Proprietorship

“ The student should realize that usually the owner or owners of a business enterprise have both assets and liabilities other than those employed in the business. These personal properties and obligations of the owners are not to be taken into account when showing the proprietorship of a business unit or enterprise. They are to be considered only in showing the total proprietorship of any individual owner, when of course all of his properties, both inside and outside of the business, must be listed. ”

“ The nature of a corporation is such, however, that many acts and privileges which are per se rights of the stockholders must in their exercise be delegated to others. Thus, while the right of ownership and control of the profits of a corporation is inherent in its proprietorship, the control is indirect—through the medium of a board of directors subject to periodic review and election by the owners. ”

“ Every change in an asset which is not reflected among the other assets or the liabilities relates to proprietorship; or, as stated from the profit and loss point of view, every change in proprietorship, except it be merely a transfer between proprietorship items, is reflected as a change in assets or liabilities. The original contribution of capital is reflected among the assets. ”

“ Temporary proprietorship accounts make temporary and immediate record of the results of the agencies or forces at work within the business to produce a profit. They set forth the efforts to increase the net worth of the business. They record the costs of the effort and its yield in earnings, the record being made under appropriate titles to show the kind of cost and the source of the yield. Vested proprietorship accounts record the ultimate or summarized results of business transactions. They therefore record the original investment and its subsequent net increases and decreases. ”

“ Furthermore, stocks which have never been issued have no owners and so can command no proprietorship in the enterprise. The most that can be said about them is that they are contingent assets, showing that certain legal formalities have been met which authorize their issue if so desired. The remaining necessary procedure, viz., that the stock be placed on the market and sold, is, however, the condition which must be met to create a real asset and to create proprietorship. ”

“ The Single Proprietorship.—The simplest form of business enterprise is that conducted by a single proprietor. This form is well adapted to businesses where the capital necessary for efficient production is small, where the processes are simple and capable of [Pg 17] being handled by the average individual, and where the risks are slight. Very few legal obstacles are placed in the way of the individual desiring to go into business for himself, nor is a great deal required of him. ”

“ Relation between the Corporation and Its Owners.—It should be noted that the owners of a corporation are on a somewhat different basis in their relationships and activities to the business than are the owners of a partnership or single proprietorship business. The legal theory that the corporation is an entity, a person, separate and apart from its owners, necessitates a change in the status of accounts with owners as compared with similar accounts in the other types of organization. ”

“ The kinds and quantities of goods and opportunities which any man can appropriate without admitting other men to some sort of partnership are limited indeed, and the point upon which I am insisting is that so soon as this partnership is entered into, whether for consumption or for production, absolute ownership ends, and a new relation with new ethical limitations begins, viz., the relation which I designate as proprietorship. ”

“ Private property shall not be appropriated without the consent of the owner, except for the sake of public use, and with previous indemnification. The law shall determine the authority which may make the appropriation and the conditions under which it may be carried out. No corporation, civil or ecclesiastical, whatever may be its character, denomination, or object, shall have legal capacity to acquire in proprietorship or administer for itself real estate, with the single exception of edifices destined immediately and directly to the service and object of the institution. ”

“ Its creation (except where the corporation is sole) is the investing of two or more persons with the capacity to act as a single individual, with a common name, and the privilege of succession in its members without dissolution, and with a limited individual liability. The right and privilege, or the franchise, as it may be termed, of being a corporation, is of great value to its members, and is considered as property separate and distinct from the property which the corporation itself may acquire. ”

“ When a business corporation, instituted for the purposes of gain or private interest, is dissolved, the modern doctrine is that its property, after payment of its debts, equitably belongs to its stockholders. ”

“ When, therefore, all of the property of the corporation is assessed,-its franchise and all of its other property of every character,-then all of the stock of the corporation is assessed, and the mandate of the Constitution is complied with. This property is held by the corporation in trust for the stockholders, who are the beneficial owners of it in certain proportions called shares, and which are usually evidenced by certificates of stock. The share of each stockholder is undoubtedly property, but it is an interest in the very property held by the corporation. ”

“ The language is general, so general that it includes everything, not excepting good will, dividend-earning power, and the like, for they are 'capable of private ownership.' They belong to the corporation. There is no good will in a share of stock over and above the good will which belongs to the corporation, and, if the corporation sells and conveys all that it possesses 'capable of private ownership,' it sells and conveys its good will, and there is nothing left of good will or anything else belonging to the stockholders. ”

“ So true is this, that the proprietor—neither wishing nor knowing how to produce, and perceiving that as fast as he uses his property he destroys it for ever—has taken the precaution to make some one produce in his place. That is what political economy, speaking in the name of eternal justice, calls PRODUCING BY HIS CAPITAL,—PRODUCING BY HIS TOOLS. And that is what ought to be called PRODUCING BY A SLAVE—PRODUCING AS A THIEF AND AS A TYRANT. He, the proprietor, produce!... ”

“ A party may deal with a corporation, in respect to its property, in the same manner as with an individual owner, and with no greater danger of being held to have received into his possession property burdened with a trust or lien. ”

