CORPORATION - Black's Law Dictionary

What is CORPORATION? Definition of CORPORATION in Black's Law Dictionary - Legal dictionary - Glossary of legal terms.

An artificial person or legal  entity created by or under  the authority of the laws of a state  or nation, composed, in some  rare  instances, of a single person and  his successors, being the incumbents of a particular office, but ordinarily consisting of an association of numerous individuals, who subsist as a body politic under a special denomination, which  is regarded in law as having  a personality and existence distinct from  that of its several members, and which is, by the same authority, vested with the capacity  of continuous succession, irrespective of changes  in its membership, either in perpetuity or for a limited term of years,  and of acting as a unit or single individual in matters  relating  to the common  purpose  of the association, within the scope of the powers and authorities conferred upon such bodies by law. Dartmouth College v. Woodward, 4 Wheat. 518, 636, 657, 4 L.Ed. 629; U. S. v. Trinidad Coal Co., 137 U.S. 160, 11 S.Ct. 57, 34 L.Ed. 640; Andrews  Bros. Co. v. Youngstown Coke Co., 86 F. 585, 30 C.C.A.  293; Porter  v. Railroad Co., 76 Ill. 573;  Nebraska Wheat Growers' Ass'n v. Smith, 115 Neb. 177,  212 N.W.  39, 44; State  v. Thistle Down Jockey Club, 114 Ohio St. 582, 151 N.E. 709, 711; Congdon v. Congdon, 160 Minn. 343, 200 N.W. 76, 87; Forest City Mfg.  Co. v. International Ladies' Garment Workers'  Union, Local No. 104, 233 Mo.App. 935, 111 S.W.2d 934; In re Crown Heights Hospital, 183 Misc. 563, 49 N.Y.S.2d 658, 660; Froelich and Kuttner, of Manila, P. I., V. Sutherland, 57 App.D.C. 294, 22 F.2d 870, 872.

A franchise possessed by one or more  individuals, who subsist as a body politic, under a special denomination, and are vested by the policy of the law with the capacity of perpetual  succession, and of acting  in several respects, however numerous the association may be, as a single  individual. 2 Kent, Comm. 267.

An artificial person  or being,  endowed by law with the capacity of perpetual succession; consisting either  of a single individual, (termed a "corporation sole,") or of a collection of several  individuals, (which  is termed  a "corporation aggregate.") 3 Steph.Comm. 166;  1 Bl.Comm. 467, 469. An intellectual body, created by law, composed of individuals united under a common name, the members of which  succeed each other,  so that the body continues always the same, notwithstanding the change of the individuals who compose  it, and which, for certain purposes, is considered  a natural person. Civil Code La. art. 427.

A "corporation" is more  nearly  a method than a thing, and the law, in dealing with a corporation,  need not define it as a person or entity, or even as an embodiment  of functions, rights, and duties. Farmers' Loan  & Trust Co. v. Pierson, 222 N.Y.S. 532, 543, 130 Misc. 110.

The statement that a "corporation" is an artificial person or entity, apart from its members, is merely a description, in figurative language, of a corporation viewed  as a collective body.  McIntosh v. Dakota Trust  Co., 52 N.D. 752, 204 N.W. 818, 825, 40 A.L.R. 1021.

A corporation is a collection of natural persons, joined together by their voluntary  action or by legal compulsion, by or under the authority of an act of the Legislature, consisting either  of a special  charter or of a general permissive  statute,  to accomplish some purpose, pecuniary, ideal, or governmental, authorized by the charter or governing statute. State v. Knights of Ku Klux Klan, 117 Kan. 564, 232 P. 254, 257, 37 A.L.R. 1267.

