Jurisprudence

by Sir John W. Salmond

SUMMARY OF CHAPTERS XIII. AND XIV.

Possession	In fact—possessio naturalis.
	In law—possessio civilis.
Possession in law	Seisin
	Possession.
Possession	Corporeal—possessio corporis—Sachenbesitz.
	Incorporeal—possessio juris—Rechtsbesitz.
Corporeal possession—the continuing exercise of a claim to the exclusive use of a material thing.
Elements of corporeal possession	Animus sibi habendi.
	Corpus.
Animus sibi habendi:
1. Not necessarily a claim of right.
2. Must be exclusive.
3. Not necessarily a claim to use as owner.
4. Not necessarily a claim on one’s own behalf.
5. Not necessarily specific.
Corpus—the effective realisation of the animus in a security for enjoyment.
Elements of the corpus:
1. A relation of the possessor to other persons, amounting to a security for their non-interference.
The grounds of such security:
1. Physical power.
2. Personal presence.
3. Secrecy.
4. Custom.
5. Respect for rightful claims.
6. Manifestation of the animus.
7. Protection afforded by other possessions.
The rights of a finder.
2. A relation of the possessor to the thing possessed, amounting to a security for the use of the thing at will.
Possession	Immediate—without the intervention of another person.
	Mediate—through or by means of another person.
Mediate possession	1. Through servants or agents.
	2. Through bailees or tenants at will.
	3. Through persons claiming temporary possession for themselves.
The relation between the mediate and the immediate possessor.
The exclusiveness of possession.
Exceptional instances of duplicate possession:
1. Mediate and immediate possession.
2. Possession in common.
3. Corporeal and incorporeal possession.
The acquisition of possession:
	1. Taking
	2. Delivery	Actual
		Constructive	Traditio brevi manu.
			Constitutum possessorium.
			Attornment.
Possession not essentially the physical power of exclusion.
Incorporeal possession:
Its nature—the continuing exercise of any claim, save one to the exclusive use of a corporeal thing.
Its relation to corporeal possession.
The generic conception of possession.
The relation between possession and ownership.
Possession the de facto exercise of a claim.
Ownership the de jure recognition of one.
The identity of the objects of ownership and possession.
Exceptions:
1. Things which can be possessed, but cannot be owned.
2. Things which can be owned, but cannot be possessed.
Possessory remedies.
1. Their nature.
2. Their objects.
3. Their exclusion from English law.

CHAPTER XV.
PERSONS.

§ 108. The Nature of Personality.

The purpose of this chapter is to investigate the legal conception of personality. It is not permissible to adopt the simple device of saying that a person means a human being, for even in the popular or non-legal use of the term there are persons who are not men. Personality is a wider and vaguer term than humanity. Gods, angels, and the spirits of the dead are persons, no less than men are. And in the law this want of coincidence between the class of persons and that of human beings is still more marked. In the law there may be men who are not persons; slaves, for example, are destitute of legal personality in any system which regards them as incapable of either rights or liabilities. Like cattle, they are things and the objects of rights; not persons and the subjects of them. Conversely there are, in the law, persons who are not men. A joint-stock company or a municipal corporation is a person in legal contemplation. It is true that it is only a fictitious, not a real person; but it is not a fictitious man. It is personality, not human nature, that is fictitiously attributed by the law to bodies corporate.

So far as legal theory is concerned, a person is any being whom the law regards as capable of rights or duties. Any being that is so capable is a person, whether a human being or not, and no being that is not so capable is a person, even though he be a man. Persons are the substances of which rights and duties are the attributes. It is only in this respect that persons possess juridical significance, and this is the exclusive point of view from which personality receives legal recognition.

But we may go one step further than this in the analysis. No being is capable of rights, unless also capable of interests which may be affected by the acts of others. For every right involves an underlying interest of this nature. Similarly no being is capable of duties, unless also capable of acts by which the interests of others may be affected. To attribute rights and duties, therefore, is to attribute interests and acts as their necessary bases. A person, then, may be defined, for the purposes of the law, as any being to whom the law attributes a capability of interests and therefore of rights, of acts and therefore of duties.

Persons as so defined are of two kinds, distinguishable as natural and legal. A natural person is a being to whom the law attributes personality in accordance with reality and truth. Legal persons are beings, real or imaginary, to whom the law attributes personality by way of fiction, when there is none in fact. Natural persons are persons in fact as well as in law; legal persons are persons in law but not in fact.[^[256]]

§ 109. The Legal Status of the Lower Animals.

The only natural persons are human beings. Beasts are not persons. They are merely things—often the objects of legal rights and duties, but never the subjects of them. Beasts, like men, are capable of acts and possess interests. Yet their acts are neither lawful nor unlawful; they are not recognised by the law as the appropriate subject-matter either of permission or of prohibition. Archaic codes did not scruple, it is true, to punish with death in due course of law the beast that was guilty of homicide. “If an ox gore a man or a woman that they die: then the ox shall be surely stoned and his flesh shall not be eaten.”[^[257]] A conception such as this pertains to a stage that is long since past; but modern law shows us a relic of it in the rule that the owner of a beast is liable for its trespasses, just as a master must answer for his servant, or a slave-owner for his slave.[^[258]] This vicarious liability, however, does not involve any legal recognition of the personality of the animal whose misdeeds are thus imputed to its owner.

