TITLE VI. THE CORPORAte Life.

CHAPTER 10.

THE MODE OF CORPORATE EXISTENCE AND ACTION.

ARTICLE I. MODE OF EXISTENCE.

Sec. 227. Perpetual succession.

THE STATE, EX REL. WALKER, ATTY.-GEN'L, v. PAYNE.'

1895. IN THE SUPREME COURT OF MISSOURI. 129 Mo. Rep. 468-482.

[Quo warranto by the attorney-general against Payne and his associates, charging them with usurping the franchise of being a corporation, after the term of corporate existence was alleged to have expired. The defense was that the term had not expired.]

MACFARLANE, J. * * The only question presented by the pleadings which we deem it necessary to discuss is whether, under the act incorporating the Kansas City Gaslight and Coke Company, its corporate rights and powers ceased at the expiration of thirty years after the act became a law. The question is one of vast importance both to the corporation and the citizens of Kansas City. The corporation has expended and now has invested a large amount of money in plants, mains and other property, which will necessarily be much depreciated in value should the property go into the hands of the stockholder or trustees for the settlement of the corporate business. The citizens, and city itself, have also great interest in securing adequate light at reasonable rates. These considerations, however, can not affect the legal principles involved.

At the time the act in question was passed the general law of the state concerning corporations declared: "Every corporation, as such, has power to have succession by its corporate name for the period

1 Statement, arguments and part of opinion omitted. Sufficient facts are stated in the opinion for an understanding of the case.

limited in its charter, and when no period is limited, for twenty years." The first section of the act incorporating the said gaslight and coke company granted to it "perpetual succession." The second section grants to the corporation the "exclusive right and power of manufacturing gas and coke from any substance whatever for and within the city of Kansas, Jackson county," for the term of thirty years.

It is insisted by respondents that the grant of "perpetual succession," without other limiting words, gave to the corporation the right to perpetual existence, and that the limitation of thirty years, contained in section 2, was not intended to limit the duration of corporate existence, but of the exclusive rights specified.

The word perpetual, as used in the act, expressly qualifies the succession and not the duration of the corporate existence. In the connection used, does it imply that the legislature intended to grant the corporation unlimited existence? The word itself does not necessarily so imply. It has more than one meaning, as "everlasting, "continued," "uninterrupted." All lexicographers give these or equiva-. lent words as proper definitions of the word "perpetual."

The word "succession," in its common legal use, denotes the devolution of title to property under the laws of descent and distribution. It is defined as "the coming in of another to take the property of one who dies without disposing of it by will." Title to corporate property and franchises is held continuously and uninterruptedly by and in the name of the corporation, and not in the names of the various stockholders. There is no devolution of title in case of the death of a member or stockholder. The succession is not interrupted, but continues in the corporation. The succession is continuous during the life of the corporation, whether it be for years or for an unlimited time.

Blackstone says that the very end of a corporation is "to have perpetual succession," "for there can not be a succession forever without an incorporation." I Cooley's Blk. Com., 475. Chancellor Kent says: "A corporation is a franchise possessed by one or more individuals, who subsist as a body politic under a special denomination, with the capacity of perpetual succession and of acting in several respects, however numerous the association may be as a single individual.” 2 Kent's Com., 268.

The duration of a corporation, though unlimited by its charter, and though it is given the capacity to have perpetual succession, can not be regarded as everlasting within the general and common meaning of that word. It may be dissolved and cease to exist for want of members, by voluntary surrender of franchises, forfeiture by misuser, etc. Ang. & Ames Corp. [1 ed.], § 8.

It will be found, by reference to all the authorities, that a grant of capacity to take in "perpetual succession" refers rather to the continued legal identity and succession than to continuous or perpetual succession. 1 Blk. Com., supra; 2 Kent's Com., supra; 1 Dill. Munc. Corp., § 18; Dartmouth College Case, 4 Wheat. 636; Field Corp., §§ 1 and 71.

