pleasure of the supreme authority in the State, though it might be that its property should continue to be appropriated to public uses. The case is very different with private corporations. The acts of incorporation and acceptance constitute a contract between the State and the corporators. This cannot be destroyed nor altered by the legislature, unless there be a special power to that effect reserved by the State, a case to be hereafter considered. It is not material that no money is paid by the corporators for the charter, nor that the trustees receive no pecuniary benefits. It is enough that the persons whom the trustees represent may derive a benefit from it. These principles are fully set forth in the celebrated "Dartmouth College Case." The college had been chartered by the King of England during the colonial period. It was placed by him under the control of a board of trustees having self-perpetuating power. After the Revolution, the State of New Hampshire attempted to subvert the old organization by a statute which the college did not accept. This act was declared by the court to be unconstitutional and void. This decision met with much opposition, it being maintained by some of the State tribunals that an act of incorporation ought to be deemed a law, and so in its nature repealable, rather than a contract and for that reason irrepealable. The answer to this view made by Mr. Mason in his argument for the college seems very strong. If this be a law, where is the necessity or propriety of acceptance of it by the corporators? Must a law, after it is duly enacted, be accepted or assented to by an individual in order to make it binding on him ? 2 After the decision of the Dartmouth College Case a practice grew up to the following effect: Either to insert in the charter of incorporation a clause giving the legislature full power of amendment or repeal, or to enact a general law of the State applicable to all future incorporations, or, for still greater caution, to insert a similar clause in the State constitution. Such a clause forms a part of the contract between the legislature and the corporation, and subjects the charter to amendment or repeal at the will of the legislature. Even with this reservation of such power, an arbitrary repeal of a charter, interfering with 1 Dartmouth College v. Woodward, 4 Wheat. 518. 4 Peik v. Chicago & N. W. R. R. Co., 94 U. S. 164; C. B. & Q. R. R. Co. v. 2 Dartmouth College Case, as separately Iowa, Id. 155; Schenectady, &c. Plank printed, p. 68. Road Co. v. Thatcher, 11 N. Y. 102, 108, 109. 8 See, for an illustration, Constitution of N. Y., Art. VIII., sect. 1 (last clause). rights of property, would be unreasonable and unjust and contrary to the constitutional safeguards for the protection of such rights. III. Surrender of corporate rights. A corporation may be dissolved by surrender, assuming that the surrender is accepted by the State. If a charter is to be treated as a contract, the corporation has duties as well as rights. It cannot by its own fiat dissolve the contract. So a corporation may surrender its charter by implication, as, for example, where a new charter is accepted inconsistent with its then existing incorporation.1 IV. By adverse judicial decree. (1) Under the common law. The proceeding for this purpose is a writ of scire facias or an information in the nature of a quo warranto, already explained. Sufficient cause for the proceeding is either the usurpation of a right or power, e. g., when a literary college at Geneva, N. Y., assumed, without legal ground, to establish a medical college in the city of New York; 2 suffering an act to be done which defeats the end for which the corporation was instituted; acts of neglect causing injury, such as that of a turnpike company permitting its road to fall into such a state of decay as to be dangerous or inconvenient to travellers; 4 non-compliance with the requirements of the charter by neglect or design, even though there be no bad or corrupt motives.5 In these cases, it will be no answer to the proceeding that any person injured will have a remedy by action. It is important to remark that a violation of corporate duty or a breach of the charter does not of itself dissolve the corporation. There must be a judicial proceeding. None but the "people,' through their proper officer, can claim that the charter is forfeited. An individual cannot set up the forfeiture as a defence to an action brought against him by the corporation to enforce a legal liability. This rule applies even though the charter provide that on the performance or non-performance of an act the corporation shall be ipso facto dissolved. These words are construed to mean dissolution at the election of the State through a judicial proceeding. (a) 2 The People v. The Trustees of Geneva College, 5 Wend. 211; and see People v. Utica Ins. Co., 15 Johns. 358, 383. 