A beast is as incapable of legal rights as of legal duties, for its interests receive no recognition from the law. Hominum causa omne jus constitutum.[^[259]] The law is made for men, and allows no fellowship or bonds of obligation between them and the lower animals. If these last possess moral rights—as utilitarian ethics at least need not scruple to admit—those rights are not recognised by any legal system. That which is done to the hurt of a beast may be a wrong to its owner or to the society of mankind, but it is no wrong to the beast. No animal can be the owner of any property, even through the medium of a human trustee. If a testator vests property in trustees for the maintenance of his favourite horses or dogs, he will thereby create no valid trust enforceable in any way by or on behalf of these non-human beneficiaries. The only effect of such provisions is to authorise the trustees, if they think fit, to expend the property or any part of it in the way so indicated; and whatever part of it is not so spent will go to the testator’s representatives as undisposed of.[^[260]]

There are, however, two cases in which beasts may be thought to possess legal rights. In the first place, cruelty to animals is a criminal offence, and in the second place, a trust for the benefit of particular classes of animals, as opposed to one for individual animals, is valid and enforceable as a public and charitable trust; for example, a provision for the establishment and maintenance of a home for stray dogs or broken-down horses.[^[261]] Are we driven by the existence of these cases to recognise the legal rights and therefore the legal personality of beasts? There is no occasion for any such conflict with accustomed modes of thought and speech. These duties towards animals are conceived by the law as duties towards society itself. They correspond not to private rights vested in the immediate beneficiaries, but to public rights vested in the community at large—for the community has a rightful interest, legally recognised to this extent, in the well-being even of the dumb animals which belong to it.

§ 110. The Legal Status of Dead Men.

Dead men are no longer persons in the eye of the law. They have laid down their legal personality with their lives, and are now as destitute of rights as of liabilities. They have no rights because they have no interests. There is nothing that concerns them any longer, “neither have they any more a portion for ever in anything that is done under the sun.” They do not even remain the owners of their property until their successors enter upon their inheritance. We have already seen how, in the interval between death and the entering of the heir, Roman law preferred to personify the inheritance itself, rather than attribute any continued legal personality or ownership to the dead man.[^[262]] So in English law the goods of an intestate, before the grant of letters of administration, have been vested in the bishop of the diocese or in the judge of the Court of Probate, rather than left to the dead until they are in truth acquired by the living.

Yet although all a man’s rights and interests perish with him, he does when alive concern himself much with that which shall become of him and his after he is dead. And the law, without conferring rights upon the dead, does in some degree recognise and take account after a man’s death of his desires and interests when alive. There are three things, more especially, in respect of which the anxieties of living men extend beyond the period of their deaths, in such sort that the law will take notice of them. These are a man’s body, his reputation, and his estate. By a natural illusion a living man deems himself interested in the treatment to be awarded to his own dead body. To what extent does the law secure his desires in this matter? A corpse is the property of no one. It cannot be disposed of by will or any other instrument,[^[263]] and no wrongful dealing with it can amount to theft.[^[264]] The criminal law, however, secures decent burial for all dead men, and the violation of a grave is a criminal offence.[^[265]] “Every person dying in this country,” it has been judicially declared,[^[266]] “has a right to Christian burial.” On the other hand the testamentary directions of a man as to the disposal of his body are without any binding force,[^[267]] save that by statute he is given the power of protecting it from the indignity of anatomical uses.[^[268]] Similarly a permanent trust for the maintenance of his tomb is illegal and void, this being a purpose to which no property can be permanently devoted.[^[269]] Even a temporary trust for this purpose (not offending against the rule against perpetuities) has no other effect than that already noticed by us as attributed to trusts for animals, its fulfilment being lawful but not obligatory.[^[270]] Property is for the uses of the living, not of the dead.

The reputation of the dead receives some degree of protection from the criminal law. A libel upon a dead man will be punished as a misdemeanour—but only when its publication is in truth an attack upon the interests of living persons. The right so attacked and so defended is in reality not that of the dead, but that of his living descendants. To this extent, and in this manner only, has the maxim De mortuis nil nisi bonum obtained legal recognition and obligation.[^[271]]

By far the most important matter, however, in which the desires of dead men are allowed by the law to regulate the actions of the living is that of testamentary succession. For many years after a man is dead, his hand may continue to regulate and determine the disposition and enjoyment of the property which he owned while living. This, however, is a matter which will receive attention more fitly in another place.

§ 111. The Legal Status of Unborn Persons.

Though the dead possess no legal personality, it is otherwise with the unborn. There is nothing in law to prevent a man from owning property before he is born. His ownership is necessarily contingent, indeed, for he may never be born at all; but it is none the less a real and present ownership. A man may settle property upon his wife and the children to be born of her. Or he may die intestate, and his unborn child will inherit his estate. Yet the law is careful lest property should be too long withdrawn in this way from the uses of living men in favour of generations yet to come; and various restrictive rules have been established to this end. No testator could now direct his fortune to be accumulated for a hundred years and then distributed among his descendants.

