§ 390. Corporations are, in the United States, created by the legislature, and in England by the royal charter and act of Parliament. They may also arise by prescription. There are, in this country, certain corporations, created originally by charter, previous to the revolution, but these have been recognized and adopted either impliedly, or by the express provision in the constitution of the States in which they were situated. Corporations are divided into aggregate and sole. A sole corporation is composed of one person, who is created a corporation in order to confer certain privileges, such as succession, which in his private capacity he would not possess. The king, bishops, deans, parsons, and vicars, in England, are examples of sole corporations.1
§ 391. Aggregate corporations at common law are combinations of individuals united into one collective body, under a special name, and invested with certain privileges, immunities, and capacities as a body which do not belong to them as individuals, such as the capacity of succession and perpetuity; and this class of corporations is almost the only one known in this country. Aggregate corporations are subdivided into public and private. Public corporations being founded by the government for political purposes solely (where the whole interest belongs to the government), such as towns, cities, parishes, counties, government banks (where the stock is exclusively owned by the government), and hospitals endowed by government.2 And private corporations being any corporation of which the foundation is private, however extensive or public its uses may be.3 Insurance, railroad, canal, bridge, and turnpike companies, colleges, hospitals, and banks, are therefore private corporations, unless they be created and endowed and owned solely by government.1 So, also, eleemosynary corporations, which are corporations instituted for purposes of charity, if founded by private persons, are private corporations, although they be for general and public charity. Nor does the fact, that the funds of a corporation founded by private persons have been increased by the bounty of government, thereby render the corporation public.2
1 Co. Litt. 8 b, 250 a; 1 Black. Comm. 469, 475; Dartmouth College v. Woodward, 4 Wheat. 518.
2 2 Kent, Comm. lect. 33, p. 274, 275; Dartmouth College v. Woodward, 4 Wheat. 518; Philips v. Bury, 2 T. R. 346. 3 Ibid.
§ 392. If a corporation be public, its existence is dependent upon the pleasure of the government by which it is created, and it may be modified in its constitution and privileges and powers by the government.3 But, by common law, a private corporation is not subject to the control or interference of the government, unless it violate its charter, or unless the government, in incorporating it, reserve special powers to interfere.4 If, therefore, special powers be not reserved, the government cannot, without the consent of the corporation, alter or amend the charter, or divest the corporation of any of its franchises, or add to them, nor can it increase or diminish the number of trustees, nor remove the members, nor change nor control the administration thereof, nor compel it to receive a new charter.5 A corporation is, of course, subject to the general law of the land, and to the general superintending power of a court of equity, which possesses full jurisdiction in all cases of an abuse of trusts to redress grievances and to suppress frauds.6
1 Ibid.; U. S. Bank v. Planters' Bank, 9 Wheat. 907; Dartmouth Coll. v. Woodward, 4 Wheat. 518.
2 Allen v. McKeen, 1 Sumner, 299; Philips v. Bury, 2 T. R. 346; s. c. 1 Ld. Raym. 5, 9.
3 Dartmouth College v. Woodward, 4 Wheat. 518; Philips v. Bury, 1 Ld. Raym. 5, 6; 2 T. R. 346.
4 Micou v. Tallassee Bridge Co., 47 Ala. 652 (1872). In Massachusetts, by statute (Rev. Stat. ch. 44, § 23), it is enacted that every act of incorporation, passed after such statute, shall be subject to amendment, alteration, or repeal, at the pleasure of the legislature, unless there be an express provision to the contrary in the act. See Gen. St. ch. 68, § 41.
5 Dartmouth College v. Woodward, 4 Wheat. 518; The King v. Pasmore, 3 T. R. 240; Ellis v. Marshall, 2 Mass. 269; Wales v. Stetson, 2 Mass. 143; Wilmington Railroad v. Reed, 13 Wall. 264.
6 Dartmouth College v. Woodward, 4 Wheat. 518; Mayor of Coventry but was bound in all cases to use its corporate seal. But this doctrine has been gradually relaxed, until, at the present day, in England, the rule is subjected to the following exceptions, in which it is not required to act under its seal; namely: 1st. Where the acts done are of daily necessity, or too insignificant to be worth the trouble of affixing the common seal. 2d. Where the corporation has a head, as a mayor or a dean, who may give commands. 3d. Where the acts to be done must be done immediately, and it would be impossible to wait for the formation of a common seal. 4th. Where the very object and purpose of the corporation require that it should have the power of acting without the seal, as in the case of a bank, which must have the power to issue bills of exchange and promissory notes without the seal.1 All the exceptions are founded on necessity, or great convenience.2 In America, however, the old common-law rule has worn away altogether, and the doctrine obtains, that a corporation may be bound by the contracts of its agents,3 done within the scope of their authority, whether they be under seal4 or by parol, or express or implied, and that in signing a contract only operates, at the present time, as prima facie evidence in favor of the corporation; and the presumption which it thus created may be rebutted by evidence of mistake or surprise; or, indeed, by any evidence which would bind a principal, upon the contract of his agent.1
§ 393. The incidents of a corporation are stated by Black-stone 1 to be, 1st. To have perpetual succession; and therefore all aggregate corporations have a power necessarily implied of electing members in the room of such as go off. 2d. To sue and be sued, implead or be impleaded, grant or receive by its corporate name, and do all other acts as a natural person may. 3d. To purchase lands, and hold them for the benefit of themselves and their successors. 4th. To have a common seal. 5th. To make by-laws or private statutes for the government of the corporation." Mr. Chancellor Kent adds a fifth incident; namely, the power of amotion or removal of members.2 What principally concerns us in the present treatise is their powers and liabilities in respect to their contracts, and these we shall proceed to consider.