Court Opinion

ID: 6406501
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:49:22.797203+00
Date Added: 2024-06-11T15:51:13.677536
License: Public Domain

Putnam J.
delivered the opinion of the Court. The question is, whether corporators in a manufacturing corporation are partners, joint tenants or tenants in common, within the meaning of the St. 1823, c. 140. The same question was considered and determined in the negative, in the case of Pratt v. Bacon, 10 Pick. 123. We have, after hearing the ingenious argument of the counsel for the plaintiff, revised the former decision, and cannot perceive any fallacy in the reasoning or 3onclusion. In many things there is a similarity between corporators and partners. Corporators are interest ed in the profit and loss of the business, and so are partners. But there are such strong and obvious differences between them, as leave no doubt but that the statute does not embrace corporators as co-partners.
One great reason for giving a remedy in equity in the case of partners, was the inadequacy of the legal remedies which existed. But the corporation, the artificial being, may be sued by a corporator, as well as by a stranger. We are not sure however that the legislature took the case of corporators into consideration when they legislated about partners ; and if we were at liberty by construction to extend the equitable jurisdiction of this Court to cases which might fall within the reasons, though not within the language of the legislature, it would not be difficult to bring the case at bar within it. We have adopted a different course in former decisions, believing it to be according to the manifest course of legislation, that the equity jurisdiction was intended to be given with great caution. Proceeding upon that principle, we cannot suppose that by partners the legislature intended corporators.
The differences are very obvious. Partners may change the name of the firm when they please ; the name of the corporation remains until the legislature, upon the application of the corporators, shall alter it. Suits in favor of or against a partnership, must be' carried on in the names of the partners ; the corpr rators are not named in suits for or against the corporation. There is no such joint and several liability between corporators as between partners. The responsibility *69created by St 1808, c. 65, subjecting the property of corporators to the payment of the debts of the corporation, is rather an awkward approximation to, than an exact copy of the well known liability of partners. The corporator may transfer his shares at his pleasure, and the purchaser becomes a member; partners cannot introduce new members into the firm, without the consent of all concerned. Corporators have .no legal interest in the corporate property. It could not be levied on or taken by execution for the particular debt of the corporator. The real and the personal estate of partners is held by themselves. But we would rather refer to the other differences between corporators and partners which are mentioned in Pratt v. Bacon, than proceed with any further remarks upon that point.
The act of incorporation has been accepted, and the corporation was properly organized, and it appears that all the dealings which are the subject of enquiry between the parties, were had by them as corporators. The plaintiff may sue the corporation. It may not give him so perfect a remedy as might be devised, but it is the remedy provided by the law, and he must conform to it.
It was argued that the proposal of the defendant to the plaintiff to become jointly interested in this concern, each taking eight shares, made them partners or joint tenants or tenants in common ipso facto, upon its adoption. But we cannot perceive that inference ; for the corporation continued. The parties did not, by the new arrangement, acquire a legal title to the corporate property. They had indeed joint and equal control over it, but their acts and doings must appear through the proceedings of the corporation in the due forms of the law.
The legal title in the corporation remains, notwithstanding the individual members change. The stock, if every individual member should decease at. the same moment, would be distributed according to the statute of distributions or according to the wills of the individuals deceased. The legal representatives of the deceased members would have authority, by law, to manage the corporation, and no dissolution would tn such case take place.
*70It is said that the parties held for two years without doing any corporate act. If it were so, we cannot perceive that they would become partners instead of corporators.
If the shares of the corporation should all centre in one person, and the forms of proceeding or by-laws should prescribe acts to be done by two or more, we do not perceive any difficulty in the sole owner’s making sale of shares, so as to conform to the letter of the rule. There is, we think, no evidence of a dissolution of this corporation.
Upon the whole, we are of opinion that these parties are not partners, tenants in common or joint tenants, and that the bill must be dismissed.