This section is from the book "The Law Of Banks And Banking", by John Maxcy Zane . Also available from Amazon: The law of banks and banking.
An unconstitutional law is really a contradiction in terms; a more correct phrase is an attempt to pass an unconstitutional enactment. The unconstitutionality may arise from various reasons, such as a failure to observe constitutional forms, a subject which is not germane to this work. Such a law is no law at all. It follows logically that a corporation formed under an unconstitutional enactment is not a corporation either dejure or de facto, because a de facto corporation can only exist under circumstances where a dejure corporation could be formed. It follows then that the corporate acts of such a corporation are absolutely void as corporate acts. So the authorities hold.1 But there would seem to be no reason why the incorporators could not both sue and be sued as partners, unless private banking were prohibited; but even then recovery might be had in quasi-contract on the ground that the fact causing the unconstitutionality was not known at the time, or that the parties were not in pari delicto. Yet this latter proposition is impliedly denied in State v. How, 1 Mich. 512, which cannot be considered an authority on account of the fact that the point is not suggested to the court, and because the case was a bill in equity to enforce the contract, not an action in quasi-con tract in disaffirmance of the contract.2
& J. 234; Phinney v. Baldwin, 16 I11. 108; Commonwealth v. Bass-ford, 6 Hill, 526; Madrazo v. Wells, 3 Barn. & Ald. 353; Mclntyre v. Parks, 3 Met 207.
1 Hurlbut v. Britain, 2 Doug. 191; State v. How, 1 Mich. 512; Nes-sinith v. Shelden, 4 McLean, 375, Fed. Cas. No. 10,125. Compare Smith v. Barstow, 2 Doug. 155, where the court enforced a contract whose sole consideration was illegal and void debts. But it is held that a debtor cannot set up this defense Snyder v. State Bank,
1 I11 161. This ruling is extraordinary.
2 The law was held unconstitutional by a queer vagary of the judicial intellect in Green v. Graves, 1 Doug. 351, disapproving Thomas v. Dakin, 22 Wend. 76, and Falconer v. Campbell, 2 McLean, 195. It followed necessarily that the corporate acts, as corporate acts, were nullities. And in State v. How, supra, it was correctly held that they were nullities, and that the unconstitutional act could not be appealed to in order to create assumption that if the defective step in the organization had been properly taken, a de jure corporation would have resulted; in fact, as against every party but the state, such a corporation is de jure.
 
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