Corporation, an artificial legal entity, established by law, composed of one or more persons, with certain powers and functions to be exercised in the corporate name, and continued by a succession of members. Black-stone and most other writers attribute the honor of inventing these artificial beings entirely to the Romans, and refer their original to the time of Nuraa, who, according to Plutarch, finding upon his succession the city torn to pieces by the rival factions of Romans and Sabines, thought proper to subdivide the two into many smaller ones, by instituting separate societies of every trade and profession. But this, if not fabulous like most which has been reported of that period, would seem to be a mere classification of the people without any of the essential incidents of a corporation. The greater division into patricians and plebeians (which grew up by a natural course rather than by any public enactment) had perhaps as much of the corporate character. The sacred orders (also supposed to have been instituted by Numa) of pontifices, augures, feciales, and others, might with more propriety be called corporations; yet these were all constituents of the municipal government, and were in no other sense corporate than was the senate.
The universitates or collegia of the civil law were rather associations than corporations. (See College.) The true original of corporations is to be found in the middle ages, when cities, towns, fraternities of tradesmen, and the like, obtained charters from feudal sovereigns of certain privileges and immunities, sometimes for the protection of personal liberty, and sometimes for the advantage of trade, the latter being somewhat in the nature of a monopoly. - Corporations are either aggregate, that is, composed of two or more persons at the same time; or sole, when they consist of one member only at a time, as in the case of the English bishops. They are also divided into ecclesiastical, or those which are created for the furtherance of religion and perpetuating the privileges of the church; lay, or those created for secular purposes; and eleemosynary, or those created for charitable purposes, using that term in a broad sense, which will include means of instruction, etc. A further classification is into public, or those which are formed as instruments or conveniences of government, as cities, villages, etc.; and private, or those which are created for the benefit of the corporators, and in which the public have only an incidental interest.
Under the civil law corporations appear to have been created by the voluntary association of members, but the consent of the government in some form is always essential. In England the prerogative of creating corporations was in the king, who granted a charter for the purpose; but charters may be granted by parliament also, and in modern times this is the ordinary course. Corporations may also be established by prescription, which supposes a charter to have once existed; and there may be corporations by implication, where powers are conferred upon individuals to the exercise of which corporate capacity is essential. (Dyer's Rep., 400; 10 Barnwell and Cresswell, 349.) In the United States corporations are created by special charter of the legislature, or formed by voluntary association of members under a general law. In some states special charters are forbidden by the constitution. - The incidents of a corporation are, to have a corporate name by which it is known in the law, and a corporate seal, under which in general its business is transacted; to have capacity to hold property for corporate purposes, to sue and be sued, to make by-laws in furtherance of the purposes of its incorporation, and to continue in perpetuity unless restricted to a specified period of time by its charter.
The by-laws of a corporation must be reasonable, and in harmony with the general laws of the commonwealth. Corporations in the transaction of business are subject to the same rules and responsibilities as natural persons; and in respect to their officers and agents they occupy the position of master to servants, and must respond to third persons for the injuries caused or done by such officers and agents while transacting their business. Every corporation is under the supervision of some visitor, who generally in England is the king, except in the case of inferior ecclesiastical corporations, of which the ordinary is visitor, and of corporations endowed by a founder, in which case he and his heirs are visitors. In the United States the legislature possesses in general this right of supervision. Corporations may be dissolved in several ways: 1. By the death of all their members without successors; but this mode of extinction can seldom occur. 2. By surrender of the charter by the corporators. 3. By the repeal of the charter; but this, in the case of private corporations, is not admissible in the United States unless the right of repeal was reserved when the charter was granted; such a charter being held to be a contract, and the states being prohibited by the constitution of the United States from violating the obligation of contracts.
To obviate this difficulty, some states by their constitutions expressly make all charters subject to repeal. 4. By judgment' of some competent court pronouncing a forfeiture of corporate rights for misuser or non-user of franchises. It is a tacit condition of the grant of every corporate franchise that the corporators shall fulfil the purpose or design of their incorporation, and not abuse the franchise conferred; but a forfeiture for neglect or abuse can only be declared in a public proceeding instituted for that express purpose, and cannot be taken advantage of by private persons in suits where the corporate existence may come collaterally in question. Formerly the law was very strict in requiring corporate business to be done under the corporate seal; but now these bodies are permitted to contract like natural persons, and the same civil remedies may be had against them. For some wrongs, as the creation or continuance of a nuisance, criminal proceedings may also be had against them.