'■^Va ORIGIN, DEVELOPMENT AND ECONOMIC EFFECTS OF LIMITED LIABILITY IN CORPORATION FINANCE IN ENGLAND AND THE UNITED STATES BY RAY GEORGE ELLIS B. S., Pd. B. Syracuse University, 1917 THESIS Submitted in Partial Fulfillment of the Requirements for the Degree of MASTER OF ARTS IN ECONOMICS IN THE GRADUATE SCHOOL OF THE UNIVERSITY OF ILLINOIS 1921 Digitized by the Internet Archive in 2016 https://archive.org/details/origindevelopmenOOelli :iv i \ UNIVERSITY OF ILLINOIS THE GRADUATE SCHOOL £ ./V iA Ky / _ ] 92 f i I HEREBY RECOMMEND THAT THE THESIS PREPARED UNDER MY /\ SUPERVISION BY (L f S dhcci .jt BE ACCEDED AS FULFILLING THIS PART OF THE REQUIREMENTS FOR Head of Department Recommendation concurred in* Committee on Final Examination* *Required for doctor’s degree but not for master’s dc • O’ uj- • 1 CHAPTSn I. The corporation as a form of business organisation has proved itself si^erior to the individual enterpriser and PcJrtnership. 'iodern business enterprise is carried on very largely by this form of organization, on account of its many advantages. It is used in .u.any forms of activity, business, political, and social. In the business field, manufacturing, commercial, bonhing, and financial groups are using it. Pol- itically, the various forms of our governrsent, federal, state, and municipal are organized as corporations. In the social field, there are membership, religious, and fraternal coip.'Cr- a'*'icns. This form of organization, especially in the business world, is becoming more common every day. The percentage of the world's business that is being done by it is continually increasing. VI3 are surrounded by corporate activity on every side; we regard it as the natural coijrse of development. Te are more or less familiar with the working of the modern cor- poration, It is here and we use it. Until very recently little has been said or written about the history of corpor- ate development from its earliest traces to the present time. In regard to almost any phase of corporate activity it is difficult to determine when that pscrtioular characteri s tic first bsg,iji tc be used, or what were the oir cuimstanoes that lead to its adoption. The purpose of this paper is to show something of the history and de-’^elopment of one corporate characteristic that is very important in modern business, viz. the limitatio 2 of the liability of the stockholder. before starting this probl«:a there are t^vo things that ;jiust have so;ne consideration: (l) What it is that rohes a business unit a corporation, (3) The exact kind of limited liability that is being considered. In regard to the first of these there are m.nny diff- erences o:^ opinion as to what is, and, ivhat constitutes, a corporation. The economist regards the corporation as a collection of funds, ’’massed capital” used for certain stated purposes and administered by persons who .are agents the corporation. The law^’-er regards the corporation .-as an arti- ficial or metaphysical person endowed with certain rights and privileges. Thus Elackstone says, "the corporation is an arti- ficial person created for pyreseriring in p)er'petual succession certain rights, which being conferred on natural persons only, would fail in the process of ti'-ie,” In the Dartmouth College Case in 1319, Chief Justice ’Jarshall cf the United States Supreme Court gave a definition that is ^;ery similiar to the one that Blachstone formulated. Marshall referred to a corpor- ation as "an artificial being, invisible, intangible, and ex- isting only in contemplation of law.” This idea of an artific- ial p. erson has been held since the fifteenth century in Turcpe and was well known to the Romans, from whom the T'arope.an3 ob- tained many of their ideas on the smject. The above two def- initions are the two most famous and most liUoted, but there were in earlier times very definite ideas as to what made a corporation an independent entity v;ith a personality of its OvTn. There are three particularly clear statements of what con- 3. stitutes a corporation. One of these iates hack to 1612 and was brought out in Sutton's Hospital Case^. At this tine the following things were said to be "of the essence of a corpor- ation. 1st. La’^ul authority of incorporation and that uay be by four rieans, vis., by the coroon law, as of the king hira- self, etc.; by the authority of ParliaiBent; by the king's charter; and by prescription. The 2d, which is of the essence of the incorporation are persons to be incorporated, and that in two laonners; viz., persons natural, or bodies incorporate end political. 3d. A nariie by which they are incorporated. 4th. Cf a place, for without a place no incorporation can be made. 5th. By words sufficient in law but not restrained to any cer- tain legal, and prescript form of v/ords." The first requirement is of fundamental importance and is known to ha\=e existed in the Roman law. It is stated on good authority*^ that sc far as is known prescription and common law corporations were the older forms and that from the first a charter from the king or authority from Parlia- ment was necessary to form a business corporation — and bus- iness corporations are the ones that make the greatest use of the principle that is about to be considered. 1- 10 Rep. 29 b. 3- Samuel Willi ston. History of the Law of Business Corpor- ations Before 1300. The three sets of things that gc to make a corporation, given in this chapter, occur in Williston’s Article in Harvard Law :^.eview Vol. II. X... . " a. r U- . •■■' ' ' /■ <1 • 1 • •., t <' Cr ■ •, ■ ?' • , ( •r •y t;w V... " . . . f h r. •» The oecond re luire’ient Is also liiportant anl will, of course. always be present in the case of a business corporation. In regard to the third point there have been cases'^ in v;hich the lack of, or, a change in, na^*e lid not des-'rpy the corporate nature of the enterprise. The fourth re'iuireraent, that of place, was considered very i»»portant during the iiiddle ages and until corporations began to be used for .-ore varied pur- p poses. Williston states that 'it is hardly -mientioned in "The Law Corporations" or in 31ackstone’s chapter (Blacks. Cons, Ch. XVIII. ) ayi nterely says, "It is generally lenonin- ated of soiiae place." (l Kyd, 32S.), and it may be assumed us true of business corporations, as '.cell as of most ethers, that before the beginning of the present (l9th. ) century there was no force in Coke's fifth essential for the existence of a corporation, other than as a ma-^ter of convenience . ' ^ The last requireijient "By words sufficient in law..." must bs be used in order to carry out the first one. Neither the x^ing nor P ai’ 1 i a..xen t can bring a corporation into being without the use of v;ords siofficient in law. If it is concluded that the first cf the above four ccniitlons to corporate being is the only one that needs to be considered in connection with (busi- ness) corporations, the conclusion will be in agreemen''' with 1- 'layer of Stafford v. Bolton, 1 B. S; P. 40. B- Har\^rd Law Review. Vol. II. Bishop of Rochester's Case, Owen, 73. I ' cn ' o e , Other cases are 1 Ventr. 355. cited by Pi 11 is ton. t % ■A I T V \/- ■ ■■ „ ,• . 5. Colc 3 , who says, in regard to a corr-oration already created : " 7 .’h 3 n a corporation is duly created, all other incidents are tacitly annexed — ...and therefore .divers clauses suhse'iuent in the charter arc not of necessity, but only declaratory, and might as well be left out as: — 1st. 3y the sa/ae to have authority, ability?’, and capacity to purchase, but no clause is added that they may alien, etc., and it need not, for it is an incident. 3d. To sue and be sued, implead and be impleaded. 3d. To ha\^8 a seal; that is also declaratory, for when they ere incorporated they maize or use what seal they will. 4th. Tc restrain them from aliening or devising but in certain forms; that is an ordinance testifying the king's desire, but it is not a precept and does not bind in lav;. 5th, That the s'orvivors shall be a corccraticn; that io a good clause to oust doubts and questions .vhich might arise, the n'uiiber being certain, Sth. If the revenue increases, that they shall be used tc increase the number of the poor, etc., that is also explanatory. Sth. To maize ordinances; that is a re^^uisite for the good order and government of the peer, etc., but not to the essence of the incorporation. 10th. The license to purchase in mortmain is 1- Sutton's Hospital Case. 1C Rep. 50. This is the second of the three lists referred to, above nscsssaxy -^cr tl*o niaintsr.ar.ee and sj^jpert of tiis i-’oor, for without revenuea they caiinct live, end .vitheut a licsnse in .-crtnain they cannot lawfully purchase rsvenuss, and yet that is not of the essence of the ccrpcra.tion, for the cor- peratien is perfect without it.” The list of corporate attributes given by flachstone is very similiar.^ According to hiiii the incidents which are annexed to every corperation as soon as it is duly erected are: 1st. Tc have perpetual succession. This is the very end of its incorporation for there can not be a succession forever without an incerperat ion, and therefore all aggregate corporations have a power necessarily i;..pliad of electing nenbers in the rcoru of such as go off. y O ran or 2nd. To sue and be sued, iapl<=aci and be iiuy leaded, receive by its corporate no:ae, and do all other acts as natural persons .;iay. 3rd, To purchiuae lands and hold them for the benefit of themselv-es and their successors, which two are consequen- tial of the for.mer. 4th. Tc have a common seal. 5th, To :zake by-laws or private statutes for the better government of the corporation, which are binding on thsiiselv'es, ^jnless they are contrary to the law of the realm, and then they are void. 1- Elackstens's Ccmiientaries 47o, is t-.e last of the three li sss reierrsd to, above. V.'ocd's Inst, of the Laws of Eng., Eock I, Chap . S. 7 . It is advisable not tc sc tec e-^actlng as to jact v.’bat fcrrus a group cf persons into a correratien v;licn such excellent autnorities as ’'^cllock and. "'.?vi-*:land advise suck caution as this: "V.'e are net likely to find tLs essence of a corporation in any one rule rule of la'.v. If, for exaiple, an I]nglish lav.yer rould :iake all turn on the cou'"or. seal, he vrculd be setting up a merely English rule as a necessary naxiii on jurisprudence; not only sc, for he v.culd be begging an important ^lUestion a,bout the early history cf corporations in England. Sonie again may feel inolired to say th^t a oorp.sr- ation must have its origin in a special a.ct of the Sta.te, for examp.le, in England a royal charter; but they again vill be in danger of begging a Cj.uestion about ancient history’-, /hiile they .vill have difficulty in sq.uaring t?ieir opinion vlth the iicdern history: of Joint-stock cOi:ftpa.nies . do.lern legislation enables a s.iall group of private ;ien tc engender a corporation by registration, and to u^ge that this is the effect of 'stat- ute’ and not of 'co.imon law' is to insist upon a distinction v;hich Yv'e hardlj'- dare carry be^’oni the four seas. Or, to cone to .a :.;ore vital point, shall we demand that an indivivdual cor- porator -shall net be liable '^^or the debts of the ^v^ri orat icn? 'Si quid universitati debetur singulis non debetur; nec -lucd debet universitas singuli debent.' (Dig. 3,4,o.) — is not this the very core of the matter? Once ^aore uodern legislation bids us pa’use;- there is no rea^son why a statute should not say that a Judgement obtained against a corporation can not be enforced against all the goods cf every single corporator, and this althoU:?h the cerroratien still exists:- in ordering e. that tl'.ia he so ^ le^iela.ture dees not contra^di at In the first half of this century — nineteenth — cur^parlie- ’■/i.ent tried ■•cany experl '•*ients of this kind. (Hse, for exu'-ple, the Act for the Registration of Joint-Stock Go?ip'mies, 7 d 3 ’net. c. 110. sec. £5, Se.)'»^ Ohere is one requisite running through these lists that_, in regard to husiness corporations, v;e .Lay he certain is absolutely f ■’Jin d anient al, and it is, that corporations :»ust come into being through the instrumentality’- of the sovereign po^er.'^ Sotu Coke and Elackstone agree that the other things are net essential; that to be "incorporated” .means to have them; they are "incidents" and -/v-ill aluays bs present. However, in the earlier English companies, it is difficult to determine when a corporation has been created. For instance, .m-any of the monopolies cf the 'liddle Ages were not corporations and were not intended to be such. They were granted a monopoly only’’; a separate, artificial person was not created. Revertheless some of these companies doing business within the country, having a grant from the king or Parliament, but not specifically’- declared to be a corporation, have performed all of the functions of the corporation as it was constituted at that time. In such cases, or, in any’- case where a company has a charter from the king or Parliament and exercises so;.:e of the functions set forth by P lack 3 ton cr Ccke as of the "essence cf a corporat icn, " I s hall con- 1- Pcllcck and Puitland. Eist. cf Eng. Law. Vol. T, p. p. 3. 2- Supra 427. -j i.'«,/ ■ , '-vW /t • 'i-! -(w ,'>*.‘iS, V , * >iWK -/3 * “I;. '■ ': •a4<%;V.. •. t<\ • ;;>l* . ./r v . ’• ,_.T ,y -X rviii / •' Jjt '• -^'i ■■ ■■ I ' ^ V 1M^U^y.SfJCTj^ ■ I ^ ?.'• ■ -^trU. -:i .i? : *-' . : ' ■ : . ■; !, i ''- ■- "‘i TWrrjl li.itt'iii,;i*' „ -iiit'' 'j ^‘- >: ■ u- . o sidc?r It a corpcraticr. . This is nscssc^ry bscaua^ the cer::cr- aticn lias been develcpad by a slo-v end evcluticnary process,'- It is practically impossible to determine nhetner seme si the eai’ly irnglisb cc.;:pani^s should, or, should not, be included in the list of corporations, just as it is difficult, at the pres- ent time, to draw the line, in sc'^-.e cases, betv;s8n the limited artnership and the trus corporation. In cases of this hind the coui’ts have followed about such a policy as I have sug- gested, vi«. where little ?/as known except that the fw.ct that they were incorporated, they were held to have hv.d the other corporate characteriet ics . ^ Ey limited liability is meant the limitation of the liaoility of the shareholders of tne corporation. This needs little e.q.'l aviation as it is a la^uiliar principle today. In the modern business corporation the stock*.older who has fully ,-o^id the par value ci his stock has no further liability. That is, in case of insolvency, the creditors can not bring suit against him as they might i-n the case of a 'cartnershir, , oiA J .ith. English Gilds. E. Staley, '"he Gilds of Florence. Geo. "Unwin. Industrial Organization in t:..e XVIth, & IVIIth. V Centuries. J. P. Eenvis. Corporations. Their Origin and I-evelcpment. W. R. Scott. Joint-Stock Goripanies to 1730, Vh C. Holdsworth. The Early History of Cora--. 3 roial Socie-*:ies In J’uridical Review, Vcl, 3S. 3- Company of Wcc'diiicngers. Finer 's Abridg.rent. Vol. VI, -c. 3S8, 10 . Tills is tiis kind of liability and its li.iltaticn that ’.vill no'.v be considered. There are cases of special liability of the aerabsrs of corporations, bat they have no direct bear- ing on this topic, and will, in most cases, bo disregarded, such as; the double liability imposed on stockholders of all corporations in certain states^, ti^e double liability that usually goes with banking and certain other forms of ,bu 3 lne'=^ wherever they may be situated, spec^"'' li'='bility of stock- holders for the payment of wages to labor employed. It is conceivable that any kinl of stockholders’ liability may ex- ist by special agreement. In a case* where all of the members of a corporation covenanted in its behalf, under their private seals, binding themselves and their heirs that the corpor- ation should do certain acts, it was held that t..ey were per- sonally bound. The power that creates the corpcratlcn (uing, Parliamnet, legislature.) may ilso make any kind cf special liability for the members of certain ccrpcrations which they authorise. ^ 1- 'linnesota, California. See Con 3 ?’ngton. Corporate Organisation and ’management, p. 11c. 0- Tillensten et al. v. Newell et. al. 13. Mass. 406. 3- Supra. 7 & S. Hef. Pollock and Maitland. 11 . r«T-f /''DfTiT7'-' TT w .lii. - " . . ■>. X . The corpore.tlon is of very ancien+: origin. If is the opinion of Angell nnd Ames that it was hnovm to the Greeks, that the Romans obtained their knowledge of it from them. ^ In the early Roman law there was not a limitation of liability for the members of a. corporation. As the Homan corporations were not, in most cases, business or trading organisations, it is not strange that this feature developed later. "In Rovem law it seems that if the corporation became insolvent the per- sons constituting it were obliged to contribute of their per- r> sonal fortunes. Later, in the Roman law, there was a limitation of liability’- set forth in the Code of Justinian in the sixth cen- tury. "Si quid universitati debetur singulis non debetur; nec 3 c\,icd debet miversitas sin gull debent." The development in Rngland was about the same. In the earlier psrt of their history there was no limitation of the responsibilities of the members of corporations -"hile after the fifteenth century members were not responsible in their personal property for the debts of the corporation. There is no connection between the lack of this feature in early Eng- land and its non-appearance in early Rome. There is, however, 1- Angell and Ames on Corporations. Select Essays in Anglo-American Legal History. p. 107, See: Ayliffe 200 (Code Book I tit. 3. ) Savigny Sys. J33 Williston' 3 Article In Harvard Law Review, 7cl. II, P. ISO 3- Elackstone (Cooley) Vol. I, p. 435 quoting Pandectae (Fleta. ) .