5. Corporations, too, are divided into eleemosynary, or such as disburse only charity and subsist for that purpose only, — such as schools, colleges, and hospitals, and those which are of a business or pecuniary character, called civil or political bodies, intrusted with certain rights or duties, and required to perform certain functions, more or less connected with the polity of the state or nation, such as towns, counties, school districts, or railways, banks, and manufacturing, or merely business corporations.

6. Corporations are either public or private. Public corporations embrace all the municipal subdivisions of the state; such as counties, towns, and cities, and school districts, and other similar organizations. Private corporations include all aggregate, jointstock, incorporated companies, whose capital stock is owned by private persons. But such joint-stock corporations as possess no shares not owned by the state or nation are also regarded as public corporations, the same as the municipalities of the state. The law in regard to railways was thus stated in the former edition of this work.

7. Railways in this country, although common carriers of freight and passengers, and in some sense regarded as public works, are ordinarily private corporations.5 By private corporations nothing more is implied, than that the stock is owned by private persons.

8. If the stock is owned exclusively by the state, the corporation is a public one. And such public corporations are under the control of the legislature, the same as municipal corporations, and ordinarily acquire no such vested rights of property as are beyond the control of legislative authority. The American cases going

*

There is no necessity for these public functions being confined to aggregate corporations, as is the universal practice in this country. The same franchises and immunities might be conferred upon any private person, at the election of the legislature, as was done by the legislature of New York upon Fulton and Livingston, in regard to steamboat navigation, which grant was held valid but for the United States Constitution. And whoever was the grantee, the same rights, duties, and liabilities would result from the grant, whether to a natural person or to a corporation.

5 Ante, § 1, pl. 6.

Dartmouth College v. Woodward, 4 Wheaton, 518, 568; 2 Kent, Comm. 7th ed. (275) 305 and notes. If the question were entirely new, it might be regarded as admitting of some doubt, perhaps, how far the American states could with propriety undertake such extensive public works, whose benefit enures almost exclusively to private emolument and advantage. But the practice is now pretty firmly established. And there seems to be no proper tribunal to de

to confirm this proposition, and to show that railways are private corporations, are numerous.7

termine such questions between the states and the citizens. Public opinion is the only practical arbiter in such cases. And that is so much under the control of interested parties, ordinarily, that its admonitions are not likely to be much dreaded by those who exercise the state patronage.

Donnaher v. State of Mississippi, 8 Smedes & M. 649, 661. By the court, in Trustees of the Presbyt. Society of Waterloo v. Auburn & Rochester Railw., 3 Hill, 570; Dartmouth Coll. v. Woodward, 1 N. H. 111, 116; Eustis v. Parker, 1 N. H. 273; Dearborn v. Boston, C. & Montreal Railw: Co., 4 Foster, 179, 190; Ohio, &c. Railroad Co. v. Ridge, 5 Blackf. 78; Bonaparte v. Camden & Amboy R., 1 Baldwin's C. C. 205, 222; Rundle v. Delaware & Raritan Canal Co., 1 Wallace, Jr. 275; R. & G. R. v. Davis, 2 Dev. & Batt. 451; Thorpe v. R. & B. R. 27 Vt. 140. This last case discusses at some length the right of legislative control over private corporations, whose functions are essentially public, like those of banks and railways. The importance of such control, within reasonable limits and under proper restrictions, both to the public interest and that of these corporations, will be obvious when we consider the magnitude of the interests committed to such corporations, and the vast amount of capital invested in such enterprises. We make no account of the banking capital of the country, most of which is occupied in business more or less connected with railway traffic. But the capital and business of railways is almost incalculable.

