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It is another characteristic of a corporation, that it is capable in its collective capacity of possessing property, and transmitting it in perpetual succession; .

A third characteristic of a corporation is, that the members of which it is composed, are subject to common burthens;

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Another characteristic of a corporation is, that it may sue and be sued in its collective capacity; . . .

And after stating what he calls the essentials, he continues:

A CORPORATION then, or a body politic, or body incorporate, is a collection of many individuals, united into one body, under a special denomination, having perpetual succession under an artificial form, and vested, by the policy of the law, with the capacity of acting, in several respects, as an individual, particularly of taking and granting property, of contracting obligations, and of suing and being sued, of enjoying privileges and immunities in common, and of exercising a variety of political rights, more or less extensive, according to the design of its institution, or the powers conferred upon it, either at the time of its creation, or at any subsequent period of its existence.1

The views which Mr. Kyd expressed and which were no doubt shared by American lawyers of his day were, it is believed, also the views of the early settlers; and these views were based upon reported cases decided by English Judges during the period of American colonization. Thus, Sir Henry Hobart,

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a most learned, prudent, grave and religious Judge," Attorney General from 1606-13, when the early American charters were granted, and Chief Justice of the Court of Common Pleas from the latter date to his death in 1625, said in the case of Norris v. Staps (Hobart, 211), decided in 1617:

Now I am of opinion, that though power to make laws, is given by spe- By-Laws cial clause in all incorporations, yet it is needless; for I hold it to be included by law, in the very act of incorporating, as is also the power to sue, to purchase, and the like. For, as reason is given to the natural body for the governing of it, so the body corporate must have laws as a politick reason to govern it, but those laws must ever be subject to the general law of the realm as subordinate to it. And therefore though there be no proviso for that purpose, the law supplies it. And if the King in his letters patents of incorporation do make ordinances himself, as here it was (as aforesaid) yet they are also subject to the same rule of law.

In his treatise on the law of corporations Mr. Kyd laid it down that "not only all bye-laws must be reasonable and consistent with the general principles of the law of the land" for which Lord Hobart's authority is sufficient, but also "their reasonableness and legality must be determined by the Judges in the Superior Courts when they are properly before them"; for which statement the learned author invoked the authority of the Master and Company of Framework-Knitters v. Green (1 Lord Raymond, 114), decided in 1695, in which it was said by the Justices that " members of corporations are not bound

1 Stewart Kyd, A Treatise on The Law of Corporations, 1793, Vol. i, pp. 2, 3-4, 7, 10, 13.

Develop

ment of Trading Companies

to perform by-laws unless they are reasonable, and the reasonableness of them is examinable by the Judges."

Finally, for present purposes, another quotation may be made from Kyd, as it is material to the subject in hand. Thus he says:

When the corporate body has a jurisdiction over certain limits, a bye-law made by them for the public good, and whose object is general without being limited to people of any particular description, binds every body coming within the limits of the jurisdiction, whether strangers or members of the corporate body [Brownl. and Goulds, 179]; for every man, says Holt, who comes within the limits of the local jurisdiction of a corporation, must take notice of their bye-laws at his peril [Per Holt, Skin. 35].i

The charter granted territory within which the trading companies should operate. It incorporated certain persons, making of them and their successors a body politic, providing for a governor or treasurer, whom we today would call a president or chairman; for a general court, council, or assistants, whom we today would call a board of directors; and a more numerous body of persons declared to be "free of the company," whom we would today call stockholders in a company engaged in a common venture upon a joint capital, but who would be tradesmen in a trading company, where each member acted individually, not jointly.

The nature of this process, its development and its consequences are thus stated by Messrs. Cawston and Keane in their work on The Early Chartered Companies:

The trading associations that were now springing up and clamouring for the aegis of the most high, mightie and magnificent Empresse Elizabeth' were constituted on two distinct principles. First in the natural and actual order came the so-called Regulated Companies, which were suitable to the first efforts of the nation to acquire a share of the world's trade, but destined eventually to be superseded by the far more powerful and efficient JointStock Companies. For a long time all belonged to the first category, and even so late as the end of the seventeenth century there existed in England only three founded on the joint-stock principle, although these three- the East India, the Royal African, and the Hudson Bay-were perhaps more important than all the rest put together.

