motest idea of resuscitating it. Here is, then, a corporation possessed of nothing, abandoning the end and object of their institution, without pretending that they ever hope or expect to resume their functions; and, it may be added, all the corporators either admit the dissolution of the corporation (I speak of those who have suffered the bill to be taken pro confesso), or deny that they are corporators, thus presenting the phenomenon of a corporation without corporators, a nominal, inert body, pretending to have life and existence. Such an anomaly can not be recognized. The argument is, that being incorporated for twenty years, there exists a corporate capacity during that period, and that although all the functions of the corporation have ceased, yet they may be resumed. The second section of the act provides that as soon as the certificate shall be filed, the persons who shall have signed and acknowledged the same, and their successors, shall, for the term of twenty years next after, be a body politic and corporate, in fact and in name, etc. The legislature never meant, nor does the act authorize the conclusion, that the corporation should remain and continue during all that period nolens volens. It was implied that during that time they should do nothing to forfeit their rights, nor surrender them back, or do any act tantamount thereto. The act prolongs the corporation for twenty years, subject to all the incidents attending corporations; and I have endeavored to show that one of the incidents is an extinction of the corporation if it does what is equivalent to a surrender. I doubt, extremely, whether the capacity to resume the functions of the corporation does, in fact, exist, but it is not necessary to decide that point. I consider it merely as a matter of speculation, thrown out, without any practical reference to the cause, as a stumbling block to the attainment of justice between the parties. For all the substantial purposes of justice, and in effect, the corporation is dissolved.

In point of good sense this corporation was dissolved within the meaning and intent of the act as regards creditors, when it ceased to own any property, real or personal, and when it ceased for such a space of time from doing any one act manifesting an intention to resume their corporate functions. The end, being and design of the corporation were completely determined, and even if it had the capacity to reorganize and reinvigorate itself, the case has happened, when, as relates to its creditors, it is dissolved.

If I am right thus far, then by the seventh section of the statute, the persons composing the company at the time of its dissolution are individually responsible to the extent of their respective shares for the debts then due and owing by the company.

With respect to the period of the dissolution, it appears to me that we may safely say it happened on the 1st of February, 1818, when all the property of the company was sold, for since that time no corporate act has been done.

(Held also that Slee assenting to discharge of members upon payment of 50 per cent. of stock was bound by it, but that he was not Reversed.

bound by the resolution releasing shareholders upon payment of 30 per cent.)

As to insolvency, see, also, 1857, Coburn v. Manufacturing Co., 10 Gray (Mass.) 243; 1887, Dewey v. St. Albans, etc., Co., 60 Vt. 1, 6 Am. St. R. 84; 1888 Jones v. Bank of Leadville, 10 Colo. 464, 20 Am. & Eng. C. C. 554; 1889, Rouse v. Merchants' Bank, 46 Ohio St. 493, 15 Am. St. Rep. 644; 1893, Sabin v. Columbia Fuel Co., 25 Ore. 15, 42 Am. St. 756; 1893 Larrabee v. Franklin Bank, 114 Mo. 592, 35 Am. St. Rep. 774.

Note. Surrender.

1. A corporation may voluntarily surrender its franchises. 1822, Slee v. Bloom, 19 Johns. (N. Y.) 456, 10 Am. Dec. 273, supra; 1832, Chesapeake & O. Canal Co. v. Bal. & O. R., 4 Gill & J. (Md.) 1; 1834, Boston Glass Mfy. v. Langdon, 24 Pick. (Mass.) 49, 35 Am. Dec. 292, supra, p. 866; 1839, Penobscot Boom Corp. v. Lamson, 16 Maine (4 Shep.) 224, 33 Am. Dec. 656; 1839, McIntire Poor School v. Zanesville, etc., Co., 9 Ohio 203, 34 Am. Dec. 436; 1858, Lauman v. Leb. V. R., 30 Pa. St. 42, 72 Am. Dec. 685; 1859, Attorney-General v. Clergy Soc., 10 Rich. Eq. (S. C.) 604; 1869, People v. California College, 38 Cal. 166; 1870, Houston v. Jefferson College, 63 Pa. St. 428; 1871, Moore v. Whitcomb, 48 Mo. 543; 1892, Cronin v. Potters' Co-op. Co., 29 Wkly. L. B. (Ohio) 52.

