a partnership. In the federal courts it is held that a joint stock company is not a corporation within the jurisdictional rule governing diverse citizenship.1

These include types

§ 166. Voluntary associations. and examples that are older than corporation law; and they are normally the possessors of rights and property which are impressed with a purpose, and which belong to the purpose rather than to the group members. If the common law theory controls, namely, that a voluntary association is not an entity, then (1) no suit can be maintained in the group name; (2) the members are liable for the association's liabilities; (3) and they hold the associated assets as tenants in common but impressed with the common purpose. But the common law theory, in denying artificial personality to voluntary groups, has never adequately fitted the facts. To meet the many difficulties which a strict application of the theory would entail, the courts have from time to time ignored it; and at the present time there is much to be said for "the frank recognition of the corporate personality of voluntary associations." The law, however, is in a state of confusion. It is generally held: (a) Voluntary associations for profit are, for the purposes of procedure and as regards the individual liability of the members, partnerships. (b) In associations not for gain, a representative action, so called, may be brought by or against some of the members as representatives of the whole body;

1 See Thomas v. Ohio State University Trustees, 195 U. S. 207 and the cases therein reviewed. Compare also Insurance Co. v. Massachusetts, 10 Wall. 566.

2 See the instructive case of Ponce v. Roman Catholic Apostolic Church, 210 U. S. 296.

3 Harvard Law Review, xxv, 580.

but, in the absence of statute, the association cannot sue or be sued in the group name. A judgment against the association in a representative action can be collected out of the group assets only; but the decisions differ as to whether the members are also liable individually to suit and judgment at the plaintiff's election. The reasonable view seems to be that the member, merely as such, does not pledge his credit or incur responsibility for the obligations, in contract or in tort, of the association; and further, that persons dealing with the officers, as such, are presumed to look to the group assets for payment.1 (c) The weight of authority still denies to the voluntary association such personality as would enable it to acquire and convey title in the group name. The members hold as tenants in common for the common purpose; consequently, in the absence of statute, a member cannot be guilty of theft of the common property. The association's property rights can be and usually are protected by means of trustees.2

1 Lindley on Partnership, Vol. I, chap. 1, sec. 5. "It is a mere misuse of words to call such associations partnerships; and if liabilities are to be fastened on any of their members, it must be by reason of the acts of those members themselves, or by reason of the acts of their agents; and the agency must be made out by the person who relies on it, for none is implied by the mere fact of association." See also Harvard Law Review, xxv, 583; 25 Am. & Eng. Ency., 1129.

2 In Taff Vale Railway Co. v. Amalgamated Society of Railway Servants (1901 A. C. 426), it was held that a trade union registered under Act of Parliament but not incorporated, could be sued in its registered name and had so much of a corporate character as to subject it at least to liability to injunction and payment of damages out of the common fund. In Littleton v. Wells & McComas Council, 98 Md. 453, a voluntary association was held liable to suit at law in the group name. It was said: "An unincorporated society

§ 17. One-man companies; Ignoring the corporate fiction. It has been held that if all the shares are vested in one owner, the corporate existence is thereby suspended.

or association was regarded at common law as a partnership, so far as its rights or liabilities were concerned, and suits could not be maintained by or against it in the name of the society or association, but the members composing it were the proper parties. Sec. 415 of Art. 23 of the Code of 1904 (being sec. 215 of ch. 471 of the Acts of 1868) provided that 'It shall be sufficient in any suit, pleading or process, either at law or in equity, or before any justice of the peace, by or against any joint stock company or association, to describe the said joint stock company or association by the name or title by which it is commonly known, or by or under which its business is transacted.'" Upon this statute and an earlier case construing the same it was further said: "The statute does not take away the right existing at common law to sue the members of an unincorporated association, but the creditor has the option to sue either the association or the members, and when the suit is against the former a judgment obtained can only affect its joint property." This language, however, was probably not intended to convey the idea that the members of a voluntary association, not for gain, are as such responsible for its obligations. In Snowden v. Crown Cork & Seal Co., 114 Md. 658, the court took a long step forward. It was there held that the statutory right of a voluntary association to sue in the group name "presupposes the right to acquire and possess in the same capacity the interests which a suit might protect." Accordingly, a transfer of stock by gift inter vivos to a voluntary association with a fluctuating membership, was upheld. The case of a testamentary gift was distinguished, but the language is broad enough to include real estate conveyances. The Act of 1908, revising the corporation laws of the State, changes the words "joint stock company or association," which were contained in the Act of 1868, to "corporation" (Code 1911, art. 23, sec. 88); and it is probable that the former words in the Act of 1868 were used technically as meaning a "company or association" having a joint stock, and not a voluntary association. It is worthy of note that a voluntary association having the capacity to acquire and vindicate rights in the group name, has practically all the elements of corporate personality.

