64 Md. 85 | Md. | 1885
delivered the opinion of the Court.
The charter of the “ Silver Valley Mining Company” was granted by the Legislature of North Carolina by an Act whi ch was ratified on the 15th of February, 1861.
The title of this statute is “An Act to incorporate the Silver Valley Mining Company, in the County of Davidson.” By the. first section it is enacted that five named persons and “ their associates, successors, and assigns, be and they are hereby created and constituted a body politic and corporate, by the name and style of the Silver Valley Min
The second section provides “ that the said corporation may divide their stock into such number of shares, and may provide for the sale and transfer thereof in such manner and form as said corporation shall from time to time deem expedient, and may levy and collect assessments, forfeit and sell delinquent shares, declare and pay dividends on the shares, and may make, alter and repeal such by-laws and regulations as said corporation may deem necessary, not repugnant to the laws of this (átate and of the United States.”
The third section makes it “ lawful for the said corporation to be managed by three or five directors, two of whom at least shall be residents of this State, who shall have power to fill vacancies in their own body, shall continue in office until others are elected or appointed, and shall exercise all such rights as by this Act are conferred and granted; but the stockholders shall have the right to elect said directors annually.” By the other sections it is enacted that the aforesaid five named corporators “shall manage the affairs of said corporation as directors until others are elected or appointed,” that the “ corporation shall exist for thirty years, and that this Act shall bo in force from and after its ratification.”
The appellant by his bill in this case filed in February, 1880, avers that in March, 1869, he became the holder of a certificate which justly and legally entitled him to the ownership of 1800 shares of the capital stock of this cor
The bill then prays that the company and Wilkins and Denison may severally answer under oath, and set forth explicitly and fully the proceedings whereof the forfeiture of his stock is alleged to have occurred, and may discover when, by whom, and to whom it was sold and at what price, who is now the holder or ostensible holder thereof, and for whose benefit and interest the same is held, why they did not give greater publicity to their said proceedings, and the names of the persons who combined and cooperated with them in the formation and consummation of the "attempt to forfeit his stock, if any such persons there be, and to whose benefit the supposed forfeiture and sale have enured; that these proceedings of the corporation may be declared to be null and void, that the supposed forfeiture and sale may be annulled, that he may be reinstated in the possession and enjoyment of his said stock, that the said company and Wilkins and Denison may be forever enjoined and prohibited from setting up this supposed forfeiture, and from claiming any benefit therefrom, and that he may have full and fair compensation from them on account of the premises, and for general relief.
All the defendants filed a demurrer to the bill, which was overruled. They then filed separate answers in which they put the complainant upon proof of his ownership of stock, deny all the charges of combination or fraud, set out the proceedings under which the forfeiture and sale were made, and insist that the same were duly and lawfully conducted, and are legal and valid. Proof was then taken, and upon the hearing the Court below passed a
It thus appears that one of the grounds upon which the bill assails the validity of the forfeiture, is that the meeting of the directors at which the proceedings to that end were adopted, was not held within the limits of the sovereignty granting the charter, but another question is presented, and this goes to the corporate existence of this company at the time the appellant became a holder of its stock. The mere grant of a charter like this, where it does not appear upon the face of the incorporating Act, or otherwise, that the named corporators applied for it, does not create the corporate body. Something more must he done. There must be at least an acceptance of the grant hy a majority of the corporators, before corporate life and existence can begin. Angell & Ames on Corp., (11 Ed.,) sec. 81; Morawetz on Private Corp., secs. 14, 17; Boone on Corp., sec. 23. Nor is this a case in which acceptance is to be presumed or inferred from the assumption and exercise of the corporate powers, for the proof clearly shows, when, where, and how this charter was accepted. The testimony is explicit and without contradiction, that the named corporators held their first meeting in the City of Baltimore on the 5th of March, 1861, less than a month after the passage of the Act, and .that on the next day (March 6th, 1861,) they accepted the charter at a meeting held by them at the same place. It also appears that, at the same time or shortly thereafter, they elected a president, secretary and treasurer, adopted a seal, determined upon the number and par value of the shares of capital stock, and in fact did every thing pertaining to the organization of the company, at meetings held by them at the same place. In short, the proof is direct and positive, that no official meeting either of the corporators, stockholders or directors was ever held in North Carolina until the s]3ring of 1882, nearly two years