A child in its mother’s womb is for many purposes regarded by a legal fiction as already born, in accordance with the maxim, Nasciturus pro jam nato habetur. In the words of Coke: “The law in many cases hath consideration of him in respect of the apparent expectation of his birth.”[^[272]]

To what extent an unborn person can possess personal as well as proprietary rights is a somewhat unsettled question. It has been held that a posthumous child is entitled to compensation under Lord Campbell’s Act for the death of his father.[^[273]] Wilful or negligent injury inflicted on a child in the womb, by reason of which it dies after having been born alive, amounts to murder or manslaughter.[^[274]] A pregnant woman condemned to death is respited as of right, until she has been delivered of her child. On the other hand, in a case in which a claim was made by a female infant against a railway company for injuries inflicted upon her while in her mother’s womb through a collision due to the defendant’s negligence, it was held by an Irish court that no cause of action was disclosed.[^[275]] The decision of two of the four judges, however, proceeded upon the ground that the company owed no duty of care towards a person whose existence was unknown to them, and not upon the ground that an unborn child has in no case any right of immunity from personal harm.

The rights of an unborn person, whether proprietary or personal, are all contingent on his birth as a living human being. The legal personality attributed to him by way of anticipation falls away ab initio if he never takes his place among the living. Abortion is a crime; but it is not homicide, unless the child is born alive before he dies. A posthumous child may inherit; but if he dies in the womb, or is stillborn, his inheritance fails to take effect, and no one can claim through him, though it would be otherwise if he lived for an hour after his birth.

§ 112. Double Personality.

It often happens that a single human being possesses a double personality. He is one man, but two persons. Unus homo, it is said, plures personas sustinet. In one capacity, or in one right as English lawyers say, he may have legal relations with himself in his other capacity or right. He may contract with himself, or owe money to himself, or transfer property to himself. Every contract, debt, obligation, or assignment requires two persons; but those two persons may be the same human being. This double personality exists chiefly in the case of trusteeship. A trustee is, as we have seen, a person in whom the property of another is nominally vested, to the intent that he may represent that other in the management and protection of it. A trustee, therefore, is for many purposes two persons in the eye of the law. In right of his beneficiary he is one person, and in his own right he is another. In the one capacity he may owe money to himself in the other. In the one capacity he may own an encumbrance over property which belongs to himself in the other. He may be his own creditor, or his own landlord; as where a testator appoints one of his creditors as his executor, or makes one of his tenants the trustee of his land.[^[276]] In all such cases, were it not for the recognition of double personality, the obligation or encumbrance would be destroyed by merger, or confusio as the Romans called it, for two persons at least are requisite for the existence of a legal relation. No man can in his own right be under any obligation to himself, or own any encumbrance over his own property. Nulli res sua servit.[^[277]]

§ 113. Legal Persons.

A legal person is any subject-matter to which the law attributes a merely legal or fictitious personality. This extension, for good and sufficient reasons, of the conception of personality beyond the limits of fact—this recognition of persons who are not men—is one of the most noteworthy feats of the legal imagination, and the true nature and uses of it will form the subject of our consideration during the remainder of this chapter.

The law, in creating legal persons, always does so by personifying some real thing. Such a person has to this extent a real existence, and it is his personality alone that is fictitious. There is, indeed, no theoretical necessity for this, since the law might, if it so pleased, attribute the quality of personality to a purely imaginary being, and yet attain the ends for which this fictitious extension of personality is devised. Personification, however, conduces so greatly to simplicity of thought and speech, that its aid is invariably accepted. The thing personified may be termed the corpus of the legal person so created;[^[278]] it is the body into which the law infuses the animus of a fictitious personality.

Although all fictitious or legal personality involves personification, the converse is not true. Personification in itself is a mere metaphor, not a legal fiction. Legal personality is a definite legal conception; personification, as such, is a mere artifice of speech devised for compendious expression. In popular language, and in legal language also, when strictness of speech is not called for, the device of personification is extensively used. We speak of the estate of a deceased person as if it were itself a person. We say that it owes debts, or has debts owing to it, or is insolvent. The law, however, recognises no legal personality in such a case. The rights and liabilities of a dead man devolve upon his heirs, executors, and administrators, not upon any fictitious person known as his estate. Similarly we speak of a piece of land as entitled to a servitude, such as a right of way over another piece. So, also, in the case of common interests and actions, we personify as a single person the group of individuals concerned, even though the law recognises no body corporate. We speak of a firm as a person distinct from the individual partners. We speak of a jury, a bench of judges, a public meeting, the community itself, as being itself a person instead of merely a group or society of persons. But legal personality is not reached until the law recognises, over and above the associated individuals, a fictitious being which in a manner represents them, but is not identical with them.

Legal persons, being the arbitrary creations of the law, may be of as many kinds as the law pleases. Those which are actually recognised by our own system, however, all fall within a single class, namely corporations or bodies corporate. A corporation is a group or series of persons which by a legal fiction is regarded and treated as itself a person. If, however, we take account of other systems than our own, we find that the conception of legal personality is not so limited in its application, and that there are at least three distinct varieties. They are distinguished by reference to the different kinds of things which the law selects for personification.