In the regulated' companies, at that time chiefly represented by the Russia, the Turkey, and the Eastland, every member or 'freeman' traded solely on his own account, subject only to the 'regulations' of the association. In fact, they may be regarded as growing out of the trade guilds, modified to meet the requirements of their more enlarged sphere of action. In the guilds each member purchased a license to ply his trade in his own district at his personal risk, the guild itself being irresponsible for his liabilities in case of failure. On the other hand, he enjoyed all the advantages of membership in an incorporated trade, which could not be exercised by outsiders, even though residents in the district. In the same way no subject of the Crown could trade in any foreign'district' where a regulated company was established without first acquiring membership by the payment of a fee.2

1 Kyd, A Treatise on the Law of Corporations, Vol. ii, p. 104.

2 Cawston and Keane, Early Chartered Companies, pp. 9-10.

It is thus seen that in the very elements of their constitution the regulated companies were merely a development of the local guilds adapted for trading purposes beyond the seas. The reasons which caused the scales to tip on the side of the joint-stock companies are thus stated by the same learned authors:

Then came the time when, with the growth of wealth and experience, these pioneer traders in foreign lands acquired a deeper consciousness of their latent powers, a greater sense of their higher destinies, and especially that mutual confidence in each other which was needed for the adoption of the joint-stock principle. As in the regulated associations each member retained his personal independence, and mainly acted on his own account-traded on his own bottom,' as was the phrase so in the joint' concerns the individual was largely merged in the corporate body, all working together primarily for the common good rather than for their direct personal advantage.

It was by the general adoption of this principle that the great chartered companies acquired their enormous expansion, and in some memorable instances were by the force of circumstances gradually transformed from mere commercial associations of Adventurers into powerful political organizations.1 On December 31, 1600, Queen Elizabeth granted to George, Earl of Cumberland, and to two hundred fifteen Knights, Aldermen, and Merchants a charter whose terms are thus stated in Anderson's Origin of Commerce:

That, at their own costs and charges,— they might set forth one or more voyages to the East Indians, in the country and parts of Asia and Africa, and to the islands thereabouts,- divers of which countries, islands, &c. have long sithence been discovered by others of our subjects;- to be one body politic and corporate, by the name of, The Governor and Company of Merchants of London trading to the East Indies; - to have succession; to purchase lands (without limitation;) - to have one Governor, and twenty-four persons, to be elected annually, who shall be called Committees, jointly to have the direction of the voyages, the provision of the shipping and merchandize, also the sale of the merchandize, and the management of all other things belonging to the said Company.- Sir Thomas Smith, Alderman of London, was to be the first Governor, and a Deputy-Governor to be elected in a General Court; both the Governors and all the Committees to take the oath of fidelity. As also, every member shall take an oath, before being admitted, to traffic as a freeman of this Company.- The Company . . . may freely and solely trade, by such ways and passages as are already found out, or which shall hereafter be discovered . . . beyond the cape of Bona Speranza to the Streights of Magellan, where any traffic of merchandize may be used to and from every of them, in such manner as shall, from time to time, be limited and agreed on at any public assembly or general court of the Company; any statute, usage, diversity of religion or faith, or any matter, to the contrary notwithstanding; so as it be not to any country already possessed by any Christian potentate in amity with her Majesty, who shall declare the same to be against his or their good liking. Either the Governor or Deputy Governor must always be one in general assemblies, when they may make all reasonable laws, constitutions, &c. agreeable to the laws of England, for

1 Cawston and Keane, Early Chartered Companies, pp. 11-12, 13.

Spread to
America

their good government, by plurality of voices, and may punish, by fines and imprisonment, the offenders against their laws . . . None of the Queen's subjects, but the Company, their servants, or assigns, shall resort to India, without being licensed by the Company, upon pain of forfeiting ships and cargoes, with imprisonment, till the offenders give one thousand pounds bond to the Company, not to trade thither again.- Nevertheless, for the encouragement of merchant-strangers and others to bring in commodities into the realm, the Queen gives power to the Company to grant licenses to trade to the East Indies; and she promises not to grant leave to any others to trade thither during the Company's term, without their consent. The majority of any general meeting of the Company may admit apprentices, servants, factors, &c. to the fellowship or freedom of the said Company. . . .

