Thomas v. Dakin.

of corporations, or of joint stock companies created by acts of parliament." This language is loose and confusing, and clearly shows, that the minds of these distinguished jurists were far from being directed to the question, whether transferability of stock is an essential property of a corporation. Ch. J. Best states it in substance, as an unqualified proposition, that shares of stock are not transferable, except by act of parliament. With great respect, that is an error. The stock in every voluntary association, by agreement of the associates, may be transferable at the will of the owner, as has been already stated and illustrated; and daily practice confirms it.

But from whatever source the notion came, that transferability of stock was an exclusive attribute of a corporation, or however well it is sustained by authority, one position respecting it is clear, and in that all the cases concur, viz: that to render the transferability of shares, a corporate property, the shares must be transferable at the mere unrestricted option of the holder. And where the shares could not be transferred to a person who would not enter into the original covenants; and where the same person could not hold more than twenty shares; and where the transfer of shares was limited to persons residing in the neighborhood; and where a person could not become a member of a company till he had signed the partnership articles, nor until he had been approved by a certain majority of persons present at a meeting of the society-the court of king's bench gladly availed themselves of these circumstances, to hold the associations valid, under the English statute, and of course, that such restricted transferability was not a corporate attribute. Collyer, 624, 625, and cases there cited.

There is only one clause in our general banking law which regulates the transfer of stock; and that, instead of permitting the shares of the associations to be transferred at the mere unrestricted option of the holder, subjects them to two statutory restrictions, and also to as many others as each association may think proper to impose. The words of the clause are, "The shares of said association shall be VOL. XXII.

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deemed personal property and shall be transferable on the books of the association, in such manner as may be agreed on in the articles of association; and every person becoming a shareholder by such tranfer, shall, in proportion to his shares, succeed to all the rights and liabilities of prior shareholders." 1. The shares are transferable on the books of the association. 2. The transferee succeeds, not only to the rights, but to the liabilities of the prior shareholders. These are imposed by law upon him. 3. The shares are transferable on the books of the association, in such manner as may be agreed on in the articles of association. This enables each association to impose such restrictions as it pleases; and so obviously is the holder of stock in the associations restrained from transferring his stock at his mere unrestricted option, that it seems unnecessary to occupy more time with this topic.

The counsel next proceeded to examine those parts of the act of April, 1838, which it had been insisted conferred corporate powers on the associations authorized thereby. He cited 15 and 16 of the act, and in connection with those sections quoted 1 of the act to restrain unauthorized banking, 1 R. S. 711, and proceeded to enquire whether such associations, have all or any of the four essential requisites, as defined by him of a corporation.

FIRST: Has every association a collective existence by name, created by the sovereign power, exercised directly or immediately? and then observed, who can fail to see, that the object of passing this clause of the fifteenth section of the general banking law, was to repeal, in effect, the first section of the restraining act, and open banking to the community? The legislature evidently intended to allow any person, who chose, to become a member of an association to conduct the business of banking; and when they say, "any number of persons may associate to establish," &c. is it not a perversion of their language to insist that they thereby call into being an indefinite number of corporations? The enactment is merely permissive. It only removes a previous legal restraint, and allows free action. It creates noth