1. The first class of legal persons consists of corporations, as already defined, namely those which are constituted by the personification of groups or series of individuals. The individuals who thus form the corpus of the legal person are termed its members. We shall consider this form of fictitious personality more particularly in the sequel.

2. The second class is that in which the corpus, or object selected for personification, is not a group or series of persons, but an institution. The law may, if it pleases, regard a church, or a hospital, or a university, or a library, as a person. That is to say, it may attribute personality not to any group of persons connected with the institution, but to the institution itself. Our own law does not, indeed, so deal with the matter. The person known to the law of England as the University of London is not the institution that goes by that name, but a personified and incorporated aggregate of human beings, namely the chancellor, vice-chancellor, fellows, and graduates. It is well to remember, however, that notwithstanding this tradition and practice of English law, fictitious personality is not limited by any logical necessity, or, indeed, by any obvious requirement of expediency, to the incorporation of bodies of individual persons.

3. The third kind of legal person is that in which the corpus is some fund or estate devoted to special uses—a charitable fund, for example, or a trust estate, or the property of a dead man or of a bankrupt. Here, also, English law prefers the process of incorporation. If it chooses to personify at all, it personifies not the fund or the estate, but the body of persons who administer it. Yet the other way is equally possible, and may be equally expedient. The choice of the corpus into which the law shall breathe the breath of a fictitious personality is a matter of form rather than of substance, of lucid and compendious expression rather than of legal principle.

§ 114. Corporations.

We have now to consider more particularly the nature and purposes of the legal conception of incorporation, inasmuch as legal personality goes no further than this in English law. Much of what is said in this special connection, however, will be applicable mutatis mutandis to the other classes of legal persons also.

Corporations are of two kinds, distinguished in English law as corporations aggregate and corporations sole. “Persons,” says Coke,[^[279]] “are of two sorts, persons natural created of God, ... and persons incorporate or politique created by the policy of man (and therefore they are called bodies politique); and those be of two sorts, viz., either sole, or aggregate of many.” A corporation aggregate is an incorporated group of coexisting persons, and a corporation sole is an incorporated series of successive persons. The former is that which has several members at a time, while the latter is that which has only one member at a time. Corporations aggregate are by far the more numerous and important. Examples are a registered company, consisting of all the shareholders, and a municipal corporation, consisting of the inhabitants of the borough. Corporations sole are found only when the successive holders of some public office are incorporated so as to constitute a single, permanent, and legal person. The Sovereign, for example, is a corporation of this kind at common law, while the Postmaster-General,[^[280]] the Solicitor to the Treasury,[^[281]] and the Secretary of State for War[^[282]] have been endowed by statute with the same nature.[^[283]]

It is essential to recognise clearly the element of legal fiction involved in both those forms of incorporation, for this has been made by some writers a matter of dispute. A company is in law something different from its shareholders or members.[^[284]] The property of the company is not in law the property of the shareholders. The debts and liabilities of the company are not attributed in law to its members. The company may become insolvent, while its members remain rich. Contracts may be made between the company and a shareholder, as if between two persons entirely distinct from each other. The shareholders may become so reduced in number that there is only one of them left; but he and the company will be distinct persons for all that.[^[285]]

May we not go further still, and say that a company is capable of surviving the last of its members? At common law indeed, a corporation is dissolved by the death of all its members.[^[286]] There is, however, no logical necessity for any such rule, and it does not apply to corporations sole, for beings of this sort lead a continuous life, notwithstanding the intervals between the death or retirement of each occupant of the office and the appointment of his successor. Nor is there any reason to suppose that such a ground of dissolution is known to the trading corporations which are incorporated under the Companies Acts. Being established by statute, they can be dissolved only in manner provided by the statute to which they owe their origin.[^[287]] The representatives of a deceased shareholder are not themselves members of the company, unless they become registered as such with their own consent. If, therefore, on the death of the last surviving members of a private company, their executors refuse or neglect to be registered in their stead, the company will no longer have any members. Is it, for that reason, ipso jure dissolved? If not, it is clear that since a company can survive its members and exist without them, it must be something entirely distinct from them.[^[288]]

In all those respects a corporation is essentially different from an unincorporated partnership. A firm is not a person in the eye of the law; it is nothing else than the sum of its individual members. There is no fictitious being, standing over against the partners, as a company stands over against its shareholders. The property and debts of the firm are nothing else than those of the partners. A change in the list of partners is the substitution of a new firm for the old one, and there is no permanent legal unity, as in the case of the company. There can be no firm which consists of one partner only, as a company may consist of one member. The incorporation of a firm—that process by which an ordinary partnership is transmuted into a company—effects a fundamental change in the legal relations of its members. It is nothing less than the birth of a new being, to whom the whole business and property of the partnership is transferred—a being without soul or body, not visible save to the eye of the law, but of a kind whose power and importance, wealth and activity, are already great, and grow greater every day.