"The immortality of a corporation means only its capacity to take in perpetual succession as long as the corporation exists. So far is it from being literally true that a corporation is immortal, many corporations of recent creation are limited in their duration to a certain number of years." Ang. & Ames Corp., § 8.

Aggregate corporations are "immortal, because, in the judgment of law, they never die, yet in point of fact, like natural persons, they are subject to death and dissolution in various ways. Its immortality, therefore, means only its capacity to take and to act in perpectual succession so long as the corporation exists." Potter Corp., § 2.

"When it is said that corporations have perpetual succession, it is meant that they have continuity only during any limited period of time which may be fixed by the law of their creation.

In

the proper and more restricted sense the immortality of a corporation means only its capacity to take in perpetual succession so long as it exists. Spelling Priv. Corp., § 4.

Chancellor Kent says: "It is sometimes said that a corporation is an immortal as well as an invisible and intangible being. But the immortality of a corporation means only its capacity to take in perpetual succession so long as the corporation exists." 2 Kent, supra.

Thus, it appears that the words "perpetual succession" as used in charters generally mean nothing more than that the corporation should have continuous and uninterrupted succession so long as it should continue to exist as a corporation, and are not intended to define its duration. If no limit is fixed to its existence then it would have an indefinite or unlimited duration. Morawetz on Corp., § 411.

The general law in force at the time this special act was passed declared that every corporation should have the capacity of succession by its corporate name for the period limited in its charter, and when no period was limited, for twenty years. R. S. 1855, § 1, p. 369.

It is claimed by respondents that this provision of the general law is inconsistent with this special act of incorporation and was expressly repealed by the ninth section. But if, as we have seen to be the case, the words "perpetual succession" were intended to imply nothing more than a continuous succession during the existence of the corporation, then there is no inconsistency. The general law must be read into and made a part of the special act. The general law must be taken as declaring the intent of the legislature in respect to the duration of the corporation. As is said: "Statutes granting such special privileges are, in one sense, to be read together and construed in conformity with general statutes laying down universal rules applicable to the class of corporations to which the one claiming under the special act belongs. Endlich Interpretation of Statutes, § 56.

Reading the general law and the first section of the special act together the duration of the corporate existence of the gaslight company is clearly fixed at twenty years. It does not seem that a doubt of the

legislative intent can be raised, but if one should exist it must be resolved against the corporation.

Judgment of ouster.

Note. The foregoing case is contrary to 1881, State ex rel. etc., v. Stormont, 24 Kan. 686, which is distinguished, and also to 1880, Fairchild v. Masonic Hall Assn., 71 Mo. 526, which it overrules. It also seems to conflict with 1889, State v. Ladies of the Sacred Heart, 99 Mo. 533, which is not mentioned in the case. The later case of 1897, State, etc., v. Lesueur, 141 Mo. 29, where the language used was "the trusteeship shall be perpetual," with a provision for each trustee to appoint his successor, holds that "a continuous or perpetual term" of existence is clearly implied. The case of 1878, Scanlan v. Crawshaw, 5 Mo. App. 337, is in accord with the principal case.

In case the duration is not expressly limited in some way the corporation is supposed to have the right of an endless existence, if it is not guilty of misuser or non-user, so that the state can complain of a forfeiture: 1841, Vanderbilt v. Eagle I. W., 25 Wend. (N. Y.) 665; 1850, Farmers' L. & T. Co. v. Clowes, 3 N. Y. 470; 1879, East Tenn. Mfg. Co. v. Gaskell, 70 Tenn. (2 Lea) 742; 1889, State v. Ladies of the Sacred Heart, 99 Mo. 533; 1892, Cronin v. Potters' Co-op. Co., 29 W. L. B. (Ohio) 52; 1897, State v. Lesueur, 141 Mo. 29.

Charter, statutory or constitutional provisions usually fix the period of existence. Many of these fix the limit in such a way that the articles of association can not provide for a longer duration: 1876, Atlantic & G. R. Co. v. Allen, 15 Fla. 637; 1884, People v. Cheeseman, 7 Colo. 376; 1890, Marysville Inv. Co. v. Munson, 44 Kan. 491.

