or general, may throw light on the subject. The will of the majority determines presumably in such cases.1 The power to make by-laws presupposes the power to enforce them by appropriate penalties, or to repeal them altogether; 2 but their repeal cannot affect vested rights under a fundamental law, any more than their passage.3 And bylaws, when made, are binding upon all the members of the corporation, and upon others acquainted with their mode of business conformably to the by-laws. By-laws regulating the directors and other agents of the company as to the business management should be observed by them. But those who deal with a corporation in ignorance of a certain by-law cannot be affected in their rights merely because the by-law exists; for members and officers are presumed to know all the by-laws, while third persons must have had the knowledge of any by-law brought home to them in such a manner that it entered into the mutual agreement.5 § 229. The Corporate Seal. Much significance was formerly attached to the corporate seal; probably because such of our ancestors as could not write found the use of a seal almost indispensable to authenticate their solemn acts. But it must be admitted that there is a peculiar propriety in giving to every corporation, as well as to every government, an official seal, to be used in formal instruments as a means of confirming the authority and assuring the deliberate purpose of the officers who execute on behalf of the corporation at large. Blackstone carries this reason very far when he asserts that a corporation acts and speaks only by its common seal, because, being an invisible body, its intentions cannot be manifested by any personal act or oral discourse; 1 Morawetz, § 366. The term bylaw was originally applied to the laws and ordinances enacted by public or municipal corporations. Morawetz, § 366. 2 Rex v. Westwood, 2 Dow. & C. 21; Ang. & Ames, §§ 327–329; Taylor, § 584; Abb. Dig. Corp. "ByLaws; Union Bank v. Ridgely, 1 Harr. & G. 324. 8 See Kent v. Quicksilver Co., 78 N. Y. 159. 4 Stevens v. Davison, 18 Gratt. 819. See Morawetz, §§ 366-370. 5 Ib.; Palmyra v. Morton, 25 Mo. 593; 2 Kyd, 156; Royal Bank of India's Case, L. R. 4 Ch. 252; Morawetz, §§ 332, 370. The rights of a third person under a by-law to establish a legal claim must depend for, in truth, government speaks by its legislative acts, and every corporation public or private manifests its intention clearly enough by its ordinances or by-laws.1 At the present day private corporations make contracts and manifest their assent either by the common seal, or in other words by deed; or by the vote of the corporation; or by the contracts or agreements of their authorized agents; and so, too, the inference of a promise by implication may be drawn from certain corporate acts. With the progress of invention, and the enormous growth of business details, we find ourselves, in this day, gladly escaping many of the clumsy formalities which were in favor at a time when men found ample leisure for solemnizing every important legal transaction; and the impression of a corporate seal upon the substance of the paper is now regarded commonly as quite effectual without the use of the once significant wax; though, as the courts of some States rule, the seal is not sufficiently affixed if printed on a blank certificate at the time when the rest of the paper was printed, and afterwards signed by the corporate officer. The effect of sealing is the same as when an individual signs and seals; it makes the contract a specialty or sealed instrument. We should be careful to distinguish the individual from the corporate signature and execution; and it must always be borne in mind that the corporate seal affixed to a contract or conveyance does not render the instrument valid unless affixed by an officer or agent duly authorized either generally or specially for that purpose.5 upon general contract principles. Flint v. Pierce, 99 Mass. 68. 3 to affix, "In witness whereof, the A. B. corporation, by J. S., their 11 Bl. Com. 475; Ang. & Ames, [treasurer], duly authorized for this § 216; Taylor, §§ 12, 248. 2 Ang. & Ames, § 112; Morawetz, § 167. 8 See Hendee v. Pinkerton, 14 Allen, 381; Haven v. Grand Junction R. R. Co., 12 Allen, 337; Ang. & Ames, § 218 et seq.; Abb. Dig. Corp. Seals." 4 Ib.; Clark v. Woollen, &c. Co., 15 Wend. 256. The usual style is purpose, have hereunto," &c.; J. S. signing with the addition of his official name; but less formal methods of execution are sometimes sustained. Ang. & Ames, § 227; Hutchins v. Byrnes, 9 Gray, 367. See Eureka Company v. Bailey Company, 11 Wall. 488. 5 Damon v. Granby, 2 Pick. 345; Bank of Ireland v. Evans, 5 H. L. § 230. Power of Private Corporations to hold and dispose of Personal Property.-To investigate the powers and capacities of corporations at length would be foreign to the purpose of the present treatise; and the reader should refer to more exhaustive works for information on this important topic of law. Of corporation stock and the rights of stockholders, we shall speak in a future chapter. But having sufficiently set forth those legal principles which determine the organization of private corporations, we now come to a most pertinent branch of the present subject: namely, the power of such corporations to take, hold, transmit in succession, and alienate personal property. § 231. The Same Subject; Right to purchase and hold Personal Property. The rule is generally stated quite broadly, and to this effect, that every corporation has at common law a right, incidental to its creation, to take, hold, and in succession transmit property, both real and personal, to an unlimited extent or amount.1 As to personal property in particular, this unlimited right is asserted in the absence of charter restrictions. But while a business corporation ought to be able to hold and dispose of property to an extent sufficient to inspire confidence in its resources and enable it to pursue legitimate