visions of the charter, make the stockholders liable for the debts of the company. It is, therefore, wholly immaterial whether the stockholders were liable to assessments on their stock, in virtue of the failure of the subscriptions to amount to $60,000, except so far as such failure may, in law, be an obstacle to the due organization of the company, and the creation by it of the debt sought to be enforced.

In charters which are mere propositions for the organization of a corporation, and which require certain acts to be performed precedent to the existence of the corporation, no corporation can exist, and of course, no corporate act can be performed till these conditions have been complied with. In all such cases, where a certain amount is named in the charter as necessary to be subscribed as the capital stock of the company, such subscription is regarded as a condition precedent to the existence of the corporation, unless otherwise provided in the charter. Persons, therefore, who subscribe for stock under such a charter have a right to assume that they will not be called upon to pay until the amount named in the charter shall be subscribed, and, accordingly, in that class of charters it has been held that subscribers for the stock are not liable to assessments on their stock until the full amount of the subscription has been made. But this rule does not apply if there be anything in the charter which shows a right in the corporation to make the assessments before the full amount of the stock is subscribed, as was decided in Selma and Marion Railroad Company v. Anderson, 51 Miss. 829.

The charter of this company is not of that character. By the first section of it, it is provided that the twenty-one persons named in it, "and all others who are now or hereafter become associated with them and their successors and assigns, be, and they are hereby, created a body politic and corporate under the name and style of the Perkinsville Manufacturing Company," etc. This was no proposition to create a corporation upon the performance of precedent conditions, but it was itself the creation of a corporation, requiring no other act to be performed by the corporators than their acceptance of the charter, and this even was unnecessary, if, as it is probable, the corporators had applied for the grant of the charter, and thus accepted it in advance. Action under the charter would be an acceptance of it, and hence, there never could be any question as to the existence and due organization of the corporation, when determining upon the validity of a corporate act done within its charter powers, for the performance of the act itself would be an acceptance of the charter.

The distinction between the two classes of charters is thus seen to be, that in the first-class the charter is a mere permission on the part of the legislature for the formation of a corporation, upon the doing of certain acts prescribed in the charter as precedent conditions, and, as a necessary result, no corporate act can be done until these conditions have been performed, except such as may be expressly permitted by the charter; and as to those acts, it would be considered that the corporation had an existence before its full investiture with its corporate franchises. In the latter class, in which is this company,

the corporation is in existence, for all the purposes of its creation, from the beginning, except so far as there may be restraints placed on it by the charter, either expressly or by plain implication.

As the bill alleges that the $60,000 of stock was subscribed before the execution of the obligation sued on, it is unnecessary for us to decide whether the charter so far restricts the power of the corporation to make contracts within the scope and purpose for which the charter was granted, as to prohibit the making of this contract until such subscription is made. But it is insisted that the corporation could not elect a president or a board of directors, nor confer the power on them, when elected, to make contracts until after the subscription of $60,000 of stock should be made, and for this reason it is urged that the obligation sued on, and which was made by the president and secretary on behalf of the company, should be held as made without the proper authority of the corporation.

We do not consider the position a sound one. There is no restriction in the charter upon the exercise, by the corporation, from the moment of its creation, of any of its corporate powers, unless it can be implied from the terms of the second section, fixing the amount of the capital stock, as hereinbefore quoted.

It has been seen that the subscription of the prescribed amount of capital stock is not a precedent condition to the organization of the corporation, that the corporation was created by the very terms of the charter, eo instanti with its acceptance by the corporators. The charter does not prescribe how nor when the subscription is to be made, nor the time at which the subscription is to be made payable, nor does it attach any disability to the corporation prior to the subscription. It makes no provision as to how the stock shall be divided among the corporators named, nor as to the terms on which new corporators should be admitted. All these were necessarily left to the discretion of the corporation, and the power to regulate those matters was also expressly granted to the corporation as it was created by the charter, by the provision contained in the first section of that instrument, that the corporation might, "make all by-laws, rules and regulations for the management of its business, property and effects, and the transfer of its stock, as to them may seem best."