In the case of corporations sole, the fictitious nature of their personality is equally apparent. The chief difficulty in apprehending the true nature of a corporation of this description is that it bears the same name as the natural person who is its sole member for the time being, and who represents it and acts for it. Each of them is the Sovereign, or the Solicitor to the Treasury, or the Secretary of State for War. Nevertheless under each of these names two persons live. One is a human being, administering for the time being the duties and affairs of the office. He alone is visible to the eyes of laymen. The other is a mythical being whom only lawyers know of, and whom only the eye of the law can perceive. He is the true occupant of the office; he never dies or retires; the other, the person of flesh and blood, is merely his agent and representative, through whom he performs his functions. The living official comes and goes, but this offspring of the law remains the same for ever.

The doctrine that corporations are personae fictae, though generally received, has not passed unchallenged. Attempts have been made in recent years, especially by German jurists, to establish in place of it a new theory which regards corporate personality as a reality, and not a fictitious construction of the law. A corporation, it is said, is nothing more, in law or in fact, than the aggregate of its members conceived as a unity, and this unity, this organisation of human beings, is a real person and a living organism, possessed of a real will of its own, and capable of actions and of responsibility for them, just as a man is.

With respect to this theory it is to be observed that, even if applicable to corporations aggregate, it must leave corporations sole and the other classes of legal persons to be explained in the older fashion. And even in the case of corporations aggregate it seems impossible to admit that their personality is anything more than the outcome of metaphor and fiction. A society is not a person, but a number of persons. The so-called will of a company is in reality nothing but the wills of a majority of its directors or shareholders. Ten men do not become in fact one person, because they associate themselves together for one end, any more than two horses become one animal when they draw the same cart. The apparent absurdity of holding that a rich and powerful joint-stock company is a mere fiction of the law, and possesses no real existence, proceeds not from the fiction-theory, but from a misunderstanding of it. No one denies the reality of the company (that is to say, the group of shareholders). What is in truth denied is the reality of its personality. A group or society of men is a very real thing, but it is only a fictitious person.[^[289]]

§ 115. The Agents, Beneficiaries, and Members of a Corporation.

Although corporations are fictitious persons, the acts and interests, rights and liabilities, attributed to them by the law are those of real or natural persons, for otherwise the law of corporations would be destitute of any relation to actual fact and of any serious purpose. Every corporation, therefore, involves in the first place some real person or persons whose interests are fictitiously attributed to it, and in the second place some real person or persons whose acts are fictitiously imputed to it. A corporation, having neither soul nor body, cannot act save through the agency of some representative in the world of real men. For the same reason it can have no interests, and therefore no rights, save those which are attributed to it as a trustee for or otherwise on behalf of actual human beings.[^[290]] Whatever a company is reputed to do in law is done in fact by the directors or the shareholders as its agents and representatives. Whatever interests, rights, or property it possesses in law are in fact those of its shareholders, and are held by it for their benefit. Every legal person, therefore, has corresponding to it in the world of natural persons certain agents or representatives by whom it acts, and certain beneficiaries on whose behalf it exists and fulfils its functions. Its representatives may or may not be different persons from its beneficiaries, for these two capacities may or may not be united in the same individuals. The shareholders of a company are not merely the persons for whose benefit it exists; they are also those by whom it acts. In the case of a corporation established for charitable purposes it is otherwise, for the beneficiaries may have no share whatever in the management of its affairs.

The representatives and beneficiaries of a corporation must not be confounded with its members. These last are, as we have seen, the individuals who form the group or series personified by the law, and who so constitute the corpus or body of the fictitious person thus created. Membership of a corporation does not in itself affect in any way the rights or liabilities of the members, for it is nothing more than a matter of form. A man’s privileges and responsibilities in respect of a corporation depend on whether he is one of its representatives or beneficiaries, not on whether he is formally accounted by the law as one of its members. Municipal corporations are constituted by the incorporation of the inhabitants of boroughs; but if by statute it were declared that they should consist for the future of the mayor, aldermen, and councillors, the change would not affect the rights, powers, or liabilities of any human being.

The extent to which the three classes of persons with whom a corporation is concerned, namely its members, its representatives, and its beneficiaries, are coincident and comprise the same persons, is a matter to be determined as the law thinks fit in the particular case. The members of a corporation may or may not be those by whom it acts, and they may or may not be those on whose behalf it exists.

It is worth notice that some or all of the members of a corporation may be corporations themselves. There is nothing to prevent the shares of a company from being held by other companies. In this case the fiction of incorporation is duplicated, and the law creates a fictitious person by the personification of a group of persons who themselves possess a merely legal and artificial personality.

§ 110 The Acts and Liabilities of a Corporation.

When a natural person acts by an agent, the authority of the agent is conferred, and its limits are determined, by the will and consent of the principal. In general only those acts of the agent are imputed by the law to the principal, which are within the limits of the agent’s authority as thus created and circumscribed. But in the case of a corporation it is necessarily otherwise. A legal person is as incapable of conferring authority upon an agent to act on its behalf, as of doing the act in propria persona. The authority of the agents and representatives of a corporation is therefore conferred, limited, and determined, not by the consent of the principal, but by the law itself. It is the law that determines who shall act for a corporation, and within what limits his activity must be confined. Any act which lies beyond these legally appointed limits will not be imputed to the corporation, even though done in its name and on its behalf. It is said to be ultra vires of the corporation, and as a corporate act it is null and void.

