ciples of law will apply to the acceptance by an existing corporation of a new or amended charter.1 Private corporations are frequently organized in these days, under general acts; and for such organization a substantial compliance with all the terms imposed by the act as conditions precedent is the essential prerequisite.2 § 221. Language of Legislative Acts of Incorporation. — To create a corporation, such words as "found," "erect," "establish," or "incorporate" are commonly used; but they are not essential; the intention of the legislature in enacting a law of this kind being the main thing which the courts will regard.3 § 222. Constituent Elements of a Private Corporation. There are certain constituent elements in every private corporation. A body corporate is usually made up of natural persons in their natural capacity. Every corporation should have a name,—or, as Coke called it, a name of baptism, by which it may be known as grantor and grantee, perform all legal acts, hold and transmit property, and sue and be sued; and here we notice that the name of this legally created being usually expresses the objects for which it was founded, and that it is sufficiently named whenever the identifying words are used; but a natural person's name is short, and cannot suffer verbal changes without losing the means of identification altogether. And, since corporate powers are only locally exercised, every corporation should be constituted as of some particular place; and the principal office 1 Commonwealth v. Cullen, 13 Penn. St. 133. 2 Morawetz, § 17, and cases cited; Utley v. Union Tool Co., 11 Gray, 139; People v. Selfridge, 52 Cal. 331; 55 Barb. 45; Doyle v. Mizner, 42 Mich. 332; Hurt v. Salisbury, 55 Mo. 310. So, too, there may be conditions precedent under a special charter, whose observance is essential in the same sense. Morawetz, § 18. 3 Phillips v. Pearce, 5 B. & C. 423; Lawrence v. Fletcher, 8 Met. 153; 1 Kyd, 63; Ang. & Ames, §§ 76, 77; Morawetz, § 9; Liverpool Ins. Co. v. Massachusetts, 10 Wall. 566. Corporations are the creatures of local law, and they have no powers out of the State where they were created, except such as are conceded by the lex loci; though, we may add, the legal principles applicable to consolidated railways which operate in a number of States are lately developing. See Paul v. Virginia, 8 Wall. 168; InterState commerce act (1887); 118 U. S. 557; 158 U. S. 564. Ang. & Ames, §§ 95-102; 2 Kent Com. 292; Forbes v. Marshall, 11 Ex. 166; Sutton v. Cole, 3 Pick. 232. for the transaction of business usually determines the local residence of this ideal inhabitant.1 The powers and capacities which are essential to all corporations, and implied in every act of incorporation, are often enumerated as follows: (1) to have perpetual succession, admitting new members to fill old vacancies; (2) to sue and be sued, implead and be impleaded, grant and receive by its corporate name, and do all other acts as natural persons may; (3) to purchase and hold property, whether real or personal, for the benefit of its members and their successors; (4) to have a common seal; (5) to remove members. But, as Mr. Kyd says, some of these powers are to be taken in many instances with much modification and restriction; for the essence of a corporation consists only of a capacity to have perpetual succession, under a special denomination and an artificial form, and to take and grant property, contract obligations, and sue and be sued by its corporate name, and to receive and enjoy, in common, grants of privileges and immunities.2 The incidental powers and capacities of every corporation are subject moreover to such limitations as may be prescribed by the sovereignty which creates it; nor has any corporation other powers than such as are specifically granted, or are within the letter and spirit of the act of incorporation.3 § 223. Internal Organization and Management; Directors, Membership, etc. The internal management of a private corporation is primarily vested in the members; but it is more immediately in the hands of the president and directors, or a sort of managing board with a chief executive at the head. In joint-stock corporations, those which consist in combinations of capital, usually for some business purposes,the rights of membership are incident to the ownership of stock. As Shaw, C. J., has observed, in all bridge, railroad, 1 Bank of U. S. v. Devaux, 5 Cr. 84; Ang. & Ames, § 107; Ohio R. R. Co. v. Wheeler, 1 Black, 286; Potter v. Bank of Ithaca, 7 Hill, 530. 21 Kyd, 13, 69, 70; 2 Kent Com. 278. 8 Ang. & Ames, § 111; Dublin v. Attorney-General, 9 Bligh, N. s. 395; and turnpike corporations, in all banks, insurance corporations, manufacturing corporations, and, generally, in corporations having a capital stock and looking to profits, membership is constituted by a transfer of shares, according to the by-laws, without any election on the part of the corporation itself.1 This right to elect officers and otherwise control the corporate interests may, however, be modified by the express terms of the charter or a general statute applicable to the company.2 And members of private corporations sometimes make a by-law, creating a select body to whom they delegate the power of electing officers and members.8 The charter or statute is usually explicit as to the times and manner of election and the qualification of voters; otherwise the corporation may regulate such matters for itself. At the proper time and place of meeting, every candidate is proposed (though nominating committees frequently regulate the presentation of lists to the members at large), and those having a majority of the votes cast, the assembly being sufficiently large, are the officers elected; no more officers being chosen than such as suffice to complete the proper number; and a plurality or any other system being optional in preference