Pratt v. Bacon , 27 Mass. 123 ( 1830 )

Per Curiam.

The Court are all ■ of opinion, that this bill cannot be sustained. It is, in effect, a bill by one corporator against other corporators, for an account of the corporate property. The plaintiff considers the act of incorporation as still in force, and the corporation still subsisting, and proceeds upon the ground, that as between each other, corporators are partners, joint-tenants or tenants in common, within the meaning of the statute, conferring upon this Court equity jurisdiction in controversies between parties standing in those relations. The equity jurisdiction of this Court is strictly limited, in regard to the subject matter of it, though ample and entire, as to every incidental question, and every remedy and course of proceeding, falling within the scope of such subject matter. It has often been decided, that the Court does not take equity jurisdiction, except where it is given by statute, either in express terms or by necessary implication, and that it will not be assumed, by analogy or equity of construction.¹

There is certainly some resemblance between a corporation and a partnership, inasmuch as each may consist of two or more persons associated together, and acting in concert, for the promotion of some private or public object. But the difference between the relative rights and duties, the legal qualities and characteristics of the members of a manufacturing corporation, and copartners and tenants in common, is obvious and strongly marked. A corporation is an ideal body, subsisting only in contemplation of law, which may be composed of members constantly changing, which is deemed, for useful purposes, to have an existence independently of that of all the members of which it is composed, to be capable of perpetual succession, and of acquiring, holding and conveying property. Its real and personal property is deemed to be vested in the corporation and not in the individuals composing it; and these- have no other interest in it, or control over it, than the qualified ones, of electing officers, and receiving dividends and profits in the manner provided by the act of incorporation, or the votes and by-laws, which may be made pursuant to the powers conferred by it. They cannot bind their associates, or the corporation, either in any personal obligation, or executory contract, nor alienate, pledge or otherwise affect the corporate property, by any sale, mortgage, contract or other personal act. They may change their relation to the corporation, at any time, by a sale of their shares ; and such sale is not deemed to be a transfer of any legal interest in the corporate property, but of the qualified, beneficial interest before mentioned. By a like transfer of shares, strangers may become members without the consent of the corporation, unless when some restraint is imposed upon the general right by a by-law, and such by-law, by imposing a particular limitation, would itself imply the existence of the general rule. It is true, that at the time this corporation was established, by force of a particular provision of law, the individual members were made conditionally liable for the debts of the corporation ; but as the law then stood, this liability ceased, by their ceasing to be members, by a sale of their shares, even for debts and obligations incurred whilst they were members, contrary to the well known rule of law in relation to partners. But further, this liability was several and not joint; it was provisional and collateral, in the nature of a guaranty, not the debt or obligation of the corporators themselves personally ; it resulted from the positive provision of the statute, and not the common law obligation of a contract deemed to be made by them, and growing out of the relation in which they were placed. In all these respects the members of a manufacturing corporation, in their legal relations to each other, differ essentially and radically from partners, joint-tenants and tenants in common ; and however beneficial it might be for the members of corporations, now so extensively multiplied through the Commonwealth, to have the aid of a court of equity, in adjusting the multifarious and perplexing controversies, which are likely to arise out of this relation, still we are all of opinion, that by no reasonable construction of the statute relied upon, can their case be brought within the equity jurisdiction given by that statute.¹

net. 13th.

In consequence of a remark of the Chief Justice, that this decision would not affect the question, what would be the relation of members of a corporation to each other, and to the real and personal-property, after a dissolution of the corporation, the plaintiff offered an amendment to the bill, setting forth that there had been no meeting of the corporation since ISIS, with other facts, whereby, as he alleged, it would appear that the corporation had been dissolved.

Per Curiam.

This amendment is, in effect, making a new bill, and a wholly new case, and, under the circumstances, cannot be allowed.² It is said that amendments are allowed liberally in suits in equity. This is true, but it depends upon the nature and objects of the proposed amendments. Where the object is to strengthen, elucidate and explain the case made by the original bill, to traverse and draw in issue every material fact which may directly or indirectly affect such case, amendments, however considerable, will be freely allowed ; but where the effect of an amendment is to abandon the case originally made and to make a new and distinct one, we think a different rule should guide the discretion of the Court, and in general it will be more consonant with the purposes of justice, to leave the plaintiff to bring a new suit, if he shall be so advised. So at common law, where there has been a general demurrer and a decision upon the merits, the Court in general will not permit such an amendment as to make substantially a new case. This principle is applicable here.

Various facts are set forth in the amendment, from which the Court would be called upon to determine whether there had been a dissolution, of the corporation, and if so, what were the relations of the parties to each other and to the corporate property, upon such dissolution, either at common law or by statute. Upon these questions we give no opinion, in deciding that the amendment now offered cannot be allowed.

Bill dismissed.

1 See Galvin v. Shaw, 3 Fairfield, 456; Given v Stimpson, 5 Greenleaf, 303.

1 Russell v. M‘Lellan, 14 Pick. 63.

2 See Bishop v. Williamson, 2 Fairfield, 502.