the Legislature has not invested it if those powers interfere with the rights or property of others, whether such exercise is mistaken or fraudulent. See Millville Gas Light Co. v. Vineland Light & Power Co., 72 N. J. Eq., 305. A charge, in a bill, of want of power by a stockholder to contest the validity of an agreement made by the directors, contained in a separate and distinct paragraph unconnected with the incidents and conditions of fact under which the agreement was entered into, is demurrable. Thompson v. Moxey, 47 N. J. Eq., 538. 2. Proceedings by the Attorney-General to forfeit the charter of the company. "The state may interpose its authority at any time and compel an abandonment of the act in excess of power, and, if need be, revoke the charter of the company for its usurpation. "When the state challenges the legality of the transaction, the paramount and only question is whether it has bestowed upon the company the requisite authority to engage in it. When the question arises between the company and the other party to the contract, other legal principles apply in determining whether the contract shall be observed." Camden & Atl. R. R. Co. v. Mays Landing, &c., R. R. Co., 48 N. J. Law, 530. The Court of Chancery is not the proper tribunal for calling in question the rights of a corporation as such, for the purpose of declaring its franchises forfeited and lost. Such power is of right to be exercised by a court of law. Society for Establishing Useful Manufactures v. Morris Canal & Bkg. Co., 1 N. J. Eq., 157; Stockton v. American Tobacco Co., 55 N. J. Eq., 352; aff'd 56 N. J. Eq., 847; McCarter v. Firemen's Ins. Co., 70 N. J. Eq., 291; McCarter v. Pittmon, Glassboro & Clayton Gas Co., 69 Atl. Rep., 211. "Trusts': Power of court of equity to restrain. A court of equity does not possess power to restrain a corporation, organized under the forms of law, from performing acts within its corporate power because the purpose of the incorporators may have been to establish a monopoly. Quo warranto is the appropriate procedure to challenge the right of a corporation to exercise its franchises. Stockton v. Am. Tobacco Co., 55 N. J. Eq., 352; aff'd 56 N. J. Eq., 847. Unlawful combinations. "It may be conceded that if this corporation had entered into an agreement with other manufacturers of these goods, whether those manufacturers were individuals or corporations, by which agreement prices were to be fixed and competition paralyzed, such an arrangement would be a subject of equitable cognizance. Such was the case of Stockton, Attorney-General, v. Central Railroad Co. and Philadelphia & Reading Railroad Co., 50 N. J. Eq., 52. In that case the defending corporations had entered into a contract to lease the Central Railroad to what was substantially the Philadelphia and Reading Railroad. The lease was declared not only to be ultra vires, but to be made for the purpose of creating a monopoly in coal. The right of either of these companies to regulate its own business, whether it involved the fixing of the price for which coal should be sold, or to whom it should be sold, was not involved, nor were the corporate powers of the company curtailed. What was done by the Court of Chancery was to annul a contract made by one company with another corporation, entirely aside from its corporate power and executed for an illegal purpose." Id., at pp. 367, 368. Same. A stockholder cannot enjoin a corporation, which is engaged in refining and selling sugar, from selling its product below cost, on the ground that it is doing so for the purpose of forcing a rival concern into an unlawful combination, since neither of the corporations has a natural monopoly, and the public cannot object to their acting in combination. Trimble v. Am. Sugar Refining Co., 61 N. J. Eq., 340. 3. Banking powers prohibited to corporations organized under this act. No corporation created or to be created under the provisions of this act shall, by any implication or construction, be deemed to possess the power of carrying on the business of discounting bills, notes or other evidences of debt, or of receiving deposits of money, of buying gold or silver bullion or foreign coins, or of buying and selling bills of exchange, or of issuing bills, notes or other evidences of debt, upon loan or for circulation as money. (As amended by Chap. 176, Laws of 1899; P. L. 1899, p. 473.) This section affects in no way the power of a corporation to issue and receive negotiable paper in the usual course of business or for purposes incidental to legitimate business. Morawetz on Corpns., Sec tion 321. The general prohibition against the exercise of unauthorized banking powers is contained in the "Act Concerning Banks and Banking" (Revision of 1899). Banking corporations must form under that act. Corporations organized under an "Act Concerning Trust Companies" have all the powers of banks except the power to discount bills and notes. As to the right of a corporation to loan its credit or cash for the express purpose of fostering its legitimate business, see Whitehead v. Am. Lamp & Brass Co., 70 N. J. Eq., 581, at 585; Earle v. Am. Sugar Refining Co., post. The business of banking, as defined by law and custom, consists, among other things, in making loans of money on collateral security. Earle v. Am. Sugar Refining Co., 71 Atl. Rep., 391, 395. This section applies to all corporations and is not limited to corporations created under the Act of 1896. It indicates what shall be banking powers, and a certificate of incorporation cannot include such powers. McCarter v. Imperial Trustee Co., 72 N. J. Law, 42. Where a corporation has power to issue negotiable paper a bona fide holder may presume that it was issued under proper authority, and the right of such a holder can be defeated only by showing that he took the paper with knowledge of the infirmity or with such suspicion that his conduct in taking it was fraudulent. National Bank of Republie v. Young, 41 N. J. Eq., 531. 