3 People v. Bank of Hudson, 6 Cow. 217. People v. Bristol, &c. Turnpike Co., 1 This mode of dissolution is called in the statute-book in New York “voluntary dissolution," meaning that it is at the will of the corporation, but still under the sanction of the State; Code of Civ. Pro. SS 2419-2431. Certain corporations are 23 Wend. 222. excepted. See §§ 2420, 2431. See also 2 R. S. 467, §§ 66-89. (a) See Application of Brooklyn El. Ry. Co., 125 N. Y. 434, and compare Brooklyn Steam Transit Co. v. City of People v. Kingston & M. Turnpike Road Co., 23 Wend. 193. Brooklyn, 78 N. Y. 524; Matter of Brooklyn, Winfield, & Newtown Ry. Co., 72 N. Y. 245. Courts of equity may in their administration of the law of trusts appropriate the property of insolvent corporations to the payment of their debts. This is readily done through the medium of a receiver, who under the direction of the court will bring actions or submit to be sued, collect the assets, and devote them to the use of the creditor. This may result practically in the dissolution of the corporation. (2) Dissolution as a statutory remedy. In the great multiplication of corporations in modern times, and the ease with which they are formed under general laws, it will readily happen that many will turn out to be formed for impracticable and visionary purposes, or, after having had a temporary business success, will fail, and become insolvent. The attention of legislatures is naturally turned to methods whereby they can be summarily dissolved or "wound up," and their affairs finally settled. A marked instance of this mode of proceeding is "The Companies Winding up Acts" of the English Parliament.1 1 25 & 26 Vict., c. 89, called "The Companies Act of 1862," with amendatory acts. The powers and liabilities of companies under this act depend both upon the articles of association among the members and the provisions of the Act of Parliament incorporating them. Re Cambrian Peat, Fuel, & Charcoal Company, Limited, 31 L. T. 773. The company is required to be registered under a name in a prescribed way, whereupon it obtains a certificate from the registrar, which is conclusive, so that its incorporation can not be successfully impugned. Oakes v. Turquand, L. R. 2 H. L. Cas. 325; Peel's Case, L. R. 2 Ch. App. 674. Companies under this act may be incorporated for any lawful purpose. § 6. The liability of members may be limited at the pleasure of the members, so that there shall be no liability beyond the shares subscribed. This is called a company with liability "limited by shares." It must be publicly registered in a prescribed registration office with the word "limited as the last word in its name. The liability of members may be "limited" in another way, which is to fix in the articles of association an amount in addition to their shares for which they un. dertake to be liable. This is called a company "limited by guarantee." § 9. The word "limited" in this case must also be the last word in the company's name, and there must be a registration as prescribed by law. Finally, the members may, if they will, be organized on the principle of unlimited personal liability. § 10. It is plain that, under these provisions, "the winding up" of the various corporations in case of dissolution will have quite a different meaning. In the strictly limited corporations, the shareholders will only contribute in case they have not paid up their original subscriptions, and then only to the extent of sums not yet paid. In the other cases, the shareholders will be required to contribute in addition whatever their articles of association may provide for. Accordingly, those are "contributories" to the payment of the debts of the company who have in some way bound themselves by contract either directly to the creditor or with the corporation that has contracted with the creditor. Bright v. Hutton, 3 H. L. Cas. 341. The list of contributories includes all who have agreed to become members, and not entitled to rescind the contract on the ground of fraud. In re Scottish Petroleum Co., L. R. 23 Ch. D. 413. The subscriber is bound to take the shares he subscribed for and to pay money or money's worth. Forbes & Judd's Case, L. R. 5 Ch. App. 270. Persons holding shares as trustees may be liable, although There is also important legislation on the same general subject in the State of New York, resembling in some of its methods the English Winding up Act of 1862, and amendatory statutes. There are three principal cases under the New York statutes: 1. A majority of the directors may petition for a dissolution of the corporation on the ground that its property is not sufficient to pay the just demands against it, or for other reasons beneficial to the stockholders. In certain specified cases there may be a petition by those in favor of dissolution, though the directors are equally divided in opinion. The contents of the petition and the mode of proceeding under it are specifically marked out. The question is heard before the court or a referee. If the facts warrant it, an order is entered dissolving the corporation. The assets are administered by a receiver. All sales or transfers after the filing of the petition, or judgments confessed, whether to pay or secure debts, or for other considerations, are void as against the receiver or creditors.3 their names are entered on the share