VARIOUS KINDS.

2. Primarily all corporations are divided into two great classes, public and private; public being those created for the public use, and private being created for private objects.

Another class, known as quasi public corporations, combines the elements of both public and private. Though organized for private profit, they are compelled by law or contract to render public service.

Blackstone divided corporations 10 into aggregate and sole, according to the number composing the body; into ecclesiastical and lay, according to the character of the persons composing them; and into civil and eleemosynary, according to the uses they were intended to subserve; and this classification is still generally recognized and utilized in England. But it is not profitable for us to discuss whether the division is now exactly correct in theory, for certainly it is of little present practical use in America.

Public and Private Corporations Distinguished.

The distinction between public and private corporations is not only of theoretical interest, but of great practical importance. Upon this pivot is often made to turn the liability of the corporation for the torts and contracts of its agents, and the powers and privileges of the body. Nor is the subject free from difficulty, either upon reason or authority. It is easy to understand that counties, cities, and towns, and other public bodies upon which the legislature has conferred definite powers, to be exercised for public purposes only, are public corporations; but whether banks, colleges, schools, and hospitals, designed and operated for the public welfare, are public or private, is matter of disagreement in our American courts; and there are decisions which declare a municipal corporation to have a private char

10 1 Bl. Comm. 469-471.

11

acter, and others holding railway companies and grain elevators to be public corporations quoad hoc.12

It is declared by the Supreme Court of Georgia that “a bank organized by the government for public purposes is a public corporation if the whole of the stock and all interest in it reside in the government." 18 But the three neighboring states of North Carolina, South Carolina, and Alabama, by their Supreme Courts, declared the contrary doctrine; 14 and to this view the United States Supreme Court inclines in at least two cases. 15 In the matter of schools and colleges the law was declared by that tribunal in the celebrated Dartmouth College Case, in 1819, to be that a corporation is not necessarily public because it has been established for the purpose of general education or charity. If the foundation be private, though under government charter, the corporation is private, however extensive the uses may be to which it is devoted, either by the bounty of the founder, or the nature and objects of the institution; and so, if the making of profit is the purpose of a corporation, it is

11 BAILEY V. NEW YORK, 3 Hill (N. Y.) 531, 38 Am. Dec. 669; Macauley v. New York, 67 N. Y. 602; City of Memphis v. Kimbrough, 12 Heisk. (Tenn.) 133; OLIVER v. WORCESTER, 102 Mass. 489, 3 Am. Rep. 485; Lloyd v. New York, 5 N. Y. 369, 55 Am. Dec. 347; PEOPLE v. DETROIT, 28 Mich. 228, 15 Am. Rep. 202.

12 MUNN v. ILLINOIS, 94 U. S. 113-126, 24 L. Ed. 77; CHICAGO, B. & Q. R. CO. v. IOWA, 94 U. S. 155, 24 L. Ed. 94; Peik v. Railroad Co., 94 U. S. 164, 24 L. Ed. 97. These are commonly known as the "Granger Cases," in which was maintained and enlarged the old legal doctrine enunciated by Lord Hale, that, "when private property is affected with a public interest, it ceases to be juris privati only." 1 Harg. Law Tracts, 78. It has also been applied to water companies, Spring Valley Waterworks v. Schottler, 110 U. S. 347, 4 Sup. Ct. 48, 28 L. Ed. 173; and to gas companies, State v. Gas Co., 37 Ohio St. 45.

13 Cleaveland v. Stewart, 3 Ga. 283.

14 State Bank v. Clark, 8 N. C. 36; Bank of State v. Gibbs, 3 McCord (S. C.) 377; Bank of State v. Gibson's Adm'rs, 6 Ala. 814, 816.

15 Bank of U. S. v. Bank, 9 Wheat. (U. S.) 907, 6 L. Ed. 244; Bank of Kentucky v. Wister, 2 Pet. (U. S.) 318, 7 L. Ed. 437.

a private corporation, though it may be engaged in the service of the public.16 In the Planters' Bank case, above cited, the State of Georgia was both the proprietor and a corporator of the bank, but not the exclusive owner. In the Kentucky Bank Case, the state was not a corporator, but was the exclusive owner of the stock of the bank. In both cases the bank was held by the Supreme Court of the United States to be a private corporation. The conflict in these decisions on the subject of banks doubtless results from the application to stock corporations of the remarks of the Justices of the Supreme Court of the United States, in the Dartmouth College Case, upon the qualities and attributes of public and private corporations, which were intended to be applied only to nonstock corporations, such as was Dartmouth College, where private profit was not the object of the corporation.

The decided preponderance of authority is that, where profitmaking is the object of the corporation, it is private; 17 if it perform public functions, engage in public service, or exercise any sovereign power, it becomes a quasi public corporation.18

16 TEN EYCK v. CANAL CO., 18 N. J. Law, 200, 37 Am. Dec. 233; MINERS' DITCH CO. v. ZELLERBACH, 37 Cal. 543, 99 Am. Dec. 300; People v. Forrest, 97 N. Y. 97; Commonwealth v. Gaslight Co., 12 Allen (Mass.) 75.