Speaking generally, we may say that a corporation can do those things only which are incidental to the fulfilment of the purposes for which the law created it. All its acts must be directed to its legally appointed end. Thus the memorandum of association of a company must set forth the purposes for which it is established; and even the unanimous consent of the whole body of shareholders cannot effectively enable the company to act beyond the limits so marked out for its activity.

It is well settled in the law of England that a corporation may be held liable for wrongful acts, and that this liability extends even to those cases in which malice, fraud, or other wrongful motive or intent is a necessary element. A company may be sued for libel, malicious prosecution, or deceit.[^[291]] Nor is this responsibility civil only. Corporations, no less than men, are within reach of the arm of the criminal law. They may be indicted or otherwise prosecuted for a breach of their statutory duties, and punished by way of fine and forfeiture.[^[292]]

Although this is now established law, the theoretical basis of the liability of corporations is a matter of some difficulty and debate. For in the first place it may be made a question whether such liability is consistent with natural justice. To punish a body corporate, either criminally or by the enforcement of penal redress, is in reality to punish the beneficiaries on whose behalf its property is held, for the acts of the agents by whom it fulfils its functions. So far, therefore, as the beneficiaries and the agents are different persons, the liability of bodies corporate is an instance of vicarious responsibility, and it is to be justified on the same principles as are applicable to the vicarious liability of a principal for the unauthorised acts of his agent—principles which will be considered by us at a later stage of our enquiry. For although the representatives of a corporation are in form and legal theory the agents of that fictitious person, yet in substance and fact they are the agents of the beneficiaries. A company is justly held liable for the acts of its directors, because in truth the directors are the servants of the shareholders.

A more serious difficulty in imposing liability upon bodies corporate arises from the following consideration. The wrongful acts so attributed by the law to fictitious persons are in reality the acts of their agents. Now we have already seen that the limits of the authority of those agents are determined by the law itself, and that acts beyond those limits will not be deemed in law to be the acts of the corporation. How, then, can an illegal act be imputed to a corporation? If illegal, it cannot be within the limits of lawful authority; and if not within these limits, it cannot be the act of the corporation. The solution of this difficulty is twofold. In the first place, the argument does not extend to wrongful acts of omission, for these are done by the body politic in person, and not merely by its representatives. No fictitious person can do in person what by law it ought not to do, but it can in person fail to do what in law it ought. And in the second place, the liability of a corporation for the acts of its representatives is a perfectly logical application of the law as to an employer’s liability for his servants. The responsibility of a master does not depend on any authority given to his servant to commit the wrongful act. It is the outcome of an absolute rule of law that the employer is himself answerable for all wrongs committed by his servant in the course and process of doing that which he is employed to do. I am liable for the negligence of my servant in driving my carriage, not because I authorised him to be negligent, but because I authorised him to drive the carriage. So in the case of the agents of a corporation: the law imputes to the corporation not only all acts which its agents are lawfully authorised to do, but all unlawful acts which they do in or about the business so authorised. The corporation is responsible not only for what its agents do, being thereunto lawfully authorised, but also for the manner in which they do it. If its agents do negligently or fraudulently that which they might have done lawfully and with authority, the law will hold the corporation answerable.[^[293]]

§ 117. The Uses and Purposes of Incorporation.

There is probably nothing which the law can do by the aid of the conception of incorporation, which it could not do without it. But there are many things which it can by such aid do better or more easily than would otherwise be possible. Among the various reasons for admitting this fictitious extension of personality, we may distinguish one as of general and fundamental importance, namely, the difficulty which the law finds in dealing with common interests vested in large numbers of individuals and with common action in the management and protection of such interests. The normal state of things—that with which the law is familiar, and to which its principles are conformed—is individual ownership. With a single individual the law knows well how to deal, but common ownership is a source of serious and manifold difficulties. If two persons carry on a partnership, or own and manage property in common, complications arise, with which nevertheless the law can deal without calling in the aid of fresh conceptions. But what if there are fifty or a hundred joint owners? With such a state of facts legal principles and conceptions based on the type of individual ownership are scarcely competent to deal. How shall this multitude manage its common interests and affairs? How shall it dispose of property or enter into contracts? What if some be infants, or insane, or absent? What shall be the effect of the bankruptcy or death of an individual member? How shall one of them sell or otherwise alienate his share? How shall the joint and separate debts and liabilities of the partners be satisfied out of their property? How shall legal proceedings be taken by or against so great a number? These questions and such as these are full of difficulty even in the case of a private partnership, if the members are sufficiently numerous. The difficulty is still greater in the case of interests, rights, or property vested not in individuals or in definite associations of individuals, but in the public at large or in indeterminate classes of the public.