Classification

According to the accepted  definitions and rules, corporations are classified as follows:

Public and  private. A public corporation is one created by the state for political purposes and to act  as an agency in the administration of civil government, generally within a particular territory or subdivision of the state,  and usually invested, for that purpose,  with subordinate and local powers of legislation; such  as a county, city, town, or school district. These are  also sometimes  called  "political corporations." Goodwin v. East Hartford, 70 Conn. 18, 38 A. 876;  Dean  v. Davis, 51 Cal. 409; Ten Eyck v. Canal Co., 18 N.J. Law, 200, 37 Am.Dec. 233; Murphy v. Mercer County,  57 N.J.Law,  245, 31 A. 229; Van Campen v. Olean General Hospital, 210 App.Div. 204, 205 N.Y.S. 554, 555; Providence Engineering Corporation v. Downey Snipbuilding Corporation, C.C.A. N.Y., 294 F. 641, 646; National Bank of Commerce in New  Orleans v. Board of Sup'rs of La.  State University and Agricultural and Mechanical Corlege, 206 La. 913, 20 So.2d 264, 269.

Private corporations are those  founded by and composed of private individuals, for private pur poses,  as distinguished from governmental purposes, and  having no political or governmental franchises or duties. Santa Clara County v. Southern Pac.  R. Co., C.C.Cal., 18 F. 385,  402; People v. McAdams, 82 Ill. 361;  Providence Engineering Corporation v. Downey Shipbuilding Corporation, C.C.A.N.Y., 294 F. 641, 648.

The  true  distinction between public and  private corporations is that  the former are organized for governmental purposes, the latter not. The term  "public" has sometimes been applied to corporations of which the government  owned the entire stock, as in the case of a state bank.  But bearing in mind  that "public" is here equivalent to "political," IA will be apparent that this is a misnomer.  Again the fact that the business or operations of a corporation may directly and very extensively affect the general  public  (as in the case of a railroad  company or a bank or an insurance company)  is no reason for calling it a public  corporation. If organized by private  persons for their own advantage,—or even if organized  for the benefit of the  public generally, as in the  case  of a free public hospital or other charitable institution,-it is none  the less a private corporation, if it does not possess governmental powers or functions. The uses may in a sense be called "public,"  but the corporation is "private," as much so as if the franchises were vested in a single person. Dartmouth College  v. Woodward, 4 Wheat.  562, 4 L.Ed. 629; Ten Eyok v. Canal Co., 18 N.J.Law, 204, 37 Am.Dec. It is to be observed, however, that those corporations which  serve the public  or contribute to the comfort and convenience of the general public, though owned and managed  by private interests, are now (and  quite appropriately)  denominated "public service corporations." See infra. Another distinction between public and private corporations is that the former are not voluntary associations (as the latter  are) and that there  is no contractual relation between  the government and a public corporation or between the individuals  who compose it. Mor.Priv.Corp. § 3; Goodwin v. East Hartford, 70 Conn. 18, 38 A. 876.

The terms  "public" and "municipal," as applied to corporations, are not convertible. All municipal corporations are public,  but not vice versa.  Brown  v. Board  of Education,  108 Ky. 783,  57 S.W.  612.  But there  may  also be "public" corporations which  are not "municipal" even in this wider  sense of the latter  term.  Such, according to some of the authorities, are the "irrigation districts" now known in several of the western  states. Irrigation  Dist. v. Collins,  46 Neb. 411, 64 N.W. 1086. Compare Herring  v. Modesta Irrigation Dist., C.C.Cal., 95 F. 705.

Ecclesiastical and  lay.  In the English law,  all corporations private are divided into ecclesiastical and lay, the former being  such corporations as are composed exclusively of ecclesiastics organized for spiritual purposes, or for administering property  held for religious  uses, such as bishops  and  certain other dignitaries of the church and  (formerly) abbeys and  monasteries. 1 Bl. Comm. 470. Lay corporations are those composed of laymen, and existing for secular or business purposes. This  distinction is not recognized in. American law. Corporations formed for the purpose of maintaining or propagating religion or of supporting public  religious services, according to the rites  of particular denominations, and  incidentally owning and administering real and personal property for religious uses,  are called "religious corporations," as distinguished from business corporations; but they are  "lay" corporations,  and not "ecclesiastical" in the sense  of the English law. Robertson v. Bullions, 11 N.Y. 243.

Eleemosynary and  civil.  Lay corporations are classified as "eleemosynary" and "civil;" the former being such as are created for the distribution of alms  or for the administration of charities or for  purposes falling under the description of "charitable" in its widest sense, including hospitals,  asylums, and  colleges; the latter being organized for the facilitating of business transactions and the profit or advantage of the members. 1 Bl.Comm. 471; Dartmouth  College v. Woodward, 4 Wheat. 660, 4 L.Ed. 629.

