Court Opinion

ID: 8257218
Source: CourtListenerOpinion
Date Created: 2022-10-16 15:32:59.584178+00
Date Added: 2024-06-11T16:43:02.294380
License: Public Domain

Fisher, J.,
delivered the opinion of the court.
This was an information in the nature of a writ of quo warranto, against the defendants, in the Circuit Court of Yazoo county, alleging that the defendants, for the space of twelve months last past, had exercised and enjoyed, without legal warrantor authority, the franchise of being a banking corporation, to wit: that of being a body politic and corporate, in law and in fact, by the name of the Commercial Bank of Manchester; that, by virtue of said franchise, they claim the right of issuing notes to circulate as money, of receiving deposits, and dealing in exchange, and finally, that the defendants have, dui’ing the time aforesaid, done the several acts named. To this information the defendants appeared, and pleaded that by an Act of the legislature, passed on the 26th day of .February, 1836, there was created and established, in said county and State, a body politic and corporate, by the name of the Commercial Bank of Manchester, which was by the said Act chartered as such, and invested with all the liberties, privileges, and franchises in the information mentioned, and which is still, by virtue of said Act, in the possession, use, and exercise of said franchises and privileges; and that they own a portion of the capital stock of the said bank, the residue being owned by other persons; that the defendant, Joseph H. Johnston, is the duly elected president of said corporation, and that they are thus members thereof; and as such members, in con*506junction with the other members of said corporation, and not otherwise, they use, enjoy, and exercise the privileges and franchises in the said information mentioned. The district attorney demurred to this plea, and the court below overruled the demurrer; and this is the first error assigned and argued by counsel.
It is contended on behalf of the State, that as the plea fails to show, that the corporation was organized in the manner required by the charter as pleaded, the demurrer should have been sustained. On the other hand it is contended, in answer to this position, that the corporation is made complete by the Act of incorporation, and that the plea is therefore sufficient. The fourth section of the charter of the bank declares, “ that the subscribers to the capital stock of said company, their successors, and assigns, shall be, and they are hereby created, a corporation and body politic, by the name and style of the Commercial Bank of Manchester,” &c. Acts of 1836, p. 140.
. Conceding for the sake of the argument, that the subscribers to the capital stock were created a corporation, as contended, the question still arises for consideration, whether merely as such subscribers, they are a corporation for the purposes specified in the information, to wit, that of issuing notes to circulate as money, to receive deposits, to deal in exchange, and to do divers other acts enumerated in the charter; for if they are a corporation in this sense, there can be no question as to the sufficiency of the plea. But if, on the other hand, they are a corporation in a limited sense, having no power merely as corporators, to exercise any of the various acts above enumerated, but only to organize and to keep in a state of organization, the. corporation, by the election of directors, &c., under whose supervision the affairs of the corporation must be conducted, there can be as little doubt that the plea is insufficient, and that the demurrer should have been sustained. For the question, as presented by the plea, is not merely, whether there is a corporation or no corporation, but whether the defendants, merely as stockholders in conjunction with the other stockholders, and not under the mode of organization and of action prescribed by the charter, may use and exercise the franchises, in the manner alleged in the information ? Or, in other words, whether they can issue notes to circulate as money, receive deposits, deal in exchange, &c. ? A *507response is given in the negative, to this question; for certainly, as members of the corporation, they could claim no such right, while it may be true, that they could so organize the corporation, that the same acts might be done by those intrusted with the management of its affairs. A stockholder issuing notes to circulate as money, could not bind the corporation, although he may act in its name, for the reason, that this is not the mode in which it can contract.
It can only be bound by those who are authorized to manage its affairs, and to contract in its name; and the stockholders having power to select the persons, at least in part, for this purpose, can only, as such, exercise this power. This question, however, will scarcely admit of doubt, and it does not therefore require elaboration.
The question upon which the case must turn may be disposed of in a few words. It is alleged, that the defendants have usurped the franchise as set forth in the information, and have exercised and used the liberties so granted, for the space of twelve months. The question is, what is a sufficient answer to this allegation ? It may be a denial; or if it is a confession and avoidance, they must certainly show that the corporation was, during the twelve months, in such a state of organization, to wit, that it could, in its corporate name, issue notes, &c., and bind itself, according to the terms of the charter, for their redemption, and for the perfonnance of its other obligations.
It is however difficult to see how the defendants, as stockholders, could interpose such a plea. But if they undertake to justify what they have done in the name of the corporation, they must show that it was done in such manner as to bind the corporation according to the terms of the charter ; otherwise, it will be but the individual act of the parties concerned; and it is unnecessary to enumerate the evils resulting from such a course of business. Paper purporting to be money is thrown upon the community, and it circulates under the general belief that it emanated from a bank bound for its redemption, when in truth, if the hank had an existence, it had no capacity to act, for the want of persons legally authorized to direct its action.
Under this view of the plea, we are of opinion, that the court *508below erred in overruling the demurrer, and this makes a decision of the points presented by the replications unnecessary.
Judgment reversed, demurrer sustained, and cause remanded.