The length of railway in the United Kingdom of Great Britain and Ireland in 1857, was 8,635 miles, and the cost, in round numbers, £311,000,000 sterling, being more than one and one-half billion of dollars. The amount invested in this country was about half as much in 1851, and the number of miles in operation nearly twice as great, and almost as much more then in progress, a large portion of which is now complete (1857). When it is considered that these private corporations, possessing such vast capital, have engrossed almost the entire travel and traffic of the country, and that their powers and functions come in daily contact with the material interests of almost every citizen of this great empire, the importance of their being subjected to a wise and just supervision can scarcely be over-estimated. This can only be permanently secured by wise and prudent legislation. And to be of much security to public interests, it must be by general acts, as it is in many of the states, and in England, since 1845. It is worthy of remark, we think, that while in the United States a large proportion of the capital invested in railways has proved hitherto wholly unproductive, and much of it has already proved a hopeless loss, and a very small proportion of the whole can be said to have been at all remunerative, in Great Britain the whole amount of their loan and preference stock, secured virtually by way of mortgage, has produced, upon an average, more than five per cent, and the ordinary stock has produced an average dividend of more than three per cent; and in France railways have proved still more productive, making average dividends throughout the empire, for the year 1857, of nine per cent upon the whole investment, some as high as sixteen per cent, and one, the Lyons and Marseilles line, twentythree per cent. It is difficult to account for the difference in results, without

*9. It does not alter the character of a private corporation, that the state or the United States own a portion of the stock.8 suspecting something wrong somewhere. Since the former edition of this work, considerable advance has been made in railway enterprise throughout the world. Railways have become so nearly a military necessity, in order to enable any nation of considerable power and prominence in relative national position to maintain its due weight and importance, that very extensive, and in some instances vast, works of that kind have been accomplished, mainly upon that ground. The experience of the national government during the late civil war has removed all question of the right of that government to charter and construct, or aid in the construction of, extensive and independent lines throughout the country for military and mail purposes alone. It is stated that the present length of railway line in the United States is about 32,000 miles, at an average cost of $40,000 per mile, equal to $1,280,000,000 in all, and there is every reason to believe the Atlantic and Pacific coasts will speedily be united by railway. The advance in Great Britain and Ireland has been very great since the first edition of this work, but probably not in the same proportion as here.

The number of miles of railway now in operation in France is about 8,000, at a cost of nearly $1,300,000,000, and producing, according to the late returns of the Minister of Public Works, a net income or dividend of nearly nine per cent. This is the same rate of income produced by the French railways in 1858, as stated above. The average income from railway investment in Great Britain and Ireland is probably not above half that sum; and, in the United States, it is perhaps even below that. But our country is so immensely extensive, and easy and rapid intercommunication between all portions of the empire so much a state necessity, that it might naturally be expected that for a long time considerable portions of the line should remain unproductive in a pecuniary point of light. There have been great changes in the policy of railway construction and management since this work first appeared, and mainly in the right direction. Reckless and destructive railway management is now, we trust, becoming the rare exception in this country, although there is still, no doubt, great room for improvement. There is probably no other country in the world where it is so difficult to bring the employees and others connected in various relations with railway management, to understand and appreciate the indispensable importance of bringing every thing to the unbending control of a single will. This is not only indispensable for success, but equally for security.

From authentic sources it now (1869) appears that the extent of railway in operation in Europe is not less than 50,000 miles. Of this, Great Britain has 14,000 miles, at a cost of £500,000,000 sterling; France has nearly 10,000 miles; Germany, including Austria, 13,000 miles; Spain, 3,000 miles; Sweden, 1,000 miles; Belgium, 1,000 miles; Switzerland and Holland, each, less than 1,000 miles; and Italy about 3,000 miles; and Russia nearly 3,000 miles. There are also more than 3,000

8 Bank of the United States v. The Planters' Bank of Georgia, 9 Wheaton, 904; Miners' Bank v. United States, 1 Greene (Iowa), 553; Turnpike Co. v. Wallace, 8 Watts, 316. Bardstown & Lou. Railway v. Metcalfe, 4 Met. (Ky.) 199.

* But a turnpike company or other corporation, managed exclusively by state officers, and at the expense and for the benefit of the state at large, is a public corporation.9

SECTION II.

How Corporations are created.

1. Corporations created by grant of the sovereignty. This may be proved, by implication or by presumption.

2. The sovereignty may establish corporations by general act, or delegation or procuration.

3. Different forms of defining a corporation.

4. The corporate action of corporations restricted to state creating them.

5. It may act by its directors and agents in other states.

n. 10. But cannot properly transfer its entire business to another state.

