Chartered company

“ First, a Chartered Company consists of a band of merchants, ruling through, and by, a great man. If that great man who expands the influence and power of the Company lives long enough to establish a form of policy, well and good. I have sufficient trust in the common sense of a band of English merchants, provided their interest is common, to believe they will adhere to the policy; but suppose he does not, or suppose you do not start with a good man, you will merely have a mess, as has been demonstrated by the perpetual failures of our French [Pg 398] friends’ Chartered Companies. ”

“ They often have very heavy corresponding obligations, as will be seen in the case of one (the East Africa) where the obligations were too onerous for the company to discharge, though they were inseparable from its position. The charters of modern companies differ in two points strongly from those of the old: they contain clauses prohibiting any monopoly of trade, and they generally confer some special political rights directly under the control of the secretary of state. The political freedom of the old companies was much greater. ”

“ Charters were given to companies trading to Guinea, Morocco, Guiana and the Canaries, but none of these enjoyed a very long or prosperous existence, principally owing to the difficulties caused by foreign competition. It is when we turn to North America that the importance of the chartered company, as a colonizing rather than a trading agency, is seen in its full development. ”

“ The pertinent parts of article 6625 follow: 'In case of a sale of the property and franchises of a railroad company within this State the purchaser * * * and associates, * * * may form a corporation * * * for the purpose of acquiring, owning, maintaining and operating the road so purchased * * *; and, when such charter has been filed, the new corporation shall have the powers and privileges then conferred by the laws of this State upon chartered railroads. ”

“ It is not questioned by counsel on either side that the charter of a private corporation is a contract between the State and its corporators, and protected under the Constitution of the United States, like any other contract, from legislation impairing its obligation. ”

“ The directors are the officers or agents of the corporation, and represent the interests of that abstract legal entity, and of those who own the shares of its stock. One of the objects of creating a corporation by law is to enable it to make contracts; and these contracts may be made with its stockholders as well as with others. In some classes of corporations, as in mutual insurance companies, the main object of the act of incorporation is to enable the company to make contracts with its stockholders, or with persons who become stockholders by the very act of making the contract of insurance. ”

“ When the charter is silent as to the contracts which a corporation may make, it has, as incidental to its existence, the power of making all such contracts as are necessary and usual in the course of the business it transacts, as a means to attain the object for which it was created. ”

“ Baring and Rutherford, would be wholly immaterial under the act of 1839.
If the company be considered as a corporation, the same consequence follows, with the single anomalous exception which I shall presently notice, a fortiori.
The first great difference between a corporation and a private partnership or voluntary association is, that in the former the company acts only by its constitutional organs, whether a committee of directors or appointed officers; while, in the latter, the obligations of a single member, or number of members, by the subscription of the firm, will bind the society. ”

“ It thus appears that the charter of the company, by adopting the provisions of the act of 1809, became subject to a reserved power of the legislature to make further provisions and regulations for the management of the business of the corporation and for the government thereof, or wholly to repeal the act, or any part thereof, establishing the corporation. ”

“ The laws of the state require a foreign corporation, as a condition of the right to do business in the state, to make an application to the charter board of the state to do such business and to file a certified copy of its charter or articles of incorporation, and to furnish certain information to such board. The statute also required the payment of a charter fee graduated upon the amount of the capital stock of the corporation. ”

“ While the purpose may not always be mentioned in the indenture, nevertheless it must accord with the charter of the corporation and the laws of the State. The company cannot exceed the powers that have been granted to it. ”

“ The charter of a corporation, read in connection with the general laws applicable to it, is the measure of its powers, and a contract manifestly beyond those powers will not sustain an action against the corporation. But whatever, under the charter and other general laws, reasonably construed, may fairly be regarded as incidental to to the objects for which the corporation is created, is not to be taken as prohibited. Thomas v. Railroad Co. ”

“ By the term 'corporate franchise or business,' as here used, we understand is meant (not referring to corporations sole, which are not usually created for commercial business) the right or privilege given by the state to two or more persons of being a corporation, that is, of doing business in a corporate capacity, and not the privilege or franchise which, when incorporated, the company may exercise. The right or privilege to be a corporation, or to do business as such a body, is one generally deemed of value to the corporators, or it would not be sought in such numbers as at present. ”

“ Here was a splendid opportunity for the King to reap a harvest, and nothing remained for the authorities of the Company but to obtain a Charter as soon as possible and to avoid the heavy penalties to which they would otherwise be subjected by assenting to the legal fiction that they had not acted as a corporation, and never had been one, but merely an association in existence from year to year, acting under ancient and well-recognized privileges. ”

“ It is not denied that Lord was in some respects the agent of the corporation; but it is asserted that he had not the power or authority to make a contract of the character here involved. The charter of the Sun Association provided for no other officers to manage its concerns but a board of trustees. In the by-laws provision was made for the election of a president and secretary, whose duties were not prescribed, except as to the signing of certificates of stock and the transferring of stock on the books of the company. ”