“ Ownership, in this generic sense, extends to all classes of rights, whether proprietary or personal, in rem or in personam, in re propria or in re aliena. I may own a debt, or a mortgage, or a share in a company, or money in the public funds, or a copyright, or a lease, or a right of way, or the fee simple of land. Every right is owned; and nothing can be owned except a right. Every man is the owner of the rights which are his. ”

“ They shall have power to sell, lease, or mortgage all their property and lands acquired by said corporation; to issue the bonds of the same, signed by the proper officers thereof, for the purpose of raising money to carry on the business of the corporation, and to secure the same by mortgage upon real estate, buildings, machinery, and other property of the company. They shall also appoint a president and vice-president from their own number, a secretary and treasurer, who may or may not be directors, and such other officers as may be deemed necessary. ”

“ Much of the property of the country is in the hands of incorporated or joint-stock companies; the business in which they are engaged being of a magnitude requiring an outlay of capital that can be met only by associated wealth. ”

“ The capital stock of each association shall be divided into shares of one hundred dollars each, and be deemed personal property, and transferable on the books of the association in such manner as may be prescribed in the by-laws or articles of association. Every person becoming a shareholder by such transfer shall, in proportion to his shares, succeed to all the rights and liabilities of the prior holder of such shares; and no change shall be made in the articles of association by which the rights, remedies, or security of the existing creditors of the association shall be impaired. ”

“ We can discover no sound reason why a corporation existing in England may not as well hold real property in the United States, as ordinary trustees for charitable, or other purposes, or as natural persons for their own use. ”

“ In the case of a sole corporation, as a parson of a church, when he dies or resigns, though there is no actual owner of the land till a successor be appointed, yet there is a legal, potential ownership, subsisting in contemplation of law ”

“ It is well settled that a corporation, without special authority, may dispose of land, goods, and chattels, or of any interest in the same, as it deems expedient, and in the course of their legitimate business may make a bond, mortgage, note, or draft ”

“ It is enough that the corporation, in complying with the lawful command of the state to part with ownership, is afforded a fair opportunity to realize the value of the land, and that the sale, when required, is to be under conditions reasonably calculated to realize its value at the time of sale. ”

“ Under one type it is provided that, when property is taken by the corporation in payment of its shares, the incorporators alone are the judges of the values of such property and that the state’s only duty is to prevent fraud. ”

“ The property of a railroad company for purposes of taxation consists of its realty, its local personalty, its rolling stock, its choses in action, and its franchises. The franchise is a privilege conferred by the charter of incorporation, namely the right to exercise all the powers granted in the mode prescribed for the purpose of profit. It is a unit not confined to any one county in which it may be exercised. ”

“ Such owner, lessee or agent, whether a corporation, firm or individual, shall be governed in proceedings to appropriate such land by the laws relating to the appropriation of private property by corporation; but no land shall be so appropriated unless the court is satisfied that suitable land cannot be obtained upon reasonable terms. ”

“ There is but a single exception to this rule,—that of the proprietor, who, producing by his right of increase, is not associated with any one, and consequently is not obliged to share his product with any one ”

“ The proprietor is in a sort of partnership with the cultivator, finding the necessary capital, while the latter finds labour, and there is commonly an agent employed by the large proprietors, to see that the countryman performs his part of the bargain, without secreting any of the profits. ”

“ Those individuals, using the name of a corporation for the benefit of themselves and their clients, citizens of Georgia, seem to be the real parties in interest in every transaction carried on in the name of the corporation. ”

“ Personal property, by the express wording of the statute, is made to include the capital stock of a corporation; and the provision above referred to requires all corporations doing business in this state, except banking and others whose taxation is specifically provided for, to list all their personal property, including in the return thereof all such real estate as is necessary to the daily operation of their business, together with their moneys and credits of every description within the state. ”

“ With such a corporation, it is not competent for the legislature to interfere. It is a franchise, or incorporeal hereditament, founded upon private property, devoted by its patron to a private charity, of a peculiar kind, the offspring of his own will and pleasure, to be managed and visited by persons of his own appointment, according to such laws and regulations as he, or the persons so selected, may ordain. ”

“ Suppose you and a number of other men of your time, all having separate claims in a mining region, formed a corporation to carry on as one mine your consolidated properties, would you have any less private property than you had when you owned your claims separately? ”

“ Reserved and accumulated earnings, so long as they are held and invested by the corporation, being part of its corporate property, it follows that the interest therein, represented by each share, is capital, and not income, of that share, as between the tenant for life and the remainder-man, legal or equitable, thereof. ”

“ Corporations may, therefore, be very well said to be for public use, of which the property and privileges are yet private. Indeed, there may be supposed to be an ultimate reference to the public good, in granting all charters of incorporation ”

“ Article 575 provided that every private corporation, as such, has power 'to enter into any obligation or contract essential to the transaction of its authorized business,' and article 589, that 'no corporation created under the provisions of this title shall employ its stock, means, assets, or other property, directly or indirectly, for any other purpose whatever than to accomplish the legitimate objects of its creation.' Sayles' Civil St. ”