It seems to be well settled by the weight of authority, that directors may hold meetings, have an office, make contracts, and transact a part at least of the general business of the corporation in another State, unless prohibited by local legislation. But the directors when so acting are not the corporate body, but its mere agents. Angell & Ames on Corp., sec. 104; Balt. & Ohio R. R. Co., et al. vs. Glenn, et al., 28 Md., 287. Nor do we think it makes any difference as to the operation of this rule, that the named corporators, as in this case, are empowered by the charter to manage the affairs of the corporation, and to exercise all such rights as the charter grants, “ as directors ’’ until others are elected. The two capacities of corporators and directors are distinct, and they cannot do in the latter those acts which the law requires them to do in the former capacity. We find nothing in this charter which dispenses with the necessity of its acceptance, and of organization under it, by them as corporators, and certainly nothing which authorizes them, even if the grant of such authority would in any case be valid, to do these acts in another State. But while the directors may thus act as agents of the corporation it has, ever since the decision of the Supreme Court in the case of the Bank of Augusta vs. Earle, 13 Peters, 519, been the recognized rule of American law, that a corporation can have no legal existence out of
The two cases most generally cited in illustration and application of this rule, are Miller vs. Ewer, 27 Maine, 509, and Freeman vs. Machias Water Power and Mill Co., 38 Maine, 343. The former was a writ of entry to recover a tract of land in the State of Maine, and the demandants claimed title through a mortgage thereof executed by the president and secretary of the Bluehill Granite Company, a corporation chartered by that State in 1836. It appeared in proof that shortly after the date of the charter, a meeting of the corporators for organization under it, was called and held in the City of New York, that the charter was there accepted, and the officers of the corporation, president, secretary, and directors were there chosen ; that at a meeting of the directors held in the same city in April, 1837, the president and secretary were authorized by vote to execute the mortgage in question, which they accordingly did, and there was no proof that any meeting for the organization of the company, or for the choice of its officers had ever been held in the State of Maine. The Court upon this proof held that the mortgage' passed no title because the directors who ordered its execution were not lawfully chosen, and by a process of reasoning which seems to us entirely sound, reached the conclusion and laid down the proposition “ that all votes and proceedings of persons professing to act in the capacity of corporators when assembled without the bounds of the sovereignty granting the charter are wholly void.” The Court also in
In the other case a party sued the corporation for dividends upon his stock, which he alleged had been illegally forfeited. There also it appeared that the Act of incorporation was passed by the Legislature of Maine in March, 1836, and in April following an attempted organization was made in the City of Boston, where the number of shares was determined and the certificate issued; and the Court following the decision in Miller vs. Ewer, held that the slock certificate which the plaintiff offeired as proof of his right being evidenced by officers chosen in Boston, was invalid, because there can be no stock in a non-existent corporation, and that he could not be a stockholder under any attempted organization outside of the State granting the charter.
As we have' said these cases have been generally approved as expressing the correct rule of law on this subject, and we have found no subsequent case in which, upon the same or asimilar state of facts, a different adjudication has Been made. In Keene and Brady, Trustees, et al. vs. Van Reuth, 48 Md., 184, no question as to the validity of corporate acts like those in the present case, done or attempted to be done by corporators out of the State granting the charter, arose or was decided. Courts have sometimes differed as to what are corporate acts, and what are acts merely of agents, the majority holding that the directors are merely agents, .while some hold their acts as directors to be corporate acts, but the cases are uniform in holding that the charter can be accepted and the corporation organized only within the limits of the State creating it. Nor do we see any good reason why this rule should
We are therefore of opinion that upon the facts appearing in this record, this supposed corporation had no existence at the time the appellant became the holder of what purported to be a certificate of its stoch, and upon this ground alone we rest the affirmance of the decree dismissing his bill, without considering the other questions which have been argued with much ability /by counsel for the appellant.
Decree affirmed.