liability. in any way whatever for the debts of the corporators (a). Such as contract with the corporation must look for payment solely to this property, or its proceeds, as the case may be. The members are in Limited no sense its sureties or guarantees, as in the case of a partnership, unless they choose voluntarily to assume that character. So deeply rooted is this principle in the law, that it required a special statute to enable the Crown to erect corporations in which the members should individually incur liability for the acts or debts of the corporation (b). It has sometimes been thought that companies erected into corporations by royal charter in Scotland do not possess limited liability. Such a view is entirely opposed to the theory of corporations, can be supported by no decided case, and seems to have arisen from confusing the proper person of a corporation with the quasi person of a firm (c). majority. The will of the majority, duly expressed at a meeting legally Will of constituted, and acting within the sphere and in accordance with the provisions of the constitution, is the will of the corporation, and binds dissenting members (d). Corporations have the power of making bye-laws, where this is Bye-laws. necessary for accomplishing the purposes of formation. These laws bind the members and servants of the corporation (e). To render them binding on the public, would now seem to require the intervention of the Legislature, either directly by special act, or indirectly by statute in aid of a charter. The members are not in general the agents of the corporation; Officials. nor have they, as in partnerships, any implied authority to bind it. The corporate affairs are carried on by officials specially charged with that duty; and their number, character, and mode of election are in general very specifically prescribed in the instrument of erection. succession. Endurance in perpetual succession appears to be of the essence Perpetual (a) Sh. Bell's Prin. s. 2178; Ersk. supra. (b) Sh. Bell's Prin. s. 2177. See Lindley 309. (c) 1 More's Lectures 212. (d) Hill v. Fairweather, 1823, 2 S. 491; Gray v. Smith, 1836, 14 S. 1062; Howden v. Corp. of Goldsmiths, 1840, 2 D. 996; Sh. Bell's Prin. 2178; Grant on Corp. 68; (e) Ersk. i. 7, 64; Hill v. Fair- Naturalia of corporations. Special privileges. Dissolution. of a corporation. The ideal being constituting the person of the corporation is a continuous identity: the composing units vanish, and are succeeded by others, but the legal entity remains; just as, in a living organism, the substance is continually wearing out and being renewed, while the identity of the individual continues uninterrupted and unimpaired. This is so necessary an attribute of a corporation, that without an Act of Parliament the Crown appears incapable of fixing a term of duration in the incorporating charter (a). There are certain incidents so natural to corporations, that the incorporating instrument is held to include them without express mention. These appear to be: endurance in perpetual succession; the power of acting and transacting, suing and being sued, in the corporate name; the right of holding property; the power of expressing the corporate will by majorities; that of making internal regulations for its members; and limited liability. There are, again, certain rights and privileges which are not naturalia of a corporation, but which, when necessary to be possessed, can be obtained only by statute. Among these may be mentioned aggressive powers, monopolies and exclusive privileges, jurisdiction, and the exercise of any rights or powers trenching on the common law. Corporations being created not by the will of their members, but by public authority, cannot be dissolved, like partnership, by the resolution of their members. To effect a dissolution, a surrender of the corporate rights, when these were created by charter, must be duly made to and accepted by the Crown; unless an Act of Parliament is obtained, which will operate a dissolution in whatever way the corporation may have been erected. Corporations may, however, be extinguished by becoming incapable of fulfilling the purposes of their institution, e.g. by the total loss of their membership, or by becoming reduced to so small a number as to be incapable of effective management; and by forfeiture, in consequence of abuse of powers, or breach of the implied conditions of their erection. This last mode, however, requires the intervention of the tribunals, to declare the forfeiture and to wind up and dissolve the corporation. A corporation may also be dissolved by mere (a) Grant on Corp. 30; 1 Vict. c. 73, s. 29. expiration of time, if by Act of Parliament a limited period has been set to its duration (a). of dissolution. On dissolution, the donors of the corporation property are Consequences entitled to its resumption, in default of which it vests in the Crown. The creditors are, however, generally entitled to insist for sale and distribution in payment of their claims. But in no case can they proceed against the members as such for its debts or obligations, however inadequate the corporation funds may prove for their liquidation (b). and corpora trasted. Having thus given a general view of the simple partnership and Partnerships the proper corporation respectively, we shall conclude by pointing tions conout the salient points of difference. A partnership is created by the mere will of the partners; a corporation by public authority. A corporation possesses a proper person, a partnership a quasi person. The former holds property, acts and transacts, sues and is sued, in the corporate name; the latter, by the intervention of its partners. Limited liability is unattainable by a mere partnership; it is the natural attribute of a corporation. A partnership terminates at the will of its members, generally at that of a single partner, or by his death; a corporation endures in perpetual succession, and can be dissolved only by public authority, by inanition from loss of its component parts, or by elapse of the prescribed period of its existence. (a) See Grant on Corp. 295; Sh. Bell's Prin. s. 2179. (b) See More's Lect. 212. General classification. CHAPTER IV. OF THE FORMS ASSUMED IN SCOTLAND BY ASSOCIATIONS ASSOCIATIONS for the purposes of gain assume in Scotland a great 3. Proper corporations. 4. Proper corporations with peculiar privileges and powers. Private firms. I. PRIVATE PARTNERSHIPS AND COMMON LAW COMPANIES. These are formed at common law by the mere will of the members, and may in like manner be dissolved. Of private partnerships or firms we have already given a general description. They consist of few members, and realize the idea of the Roman Societas. Where the partners are associated for a single adventure or transaction, the copartnery is sometimes called a joint adventure, and has been treated of by some writers as a separate contract. But after mature consideration, we have come to be of opinion that there is no good reason for maintaining this distinction, and that, so far from elucidating, it tends rather to obscure the legal principles which necessarily regulate the partnership relation, whether it is applied to a single adventure or to a series of transactions (a). (a) Per Lord Eldon in Davidson's Appeal, 1815, 3 Dow 218; 2 Bell's Com. 649. companies. Common law companies are essentially partnerships, and differ Common law from private firms in so far only as the rules applicable to the latter are necessarily modified and adapted to meet the requirements of associations with a numerous and fluctuating membership. This is so much the case, that it is not always easy to determine whether a given association should be designated as a partnership or as a company. It may, however, be taken as a general rule, that a partnership deserves the name of a company when it possesses most of the following characteristics: When it is managed by directors, trustees, managers, or other special officers, and not by the whole body of partners; when the shares are of equal value, and transferable at the will of the holder; and when the profits and losses are apportioned with reference to the shares, and not to the partners. Where common law companies differ from partnerships, they approach the nature of corporations; and in the law of Scotland, it may be said that they stand midway between the two, being somewhat more than mere partnerships, and somewhat less than corporations. It is their occupying this intermediate and debateable ground that has made them the subject of many legal questions. Under the denomination of common law companies, it is intended to comprehend all such associations as, though possessing a more numerous membership than private firms, exist merely at common law, and possess neither the privileges of complete corporations by charter or special act, nor such more restricted rights as may be enjoyed by letters patent or registration, all such associations, in fact, as are not included under the three remaining classes. Since common law companies are fundamentally partnerships, they will be throughout this work treated of under one category; but care will be taken to point out in the proper places such distinctions in their management and legal consequences as shall be found to exist. Common law companies approach the corporation. II. COMPANIES ERECTED BY PUBLIC AUTHORITY, BUT NOT VESTED Under this category are included companies formed under the Registration Act of 1862, but without limited liability; companies formed under the Letters Patent Act, 1837, 1 Vict. c. 73, without Imperfect or tions. quasi corpora |