*.s' i * > X. ...:,£ ‘ a connecticn betxsan the developneent of the cf lim- ited liabilitj^ in England and the use of it by the later l.on- .•me. Hien the ^nglieh lawyers began to search the old F.onicn lav/3, from the thirteenth centur\^ on, it is only nat^rral that they would be influenced by what they fo’jnd. John ?. llavis states that limited liability'- was not a featiurs of the e.arly corporate life in T^nglsnd. He further sa 3 ’’S, ’in a rough way, the members of medieval gilds and municipalities were held ;;ointly responsible for the debts of members, whether incurred in personal transactions, or in transactions relating to matters of common concern; it was only when the cornuunity in thought and aotion and legal i-ules was con^lete, in the fif- teenth centurj'' that the well-known principle of the ccmiacn law "Si '-.yail ^jni versit at i debetur singulis non debetur; nec quod debst univsrsitas sinsuli debent.” became annlicable in Hng- land. ’ 1 This statement is in agreement with f’ollock and Mait- land who say that, ”If v;e insist ■'■hat the common la*" can not hold the singuli liable for the debt of the universitas, we shall •'’ind little to sa^^ about corporations in pcny oentur^" ; rib . 1 doss isr than the fifteenth. There is only one authorit;/ that I ha''-e found who not agree that liwiteci liability’- was not well establish he cemoon law in Hnglani b^’’ the fifteenth century*. This ed 1- John P- Davis. Corporations Their Origin and Oevelonment . ""el. I. p. C6. 2- Pollock and '■''aitland. Histor\’’ of '^n^lish Law. U07 ^,^Ol. I. authority^ has this to sa^?-: 'i.ou’ot It has hssn settle! for a long time that the in!i viau..' 1 aemoers are not liable for the hibts of a cori’. oration, oni it has even been saih that "the personal responsibility of the stockhollsrn ia inconsistent with the nature of a boly ccri'crate, " ("lyers r. Trvrin, h 3, & H. 371, per Tilghman, G. J. ) yet in the hornan law it seems that if the coip^oraticn became inscl\/-ent tl.e x-ersons consti- tuting it were obliged to contribute their private for‘^urv=e; (Ayliffe, £00, referring to code, Bk. i, tit. 3; oavigny Cys. a 0£. ) and though it may be hazardous to assert that at common IctW the rule the same in England, it is certain that, so fa,r as the evidence goes, it points to that conclusion. This is followed on the same page by cases where the members v;ere not held liable and by cases -where thej were so held. As I an using the sane cases a little farther on, T ./ill not take them i:^. here. The cases which he gives shew that members were held liable are exceptional and u^iusual and seem tc in- ■'.’•clve questions of pleading and prcceedure rather than a desire on the part of the court to hold individual members of cor- pora.tions lia,ble for its debts. ^ The idea of the corporation as a distinct, separate personality had been under discussion by English lawyers for some time by the fifteenth century and wus practically accex: ted 1- "!^/illis ton . Harvard Law B.e view, Vol. II. £- Ibid. p. 160. o- The cases are: Dr. Salmon v. The I-'a/nbo rough Co/ipany; Ch. Gas. 334; s. c. c Vin. Abr. 310. Harvey v. East India Companv. 3 Vern. 335 . LS., K r» K •« lli * k.' * n [«> * ff / ,*•- "fi'4 -’lA' > ■■■■ ■ • V T7_v.rr3Lrtr,-;T«'-r'- ":i'7 ---'r: xsEssjaia i( .( t| i, •- ■ > , U. i ,J«" . / t !; r ; , r ’V. • .r' . , #W V L. ' - • * 1 5 . ‘ ' ’ ' ■ j r . « . ".. ' "v ^ .J, '■ ■ ■ ■ ■i I j 4 '< 17 CHAPTER III. There were no more cases involving the liability of the members of companies until after the middle of the seven- teenth century. There is considerable indirect evidence to show there was a steady progress in the development of the idea. in the meantime. An interesting case was tried in 1670 which Viner gives as follows: "Money was loaned to the Company of Woodmon- gers, who were incorporated, and a bond was sealed with their common seal, and subscribed by the defendants, who were two of the principal of the company. The bond was noverint universi &c. nos magistrum & guardianos &c. of the Corrpany of Woodmongers &c. and now the company being dissolved action was brought against those who subscribed the bond; but ruled, that it could not lie; so the plaintiff was nonsuit."^ Five years later there was a similiar decision: "A member of a company set his name to a bond under the common seal of the company; this does not legally bind him in his capacity. So far as the records show it was seven years before another case bearing on this sub;Ject came up, and the decision was "For a duty or charge \:pon a corporation, every particular member thereof is not liable, but process 1- Viner 's Abridgement of taw and Equity. Vol. VI, p. 298. See also Lev. 237 Pasch. 20 Car. 2 B, R. Edwards v. Brown. Viner also refers to 1 Stra. 434, Show. 174, 3 Wils. 269. 2- Ibid. Vol. VI, p. 299. Arg. Fin. R, 84 Hill 25 Car. 2. in Case of Naylor v. Brown late master of the Wood- mongers’ Company. i: h •I n ( b I u I. ; o o © \T i V'*-’ «. >•*. t > -!l ( ■> V -L :< i I I ■* f SfcteSa* < * > ri. 18. ought to go in their publick capacity."^ These axe all of the cases occuring during this period that have a definite bearing on limited liability. There were several oases in which the individual members of companies were held responsible for the company’s obligations where the com- pany had no goods. However, these were cases involving irreg- ular pleading, usually involving distringas, and the result ob- tained was because of this and not because the court wished to hold the members of companies liable for the latter’s debts. ^ One of these cases (The Haraborough Case) that will be consider- ed in the following extract from an article by W, S. Holdsworth occuring in the 28th. volume of the Juridical Review was diff- erent in that the creditors were able to force the company to make leviations against the members of the company for the pay- ment of its debts. Holdsworth summarizes this whole period as follows: "As early as the fifteenth century it was clear that an in- dividual corporator was not personally liable for the debts of the corporation; (b) and, after some hesitation, (c) this 1- ¥iner*s Abridgement. Vol. YI, p. 299. 2- Ibid. Vol. VI, p. 310. Vern. 122. Hill 1682 in Case of Curson v. African Company. S. G. & S. P. cite 2. Vern. 396 in Case of Harvey V. African Company. Dr. Salmon v. Hamborough Co. (b) Holdsworth, H. E. L. , III. 369. ’* '> ' 7 • i* ' . \vJ f_ ,,, • 0 *\ ^ ^ ■ * *1 ^ ^ *jC 0 ‘ :xjrjoo 0*:.' .g ^:: , r, o/J.ijliT •iiC-s> t?;'7 t»proid^< i£r\-- u' _g. ,; :.:f ^ • ■ ' ’- -:•'/: I £ .'■-. !T i; ■ idtc- ■ij. ,'I'.V v'f:- ;.■.. ,4;ri V.. ' !iV’ r24v A.'' ;■'::* u.': »i>; ,IJ' J;A' ^JS£fr> ; c*-'..^'’!:' ^ : .^T' D '. : ■ : r..;: t ’ v * 11 fT' c.i.. H . r, :: ; ,;.h ; :«• r. , ^ r' .... ' .i: f .; 2i = . ■ i ■0! j :^01 . . .r ,i :- ‘.J t«inbOv, . 7.^ ■ <.#« •’ ' -'-'•il; iHift. v-’K. I.. ; .. •• '1 7'- t ■ , '//.u/.:: trli _j:j\ r.'. i <••••. .V,; *1 •: .. 'EO'^V •- :.r * »’I • ' ( .'■ y ^ i3‘0..< .' .•*■ t o '.»i » r ,■“ .)' y-, : .'. i c ) . i' Oi •» ♦ .V Ct.-jc ‘ .tL V ., v^ 4.4) J^to .' ' . ill?/ . > :w • i'.‘.^ J'* "*'1 SOQfjVrii ■ ■ pji, '■' . ■ " • .r’jii , *: ■' 1 19. conclusion was ultimately accepted in the latter part of the seventeenth century, (a) Indeed, one of the advantages which petitioners for incorporation frequently set out was the clear separation which necessarily followed between the liability of the corporation and that of its members; (b) and it is fair- Continued: (c) See the authorities cited by Carr, Select Charters (S.S.), XVIII. n. 1. He points out that "the indenture which settled the sums and rents due to the king from the Starch- makers Company (Patent Rolls, 20 Jac. I. pt. x. ) provided that no such s\iras 'shall in any sort be demanded levied re- covered or had but only of the body corporate’"; and that in 1655 the Governor of the East India Company got an in- demnity from the company "because his name is used in all suits and actions"; Hobbes (Leviathan, 120) thought that "If a body politique of merchants contract a debt due to a stranger by the act of their representative anently, every member is lyable by himself for the whole. " (a) Edmunds v. Brown and Tillard (1668), 1 Lev. 237; Salmon v. The Hambo rough Company (1671), 1 Ch. Cas. 204. (b) Carr (Select Charters (S, S. ), XVII., XVIII.) says that the following formula, taken from a petition for incorporation in 1693, is common:- "The same (i. e. a joint stock) is not to be raised unless upon the establishment of a corporation, because if such an undertaking should be carried on only by articles of partnership, the stock will be liable to the particular and private debts of the several partners and ■ r.' -t M , a = , (. , > 1 ) ■ , ' ' V, , ■ ,’ •■♦ ' ■ ' , ' vd>^ 'lo'-<:iA -4 *^.9 ■ id ‘ , ^ ' vi^:*. ,i. t'Ui: • -i*jt 9(iQt}- ■ ' .• . ••uj-ori'u .jSt .citrv;:CTt6 ' ■*'' ' ii • I ■ I, O' &£-: .'»/o,' '^, . ■, . i J«?q v>M Zo -U n «<»«>, J^.'' fr.c*AO .' i ;• . ^;i a Di: i ! •. •! 'iib'i''.'’l l-Bl :\£' \ti f* ( J) .«vW: if t«.o4{i ■ i-’-\ i: v\ f3d^ K'- H* > ■*. '^•', C- #oeii.'n^ . ,n.‘U ' y-i/ ..• . .Iiori : 2t*iit eW^U.' 'V'’ ,;.u: . ^ ^ - V A i :• ■" .u^y?T^^h£)( ' ^H'•^ ■'ijo’i i' r..> cr-'i/ir r-ny ■ : V ii;;, xXfi.''-' . .i vi;^ 4*1 1 ■ , \ y.- - „.i :■: , .f!: ■ ■ . •*.'< , ■• .; /■■' ; ;*/jn:' i V ‘ :■•.•• -"•/q.’-i'ivo- v,.io-v ■•- ■'\&s) to -ICWI-IOVO- . . i',- , , . , - ' V .. „A, iiJT«- ' ii ijJr ©iJWI/. " -:1 0 • I 1 1 * ■vt ■' '-jj *. " 1 , r “' ;OX 'r ." i, ■C OX. Si', 7*0 6 '• Xi .. •:•<■ 1 .i ol/', » ■.'.: I io^v7v'i.>.r J ’>. f?! > •' . -U.S 4 ' ‘ . i*s , ^ , '', •? /•> ■■•l;\£.-r.A I : c > £rf.‘> '.v., , - i' aOirff •- 7 i ■■• " ■ '■ V • >' .1 '. ' ^ ; ■■• ' ^ Ar.O' -V' , ^ yrf.:rX' ■ t' ^ ' r x*/ ' , . \ ii t * * > -*: i': t -t r . yl Jf?i( t* ^ r \,»,r A X *X i, ft* 'ti ^»> u ^ 0^-<4 . 0- ft ^ o • 'i ' *, i l3 ^ ^ ^ 0 ift i ■ --oa :Ki; s u'ntc’X.. . . i) ••. ' '= -: 1 I ::l ,?,OSl%!l •'"ri^ > . , 4' ■ o ^ tOx.’ioc J.j/ yVf.V '.:'di>x-Dc.ii/ ,.;S .:'iOJkS^ ^:! If .7 ..rr; 'Ic. e'.i 7 f .iJ r.i'' >.(*'• . J ' tr '' %d i5ecol!^t.7£c; . : lev 7 . 2 : .; 2-i. 2„ - J-" :^i qaoQ >-iOcfai»n ..n -oai^vc^ f ^ 'l-?- r v»^^ ...^ . I. , I - J k '^'. v . fctlr, . - : uuimifiloO /iocmoO la .7 5i>tO • lo er: ' ' . 0 ; qs tr L^o « « vr:..u:» r^*" eti.* £>^c;?e©. #!f .:! . '.’/v.xof c r ,^;J- ^i-L / .- I ::A 2 . ri* 'i©i ...*■;,*- ,^2 . ’ boD) • 7 . T7 -Cl o^ aen ai'&fr enal?*.\rs5f .-: fifg; ifiMC :£>, ;.i-, tvj on; ; 0 ; , .c . 4 th .e^ .... 1 . . ” .>2 7 v;!' ... .- . TLii-alAr . rnx^ . . . : .,;x7 f./:: '.,■ :r..';,-'.^' \Zive aoqu rjrUetTf'i 9^‘rC7h j:' .JJL rt.2.. -..J Ylal.^.,7 CJJ ;nicnii-ci ‘‘‘ r- i:»ya.:)r ■.. .«•.*•' ,.:<.'xc ff^ . ;’.r F» ‘Hf.+ r '5C.\>' ^ -'.7 ; Q-F 'llig V. ’rc.t.f'' i'Cf c'J oi? Vijiicfli bljBo i F7* . . . v/') (d) (u) creditors' rights against the individuals depended upon the ex- istence of the company's right to make "leviat ions" upon the in- dividuals composing it, they lost these rights if in fact the company had no power to make leviat ions. This opened the door to the possibility of limiting the liability of the members of the company by a contract between the members of the company and the company, which provided that the members should not be liable to be called to pay more than a fixed sum. Such bargains were made; (d) and that they were both common and efficacious Continued : paid, then and from thenceforth every person of the said company, upon such a leviat ion shall be made to be liable in his capacity to pay his quota or proportion assessed. And the Loed Chancellor. . . is to order. . . that such process shall issue against any such members so refusing or delay- ing to pay his quota or proportion as is usual against persons charged by the decree of the said court, for any duty in their several capacities. " For further information about this case and the difficulties of the company see Hist. MSSS. Com. 8th Rep. App, p. 147, No. 310; 9th Rep. (d) Scott, op. cit., i. 238 — An agreement in 1637-38, that a shareholder in the Mosquito Islands Company who had paid calls \; 5 ) to LlOOO might elect not to go farther; ibid. , 344 — The shareholders in the Million Bank were promised that they should only be liable to the extent of their stock. I do not agree with Mr. Scott (op. cit., i. 370) App. pt. ii. p. 27. No. 109; ibid., p. 47, No. 186. ■: '''' .:C’c .' - J • .• ; ecr. .-.i . ' -xfe, -:;t r.*: «w.js -’cr.ci iv _ u- ■< i; t.xx.- a ' f .t 8 f *31 S': i It .' ■ .-'i. ,n;i* ;^aiaoqir-’j. xco;' ?i.v 1 VC i. o' ■r,i..';.o 1L*> - U p*' . r .•..; ;.•: ,+ '.x ' ■-.oo a -V-.' .1. : -./r^ :. ::(,•' ,T'fwa«jpCHI ' V ., -^IL&O v.cf 03“ L'i ■.•:£: I ^ Yii..: •:;roo Ic .-. *Oi: jcXror' ■ '■ " ■ ' j ;•'■ I d iioi.ff- CiCfoioeci; ' :C' : r-i^i.. „'. : r‘K dr VC t;o Xlax^e iiol3iotvei ' J- -, . ' Vi C- 1* V-* • > i '■ -. oc{C ‘j -'i ':i> cri! ••' d :0'i . > ‘ • J . . . .olio ckX ai ...-•"< -Y’S-Oi' *Tv’ fjCst'rM ■ V ‘ ;m :^6 :'JI;*. - . w- ‘.JL' r- ? c£ fi\^ I : " ■’ Jt .' ■ u ' V jr>i •! 0 ' ^ .."'j CO X- !: / i:. »-Li^ -■ V fi'-’ ■ ‘;,V'^'*i':j; •X£fluli;'l * ••'. “ .* •' ic V . i r.-. B1-- ■ •..■ i„ioo 6dvt >• :• ■‘i: ‘ .qsH -V ^ . , 'i- . . . . • (^• ■t 0*,.. , . j * cj £ C u Xji / L C' TT » ,, i ;cedvt: . ;^ v'ojXo- -uiviir ". r 'i t io - .i-diiil e.i7 , ■"I’i.-iio/. T -'■ -. ■ ! JO'. dXO / w * I. ' ■ - '- X . ’ ' ■ . . y ... - 4 V Ji 0 Ptff'^ili *■• '•■ •' - •J i'iiA I' ■ xc du B.i • >^--■ : ' ' ‘ dl ' > < • Yc:.: 23. may be gathered from the section of the statute of 1694 dealing with the liability of the shareholders in the Bank of England, which declared that in certain events they were to be personally liable for certain debts, notwithstanding any agreement which they may have made with the company, (a) Thus it would seem that, by the adoption of the corporate form, a clear line could be drawn between the company and its members, the individual liability of the members of the company could be limited in any way agreed on between the contracting parties." The first statutory guarantee of limited liability was in the form of an Act, in 1662, favoring certain compan- ies in such a way as to amount to limited liability for the members of those companies. Certain events paved the way for this action. The trading and fishing companies were having financial difficulties about the middle of the seventeenth century. In 1633 and 1634 the Fishery society had suffered losses. It was resolved by the members of the company that any further capital subscribed should be exempt from any liability for the deficit of these two years. This was an Continued: that the Act of 14 Charles II. c. 24, which exempted cer- tain shareholders from the bankruptcy laws, amounted to a limitation of liability; it only comes to this, that they were not to be accounted traders and so could not be made bankrupt; if they were solvent their liability would be un- limited, (a) 5 & 6 William & Mary, c. 20 sect. 25. * ; HV .C': • > ■■-r. , ^ ^ ^ ;>e6X'= lo <»itf 1^0 coI^f-feS edJ mrsi ^6i©H;t«j5. •^" ’ ' :' -.‘’jlil "i. ■ ^ .jtoiXarrS 'io -wJj^ lyX »55JtXoilei;£4« ^o \HUd^ti edi* dlXir j W-* - *w Xii^noQTt^ o>f nlAJi©o ci £>o*£«Xo©b^ doldr e* l»r » ' ^ ' do'J^itiF ?rsflj©sig^ vnjB ftf.’'L6.na^6lfi /wXoc ,dJcfi&Zli itiA^*xco< xol ©Xd£iX ^ iff©©* bXtfgw tt eirjiT sdJ © i3«Biri©“60 ^S 581 rri ,io 6 cw 1 o enoV ttt »dt 10^ >:^lXldalX tfiJlMii of ^ 0 .foua^^nl tB9i 'io^ \Aw Bdt bwaq €^a&v3 .telrxsqpcoo aoodJ lo a%©4io^tB {^niviicl ^ow ealiSfiCpkoo saldBi? LfiiJ 4»;ic^iv ©dT d^ooot noTO© ^^£i^ “to ©X£il>Xts Qd^ iwocx: ©ai^Xifoil^lis lAtanmiXl berel^g W yseden cd3r fesX X-tui teax at 9 aC^ ^iUBqsocj fixS9 lo t4l5 v(f jbsvlo*^ w*w .e«®&Ol ^iia aKytt ^ t jL*/od5 . lied 1 toad*/© X«;liq6© YOB OB 8fiw oidT .at!£a!t Ofc* ea©d;f lo ftol'eb icoT x^XXlrfftXX ■ _ f j 2' a^ai.+noO w" ../'«. -leo t*Jq«»*a inlaw >S .o .'I eoXTaiO 1 -X t'o taA adV ini# A> 03 bBtnxrOttC ^sWifiX Biot Xofia^xads tsrf^ ^^slrfid ct sdinoo xXdo i t iY^XIlo’oiX io nolens txlX f>L»m ed ioa bXtfOo oa bnus axolsarii f eiawooc£ 50" oi jrti ©low ' -ixo od bXwow »;llXtd-EtX it^riit, inovlcs ©1011 i:l if q*fi:tii6d .cJ6 .tooi^ 0£ .0 ^ 5 (a) 24. unusual arrangement and it is not known, had a case come i?) involving the company, whether the Fisheries society would have been classed as a corporation and the principle of lim- ited liability upheld or not.^ "Again in the Mosquito Is- lands Con^^any it was agreed that any member who had paid calls up to LI, 000. a share might elect *not to go farther', o in which case he should be free from further calls." W. R. Scott remarks that this resolution would have raised some interesting legal questions, had it been necessary to assess the shareholders for the payment of the company's debts. ^ Then came the Act of 1662, mentioned above. ^ As Scott says, "The most remarkable feature, connected with the companies of the Restoration, was the Act of 1662, which created a species of limited liability in favor of the share- holders in the EAST INDIA, AFRICAN, and FISHERY companies. It was enacted that subscribers to these undertakings should not pro tanto be subject to the law of bankruptcy, in the event of losses being incurred by any of the companies named. The effect of the statute was that a shareholder was only liable for the amount unpaid on his shares, and it is clear that such legislation was disadvantageous to unincorporated 5 companies." Holdsworth does not agree with this view. He be- 1- W. R. Scott. Joinjt-Stock Companies to 1720. Vol. 1, p. 228. 