shall happen to their said joint business by ill commodities, bad debts, or otherwise, shall be borne and paid between them in the like proportion.

And it is agreed by and between the said parties, that there shall be had and kept at all times during the continuance of their copartnership, perfect, just, and true books of account, wherein each of the said copartners shall enter and set down, as well all money by them or either of them received, paid, laid out, and expended in and about the said business, as also all goods, wares, commodities, and merchandise, by them or either of them, bought or sold by reason or on account of the said business, and all other matters and things whatsoever to the said business and the management thereof in any wise belonging; which said books shall be used in common between the said copartners, so that either of them may have access thereto, without any interruption or hindrance of the other. And also the said copartners, once in or oftener if necessary, shall make, yield, and render, each to the other, a true, just, and perfect inventory and account of all profits and increase by them, or either of them, made, and of all losses by them, or either of them, sustained; and also all payments, receipts, disbursements, and all other things by them made, received, disbursed, acted, done, or suffered in his said copartnership and business, and the same account so made shall and will clear, adjust, pay, and deliver, each to the other, at the time, their just share of the profits so made as aforesaid.

And the said parties hereby mutually covenant and agree to and with each other, that, during the continuance of the said copartnership, neither of them shall nor will indorse any note, or otherwise become surety for any person or persons whomsoever, without the consent of the other of the said copartners. And at the end, or other sooner determination of their copartnership, the said copartners, each to the other, shall and will make a true, just, and final account of all things relating to their said business, and in all things truly adjust the same; and all and every the stock and stocks, as well as the gains and increase thereof, which shall appear to be remaining, either in money, goods, wares, fixtures, debts, or otherwise, shall be divided between them, in the proportions aforesaid.

In Witness, etc.

(Signatures.)

VARIOUS COVENANTS AND CLAUSES WHICH MAY BE INTRODUCED IN ARTICLES OF COPARTNERSHIP ACCORDING TO CIRCUMSTANCES.

Not to trust any one whom the Copartner shall forbid. And that neither of the said parties shall sell or credit any goods or merchandise belonging to the said joint trade, to any person or persons, after notice in writing from the other of the said parties, that such person or persons are not to be credited or trusted.

Not to release any Debt without Consent, Etc.

And that neither of the said parties shall, without the consent of the other, release or compound any debt or demand, due or coming to them on account of their said copartnership, except for so much as shall actually be

received, and brought into the stock or cash account of the said partnership.

Not to be bound, or indorse Bills, Etc., for any one without Consent, Etc.

And that neither of the said parties shall, during this copartnership, without the consent of the other, enter into any deed, covenant, bond or judgment, or become bound as bail or surety, or give any note, or accept or indorse any bill of exchange for himself and partner, without the consent of the other first had and obtained, with or for any person whatsoever.

Neither Party to assign his Interest, Etc.

And it is agreed between the said parties, that neither of the said parties shall, without the consent of the other, obtained in writing, sell or assign his share or interest in the said joint trade, to any person or persons whatso

ever.

Parties to draw Quarterly, Etc.

That it shall be lawful for each of them to take out of the cash of the joint stock the sum of quarterly, to his own use, the same to be charged on account, and neither of them shall take any further sum for his own separate use, without the consent of the other in writing; and any such further sum, taken with such consent, shall draw interest after the rate of per cent., and shall be payable together with the interest due, days after notice in writing given by the other of the said

within parties.

(97.)

Certificate of a Limited Partnership with Acknowledgment, and

Oath.

This is to Certify, That the undersigned have, pursuant to the provisions of the statutes of the State of

ship, under the name or firm of business to be transacted is

and

formed a limited partnerthat the general nature of the (describe the business) and that is the special

are the general partners and

partner and that the said (the special partner) hath contributed the sum of dollars, as capital towards the common stock, and that the said partnership is to commence on the

day of

and is

and who executed the above certificate, and they severally acknowledged that they executed the same.

the general partners named in the above certificate, being duly sworn do depose and say, that the sum specified in the said certificate to have been contributed by the special partner to the common stock has been actually and in good faith paid in cash.

Sworn this

day of

19, before me,

In some of the States, the oath should be made by the general partner; and it would always be safe for all the partners, general and special, to take the oath, and be included in the certificate.

