This name usually designates a partnership in which the capital is distributed by shares among a large number of partners. They assume in certain respects a corporate form, but possess legally none of the peculiar attributes or powers of corporations, except as conferred by statute. Like these, however, they adopt a corporate name; divide a fixed capital into shares, which they make transferable by assignment and delivery; and commit the conduct of their business to a board of directors. It is also sometimes stipulated in the fundamental articles of the association, that no member shall be liable for the company's debts beyond the amount of his shares. So far as the partners alone are concerned, they may adopt what rules they will for the internal administration of the partnership; but their imitation or assumption of corporate powers or responsibilities cannot avail them in law, except so far as recent legislation favors them, or prejudices the rights of third parties. They remain partnerships, and are generally subject to the rules of law which govern partnerships.
Thus, such a company cannot sue its shareholders at law for breach of their engagements to it; for as copartners of the plaintiffs, they cannot be made liable, according to the rules of pleading, in such a suit; they must therefore resort to the intervention of trustees in order to avail themselves of contracts made or to be made with their members, or they must sue in equity. And they are bound by that familiar rule of partnership law, which no mere mutual agreement can evade, that each member of the association is liable as a partner in solido, or to answer with his whole private property for all the debts of the partnership. It is doubtful whether this rule would be changed even though the creditor dealing with the company have notice of a stipulation in the articles of association limiting the responsibility of the members to the mere joint funds, or to a qualified extent. In recognition of the advantages secured to the community by the combination of capital in the prosecution of important enterprises, and in view of the embarrassments to which they are subjected by the operation of the rules of law, joint-stock companies have received both in England and in the United States some assistance from legislation, which gives them a qualified corporate character, and a separate legal existence apart from that of their individual members.
There is no such uniformity in these statutes as will admit of a comprehensive statement of their purport. In general it may be said that the statutory joint-stock companies occupy an intermediate position between corporations and partnerships, and partake of the nature of both.