in some stances, belongs to a class of acts which is authorized and within the scope of their business (a). And notwithstanding the apparent contradiction of imputing a fraudulent intention to a corporate body, it may be made liable in an action of deceit for the fraud of its agent committed in the course of the corporation's affairs (b). And the same principle is extended to make it generally subject to all liabilities incidental to its corporate existence and acts, though the remedy may be in form ex delicto or even criminal. Although it cannot commit a real crime, "it may be guilty as a body corporate of commanding acts Indictable to be done to the nuisance of the community at large" and case. may be indicted for a nuisance produced by the execution of its works or conduct of its business in an improper or unauthorized manner, as for obstructing a highway or navigable river (c). A corporation may even be liable by prescription, or by having accepted such an obligation in its charter, to repair highways, &c., and may be indictable for not doing it (). Likewise it may be convicted and fined under a penal statute regulating the trade carried on by it (e). However a steamship company has been held in equity to be not indictable under the Foreign Enlistment Act of Geo. 3, and therefore not entitled to refuse discovery, which in the case of a natural person would have exposed him to penalties under the act, (f) but the decision seems mostly grounded on the language of the particular statute. As to the difficulty of imputing fraudulent intention to a corporation, which has been (a) It is unnecessary to enter at large upon the cases on this head, of which there are a great number: among the latest are Bayley v. Manchester &c. Ry. Co. L. R. 7 C. P. 415, 8 C. P 148; Moore v. Metrop. Ry. Co. L. R. 8 Q. B. 36; Bolingbroke v. Swindon Local Board, L. R. 9 C. P. 575. (b) Barwick v. Eng. Joint Stock Bank, L. R. 2 Ex. 259: notwithstanding dicta to the contrary in Western Bank of Scotland v. Addie, L. R. 1 Sc. & D. 145, see the later case of Mackay v. Commercial Bank of New Brunswick, L. R. 5 C. P. 394. Savigny's statement that a corporation cannot commit a "true delict" (3. 317) is so qualified as perhaps not to be inconsistent with the English (c) Reg. v. G. N. of Eng. Ry. Co., (d) See Granton Corporations, 277, (f) King of Two Sicilies v. Will thought to be peculiarly great, it may be remarked that no one has ever doubted that a corporation may be relieved against fraud to the same extent as a natural person. There is exactly the same difficulty in supposing a corporation to be deceived as in supposing it to deceive, and it is equally necessary for the purpose of doing justice in both cases to impute to the corporation a certain mental condition-of intention to produce a belief in the one case, of belief produced in the other-which in fact can exist only in the individual mind of the person who is its agent in the transaction. Lord Langdale found no difficulty in speaking of two railway companies as "guilty of fraud and collusion" (not in an exact sense however): 12 Beav. 382. But cannot However the members of a corporation cannot even by of the express authority in the name by acts of giving an even all its poration make it responsible, or escape from being individually members responsible themselves, for a wrongful act (as trespass in removnon-corpo- ing an obstruction of an alleged highway) which though not a be bound when of a rate cha racter. cor personal wrong is of a class wholly beyond the competence of the corporation, so that if lawful it could not have been a corporate act (a). Likewise it is not competent to the governing body or the majority, or even to the whole of the members of a corporation for the time being, to appropriate any part of the corporate funds to their private use (unless in some manner distinctly warranted by the constitution); for it is not to be supposed that all the members of the corporation are equivalent to the corporation so that they can do as they please with corporate property. Lord Langdale held on this principle that the original members of a society incorporated by charter, who had bought up the shares of the society by agreement among themselves, were bound to account to the society for the full value of them (b). The fallacy of the opposite assumption (viz. that a corporation has no rights as against its unanimous members) is easily exposed by putting the extreme case of the members of a corporation being by accident reduced till there is only one left, who thereupon unanimously appropriates the whole corporate property to his own use. It is perhaps worth while to observe that writers on the civil law have laid down the powers of (a) Mill v. Hawker, L.R. 9 Ex. 309; no judgment on this part of the case in Ex. Ch. L. R. 10 Ex. 92. (b) Society of Practical Knowledge v. Abbott, 2 Beav. 559, 567. Cp. Sav. Syst. 3. 283, 335. majorities in corporate affairs with an extraordinary latitude, assigning unlimited authority to the majority of a properly convened meeting in most cases, and to the whole body of existing members in any case. But Savigny has shown this to be not only false in principle but unwarranted by the Roman law, the authorities relied on being in truth special provisions for the government of municipal corporations which were never intended to be of unlimited application (a). His exposition is interesting for the clearness with which he enforces the fundamental proposition that a corporation is not identical with the sum of its existing members, but otherwise it throws little if any light on the problems arising from the modern development and multiplication of corporate bodies in the English and allied systems of law. It is further to be observed that such cases as those last mentioned have but a slight and perhaps a misleading likeness to those where we have to determine the rights of strangers against the corporation arising out of contract or dispositions