be or exist as a corporation is declared to be of itself a fran 5 chise belonging to members of the corporation. rights and privileges as are conferred upon corporate bodies by legislative grant." Fietsam v. Hay, 122 Ill. 293, 294, 13 N. E. 501, 11 West. Rep. 582, 3 Am. St. Rep. 492, per Mulkey, J. (a case of right to sell or transfer). 5 People v. O'Hair, 128 Ill. 20, 21 N. E. 211, per Schofield, J. (a case of quo warranto and whether franchise involved on appeal); Louisville Tobacco Warehouse Co. v. Commonwealth, 20 Ky. L. Rep. 1047, 1050, 48 S. W. 420, quoting from People v. Utica Ins. Co., 15 Johns. (N. Y.) 357, 387; Pierce v. Emery, 32 N. H. 484, 507; State v. Austin & Northwestern Rd. Co., 94 Tex. 530, 532, 62 S. W. 1050, per Gaines, C. J. (a case of railway taxation.) See also the following cases: United States: Central Pacific Rd. Co. v. California, 162 U. S. 91, 125, 40 L. ed. 903, 16 Sup. Ct. 766, where it is said that "corporate capacity is a franchise" (a case of taxation); Mercantile Bank v. Tennessee, 161 U. S. 171, 40 L. ed. 656, 16 Sup. Ct. 466, per Peckham, J.; Memphis & Little Rock Ry. Co. v. Railroad Commissioners, 112 U. S. 609, 610, 5 Sup. Ct. 299, 28 L. ed. 837. California: Spring Valley Water Works v. Schottler, 62 Cal. 69 (under state constitution). Colorado: Iron Silver Mining Co. v. Cowie, 31 Colo. 450, 72 Pac. 1067 (upon the question of mandamus and the jurisdiction of the Supreme Court to review judgment, a franchise was held to be involved, where the legal existence of the corporation was treated by both parties as the sole issue). Memphis & Little Rock Rd. Co. v. Commissioners, 112 U. S. 609, 619, But it is Illinois: People ex rel. v. Cooper 139 Ill. 461, 29 N. E. 872 (franchise involved and appeal lies where legal existence of drainage district and of commissioner's powers the question in issue); Porter v. Rockford, Rock Island & St. Louis Rd. Co., 76 Ill. 561, 573, per Scholfield, J. Iowa: Cedar Rapids Water Co. v. Cedar Rapids, 118 Iowa, 234, 239, 91 N. W. 1081, per Weaver, J. Kentucky: Board of Councilmen of City of Frankfort v. Stone, 108 Ky. 400, 22 Ky. L. Rep. 25, 56 S. W. 679 (a case of taxation and apportionment of tax. In this case a distinction was made between the franchise itself and the means of exercising the franchise, Id., 407). Michigan: See Grand Rapids Bridge Co. v. Prange, 35 Mich. 400, 405, 24 Am. Rep. 585. Minnesota: State v. Minnesota Thresher Mfg. Co., 40 Minn. 213, 225, 226, 41 N. W. 1020, 3 L. R. A. 510, per Mitchell, J. New York: People ex rel. Metropolitan Street Ry. Co. v. Tax Commissioners, 174 N. Y. 417, 435, 67 N. E. 69; State v. Mayor, etc., of New York, 3 Duer (N. Y.), 119, 144, per Bosworth, J. Virginia: Tuckahoe Canal Co. v. Tuckahoe Rd. Co., 11 Leigh (Va.), 42, 76, 36 Am. Dec. 374 ("thus it is a franchise to be a corporation, with power to sue and be sued and to hold property as a corporate body," per Tucker, P.). See State ex rel. Vilter Mfg. Co. v. Milwaukee, Burlington & Lake Ge 28 L. ed. 837, 5 Sup. Ct. 299, per Matthews, J.; Fietsam v. Hay, 122 said that the franchise to be a corporation belongs to the corporators in so far that it does not pass by mortgage and neva Rd. Co., 116 Wis. 142, 92 N. W. mond Tobacco Co. v. Randle, 114 Ill. per Winslow, J. 412, 434, 2 N. E. 536, per Scholfield, J. 146, Corporations or bodies politic are the most usual franchise known to our law." Wilmington & Reading Ry. Co. v. Downward (Del. Ct. Err. & App., 1888), 14 Atl. 720, 721, per Salisbury, Ch. "The creation of a corporation, the grant of power to exist and act as such is, in itself, a franchise." San Joaquin & King's River Canal Irrig. Co. v. Merced County, 