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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