In the law of Louisiana, the term  "civil" as applied to corporations, is used in a different sense, being contrasted with "religious." Civil corporations are those which  relate to temporal  police; such are the corporations of the cities, the companies  for the advancement of commerce and agriculture,  literary societies,  colleges  or universities founded for the instruction of youth, and the like. Religious corporations are those  whose establishment relates only to religion; such  are the congregations of the different religious persuasions. Civ.Code La. art. 431.

Aggregate and  sole.  A corporation sole  is one consisting of one person  only, and his successors in some ,particular station,  who are incorporated bylaw in order to. give them  some  legal  capacities  and  advantages, particularly that  of perpetuity, which. in their  natural persons they  could not have had. In this sense, the sovereign in England  is a sole corporation, so is a bishop, so are some  deans  distinct from  their  several chapters, and so is every parson  and vicar. 3 Steph.Comm. 168,  169;  First  Parish v. Dunning, 7 Mass.  447; Reid v. Barry, 93 Fla. 849, 112 So. 846, 859.

A corporation aggregate is one composed of a number  of individuals vested with corporate powers;  and  a "corporation," as the word is used  in general popular and legal speech, and as defined at the  head of this  title, means a "corporation aggregate."

Domestic and  foreign. With reference to the laws and the courts  of any given state,  a "domestic" corporation is one created by, or organized  under,  the  laws of that  state; a "foreign" corporation is one created  by or under the laws of another state, government, or country. In re Grand Lodge,  110 Pa. 613, 1 A. 582; Fowler v. Chillingworth, 94 Fla. 1, 113 So. 667,  669;  In re Ewles' Estate, 105 Utah 507, 143 P.2d 903, 905.

Close  and open.  A "close"  corporation is one in which the directors and officers  have the power to fill vacancies in their own number, without  allowing to the general  body of stockholders any choice or vote in their election. An "open"  corporation is one in which all the members or corporators have a vote  in the election of the directors and  other officers.  McKim  v. Odom,  3 Bland,  Md., 416.

A close corporation is one which fills its own vacancies or in which power of voting is held  through manipulation under fixed and virtually perpetual proxies. Brooks v. Willcuts, C.C.A.Minn., 78 F.2d 270, 273.

Subsidiary and parent. Subsidiary corporation is one in which another corporation (called parent 'corporation) owns  at least  a majority of the shares, and  thus has  control. Wheeler v. New York, N. H. and H. R. Co., 112 Conn.  510, 153 A. 159,  160; International Order of Twelve Knights and  Daughters of Tabor v. Fridia, Tex.Civ.App., 91 S.W.2d 404.

Other Compound  and Descriptive  Terms

A business corporation. One formed for  the purpose of transacting business in the  widest sense  of that term, including not only trade  and commerce, but manufacturing, mining, banking, insurance, transportation, and practically every form  of commercial or industrial activity where the purpose  of the organization is pecuniary profit; contrasted with  religious, charitable, educational, and  other like  organizations, which are sometimes grouped  in the statutory law of a state under the general designation of "corporations not for profit." Winter v. Railroad Co.,  30 Fed.Cas. 329; McLeod v. College, 69 Neb. 550, 96 N.W. 265.

Corporation de facto.  One existing under  color of law and in pursuance of an effort made in good faith to organize a corporation under  the statute; an association of men claiming to be a legally  incorporated company, and exercising the powers and functions  of a corporation, but without  actual lawful  authority to do so. Foster  v. Hare,  26 Tex. Civ.App. 177,  62 S.W.  541;  Cedar Rapids Water Co. v. Cedar Rapids, 118 Iowa, 234, 91 N.W. 1081; Tulare Irrig. Dist. v. Shepard,  185 U.S. 1, 22 S.Ct. 531, 46 L.Ed. 773; Evens v. Anderson, 132 Minn. 59, 155 N.W. 1040, 1041.

