Chapter 79. Definition and Nature of Corporations. Chapter 80. Preliminary Observations in Organization of Corporations.

Chapter 81.

Charter and Organization. Chapter 82. Promoters of Corporations.

The corporation as a person.

§ 640. Corporate entity not allowed to defeat responsibility of real princi

pal.

§ 641. Corporations distinguished from partnerships.

§ 642. Reasons for the incorporation of business companies.

§ 643. Kinds of corporations.

§ 644. Purposes for which corporations may be formed.

§ 637. (Corporations, Sec. 1.) Corporations defined.

Case 631. Thomas v. Dakin, 22 Wend. (N. Y.) 9. Facts: Thomas sues on three bills of exchange as president of an association called The Bank of Central New York, formed under a statute to authorize "the business of banking." Defendant makes a technical defense raising the question whether the bank is a corporation.

Point Involved: The definition and characteristics of a body corporate.

MR. CHIEF JUSTICE NELSON: Are these associations [formed under the law in question] corporations? In order to determine this question, we must first ascertain the properties essential to constitute a corporate body, and compare them with those conferred upon the associations; for if they exist in common, or substantially correspond, the answer will be in the affirmative. A corporate body is known to the law by the powers and faculties bestowed upon it, expressly or impliedly, by the charter; the use of the term corporation in its creation is of itself unimportant, except as it will imply the possession of these. They may be expressly

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conferred, and then they denote this legal being as unerringly as if created in general terms. It has been well said by learned expounders, that a corporation aggregate is an artificial body of men, composed of divers individuals, the ligaments of which body are the franchises and liberties bestowed upon it, which bind and unite all into one, and in which consists the whole frame and essence of the corporation. The 'Franchises and liberties,' or, in modern language, and as more strictly applicable to private corporations, the powers and faculties, which are usually specified as creating corporate existence, are: 1. The capacity of perpetual succession; 2. The power to sue and be sued, and to grant and receive in its corporate name; 3. To purchase and hold real and personal estate; 4. To have a common seal; and 5. To make bylaws. Any one comprehending the scope and purpose of them, at this day, will not fail to perceive that some of the powers above specified are of trifling importance, while others are wholly unessential. For instance, the power to purchase and hold real estate is no otherwise essential than to afford a place of business; and the right to use a common seal, or to make by-laws, may be dispensed with altogether. For as to the one, it is now well settled that corporations may contract by resolution, or through agents, without seal; and as to the other, the power is unnecessary, in all cases where the charter sufficiently provides for the government of the body. The distinguishing feature, far above all others, is the capacity conferred, by which a perpetual succession of different persons shall be regarded in the law as one and the same body and may at all times act in fulfillment of the objects of the association as a single individual. In this way, a legal existence, a body corporate, an artificial being, is constituted; the creation of which enables any number of persons to be concerned in accomplishing a particular object, as one man. While the aggregate means and influence of all are wielded in effecting it, the operation is conducted with the simplicity and individuality of a natural person. In this con

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sists the essence and great value of these institutions. Hence it is apparent that the only properties that can be regarded strictly as essential, are those which are indispensable to mould the different persons into this artificial being, and thereby enable it to act in the way above stated. When once constituted, this legal being created, the powers and faculties that may be conferred are various-limited or enlarged, at the discretion of the legislature, and will depend upon the nature and object of the institution, which is as competent as a natural person to receive and enjoy them. We may, in short, conclude by saying, with the most approved authorities at this day, that the essence of a corporation consists in a capacity: 1. To have a perpetual succession under a special name, and in an artificial form; 2. To take and grant property, contract obligations, sue and be sued by its corporate name as an individual; and 3. To receive and enjoy in common, grants of privileges and immunities.

"We will now endeavor to ascertain with exactness the powers and attributes conferred upon these associations by virtue of the statute.

"1. Upon a perusal of these provisions, it will appear that the association acquires the power to raise and hold for common use any given amount of capital stock for banking purposes, which, when subscribed, is made personal property, and the several shares transferable the same and with like effect as in case of corporate stock; to assume a common name under which to manage all the affairs of the association; to choose all officers and agents that may be necessary for the purpose, and remove and appoint them at pleasure. It will hence be seen, that although the association may be composed of a number of different persons, holding an interest in the capital stock, its operations are so arranged that they do not appear in conducting its affairs; all are so bound together, so moulded into one, as to constitute but a single body, represented by a common name, or names (the knot of the combination), and in which all the business of the institution is conducted by common agents.