“ The doctrine that no recovery can be had upon the contract is based upon the theory that it is for the interest of the public that corporations should not transcend the limits of their charters; that the property of stockholders should not be put to the risk of engagements which they did not undertake; that if the contract be prohibited by statute everyone dealing with the corporation is bound to take notice of the restrictions in its charter, whether such charter be a private act or a general law under which corporations of this class are organized. ”

“ When any person takes stock in a railroad corporation, he has entered into a contract with the company, that his interests shall be subject to the direction and control of the proper authorities of the corporation to accomplish the object for which the company was organized. ”

“ In legal theory, a corporation is looked upon as a separate entity. Most States require at least three persons to incorporate. A, B and C form a corporation under the laws of the State of New York. There are then four legal persons in existence: A, B, and C, and this separate person, or legal entity, the Green Corporation, if that is the name given the company. In the case of a partnership, the law does not, as a rule, consider the partnership as an entity distinct and separate from the members who make up the firm. ”

“ A corporation cannot, without the assent of the legislature, transfer its franchise to another corporation, and abnegate the performance of the duties to the public, imposed upon it by its charter as the consideration for the grant of its franchise. Neither the grant of a franchise to transport passengers, nor a general authority to sell and dispose of property, empowers the grantee, while it continues to exist as a corporation, to sell or to lease its entire property and franchise to another corporation. ”

“ There is the question whether the new company is validly organized; whether proxies are executed in pursuance of the provisions of the state code; whether the charter of a corporation can contain certain kinds of provisions, authorize certain types of securities, etc., etc. ”

“ They have the power of defining how and when and in what shape and under what supervision it shall start into existence and begin to act as a trading corporation.” Such a control over the destinies of the company involves correlative obligations towards it, and one of these obligations is that the promoter must not take advantage of the company’s helplessness. ”

“ It is, moreover, conclusively determined that where the constitution of a state reserves the power to repeal, alter, or amend a charter, such provision is applicable to the charter of a consolidated corporation where, as the result of the consolidation, a new corporation takes being, new stock is provided for, new franchises are conferred, and new officers appointed. ”

“ That act created a new corporation, and endowed it with the several immunities, franchises, and privileges which had previously been granted to the two companies, but which they could no longer enjoy.
It necessarily follows that the new company held the rights granted to it under and subject to the law as it was when the new charter was granted. And the code of the State, which came in force on the 1st of January, 1863, before the charter was granted, contained the following provision:--
'SECT. 1051. Persons are either natural or artificial. ”

“ Your Committee thought proper, in the first place, to enquire into the nature and extent of the charter granted by King Charles the Second, to the Company of Adventurers trading into Hudson's Bay; under which charter the present Company claim as right to lands and an exclusive trade to those countries ”

“ To give color to this idea, the names of men from most of the states and territories are included among the incorporators, some fifteen or twenty of whom are named as provisional directors who are to hold their places until the first regular meeting of the company, and the election of officers. Congress fixes the time and place of meeting and the notice to be given to the stockholders, and to carry out the idea that it is to be a company in which all can participate, the charter provides that any person can subscribe stock and become a stockholder who desires to do so. ”

“ No officer of agent of any corporation, joint-stock company, or association, and no member or agent of any firm, or preson directly or indirectly interested in the pecuniary profits or contracts of such corporation, joint-stock company, association, or firm, shall be employed or shall act as an officer or agent of the United States for the transaction of business with such corporation, joint-stock company, association, or firm. ”

“ And no one will contend that, if the creation of a corporation is a suitable agency and means of carrying on the financial operations of the government, the creation of a corporation is equally apposite as an agency and means of carrying out the objects above mentioned. ”

“ It may be established by proof of the course of business between the parties themselves; by the usages and practice which the company may have permitted to grow up in its business; and by the knowledge which the board, charged with the duty of controlling and conducting the transactions and property of the corporation, had, or must be presumed to have had, of the acts and doings of its subordinates in and about the affairs of the corporation. ”

“ It is usual for these larger corporations to choose a very liberal form of charter. "A third form of organization, which is in many particulars quite like the original trust form, is that which has been taken by the Federal Steel Company, by the Distilling Company of America, and others. In this form the central company, instead of purchasing the plants of the different corporations which it is proposed to unite, simply buys a majority of the stock, or possibly the entire stock of each one of the corporations. ”

“ I agree that, by the consolidation effected under the statutes, a new corporation was created, with the powers and restrictions of the constituent corporations. I agree, therefore, that the legislature reserved the power to repeal, alter, or amend the charter. But I deny that under this reserved power it was competent for the legislature to take away the right given to the company to charge such freight and tolls as the directors might deem reasonable, while at the same time continuing the company in existence, subject to all the duties imposed upon it. ”

“ For, it is said, 'there must always be a corporation in existence liable to the public for the duties and liabilities assumed by the grantee for the privileges conferred in the grant of the franchise.' This reasoning, it seems to us, assumes that the franchise to operate the road did not pass by the sale, unless such new domestic corporation is organized. ”

“ The purpose of having officers of subsidiaries who could deal directly with customers does not indicate an agency relationship. On the contrary, the very purpose of the organization adopted was to lead customers to believe that they were dealing with top men in the company actually manufacturing and selling the products they purchased. ”