In view of these difficulties the aim of the law has been to reduce, so far as may be, the complex form of collective ownership and action to the simple and typical form of individual ownership and action. The law seeks some instrument for the effective expression and recognition of the elements of unity and permanence involved in the shifting multitude with whose common interests and activities it has to deal. There are two chief devices for this purpose, namely trusteeship and incorporation. The objects of trusteeship are various, and many of its applications have a source and significance that are merely historical. In general, however, it is used as a mode of overcoming the difficulties created by the incapacity, uncertainty, or multiplicity of the persons to whom property belongs. The property is deemed by the law to be vested, not in its true owners, but in one or more determinate individuals of full capacity, who hold it for safe custody on behalf of those uncertain, incapable, or multitudinous persons to whom it in truth belongs. In this manner the law is enabled to assimilate collective ownership to the simpler form of individual ownership. If the property and rights of a charitable institution or an unincorporated trading association of many members are held in trust by one or two individuals, the difficulties of the problem are greatly reduced.

It is possible, however, for the law to take one step further in the same direction. This step it has taken, and has so attained to the conception of incorporation. This may be regarded from one point of view as merely a development of the conception of trusteeship. For it is plain that so long as a trustee is not required to act, but has merely to serve as a depositary of the rights of beneficiaries, there is no necessity that he should be a real person at all. He may be a mere fiction of the law. And as between the real and the fictitious trustee there are, in large classes of cases, important advantages on the side of the latter. He is one person, and so renders possible a complete reduction of common to individual ownership; whereas the objections to a single trustee in the case of natural persons are serious and obvious. The fictitious trustee, moreover, though not incapable of dissolution, is yet exempt from the inevitable mortality that afflicts mankind. He embodies and expresses, therefore, to a degree impossible in the case of natural trustees, the two elements of unity and of permanence which call for recognition in the case of collective interests. An incorporated company is a permanent unity, standing over against the multitudinous and variable body of shareholders whose rights and property it holds in trust.

It is true, indeed, that a fictitious trustee is incapable of acting in the matter of his trust in his proper person. This difficulty, however, is easily avoided by means of agency, and the agents may be several in number, so as to secure that safety which lies in a multitude of counsellors, while the unity of the trusteeship itself remains unaffected.

We have considered the general use and purpose of incorporation. Among its various special purposes there is one which has assumed very great importance in modern times, and which is not without theoretical interest. Incorporation is used to enable traders to trade with limited liability. As the law stands, he who ventures to trade in propria persona must put his whole fortune into the business. He must stake all that he has upon the success of his undertaking, and must answer for all losses to the last farthing of his possessions. The risk is a serious one even for him whose business is all his own, but it is far more serious for those who enter into partnership with others. In such a case a man may be called upon to answer with his whole fortune for the acts or defaults of those with whom he is disastrously associated.

It is not surprising, therefore, that modern commerce has seized eagerly upon a plan for eliminating this risk of ruin. Incorporation has proved admirably adapted to this end. They who wish to trade with safety need no longer be so rash as to act in propria persona, for they may act merely as the irresponsible agents of a fictitious being, created by them for this purpose with the aid and sanction of the Companies Act. If the business is successful, the gains made by the company will be held on behalf of the shareholders; if unsuccessful, the losses must be borne by the company itself. For the debts of a corporation are not the debts of its members. Si quid universitati debetur, singulis non debetur, nec quod debet universitas singuli debent.[^[294]] The only risk run by its members is that of the loss of the capital with which they have supplied or undertaken to supply the company for the purpose of enabling it to carry on its business. To the capital so paid or promised, the creditors of the insolvent corporation have the first claim, but the liability of the shareholders extends no further.

The advantages which traders derive from such a scheme of limited liability are obvious. Nor does it involve any necessary injustice to creditors, for those who deal with companies know, or have the means of knowing, the nature of their security. The terms of the bargain are fully disclosed and freely consented to. There is no reason in the nature of things why a man should answer for his contracts with all his estate, rather than with a definite portion of it only, for this is wholly a matter of agreement between the parties.

§ 118. The Creation and Extinction of Corporations.

The birth and death of legal persons are determined not by nature, but by the law. They come into existence at the will of the law, and they endure during its good pleasure. Corporations maybe established by royal charter, by statute, by immemorial custom, and in recent years by agreement of their members expressed in statutory forms and subject to statutory provisions and limitations. They are in their own nature capable of indefinite duration, this being indeed one of their chief virtues as compared with humanity, but they are not incapable of destruction. The extinction of a body corporate is called its dissolution—the severing of that legal bond by which its members are knit together into a fictitious unity. We have already noticed that a legal person does not of necessity lose its life with the destruction or disappearance of its corpus or bodily substance. There is no reason why a corporation should not continue to live, although the last of its members is dead; and a corporation sole is merely dormant, not extinct, during the interval between two successive occupants of the office. The essence of a body corporate consists in the animus of fictitious and legal personality, not in the corpus of its members.[^[295]]

§ 119. The State as a Corporation.

Of all forms of human society the greatest is the state. It owns immense wealth and performs functions which in number and importance are beyond those of all other associations. Is it, then, recognised by the law as a person? Is the commonwealth a body politic and corporate, endowed with legal personality, and having as its members all those who owe allegiance to it and are entitled to its protection? This is the conclusion to which a developed system of law might be expected to attain. But the law of England has chosen another way. The community of the realm is an organised society, but it is no person or body corporate. It owns no property, is capable of no acts, and has no rights nor any liabilities imputed to it by the law. Whatever is said to the contrary is figure of speech, and not the literal language of our law.

