the presence of the society, to forfeit his position as a gentleman? The record is silent. That silence is significant. That which is material and is not averred by the society in their answer is presumed not to exist. No ungentlemanly conduct in presence of the society is set forth in their response, and this court must presume none existed. Dr. Waring was convicted of the charges first mentioned in reference to the suretyship, and brought formally before the society and censured. To this illegal and unauthorized proceeding he submitted. But, not satisfied with this, at the next meeting of the society he was again brought up, and his resignation demanded, and he was given till the succeeding meeting to comply with the imperious and unauthorized demand. This he declined to do. And a preamble and resolutions were then passed, setting a future day when the society would vote on his expulsion for refusing to resign, and for discourteous behavior towards the society at two former meetings. In what the discourteous behavior consisted we are not informed by the record. In the meantime, however, the gracious privilege of avoiding expulsion by resignation was still held out to Dr. Waring. When the țime came for the much-cherished object by the infliction of the extreme penalty of expulsion, Dr. Waring was at home sick, and unable to attend, but he wrote the society, disclaiming all intentional discourtesy to it or its members, and protested against the irregularity and illegality of the course resolved upon, as set forth in said preamble and resolutions. But all to no effect. His expulsion was predetermined, and that determination was executed. A more illegal or unjustifiable proceeding has seldom been brought before a court. After argument had, and a thorough examination of this case, it is the unanimous judgment of this court that the judgment of the court below be reversed, and the judge of the superior courts of said county is hereby instructed and ordered to grant a peremptory mandamus, commanding and compelling the said "The Georgia Medical Society" to restore the said Dr. James J. Waring to all his rights and privileges as a corporator in said society.

Note. See, infra, p. 1171; Evans v. Philadelphia Club, 50 Pa. St. 107-127, and cases cited; and Belton v. Hatch, 109 N. Y. 593, 4 Am. St. 495, infra, p. 178. Also 1896, Board of Trade of Chicago v. Nelson, 162 Ill. 431, 44 N. E. ̃743; 1892, Spilman v. Supreme Council of Home Circle, 157 Mass. 128; 1887, Pitcher v. Board of Trade, 121 Ill. 412; 1844, Commonwealth, ex rel., v. Pike Beneficial Soc., 8 W. & S. (Pa.) 247; 1883, Medical & Surg. Soc. of Mont. Co. v. Weatherly, 75 Ala. 248, 253; 1875, Meyer v. Johnson, 53 Ala. 237, 325; 1878, Board of Trade v. People, 91 Ill. 80; 1863, Sayre v. Louisville, etc., Association, 1 Duval (Ky.) 143, 85 Am. Dec. 613; 1864, National M. F. Ins. Co. v. Yeomans, 8 R. I. 25, 86 Am. Dec. 610; 1855, Hiss v. Bartlett, 3 Gray 468, 63 Am. Dec. 768, note 773; 1857, Austin v. Searing, 16 N. Y. 112, 69 Am. Dec. 665, note 677; 1866, Society v. Commonwealth, ex rel., 52 Pa. St. 125, 91 Am. Dec. 139; 1866, Dane v. Derby, 54 Maine 95, 89 Am. Dec. 722, note 736.

Sec. 25. Same.

FIETSAM v. HAY ET AL.1

1887. IN THE SUPREME COURT OF ILLINOIS. 122 Ill. 293-297, 3 Am. St. R. 492.

Appeal from the circuit court of St. Clair county.

Mr. Justice MULKEY delivered the opinion of the court:

The People's Bank of Belleville, incorporated under a special act of legislature, approved and in force March 27, 1869, having become insolvent on the 17th of April, 1878, made a general assignment of all its property and effects for the benefit of creditors. The assigneé presented a petition to the county court of St. Clair county, at its March term, 1887, for leave to sell "all the rights, privileges, powers and immunities which were granted by the said act incorporating said bank." The judge of the county court being interested in the result of the proceeding, the venue was changed to the circuit court of St. Clair county, where, upon due consideration of the petition, that court entered an order dismissing the same. The present appeal is from the order of dismissal.

The correctness of the decision of the circuit court depends entirely upon whether the title to the franchise created and conferred by the bank charter passed as an asset of the bank, to the assignee, under the assignment. That its language is sufficiently comprehensive, and adequate to pass the franchise to the assignee, if, as matter of law, the bank could transfer it at all, we have no doubt. This is not questioned. The question, therefore, is whether a corporate franchise, in the absence of statutory authority, is in law capable of being assigned or transferred. Differently put, the question, as formulated by the parties themselves, is, "did the franchise of the said bank pass with the deed of assignment to the assignee as a salable asset of the said bank?"

