Town v. Bank of River Raisin. poration, to trustees of the directors' selection, and preferring some creditors to others, it is a fraud upon creditors, and contrary to the policy of the statutes of 1836 (S. L. 1836, p. 157), of 1837 (S. L. 1837, p. 307), to R. S. 1838, p. 229, and to the statute of 1839 (S. L. 1839, p. 94). First. These contemplate an equal distribution among creditors, of the assets of an insolvent corporation, and under the supervision and control of chancery, through the agency of its own offiSecond. They are bankrupt laws, and are to be construed together as one system, and favorably for creditors: 2 Kent's Com., 315; 2 Hoven. on Frauds, 331; 1 Burr., 474. Third. Transactions contravening the policy of these acts are void, even if they are not within the letter: 2 Hov. on Frauds, 368, 369, 370, 371; Cowp., 123-125, 632, 633; 3 Ves., 85; 6 T. R., 84; 1 Burr., 476, 482; 14 Ves., 188, note, new ed.; 4 Burr., 2239, 2240; 16 Eng. C. L. R., 88; 1 Johns., 373, 374; 5 Id., 424; 1 Stark., 70 (or 89). cers. IV. Chancery has jurisdiction to set aside an unlawful assignment, not only on general principles, but under the statute of 1839: S. L. 1839, p. 103, § 47. A. D. Fraser (with whom was J. F. Joy), for the defendants: 1. The assignment is valid; it is not in violation of law; nor is it impeached on the ground of fraud. All corporations have the absolute jus disponendi of their property, neither limited as to objects, nor circumscribed as to quantity, unless restrained by charter, or by some *unequivocal provisions of law; having the same [536] power in this respect as an individual: 1 Kyd on Corp., 108; 1 Siderfin, 161, notes; 4 Com. Dig., Tit. Franchise (F), 11, 12; 10 Co., 306; 10 Rep., 1. A corporation may, although insolvent, assign its property in trust for the payment of its debts-defeating, by preferences, when the law does not inhibit it, the priority of the state: Ang. & Town v. Bank of River Raisin. Ames on Corp., 126; Kent's Com., 315, note; State v. Bank of Maryland, 6 Gill. & John., 205; Union Bank of Tennessee v. Ellicott, Ibid., 363, 371; Warner v. Mower, 11 Verm., 385; Pope v. Stewart, 2 Stew., 401; 2 Bland's Ch., 142; Ex parte Conway, 4 Ark., 302, 346; Catlin v. Eagle Bank of New Haven, 6 Conn., 233; Savings Bank of New Haven v. Bates, 8 Id., 512; Dana v. Bank of United States, 5 Watts & Sarg., 240; 3 Id., 205; Revere v. Boston Copper Co., 15 Pick., 351; Lenox v. Roberts, 2 Wheat., 373; 7 Gill. & John., 459, 465; Brace v. Bishop, 3 Wend., 13; 5 Id., 570; 1 Brock. C. C. R., 461. 2. It may be said that this construction would place too large authority in the hands of the corporate officers, who might place the property beyond the reach of the members; but this court can aid in the case of fraud, and the security against improvidence and bad management must be looked for in the interests, wisdom, and the justice of the official agents: 4 & 5 Ohio, 205; 1 Ves. & Bea., 226. On 3. Now there is no fraud here alleged or proved. the contrary, the object-the payment of the debts of the bank-is a most laudable one. On general principles, therefore, this assignment is perfectly valid, and notwithstanding the bankrupt and insolvent laws: Pickstock v. Lyster, 3 Maule & Selw., 371; Mease v. Howel, 4 East., 1; 5 T. R., 420; Inglis v. Grant, Ibid., 526; Nunn v. Wilsmore, 8 Id., 520; Rex v. Watson, 3 Price Ex., 6; Bailey v. Burton, 8 Wend., 348; Hunter v. U. S., 5 Peters, 173; 3 Com. [537] Dig., 285, Title Covin, B, 2; Fidgedon v. Beecher, 2 Rose, 153; Goss v. Neale, 16 Eng. C. L. R., 387; Phenix v. Ingraham's Assignee, 5 Johns., 425; Brooke v. Marbury, 6 Pet. Cond., 233; U. S. v. King, Wallace C. C. R., 21; Wheelright v. Jackson, 1 Eng. C. L. R., 30; S. C., Ibid., 217; 3 Taunt., 241; Small v. Ondley, 2 P. Wms., 247. 4. The objection that it was incompetent for the directors to execute the assignment without the concurrence of the Town v. Bank of River Raisin. stockholders, is untenable, as coming from the present complainant. If their consent was necessary, their acquiescence is sufficient, for they do not complain; and it was done with the assent of a large majority of the stockholders. No person can make complaint on this head but the stockholders: 2 Kyd on Corp., 466; 1 Id., 308; State v. Bank of Vincennes, 1 Blackf., 277; Ang. & Ames on Corp., 167, 213, 214, 155-160; Robins v. Embree, 1 Smedes & Marsh. Ch., 207, 269; Spear v. Ladd, 11 Mass., 94; 2 Metc., 167. 5. Assuming that the assignment operated as a surrender of the charter it would not therefore be void. It is surely competent for the bank to close its affairs at any time, and in its own way, even if a surrender followed; this is an incident which belongs to every corporation. But the assignment has no such effect; the corporation is not even dissolved by the judgment of seizure, but exists until the franchises are seized by execution on the judgment: Hackstone v. Bishop, 1 Wend., 1; 2 Kyd on Corp., 446, 466; State v. Bank of Vincennes, 1 Blackf., 271, 282. 