ends, a limit may not unreasonably be imposed; and in some cases it is maintained that even the common law gave corporations the right to purchase and hold property only so far as might enable them to fulfil the objects of their creation. Be this as it may, we find that it is quite common for an act of incorporation or general statute not only to require that the whole capital stock, or a certain amount of it, shall be paid in or subscribed before the corporation can commence operations, but also to limit the right of holding prop Cas. 389; Koehler v. Black River 1 Abb. Dig. Corp. 584; 2 Kent Com. 281; 1 Bl. Com. 475; Ang. & Ames, § 145, and cases cited; Taylor, §§ 128, 129; McCartee v. Orphan Asylum Society, 9 Cow. 437; Over- See Page v. Heineberg, 40 Vt. 81; Blanchard's Factory v. Warner, 1 Bl. C. C. 258; State v. Commissioners, 3 Zabr. 510. erty to whatever amount may be needful or necessary to the object of its creation. And in such cases the decision of the court will usually turn upon mere construction. To prevent monopolies, to place a check upon arbitrary power, and to guard the public against those evils which attend the wielding of immense wealth in the hands of a few, our State legislatures often indicate plainly, in the charters they grant, how much property the corporation may hold at the outside limit, in what it shall consist, the purposes for which it shall be purchased and held, and the mode in which it shall be applied. But the amount of capital stock to which a corporation is by its charter limited is not per se a limitation upon the amount of property which it may own, or upon its outstanding liabilities; for the capital stock is rather to be regarded as that sum, divided into shares, which represents the aggregate interests of the various stockholders, and upon which assessments are to be computed and dividends paid.2 Nor are the individual members of a corporation legal owners of the corporate property, either jointly or as partners; though in some joint-stock companies of a peculiar character a sort of partnership is found to exist among the associated members. In what are, strictly speaking, corporations, the corporation, as such, is the sole owner, notwithstanding the individual stockholders are indirectly to profit by the increase or lose by the destruction of the property.4 1 Callaway Co. v. Clark, 32 Mo. 305; Ang. & Ames, § 146; Minor v. Mechanics' Bank, 1 Pet. 46. 2 Ang. & Ames, § 151 et seq.; Harpending v. Dutch Church, 16 Pet. 492; Barry v. Merchants' Exchange Co., 1 Sandf. Ch. 280. 8 See § 201. 4 Regina v. Arnaud, 9 Q. B. 806; Abb. Dig. 584. To show that the limitations imposed upon corporations, in respect of the power to hold property, give rise to nice distinctions, even where the construction of words used in the charter determines 3 the controversy, let us take two American cases, decided the one in Missouri, and the other in New Jersey. In each case a corporation was authorized in effect by its charter to hold such property as might be needful or necessary to the object of its creation. The Missouri corporation was created for the purpose of mining and transporting coal; and the court decided that it might properly purchase and own a steam-boat for transporting and delivering the coal. Callaway Co. v. Clark, 32 Mo. 305. But see Pearce v. Madison, &c. § 232. The Same Subject. The rights of corporations are not equally favored in all parts of this country. Sometimes jealousy of their encroaching force seems to influence the decision of the court; on the other hand, it is often, especially where railways are concerned, confidence that a new and undeveloped region will be laid open to prosperous trade, or deference to capital allied with power. Prohibitions in an act of incorporation receive frequent consideration; and it is said that there is a broad distinction between a prohibition in a corporation charter to purchase or take, and a prohibition to hold.1 Corporations are usually allowed to purchase and hold bills of exchange and promissory notes within the limits already indicated.2 As to the power of a corporation to hold its own stock or to subscribe for stock in another corporation independently of charter provisions, there is some uncertainty. A corporation's right to purchase its own stock appears to be in disfavor in England; while in this country the rule is rather, that there is no illegality in doing so, though the exercise of such a right admits of some salutary qualifications. For one corporation to subscribe in the stock of another would be objectionable, and unless in some way authorized by the charter - would probably be treated in most cases as void. And yet it is held not objec R. R. Co., 21 How. 441. The New Jersey corporation was a railroad and transportation company; and in this case it was held that among the necessary appendages were suitable depots, car-houses, water-tanks, shops for repairing engines, houses for switch and bridge tenders, and coal or wood yards for the use of the locomotives; all of which, then, it might erect, maintain and own; but as what was necessary did not extend to things merely convenient or advantageous, it could not set up factories for making its own rails, engines, and cars, nor purchase coal mines to supply its fuel. State v. Commissioners, 3 Zabr. 510. And see Railroad v. Berks County, 6 Penn. St. 70; Worcester v. Western 1 Leazure v. Hillegas, 7 S. & R. 313; Runyan v. Coster, 14 Pet. 122; Blunt v. Walker, 11 Wis. 334. 2 See Abb. Dig. Corp. 586, 587. 8 Taylor, §§ 134, 135; Vail v. Hamilton, 85 N. Y. 453. An insolvent corporation cannot thus purchase, nor is the prior holder to be thus relieved of his statutory liability to creditors. Ib. 4 Mechanics' Savings Bank v. Meriden Agency Co., 24 Conn. 159; Morawetz, § 197; Clearwater v. Meredith, 1 Wall. 40. In Branch v. Jesup, 106 U. S. 468, it was recently held that the purchase by one railway company of a road constructed by another was not ultra vires. See § 245, post. |