4. Charters subject to repeal. The charter of every corporation, or any supplement thereto or amendment thereof, shall be subject to alteration, suspension and repeal, in the discretion of the legislature, and the legislature may at pleasure dissolve any corporation. P. L. 1846, p. 65; P. L. 1849, p. 301; Act of 1875, §§ 6, 13. This provision in effect becomes a part of every charter granted, to which by its terms it is applicable. Shiloh Turnpike Co. v. Bates, 76 Atl. Rep., 448. An act granting an exemption from taxation containing a provision for future repeal is nothing more than a legislative concession voluntarily made, subject at any time to be withdrawn or modified at the will of the Legislature. Morris & Essex R. R. Co. v. Commissioners, &c., 37 N. J. Law, 228; Little v. Bowers, 46 N. J. Law, 300. Constitutional Provision. The State Constitution, Article IV, Section 7, subdivision 11, also contains provisions reserving the power to alter or repeal charters, as follows: 66 * * * The Legislature shall pass no special act conferring corporate powers, but they shall pass general laws under which corporations may be organized and corporate powers of every nature obtained, subject, nevertheless, to repeal or alteration at the will of the Legislature." New York State. The statute of the State of New York, subjecting corporate charters to alteration, suspension and repeal, in the legislative discretion, is contained in Section 320 of the General Corporation Law of that state, which reads as follows: "$320. Alteration and repeal of charter. The charter of every corporation shall be subject to alteration, suspension and repeal, in the discretion of the Legislature." It has been held respecting the above provision that the reservation becomes a part of the charter of every corporation, whether organized under a general act or by special statute, thus preventing it from becoming irrevocable. Lord v. Equitable Life Assur. Society, 194 N. Y., 212; Pratt v. City of N. Y., 183 N. Y., 151. Under its reserved power the Legislature cannot interfere with or annul contracts made with third persons, nor can it take away property acquired by the corporation without providing compensation, as such property is protected by the United States Constitution. Mayor, &c., v. N. Y. & Twenty-third St. Ry. Co., 113 N. Y., 317; People v. O'Brien, 111 N. Y., 1. For additional cases under the New York statute, see White on Corporations (seventh edition), pages 182, 183. Charters are contracts. "Charters of private corporations are regarded as executed contracts between the state and the corporator, and the rule is settled that if the charter does not contain a reservation of power in the Legislature to modify or change the contract, the Legislature cannot repeal, impair or alter such a charter against the consent or without the default of the corporation." Montclair v. N. Y. & Greenwood Lake Ry. Co., 45 N. J. Eq., 436; Cooper Hospital v. Camden, 68 N. J. Law, 691; Trustees of Dartmouth College v. Woodward, 4 Wheaton (U. S.), 418. "The power of the Legislature has its limits. It can repeal or suspend the charter; it can alter or modify it; it can take away the charter; but it cannot impose a new one and oblige the stockholders to accept it." Zabriskie v. Hackensack & N. Y. R. Co., 18 N. J. Eq., 178, 192. The Legislature has no authority to make any alteration or amendment, in a charter granted subject to this section, that will defeat or substantially impair the object of the grant or any rights which have vested under it. Id. The power to repeal, suspend or alter the charter is "a reservation to the state for the benefit of the public, to be exercised by the state only. The state was making what had been decided to be a contract, and it reserved the power of change, by altering, modifying or repealing the contract." Mills v. Central R. R. Co. of N. J., 41 N. J. Eq., 1, 8. A charter granted as a special act of the Legislature containing a limitation on the power of the corporation is a part of the contract existing between the stockholders themselves and between stockholders and the corporation, which, under the Federal constitutional restriction against the impairment of the obligation of contracts, cannot be abrogated by the directors or by a majority of the stockholders, however large, against the objection of the holder of a single share. Einstein v. Raritan Woolen Mills, 74 N. J. Eq., 624. The Legislature has power to confer upon a court authority to declare a charter forfeited for a specified misfeasance or malfeasance. Huylar v. Cragin Cattle Co., 40 N. J. Eq., 392, 396. See section 44, post. 4a.* Notice of intention to repeal. Of the intention to apply for the passage of a bill to repeal the charter of any corporation, or bill to repeal the charter and dispose of the property of any corporation, the public notice required by the first section of the act to which this is a supplement shall be given by publishing the same, in a daily newspaper published in Trenton, for at least six consecutive days prior to the introduction of such bill, and by serving a copy of the notice upon the president or secretary or a director or registered agent of the corporation, if such officer or agent can be found within this state, and if none of them can be found, then by personal service of such copy upon them or one of them out of this state, or by mailing a copy to them or one of them, directed to the residence or post-office address of such officer or agent, if known. Supplement to "An Act to prescribe the notice to be given of applications to the Legislature for laws, when notice is required by the constitution," approved February 21, 1905; P. L. 1905, p. 17. *Arbitrary number. Section inserted here merely for convenient reference. |