2- Ibid. 3- Svpra. p. 22, Note (d) 4- 14 Car. II. c. 24. 5- Same as 3. vj; "xoc .• iiao I - -■ * ,.(won:i joir Li It I>.T« -:-,r • ..rjit'Cj air tar ' ' i;;'7v V. ’r,'8 at^t-t -iirl'’! ,v.:-qnj ' ..vJivIoTrni -ri Ttortiq erfv iff/5 f! XOwJ'TOO & €• ■Oc’aii II&B4 ■ »jjiA •' “ . ^ '“T 10 fcr^dqv teit ' ^ ' * V rf ■• - • T 1*1 •» ■f rtoi ei«t1a . X*.£J V alXi’ . ■ . -, , -.a: ‘Li wxl Od b’ r, :.rjii*w aX i:rjr. 'ei t.\ . . V ifvli mloed-i v’Lfc.T r**.*;-!''' 'c ’.ta'y. ." j ,; •^?rxe. ■ -£? cj ' iL-.o: .‘ .'■ .’S*q ’T ■'■'■*• criJ ir. , ‘ ."v .:;; .'.V, - iw /nft e.i: c •i'fiT ri>t : '• ’ i'-Y - d'-.;.:v : >o i €'-..• .i>r. . ■Liitr’ic.' ,.oH- SI •• p-'iiwqBCo -t'ici.y .' Y3 L*. ; i . ' ' Erio' ,1. l bet>:'enc> .:5sin.- : *. ea^ r.t Br.nt.U.-rioLru =?^" o; • ' j' r iziit C->: -3;**“' LJi# CT£ ,Y-'-' '■' ^ -‘C'fi; to’ oi-r^T ion ! vif.-.:.- -idt ■ ^ ’•{ i t’i'imr.i ao^iaol Exmft i v ln..’ . - r. -tit L Ion©%';.d.:. t ,iier Qiujcir. i- to jLt^io -• i Lr. ' waiii’L Mil -TO L ±niJOfcn . : ■ :»L*. "•Li- - i '..* ctf a£>v: *"^'^ .. * tv L j . >;: ef-ot {ii'T or^blo’'^ f , . oi "StrL-^v'oO Il-ctC ’*r: . . . ■ ~X ‘ - . ( , . - ■ -C . t * ... . — X i ■ ' u - " i ' 4 .1 )•..• -2 •• ■ -If 25. lieves that it only saved them from enforced bankruptcy and that as long as the companies mentioned in the Act were sol- vent they would be fully liable. The Act^ itself does not appear to justify a conclusion that limited liability of the members of those companies was the exact thing that was es- tablished. It would seem that Holdsworth held himself to the letter of the Act while Scott studied it in its setting and determined the legislative intent. 1- The Act reads as follows; An Act Declaratory Concerning Bankrupts. "Whereas divers Noblemen, Gentlemen and Persons of Quality, no v/ays bred up to Trade or Merchandise, do oftentimes put in great stocks of Money into the East India Company, or Guiney Company, and the Fishing Trade, and such other publick Socie- ties, and receive the Precede of those Stocks sometimes in Monies, sometimes in Commodities which they usually sell for Money, or exchange again; by which means the Trade of those Companies is much encouraged. Fishing and Navigation increas- ed, and the publick good of the whole Kingdom very much ad- vanced: II. Notwithstanding which great Advantages to the Publick, there hath lately been some Opinion conceived, that such per- sons may and ought to be made subject to the statutes provi- ded against Bankrupts; III. For the better declaring and explaining the Law therein, and to the end that such persons may not be discouraged in those honorable Endeavors for promoting publick Undertakings; i^Di fwy. ff well i©v£g t^no - Jt swell — Xoi? jri6T/ 3"1?A gjiiJf /rX^!>©nol^t lo • e7i^a lsi >.nl edl l*e0l |f- I ;i«oXXol edT -X . SalnT&ouo^ ^ lo 8fio«i6 »neo»X4oVS axwlX) ^ r.l ti/q amUnbf^o ott .etltcsdeTeV *io eb^t o5 two ax^* XealdS 70 .YrrcqmOO fes^ odt oifit y®oo^' lo^tJtoQ^s -eloo3 iciitftiq i1o*jb bRX .ebjuxT j "tilslt od^ baa ,va^»<3iAtoO nl ooalt^^iod lo etetjoisr t-rti^ svleoox Ijne *8»XJ •lOl XXoa xXI*u/&d ftoidw eetJttOfschOO rsi aemli^aoe ,8«laolJ^ eaodv^ lo el'^iT ed4 darf. v e^cada'/e lo ,xoaoK [ -eaeTC^fil aolia^itvcat t>OB {jclriPlt ^bssAXUODas douw el s^tadq^t) -Xs rteiJo yTe'v mo.t^TlXi aXo4« &dl lo bocjft' iolldwti sal boa oinlqO a«o« fl&ed diarf exsdl -tvoxq 6eXjL^■‘i5^c^ ©d^ oJ jcfttdua eli«« ad of fdpio 1}*^^ y(aai&aoe I ;aiqnaitBfl ^anlaja’ baJ) .citzadf wBj^adf ficlatalvFd bria s^tTaloel* zeftsd edt %d^ .HI at £© 5 axtrtj&dili v^on x.*^* anoftieq rtoue Dee ©til of baa la'aaliJalieiia/J ioliou -4 j^ni^cawq xol sa>^fetxT3 eldaxonod oaoil k i 36 . All of the evidence points to the fact that there has been a well defined understanding of the principle of limited liability for the shareholders of corporations in England since the beginning of the fifteenth. There is also good reason to believe that the principle was much used during that time by the Incorporated companies. The cases point to this conclusion; Continued; (3) Be it declared and enacted by the King’s most Excellent Majesty, with the Advise and Assent of the Lords Spiritual and Temporal, and the Commons, in this present Parliament assembled, and by the authority of the same. That no Person or Persons whatsoever who have adventured or put in, or who hereafter shall adventure or put in any Sum or Sums of Money in the said East- India Company or Guiney Company, or into any joint-stock or Stocks of Money by them or either of them made or raised or to be made and raised, for and towards the maintaining and carry- ing on the Trade of said East-India Company or Guiney Company managed or to be managed, or who have formerly or who shall hereafter adventure or put in any Sum or Sums of Money into any Stock or Stocks of Money for the managing or carrying on of the said Fishing Trade, or the Trade now called the Royal Fishing Trade, and shall receive and take his or their Part or Dividend of Fish, Goods, or Merchandise in Specie, and shall receive or exchange the same, shall for or by. reason only of such Adventure of Monies so put into the said East-India Company or Guiney Com- pany, or into any Stock or Stocks for and towards the said Fish- ing Trade, or for or by reason only of the receiving and taking idd €‘‘56*1^ iOJBl tiU CX* ©ifit lO "IIA ^ to dX®T: fcoo 9 oeXiKei ftAi to gcirinis®^ 'eoflie -r ' X 69lU teai/ doitti «cir eXqXcutiTq ^4-~4M dt fixoxoirloiioa sid^ ^itxlo^ cssaJK^ OdT ,€©lff®<¥noo froiAiuilodni c^^t^ ib^citHfaoO >-' ^ ^n*-I^ox3 tfeom a*;^iiX2: od^ xd b&touexii i>a£> 6oi«Xo$ij (8) £ifW XiiU^iiX^B bLtoJ ©dj to jrteeaA bac osIv-txA ^i>-sXd«©6©« ^nawAtlxe^ Sa6J?9tq ^idi nl ,axiO£«i:»0 ©dJ' £in# ^Iatpi^T ^ «• tfo noeTO^ on ^/id'T -moC vQrit^ lo r, o^ 'lo^ueeXx.t ro flsea- tc -icd^td nedX x^'ctolf to aiod^fS ' i»if© o-Xaia add adt/^Ov cust> tot ,Xio«Xdt Xa® " -n I Xi\tsqou}0 'I® vm.v?ttO0 PJUit to soaiT ♦dX fto- joi ,, f Xl4>ita Qifw tc ftvad o:ft> zo od of '^o te^^tvom XiU'. o^ni xa®oK to bicuB to uifltJS oX Xpo^8 sotdeil l6x®^ iaiX.^0 troa oln«.tT ©dt *sO .aXseiT fiffXdot*! Mjea t/isfch/Xa 10 d'l*,^ il{>d;t ro aid ojfei 3vt©c.0i Xlcds ixi* '.©fc^rT TO svtscoi XXfcda Xits ^aloac^ uX 0 ciijft*i!o*r 6 V ro .aibooO ^doil to B eiPi^nwbA iioi /9 to \lno aoae^ X® XXaiMia .cansa ed? a^gnsdo^B wffoCi xoaIxfO TO x^ffif^DO- 6itnli-^ea2 feXr*« edi o;^ai ^pq oa aelooU to -dai'T XjLbo sdx ahTJsmoi Lab lot ajfooeB lo icoXB xa* 00 ni zo ^ inXia^ tigs xnivi&tBi adit to ^0 i*> lOt 10 t«b«.T grtl '■•*1 "j*! i' 27. the secondary writers all agree that the principle of limited liability was known and used. Holdsworth and Scott do not agree on the Act of 1662. However, I am of the opinion that a study of the Act itself, even without taking into consider- ation the legislative intent that may not show in the letter Continued: such Fish, Goods and Merchandizes in Specie, or selling for Money, or exchanging the same again, be adjudged, taken, es- teemed or reputed a Merchant or Trader within any Statute or Statutes for Bankrupts, or to be liable to the same. IV. Provided always, and it is hereby declared. That every Per- son or Persons who shall trade, traffique or merchandize in any other Way or Manner than in the said Royal Fishing Trade, or the Trade managed by the said East-India Company or the Guiney Com- pany as aforesaid, shall for and by reason of his and their mer- Trading, Traffiquing and Merchandizing, be liable to Commission and Commissions against Bankrupts, as fully to all Intents and Purposes, and not otherwise, as if this Act had never been made; any thing in this Act to the contrary notwithstanding. V. And be it further enacted. That a Verdict and Judgement in Replevin heretofore had or given in the Term of Easter in the year one thousand six hundred fifty- three, in the King's Bench, betwixt Phinehas Andrews, Plaintiff, Richard Woodward and William Meggs, Defendants, whereby Sir John Wolstenholrae Knight, an Adventurer in the said East-India Company, was adjudged and found liable to a Commission of Bankrupts, only for and by reason of the law, will bear out Scott’s opinion. St St ' pfjf tmil «iiJ sr^ri^ 6 ®t:p« XXjb e'xe^i’iav silcf - ^1 ;tao uL t-nu» iU»xcir*;feiXc;0 .fct^Etr rfTt^ttjl &j($^ iXidslX ■-tfr XArfd* m>.tai:;jo ©ci^ Af- I ^isvetroH .S^dX lo JoA tidt-. aQ ' -iBXJBflOO oc^/iK^t'.X^Ui; jrf^XW x»v© ,'U^Bii ;^oA <6 * ■« ‘. ® Tfeii-©! ©ilt ul notifi, ^aa iAiirf tv tdf pj^fs .;v-*'ial*iO iisc jMep li'iw ^vjil ed^ tc • A »• • : bevaitncO '■' ' :K lol gxrXlXoB *jo nl sei.JtJt;iiiKlo*tei: X)ii* acooC ,d«x^ diHS& -a© ^JfcegXi^tX* gnXgisedt'Xi to 10 *raU5T? lo rfnAi/i. » ^ ©ftAi? ifedJ im ©iff Jo tax’ iol Xijbri; »fcJtiBf©iO?«, on \«q aoIeslfpisoC ©Xi&>4 Xii>« jaiiiFpXtIjPt ^ ^galXiStiT tp£ IXb oj \Iii/% s€ ^feXqu-iiceS Ocoii-sjUtfroO ;fiXxea neatf 'i©t©n b£d iok hl 6 i I'.t a* .©otnieiflo ttoft fcna >.i! P xxJixJr.oo sxl4 o^ toA. aldt ni ^icW” ij;ixo fiX Xneosg^iLa X: isV #J i”©ftT tatft'iitfit ^1 cd 'fccA ..f , 3 ni lOtBfiS to HBW? bds al itJivij to btti ©ioIo^bisX airBlcieii jiforea s’gnrj! ©rfif ni ,soti(v t eT^nifd xia hr^^^suodt «io laot 1/01. 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CHAPTER 17. With the bursting of the South Sea Bubble^ in 1720 corporate development received a set-back from which it did not recover in a little over a hundred years. During this period there was very little corporate activity compared with the years immediately preceeding or following. There was no suivance made toward a more general use of limited liability; this came with renewed activity in the corporate form of busi- ness organization. When the corporation again came into extensive use, near the end of the first quarter of the nineteenth century, limited liability seems to have been the particular feature for which they were organized, A great controversy was carried on in England as to the advantages and disadvantages of this corporate characteristic. Many of the people who were in favor of it wished to go a step farther and have partnerships with limited liability, modeled after the French partnership "en commandite.”^ This agitation was kept for over fifty years. While it did not succeed in legalizing the limited partner- •z ship'^ in England, it did bring about great progress in the dev- 1- Scott. Joint-Stock Companies to 1720. Vol. I. 2- See the following: M. A. Begbie. Partnership ”en commandite." 1848. Spencer Brodhur'st. Limited versus IMlimited Liability in MacMillan's Mag. Nov. 1898. Vol. 79, p. 20-29. 3- The limited partnership was not made legal in England until 1907. OSVI rrl r jWi vt it' i.. i> r. i l. (lcil±: fi in'T: y. ■ - x. tc^.v Ivc^'j ^rii'-^.qoXir'; ciOhIco niii^ '-■nil!..: .- 'ii'EY lt*rhD^!tt £ n^vo tlCttL » i,’: i-©vorei toe “V .("Iv. I'i’ \(.j iY i-tof?. t'ir.'.-qzL-: ©i.?^iX •: jf’iorii foiTceQ >. ;i Mox.” . a ?!voiio^ .TO ;,Lijb£»ej&ex'.: x J ^ f.'iAtx ai(3 ‘ Cidiiir Ie*lr»-..'j ^.c- li -rfiaeq &zca a «>of»^'£>p -ici c' -c *jr:.i.r a^^iTocTiorj ©ai at \tt\ Uttrr eaveo '^idt ^ ■“ ■■ . :?o !' 0 , c e»n •. c,:' ..i . .'.••.OC' /ioi^4.'7cqvcf ^yri* nedW< .; *1 1 ' 1 f : '..ei r^ciiTii-: ea.-f 0f,'\ evJSt; ci* 'r-: ■■--/.( ’■ f.-r'-v o’i.'tr.c-:.. A u ®irf? aO, re^^.orii v.< >■ '• ic r.i-r *-r \:o.U aoti» icff oi an f nl no ’jwh’t ni e*jer ; •: ;. Xo vrdsl-' .*'• i j'nxit ^Xxtoq’io:- liyi’}. 8.^' »!f aaf>.' ; ■ q :^'rd i nA qfc.tr y. oj< o^ bhdelv X 'Ic il fcil? XjelatOQ: ,Y^iI M*.£I r.fcJ’iiJ'II ■:i . '..?4jX X Iflvo 70' T Jqi i aoVt «ti7' - '• .n vtrrxmaoc: -'irr:^7J?q ^a;.. tix-i.©I i:!. Lil'.luu ^c;i ijtb +i ?XlaW- S^ V- '. 'nr- nt b^*^7•:o"cr Sl’qv \ ,: t\d blJ: tt ni . Tov .CL-TI o.*- j'fctoflqjcor :(oo^r.~.-^a.toT ~X . c. t-.'^ d8t. -r — ” . •; .t ii.iT{£jijinc-'’ no'' .cj'. ''• bfc? iir c^i-yrev te.ttcitJ ztf-roqa “X-Ct: ,q .ioY . - . . t?r . . • ■■ . iM;. ‘ Il.-^rx' . ' I^-aS nl ti^uoX at-iJL' .■}.'•, i i>t». ..Xilutaii^.i/sq ■ ‘j©jf ic- II f -I . oe x 30. elopraent of complete limited liability for corporations. George Dodd, writing in 1865, summarized the progress of the limited liability system. As the Act of 1844 is the first one to receive much consideration at the hands of the writers of the Law Records, Abridgements, etc., the first part of his article will be included here. He says, "As long ago as 1826 an Act was passed, empowering the Crown to confer charters of incorporation on certain trading and other companies, de- claring in the charter some limit to the liability of the share- holders. As this was a favor, specially shielding the share- holders from that unlimited liability which would otherwise rest on them, it was understood that the companies thus fa-^ored ought to be more than usually advantageous to the public. In 1834 an Act declared that ’divers companies associate themselves together for trading, charitable, literary, or other purposes, which it would be inexpedient to incorporate by royal charters, although it would be expedient to confer upon them some priv- ileges incident to corporations; ’ thereupon the Crown was em- powered to grant Letters Patent to such exceptional companies. Shareholders’ liability was to be limited not in amount, but in time, terminable when they had for three years ceased to be shareholders. In the same year a particular statute placed on an improved basis the conditions for investing small sums in friendly societies, and insuring honesty in their management. In 1836 was passed an Act relating to Benefit Building Societies. Such societies had before existed; but this statute legalized and encouraged them, and applied many provisions of the Friend- ly societies’ Act to them. The shares were not to exceed 100 1. I .Bnoi^£toci^oi> ’xol xtiXiefJ&JtX he^lOitL ©ic-Xq^ntoc* ito viMMliqoIo .»TSW 0^ eeft-igoivi ariif ^al$X\'V ^XiIjoCI e^ioeO siJ 8i i^I “id o4v aA Is&tiifiil To JufciieVf Sif^J ftoX^m-editiroo dtt'« evXf;io«T eod 1* ' , ^ 1 ^dS' ^.c38 X*sdA ^a.hTO&; g jgj^ > aftt* lo eTdtitTr S'- "^■^-' ' && os^ jr.ol eA“ ,ax®8 aH .aro4 l>abi;Icrti «o xnw‘»Xol3*i# ai^ lo vS ©•2,©.t*xj8f^o 'laTcdo o;>‘ mf©iU axT# ^cl^aKOcpna 4Jbe«3e«de ad# iil^g/iitiDXo. ^x*iie ©d# ^nlcXside ^XlaXceqe ,xovjq 1: a aid;?; aA .axabidd Q ■■O.^ PBiTrxadio ikXwow doXifa '^#iiitfaXX hetimllaki #Adi ,rjOxT ei»£>Xod Xirxo?aT 8i;d^ aaixiifcpioc. ad# #jerdi 3«w ti no-?##©! •^ ' ' , . flj-+ ’:■ ' o iV'K "''■ (j ”■’■ ■"■"C'' KK nl .rviidirq edi ^ilajuu} aksf.i a'lQK ©cT o# bJ ft;, . V G©vXt»«idd# sijsXooBGa ef'crvlfc* X>©iiiIo«fc ^oA m AC8X' ^eraoqxfq ladfo xo ^vxj6x©iiX ^aId/^3-i;xj?xtc> lol x»4^©;|Oi ' \ ■ ^9 * ^'i'''SB ^axsiXJ6xit X^\uTt e#©to^grf.ocjfli di ^fle^^©qlt€;1X 4w3 JbXi;r» ti aolsfw li p ' ^ . f -^ix:q 8moa xa©di do^/t; laldod ^ #n6if.c>^e ©d lexa»osXiJcXd-idq a ©mec ©di al .txtftXoda'xad^ ni ticare XXAxne sni#if»«»viii lot enoiiiiinoo ed# eiaAd iw oxqi»i ae^ .ir^iegBxia® ai©ft3 al '^^s©noil salxuaiil doa .aaXiolooa Y^dnaiTcT®^! i;3 GPli^idoe 2i^XJcX UiS # tl©n©2 oi j^niiJSXdx;. #oA a© i:©B«i&q paw Q£8X oI • E, . X ^ de.'£iX«36i eXxri^^o arid# Xt/c jaa^eix© arteisd dAd eeiXAiooi ripi/S ©di ■'io i-iioleivdSEq d©iXqq« Jbae ^joed# Jbagx'iLXidil© d«8 ,1 OCX ioficxt. ov Xon ©Tsw aexAds ©d-T .mejiX oi v#oA ’afriXsidoa xX iTiS 31. each, and the payments to exceed 1 1. per month. The society was to but or build houses, and to hold them as mortgages till all the instalments were paid 15 ). The kind of liability was the same as in friendly societies. In 1837 was held one of many Perlia^ mentary Conunittees^, to inquire whether it would be safe to sanction the principle of limited liability in trade, more or less on the basis of the French societes commandite; much useful in- formation was collected and published, but the committee did not make any definite recommendations. In the same year was passed an Act for enabling the Crown to confer certain powers and im- munities on trading and other companies, in the form of charters of limited liability. The first to avail themselves of this priv- ilege was the Commercial Steam Navigation Company, for running steamers from London to the Channel Islands, France, and Spain. In 1841 an Act was passed, not immediately effecting liability, but strengthening the security of Banks of Issue; the banks were required to 'make up just and true weekly accounts of the average amount of notes in circulation, ' and in other ways to give pub- 2 licity to their proceedings. ” ■7 In 1844 was passed the Con^anies Act which applied to every joint stock company, as defined in the Act, in England, 1- These committee reports are given in M. A. Begbie's Partner- ship ”en commandite. ”, Appendix B, p. 335. 2- Geo. Dodd. Progress of the Limited Liability System. In the British Almanac, 1865. Volume 79. 3- 7 & 8 Viet. c. 110. V t- ;‘f»oa \L *' . <■ .1 ■ Jf-Jfceox© tSv CJ 1 ftfi. I Hr. i'X t»J ?. ■! ■ •■-' I Xon o"' iJlJi- .. i XtiM iC' Xi?o o* ^ »'• w;/'' vsiXi. ' >.i '.u rr./A 6 ». . iir i.'iX'q &d: O’ffe i-joii c«f>?r '4 fri . ; . Ltoxcos ; i.,-- I'll rut di-i ji Ow"’ ri;-? ■ '-t^iTjSdvT o" r..!- . •' ,;- jij'y;T cii ' .' ’o 6l-'*rvM. • i/A^K -r.o< Oi f.. Xenc-scV cr ot*,. *■ ro*ft j •> •, } , .Y; 1 1 1 •- .. i -or« i ^ ‘ \ jT^ X4^6.£ uT i * riiiv"’ i}d* 3.1 U* ._.