2 Cal. App. 593, 84 Pac. 285. Where the creation of a corporation was sought to be enjoined and the question was one of appeal and whether a franchise was involved, the court declared that to be a corporation was itself a franchise. Drum Ill. 293, 295, 3 Am. St. Rep. 492, 13 N. E. 501, per Mulkey, J. See criticism of this case by Judge Thompson in next following note. Driscoll v. Norwich & Worcester Rd. Co., 65 Conn. 230, 256, 32 Atl. 354, per Torrence, J., in dissenting opinion. See Medical & Surgical Soc. of Montgomery v. Weatherly, 75 Ala. 248, 253; Coe v. Columbus, Piqua & Indiana Rd. Co. 10 Ohio St. 372, 385, 75 Am. Dec. 518, per Gholson, J. "A corporation is itself a franchise belonging to the members of the corporation." Spring Valley Water Works v. Schottler, 62 Cal. 69, 106, per Thornton, J.; Louisville Tobacco Warehouse Co. v. Commonwealth, 20 Ky. L. Rep. 1047, 1051, 48 S. W. 420. Both cases quoting from Pierce v. Emery, 32 N. H. 484, 507, per Perley, J. "Franchise is the privilege held by the individual members to be a cor Franchises "are very generally granted to corporations. Indeed, the right of incorporation is said to be itself a franchise." Sellers v. Union Lumbering Co., 39 Wis. 525, 527, per Ryan, C. J., citing 2 Bl. Comm. 37; Angell & Ames on Corp. § 4. "It is true, the right to be a corporation is itself a franchise, but all franchises granted to a corporation do not become corporate franchises." Green v. Knife Falls Boom Corp., 35 Minn. 155, 157, 158, per Vanderbergh, J. "When the legislature grants a charter of incorporation, it confers upon the grantees of the charter the poration and exercise corporate powers." Cedar Rapids Water Co. v. Cedar Rapids, 118 Iowa, 234, 239, 91 N. W. 1081, per Weaver, J. "The rule is that the primary franchise of being a corporation vests in the individuals who compose it, and not in the corporation itself." State v. Water Co., 61 Kan. 547, 560, 60 Pac. 337, per Smith, J. sale thereunder. And considered in connection with the right to assess for taxation, the assessment should not be vested, by the policy of the law, with the capacity of perpetual succession, and of acting in several respects, right or privilege of forming a corpo- a special denomination, and are rate association, and of acting, within certain limits, in a corporate capacity, and this right or privilege is called the 'corporate franchise.'" Jersey however numerous the association City Gas-Light Co. v. Gas Improvement Co., 46 Fed. 264, 265, per Greene, J., case aff'd 58 Fed. 323. "A corporation is defined by Mr. Justice Blackstone (2 Black. Comm. 37) to be a franchise. It is, says he, 'A franchise for a number of persons to be incorporated and exist as a body politic, with a power to maintain perpetual succession, and to do corporate acts.'" Dartmouth College v. Woodward, 4 Wheat. (17 U. S.) 518, 657, 4 L. ed. 629, per Washington, J., See also id., 700 per Story, J. A corporation franchise to be and act as a corporation merely gives the corporation life as a person, bearing the same relation to the taxing powers borne by the natural person. San Joaquin & King's River Canal Irrig. Co. v. Merced County, 2 Cal. App. 593, 84 Pac. 285. "A corporation is a franchise possessed by one or more individuals, who subsist as a body politic, under may be, as a single individual. The ordinary incidents to a corporation are to have perpetual succession, and the power of electing or otherwise providing members in the place of those removed by death or otherwise; to sue and be sued; to grant and receive and to purchase and hold lands and chattels by their corporate name; to have a common seal; to make by-laws for