Eminent Household v. Thornton , 134 Ga. 405 ( 1910 )

Atkinson, J.

The record is voluminous, but after careful consideration the view which we take of the case renders it unnecessary to state more of it than is expressed in the statement of facts. One question presented is: Did the petitioners for charter have the power, in December, 1909, to amend the by-laws and make rules relating to the control of the internal affairs of the order? If they did not, the action taken by them at that time was void, and the action of their appointees, the defendants whom the court refused to enjoin, was unauthorized and should have been enjoined. The question does not involve the exercise of the corporation function by a corporation, but relates to an alleged power conferred upon individuals to control a corporation. It was asserted that the charter of the corporation conferred upon the individuals who applied for it the power to retain supreme control over the internal affairs of the institution until there should be a meeting of the Eminent Household. The charter does not purport to have been granted by the legislature, but by the secretary of State under the provisions of an act of the legislature approved December 18th, 1893 (Acts 1893, p. 73 (Civil Code, § 2007 et seq.)), and the amendatory acts. The petition for charter recited, among other things, that it was desired that the petitioners for incorporation, their associates and assigns, should retain such power over the corporation as has been referred to, and the certificate issued by the secretary of State purported to have conferred that power. It was contended, on the one hand, that this alleged delegation of power was futile and of no effect, because it was unauthorized by the constitution or any act of the legislature. On the other hand it ivas contended that it was a valid conference of power upon the incorporators. In support of this latter contention it was urged, that, while not otherwise expressly provided for by law, the recital of power in the petition for incorporation, sanctioned by the secretary of State, amounted to a specification and limitation which was not inconsistent with the general provisions of the law, but, being’ consistent with the general law, it became effective as a charter power, the same as if the corporation had been created by an act of the legislature and the power had been expressly conferred by a legislative act. We can not concur in this view. For many purposes, and with respect to many corporate powers which a corporation might exercise, a charter for certain corporations may be issued by the secretary of State under our constitution and statutes; but to pursue further discussion with regard to that subject is to wander away from the question in the present ease, which relates, not to powers to be exercised by a corporation, but specifically to the power of individuals to exercise control over a corporation after it has been organized. A corporation is a creature of the law. Civil Code, § 1802. It can not be brought into existence except as a result of express legislation. The conference-of power upon persons to organize a corporation is legislative in character, and must be done 'by direct legislation, or be founded upon legislative or constitutional provisions. To authorize the incorporators, as such, to reserve power of control over the affairs of the corporation, after it has become an entity, stands upon the same footing. In the absence of special legislative limitation, a corporation should be under the control of all its members. There is no statute in this State which confers upon the incorporators the power, or authorizes the power to be conferred.upon the incorporators as such, to exercise supreme power of control over the corporation after it has been created. It is urged that the secretary of State has been vested with such power by the legislature, except in such instances where the power may be in conflict with the general law; but this position is untenable. The secretary of State of course would not have a power which the general law prohibited; but to confer upon the incorporators such power as is contended for in this case is a legislative function and can not be exercised by that official under the constitutional provisions hereinafter, referred to, whether the general laws expressly forbade it, or whether they were merely silent upon the question. The control of the corporation, after its organization, by the individuals who petition for- its charter is not a necessary, but an unusual power. One provision of the constitution of this State is: “The legislative power of the State shall be vested in a General Assembly, which shall consist of a Senate and House of' Kepresentatives.” Civil Code, § 5744. Another provides: “The legislative, judicial, and executive powers shall forever remain separate and distinct, and no person discharging the duties of one shall at the same time exercise the functions of either of the others, except as herein provided.” Civil Code, § 5720. Under these provisions of the constitution, the legislature alone can confer a power which requires legislation to authorize it. The secretary of State could not confer it alone or concurrently with the individuals who might apply for a charter.. Another provision of the constitution declares: “The General Assembly shall have no power to grant corporate powers and privileges to private companies, to make or change election precincts, nor to establish bridges or ferries, nor to change names of legitimate children; but it shall prescribe by law the manner in which such powers shall be exercised by the courts. All corporate powers and privileges to banking, insurance, railroad, canal, navigation, express, and telegraph companies shall be issued and granted by the secretary of State in such manner as shall be prescribed by law; and if in any event the secretary of State should be disqualified to act in any case, then in that event the legislature shall provide by general laws by what person such charters shall be granted.” Civil Code, § 5780. This is to be construed in connection with the other provisions of the constitution to which reference has been made, and should not be held to confer authority upon the secretary of State to exercise such a legislative function as granting special authority to incorporators, as such, to control a corporation after it has been created. The petition expressly alleged that the Eminent Household of Columbian Woodmen was duly chartered and organized, and the answer expressly admitted these allegations. These were solemn admissions in judicio, which the parties would not be heard to deny, even if they had contended in argument that there was an issue upon that subject. It appears that the petitioners for charter formally accepted it in 1903, a few days after the certificate was issued by the secretary of State, and while they constituted, so far appears from the record, its sole membership, enacted by-laws, elected officers, and organized the Eminent Council, which under the by-laws had authority to make contracts, conduct all of the business of the corporation, and exercise supreme legislative and judicial control over the corporation while the Eminent Household was not in session; and under administration of the Eminent Council, of which all the incorporators were its first members, the corporation was launched into business, which was continued under the administration of the Eminent Council for a period of six years, during which time it had acquired a membership approximating fifteen thousand and assets valued at about $250,000. After all of this had been done, it was contended in 1909 that the authority of the original incorporators to organize had not been terminated, because they had not formally surrendered the corporation to its stockholders. The history of the organization above recited completely answers the contention. The organization of the corporation was complete without the added formality of a declaration to that effect to be made to the Eminent Household. Eor the reason indicated, there was no authority of law for the petitioners for incorporation, in 1909, to take legislative control of the corporation. It follows that the defendants named in the original petition were unauthorized to do the things complained of, and should have been enjoined.

On the prayers of the answer in the nature of a cross-petition the court enjoined L. T. Binford from- assuming to exercise the duties of Viceroy or Eminent Consul, and restrained the other parties defendant to-the cross-petition from interfering with the performance of duties of Eminent Consul by J. B. Erost. The other prayers for injunction in the cross-petition were not passed on by the judge and are not before us. In view of the ruling announced in the first division it is unnecessary to enter into an extended discussion of the ease under the assignment of error which complains of the injunction against L. T. Binford and his associates. The record discloses that they were officers of the order, formally elected by the Eminent Council in accordance with the constitution and bylaws formally adopted by the original incorporators at the time of the organization of the corporation, as afterwards amended according to the rules contained in the original by-laws providing for their amendment. It also shows that the things complained of in the answer in the'nature of a cross-petition were being done by them in the exercise of official authority conferred by the constitution and by-laws. There was no dispute of fact involved, the controlling question being as to their authority to do the things which they were attempting to do. As they were acting within the limits of their authority, it was erroneous to enjoin them.

Judgment reversed.

All the Justices concur, ex'cept Fish, C. J., absent, and Lumpkin, J., disqualified.