State v. Stebbins , 1 Stew. 299 ( 1828 )

JUDGE SAFFOLD

delivered the opinion of the Court.

In the determination of this case, it is necessary to make a brief examination into the nature and design of corporations in general, and of this in particular. The object and necessity at all times and in every country, of incorporating companies, has been to give them perpetuity and legal authority to exercise specific powers and privileges of a nature promising some degree of public utility, and to which individuals in their natural capacity, are supposed incompetent; or such as are of a nature so far involving the general interest of society, that public policy forbids the unrestrained pursuit of them by individuals. The doctrine has universally prevailed, that a corporation can only exercise such powers as are specifically granted by the “ act of incorporation,” or are necessary to carry into effect the powers expressly granted. This principle is clearly maintained by Thompson, Chief Justice of the Supreme Court of New-York, in the same opinion referred to by the defendant’s counsel to maintain another principle, deemed material to the defence. ^a The latter principle alluded to is, “ that the' right of banking was a common law right, belonging to individuals, and to be exercised at their pleasure.” Such is the language of the Chief Justice, and is a doctrine which this Court has no disposition to disturb or question, but the deductions proper to be drawn from it, are worthy of consideration. Does it follow that corporations can claim all rights, privileges and immunities, which the law has not denied to individuals? or if they can, must they not derive such rights from the principles of the common law and general legislation ?

If the first branch of the proposition is assumed, the consequence would be, that corporations, instead of being limited to the powers granted them, can claim irrevocably, all powers not expressly denied them. If the latter, the necessary consequence must be, that the rights and powers of corporations, like those of individuals, are general and insecure, dependant on such restraints and modifications as the Legislature may think proper to prescribe.

That corporations have only a legal, invisible, untan-gible existence, with powers specially granted and circumscribed, within limits necessary to the objects of their creation, is one of the prominent principles of elementary law. In the case, of the Bank of the United States against Dandridge,^b Chief Justice Marshall, in a dissenting opinion, but on points in which he was not opposed, says “a corporation being one entire impersonal entity, distinct from the individuals who compose it, must be endowed with a mode of action peculiar to itself, which will always distinguish its transactions from those of its members.” This faculty must be exercised according to its own nature.

In the case of Head and Amory against the Providence Insurance Company, ^c the Supreme Court said, w an individual has an original capacity to contract and bind himself in such manner as he pleases. He who acts by another, acts by himself.” He who authorises another to make a writing for him, makes it himself; but with these bodies, which have only a legal existence, it is otherwise.

The act of incorporation is to them an enabling act. It gives them all the power they possess. It enables them to contract, and when it prescribes to them a mode of contracting, they must observe that mode, or the instrument no more creates a contract than if the body had never been incorporated. In the case of the New York Firemen Insurance Company against Sturges, ^a it was ruled, that “ a corporation having no power by the act of incorporation to discount notes, but created for the purposes of insurance, has no right to carry on the business of discounting ; that a corporation has no powers except such as are specially granted, and those that are necessary to carry into effect the powers so granted.”

The authorities r< ferred to, shew conclusively to my mind, that no corporation can legally exercise banking privileges, unless the power be specially granted. Then it is material to examine whether there is either an express or implied grant of banking powers or privileges contained in this charter. In the decision already re-ferrecj to,^b several well established rules of construction are recognized and enforced. They are, that where the words of a statute are obscure or doubtful, the intention of the Legislature is toJbe resoried to in order to discover their meaning s that a thing within the intention, is as much within the statute as if it were, within the letter; and a thing within the letter is not within the statute, if contrary to the intention of it; that such a construction ought to be given, as will not suffer the statute to be eluded; and thai a statute, restraining any person from doing certain acts, applies equally to corporations or bodies politic, although not mentioned.

The charter in question, appears to be one sai generis; it is difficult to interpret its object. Evidently, however, it confers no express grant of powers in which society is interested, or which individuals are incapable of exercising, except the perpetuity which is incident to all corporations. It is true, authority was granted by this charter to the persons therein named, their associates and successors, to purchase and hold lands, goods, &c. and to dispose of the same ; to sue and be sued, to have and to use a common seal; and also to ordain, establish and enforce bve-laws and ordinances, which are not repugnant to their own constitution or the laws of the land; and generally, to do all acts which are incident to bodies corporate, un-<Ier tbe restrictions therein mentioned. Through the entire grant of powers, there is not to be found the slightest intimation of any important object to be effected, or enterprise to be pursued, for which a corporate capacity was necessary. If any thing contained in the charter would justify an interpretation of the object of the grant, it can be no other than the name and style of the company. It is entitled The St Stephen’s Steamboat Companyhad it been the St Stephen’s Banking Company, it could have been argued with more plausibility, that banking powers and immunities were in ti e contemplation of the Legislature. And as the intention of the Legislature must govern the construction of all statutes, if it were necessary to ascertain the chief object of this grant, in the absence of any other indication of it, I should not heshate to say from the title merely, that it had reference to the erection or ownership, and profits of steamboats, and such incidental privileges as were deemed necessary to a full and lucrative prosecution of the enterprise. This interpretation is resisted, and it is contended for the defendants, that the style of the corporation can afford no aid in the interpretation of the charter. If so, what are the consequences? If it confers no steamboat privileges, it evidently confers no banking powers. If it contains no grant of any specific powers or privileges which can be reasonably regarded as the object of the incorporation, under the axiom that corporations can only exercise such powers as are conferred by the charters of their creation, the consequence is, that the charter in question is nothing better than a dead letter. But as far as this case is concerned, it is only material to decide whether this charter contains any grant of banking privileges.

