as to the local place of residence of a trading corporation within. the state of its domicile, that the principal place of administration must be regarded. Where the inquiry is as to other corporations, such as churches or charitable corporations, the general rule is that they reside where their functions are to be discharged. So that a church organized for work in the city of New York has its residence there.2

The existence of a foreign corporation is recognized in the courts of other States. The capacity to enter into legal transactions in such a case must be determined by an examination of the law constituting the corporation, as well as of the country where the transactions take place.

A State may prevent a foreign corporation from entering into a contract which it might allow in the case of a domestic corporation. This principle applies as between the States of the Union. A corporation chartered in Ohio is in New York a foreign corporation. A State of the Union may impose conditions upon a corporation chartered elsewhere as to business transacted within its limits. These must be observed, and a contract made without observance of them will be void.3 (a) Thus, if the provision were that a foreign corporation, before doing any business in the State, must duly execute a power of attorney appointing an agent, upon whom all legal process may be served in suits against the corporation, a contract made without such an appointment would be illegal and void. A statute requiring an act to be done after commencing business, such as filing a specified instrument within thirty days after that time, would not prohibit the corporation from continuing business after the time had expired, even though it had failed to comply with the statute.5

A law passed by a State legislature prohibiting a foreign corporation when sued in its courts from removing the case under the provisions of the Act of Congress applicable to the subject into the United States courts, is unconstitutional and void, and the

1 Keynsham Blue Lias Co. v. Baker, 2 H. & C. 729; Taylor v. The Crowland Gas & Coke Co., 11 Exch. 1; Adams v. Gt. W. R. R. Co., 6 H. & N. 404.

2 Dicey on Domicil, 111, 112.

8 Lamb v. Lamb, 13 Bankr. Reg. 17.

(a) Union Cent. Life Ins. Co v. Thomas, 46 Ind. 44; Dudley v. Collier, 87 Ala. 431. A distinction is made by some authorities between executed and executory contracts. Farrior v. New Eng. Mort. Co., 88 Ala. 275. The contract will not be declared

4 In re Comstock, 3 Sawy. C. Ct. 218; Semple v. Bank of British Columbia, 5 Sawy. 88.

5 Northwestern Mut. Life Ins. Co. v. Overholt, 6 Cent. L. J. 188.

void unless it is plain the legislature so intended. Toledo Tie, etc. Co. v. Thomas, 33 W. Va. 566; Sherwood v. Alvis, 83 Ala. 115; Morawetz, Private Corporations, § 665.

removal may be made regardless of the law. Still, if a law should be framed so as to revoke the license of a foreign corporation to do business within the State if it made such a removal, the law would be valid, and the corporation would have to elect between withdrawing from the State and complying with the law. This rule rests upon the proposition that as the State has the right to exclude foreign corporations, the Federal courts will not inquire into the reasons for the State's action, or into the means of enforcing it.1

(2) Corporations as trustees. It was formerly a mooted question whether a corporation could be a trustee. It is now well settled that it can be. Any other view is based on a mere technicality. If a trading corporation, it is a trustee as between itself and its shareholders. It may also hold property in express trust, as has been shown in the case of charitable corporations. Moreover, in modern times corporations are expressly created for the purpose of acting as trustees for third persons. Of these there are many examples in the State of New York, having large capital and transacting a great amount of fiduciary business. These corporations, called Trust Companies, act as guardians for wards, so far as administering estates are concerned, as trustees to pay over income to beneficiaries, as trustees of railroad mortgages in behalf of bondholders, and in other analogous transactions. Companies of this class are placed under the control of the superintendent of the banking department, and are required to make periodical reports to him, and to submit to an examination by competent experts, and to deposit with him as a guarantee fund ten per cent. of their paid up capital stock. (a) Companies of this class have proved highly useful to the community, and, with few exceptions, have been managed with fidelity and success.

(3) Construction of corporate charters. It is a general rule of law that a corporation possesses no powers except those which are specifically granted, or which are incidental to specific grants. This general rule is declared by statute also in some States; e. g., in New York. Whenever privileges are granted to a corporation, they are to be strictly construed; nothing passes but what is granted in clear and explicit terms.2 The principal difficulty is in determining what powers are incidental to specific grants. A few instances may be mentioned.

Thus, a corporation has an implied power to accept a bill of

1 Doyle v. Continental Ins. Co., 94 U. S. 535.

People v. Newton, 112 N. Y. 396.

(a) See Laws of 1892, ch. 689, § 14.

exchange or make a promissory note based upon a debt contracted by it in the course of its business. This rule could not be applied to a note given outside of its legitimate business. It must affirmatively appear that it was made in the course of its business.2 This rule is applied to a municipal corporation as well as to one of a private nature.3

A corporation has an implied power to borrow money to use in its legitimate business, and to give its note or draft on that account. It may, of course, pay its lawful debts, and may to that end make a general assignment in trust for its creditors, unless prohibited by statute.5 (a) A trading corporation may, as a trustee for its stockholders, bring an action in their behalf to cancel spurious certificates of stock. It cannot, however, as a rule, use its funds to sustain another corporation. (b) A corporation having power to insure lives has an incidental power to invest its property (held as a protection for the insured) in approved securities, such as suitable bonds and mortgages.7

If, however, a corporation be restricted by statute to a particular mode of doing business, it must follow that method. If it have authority to loan only upon bond and mortgage, any other investment will be void.8 This is true both of the security and the loan itself.9

Though some of these cases seem severe and harsh in their operation, they would appear to be sound, as long as the view prevails that a corporation is a creature of limited powers.