Its elements are a law or charter authorizing such  a corporation, an attempt in good faith to comply  with law authorizing its incorporation, and unintentional omission of essential requirements of the law or charter,  and exercise in good faith of corporate functions under  the law or charter. Richmond v. Town of Largo, 155  Fla. 226, 19 So.2d 791, 793.

Corporation de jure.  That  which  exists  by reason of full compliance by incorporators with  requirements of an existing law permitting  organization of such  corporation; it is impregnable to assault  in the courts from  any source. Henderson v. School Dist. No. 44, 75 Mont. 154, 242 P. 979, 980.

Joint stock corporation. This differs from a joint-stock company in being regularly incorporated, instead of being a mere partnership, but resembles it in having  a capital  divided into shares of stock. Most  business corporations (as distinguished from eleemosynary corporations) are of this character.

A "jointstock corporation" is one organized under a general  statute  authorizing the creation  of such corporations  and providing the procedure for creating it, and is distinguished from a "corporation" created by special resolution or act of the Legislature, which resolution or act is the charter  of the corporation, when accepted, and the corporation  organized thereunder,  and the corporation is a chartered corporation, as distinguished from a joint stock corporation. Barber v. Morgan, 89 Conn. 583, 94 A. 984, 986, Ann.Cas.1916E, 102.

Migratory corporation. A corporation, organized under  laws  of another state  than  that of incorporators' residence for purpose of doing  all or greater part of their business in state of their residence or in other state than that of incorporation.  Toklan Royalty Corporation v. Tiffany, 193 Oki. 120, 141 P.2d 571, 573.

Moneyed corporations are, properly speaking, those  dealing in money or in the business of receiving deposits, loaning money, and exchange; but in a wider sense the term is applied to all business corporations having a money capital and employing it in the conduct of their  business. Mutual Ins.  Co.  v. Erie County, 4 N.Y. 444; In re California Pac. R. Co., 4 Fed.Cas.  1,060; Hobbs v. National Bank,  C.C.A.N.Y., 101 F. 75, 41 C.C.A. 205.

Municipal corporations. See that title.

Public service corporations. Those whose operations serve  the needs  of the general public or conduce  to the comfort  and convenience of an entire community, such as railroads,  gas, water, and electric light companies. The  business of such companies is said  to be "affected with  a public interest," and for that reason they are subject to legislative regulation and control to a greater extent than corporations not  of this character. Washington & C. Ry. Co. v. Mobile & 0. R. Co., C.C.A.Ala., 255 F. 12, 14.

Quasi  corporations. Organizations resembling corporations; municipal societies or similar bodies  which,  though not true corporations in all respects, are yet recognized, by statutes or immemorial usage, as persons  or aggregate corporations, with precise  duties which  may be enforced, and privileges which may be maintained, by suits at law. They may be considered quasi corporations, with  limited powers, coextensive with the  duties imposed upon them by  statute or usage, but restrained from  a general use  of the authority which belongs to those metaphysical persons by the common law. Scates  v. King,  110 Ill. 456;  Barnes v. District of Columbia, 91 U.S. 552, 23 L.Ed. 440.

This  term  is lacking in definiteness and  precision.  It appears to be applied indiscriminately (a) to all kinds  of municipal corporations, the word "quasi" being introduced because it is said that these  are not voluntary organizations like private corporations, but created  by the legislature  for its own  purposes and  without reference to the wishes of the  people of the  territory affected; (b) to all municipal corporations except cities  and incorporated towns, the latter being considered  the only true municipal corporations because they exist and act under charters or statutes  of incorporation while counties, school districts, and the like are merely created or set off under  general laws; (c) to municipal corporations possessing only a low order  of corporate existence or the most limited  range  of corporate powers, such as hundreds in England, and counties, villages, and school districts in America.

A term applied  to those bodies,  or municipal societies, which,  though  not vested with the general  powers  of corporations, are yet recognized, by statutes or immemorial usage, as persons, or aggregate  corporations, with precise duties, which may be enforced,  and privileges,  which may be maintained, by suits  at law. State  v. Hagen, 136 La. 868, 67 So. 935, 936.