CHAPTER XVIII.

CORPORATIONS.

A CORPORATION, as the term is used in mercantile law, is an association of individuals united into one collective body, under a special name, and possessing certain immunities, privileges and capacities in its collective character which do not belong to the natural persons composing it. The most important of these are, the capacity of succession, by which it continues to exist without regard to changes in its membership, the right to hold and convey property, real and personal, to sue and be sued, to make contracts, and to do other acts like an individual. The courts frequently speak of it as an "artificial person."

The fundamental distinction between a partnership and a corporation is that the former is merely an aggregation of individuals, having no personality of its own, and which therefore cannot be considered apart from the members composing it; whereas a corporation is, in the eye of the law, an entity, an artificial person, quite distinct from the individual stockholders.

From this difference of constitution result important practical differences, some of the principal of which are as follows. In a partnership the death of one partner dissolves the firm; while the death of a stockholder has no effect upon the corporation.

The interest of a partner cannot be transferred or assigned so as to make the assignee a member of the firm, without the express consent of the other partners; whereas by a transfer of the stock which represents the stockholder's interest in the corporation, the assignee becomes at once a member of the corporation without regard to the consent of the other stockholders. In a partnership each partner is the agent of all the others, and may bind them by his acts within the scope of the partnership business; on the other hand an individual stockholder has no power to bind the corporation, which can act only through such agents as the stockholders in their corporate capacity may select. Lastly, each partner is liable individually for all the debts of the firm, whereas a stockholder in a corporation is subject only to a limited liability-usually only to the extent of the stock which he holds.

Corporations are of many kinds, but we propose here to consider only those formed for the transaction of mercantile, manufacturing and other similar kinds of business. The comparative ease with which such corporations are managed, and the limited liability of the stockholders, have commended them to business men, and the greater part of the business of the country is now carried on in that form.

Formerly, corporations were usually created by special acts of the legislatures of the several States, but now, in every State there are general acts providing for the formation, regulation and management of corporations of different kinds, and in many of the States it is provided that no business corporation shall be formed by special act. These laws vary greatly in the different States. As to the formation of corporations under them, it would be impossible in a work of this kind to give even an abstract that would be of any practical value. We can only say that the business of organizing a corporation should always be entrusted to a competent lawyer, not only because it calls for accurate knowledge of the law and for legal skill and experience, but because failure to comply with all the requirements of the law may result in serious liabilities on the part of the stockholders and officers. We shall confine ourselves to the statement of a few general principles relating to the management of corporations, and add an abstract of the statutory liabilities of stockholders and directors.

A corporation is a "person" in the eye of the law, and laws relating to persons are held to include corporations so far as they are applicable.

In this country a corporation is a citizen of the State that creates it, or under whose laws it is organized. As such it has a right to sue and be sued in the courts of the United States. But it has no status as a citizen in any other State. As to such State it is a foreign corporation. It may by comity transact business in another State, but if it goes there for that purpose the State into which it goes may prescribe the conditions under which it may do business there, and may discriminate between it and domestic corporations. It may even go so far as to compel it to cease business in that State, as has been done in several instances in the case of foreign insurance companies. In several of the States foreign corporations are not permitted to own real estate.

As a corporation is purely a creature of the law, it can exercise only such powers as are given to it in its charter or act of incorporation. If it attempts to exercise powers not specifically or impliedly granted its charter is liable to forfeiture by the State, such acts being beyond its powers, or ultra vires, to use the legal phrase. Contracts ultra vires are not enforceable by the corporation, and the corporation itself may defend against them on the ground that they are beyond its powers. In this respect however charters are liberally construed, and are held to confer upon the corporation, not merely the powers specifically granted, but such other ancillary or incidental powers as are reasonably necessary to enable the corporation to carry on the business for which it was organized. And courts have frequently refused to sustain this defense where no statutory prohibition has been violated, and the contract in question was founded on a good consideration. Indeed, it has been held that the plea of ultra vires should not as a general rule prevail when it would not advance justice, but, on the contrary, would accomplish a legal

wrong.

As to the conditions under which a corporation may commence business, the law varies widely in the different States. In some, the stock subscribed for may be made payable in instalments, either at definite fixed dates or on calls made by the directors as the business of the corporation may require. In