See notes to State v. Dawson, and Benbow v. Cook, infra, pp. 413, 416. See, also, Angell & Ames, §§ 81-95; Beach, § 15; Boone, §§ 23, 24; Clark, §§ 23, 24; Cook, §§ 499, 640; Elliott, §§ 23-25; Field, §§ 23-26; Grant, pp. *18-*24; Morawetz, §§ 21-23, 25, 26, 40; Taylor, § 449; 1 Thompson, §§ 52, et seq.; VII Thompson, § 8160.

Sec. 86. The offer may be withdrawn before acceptance. Acceptance is essential.

THE STATE, EX REL., v. DAWSON.

1861. IN THE SUPREME COURT OF INDIANA.

Appeal from the Clark circuit court.

16 Ind. Rep. 40-43.

PERKINS, J. Information against the defendants, charging that they are pretending to be a corporation, and to act as such, when they are not a corporation. It charges that in January, 1849, the legislature of the state of Indiana enacted a special charter of incorporation (which is set out at length) for a railroad from, Fort Wayne, Indiana, to Jeffersonville, to be called the Fort Wayne and Southern Railroad; that the persons named in the charter as directors did not accept said charter till June 2, 1852, when they did meet and accept the same, and organized under it. It is alleged that the defendants are assuming to act under said charter, never having organized under any other. The court below sustained a demurrer to the information, thus holding the defendants to be a legal corporation.

The present constitution of Indiana took effect on November 1, 1851. It contains these provisions:

"All laws now in force, and not inconsistent with this constitution, shall remain in force, until they shall expire or be repealed." Sched. (I sub. sec.) of Constitution.

"Corporations, other than banking, shall not be created by special act, but may be formed under general laws." Art. xi, § 13.

"All acts of incorporation for municipal purposes shall continue in force under this constitution, until such time as the general assembly shall, in its discretion, modify or repeal the same." Sched., supra, sub. §4.

The charter for the Fort Wayne and Southern Railroad was not a charter for municipal purposes, and hence was not specially continued in existence. Article 11, § 13, above quoted, prohibits the creation of a corporation by special act or charter, that is, as we construe the prohibition, through or by virtue of, such special act or charter, after November 1, 1851. The policy that induced the prohibition, as well as its literal import, demands this construction. It is necessary for us to ascertain, then, when the defendants, if ever, were created a corporation. The simple enactment of the charter for the corporation by the legislature, did not create the corporation. It required one act on the part of the persons named in the charter to do that, viz. acceptance of the charter enacted.

Says Grant in his work on corporations, vide, p. 13 "Nor can a charter be forced on any body of persons who do not choose to accept it." And again at p. 18, he says, "The fundamental rule is this: no charter of incorporation is of any effect until it is accepted by a majority of the grantees, or persons who are to be the corporators under

it. Bagge's case, 2 Brownl. & G. 100, s. c. 1 Roll. Rep. 224; Dr. Askew's case, 4 Burr. 2200; Rutter v. Chapman, 8 M. & W. 25; per Wilmot, J., Rex v. Vice-Chancellor of Cambridge, 3 Burr. 1661. This is analogous to the general rule that a man can not be obliged to accept the grant or devise of an estate. Townson v. Tickell, 3 B. & Ald. 31." See, also, Ang. & Am., § 83, where it is said, if a charter is granted to those who do not apply for it, the grant is said to be in fieri till acceptance. We need not inquire whether this rule extends to municipal corporations in this country. . As to what may constitute an acceptance we are not here called on to decide, as the information expressly shows that there was none in this case till June, 1852, which fact is admitted by the demurrer.

The grant of the charter in question, then, to those who had not applied for it, was but an offer, on the part of the state; a consent that the persons named in the charter might become a corporation, might be created such an artificial being by accepting the charter offered. But an offer, till accepted, may be withdrawn. In this case,

the offer made by the state in 1849 was withdrawn by the state November 1, 1851, by then declaring that no corporation, after that date, should be created except pursuant to regulations which she, in future, through her legislature would prescribe.

This pretended corporation, then, was not created before November 1, 1851, and it could be created afterward only by the concurrent consent of the state and the corporators. But, at that date, the constitution prohibited both the state and corporators from giving consent to such a corporation, to wit: One coming into existence through a special charter; and hence necessarily prohibited the creation thereof. This decision accords with that of the supreme court of the United States in Aspinwall v. Daviess County, 22 How., p. 364, where it was held that the new constitution prohibited a subscription of stock to the Ohio and Mississippi Railroad Company, authorized by the charter of the corporation, granted under the former constitution and actually voted by the people of the county under that constitution.