The shares may be re-distributed and the corporation revived. Again, it may happen that a single person holds all the shares, except those registered in the names of his nominees for the purpose of maintaining the organization. In such cases, may the rights and liabilities of the corporation be treated as identical with those of the sole or dominant owner? Again, if a corporation sells out its business and, with the assent of its principal stockholders, enters into a lawful covenant against future competition with the vendee, does the covenant bind the stockholders (who have assented but not personally covenanted) or a new corporation formed by them? These questions involve and illustrate the modern doctrine of "ignoring the corporate fiction"; and the fiction has sometimes been needlessly invoked and mistakenly applied. According to the weight of authority and reason,. neither the sole owner of the corporate stock nor a combination of all the owners have any title to the corporate assets which they can convey. Dominant ownership.. whether it be fifty-one or ninety-nine per cent. of the shares, does not of itself make such owner responsible for the debts of the corporation or prevent him from competing with other creditors in the distribution of its assets. It is true that the sole or dominant owner may so conduct himself as to incur personal responsibility; but the doctrine of fraud or estoppel is usually sufficient to meet such cases. A person knowingly dealing with a corporation has notice of limited liability; if the shares are paid up it can make no difference to him whether they are held by few or by many persons; and if money has been loaned to the corporation by a stockholder, it is immaterial whether the latter

1 Swift v. Smith, 65 Md. 428; Louisville Banking Co. v. Eiseman, 94 Ky. 83, 19 L. R. A. 684; II Morawetz Corp., sec. 1009.

be the holder of few or of many shares. And so, if a purchaser of a corporation's good will and assets desires to secure himself against the future competition of the individual shareholders, he can easily stipulate for such result and not assume that it is included in the covenant of the corporation.1

1 Hall's Safe Co. v. Herring, &c. Safe Co., 146 Fed. 37. And see generally, Warren's Cases on Corporation Law, ch. 3; Salomon v. Salomon & Co., L. R. (1897) A. C. 22. In Swift v. Smith, 65 Md. 428, a mortgage of corporation chattels made in his own name by the sole owner of the shares, was upheld against a creditor of the revived corporation. In this case, which has been criticised (Parker v. Bethel Hotel Co., 96 Tenn. 255; Louisville v. Eiseman, 19 L. R. A. 684), the creditor had actual knowledge of what was in fact an equitable mortgage; and the decision was right. But the view of sole ownership taken by Judge Irving is contrary to the great weight of authority and would nullify the recording laws. In Pott v. Schmucker, 84 Md. 535, the trustee of a dominant shareholder (who held all but four shares and in reality owned these) was denied the right to prove the shareholder's claim against the assets of the insolvent corporation in competition with its other creditors. It Iwas said that a creditor "in a proper case and in furtherance of the ends of justice, may treat the debtor corporation and the individual owning all its stock and assets as identical." The court nevertheless held the corporation to be a distinct entity and decided that the trustee of the "individual owning all the stock and assets" was not entitled to the assets of the corporation. The facts (pp. 554-556) make a strong case for estoppel, and the decision could have been rested on this ground. See further, Tompkins v. Sperry, 96 Md. 560; Re. Bauernschmidt, 101 Md. 162; Day v. Postal Co., 66 Md. 369.