2. Acceptance by the state (through the legislature) is necessary in order to complete dissolution. In 2 Kyd Corporations, 447, it is said the king may accept a surrender of charters granted by himself, but_not one granted by parliament. 1828, Enfield Toll B. Co. v. Conn. R. Co., 7 Conn. 28, 45; 1834, Boston Glass Mfy. v. Langdon, 24 Pick. (Mass.) 49, 35 Am. Dec. 292, supra, p. 866; 1834, Revere v. Boston Copper Co., 15 Pick. (Mass.) 351; 1836, Harris v. Muskingum Mfg. Co., 4 Blackf. (Ind.) 267, 29 Am. Dec. 372; 1845, Greeley v. Smith, 3 Story 657; 1847, Town v. River Raisin Bank, 2 Doug. (Mich.) 530; 1851, Norris v. Mayor, etc., 1 Swan (31 Tenn.) 164; 1861, McMahan v. Morrison, 16 Ind. 172, 79 Am. Dec. 418; 1861, Curien v. Santini, 16 La. Ann. 27; 1870, Wilson v. Central Br. Co., 9 R. I. 590; 1870, LaGrange, etc., R. Co., 7 Colw. (Tenn.) 420, 437; 1895, Combes v. Keyes, 89 Wis. 297, 46 Am. St. Rep. 839; 1896, The Attorney-General v. Superior, etc., R. Co., 93 Wis. 604. See, contra, Merchants' and Planters' Line v. Waganer, 71 Ala. 581, supra, p. 880, and cases therein stated. A statutory method of voluntary dissolution under a general law giving the state's consent when certain formalities are complied with, is quite usually provided by the states.

3. As to the right of the majority to surrender the charter and dissolve the corporation, there seems to be considerable conflict. The question is closely allied to the right of a majority to dispose of the assets of the corporation, and the following cases, or many of them, are upon this point.

a.

In the case of a solvent, going, private business corporation the majority can not, against the wishes of the minority, dispose of the assets and dissolve the corporation: 1813, Smith v. Smith, 3 Des. Eq. (S. C.) 557; 1844, Ward v. Soc. of Attys., 1 Coll. 370; 1857, Mobile & O. R. v. State, 29 Ala. 573, 586; 1861, Curien v. Santini, 16 La. Ann. 27; 1861, Abbott v. Am. Hard Rubber Co., 33 Barb. (N. Y.) 578; 1867, Zabriskie v. Hackensack, etc., R., 18 N. J. Eq. 178, 90 Am. Dec. 617; 1868, Clinch v. Financial Corp., L. R. 5 Eq. Cas. 450; 1872, Bird v. Bird's, etc., Co., L. R. 9 Ch. App. 358; 1873, Black v. Del. & R. Canal Co., 9 C. E. Green (24 N. J. Eq.) 455; 1876, Buford v. Keokuk N. L. Co., 3 Mo. App. 159; 1882, Bergman v. St. Paul, etc., M. B. Assn., 29 Minn. 275; 1883, Balliet v. Brown, 103 Pa. St. 546; 1887, Barton v. The Enterprise Loan, etc., Co., 114 Ind. 226; 1889, In re Sovereign Life Assurance Co., 42 Ch. D. 540, 61 L. T. R. 455; 1890, Rothwell v. Robinson, 44 Minn. 538; 1892, Chicago, etc., Cab. Co. v. Yerkes, 141 Ill. 320, 33 Am. St. Rep. 315; 1892, People v. Ballard, 134 N. Y. 269; 1895, Byrne v. Schuyler Elec. Mfg. Co., 65 Conn. 336; 1896, McCutcheon v. Merz Capsule Co., 37 U. S. App. 586; 1897, Pringle v. Eltringham Constr. Co., 49 La. Ann. 301, 6 A. & E. C. C. (N. S.) 385; 1898, Forrester v. Boston M. M. Co., 21 Mont. 544, 55 Pac. Rep. 229.

