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R. 257.) · As issuing bills to circulate as money is the most important and valuable feature of our system of banking, this decision of the Supreme Court of the United States effectually restrains the States from engaging in it.
We commenced our restraints upon private banking in this State at an early day. On the 26th of May, 1781, Congress incorporated the “Bank of North America," and recommended to the several States of the Confederation to provide by law," that no other bank or bankers shall be established or permitted within the said States during the war.” In pursuance of this recommendation, this State passed an act on the 11th April, 1782, incorporating the “Bank of North America” within this State, and declaring, “that no other bank, public or private, shall be established within this State during the present war with Great Britain, on pain of the forfeiture of one hundred pounds for every offence by every person concerned in such bank or banks.”— (1 Green, 50.). After the treaty of 1783, which secured our independence, there was no necessity for restraining banking; on the contrary, I have understood, it was difficult to induce capitalists to invest their funds in such business ; and so much so, that when “ The Bank of New York” was incorporated, on the 21st March, 1791, which was the first bank incorporated in this State after the war, it was difficult to obtain subscriptions for the stock, and appeals were made to the patriotism of the citizens to come forward and take it up, as a measure of public benefit. After incorparating the Bank of Albany, on the 10th of April, 1792; the Bank of Columbia at Hudson, on the 6th March, 1793; the Manhattan Company, on the 20 April, 1799; and the Farmers' Bank of Troy, on the 31st March, 1801 ; and pressing applications for several others having been made, the Legislature, on the 11th April, 1804, passed an act entitled, “ An act to restrain unincorporated banking companies,” generally denominated the
Restraining Act.” (3 Web. 615, 27th Sess. ch. 117.) This
statute prohibits, under heavy penalties, all persons, associations, or companies, from banking, unless specially authorized by law. This statute has been continued to the present time and is still in force, having been strengthened and its severity increased from time to time by amendments. (2 R. S. 234; Laws of 1818, p. 242, 41st Sess. ch. 236, Sec. 1-2; 1R. S. 712.) But for these laws, every citizen, association, copartnership or company, would have an unqualified right to commence and carry on the business of banking; and the very passage of the acts shows the existence of that right. Let it then be distinctly understood and remembered, that banking is no franchise, no attribute of sovereign power, to be granted by the Legislature to her citizens, either as individuals or members of associations; but a right that belongs to them, unless taken away by legislative enactment. Even in England, where privilege and monopoly are rife, and where the very existence of the government almost depends on sustaining the Bank of England, the business of banking is permitted to all, except in a comparatively small district around London.
Only parts of the statute
So far then as the statute under consideration ope
rates as a mere repeal of our restraining acts, it is not only unobjectionable, but meritorious; for so far, it is a restoration of our citizens to their former rights. Those sections, or parts of the Statute only can be assailed, which confer powers on the associations which it authorises, analagous to those usually conferred on corporations.
An examination of the statute will direct us at once to those parts of it, which are supposed to confer corporate pow
They are the following: "§ 15. Any number of persons may associate to establish offices of discount, deposite and circulition, upon the terms and conditions, and subject to the liabilities, prescribed in this act.
“Ş 16. Such persons, under their hands and seals, shall make a certificate which shall specify :
* 1. The name assumed to distinguish such association, and to be used in its dealings :
“5. The period at which such association shall commence and terminate.
“ § 18. Such association shall have power to carry on the business of banking, by discounting bills, notes and other evidences of debt; by receiving deposites ; by buying and selling gold and sil. ver bullion, foreign coins and bills of exchange, in the manner spe. cified in their articles of association for the purposes authorized by this act ; by loaning money on real and personal security ; and by exercising such incidental powers as shall be necessary to carry on such business ; to choose one of their number as president of such association, and to appoint a cashier, and such other officers and agents as their business may require, and to remove such president, cashier, officers and agents, at pleasure, and appoint others in their place.
s § 19. The shares of said association shall be 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 transfer, shall, in proportion to his shares, succeed to all the rights and liabilities of prior shareholders ; and no change shall be made in the articles of association, by which the rights, remedies or security of its ex. isting creditors shall be weakened or impaired. Such association shall not be dissolved by the death or insanity of any of the share. holders therein.