I do not understand it to be contended that any word, clause or sentence in it expresses banking powers or privileges. The supposed right must rest alone on the argument, “ that this act created a corporation and gave to the company the powers incident to suchthat at the time of.the grant, banking being a common law right, inasmuch as no statute had at that time, restrained the right, the power was incidentally and irrevocably granted. If we could imagine that the Legislature had no specific object jn view for the grant, but intended to create a corporation with general powers, to pursue any and every enterprise that their ingenuity could invent, I think I have sufficiently shewn from principles of well established lau , that the charter would be void for the want of a specific grant. But the case does not rest here. I think tj,ere can pe n0 difficulty in shewing that no banking privileges were intended to be given. If the power can be exercised under this act, one dozen or more banking companies may spring up from the several towns and villages in the State, to which acts of incorporation have been granted, in each of which will be found no less allusion to banking than is in this act. But has this or any adjacent State or Territory, (while many bank charters have been granted within them,) at any time during their history, granted a bank charter without expressing the object, or prescribing any rules for its government, and without locating the institution or requiring any capital whatever? The same Legislature at the same session, granted the charter establishing the Tombeckbee Bank in the town of St Stephens; the same town in which the steamboat corporation was to exist, if by construction from its title or otherwise, we can give it any locality. In the Tombeckbee Bank charter, among a variety of other restraints and limitations, the maximum capital was limited; the rules for raising it were particularly prescribed, as also the proportion’ to be observed between the amount of bills emitted, and the capital actually paid in; and the minimum capital in specie was stipulated, on which the operations could commence. Provision was therein contained, subjecting the stockholders to individual responsibility, for their proportion of the debts, and the directors in-like manner, for excess of emissions. It prescribed remedies for and against the bank ; directed when dividends should be declared, and limited the duration of the corporation ; and in almost every section, the object is clearly expressed, in this charter, nothing of a kindred nature to any of these restraints is to be found. If other proof was necessary that banking powers were not contemplated in the steamboat charter, the fact that it has no limitation of time, would supply the deficiency.

Whether banking power was or was not a franchise in this State when this charter was granted, does not. it is conceived, influence this question. Admitting it was not, as contended in behalf of the defendants, yet the State retained the power of constituting it one at pleasure, in re-iation to all persons, associations or corporations, to which the power had not been expressly granted, if indeed the latter could otherwise exercise it. The constitution made it a franchise, after the passage of this charter, but many years before the project of banking under it commenced, or was perhaps invented. The constitution, bye-laws or regulations of the corporation, could not be regarded with reference to banking powers, if they were known, because they have not been adopted or sanctioned by competent authority; but inasmuch as they are not before us, they cannot be noticed.

But it is further contended that the act recited under which this indictment was preferred, admits that the act of incorporation gave the power, “ as it would seem, by construction,” to use banking privileges; and if so, the Legislature cannot abridge that power. It is admitted by the Court, that when any legal charter has conferred banking or other powers, the Legislature is incompetent to repeal or abridge them, during the validity of the grant; but it is equally clear, that an admission by the Legislature, that a corporation once had a power, which was never granted, and which in truth they never had, cannot confer such power. A recognition by statute of such a right, as having previously existed, and to be exercised in future, might give it a legal existence, but then it could only date its legitimacy from the time of the recognition. Here, in the same sentence which contains the admission, is an express repeal of the assumed constructive privilege.

If, however, banking as common law privilege could, without grant, as is contended, be exercised by this corporation in common with individuals, it also, in common with individuals, must remain subject to legislative restraints, as far as such rights are concerned. With this view, and to that extent only, if at all, can this repeal be regarded as material.

Whether the non user of a right for seven or eight years, which had once been sufficiently granted to a corporation, would, as contended on the part of the State, operate as a forfeiture, is not material on this occasion, to be considered.

The constitution of the State, by any liberal construction, denies banking privileges generally, and even by legislative authority, unless under severe restraints and limitations ; and it would be a novel doctrine to allow to a corporation under mere common law authority, rights which the supreme power of the State cannot exercise, ^hat since the adoption of the constitution, banking in this State is to be regarded as a franchise ; that to regulate and limit the issuing of any circulating currency in a State, except under previous authority, is at all times one of the prerogatives of sovereignty; and that the passage of the act of 1827', under which this prosecution was instituted, was a legitimate exercise of sovereignty, are propositions, the force of which we are constrained to admit.

But it is also contended by the counsel for the defendants, that as those persons acted in a corporate capacity, which is invisible and untangible, they cannot be subjected to criminal animadversion. To this it is consiriered a sufficient reply, that these defendants are indicted n their individual capacity ; that the act of incorporation can af-foid no protection beyond the sphere of its legitimate power. The special verdict,finds that all these defendants bv name, participated in the issuance of the prohibited note ; and to admit that the individuals composing a corporation, are exempt from the restraints of criminal law, would be subversive of all sovereignty.

The Court are unanimous in the opinion, that the conviction is legal, and that the judgement must be affirmed.-

a The People vs. Utica Ins. Co. 15 John R. 352.

b 12 Wheat 91.

c 2 Cranch 127.

a 2 Cowen's R. 664

b 15 John. R. 358