b. But the majority may dispose of the assets of a corporation, surrender its charter and dissolve the corporation, even against the wishes of a minority, when the corporation is in failing circumstances, unable to go on and accomplish its ends, in the absence of unfairness, oppression or fraud: 1847, Sargeant v. Webster, 13 Metc. (Mass.) 497, 46 Am. Dec. 743; 1850, Hodges v. New Eng. Screw Co., 1 R. I. 312, 53 Am. Dec. 624; 1856, Treadwell v. Salisbury Mfg. Co., 7 Gray (Mass.) 393, 66 Am. Dec. 490; 1862, Bank of Switzerland v. Bank, 5 L. T. (N. S.) 549; 1870, Wilson v. Proprietors, etc., 9 R. I. 590; 1881, Hancock v. Holbrook, 9 Fed. Rep. 353; 1883, Sheldon Hat Co. v. Eickmeyer, etc., Co., 56 How. Pr. (N. Y.) 70; 1886, Ervin v. Oregon R. & Nav. Co., 27 Fed. Rep. 625; 1886, Hutchinson v. Green, 91 Mo. 371; 1888, Berry v. Broach, 65 Miss. 450; 1888, Botts v. Simpsonville Tp. Co., 88 Ky. 54; 1889, Mason v. Pewabic Min. Co., 133 U. S. 50; 1889, Sawyer v. Dubuque, etc., Co., 77 Iowa 242; 1890, Hayden v. Official Hotel, etc., Co., 42 Fed. Rep. 875; 1891, Trisconi v. Winship, 43 La. Ann. 45; 1892, Skinner v. Smith, 134 N. Y. 240; 1893, Price v. Holcomb, 89 Iowa 123; 1893, Sewell v. East Cape May, etc., Co., 50 N. J. Eq. 717; 1896, Elyton Land Co. v. Dowdell, 113 Ala. 177; 1897, Peabody v. Westerly W. W., 20 R. I. 176, 37 Atl. Rep. 807; 1899, Phillips v. Prov. Steam, etc., Co., 21 R. I. 302, 45 L. R. A. 560.

See, infra, The State and Corporation, §§ 453-73. Also see Proprietors of Piscataqua Bridge v. New Hampshire, 7 N. H. 35, supra, p. 309; Flint & F., P. R. Co. v. Woodhull, 25 Mich. 99, supra, p. 398; Commonwealth v. Cullen, 13 Pa. St. 133, supra, p. 417; Dartmouth College v. Woodward, 4 Wheat. 518, supra, p. 708; Hawthorne v. Calef, 2 Wall. 10, supra, p. 752; Tomlinson v. Jessup, 15 Wall. 454, supra, p. 754; Ireland v. Palestine Turn. Co., 19 Ohio St. 369, supra, p. 757; Mormon Church (Romney) v. United States, 136 U. S. 1, infra, p. 906.

See, infra, The State and Corporation, §§ 410-18. Also see King v. Mayor of London, 1 Show. 280, supra, p. 152; People v. N. R. Sug. R. Co., supra, p. 100; Higgins v. Downward, 8 Houst. (Del.) 227, supra, p. 152; State v. Standard Life Assn., 38 Ohio St. 281, supra, p. 234; State v. Curtis, 35 Conn. 374, supra, p. 259; State Bank v. The State, I Blackf. (Ind.) 267, infra, p. 891.

Sec. 249. Ownership of stock by one member.

LOUISVILLE BANKING COMPANY v. EISENMAN.1

1894. IN THE COURT OF APPEALS OF KENTUCKY. 94 Ky. Rep. 83-96, 42 Am. St. Rep. 335, 19 L. R. A. 684, with note. [Suit by the bank to hold J. C. Eisenman personally liable upon an acceptance for the accommodation of Mattingly & Sons of drafts to the amount of $20,000, drawn by them upon the corporation of Eisenman Bros. & Co., and accepted by it, after J. C. Eisenman had become the sole owner of the stock of the corporation. The failure 'Statement much abridged. Arguments and part of opinion omitted.

of Mattingly & Sons to meet the drafts rendered Eisenman Bros. & Co. insolvent. The bank knew the circumstances under which the drafts were accepted. The statute provided "any number of persons may associate themselves together, and become incorporated,” etc. The bank contended that the sole ownership of stock dissolved the corporation, and rendered the sole owner individually liable. The lower court held otherwise.]