SECTION IV. The Visitation of Charitable Corporations. The word "visit," as here used, means the right of one or more persons known as visitors, to examine into the condition of the corporation, to search for abuses and irregularities, and to correct them if found to exist. In some instances their action is invoked by persons interested in the corporate affairs. If the corporate

1 Moss v. Oakley, 2 Hill, 265; Partridge v. Badger, 25 Barb. 146.

2 McCullough v. Moss, 5 Den. 567.

6 N. Y. & N. H. R. R. Co. v. Schuyler 17 N. Y. 592.

7 Farmers' Loan & Trust Co. v. Clowes,

Halstead v. Mayor, &c. of N. Y., 3 3 N. Y. 470. N. Y. 430.

Curtis v. Leavitt, 15 N. Y. 9. 5 Hurlbut v. Carter, 21 Barb. 221.

(a) Such assignments are frequently prohibited, when the corporation is insolvent. In New York, see The Stock Corporation Law, § 48. In the absence of express words, a foreign corporation is not regarded as within the terms of this prohibition, and an assignment by it would

8 New York Firemen Ins. Co. v. Ely, 2 Cow. 678.

9 Life & Fire Ins. Co. v. Mechanic Fire Ins. Co., 7 Wend. 31.

body has become inactive or dormant, it should be stimulated to action. If it is acting extravagantly and without due warrant, it should be restrained.

Visitation, in its strict sense, is applicable to charitable and ecclesiastical corporations. It is not necessary to consider the case of ecclesiastical corporations, there being none in this country.

The "visitation" of charitable corporations is derived from the doctrine of foundations and "founders." The word "founder" is used in two senses in English corporation law. One meaning refers to the person who in the outset supplies the property to carry on the corporate business; the other refers to the king or other authority that gives legal existence to the corporation. No particular words are necessary to create a visitor. An authority to one to inspect the foundation and correct what he may find amiss, makes him a visitor. The necessity of a visitor arises from the fact that charitable institutions are in their nature perpetual, and in the lapse of time abuses may arise. "Visiting" is not confined to corporations, but may extend to unincorporated trustees. The more common case found in the law books is the visitation of corporations. There may be a series of foundations made by different persons, so that one may have an original design upon which later foundations are grafted. In such a case the one who first supplied the funds would be deemed the founder, unless there may be special circumstances varying the rule. The king, in England, has in many instances established a charitable foundation. The Lord Chancellor, in such a case, becomes a visitor, as representing the king. He does not in such a case hold the Court of Chancery, but has an authority resembling that of a visitor on a private foundation or an endowment.

In other cases, the visitatorial power vests in the founder, and on his death passes to his heirs; but if he leave no heirs, it devolves upon the king. The authority may be delegated to others by the founder. The fundamental principle is, that the owner of the property has the right to oversee within certain limits the disposition that may be made of it.

It is common for the founder to lay down rules for the management of the institution. These are commonly called statutes. It is a part of the business of the visitor to see that these "statutes" are observed. These statutes are frequently in England of long standing, often whimsical in their nature, and poorly suited to modern conditions of life. Unless contrary to public policy, or illegal in their nature, they will be enforced, the will of the founder, though long since dead, being still followed. Some

remarkable instances of this rule are found collected in a work called "The Dead Hand." 1

A distinction in the law of visitation of corporate charities is to be taken between the case where the funds belong to the corporation for its general purposes, and where they are vested in it for special purposes, or, in other words, held on special trusts. The distinction is so important that illustrative examples will be useful.

Let it be supposed that a testator simply bequeaths to a college ten thousand dollars. No restriction is placed by him upon the use of the money. The corporation may use it for any legitimate purpose. It holds the property in a fiduciary character, but not on any special trust. On the other hand, let a testator give a fund to be invested, of which the income shall be used to found a particular professorship, or establish a scholarship to be filled only from time to time by beneficiaries bearing his own name. There is now a special trust. These two cases will now be treated separately.

(1) Charitable funds held for general purposes. — A preliminary remark may properly be made as to the meaning of the word "charitable," as applied to corporations, and also applicable to trusts under the care of trustees, not incorporated. The word

1 This book was written by Sir Arthur Hobhouse, now Lord Hobhouse, a lawyer of great distinction, an English judge, and a member of the judicial committee of the Privy Council. (London, 1880.) He refers to the case of Bishop Pursglove, who founded a school in Hull in the year 1560. His scholars were to range from those who had not yet learned to speak plainly to those who could read Horace and Cicero, and write Latin verses. The school is divided into four forms, and the studies of each form were prescribed by the bishop in minute detail. The whole teaching, substantially, is to be done by the master in person, beginning with teaching the children to pronounce and sound their letters, and ending with the highest work. He must be teaching ten hours per day in the summer and eight in the winter, with only five weeks' vacation. The scheme of the bishop still prevails, leading to a deadly feud from time to time between the master and the governors of the charity, who threaten to dismiss him if he does not follow literally the plan of instruction and discipline laid down three

hundred years ago. Other cases still more peculiar might have been cited. Sometimes the statutes encourage wild acts on the part of the students, as in Sir John Deane's charity in Wilton, County of Chester, A. D. 1557, where the scholars were directed by the founder to "bar out the schoolmaster" a week before Easter and Christmas.

It has been suggested by leading writers on this topic, that the rules of law should be more flexible than at present, and that while the views of "founders" or donors should be observed when their plans are reasonable or practicable, yet that the proper court should have power to modify them where there is clear reason to justify such action. See "The Dead Hand," p. 229. Any scheme of this kind should be adopted with much caution, as it might result in diminishing or perhaps extinguishing charitable gifts or bequests. In this country, reference would have to be made in altering the charter of a charitable corporation to the prohibitions of the United States Constitution as to the impairment of the obligation of contracts.