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ing; but allows parties to contract with each other to accomplish an object theretofore unlawful. This will appear the more evident, by comparing the language with that of our general acts of incorporation. Take, for example, the act relative to incorporations for manufacturing purposes. The first section directs, that "any five or more persons, who shall be desirous to form a company," &c. "may make, sign, and acknowledge, before a justice of the supreme court," &c." a certificate in writing, in which shall be stated the corporate name of said company," &c. And the second section enacts, "that as soon as such certificate shall be filed as aforesaid, the persons who shall have signed and acknowledged the said certificate, and their successors, shall, for the term of twenty years next after the day of filing such certificate, be a body politic and corporate, in fact and in name, by the name stated in such certificate, and by that name," &c. 3 R. S. 310. Under this law, a corporation is brought into existence by legislative enactment. Under the general banking law, an association is formed by contract, by agreement of the parties. By that law, any number of persons may associate—and if they do associate, it is their own voluntary act; and their association derives its being from their mutual consent-and in like manner, may be dissolved at their pleasure. They are allowed by agreement to fix the period of its commencement and termination, as in all other cases of voluntary associations-time of commencement and dissolution, like a strict copartnership; and if the parties are dissatisfied with each other, or the business, they may by general consent dissolve at any time before the period fixed for the termination of the association. In these respects, the associations are wholly unlike corporotions. The latter always have a period fixed by law for their commencement and termination, unless they are perpetual; and then, their perpetuity is likewise declared by law, and it is not in their power to dissolve themselves. They may commit acts which forfeit their existence, but cannot dissolve at pleasure.

Furthermore it is understood to be the true construc

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tion of this statute, and that such construction was deliberately given to it by the late comptroller and attorney-general, after full and mature examination, to authorize any individual to conduct the business of banking according to its provisions. And it is a well known fact, that several individuals have deposited their respective securities with the comptroller, received bills, and are now prosecuting the business of banking in their respective offices, and on their respective accounts. If this is the true construction of the act, and there appears to be no reason to doubt it, there would seem to be an end of all pretence even, that those who avail themselves of its provisions are corporators. The statute certainly does not constitute each of the individuals referred to, a corporation, or, in other words, give each of them a corporate existence. Nor does the statute give a name to the association formed under it, as is always the case, when a corporation is created; nor does it adopt any selected by the parties, as in the general act of incorporation for manufacturing purposes. The name of each association is given by agreement of the associates. They determine and agree what it shall be. It is given by contract and not by statute. It comes from the will of individuals, and not from the sovereign power. Besides, the associations have no common name by which they are known; by which they take and give title and make contracts, and by which they sue and are sued. Nor have they two names, one by which they may take and grant, and another by which they may sue and be sued. They have only one name, and that for a single purpose, viz: "to be used in their dealings." They neither take, nor grant, nor make contracts in that name, nor do they sue, nor are they sued by it, as will be more distinctly seen when other sections of the statute are examined.

SECOND: Has every association a standing in court, as a collective existence by a given name or designation, with the rights and liabilities of a party liligant? The clauses of the statute which relate to this part of the subject, are found in the 21st and 22nd sections. These are as follows: "And all suits, actions and proceedings brought or prosecuted by

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or on behalf of such association, may be brought or prosecuted in the name of the president thereof."-" All persons having demands against any such association, may maintain actions against the president thereof." The ground taken by the counsel for the defendent is, that the suits permitted by these provisions of the statute, are to be brought and prosecuted in the name of the office of the president of the association, and not in the name of the person who fills the office; and that each association has therefore a name given to it by statute, by which it sues and is sued. This is obviously an erroneous construction of the act. The title of this very cause is a practical evidence of the It is in the name of Anson Thomas, president, &c.; and not in the name of The President of the Bank of Central New-York. The language of the statute shows, that the office of president is referred to as a mere description of the person in whose name the suit may be brought, and against whom it may be maintained. The words are, "all suits," &c. "may be brought or prosecuted in the name of the president thereof," and not in the name of the office of president thereof. So, "all persons," &c. "may maintain actions against the president thereof," and not against the office of president thereof. But there are other clauses in these two sections of the statute which are conclusive of its construction.

error.

If the suits may be brought in the name of the office of president, or maintained against the office of president, then no suit brought in the name of that office, or against it, would abate by death, resignation or removal of the officer. But in the 21st section, the legislature provide, that no "suit, action, or proceeding," "brought or prosecuted in the name of the president thereof," "shall abate by reason of the death, resignation or removal from office of such president, but may be continued and prosecuted according to such rules as the courts of law and equity may direct, in the name of his successor in office." So also, in regard to suits against the president, the 22d section contains the following provision: "which suits or actions shall not abate by reason of