Whether, as a matter of fact, the charter in this case was accepted under the old constitution, must be determined on a trial of the cause below.

Had the provision in our constitution, like that on this subject in the constitution of Ohio, ordained that the legislature should "pass no special act conferring powers," the restraint would clearly have been imposed alone upon future legislative action; but, in our constitution, the restraint is plainly imposed upon the creation, the organization of the corporation itself. See The State v. Roosa, 11 Ohio St. Rep. 16. Per Curiam.-The judgment is reversed with costs. Cause remanded for further proceedings in accordance with this opinion.

Note. The original act provided that Allen Hamilton and others named "are hereby constituted a body corporate," etc. In the later. case, State v. Dawson, 22 Ind. 272 (1864), it appeared that the charter had been applied for by the corporators; this was held to be an acceptance. See 1807, Ellis v. Marshall, 2 Mass. 269, 3 Am. Dec. 49, supra, p. 306; 1820, Lincoln & K. B. v. Richardson, 1 Maine (1 Greenl.) 79, 10 Âm. Dec. 34; 1839, Thomas v. Dakin,

22 Wend, 9, supra, p. 19; 1842, State v. B. & O. R. R., 12 Gill & J. (Md.) 399, 38 Am. Dec. 317; 1847, Haslett v. Wotherspoon, 1 Strob. Eq. (S. C.) 209; 1859, Cypress Pond Draining Co. v. Hooper, 2 Metc. (Ky.) 350; 1870, Lyons v. Orange, A. & M. R. Co., 32 Md. 18; 1872, Mason v. Finch, 28 Mich. 282; 1875, P. W. & B. R. Co. v. Kent Co. R. Co., 5 Houst. (Del.) 127; 1885, Smith v. Silver Valley M. Co., 64 Md. 85, 54 Am. Rep. 760, 20 Atl. 1032; 1893, Atkinson v. Fennill, 14 Ky. Law Rep. 922. See references to text-books, supra, p. 411.

Sec. 87. Acceptance may be inferred from signing articles, holding meetings, organizing and acting as a corporation.

BENBOW v. COOK.1

1894. IN THE SUPREME COURT OF NORTH CAROLINA. 115 N. C. Rep. 324-334, 44 Am. St. Rep. 454.

["Plaintiff sued to recover possession or damages for non-delivery of cotton mills machinery claimed under a mortgage from the Crown Mills corporation, and which defendant had seized as sheriff and sold under executions against the corporation."]

AVERY, J. If the corporation never had any lawful existence, as the defendant contends, of course it did not authorize the execution of a mortgage some months after it is claimed that it was duly organized. The statute, The Code, § 677, provides that "Any number of persons, not less than three, who may be desirous of engaging in any business not unlawful, except building railroads or banking or insurance, at any place within the state, may, if it please them, become incorporated in the manner following," etc. It seems that three persons, Amos Ragan, O. S. Causey and R. E. Causey, as the sole corporators of a manufacturing company, having ten shares each, signed articles of agreement before the clerk of the superior court of Guilford county, which were duly recorded. Having complied with the requirements as to the form of the articles of agreement and caused the proper record to be made, the three persons named as sole corporators became a body politic for the purposes set forth in the agreement. The Code, §§ 678, 679. When corporate powers are granted by a special instead of a general act of the legislature, there must be evidence of acceptance by the corporators and compliance with all conditions precedent prescribed by law, in order to show affirmatively that the corporation is lawfully organized. But in our case every corporator affixed his hand and seal to the articles of agreement recorded, and by such signature and the recording of the instrument, became invested with all the powers which it was contemplated by law to confer in such cases. The Code, § 679. Private corporations are formed when the necessary contractual relations are created between the persons clothed by law with the powers of a body politic. 1 Morawetz 24. The existence of the company depends upon the fact of the acceptance of the privilege (1 Morawetz 26), and it was evidently 1 Only the part of the decision relating to acceptance of charter is given.