PRYOR, J. * * * The purpose of the statute was to enable two or more persons possessed of capital or skill to associate themselves in business, and to limit their liability as against the improvident acts of each other, or the act of the corporation, in the event of pecuniary loss in the legitimate and proper conduct of its business. It invites the investment of the capital stock of one to be placed in the same business with the skill of another, or a combination of capital that encourages trade, the burden of which mere individual enterprise would be unwilling to assume, and it could not have been the legislative intent that any one man could form a corporation of which he is the creature and sole stockholder, so as to limit his liability for the debts contracted, and from which he has derived the benefit, to the extent only of what he might designate his corporate estate. He owns the entire property belonging to the corporation-it is his. He can sell or dispose of it as he pleases; borrow money, acquire property, in the name of the corporation, for the sole purpose of exempting him from any responsibility, other than that belonging to the corporation; and however reckless or improvident he may be, he has all to gain and nothing to lose. He could make a gift of the entire corporate estate, dispense with all corporate forms, and to say, when exercising such unlimited control, he is not personally responsible for every debt he contracts, would be to pervert the plain purpose of the statute.

There is no such being in this state as a sole corporation, and certainly none such allowed to be created by the statute.

This corporation, however, was properly organized, had its several stockholders and board of directors and was prospering in its business until these drafts were drawn for the benefit of Mattingly & Sons.

That both the appellant and appellee were acting on the belief that the corporation was alone liable is beyond dispute, and the corporation, as it was called, the appellee being the sole owner of the stock, submitted to the judgment against it for the drafts in an action by the bank, and the appellee is making no resistance to its payment out of the property of the corporation, but insists that no personal liability exists. The appellant has obtained all he contracted for. There was no fraud practiced upon it by the appellee, and certainly no intention to bind himself personally, nor any of the proceeds of these drafts applied to his benefit in any manner or to the benefit of what he supposed was an existing corporation. If the stock had been held as it was originally the pecuniary condition of the corporation would have been the same, as no act had been done by the appellee by which the interest of creditors or those dealing with the corporation would have

been prejudiced. Nor are we prepared to adjudge, after a corporation has been created by the statute, with the stock distributed among several stockholders, that the purchase by one stockholder of all the stock destroys the corporate existence and places all the property of the corporation upon the same footing with the other estate of the individual stockholder. The legal title to the estate of the corporation is still vested in it, and while the stockholder's interest could be subjected to the payment even of his individual debt, when he contracts in behalf of the corporation, and with no fraudulent intent, it seems to us the party with whom he contracts gets all he bargains for when he subjects the corporate property to the payment of his debt. (Citing and commenting upon Swift v. Smith, 65 Md. 428.)

In the case before us there was no surrender of the franchise, but the business conducted in good faith and under the belief that the corporate estate was alone liable. The corporation still lived and had such vitality as enabled the holder of the stock to transfer it and proceed with the corporate powers as if he had never become the sole owner; and the argument that such a construction as to the meaning of the statute would enable two or more to organize a corporation with a view of vesting the entire stock in one of the corporators is not available, for the reason that the corporate property in the hands of one stockholder, when made liable by him for his corporate or individual debts, remains so, although he may transfer the stock to others, as they must take it subject to the incumbrances the sole stockholder has placed upon it prior to his sale of the stock. (Citing and commenting upon Button v. Hoffman, 61 Wis. 20; Wilde v. Jenkins, 4 Paige 481; Winona, etc., R. Co. v. St. Paul, etc., R. Co., 23 Minn. 359; Cook on Stock, § 631; Morawetz, p. 635.) *

While we recognize the general rule on the subject sustained by the authorities referred to, it must be held that the purchase by one of all the shares in a corporation created under the statute is a dissolution of the corporation to the extent that it suspends the exercise of the rights under the franchise until the owner transfers the stock in good faith, so as to maintain an organization under the statute. There is a difference between the attempt to create one person a corporation under this statute, and the purchase in good faith of all the stock after the corporation has been created. In the first instance there is no corporation, and in the last there is a franchise, the operations of which are suspended until the stock may be transferred to others; and while in the hands of one person the corporate and individual property are ordinarily alike liable for the payment of any debt contracted by the owner, and subsequent purchasers of stock take it subject to the liens or equities of the creditors of the sole owner created prior to the transfer of the stock to them.

Affirmed.

Note. One-man companies.

1. It seems that where a statute provides that "any number of persons" may form a corporation, the courts will hold that more than one person is meant. Louisville Banking Co. v. Eisenman, 94 Ky. 83, 42 Am. St. Rep. 335, supra, p. 887; Montgomery v. Forbes, 148 Mass. 249, supra, p. 594. Yet the