of property. In Society of Practical Knowledge v. Abbott (b) the principle is that, quite apart from the nature of its particular objects, a corporation does not exist for the sake of the persons who are the members at any one time, as is also shown by the rule of common law that they have no power of their own mere will to dissolve it. No corporate property can be treated as the property of the members, or divisible among them, unless there appears from the nature and constitution of the corporation an intention that it shall be so treated. In Mill v. Hawker (c), again, the removal of an obstruction to a highway is a thing which by its nature cannot be a corporate act at common law. The common law right is founded on the use of the highway by the person removing the obstruction, but a corporation cannot use a highway. No doubt a corporation might have a statutory power or be under a statutory duty to remove obstructions, and the true question in the case was whether any such power or duty had been conferred on highway boards. The majority of the court held that it had not. But if such had been the case, the (a) Sav. Syst. 3. 329 sqq. §§. 97-99. The illustration in our text is given at p. 350, note, with the remark, "Hier ist gewiss Einstimmigkeit vorhanden." (b) 2 Beav. 559. (c) L. R. 9 Ex. 309, sec at p. 31 theories of powers. right so conferred would still have been wholly distinct from the right of a natural person at common law to remove things which obstruct his lawful use of a highway (). As limited We now come to consider the far more difficult and complicated by positive law. Con- question of special restrictions. The importance of this subject flicting is quite modern; it arose from the general establishment of railcorporate way companies and others of a like nature incorporated by special Acts of Parliament, and has been continued and increased by the multiplication of joint stock companies, building societies, &c., which are incorporated or made "quasi-corporations" under general Acts. On this there have been many decisions, much discussion, and some real conflict of judicial opinions. There are two opposite views by which the consideration of the matter may be governed, and they may be expressed thus: 1. A corporation is an artificial creature of the law, and has no existence except for the purposes for which it was created. No act exceeding the limits of those purposes can be the act of the corporation, and no one can be authorized to bind the corporation to such an act. In each particular case, therefore, the question is: Was the corporation empowered to bind itself to this transaction? 2. A corporation once duly constituted has all such powers and capacities of a natural person as in the nature of things can be exercised by an artificial person. Transactions entered into with apparent authority in the name of the corporation are presumably valid and binding, and are invalid only if it can be shown that the Legislature has expressly or by necessary implication deprived the corporation of the power it naturally would have had of entering into them. The question is, therefore: Was the corporation forbidden to bind itself to this transaction? As Mr. Justice Lindley puts it (), the difference is "as to whether the act of incorporation is to be regarded as conferring unlimited powers except where the contrary can be shown; or whether alleged corporate powers are not rather to be denied (a) On the nature of corporate action in general cp. Hobbes, Behemoth, part 4. ad init. (6. 359, ed. Molesworth), and Leviathan, pt. 1. c. 16; and on its artificial character, Maine, Early History of Institutions, 352. (b) 1. 265, unless they can be shown to have been conferred either expressly or by necessary implication." As we shall often have to refer to these views, we may call (1) the doctrine of special capacities and (2) the doctrine of general capacity. There is much to be said on principle for the theory of special "Special capacities. Most if not all corporations are established for capacities" tolerably well defined purposes, which persons dealing with them. can ascertain without difficulty. They are certainly not intended to do anything substantially beyond those purposes, and a reasonable and liberal construction of their powers may be trusted to prevent the application of the doctrine from causing any real hardship (a). This theory was the prevalent one in the earlier period of the discussion. For a while the common law courts took it without question from the courts of equity, where for particular reasons to be mentioned afterwards it appeared in a somewhat more positive form and was maintained for a longer time. It is adopted by some of the best English writers (b), and in America Kent stated it (long before the subject had attained its present development in England) as the modern and even as the obvious doctrine ("). It also seems to have been taken for granted by those who framed the modern statutes defining the powers of incorporated companies (d); which, if the opposite view be correct, are redundant in permission and defective in prohibition. this now doctrine. The theory of general capacity, on the other hand, may well "General be supported on principle as tending to call the attention of the capacity:" Legislature more distinctly to the limits it may be proposed the preto assign to corporate powers, and ultimately to promote the vailing general convenience by making those limits more certain. It is also favoured by the general analogies of the law. There is a fallacy latent in the phrase of the other theory. When we speak of an artificial person as a creature of the law, we mean its legal (a) See judgment of Coleridge, J. Mayor of Norwich v. Norfolk Ry. Co. 4 E. & B. 397, 24 L. J. Q. B. 105, 119. (b) Leake on Contracts, 258; Lindley, 1. 263. (c) Kent, Comm. 2. 298-9 (in the later editions, however, this is much qualified by the note at p. 278.) The (d) See L. R. 9 Ex. 266. |