•, ' v '* L-jinj-^v Oiiv ■ iii;: dtj^AltriuS t;:i. '.o r- ' rx- *. : '. r.'iv i r>; XtL'(_ uir - aj vT ^ AIVa u • 0 AJt - •- I '"'i Si ■ '-.' • tii.'o iii ! ; ' at ecJo^io JJsto^js ji 'O' ■ ■ l> CTi;, xli 9 tlf \il 0 l' {' *■ t acirfw e*iiiEqtncO xt-rvxHi • • vr ,J:.Ti f' ; " f.i ir,.-;- t:- r.x ^Viinqjtco U tr '. X'XQY'. *-•- ?.iT; » . o« » - • o; t>f? . ‘ &•:£ tltcijf? ‘ • x'ttij jrtor ' . • i 1 ? -X \t, ■i.i'..;f-i*r : qi * ^ A ; i -4 X i 0 ' f ** i. x . ,L’.r. ‘OilA di 33. or Ireland, or in Scotland, if they had an office or place of business in any other part of the united Kingdom, established for "any commercial purpose, or for any purpose of profit, or for the purpose of assurance or insurance, with certain ex- ceptions viz., banking ooii?)anie8, schools, scientific and lit- erary institutions, and also friendly societies, loan societies, and benefit building societies, respectively duly certified and enrolled under the statutes in force respecting such societies, other than such friendly societies as grant assurances on lives to the extent specified in the Act The Act did not, except where expressly made applicable, apply to partnerships existing before November 1, 1844, or, except as specially provided, to any company for executing such works as bridges, canals, reser- voirs, railways, harbours, and the like, which could not be ex- ecuted without Parliamentary Authority, or (except as specially provided. ) to any company incorporated by statute or charter, or to any company authorized by statute or letters patent to sue or be sued in the name of some officer or person,"^ The liability was less than before but the shareholder was still liable for three years after he had sold his shares. This limitation in time was practically the only ’:benef it of this Act as far as liDjited liability is concerned. It did bring about a more uniform 1- Earl of Halsbury. The Laws of England, Vol. Y. , p. 25. See also: G, H. Lewis. Liabilities Considered, Chap. II & III. Geo. Dodd. Progress of the Limited Liability System. In the British Almanac, 1865. p. 104. 10 L i.Si CiL>c r:i to ^to^iXciI io i •• -.r. *.:'CU '-ci'- :cr ^!U. at BBtaUL'J ^ ^-- -I /II' TC': ^ 2 ?<. J YJJ J..*; I t-T* . :r. o. xob" -:o> ; •., , or.. -. ./.c 4 p Io - ;,q eri^ io> -,’iJ. .Cil r..-;.., £ .: ,;£iooat.fi •■Bqn..;ri,iii3iwc . . .iv wicij^iscv ei toa £-u;jX .fsffsi. .jr ij t v j.,^ tc; .■!.■»•! PO y/jjj vim f;o?qee.^ .ci.irj'GOfc '..■.ilXiu.r iileaeo' Im'' talfpic-LX, rtcr. ,.f .-sJii.titJt- SB- -i*Ba. i«»lj:, 0 TnE .af e-s\ H . , . jc.nfct! , lu.jj „i. r: icffo' x- ' »/t’. doUB I'sufi -rmcita t,U rfu V: • Ci ■• '• ii’r/r.eqa ?n-^jce jjr... 01 YlH'/r. ,Micficiiqq 8 ,v :i vO'ln Yll£ltc- X- O^' 1 "r X^B' r - • « V > ^ . ;:r?!U(. ‘ S'-'* ■--■» or. ,..,YafXf«.1 .sTior vH.v£ Rcq£. .v?lK:.*W ^t-^nor/ JX t* *. *.' --iWi :■■ ,o-J-r.x;£. 00 sJuJb;- x<: r-^.a-ro ■ ,.,orl c' { !'-stiyci 7 'v. i-. - f q B . . Isi TO vd f.dSi'*rrvf!.TiJJft ^rnjsqwt}:^- Y/3B 0-;l :;J jtl ic’jp ti e/iT -t". 5 ,- - c,,-. o. ^ ^ ' - 6 -. VO. in,, ff wv ,.; .,nt.r n _;.*oX/v. sd la. XJ’lls '.^v, J,n:r o;rd —v 1-0' x.'/j “X Vv ■ 5 u t ils- fT lc
  • /' *■.»» r. or, j *■ ' r> '•• ^ ■ t. - *-‘- <-xi- erxl « 1 WTC*.Xi;x; £ ?; oc'x d > r < , - t 1 C' S. V*£i i *'• . J I - . con'': . :v^:col£f' Xr -2 -X ;oH’X(- e&S f.X'iecc:; ■ . ". JfeitJ ®flij >0 sac 'i 30"^ . ^ - «c-Xik't,/?ox dr^XiiTi *>i..‘ iix 33. system and served to hasten more direct legislation in regard to the liability of the members of corr^anies. In the next year, 1845, was passed the Compaines Clauses Consolidation Act^ which applied to a certain group of corpor- ations, viz., those for carrying on or undertaicing enterprises of a public nature. It was to apply to all such corr5)anies incor- porated by Acts thereafter passed. The execution against stock- holders was limited to the extent of their shares of capital not fully paid. Practically every account of the development of the system of limited liability of stockholders of incorporated companies leaves the Act of 1845 out of their account. One or two of them refer to it as having been passed in that year, but say nothing about it. It appears to me that this was a definite s step. It not only gives complete limited liability but provides that this Act shall apply to all other companies of a similiar nature to be incorporated by future Acts, The following extracts from the law itself will bear this out: ”If any execution, either at law or in equity, shall have been issued against the company, and if there cannot be found sufficient whereon to levy such execution, then such execution may be issued against any of the shareholders to the extent of their shares respectively in the O • capital of the company not then paid up *^‘ provided always, that no such execution shall issue against any shareholder except under an order of the court in which the action, suit, or other proceeding shall have been brought or instituted, made upon motion in open 1- 8 & 9 Yict. c. 69. 2- The underlinings are my own. * wVf q# e 1 t I u optit e»toc^. aa tf «JbJLnr«qiRO:.. ttci lo ^tMXidfciX: «d7 eeou-rXp 5?if:tR<^oD JbO£2u^<5 5'xea &dt,iOX. ■ -icq'too io ^cdjj xrtj»^‘ie*o a+ JoidHf f^cJL aoi^^ijHoaooO 1. iG oo jcX^aiij»TjtX %d aetf^fi aOU ao oox^ .^riiOCiO^ xiaitr^ to J;/0 ci-dl to ScA <»-‘*r£pi oaJUlAqpRO'o ^ ' . "'I ^t£ax 4\l iioaeaiq oapc sohr^d tX o? laJa'i a ©iiTTitaij iB eiO^' tJbd4t aw off ea^a^jiia f"! ,.tx ff'jL’0i;.UaA &ttm^t XXad^ j>1"tq1w£X iJS ’■'•'■I "-1 doBfs '^cX 0^ oofiir t'tt*i’ .tnainitliis ijrajct’ so", toxu'ie^'^eaadt ^ ' • ^ , / ij "^1 j" V = t€ dGirXttg.'ii Xaosei aef ooXti^oeica- cidi?^ na^dJf'j^ ^ooXi^irpaxe ,, '• ,r ■■' is '* i sd^ cl xXav idroeqeai ooxBilo .aXed^^r'JX' ^usffzx adX ot v^aAiodaWa '■ ' 60 ^a\£irXa tei?Xvaiii i:jsq XP#on such motion such court may order execution to issue accordingly, and for the purpose of ascertaining the names of the shareholders and the amount of capital remaining to be paid i:pon their respective shares , it shall be lawful for any person entitled to such execution at all reasonable times to in- spect the register of the shareholders without fee If by any means such execution shall have caused any shareholder to pay any sum of money beyond the amount then due from him in re- spect of calls, he shall forthwith be reimbursed such additional sum by the directors out of the funds of the company Com- panies hereafter created by special Act must not conflict with this Act. The Acts of 1844 and 1845 marked the beginning of further serious discussion of the extension of the principle of limited liability. In 1844 another Parliamentary Committee collected evidence on the question but made no recommendations. In 1851 a Committee of the House of Commons attempted another investigation and ended by recommending that the Crown ^point a commission to investigate the whole question of limited liability. In 1852 an Act was passed encouraging industrial and provident institutions. This Act gave them partial limitation of liability for their shareholders. The next year the Crown appointed the commission that had been recommended by the House of Commons. The results of this commission are very instructive and show the importance that was attached to the principle in question as well as the conflict- ing opinions. 'The commission, composed of Judges, barristers, 1-r Chitty's Statutes of the Realm. Vol, II. . rC :> q eii^ c*j 'vf l-+i*:w cij‘ ©olton ^xisiotTltie -reJlr wii/oo I . noi.' i'.r X© '.rf.L'io VJir ^i^ioo licue rvlfoct liriL'!:' toP C' i -I en'r lo cbOc^iL-q &iiz' jQf txu^^ v^i: ejjscl od || ^ j li of ;-. t r iJt .'■:.t^ rui iqjic io Si .5 Lrx ^0 iSSi*ii;r :| 'IP^ 10- Xutv-tl fo XIrdc tl .Rt’}.y.‘V £^- tv ©o- ^ -ftX I 'nfji.t i-Io> xToj^f.c X i.* ■ ' itol-f Lt‘j:iu;.'c ji:.n'c i seuco sv-r.n XXr xlti t ' ;;ce3!© x biiA^jK !* iii c;07' i ox/jb nerlJ *r.yoaP- tr'.; > noxg^, X-^'X ! ii" J '&i- T xj J, t- o. f c *’ c*J.\ rc'^ S . ^ ^ l~o ;toeg fi -^c’’ . . . . . - ;tmoo 1:c fboi t ©n r to ?i / o v-r '^-*vr d’oi X’iroc. ^'on ?e. ir. doA I'Oir! '‘Tr ycf be.^-Cvic- ?>eirv*>q ■ ':A ciiiJ jO <'-j ; •■■•>.*7j;i^a'i / “to tdXcaei ip' . u.oa-voO to ©atso"! fni.i yd -doooi IX'a tadi €tusi70 ©d^ ‘..ode ..Hi- ©vidLL^^snX \iav ©*fj9 aotcbipir.oo Rld:^ i X '1 !00 oih -o IXsw e-a ooid-Eietp nt t i.qXt ciiq od Mr d Bii*t£c-' , 8 © 3 bi/(; to boecqE;^.‘c .iiOiRtik'. ir , o ©. ' .er Xdiqo gnX ,I : Pii^ to ae;tulBJG c’y.ijitiO ^X 35 . and conunercial men, addressed queries to leading persons in most European countries concerning the practical working of the com- mandite, or limited liability principle; and they also examined commercial men at home. They framed a series of thirty-one quest- ions, and sent printed circulars relating to them to ninety in- fluential and experienced persons in the United Kingdom and Am- erica, and to twenty Chambers of Commerce. Seventy-five answers were received; and the commissioners were not a little embarass- ed by the result. "Gentlemen of great experience and talent have arrived at conclusions diametrically opposite; and in supporting their conclusions, have displayed reasoning powers of the high- est order. It is difficult to say on which side the weight of authority in this country preponderates. " Then, to ascertain the opinions of foreigners on the actual working of the commandite system, the commissioners freimed a circular of fifteen questions in French, and sent copies of it to twenty-two firms and individ- uals. Of the result they say, "The opinions received from foreign countries preponderate in favor of limited liability; but many of the foreign correspondents, while bearing testimony to the ben eficial operation of the law as to partnerships with limited liability in their own countries, suggest that it may, neverthe- less, well be, that the circumstances of the trading interests of the United Kingdom may give it a very different operation there. " When such men as Lord Ashburton, Mr. Norman, Mr. Frances Baring and Mr. Nassau Senior pronounced for limited liability, and Lord Overstone, Mr. Tooke, Mr. Larpent, and Mr. Harsley Palm- er, against it, it is no wonder that the commissioners found un- animity of opinion among themselves to be unattainable; they •VO ' i. • o— Vo*ii/)6j0 nt ^ Gif .-j—^ ' -tat. rnv ; ,J^-t, nl> 7 5‘ V.' r •■ ', . Vi. . . w ' 0 i \ i.ite at t ::£ ^r;e r * ; QT#«||iCr- Ijxxfi .r;.‘7 v s^i;7 ' '.nt . v it ' :i‘:Si© £, t Jfi u /.Gt^aSBlC. •:.fTi*rli iix^^ i-ni2-^^eaol . ..£ u»..w..iwj * 1 Of:* .'. rG-;AC :€5.irOv ■^or-. T L t*,'\v ■ '» .C> ' Gt, ■’ •^..’ • iT~ t.jlfc iJtar* : OT#‘^' c..c*"r ..• £r.c '• . - itfGd'S ,wtt. ja.i;- oq iv£ -xi.Sivf j »7/‘ V r i V' Vw. . ‘ *’ , G *. f. o ^ i i.G ■: G .-Jf •* f.i t. ; ^ flocoo '(sn(i iiv;. dzi. ,. .0 ■•v.v.,. s'.:» i : l ^ 0 / ,:Fv;r/vor. 0 /lJ G O Q i C u G G’ p [J 'a C k.' ^ » < > -£|J^ ilivi: i . i p ' *1 1 ' •« j lai . j , n 1 ^ ■ - • . it<'. r V .' ...7 t ’ .1 L \ ■ n " '* - . 7 ' V« !>tO .* •- lo saoiniii ' UCo * AC .'.•Ol'i G-** . 7 G>'‘ 1 -roxriv ':.ix:{.: lirifc t X ; «2 ; ' tx >0 - (;0'J o: V.f.ov ’ G>*. i --tjO ' ■>• j.,.1 i.ii /irx c : .■ —,; GV ' ,Y48/T! V . t Ukw r. 'T ©r ru }i-i , ^ V.'I X V.,; Iv ftOG ■"'i “* t 'I . : '{ e '1 iUb v'l^v T, :»1 r- • {XUOCOT V ' 1 •' >■ -k ;»'6 a ji V ^ rr f *: * 0 :\ ? ru/oc f- r.O *.■?£• -J *' VG lUl ' VC'l ^ 0 -I I-' I •<• rv . U r nX xtJUdmi ' ' '■' ' ,0 il f ^eeax ' ' ■* • • : ~tJ > j . '■•" OV « • .OZl^dJ •> . jf’ ^nixsf! nc;^ 9 t£v 0 Jtn ' G'i '- '♦ >':.j- 10 36. divided in the ratio of five to three against limited liability.'^ In 1854 a return to the House of Commons showed that since 1837 there had been 164 applications for the charters of limited liability that existing statutes empowered the Crown to grant under special circumstances. Of this number of applications ninety had been granted. Some of the companies receiving them were: the Royal Mail , Steamship , the Great Eastern Ship, the Peninsular and Oriental Ship, the Society of Arts, the Great Exposition of 1851, the Panoptican, the Crystal Palace, the General Theatrical Fund, together with gold, banking, and electric telegraph com- panies. The demand, by this time was so great that, in 1855 two bills were brought before Parliament; one relating to part- nerships, and one relating to con^anies. The former failed; the second was passed. By this Act^ any joint stock company formed after the going into effect ,of this law, with a capital divided shares of a nominal value of 10 1. each, or any solvent joint stock company already registered under the Companies Act of 1844, or constituted under any private Act of Parliament, was enabled to obtain a certificate of complete registration with limited liability on complying with the Act. Assurance companies were expressly excluded by this Act. 3 - 18 & 19 Viet. c. 133. See Earl of Halsbury. Laws of England. Vol. V. p, 25. Geo. Dodd. Progress of the Limited Liability System. 1- Same as last reference above. I } . • ^ '3 c»’. I '"j "rc' ■•■j J4i‘i 70 1 uioi.-i;,., : , av t ,.'irvie^ ■‘07 "'vi'rr*:!!. ov nj ;-i-i. Li £ r.! r-c - '? ■*■ * VlJl V » ‘- ■ ■ aiscro^-'.' *, to i!Oi 2 "o®70 '• ,r.* •:.A ‘ Xi oi ■• jr.r n'^ -.- ' •JC - i ' *’ .■tL-«if b' f- 1 \-fw .:a»ov v ' f.'lt'.t :-. •=! ., .rqtyoc.' t’HiL?’7ii ei bt^Lt- Cr* i L ■■ :r fl'! :. t r'v£ ? ''-^:3x t ^bflls :>:{( . y/ ■ M ^ ;*XX Jbe li’XwXi /t'^t/'T- -4^ Xrti_ . C •rsj^uu < / • • C'..:>'j.-^ t.ajn‘*t(r&aXa Vcraai^, Jlci' ilyca srfi . ,a.‘-5» Uii,el70 Dfl£ ■- " ■-•■i'" ,‘'.-C0ii 0£iy ,|28X - '- .2 :.C5 ifji? . "#* fiiJ. q X''- ,'“ii 6l riiT a-rsv^ hUtcj58 0 ^“ ■••“ ^’M •■.£(: ' .- . o , iu-i' lit -::c ' t. •. c -‘ f v.- • .‘-O^ ^* 4 - (■ cli -rilVOT^ - *r . . “f *U. 1 tl ,**'A '’y -Cii.t vr i, , ^ . jj iXesti , . • i ■ - ■. j'r %/.» , .._j.^, .. . . . i ,/i e.u* leJL- - . 1 ^.. J.g::tf 1 ? j . 1 .: - as 6 , ''e fU an* C 25 -i. ' •'t«.ni-ui d.*f, no i. ,«.... ,etr«. , . „i, jifjfx Of ■ “'* '■" ■ i'ili L' -' - 'f)t. !•<..• .Ttjiit . ., ajsr •' •■' odi Sif;''i:**ruy^.A i.zf-. - - . ,• . '' ' ' -t*rA. , : I ', i £it£tTOO Ui. .-■ ■ ,t i_)»t (o '. ij: .-p“ .' /ir t ' . o ^ i. ^ aei/ueqmofi k.-iiitfT'. f ,U>ii . 6“ 'A .* V w ' 'v . ^ 1 1d ' a ... fKK ^,i|^ <- ■ ’ V .. S «CSi:. • » 'll iiU i njc .,. • .ri-' iE • . ,. . . i.<.l V.i,- ■P'-'- ».-5 ,«..n»».»-ti(,p8., ,*rfto • .>tw«, ;:txf-4«ieo i /■ *' "•■ i ' If i •'•*^'M*iX kWteiX i !.««**]», i d ., '■ ’■» «C’ d.-*. ofeXosne I-OC MU ot oof ,-,.r . „,,,. ■fWI io :.t • • <. ex -I • '''•* -• oiT ’ A 7 -I *• Of .wst® ^ • -• <}ci)> C^r' dX — 4 0 ,.r;fcdr 38. became a body corporate, with perpetual succession, a common seal, power to hold lands, and limited liability. The Joint Stock Companies Act of 1857^ repealed the Act of 1856 but ”it was provided that the three Acts^ which had been repealed should be deemed to have been and still to remain unrepealed as to any company completely registered which had not obtained registration under the Act of 1856, until the company obtained registration under the Acts of 1856 and 1857, after which they should be repealed as to such company.” This Act also enabled seven or more shareholders, with a fixed cap- ital in shares, to register with the Act either with or without limited liability. If the liability was not already limited, certain assents had to be obtained in lOrder to register with limited liability. This Act systematized the whole problem of liability by providing that if after July 13, 1857 more than twenty persons were engaged in a partnership business for profit, each of them should be liable for the whole debts of the part- nership unless they were; 1- A company registered under the Act of 1856. 2- A company incorporated or otherwise legally constituted by or in accordance with some Act of Parliament, royal charter, or letters patent. 3- A company engaged in working mines in the Stannories Jurisdiction. 1- 20 & 21 Viet. c. 14. 2- 1844 (7 & 8 Viet. c. 110.) 1855 (18 & 19 Viet. c. 133.) 1856 (19 & 20 Viet. c. 47. ) ■’:r- •'... aoft'^.-oc " ,M'C isi T,;-.^ I,. , • i.:: iv," c:;?.';. , js,< ©flifioecf '* ■„ . _ itK/i . i; •. ,ai n». ' i o.** :>;' : ©wcq ,ijae.e . .:' 1 • ■ r.'^:i \o ?•. ;. ••• -'v . .-^ .v. c.'o ~rjtv»b oj^'x. i-bt .''.vo:;.q * •• •■; ~f " iud- . d8I lo #0'^ ■ . . 'U' c-.: i. . . . ^ ^ . . V. o'f>i .1 uii.1 Ii/:iu I lo 0 r-A i'/. ; ..^ ‘ .v.-t’s Jbfirf IPm 'u -U to € .* f - • '!1 •'?.» a*' tM®.! ;>i i: Jdo ^keciic:-: ' :;,:■ ' ". , i.fif'D', v* t. : : >:■ l.: 6C jbl ;o:l •' . rt £ .iSl'A ^ '.-r.- " r.c 09 lA toA Kjix.' i.,. r'.: i t/ i .>■ ito/. »■)* " .' . r'.’i* " t . ,c-(i;-'iuidc‘ iii X<8^i ybrt- L. r r r . : ' Ail Xk»^le4.X il.^irr T*: ■* ' iv *;.' 'i&ij'Tiu /rj: i ':,i( ir ' *^o ...i« r::o>T -, f.xc--.-*- -4i-: L> lA.- c tif , >!■£ LeHetl iV. V** V ' ( Yi.. I , tu. 1 ( , iT . ■ ■ T’ ■r:u+ -j-Ji-ivo;. illdcXi TO- ; . i.rT^i, Z~ : .* <■ .*:*}?> ‘'’’i-'l. \X XI©V< ?r'T . ; «■ r ; , o.Oi, ‘ ilT *iO u Slo':: M vC fit€H^ • lO XfCMf9 :• Tf \©r‘, ' ve* {.jidaien 8 j: to r-wn 'f©i, X’ ! • n'r b i \ ■{.T^O^.ut A ’CCCi>«©I trite T 'Xi'Triot A • A:A t.;- .-(iybTOCO.. 'f . \'. *.» X ICTJ 19 J S’', i. i L 'O StJ t ’. *) ;' . Z\’ -. .■toitoi: ■:. ! Tirl, r ;• f \-4- :••■ '/.} dc‘j„ Toi? i5i -I r* ^ V) -8 ^ ^ i*j* J* V* t 39. All companies, whether they had limited liability or not, except insurance con5)anies, must be registered under the Acts of 1856 or 1857 before November 3, 1857. If they were not so registered, they would be incapable, until registered, of sueing or paying dividends; and their directors and managers would be liable to penalties. The default, however, would not render the con^^any illegal. Banking companies, by another Act^, were brought under the operation of the Joint Stock Companies Act of 1857, in that same year, but were not given limited liability. This feature, p except as to notes, was given them by a subsequent Act . 