The word "franchise" is often used in the sense of privileges generally, but in its more appropriate and legal sense the term is confined to such rights and privileges as are conferred upon corporate bodies by legislative grant. It is in the latter sense, alone, the word is now to be considered.

The franchise proposed to be sold is a corporate franchise, and the artificial body or political entity to which it pertains is what is known to the law as an aggregate corporation. Such a corporation has been well defined to be "an artificial being created by law, and composed of individuals who subsist as a body politic under a special denomination, with the capacity of perpetual succession, and of acting, within the scope of its charter, as a natural person." Now, a franchise is nothing more than the right or privilege of being a corporation, and of doing such things, and such things only, as are authorized by the 1 Arguments omitted.

1

corporation's charter. This right of a body of men to be and act as an artificial person, without, as a general rule, incurring individual responsibility, is declared by Blackstone to be "a royal privilege, or branch of the king's prerogative, subsisting in the hands of a subject." (2 Blackstone, 37.) Such right or franchise is defined by Bouvier to be "a certain privilege conferred by grant from government, and vested in individuals." (1 Bouvier, 545.) Now, it is clear from these definitions, and from the very nature of a corporation, that a franchise or the right to be and act as an artificial body, vests in the individuals who compose the corporation,and not in the corporation itself. This fact, we think, is not without significance in reaching a conclusion upon the main question to be determined, outside of the numerous authorities bearing directly on the subject.

It will be kept in mind that the corporate body, for purposes of ownership, and, indeed, for most purposes, has a distinct identity from that of the individual corporators. The latter may be wealthy, when at the same time the former is insolvent, and vice versa. The corporation has no right to appropriate, sell or otherwise dispose of any of the property or effects of a corporator. The relation of debtor and creditor may subsist between them in the same manner as between the company and other persons. The company's entire property may be swept away from it by sequestration, or other means, and yet its franchises will remain vested in the corporators, until they are either abandoned or forfeited to the state. All these propositions are familiar to the courts and the profession, and are all well sustained by authority.

If, then, the franchise is vested in and belongs to the corporators, and not to the corporation itself, how could the latter transfer or assign it to another? On the plainest of principles this could not be done without legislative authority for that purpose, and we find nothing, either in the statute or the company's charter, conferring such authority. While it is conceded the legislature might confer on the artificial body the power to sell or assign the franchise to strangers, yet this would be, in effect, to authorize it to commit a species of suicide, for it is manifest the corporation could not exist a moment after the franchise conferred upon its members had been transferred to others. Indeed, when we consider the attributes and essential elements of corporate existence, resulting from the grant of the franchise, and without which the artificial body could not accomplish the objects of its creation or perform the duties imposed upon it by law, the sale or assignment of the franchise without special legislative authority would seem to be wholly inadmissible. It is proposed here, it will be noted, to sell simply the franchise of the bank. Assuming this can be done, the question arises what would be the effect of such a sale? It clearly could not have the effect of making the purchasers, if more than one, an aggregate corporation, with the general banking powers conferred by the bank charter. To assert such a proposition would be simply startling; and yet, if in such case the purchasers would take anything at all, they certainly could not take less than the

right to be a banking corporation, with all the powers and privileges conferred by the charter, for these rights are of the very essence of the franchise; and consequently the one could not be thus acquired without, by the same act, securing the others-a view which, as already indicated, has no sanction in reason or authority.

While statements are to be found on this subject in some of the textbooks, as well as in some of the decided cases, which can not be reconciled with the conclusion we have reached, yet we are clearly of opinion that a corporation, in the absence of statutory authority, has no right to sell or transfer its franchise or any property essential to its exercise, which it has acquired under the law of eminent domain. This proposition, in our judgment, is sustained both by reason and the decided weight of authority. Black et al. v. Delaware and Raritan Canal Co., 24 N. J. Eq. 455; Freeman on Executions, §§ 179, 180; Pearce on Railroads, 496-1; Jones on Mortgages, § 161; Rorer on Judicial Sales (2d ed.), 222; Archer v. Terre Haute and Indianapolis R. Co., 102 Ill. 493; Bruffett v. Great Western R. Co., 25 Ill. 353; Chicago and Rock Island R. Co. v. Whipple, 22 Ill. 105; Ottawa, Oswego and Fox River Valley R. Co. v. Black, 79 Ill. 262. The circuit court having reached this conclusion, its order and judgment will be affirmed.

Judgment affirmed.