the government of the corporation; and sometimes the power of a motion or removal of members. * * The right to be a corporation is itself a separate, distinct and independent franchise." Southern Pacific Rd. Co. v. Orton, 32 Fed. 457, 473, per Sawyer, J., citing 2 Kent's Comm. (9 ed.), 306, 325; Memphis & Little Rock Rd. Co. v. Commissioners, 112 U. S. 609, 5 Sup. Ct. 299. Above quotation is given in part in Porter v. Rockford, Rock Island & St. Louis Rd. Co., 76 Ill. 561, 573, per Scholfield, J. "What is called 'the franchise of purchaser; and conflicting jurisdiction); New Orleans, Spanish Fort & Lake Rd. Co. v. Delamore, 114 U. S. 501, 510, 5 Sup. Ct. 1009, 29 L. ed. 244 (a case of federal jurisdiction over state judgment as to sale; jurisdiction in bankruptcy; railroad franchise of right of way, title by foreclosure; right to mortgage; and of transfer to assignee in bankruptcy of franchises mortgaged). See subsequent sec 'See New Orleans Debenture Redemption Co. v. Louisiana, 180 U. S. 320, 329, 45 L. ed. 551, 21 Sup. Ct. 378, per Peckham, J. (a case of action to enjoin use of charter; necessary parties, and power of States over corporations); Julian v. Central Trust Co., 193 U. S. 93, 106, 48 L. ed. 629, 24 Sup. Ct. 399, per Day, J. (a case of state laws as rules of decision; railroads, foreclosure of mortgages; purchase by foreign corporation, tions herein as to this power to transvalidity of; indebtedness; liability of fer or alienate. made against the stockholders or members as such, but against the corporation, for this franchise of a right to exist, while in a certain sense belonging to the members of the corporation, must be availed of through the corporation itself. Again, it is declared that corporate rights are granted to the corporation and not to the individuals interested therein, as is instanced by a case where the stockholders may separately assign and transfer their stock, and, independently of their rights, the corporation itself may alienate its property and franchises, where the law permits such transfer, mortgage or conveyance. forming a corporation,' is really but an the corporation which comprise the exemption from the general rule of the common law prohibiting the formation of corporations. All persons in this State have now the right of forming corporate associations upon complying with the simple formalities prescribed by the statute. The right of forming a corporation and of acting in a corporate capacity under the general incorporation laws, can be called a franchise only in the sense in which the right of forming a limited partnership, or of executing a conveyance of land by deed, is a franchise (2 Morawitz, Priv. Corp. § 923)." State v. Western Irrigating Canal Co., 40 Kan. 96, 99, 19 Pac. 349, per Horton, C. J. "The corporation itself is not a franchise, but it is the attributes of 8 Bank of California v. San Francisco, 142 Cal. 276, 75 Pac. 832, 64 L. R. A. 918. Detroit, City of, v. Mutual Gas Co. & Mutual Gas Light Co., 43 Mich. 594, 5 N. W. 1039. Judge Thompson after quoting from an Illinois case to the point, "that a franchise or right to be and act as an artificial body, is vested in the individuals who compose the corporation, and not in the corporation itself,'" Fietsam v. Hay, 122 Ill. franchises thereof, its special powers and rights,' 1 Wood, Ry. Law, § 14, p. 27; now, it is perfectly apparent that any acts done to further the objects of the corporation are the exercise of its franchises." Young v. Webster City & So. West. Ry. Co., 75 Iowa, 140, 143, 39 N. W. 234, per Rothrock, J. "Strictly 'the franchise to exist as a corporation' is not a corporate franchise 'or franchise