3 Other Acts have been passed making changes, improv- ing certain means of proceedure, repealing former laws and sub- stituting new ones in their places. In all cases there has been no tendency to weaken the principle of limited liability. From the above Acts it is evident that the principle of limited liability has been recognized by statute, in England, to some extent , at least, since the beginning of the second quarter of the nineteenth century. Since that time there has been staedy progress in extending and improving the principle until, by the Act of 1857, any seven or more persons engaged 1- 19 & 20 Viet. c. 47. s. 2. 2- Stat. 21 & 22 Viet. 91. 3- 1862 — 25 & 26 Viet. c. 89. 1867 — 30 & 31 Viet. c. 131. 1900 — 63 & 64 Viet. 48. 1907 — 7 Edw. 7. c. 50. 1908 — 8 Edw. 7. c. 69. ^ j. . : '.iK ^-;Dff \ :n' .'. iif(W • ' . ii.il ?•. .C' Li/^‘7 . .?.<■- 1,- iiV"* r»&'i i.‘ ^ t-us ' . •■*.. ■ t 'I ion A^If'Or ^'Xfpvow;.'!. , tJ . «« t;iXjais9-i . Ji’i^LLt r iCL.i'-i ■ .' vv, ; '^qr.oo irTixiaBo l: IXw u C A AW#ii .0 ,otji«Teio (.'*;* , . I ^ Scr, ,:Lri ^7Stx -^b '. ’z-k w*;T'.u-. 1 '. .: L ^ n^' t'3 • ■'. , • -i: cxf r-i JiTSOX® -vc j'-i.'itl : X - ■ . a-vc ^*o< itXiO -.i", iiV'Zt ^ . >:•'; ..: at-'^T&o gfti not:'.' '•A.X Oien'.. Or'^>:U Lii. . .“.• •.•eF ; ; , ... . r>.'’.0;Xl vt)L .-’i * 'iSa*. i ',■* ^! ti 'io ‘o .'■ • Xi'.*.r : 1 ‘£i7 .i-^N. *:yt o5 on t- : .’. . • . ;?.<:.•; i r v.ti ir-j \ .■} - 'r a-ToA v/ v'-if -' ‘ .':*OtX ,.■■.• c - ., - :r-iu.:.;Ovl zzO \ -li'v il rs^.u/itl TLQ tuozc: Miv.‘ : ' ■ J-. ,^rvfX; V.1 i.*i' o.rie ^'*■aii■sl ©inoe o^ k omii • i. t.‘ . r.' dv«::' . t j (. : ictJ-t-.J. i^xeyp j '. [■ ,l . edtt gjiUco- ... ill. JOT V. ■, naed Id;;,..:.... - .;a.Mis>i sir.:, . . -t i vCA '. . ,‘v . . .. ..V Cv ..■ 9.L -X "S '}■ ^^- . :t . . :.j yfc. i r *. — -€ .. .vCiV X€ A ' '3X .. . '•' Kl — 0C2I . . . 7 -•- Trex . . 8cei 40 . in a business for profit may form themselves into a corporation with limited liability and any twenty or more persons so employ- ed must so constitute themselves or be considered a partnership in which each member will be held liable for the debts of the who le . The whole movement for the protection of the individ- ual members of incorporated companies may be summed up as follows; (l) Since the fifteenth century the members of in- corporated companies have been given protection, beyond their fully paid shares of stock, by the common law. (2) Since the middle of the nineteenth century stockholders have been allowed limited liability by statute. .T ,C^ ■ .. ^ M ; a;f«i ^i&vt^^e^h^i) ra-it^lt i{jb« dri'toiq "lo^ »t-yahttsti s at ■ -'iolqa© ofi anoei«q eiom to fh» d^i:% ' ^ v< . qidaisxitfi^^q c bei^^i^iaucp eo lo e6\rX0R«9'd,t o#c/ti^a«ca, o« d»i;« ‘fcs ■V - 0 *sif:^ lo oilt to'\ ©XO«ii fcied ad XiXw lacfaeax do«« dolxfir ‘Ht 3 • /#. -X'iviji^.t "io xtoi^ca^oiq evd^ *iol itneftovoo «Xodl» »dT 9£ ^ 0©l’JOI/ 8 etf VRCT BSinfiC^nOO iq^OOCll 'to fT9d»«B -ni to •’^atf/Bao en'^ x-uitniBO dtnfiscttx t &rit' ©onf 8 (X) ..’sWoXXot f liod^ Xjuo^Bd ^Koi^oatf’oiq n?v /liad ovj&n atjirje^ijdoo ^Xo^Atoijrroo ooiriS (S) ,.J5i jSfmoo ecl^, xd ^^ioois to 6©xer(a diWq X-CXx/t cecd svijcf GiDi»iodioo:*'e X'iJJiavo ds^ti^&iQala ©d.t; to eXfcMM; .s tt^/•^J^>*ra xtilidclX Jbo«‘ii6fc£ S>®voIXs n 41. CHAPTER V. From 1777 to about 1796 most of the session laws of New York state were concerning constitutional questions, the organization of the subdivisions of that state, and the dev- elopment of a system of laws. During this time, and, especially after 1795 many road and turnpike conqpanies were incorporated. There were hundreds of these incorporations but in none of them is the question of limited liability mentioned. They were given the right of eminent domain and all of the other character- istics of a corporation. These characteristice were so carefully enumerated and the separate personality made so plain that I am convinced they took the existence of limited liability for grant- ed; they understood that it was of the "essence of incorporation." There are several things that caused me to come to this con- clusion: (l) The acts of incorporation, in the early session laws of New York state, bring out the nature of a corporation so perfectly that unlimited liability seems inconsistent with it. (3) The legal writers maintain that this principle was under- stood by the people of that time.^ (3) The New York Chamber of Commerce was incorporated by the English Crown under Letters Patent; In the 5th. session of the New York legislature they were re- incorporated with all of the rights and privileges of their first incorporation, and incorporations by letters patent carried limited liability of the members. (4) The common law of England was made the basis of law in New York and the early states, and the English common law recognized the limited liability of shareholders as one of the features of a corpor- Kent's Commentaries. Vol. II. r :ssmate==i^r. .u / .V samnc ’lo 8 w*X floJtaeea eiltf to i^aoTi CeVX ifirocfjj oi ^^TX m ® eilJ' , aiio J: i’sejjp I^coi^i/^X^fsiioo galat^oaoo aiew jitoT wel! *’ -vai) 0iiJj jtex!^ to anoialTitcfj/e td^ Itf aol;f«slii85’xo XXXflXc&qea ,Xxi 8 ^eici^ sXri^ gfrltirtl .s**X to to ?no&qolo>w D . .^©;f^To^i^oo^X ©low osXaeqinoo Lofc J^oi 6QTX xOtflii to ©noij nX ;fytf aooXi'iiioqioOiiX &Q&d* to Si-e 'widw oiedT Giew YsdT .Iejttoii^.T8c v'^XXio.BlZ *:®?i/eiX to xtoXteevp al^rn^d: ,/a •I' .e^oaxado x*d;^o acit to XX£. boM at^aiot iR&aimi to ^dgX*:r©if^ xjovis YXIyteico oa ei©# soi^aiio^tNfrXitfo t«aad7 .noX^axo^oo a to aoXtaX ly an£ X SMdi os etsortj x^^Xl^aoExeq ©wfixa^joe ©d^ !>a;^a'IMUJa^ ~^xrci3 xct '\fiiie‘ail fcarf'imXI to ©o/Tfet^eX*:© odt ^ooi' v 9 J390£Lttooo % 'A '■ t ” .dol^aaoqxoonl to soa&eet '' ©da to ls« tfX i£dS too^azolm -noo etd^ otf ®a:oo o^ e® bt^avso .TAdit Xaiovds'ei* exsdT | '^ iTcXesto yXi^o odtf nl ^?ioit;xxO‘'^c*Oiri to e^OJt edl (X) :noX»t;Xc ffoitAioqxoo £ to s-ii/vAn xhoY- t©K to ana X s^tF iaa^ot^nooai amtas’ ^cMXio^iX tbitu-tim} i£dt' xlsx^at^Bq, oe -isJbao eaw ©XqXcnXiq aid? X«di Di^&ntjrei sx^^Xiw XaseX edf (S) ^ aw^ ocioaBtoO ■ « q©d? ©xj-CAlaXseX iioY wsH 6 dv+ to floXe «©6 ,di*d 94 ^ .01 ;Xao^x^ 0 to ©egsXivXjKl^XflO s^d^Xx sdi to XXa dvXir fcx.JAiajxjrnX-a^^ wow Bxot.tftX Qa6lS£icq*zocnd bat .aoilAXoqiooni ^ailt xXedl .'1 tiaX docnoo oriT (i-) .ex^datra od^ tc ‘Y^XiicteXI h9!ftebl£ iioXiXAO xXxA© edS^ Xirr£ aIxoY tv^eH aX wsX ^0 ©ieod ed^ efcgs® aev Xrr^I^oa to Jis^irXX ©dX f-osliisooex WjsI noranoc deiXgoa edrf Jbxsa ^ >y -loqxoD A to eexo^A&t edd' to ©no aii STeModoxcSrie to ^dlildo^X 42 . ation. (5) When the manufacturing corporations bacarae common, limited liability was one of the features mentioned in the acts incorporation them. There is nothing to indicate that there was any change in legislative policy at this time. It seems to have been merely a case of stating what already existed. (6) There are a few cases, which will be discussed later, in which the corporators were made liable in their individual and private capacities. As these cases occured before the time when limited liability came into questioniin New York state (1825), the mere fact that it was necessary to mention that they were to be liable in their individual and private capacities seems to in- dicate, that if this were not mentioned, the corporators could not be so held. At the end of the eighteenth century this principle was being mentioned along with the other corporate privileges. The stockholders of the Manhattan Company for sij^jp lying the city of New York with pure and wholesome water were liable for calls: "all such sums of money by them subscribed or to be sub- scribed. " There is nothing in the act^ to indicate that the subscribers or stockholders could be held for more, either by the directors or by creditors, and the wording of the act seems to imply that they could not be held responsible beyond their paid up shares. An interesting act was passed April 28, 1786 by the legislature of New York. This is made a strong argument, by J. S. Davis^, to prove that limited liability existed early. 1- Laws of New York. 1797-1800. Vol. IV. p. 433. 2- Essays in the Earlier Hist, of Am. Corporations. ,LOiT^\OZ ■■’iCZi’xot' n jt t; C' js^i/rx ic cii^ ns.a« (c) zlitM etiii tiii ni :z-.,r.lvaz>:-. C£w eiEiS^ t’ , f f.c ^nxi:^OA: xO sno vJiLl’ .1 ezLtd'^ ti. 1 ■*<•'£ O'i^TrocnA r- > ■ 07 af.'eve , :• it' \r..:fcu x nt r’ 4 .,.f*iio \c/. . ...Iw- , ’: i rar/.; r... 2.b c-o f.Ixw dc-ir'” ,fc^O V ** ' l^jfttvi ^ ..: ■ iea ' ril ®.io\eiX eb£.:^ aiew i'Li’t ':£ .-recTv; e.-nii- od;^ c'^orrc X*'T1 .'olo ©dr fA . r5X"ic.::i eo' dJ i *:e-‘ y -,’7 ii:.-:.* i-rut ■'.xr«m ^ ' \'.v. f-aeoro er .. v‘l SJfd^ ^04.1 X a A' X 1 oxiqr:o c q . i • ' '■..TbXvXL'f/x T^ ol eXd£lX ir-i . u . t< TO V •^O.'frO £:( r " v' V i :‘ . '4 .*• Xc .’ CT.^ rir’i 11 i'it^ 1 - .i Led . ©d ^oa !■ F i qi: ri'ic v :.\.z r ' d~l-. edi '■o to;- i-A i :c' 'Ttji.'io f.:.* 1\ tPivoi^aea led ejBio od.* a ^vf ,L’'- Tut v^^ciaoO Tfi,**-* .f.'r'}: edr :o rif.Modic/p^e odT lo: gL'JcH >;.twv/ ■i£-'t£-v^ rC‘S e£ 'Ji'v. *'r;7^ dv.'/w tCtoY to -'-'lj Qci TO -Vtro uoo £.iodi \f:c'Ljt6 js er/Er: ei ©Irl? .dToV to 7 .yX'-xs yXxXX.' xX tt-:^tLitI evoTq .• .1 £~'7'-.7£ . -I B^t \o \7citOt) liDA mSu^ tw \n*imro<) iioul ixfrwalj' bo^-filoocaA I T. 0 I’ exaex i^^rea n>t X\-tX,ldaiI i^ai^iURiX . . . *te*£*4*i;S &b» i^oT ws'/ e»tj£t>j:Xqi/jb jb uJBciJ t»i)iTorf»i ,si&an x^"UScjj)|po i^a^o^^noou 8^^a|i ’“■ ' - 5 ;^ ''if ^ -Q*iioadi;8 tcXi aoi^iiroMcHm od:^ to ■ tfj tn£ 8tl3/ioes rufa”^ 9Cf tB^altXod rijBiU eliiv ,aie ' ^V?xsifoc iiBlc ^ds to £>L,l\Xo^d^ tit alll co ^fqojT --' T r • ear ifi x^'taeXD .Id^i-oiiOi: et ^d^LOB crsv6 B4a iiijliijiaqiosaJt iadif>4W -fsoo cLt tfTji sesw tjlfl# itai; ei i^X ” Joa -yo^ce p'raif eslnii».qmco l9f£‘Zoqzoti,ii tins ,tssjt oaM^^^at .ti T ' • . *•■ ‘^S ' eaad^ d'lid ss tu «oxA;tttf5Tl:^ Bdt sxii It m . -«il levHctts eTi/|£.Xeiji&X o/itf tod to ct ,a« tdpotf oiaoa aX ,y/54qffi00 ooflinu Btdt to yrfi? ijkT \JiXl'3taXX fc©*! ^ raaoXXol aa eiic^'T mi? .iicP5a!t£«X3iu» xXi**u4V> ai aio^ lUB .J -qXo 3 ,iTt>aXX6i( x.\BiIiilT ffMPfiiiXf ^r*ei:,«|0 Xsji/iwS aatnadW” ' 6jV\r '" ■ ^ i>a^i:o&£»iqdU avad ,fne£fio i>rj» t7*:^sJB zt>tr^n»lA ^aooi^tS oom Ci.T* lo di&afi §n4 sXa tooftft£ cj toaoqailipaTa , 3 =. \o Y^naoO X>na y«XO to y/raqaoO ftoicT az^ltii/catiLrflislt £/#MlcOBa«' ^ - jt cozi lo 2 ,nJtTU^ 06 ti'aB 8 ; adi" ^AX^owotq to tucQtuq^ ddS io!t 'i^oY'waK adw to al.qosq odS yd tetoesie tO'xoia^euiT tdi^AjS &Jbdt stt . ■‘■‘ E ' . ▼'■H* '* !T ydoisd: t»x i't bcu3 ^yXocioaeA siaoa® al . ^.,.^_aTq5i XioT wall to .aaib^O Xat/ciaS 8d<^v£iZT lo \4X’iod?i/ja. adS yd X^aXojsxxa 'xetaaxelA ,cooq?ii8 accioXoB ^r.oeSlot ic4lXil4 ^eic^Saacb B#iXXXff -tos^eet £ina yXX^im'Os iXada «&&XaiooeajQ iXod^ i'lAwatfe . I tdv to ^iiiSio BdS no Latd&ztnov toob \%uv^ tct fflosll orf ylcTl I ' ' i ■ • .; Ic eeaocyii/q Xeloe<.re arf* lOt .ctsaaTota otabn edt yd yiia^j^oc. X>iaa ed^ to ooX^ioqoTq doua flrJt to ^ultuSofiYiuip^^ on? 44. whole of the said debts from time to time contracted on the credit of the said company, as his or her subscription or stock shall bear to the whole amount of the stock of the said company, with- out regard to the sume by the said copartners respectively paid for the discharge of any other debts by the said company contrast- ed: and that such persons composing the said company, shall not jointly liable for the discharge of such debts, beyond the whole stock of the company; any law, usage or custom to the contrary thereof notwithstanding. Provided always. That a duplicate of the original articles of agreement subscribed by all the persons com- posing such company and particularly specifying the shares and am amount in value thereof, of each of them, in the said stock of the company, shall within four months after the passing of this act be filed in the office of the clerks of the city of New York, to which di^^licate every person'*^ shall from time to time be of the said company shall from time to time subscribe his or her name, and specify his or her share in the stock of the said company, and no person whose name shall not be signed to the said dupli- cate agreement filed in the clerks office shall receive any ben- efit from the provisions of this act. And be it further enacted by the authority aforesaid. That this act shall be in force for the term of seven years and no longer. There is one thing, above all others that this act does show, and that is, that, from this time on, the legislature no longer omits comment on liability. It is made limited or unlim- ited by statute, in most cases hereafter. At any rate, the leg- 1- Laws of New York. VoU II, p. 395. r yj te c. 1 M xio l3oicMn.i(toc eai<^ 03 ftOiT 8itfoi> Ijiae, fjdt to iXOTV mr Xlx'rfa 3iD0;fe led io »Xrf sj^ ^^itRqiBoo ^JtjiB oiljf tc l»iBB ed^, to aJcoi^a © filAq \i8Tt^C'tiJi€.i eioa^tivsqoo i‘i«E cxi? owB ^dS' x^usseiTi^ifO V ton ^ HOC trK($aoo HtXae orirt -neti^o cds .^oj^ ton L££dB jXrfceqruito IjXvRb odt so-t^®OviBioo Dijoen^xi doufe tBdt tea elotln »dt ,eXcf9t Hone to saxfijl&aiiD ipi &Xcfino« dit/s ^io eoXoXtiul Xjutljgiip ... fltf Xnx^ D-OTfixiv ’CXi'f'Xwollnjaq v^MJCjiuop dbti9 s^Xt'pq to jCoo^t; srfjT til ,a\Grfj’ io o'cam to Btsl-^^ isk ijox/pflGB ifo* atrf; to ^;g/iX6s8q fixfv feifj^^ios* ni/ol iijsiJti ,^^£^9100 ■tJ fc ■ 05 ^aTtoY wpTT to ^5io orf^ \o fiatteeX;^ *d!^‘ to CfOXtto adt ai £®lit ^lOcT * odd' io 5 £f fluid od ©ffit 5 don't II;prt 0 aostfeq %*tme Bteolic^b /SoJtdfi .1? ,0*Bda tod TO eXrf PdiTti 6 tfi.£ c>ti5 o:f ^i5 sv/iit tX 4 eidi» t^«<|EOC y ^td*qi !!00 tXsfl ud5 to ;iot3/o eds oi ftMc? Tfld tid '^iXooqe f *~lXqoL fji£a Qdt 05, fco/T^iCi &T^pi %o eftltiWlQco iooiTii e^/iiogtooni o^ V^i ,OE 4oi6l* teeeeq ba« S^a# aA enUSnot* edT gaili/^OAlunAfe ng^XXwii’ ©ds iro rxofcXod ■’ 3 * XXiPrffc LeoleTBoo .>c/«u ®irf^ oi snld^on iexf? e^c*wIe feefcJhroiSl’^ ,oXil^ ut i‘ -noo X}Xe» ©dS lo eieciR&ai €»g 5 e5^7.f?noSi© teuxS^csoo lo oeilfttf ©d * - Qdi xd x^^oni «d le.t'itttoxed doXdw pSo«-C ^o© udrii nolSAioq ’^OModj eiediaes ©dx lo vrovs tij* do*'.e s-sii. S'od ,lo»iefJ^ sao^^deiiX) ijBijijXvXi'nX fitfl nX 05T X.eXi/s^e©oiq ed oX e‘* 6i ©H ” et^ixoqxoo 9 dt.: -^txoqjoopi vaa XQ& JeomXjE iiw <{;?XXidBiX to eX^Jioaliq edx .©Xd^tX yXXuI sLb® tTOtf ^arJ^ a lol .eaol *r. Yidedorq Si Iwui y/T£qffjoo ©ids lo iM^6d eX' *M>dsiwl jjffidSGH' lo e&jsso xXfl9, odS ai sidS Sxdi Soal ©rfT .noiS£i©qo Saew lovea yarfS SAdi Soal eds jBiiolSflioqrooni yXuB©^ adS ^/toeie Jboii aSi [*- • ^ m . 1 ivbzlbpt zBdtzal ai ^eXdAXX ©d Sei/p yedS S©dS aSAi© ylieeXo o©^ \ zsiij^az 9dS fflO-il exo^^ijBqoi) a ^iaisauiiu ^syt ©^t) widtf tadS looiq .e«iS aril I05 yoiXoq SXiWofiieSisi TBdiQn^ Bad aJxaVi .Q X ^floiSqofrqoo eiril al •"^ /:4- ./lOiooeB .rises .d'XOY voH lOitrjJt -X laijxrx oqp ,.efloiSaioqtoQ. ,IHA lo .sa^il loiXij&S .eivad .3 -S 46. illustration, and some reraarke that agree with the statement that I made above^ about the English common law being the basis of liability in this country and limited liability being taken for granted. He says, "In the absence of general statutes and decis- ions, it is necessary to turn to the specific acts of incorpor- ation to discover details of the public policy Limited liability was recognized as an attribute of an incorporated com- pany, almost invariably without specific mention; indeed it was a principal object desired through incorporation. A subscriber to the Bank of New York, in 1784, refused to pay his subscription when the legislature denied a charter, saying: ’When the regu- lations were published and agreed upon, it was stipulated that no subscriber should be liable for more than his stock. This pre- supposes the grant of a charter; for, without it, this article could not take effect; should the subscription money be at pres- ent paid in, the stockholders become to all interests and pur- poses bankers, and every man is liable — for all the engagements of the bank to the extent of his whole fortune. ’ In the petition of the directors of the bank for a charter in July, 1789, it is stated: ’That standing on the footing of a private company, in which each and every member is supposed to be personally liable for all the engagements entered into, it has been found that many persons who would otherwise be desirous of becoming subscrib- ers, are deterred by that circumstance from doing it; whereby the increase of the stock of the bank is obstructed and the operations proportionately confined. ’ In the single instance, that of the Hamilton Manufacturing Society, New York, 1797, was this limitation 1- Supra, page 41. ,oi> erf.T dfiit i£dt 6 iT««ei Bmoe ^La ^aoidMTitBisLLt :. M Is”^ ’ * . '3 ■{. o f/£f^ ^iTitcf fiotf!flit>o tsdd &uodMt ^BV(xis 5i)nBJt) I tcol at,^t gcied 'itlS.idsdl JbB&tall baa x’ltcjsty^ ^Xd$ lil xttlXd^lL -eitefc hew peS^j^UtB Yc ocitaacfii lil" .ftalnje-js — loqTOont t& c^’Ofi &iiX ot c'ti/i o^^^fS!Nia©ooa si -'V xolloq bUdtiii^BCi to BlUSBb \wfoo9tb oi aott£. -flioc bi-terociioost- D& to htudluiB. em- ^) 05 i^ 5 go^o•!^ wsw WJW it b^Gtisrl iaotiaem oiliofqe iL^oditv ^Xdiii'-LBvci ?so«Xa »\0£q a ^BdisoLdUB A .r?ci?iiicq3c.o/il lisnieet tOBtdo -Xsqfbnlrq s' nol^qiicacfirp slrf ot^ hf-shtet eft ,^aoY irig'Yo iitBS sfit -x>5®T eri;^ saj;/jffiisi3©X eri^ Q®ifw XjSo^iiiiqiw'a acip .