Note. 1867, Cleveland, etc., R. Co. v. Speer, 56 Pa. St. 325, 94 Am. Dec. 84; 1869, Miner's Ditch Co. v. Zellerbach, 37 Cal. 543, 99 Am. Dec. 300; 1887, Chicago Gas Light Co. v. People's Gas L. Co., 121 Ill. 530, 2 Am. St. 124; 1864, Caldwell v. Alton, 33 Ill. 416, 85 Am. Dec. 282; 1863, Story v. Plank Road Co., 16 N. J. Eq. 13, 84 Am. Dec. 134; 1862, People v. Railroad Co., 24 N. Y. 261, 82 Am. Dec. 295; 1859, Coe v. Railroad Co., 10 Ohio St. 372, 75 Am. Dec. 518; 1825, Ammant v. Turnpike Road, 13 S. & R. (Pa.) 210, 15 Am. Dec. 593; 1877, Hudson v. Cuero Land, etc., Co., 47 Tex. 56, 26 Am. Rep. 289; 1865, Commonwealth v. Smith, 10 Allen (Mass.) 448, 87 Am. Dec. 672, infra, p. 1070; 1862, Bardstown & L. R. Co. v. Metcalfe, 4 Met. (Ky.) 199, 81 Am. Dec. 54, infra, p. 1074; 1893, Brunswick G. L. & Co. v. United Gas, etc., Co., 85 Me. 532, 35 Am. St. R. 385, note, p. 390; Jones v. Guarantee Co., 101 U. S. 622, infra, p. 1078; 1872, State of Ohio, ex rel., etc., v. Sherman, 22 Ohio St. 411, infra, p. 1082; 1892, Overton Bridge Co. v. Means, 33 Neb. 857, 29 Am. St. R. 514; 1901, Detroit Citizens' Ry. Co. v. Detroit, 125 Mich. 673, 84 Am. St. R. 589.

Sec. 26. (3) The secondary franchises and privileges as well as all other rights except the primary franchise, belong to the corporation, or artificial being, rather than to the individual members.

MEMPHIS AND LITTLE ROCK RAILROAD COMPANY v. RAILROAD COMMISSIONERS.1

1884. IN THE SUPREME COURT OF THE UNITED STATES. 112 U. S. 609-623.

[This was a bill in equity filed in the chancery court of Pulaski county, Arkansas, seeking to enjoin the board of railroad commis1 Statement of facts condensed, arguments omitted.

sioners of the state from appraising, for the purposes of taxation, any part of the property of the plaintiff in error, on the ground that it is exempted from taxation by a contract with the state contained in its charter of incorporation. The supreme court of the state, on appeal, affirmed the decree of the chancery court dismissing the bill. That decree of the supreme court was brought here by writ of error, for review, on the allegation that it enforced a law of the state impairing the obligation of a contract in violation of the rights of the plaintiff in error under the constitution of the United States.

The Memphis and Little Rock Railroad Company was incorporated in 1853, with power to borrow "money on the credit of the company, and on the mortgage of its charter and works" (§ 9); and its capital stock was to be exempt from taxation until its road paid a dividend of 6 per cent., and its road, fixtures, etc., were to be exempt from taxes until twenty years after it was completed. (Sec. 28.) At the time. of its incorporation the constitution of Arkansas permitted corporations to be created by special acts, and there was no restriction as to the power to exempt such corporations from taxation. The supreme court of the state, in Oliver v. Memphis and Little Rock Railroad Company, 30 Ark. 128, had held that the exemption from taxation in the charter of this road was a contract between it and the state, that was not to be impaired. The railroad company in 1860 issued its bonds, secured by mortgage covering "the charter by which said company was incorporated and under which it was organized, and all the rights and privileges and franchises thereof," and also all lands; etc., belonging to said company. October 13, 1874, a new constitution of the state went into effect providing that corporations should be formed only under general laws, and no special act should be passed conferring corporate powers; that all property should be taxed according to its true value; that all laws exempting from taxation (except churches, etc., especially named and not including railroad companies) should be void; that the power so to tax corporations should never be surrendered or suspended by any contract on the part of the state, and that the legislature shall not pass any general or special law for the benefit of any corporation then existing, except upon condition that such corporation should thereafter hold its charter subject' to the provisions of the constitution.

December 9, 1874, the legislature passed a law "whereby the purchasers of a railroad of any corporation of the state, and their associates, acquiring title thereto by virtue of a judicial sale, or of a sale under a power contained in a mortgage or deed of trust, were authorized to organize themselves into a body corporate, vested with all the corporate rights, liberties, privileges, immunities and franchises of and concerning the railroad so sold, not in conflict with the constitution of the state, as fully as the same were held, exercised and enjoyed by the corporation before such sale." A certificate of such organization was to be filed with the secretary of state. The road was not completed till November, 1874. In 1876, a bill to foreclose the mortgage was brought by the trustees under the same, and a de