6. The assignment is not in violation of the acts of 1837 and 1839 (S. L. 1837, pp. 307-308, S. L. 1839, pp. 94-105), whether the bank was solvent or not. These statutes nowhere prohibit such an assignment. They are not in their nature bankrupt laws (2 Bl. Com., 209, 307); but were designed merely to prevent the fraudulent disposition of their property, by banking corporations. *WHIPPLE, J., delivered the opinion of the court. [538] On the part of the complainant, it is contended, that the assignment is void, on general principles, and irrespective of the statutes of this state. The first reason offered in support of this proposition is, that the assignment is in effect a surrender of the franchises of the corporation, without the concurrence of the state. No rule is better settled than that a corporation may be dis Town v. Bank of River Raisin. solved, by the surrender of its franchise of being a corporation into the hands of the government; if accepted by the government, the dissolution becomes effectual. The modes. in which a surrender is to be made, and as to what facts constitute a surrender, have been a fruitful subject of discussion in the courts of this country. In England, the surrender is by deed to the king, by whom corporations are usually created by charter. In this country, corporations are created by an act of the legislature, and it would seem to follow, in the absence of any statute prescribing the mode in which a surrender is to be made, that to become available, it must be accepted by the authority which created the corporation. I have no doubt that a surrender made by the great body of the society, and accepted by the legislature, would operate as a dissolution of the corporation; but such a surrender and acceptance would not, perhaps, in this country, absolve the corporation from any of its liabilities, contracts being protected by the constitution of the United States. Regarding an act of incorporation, when accepted, as a contract between the state and the corporation, it would, then, appear necessary, in order to dissolve a corporation, that the consent of both parties should be obtained. If, therefore, the members of a corporation are desirous of bringing its business to a close, a resolution to surrender by the great body of the corporators, being presented to the legislature, and assented to by that body in the form of a [539] *legislative act, would be effectual to dissolve the corporation. So an act of the legislature repealing the charter, if assented to by the corporation, would operate as a dissolution. That a corporation, by its own act, can dissolve itself, is nowhere asserted, nor can it be sustained; this must be done by the concurrence of the parties to the compact, or by the solemn judgment of a court of competent jurisdiction. See Ang. & Ames on Corp., 656, 657, 658, and authorities cited in note; 15 Pick., 351 (Revere v. Boston Town v. Bank of River Raisin. Copper Co.); 24 Pick., 49 (Boston Glass Manufactory v. Langdon), and cases there cited; 2 Kent's Com., 310. Applying these rules and principles to the case before us, it would be difficult to maintain, that the assignment either operated as a surrender of the charter, or a dissolution of the corporation. The deed of assignment does not indicate, on the part of the corporation, any design to surrender its franchises, or contemplate a dissolution. On the contrary, it appears from the deed that the assignment was executed on account of the inability of the bank to pay, at that time, its debts, on demand, owing to the difficulty of converting the property and assets of the bank into cash; and the answer, though it admits that the bank had suspended the payment of its debts in specie, and failed to meet its engagements, and had ceased to do banking business, does not admit that the bank will prove insolvent, or be unable ultimately to pay its creditors. Admitting for a moment the legal competency of the corporation to make an effectual surrender of its franchises without the consent of the state, it is apprehended that the facts disclosed in the deed of assignment and answer would not amount to such surrender. It is not essential to the existence of a corporation that it should possess property; its legal existence, therefore, is not necessarily *determined by even actual insolvency: 24 Pick., 53. [540] The franchise remained, although the bank may have assigned all its property to pay its debts. By thus dispossessing itself of its property, the bank might be under the neces sity of discontinuing, temporarily, and perhaps permanently, its proper and legitimate business. The capital stock of the bank was $100,000 dollars, with the power to increase it to $500,000. Suppose, on the day following the assignment, the bank had, by resolution, increased its capital stock $100,000, and that this amount had been actually paid in, and the usual business of the bank resumed; could it be |