-tX [sxcepj Dosijjs ios tosistXdJjq arrw? fffiol I -©:rq sidT .:^oovS aid npd;t sTojh lol oXdr.ii ecf bXtieds "reKfiicsdiira on fiX.ii ,-101 ;t 93 ^‘T^dc j& I'o it OS’S ^ BtOt sssoqqao -&©iq ©ci ^ob 65. BDi^qiic^BoW edif i>lL0d8 ©a(jl»^ ion iJW*o a R /; ^ -^q Pr\M nl £iIb o& oiBOc&d arsblodicois ©di ,/ii M'j»q in© aineae^^co ©dj iXji icY — eXcJ^ii tt ncr. iaa ^sieatadd ssaoq nol^idaq edi rtl eXods ©id to ihBiXG sdi ot^^AasC ©di lo oi ii ^8pvx /xXiJ’T* ci -leiTBdp t uoY 5J.rseo' edi to .eiorfcsxUb eifi to, nt ,xAaqifi>o si«vixq b lo scUoot Bdi 'scfthmis iax^' ©XcfAiX ■^iXf-ffOsi6fr ©tf oi L*tB0qqj3 at TOCUftOK ^xove Jbjuj rfoa© doidw inrii 13XU/Q1 flSed ©^4 ii ^oini ijsx©iflliMxoqp otii bos ijoiouxiado ai driaid eJi lo ioois odS Yo ssJBSioxii &di *o isfLi fSOKBtTani ©Xgiii^ tnii nl ’ *it»fliYdOO X-^®i*f*oiiioqcwcq aoliBttaU aUi e«s ,V.Gyx ,dxoV veK f^f^tiniostvoBU aofUtrjsB t .L . 1 ^ 9 $jsq .Btqi/S “I 47 of liability refused tp a corporation." Limited liability continued to be a feature of the in- corporations until near the beginning of the second quarter of the nineteenth century. An act passed in 1811 to incorporate the Clinton Woollen Manufacturing Society of the County of Oneida may be taken as representative of the legislation of the first quarter of the nineteenth century. This act contained the follow- ing: "VIII. And be it furthermore enacted. That for all debts which shall be due and owing by the said company, the per- sons composing the said corporation at the time of its dissolution, shall be responsible in their individual and private capacity to the extent of their respective shares, and no further, on any suit or action to be brought or prosecuted after the dissolution of the said corporation. " Some of the other acts that were passed during the 34th. session of the legislature of New York, containing the same provision, are: An ACT to incorporate the Somerstown Manufacturing Society. Passed February 32, 1811. An ACT to incorporate the James ville Iron and Woollen Factory. Passed March 8, 1811. An ACT to incorporate the Stockholders of the New York Sugar Refining Company, Passed March 22, 1811. An ACT to incorporate the Chenango Manufacturing Society in the County of Chenango, Passed April 3, 1811. An ACT to incorporate the Stockholders of the Columbian Lead Mine Company. Passed ^ril 5, 1811. ' \r . \ t' O * fcee* ‘r.*: Y.nitcfAii ^0 -• '. ’ iiJ ?c jj»ei ^ e6c L^i=; ' nr . ,^• ,&1 "^’•-^xXv'- ? !"• L i-ii fi ^ ‘ ' JL- e aJ,Z . , ■ .' ,' ,''' >.' !..'Xr. • * * •, 4< v;:: ^Ji^:r i &d > ^ .'. / ^ .^JU .|s. or> (. i ^ r. e*rfi :o i‘ . L ? .-^Xl nOXl.Pt .-..j'.'..-; i 60 CS Liu. x...iribal *: X r;c.' it 1 ::f. 04 v''ii: r:*r‘ , 1 1 D 7 'r; ^aoXrotc. f tt ,etil£d£ r.rLi.i:] • 07 ii •:• ^ -A n . ^ 'k- -....u ,’ vticx»< 3 [jjc lO -.jv y* ;:r?. , •,_. f , : . o^. . rox .^A’-T .-'CT'rci. ttiiS SUf ’. .• Lid: .■ tb f iV * > • • r;e£iO^^ firl ii- : TT ,n:.; r rv . s, Ci^ < • . *»1: 'ij j 'U’v '■ 0£i) \:' \ I'- .?"■ X rrt n c» o :. • r.. , . . 'i > . :: i f' i X Q oV £,rK .TO*: I M, 1 i V r o I •V.' 'i' \JLX. •’■'t »■-" rfO'tJ^y j^Ov'Ke^: stv 'io •• >. I <-• ».i •* >. ^ • . ^ '.Li:; j... : ,.\' 7 CML. . c Ot' I'CA itA rrA or 3 ^x.Tn^H . :iL '8 c. •' i-if cit^ ,vr;o‘ s.^£TO€it L or* TDa ;:;4 i ,a Ktv'. t/it* juatJ'j I 48. An ACT to incorporate the Cornwall Cotton Con?)any. Passed April 8, 1811. An ACT to incorporate the Oldenbomeveld Manufacturing Company. Passed i^ril 9, 1811. An ACT to incorporate the Montgomery Manufacturing Society. Passed i^ril 9, 1811.^ Some of the acts passed during the 35th. session of the legis- lature were: An ACT to incorporate the Ulster Lead Mining and Manufactur- ing Company. Passed June 1, 181S. An ACT to incorporate the Stockholders of the Dutchess County Slate Company. Passed June 8, 1813. An ACT to incorporate the Onondaga Manufacturing Company Passed June 9, 1812. This company was placed under one special liability. In addition to the above mentioned clause, its act of incorporation contain- ed this: "And be it further enacted, That it shall and may be lawful for the president and directors of the Onondaga Manufac- turing Company, or their successors in office, to erect a grist- mill for the use and benefit of the said company: Provided, That the individuals composing said company shall at all times here- after be responsible, both in their individual and corporate capacity, for all debts contracted in erecting said mill and for keeping the same in repair. " This is not at all unusual for cor- porations in those days were narrowly restricted in functions. If they wished to enlarge their sphere of activities and to go 1- These acts may be found in Laws of New York, 34th. session. \:n: O'V • - i. ^ X X ’,1. j -H '.-(! ■'• --' i.-r-f :; V' ";j. ■ i-. V" njoclufiX'^o • - ‘’i t ,A i-cetXJ^ i XX'iqA i :. £ (%f.' -& ■ oJL * ,. f "ic noli . Gilt ,-. ♦•'/•• Bl' lr.‘ '.r.lui'J t^S ■ ' •i ,x &fxi/T, -> . G r . . ; .-5 :j r 0 /■• X ::• ; _ ■^.-l : . , i-rrifL tfcnc. •' V.‘ ' - Ov' » tiij 0;.i ' ;. ' . ^,.T I r r,p - ^T • • f ^ V-/ C V.- • : ■ ; . - . ■ r : : ii, :■;*;■(*.: •..- /.i.r itol J v.orrl "u., :' • , '■ c^d Y--' i .'■ i . xr/ , : \ -~i.\x- .*'/f t. i' -■' 9 "*a fell * ..1 :,r ^i.'; ;''■'! - li « xJ; -91T.5;i GM;.i ^ I Vi.XVOo'O^ i- oc;*! .jf. .'.jic i\- h t.!6i' r -■ ilB IXl'X i X,X;-; ; 'I. OftTIf; ,'ji ’ 10. T tl' : L.iL :'{rrn i ix '.a fe i ..I re. Jcilitj sei -fc. - tS l\' j. : Jo o*"" r. i! / ' e L-E —i. ■ ..X fko cro '- :- r9V • i " ‘ OiO-^ rjk. - . ;0:> jCit c... T!>A nA y -Krox TrtfToO ■:*!* •., - v^'-viv' .il .'-.V V;.4 nA ..i'fiv \.frrlq t -{fiAqRoo 6iriT ,zcu^ir. dfnoi,.?n'^ «’/od^ ol, .Jiif'i ■♦1 3d f:r ' no .+ r-ot taciq I .,'.-* fol AiitirjiX rCM' 1"! . .iCf 1*.. , 10 Ji ' : s :'t ILim hiMO £j;nj : s**? • irl rft... t'.'i • X.j'';0.it;eT,«^ -•-17.";-- .':,'ir:t< L:it -ic' ” . iU i-rit x,oiqo9i • 'Xf?w £ - 3 0f'^ .’' fjrrcitrf: 7oq %*• ■ * - • !'i,4 II ■jU iloY J StlfJ fll /..frJIoA r ^ .i . •i 49. beyond what a strict interpretation of their charter indicated they might do, then it wels considered only fair that they should assume addition obligations in regard to that function. In all other respects they had limited liability, just the same as their contemporaries. An Act to incorporate the Clason Woollen Manufacturing Society in the Town of Yonkers, in the County of Weschester. Passed June 19, 1818.^ All of these acts were the same as those passed in the 34th. session, in most cases containing the clause quoted on page 47, or words to the same effect. The uniformity of the above acts is accounted for by two general acts in regard to corporations that were passed during the 34th. session. These acts stated exactly how the acts incor- porating all companies must read in regard to the different features. The first general act, passed March 22, 1811, contain- ed this clause, "VII. And be it further enacted. That the stock in such company shall be deemed personal estate, and be transfer- able in such manner as shall be prescribed by the laws of the company: and that for all debts which shall be due and owing by the company at the time of its dissolution, the persons then composing the company shall be individually responsible to the extent of their respective shares of stock in the said company, 2 and no further. " 1- These acts may be found in Laws of New York. 35th. session. 2- Ibid. All "acts" hereafter quoted may be found in session lav7S, ‘onder the year they are dated. .0^ tlvoiiz ^Bdi ^Iro £ 4 X 2 ^ii1*.’!' .jcrtj'^ta onsa od?,' o? oDioa 10 ^ I Xd lot ba?nLOPc* 8 l •*Sv'» ^a \;^iaiotlaj# * .« '< 30 iit/X Jbaeaaq eiaw aaol?£icqxoc oS, ^ 7 j»;.ei iri it'le# * a -loofil (S?oa £rrf? wdd xXicaxe t?o« .ricUattt ^ed? ?naiottli> ad? o? nl lis^i fcifm BaJtiwsqjcroo XXjt^ 3 oi?axoq -aia?ucc tXXSX dofaU Xxjeiiii-i ^?ra Xseitcsrj ?eiit ©iff .eaiif?aeti 3(oo?£ Sit? iadT , If trains led- Tifl ?i ad liiA ,IIV’ , 8 sx!aXo sldif -rietanc^? ^o^xrae iJsf:oti©*qf ?‘« 4 arocjb ©cl XXa/a Xfl^qjcoo rloi/s oX Cid^ to w!« 5 i sd? x;d l»©cCl‘j!t/Bei v od XXace c© lacj^a® iou» iil eXda Ilia ewJb ed ££i.,lB koix!© «?dofi Xia aot** 3a xreX? D.iOaiaq en? ^tiOliL’XoofeU^ e^i to te-^U e»i? edd ©if? ot oI«fl 3 irot^©i \cXi£xifi&lvlti 0 l sd titdB '^aqiooc od 3 ^nlacqaioo fkdit ml Heo?e to faiXxf© 67l?caqi!ai ilad? to^ Indlxo I t .HidlT^t oa ii-na *^py H 5 .‘. 6 <>'£j 0 l iiiUfOt ed \ajD 3 ? 5 »a 08 ®dT -X t • **■ 1 .btdi -a : ,.r? ,'X, urfr ni £.uw,^i pf< fetietfr ladtaeied ‘'e?oa* XXI 50. Less than a month later, April 9, 1811, another general act, sim- iliar to it, was passed. This one was primarily for the benefit of creditors and aimed to bring about uniformity and honesty in the winding up of corporations. It read as follows; "An ACT for the Relief of the Creditors of Coiporations created by any Law of this State. I. Be it enacted by the People of the State of New York, re- presented in Senate and Assembly, That \;pon the dissolution of any corporation already created or which may be hereafter created by any law of this state, the president and directors, or the managers of the affairs of the said corporation at the time of its dissolution, by whatsoever name they may be known in law, shall be trustees of such corporation with full power to settle the affairs, collect the outstanding debts and di- vide the monies and other property among the stockholders, after paying the obligations due and owing by such corpor- ation at the time of its dissolution, as far as such monies and property shall enable them. II. And be it further enacted. That the persons constituted trustees as aforesaid shall have authority to sue for and recover the aforesaid debts and property by the name of the trustees of such corporation, describing it by its corporate name, and shall be suable by the same name, or in their own names and individual capacities, for the debts owing by such corporation at the time of its dissolution, and shall be jointly and severally responsible for such debts to the amount of the monies and property of such corporation at the time of its dissolution. " ■' Xit^^ ^t9ml dt.?fitoqfioD loo azdiXb&iL’!> 9 dii lo Ttii >, .a* e j 3' eiff.l x <^' ' ' t.'sM ^ lo bai'oAti9r ^l aS .1 fiolv‘t/ioe&iX^ asfif LO'xiir t>o^ 3 ««eaa ^ . '-^ t'^ la^l-efirierf sd vbji tteidw to a<- tiatfOij'ioo.^fMj lo P|, * '*■ .. -’ ' * feipi'goxtl 't;?^l^er*x>j 5il? aX'‘Id’ ^ *1111 '|c/tJ croK^A':oit 5 (w> Jbijss ©ff.t 'Vo ad^ :tb cx 8 ,vjn»«’ to tttoax" 80 'fr.o ©ojan rQV9 66^bt^^f! ^iioi:iiatJioanit«Jifo jfo^XXoo ,yii£»*k'la aXi’^aa 0 ^ ,etadtci£iioo ^6 ar * ^riOiiis ifiteqot% laif-'o boM a^laotd 9tiP kbXr , , ® -totttOD xloL '8 ^rri^c rSdif 84 b 8 toXcr£jtio'o edjf tan« aoliTOffl cbua ba ti^T aa ^lot^oloa&xi^ >c ad;? aoi^A «,?t'£rrja XX^d« ^txtficnq* lio=^i;;tijei':oo «no;\ 2 aq ad? 7«tiT ,j&atfoAa<> i»d?*n.r^ «jd teA *II bail io^ sua oi ort.d XX^iia XfiAftatola e# aoaistrt? 5d? 10 aAita ati? ^5 ,n9l&tosc^ iMssbJbf ttaX tew Ba-nidd' fid XXl^ila bfu; ,rroi?i/Xv 2 Gi^ 8 io s®!# otf? 3 a dOX^AtCcnoo ©d? o?i a?0ttl3 doiiB -ol axbieftoi^M tii^tavao Jbrtjy ^IJnXbt 3* noi?ATCcfroo dou« lo v^^eqwgbfot tai/roii ad? to ?ax«jjRd • 4 *^ol?juX©fiialb afl lo ofcX? adt 51. There were some acts of incorporation during the 34th. and 35th. sessions of the legislature in which nothing was said about the liabilities of the corporators. If there were any doubts in the mind of an investigator, on account of these cases, the two gen- eral acts just quoted should remove them. The acts of incorporation passed during the next three sessions contained the same limiting clause. ^ The following incorporations, one for each session, are offered in proof of this statement: An Act to incorporate the New York Copper Manufacturing Company. Passed April 9, 1814. 37th. Session. An ACT to incorporate the Dutchess County Marble Corrpany, Passed March 19, 1813. 36th. Session. An ACT to incorporate the Linen Company. Passed April 18, 1815. 38th. Session. Again a general act reinforces the conclusions obtained from a study of the individual incorporations. This general act was ,passed during the 36th. session, April 9, 1813, and reads as follows ; ’Whereas it will be of general public advantage, and aid the several manufacturing companies incorporated in this state, as well as many private individuals engaged in domestic manufactures, if a company should be established for the purpose of disposing of articles solely of American manu- facture, and to make loans thereon when deposited for sale: 1- S\pra. Page 47. ^ Lis^ to s^oii c^aw •■^edT JJS &Ci JuodM jbJtea /B£t» £loto'rt± extrtf’^ tat.’^sX erftf to exjojtaaae ’ ' . '' V. ' ^ ^ oiis^-nl eidxtoli aieriiT M .uio4*Toqxco *♦ 0 ;^ ^0 feai^XXidAiX 3:o 9nucoc4 xxo 1,0 Attita l.- IP ^ *>' j, I -womaT. i>XVvJif<5 J^iLsyp, sfefc/t atoa^iaiQ ifxen ^3i‘ii»tiKfc fcoacfiqt aOi^/''i^ccr<3^?rti lo e^ao ©4t /, • V k 3 XiiifoXXol etl7 .saiaeX'- gni^XXfttl ©AiflS' flfi^ X>a/jij»tfaoo anoiaaea <;> lo looKi nT iJa'xello s-ra ,noXaaoa rfo«© !fo> s«o ,»/ioX^Aio(jyooci V >• . , : hidi to(j«5gO 3fioY iir©^ ©jii*' svB^fOfpxtroat od', ak, " s .^X8X XXx^ Y^ttScpnoO r : •' '*> ^ HMp Iff edi ©:4Ti-q,f (»xiit. ol"- TCSt' xsA> .tJfil ,$r .iid^Xeuea .vfrf^a ■/■L . ' i .\(*xy^oO rrsrriJ sax ei^jtoqtc^aaX oJcTPA OA .6X9X ,81 XXti^.A .fToiaPB3>.S.t'^£ . « * ' ■ r iionXfitfdc BHaXayX&jfiOo adc? ©etiTdl*'iXe*r -+6.f*'IO(Xtoo^r^ fSdt lo I ' ^ cA e^str i)n* ^EX6X ,6 XXiqA ,jiotesXT©jKA,-«lo Y-Calpa oaXoiXi/;* lo jt& aeO'jinJ''i' '.i^ :AX*?^jr tol tjaXXaCK^at nbd% aooTetl^ aoaol ajUsut otf 600 j ,T^ .;;'iqtf2 rX ■gfcsara mgrrr: iry - ft ' _ » ap* *8i»4~pi - - i i\ t\ i il 52 . Therefore, I. Be it enacted by the people of the state of state of New-York, represented in Senate and Assembly, That Thomas Storm, Isaac Marquand, Seth Capron, and all such other persons as now are or hereafter shall be associated for the purpose aforesaid, be and are hereby ordained, con- stituted and declared a body corporate and politic in fact and in name, by the najrne and style of ”the president and directors of the commission company, ” and that they and their successors, for the term of fifteen years hereafter, shall and may have succession, and shall be persons in law capable of suing and being sued, defending and being defended, answering and being answered unto in all courts and places whatsoever, and of holding and conveying real and personal estate for the use of the corporation, and that they and their successors may have a common seal and may change and alter the same at their pleasure; Provided, That such real and personal estate shall be necessary for the objects contemplated in this act. III. Ane be it furthermore enacted. That the total amount of debts which the said corporation shall at any time owe shall not exceed twice the sum of the capital stock subscribed and actually paid into the said company, and in case of such ex- cess, the directors under whose administration it shall happen, excepting such as axe absent, or not assenting, shall be liable for the same in their separate and private capac- ities, but this shall not be construed to exempt the said corporation or any estate real or personal which they may hold as a body corporate from also being liable and chargeable ■"tjait ''ir> i lo sd^ lo eXup^iq ed® vrf ^c*^^c5iu■l^ .t ® -X ^ ■f’ dms llB hrLf ddttyS ,irr«j.,f TU5J< oiiftel ^ano?-? ataisocJT ■®: 3 i-*;' r ; ;• oci»^l4rfe i3 ®tit t^oc ©o led^O ' ' ... ^ -/top ^oo‘:©4 ^ lOt .»c£> ai ‘oJtXiXu;i a >.aa po^u^itB fcc£ ;Jn©iX!iei'4 V. el’f^e lire ^9.Aa ai brr^ X>ad tfedii’ ^iQ« •' :!t»nd ncX<«^i«ao'^ »tr*e ,: uiAf© lo oidiiosao fusX a;f*rvoc IlJe at c^v.h -gAlifS hrxP p ^£^i>in©l«i) ,«> ., X££>: ^:ii{9v^C>o *to f tXOf JiilW eooAXq X>iia ' - ' '’"'" ' ^ i &£d:^ btji ^aoti^'tofficx^ sri" tc 50%. tdt -lOl Ifldoaioq fc/iE ' ' ? f?n43 Ld©« fWinti*'»p/ b ^#TOs.fa€ OCAiJa liadr Lsm 'X9ii& ,l'3hlro't% :^i.J(ifiet!<^ 6d»% fed? t«iX« ‘’X- ed> *iol x'J'^^aeeoon sd IXefi> ©;t^*-3£;9 i-ehoeiaq Xoa laet dot/a . ) Q ^'"< ^ .'e/S:o exOj^xpaXxirx tt ©d ^eoA .tll • ( Xxrds owe oiedi>i' isbm.* sio^^^enlfc ©dX ,63©o iiBda ^:gnl^fxv^0£ Xofi to otu dox/«- i^nX^qBoxo ^iseq^iad -oecjrci 9#0 vXt*i ijitc ee^T^sqsa. rXedX ffX saiio '©if* toI dXdaiX od X'Xi^ »d? ot^ psjX'Tjctjoo &.^TAjixci. i*0uu ©XdiBiX i^aXad oaix> mori ©jfjsioqrop vXiod 0 fcfis^tXo ' K.'. 53. with such excess. " It will be noticed that the last sentence of the above act says that the property which they own ”as a body corporate” may be taken for debt, but it does not go on and mention the stockhold- er. The next general act, passed February 25, 1815, in the 38th. session of the legislature, will make the policy of the legislature, during this period, still more clear. The act follows: •An ACT to amend the Act entitled ”An Act relative to Incor- porations for Manufacturing Purposes”. Be it enacted by the People of the state of New-York, repres- ented in Senate and Assembly, That from and after the pass- ing of this act, it shall and may be lawful for any five or more persons who shall be desirous of forming a company for the purpose of manufacturing clay or earth into wares or articles for any use whatsoever, to associate together and form such company according to the directions and restrict- ions mentioned in the act entitled "an act relative to in- corporations for manufacturing purposes, ” passed March 22d, 1811; and such company when formed, and their successors, shall be a body politic and corporate, in fast and in name, with all the privileges, capacities and liabilities in the said act mentioned and contained. ' This act not only gave corporators the same limitation expressed in the act of 1811, but operated as an enabling act for any per- sons desirous of entering this particular line of business. It is significant that in order to "encourage” industry this feature is always included. I. ■W ’^.Bsasxfi doif# ittw ty,r,e toA 6vod£ 9&S Ic ^ar tABt ^dS ijtdi Sieivno^ ed XlJhr M' eci v*® ®©1-Bloqioo v:6oi^ a ej»" ot© doidv ®rf^ 0 , 'v , .V-'>*‘ ^ ’-iilorfiooi^a sjcft bna ac (^ ^pn o^oi> :fl tfud tot o^iAi ".