6. A college located at one place cannot establish a branch at another.

§ 17 a. 1. Strictly speaking, corporations can only be created by the authority of the sovereignty, either state or national.1 Hence, the ordinary mode of creating joint stock business corporations is by charter, by way of legislative act of the several states. But as, in some cases, the record of such charters may not have been preserved, and in other cases, the grant of corporate powers miles of railway in British India; about that extent in the Canadas; and there is more than half the extent of railway line in the United States that there is in all the rest of the world; and when the three lines of Pacific railway shall be completed, the extent will fall little short of equalling that of all the rest of the world. But a very large proportion of it is constructed with only a single track, and much of it is very imperfectly built, and has not proved remunerative as a general rule. But it is the controlling interest of the country, far more important than any other pecuniary or political interest, both in peace and in war, and without which it is impossible to calculate what might have been the result of the late civil war.

9

Sayre v. North W. Turnpike Co., 10 Leigh, 454. But see Toledo Bank v. Bond, 1 Ohio N. S. 622, 657. Opinion of Storrs, J. in Bradley v. New Y. & New H. Railw. 21 Conn. 294, 304, 305.

1 As the national sovereignty is limited to the subjects and powers enumerated in the Constitution, and such implied powers as are requisite to the successful exercise of those expressly granted; and as no general power to create corporations is expressly given, the construction of the court of last resort upon these questions, established at an early day, is, that Congress can charter only such corporations as are fairly to be esteemed necessary to the successful accomplishment of its delegated powers and functions. McCullough v. Maryland, 4 Wheaton, 316; Osborne v. Bank of United States, 9 Wheaton, 733.

may have been by way of implication rather than express legislative act, the courts have allowed corporations to prove their corporate character and capacity, by evidence that such character and capacity is reasonably, or necessarily, implied from other legislative action; or else, that its existence is fairly to be presumed from the long continuance of its unquestioned exercise.3

#

2. The legislature may create corporations by general acts of incorporation, as they are called, whereby a given number of persons, by forming an association in a prescribed form, shall become possessed of corporate powers, for certain defined objects and purposes. This is common, in many of the states, as to ecclesiastical and charitable, or benevolent associations, and not unfrequently as to banking, railway, and other business corporations. although at one time questioned, it seems now conceded, that the sovereign authority may grant to any one the power to erect corporations to an indefinite extent, upon the maxim: Qui facit per alium facit per se. This power is given to the Chancellor of the University of Oxford, and exists in many other forms.

And

3. A corporation is defined by Lord Holt, Ch. J.,5 as an ens civile, a corpus politicum, a persona politica, a collegium, an universitas, a jus habendi et agendi. A corporation is well defined, as to the general sense of the term, by Chief Justice Marshall, as “an artificial being, invisible, intangible, and existing only in contemplation of law." It is, in fact, the mere creature or creation of the law. Endowed by its charter with the capacity of performing certain functions, and having no rights, and possessing no powers, except those conferred by the sovereignty by which it was created.

4. It is upon this ground, that it has been declared, upon the most unquestionable basis, both of principle and authority, that a corporation can have no legal existence out of the boundaries of the sovereignty by which it is created."7"It exists only in con

66

2 Conservators of the Tone v. Ash, 10 B. & Cr. 349.

3 Dillingham v. Snow, 5 Mass. 547; 2 Kent, Comm. 277; 1 Bl. Comm. 473. 4 1 Bl. Comm, 474.

5 Anonymous, 3 Salk. 102.

Dart. College v. Woodward, 4 Wheat. 518.

The same learned judge, in

another place, Providence Bank v. Billings, 4 Pet. U. S. 514, thus comments upon the purposes of acts of incorporation : "The great object of an incorporation is, to bestow the character and properties of individuality on a collective and changing body of men."

7 Taney, Ch. J. in Bank of Augusta v. Earle, 13 Pet. U. S. 519, 588.