Some statutes, however, fix a limit only in case the articles of association do not name a limit. See the Missouri cases cited above, and 1887, Steadman v. Merchants' & P. Bank, 69 Tex. 50.

ARTICLE II. MODE OF ACTION; SHAREHOLDERS AND DIRECTORS.

Sec. 228. Shareholders' meeting.'

DUKE v. MARKHAM.'

1890. IN THE SUPREME COURT OF NORTH CAROLINA. 105 N. C. Rep. 131-138, 18 Am. St. Rep. 889.

[Action by Duke to recover from Markham certain property he had taken possession of as the property of a corporation by virtue of executions in his hands. Plaintiff claimed under a mortgage by the corporation which the trial judge instructed the jury was valid. The error assigned was this instruction and allowing the mortgage to be put in evidence. The secretary of the corporation testified as to the execution of the mortgage as follows: "Before this mortgage was executed he went around and saw the stockholders separately in

1 See Ang. & Ames, §§ 487-514; Beach, §§ 272-298: Boone, §§ 62-6; Clark, pp. 462-493; Cook, § 589, et seq.; Elliott, §§ 463-493; Morawetz, §§ 474-533, 641-7; Taylor, §§ 184, 573-6; I Thompson, §§ 686-697; II Thompson, §§ 19001910; III Thompson, §§ 3905-37; V Thompson, §§ 6176-6486; VII Thompson, §§ 8451-90.

2 Statement abridged, only part of opinion given.

53-WIL. CASES.

regard to executing it; he did not see all the stockholders or directors, he saw a majority of them; they had no meeting, but each one he saw authorized him to execute the mortgage; the plaintiff requested the president and two stockholders to sign the mortgage; this was done; Mr. Duke signed the note for $3,000, and witness got the money from the Raleigh National Bank; the money was used in the business of the corporation; he said nothing more to the stockholders or directors; the directors were stockholders; the note has never been paid; it sometimes happened that we could not get a meeting of the board of directors; they did not attend the meetings regularly; the mortgage was delivered to W. Duke immediately."]

*

CLARK, J. We think his honor erred in admitting the mortgage in evidence upon such probate, and likewise in instructing the jury, upon the proof offered by plaintiff, that it was valid as to creditors whom defendant represented by virtue of the executions in his hands.

In Pierce v. New Orleans Building Co., 9 La. 397, it is held that the act of a majority of the stockholders, expressed elsewhere than at a meeting of stockholders, as where the assent of each one is given separately and at different times, is not binding on the corporation. The same is true of a meeting of which notice is not given. Stow v. Wyse, 18 Am. Dec. 991 and notes; Cook Stockholders, § 594; 1 Potter on Corporations, § 336 and notes.

In Leggett v. N. J. M. & B. Co., 1 Saxton Ch. 541, it is held that a corporation is only bound by an agent's acts when within the scope of his authority, and that a president and cashier, as such, can not execute a mortgage of corporate property without special authority from the board of directors or the stockholders, and that the proceeds of a mortgage have been applied to the use of the corporation in paying its debts, or otherwise, is not sufficient to render the mortgage binding if its execution was not properly authorized.

"The members of a corporation can not, separately and individually, give their consent in such manner as to bind it as a collective body, for in such case it is not the body that acts, and this is no less the doctrine of the common than of the Roman civil law. Being lawfully assembled," says Ayliffe, "they represent but one person, and may consequently make contracts, and by their collective assent, oblige themselves thereunto. And though all the members of a corporation covenanted on behalf of it under their private seals," this, it was held, would only bind them personally, and not the corporation. Angell & Ames Corp., §232, which is supported by the numerous cases there cited. Again, in the same work, section 504: "The separate action, individually, without consultation, although a majority in number should agree upon a certain act, would not be the act of the constituted body of men clothed with corporate powers." Indeed, the authorities upon this subject are numerous, uncontradicted and supported by reason.

Error.

1 Infra p. 835.