in every given case should be deliberately examined, and that before the request should be granted in any instance, two thirds of the members elected to each house should be satisfied of its propriety and necessity. The discretion and judgment of the legislature is required upon every proposed corporation, and so great is the caution, that the legislative integrity and judgment of two thirds must be exercised and satisfied before the corporation can be created. Any number of corporations might be included without objection in the same act, as when particularly named, the judgment of the legislature would be applied to each. The log-rolling tendency of such an act would be objectionable, but constitutionally no objection is perceived. The exercise of legislative discretion and judgment by the law in question is entirely removed, and is exercised by individuals guided by no public interest, and bound by no public engagements, but governed solely by a regard to their own interests, real or imaginary. He therefore submitted that the passage of a law like that of 1838, authorizing unlimited creations of corporate existences, is at war with the spirit and intention of the constitution, and cannot be sustained by the courts.
At the time of the adoption of the present constitution, laws were in existence authorizing corporations, in certain cases, at the pleasure of individuals. These went to authorize, 1. Colleges and academies; 2. Religious societies; 3. Library associations ; 4. Medical societies; and 5. Man
Thomas v. Dakin. ufacturing incorporations. These laws were not intended to be repealed, and have been acted upon very frequently since that time, in the creation of academies, colleges, churches, medical societies, &c. They were passed in 1811 and 1817, when no such constitutional restriction upon the creation of corporations, as now exists, fettered the action of the legislature. There was nothing requiring legislative discretion and judgment to be applied to each case presented, and the legislature might therefore lawfully enact general laws of such character as they should deem expedient. No argument can be drawn from the passage of these laws to support the present enactment; but viewing the present provision of the constitution as not applicable to those laws previously passed, it stands with full force in opposition to all general laws passed since 1822, when the new constitution becanie the supreme law of the land.
C. P. Kirkland, for the plaintiffs, submitted the following points, in support of the declaration, and the action of the plaintiffs :
1. The first and second causes of demurrer are not well assigned. The act expressly authorizes and directs the suit to be brought in the name of the president; and he suing in a representative capacity, must lay the indebtedness and the promises to the persons or body whom he represents.
The third cause, and the first branch of the fourth cause, are not well assigned ; for the legislature might, without violating any constitutional provision, authorize suits in behalf of any number, or of any association of persons, in the name of one of them.
The matter stated in the second branch of the fourth cause, cannot arise on these pleadings.
II. There is no ground of general demurrer to this declaration, for the associations authorized by the act referred to are not “ bodies corporate.”
1. They are destitute of many of the essential and distinguishing attributes of a corporation, and without which a corporation cannot in a legal sense be said to exist.
Thomas v. Dakin 2. They are in the nature of a limited or special partnership of individuals, possessing by legislative grant certain facilities in the transaction of their business.
3. The act is in substance a mere repealing act, authorizing the exercise of a privilege which was before prohibited, and prescribing the manner of its exercise.
4. Associations as authorized by this act, are a new mode of union, unknown at the time of the adoption of the constitution, and falling within no description or definition of “ bodies corporate" then known and existing, and of course they are not within its prohibitory clause.
5. The act was not intended or supposed by its framers to create bodies corporale.
For these reasons, this act is not an act “creating a body corporate,” in the constitutional sense.
III. The act is in no sense an act " creating” a body corporate.
It is in any event nothing more than an act authorizing or allowing, by subsequent voluntary association, the existence of a "body corporate.”
Such an act is not within the inhibitory clause of the constitution.
1. This mode of giving existence to bodies corporate, as contradistinguished from the mode of direct action by the legislature, was in full force and operation at the time of the adoption of the constitution. To the latter, and not to the former mode, the prohibitory clause applies.
2. This mode is not within the letter of the clause.
3. It is not within the mischief intended to be remedied and prevented.
IV. Assuming that these associations are “ bodies corporate," and that the act is an act “creating a body corporate," it is no objection to it that it creates or authorizes more than one association ; it being conceded, as it is and must be on this argument, that it received the requisite constitutional vote.
1. The prohibitory clause of the constitution does not in terms extend to this case : it is specially limited to the number of votes required.