-.leNtt pdf n2 ^SXftX ,68 !CXftiittf&'^ Jbi?Bae eXdji to jni tol \fnatjmOo a ^cXfutot lo Boot feat ad iXeda odf 6 aoat®q'’ 9 iOffl to 4ei£w ot«i7l to y^ cmoX k > tij8€ dotnlf beB«flq ” . aoaoqtjL q gi.iXt^xciJti:^6£fl* tpl aooXdvBToqtoo . ,atooaooei/s tiedd biia* ,2»amtoX (tod^ yruBqBOo doue b£ui ';XX8X ,0iCftfr fii bpA doAt ai ^ad-atoqtoo J^irs oiif tloq jb ad XXida *■ -S *1 add cct B^nutdeil ba^a0itlo3qpio ^acgBCtvtiq 6d& Xle ddXw 'i* ;iT'’^ W*. ^ * .j^uXvSdiioc boA i)6aoXJGSj» don bi^e ^ ' ■ . • '' oaosot^a aoid’ntifiiXI ^c4& €tod*etO(p!oo evj8§ aidT -taq d-pt? ^nMrUito r»/« ©XIj80 tSISX ^0^ aa^fr ^iroifc tedi^oaa a'ljJtBl y 9 .XfrfToi;Jx!© a/iDl;tfi^oqi;oofcX o& svXfalQX io£ n» o«* i®snoX I ■■ ji 8i il .6X61 ^dn yxjm'tdo'i basa«q •*88B0. 'i M ,-i ^ ttl :\{T[j^8rfcrtX lo aoiiil lod^o d^.iiiooAtJ ol &*jimbXc ^ jbedjyXttfrX v:©d;t «UB edX lacMa Jbnfi eoil d^dT tX «f taA'^.XI" B^’oa 5dJt dO'irfr £ii smX;^ o4^ ? arX *xi/d5>n« ,icA ttXdX to V “r."' r ‘ y- *C^if. bos XiAde ^1 ,9oio^'*nX pi^X^taoo Xi^9 t^natfoba ovoda -lieel scf^.XX^d3 qOw ,baoo 19<3 ©xora xo evil t© 1 ,Xxf^«X ©d jAiX4;^3«>tJttfiK to eeoqxi/q «rlX t&l y/^aqfr*oo * ^oimoX to oi/off' If -^xoq xo ©Xa /x©©d ^aJt'OJi'aetuiiaoi to eooqjyq bdS xot xo “,tnXq %■ -oo««j6 Ov ,©xo jioxt 1>«©I 3Ai;^OJSi*JL)3te to aaoqxttq ©jjrf lol ‘XO ,10 Jjanci JO 0 tX£) 9dsr of snlftxooSrtti -® «rrol ^xe^ifQJ^ot of at • --' * . • 4iEX^l$xi8 bdf (tX toooXfaem 8fioX^c»iT.tfcex odt xat-'AXf bdfi ^ ’s -soqvjq ^aizififo^tunita rot edot^ATOqiooAX of »vXisXtx foa a*' > 1 :' , 6 TOe» 0 oa »8 'xisd{^ bftjB ,f)£mxo':: oa Xi5d>r x.iMCfp^oo ioti% bat ’^ae «3T ^ 3 fT 60 Y-« 6 ;! lo ©taid 9 l< 50 ©q> 4 ^ ^ Momti (F_ ■ ■ ' & ■’> - ^-' ,iia^ ©ij;>. diatfT ^TcItfatpaeA f>i?* Ou^iftaS «1 t/a^iteao-i » ''i.uq -so^ fi«ofc^^ 3 lo<^^o^ 4 i oi” avtiJiXai ;^ 04 ^^ 4 wb' i "’ . ■ ■ , - 1 ' ■ •■'' ■'■' -erjoiii ©no ni ^ijiTOtoe-^ite^jr dwif boaeJi^oiK/ «aeecq q 1 e«;88 erii |>fta sd jitVAj.*- ^t%ie JbcMi^;. . ^*s„' ©rid moTl Bi«©v-, 4 i' tevjt^ j tidf ^to e^ 6 «J 9 q . j 5 »? • T' '■ tr_ eenii ©d.*i?O\|acJ 0 f!t od i?dr crus saol dstitaytopr^d od 9i©w ^e«ce ©dd. loY snolar/osq Xa*x©ijeij ©lid aeenlaod lo , '' ' ? £fVBil Od ®x©w xe/fd 8©a/io £X-s «I 9hlf.x ©daiooe dcaoi'i ©dd t©d!UB t©a*x»ddi» - z&v^i ItiA ,t/Mi daiIji/xS ni d'laq.ifdru/o.j on o£w etadd ^©dJtlioeaswooV p ~i«)D £f©sd dX a« zz^ a« dxrocfd tidT .7061 U^m ,na©d aid -Xaud rri y^dtlldiiiiX X^edift-.H “to dXqtoniiq add £>©do©©'r ©dBde i-roY wreii dadd ,d4Bj,»llffXo!iljta^ etieae dj; ^brip' ^saan \ .SS8X iLfi yXia© e« dXmtX sXdd . 1 ■ ' • ' • -tol eiIOid£»^0(rroo.-:i iwst ©tbw £.iedd 2S8I od 8X81 rtioi!? ^ ©vldflXaX^el odd €Sv>£ Taox gnXijjCl .aoaoqu/q ^nirydtjuB'hJXsaa d^ioe-fli©©;j3 lOvXH (soaXjij'B) rtddoa adT .©iiwip ©dd betiMmPt iot»:oq ^IdAlL alkjffi ais^ \tnaqwoC diipfi-^sda '©i-ri? add Jbcia XiifiqwoO X^Mid^siX 1 tortd od \kj% tiioa ai jjitXddOfl dxid a^oiiio© no^noo a* ^td od xoiXpq ©cd wpda ^^sx. «Xdd 1o ©dpa ^oddo «A .aaia'ioddo I i.\ .fiCSiiC. ^Ofi .acaO l)fia 6 »S> .ca ©3 .iliolT t©? lo awad -X ^^J 5 jS^ 5 EirpSB 3 CBB 3 ^J 52 ,^ 3 PS 3 fclS 3 S 2 lSttS 5 %a®??S soonansi wtdaap: 56. been to give stockholders the benefits of limited liability. The The section making these two companies liable as common carriers reads thus: "VI. And be it further enacted. That the members of the said corporation shall be liable, Individually, in the same manner as carriers at common law, for the safe transpor- tation of all goods, wares, and merchandize, delivered to the agents of such corporation, and for all contracts which shall be made by such agents, relating to the business of the said corporation. " In 1831 "An ACT to revive and continue in force and operation an 'Act relatice to Incoqi^po rat ions for Manufacturing purposes,'" was passed. This has reference to the same act that was revived during the year 1818 and which was to continue in force for five years. This time, two years before the former act would have ex- pired, a duplicate act was passed and no time limit set. During the next year the original act was amended: An ACT to amend an act entitled "An act relative to incor- porations for Manufacturing Purposes." This act continues in force the former acts, which had limited liability, though that is not mentioned in the last act — it was not necessary to mention it. • — and gives the corporations incorporated under it the right to mortgage their property just as an individual might, provided the written assent of the stockholders owning more than two- thirds of the stock is ob- tained. This act was passed during the 45th. session of the legislature, April 16, 1833. The policy of the legislature from this time to 1835 odT « 6*f^ BT©fcXoiJ3{o€)iJ“« ovij'^oif CQ^d frownoo 8«c sld^iX e©Xixflqa.oc off^ ©Btui^ girii*« noi;^odii edT r. - -_ — . tBtfdit sJ^Be-i » . i. - fj' ’ srkf lo ar&ucfifi£‘. orf^ #iicT it-tid^boA .r?" 0 f ■• * ‘" ' * ' 1 ,' e«£s 9ti) Bt ,^lLaiiMr!xr.t .eitfell IxS'.TS-JiM^iioiiaoo ''_^^ ■ ^ w>' f-. •^ocrattei? bIbc edd trol aoisuttoo tjB axt^X^xfio SB lenneja oit fean-aviXai)^ ,asibftBdct’^c brsa .aaiar ^afcoos ly nol^jai S^OB't^nSO XX-8 305 btiA /ionrtl ItO B^fl93& 6ii^ aatjcieyi/ ©dif oi «e?T&j 4 ilMrec^ fttjBB ©d XlBifa'^doXdir \ .> ■'-' *’' ' .iioXrljrtl 0:^200 bXst es[jf' lo \^jr i . no.UL.TBqo fcfl© ociol n£ tJifcX^'rtoo cne «v1v©t od XE8X 'bI « I ,a©8CKnwq g.iiTi/j’OBtuffljK Toi enoi^«Tf«iTOoxiX BoXtf4X©i \^oA • nc^ bdTlTBT »B1r 9^8 Qi 90ntJT9l4T CJlXl BtdJ .bBBBBq BBW ©71^ lOl BOTOt Rl 91/niJfCOC LXf BBlT dotdV: tcB 6X8X ' . eili snitni> - * ' Vi ', • il ’ “■■ ~xe 3V'i:£i iiXi/oiv ^OL> iBttTO'r ©ft;^ sTolrd btbb^ or^ ,© iJBtBBq eaw ^* 0 © orfBoiXqi'^JbrB ^JbeiXq .'bei'jierjs esw jj&xfi^Xto odtf ^ add -TDonl ot f?v i^4tX«T nA" i>eX^iifn9 £^ao bb /^-cbisb o^^ TOA nA ”.«eaocra/^i ^*ai!ttri^ onloads t6l anv.tiMX\ fcetXjwti tBd doXdw ,atfoB T6«Tol edt ©oTOt ni Boual^nrta ..tcvB sXdY . ^ 'B ifx — tcw^. teal eifj Hi bonoXtneta toe *i dswotf^ ,tS“tXt:JBlX t oiioX^xiT offjxoo Bev bn© -- .ai noXi'aejjB ot ^On aa» t^TBqorq Tlodt 4isn|^to« ot edf ?i Tebod be^JBioqr ooai ^ i . "if I ’ ’ ' . ©At io tUBBCB nB^ilTlfr sd^ fc’BbJt\*OTQ XBoJ^Xy XblxX OB IB ^ 8 t 7 (^ -do ot edr to ebtid^-oiif mtdt oto« snXfttfo et&bXoriit^^a lo doXGBOe .ddSf* odd sniitrt XoecBq obw i^cxB eixlT .banted , .SS8X ,8X XHljA tOTW^Bleis^ff ^ Ssex cU Bi'id Qldi, «t(yit e-audieX^oX odd to ^oXXoa ©rit. 57. is more difficult to trace, incorporations for general manufactur- ing or business purposes are fewer, relief acts are more numer- ous in the session laws of this period. Nevertheless, the legis- lative policy in regard to new incorporations did not change un- til 1835. In this year, however, there was a decided change. The stockholders were held fully liable by clauses like the one in the act incorporating the Troy Steamboat Company, passed March 31, 1835, which read as follows: "VII. And be it further enacted. That notwithstanding the said company is hereby incorporated, and not withstanding any thing herein contained, the members and stockholders of the said company, including the directors, shall be ans- werable and responsible, in all respects, upon all eJ 5 )ress contracts made by the said corporation, or by the said directors, or by their agents or servants, lawfully author- ised, and may at all times be sued and prosecuted either at law or in equity, as if this act held not been passed; and the said stockholders and directors shall also be answerable and responsible i?>on all implied contracts, and for all acts of malfeasance, misfeasance or nonfeasance of the said com- pany, or of the directors, agents or servants thereof, law- full authorised, as if the said company were not incorpor- ated, and as if this act had not been passed, any law or usage to the contrary notwithstanding. " Some of the other acts carrying the same clause, or, one similiar were : An ACT to incorporate the Franklin Manufacturing Company. •j j *, .r » "S._— • •ve -2 U’i'c-t^iiiirai toeoe® io*V anoi:^«2oqtiOt>ji X»f( sieModjt^oJ^ do'L^V bosRAq ^Yfu.qinoO i^acKfam^fl xoi^ ^yXtfjiioci'tooaX / mvoiLot J5A82 doitiw ,€$eX ,X« ad? 3uttiX3JsridX\vlon d-itnT tX ocT i^xxA- .IIV® 3rtiXn«;tftd';; in wo/i t(ia ,i^^ja'3Coq;i6Xx3rijCocKfB bc*» e^e-i'inQot cri'd >b84:Xj^^rroo' . aaid^V?xia ■ y| |y ^ -eois od XXiJds ,» 20 :fpo 2 XD Ox15 3 #i 2 !iitfXoxiX X>1 jB8 odi to eaai'jKe I££ aofpf ,aiP 64 i’.»i Xi^ «1 ,«Xtii*i«oqa©x ba* dtsn »(li 1C .aoirf^xoqxoc XX«€ Ytf K^OMrinoo /^; ,e^£uv 2 cs 20 aiAsaJa it-dtf, \d to .^xq^onXX ^ Xas 2811^2© fca^^uooeoaq Pak feat^e ad eaiaivt Ujb iXb tfli, t^8*X ' bfiB ^baeasq C68,cf ^oa h^sS SziB aJLii- ti tta 4'5XXap8 ni to IbI 8Xd8to»6A« sd oftl4S XlBiia eio.+cbxXX .b«* ,e2«tXodico^e biAa edtf 6^06 XXb tot fcco 48 -w^uBitfnop ^ 6 XXi|bX XX#f aoqo ‘sXdXDAoqsox Xoa -ffloo x>i;£tB tfd^ to i^onA&bttsiod 20 eO/waaetaXis ,80fD5ac«tXi3a^to -wfiX ,tos 2 odX «if«8viea 20 u^nd:^ ^atotfooxib ori^ to 20 ,YiuBq -xoqxoonX ;>oxi atow ^tal^oo bijaa odd U eua *i>eeX 2 c«l;t iJ *- ‘>1 :. vjrl. tl'Tl ucl :i’:oY AC*? 4 «^<}< • •:i I - ■' ‘ ’ - . _f\ 1 i'. : ai ^ 1 .-■k' tsifx.uiX ' . 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' ’'^ ^^ToV'-fjorl '■ r.r.'-s < "i o r.i otf TOA 'i ♦ ' •' j- ■ .. iir-': 3 xrXtIoi -=3 k.-'-v to en-^:.: iiX 'Viu y- ©« st.-rion an i o^ox e©'’. -X ‘-"Hpl "ip ,'.:^‘■^-oxoX al ei'rti^aoo drive’s oJ TOA siA " ^^cf-f^iooS ar,bl8£i0 ^x*jtog350cai* TOA oA" .6S8i *9 /itiJtlf ,bX8X r^^'^05^5 6en8j5\:XoiL2oc>^ii 9dt ^B90t> ©nb et> iwsai/ r,’ I .Tfoti ev.6H ew’ dxliJt ftAii latJtXiwia Y^XIidAiX l>oli«iX lo X Bdi. ,aoieaae "xan ad? cl ;toiBl ed3 lo coiaXqo eid# oiad 1 '^medt %c JbXed lo ^cwotji leriit o=^" ooittae^qx© edvMuoo aac'ftwo edtr aod^ ,LiJKi Ylli/T toe aioif :SSC^ >vm K5^: ' I .c© o'tev »* «*xofciocJjf6oc?^ xfoi/o tto tSico^ctTXJb. edt ^jahitso »^;atfoi3%?4iop ear i>n«a©5 xo £l»yii ;fli09x^ -i« u* X 4/e XJ0U6 0/1 ^led^aiir^ Ji>»ciT lo iatn>5r^|^, vififtcl Me locvfiidd tcox^ e» ^'iCtJt^qmoo ti£o 'to xoolitto leaoia e-d^ ^ * ' •iti* . ‘’ .kiiMir MlXcinoo' ^ -lOviTorfiJi cf :SoA nA^^,%e:^£,[ BXpl un^-xl^O tc8»»q bsw ^ikd' cfoc r:f)«7fii 8,t9fflaitoo ,”.YJi£q t- .‘i,,: -U.' ,Koij£iog-.oe Mee srij ijtf et«B eiocijjiov XL* no ina .aoXie^oq -WotS.-CcoJa s-xa itea? esa# tax Saiii;*. .Tiossaaj v#i-ioriX«6 « jo .^i^Bvi-joeqaex /pr^c;^' ^cf td:f lo JiaLt/oiae oj’tjsxe jxetlorf3it.o^e"iin£. aiotfo6iiX i^Jiaer ftdtf %i at u^qoo xo ex»Mat-^«iot tnon io tJbB^jixcqxoo«X tod 9x^ xti Tc x^axWit- .teti-x^enoiq taz he im ed ’^^bib to0 to tmxBocoo f/risoXei/d eti g« getx^xeo 9x©if tt ^ ti/odtiw Im eT%Xa©i-;»xi2ot b 8 Aoiw^/Bxoqiod Waa -fcccaadsixte^a teplc^aoo nioxad ^eXdt »l«i4sxoqioofli snlB " “ >:5 « .a/tJt ' ¥1^ .. ' '■^'i  aeXfii tx to 4U BJ xx©> 6i6 elcij* lo «i«ow wri 1 ,-. V* 5 k>. © 6 „ ^ .1'!^ v:.: ^*^0* 0 . ^. i ■■:'Uo’i ! .* Xfw^x ; ? , ;:ol^ . 1 ■'.. ^ d'lf n .,lo ifst^cisiv .r t \L’.c ' v*: XeT^v'ioi seit^?/:iS Iteiv bf. ca*; js >0 Xj;.icpBn j;l. ‘i.irn; ax . i' .x:..o^e ^o :.'li..* -Ua: ^:. t (lO'iL f VivC; Ofi iXiC>(Ia fl .-' atioljlo; « ) f - fti v'.’-iri.- •..i-.-i -lci:^.-.c •'* rX 6C* XX/aii; '; Q y/J 1 ' •-■* ■ f • K r i-kW m'-m r- >'V 3U wLf. .« ''’i.' •'. blad:^0kf3 ri*4'’fi ■,-(’• ,iv‘ Gt"-^X •!.-./ n ,.: \"jaEeocoii orii r.‘fi y<' X,!-;: si/>da f \ f.i i VC ii.^ itiC'iJ;! 1o -01 hd iXi'i'le •; -• 0 noX. VC-'.iJ'ICi r r'ifr 7C *'r C'0 w;jo j 6i:i lo PT'- er o.* ‘ f^zlLg -u'f/aivfcy^ - • ,a i'roit Xiift r.^*.t mJ f *: -..i''/ 6aw ad a *'«• ...’io .ij;) .f.E edX *:eeo cat^ Eii.vt V.r. ^n*;^^:'£3S *• ,-r :i aiioT wt/r '^Q J.k.'ii?’ !>*:: L’r.X6i"£'I -':■■; 0 .-.of -'-- to ©JoA ler.^o ~I : : “f.'q ycili '.j sd" no wdJJ' ojC." ixicv t • . . t :■ jj i.. c c i Co XoA fiA • ‘ X ,'■ i*:’’iii?* XfOCiAj^T '*' l 3 ii“ 1 t tl .' •;* o ,r '.' ..(c;i COC'.i c ^ v .. A nA r rar ^tLT — - r i ■ - ^i — - . .XX; ,62. What has been said about limited liability concerns New York state only. In most of the other early states there was not such an orderly and systematic application of the principle, with only one two-year break. In order to show the complete development of limited liability in this country it would be necessary to make a thorough study of the statute laws of all of the states, and, then, it would be difficult to show the existence of any orderly development. The above-mentioned break in the continuity of this idea, in New York state, was merely an indication of a policy that was current at that time. Kent says, "There has been a disposition in some of the states to change, in an essential degree, the character of private incorporated companies, by making the members personally responsible in certain events, and to a qualified extent, for the debts of the company. This is intended as a check to improvident conduct and abuse, and to add to the general security of creditors; and the policy has been pursued to a moderate and reasonable degree only, in Rhode Island, New York, Maryland, and South Carolina, But in Massachus- etts, by a series of statutes, passed in 1808, 1818, 1821, and 1827, an unlimited personal responsibility was io^^osed iQ)on the Continued: Passed March 29, 1827. An Act to incorporate the Casadagua Steam Mill Company. Passed April 7, 1837. An Act to incorporate the Monroe Manufacturing Company. Passed March 28, 1828.* An Act to incorporate the Attica Manufacturing Company. March 31, 1828.* ♦51st. Session, cOTBCflOC iiecfinlX Jstijji '*n*, 8 d e«fl asw e«aiiJ &n-Ms. \Xue terJo 0 d& al^i.^ic.o e:l;6f« iioT wdH ' * 3 ,«XqXr>ftiTq o/iit 1o iToltfjBp.^Xqfji^ ^i'tfxbtk svb li^n^ tea ettlqpoa, 9 cV ffoUa ot; ifikto til rJXt>td ■Mt^-ow^ 8 fio TfXno rftlir iSt r ■s© ©t/ ij'Xirow' tl'xitdL^OL^' at XttllOlitl t^/i-ilt Ao ^ X£^ 5 ro bwbX ©;tx«i«dc eitT \tvtti a ©i£j 9 ot iid^ vof(ii cftf :fIi>oiltXb ©cf bXi/cr ft ^sis.dt lo iJ- ' \ ' .d^MdiqoXav^tij ^XtteJfcio vn« to eoixffJticca / 'n &( eXxi^ lo x^iifui*sioo eni at iC6td t^iitpUci 9 A-^if odh ©ifX YoiXexX ^ lo iioX^fcoXLiti rr« Y^trxe^B a^w iioY w©^ aX 0^^ o^ed Bsd ^£^/e .©fii? thdt tJt ^“nbKi^ifo" B«ir - X«i^r;i 8 Re o£ fli ,ejo©tiD edi} \o ©too© irSx ccitXBoqeXA < I J ^0 je&XnccjFKjq i)©tjwo^tOwu i to* ’ie^cwlxedo ^ofTjali -1 Jk' ^ 4 :*c©vs» itXad'j&c nt eXdXfiircqoet "^iX-ftifOPt^q oifed-ttba axt^ ;^ctlil 8 » • w &S(ii 9df to P,Tc:fe. ,*|t©d,ic© btilliiStlp 3 ot^bsm ot lilt ^sancis bcuj ui>/jXaoo fneJiivoiac 1 oi iioerfb « uj! beJEjBftj^aX ei r; j '^'^i uAd \:ciXoq saaJ tju? ta’iOrf IXe^io’ to Jt^uooa XiBioflei cd^ t>bn \ J etodH ui ,v,Xac i!Jc4iAo©^ex XfSJB ©^4;3eX.o3t «i 0^ fraOeioq oood -BC/ilcjteaaK «1 5 tfS ,i‘*'iXXo 5 i^i& tm, .tr^Xxwt , 3 {'XoT woW brtfc ,XCBX ,8161 ,60^r ill 6ij€€i»q ,iec,;t•^^Xs to 8©ti08 "4 "’ tCtin 6 n> notjs £ft 6 .-vpi e*ff Yiijioton'b tpe^L Xiictof ioq o©dXi»iXni *& \Vs 8 X * WM .^USi ,€ii dMiald I ;i 56 iiaXxnoO itl'k iiL$0f>ABisX! edt ei fioeioceit o# tfoA ni? .StSX ,V lt% (k teBfcja? .v-A^ejfcioO »oino^^ odtf ©^^'ioqttoorX of tfcA o4 *.°feex ,as. fioiAit UoMj'j " .«r*AcprioC acl;^4A K-dS ©:fj5!i0crxocfti tfoA flA if] *.8S8X ,XC dtT^U “ j m * 4 ires. They are made liable in their individual capacities only to the entent of the stock they may hold in the bank at the time of the abuse, or at the time of the expiration of the charter. This provision was continued by b the Mass. Rev. Stat. of 1836, p. 312, sec. 30, 31, and has been essentially adopted by statute in New Hampshire, in 1837, in re- spect to manufacturing corporations."^ 1- Kent’s Commentaries. Vol, II, p. 272. See also Angell and Ames on Corporations. Chap. 17, p. 648- 656. •Cl t ft- , , * - Ilf . *: •; . •! s ^ !. £'l ox^^st ■ • * ■ .^'oc . " ' X ' 54' j j| , c 9i NU ; jt , . ^ ^ t iiXJ*. ■’>* ; C ^ . 'rC'ir; S;.- CW . V - , . fy -w-r. 2 -It < i’’/ .'. : ri. * r- ' .1^ I ■ -■ ■ • oC - • . - ni-.i:oo blk , • : £ ; •/ - ■ ,:r , *'I , 7 .S£!i :ji ^«i*riii • ^ • * ■•• •.a- ic efi»i. . -f.'i.‘j'r , .j. gXx.i.. cr ^ ^ ].■ u!: -1 • c:L*. f «w««ww ;iX bXOXi \’*'- , r^-.r'r!': srfd ’io J ; 'l itqj:* *^..: ftt 4 ‘.-'. ' . ,' . . , ■ . ■* r;\ . . ycJ Cftc?r:v>^ X/:l ^ :'.(. :^:qidO 'Jfifl'X^’.tcyti'lL'rJBflj o:' ^cecif 9 ■ - » J. ift; •V- -X'i' . i ,Va 64. CHAPTER VI. The effect of limited liability in corporation finance has been to encourage greater business activity, to enable in- vestors to undertake new and untried ventures, to call out cap- ital that might not otherwise have been at the disposal of the business enterprise. The earliest case of limited liability by statute, in England, was the Act of 1662 which conferred this privilege i:pon the East India, African, and Fishery companies. Even at this early time it was evident that such a privilege gave those com- panies an advantage. W. R. Scott remarks, "The effect of this statute was that a shareholder was only liable for the amount unpaid on his shares, and it is clear that such legislation was disadvantageous to unincorporated con^anies. Mathew Arnold Begbie, writing in 1848 at the time when the question of limited liability was under discussion every- where in England, devotes his whole book^ to discussing the ad- vantages and disadvantages of the principle and always decides in its favor. He shows the advantages of such limitation of liability to the amount of money invested in America and on the Continent of Europe. After discussing the disadvantages of having a few large houses carry on the foreign trade of England 1- W. R. Scott. Joint Stock Companies to 1720. Vol. I, p. 270. 