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be committed and punished without the other. Yet says Mr. Collyer, in a subsequent page—“The only act, however, which has been expressly stated to be an assuming to act as a corporation, is that of making the shares transferable without any restriction, at the mere will of the holder.” He adds "The universal illegality of this proceeding was doubted, as we have before observed, by Lord Ellenborough. But in Joseph v. Preber, [3 Barn. & Cres. 639; 5 Dowl. & Ryl. 542,] it was held to be universally illegal, not only as it should seem, under the words of the Statute on that particular point, but with reference to the more general offence of acting as a corporation.” C. J. Best, in a subsequent case, [4 Bing. 267,] says: “There can be no transferable share of any stock, except the stock of corporations, or of joint stock companies created by acts of Parlia
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. C. J. Best states it in sub-. stance, 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 ayailed 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 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."
FIRST: The shares are transferable on the books of the association.
SECOND: The transferee succeeds, not only to the rights, but to the liabilities of the prior shareholders. These are imposed by law upon him.
THIRD : 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 just 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.
Examination of The way now appears open, to examine those parts of our General Banking Law, which are supposed to confer corporate powers on the associations which it authorizes, and ascertain, whether the associations have all, or any of the four essential requisites of a corporation before stated.
First : Has every association a collective existence by name, created by the sovereign power, exercised directly or mediately ?
There are only parts of two sections of the Statute which relate to this corporate feature, viz: the first clause of the fifteenth section, and the first and fifth sub-divisions of the sixteenth section. They are,
“ § 15. Any number of persons may associate to establish offices of discount, deposit and circulation,” &c.
“ § 16. Such persons, under their hands and seals, shall make a certificate which shall specify :
6 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.”
The force and true meaning of the clause of the fifteenth section cannot be fully apprehended, without reading it in connection with the act to restrain unauthorized banking. That act is as follows:
§ 1. No person unauthorized by law, shall subscribe to, or be. come a member of, or be in any way interested in, any association, institution or company, formed, or to be formed, for the purpose
of receiving deposits, making discounts, or issuing notes, or other evi. dences of debt to be loaned or put in circulation as money." &c.(1 R. S. 711.)
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 al. low 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 nothing; 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 agree
ment 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 co-partnership; 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 corporations. 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 construction 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 haye 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