"§ 21. Contracts made by any such association, and all notes and bills by them issued and put in circulation as money, shall be signed by the president or vice-president and cashier thereof; and all suits, actions and proceedings brought or prosecuted by or on behalf of such association, may be brought or prosecuted in the name of the president thereof; and no such suit, action or proceed. ing 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 rect, in the name of his successor in office, who shall exercise the powers, enjoy the rights and discharge the duties of his predecesso
“ $ 22. All persons having demands against any such associa. tion, may maintain actions against the president thereof; which suits or actions shall not abate by reason of the death, resignation or removal from office of such president, but may be continued and prosecuted to judgment against his successor : and all judgments and decreés obtained or rendered against such president, for any debt or liability of such association, shall be enforced only against the joint property of the association, and which property shall be
liable to be taken and sold by execution under any such judgment or decree.
“§ 23. No shareholder of any such association shall be liable in his individual capacity for any contract, debt or engagement of such association, unless the articles of association by him signed shall have declared that the shareholder shall be so liable.
“ $24. It shall be lawful for such association to purchase, hold and convey real estate for the following purposes :
“1. Such as shall be necessary for its immediate accommodation in the convenient transaction of its business; or,
“ 2. Such as shall be mortgaged to it in good faith, by way of security for loans made by, or monies due to, such association; or,
“3. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings ; or,
" 4. Such as it shall purchase at sales under judgments, decrees or mortgages held by such association.
“ The said association shall not purchase, hold or convey real estate in any other case or for any other purpose ; and all conveyances of such real estate shall be made to the president, or such other officer as shall be indicated for that purpose in the articles of association; and which president or officer, and his successors, from time to time may sell
, assign and convey the same, free from any claim thereon, against any of the shareholders, or any person claiming under them.”—[Laws of 1838, ch. 260, p. 245.]
Essence of a Corporation.
The ordinary incidents to a corporation are well stated by Chancellor Kent in his Commentaries. They are :“1. To have perpetual succession, and, of course, the power of electing members in the room of those removed by death or otherwise; 2. To sue and be sued, and to grant and to receive by their corporate name; 3. To purchase and hold lands and chattels; 4. To have a common seal; 5. To make by-laws for the government of the corporation ; 6. The power of amotion or removal of members.” [2 K. Com. pp. 277, 278, 2d ed.]
Although these are the ordinary powers of a corporation, they are by no means peculiar to it. Every one of them probably, and most of them certainly, may be, and often are possessed and enjoyed by voluntary associations, in the form of copartnerships, or joint stock companies. And in this respect the associations
authorized by the Statate are like all other voluntary associations or copartnerships. For it must be admitted, that they have, substantially, many of the powers ordinarily possessed by corporations. But that circumstance is far from constituting them technically, legally, or really, bodies corporate. The members of a strict copartnership may agree in their articles of association to have succession, perpetual, or for a designated number of years; by admitting the representatives of every member who should die, or otherwise cease to be a member; or by electing a person in his place; or in any other mode their fancy or interest should suggest. They may also agree to have a common seal, and that it shall be affixed to all contracts, and that they will not he bound unless it is so affixed. And such an agreement would doubtless bind all the members fo the copartnership, and all persons who dealt with them and had knowledge of it. They may also, by agreement, make, or provide for making, by-laws for the government of themselves, their successors and agents; and provide for, and regulate the manner, and declare the cause of removal of the members of the copartnership. Yet copartnerships are not corporations. When viewed and compared in general, they are easily distinguished ; but the task, I apprehend, is difficult, to ascertain satisfactorily, the unequivocal iudicia, and the peculiar and distinctive characteristics of a corporation, which mark it, and distinguish it from every other legal or natural being. And the difficulty is increased by the consideration, that any one, more, or all, of the ordinary powers of a corporation, may. be conferred by statute on a joint stock company, and still not give it the character of a corporation; and, on the contrary, a corporation may be created by statute, which has only one, or even none of the ordinary corporate powers, but others which better subserve the end of its creation.
Difficult, however, as the duty is, to ascertain and present the peculiar features and essential requisites of a corporation, its performance must be attempted in the course of this argument.