2- M. A. Begbie. Partnership "en Commandite. " or Partnership with Limited Liabilities. .ie , -IV 03mHO •ifi U^.'"'‘ ■ S ..IV03T9.AHO ' 5 ' ' s; M t^OAJSni't xioJ:^A-:totv .-:, ■ -^n tuo liati *tc h;ii^iiohms. o^ ftioyasv e>n^ \o lA^o^ietb oijs iraad aejb»icld^o A. \ ^ ■'A iii \d x^iHliifail L5^1wU lo ©i’.4itp tfaeiXiAj© wIT BE^ noqjt; t:aue^rofi ddXdw saai Ic idi ca» ^Jia«i|flS f.^ atiiti fa. oav^T: .HsXxTiEqn5t»o .xynoitlA ,4^ttal -Tioo e&wvv e*;«3 e^itfXXv ly<% z’ ^mJb.Xva SMBt etqjt^ *3 .f .c|aifaiwJUi\'fl|i e©iu«q £m ^:{$jva^ i}4ii dXdftlX leX/XotieTAda u •:ir 'uiivr noXi^^:int>i iioi^ft tJ^lp 9i Ai bctB ^aeuEuX® «Xd. x:d bi^qpis . ^ *■ .asxnxjqpioc ^^^tfiotjiKOonlni; 0 ^ ciroegfi^nciiJlAdtXi) juaiSir ©mil c*itv‘ ;tx» 8^81 a I \9id^tU JblomA neditMU -X^irjvB xsoi;aa;;6©lt •HLau ftsw ^ddall^teftmiX Ito uoi^aoi/p ©x£t -ij$ 9(ifdod, aXodw a.id tie^cvdf) ,i>nifigfiaj’‘ n»" qldBton^iA'? ,©Xd^©S .A .K -S *i 10 IL >j (ii '.'• gi>r: 65. and after showing that wild speculation exists because there is no safe plane for the middle classes to invest their money he says: "This running rashly into such speculations may be prevent- ed, if the middle classes be allowed to invest their money, with comparative safety, in Great Britain, Ireland, and the Colonies, by means of limited partnerships^, in which the liability does not extend beyond the actual amount of money put into each con- cern by each person The character and advantages of the principle of Limited Partnerships cannot be more truly and forc- ibly given than in the words of one of the witnesses, on the Law of Partnership, in 1836:- 'It is chiefly called into oper- ation in extensive manufactories, wherein individual means are necessarily inadequate to si: 5 )ply the capital for carrying on the concern. It holds an intermediate station between Joint-Stock Companies established by Charter or Act of Parliament and the less extensive character of Ordinary Partnership. By its means large and efficient s\;pplies of c?^ital may be obtained and put into operation, free from the Monopoly rand uncontaminated by the spirit of share- jobbing, which chartered companies too frequent- ly obtain. It excites Enterprise without inducing Gambling; it increases Manufactures without intro ducing Scheming. Partner- ships of this nature are frequently formed where practical science and ability reside in persons who have not the pecuniary means of bringing their talents and skill into operation; but who. 1- Ibid. While it is the limited partnership that Mr. Begbie is advocating, many of the things that he says about lim- ited liability in them are equally true of the same prin ciple used in the corporation. V *■ . f, i (it itiuQ DftjL/jBoed noij^jsli/oeas &Xiw gni-wodii T.e^la da« ^ ^ „ ' . "j »a xenom iltd*a tf’&evxri ^aeBld t^Xfcfcln, lol ”©oaiq 'e^aa o« [,' -^aarsnq od ti?(a exaoiJaXu&©qe duit' 0^-01 ^silam^^'^otdT' - laxM^' I ' ^ u . ii;fJtr ^x^Qtr iledi ^&trai o;> taroila. ed eeeMXo ©XZxbiw sd^ li ,Jt© :1 ! ,'. J' ^fiainoXcO Jcft© jlaaXaxI ' ,'f3-^5^8 evitvciaii^sW . tpct Y^iXldafl doidw nX iO enusm I -0ot doat o^aX ^wq ^©tioa ?o ©dS fcnv;»t®d tnaJx© toa r*. ^ ^ •. -^ i t* "i ^ e4d \o E,C>^:tiw^vXj» lid©* Alio .©d^. . .nc«T©q do«« \d ip; -01 ot bna Mlti'r:* s>2.d» ed BqiaB*f©A;tiaSl MJttnhd 1c' eXqtoAi^q ©iW 00 ,tafc»eoitd^fti ©dd to ^tto to «tiow i^ir^^aL'- BA>di a^v t:g \ldi -laqo I:©Xjlao rX jrl* ^iQCdX rU ,qtd*ien;t/ 0 W|^‘ - ''• - ,j S0ai©« I30tivM^o^ nJtct>*!S«f ^u>Jt\h:fui'Wiuim. d-vlefifeXx© 0 X noXiS# •8rft. 00 $inXY’5'x»Q -*xot, ijEvliTWL ^Xq-?Lfft oi 8d^4/p*©Xtafll ^Xi^iBiiaeofn •3i!:G:^5-’’'0Xt'T> iK^ewirijc /roii:av^0 ©?ri;Xfcem«tni fte cM6d i-I ,*t*r©ofloc ' 'S' £8:^1 '^di Lns. JtTaisjtdXjd^ff Jo irA la- vd iiariaXXcfa^so asXaaqwoO dgieX 8£S0©«J ,qidB'^taiiB^-X’isnt‘t’sTX lo Te^oaitadw' Wx®n«^x® { Xni wtrq 4iir i©* 7 Jij#do ©cl ifisiQ XaXXr^o.to nafXIqca^s ctneXoXlt© Xina > -jj ^ Cl f-. . :i. .. BliS xil iBi£tfU.t>.ijiOt>ai JC0ft* \^X<^'5rd0OX «;07t -©ai:l ^aoX^aioqo -dn6£'p©lt ooiJ caX^aqfltflro rlt Itt^ to lliXqa ; 30 Ud«s©O jgniMd'dX p^b!i:tJtjr /ala^do '^X ,3B*lo8 s>0it5ir£5‘ oaXril ^i;od;fitr BQWfos^uaaX apfi^Rjoii ]o biBsiw hbA'^'i \limypfitl ©u ©Tti^an aXtfif to* aqXda , t7i^i0uceq<»ri^ ioc waff offtf’ aaof.'xeq int ©J^Xeoi x^iXId^a JbnA eonoioc '•' <' ,r iito incX^jraaqo oi^iri XXXii® to« SAiS^Xid to cioaoii Q ? ' ’ ' ■ , ' ' " ' 0 i ‘f.ei ©Xd$o8 .i3« r^oriX qXda:E«a;f7aq X©4i«iX ©d^ aX ft eXXdf ,fiXdI -X •»' HjrXI :^i/ocXqf ®d taiiJ esfliini ad^ to xc^ I ,• ••niTq eiwpe tc ©u*Jif xXXaf/^ b*l& laaxiit aX x^tlidpti JbeXX -0OX;?/i'IoqiO9 o4l^ fit OfeAif ©Xqlo . ixMMSer iMTrn|,iiNi %fi tj|,,r, i)| tl 'v. 66 . by the aid of such associations may be enabled to do so, to the common gain of those who thus associate themselves and to the great promotion of the public good.' If the absurd enactments of the British Legislature as to the liability of part- ners were annulled, and if the system of Limited Partnerships were admitted into operation — as it is in Holland, Belgium, France, and America — persons in the middle claases, even with comparatively contracted means, might unite to sij^jply that aggregate of Capital, necessary to carry on different branches of trade and commerce, by which their personal resources would be augmented and the requirements of the country be adequately provided for. Thus, instead of bloated, plethoric houses, start- ed with minimum of capital and conducted with a majcimum of dis- honesty, we should and ought to have firms with adequate means, whether belonging to a few moneyed individuals, or resulting from the aggregate contributions of numerous persons joined to- gether in an extensive copartnership, and liable only to the extent of the capital which each had brought into that aggregate coiiLTion stock." Pages more of the same kind of arguments might be taken from this same source. He can not say enough in favor of the principle of limited liability. He attributes the whole prosperity and development of the United States (to the time he wrote, 1848.) to the use of the limited partnership or corpor- ation with limited liability. He says that the prosperity of the United States "has mainly resulted from the aggregate of small means into large amounts, by means of the Limited Partner- ship Why do we thus point out what has been done in the United States with respect to Steam Navigation, Railways, and t.' is:«5!Ssc: ,aa oif ■;&• oJb o;^ ©cf ©noiJ-Alooeefi ifoi/e 1:is4i btiM ^ ' ‘ f, M xXq(|/B t(4cttii^ no oJ. \'iBaa©fM&i; ,Xb4£v^£k t Bcf adae»d*rXx/pei ©xii 60 -'^'xoie ^aooi/Qd cltodtf'alq ^ta^old to tflOv8 •« 0^ spiaaoXtcT'xeif-oxiB , -od^ fieiiioL Bnoa^oq c,po%©frjjc to ecoiXt'dXrdnoo ©fcJB^o'Xsgxi e>xi^ ooxt ©rid od ^XiiO aXdaXI triA ^qldf^t^txitsqfip BvtBtrBSr.s ne ol leiidos sdsBO^sao d,arid odol drisL'oi© tori rioo© rioiriw c^d *o dri^Xa. fidfleay^a*?* to toii ©tii£A .prid to Oto» f** (iO;.woo 70vi.t X5i riguonc doxi cco oB ,©o,i<;qe ©jpoe. oliftf aoit oeatod ori ^Xoriijr erd S8di/riiidda‘ sH .ydl UcolX tadXicXX to ©X,iio«iTq,crid to eri Bcld t4d od) oodjadS ©*fd to dri©fl;qoX©vot XisB — ocfxoo 10 qirioitJridT^q tfeditxi ©4ld to *«o .^iid oi (,8^£ I tp XdXiaqcoiq Brid darid enae «B ».\diXicfaXjt ridlw noXd*. xc^. ©dd^aft’^a3a ©rid nsoit l>©dXt'BOx cedjedS'i^dXaU ©uX' ■ ' 1 ipdX&iM sdd to a4450tfi yri ,edfli/oite aiv^eci XX^raa ©rid itX Brioi naod eari d£>ri»^ juo dfrXoq aoriiJi on o£> xril» '?' .* i,i) ~ tffix ^sxJ^^XiaH tnoidasXxaJJ avaodO^od dooqact .ridiif asdiSd® h. ! , i the Electric Telegraph? — Because the triumphs which have then and there been achieved would never have been accomplished with- out the aid of capital, which, distributed as it is in that country among all classes, never could have been brought to bear upon these aids to national prosperity and social civilization of the law had there beenyplaced a barrier to its employment. But the Limited Partnership system, which so largely prevails there, has enabled capital to be thus employed, without involving the owner in unknown and ruinous risks. It has allowed the use of capital for the construction and ownership of steamboats, rail- ways, and the telegraph. Without it, the latter could never have been completed — or, at least, not without delay and diff- iculty. Nearly all the Lines of Telegr^h in 1;he United States are in the hands of associations of individuals simply esta'o- lished in special or limited partnership, and are profitably working. " Spencer Brodhurst, writing in MacMillan’s liagazine on ”Limited Versus Unlimited Liability^, says, ” Joint-stock capital is, no doubt, more ventursorae and ready to take risks than is private capital, for the very reason that if failiire does ensue the utmost extent of the loss in known beforehand. But it is just the venturous spirit so created which has opened new fields of trade abroad, and has encouraged fresh departures and inven- tions in commercial operations at home There can, indeed, be little doubt that limited liability is to be preferred to un- limited, whether the question be considered from the point of 1- No. 1898 Vol, 79, p. 20-39. ; tl •..: i»; rv iX\C c^tiA v • ;■■. / i* l u e*raif“jf i ^ ^ ,L 4 C , . • t hA: . ?; ;l o c.' L ■■ ;J ft i 1 il 0 Jti' i *' ^ ^ *^t' i < t C' .' ‘A. a Tffi -..r. ‘.'S'K'i. YVr’,rt lllf^ Ai\ v/' ircc/tii, ^ iiv. ' J .c ..i *5 ; ). • i *..• V :B-vnct i^xvoi"" ■• C 2 i ^ .Xif.: i*:r' /' .' X <|}y ?^ 'j», 6 it •j' ' oHiid!' frX'X fi»xl 4 ' ► • •;• ^ ’ ^ C * ‘v’i i. c: .? 1 ^ VX-'-VIAX/' tr« i..‘i..\'Y‘,v ■ 5 , i:'o p-\a q^fi . •■ : ■' .bv i ^;nrri . •.* r !• ; ..VTv tfC vi ] ; '-.yL. '■• !.C r /VL ' i , '. i'XJjb tJDd . XO ■ qt.r S'-^. :■ ’ *' 'T,.' ■ - . . 1 . . A k O 0 C • Ifc ♦ + ^ » . r . . . ' . j i; V * . ■ .\i it'COl -11 }£ ^:,u y:-..Xc:L ;' 'i .• ;■ . -•lO''. ,&€.L' ’ J • • ' • ^ •y «•*• . jj ♦ ■> •• . t .IftX - f . t: . ;:l .. . ■ .1 i i'' .f}^ t/ir? lo. ftdi’ili- .1 £jP -Viir,e "4 ■ .tb.ts#. -LMt -.-Y. i: i ^ ■ 10 ftiojy.! £;:j“ «., 'ii'TC *.{. 1 . • ^ ^ Z \ 0 7 '1 ^ L j •■’ : i.iC ! ; t'vl« ... - ... TL •■ • f .1 1 . 5 ';.COi ■ ■ ’* ' *■ > t-T- ■ ^Li\ ^ ’ \ ~ ■■ !. f J . 1,1 , Pif .' 1 * 1 ;,. . J.J*' • *' ■: ' E. i*T ■ V o;- r ' ;i.' ••■ o^. i.irvv ^itiS kQ. j Li': lor : ;r '. .-J: ;’•■ . Jf '? o'^ea n ', ; • *l rt .ixw - ■ :L tj> linr, ^ ..'Oi'^. •*•'•■ rc'i i tlrr'Ki ■ .. cT t;i i '■ ?i>- t j vA‘rfi c: : :' .c eq c.£v •■ the community, of the shareholder, or of the creditor. ” Jay. P. Lee^ says, "It is a well-known fact that many of the enterprises which have greatly developed the resources of the country, and ivhich have been of great benefit to society, would never have been undertaken without corporate organizations. No new enterprise is a cinch, it is more or less uncertain and speculative, and where it involves large e:xpenditures of capital, unless the men who undertake it know the limit of their liability, it will remain undeveloped, " Hartley Withers states, "By means of tiie joint-stock system, far-seeing folk with plenty of idea^ and little money are able to get subscriptions for their ideas from those who have funds to invest, and so the material resources of the world have been incalculably increased. Sometimes the ideas do not pay and the subscribers to them are saddened; but, in the mean- time, Continents have been covered with railways, oceans have been crowded with steamships, and most of the habitable globe has been joined together into one humming hive of industry." Kent^ says that "The multiplication of corporations and the avidity with which they are sought, have arisen in con- sequence of the power which a large and consolidated capital gives them over business of every kind; and the facility which the incorporation gives to the management of that capital, and 1- Publications of the Michigan Political Science Association. No. 3, p. 74, 75. 3- Hartley Withers. Stocks and Shares. Intro. 30, 31. 3- Kent's Commentaries, Yol. II, #273. ,*» .-10^ it QUO llU Xmta^ rwofr>' » . ... \ ■tr r* ' ”" • . ' lii ii^tXcx^xaLB^etfv^ Tov,y<)-Xmn«rioa.©xl«’ • ' ■ V- j 2 & eJt >!•» ,8VJt£' ■^frsJr A .\bV fc*o^;woB^‘i fcf?qoXc?r£»ii ev^il iloiaw e®8Xi .2iio.i.trsXxtB^‘io &(t*ioqioc ifvod.tlF l>reff- i«tea • • . ' t:l bcm fitoSioww UQ6I *ro «':.ea al il vJoffXo 8 «.t iroijv olC,. ,Y>^XXX ' 4 0- .tl&SJSiti titv 08 Lnje jSc^VjRX oS-'-^AftMl WisK * j., i .'.j Sorr kfc ra«l^X t/fS ir fin, v3 YJ^<^^XJ-'tXJ£C‘iiL>qtoo lo. noX^A'OiX^i^^XjUB 1 m . . , ^ - . Jw -’W') nX £rtyf!iTA &vj}i£ QiA \Qtii’ CioXcNii' dSXw 8/t# ftfl4S ’* ■-■ ' ''' ■ i ■ '.]" *•’.' 1- «;U<5Ro teX4*i^iX<)t«po I:»i46 o?>ifcX doJitSm itwoq ndi la ®ctfax/jid» * xic-i ^ \v^XXX j* BriS lixis "lo T«tvo"we£l^ WvX,^ lo, f'fifS' asvX-ij ii(>iS'4t;7iUi4&or»RA t^Liifi^ce XjSdX^Uo^ 9 dff to acpii^JOiXtift.*? -X I i.V‘ , . 3 N*' ,i-V »€ ,ol ■‘’•.XC ,0i> ..oilal .©ff’«i48'' Xnis’ 9 2f&tvSH' .-. xcdSblt x^^Xivaff ^ . S^tX-^ , X X ^ XoV , 3 oX -jife^ri^fltrKqOr'e ^ ifxxtC!! ’ ~&. p« raejf pteea MJMfw 69. the security which it affords to the persons of the members, and to their property not vested in the corporate stock," Nicholas Murray Butler, speaking at the One Hundred and Forth Third Annual Banquet of the Chamber of Commerce of the State of New York, November 16, 1911, said, "This new movement of cooperation has manifested itself in the last sixty or seventy years chiefly in the limited liability corporation. I weigh ray words, when I say that in my judgement the limited liability cor- poration is the greatest single discovery of modern times, whether you judge it by its social, by its ethical, by its industrial or, in the long run, — after we understand it and know how to use it, — by its political effects. Even steam and electricity are far less important than the limited liability corporation, and they would be reduced to comparative impotence without it. What is a limited liability corporation? It is simply a device by which a large number of individuals may share in an undertaking without risking in that undertaking more than they voluntarily and ind- ividually assume. It substitutes cooperation on a large scale for individual, cut-throat, parochial competition. It makes possible huge economy in production and trading. It means the steadier employment of labor at an increased wage. It means the modem provision of industrial insurance, of care for disability, old age and widowhood. It means — and this vital to a body like this — it means the only possible engine for carrying on inter- national trade on a scale commensurate with modern needs and opportunities. What would happen to the export trade of the United States if we were to.rgive up our limited liability corporations and go ill 5 ▼ . j -rz^zsr. r.-^ , ( C;I: ■',0 e ,?'vO -1 - T> - ^ ^ * - 4 5m> J X . >i r cO V X W- J ^0 r.tr.i c'^. ': ■: •■ v "i.Ci i;vc>B vea / , •r*«f • ; » •'— ' t f • <. t « ,0 * W h V < ■ • -■ y:>ic -I-, ' • ■ •: V < . A . Y-- 3 • 4 1 >4 : .. ojt ■. --- ' ' .. . •;• J. i‘. ft •' ».■* ■ V >- ■•* ■ O.t 3'-r., • 0 yi I r.I : VC! ,lr;rv . :. if' C\ 'f.K.:: r. x: :.' lij' .n " • 3. ei_ L .;. 0 . V' .' 3 i.!\ . t 1 . , :.C J. . ^ ' joiob’ /j 4t « 1 i ■ ; : ;■ .-; t • «.' ^ 4 • iS i . ■ - 0‘ c;{ ’',0 0* . '.'i c’ ■ .' " L .'ict.iw » <— i i n xtfifr--' ‘ r ntOitMOi *1 .■-•>; ■ ,■ 'vi er"i; '.'•.L'-xr^ '.*)£;:. qoO' ’.0 ii f ©tif.ti V ,:- ji Yl'Tt ;lc L*w:©^ -:|. V..P 1./^ \;>x I H: jr:^7 0i^ I ■» ,:vq < • j ~ V , ;'J .viwi 3P.oi; ffJt ' i5'^ *•■ •; :': c I • V v i3*j.i:qf::0(- o? > - ; j. ori i Iircwy ■ •'•j Ft) rr *I <'i . i: ;iii'.'*qxOC tr.it I . f.'i tri I'lr jv t.^ w'., oc( 'r. i:^ v^’r-ft'oruj :Udr >;£ 311 ! •-.li '■ / ’A ■ j\ :'.'^c(- - ' ^3 . fcf-p . >‘“ :;.ri'Cc c - .1 , .'jf.C'rnvi ’, t I-t;i lol' V . •• AT ^ t/lfi t.O I * '■' . v: : c:L ■■ :. v-'KiC^ ..vieeojf: i'C px^c-YOfii ae '.o.^i i'"' *: ■ .. Li?.: t li^U;! lift?.' :/iC' £;'i:cai M ■ .- £ i i K .:’ f. : •' .. o 3,0 *t C|E%ft;.’: oX ii- ? oV r. r:i • j.oX x r; o'; . n*iaZiO%' l> . ‘ e2il ybot‘ ^ six'; -•• e/:i' •:;..^rjL rr ^•..' /;y 'iOi b-r':i:pas> t- .'.,’^ ’ •' 3:.'. . c r ;.a ' .o. I'J. 0 0 3 ' 4 -'v: tr.i& • -- :^?acrirn: 1 70. back to individual competition. ... If this principle is so bene- ficent and so important that as soon as it was discovered it spread all over the civilized world and brought about a develop- ment the like of which man has never seen, how have our troubles arisen?” This quotation is taken from a discussion of the Sher- .man law, and the author goes on to show that the business diff- iculties then present were not due to the limited liability corporation, nor to its size.^ From my own study of this subject I have arrived at the ssune conclusion, viz., that limited liability has had a very beneficial influence \:pon business; that, without it, many of our modern achievments would have been much slower in their development; that its advantages far outweigh its disadvantages. FINIS. Nicholas Murray Butler. Why Should We Change Our Form of Govem- ment. p. ,83, 85. V \ / t V \ f U"' y‘0 266980660 2 1- 1-0 C VNVGdn-SIONmi JO >UJSb3AINn