There is a well-defined and marked  distinction between municipal corporations proper and political  or quasi corporations. Cities, towns,  and villages are municipal corporations proper, while counties, townships, school districts, road districts, and the like are quasi corporations. City of East Cleveland v. Board of Education of City School Dist. of East Cleveland,  112 Ohio St. 607, 148 N.E. 350, 351.

"Quasi corporation"  is a phrase used to designate bodies which possess  a limited number  of corporate powers,  and which are low down in the  scale or grade of corporate existence, and is generally applied  to a body which exercises certain functions of a corporate character, but which has not been created a corporation  by any statute, general or special. Eakle v. Board of Education of Independent School Dist. of Henry, 97 W.Va. 434, 125 S.E. 165, 167.

Quasi public corporation. This  term  Is sometimes applied to corporations which are not strictly public,  in the sense of being organized for governniental purposes, but whose operations contribute  to the comfort, convenience, or welfare  of the general public, such  as telegraph and  telephone companies, gas,  water, and electric light companies, and irrigation companies. More commonly and more  correctly styled "public service corporations." Wiemer v. Louisville Water Co., C.C.Ky.,  130 F. 251; Campbell  v. Watson,  62 N.J. Eq. 396, 50 A. 120; Burgess v. City of Brockton, 235 Mass. 95, 126 N.E. 456, 460; Van Valkenburgh v. Ford, Tex.Civ.App., 207 S.W. 405, 414; Borough of Mt. Union v. Kunz, 290 Pa. 356, 139 A. 118, 121.

There  is a large class of private  corporations which  on account of special franchises conferred on them owe a duty to the public which  they may be compelled to perform. This class of corporations is known as public service corporations, and in legal phraseology as "quasi  public  corporations,"  or corporations  affected with a public interest. A "quasi  public  corporation" may be said to be a private corporation which has given to it certain powers of a public nature, such,  for instance, as the power of eminent domain, in order  to enable it to discharge its duties for the  public benefit, in which respect it differs from an ordinary private corporation, the powers of which are given and exercised for the exclusive advantage  of its stockholders. State ex rel.. Coco v. Riverside Irr. Co., 142 La. 10, 76 So. 216, 218.

The term  is also applied to corporations of that class sometimes  called "quasi municipal  corporations," such as school  districts; Courtright v. Consolidated Independent School Dist. of Mapleton, 203 Iowa, 26, 212 N.W. 368. 369; road districts; Road Improvement Dist. No. 7 of Poinsett County, Ark.,  v. Guardian Savings & Trust  Co., C.C.A. Ark., 298 F. 272, 274; Taylor Coal Co. v. Board of Drainage Com'rs of Ohio County, 189 Ky. 793, 225 S. W. 368, 369; irrigation districts; Bonneville Irr. Dist. v. Ririe, 57 Utah, 306, 195 P. 204, 205; and counties, townships, etc. Forbes Pioneer Boat Line v. Board of Com'rs of Everglades  Drainage Dist., 77 Fla. 742, 82 So. 346, 350.

Spiritual  corporations. Corporations, the members of which  are entirely spiritual persons, and incorporated as such,  for the furtherance of religion and perpetuating the rights of the church.

Trading corporations. A commercial corporation  engaged in buying and  selling. The  word "trading," is much narrower in scope  than "business," as applied to corporations, and though a trading corporation is a business corporation, there  are many  business corporations which  are not  trading companies. Dartmouth College v. Woodward, 4 Wheat.  669, 4 L.Ed.  629; Adams  v. Railroad Co., 1 Fed.Cas. 92.

Tramp corporations. Companies chartered in one state without  any intention of doing business therein, but which carry on their business  and operations wholly in other  states. State  v. Georgia Co., 112 N.C. 34, 17 S.E. 10, 19 L.R.A. 485.

Synonyms

The  words "company" and  "corporation" are commonly used as interchangeable terms. In strictness, however, a company is an association of persons for business or other purposes, embracing a considerable number of individuals, which may  or may  not  be incorporated. In the former  case, it is legally  a partnership or a joint stock  company; in the latter  case,  it is properly called a "corporation." Goddard v. Railroad Co., 202 Ill. 362, 66 N.E. 1066.  For the particulars in which  corporations differ from "Joint-Stock Companies" and "Partnerships," see those  titles.

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