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Under this charter, the East India Company was formed which, after many vicissitudes, became in 1876, the Empire of India.

In other words the Company consisted of a governor, a deputy governor and a committee or council of twenty-four persons. The governor (the first being named in the charter) and all other officers were to be chosen in a general court or assembly of the whole company; and every member, upon admission, was required under oath " to traffic as a freeman of the Company." The general assembly, consisting of the governor, the council, and the members of the corporation sitting as a body, was presided over by the governor or deputy governor, and the assembly was authorized "to make all reasonable laws, constitutions, etc., agreeable to the laws of England for their good Government by a plurality of voices"; and also "to punish by fines and imprisonment the offenders against these laws."

It is to be observed, in the first place, that this charter for the Asiatic trade was granted before an English colony was permanently planted on the mainland of America; and, in the second place, that the company was a body politic and corporate, possessed of legislative, executive and judicial functions, although they are not stated separately and in detail. Upon the death of Queen Elizabeth in 1603, that great monarch was succeeded by James I of England and VI of Scotland, who granted his first charter of Virginia in 1606, six years after that of his predecessor to the East India Company, to the vast tract of land named in honor of the Virgin Queen, and "this charter, with its subsequent modifications," to quote Mr. Morey's illuminating paper on The Genesis of a Written Constitution, "may be said to form the beginning of the constitutional history of the United States." 2

This charter, drawn in first instance by Sir John Popham, Chief Justice of the King's Bench, and in final form by Sir Edward Coke, then Attorney General, and Sir James Doderidge, Solicitor General, divided, as is well known, the North American coast into two parts, assigning the southern por

1 Adam Anderson, Historical and Chronological Deduction of the Origin of Commerce, Coombe ed., 1790, Vol. ii, pp. 261-2.

2 Annals of the American Academy of Political and Social Science, 1891, Vol. i, p. 537.

tion, between the 34th and 41st degrees of latitude to the London Company, and the northern portion, between the 38th and 45th degrees, to the Plymouth Company. Each company was to have a council of thirteen members residing therein, to be appointed and removed by the Crown. For these two companies there was to be appointed in England a council of Virginia, consisting of thirteen persons, to be appointed by the Crown, and to pass upon and to control the actions of the colonies subject to the instructions of the Crown.

The colonists, whether born in England or in the plantations, were specifically endowed with "all Liberties, Franchises and Immunities within any of our other Dominions, to all Intents and Purposes, as if they had been abiding and born, within this our realm of England, or any other of our said Dominions." 1

The two colonies overlapped. It was later provided in the charter that there should be a space of 100 miles between the colonies planted in accordance with the charter. The north and the south were thus to be separated geographically, as they have been historically. The southern colonies have, as a matter of fact, been modeled upon the charter and the institutions of Virginia. The northern colonies have been modeled upon the charter of New England and its institutions. In their broad lines the development of the two sections has been similar, although not identical.

It is also to be noted that this first charter of Virginia in 1606 is less liberal than that of the East India Company,- because James I was more of a believer in divine right and less of a statesman than Elizabeth,— in that it does not contain a grant of legislative power, and subjected the council in the colony and the council in England to the royal pleasure, as expressed in the King's instructions.

Charter

The settlements under this charter did not thrive. It was an experiment A Second which, within less than three years, had proved defective. Larger powers and more specific privileges were requisite. The result therefore was a second charter, probably drawn in first instance by Sir Edward Sandys, and in fiñal form by Sir Henry Hobart, Attorney, and Sir Francis Bacon, Solicitor General. Under this second charter the company or association is created a body politic, to be known, called and incorporated by the name of "The Treasurer and Company of Adventurers and Planters of the City of London, for the first Colony in Virginia." The council and treasurer, or any of them, should in the future be nominated and chosen "out of the Company of the said Adventurers, by the Voice of the greater part of the said Company and Adventurers, in their Assembly for that Purpose." The council, under the presidency of its treasurer or his deputy, was to appoint all "Governors, Officers, and Ministers . . . fit and needful to be used for the Government of

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1 Thorpe, Charters and Constitutions, Vol. 7, p. 3788; Poore, pp. 1891-2.

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