of the corporation' at all." Meyer v. Johnson, 53 Ala. 237, 324, per Manning, J. "The right to be a corporation has sometimes been called a franchise, but that is a misapplication of terms." Knoup v. Piqua Bank, 1 Ohio St. 603, 613, per Corwin, J. 293, 3 Am. St. Rep. 492, 494, says: "But this is an imperfect statement of the true conclusion,—which is, that a primary franchise, that is to say, the franchise of being a corporation, vests in the individuals who compose the corporation; while those secondary franchises which, as we shall hereafter see, are vendible by the corporation, necessarily and for that reason alone must vest in the corporation." 4 Thompson's Comm. on Corp. § 5336. The author also adds It is also held that a corporation is an entity, irrespective of the persons who own all of its stock; that the fact that one person owns all the stock does not make such owner and the corporation one and the same person; and that there is not any identity between the individual or the corporation which owns such stock in another corporation, and that latter corporation.10 And whenever a corporation makes a contract, the following: "We shall, however, fers to entity and not to individual see hereafter that judicial theory is stockholder's right of removal to so confused on the subject, that pro- Federal court, cannot be defeated on ceedings in the nature of quo war- ground that corporation not a legal ranto, to vacate the franchises of entity). corporations, are sometimes brought against the individuals who compose the corporation and sometimes against the corporation itself." Maryland: Folsom v. Detrick Fertilizer & Chemical Co., 85 Md. 52, 69, 36 Atl. 446 (corporation is person distinct from stockholders, per Bryan, 10 Ulmer v. Lime Rock R. Co., 98 J.). Me. 579, 594, 57 Atl. 1001. Whether corporation is person or entity distinct from stockholders, see the following cases: United States: Central Trust Co. of N. Y. v. Western North Carolina Rd. Co., 89 Fed. 31, per Simonton, Cir. J. ("this sovereign power made of several persons a single entity"); M'Cabe v. Illinois Central Rd. Co., 13 Fed. 827, 828 (is a legal entity, per Love, D. J.). Alabama: State v. Stebbins, 1 Stew. (Ala.) 299, 306-308 [per Saffold, J., citing Bank of United States v. Dandridge, 12 Wheat. (25 U. S.) 91, per Marshall, C. J., to point that it is one entire impersonal entity]. Illinois: Ford v. Chicago Milk Shippers' Assoc., 155 Ill. 166, 39 N. E. 651, 27 L. R. A. 298 (while legal entity and distinct from persons composing it, it cannot act independently of natural persons constituting it, per Phillips, J.). Kentucky: Lewis v. Maysville & Big Sandy Rd. Co., 25 Ky. L. Rep. 948, 76 S. W. 526 (when statute re Nebraska: Home Fire Insurance Co. v. Barber, 67 Neb. 644, 666, 93 N. W. 1024 (stating when separate and distinct in law and when not in equity, per Pound, C.). New York: Buffalo Loan, Trust & Safe Deposit Co. v. Medina Gas & Elec. Light Co., 42 N. Y. Supp. 781, 788, 12 App. Div. 199 (word "entity" is merely descriptive; but cannot act independently of persons composing it, per Green, J.); People v. North River Sugar Refining Co., 3 N. Y. Supp. 401, 408, 16 Civ. Proc. R. 1, 2 L. R. A. 33 (is not in reality distinct, although in one point of view an entity, per Barrett, J.); Supervisors of Niagara v. People, 7 Hill (N. Y.), 504, 507 (individuality of natural persons is merged in entity, per Bockee, Senator). Pennsylvania: Rhawn v. Edge Hill Furnace Co., 201 Pa. 637, 51 Atl. 360 (is an entity irrespective of persons owning stock); Monongahela Bridge Co. v. Pittsburg & Birmingham Traction Co., 196 Pa. 25, 46 AtL 99 (same statement as last case). |