register as trustees. Bell's Case, L. R. 4 App. Cas. 547; also other City of Glasgow Bank Cases. Past shareholders are also liable under specified circumstances. Helbert v. Banner, L. R. 5 H. L. Cas. 28. The corporation having been "wound up," the court may sanction a scheme for reconstruction and the transfer of remain ing assets to a newly-formed company. In re Imperial Mercantile Association, L. R. 12 Eq. 504. Other companies besides those formed under the act itself, such as one incorporated by special Act of Parliament, may be "wound up" under this statute, but not a company wholly unincorporated. In re Bradford Nav. Co., L. R. 10 Eq. 331; Re Imperial Anglo-German B'k, 26 L. T. 229. "Never having come into existence, it cannot be wound up." The general grounds for "winding up' are that the business was not commenced promptly or that the object of the organization is impracticable or impossible, or that it is insolvent. There may also be a voluntary application by shareholders. A creditor who cannot get his claim paid is in general entitled to a winding up order, though in special cases, where this (a) The Companies Act, 1862, was amended and supplemented by the "Companies (Winding up) Act, 1890," 53 & 54 Vict. c. 63. This act and the Com proceeding would not on the whole be beneficial, or for other reasons, the order may be refused. In re Herne Bay Waterworks Co., L. R. 10 Ch. Div. 42. Public interests may also intervene to prevent it. If the order is granted, "liquidators" are appointed to take possession of the assets, and protect them. The liquidator is in substance a statutory receiver, who brings actions, carries on the business, sells property; and the order may be so drawn that he will not be required to apply to the court for directions. The details of the law are very numerous, and the decisions extensive. The whole scheme appears to be in the nature of a special act of bankruptcy embracing corporations and appropriating their assets of every sort to the payment of their debts, with the additional remedy of calling on the shareholders in certain cases for contribution to pay the company's debts. (a) 1 Code of Civ. Pro., § 2419. As Id. § 2421-2431, both inclusive. to the receiver, see § 1810. See also 2 R. S. 467, §§ 66–89, which are still probably applicable to a receiver in case of voluntary dissolution. panies Acts, 1862 to 1886, are cited together as the " Companies Acts, 1862 to 1890." 2. There are several cases in which a dissolution may be had by creditors seeking to enforce corporate obligations, as where the corporation has remained insolvent for one year, or neglected or refused for a year to pay its notes or other evidences of debt, or suspended its ordinary and lawful business for one year. In case the corporation has banking powers or power to make loans on pledges or deposits, or to make insurances, there may be an application of this kind, not only when it becomes insolvent, but when it has violated any provision of law binding upon it. In this class of cases the attorney-general proceeds, in the first instance, though if he omit to do so a creditor or stockholder may take proceedings which will enable him, with the leave of the court, to proceed for a dissolution. Stockholders and directors, so far as they may be made personally liable, may thereupon be joined by the plaintiff in the same action, or may be proceeded against separately. The dissolution is brought about substantially in the same way as in the case of voluntary dissolution.1 3. Special provisions applicable to the dissolution of particular kinds of corporations, so far as they may exist, are not interfered with by the general methods already described. The details must be sought in the respective statutes. "2 The word amalgamation has been sometimes used in connection with the dissolution of corporations, and should be explained. "Amalgamation" is not a legal word. In a recent case the court said: "It is difficult to say what the word amalgamate' means. I confess at this moment I have not the least conception of what the full legal effect of the word is. We do not find it in any law dictionary, or expounded by any competent authority." It may, however, be assumed to mean the dissolution of one or more corporations, and the transfer of property and franchises to another. The term appears to have grown up from a practice prevailing in unincorporated joint-stock companies created by deed executed by the members, whereby one company would coalesce with the other. It is established law, that unless the deed provides for amalgamation it cannot take place without the consent of all the members. The language of the deed must be clear. Even the word "amalgamate" will not be sufficient to impose upon a subscriber to the original company the duty to take stock in the new organization. If amalgamation take place without 1 Code of Civ. Pro., 1785-1796. 8 In re Era Assurance Society, 30 L. J. 2 Per WOOD, V. C., in In re Empire Ch. 137. Assurance Corp., L. R. 4 Eq. 341, at p. 847. 4 In re Empire Assurance Corporation, L. R. 4 Eq. 341; Dougan's Case, L. R. 8 Ch. App. 540. |