How, then, are we to account for this failure of the law to make so obvious and useful an application of the conception of incorporation and legal personality? Why has it failed to recognise and express in this way the unity and permanence of the state? The explanation is to be found in the existence of monarchical government. The real personality of the King, who is the head of the state, has rendered superfluous any attribution of fictitious personality to the state itself. Public property is in the eye of the law the property of the King. Public liabilities are those of the King; it is he, and he alone, who owes the principal and interest of the national debt. Whatsoever is done by the state is in law done by the King. The public justice administered in the law courts is royal justice administered by the King through his servants the judges. The laws are the King’s laws, which he enacts with the advice and consent of his Parliament. The executive government of the state is the King’s government, which he carries on by the hands of his ministers. The state has no army save the King’s army, no navy save the King’s navy, no revenues save the royal revenues, no territory save the dominions of the King. Treason and other offences against the state and the public interest are in law offences against the King, and the public peace is the King’s peace. The citizens of the state are not fellow-members of one body politic and corporate, but fellow-subjects of one sovereign lord.

Insomuch, therefore, as everything which is public in fact is conceived as royal by the law, there is no need or place for any incorporate commonwealth, respublica, or universitas regni. The King holds in his own hands all the rights, powers and activities of the state. By his agency the state acts, and through his trusteeship it possesses property and exercises rights. For the legal personality of the state itself there is no call or occasion.

The King himself, however, is in law no mere mortal man. He has a double capacity, being not only a natural person, but a body politic, that is to say, a corporation sole. The visible wearer of the crown is merely the living representative and agent for the time being of this invisible and undying persona ficta, in whom by our law the powers and prerogatives of the government of this realm are vested. When the King in his natural person dies, the property real and personal which he owns in right of his crown and as trustee for the state, and the debts and liabilities which in such right and capacity have been incurred by him, pass to his successors in office, and not to his heirs, executors, or administrators. For those rights and liabilities pertain to the King who is a corporation sole, and not to the King who is a mortal man.[^[296]]

In modern times it has become usual to speak of the Crown rather than of the King, when we refer to the King in his public capacity as a body politic. We speak of the property of the Crown, when we mean the property which the King holds in right of his crown. So we speak of the debts due by the Crown, of legal proceedings by and against the Crown, and so on. The usage is one of great convenience, because it avoids a difficulty which is inherent in all speech and thought concerning corporations sole, the difficulty, namely, of distinguishing adequately between the body politic and the human being by whom it is represented and whose name it bears. Nevertheless we must bear in mind that this reference to the Crown is a mere figure of speech, and not the recognition by the law of any new kind of legal or fictitious person. The Crown is not itself a person in the law. The only legal person is the body corporate constituted by the series of persons by whom the crown is worn. There is no reason of necessity or even of convenience, indeed, why this should be so. It is simply the outcome of the resolute refusal of English law to recognise any legal persons other than corporations aggregate and sole. Roman law, it would seem, found no difficulty in treating the treasure-chest of the Emperor (fiscus) as persona ficta, and a similar exercise of the legal imagination would not seem difficult in respect of the Crown of England.

Just as our law refuses to personify and incorporate the empire as a whole, so it refuses to personify and incorporate the various constituent self-governing states of which the empire is made up. There is no such person known to the law of England as the state or government of India or of Cape Colony.[^[297]] The King or the Crown represents not merely the empire as a whole, but each of its parts; and the result is a failure of the law to give adequate recognition and expression to the distinct existence of these parts.[^[298]] The property and liabilities of the government of India are in law those of the British Crown. The national debts of the colonies are owing by no person known to the law save the King of England. A contract between the governments of two colonies is in law a nullity, unless the King can make contracts with himself. All this would be otherwise, did the law recognise that the dependencies of the British Empire were bodies politic and corporate, each possessing a distinct personality of its own, and capable in its own name and person of rights, liabilities, and activities. Some of the older colonies were actually in this position, being created corporations aggregate by the royal charters to which they owed their origin: for example, Massachusetts, Rhode Island, and Connecticut. A similar corporate character pertains to modern dependencies such as the Chartered Company of South Africa. Even an unincorporated colony of the ordinary type may become incorporate, and so possessed of separate personality, by virtue of its own legislation.[^[299]] In the absence of any such separate incorporation of the different portions of the empire, their separate existence can be recognised in law only by way of that doctrine of plural personality which we have already considered in another connection.[^[300]] Although the King represents the whole empire, it is possible for the law to recognise a different personality in him in respect of each of its component parts. The King who owns the public lands in Cape Colony is not necessarily in the eye of the law the same person who owns the public lands in England. The King, when he borrows money in his capacity as the executive government of Australia, may be deemed in law a different person from the King who owes the English national debt. How far this plural personality of the Crown is actually recognised by the common law of England is a difficult question which it is not necessary for us here to answer.[^[301]] It is sufficient to point out that in the absence of any separate incorporation this is the only effective way of recognising in law the separate rights, liabilities, and activities of the different dependencies of the Crown.