17 Clark, Priv. Corp. 29; 1 Thomp. Priv. Corp. §§ 24, 27. Corporations are private if created for private gain, even though supposed by the legislature to promote the public interest. 1 Dill. Mun. Corp. § 53.

18 Tinsman v. Railroad Co., 26 N. J. Law, 148, 69 Am. Dec. 565; Directors for Leveeing Wabash River v. Houston, 71 Ill. 318; TEN EYCK V. CANAL CO., 18 N. J. Law, 200, 37 Am. Dec. 233; Whiting v. Railroad Co., 25 Wis. 167, 3 Am. Rep. 30; Logwood v. Bank, Minor (Ala.) 23. Every stock corporation is a private corporation, though it be quasi public because of its functions, as a railroad or a canal company. So, also, are nonstock corporations erected upon a private foundation, though their functions are public. DARTMOUTH COLLEGE v. WOODWARD, 4 Wheat. (U. S.) 518, 4 L. Ed. 629.

Quasi Corporations.

In America a certain class of corporations are described as quasi corporations, by which is intended to express that the bodies so described are loosely organized, and possess only a part of the usual corporate powers and attributes. Quasi corporations represent the lower order of corporate life, and vary in their functions according to the purposes which they are intended to serve. Such are counties, townships, school districts, and the like.

For a full statement and explanation of the various kinds of private corporations, the reader is referred to Clark on Private Corporations, §§ 10, 11.

NATURE OF CORPORATIONS.

3. A corporation aggregate, whether public or private, consists of

(a) A collection of natural persons.

(b) A legal body including those persons, and yet separate and distinct from them, endowed by law with certain rights, powers, and franchises.

To avoid the confusion often arising in the minds of persons inexperienced in the practical operation of a corporation, it is of first importance that the legal body, existing only in contemplation of law, shall be kept separate and distinct from the persons of the members composing it.19 The corporation cannot exist without members. Human beings, with minds and souls, to organize, establish, control, direct, and use the powers which the state confers upon the corporate body, are essential to its existence. Until the persons authorized have breathed the breath of life into the body of the charter, there is no corporation.20 If the members all die or remove from the territory, leaving no successors to exercise these powers or maintain these

19 Clark, Priv. Corp. §§ 5-9.

20 State v. Dawson, 16 Ind. 40; Willis v. Chapman, 68 Vt. 459, 35 Atl. 459; Yeaton v. Bank, 21 Grat. (Va.) 593; Ellis v. Marshall, 2 Mass. 269, 3 Am. Dec. 49. There must be an acceptance of the

rights, the corporation is at an end. The charter is a separate, distinct, and necessary part of the organism, but it is not the corporation. The persons authorized by law to assume its rights, powers, and franchises are equally essential to its existence. But until the two have been united by the action of the persons under and within the powers of the charter, the corporation is only a potentiality. After the union of the two, and as long as the charter and members both live, the corporation exists.22 The members exercise the corporate powers and hold the corporate property and perform the corporate functions in the corporate name, and the corporation is said to be a “going concern." But with either the death of all the members or the loss of the charter the essential union of members and body is dissolved, and the legal fiction is at an end; the corporation no longer exists.28

Termination-Members.

The charter may expire of its own limitation, or it may be terminated by an act of the law, legislative or judicial; 24 the individuals composing the corporation may terminate their relation to it by death, surrender, or severance of membership, and, the life being out of the legal body, nothing but the dry shell remains. 25 And yet, essential as these two parts are to the

charter before corporate life can begin. Smith v. Mining Co., 64 Md. 85, 20 Atl. 1032, 54 Am. Rep. 760.

211 Bl. Comm. 485; Chesapeake & O. Canal Co. v. Railroad Co., 4 Gill & J. (Md.) 1; Arthur v. Bank, 9 Smedes & M. (Miss.) 394, 48 Am. Dec. 719; 2 Kent, Comm. 308, 309; Lehigh Bridge Co. v. Navigation Co., 4 Rawle (Pa.) 9, 26 Am. Dec. 111; Philips v. Wickham, 1 Paige (N. Y.) 590.

22 Smith v. Mining Co., 64 Md. 85, 20 Atl. 1032, 54 Am. Rep. 760; People v. Watertown, 1 Hill (N. Y.) 620; PARKER v. HOTEL CO., 96 Tenn. 252, 34 S. W. 209, 31 L. R. A. 706; Clark Priv. Corp. §§ 5, 6; Humphreys v. McKissock, 140 U. S. 304, 11 Sup. Ct. 779, 35 L. Ed. 473.

23 Bacon v. Robertson, 18 How. (U. S.) 480, 15 L. Ed. 499; Mason v. Mining Co., 66 Fed. 396, 13 C. C. A. 532.

24 1 Dill. Mun. Corp. §§ 165, 169.

25 People v. Wren, 4 Scam. (Ill.) 275; Smith v. Smith, 3 Desaus. (S. C.) 557.