The Online Library of Liberty

A project of Liberty Fund, Inc.

• Lectures On Law,
• Part I.: Lectures On Law.
• Chapter XII.: Of the Common Law.
• Chapter XIII.: Of the Nature and Philosophy of Evidence.
• Part 2.: Lectures On Law.
• Chapter I.: Of the Constitutions of the United States and of Pennsylvania—of the Legislative Department.
• Chapter II.: Of the Executive Department.
• Chapter III.: Of the Judicial Department.
• Chapter IV.: Of the Nature of Courts.
• Chapter V.: Of the Constituent Parts of Courts.—of the Judges.
• Chapter VI.: The Subject Continued. of Juries.
• Chapter VII.: The Subject Continued. of Sheriffs and Coroners.
• Chapter VIII.: The Subject Continued. of Counsellors and Attornies.
• Chapter IX.: The Subject Continued. of Constables.
• Chapter X.: Of Corporations.
• Chapter XI.: Of Citizens and Aliens.
• Chapter XII.: Of the Natural Rights of Individuals.
• Part 3.: Lectures On Law.
• Chapter I.: Of the Nature of Crimes; and the Necessity and Proportion of Punishments.
• Chapter II.: Of Crimes Against the Right of Individuals to Their Property.
• Chapter III.: Of Crimes Against the Right of Individuals to Liberty, and to Reputation.
• Chapter IV.: Of Crimes Against the Right of Individuals to Personal Safety.
• Chapter V.: Of Crimes, Immediately Against the Community.
• Chapter VI.: Of Crimes, Affecting Several of the Natural Rights of Individuals.
• Chapter VII.: Of Crimes Against the Rights of Individuals Acquired Under Civil Government.
• Chapter VIII.: Of the Persons Capable of Committing Crimes; and of the Different Degrees of Guilt Incurred In the Commission of the Same Crime.
• Chapter IX.: Of the Direct Means Used By the Law to Prevent Offences.
• Chapter X.: Of the Different Steps Prescribed By the Law, For Apprehending, Detaining, Trying, and Punishing Offenders.
• Bibliographical Glossary *
• Afterword

CHAPTER X.

Of Corporations.

In a former part of my lectures,a after having described a state, I observed, that, in a state, smaller societies may be formed by a part of its members: that these smaller societies, like states, are deemed to be moral persons, but not in a state of natural liberty; because their actions are cognizable by the superiour power of the state, and are regulated by its laws. I mentioned, that, to these societies, the name of corporations is generally appropriated, though somewhat improperly; for that the term is strictly applicable to supreme as well as to inferiour bodies politick. In obedience, however, to the arbitress of language, I shall designate those smaller societies by the name of corporations; and to the consideration of them I now proceed.

A corporation is described to be a person in a political capacity created by the law, to endure in perpetual succession.b Of these artificial persons a great variety is known to the law. They have been formed to promote and to perpetuate the interests of commerce, of learning, and of religion. It must be admitted, however, that, in too many instances, those bodies politick have, in their progress, counteracted the design of their original formation. Monopoly, superstition, and ignorance have been the unnatural offspring of literary, religious, and commercial corporations. This is not mentioned with a view to insinuate, that such establishments ought to be prevented or destroyed: I mean only to intimate, that they should be erected with caution, and inspected with care.

In England, corporations may exist by the common law, by act of parliament, by prescription, and by charter from the king.c The king and the parliament are corporations by the force of the common law.d

In the United States, and in Pennsylvania, corporations can only exist by the common law, or by virtue of legislative authority. This authority, however, may be exercised by a power delegated by the legislature; as has been done, in this commonwealth,e with regard to churches. Upon the same principle, the king, in England, may communicate to a subject the power of erecting corporations, and may permit him to name the persons of whom they shall be composed, and the authority which they shall enjoy. Still, however, it is the king, who really erects them; the subject is only his instrument; and the act of the instrument becomes the act of its mover, under the well known maxim, “qui facit per alium, facit per se.”f1

To every corporation a name must be assigned; and by that name alone it can perform legal acts.g

When a corporation is duly established, there are many powers, rights, and capacities, which are annexed to it tacitly and of course.

It has perpetual succession, unless a period of limitation be expressed in the instrument of its establishment. This succession is, indeed, the great end of an incorporation; and, for this reason, there is, in all aggregate bodies politick, a power necessarily implied of filling vacancies by the election of new members.h

The power of removing any of its members for just cause, is a power incident to a corporation. To the order and good government of corporate bodies, it is adjudged necessary that there should be such a power.i

Another and a most important power, tacitly annexed to corporations by the very act of their establishment, is the power of making by-laws.j This, indeed, is the principal reason for erecting many of the bodies corporate. Their nature or their circumstances are peculiar; and provisions peculiarly adapted to them cannot be expected from the general law of the land. For this reason, they are invested with authority to make regulations for the management of their own interests and affairs. These regulations, however, must not be contrary to the overruling laws of the state; for it will be remembered, that these smaller societies, though moral persons, are not in a state of natural liberty. Their private statutes are leges sub graviore lege.2 “Sodales, legem quam volent, dum nequid ex publica lege corrumpant, sibi ferunto,”3 is a rule as old as the twelve tables of Rome.k4

The general duties of every corporation may be collected from the nature and design of its institution: it should act agreeably to its nature, and fulfil the purposes for which it was formed.

But corporations are composed of individuals; those individuals are not exempted from the failings and frailties of humanity; those failings and frailties may lead to a deviation from the end of their establishment. For this reason, as has already been observed, they ought to be inspected with care. The law has provided proper persons with proper powers to visit those institutions, and to correct every irregularity, which may arise within them. In England, it has, by immemorial usage, appointed them to be visited and inspected, in the court of king’s bench, according to the rules of the common law.l We have formerly seen,m that the powers of the court of king’s bench are vested in the supreme court of Pennsylvania.

A corporation may surrender its legal existence into the hands of that power, from which it was received. From such a surrender, the dissolution of the body corporate ensues. An aggregate corporation is dissolved by the natural death of all its members.n By a judgment of forfeiture against a corporation itself, it may be dissolved; but not by a judgment of ouster against individuals. God forbid—such is the sentiment of Mr. Justice Wilmoto5 —that the rights of the body should be lost or destroyed by the offences of the members.

Suffice it to have said thus much concerning corporations, or subordinate societies established within the society at large.

[a. ]Ante. vol. 1. p. 636.

[b. ]Wood. Ins. 111.

[c. ]10. Rep. 29 b.

[d. ]Wood. Ins. 112.

[e. ]3. Laws. Penn. 40.

[f. ]10. Rep. 33b. 1. Bl. Com. 474.

[1. ]Who acts through another acts for himself.

[g. ]10. Rep. 122.

[h. ]1. Bl. Com. 475.

[i. ]1. Burr. 539.

[j. ]Ld. Ray. 498. Hob. 211. 1. Bl. Com. 475.

[2. ]Laws under a weightier law.

[3. ]The private laws of a corporation cannot conflict with the laws of the state.

[k. ]1. Bl. Com. 476.

[4. ]The twelve tables of Rome formed the centerpiece of the Roman constitution. They were completed in 449 bc

[l. ]Id. 481.

[m. ]Ante. p. 902.

[n. ]3. Burr. 1867.

[o. ]Id. 1871.

[5. ]Sir John Eardley-Wilmot (1709–1792) was appointed chief justice of Common Pleas in 1755.