Home1860 Edition

CORPORATION

Volume 7 · 1,433 words · 1860 Edition

s the term applied in Britain to a body of men by special law endowed with the power and means of acting collectively, with the distinctness and individuality of one man pursuing the dictates of his own will, while their existence is kept up by a perpetual succession, so that the collective body acts like an individual man with a perpetuated vitality. Though the corporation might be deemed, from the admiration bestowed on it by professional writers, to be the peculiar creation of English genius, there is little doubt that the system was derived from the municipia, universitates, and collegia of the Romans; and there is even reason to believe that there are corporations which date their history back to the institutions of the Western empire. (See MUNICIPAL CORPORATIONS.) The adage, indeed, expressed by a Roman jurisprudent, that it required three to make a college—tres facere collegium (50 Dieg. 16, 85)—shows a practical consciousness of the most effective means of strengthening the action of a small corporation, in an adjustment, by which equal numbers with the chances of balanced divisions are to be avoided, and that number is selected which always affords a majority of two to one.

Corporation law has been a favourite field for the indulgence of the English legal propensity for creating fictions. The commentators have exhausted their ingenuity in analogies between the individual human being and the body corporate or collective which acts like one man; and Sir Edward Coke is happy in discovering, that the reason why corporations cannot be excommunicated, is because they have no souls, being in the eye of the law mere bodies. In its love of fictions the English law has applied to certain holders of office the expression "corporation sole," so that after having exercised its ingenuity in endowing groups of men with the characteristics of individuality, where this individuality is real, the law reverses the process and bestows on it the collective qualities of an aggregate body. "Corporations sole," says Blackstone, "consist of one person only, and his successors in some particular station, who are incorporated by law, in order to give them some legal capacities and advantages, particularly that of perpetuity, which in their natural persons they could not have had. In this sense the king is a sole corporation; so is a bishop; so are some deans and prebendaries, distinct from their several chapters; and so is every parson and vicar." He gives reasons for this fiction, in the possibility that without it the public property held by the parson might become feudally vested in his heir. "The law therefore has wisely ordained that the parson, quatenus parson shall never die any more than the king, by making him and his successors a corporation, by which means all the original rights of the parsonage are preserved entire to the successor," &c. (B. i. In England, however, as in other countries, the nature of a systematic succession to office, and the separation of public from private property, could be effectually understood without recourse to a supposition which only tends to throw confusion on the notions of a real corporation.

It is another fiction of the law of England, but one which has tended beneficially to define the power of incorporation in later times, that corporations can have no other foundation than royal authority. In reality, though some of the corporate bodies have risen silently along with the monarchical and other institutions of the country, yet the law treats them as having sprung directly from the prerogative of the crown; "such as the city of London and many others, which have existed as corporations, time whereof the memory of man runneth not to the contrary, and therefore are looked upon in law to be well created. For though the members thereof can show no legal charter of incorporation, yet in cases of such high antiquity, the law presumes there once was one; and that, by the variety of accidents which a length of time may produce, the charter is lost or destroyed." (Ib.)

Both the spontaneous rise of such great corporations, and the power of the crown to create them, have now virtually departed, and all great corporate powers arising in later times have been created by statute.

Blackstone and other commentators give many divisions of corporations, as into lay and ecclesiastical, civil and ecclesiastical. There is a division, however, not known in law, but more important in practice than any of the technical divisions. It exists between those corporations which, like banking or trading companies, are created for the profit of the members, and those which, like municipal institutions, are created for the benefit of the public through the performance of public duties. There are corporations in which the two functions are in some measure mixed together in a modified shape; such as associations of literary men and artists, by whom a public service is done by the promotion of intellectual education, while the members to some extent hold personal privileges, and act to the extent of their powers for their own advantage. It is worthy of observation, that this kind of body, containing a moderate amount of the characteristics of both the main classes of corporations, is the only kind now virtually incorporated by the crown. It has ceased to incorporate municipal bodies with governing powers, as these can only now be satisfactorily communicated by act of parliament. The power to confer monopolies or other commercial privileges, long viewed with jealousy, scarcely survived the Patents Act in the reign of James I.; and any privileges now granted by charter to commercial bodies merely involve the right to transact their business, hold their property, and conduct litigations in a corporate name without the intervention or involvement of individual members of the corporation.

The phraseology of the English law of corporations has migrated to Scotland, and brought with it in some measure the corresponding practice. But it is probable, that if a sufficient inquiry were made into the origin and nature of collective bodies associated for common action in Scotland, they would be found to be very different in their fundamental constitution from an English corporation. It is certain that there exist in Scotland many such bodies, which neither in reality, nor by admitted fiction of law, were created by the crown; and some of the burgh corporations have, from time to time, by "seals of cause," as they were termed, exercised the power of creating distinct corporate bodies with specific internal powers. Though it has been the practice to append the great seal to Scottish charters of incorporation, it has been doubted whether this be necessary. In England nothing was more clearly established than the law, that the members of a corporation are not under any personal responsibility for its debts or other obligations. This arises from the method in which its fictitious individuality is represented by the common seal. "For a corporation," says Blackstone, "being an invisible body, cannot manifest its intention by any visible act or oral discourse; it therefore acts and speaks only by its common seal. For though the particular members may express their private assents to any act by words, or signing their names, yet this does not bind the corporation; it is the fixing of the seal, and that only, which unites the several assents, who compose the community, to make one joint assent of the whole." The seal is often adopted in Scotland in imitation of English practice, but it is not admitted to have the same mysterious capacity of representing the ideal individuality, nor is it a fixed point that the members of a trading body can be exempt, in Scotland, from their liability as partners by mere incorporation, or by any other authority than a special statutory limitation. In 1825, on the understanding that the act of incorporation by the crown is an absolute exclusion of personal responsibility, an act was passed for enabling the crown to grant charters of incorporation, containing provisions for the liability of the members for the debts of the corporation. By an act of 1836, amended in 1837 (7th Will., IV., and 1 Vict., cap. 73), arrangements were made for enabling the mere commercial privileges of a corporation, including representation by office-bearers, and partial or total exemption from personal responsibility, to be conferred by the crown in a more simple manner than incorporation by letters patent. The objects of a large portion of the old corporation laws are now superseded by the mass of legislation relating to banking, railway, and other joint-stock public companies. See Joint Stock.