Second. Property rights upon dissolution. The common law rule was drastic but simple. The real property of the corporation reverts to its immediate grantor or his heirs,-"for the law doth annex a condition to every such grant that if the corporation be dissolved, the grantor shall have the lands again";1 its goods and chattels vest in the crown as property without an owner and "the debts of a corporation, either to it or from it are totally extinguished."3 In some of the earlier cases in this country these principles were recognized and applied; but not for long. Sometimes criticised as resting only upon dicta and sometimes distinguished as applicable only to particular charters, the doctrine has been utterly repudiated as to stock corporations; but as to others, it is not entirely obsolete. In the modern view, even where there is no statute so providing, a court of equity may and must take charge of the assets of a defunct share-corporation and, after the payment of its debts, make distribution of the remainder among the shareholders. And even where the corporation has no capital stock, its property will, upon dissolution, belong to the members, unless it is impressed with some element of trust or special use. In Mormon Church v. United States, 136 U. S. 1, Congress had repealed the charter and had, through the courts, seized for the benefit of local churches and

11 Bl. Com. 484.

2 2 Kyd Corp. 516.

1 Bl. Com. 484.

4 In Agnew v. Bank, 2 H. & G. 360 (1828), the question was left

open.

5 Bacon v. Robertson, 59 U. S 480,-in which there is a very learned review of the common law doctrine by Mr. Justice Campbell. See, also, Greenwood v. R. R. Co., 105 U. S. 13.

6 Wilson v. Leary, 120 N. C. 90; 5 Thomp. Corp. sec. 6746.

schools, the property of the Church of Latter-Day Saints,a corporation of Utah,-then a territory and under the "general and plenary" power of the federal government: "The next question is whether Congress or the court had power to cause the property of the said corporation to be seized and taken possession of as was done in this case. When a business corporation instituted for the purpose of gain or private interest, is dissolved, the modern doctrine is, that its property, after payment of its debts, equitably belongs to its stockholders. But this doctrine has never been extended to public or charitable corporations. As to these, the ancient and established rule prevails, namely: that when a corporation is dissolved, its personal property like that of a man dying without heirs, ceases to be the subject of private ownership and becomes subject to the disposal of the sovereign authority; whilst its real estate reverts or escheats to the grantor or donor, unless some other course of devolution has been directed by positive law, though still subject as we shall hereafter see, to the charitable use. To this rule the corporation in question was undoubtedly subject. But the grantor of all or the principal part of the real estate of the Church * * * was really the United States. * * * Where a charitable corporation is dissolved and no private donor or founder appears to be entitled to its real estate (its personal property not being subject to such reclamation), the government or sovereign authority, as the chief and common guardian of the state, either through its judicial tribunals or otherwise, necessarily has the disposition of the funds of such corporation, to be exercised, however, with due regard to the objects and purposes of the charitable uses to which the property was originally devoted, so far as they are lawful and not repugnant to public policy." In Titcomb v. Insurance Company,

79 Me. 315, the court went further in applying the old doctrine. The appellee was a mutual insurance company which went into voluntary dissolution in 1884, having no outstanding policies: "The only question is to determine what shall be done with the assets of the company. Our statutes contain ample provisions for the disposition of the assets of stock companies. * But this is a mutual

* *

company and has no stockholders and the provisions cited do not apply. According to the old settled law of the land,' says Chancellor Kent, 'upon the civil death of a corporation when there is no special statute to the contrary, all its real estate reverts to the grantors and their heirs, and all its personal estate vests in the People.' * But it is said that in this class of cases the corporators named in the Act of Incorporation should be regarded as stockholders. They are not stockholders, and to hold that they are would be a fiction, and fictions are not favored, and are never resorted to except to work out some strong and inherent equity, and there is no such equity in favor of the corporators of a mutual insurance company. They contribute nothing toward its assets and we think it would be against public policy to allow them to have a pecuniary interest in them. Such an interest would inevitably tend to create a temptation to fix the rates of insurance higher than would be necessary to meet losses. * We think there is a much stronger equity in favor of the former policy-holders whose money has contributed to produce the assets. But we do not think they can be regarded as stockholders after their policies have expired and their premium notes have been cancelled or given up to them. * * * When a man dies leaving no wife or kindred, his property descends to the state. And when a corporation which, like a mutual insurance company, has no stockholders, ceases to exist, we

*

are not prepared to say that the rule of the common law, which gives its surplus assets to the state, is not a wise one."

Third. Suits. Statutes usually provide for the saving, notwithstanding dissolution, of existing rights of action and pending suits; but where no such statute exists the law is clear. A dead corporation, like a dead man, cannot be sued; the death of either will abate a pending action;1 and a judgment recovered therein will constitute, as such, no valid claim against the estate of the corporation in the hands of its receivers.2

§ 161. Forfeiture. For non-use or abuse of the franchise, the state has a clear right by judicial proceedings, upon proof and after a hearing, to a judgment of ouster. This right is not affected by the fact that the corporation has an irrepealable charter; and forfeiture must be distinguished from certain other cognate ideas. Forfeiture proceedings assume the legal existence of the corporation. An association which never had a valid charter or whose charter has expired, may be acting in a corporate capacity; and in such a case, the question: by what warrant it presumes so

1 The rule in the text is logically applicable to suits by a corporation, but there is authority for the proposition that dissolution pending such suit does not abate it. See 2 Clark & Marshall, Corp. sec. 329; and compare Boyd v. Hankinson, 92 Fed. 49,—as to which,-query. In Agnew v. Bank, 2 H. & G. 360, it was held that the expiration of the plaintiff's charter after suit brought was not a defense that could be raised under the general issue plea already pleaded.

2 Mumma v. Potomac Co., 8 Pet. 281; Ordway v. Central National Bank, 47 Md. 238; Pendleton v. Russell, 144 U. S. 640,--an instructive case. Of course, claims constituting causes of action may be proven against the estate of the corporation in the court administering its affairs. For the right to damages on an executory contract, see 2 Clark & Marshall, Corp. page 926.

to act, may be raised by the state and the usurpation enjoined, by an information in the nature of a quo warranto— Regents v. Williams, 9 G. & J. 232. Again it must be remembered that the mere existence of a cause of forfeiture does not, of itself, terminate corporate existence. The franchise may be abandoned, the property of the corporation may be taken from it by creditors or receivers, but the corporate existence is not thereby destroyed.1 Again, forfeiture proceedings are always and only taken by the state in the exercise of its prerogative, while those for a dissolution, whether voluntary or involuntary, may be instituted by private persons, and the court's jurisdiction is measured by the statute conferring it. In the light of these general principles, it remains to consider the law of Maryland.

First. Procedure. Under the Act of 1908, ch. 240, (Code 1911, Art. 23, secs. 82-86), the Attorney-General or the State's Attorney for the city of Baltimore or for any county may, when authorized by the Governor, file against the offending corporation a petition in the name of the State, setting forth the cause of forfeiture. This petition must be filed in the Circuit Court for the county or in the Superior Court of Baltimore City, according to where the principal office of the corporation is located. Provision is made for the manner and the time of filing the pleadings necessary to produce an issue; either party is entitled to a jury trial; and even where a cause of forfeiture has been shown, the court may, before passing a final judgment, give the corporation time within which to remedy the grievance. Either party may appeal within thirty days from the date of the

1 Nor is a cause of forfeiture the subject of collateral attack. Canal Co. v. R. R. Co., 4 G. & J. 1; Murphy v. Wheatley, 102 Md. 501.