to a majority vote, if regularly and properly adopted by the members at large. For we are to remember that members of a private corporation are not unlike citizens and voters under a constitutional form of government. Where the election was conducted in good faith, the officers appointed are usually considered to have been properly appointed, in the absence of positive formalities which were neglected; and persons acting publicly as officers of a corporation are always presumed to be rightfully in office. When questions of this sort are raised, the language of the charter or statute will usually be resorted to as determining whether the irreg Beaty v. Knowler, 4 Pet. 152; Brightly 1 Poor v. Sears, 22 Pick. 122. And see Ang. & Ames, § 113; Gilbert v. Manchester Iron Co., 11 Wend. 627; Downing v. Potts, 3 N. J. 66. See chapter, infra, on Stocks and Shares. VOL. I. 19 2 Ang. & Ames, §§ 115-118; Commonwealth v. Gill, 4 Whart. 228. 8 12 Mod. 225; Ex parte Wilcocks, 7 Cow. 407. 42 Kent Com. 294; Ang. & Ames, passim, §§ 118-123; Morawetz, §§ 236, 382. 289 ular election was void or only voidable; and where a person has been de facto elected to a corporate office, and has accepted and acted in the office, the validity of his election and his title to the office in the latter instance can only be tried in proceedings on a quo warranto information.1 § 224. The Same Subject; Powers of Directors, Corporate Officers, etc. The management of private corporations is usually vested in certain officers and boards; the body of the members having no voice except in their election. The board of directors, as it is called, constituting a sort of executive committee, though with more than purely executive functions, represents the corporation, and in general may act as such, and, unless specially restricted, exercise all the corporate powers. It would be manifestly inconvenient for a large body of members to meet and transact the multifarious details of corporate business; hence, the custom, in the present day universal, of choosing a special board or body of directors, as the representatives, agents, or managers of the corporation at large. There was formerly great stress laid upon the use of the corporate seal, as indispensable to the validity of the business contracts of a corporation; but the modern rule is, that the acts of the board of directors are as binding upon the corporation when evidenced by a legal vote; and, in the absence of a charter, statute, or by-laws expressly providing otherwise, a majority of the directors of a joint 1 Waite v. Windham, &c., Mining Co., 36 Vt. 18; Frost v. Frostburg Coal Co., 24 How. 278; Bank v. Dandridge, 12 Wheat. 79; Ang. & Ames, §§ 137-141; Regina v. Mayor of Chester, 34 E. L. & Eq. 59. 2 Bank v. Dandridge, 12 Wheat. 113; Ridgway v. Farmers' Bank, 12 S. & R. 256; Morawetz, § 382. A majority of stockholders are incompetent to divest the directors of the fundamental management of concerns; and manifestly the body of shareholders is incapable of managing the corporate business efficiently. Taylor, § 180. The "constitution" or fundamental charter is not to be altered except as that instrument provides. Some corporations are so organized that the fundamental law leaves corporate power discretionary with the shareholders themselves to a great extent. In such case the shareholders may by resolution or by-law delegate authority to their directors and correspondingly revoke it. Taylor, § 219. 8 Burrill v. Nahant Bank, 2 Met. 163; Whitwell v. Warner, 20 Vt. 425; Ang. & Ames, §§ 228-231, 276283. stock corporation, organized for transacting some kind of business, constitute a quorum; and a majority of the quorum have authority to decide any question within the scope of the corporate powers.1 The board of directors being, in effect, but agents of the members at large; and every corporation having the implied right to choose its own general and special agents; the directors can only act for it and bind it within such limits and in such modes as the charter, statute, by-laws, or some acts of the members authorize.2 No general rule can be laid down in this respect, for their powers will differ with the rules and usage of the business; and we must refer to the laws of agency to determine the principles on which the corporation will be bound by their acts. In chartered banking and insurance companies, and joint-stock business corporations generally, the exclusive agency is generally put into the hands of the directors by the incorporating act; so that while the stockholders elect their board of managers, the managers themselves derive their authority from the charter, and are agents, not of the stockholders, but of the corporation; in which case they exercise large discretionary powers, and the body at large cannot control their movements, except in the matter of election, nor compel them to do contrary to their own judgment. And the usages of well-established corporations may guide where the fundamental law fails of guidance. The directors may commit authority to others among themselves; and here, as in the State, some executive officer is requisite for ordinary routine business, such as a president; while other officers are employed, such as 1 Cowp. 248; Sargent v. Webster, 13 Met. 497; Fleckner v. U. S. Bank, 8 Wheat. 357; Co. Lit. 66 b; Randall v. Van Vechten, 19 Johns. 65; Morawetz, §§ 167, 247. The directors act as a board and not singly; nor should formalities prescribed by the charter or constitution be disregarded, whether as to calling meetings or in other respects. Morawetz, § 247, and cases cited. - 2 Salem Bank v. Gloucester Bank, 17 Mass. 29; Ang. & Ames, § 231; Bargate v. Shortridge, 5 H. L. Cas. 297; Morawetz, §§ 238, 242, 248. 8 Ib. 4 Bank v. Dandridge, 12 Wheat. 113; Royalton v. Royalton, &c. Co., 14 Vt. 311; Commonwealth v. St. Mary's Church, 6 S. & R. 508. See Taylor, § 195. |